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Showing 361 to 380 of 1482 Records
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2023 (6) TMI 1122
Estimation of income - bogus purchase - CIT(A) restricted the disallowance by estimating at 10% - HELD THAT:- As decided in case of Simit Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] held that since the purchases were not bogus, but were made from parties other than those mentioned in books of accounts, only the profit element embedded in such purchases could be added to the assessee's income and as such no question of law arose in such estimation While arriving at the above conclusion, also relied on the decision in the case of Vijay M. Mistry Construction Ltd [2011 (1) TMI 1164 - GUJARAT HIGH COURT] and further approved the decision of Vijay Proteins [1996 (1) TMI 144 - ITAT AHMEDABAD-C]
Also in the case of CIT-II vs Gujarat Ambuja Exports Ltd. [2014 (3) TMI 147 - GUJARAT HIGH COURT] wherein, the addition of 5% of the bogus purchase confirmed by the Tribunal was upheld.
No hesitation in confirming the addition to the extent of 10% on account of alleged bogus purchase. Thus the grounds raised by the Revenue is devoid of merit and the same is hereby dismissed
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2023 (6) TMI 1121
Credit of TDS - Diductor deducted the TDS in the subsequent year - Income was shown in the ITR for the earlier year - CPC cannot grant credit of TDS appearing in Form 26AS for the earlier/subsequent A.Y unless the return has been correctly filed and TDS has been correctly shown - HELD THAT:- As assessee has shown revenue from the invoice as income during the year under consideration itself. The deductor may have deducted tax in subsequent A.Ys, but the fact of the matter is that since the assessee has shown income, the assessee has every right to get credit of TDS - we direct the AO to verify the claim and allow credit of TDS if the income is shown in the year under consideration.
Income taxable in India - taxability of receipts from sale of software - We direct the Assessing Officer to consider the claim of the assessee in light of the decision of the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt Ltd [2021 (3) TMI 138 - SUPREME COURT]. We hold accordingly.
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2023 (6) TMI 1120
Exemption u/s 11/12 as claimed in the return of income - Delayed audit-report (Form No. 10B) was filed after filing of return but before processing u/s 143(1) - HELD THAT:- As relying on Savitri Foundation [2022 (8) TMI 1372 - ITAT MUMBAI] where following the decision of Mumbai Metropolitan Regional Iron & Steel Market Committee [2015 (4) TMI 512 - BOMBAY HIGH COURT] are of the view that in the present case, the assessee can’t be denied the benefit of exemption u/s 11 as claimed in the return of income for mere delay in filing of audit-report.
Remand this matter back to the file of AO for a fresh assessment after considering the audit-report filed by assessee, in accordance with law. The assessee succeeds in this appeal.
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2023 (6) TMI 1119
TP Adjustment - transaction of purchase of electricity by appellant company from Captive Power Plant (CPP) of the group company - HELD THAT:- As decided in own case [2015 (4) TMI 884 - ITAT AHMEDABAD] addition of Transfer Pricing adjustment need to be deleted as done by TPO. Thus the grounds raised by the assessee are hereby allowed.
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2023 (6) TMI 1118
Capitalisation of Salaries and Wages - HELD THAT:- As respectfully following the above judgment in assessee’s own case for the AY 2015-16 [2022 (5) TMI 1560 - ITAT BANGALORE] in which the expenses incurred by the assessee have been held that “these expenses are revenue in nature, the question of allowability of depreciation or the question of allowing it u/s 35(1)(iv) as Scientific research expenses shall become academic and we are not adjudicating them”. Accordingly we partly allow the ground raised by the assessee.
TP adjustment - addition made to the software development segment (‘SWD’) - HELD THAT:- We deem it fit and proper to restore this issue to the TPO / AO with a direction to the TPO / AO to re-compute the TP adjustment, if any, to the assessee’s SWD segment after including CG Vak Software and Exports Ltd. and RS Software (India) Ltd. in the final list of comparables to this segment.
TP adjustment to its SWD segment is that while computing the ALP of the SWD services segment, the TPO has not considered the segmental date pertaining to the SWD segment - We note from the order passed by the TPO on this application u/s. 154 that the said request for recomputing the TP adjustment has not been considered by the TPO. We deem it fit and proper to restore this issue to the TPO / AO with a direction to the TPO / AO to recompute the TP adjustment, if any, to the Assessee’s SWD segment after taking into consideration only the amounts pertaining to the Assessee’s SWD segment and not to take into account the entity-level data as has mistakenly been done in the TP order.
Adjustment for interest on advances given to overseas subsidiaries and Adjustment made for Corporate guarantee commission - HELD THAT:- We dispose of the grounds raised in this appeal pertaining to two international transactions above by directing the TPO / AO to pass an order in terms of the above provisions modifying the total income of the Appellant in terms of the aforesaid APA subject to the Appellant having filed a modified return of income as is required in law.
TP adjustment on interest on delayed receivables to Overseas subsidiaries - HELD THAT:- As we think it will be appropriate to grant credit period of 45 days and interest is to be calculated using LIBOR 6 months+350 basis points. Accordingly this is sent back to TPO/AO to recalculate the interest on delayed receivables afresh following the LIBOR 6 months+350 basis points. This ground is allowed for statistical purpose.
Disallowance of expenses u/s 14A against exempt income - HELD THAT:- Since Rule 8D has been amended, the AO has to follow the amended Rule 8D. This ground is allowed for statistical purpose.
Taxability of Marked to Market income on reinstatement of forward contracts - HELD THAT:- As relying in the assessee’s own case in AY 2009-10 to 2015-16 [2020 (10) TMI 605 - ITAT BANGALORE],[2022 (5) TMI 1560 - ITAT BANGALORE] we restore this issue to the file of AO with similar directions. The assessee is directed to furnish relevant details to prove that the value of underlying assets is more than the value of outstanding forward contracts as on the balance sheet date.” Accordingly this ground is allowed for statistical purpose.
Disallowance of Setting off the loss arising from SEZ units against income earned by non-tax holiday units - HELD THAT:- As relying assessee's own case in AY 2009-10 to 2015-16 [2020 (10) TMI 605 - ITAT BANGALORE], [2022 (5) TMI 1560 - ITAT BANGALORE] we hold that the loss arising in eligible SEZ/STPI undertakings are not required to be adjusted against the profits arising from other SEZ/STPI undertakings and the said loss can be adjusted against profits arising from non-SEZ/non-STPI units this issue is decided in favour of the assessee.
Taxability of profits from development centers located outside India - HELD THAT:- As CIT(A) has not recorded a finding that such goods or services have been transferred at the market value. In absence of such a finding, it is not possible to uphold the finding of the learned CIT(A). This issue is required to be remitted back to the assessing officer and the assessee will be required to file the relevant details as required by the assessing officer so that the assessing officer can ascertain the market value of such goods or services transferred by arriving at the profit of the eligible business.
Exclusion of “other income” for the purpose of computing deduction u/s 10AA - HELD THAT:- As the income generated on sale of scrap/newspaper should be included in the profits of the undertaking eligible for deduction u/s 10AA - In this year also, the break-up details of “Other income” are not available. Accordingly, we restore this issue to the file of AO with the direction to examine the break-up details of other income which were debited into the profit & loss account in earlier years and decide the issue in accordance with the discussions made supra. Accordingly this issue is partly allowed for statistical purpose.
Rejection of claim for deduction u/s 10AA of the Act in respect of interest income earned by the assessee - HELD THAT:- During the year under consideration, the assessee had earned interest income on short term deposits made out of PCFC Loan and also from Surplus funds. After deducting the interest expenses, there was net surplus of 2.19 crores. AO held that the same is not eligible for deduction u/s 10AA of the Act by observing that there is no relation of interest income with the Software Development Activity of the units claiming deduction u/s 10AA. It is also not akin to investment of surpluses earned and generated from Software Development Activity, which may be regarded as profits and gains of the undertaking to the extent they are held for working capital purpose of the undertaking or units distributed to the shareholders of the company. - As per assessee own case we restore this issue to the file of AO for examining it afresh with similar directions. This ground is allowed for statistical purpose.
Eligibility of the assessee to claim deduction u/s 10AA for deemed exports, i.e., sales made to own units located in SEZs and Indian subsidiaries of Foreign MNCs - claim of the assessee was rejected by the AO by observing that only turnover pertaining to sales outside India is being taken as export sales - HELD THAT:- As relying on Tata Elxsi [2015 (10) TMI 634 - KARNATAKA HIGH COURT] we direct the AO to include deemed exports to SEZ as part of turnover while computing deduction u/s 10AA of the Act. Accordingly this ground is allowed.
Deduction u/s 10AA - whether reimbursements received by the assessee are required to be excluded from the export turnover for the purpose of computing deduction? - HELD THAT:- We restore this issue to the file of AO with the direction to examined the break-up details of reimbursements and follow the directions given in AY 2009-10 to 2014-15 for computing deduction u/s 10AA of the Act. Accordingly, the grounds raised by the assessee is allowed for statistical purpose.
Deduction u/s 10AA - whether the expenditure incurred in foreign currency is required to be deducted from the export turnover while computing deduction - HELD THAT:- We observe that the expenditure incurred outside India for onsite development of computer software is not to be deducted from export turnover. Only the expenditure on telecommunication charges or insurance attributable to the delivery of the computer software outside India or expenses, if any incurred in foreign currency in providing technical services outside India also are required to be excluded from the export turnover. Further , if any amount excluded from the export turnover is required to be deducted from total turnover. An identical issue was examined by the coordinate bench in the assessee’s own case in AY 2009-10 to 2014-15 [2020 (10) TMI 605 - ITAT BANGALORE] Thus we set aside the order passed by AO on this issue and direct him to compute deduction u/s 10AA.
Eligibility of the assessee to claim deduction u/s 10AA of the Act in case of Delayed collections of export proceeds - A.O. rejected the claim of the assessee on the reasoning that mere submission of application by the assessee to RBI is not sufficient to infer that RBI has allowed extension of time for realizing sale proceeds in foreign exchange - HELD THAT:- Since this issue has been decided as stated above for the AY 2015-16 in assessee’s own case [2022 (5) TMI 1560 - ITAT BANGALORE] accordingly, we direct the AO to allow the foreign tax & State Tax paid by the assessee, to the extent not allowed as tax credit u/s 90 & 91 of the Act, as deduction from the business income of the assessee from the respective units.
TDS u/s 195 - disallowance of payment made to M/s. Gartner Group u/s 40(a)(i) for non-deduction of tax at source - assessee submitted that it is covered under exclusion clause of royalty as per section 9(1)(vi) wherein royalty paid for the purpose of business or profession carried outside India or for the purpose of making or earning any income from any source outside India is not regarded as royalty - HELD THAT:- As decided in assessee own case this issue requires fresh examination at the end of AO. If the AO comes to the conclusion that the decision rendered in the case of Engineering Analysis Centre of Excellence P Ltd [2021 (3) TMI 138 - SUPREME COURT] is applicable to the payments made to Gartner group and there is no requirement to deduct tax at source, then there is no requirement of making any disallowance u/s 40(a)(i) - if the AO comes to the conclusion that the above said decision of Hon’ble Supreme Court is not applicable and the assessee is liable to deduct tax at source, then the AO shall grant enhanced deduction u/s 10A/10AA/10B of the Act by increasing the profits of undertaking by the amount of disallowance so made. The assessee is given liberty to raise all contentions in this regard before the AO.
Disallowance of interest expenditure incurred on investment in Foreign Subsidiary u/s 115BBD - HELD THAT:- We are of the view that the A.O. was not justified in invoking the provisions of sec.115BBD for making the impugned disallowance, accordingly, we direct the AO to delete the disallowance u/s 115BBD of the Act, if the assessee has not received any dividend during the year under consideration.
Claim for deduction of Education Cess as expenditure - HELD THAT:- This ground is liable to rejected in view of the amendment brought in by Finance Act 2022 inserting specific provision in the Income tax Act providing for disallowance of Education Cess. A similar issue has been decided against the assessee by the co-ordinate bench of the Tribunal in assessee’s own case - dismiss the ground raised by the assessee.
AO not following the directions issued by the DRP vide its Directions - assessee is contending that although the DRP directed that the deduction u/s 10AA ought to be recomputed by adding back the disallowance of wages capitalized, the AO did not give effect to the said direction - HELD THAT:- On examining the DRP’s directions, we find that such a direction was in fact issued by the DRP. However, we find that while computing the deduction allowable under S.10AA, the said direction of the DRP has not been given effect to. We, therefore, direct the AO to comply with the aforesaid direction of the DRP of the directions and to, accordingly, recompute the deduction allowable to the assessee u/s10AA of the Act.
DRP’s direction that foreign taxes in the nature of VAT or GST have not been added back to the Export Turnover while computing the deduction under S.10AA which has however not been given effect to by the AO in the final assessment order - On examining the DRP’s directions, we find that such a direction was in fact issued by the DRP, we find that while computing the deduction allowable under S.10AA, the said direction of the DRP has not been given effect to. We, therefore, direct the AO to comply with the aforesaid direction of the DRP and to, accordingly, recompute the deduction allowable to the assessee under S.10AA of the Act.
Credit of TDS credit on the basis of additional TDS certificates - AO denied grant TDS credit on the reasoning that the said TDS amount were not reflected in Form 26AS and the ld. DRP has also rejected the objection filed before them - HELD THAT:- If the deductor of TDS has filed the Statement of TDS with the Income tax department, then the said TDS will automatically reflect in Form 26AS. If there is failure on the part of the deductor to file statement of TDS, then it will not be reflected in Form 26AS. In our considered view, the assessee cannot be penalised for the fault of the TDS deductor in not filing statement of TDS. It is also possible that the deductor of TDS would have filed the statement of TDS belatedly - This issue requires verification at the end of AO - we restore this issue to the file of AO with the direction to examine the claim of the assessee and allow TDS credit in accordance with law.
Denial of grant MAT credit of brought forward losses from the previous years when the tax liability was determined under the normal provisions of the Act - HELD THAT:- We find that when this issue was raised before the DRP, the DRP did not examine the Assessee’s claim on the ground that it did not amount to a variation made by the AO to the returned income and that, therefore, it could not adjudicate upon the same. Without going into the merits of the matter, we find that this is an issue that requires to be examined by the AO afresh - restore this issue to the file of AO with the direction to verify the claim of the assessee and accordingly grant MAT credit in accordance with law.
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2023 (6) TMI 1117
Fresh claim by filing revised return of income - Disallowance of unamortized brokerage expenses - HELD THAT:- As per the decision rendered in the case of Goetze (India) P Ltd [2006 (3) TMI 75 - SUPREME COURT] the assessee can make fresh claim by filing revised return of income. Even if the revised return of income is not filed, Tribunal can admit any fresh claim. In the instant case, the assessee has claimed the deduction of unamortized brokerage expenses through revised return of income. Hence, we are of the view that the said claim was rightly made by the assessee.
Whether the assessee can make a claim, which is against the accounting policy followed by the assessee in the books of account? - In the instant case, there is no dispute that the upfront brokerage expenses were incurred during the year under consideration and it was revenue expenditure. Hence, the assessee could claim entire expenditure as deduction in the current year itself. Since the assessee was following a particular method of accounting in the books of accounts with regard to the above said expenditure, it has been claiming deduction in that method in the return of income also.
As per the decision rendered in the case of Taparia Tools Ltd [2015 (3) TMI 853 - SUPREME COURT] the same would not preclude the assessee from claiming entire expenditure in the current year itself. CIT(A) was correct in law in deleting this disallowance and accordingly, we uphold the decision rendered by CIT(A) on this issue.
Disallowance of ESOP expenses - HELD THAT:- As the assessee is actually incurring expenses in purchasing shares of M/s Deutsche Bank AG. This is purchased as per the employee welfare scheme as per the agreement entered with the concerned employee. The deduction is claimed when the right is vested upon the employee.
It is held in the case of Biocon Ltd [2013 (8) TMI 629 - ITAT BANGALORE] that deduction can be claimed in the year of vesting. It can be noticed that it is a staff welfare expenditure incurred by the assessee and further, it is stated that the assessee has deducted TDS also thereon. No impediment in allowing this expenditure as deduction. Accordingly, we uphold the decision rendered by Ld CIT(A) on this issue.
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2023 (6) TMI 1116
Addition u/s 68 - addition of notional commission (2% of the accommodation entry) - HELD THAT:- Respectfully following the decision in the case of Sohanraj Uttamchand [2018 (2) TMI 2087 - ITAT CHENNAI] in which it was held that since the transaction of scrips of M/s. PFL Infotech Ltd took place in recognized stock-exchange which is not under the control of assessee; [viz the shares were purchased and sold in Bombay Stock Exchange in the open market from unknown and unconnected persons;] and the transactions are supported by contract notes and consideration has passed through the banking channel, merely based on the abnormal ups and down in the share market of this scrip cannot be a ground to disallow the LTCG claim of the assessee.
Therefore, the impugned action of the Ld. CIT(A) is set aside and the addition made by the AO u/s 68 and 69C of the Act are directed to be deleted. Decided in favour of assessee.
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2023 (6) TMI 1115
Disallowance u/s.14A - Addition as against the exempt income which is out of the dividend income earned by the assessee - HELD THAT:- This issue before us is no longer res integra as various courts including the Hon'ble Apex Court has held that disallowance u/s.14A read with rule 8D should not exceed the exempt income earned by the assessee.
As decided in the case of Chalet Hotels Ltd. [2021 (1) TMI 1134 - ITAT MUMBAI] wherein on similar facts where the assessee had made suo moto disallowance more than that of the exempt income earned for that year, it was held that the disallowance should be only to the extent of the exempt income earned and not more than that.
We are of the considered view that disallowances u/s.14A r.w.r. 8D is to be restricted only to the extent of the exempt income earned by the assessee during the impugned year. We, therefore, direct the A.O. to recompute the income of the assessee accordingly. Hence, the ground raised by the assessee is allowed.
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2023 (6) TMI 1114
Depreciation claimed in respect of fixed assets denied - onus of establishing that the assets were put to use for the purpose of business - HELD THAT:- CIT(Appeals) has rightly disallowed the depreciation on the assets by observing that the assessee was unable to prove that the assets were used for business purpose with cogent evidence. AR relied on many case laws which are distinguishable on the facts of the present case. Decided against assessee.
Liability written off - whether liability written off in respect of depreciable asset (i.e., software tool) falls under section 43(6)(c)(i)(B) and not under section 28(iv)? - HELD THAT:- In case of Commissioner v. Mahindra & Mahindra Ltd [2018 (5) TMI 358 - SUPREME COURT] had observed that the assessee had received a loan, a part of which was later on waived off. Under the circumstances, the Supreme Court held that the assessee had received cash or money and as such the same was not covered by section 28(iv) of the Income Tax Act.
But in the case on hand, the assessee had purchased assets and created liability and later on it found that the assets were not suitable for the business and the assets were returned to the vendor. Therefore the case law relied on by the ld. AR of Mahindra & Mahindra Ltd. [2018 (5) TMI 358 - SUPREME COURT] is distinguishable on facts of the case on hand. CIT(A) has passed a good and reasoned order and find no reason to interfere with his order. Accordingly the grounds of the assessee are rejected.
Computation of revised profits as per the section 10A if disallowance of the depreciation on assets and liability written off is upheld - HELD THAT:- Since we have upheld the order of the CIT(A) treating the disallowance made as business income and the issue has not been examined in the light of section 10A, therefore considering the documents submitted by the assessee, remit this issue to the AO for examination in light of section 10A of the Act and decision in accordance with law, after providing opportunity of being heard to the assessee. The assessee is directed not to seek unnecessary adjournments and cooperate in early disposal of the case. This ground is allowed for statistical purposes.
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2023 (6) TMI 1113
Bogus share trading loss - capital gains/loss in penny stock companies - HELD THAT:- The company in which the assessee traded was also held to be a penny stock company. AO has noted that the above scrip of ASHIKACR in which the assessee traded appeared in the list of 84 scrip involved in dubious transaction identified by the Investigation Wing. The said report of the Investigation Wing has been duly taken note by the Hon’ble Calcutta High Court. The issue is squarely covered by the decision of the Calcutta High Court in the case of Swati Bajaj [2022 (6) TMI 670 - CALCUTTA HIGH COURT] against the assessee and in favour of the revenue.
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2023 (6) TMI 1112
Addition u/s 68 - unexplained cash credit - as per DR investor company had source of investment from sale of its investment in various private limited companies and it is not proved on the file that the above source was from sale of shares of genuine companies, thus source of the source was not verified - HELD THAT:- AO has categorically mentioned in the assessment order that notices u/s 143(2) and 142(1) were issued and duly served upon the assessee, but there was no compliance.
AO has also mentioned that the assessee was required to furnish the various details as noted above but there was no mention in the assessment order that such details were ever filed by the assessee before the Assessing Officer. Though as pointed out by the ld. counsel, some details might have been filed by the assessee before the Assessing Officer but as noted by the AO, all the requisite details as called for by the AO have not been filed. Notice issued u/s 131 along with questionnaire have not been complied with.
Even, there is no discussion in the impugned order of the CIT(A) regarding the aforesaid points raised by the assessee. There was no submission of the assessee before any of the lower authorities that the subscribing company was a group company of the assessee.
Though, it has been contended before us that the source of the investor company was from sale proceeds of shares, however, no such details have been filed before any of the lower authorities. The case was selected for scrutiny of large share premium and the assessee has not justified about the same by way of either submission or furnishing requisite details. In our view, the entire issue is required to be examined afresh at the end of the AO - We, accordingly, set aside the impugned order of the CIT(A) and restore the issue to the file of the Assessing Officer for de novo assessment. Appeal of the assessee is treated as allowed for statistical purposes.
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2023 (6) TMI 1111
Undisclosed sale receipts/ on money Receipt - HELD THAT:- The entire basis of the AO was based on the presumption and conjectures, and the addition therefore was not justified more particularly, when no incriminating material in relation to undisclosed sale was found during the search.
Therefore, we completely agree with the ld.CIT(A) that the addition made on account of undisclosed sale receipts was totally unjustified. The deletion of addition made by the ld.CIT(A) therefore on account of undisclosed sale receipts is accordingly upheld.
Unsecured Loans & Interest on Unsecured Loans - CIT- A deleted the addition - HELD THAT:- Clearly the very basis with the Department of unsecured loans being bogus accommodation entry for unaccounted sales of the assessee no longer survives, on the addition made of unaccounted sales being deleted by us above. And added to it the fact that no material was found during search evidencing the Revenues stand.
The finding of the AO that the unsecured loans were bogus accommodation entries is based merely on surmises and conjectures and is not sustainable more particularly when the assessee has been found by the Ld.CIT(A) to discharge its onus of proving the genuineness of the transactions. CIT(A), we find, noted that the assessee had filed all evidences to prove genuineness of the transaction.
With regard to the unsecured loans taken by the assessee in Asst. Year 2014-15 from Vansh Glass P. Ltd. The ld.CIT(A) has recorded a categorical finding of the fact that this amount was offered for settlement by Param Enterprise, an entity of the group searched. The above factual finding of the ld.CIT(A) have not been controverted by the ld.DR before us.
Therefore we are in complete agreement with the Ld.CIT(A) that there was no basis or material with the AO for treating the unsecured loans of the assessee as being accommodation entries. Decided in favour of the assessee.
Net Profit estimation - addition by CIT-A by estimating net profit earned by the assessee at the rate of 17.5% as against 16% declared by the assessee on the basis of disclosure made by other group concerns in their Settlement Application filed - HELD THAT:- An estimated net profit rate was applicable only in the circumstances where books of accounts of the assessee were found to be not reliable and rejected by the Department. In the present case, both the ld.CIT(A) and even ITAT have found no infirmity in the books of accounts of the assessee.
As no infirmity found in the books of accounts of the assessee. In the absence of any infirmity there is no reason to reject book results and estimate net profit rate. Accordingly, net profit applied at the rate of 17.5% of the turnover disclosed in the books of the assessee, is held to be untenable in law, and addition made on account of the same is directed to be deleted in both the years. The assessee’s appeal in both the years is accordingly allowed.
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2023 (6) TMI 1110
Interest on capital paid to the partner - payment of interest by the two partnership firms towards use of partners’ capital - Expenditure incurred on account of commercial expediency or not? - whether is in the nature of “expenditure” or not for the purpose of section 36(1)(iii) read with section 40(b) or whether interest payment is allowable under the provisions of the Income Tax Act? - As argued if at all any disallowance has to be made in the hands of the firm, the same cannot be taxed in the hands of concerned partners - HELD THAT:- When the partnership firm and its partners are seen holistically and in combined manner, the payment of interest to partners and its allowability in the hands of the partners does not lead to deriving of any additional advantage by a firm since the same interest is taxable in the hands of the partners simultaneously. Being so, in our opinion, the interest payment to partners by these firms to be allowed as a deduction while computing the income of these firms. However, the same shall be limited to the extent of allowability u/s 40(b) of the Act.
in the present case, in the assessment years 2011-12, 2012-13, 2016-17 and 2017-18 has been allowed. The same cannot be questioned in the assessment years 2013-14 to 2015-16. Similarly, in the case of M/s. Century Silicon City it has been allowed in the assessment years 2012-13, 2016-17 & 2017-18. Hence, it cannot be questioned in the assessment years 2013-14 to 2015-16 and the revenue cannot be allowed to take different view in different assessment year as the judicial discipline requires consistency in these proceedings. On this count also, this disallowance is not justified.
From the proviso to section 28 (v) of the Act, it is seen that if there is any disallowance of interest in the hands of the firm due to clause (b) of section 40, income in the hands of the partner has to be adjusted to the extent of the amount not so allowed to be deducted in the hands of the firm. Hence, it is seen that the operation of the proviso to section 28(v) of the Act will come into play only if there is some disallowance in the hands of the firm under clause (b) of section 40 of the Act.
In our opinion, the argument of the ld. A.R. is justified. Therefore, on this count we are of the opinion that since the amount has been taxed in the hands of partners u/s 28(v) of the Act same to be allowed in the hands of the assessee u/s 40(b) of the Act, otherwise it amounts to double taxation.
In the present case, it is not the case of either of the parties’ interest payment is not exceeding the limit provided in section 40(b) - Hence, we direct the AO to allow the deduction to the extent of limit prescribed in section 40(b) of the Act. It is needless to mention herein that what is allowed in the hands of these assessees u/s 40(b)(iv) of the Act as a deduction, same to be taxed in the hands of the respective partners u/s 28(v) of the Act. In view of the above, we allow the grounds of appeals raised by both the assessees.
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2023 (6) TMI 1109
Seeking permission for withdrawal of petition - demand for pre-deposit within the meaning of Section 129E of the Customs Act, 1962 - HELD THAT:- Learned senior counsel for the petitioner seeks permission to withdraw the special leave petition and liberty to file a review. The special leave petition is dismissed as withdrawn with liberty to file a review but limited only to the aspect about the alleged violation of the principle of law laid down in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [2021 (3) TMI 384 - SUPREME COURT].
SLP dismissed as withdrawn.
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2023 (6) TMI 1108
Seeking grant of bail - Smuggling - prohibited goods - Bharath Jeera Goli Candy Mukh - prohibited goods or not - HELD THAT:- At this stage, it is noted that the petitioner has already spent nearly three years in custody. From the charge sheet it is noted that around 14 witnesses are to be examined among whom only two have so far been examined. Hence, the trial also is not likely to conclude immediately. Keeping all these aspects in view, it is deemed appropriate to grant bail to the petitioner.
The petitioner shall be released on bail subject to the conditions to be imposed by the Trial Court - SLP disposed off.
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2023 (6) TMI 1107
Clandestine Removal - Supply of goods against ICB - sub-contractor of the main contractor for a power project awarded by M/s. Cairn Energy India Pty. Ltd. under International Competitive Bidding - Denial of benefit of N/N. 6/2006 CE dated 1.3.2006, on the ground that the Project Authority Certificate (PAC) was issued by M/s. Cairn Energy India Pvt. Ltd. to the IGP unit situated at Kottivakkam and not to the appellant unit, which is situated at Sembakkam - HELD THAT:- The gaskets under the above invoice have been cleared to M/s. Cairn Energy India Pty. Ltd. A/c L&T Ltd, Northern Area Development Project, Rajasthan as mentioned in purchase order dated 25.3.2009 issued by L&T. We also find that the LOI and PO were addressed to IGP’s HO, it was only the PAC which mentioned the unit situated at Kottivakkam. The said PAC has subsequently been amended to rectify and the reflect the actual clearances made to the same project. Annexure I to the split PAC’s Nos. 188 & 189 certified by the main contractor also mentions the LOI/PO number and date.
When the goods have been found to have been cleared towards the power project under ‘International Competitive Bidding’ which was eligible for duty exemption, the LOI and PO for the supply were addressed to IGP’s HO and there is no allegation of clandestine clearance etc, duty exemption benefit cannot be denied merely because the initial PAC was in the name of Kottivakkam unit and not in the name of Sembakkam unit on the date of clearance when the PAC was also rectified later.
The appellant is eligible for availing exemption from duty under Notification No. 6/2006 CE dated 1.3.2006 for the impugned goods. This being so demand for interest and penalty do not survive - Appeal allowed.
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2023 (6) TMI 1106
Conversion to DTA from EOU - Alleged incorrect payment of duty on semi-finished goods and finished goods at the time of de-bonding into a DTA unit - failure to adopt Rule 14 of Customs Act, 1962 - whether the assesse is liable to pay the demand of differential duty on the semi-finished goods and finished goods at the time of de-bonding?
HELD THAT:- The issue with regard to the liability to pay duty on semi-finished goods was considered by the Tribunal in the case of Jubilant Life Sciences Ltd. [2018 (5) TMI 466 - CESTAT ALLAHABAD]. The Tribunal observed that the duty demand is on the goods that had not come into existence (that have not completed the manufacturing stages) and therefore not sustainable. Moreover, these goods have been further processed into finished goods and the assesse has exported these goods - In the case of Tirumala Seung Han Textiles Ltd. Vs. CCE (A) Hyderabad [2008 (9) TMI 252 - CESTAT BANGALORE], the Tribunal set aside the demand observing that there is no mention of semi-finished goods in Para 6.18 of the Foreign Trade Policy and the demand for duty on such goods is not sustainable.
The duty demand on finished goods was defended by the learned Counsel by submitting that the goods having been exported the demand cannot sustain. It is an admitted fact, in the Show Cause Notice as well as the OIO that these goods have been exported. At the time of such export assessee has paid duty as per provisions of Section 3(1) of the Central Excise Act, 1944 on the export clearances - The Tribunal in the case of M/S BHATI AND COMPANY VERSUS COMMISSIONER OF CENTRAL EXCISE [2019 (9) TMI 1500 - CESTAT NEW DELHI] had set aside the demand of duty raised invoking proviso to Section 3(1) of the Central Excise Act without availment of Notification No. 23/2003. It was observed therein that the finished goods having been exported the duty demand cannot sustain.
In the present case, there are no grounds to take a different view - at the time of de-bonding, the assesse has to pay duty as per Section 3(1) of Central Excise Act. The appellant has paid duty on the goods for the second time at the time of export as per Section 3(1) of Central Excise Act, 1944. The goods having been exported we hold that the demand cannot sustain.
The duty demand raised on the semi-finished goods and finished goods cannot be sustained for the reason that the goods have already been exported and that too on payment of duty under Section 3(1) of Central Excise Act, 1944. As the differential duty demand by applying proviso to Section 3(1) without availing the benefit of notification has been set aside, there are no reason to uphold the disallowance of credit. The appellant is eligible to avail credit of duty paid on finished goods and semi-finished goods.
Appeal allowed in part.
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2023 (6) TMI 1105
Distribution of CENVAT credit - nexus between the invoices and utilisation of input service tax credit could not be established - Rule 9(1)(g) alongwith Rule 7 of CENVAT Credit Rules, 2004 - Banking service - construction service - extended period of limitation.
Whether it is a case of transfer of credit by ISD or it is a case of taking of credit on the strength of “invoice” not having the name of the concerned unit/recipient?
HELD THAT:- As per Rule 9(1), the cenvat credit can be taken by the manufacturer on the basis of certain documents like invoices, bill or challan etc. It can also be taken on the strength of invoice, bill, challan and issued by ISD (input service distributor) under Rule 4A of Service Tax Rules 1944. In this case, it is seen that while Department has claimed the Hyderabad office as “head office” and therefore in order to pass the credit, they should have taken ISD registration and should have also followed the statutory procedure for distribution, whereas the appellants are argues that documents like challan issued by banks are sufficient document under Rule 4A and hence on that strength that itself they can take credit.
ISD can be any office, where the invoices issued under Rule 4A are received and distributed. The invoices under Rule 4A of STR provides for issuance of a specific invoice bill or challan giving certain details etc. In fact, in the case of a bank company an invoice, a bill or challan, as the case may be, also includes any document by whatever name called, whether or not serially numbered and whether or not containing address of the person receiving taxable services but it should contain other information in such documents as required under the said subrule.
Whether the debit advice/invoice issued by the banks to their office in Hyderabad, can be considered as an “eligible documents” issued under the provisions of Rule 4A or otherwise? - HELD THAT:- It is a case where there is no need for any ISD distribution and the only issue which needs to be decided is whether the invoice/advise raised by the banks are sufficient to allow the Gumpam unit to take the credit - It is undisputed fact that such imports have taken place with reference to Gumpum unit only and the input service in issue is an eligible input service. It is also noted that in the case of provision of services by Bank etc, much latitude has been given regarding nature of documents which could be issued under Rule 4A. There is no allegation in the show cause notice that the raw materials were not received in the Gumpam unit. Therefore, nonmentioning of the name and address of the unit receiving such services despite having actually received and also have incurred expenses towards that, can not result in complete denial of credit. Thus, the challans/debit advice issued by bank, if correlatable to Bill of Entries in the name of Gumpum Unit, indicating payment of service tax, has to be as a treated as valid document for the purpose of taking credit under Rule 9(1) by the appellant.
In the case of LAXMI ORGANIC INDUSTRIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD [2017 (5) TMI 665 - CESTAT MUMBAI], the Tribunal held that credit cannot be denied on the ground that either the invoice is not in appellant’s name but in the name of their Head office or that the Head office is not registered under the ISD.
The provisions under CCR provides for clearance of input or capital goods as such by reversing the credit taken originally on such inputs or capital goods. It is admitted that this provision has not been adhered to in the instant case, as the inputs were being cleared on stock transfer basis on the payment of central excise duty even when there was no manufacture involved, which is different then the mechanism provided for clearance of inputs as such, on which the credit has been take under.
Banking service - HELD THAT:- Here admittedly there has been stock transfer of such inputs on which they had taken credit initially and even though, they have paid central excise duty on the same, it cannot be considered as a method for reversing the credit for clearance of input as such. And to that extent, the inputs not used at Gumpum Unit cannot be considered to have been used in their factory - The co-relation of the invoice/challans issued by the bank and the Bill of Entries under which the inputs have been received by Gumpam unit needs to be done in detail as per the Appellants provide all the relevant documents to Original Authority. Thereafter, to the extent to which such inputs, not having been consumed in the Gumpam unit, the credit has to be denied on account of their having not been used in relation to the manufacture of the final product. The remaining credit is to be allowed. The interest and penalty applicable under section 15(2) of CCR 2004 read with Section 11AC (1)(c) of Central Excise Act 1944 would also be applicable on such ineligible credit.
Construction Service - HELD THAT:- It is clearly not admissible and so to that extent the amount of Rs. 1,05,424/- out of total demand of Rs. 13,01,140/- as confirmed by the Original Authority and also upheld by Commissioner (Appeals) needs to be upheld. Thus, the extent of demand on account of credit of ineligible service i.e. construction service, the Order of Original Authority and Commissioner (Appeals) is upheld and for remaining amount of demand, the order is set aside for the purpose of redetermination of admissible credit.
Extended period of limitation - HELD THAT:- Since the admitted fact is that they have not correctly followed the procedure for clearing inputs on which credit was taken, as also the fact that appellant have not come out clean before the Department with all the relevant facts before the audit, it is not found, that sufficient grounds have been brought on record by appellants so to interfere with the observations of Commissioner(Appeals) on this issue. Therefore, the extended period has been rightly invoked in the facts of the case.
The appeal is partly allowed by way of remand for redetermination of amount of eligible credit out of total demand and for recovery of remaining amount, levy of interest applicable and imposition of penalty with reference to such ineligible credit, so determined.
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2023 (6) TMI 1104
Denial of CENVAT Credit and order for recovery of same - denial of credit on the ground that credit taken was pertaining to the period prior to registration - denial also on the ground that the invoices issued by the ISD did not contain the particulars like name, address and registration number of the person providing the services - alleged also that CENVAT Credit distributed by the ISD was without excluding the credit attributable to the turnover of trading activities which is an exempted service - HELD THAT:- It is a little strange on the part of Revenue that while the appellant-ISD had distributed credit of Rs.44,78,255/- to its manufacturing unit at Pune and Rs.94,84,508/- to the appellant at Puducherry unit, the Revenue has accepted the distribution of above credit to its Pune unit. The Department has not accepted the distribution of credit by ISD in respect of the appellant’s Puducherry unit. A perusal of both the Show Cause Notice and the impugned Order-in-Original do not reveal anything as to why the appellant’s unit was cherry picked up just to deny credit.
Certificate of registration dated 24.01.2011 - HELD THAT:- It is clear from the same that the addresses of business premises of the ISD and that of two manufacturing units to which credit on input services was distributed or intended to be distributed is clearly reflected. The Revenue, on the other hand, is not disputing the validity of this certificate of registration.
Admittedly, transactions in the present case relate to the period prior to 01.09.2014 and therefore, the restriction which is applicable prospectively, cannot be applied retrospectively.
In the case of Hon’ble High Court THE COMMISSIONER OF CENTRAL EXCISE, O/O THE COMMISSIONER OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX VERSUS M/S. PRICOL LTD. [2021 (2) TMI 495 - MADRAS HIGH COURT] has categorically held, following the judgement of the Hon’ble Gujarat High Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DASHION LTD [2016 (2) TMI 183 - GUJARAT HIGH COURT], that there is nothing in the said Rules of 2005 or Rules of 2004 which would automatically and without any additional reasons, disentitle an input service distributor from availing credit unless and until such registration was applied and granted - Interestingly, the ratio of the decision was followed by Hon’ble Karnataka High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE SERVICE TAX AND CUSTOMS BANGALURU-II, VERSUS M/S. HINDUJA GLOBAL SOLUTIONS LTD., [2022 (4) TMI 71 - KARNATAKA HIGH COURT] and later by various judicial fora.
Thus, the finding of the learned authority for denying credit on the ground that the credit taken was pertaining to the period prior to registration, cannot be approved.
Credit denial also on the ground that invoices do not have the details of person who provided the service - HELD THAT:- The invoices placed on record clearly reflect the service provider challans and corresponding invoices issued by ISD for distribution of credit. Hence, merely because the above invoices do not have the details of person who provided the service, the same is not a valid ground to deny the benefit of credit.
The supporting documents placed on record by the Revenue with regard to the allegations that are made in the Show Cause Notice as to the trading units, but it is also unfortunate that the adjudicating authority has also made a very vague observation in this regard. But it is also equally true that what is referred to in Show Cause Notice is trading unit and not trading activities. Hence, in the absence of any specific trading activity by the appellant, the finding of the authority that the IPR services and management, consultancy services are important component of trading activities, appears to be vague and baseless - consequent action of denying credit is clearly therefore illogical and unsustainable in the eye of law.
The denial of credit is clearly unwarranted - Appeal allowed.
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2023 (6) TMI 1103
Wrongful availment of CENVAT Credit - manufacture of Emulsion Matrix (bulk explosive) - whether the disputed goods had been used for the purposes of manufacturing of BMD Vehicles and the Storage Tanks, without which, the Bulk Explosive cannot be prepared? - HELD THAT:- It is seen from the Appeal Paper Book that the Appellant has submitted copy of the Chartered Engineer’s Certificate specifying the usage of the inputs/capital goods in question. This Tribunal, in the Appellant’s own case M/S PRASAD EXPLOSIVE & CHEMICALS VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, RANCHI [2022 (10) TMI 514 - CESTAT KOLKATA] for the demand made for the period January 2013 to December 2013 has gone through the issue and dealt in detailed manner and has held I find that the ld.Adjudicating Authority has relied upon the Larger Bench decision of the Tribunal in the case of [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] for dis-allowance of cenvat credit as claimed by the Appellant, which is not at all applicable to the facts of the present case. I further find that the Hon’ble Chhattisgarh High Court M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] has distinguished the decision of the Larger Bench of the Tribunal on the findings that it is not a good law and various other High Courts have also expressed similar views.
Since the issue is identical pertaining to the same Appellant, respectfully following the decision of this Bench, the present Appeal is allowed.
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