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Showing 401 to 420 of 1564 Records
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2022 (12) TMI 1164
Revision u/s 263 - assessees claimed deduction u/s.80P in respect of interest from cooperative banks and nationalized banks which got allowed by the AO - HELD THAT:- Insofar as the allowability of deduction u/s.8P(2)(a)(i) is concerned, we find that the Pune Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit [2019 (4) TMI 682 - ITAT PUNE] has decided the question of availability of deduction u/s 80P on interest income by noticing that the Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [2015 (8) TMI 1085 - ITAT PUNE] has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed in Tumkur Merchants Souharda Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] allowing deduction u/s. 80P on interest income and that of Mantola Cooperative Thrift Credit Society Ltd. [2014 (9) TMI 833 - DELHI HIGH COURT] not allowing deduction u/s.80P on interest income earned from banks. Both the Hon’ble High Courts took into consideration the ratio laid down in the case of Totgar’s Cooperative Sale Society Ltd. [2010 (2) TMI 3 - SUPREME COURT].
No direct judgment from the Hon’ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). The position continues to remain the same before this Tribunal also. We thus hold that no exception can be taken to the granting of deduction on interest income by the AO u/s 80P(2)(a)(i) of the Act.
Deduction u/s.80P(2)(d) of the Act, it is crystal clear from the language of the provision that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessees are also Co-operative societies registered under the Act and hence qualify for the grant of the deduction. Similar view has been taken by the Pune Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. [2022 (12) TMI 959 - ITAT PUNE]
We hold that the impugned orders questioning the grant of deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest income, cannot be sustained. Appeals are allowed.
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2022 (12) TMI 1163
Disallowance for bad debt - Allowable business loss - AO requires the assessee to explain the genuineness of claim of bad debt as required under the provision of 36(1)(iii) of the Act i.e. the amount claimed represents debt arising out of business transaction, the amount has been included in the computation of income and the amount has been written off in the books of accounts - HELD THAT:- It is the trite law that the nomenclatural given by the assessee for making a claim is not a decisive factor. The claim of the assessee whether allowable or disallowable has to be seen in the light of the provisions of the Act. Thus, we are of the view that no disallowance can be made for the claim made by the assessee which was wrongly classified as bad debts. As such, it was the duty of the authorities below to verify the nature of the claim based on the documents whether such bad debts can be classified as business loss and allowable under the provisions of section 28 or 37 of the Act. Though, the assessee before the authorities below has contended that the impugned claim of the assessee represents the business loss but we note that no one has verified the agreement filed by the assessee in support of its claim which is available on record. Thus we are of the view that the claim of the assessee needs to be re-verified at the level of the AO de-novo as per the provisions of law. Therefore, we hereby set aside the issue to the file of the AO for fresh adjudication. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.
TDS u/s 194J - Disallowances of production expenses - Addition u/s 40(a))(ia) - HELD THAT:- As coordinate bench of Hyderabad Tribunal in case of BBR Project (P.) Ltd [2020 (8) TMI 69 - ITAT HYDERABAD] where the bench set aside the issue to file of the AO for fresh adjudication with a direction to verify whether the assessee is an assessee in default under the provision of section 201(1) of the Act or not - In view of the above and in the interest of justice and fair play, we are inclined to restore the issue to the file of the AO for de novo assessment as per the provisions of law and in the light of the documents available on record. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.
Non-deduction of tax at source - Studio Renewal charges includes addition of new facilities such mike, sound system and lighting in recording studio in which no labour was included - HELD THAT:- we note that the assessee before the learned CIT(A) contended that legal expenses of Rs. 5 lakh and studio renewal expenses of Rs. 6.5 lakh include reimbursements of certain expenditure where the provisions of TDS are not applicable. The assessee in support of its contention has also filed necessary documentary evidence besides raising its contentions before the authorities below. However, the documents filed by the assessee have not been verified by the Authorities below. The learned AR for the assessee at the time of hearing also contended that recipients of the impugned amount are regular tax filing assessee and paying taxes on the income earned by them. Therefore, in such circumstances, the assessee should be provided with the benefit available under second proviso to section 40(a)(ia) of the Act. In this regard we find the coordinate bench of Hyderabad Tribunal in case of BBR Project (P.) Ltd [2020 (8) TMI 69 - ITAT HYDERABAD] where the bench set aside the issue to file of the AO for fresh adjudication with the direction to verify whether the assessee is an assessee in default under the provision of section 201(1).
Disallowances of cash payment - addition under the provision of section 40A(3) - AR for us contended that the payment made for the purchase of the capital assets exceeding the threshold limit provided under section 40A(3) of the Act cannot be made subject to the disallowance in pursuance to the circular issued by the CBDT bearing number 34 [F. No. 13A/92/69/-IT(A-II)] dated 05-03- 1970 - HELD THAT:- As the assessee has filed necessary documentary evidence besides raising its contentions before the authorities below to justify that provisions of section 40A(3) of the Act are not applicable. However, the documents filed by the assessee have not been verified by the AO during the assessment proceedings. Therefore, in the interest of justice and fair play, we are inclined to restore the issue to the file of the AO for de novo assessment as per the provisions of law and in the light of the documents available on record. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.
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2022 (12) TMI 1162
Revision u/s 263 - allowing of the deduction by the AO(s) u/s 80P is contrary to law - grant of deduction u/s.80P by the AO in respect of interest income earned from other credit cooperative societies or Nationalised banks led to the passing of erroneous assessment orders prejudicial to the interest of the Revenue - HELD THAT:- Grant of deduction u/s.80P by the Assessing Officer (AO) in respect of interest income earned from other credit cooperative societies or Nationalised banks led to the passing of erroneous assessment orders prejudicial to the interest of the Revenue - HELD THAT:- Pune Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit [2019 (4) TMI 682 - ITAT PUNE] has decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [2015 (8) TMI 1085 - ITAT PUNE] has allowed similar deduction.
No direct judgment from the Hon’ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd [2015 (2) TMI 995 - KARNATAKA HIGH COURT] The position continues to remain the same before this Tribunal also. We thus hold that no exception can be taken to the granting of deduction on interest income by the AO u/s 80P(2)(a)(i) of the Act.
Coming to the other cases involving deduction u/s.80P(2)(d) of the Act, it is crystal clear from the language of the provision that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessees are also Co-operative society registered under the Act and hence qualify for the grant of the deduction. Similar view has been taken by the Pune Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. [2022 (12) TMI 959 - ITAT PUNE].
We hold that the impugned orders questioning the deduction u/s.80P(2)(a)(i)/80P(2)(d) in respect of interest income, cannot be sustained. Appeal allowed.
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2022 (12) TMI 1161
Reopening of assessment u/s 147 - ITO Raipur jurisdiction over the case of the assessee - addition of bogus purchases - HELD THAT:- ITO-1(3), Raipur at the time of issuance of notice u/s.148 was not vested with any jurisdiction over the case of the assessee, which as per the Notification No.1/2014-15 dated 15.11.2014 remained with the ITO-1(1), Raipur, therefore, as the notice u/s.148 issued by the ITO-1(3), Raipur was nothing short of a notice issued by an A.O who lacked inherent jurisdiction, thus, the provisions of Sec. 124(3) could not have been triggered to fasten an obligation upon the assessee to call in question the jurisdiction of the said officer, i.e., ITO- 1(3), Raipur.
The reliance placed by the Ld. DR on the judgment of the Hon’ble High Court of Delhi in the case of Abhishek Jain Vs. ITO, Ward-55(1), New Delhi [2018 (6) TMI 211 - DELHI HIGH COURT] being distinguishable on facts would also not assist its case.
As the ITO-1(1), Raipur had framed the impugned assessment u/s.143(3) r.w.s. 147 on the basis of a notice u/s.148 of the Act, issued by the ITO-1(3), Raipur, i.e., an A.O who at the time of issuance of the aforesaid notice lacked inherent jurisdiction over the case of the assessee, therefore, the assessment so framed cannot be sustained and is liable to be quashed. Accordingly, quash the assessment framed by the ITO-1(1), Raipur vide his order passed u/s.143(3) r.w.s. 147 for want of valid assumption of jurisdiction on his part. Decided in favour of assessee.
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2022 (12) TMI 1160
Estimation of income - bogus purchases - assessee has made an alternate plea that when the purchases are held to be bogus and only certain percentage only to be disallowed - HELD THAT:- By relying on the decision of the Hon'ble Bombay High Court in the case of Pr. CIT v. M/s. Mohommad Haji Adam & Co [2019 (2) TMI 1632 - BOMBAY HIGH COURT] we are in agreement with the above submissions, the Coordinate Benches are disallowing only 12.5% of the total purchases as reasonable in these type of cases. We observe in the present case that assessee has already declared profit @ 9% (confirmed by AO) the net difference of 3.5% (12.5 - 9) should be considered for disallowance. Accordingly, we direct Assessing Officer to disallow @ 3.5% of the alleged bogus purchases. Appeal filed by the assessee is partly allowed.
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2022 (12) TMI 1159
Long term capital gain - sub-tenancy right was held for more than 3 years as required by section 2(29B) - assessee claimed to have surrendered such sub-tenancy right and received a sum as consideration vide Memorandum of Understanding (MOU) - AO held that the assessee was not having any kind of sub-tenancy right and the long-term capital gain declared in the return was just a managed capital gain to claim exemption u/s. 54F, accordingly, Ld. AO rejected the claim of long-term capital gain and assessed the income as income from other sources - HELD THAT:- MOU clearly provides complete details of Rs. 5,00,00,000/- paid by owners to all parties including Rs. 3,25,00,000/- paid to the assessee.
AR has also demonstrated that the assessee has received the sum of Rs. 3,25,00,000/- through banking channel in ICICI Bank.
AR has pointed out that the fact of filing reply by the owner, Shri Dipesh Khandelwal, in response to the notice u/s. 133(6) issued by Ld. AO, as recorded in the assessment-order is not very credible because the Ld. AO has neither supplied a copy of the reply to the assessee nor narrated the contents of reply in the assessment-order. Even during hearing before us, Ld. DR has not been able to rebut or defend this submission of Ld. AR.
We also find merit in the submission of Ld. AR that FMG is an existent-company and the Ld. AO could have made enquiry from FMG but the same was not made - revenue has allowed deduction of Rs. 5,00,00,000/- in the assessment of owner, Shri Dipesh Khandelwal, which proves, without saying anything more, that the revenue authorities have accepted the factum of receipt by assessee from the said owner. Lastly, we also find merit in the contention of Ld. AR that revenue authorities have doubted the receipt of Rs. 3,25,00,000/- in the case of this assessee only. But they have not taken any adverse view in the assessments of other co-tenants who have received remaining consideration of Rs. 1,75,00,000/-, out of total payment of Rs. 5,00,00,000 to all co-tenants. We agree to Ld. AR's submission that the authorities cannot reject transaction in the hands of assessee while accepting it in the hands of other co-tenants.
We are persuaded to hold that the assessee had a sub-tenancy right in the property and upon surrender thereof, the assessee received a sum which was rightly offered as long-term capital gain in terms of section 45(1), 48, 55(2) and 2(29B) of the Income-tax Act, 1961. AO was wrong in rejecting the claim of long-term capital gain and assessing the same as income from other sources. We do not find any infirmity in the order of Ld. CIT(A) who has, after mindful consideration, reversed the action of Ld. AO and allowed claim of assessee. Accordingly, we dismiss Ground No. 1 and 2 of the Revenue.
Exemption u/s. 54F - HELD THAT:- No strength in the findings of AO and the contentions raised by Ld. DR. After a careful consideration, we are in agreement with the submission of AR that the Ld. CIT(A) has carefully dealt with facts, figures, evidences and legal position at length and rightly concluded that the assessee was entitled to exemption u/s. 54F. We do not find any infirmity in the action of Ld. CIT(A). Therefore, we uphold his action and dismiss the Ground No. 3 of Revenue.
Addition on account of shares-transactions - HELD THAT:- The assessee has also filed a copy of Account with Aditya Birla Money Ltd. for the previous year 2014-15 relevant to the assessment-year 2015-16 to the lower authorities and the same is also placed in the Paper-Book, which is duly sealed and signed by broker and clearly demonstrates that no single transaction was done during the year by assessee and the opening balance B/F as on 01.04.2015 is carried forward as such as closing balance on 31.03.2015. Thus, the evidences placed by the assessee clearly demonstrate that no transaction had been done. During hearing, Ld. DR is not able to controvert these submissions of assessee. In this view of matter, we are inclined to agree with Ld. CIT(A) that the assessee has not done any transaction of shares as alleged by Ld. AO. Therefore, the Ld. CIT(A) has rightly deleted addition and we uphold his action. Ground No. 4 of the Revenue is thus dismissed.
Disallowance of interest expenditure u/s. 57(iii) - HELD THAT:- The assessee has filed evidences in the form of (i) Ledger A/c of Interest Expenditure which shows date-wise party-wise interest-payments; (ii) Ledger A/c of BEPL which shows the loans given to BEPL from time to time on which interest has been received; and also (iii) a detailed Statement showing a co-relation of the amounts borrowed from different persons and investment made in BEPL - By means of these clinching evidences on record, the assessee has sufficiently proved that the interest expenditure has been incurred to earn interest-receipt disclosed in the return. On test-check of these evidences, we are satisfied with the explanation given by the assessee. Therefore, the assessee deserves deduction of interest expenditure, which the Ld. AO has wrongly disallowed but the Ld. CIT(A) has rightly allowed. Accordingly, we dismiss Ground No. 5 of the Revenue as well.
Allowability of long-term capital loss from sale of shares - HELD THAT:- AO has not denied the authenticity of these statutory documents, but he had simply formed a view about bogus claim on the footing that the buyer is a relative of assessee and substantial portion of the consideration had been received after 2 years of sale. We observe that the company was a loss making company and the buyer was also sister of assessee, therefore there is a justification in the deferred receipt of consideration by the assessee.
We also agree with the observations of Ld. CIT(A) that even otherwise such trivial considerations should not be a basis to deny the transaction, which has a statutory backing, supported by statutory documents and acted upon by parties. We observe that the Ld. AO has treated the loss claimed by assessee as bogus on mere suspicion and assumption as against the various documentary evidences. It is an accepted law that suspicion and presumption, how so ever strong, cannot be a basis for drawing any conclusion. Therefore, considering the documentary evidences on record in support of assessee's claim which could not have been disputed by Ld. AO, we do not find any merit in the action of Ld. AO.
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2022 (12) TMI 1158
Expenses incurred during the intervening period between setting up and actual business - pre-operative expenses - deductibility of the expenditure incurred between set-up business and actual commencement of business, set off of such expenses against the interest income earned on FDs made out of idle funds or not - HELD THAT:- The admitted facts of the case are that in the immediate preceding previous year, the appellant company had sold its business, however, it was in the process of setting up a new business by identifying some distribution business. In the process, incurred certain revenue expenditure in the form of salary, etc other expenses.
AO as well as the ld. CIT(A) simply discussed the legal principle without adverting to the material facts on record and had not really decided whether the appellant company had set-up of business and ready to commence the business or not. On perusal of the Profit & Loss Account placed at Paper Book indicates that certain expenditure was incurred in connection with business which was sold were also debited to the Profit & Loss Account.
Therefore,AO as well as the ld. CIT(A) had failed to examine the nexus of the expenditure incurred and the new business stated to have been set-up. In these circumstances, we are of the considered opinion that the matter requires remission to the file of the AO to decide the issue in appeal with reference to the material on record whether the appellant company had set-up a new business or not.
In case, on examination of the material on record,AO formed an opinion that new business had been set-up, the expenditure incurred during the interval period of setting up of a new business and its commencement of business can be allowed as deduction and can be set-off against the interest income earned on fixed deposits by the assessee assessed under head “Income from the other sources”. Grounds of appeal raised by the assessee stands partly allowed for statistical purposes.
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2022 (12) TMI 1157
Levy of penalty u/s 271(1)(c) - Defective notice u/s 274 - non-strike off of the irrelevant part in the notice issued u/s.271(l)(c) - unexplained credits introduced in garb of share application money addition u/s 68 - as argued AO did not specify any limb or charge for which the notice was issued i.e. either for concealment of particulars of income or furnishing of inaccurate particulars of such income - HELD THAT:- Hon'ble Bombay High Court (Full Bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT]. while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s.271(l)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness.
Ratio of this full bench decision of the Hon'ble Bombay High Court (Goa) squarely applies to the facts of the assessee's case as the notice u/s. 274 r.w.s. 271(l)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued.
Thus we are of the opinion that, the penalty order passed u/s 271(1)(c) of the Act by the Assessing Officer and the order of the CIT(A) in confirming the penalty order are erroneous. Accordingly, the penalty order passed by the A.O for Assessment Year 2007-08 is hereby quashed. Accordingly, Assessee’s Grounds of Appeal are allowed.
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2022 (12) TMI 1156
Disallowance in respect of provision for leave encashment - HELD THAT:- We find that the issue with respect to applicability of provisions of Section 43B(f) is decided by the Hon’ble Supreme Court in the case of M/s. Exide Industries Ltd [2020 (4) TMI 792 - SUPREME COURT] in favour of the Revenue
Since the Hon’ble Supreme Court has decided the provisions of Section 43B(f) is constitutionally valid and operative for all purposes, therefore, respectfully following the Judgment of Hon’ble Supreme Court in the case of Union of India & & Others vs., M/s. Exide Industries Ltd., & Anr. (supra), we dismiss grounds of appeal No.1 of the assessee.
Disallowance of claim of sales tax incentive - HELD THAT:- Supreme Court in the case of Union of India vs., Kamlakshi Finance Corporation Ltd [1991 (9) TMI 72 - SUPREME COURT] has held that ‘ mere fact that the order of the appellate authority is not “acceptable” to the Department and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. We find that since the order of the Special Bench of the Tribunal is still holds the field and in absence of any contrary decision brought to our notice by the Ld. D.R, and the order of the Ld. CIT(A) in deleting the addition made by the A.O. is in accordance with law, we find no reason to interfere with the order of the Ld. CIT(A) on this issue and, therefore, we hold that the amount of incentive is not a revenue receipt, but, it is a capital receipt and, therefore, we direct the A.O. to delete the addition. The Revenue fails in its grounds of appeal Nos.1(i) to 1(iv) and, therefore, the grounds on this issue are dismissed.
Adding back the excise duty exemption - Capital receipt - After analyzing the Office Memorandum dated 14-06-2002 behind the grant of Incentive has held that Excise Duty refund granted with the object of creating avenues for Perpetual Employment, to eradicate the social problem of unemployment in the State by accelerated industrial development was a capital receipt. Further, the Departmental Appeal filed against the said High Court decision of Shree Balaii Alloys [2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] has also been dismissed by the Hon'ble Apex Court [2016 (4) TMI 1161 - SC ORDER] So, this issue has attained finality. Since we find no infirmity in the order of the Ld. CIT(A) and the Ld. D.R. failed to put forth any contrary decision, we confirm the order of the Ld. CIT(A) on this issue and dismiss the grounds of appeal no.2(i) to 2(v) of the Revenue.
Swap loss - loss on derivatives in the P/L account which includes mark to market loss in respect of the LIBOR hedging with ICICI Bank, Currency Swap Transaction with ICICI Bank and Currency Swap Transaction with Centurion Bank of Punjab [presently known as HDFC Bank] - AO disallowed the claim on the contention that the swap loss arose on account of conversion of foreign exchange on the balance sheet date and such conversion was basically a mark to market loss and not the actual loss & hence it was purely notional in nature - A.O. treated the swap loss arose on account of conversion of foreign exchange basically a mark to market loss and not the actual loss and hence, the A.O. disallowed the claim of loss on foreign exchange - CIT(A) has allowed the issue in favour of the assessee - HELD THAT:- We find that the Hon’ble Supreme Court in the case of CIT vs., Woodard Governor India Pvt. Ltd [2009 (4) TMI 4 - SUPREME COURT] has held that "loss" suffered by assessee on account of the exchange difference as on the date of the balance sheet is an item of allowable expenditure/s under section 37(1) and has taken consistent view in an another appeal in the case of ONGC Ltd. [2010 (3) TMI 81 - SUPREME COURT] Since the order of the Ld. CIT(A) is in accordance with settled legal position of law, we, therefore, find no infirmity in his and in absence of any contrary decision/ material brought on record by the Ld. D.R, we dismiss the ground of appeal no.3 of the Revenue.
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2022 (12) TMI 1155
Adjustment u/s 143(1) - Set off of brought forward long term capital loss - HELD THAT:- We find that, as evident from a copy of the income tax return for the assessment year 2010-11 that the assessee had duly filed the income tax return, for the assessment year 2010-11, well within the time permitted u/s. 139 (i) i.e. on 31st July 2011. In this view of the matter, the very foundation of impugned adjustment under section 143(1) is wholly unsustainable in law. We, therefore, vacate the impugned action of the AO to allow the set off of loss brought forward from the assessment year 2010-11. The assessee, accordingly, get the relief for set off of long term capital loss. Assessee appeal allowed.
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2022 (12) TMI 1154
Condonation of delay in filing appeal - rejection of appeal by resorting to the provisions Section 128 of the Customs Act, 1962 since according to learned Commissioner the appeal has been filed beyond the condonable period of 30 days as stipulated in section 128 ibid - HELD THAT:- Although the Appellant time and again requested the department for personal hearing, granting of refund etc. etc but in response to none of these communication the department replied that the Order-in- Original has already been passed. Since they have got the copy of the adjudicating order only on 06.03.2020 therefore they had time to file appeal before the learned Commissioner upto May, 2020 but since that was Covid time therefore vide Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 r/w Notification dated 30.09.2020 the time was got extended till 31.12.2020 and admittedly the appeal was filed by the appellant on 30.12.2020.
On a specific direction issued to the department by this Tribunal vide order dated 17.11.2022 to place on record the document as to when the Order-in-Original was sent and served on the appellant, learned Authorised Representative placed on record communication dated 2.11.2022 received by him from concerned Commissionerate (filed by the learned authorised representative on 25.11.2022) stating that the file concerning the appellant is not traceable in the section and hence no comments can be offered. Since the department has failed to prove/place on record anything contrary to the claim of the appellant, therefore I have left with no other option but to accept the version of the appellant which is well supported by evidence and seems to be true. As the date of dispatch of the order is not available with the department therefore the limitation will start running from the date when the same was received by the Appellant which is 06.03.2020 and after taking into account the Taxation Act, 2020 (supra) read with notification dated 30.09.2020 which extended the time till 31.12.2020 in all the cases due to covid pandemic, the appeal filed on 30.12.2020 was filed well within limitation before the learned Commissioner.
Since the appeal has not been decided on merits by the 1st Appellate Authority therefore the same is remanded to the learned Commissioner with a direction to decide the same on merits after following the principle of natural justice and providing sufficient opportunity of hearing.
Appeal allowed by way of remand.
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2022 (12) TMI 1153
Abuse of dominant position - scope of CCI’s (Respondent No.1) power and jurisdiction under S.26(1) of the Act, 2002vis-à-vis the scope of interference by High Court under Article 226 of Constitution of India - whether the order dated 03.10.2019 passed by Respondent No. 1 forming a prima facie opinion regarding existence of abuse of dominant position is liable to be set aside as similar reliefs were claimed by Respondent No.2 in W.P. No. 13298 of 2019 and the same is pending before this Court? - HELD THAT:- An order passed under S.26(1) of the Act, directing investigation by the Director General is an administrative order passed only to determine whether the allegations made by the informant under S.19 (1) of the Act, about possible violations of competition law are true. Once information is received under Section 19(1) of the Act, CCI, based on the material produced by the informant has to form a prima facie opinion regarding the possible competition law violations. It is relevant to note that while forming a prima facie opinion, CCI has to only determine if the allegations along with the material produced are taken to be true, will that result in breach of competition law. CCI cannot determine the legality or correctness of the allegations by going into the merits of the case. It only has to see whether the allegations, prima facie, constitute violation of competition law.
It is also relevant to note that the scope of interference of High Courts under Article 226 of the Constitution of India, in an order passed directing investigation under Section 26(1) is extremely limited. CCI and the authorities under the Act, 2002 are well equipped to conduct investigation and possess expertise in the said field. High Courts cannot interfere with such investigation unless there is an abuse of process and prima facie it appears that the investigation was marred by mala fides.
A same cause of action may have reliefs under different areas of law and the party aggrieved by the same can invoke both remedies. For instance, remedy for fraud is available under civil law which may include a claim of money and under criminal law the said fraud can be prosecuted under IPC. Similarly, a party may claim damages for defamation under tort law and also initiate criminal proceedings under S.499 of IPC. Therefore, it cannot be said that Respondent No. 2 could not have approached CCI with concerns of abuse of dominant position of Petitioner No. 1.
The other contentions raised by the Petitioners that CCI/Respondent No. 1 delineated the relevant market, the share of and participation of the parties in the downstream and upstream market erroneously cannot be decided at the preliminary stage when investigation is yet to be completed. The said grounds can be raised by the Petitioners at an appropriate stage if it is found that they are guilty of abusing their dominant position. At this stage when matter is yet to be investigated, this Court cannot consider disputed questions of facts.
The writ petition is dismissed.
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2022 (12) TMI 1152
Valuation of shares - Sick industrial unit - scheme of exit - Validity of order passed by the Tribunal asking an Independent Valuer be appointed forthwith from the list of approved valuers of IBBI by the Appellant Company - HELD THAT:- It is also not in dispute that one day before the exit offer, its promoters have purchased lot of shares from Bank of Maharashtra and similarly inter se purchase has been made during exit offer from specific persons by the promoters - The Tribunal has given lot of thrust on lower valuation of shares and it seems that it is even less than earning per share. A doubt has also arisen to the Tribunal why the Appellant company has not provided Annual Returns and Balance Sheet to the Petitioners for the years 2014-2018 as also the valuation report of the Appellant company.
The Respondent has sought the reliefs before the Tribunal comprising of 6 reliefs mainly and the Tribunal has granted only one relief i.e. appointing an independent valuer from the panel of valuers of IBBI in terms of Section 247 of the Act, the cost of which to be borne by the Appellant Company
We are not commenting at the moment what will be the valuation of shares but apparently it is difficult to perceive as to how the fair value can be lower than the earning per share - It is an incumbent duty to the Appellant company to disclose all material information to its shareholders disclosing thereon even the justification for the existing price offered by the Promoters which also seems to be missing in this case.
There are no inconformity in the order and the appeal deserves to be dismissed and is dismissed.
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2022 (12) TMI 1151
Protection and recognition of pledge created in favour of the Applicant under Share Pledge Agreement - appropriate directions to the Liquidator to not treat the pledge in favour of the Appellant as a preferential transaction during the pendency of the Appeal - HELD THAT:- The issue of attracting preferential transaction arising only after the Appellant has filed the claim. It was also brought to the notice by the Appellant that R1 carried out the auction despite knowing that the Appellant has lodged this claim in January, 2018 and has also accepted EMD money from a third party. The Appellant is suspecting that R1 has filed the application under Section 43 of the Code at a later stage being afterthought in order to save the illegal auction carried out by him.
All the problem has erupted from the fact that the Appellants have mentioned about the share pledge agreement of November, 2016 as an extension of earlier share pledge agreement dated 10.06.2014 wherein the substantial portion of shares have been pledged as contemplated by the Appellants.
It is also a matter of fact to be recorded that since 2017, Respondent No.1 was having the full knowledge of share pledge agreement of 2016 but he chooses to file Section 43 application after a delay of one year. This reflects, no doubt, that filing of petition under Section 43 of the Code alleging that Share Pledge Agreement dated November 2016 is at belated stage by the R1 to deny the Appellant of their status or rights as financial creditor.
Incidentally, impugned pledged largely satisfied all ingredients of Section 43 of the Code. The impugned order dated 29.10.2020 although passed by two separate orders but in concurring orders both the Ld. Members arrived at the conclusion that the impugned pledge is a preferential transaction covered under Section 43 of the Code. The approach of the Appellant to give the colour of pledge as in the ordinary course of business is no longer res integra as per the law laid down under the Code - reliance can be placed in the case of PROFESSIONAL FOR JAYPEE INFRATECH LIMITED VERSUS AXIS BANK LIMITED ETC. ETC. [2020 (2) TMI 1259 - SUPREME COURT].
This Pledge Agreement even of 2016 only reflects that the IVL/Appellant does not hold merit for the impugned pledge created during the ordinary course of business. Circumstantial evidence also suggests that there is no another pledge agreement dated 10.06.2014. Even the 2016 pledge agreement does not have backing a board resolution or registration which is a requirement for a listed company. No approval of RBI is available for 2016 pledge agreement. Hence, the Adjudicating Authority has rightly held in the impugned order dated 29.10.2020 that it is a preferential transaction covered under section 43 of the Code.
Appeal dismissed.
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2022 (12) TMI 1150
Validity of summons issued - money laundering - proceeds of crime - process envisaged by Section 50 of the PMLA is in nature of inquiry against the proceeds of crime or investigation in strict sense of the term for initiating prosecution - authorities under the PMLA are police officers or not - HELD THAT:- The record reflects that the sole prayer of the petitioner in the writ petition was to quash the summons dated 26th of July, 2022 and 12th of August, 2022. These summons were issued for the limited purpose seeking appearance of the petitioner before E.D. on the given date. The summon for appearing on 26th of July, 2022 contains the summon No. “PMLA/SUMMON/HIU2/2022/616” and the summon dated 12th of August, 2022 contains a different summon No. “PMLA/SUMMON/HIU2/2022/663”. These summons were issued in connection with F.No. ECIR/17/HUI/2020. The summons were in terms of Section 50(2) and (3) of PMLA related to powers of authorities regarding summons, production of documents and to give evidence etc. Sub-Section 2 of Section 50 empowers the specified officer to summon any person whose attendance is considered necessary to give evidence or to produce any records during the course of any investigation or proceeding under the Act.
There is no further direction to the writ petitioner by the appellant to appear. Hence, the impugned summons have been worked out and have lost their force now. As on date, there is nothing on record indicating that the writ petitioner is further required to appear before the appellant in terms of Section 50 of PMLA. Thus, nothing survives in the pending writ petition. In fact, by way of interim relief, learned Single Judge had granted the final relief to the writ petitioner. Therefore, the writ petition has now become infructuous for all practical purposes.
Nothing survives in the present writ petition pending before the learned Single Judge which has become infructuous on account of subsequent development - Appeal disposed off.
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2022 (12) TMI 1149
Violation of the principles of natural justice - service of SCN - challenge has been made on the ground that the show cause notice issued preceding the Order-in-Original as well as the notice for personal hearing, were not served upon the petitioner - HELD THAT:- There is no finding recorded by the first respondent that show cause notice was served on the petitioner or that the four letters intimating virtual personal hearing were served upon the petitioner. Mere issuance of show cause notice or letters of personal hearing to an assessee is not adequate. Assessing Officer is required to record a finding that notices were issued and served upon the assessee but despite service of notice the assessee did not come forward to contest the proceeding. It is thereafter that the Assessing Officer may proceed exparte. Such a finding is conspicuous by its absence in the impugned order.
Matter remanded back to the first respondent for a fresh decision. Since a copy of the show cause notice dated 24.12.2020 is now available, petitioner may submit its reply within 15 days from today - petition allowed by way of remand.
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2022 (12) TMI 1148
Prayer for recalling of Final Order - Non-consideration of documents - Small-Scale benefit - Bench was of the view that since there was no data, on record, about commission received during the preceding year i.e. Financial Year 2012-13 hence Small-Scale benefit cannot be granted for the Financial Year 2013-14 - HELD THAT:- It is perused that the impugned Final Order is an order which was dictated and pronounced in the open Court. Hence, as pointed out by ld. D.R. there was no occasion for affording an opportunity to the appellant - assessee to submit any document. From the record it is also perused that several letters were sent by the Department to the applicant – assessee prior to issue the Show Cause Notice requiring the assessee to provide information and the documents to satisfy that there is no evasion of service tax for rendering the taxable services during the Financial Year 2013-14 & 2014-15, but no document was ever provided nor any information was given by the appellant. Resultantly, the Show Cause Notice dated 18.10.2018 was served. It is also perused that even before the Original Adjudicating Authority the submission of the assessee in defence talks about the expenses incurred as reimbursement or the discount received from the principal i.e. M/s. Obsurge Biotech Ltd. against the early payment, but only for the Financial year 2013-14 and Financial Year 2014-15 there is no mention of any document for the Financial Year 2012-13. No additional document was ever provided to Commissioner (Appeals).
Most of the documents as annexed with the present application also are with respect to Financial Year 2013-14 and 2014-15. Though balance-sheet as on 31st March, 2013 has also been annexed but the fact remains is that the said document, admittedly, was provided on 12.04.2012, for the first time, whereas the order in hand was dictated and pronounced on 11.04.2022. Had it been provided at the time of dictation also the said statement could have been taken into consideration. Being a document which was never provided before any of the adjudicating authorities below there seems no reason otherwise to take this document on record.
These observed facts are sufficient for me to hold that such a document cannot be considered for recalling a Final Order. Otherwise also there is no provision which permits the Tribunal to recall its own order. The impugned recalling cannot even be called as the rectification of error apparent on record - Application dismissed.
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2022 (12) TMI 1147
Levy of service tax - Club or Association Service - Intellectual Property Rights Service - Transport of Goods by Road Service - Development and Supply of Contents Service.
Club or Association Service - appellant received contributions from its members which are relatable to various privileges which the members enjoy - HELD THAT:- In STATE OF WEST BENGAL & ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE & ORS. VERSUS M/S. RANCHI CLUB LTD. [2019 (10) TMI 160 - SUPREME COURT], the Supreme Court held that companies and co-operative societies which are registered under the respective Acts can be said to have been constituted under those laws and therefore, get excluded from the definition of club or association under section 65(25a) and consequently, any service rendered by them will not be exigible to service tax under section 65(105)(zzze) - In this case, it is undisputed that the appellant is registered as a trust under the Indian Trusts Act. Therefore, the ratio of Calcutta Club Ltd. squarely applies to this case. Hence, the demand under this head cannot be sustained.
Intellectual Property Rights Service - it is submitted that the demands under this head on the appellants pertain to the period 1.4.2007 to 31.3.2010 when “intellectual property rights service” was taxable but copyrights were specifically excluded from the purview of IPR by law - HELD THAT:- On perusal of the agreements in question, we find that the appellants gave the service recipients the right to print or telecast or make copies of the Yoga programmes which they produced. In one agreement, the programmes were also being translated into Russian and telecast to Russia and CIS countries (countries which were part of the former Soviet Union). Evidently, the appellants allowed their copyrighted materials to be used for a consideration. The demand of duty is under the head IPR services chargeable under section 65(105)(zzr) - an intellectual property service will be rendered if the IPR is either transferred temporarily or its use or enjoyment is permitted. The scope of the IPR in the service tax law specifically excludes copyrights. Therefore, the amounts earned under the agreements by the appellants are clearly excluded from the scope of the taxing statute for IPR service. The demands under this head cannot, therefore, be sustained.
Transport of goods by road service - amounts paid as freight invoking Rule 2(1) (d) of the Service Tax Rules under reverse charge - HELD THAT:- Charging sections of taxing statutes must be strictly interpreted. Section 65(50b) clearly defines goods transport agency as one who renders any service in relation to transportation of the goods and issues consignment notes. It is a well settled law that if no consignment notes are issued, the service provider is not covered by section 65(50b) and consequently, any services rendered by such a service provider are not exigible to service tax. Learned counsel for the appellants submits that no consignment notes were issued in their case. We find no evidence on record to the effect that consignment notes have been issued - the demand under this head is not sustainable and needs to be set aside.
Development and Supply of Content Service - amount received from M/s. Rajashri Media Pvt. Ltd. for grant of exclusive rights to all audio, visual, audio-visual and text materials of Divya Yog Mandir Trust - HELD THAT:- Evidently, as per the agreement between the appellant and Rajashri, the appellant provided material which was developed into audio and video content by the latter and it was also commercially exploited. Part of the Revenue earned was shared by Rajashri with the appellant. Thus, the relationship between the appellant and Rajashri is not one of service provider-service recipient but one of partners in a joint venture in which each contributed something to the project and shared the Revenue earned. In the absence of any service provider-service recipient relationship, there can be no service tax because service tax is chargeable on taxable services provided. There must be a service, it must be taxable, there must be a service provider and a service recipient and a consideration to levy service tax. There is no charge of service tax on sharing of revenues in any joint venture between two entities or persons.
Levy of penalties u/s 76, 77 and 78 of FA - HELD THAT:- We do not find any evidence to substantiate the elements required to levy penalty under section 78. Therefore, only Section 76 would apply. Except for small amounts of service tax under two heads, we have also found that the demands themselves are not sustainable. Therefore, we find this a fit case to invoke section 80 and set aside the penalties under section 76 and 77 - the impugned order needs to be set aside to the extent it levies service tax on the appellant under the heads Club and Association Service, Intellectual property Rights service, Transport of goods by road service, and Development and supply of content service. The demand under the heads Renting of immovable property service and Health club and Fitness service is upheld along with applicable interest. All penalties are set aside by invoking section 80 of the Finance Act, 1994.
Appeal allowed in part.
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2022 (12) TMI 1146
Levy of Service Tax - Banking and other Financial Services - charges paid by them in respect of their foreign currency transaction on reverse charge basis - HELD THAT:- It is noticed that the matter has been examined in detail in the case of M/S RAJ PETRO SPECIALITIES P LTD VERSUS C.C.E. & S.T. - SILVASA [2018 (8) TMI 1179 - CESTAT AHMEDABAD] where it was held that any bank charges paid by Indian Bank to the Foreign Banks even though in connection with import and export of the goods and the same was debited to the appellant, the service tax liability does not lie on the appellant.
In the instant case there are no allegation that any payment has been made directly by the appellant to the foreign bank. In this circumstances we find that no service tax can be demanded from the appellant.
Appeal allowed.
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2022 (12) TMI 1145
Levy of Service Tax - differential value in comparing Form 26AS/ITR statement and taxable value declared in the ST-3 returns for the year 2016-17 - time limitation - HELD THAT:- The admitted facts involved in the present case are that the Appellant had undertaken Government construction work, in the capacity of a sub-contractor, for the main contractor M/s. Shantilal B. Patel & Co. for all the three separate disputes involved in the present appeal. All remaining demand originally proposed, are already dropped by the Adjudicating authority himself. It is also an admitted fact, as also certified by the main contractor, that they neither paid any Service Tax in respect of all three service activities in dispute, nor any demand was raised against them in this regard as well.
The Appellant has mainly contended that they were under bonafide belief that no Service Tax was payable on the work in question, being exclusively Governmental construction and when the main contractor too had not paid any Service Tax thereon without any adverse view being taken by Service Tax department. The demand is mainly contested as being time-barred as such - Also if the Appellant was liable to pay Service Tax, back to back, even the main contractor would have also been liable to pay the same. Whatever Service Tax, if paid by the Appellant, would have been back to back availed as Cenvat Credit by the main contractor anyway.
Therefore without going into any other issues, including whether exemption for construction of affordable housing under MGY scheme is available irrespective of small portion of commercial construction involved as part of MGY scheme under the tender floated, we find that the issue on hand can otherwise be decided in the facts and circumstances of the present case, on account of demands being time-barred - no purposeful meaning will be served by remanding the matter back for re-examination of this, especially in light of the fact that the appeals are required to be allowed on account of demands being time-barred anyway.
Appeal allowed.
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