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Showing 321 to 340 of 1415 Records
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2023 (4) TMI 1096
Difference in stock (difference in physical stock on the date of survey and the stock shown in stock register - assessee was maintaining stock register for silver ornaments/jewellery, while no stock register was maintained for Gold Jewellery and Silver Bullion dealt with by the assessee - HELD THAT:- There are two parties before ld. CIT(A) and principles of nature justice demand that fair hearing be granted to both the parties. Reference is drawn to Section 250(1) and 250(2) as well Rule 46A of the Income-tax Rules, 1962 - one more opportunity is required to be granted to the assessee to rebut through cogent evidences the valuation report of the registered valuer as to both weighment of the silver ornaments found during survey as also as to the purity of silver ornaments adopted by the registered valuer - it is not the case of the surrender of the undisclosed income during the course of survey proceedings, but incriminating material by way of excess stock of silver ornaments found during survey vis-à-vis stock recorded in stock register, and additions were made based on the incriminating material ( being excess stock) found during survey conducted u/s 133A. The orders of the authorities are set aside on this issue of silver ornaments, and matter so far as additions made based on silver ornaments found at Mirzapur HO during survey, is restored to the AO for denovo assessment on merit, after giving proper and adequate opportunity of being heard to the assessee.
Gold jewellery at Mirzapur HO - Assessee claimed that stock as per books of accounts as on 24.02.2012 was 1033.80 gms but no working was submitted. Thus, we are restoring this matter back to the file of the AO for verification of the claim of the assessee on merit, after giving proper and adequate opportunity of being heard to the assessee. We order accordingly.
Gold ornaments found during the survey on 24.02.2011 - As based on facts and circumstances of the case and in the interest of justice, the appellate order passed by ld. CIT(A) granting relief to the assessee w.r.t. 850 gms of gold ornaments found during survey allegedly belonging to his wife Mrs. Suman Agrawal is set aside and matter is restored to the file of the AO for fresh adjudication on merit, after providing opportunity of being heard to the assessee. The burden is heavy on assessee as claim is set up that personal jewellery of the wife is kept at business premises and that too without making any entry in the business records.
202 gms of gold ornaments found during survey belonged to one Mrs. Poonam Tripathi who gave the same for valuation purposes to the assessee’s employee Mr. Sharad Agrawal on 24.02.2012 at 10.30 AM as the assessee was not available at that time, is merely an afterthought, as during the course of survey proceedings, the assessee never stated that the said gold ornaments weighing 202 gms belonged to Mrs. Poonam Tripathi. Even initial statement of Mr. Sharad Agrawal was recorded on the date of survey on 24.02.2013, but he never disclosed that 202 gms of gold ornaments were received by him on 24.02.2012 itself at 10.30 AM allegedly from Mrs. Poonam Tripathi for valuation purposes and the same is to be excluded while determining the stock of the assessee, it is completely unbelievable. Thus, after considering the entire material on record, we uphold the appellate order of ld. CIT(A) in upholding the addition w.r.t. 202 gms of gold ornaments claimed to be allegedly belonging to Mrs Poonam Tripathi, by holding that this is the undisclosed stock of gold ornaments of the assessee. Thus, the addition made by the AO and as confirmed by ld. CIT(A) is sustained. We order accordingly.
Silver Bullion of 6.18 Kgs physically found during survey on 24.02.2012 at business premises of the assessee - As one more opportunity is required to be granted to the assessee to rebut through cogent evidences the valuation report of the registered valuer as to both weighment of the silver ornaments found during survey as also as to the purity of silver ornaments adopted by the registered valuer, as also assessee is required to prove the claim of stock of 5.751 kgs of Silver ingot in stock on date of survey.
So far as legal precedents relied upon by the assessee, it is not the case of the surrender of the undisclosed income during the course of survey proceedings, but incriminating material by way of excess stock of silver bullion(silver ingot) was found during survey vis-à-vis stock recorded in stock register, and additions were made based on the incriminating material ( being excess stock) found during survey conducted u/s 133A. The orders of the authorities are set aside on this issue of silver bullion, and matter so far as silver bullion at Mirzapur HO is restored to the AO for denovo assessment, after giving proper and adequate opportunity of being heard to the assessee.
Differences in Stock at Varansi B.O. - Explanation of alleged purchase of 177.50 kgs of artificial silver ornaments being Gillet Payal is merely an afterthought by the assessee to wriggle out of tax liability. Thus, we set aside the appellate order passed by ld. CIT(A) and uphold/sustain the addition as was made by the AO. So far as legal precedents relied upon by the assessee, it is not the case of the surrender of the undisclosed income during the course of survey proceedings, but incriminating material by way of excess stock of silver ornaments was found during survey vis-à-vis stock recorded in stock register, and additions were made based on the incriminating material ( being excess stock) found during survey conducted u/s 133A. The orders of the ld. CIT(A) is set aside on this issue of excess silver ornaments and the assessment order is upheld. We order accordingly.
Difference of stock of gold jewellery found during Survey on 24.02.2012 at Varanasi, U.P. of 128 gms vis-à-vis no stock shown in the stock register - No infirmity in the orders passed by authorities below, and we sustain the appellate order passed by ld. CIT(A) and the addition is sustained, on the touchstone of preponderance of human probabilities as the explanation offered by the assessee is held to be mere after thought to wriggle out of tax liability. So far as legal precedents relied upon by the assessee, it is not the case of surrender of the undisclosed income during the course of survey proceedings, but incriminating material by way of stock of gold ornaments was found during survey for which no satisfactory explanation could be given by the assessee, and additions were made based on the incriminating material ( being excess stock) found during survey conducted u/s 133A. The order passed by ld. CIT(A) on this issue is upheld.
4.958 kgs of silver Bullion found during survey u/s 133A on 24.02.2012 at Varanasi BO vis-à-vis no stock shown in the stock register - It is incomprehensible to believe that Mr. Shiv Bachan Yadav, Manager of the assessee of Varanasi BO could not disclose these material facts during survey on 24.02.2012 (i.e. one day after alleged receipt of 4.958 kgs of Silver Bullion from Mr. Ghurahu Yadav on 23.02.2012), to the department official who conducted survey as well to the valuer who weighed and valued the silver bullion on 24.02.2012 that this silver bullion belonged to and owned by Mr Ghurahu Yadav. No ledger account of Silver Bullion was found during survey proceedings at Varanasi BO. We do not find any infirmity in the orders passed by authorities below, and we sustain the appellate order passed by ld. CIT(A) and the addition is sustained. So far as legal precedents relied upon by the assessee, it is not the case of the surrender of the undisclosed income during the course of survey proceedings, but incriminating material by way of stock of silver bullion which was found during survey for which no satisfactory explanation could be given by the assessee, and additions were made based on the incriminating material ( being excess stock) found during survey conducted u/s 133A. The orders of the ld. CIT(A) on this issue is upheld.
Unexplained Cash Deposits in Cash book - AO rejected the contentions of the assessee, as the credibility of source of cash in the proprietary concern could not be proved - CIT(A) accepted the contentions of the assessee, as sources of cash receipts as entered in its cash book, were held to be substantiated by ld. CIT(A) - HELD THAT:- Both the concerns are proprietary concern and assessment was framed by the AO after including, inter-alia, income of both the concerns. The records were available before the AO during assessment proceedings, and these entries were made prior to the date of survey. Thus, We do not hold infirmity in the appellate order passed by ld. CIT(A) deleting addition with respect to cash received by one proprietary concern of the assessee namely M/s Raj Shree Jewellers from another proprietary concern of the assessee namely M/s Raj Shree Palace. The appellate order passed by ld. CIT(A) deleting addition is confirmed.
Excess Cash found During Survey - HELD THAT:- As affidavits filed are self serving and are not corroborated with any evidence found during survey. Even, receipts which ought to have been issued at the time of receipt of cash were not issued( no such receipt found during survey) and no evidence whatsoever was found during survey to substantiate the contentions of the assessee, and it is merely an afterthought to wriggle out of tax liability and stand rejected, and we hold that the cash found at Varanasi during survey after excluding as recorded in cash book, is an undisclosed income of the assessee. The appellate order passed by ld. CIT(A) w.r.t. unexplained cash found at Varanasi BO stands confirmed.
So far as legal precedents relied upon by the assessee, it is not the case of the surrender of the undisclosed income during the course of survey proceedings, but incriminating material by way of excess cash was found during survey for which no satisfactory explanation could be given by the assessee, and additions were made based on the incriminating material ( being excess cash) found during survey conducted u/s 133A. The orders of the ld. CIT(A) on this issue is upheld.
Rejection of Books of accounts by invoking provisions of Section 145(3) - HELD THAT:- We uphold the rejection of books of accounts u/s 145(3) by authorities below, keeping in view facts and circumstances of the case that the books of accounts were not updated as on the date of survey as well that there were discrepancies in the stock as well cash physically found on the date of survey vis-àvis as recorded in the records/books of accounts, and we have already confirmed additions on both the account of differences in cash as well stock vide this order.
Additions with respect to unexplained Sundry Creditors - HELD THAT:- All the constituents are required to be cumulatively satisfied. If one or more of them is absent, then the AO can make additions u/s. 68 of the Act as an income of the tax-payer. Regarding one creditor Mr. Sati Ram, the balance appearing was the opening balance with no transaction reported for the year under consideration, and claim is made that the said amount is written back and offered for taxation in the next year, but, however no evidence to that effect is filed on record - entire matter regarding unexplained sundry creditor need to be restored back to the AO for fresh adjudication.
Addition on account of Unsecured loans raised by assessee - HELD THAT:- It is true that the assessee received loans from the aforesaid persons vide cheques which stood credited in his bank account and confirmations were filed, ITR etc. were filed( except in the case of Mr. Gopi Nath Agrawal) but the cheque issued by the lenders is preceded by cash deposit in their bank account, and hence onus is very heavy on the assessee. Thus, in the facts and circumstance of the case and in the interest of justice and in all fairness to both the parties, we are setting aside the appellate order passed by ld. CIT(A) and restore the matter back to the file of the AO for fresh adjudication of this issue on merits.
Chargeability of Interest u/s 234B and 234C - HELD THAT:- Merely because there is an clerical error in the ITNS 150 will not vitiate the liability of the assessee to pay interest u/s 234B and 234C, which is mandatory and consequential to assessment framed by the AO. Reference is drawn to provisions of Section 292B of the 1961 Act. Thus, we do not find any merit in the contention of the assessee and uphold levy of interest u/s 234B and 234C and dismiss the ground raised by the assessee.
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2023 (4) TMI 1095
Disallowance being payment of Provident Fund and ESI u/s.36(1)(va) - intimation u/s 143(1) - incorrect claim apparent from any information in the return - as per assessee payments have not been made within the due date of 15 day of next months as per the respective Act but made much before the due date of filling of return income - HELD THAT:- Hon’ble Supreme Court in the case of “Checkmate Services Private Limited [2022 (10) TMI 617 - SUPREME COURT] has decided this issue against the Assessee.
Once the Hon’ble Supreme Court has held that if the payment has been made with respect employees contribution after the due date, the same has to be disallowed and cannot be allowed as deduction and therefore, adjustment has rightly been made
If there is any incorrect claim apparent from any information in the return, then adjustment is permissible. Here in this case, once the claim of deduction as per the law in not allowable, same can be disallowed in the intimation u/s 143(1). The judgment of Hon’ble Supreme Court is a law, which has to be interpreted that this was the position of law from the date of enactment of provision.
The auditor in the audit report specifies the due date as prescribed u/s. 36(1)(va) of the Act and the date on which deposit has been made, then in the computation of income, the same cannot be claimed as deduction, because the law envisages that such payment is disallowable, because it has not been paid within the due date.
Accordingly, we hold that such an adjustment is permissible under the scope of section 143(1) of the Act Decided against assessee.
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2023 (4) TMI 1094
Reopening of assessment u/s 147 - Assessee had paid the annual premium which is much higher than the total income declared by the assessee in the return of income - information received from the insurance company in respect of premium paid by the appellant - misreporting of the insurance company - HELD THAT:- As it is brought to our notice that assessee has no doubt made the insurance premium from the bank account maintained by the assessee in Punjab and Maharashtra Cooperative Bank Limited in Fort branch and HDFC, Andheri (W) branch.
Subscription of insurance is concerned assessee has accepted and brought on record that assessee has in fact made the payment and not through the bank reported by the Insurance Company and it is from the branch in which assessee is maintaining bank account.
Payments of premium is concerned assessee has clearly brought on record that assessee has in fact made the payment. With regard to source of funds there is no doubt on the statements and financial record submitted by the assessee that assessee has enough funds to make the above said insurance payment.
Therefore, the reason for reopening of the assessment is already clarified and addressed by the assessee. However, the issue was complicated because of the misreporting of the insurance company. Therefore, the ground raised by the assessee is accordingly, allowed.
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2023 (4) TMI 1093
Disallowance of purchase related expenses - assessee is a company engaged in power transmission - HELD THAT:- Assessee claimed that the expenditure is incurred relating to petrol, oil, lubricants for the employees of divisional office for necessary purchase for urgent work and line maintenance.
AO without finding any defect in such claim made ad-hoc disallowance and the same is confirmed by ld. CIT(A) also. Assessee being a limited company subjected to statutory audits, regular books are maintained and the alleged expenses are towards petrol oil lubricants for the employees of divisional office do not find any reason to doubt the genuineness of the said expenditure. We, therefore, reverse the finding of ld. CIT(A) and delete the said ad-hoc disallowance of purchase related expenses - Hence, ground no. 1 raised by the assessee is allowed.
Disallowance u/s 40(a)(ia) for non-deduction of tax at source - assessee submitted that since information about deduction of tax at source on the alleged sum is not available and therefore, the case of the assessee falls u/s 40(a)(ia) therefore, in view of the amendment made in Section 40(a)(ia) of the Act, from AY 2015-16 the disallowance may be restricted only to the extent of 30% - HELD THAT:- Through Finance Act-II, 2014 w.e.f. 01.04.2015 the amendment is brought in Section 40(a)(ia) and as per the said amendment 30% of any sum payable to a resident, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in Section 139(1) the said sum subjected to proviso to Section 40(a)(ia) shall not be deducted in computing the income chargeable under the head ‘Profits and gains of business or profession’. Since the year under appeal is AY 2016-17 therefore, the said amendment is applicable and therefore, the disallowance u/s 40(a)(ia) needs to be sustained only to the extent of 30% as has been requested by assessee to which there is no dispute at the end of the Revenue. Thus, ground no. 2 raised by the assessee is partly allowed.
Disallowance of bad debts written off - HELD THAT:- We notice that before us the claim of the assessee is that the alleged sum has not been debited to profit and loss account but is linked to the reversal of opening balance lying in provision for doubtful debts and therefore, disallowance was uncalled for. Since this claim was not made by the assessee before ld. CIT(A), we deem it proper to restore this issue to the file of AO before whom the assessee shall file necessary evidence in support of its claim that the alleged sum has not been claimed as expenditure in the profit and loss account towards the provision of bad doubtful debts.
Difference in reconciliation between associated companies receivable vis-à-vis outstanding position - The claim of the assessee is that the said difference cannot be treated as income since the same is running account and is not in the nature of income - HELD THAT:- We notice that the said addition has arisen since the assessee failed to reconcile the balances - said addition is only towards inter-company receivables shown of the associate concerns of MeECL, MePTCL and MePGCL. Assessee has not filed any reconciliation statement. Since it is an admitted fact that there is a discrepancy in the inter-company payable and the inter-company receivable, we deem it proper to restore this issue to ld. AO before whom the assessee shall file complete reconciliation statement so as to explain that there is no difference of the alleged amount - In case the assessee is able to reconcile the said difference to the satisfaction of ld. AO, the alleged addition shall stand deleted. Ground no. 3 is allowed for statistical purposes.
Disallowance of total expenditure claimed by the assessee in the profit and loss account - HELD THAT:- Assessee company being owned by the Govt. of Meghalaya and the various changes brought in from 01.04.2012 on account of “The Meghalaya Power Sector Reforms Transfer Scheme, 2020” the financial statements have been prepared. AO ought to have considered this factual aspect before disallowing the total amount of expenditure claimed in the profit and loss account. We, thus, restore this issue to the file of ld. AO for afresh adjudication after considering the submissions of the assessee who shall be granted sufficient opportunity of being heard. Thus, ground allowed for statistical purposes.
Disallowance u/s 14A - assessee has not offered any suo moto disallowance and AO on observing that the investments being made, computed the disallowance u/s 14A - HELD THAT:- Exercise needs to be carried out by ld. AO in this regard as to what are the investments which have fetched exempt income and only those should be considered for computing the disallowance u/s 14A - in no case such disallowance should exceed the exempt income earned by the assessee. The assessee is directed to file necessary details before ld. AO who shall examine the issue afresh in light of the settled judicial precedence after giving the assessee reasonable opportunity of being heard. Therefore, this ground raised by the assessee is allowed for statistical purposes.
Disallowance of interest expenditure - assessee has claimed the expenditure towards accrued interest on G.P.F. subscriptions - AO firstly computed the disallowance u/s 14A and thereafter, while dealing with the interest expenditure came to a conclusion that the said expenditures are not allowable as the assessee did not have any business which generated any revenue - HELD THAT:- Basis of disallowance by the Revenue authority that there is no nexus between the interest expenditure and the income earned thereon is not acceptable because the assessee is a G.P.F. Trust and is an association of persons. Source of funds are from the subscriptions collected from its employees on account of provident fund. These funds are invested for earning income and part of such funds are given as loan and advance to the holding company. One cannot question the fact that there is no nexus between the funds received and the funds applied towards investments. Therefore, outrightly the disallowance of the total interest expenditure is uncalled for - assessee also raised an issue that no show cause notice was issued to the assessee before the enhancement of the addition made by ld. CIT(A). This being a violation of principles of natural justice, we direct ld. CIT(A) to give proper opportunity to the assessee and examine the issue afresh.
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2023 (4) TMI 1092
Penalty u/s 271F - Deduction u/s 80P denied - Delay in filling return - due tax was deposited on 11.11.2019 but return was filed on 04.09.2022 - HELD THAT:- Coordinate Bench in case of Shankar Lal Kumawat [2020 (7) TMI 683 - ITAT JAIPUR] wherein the Coordinate Bench has held “that where assessee had not filed its return of income on ground that his income did not exceed maximum non-taxable amount as his income was exempt under section 54, in view of fact that assessee’s total income without giving effect to provision of section 54 came to an amount which exceeded maximum amount not chargeable to tax, assessee was required to file his return of income, and the penalty under section 271F levied upon him was justified.”
When the assessee is not filing the return of income in the proceedings before the lower authorities and did not file justification for the same the levy of penalty by the lower authorities sustained. Appeal of the assessee is dismissed.
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2023 (4) TMI 1091
Exemption u/s 11 - CIT(E) held that “since exemption under section 11 is not to be allowed to the assessee as per the decision of the Hon’ble Delhi High Court in appellant’s own case, the said income has to be taxed under the head “Income from other sources” and while computing income under the head “Income from other sources” any expenditure (not been in the nature of capital expenditure) laid out or expended for the purpose of making or earning such income is to be allowed as deduction as per the provisions of section 57(iii) - HELD THAT:- As seen that no income has been earned for some of the expenses incurred Sl. Nos. 7 to 15 of the table. Hence, expenditure incurred on these counts cannot be allowed in computing income from other sources. Since income from agricultural activity is exempt from tax, expenditure incurred on such activity is also not be allowed as expenditure.
From the details it is also seen that the appellant has received donation against which expenses on account of donation paid have been shown. Since donation is a voluntary contribution, no expenditure can be allowed for earning such income. However, in case of donations paid, the said amount is to be allowed as deduction u/s 80G in case donations paid are to entities which are approved for the purpose of section 80G. Accordingly, the Assessing Officer is directed to-
i. assess the income of the assessee with respect to activities categorized as charitable activities in the assessment order as income from other sources after verifying the expenditure incurred against SI. No. 1 to 4;
ii. no expenditure is to be allowed with respect to items at Sl. No. 7 to 15 since no income has been earned as per of section 57(iii);
iii. allow deduction tinder section 80G for donations paid amounting to Rs. 20,15,171/- after verifying that the entities to whom donations have been given are approved for the purpose of section 80G and to the extent of donations paid to entities approved under section 80G as per the relevant provisions of the Income Tax Act.
iv. not allow expenditure on agricultural activity since the said income is exempt from tax; and
v. allow set off of business income with loss computed under the held "Income from sources" after examining the applicability of the same as per the provisions of the Income Tax Act.
Revenue authorities have duly allowed the depreciation and other expenses as directed to be considered by the Hon’ble High Court. The revenue authorities have also allowed to set off of the business income with loss computed under the head “income from other sources” which is in tune with the provisions of the Income Tax Act. Since, exemption u/s 11 is not to be allowed as per the orders of the Hon’ble High Court, the expenditure on which is unrelated to the earning of the income only has been disallowed.
We decline to interfere with the order of the ld. CIT(E). The appeal of the revenue stands dismissed.
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2023 (4) TMI 1090
TP adjustment - international transaction of ‘Payment of Management fees’ with transacted value - HELD THAT:- Here is a classic case in which the TPO did not compute the ALP of the international transaction but simply proposed the transfer pricing adjustment on the basis of some working done by him to the value of international transaction.
The course of action adopted by the TPO has no sanction of law inasmuch as it is mandatory to determine the ALP under one of the six prescribed methods for ascertaining if the international transaction was at ALP. Further, a common thread running through all the six methods is that the benchmark always has a reference to the comparable uncontrolled transactions.
TPO dispensed with the adoption of any of the methods. Neither any comparison of the Payment of Management Fee in an uncontrolled situation was made nor even the allocation of the third component on the basis of head count was done by considering any comparable uncontrolled instance. Such a course of action adopted by the TPO is contrary to the mandatory statutorily stipulated procedure and hence, cannot be countenanced. If the working of the TPO, which is not in accordance with the law, is removed from the scene, what remains is the ALP determination done by the assessee of the international transaction of its Transfer pricing study report. Such determination has not been adversely commented upon by the TPO, which, ergo has to be accepted as correct.
ALP determined by the assessee in its Transfer pricing study report deciphers that the transaction was carried out at the ALP - Thus delete the addition made in the international transaction of ‘Payment of Management Fee’. Appeal of assessee allowed.
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2023 (4) TMI 1089
Revision u/s 263 by CIT - profits attributable to Appellant’s Permanent Establishment (‘PE’) in India - As per CIT-A method of computing profits attributable to PE as adopted by appellant is inappropriate - HED THAT:- As decided in [2022 (10) TMI 151 - ITAT MUMBAI], order cannot be said to be prejudicial to the interest of the revenue unless there is a categorical finding that the payment to the dependent agent is not an arm’s length price vis-à-vis functions performed, assets employed and risks assumed by the dependent agent. While doing so, one also has to bear in mind that DAPE is not anything distinct from the DA, in the light of the binding judicial precedents holding the field as of now, and the taxability of the dependent agent’s remuneration in the hands of the DA brings an end to the taxability of the DAPE also. There is no such finding about the payment to the dependent agent being less than the arm’s length price of services rendered by the dependent agent, in the present case, even though there is a finding about questioning the DAPE’s FAR analysis. The Commissioner ought to have examined the arm’s length price determination in respect of the services rendered by the dependent agent, in this context. That exercise has also not been done.
Unless the order sought to be revised cannot be said to be prejudicial to the interest of the revenue, its being erroneous, even if that be so, cannot be said to reason enough to invoke section 263 of the Act, and the order cannot be said to be prejudicial to the interests of the revenue unless there is a categorical finding that the dependent agent has not been paid arm’s length remuneration for the functions performed, assets employed and risks assumed by the dependent agent. Order being prejudicial to the interest of the revenue, inasmuch as the payment to the dependent agent not being at an arm’s length, is a sine qua non for holding that the order is prejudicial to the interest of the revenue. This exercise has clearly not been done on the facts of this case. For this short reason alone, we must set aside the impugned revision order. Appeals of the assessee are allowed.
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2023 (4) TMI 1088
Income taxable in India - PE in India - Receipts on account of Software (Prime) License Fee - Taxability under Article 13 India-UK DTAA under the head ‘FTS’ - HELD THAT:- Having gone through the agreement since the user has no right to make copies or commercially exploit the right in the copyright of such software the ld DRP following the ratio laid down by Hon'ble Supreme Court in the context of Business Income/Royalty in Engineering Analysis Centre of Excellence Private Ltd. [2021 (3) TMI 138 - SUPREME COURT] directed to exclude receipts relating to sale of software licenses in accordance with and to the extent covered under the applicable categories contained in Hon'ble Supreme Court decision. DRP held that there is no dispute regarding the fact that the assessee does not have a permanent establishment in India. Accordingly, such receipts will constitute business income under Article 7 of the DTAA in line with the above-mentioned decision of Hon’ble Supreme Court and will not be taxable in India in the absence of PE.
Receipts on account of provision of other related services - The services are in respect of training programme and updations in connection with utilization of the software PRIME. Hence, we hold that when software itself is not taxable, the training and the related activities concerned with utilization and installation cannot be held to be FTS. Further, simply latching on to use of words “Make Available” in the agreement, it cannot be said that conditions of Article 13(4)(c) are satisfied. Burden is on the Revenue to demonstrate that make available condition is satisfied. Appeal of the assessee on Ground Nos. 4 and 5 are allowed.
Addition of reimbursement - We find that the ld DRP has remanded the matter to the AO to examine travelling and lodging expenses reimbursed. AO has wrongly taxed the same under FTS. Hence, the action of the AO cannot be supported. The addition made is hereby directed to be deleted.
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2023 (4) TMI 1087
Deduction u/s. 35D - Denial of claim in respect of its Steel Division which was sold in the financial year 2000-01 on the ground that once the unit is transferred, no such deduction would be admissible - HELD THAT:- As we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2004-05 [2019 (2) TMI 2078 - ITAT MUMBAI] as held that on a perusal of section 35D shows that the Act is silent in the case when a unit is sold. Section 35D(5) of the Act refers to the transfer before the expiry of the period of 10 years to another Indian company in a scheme of amalgamation and section 35D(5A) refers to the transfer before the expiry of the period in a scheme of demerger. There is no clause in the section which debars the assessee from claiming the expenses as a write off on sale of the undertaking. We, therefore, do not find any reason for declining the claim of the assessee - Decided in favour of assessee.
Determine the annual value of the property - CIT(A) upholding that to determine standard rent of property under the Bombay Rent Control Act the reasonable rate of return should be @12% of market value of land and investment in building as against 6% on land and 7% on investment in building as per the report of architects - HELD THAT:- We observe from the record that identical issue is decided for the A.Y.2004-05 [2019 (2) TMI 2078 - ITAT MUMBAI] assessee’s contention is that the direction should be given in accordance with the earlier year ITAT order that the annual value of the property should be 12% of the cost and the land and building. In this regard, we note that it is the plea of the Revenue that making an annual value as a percentage of the cost of the land and building forever will lead to annual value fixed for eternity which can never be permitted. We find that the ITAT earlier had confirmed the same direction. The matter is already before the Hon'ble Jurisdictional High Court. We do not find any cogent reason to depart from the earlier order of the Tribunal in the assessee’s own case. Hence, we follow the same and direct that the ITAT’s order in assessee’s own case on this issue be followed, as the same has not been reversed by the Hon'ble Jurisdictional High Court - Decided against assessee.
Disallowance u/s.14A - Assessee submitted that there is no nexus between money borrowed and investment made in the earlier years and the investments were made out of sale proceeds, therefore no interest can be disallowed u/s. 14A - HELD THAT:- Various investments were made by the assessee in earlier Assessment Years which is backed with the details of the non interest borrowing funds available with the assessee in the respective years. Therefore, assessee has brought to our notice clearly that assessee has enough funds at their disposal to make various investments in the sister concerns as well as with the various investments. As assessee has utilized non interest borrowing funds for making the various investments. Therefore, the Assessing Officer cannot invoke Rule 8D(2)(ii) of I.T. Rules to disallow the interest expenditure u/s. 14A of the Act, accordingly, ground raised by the assessee is allowed.
MAT - Addition of provision of doubtful debt and advances to book profits of the assessee u/s. 115JB - HELD THAT:- We observe from the method of account followed by the assessee is that it created provision every year and carry forwards the same amount to the subsequent year and if there are any actual bad debts it is adjusted during the year. Therefore, from this method of accounting adopted by the assessee clearly indicates that it is only a provision not actually bad debts written off by the assessee.
As assessee has created merely a provision for doubtful debts without there being any actual bad debts which needs to be claimed as bad debts. Therefore, the conclusion reached by the tax authorities are just and proper. Therefore, the ground raised by the assessee is accordingly dismissed.
TP Adjustment - Disallowance of commission payment paid to its Associate Enterprise being Jaykayorg AG - HELD THAT:- The benchmarked commission payment by applying the (TNMM) method which has been accepted by the TPO can be applied in the present assessment year considering the fact that no transfer pricing adjustment was proposed by the assessee and also the method proposed by the assessing officer is also not one of the approved method u/s 92C and Income Tax Rules. No reason not to accept the subsequent year findings in the impugned assessment year. In our view, the assessee also not submitted any study and adopting the tested method in the subsequent year in assessee’s own case will justify the proper calculation of ALP for this transaction.
Benchmark for agency commission adopted by the TPO in the subsequent year should be the base for the present assessment year under consideration. Therefore, we direct the AO/TPO to adopt the TNMM method for benchmarking for this assessment year also. Hence, the ground raised by the assessee is allowed.
Enhancement of assessment by disallowance of an amount in respect of swap charges - HELD THAT:- We observe that the assessee had charged to profit and loss on account of interest swap charges paid to Bank of America for relevant period and also incurred interest expenditure, which was payable to State Bank of India and Citibank against the borrowed funds though ECB. These liabilities are ascertained liabilities and period cost for the year end.
The nomenclature used by the assessee as Provision, whereas in reality it is ascertained liabilities for the period and the respective banks have charged the interest as well as swap charges considering the billing period. What is relevant is the ascertainment of liability for the period not the nomenclature used to charge the same to the profit and loss statement. Even the Ld CIT(A) while dealing with the Book Profit u/s.115JB, considered the same provisions as ascertained liabilities. One cannot apply two rules to interpret the same nature of expenditure. Delete the enhancement proposed by the Ld CIT(A) in his order. In the result, the ground raised by the assessee is allowed.
Increase of book profit by the amount of provision for redemption of debentures - HELD THAT:- We observed that similar issue was considered and adjudicated by the Hon'ble Jurisdictional High Court in assessee’s own case for the A.Y.1997-98 in the case of CIT v. Raymond Ltd. [2012 (4) TMI 128 - BOMBAY HIGH COURT] and decided the issue in favour of the assessee as held mere fact that a Debenture Redemption Reserve is labeled as a reserve will not render it as a reserve in the true sense or meaning of that concept. An amount which is retained by way of providing for a known liability is not a reserve. Consequently the Tribunal was correct in holding that the amount which was set apart as a Debenture Redemption Reserve is not a reserve within the meaning of Explanation (b) to Section 115JA of the Income Tax Act, 1961 - Decided against revenue.
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2023 (4) TMI 1086
Seeking amendment in the bills of entry - non-availability of the decision in the case of M/S SRF LTD., M/S ITC LTD VERSUS COMMISSIONER OF CUSTOMS, CHENNAI, COMMISSIONER OF CUSTOMS (IMPORT AND GENERAL) , NEW DELHI [2015 (4) TMI 561 - SUPREME COURT] at the time of the clearance of the goods pertaining to the Bills of Entry in the present case - re-assessment, pertaining to a different period has not been considered by the 2nd respondent - assessment of the Bills of Entry - appealable order or not.
It was held by Telangana High Court that The impugned order passed by the 2nd respondent cannot be sustained and is violative of Articles 14, 19(1)(g), 265 and 300A of the Constitution of India and also the Customs Act, 1962, and it is accordingly set aside.
HELD THAT:- The impugned judgment and order of the High Court need not be interfered with.
SLP dismissed.
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2023 (4) TMI 1085
Seeking release of consignment of the petitioner imported by the petitioner - refund of detention and demurrage charges, if any - imposing of condition of furnishing bond of full value of the goods with furnishing of the Bank Guarantee of differential duty calculated at 200% of Basic Customs Duty and Integrated Goods and Service Tax - HELD THAT:- When the goods arrived at the destination port Mundra in 10 containers, a bill of lading dated 31.07.2021 was also issued, recorded therein the details of the consignment. The consignment was imported under bill of Entry No. 4961272, as stated above. It appears that inquiry was initiated by the authorities in respect of the import of magnesite lumps made by the petitioner. While the case of the petitioner was that the country from which the import originated was Turkey, the inquiry revealed that in that regard no details were available. Not only that the authorities suspected that the country of original was different and could be the Pakistan - It was on the aforesaid ground that the goods imported by the petitioner under the above description and Bill of Entry came to be detained by the Customs Authorities. For the purpose of the release of the goods, the condition as above, as reflected in Communication dated 25.10.2021 of respondent no. 2 was imposed.
In BESTO TRADELINK LIMITED VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS [2022 (5) TMI 590 - GUJARAT HIGH COURT], the petitioner had prayed for release of the consignment of the goods imported in Bill of Exchange No. 4964569. The goods were the same in respect of which the inquiry was undertaken in relation to the country of origin and it was suspected by the authorities that they were from different country Pakistan, than the the country indicated by the petitioner - As in the case of Besto Tradelink Limited, in the present case also, the inquiry is underway by the authorities and it may take further time before it may be concluded. The Court in Besto Tradelink Limited, in set of similar facts directed provisional release of the goods upon compliance of the conditions by the petitioner.
In view of the operative facts and in light of the decision in Besto Tradelink Limited, competent respondent authority is directed to provisionally release the goods of the petitioners, provided the petitioner satisfies the conditions imposed - petition disposed off.
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2023 (4) TMI 1084
Review order - error apparent on the face of record or not - scope of review - Maintainability of petition - pre deposits for filing the appeal as provided in Section 129-E of the Customs Act, 1962 - HELD THAT:- On due consideration and submissions and on perusal of the documents filed on record as also the decision rendered by the Supreme Court, in the case of Chandra Shekhar Jha [2022 (3) TMI 606 - SUPREME COURT] also the Supreme Court has held that the provisions of the aforesaid Section are not discretionary and the appellant is bound by the aforesaid provision.
Taking note of the fact that in the order under review this Court has already referred to Section 129E of the Customs Act, there is no error apparent on the face of the order, which may call for the review of the same - Petition dismissed.
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2023 (4) TMI 1083
Seeking grant of anticipatory bail - fraudulent transfer of shares - forged and alleged share certificates and share transfer forms are fabricated documents - forged signatures - HELD THAT:- Parameters for grant of anticipatory bail in a serious offence are required to be satisfied and further while granting such relief, the court must record the reasons therefor. Anticipatory bail can be granted only in exceptional circumstances where the court is prima facie of the view that the applicant has falsely been enrobed in the crime and would not misuse his liberty.
The applicant no. 1 as per Status Reports did not provide the requisite original Share certificates and also gave evasive replies during investigation. It is also appearing as surfaced during investigation that the applicant no. 1 who is managing director of the accused no. 1 could not produce any proof regarding request of the applicant no. 2 made to the accused no. 1 for payment of Rs. 6,25,000/- to the complainant on her behalf and said amount was actually credited in the loan account of the complainant. The applicant no. 1 also could not produce Jumbo share certificates which were stated to be issued on 29.1.2018 in lieu of 62,500 shares of the complainant and stated to be bearing the signature of Gulshan Jhurani as Director of the accused no. 1. Gulshan Jhurani in his statement dated 30.07.2022 also stated that he did not sign the share certificate/Jumbo share certificate after 2012. It also came into investigation that original share transfer deed between the complainant and Roohi Reshi for transfer of share certificate no. 31269 for 300 shares was executed on 12.12.2017 whereas new certificate no. 31269 was issued on 13.12.2017.
The respondent/State prayed for custodial interrogation of the applicants on grounds that they have not provided requisite documents and gave evasive replies during investigation. It is also alleged that there are contradictions in replies given by the applicants as mentioned in Status Reports and also argued by the Additional Public Prosecutor and the learned Senior Counsel for the complainant. The issue which needs judicial assessment and consideration is that whether the applicants can be subjected to custodial interrogation merely the applicants as per investigating agency did not produce documents as sought by the investigating officer and gave evasive and contradictory replies during investigation. It was also surfaced during investigation that the complainant is having financial transactions with the accused no. 1 for the last 15-20 years.
The bail applications filed by the applicants were dismissed by the court of Additional Sessions Judge-02, Patiala House Courts, New Delhi, vide order dated 28.05.2022 wherein it was observed that none including the complainant has appeared before the court with truth and conduct of the applicants is also shrouded in suspicion and appears to be much more tainted and stained as compared to the complainant - It appears that the concerned court minutely examined material collected during investigation in manner as deciding case on merits after conclusion of trial which was not warranted at time of consideration of bail applications.
The Supreme Court in relation to power to grant anticipatory bail and power of investigating agency to investigate in P. Chidambaram also observed that the judicial discretion to be properly exercised after application of mind as to the nature and gravity of the accusation; possibility of applicant fleeing justice and other factors to decide whether it is a fit case for grant of anticipatory bail. The custodial interrogation of the applicants is not warranted under given facts and circumstances of the present case and after evaluation of the available material against the applicants and particularly only to recover certain documents pertaining to the share transfer and contradictions in the replies given by the applicants during investigation. There is no direct and apparent apprehension that the applicants may flee or avoid further investigation. The applicants cannot be remanded to custodial interrogation in the absence of convincing material which warrants that certain documents and evidence pertaining to present FIR cannot be recovered without custodial interrogation of the applicants.
After considering all facts, the bail applications bearing no. 1696/2022 and 1697/2022 filed by the applicants Naresh Garg and Nirmala Aggarwal respectively are allowed, subject to conditions imposed.
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2023 (4) TMI 1082
Opportunity to be heard to ICA Lenders not provided - requirement of hearing of ‘person concerned’ as is laid down in section 71(10) of the Companies Act, 2013 - Whether the ICA Lenders led by Bank of Baroda were entitled to be intervenor and be heard in the company petition filed by the Debenture Trustee and if they had a right to be heard, then whether the Impugned Order turning down the Intervention Application correct in law, and further Impugned Order-I which was passed without hearing the ICA Lenders liable to be set aside?
HELD THAT:- Section 71(10) of the Companies Act, 2013 uses the word ‘may’ in the context when the Tribunal has to pass order on the application of any or all of the debenture holders or debenture trustee. Further, sub-section 10 of section 71 also lays down that the Tribunal may pass orders ‘after hearing the parties concerned’ - the question of proceedings to be ‘in personam’ or ‘in rem’ is also made clear by the fact that in the Company that is facing financial stress and for which a resolution plan is under consideration, 23 debenture holders who are among those represented by the Debenture Trustee are also part of ICA Lenders, though a majority of the retail debenture holders are not signatories to the ICA.
The contention of the Respondent Debenture Trustee is that the requirement of sub-section 10 of Section 71 of the Companies Act, 2013 is that the Tribunal should pass an order only keeping in view its satisfaction and what is necessary to safeguard interest of the company or debenture holders. He has contended that the issue of public interest and financial condition of the company are not necessary factors to be look into by the Tribunal while passing the order - While considering the above argument of the Learned Counsel for the Respondent-Debenture Trustee, we note that the provision under section 71 (3) and section 71(10) of the Companies Act, 2013 stipulates that NCLT shall, before making any order, give a reasonable opportunity of being heard to the Company and ‘person concerned’ in the matter.
Rule 73(3) and Rule 73(4) of the NCLT Rules, 2016 which are applicable for an application under section 71(10) of the Companies, 2013 provide that Tribunal shall, before making any order under this rule, give an reasonable opportunity of being heard to Company or ‘any other person interested, in the matter. It is quite clear from a reading of sub-rule (3) and sub-rule (4) of Rule 73 that the company is an ‘important party’ because the company has to redeem the debentures and pay the interest on the principal amount. The Company’s financial condition and health would, therefore, also become relevant factors while hearing an application under section 71(10). The ICA Lenders, who have all signed the Inter Creditor Agreement, have also taken steps for financial rejuvenation and revitalization of the Company through a resolution plan - the ICA Lenders are also important parties insofar as financial resolution of the Company is concerned, and therefore they should be afforded an opportunity to be heard in the company petition as the redemption of NCDs shall have an impact on the financial condition of the Company and would deeply affect the implementation of the resolution plan, which is for resolution of the Company.
Thus, the NCLT has denied an opportunity to be heard to ICA Lenders on the ground that insofar as section 71(10) of the Companies Act, 2013 is concerned, they do not have a right to be heard - this is an incorrect reading of the requirement of hearing of ‘person concerned’ as is laid down in section 71(10) of the Companies Act, 2013 and ‘any other person interested in the matter’ as required in Rule 73(3) and 73(4) of the NCLT Rules, 2016 - in view of public interest as is stipulated in Rule 74(4) and the involvement of public money in the Company, though the public sector banks, public interest also demands that ICA Lenders be given opportunity of hearing - the Impugned Order-II dated 27.5.2021 is incorrect and is set aside.
The Impugned Order-I dated 21.6.2021 which was passed by the NCLT suffers from the infirmity that ICA Lenders were not afforded an opportunity to be heard while passing Impugned Order-I - the matter is remanded to the NCLT, Mumbai - Appeal allowed by way of remand.
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2023 (4) TMI 1081
Admitting Section 7 application - Initiation of CIRP - default in payment of guaranteed amount by the Corporate Debtor - Whether application filed under section 7 by the Bank being barred by time ought not to have been admitted? - time limitation.
Whether default in payment of guaranteed amount by the Corporate Debtor is the same default as is committed by the Principal Borrower and the period of limitation for both the Principal Borrower and the Corporate Guarantor shall be same for the purposes of filing Section 7 application for the Bank? - Whether in the facts of the present case, the application filed by the Bank on 17.03.2020 was barred by limitation against the Corporate Guarantor? - Whether the order of the Adjudicating Authority admitting Section 7 application is unsustainable?
HELD THAT:- The scheme of I&B Code clearly indicate that both the Principal Borrower and the Guarantor become liable to pay the amount when the default is committed. When default is committed by the Principal Borrower the amount becomes due not only against the Principal Borrower but also against the Corporate Guarantor, which is the scheme of the I&B Code. When we read with as is delineated by Section 3(11) of the Code, debt becomes due both on Principal Borrower and the Guarantor, as noted above. The definition of default under Section 3(12) in addition to expression ‘due’ occurring in Section 3(11) uses two additional expressions i.e “payable” and “is not paid by the debtor or corporate debtor” - It is well settled that the loan agreement with the Principal Borrower and the Bank as well as Deed of Guarantee between the Bank and the Guarantor are two different transactions and the Guarantor’s liability has to be read from the Deed of Guarantee.
Although the Guarantor immediately become liable on any default committed by the Principal Borrower but for initiating any action against the Guarantor, a demand is to be made. Without there being any demand to the Guarantor, it cannot be accepted that period of limitation against the Guarantor shall commence. In the present case, Section 7 application filed by the Bank has been brought on the record as Annexure A-49. When we look into the Part IV of the application, the date of NPA i.e. 31.03.2017 has been mentioned in Part IV and total amount in default as on 31.12.2019 has been computed. The Application under Section 7 thus proceeds on date of NPA - default on the part of the Guarantor cannot be treated to be on 31.12.2016, when the Principal Borrower committed Default. It is also relevant to notice that the Corporate Debtor did not file any reply in Section 7 application despite giving opportunity by the Adjudicating Authority and right to reply was also forfeited - In the facts of the present case, where the Corporate Debtor did not file any reply and also did not file application for recall of order dated 23.11.2021 forfeiting right to file reply, the Adjudicating Authority did not commit any error in admitting Section 7 application.
The application filed by the Bank on 17.03.2020 was not barred by limitation - The order of the Adjudicating Authority admitting Section 7 application is sustainable.
Appeal dismissed.
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2023 (4) TMI 1080
Maintainability of petition - initiation of CIRP - Default in payment of term loan - Financial Creditors - one time settlement scheme (credit facilities) - stand of the Appellant is that, the Term Loan, is repayable over 90 monthly instalments, beginning from April 2016 and entire Loan, will get Repaid, only in October 2023, hence, on 01.06.2019, the Sum in Default, cannot not be Rs.107.48 Crores, at all - on behalf of 1st Respondent / Bank, it is projected that when there is a clear Admission of Liability, and there was an undertaking, to discharge, the Loan Liability, under One Time Settlement, the Appellant, is not justified, in coming out with vexatious and frivolous issues - existence of debt due and payable or not?
HELD THAT:- The very fact that the Corporate Debtor, had admitted its Liability, cementing on the One Time Settlement dated 18.12.2021, the same unequivocally, points out the factum, of Financial Debt, (as per ingredients of Section 5 (8) of the I & B Code, 2016), which is due and liable to be paid by it, to the 1st Respondent / Bank / Financial Creditor, (as per Section 5 (7) of the Code) - The very fact that the Loan Account of the Corporate Debtor / Company, slipped into the category of Non Performing Asset, on 01.06.2019, in accordance with the guidelines of the Reserve Bank of India, the contra plea taken on behalf of the Appellant that the Default, took place before the Covid-19 Pandemic, is turned down, by this Tribunal.
Admittedly, the main CP (IB) / 279 (CHE) / 2021, preferred by the 1st Respondent / Bank / Financial Creditor, under Section 7 of the Code on 27.10.2021, before the Adjudicating Authority / Tribunal. The Corporate Debtor’s Loan Account, was declared as NPA, on 01.06.2019. As such, the main CP (IB) / 279 (CHE) / 2021, was filed well within the Limitation Period, by the 1st Respondent / Bank / Financial Creditor / Petitioner, and the point, is so answered.
In the present case, it cannot be lost sight of that the One Time Settlement, dated 18.12.2021, amounting to Rs.84.81 Crores was rejected, by the 1st Respondent / Bank on 18.12.2021 itself, whereby and whereunder the Corporate Debtor / Company, was requested to raise the OTS Sum, which is a clear cut pointer, about the Existence of Financial Debt and Default - in the instant case, the Corporate Debtor’s Financial Debt, with the 1st Respondent / Bank / Financial Creditor, is established by means of a Default, committed by the Corporate Debtor. The available material records projected on the side of the 1st Respondent / Bank, supports the case of the Bank that the Corporate Debtor, had committed Default, in respect of the Debt, due and payable.
Suffice it, for this Tribunal, to pertinently make a mention that as the Debt, due and payable by the Corporate Debtor, is not interdicted by any Law, and this Tribunal, on being subjectively satisfied as to the Default, committed by the Corporate Debtor, in respect of the Financial Debt, due and payable, then, the view arrived at, by the Adjudicating Authority/Tribunal, in holding that the Financial Debt of the Corporate Debtor, was proved by the 1st Respondent / Bank / Financial Creditor, is free from any Legal Flaws.
Appeal dismissed.
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2023 (4) TMI 1079
Jurisdiction for deciding on the eviction vested with the Small Causes Court or the NCLT where liquidation was underway - Appellant was a ‘tenant’ or a ‘licensee’ or an ‘illegal occupant’ - putting the premises under lock and key of the Liquidator once a status-quo order has been passed by the Small Causes Court, Mumbai - HELD THAT:- Once a property was part of the liquidation state of the Corporate Debtor under liquidation, the provisions of IBC were applicable regarding the assets which were in the ownership of the Corporate Debtor and Section-238 of the IBC prohibited the applicability of any other law which was inconsistent with the IBC.
In the matter of Embassy Properties Developments [2019 (12) TMI 188 - SUPREME COURT], the Hon’ble Supreme Court has held that “if asset owned by a third party in possession of the Corporate Debtor held under contractual arrangements, is specifically kept out of the definition of the term “assets” Further, in a situation where a contractual arrangement is ongoing, the Resolution Professional cannot short-circuit the same and bring a claim before NCLT taking advantage of Section 60(5). These judgements are distinguished on the basis of the fact that no contractual arrangement existed between the Appellant and the Corporate Debtor after 02.07.2020, when the extended Leaves and Licence Agreement expired and therefore the ratio in these judgements cannot provide support to the case of the Appellant.
The residuary jurisdiction is relevant during the CIRP when the insolvency resolution of the corporate debtor is taking place, whereas in the present case the liquidation of the corporate debtor is being considered and the liquidator has taken recourse to its powers under section 33(5) to get control and custody of the asset of the corporate debtor.
The NCLT order notes the contention of the Liquidator that Respondent No. 1 had obtained status-quo order from the Small Causes Court, Mumbai by suppressing facts and without making the Liquidator as a necessary party. We therefore, are of the opinion that the ‘status- quo’ order was obtained from the Small Causes Court by the Appellant without placing full and complete facts regarding its occupation and possession of the said premises and without impleading the Liquidator as a necessary party - the NCLT possesses the correct jurisdiction in considering an application for vacation of the premises in question and that the NCLT was correct in passing the Impugned Order which would be necessary to put the premises in question with the Liquidator and pending the final disposed of I.A. No. 1635 of 2020 - The Impugned Order does not need any intervention.
The NCLT possesses the correct jurisdiction for considering an application for vacation of the premises in question in the circumstances of the present case, and the NCLT was correct in passing the Impugned Order which would be necessary to place the custody of the premises in question with the Liquidator pending the final disposal of I.A. No. 1635 of 2020 so that the liquidation process is completed timely and in accordance with legal provisions - Appeal dismissed.
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2023 (4) TMI 1078
Seeking grant of Regular Bail - Money Laundering - pecuniary advantage/illegal gratification was obtained by the accused out of the funds received from UAE Red Crescent meant for flood victims in Kerala though Life Mission Project - reception of bribe in foreign currency and rooting of the sam e through the diplomatic channel - case of petitioner is that the entire case is built up as a political hit by the Enforcement Directorate to falsely implicate the petitioner and by extension, the executive head of the State and his family members - bail sought also on medical grounds (Section 45 of PMLA).
HELD THAT:- Since this Court is considering bail plea at the instance of the petitioner in the instant crime on scrutiny of the relevant materials in the present case, this Court cannot consider the said aspect without going into niceties of the facts of the two cases in detail. Therefore, I leave the said question to be decided at an appropriate stage after referring all the materials in both these crimes meticulously. As of now, for the just disposal of the bail application, I am inclined to accept the argument tendered by the learned ASGI that a portion of the bribe being converted into foreign currency and taken to diplomatic channel to the foreign country, emanated from the predicate offence as pointed out by the learned ASGI, and the said aspect is a matter within the ambit of PML Act for which detailed investigation shall go on.
Whether the petitioner is liable to be released on bail by resorting to proviso to Section 45(1) of PML Act? - HELD THAT:- It is interesting to note that the Act doesn't define the term either `sick' or `infirm'. The term `sick' as per the Oxford English dictionary means, “affected by illness; unwell, ailing”. Similarly, the term `infirm' means “not physically strong or healthy; weak; feeble, especially through old age”. Therefore, the `sick' or `infirm' condition of a person has to be inferred from the materials available in each individual case. However, it is pertinent to note that the statute provides release of an accused on bail, who are covered by the proviso reading the same disjunctively and the statute used the word `may'. Thus it has to be held that release of a person covered by the proviso to Section 45(1) of PML Act is not mandatory and the same is the discretion of the court.
Three judgements of Supreme Court referred - STATE THRU DY. COMMISSIONER OF POLICE SPL. BRANCH DELHI VERSUS JASPAL SINGH GILL [1984 (6) TMI 264 - SUPREME COURT], DIRECTORATE OF ENFORCEMENT VERSUS SHRI ASHOK KUMAR JAIN AND VICE-VERSA [1998 (1) TMI 529 - SUPREME COURT] and State of U.P. v. Gayatri Prasad Prajapati [2020 (10) TMI 1281 - Supreme Court] - Reading the ratio of the above decisions, if the jail authorities or the prosecution agency could arrange proper and adequate treatment, even a sick person need not be released on bail.
No doubt, crime No.ECIR/KCZO/31/2020 arose out of predicate offence registered by the Vigilance and Anti-corruption Bureau and CBI and the present crime arose out of predicate offence in OR.No.7/2020, registered by the Customs (Preventive) Commissionerate of Cochin and Crime No.2/2020, registered by NIA and, therefore, as I have already pointed out, there is no reason to hold at this stage that registration of this crime is bad in law.
In the instant case, the petitioner could not be held as a person who would flee from trial. However, his propensity to tamper with the evidence and to influence witnesses could be foreseeable, since the petitioner is a person having very much influence in the ruling party of Kerala, particularly with the Chief Minister of Kerala. It is apposite to refer that even after his initial arrest and subsequent release on bail, the petitioner was reinstated in service w.e.f 6.1.2022 and he continued the same till his retirement holding pivotal post in the State of Kerala, ignoring his involvement in serious crimes. That is to say, his involvement in serious crimes prior to this crime, in no way affected his official stature because of his authority in the State Government. - Since it has been discussed that the petitioner is not cooperating with the treatment offered, I am not inclined to release him on medical ground since his sickness would be addressed by the prosecution agency/jail authorities by providing adequate treatment. Similarly, his chance of propensity to tamper with evidence or influencing witnesses, is very much there, since the petitioner is a person having very much influence in the ruling party of Kerala, particularly with the Chief Minister of Kerala.
In this matter, the investigation is at the initial stage. Many accused are yet to be arrested including Smt.Swapna Prabha Suresh. Why the prosecution is delaying the arrest of Swapna Prabha Suresh is also a matter of serious concern, though she had an active role in the present crime - Bail application dismissed.
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2023 (4) TMI 1077
Levy of Service tax - Auctioneer’s Service - Business Support Services - Goods Transport Agency Service - suppression of facts or not - extended period of limitation.
Auctioneer’s Service - marketing and other services rendered for selling agricultural produce of its farmer members - HELD THAT:- A numerous judicial decisions have already gone into the differences between Auction and Tender. The Tribunal in M/S. THE SALEM STARCH & SAGO MANUFACTURERS SERVICE INDUSTRIAL CO-OPERATIVE SOCIETY LTD. VERSUS CCE & ST, SALEM [2018 (3) TMI 192 - CESTAT CHENNAI], has analysed the differences between “auction” and “tender” and held that in the traditional method of auctioneering, apart from the auction process per se the auctioneer also provides a gamut of other related services like providing a facility, advertising or illustrating the goods in auction, engage in pre-auction estimates, short term storage services, etc. - while both sale by tender and sale by auction may have a common intendment of selling the goods, the modalities and the processes involved in each are very different and demand do not sustain.
Further, Learned Advocate has drawn our attention to M/s. Attur Agricultural Producers Co-operative Marketing Society Ltd. Vs. CCE, Salem, [2019 (8) TMI 262 - CESTAT CHENNAI] wherein it has been held This is not service rendered to anybody at all. It is true that, in turn, the appellant has been borrowing money from their bank but it does not mean that the appellant is supporting service of the bank. They are borrowing money from the bank on their account and in turn lending it to their members. In view of the above, we find that demands on both these counts are not sustainable and need to be set aside.
The facts in these two appeals are identical. The marketing and other services rendered by the appellant to their farmer members in selling their agricultural produce through tender process would not be coming under “Auctioneer’s Service under Section 65 (105)(zzzr) of the Finance Act, 1994 - demand do not sustain.
Business Support Services - appellants are taking loans from M/s. Salem District Central Co-operative Finance Bank and utilizing this money in providing jewel loans to their farmer members - HELD THAT:- The services rendered by the appellant are relatable only to its members and not to the bank and the charges collected for appraising jewels before sanctioning of loans are in the nature of cost incurred by the appellant for sanctioning of loans. As such, there is no BSS rendered in the instant case. As such, the demands raised under the impugned orders demanding service tax under “Auctioneer Service” and BAS are not maintainable.
GTA Services - Non-payment of service tax on transport of goods by road - appellants have undertaken the work of lifting and delivering of goods to the ration shops under the Public Distribution System - period from April, 2006 to March, 2011 - HELD THAT:- Reportedly the appellant has undertaken transportation of not only food grains and pulses but also sugar and other articles. The exemption for transport of food grains and pulses is available only with effect from 29th February, 2010. There is a finding in the Order-in-Original that the appellant has failed to give any evidence in order to claim exemption under Notification No. 32/2004-ST which provides for 75% abatement if the transporter has certified as to non-availment of cenvat benefit and also the benefit of Notification No. 34/2004-ST where freight paid on individual consignment upto Rs. 750/- and multi-consignment freight upto Rs. 1500/- exempted from payment of tax. The appellants have failed to submit consignment notes, freight vouchers, ledger account details etc. in order to substantiate their claim for these exemptions.
Appellant has relied upon the decision rendered in the case of M/s. Mutual Industries Ltd. Vs. Commissioner of CST, Vapi [2016 (1) TMI 889 - CESTAT MUMBAI], wherein it was held that denial of benefit of 75% exemption under GTA services for want of endorsement on the consignment note to the effect of non-availment of Cenvat credit is not maintainable - Considering this decision, it is held that the appellant is eligible for the benefit of Notification No. 32/2004-ST dated 03.12.2004 in computation of the demand of service tax payable for GTA service rendered - demand of service tax in respect of GTA Service provided is confirmed for the normal period which needs to be computed after according the benefit of Notification No. 32/2004-ST dated 03.12.2004.
Extended period of limitation - Suppression of facts or not - HELD THAT:- The appellants have put forth that no malafide can be attributed to evade payment of service tax and non-payment of service tax was due to the bonafide belief and there was no deliberate intention for not paying tax and it is the responsibility of the Revenue to discharge the burden that the appellants have deliberately omitted to pay tax. GTA service was introduced w.e.f. January 2005 and the understanding was that individual truck owners engaged would not fall under GTA service - The appellants had mostly undertaken carrying food and other items as part of PDS. So it cannot be said that appellant has wilfully suppressed any facts and so demand in respect of GTA invoking extended period cannot be sustained. As such, penalties imposed under Sections 77 & 78 of the Finance Act, 1994 are not warranted.
Thus, the demands confirmed against the appellant under “Auctioneer’s Service” and “Business Support Service” are not justified. Consequently, demand of interest and imposition of penalties are also set aside - However, demand of service tax in respect of GTA Service provided is confirmed for the normal period which needs to be computed after according the benefit of Notification No. 32/2004-ST dated 03.12.2004.
Appeal allowed in part and part matter on remand.
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