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Showing 381 to 400 of 1570 Records
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2024 (5) TMI 1190
Writ jurisdiction of the High Court post privatization - respondent No.3(AIL) taken over by a private corporate entity - non-suit on account of the fact that during pendency of their writ petitions - nature of the employer changed from a Government entity to a private entity - delay in disposal of the writ petition could be treated a valid ground to sustain the claim of the appellants even against the private entity.
Whether respondent No.3(AIL) after having been taken over by a private corporate entity could have been subjected to writ jurisdiction of the High Court? - HELD THAT:- The employee-writ petitioner filed a writ petition before the Delhi High Court to challenge his termination wherein, a preliminary objection was raised regarding maintainability of the writ petition on the ground that during pendency of the proceedings, the company had changed hands and no longer retained the characteristic of a ‘State’ or ‘Other authority’ as defined under Article 12 of the Constitution of India. The assertion of the writ petitioner was that the petition was maintainable against the respondent on the date it was filed. As per the writ petitioner, the rights and obligations of the parties stood crystallized on the date of commencement of litigation and thus, the reliefs should be decided with reference to the date on which the party entered the portals of the Court.
Various High Courts across the country have taken a consistent view over a period of time on the pertinent question presented for consideration that the subsequent event i.e. the disinvestment of the Government company and its devolution into a private company would make the company immune from being subjected to writ jurisdiction under Article 226 of the Constitution of India, even if the litigant had entered the portals of the Court while the employer was the Government.
Whether the appellants herein could have been non-suited on account of the fact that during pendency of their writ petitions, the nature of the employer changed from a Government entity to a private entity? - HELD THAT:- The issue about exercise of extra ordinary writ jurisdiction under Article 226 of the Constitution of India would arise only on the date when the writ petitions were taken up for consideration and decision. The respondent No.3(AIL)- employer was a government entity on the date of filing of the writ petitions, which came to be decided after a significant delay by which time, the company had been disinvested and taken over by a private player. Since, respondent No.3 employer had been disinvested and had assumed the character of a private entity not performing any public function, the High Court could not have exercised the extra ordinary writ jurisdiction to issue a writ to such private entity. The learned Division Bench has taken care to protect the rights of the appellants to seek remedy and thus, it cannot be said that the appellants have been non-suited in the case. It is only that the appellants would have to approach another forum for seeking their remedy - the issue decided against appellant.
Whether the delay in disposal of the writ petition could be treated a valid ground to sustain the claim of the appellants even against the private entity? - HELD THAT:- The delay in disposal of the writ petitions could have been a ground to continue with and maintain the writ petitions because the forum that is the High Court where the writ petitions were instituted could not have issued a writ to the private respondent which had changed hands in the intervening period. Hence, the question is also decided against the appellants.
The view taken by the Division Bench of the Bombay High Court in denying equitable relief to the appellants herein and relegating them to approach the appropriate forum for ventilating their grievances is the only just and permissible view - there are no reason to take a different view from the one taken by the Division Bench of the Bombay High Court in sustaining the preliminary objection qua maintainability of the writ petitions preferred by the appellants and rejecting the same as being not maintainable.
Appeal dismissed.
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2024 (5) TMI 1189
Violation of principles of natural justice - excess claim of Input Tax Credit, without considering the reply filed by the Petitioner - HELD THAT:- On going through Form GSTR-2A, as available on the portal and from it prima facie appears that the same has not been carefully examined by the Proper Officer. In view thereof, the impugned order calls for a remittance of the case.
The impugned order dated 15.03.2024 is set aside. Show Cause Notice is restored on the file of the Proper Officer, who shall re-adjudicate the Show Cause Notice in accordance with law after examining the reply filed by the Petitioner and after giving an opportunity of personal hearing to the Petitioner within the period prescribed under Section 75 (3) of the Act.
Petition disposed off.
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2024 (5) TMI 1188
Rejection of adjudication order - intent to evade tax - existence of mens rea or not - whether the annual return filed by the appellant in GSTR-9 for the financial year 2017-18 can altogether be ignored? - HELD THAT:- The appellant submitted representation but however, the adjudicating authority in the order dated 15th December, 2023 maintained the same stand.
The two aspects have appealed to send back the matter to the adjudicating authority. First is with regard to the effect of GSTR-9. This being an annual return filed within the extended period of limitation viz., upto 7th February, 2020 on account of various notifications issued by the Government due to the Covid pandemic. Therefore, if the GSTR-9, which was filed within time is not considered, the assessee’s rights would be greatly prejudiced. The second aspect, which has persuaded is the contention of the assessee that the entire matter is revenue neutral.
The matter remanded back to the adjudicating authority viz., the Assistant Commissioner, State Tax, Taltala and New Market Charge to consider the submissions made by the assessee, afford an opportunity of personal hearing, examine the annual return filed in GSTR-9 and proceed to take a fresh decision on merits and in accordance with law.
Appeal allowed by way of remand.
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2024 (5) TMI 1187
Cancellation of GST registration of petitioner with retrospective effect - closure of business - SCN does not give any specific reasons for rejection - Violation of principles of natural justice - HELD THAT:- There is no material on record to show as to why the registration is sought to be cancelled retrospectively. It may be noted that in the column at the bottom there are no dues stated to be due against the petitioner and the table shows nil demand - the SCN and the impugned order are also bereft of any details. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. Accordingly, the same cannot be sustained.
In terms of Section 29 (2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so - it apposite to examine this aspect but assuming that the respondent’s contention is required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
The Petitioner does not seek to carry on business or continue the registration, the impugned order dated 30.11.2022 is modified to the limited extent that registration shall now be treated as cancelled with effect from 25.04.2022 i.e., the date when petitioner filed an application seeking cancellation of GST registration.
The petition is disposed off.
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2024 (5) TMI 1186
Validity of order passed u/s 73 of the Central Goods and Services Tax Act, 2017 - lack of communication of the notice to the petitioner - Petitioner was unaware of the initiation of any such proceedings and accordingly could not respond to the same - violation of principles of natural justice - HELD THAT:- Perusal of the impugned order shows that the impugned order categorically records that the tax payer has not replied or appeared in person and a demand as ex-parte is created. It merely states that “Further, another opportunity to submit reply and for the sake of natural justice opportunity for Personal Hearing, as per provision of Section 75 (4) DGST Act, was also provided to the taxpayer by issuing “REMINDER” through the GST portal. Now, since no reply/explanation has been received from the taxpayer despite sufficient and repeated opportunities, which indicate that the taxpayer has nothing to say in the matter.
The undersigned is left with no other option to create demand ex-parte, in accordance with the provisions laid down in Section 73 (9) of the CGST / DGST Act, 2017, as per discrepancies already conveyed through SCN/DRC-01.” The Proper Officer has opined that despite providing another opportunity, neither an online reply has been filed nor has the petitioner appeared in person or through an authorized representative.
Since the only reason for passing the impugned order is that Petitioner had not filed any reply/explanation, Petitioner needs to be granted one opportunity to respond to the Show Cause Notice and thereafter, the Show Cause Notice to be re-adjudicated.
Petition disposed off.
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2024 (5) TMI 1185
Validity of adjudication order u/s 73 of CGST Act, 2017/WBGST Act, 2017 - appeal barred by time limitation - provision under Section 107 of the Act to accept the appeal after one month of prescribed period of limitation as provided under Section 107 (4) of Act or not - HELD THAT:- Admittedly, in this case the appeal preferred by the petitioner before the Appellate Authority was barred by limitation since, the same was filed beyond the time prescribed. The petitioner had, however, in response to the show cause notice had explained the delay in filing the appeal. It appears that condonation of delay was sought for on medical reasons. Although, the appellate authority did not disbelieve the medical certificate, however, had arrived at a conclusion since the petitioner could carry on business, there was no reason for the petitioner not to file the appeal within the prescribed period. Despite observing as such, the Appellate Authority, however, proceeded to dismiss the appeal by holding that there is no provision laid down under Section 107 of the said Act to accept an appeal after one month from the prescribed period of limitation.
The Appellate Authority had chosen not to question the medical certificate produced by the petitioner. Once, the Appellate Authority had accepted the medical certificate, there was nothing on record for the Appellate Authority to conclude since the petitioner could carry on business despite illness by submission of GSTR-1 and GSTR-3B in due time, the illness could not be a reason for the petitioner not to file the appeal in time - Since, on the disclosure made by the petitioner it is apparent that the petitioner was prevented by medical reasons from filing the aforesaid appeal in time, the Appellate Authority ought to have, by taking the same into consideration condoned the delay. The discretion exercised by the Appellate Authority in refusing to accept the explanation does not appear to be justifiable, rather arbitrary.
The discretion exercised by the Appellate Authority in refusing to accept the explanation does not appear to be justifiable, rather arbitrary. Having regard to the same, the delay in preferring the appeal should be and is accordingly condoned - the order passed in Form GST APL-02 dated 6th March, 2024 is set aside. The appeal is restored to its original file and number.
The writ petition is disposed of.
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2024 (5) TMI 1184
Condonation of delay in filing appeal - Dismissal of the appeal preferred under Section 107 of the West Bengal Goods and Services Tax Act, 2017 - appeal was barred by limitation but not accompanied by an application under Section 5 of the Limitation Act, 1963 - HELD THAT:- An identical issue had fell for consideration before the Hon’ble Division Bench of this Court in the case of S.K. CHAKRABORTY & SONS VERSUS UNION OF INDIA & ORS. [2023 (12) TMI 290 - CALCUTTA HIGH COURT]. The Division Bench of this Court, while considering the scope and ambit of Section 107 of the said Act and the applicability of Section 5 of the Limitation Act, 1963 on the basis of the provisions contained in Section 29(2) of the Limitation Act, and by placing reliance on the judgment delivered by the Hon’ble Supreme Court in the case of SUPERINTENDING ENGINEER/ DEHAR POWER HOUSE CIRCLE BHAKRA BEAS MANAGEMENT BOARD (PW) SLAPPER & ANOTHER VERSUS EXCISE AND TAXATION OFFICER, SUNDER NAGAR/ASSESSING AUTHORITY [2019 (11) TMI 6 - SUPREME COURT], had concluded that in absence of non obstante clause rendering Section 29(2) of the Limitation Act, 1963, non applicable and in absence of specific exclusion of Section 5 of the Limitation Act, 1963, it would be improper to read implied exclusion thereof.
Having regard to the above, the Appellate Authority is not denude of its power to condone the delay beyond one month from the prescribed period of limitation as provided for in Section 107(4) of the said Act.
It also appears that another Hon’ble Division Bench of this Court in the case of KAJAL DUTTA. VERSUS ASSISTANT COMMISSIONER OF STATE TAX, SURI CHARGE & ORS. [2023 (1) TMI 1097 - CALCUTTA HIGH COURT] had while considering the provisions of Section 107(4) of the said Act, held that the statute does not state that beyond the prescribed period of limitation, the Appellate Authority cannot exercise jurisdiction.
The observations made by the Appellate Authority that it can condone the delay, provided the same is presented within a period of one month from the prescribed period, cannot be sustained and the same is accordingly set aside - no relief can be granted in favour of the petitioner at this stage - Petition disposed off.
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2024 (5) TMI 1183
Denial of Input Tax Credit (ITC) - challenge to assessment order on the ground that the same is barred by limitation - power to extend the time limit - HELD THAT:- The order under sub-section (9) of Section 73 is to be issued by the proper officer within a period of three years from the due date for furnishing the annual returns for the financial year. An order passed beyond the period of three years in respect of the financial year from the due date of filing the annual return would become time-barred and without jurisdiction. Section 168A empowers the Government to extend the time limit in special circumstances for actions which could not be completed due to force majeure. This power is overriding power, and sub-section (1) of Section 168A has a non-obstante clause.
If there is force majeure as defined in Section 168A, the Government is empowered to extend the limitation period for taking actions which could not be completed or complied with due to force majeure. No one can deny that COVID-19 was a force majeure as it was a pandemic that caused large-scale human tragedy and suffering all over the world and paralyzed the world, including economic activities.
Extension of time limit - HELD THAT:- How much time could have been extended considering the pandemic is the discretion of the Executive, which has been taken based on the recommendation of the GST Council. It is not found that the notifications impugned in the writ petition in Exts. P7 and P8 are ultra vires the provisions of Section 168A of the CGST/SGST Act. The Government is well within the power to extend the limitation for completing the proceedings and taking action under Section 73 of the Act by issuing notification under Section 168A of the GST Act if there is force majeure. COVID-19 was a force majeure, and taking into account the various factors, the time limit has been extended. Therefore, there are no substance in the challenge to the said notifications, and the writ petition is dismissed to that extent.
As the Government itself has come out with Circular No. 183/15/2022-GST dated 27.12.2022 to deal with the difference in Input Tax Credit availed in Form GSTR-3B as compared to that detailed in Form GSTR-2A for the Financial Year 2017-18 and 2018-19, it is found that in the case of the petitioner also the benefit of the said Circular should be given and the assessment order to be passed afresh.
The matter is remanded back to the Assessing Authority to pass a fresh Assessment Order giving the benefit of Circular No. 183/15/2022-GST dated 27.12.2022 - Petition allowed by way of remand.
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2024 (5) TMI 1182
Violation of principles of natural justice - inadequate opportunity for hearing by appellate authority - denial of interim order - HELD THAT:- The appellate authority fixed the date of personal hearing on 29.05.2023 and admittedly the appellant did not attend the personal hearing and the order has been passed. Under normal circumstances, the court would have declined to interfere with the order - the appeal filed by the appellant was presented before the appellate authority on 25th May, 2022 and the appeal was taken up for hearing after one year and on the very first date, namely, 29.05.2023 the appeal has been disposed of.
Since there has been a delay of one year in taking up the appeal, the appellate authority could have granted one more opportunity to the appellant by issuing a fresh notice of hearing. Furthermore, none of the grounds raised by the appellant in the appeal petition which is about 38 pages have been considered or dealt with.
The appeal has to be heard out on merits and fresh orders have to be passed by the statutory appellate authority - The order passed by the appellate authority dated 29.05.2023 is set aside and the matter is remanded to the appellate authority for fresh consideration.
Petition allowed by way of remand.
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2024 (5) TMI 1181
Provision for warranty in excess of 2.14 percent of sales - assessee had not made the provision on a scientific basis - As decided by HC 2023 (4) TMI 1053 - KARNATAKA HIGH COURT] provisions made between A.Y. 2007-08 and 2017-18. Appellant is right in his submission that the total utilization for the corresponding A.Y.s 2008-09 to 2017-18 is 95.5% of the total provision. Therefore, as held in Rotork Case, 2009 (5) TMI 16 - Supreme Court the estimate made by assessee is reliable and robust and the orders passed by the AO and confirmed by CIT(A) and the Tribunal are unsustainable in law and these appeals by the assessee merit consideration
HELD THAT:- There is a delay of 225 days in filing the special leave petition. We are not satisfied with the explanation offered seeking condonation of delay in filing the special leave petition.
We also note that since identical matters have already been dismissed, we dismiss this special leave petition both on the ground of delay as well as on merits.
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2024 (5) TMI 1180
Restraint Order on the Locker - Verification of Revocation Order - Prayer seeking direction to the respondent-bank to remove the Restraint Order from the locker of the petitioners and grant access to their lawful assets, kept in locker - it was the objection of the bank that the petitioners had never shown or provided the official/original Revocation Order of the Income Tax Department
HELD THAT:- This Court notes that by order dated 07th October, 2022, statement of learned Standing Counsel for Income Tax has been recorded, wherein, the said Standing Counsel has stated, on instructions, that the Revocation Order dated 17th October, 2012 (wrongly recorded as 17th October, 2022 in the said order), was duly served on the Manager, Union Bank of India.
The authenticity of the aforesaid Revocation Order dated 17th October, 2012, as issued by the Income Tax Department thereby revoking the Restraint Order on the locker No. 211 maintained with Union Bank of India, 14-15, F-Block, Connaught Place, New Delhi-110001 in the name of Sh. Pradeep Garg and Smt. Meenu Garg, i.e., the petitioners herein, has already been confirmed by the Income Tax Department.
Considering the aforesaid, there is no reason or ground for continuation of the restraint over the said locker and not allowing the petitioners to operate the said locker. As Restraint Order with respect to the locker in question has already been revoked by the Income Tax Department, it is directed that the petitioners herein shall be granted access to the aforesaid locker.
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2024 (5) TMI 1179
Revision u/s 264 - Pr. CIT dismissed the application - Manner of passing of impugned order by PCIT J&K, Jammu - whether was in accordance with procedural fairness and rules of natural justice? - petitioner filed a petition u/s 264 as stated that no prior notice calling for information or attending hearing or notice of demand was ever received by him and put up an explanation with respect to the subject matter of said show cause notice - Principal Commissioner dismissed the petition on the grounds that the petitioner had nothing further to add beyond the petition.
HELD THAT:- This Court is of the opinion that the manner of passing of the impugned order by the responded No. 2 fell short of fairness of procedure. Firstly, in absence of the representation from the petitioner's end, the petition came to be disposed of without citing reason as to why the petitioner's reason for adjournment was not granted for putting the petitioner on caveat that on account of refusal of adjournment, the case was to be taken up for hearing on merits on the next date.
Even if the petitioner’s presence was not to be of any purpose in the estimate of the respondent No. 2-Pr. CIT for enabling adjudication of the revision petition on its merits, we find that the order impugned does not contain any reason whatsoever as to on what basis the respondent No. 2- Pr. CIT came to uphold the validity of the order of the Assessing Officer questioned by the petitioner in the revision petition, more particularly when from the report submitted by Assessing Officer before the respondent No. 2, the enlisted notices issued to the petitioner were for and at the address with which the petitioner claims to have no relation.
We find that even if on the merits of the case the petitioner may not succeed to evade the consequences as envisaged in terms of the communication dated 17.07.2017 of the Income Tax Officer ward 3(2), Srinagar, but still upon an opportunity of being heard in meeting the requirement of rules of natural justice would have stood well served taking the matter to its logical end.
Thus, we set aside the impugned order of the respondent No. 2-Principal Commissioner Income Tax, J&K Jammu and direct rehearing of the matter by the respondent No. 2-Principal Commissioner Income Tax, J&K Jammu. We direct the petitioner to present himself before the respondent No. 2-Pr. CIT on 2nd of November 2023.
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2024 (5) TMI 1178
Assessment u/s 153A - Addition u/s 68 - income from undisclosed sources - HELD THAT:- From examination of record in light of aforesaid rival contentions it is crystal clear that appellant / assessee Smt. Shrikanta Bajaj filed return for assessment year. Appellant / assessee is partner in M/s. RNB Leasing and Financial Services.
Consequent to search and seizure operations on 20.4.2017 key of Indian Overseas Bank Locker No. 111 in the name of Lalita Bajaj and the assessee i.e. Smt. Shrikanta Bajaj was found. On search of locker No. 111 dated 12.5.2017, nothing incriminating was found as is evident from punchnama and assessment order.
As decided in Lalita Bajaj and Namita Bajaj [2023 (10) TMI 557 - ITAT DELHI] in these case issue was of alleging the allotment of Shares by assessee company against share application money and share premium and the AO made addition u/s 68 by holding that the identity and creditworthiness of investor and genuineness of transactions could not be established by the share application and premium recipient assessee company.
But in the present case, the assessee has not received any share application money or premium from the investor but the impugned transaction in the present case pertains to sale of investment/shares by the assessee to the other entities and such transaction cannot be alleged as unexplained or bogus particularly when the Department has not disputed the investment in shares of RNB Infrastructure Pvt. Ltd. by the assessee during the earlier period of time i.e. in the A.Y. 2008-09 in the year of investment by the assessee. Therefore, benefit of case laws relied by CIT(A) having distinct and dissimilar facts and circumstances are not available for the Revenue in the present case - Ground of assessee on merits is allowed.
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2024 (5) TMI 1177
Taxability of creditors as unexplained/cessation of liability - AO found that certain creditors were actually loans/advances and not creditors - HELD THAT:- The liabilities of G.G.Telecrest Pvt. Ltd. and Uttam Strips Pvt. Ltd. have to be disclosed in the balance sheet of the appellant/assessee as loan/advances. It cannot be ruled out that there may not be some error in the grouping of these liabilities under the head ‘creditors’ instead of ‘loans and advances’ as these liabilities are not appearing under the head ‘loans and advances’ in the balance sheet of the appellant/ assessee. In view of the above, we are of the considered opinion that the liabilities of the above mentioned two parties; G.G.Telecrest Pvt. Ltd. and Uttam Strips Pvt. Ltd., aggregating Rs. 95,00,000/- require further investigations/verifications.
Therefore, in the interest of justice appellant/assessee deserves reasonable one more opportunity to make good the defects/shortcomings - we deem it appropriate set aside the issue of taxability of liabilities of G.G.Telecrest Pvt. Ltd. and Uttam Strips Pvt. Ltd.and remit the matter back to the file of the AO for de-nova consideration.'
In respect of creditors other than those mentioned above in para 10, the appellant/assessee did not file any details or confirmation either before the AO or CIT(A). we therefore, have no option except to upheld the addition for this.
Disallowance of commission expenses u/s 40(a)(ia) - Taxability of cash deposits in the bank account of the appellant/assessee - The appellant/assessee has failed to bring any material on the record to contradict the findings of the Ld. CIT(A) on these two issues. We, therefore, do not find fit to interfere in the findings of the CIT(A) in this regard.
Appeal of assessee is partly allowed.
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2024 (5) TMI 1176
TDS u/s 194A, 194H, or section 194J - surplus interest retained by Non-Banking Financial Companies (NBFCs] - Levy of tax u/s 201(1) and interest u/s 201(1A) - assessee opted for the first method, i.e. the premium in the form of consideration gets deferred as the assessee agreed to retain a lower rate of interest on its portion of the assigned loans and the balance of the contracted interest from the borrowers goes to the NBFCs - assessee is a bank established under the State Bank of India Act, 1955. -
Whether interest retained by the NBFCs on the pool of assets allotted to the assessee falls within the category of “interest” for the purpose of section 194A or within the category of “fees for professional/technical services” for the purpose of 194J of the Act or within the category of “commission/brokerage” for the purpose of 194H ? - HELD THAT:- TDS u/s 194A - In the present case, it also cannot be disputed that the borrowers have taken the loans from the NBFCs, which were subsequently purchased by the assessee by way of Direct Assignment, and on these loans, the borrowers are paying interest, which is getting deposited in ‘Collection and Payout Account’, which is the Escrow Account operated by the Assignee Representative and ultimately this interest is distributed amongst the NBFC and the assessee as per the tripartite agreement.
Therefore, from the aforesaid undisputed facts, it is sufficiently evident that the assessee has only purchased a part of the loan by making the upfront payment and allowing the originating NBFCs to retain part interest on such loan paid by the borrowers. In the present case, there is no material available on record to show that the assessee borrowed any funds or incurred any debt from the NBFC. Such being the facts of the present case, the question of payment or crediting of interest by the assessee in favour of NBFC does not arise. Therefore, in the absence of any funds borrowed or debt incurred by the assessee from the NBFC, we are of the considered view that the part interest allowed to be retained back with the originating NBFC cannot be said to be interest within the meaning of section 2(28A) of the Act. Further, it is pertinent to note that under section 194A of the Act, the payment must be in the nature of interest in order to make the payer responsible for deducting tax at the time of payment or credit of such income.
Though the payment by the borrower of the loan, in the present case, is in the nature of interest, however, when the same is allowed to be retained with the originating NBFC by the assessee under the tripartite agreement, the nature of the same is converted to a consideration for the purchase of 90% of the pool of assets. The nature of income in the hands of the recipient and the nature of expenditure of said sum by that person may not always be the same. Therefore, it is not necessary that what is received as interest is also interest when paid, particularly in the absence of any money borrowed or debt incurred.
Accordingly, we are of the considered view that there is no obligation on the assessee to deduct tax at source under section 194A.
TDS u/s 194H - As per the aforesaid definition, for a payment to be considered as “commission or brokerage”, the same must be received by a person acting on behalf of another person for services rendered. In the present case, no material has been brought on record to show that the loans advanced by the NBFC to the borrowers were on behalf of the assessee. Further, from the perusal of the Deed of Assignment of Loans, it is sufficiently evident that the loans already granted to the borrowers by the NBFC were assigned to the assessee. Insofar as various services rendered by the NBFC to the assessee, both parties have separately entered into a tripartite service agreement, which provides for payment of separate service fees in lieu of such services. Thus, in the present case, neither the assessee nor the Revenue has claimed that the NBFC has acted on behalf of the assessee. Since the NBFC is not acting as an agent of the assessee in respect of the loans advanced to the borrowers, therefore, we are of the considered view that no question arises of deduction of tax at source under section 194H of the Act, and accordingly the findings of the learned CIT(A) in this regard are set aside.
TDS u/s 194J - The principal amount of the loan given to the borrower is nothing but the direct cost to the NBFC, 90% of which was assigned to the assessee. Further, an independent commercial transaction between two independent parties cannot be on a cost-to-cost basis without any mark-up. Therefore, for selling the share of a loan, the consideration cannot be the same as the principal amount of the loan. Thus, we agree with the submissions of the assessee that in the present case, the assessee has opted to pay the consideration partially by way of an upfront payment equivalent to the principal amount of the loan assigned to it and partly by agreeing to earn a lower rate of interest on its portion of assigned loans and allowing the NBFC to retain the part interest received from the borrower. Accordingly, we find no merits in the findings of the learned CIT(A) that tax must be withheld under section 194J of the Act, and hence the same is set aside.
Levy of tax u/s 201(1) and interest u/s 201(1A) - NBFCs have already offered to tax in its return of income the interest earned on loans sold to the assessee and requisite documents as per first proviso to section 201(1) of the Act were also furnished by the assessee before the learned CIT(A). Therefore, tax under section 201(1) of the Act is in any case not leviable on the assessee. Further, the levy of interest under section 201(1A) of the Act is also not sustainable in view of our aforesaid findings. Decided in favour of assessee.
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2024 (5) TMI 1175
Unexplained cash credit u/s. 68 - assessee failed to explain nature and source of the cash deposits in the bank account - bank account statement treated as books of account - as submitted by AR that as it was a case of simplicitor cash deposits in the bank account that was jointly held by the assessee and her husband - as per assessee it has been sourced out of cash withdrawals/accumulated savings, therefore, no addition of any part of the said amount was called for in the hands of the assessee - HELD THAT:- As in the present case, the cash deposits are not in the nature of cash deposits appearing in the “books of account” of the assessee, therefore, we find substance in the claim of the Ld. AR that the addition of the said amount could not have been made u/s. 68 of the Act.
As the very basis for making the impugned addition by the A.O suffers from a jurisdictional defect as had been looked into in the case of CIT Vs. Bhaichand H. Gandhi [1982 (2) TMI 28 - BOMBAY HIGH COURT] thus we vacate the disallowance - Decided in favour of assessee.
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2024 (5) TMI 1174
CENVAT Credit - capital goods/inputs - various steel items namely, M.S. Rods, M.S. Channels, Beams, M.S. Plates, Bars, Joints, Beams, Angles, Flats and Flanges falling under Chapter 72 of the Central Excise Tariff Act, 1985 - invocation of extended period of limitation - HELD THAT:- The appellant has been able to show the usage of the said items in fabrication of their capital goods, without which no manufacturing activity can take place. The same is supported by the certificate issued by a Chartered Engineer - during the impugned period, the issue was in dispute as to whether an assessee is entitled to take CENVAT Credit on the above said steel items as inputs or capital goods - the extended period of limitation is not invokable in the facts and circumstances of the present case.
As the appellant has been able to establish that the items in question have been used in the fabrication of their capital goods, in these circumstances, the appellant has correctly availed the CENVAT Credit.
The impugned order is set aside - appeal allowed.
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2024 (5) TMI 1173
Time Limitation - submission of annual returns after the expiry of the prescribed time-limit - Validity of self-assessment u/s 35 of the Assam VAT Act, 2003 - Legality of re-assessment proceedings u/s 40 of the Assam VAT Act, 2003.
Timeliness of Submission of Tax Returns and Annual Returns - HELD THAT:- The monthly returns for the annual year 2009-2010 was not submitted within the 21st day of the succeeding month, in other words, it was not submitted within the time prescribed under 17 (1) of the said Rules, 2005, which is within next 21 days of the succeeding months. It is evident that the return for the month of April 2009 was submitted on 12.06.2009 which is after the expiry of the prescribed time. Similarly, in respect of other months for the year 2009-2010, the monthly returns were submitted after the expiry of the prescribed time - The revised returns were filed on 13.04.2011 i.e. after expiry of two months prescribed in Rule 17 (5) (a) of the said Rules, 2005 and as such the said revised returns were also not submitted within the prescribed time and therefore, no self-assessment can be deemed to have been completed under Section 35 of the said Act. Pertinent to mention that in the affidavit-in-opposition filed by the assessing authorities, there is no denial to the aforesaid statements made in paragraphs 4 and 5 of the writ petition. It is well settled that averments if not denied would amount to an admission of the facts.
The assessing authorities did not deny these facts, which are thus deemed admitted.
Validity of self-assessment u/s 35 of the Assam VAT Act, 2003 - Legality of re-assessment proceedings u/s 40 of the Assam VAT Act, 2003 - HELD THAT:- The assessment was initiated under Section 40 of the Act without completion of assessment under Sections 34, 35, 36 or 37 of the Act, 2003. Section 40 of the Act, 2003 dealing with turnover escaping assessment provides that for invoking the powers under Section 40 of the Act, a dealer must have been assessed under Section 34, 35, 36 or 37 of the Act, 2003 for any year or part thereof - Since in the facts of the instant case, no self assessment can be deemed under Section 35 of the Act, 2003 re-assessment under Section 40 of the said Act, 2003 could not have been made under the provisions of the said Act.
In order to re-assess under Section 40 of the Act, 2003, there has to be firstly an assessment in law. It is only after an assessment is made, the assessing authorities has jurisdiction to exercise powers of reassessment subject off course to the fulfillment of the other two conditions stipulated therein. The ‘existence of assessment’ is a condition precedent for making a reassessment under Section 40 of the Act, 2003 and if such condition precedent exist, the assessing authorities had no jurisdiction to make the reassessment. As such, without assessment under section 34, 35, 36 or 37 of the Act, 2003, the respondent authorities could not have resorted to the provisions of the reassessment stipulated under Section 40 of the said Act.
In the present case, there was no assessment under section 35 of the Act, 2003, made during the prescribed period. Therefore, no assessment can be deemed to have been made in law - the said order of re-assessment having been completed without any assessment made under section 35 of the Act, 2003, the order of reassessment dated 17.03.2018 is absolutely illegal and without jurisdiction - the very initiation of proceedings under section 40 of the Act, 2003 is absolutely illegal, without jurisdiction and not tenable in law.
The impugned Order of re-assessment dated 17.03.2018 and the Notice of Demand dated 17.03.2018 are set aside and quashed - Petition allowed.
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2024 (5) TMI 1172
Classification/Nature of company for taxation purposes - Classification and Tax Rates for Domestic and Foreign Companies - levy of income tax at the higher rate applicable to a foreign company or rate of tax applicable to a domestic company - DTAA between India Netherlands -
Whether appellant is a domestic company? - HELD THAT:- The word ‘domestic company’ has been defined in Section 2 (22A) of the Act, 1961 which has been reproduced above. As per definition, an Indian company or any other company fulfilling specified conditions, is a domestic company. The word “company” has been defined in Section 2 (17) of the Act, 1961 which means (i) an Indian Company, (ii) any body corporate incorporated by or under the laws of a country outside India. - Thus, the Appellant is a company falling under Clause (ii) of Section 2 (17) of the Act, 1961. As per the Act, 1961 there are two class of companies, namely –“Domestic Company” defined u/s 2 (22A) and “Company other than Domestic Company”. It is admitted case of the appellant that it is not a “Domestic Company” rather it is a “foreign company” i.e. “Company other than Domestic Company” as defined in Section 2 (23A) of the Act 1961. Thus, the appellant company is not a domestic company but it is company other than a domestic company.
Applicable rate of Income Tax And Classification of Companies for rate of Tax - The first category is “domestic company”. The second category is “Company other than a domestic Company”. Undisputedly the appellant’s company is not a domestic company. Therefore, the appellant’s company falls under the other class i.e. “a company other than a domestic company” as classified in paragraph E of the Finance Act. In ground no. (IV) of the Memorandum of Appeal (afore-quoted) the appellants have admitted themselves to be a foreign company i.e. “company other than a domestic company”. Thus, it is admitted case of the appellant that it is not a domestic company as it is neither an “Indian Company” nor “any other Company” as it has not made prescribed arrangement in respect of its income liable to income tax under the Income Tax Act for declaration and payment within India of the dividends including dividend on preference shares payable out of such income. The classification made in paragraph E of the First Part of the First Schedule to the Finance Act, has not been questioned by the appellants. The classification so made is a valid classification.
In Amalgamated Tea Estates Co. Ltd. v. State of Kerala [1974 (4) TMI 32 - SUPREME COURT] Constitution Bench of the Hon’ble Supreme Court considered the challenge to the validity of classification of a domestic company and of a foreign company for rate of tax under the Kerala Agricultural Income Tax Act and held that the classification of a domestic company and foreign company for rate of tax is valid.
Interpretation of Taxing Statue and Treaty - It is admitted case of the appellant that it is not a “Domestic Company” but “a Company other than a Domestic Company” Paragraph E of Part I of the First Schedule of the Finance Act, in clear terms, provides for separate rate of tax for company “other than a domestic company” and separate rate of tax for “domestic company,”. Therefore, there being no ambiguity in classification and rates of tax, the appellant is liable to tax at the rates prescribed for a company “other than a domestic company”. It is not the case of the appellant that it fall within the phrase “any other company ” used in Section 2 (22A) of the Act 1961 or in Clause (a) of Sub-section 12 of Section 2 of the Finance Act defining domestic company. Therefore, the appellant is liable to tax at the rate specified for a company other than a domestic company.
Whether Explanation to Section 90 of the Act, 1961 is in conflict with Article 24 (2) of the DTAA? - Article 24 (2) of the DTAA prevents from less favourable levy between two enterprises falling under one and the same class and not between one falling under one class and the other falling under another class. The phrase "shall not be less favourably levied" used in Article 24 (2) of the DTAA simply means that taxation on a company falling under "any other company" under Section 2 (22A) of the Act, 1961 shall not be less favourably levied than an" Indian company" which both fall under one and the same class i.e. Domestic Company under Section 2 (22A) of the Act, 1961 read with Section 2 (1), Section 2 (12) (a) and Paragraph "E' of Part I of the First Schedule of the Finance Act, which provisions existed even prior to the DTAA in question and the clarificatory retrospective insertion of the Explanation in Section 90 by the Finance Act, 2001. Thus, there is no conflict between the Explanation to Section 90 of the Act, 1961 and Article 24 (2) of the DTAA.
The rate of tax has been provided by the Finance Act which also defines “domestic company”. It classified companies in two categories for rate of tax, namely (I) domestic company and (II) a company other than a domestic company. Thus even without explanation appended to Section 90 of the Act 1961, the appellant company is liable to tax as a “company other than a domestic company” at the rate prescribed in paragraph E of Part I of the First Schedule to the Finance Act. The Explanation has merely clarified the existing position of law.
Thus explanation to Section 90 is not in conflict with the provision of DTAA and that there is no conflict between the provision of the DTAA and the Income Tax Act 1961 in regard to non-discrimination.
Effect of circular number 333 dated 02.04.1982 issued by CBDT and the letter of the CBDT dated 21.11.1945 - The aforesaid circular of the CBDT deals with the situation where there is a specific provision in the DTAA then that provision will prevail over the general provisions contained in the Income Tax Act, 1961. We find that there is no specific provision in the DTAA providing for rate of tax applicable to a “domestic company” or a “company other than domestic company” as defined under the Act, 1961 and as prescribed in and paragraph E of the First Part of the First Schedule to the Finance Act read with Section 2 (1) and Section 2 (12) (a) of the Finance Act.
The aforesaid circular states that the DTAA also provides that the laws in force in either country will continue to govern the assessment and taxation of income in the respective country except where provisions to the contrary have been made in the Agreement. We find that the DTAA in question including Article 24 (2) does not contain any provision contrary to the provisions of Section 2 (22A) and Section 4 of the Act 1961 and Section 2 (1), Section 2 (12) (a) of the Finance Act and rate of tax as provided in paragraph E of part one of the first schedule to the Finance Act. Therefore, circular no. 333 dated 02.04.1982 is of no help to the appellant.
So far as the letter dated 21.11.1994 issued by Joint Secretary and addressed to Chief Commissioner of Income Tax II Kolkata is concerned, we find that it was written in response to a D.O. letter of the Chief Commissioner. The said letter is a D.O. letter. It is not a circular issued in exercise of power conferred under Section 119 of the Income Tax Act, 1961. That apart the said letter is in conflict with plain and unambiguous provisions of the Act 1961 and the Finance Act which we have discussed above. That apart the opinion expressed in the aforesaid letter was also changed even before the Explanation was inserted. We also find ourselves in agreement with the reasons recorded by the ITAT in paragraph 59 of the impugned order. Accordingly we hold that the said letter cannot override the plain and unambiguous provision of the Act, 1961 and the Finance Act.
A taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed. Once, Parliament has legislated, the Court must first look at the legislation and construe the language employed in it. If the terms of the legislative enactment do not suffer from any ambiguity or lack of clarity they must be given effect to even if they do not carry out the treaty obligations. But the treaty or the Protocol or the convention becomes important if the meaning of the expressions used by the Parliament is not clear and can be construed in more than one way. Since the expressions used in the aforesaid provisions of the Act 1961 and the Finance Act are clear and capable of only one construction as discussed and there is no ambiguity or lack of clarity, therefore, the provision of the Act 1961 and the provision of the Finance Act, as discussed above, are bound to be given full effect. Accordingly it is held that the appellant is liable to tax at the rate applicable to a company other than a domestic company as provided in the Finance Act.
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2024 (5) TMI 1171
Rejection of application u/s 119(2)(b) - delay on the part of the petitioner in furnishing the Form 10B along with the Auditor’s report - Exemption u/s 12A - HELD THAT:- Admittedly the petitioner is an establishment which has got exemption under Section 12A of the Act. It is in operation for the last 25 years. There does not seem to be any default on the part of the petitioner for all these years for some reason for the Assessment Year 2018-19, Form 10B could not be submitted within the stipulated period and there was a delay of 161 days in filing of the same. Similarly, for the AY 2020-21 also, certain unavoidable circumstances, Form 10B could not be furnished within the stipulated period and there was a delay of 3 days in the submission of the same. For both the aforesaid years, the petitioner has submitted Form 10B and subsequently also moved an appropriate application under Section 119 (2)(b) of the Act seeking for condonation of the delay in the submission of the Form 10B.
The plain reading of Clause 5 of the said Circular in very categorical terms reflects that this CBDT had conferred/authorized Commissioners of Income Tax for entertaining the application under Section 119 (2)(b) of the act seeking condonation of delay in filing Form 10B, if the delay was less than 365 days. The reading of the aforesaid clause 5 also gives a clear indication that the said power stands conferred/authorized upon the Commissioners of Income Tax with a specific purpose of entering the applications u/s 119 (2)(b) of the act in a more liberal and pragmatic manner, provided a reasonable clause and plausible explanation has been provided by the assessee.
Keeping in view the aforesaid instructions of the CBDT, if now looking into the impugned order what is apparent is that the impugned order does not indicate anything in respect of the contents of the application u/s 119(2)(b) of the act filed by the petitioner seeking for condonation of delay. There is no discussion on the explanation so provided being provided in Column Nos. 14 and 15 of the said application u/s 119 (2)(b) of the act. Once when the assessee provides for an explanation, it is incumbent upon the authorities concerned to consider the explanation and give a specific finding whether the explanation so provided is satisfactory or whether the explanation provides reasonable cause which prevented the petitioner in filing Form 10B within the stipulated period of time.
Thus the order to be set aside, the delay on the part of the petitioner in submitting Form 10B is ordered to be condoned and the matter stands remitted back to the 1st respondent, who in turn is directed to pass appropriate orders on merits.
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