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Showing 361 to 380 of 1642 Records
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2024 (7) TMI 1282
Long Term Capital Loss - assessee approached builder that assessee is desirous to cancel the allotment of the above flats and builder refunded assessee - assessee offered long term capital loss on the surrender of allotment letters - as argued consideration received by the assessee, cost of acquisition and fact of surrender of capital asset squarely prove that there is a transfer of a capital asset for consideration which has cost of acquisition and therefore, there has to be a computation of capital gain on such transfer.
HELD THAT:- In the cancellation letter sale consideration is mentioned. Thus, the assessee has acquired by way of allotment, right to acquire two flats in his name. This 'right to acquire' these two flats is naturally a capital asset. On surrender or extinguishment by cancellation letters of such capital asset, it has been surrendered and assessee loose right to acquire these two flats. Therefore, there is a transfer of capital asset. On the transfer of capital asset, assessee has also received consideration. The capital asset was also acquired at a total cost of ₹ 3,36,60,000/- for each flat.
The right to acquire was acquired on 20th September, 2010, on transfer of such right naturally the capital gain arises in the hands of the assessee.
The consideration received by the assessee, cost of acquisition and fact of surrender of capital asset squarely prove that there is a transfer of a capital asset for consideration which has cost of acquisition and therefore, there has to be a computation of capital gain on such transfer. AO was submitted both the cancellation letter where the amount of consideration received by the assessee is duly mentioned. Therefore according to us, on transfer of right to acquire these flats, has resulted in to a long term capital loss in the hands of the assessee and same dserves to be allowed.
CIT (A) agreed that there is a transfer and capital gain is chargeable, however, he held that provisions of Section 50C of the Act and Section 56(2)(X) of the Act applies. This observation of the CIT (A) clearly shows that computation of capital gain is required to be made on these transactions.
Whether on this transaction, provision of Section 50C of the Act applies or not? - The Provisions of Section 50C of the Act applies only when capital assets transferred is ' land or building or both." In this case assessee has transferred 'right to acquire' the flats. Thus, Provision of Section 50C of the Act does not apply. Further, as Provisions of Section 50C of the Act does not apply, naturally, the provisions of Section 56(2)(X)(b) of the Act also do not apply.
Accordingly, solitary ground raised in this appeal is allowed and AO is directed to allow carry forward of capital loss.
Penalty u/s 271(1)(c) - difference in Income in return u/s 148 and original return as concealed income when no additional income was offered but just claim of an expense was withdrawn voluntarily before any confrontation by AO - HELD THAT:- To invoke the penal provisions of the Act against an assessee in such a situation would throw to the winds the elements of fairness in tax administration and discourage assessees from disclosing defects in their tax returns before their Assessing Authorities.
This is more so when, as in the present case, the assessee had also paid the interest on the differential tax to cover the period of delay in payment thereof. The payment of statutory interest having compensated the exchequer adequately, to further penalise the assessee would tantamount to an act of overkill and would be antithetical to the rule of law. We are of the firm view that the honesty of an assessee cannot attract the penal provisions under the I.T. Act and that, in the instant case, the essential pre-conditions for the invocation of the provisions of Section 271(1) (c) of the I.T. Act against the assessee were not established. Assessee appeal of allowed.
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2024 (7) TMI 1281
Penalty u/s 271(1)(c) - claim of the assessee respondent as regards deductions claimed u/s 54B allowed - HELD THAT:- Admittedly, the quantum addition, on being challenged by the assessee before this Appellate Tribunal has been set aside [2019 (8) TMI 983 - ITAT JAIPUR] filed by the assessee and thereby allowing deductions claimed u/s 54B of the Act.
When the claim of the assessee as regards deductions u/s 54B of the Act has been allowed by this Appellate Tribunal subsequent to passing of the order of penalty there is merit in the contention raised on behalf of the assessee that the penalty order has been rightly set aside by CIT(A). Decided in favour of assessee.
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2024 (7) TMI 1280
Unexplained money u/s 69A r.w.s. 115BBE - assessee was a non-resident of Israel and had remitted funds from his bank account with Hang Seng Bank, Hong Kong to his NRE bank account in HDFC in India - assessee had also submitted copy of Foreign Inward Remittance Certificate to show that the funds had been commuted by the assessee from his overseas bank account with Hang Seng Bank in Hong Kong to NRE bank account with HDFC Bank, India.
HELD THAT:- The residential status of the assessee, being a non-resident is not in dispute, there is no allegation that the assessee had any business connection India or that the amount remitted by the assessee from his overseas bank account in Hong Kong to his NRE bank account in India is coming out of income earned by the assessee in India, the copy of passport and other documents confirm that the assessee was a non-resident during the year under consideration, the assessee has furnished Foreign Inward Remittance Certificate to establish that the money had been remitted by the assessee from his bank account held with Hang Seng Bank, Hong Kong to his NRE account in India, in our considered view, the assessee has discharged the primary onus regarding the source of funds being outside of India and accordingly, the addition made by the assessing officer is liable to be deleted looking into the instant facts. Appeal of the assessee is allowed.
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2024 (7) TMI 1279
Addition made on the basis of sale made outside of the books of account - HELD THAT:- It is true that on the basis of Whatsapp chat, AO has brought out some of the parties on record to whom the Assessee has made sales outside the books of account. As no other incriminating document was found in the case of other parties, therefore, action of the CIT(A) in restricting the addition to the parties whose names figure in Whatsapp chat is very much logical and justified.
We have also considered the various case laws brought on record by Assessee as well as CIT(A) on this issue in support of their arguments.
The addition could be confirmed only on sales made outside the books made to the parties which figures in the Whatsapp chat only. CIT(A)’s action of restricting the addition made on the basis of sales made during the year under consideration outside the books of account to parties which figures in the Whatsapp chat only are justified and therefore, Assessee’s appeal on this Ground of appeal is allowed.
Estimation of GP - Addition made on the basis of sales outside the books of account - The confirmation of addition of entire amount of sales made outside the books of account to other parties by the ld. CIT(A) does not look logical or justified. It is because whatever sales of cycle parts have been made to these parties outside the books of account, must have been procured / purchased / manufactured by the Assessee firm outside the books of account only. In this case, the addition of GP ratio of 8.60% of such sales of Rs. 26,58,600/- could only be sustained along with addition of G.P. on the sales made to M/s Dhanawat to the tune of Rs. 6,11,043/-.
We confirm the addition of 8.60% (GP ratio declared by the Assessee) on total sales of Rs. 26,58,600/- + Rs. 6,11,043/- as calculated and confirmed by the CIT(A). Thus, Assessee’s appeal on this Ground is partly allowed.
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2024 (7) TMI 1278
Correct head of income - treating short term capital gain as business income - HELD THAT:- In the case of the present assessee, it is second year of the business and half way through the financial year, the trading was initiated in shares. Thus, by merely mentioning the shares to be the investments, benefit of Circular No.4 of 2007 dated 15.06.2007 cannot be granted.
Then, in the judgement in the case of Indi Stock (P) Ltd. [2022 (10) TMI 130 - CALCUTTA HIGH COURT] again the assessee was found to be maintaining separate account for trading in shares and stock-in-trade and the assessee was found to have purchased shares by way of investments only and debited cost to the investment account. Then in the order in ACIT vs. Jignesh Madhukant Mehta [2017 (5) TMI 1644 - ITAT MUMBAI] it was found that the assessee had undertaken delivery based transactions.
In the order in the case of Second Leasing (P) Ltd. [2018 (6) TMI 405 - ITAT DELHI] again in the preceding years income arising on sale of investments was accepted by the AO as capital gains and all the transactions was delivery based. Therefore, we are of the considered view that the claim of assessee was investing its own funds which were lying idle is not in itself sufficient to establish that the trading in shares was done as investments to earn capital gain
Exemption u/s 80IC for business income - differences in balances of tax audit does not entail a disallowance of claim of Sec 80IC, if all the conditions are fulfilled - as pointed out that Section 80IC claims were accepted in subsequent years - HELD THAT:- CIT(A) has not disputed the fact that the assessee company was located in a geographical area which was covered by the CBDT Notification for the purpose of benefit u/s 80IC of the Act. Before us, the ld. AR has demonstrated on the basis of copies of Notification available with special reference that areas of Salempur Mehdood and Rawli Mehdood fall in the notified industrial areas.
As we go through the assessment order for AY 2012-13, copy of which is available, it appears that the manufacturing activity and income of the assessee from the business of manufacture of milk and milk based products is not disputed at all and, during AY 2012-13, on the basis of particulars of sales and net profit of the assessee company for AY 2010-11 and 2009-10, the AO had re-determined the NP ratio to make an addition. Thus, there is no justification in findings of CIT(A) that the manufacturing activity of the assessee itself is doubtful.
Disallowing @ 20% out of the total purchases of milk - HELD THAT:- Tax authorities have fallen in error in making ad hoc disallowance without pointing out any error in the books of account of the assessee. As we go through the books of account of the assessee in the form of tax audit report available and audit report in Form 10CCB available and audited financial statements available, we find that the assessee has maintained a composite trading and profit & loss account for the year ending 31st March, 2010 and all expenses of the nature like advertisement expenses, director’s remuneration, interest expenses, machine running & maintenance, salary, staff welfare expenses, vehicle running and maintenance expenses, have been debited and which have not been doubted.
We are of the considered view that the nature of business of the assessee primarily requires electricity consumption and fuel expenses which along with substantial purchases stands allowed. Thus, there is no justification to doubt the purchases by accepting the sales and the income. As, we have observed on the basis of assessment order for AY 2012-13, the assessee’s net profit ratio for AY 2010-11 have been considered for making an assessment of the net profit for AY 2012-13. Thus, there is no justification to discredit the purchases on ad hoc basis. Accordingly, we allow this ground.
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2024 (7) TMI 1277
Delay in filing the appeal before CIT(A) - appeal after a delay of 1154 days - reasons given are that appellant has left all income tax matter in the hands of CA; that he was ignorant of law and that he was busy in agricultural and household activities - HELD THAT:- It would not constitute “sufficient cause” within the meaning of Section 249(3) of the Act. It is thus crystal clear that after receiving the assessment order, the appellant has remained inactive and was grossly negligent. There was no due diligence on the part of the assessee.
Such casual and lackadaisical approach against the assessment order and consequential filing of appeal before CIT(A) would not constitute "sufficient cause" within the meaning of section 249(3) of the Act. In view of the above facts and respectfully following the authoritative precedents cited, no reasons to interfere with the decision of CIT(A) in refusing to condone the delay in filing appeal before CIT(A). The ground is accordingly dismissed.
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2024 (7) TMI 1276
Demand u/s 201(1) - assessee in default in respect of the payments made by the assessee to BDA without deducting TDS - HELD THAT:- AO has taken into consideration some amounts received by the BDA from the departments other than the assessee and therefore, the calculation mistakes/errors cannot be ruled out. The assessee has now filed the certificate in Form No.26A.
Thus, all these factual aspects of the matter are required to be properly verified while computing the quantum of default if any made by the assessee. The assessee has relied upon the order of the Co-ordinate Bench in case of District Organiser Tribal Welfare, Ujjain Vs ITO [2013 (6) TMI 934 - ITAT INDORE] for the assessment year 2008-09 however, it is pertinent to note that the factual point that the BDA is also retaining some percentage on account of supervision charges was not brought to the notice of the Tribunal in the said case. Since the impugned orders were passed by the CIT(A) ex-parte therefore, these relevant details as well as the certificate in Form No.26A were not produced before the CIT(A) and consequently the same remained unexamined.
Hence, in the facts and circumstances of the case and in the interest of justice the impugned orders of CIT(A) are set aside and the matters are remanded to the record of the A.O for fresh adjudication after considering the relevant details as well as certificates issued u/s 26A and verification of the factual mistake as pointed out by the assessee. Appeals of the assessee are allowed for statistical purposes.
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2024 (7) TMI 1275
Taxability of income in India - Denial of exemption u/Article 13(3B) and 13(4) of the India-Mauritius Treaty and brought to tax - since the control and management of the assessee company lies outside Mauritius and in UAE, the beneficial owner being resident of UAE, the assessee company is not entitled to avail benefit of India- Mauritius Treaty - Taxing the entire capital gain derived from sale of shares and futures and options etc. - CIT(A) holding that the assessee is eligible for availing benefit of India- Mauritius tax treaty
HELD THAT:- On perusal of materials on record we agree with the aforesaid factual finding of learned First Appellate Authority. The information received from SEBI, which has been reproduced in the assessment order, clearly indicates that it did not pertain to assessment year under dispute but to subsequent assessment years. Therefore, no conclusion regarding control and management of the assessee company or beneficial ownership for the impugned current year can be drawn based on such documentary evidences.
TRC certificate, Category 1 Global Business License, and SEBI registration clearly demonstrate that the assessee is a genuine tax resident of Mauritius. Except the information received from SEBI, the Assessing Officer has failed to bring on record any adverse material which can establish beyond any shadow of doubt that the control and management of the assessee was outside Mauritius and the beneficial owner was a resident of UAE.
Information available with the AO clearly suggests that in the year under consideration the assessee had three directors, all residents of Mauritius. Even, sample copies of Board Resolutions furnished in the paper book demonstrate that Board meetings were conducted in Mauritius.
The very fact that the assessee has continued its business activities in India proves that it is not a fly by night operator created only for the purpose of availing Treaty benefits. In so far as applicability of protocol dated 07.03.2024 amending the India-Mauritius Treaty, undisputedly as per Article 3(1) to the protocol, it will come into force only after each of the contracting States notify it.
On a specific query from the Bench, learned Departmental Representative fairly submitted that the process mentioned in Article 3(1) of the protocol is yet to be finalized. Thus, when the protocol is yet to come into force, it cannot be made applicable.
Judicial precedents relied upon by the learned counsel for the assessee, they are based upon the broad principles set out by the Hon’ble Supreme Court in case of Azadi Bachao Andolan [2003 (10) TMI 5 - SUPREME COURT] while interpreting CBDT Circular no. 789 dated 13.04.2004. The ratio laid down in the judicial precedents clearly applies to assessee’s case. Thus, on over all consideration of facts and materials on record we do not find any infirmity in the decision of learned First Appellate Authority. Decided against revenue.
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2024 (7) TMI 1274
LTCG - Deduction u/s 54F - circle rate of the property - Claim of the appellant that the circle rate of the property should not have been taken by the AO u/s 50C as on 01.09.2008 as the 'Agreement to Sale' was made in the month of August and part payment has already been received in June, has been rejected by CIT(A) - HELD THAT:- We are of the considered view that First Proviso to Section 50C as inserted by Finance Act 2016 w.e.f 01.04.2017, certainly applies to the present facts and circumstances as the agreement was executed prior to the amendment but with intention to seal the deal and transaction of payment of earnest money of Rs. Ten Lac, was by way of cheques. The Bank account statements filed corroborate the same. The retrospective application of this First Proviso, as been upheld in CIT, Chennai Vs. Shri Vummudi [2020 (10) TMI 517 - MADRAS HIGH COURT] as relied by ld. AR. The CIT(A) has also fallen in error to hold that application is prospective.
Deduction u/s 54F - Tax authorities below have fallen in error in not considering the agreement to sell as an investment in a house for the purpose of section 54F when whole of the amount stood paid and possession delivered.
Thus we consider it an appropriate case to set aside the findings on issue of computation of capital gains to the files of AO with directions to take into consideration the aforesaid conclusions of this Bench and complete the re-computation of the capital gains afresh. An opportunity of hearing be given to the assessee for the same.
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2024 (7) TMI 1273
Deduction u/s 80)(2)(d) - interest income from co-operative banks/societies - As per the AO, such income was not available for deduction u/s 80P(2)(d) - CIT(A) confirmed the order of the AO but directed the AO to allow the cost incurred by the assessee against the impugned income - HELD THAT:- There is no ambiguity to the fact that the interest income earned by the assessee from nationalized bank/co-operative banks are not available for deduction u/s 80P(2)(d) of the Act, but the cost incurred against such income should be considered for calculating the amount of interest income from nationalized bank/cooperative banks. As such the net interest income should only be disallowed and not gross interest income while calculating the eligible amount of deduction u/s 80P(2)(d) of the Act. Therefore, in the interest of justice and fair play, we are setting aside the issue to the file of the AO to calculate the cost incurred by the assessee against the impugned income after giving opportunity to the assessee.
Interest earned by the assessee from the co-operative society is eligible for deduction u/s 80P(2)(d) of the Act.
While calculating the interest from the co-operative society, the principles laid down in the case of Kerala State Co-operative Agricultural and Rural Bank Ltd., [2023 (9) TMI 761 - SUPREME COURT] should also be considered by the AO. With this observation, the ground of appeal filed by the assessee is hereby allowed for statistical purposes.
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2024 (7) TMI 1272
Addition u/s 69A - unexplained income as advances taken - HELD THAT:- In the present case admittedly though there was an error of punching of the date in the books of account, but loan amount given, and loan amount taken from two different parties was recorded in the books of accounts of the assessee supported by the bank statement and confirmation of those parties. It is immaterial for the application of section 69A of the act that assessee could not submit the detail of the transaction of advances for immovable property which did not materialize.
Therefore, it cannot be said that assessee is owner of the asset which is not recorded in the books of account of the assessee. Therefore, the provisions of Section 69A are not satisfied as the assessee is not found to be the owner of any sum, which is not recorded in the books of account of the assessee. CIT – A has considered all the aspects of the above transaction and thereafter deleted the addition made u/s 69A of the act by the learned assessing officer with reasons. No infirmity is pointed out in the order of the first appellate authority. Therefore, we do not have any hesitation in upholding the order of the learned first appellate authority. Accordingly, we do not find any merit in the appeal of the learned AO.
Addition on account of transaction with Outstripe Suppliers Pvt. Ltd. - HELD THAT:- The amount of ₹1.70 crores is part of the transaction of ₹2 crores which was part of the addition of ₹2 crores made in A.Y. 2015-16. As we have upheld the order of the learned CIT (A) deleting the addition of ₹2 crore, we also confirmed the order of the learned CIT (A) deleting the addition of ₹1.70 crores for the reason that it is part of the same transaction of ₹2 crores and further, it amounts to double addition of ₹1.70 crores made by the AO. Accordingly, we do not find any merit in the appeal of the learned Assessing Officer for this year.
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2024 (7) TMI 1271
Penalty u/s. 271(c) - additions of @25% of non-verifiable purchases debited to the trading account - HELD THAT:- Addition was made on estimation of total turnover after rejecting the books of accounts. Notice u/s. 133(6) were also issued to the various purchase parties and all the notice were returned by the postal authority and the assessee has not produced the party to confirm the same. These observation of the lower authorities shows that it is not established by the revenue that the assessee had concealed the particulars of income or has submitted inaccurate particulars of income so as to attract Section 271(1)(c) of the Act.
Admittedly, the addition has been made on estimate basis, therefore, the ratio of judgment of Parasamal Babulal Jain [2011 (9) TMI 398 - KARNATAKA HIGH COURT] and various pronouncements of the judicial ITAT covers the facts of the present case of the assessee.
Since the addition was made on the estimate basis and for the aforesaid discussion, the penalty is not sustainable and rightly deleted by the CIT(A). We find no illegality in the order of the Ld. CIT(A) and same is accordingly confirmed. Decided against revenue.
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2024 (7) TMI 1270
Addition of unsecured loans u/s 68 - assessee failed to prove the creditworthiness of the creditor - CIT(A) deleted addition - HELD THAT:- This is for the precise reason that it had filed it’s rejoinder containing additional details/evidence before the CIT(A)- NFAC which had nowhere been put to factual verification at the AO’s end during remand proceedings. Assessee is found to have very well missed the bus by not filing all the relevant details before the AO in remand proceedings. Mr. Joshi at this stage drew strong parallels between the impugned loan entry vis-à-vis other amounts received. His case is that the AO had adopted pick and choose method in adding only the loan in question of Rs.99 lakhs.
We see no merit in assessee’s arguments for the reason already quoted hereinabove that the department has not been able to get all the corresponding bank accounts et., verified at the AO’s end. We accordingly deem it appropriate in these facts and circumstances to restore the Revenue’s instant former substantive grounds back to the AO for his afresh appropriate adjudication as per law, subject to the rider that it shall be the taxpayer’s risk and responsibility only to plead and prove all the relevant facts in consequential proceedings, within three effective opportunities of hearing. The Revenue instant first and foremost grievance is accepted for statistical purposes.
Addition of penalty paid to the owners by the assessee - HELD THAT:- AO’s remand report indeed expressed agreement with the assessee’s explanation that the foregoing amount was incurred wholly and exclusively for the purpose of redevelopment of project since the payments were made to the already existing tenants for their temporary transit alternative accommodation. We thus quote Smt. B. Jayalaxmi [2018 (8) TMI 208 - MADRAS HIGH COURT] and DN Purnesh [2020 (9) TMI 731 - KARNATAKA HIGH COURT] that the Revenue could hardly be held as an aggrieved party once the assessing authority submits a favourable remand report before the CIT(A)-NFAC and accordingly reject the Revenue’s instant second latter substantive ground in very terms.
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2024 (7) TMI 1269
Correct head of income - interest income representing premium on redemption of Non-Convertible Debentures [NCDs] - capital gain or income from other sources - HELD THAT:- Learned counsel is fair enough in stating at the Bar that this tribunal’s coordinate bench’s order in assessee’s appeal [2024 (4) TMI 1152 - ITAT MUMBAI] for assessment year 2010-2011 dated 15.04.2024 as held NCDs under consideration are privately placed debentures and they are not listed in the stock exchange. Further, the assessee herein has not sold the NCDs in the open market. The assessee has only surrendered the NCDs to the SPVs, viz., M/s Bhishma Realty Ltd and M/s Capricorn Realty Ltd, for redemption. Thus, it is a case of realization of money advanced by a creditor, since debentures are debt instruments only. Thus, the question of generation of capital gains will not arise, when the debentures are redeemed by the issuing companies. Further, what is received by the assessee in the form of premium is nothing but interest income only. Accordingly, we are of the view that the Ld CIT(A) was legally correct in holding that the premium/surplus received by the assessee is interest income assessable under the head Income from Other Sources. - Decided in favour of revenue.
Set-off of long term capital loss against long term capital gains - In view of foregoing adjudication, is restored back to the learned Assessing Officer for his afresh computation as per law in very terms once learned counsel is equally fair in not disputing the fact that the assessee had computed the impugned losses under the head “capital gains” long and short; and sought to set-off the same against the long term capital gains arising from redemption/transfer of non-convertible debentures (supra).
Disallowance u/s 14A - computation of administrative expenditure disallowance relating to exempt income u/sec.14A read with Rule 8D(2)(iii) - HELD THAT:- We first of all see no such distinction either in sec.14A nor in Rule 8D drawing a distinction between the categories of portfolios; whatsoever. Coming to the assessee’s reliance of this tribunal’s foregoing decision Vineet Investments [2017 (6) TMI 1124 - ITAT DELHI] we find that the learned coordinate bench had dealt with assessment year 2008-2009 whereas Rule 8D was applicable w.e.f. 01.04.2008 onwards. The same stands distinguished in very terms.
Computation of the impugned disallowance(s) - Revenue could hardly dispute that Vineet Investments [2017 (6) TMI 1124 - ITAT DELHI] have settled the issue that such a disallowance has to be computed after considering the dividend yielding investments only. We find from a perusal of the assessee’s paper book he had filed the corresponding list of dividend yielding investments in the lower appellate proceedings. The same appears to have not been considered of the lower appellate discussion. Faced with this situation, we direct the AO to compute the impugned administrative disallowance afresh in very terms. This assessee’s fourth and fifth substantive grounds are partly accepted for statistical purposes in above terms. Ordered accordingly.
Action invoking sec.17(2)(iii)(a) assessing “perquisites” - difference between actual cost of purchase of the concerned flat and stamp value adopted by the state authority(ies) - HELD THAT:- We first of all note that there is no employer-employee relationship regarding the assessee’s purchase of the flat herein once it is a tripartite agreement amongst owner/company, developer and himself [director]. There is no material in the case file which could indicate that the owner/company had in any way unilaterally borne the corresponding difference figure in it’s books of accounts or otherwise; as the case may be. We wish to observe that the employer-employee relationship in service jurisprudence is always a bilateral one whereas the facts of the instant case involve a ‘developer’ as well.
This tribunal’s learned coordinate bench’s order in Keshavji Bhuralal Gala [2018 (1) TMI 971 - ITAT MUMBAI] as further rejected the Revenue’s very stand stating as in the absence of any enquiry conducted by the Assessing Officer to demonstrate that the value adopted for stamp duty purpose is the actual fair market value of the properties sold, it cannot be said that a benefit in the nature of perquisite as provided under section 17(2)(iii) of the Act has been given to the assessee by the company.
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2024 (7) TMI 1268
Rejection of IGST exemption availed by the Appellant under EPCG Scheme as per Notification No. 16/2015-Cus. dtd. 01.04.2015, as amended by N/N. 79/2018-Cus. dtd. 13.10.2017 - confirmation of demand of custom duty in lieu of IGST - confisacation - interest - penalties u/s 112(a) and (b)(iii) of the of Customs Act, 1962 and penalty of 5,00,000 u/s 114AA of the Act.
The allegation of the department in the present matter is that Customs N/N. 16/2015-Cus. dtd. 01.04.2015 was amended by Customs N/N. 79/2017-Cus. dtd. 13.10.2017 to the effect that after amendment, as per para 3(c)(II)(d) of the said amended Custom Notification, payment received in Rupee terms (INR) for such services as notified in Appendix 5D shall also be counted towards discharge of export obligation under the EPCG, only in Authorization where exemption for Integrated Tax and Goods and Services (IGST) compensation cess is not availed.
HELD THAT:- The EPCG License was issued to the Appellant on 21.01.2019 and under the terms of the said License, the Appellant was required to meet its export obligation within a period of 6 years, i.e by 20.01.2025. We also find that this fact has neither been disputed in the show cause notice nor in the impugned order passed by the Ld. Commissioner. The department has to initiate the proceedings only after the expiry of the licencing period. Therefore, any proceeding prior to this period is purely premature and the impugned order confirming demands before the expiry of the licencing period is not justified and correct in law. Such actions, therefore, cannot be sustained.
Para 5.2 of Circular No. 16/2023-Cus dtd. 07.06.2023 state that as per the Hon’ble Supreme Court’s judgment in the case of UNION OF INDIA & ORS. VERSUS COSMO FILMS LIMITED [2023 (5) TMI 42 - SUPREME COURT], importer of goods, who do not meet the pre-import conditions, are required to pay GST and Compensation Cess, as the case may be. However, the Hon’ble Court also permitted the assesses to claim refund or avail Input Tax Credit, while specifically stating that a Bill of Entry rather than a challan would be prescribed documents for this purpose.
In view of the above judgment, it is clear that if IGST is paid by the Appellant, same shall be available as Input Tax credit to the Appellant and to that extent net liability of GST shall stand reduced while paying the GST by the Appellant. Therefore it is an exercise of revenue neutral for this reason demand does not exist - the demand on the point of revenue neutrality also set aside.
The confiscation of the imported goods cannot sustain and it is hereby set aside. On the basis of discussions above, it is also held that penalty imposed on both the appellants is unwarranted - The impugned order is set aside - appeal allowed.
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2024 (7) TMI 1267
Violation of Regulation 10(d) of CBLR - SCN time-barred as asserted by the learned counsel for the appellant, or not - penalty of revocation of licence - forfeiture of security deposit - imposition of penalty.
Violation of Regulation 10(d) - HELD THAT:- The restriction on export in this case is evident as it was part of the Foreign Trade Policy and export of Triethanolamine to Mozambique required an authorization. When the client wanted to export this chemical to Mozambique, it was the obligation of the appellant under Regulation 10 (d) to advise the client about the requirement of authorization. Instead of advising the client, the appellant filed the Shipping Bill for its export.
The appellant’s submission on this count is that the client had given a declaration that Triethanolamine is not a SCOMET item and had also given a declaration that it was being exported for use in soil testing. This submission cannot be accepted. Firstly, it is the appellant who should know the law and advise the client and the appellant cannot depend on the client to say if Triethanolamine was a SCOMET item or not. If the appellant had checked the list of SCOMET items, it would have been evident that it was clearly a SCOMET item. Secondly, any declaration by the client cannot prevail over the law - the appellant had clearly violated Regulation 10(d) of CBLR 2018.
Time Limitation - SCN time barred or not - another submission of the appellant is that the SCN was issued 255 days after the receipt of the offence report and hence it was time-barred - HELD THAT:- The Commissioner could not have proceeded against the appellant at that stage when the offence report did not name the appellant at all. So, a clarification was sought by letter dated 8.8.2022 which was followed by a reminder on 4.11.2022. Thereafter, the Assistant Commissioner issued a corrigendum dated 17.11.2022 indicating the correct name of the Customs Broker which was the appellant. This corrigendum was received by the Commissioner on 18.11.2022 and the SCN under CBLR 2018 was issued on 6.2.2023, i.e., within 80 days of the receipt of the correct offence report - the submission of the appellant that the SCN was issued after 255 days of receiving the Offence Report contrary to facts recorded in the impugned order. The SCN was, therefore, not time-barred.
If the appellant violated Regulation 10(d), is the penalty of revocation of licence, forfeiture of security deposit, and imposition of a penalty of Rs. 50,000/- upon the appellant proportionate to the violation? - HELD THAT:- On the question of proportionality of action against the appellant, we find an attempt to export SCOMET item without the required authorization is a serious violation. In this case, it cannot even be said to be a mere oversight because the exporter had given a declaration stating that it was not a SCOMET item and therefore, the possibility of it being a SCOMET item was evident- all that the appellant had to do was to refer the policy where Triethanolamine was explicitly indicated as a SCOMET item. He should then have advised the exporter accordingly - there is no evidence of the appellant profiting from this attempted export of Triethanolamine valued at about Rs. 500/. Action has been taken against both the exporter and the appellant under the provisions of Customs Act and penalty of Rs. 5,000/- was imposed on the appellant under section 114(i). The appellant has been without a licence since 26.7.2023 which means out of work for about an year - the ends of justice is met if the penalty of Rs. 50,000/-imposed on the appellant is upheld but the revocation of licence and forfeiture of security deposit are set aside.
The revocation of licence and forfeiture of security deposit of the appellant in the impugned order are set aside but imposition of penalty on the appellant is upheld - the appeal is partly allowed.
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2024 (7) TMI 1266
Levy of ADD - self-assessment done by the appellant under section 17(1) of the Customs Act was rejected and re-assessment was done under section 17(4) - N/N. 12/2021-Customs (ADD) dated 05.03.2021 - HELD THAT:- It is not in dispute that what was imported by the appellant, as stated in the Bill of Entry, is ‘Color Toner Black’. Though, it is correct that the Anti-Dumping Notification dated 05.03.2021, levied anti-dumping duty on ‘black toner in powder form’, but the Notification also mentions that ‘black toner in powder form’ would exclude a color toner - It would be seen that a color toner is excluded from levy of anti-dumping duty under the Notification dated 05.03.2021.
A color toner has four colors CMYK. ‘K’ denotes black color. What was imported by the appellant was black color toner for color printers and not a black toner for black and white printers which, as noticed above, attracted anti-dumping duty. The Assistant Commissioner merely noticed that the goods imported by the appellant were ‘black toner in powder form’ and completely failed to appreciate that the Anti-Dumping Notification itself stipulated that ‘black toner in powder form’ would exclude a color toner. This fact was specifically pleaded by the appellant in reply to the query raised by the Assistant Commissioner.
The Commissioner (Appeals) observed that the distinction sought to be drawn by the appellant was artificial in nature and also failed to appreciate that the Anti-Dumping Notification itself excluded a color toner from levy of anti-dumping duty. The Commissioner (Appeals) also fell in error in observing that in common parlance ‘color toner’ is different from ‘black toner’. A color toner has four different color toners, namely CMYK, and a black color toner is one of the four color toners constituting a color toner - thus, it has to be held that black color toner would not be subjected to levy of anti-dumping duty under the Notification dated 05.03.2021.
The order dated 17.11.2022 passed by the Commissioner (Appeals) cannot be sustained and is set aside - Appeal allowed.
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2024 (7) TMI 1265
Seeking release of an amount under Section 151 of the Code of Civil Procedure, 1908 - right of the petitioners to seek refund of their investment in terms of the ‘buy-back’ clause in the contract - HELD THAT:- Although, there is merit in the plea advanced by the learned counsel for the applicants that the right of the petitioners to seek refund of their investment in terms of the ‘buy-back’ clause in the contract dated 04.04.2010 with the respondent company had crystallized on 24.04.2014, much before the winding up order was passed appointing a Provisional Liquidator on 22.07.2016. However, what turns the table against the petitioners is the fact that they neither furnished the requisite certificate from FEMA nor came out with the plea that such certificate was not required, and thereby evidently delaying the release of the amount deposited with the Registrar General of the High Court, on their own fault.
It is manifest that the amount towards investment had been deposited with the Registrar General pursuant to the directions dated 24.04.2014, but the petitioners also failed to comply with the necessary formalities, and eventually waived their rights in lieu of placing a claim for the said amount before the Official Liquidator. The fact that no claim is lodged before the Official Liquidator is another story. Indeed, the amount is lying deposited in this Court out of the reach of the stakeholders. However, since much water has flown over the last ten years or so, the amount deposited should rather be utilised for satisfying the claims of the secured creditors.
The amount, which has been deposited with the Registrar General, may be reclaimed by the Official Liquidator with accrued interest and the same may be brought within the corpus of the funds of the company (in liquidation) to be utilised for satisfaction of the claims of the secured stakeholders in accordance with law - Application dismissed.
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2024 (7) TMI 1264
Seeeking restoration of the name of the petitioner company to the Register of Companies maintained by the respondent/Registrar of Companies (ROC) - Section 560 (6) of the Companies Act, 1956 - HELD THAT:- The action that was earlier taken by the Registrar vide order dated 29.06.2007 was pursuant to and issued in terms of Section 560 (1) (6) of the old Act, which provision is effectively pari materia with Section 248 of the new enactment. Under the old Act, the Registrar had the power to proceed with striking off the name of a company from the Register on finding reasonable cause to believe that the company is not carrying on business or is otherwise not in operation. Likewise, under Section 248 of the new Act, where the company is not carrying on any business operation for a period two immediately preceding financial years, the Registrar has the power to proceed with striking off the name of the company from the Register of Companies.
It is clearly brought forth that the provisions under which action was earlier taken under the old Act, as also the action subsequently taken under the new Act, are not inconsistent with one another. The new enactment rather provides for a more detailed procedure for striking off the name of a company as also an effective remedy for dealing with the de-registration of a company, which is not running its business or in operation. Further, the registers maintained under the old Act are also deemed to be registers maintained under the new Act and can be relied upon for seeking any legal remedy.
The remedy of the petitioner lies with the National Company Law Tribunal in view of Chapter XXVII of the Companies Act, 2013. Therefore, the application moved by the petitioner is hereby dismissed.
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2024 (7) TMI 1263
Disclaimer of Onerous property - Praying for leave to be granted to the Official Liquidator to disclaim the office space - praying for peaceful, vacant and khas possession of the sub-demised office space to the applicant from the Official Liquidator - HELD THAT:- Any mortgage or charge over the property in question would exist and be enforceable in law only so long as the sub-lease was subsisting in favour of the company (in liquidation) envisaging observance and performance of all stipulations as contained in the sub-lease. As the narrative unfolds, loans were taken from the consortium of the banks, including PNB, by the company (in liquidation) and evidently its account became a “Non Performing Asset” w.e.f. 31.12.2011 and symbolic possession was taken over by PNB on 06.02.2013.
The objections espoused by the objector - PNB to the CO. APPLs. 517/2018 and 60/2022 cannot be sustained in law. The objector-PNB cannot claim right in the property beyond what was available to the company (in liquidation) during the subsistence of the sub-lease rights. In other words, since the rights of the bank to seek forfeiture of the mortgaged property flew from the rights of the sub-lessee i.e. the company (in liquidation), on the termination of such rights at the behest of the applicant-IIPL, nothing survived in favour of the objector-PNB, so as to lay its claim over the property for the remainder of the period of the lease.
Incidentally, the facts of this case are similar to what came up for consideration before Supreme Court in the case of Stressed Assets Stabilization Fund [2019 (10) TMI 1526 - SUPREME COURT], wherein the loans were obtained by the lessee on the strength of mortgage of title deeds of the leased industrial property, but subsequently, the company went into liquidation. The West Bengal Small Industries Development Corporation Limited, which was the original lessor terminated the lease as the lessee had ceased to carry on manufacturing activities beyond the stipulated acceptable period.
Thus, leave is granted to the Official Liquidator to disclaim the entire sub-demised office space containing super built-up area of 16523 sq. feet on the 15th floor of the building “Infinite Benchmark” constructed on the demised plot of land number G-1 in Block No. EP & GP, Sector V of Bidhannagar in the District of North 24-Parganas within Police Station Bidhannagar (East), Salt Lake City, Kolkata-700 091, and handover the peaceful, vacant and khas possession of the property to the applicant-IIPL by removing padlocks and/or seals put by the Official Liquidator or by PNB upon the same, within 45 days from today.
Application disposed off.
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