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Showing 421 to 440 of 1466 Records
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2023 (1) TMI 1046
CENVAT Credit - common input services used in taxable as well as exempt goods - whether the appellant is liable to pay 10% of the value of exempted goods when they have availed the cenvat credit on common input service used in the exempted and dutiable goods however, subsequently, the entire cenvat credit on common input service was reversed? - levy of personal penalty - suppression of facts or not - extended period of limitation - HELD THAT:- This issue has been considered in various judgements as cited by the appellant wherefrom we find that once the assessee has reversed the proportionate credit attributed to the exempted goods, no demand of 10% of the value of goods can be raised by the department. Reversal of proportionate credit is one of the option provided under Rule 6(3). Therefore, it is upto the assessee which option needs to be availed. The department cannot arbitrarily choose any particular option and impose on the assessee. In the present case as per the submission of the appellant, the entire credit of Rs. 22,18,585/- has been reversed on all the common input service used in or in relation to manufacture of dutiable and exempted goods.
The adjudicating authority straight away demanded 10% of the value of exempted goods. Therefore, he neither examined the reversal of cenvat credit made by the appellant nor even calculated the proportionate credit. The submission of the appellant also needs to be reconsidered whether the excess amount can be adjusted against the interest.
Personal penalty - HELD THAT:- Firstly the appellant company has reversed the credit accordingly, the demand is not prima facie sustainable. Consequently, since the issue relates to the interpretation of Rule 6 of Cenvat Credit Rules, 2004, malafide intention of the present employee with the appellant cannot be attributed. Therefore, considering the facts of the present case, the personal penalty imposed on the appellant is not sustainable. Hence the same is set aside.
Appeal allowed in part and part matter on remand.
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2023 (1) TMI 1045
Clandestine clearance - Clearance of sugar in excess to the quota allowed to them and on this excess clearances, parallel invoices were issued whereas no duty was paid on the parallel invoices - levy of penalty under Rule 26 for the charge of abatement in evasion of duty by the company - HELD THAT:- The fact of clandestine removal done by the company M/s Shree Sardar Co-operative Sugar Industries Limited is not under dispute as the company has issued parallel invoices on which no duty was paid. The transaction were also not booked properly in the books of accounts. Against the said parallel invoices, the company also received the payment which intentionally not shown in the sales account but shown as deposit against the respective customers, therefore, it clearly transpires that the company and its board under systematic modus operandi, carried out the clandestine removal of the excisable goods - As per the facts of this case, the entire modus operandi can only be done by the board of the company which includes all the directors, it is beyond imagination that such a systematic act of clandestine removal and in proper accounting of the payment in the books as deposit can be done without the knowledge of the Directors of the company. Such type of act cannot be accepted from the employee of the company - Such type of act cannot be accepted from the employee of the company. It is also observed that the employee in their statement clearly stated that for the entire act, information is available with Shri Narendra C Solanki.
Penalty under Rule 26 is decided on the basis of the fact of each case depending on the role of the person which varies from case to case. Therefore, considering the fact of the present case, the judgments are not applicable. Accordingly, I do not find any infirmity in the impugned order imposing penalty on the present appellants.
Appeal dismissed.
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2023 (1) TMI 1044
Reversal of CENVAT Credit - seeking permission to retake credit of wrongly reversed amount - case of Revenue is that the amount was correctly reversed under Rule 6 (3) of CCR as the option once exercised to reverse amount in terms of Rule 6 cannot be changed during the financial year - HELD THAT:- The fact is not under dispute that the appellant’s products namely, ‘Colour Positive Unexposed Cinematographic Film’ became exempted vide notification No. 33/2011-CE dated 25.06.2011. In case of goods became exempted for the purpose of cenvat, the procedure prescribed under Rule 11(3) need to be followed - From the provision of said section, it is clear that in case of any dutiable goods became exempted, the assessee is required to reverse the cenvat credit in respect of inputs lying in stock or in process or is contained in the final product as of date of opting for the exemption notification. In terms of above specific provision, the appellant is required to reverse the credit attributed to inputs as such, in process, contained in finished gods, therefore, the appellant have mistakenly reversed 5% in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004.
As per the specific provision particularly in a case that the goods which were earlier dutiable and at interim stage became exempted, the provision which predominantly apply is Rule 11(3) of Cenvat Credit Rules, 2004. According to which the appellant is required to reverse the cenvat credit attributed to the input, in process and/ or contained in finished goods. The appellant have made good even though at a later stage by reversing the amount of Rs. 5,40,069/- therefore, the reversal of 5% made by the appellant is an excess reversal which need to be recredit/ refunded to the appellant.
In the present case, the fact is different inasmuch as the dutiable goods became exempted for which Rule 11(3) is applicable, therefore, the Circular in the peculiar facts of the present case is not applicable. Moreover, in catena of decision, it was held that giving options for availing a particular option is procedural requirement and on failure of the same, the assessee cannot be deprived of choosing any of the option available in Rule 6(3) and one of the option is reversal of proportionate credit - the appellant’s excess reversal of Rs. 3,24,664/- required to be refunded/re-credit.
The appellant is entitled for re-credit/ refund of Rs. 3,24,664/- and interest thereupon, if any, as per law - Appeal allowed.
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2023 (1) TMI 1043
Cenvat Credit - Duty paying documents - Disallowance of part of CENVAT credit availed by the appellant on incurring of transportation charges paid to Indian Railways - HELD THAT:- The appellant has led sufficient evidence with regard to the cenvat credit under dispute, that they have received the certified copy of RR in question given by the Railways and on the body of the RR, amount of service tax and cess is duly reflected. Further, it is found that the period under dispute is before August, 2014 when the Government issued notification to take care of the difficulty faced by the assessee, in view of the fact that Railways are issuing only a single copy of RR, which was deposited with the Railway at the time of delivery of the goods. Thus, during the relevant period, the practice was that the assessee retained one Xerox copy which was certified by the Railway staff.
The benefit of cenvat credit under dispute is allowed - appeal allowed.
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2023 (1) TMI 1042
Rejection of refund claim - time limitation - rejection on the ground that the same has been filed after one year from the relevant date i.e. date of the final order of this Tribunal and accordingly, held that the claim is barred by limitation under Section 11B of the Central Excise Act - unjust enrichment - HELD THAT:- The Court Below has erred in rejecting the refund claim on ground of limitation, as evidently, the court below has failed to take notice of the transitory provisions under the CGST Act.
The refund claim is not barred by limitation. Accordingly, this appeal is allowed and the impunged order is set aside - it is further directed that the Adjudicating Authority to grant the refund within 45 days from the date of receipt of this order along with interest under Section 35 FF, @ 12% p.a. - appeal allowed.
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2023 (1) TMI 1041
Condonation of delay of 163 days in filing revision - It is submitted that state entities are on separate footing from an individual and ample leeway is required to be granted to state entities since it involves betting at various stages - HELD THAT:- The delay in filing revision has been considered by this Court in COMMISSIONER COMMERCIAL TAX U.P. LKO. VERSUS M/S R.C. AND SONS RAKABGANJ LUCKNOW [2022 (9) TMI 533 - ALLAHABAD HIGH COURT], where the delay of 163 days was sought to be explained on the basis of the casual and lethargic attitude of the officials which prevails in the Department, on the part of the Officers concerned.
From a perusal of the affidavit filed in support of application, it is apparent that no explanation whatsoever has been given from 31st August, 2010 till 21st June, 2010. Limitation period for filing revision against order dated 18th August, 2010 was 90 days and therefore revisionist has miserably failed afford any explanation for delay of two years in filing the revision. All these facts indicate the casual and cavalier attitude on the part of the department in filing of the revision belatedly, rather, as observed by the Apex Court in the case of Central Tibetan Schools [2021 (2) TMI 1214 - SUPREME COURT] other than the lethargy and incompetence of the revisionist, there is nothing which has been brought on record to explain the delay.
The revision itself is dismissed.
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2023 (1) TMI 1040
Maintainability of petition - availability of alternative remedy - common argument of the petitioners is that Section 19(2)(ii) of the TNVAT Act permits the availment of ITC on goods purchased as ‘inputs’ in the manufacture or processing of goods in the State - HELD THAT:- All the impugned orders comprise orders of assessment, that are amenable to statutory appeal, and in one case an appellate order as well and hence, a preliminary submission has been raised assailing the very maintainability of these Writ Petitions - the question raised in these Writ Petitions revolves around an interpretation of the statutory provisions, specifically touching upon the eligibility or otherwise to ITC. The facts are undisputed. The authorities have, including the appellate authority, adopted the categoric view that the petitioners are not entitled to ITC in a situation where they have merely manufactured/purchased and consumed, an exempt product, though admittedly, such exempt product is not sold as an independent commodity, barring in one case.
The authorities, as revealed by the submissions of the Revenue and the stand taken in the impugned orders, have revealed their propensity to adopt a view that bypasses the spirit of the statutory provisions and scheme of the Act. The writ petitions are thus held to be maintainable.
Reversal of ITC on furnace oil used as fuel - HELD THAT:- Section 19(2) permits grant of ITC on any goods purchased and used as input in the manufacturing or processing of goods in the State or used as capital goods in the manufacture of taxable goods. Section 19(5)(a) denies ITC on the turnover from sale of exempt products. The entitlement to ITC must thus be seen in the context of, and decided, bearing note, not just of the letter of the law but the purpose for which the benefit was intended in the first place.
Whether ITC on fuel purchased as an input for use in power generation came to be considered by several Courts.
In the case of Saurashtra Calcine Bauxite [1992 (9) TMI 314 - GUJARAT HIGH COURT] the statutory provision considered was Section 5A of the Gujarat Sales Tax Act, 1969. The Court considered the import of its earlier judgments in the cases of J.K.Cotton Spinning & Weaving Mills Co. Ltd. V. The Sales Tax Officer, Kanpur and another [1964 (10) TMI 2 - SUPREME COURT] and Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam V. Thomas Stephen & Co. Ltd. [1988 (3) TMI 59 - SUPREME COURT] - The question that arose in these two cases was whether the furnace oil used must be regarded as a mere fuel and not as processing material. On an overall consideration of the matter, the Court held in favour of the assessee concluding that the authorities were not justified in taking a view that furnace oil is used only as fuel and not as a processing material within the ambit of Rule 42A of the Gujarat Sales Tax Rules. There is no dispute in the present cases, either by way of pleading or argument that the fuels used do not constitute industrial input.
In the present case, there is no dispute whatsoever that input fuel/electricity generated, has only been used to aid the process of manufacture. Except to a small extent in the case of SKML, neither the input fuel nor electricity generated, have been sold as an independent commodity. In that exceptional case, the commodity has suffered the rigour of taxation per regular application of the Act.
The Court rejected the case of the revenue holding that the assessee was eligible to the exemption in terms of clause (a) of Section 5A, in light of the admitted position that the shells purchased had been ‘consumed in the manufacture of other goods’.
Petition allowed.
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2023 (1) TMI 1039
Wealth tax assessment - "assets" within the meaning of Section 2(ea) of the Wealth Tax Act - assessee submitted that the land at Sakarda which is an agricultural land, hence not an asset within the meaning of explanation (1)(b)(ii) to Section 2(ea) of the Wealth Tax Act - AO held that the land was situated within the distance of 2-3 k.m. from the municipal limits of Vadodara and the assessee failed to establish the said land was used for agricultural purpose and therefore added as an asset for Wealth Tax purpose - HELD THAT:- The findings of the Ld. CIT(A) in the penalty proceedings that the land at Sakarda is treated as business asset not liable to Wealth Tax. Similarly, the land at Kapurai wherein the assessee is the Power of Attorney holder and agreement to sell the above land to third party. Thus the assessee is not the owner of the land at Kapurai and the same is treated as business activity of the assessee, which is not an asset u/s. 2(ea) of the Wealth Tax Act. The Ld. D.R. appearing for the Revenue could not able to inform, whether this penalty order is also a subject matter of appeal before this Tribunal. Thus the findings made by the Ld. CIT(A) in penalty proceedings has attained finality.
Addition made on the land at Sakarda and land at Kapurai are not an “asset” within the meaning of Section 2(ea) of the Wealth Tax Act. Therefore the additions made by the A.O. are hereby deleted. Thus the grounds raised by the Assessee is hereby allowed.
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2023 (1) TMI 1038
Addition of wealth of the assessee on account of immovable property - valuation of property - value as per the provisions of wealth tax Act or the value of the property declared in the income tax return - As submitted that the value of the property in dispute has to be determined in the manner laid down in part B of schedule III of the Wealth Tax Act - whether the property for the purpose of wealth tax has to be valued as per the provisions of wealth tax Act or the value of the property declared in the income tax return can be adopted for the purpose of the wealth tax? - HELD THAT:- As no ambiguity to the fact that the assessee has furnished the necessary details before the AO during the assessment proceedings. However, the AO without pointing out any defect in the details furnished by the assessee has adopted the value of the bungalow in dispute declared in the balance sheet filed in the income tax return.
We note that the provisions of section 7 of the Wealth Tax Act is a substantive procedure as laid down in the case Commissioner of Wealth Tax Vs Shravan Kumar Swarup & Sons [1994 (9) TMI 2 - SUPREME COURT]
No ambiguity to the fact that the value of the property has to be determined in accordance to the method prescribed under the Wealth Tax Act and without making any reference to the valuation done for any other purpose under any other Act. In our humble understanding, the case laws referred by the learned Commissioner of Wealth Tax (Appeals) in his order in the case of K.E.M.I Kwaja Mohideen V. Income Tax Officer Ward I(1) Nayapattinam [2019 (7) TMI 1442 - MADRAS HIGH COURT] is not applicable in the given facts and circumstances for the reasons as discussed above.
As such the issue before The Hon’ble High Court of Madras was with regard to computation of capital gain under section 48 of the Income Tax whereas the issue before us is related the valuation of property for the purpose of wealth tax.
Allahabad High Court in the case of CIT vs. Padampat Singhania [2016 (11) TMI 708 - ALLAHABAD HIGH COURT] has held that the value asset/property is govern by section 7 of wealth tax Act read with Schedule –III of Wealth tax Act
We are of the opinion that the valuation of the bungalow in dispute has to be done as per the provisions specified under the Wealth Tax Act. Thus, the value declared under the income tax Act of the bungalow in dispute cannot be adopted for the purpose of the Wealth Tax Act. Accordingly, we set aside the finding of the learned Commissioner of Wealth Tax (Appeals) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed.
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2023 (1) TMI 1037
Exigibility of 'Urban Land' to wealth tax - wealth Tax Officer considering the property situated at Radha Realtors, which was under construction, as asset within the meaning of section 2(ea) of the Wealth Tax Act. HELD THAT:- As assessee fairly conceded that the ground is decided against the assessee by the decision of the Hon'ble Supreme Court in the case of Giridhar G.Yadalam v. CWT . [2016 (1) TMI 826 - SUPREME COURT] Accordingly, the ground of appeal No.1 raised by the assessee is dismissed.
Taxability of the entire land for the purpose of wealth tax - HELD THAT:- We find the AO in the instant case valued the entire land of 1 Acre.03 guntas at Rs.1,40,02,927/- as the value of the asset for the year under consideration. It is the submission of assessee that in view of the decision in the case of Potla Nageswara Rao [2014 (8) TMI 636 - ANDHRA PRADESH HIGH COURT] for the purpose of arriving at the value of the land in question, the land that was transferred pursuant to the development agreement cannot be taken into consideration in the hands of the assessee as there is a transfer within the meaning of section 2(47) r.w.s. 45 of the Act and only the value of the land that has been retained by the assessee of 1067 sq. yards valued at Rs.29,73,920/- can be considered for the purpose of net wealth.
Since the lower authorities have not considered the applicability of the decision of the Hon'ble jurisdictional High Court cited(Supra), therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to adjudicate the issue afresh regarding the value of the land in question that has been retained by the assessee and the portion of the land that has been given to the Developers as per the Jt. Development Agreement. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee
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2023 (1) TMI 1036
Vacation of order restraining the transfer, selling or alienating of 11 properties purchased by a consortium of six land-owning companies - HELD THAT:- While passing an order of injunction, the Courts are required to be guided by the principles of prima facie case, balance of convenience and irreparable injury. We find that, assuming for a moment that the respondent Nos. 1 and 2 along with the other claimants have a claim of around Rs.31 crores, the entire project in an area of 115 acres cannot be stalled. If the Division Bench of the High Court found that, there was a prima facie case in favour of the respondent Nos. 1 and 2, they could have passed an appropriate order to protect the interests of the said respondents rather than stalling the entire project.
It is further to be noted that the audit report dated 16th January 2023 of Ellahi Goel & Co., Chartered Accountants would reveal that an amount of Rs.66.18 crores has been received by A.R. Developers Private Limited as sale consideration of shares of AERENS ENTERTAINMENT ZONE LIMITED from Mondon Investments Ltd. It is further to be noted that part of the amount received by A.R. Developers Private Limited has been used to pay Rs.52.76 crores to the consortium of six land-owning companies as “Advance against Future Projects”.
A blanket order directing maintenance of status quo in respect of the all 11 properties admeasuring 115 acres is not justified. If such an order is allowed to continue, it will cause irreparable injury to the appellant and the respondent No.4 inasmuch as the entire development would be stalled - Appeal allowed in part.
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2023 (1) TMI 1035
Misuse of political position by the Accused / MLA / Minister - acquiring disproportionate assets - Criminal conspiracy - misappropriation - criminal breach of trust - cheating forgery fraudulent execution of deed of transfer containing false statement of consideration amount - acquiring assets disproportionate to known legal source of income by Anosh Ekka - acquisition of lands in violation of C.N.T. Act in the name of his wife Smt Menon Ujjana Ekka - applicability of presumption under Section 20 relating to Section 13(1)(e) of the P.C. Act.
Assets - HELD THAT:- The evidence of assets acquired during the check period is not under challenge, nor in the name of which they have been acquired. The valuation of house has been disputed. There is no room to dispute the valuation of the land and flat purchased by registered sale deed or the vehicles and arms. Learned trial Court has given sufficient reasons for accepting the valuation report. The balance as standing in the bank accounts has also not been denied at any stage.
Income - HELD THAT:- There was sudden surge of the assets in the name of accused Anosh Ekka and his family members after he became minister in the State of Jharkhand. The accused has failed to account for acquisition of the assets which were disproportionate to his known source of income. Prosecution has thus proved the charge under Sections 13(2) r/13(1)(e) of the PC Act against the accused Anosh Ekka.
As far as the complicity of the other accused persons is concerned, as discussed above there is definite and clinching evidence that assets were acquired in the name of the co-accused persons namely Menon Ekka, Jaykant Bara and Deepak Lakra (appellants in Criminal appeal no.328) and Gidyon Ekka, Roshan Minz and Ibrahim Ekka (appellants in Criminal appeal no.327) . These evidence unerringly point to the active role of the appellant/accused persons in abetting the principal accused in acquiring disproportionate assets by the principal accused.
A man is presumed to know the natural consequence of his act. To “aid” and “abet” means to help, assist, or facilitate the commission of a crime, or to promote the accomplishment thereof, or to help in advancing or bringing it about. The word “abet” includes knowledge of the wrongful purpose of the perpetrator and counsel and encouragement in the crime. It is to be born in mind that it is not necessary that an instigation should be only ‘words’ and may not be conduct - In the present case from the evidence of purchase of plots of land, flats, and vehicles in their name without any other lawful source of income during the check period are evidence to show that the appellants namely Menon Ekka (wife of Anosh Ekka), Jaykant Bara, Deepak Lakra and Gidyon Ekka, Roshan Minz and Ibrahim Ekka (brother and nephew of Anosh Ekka) of Criminal appeal 328 and 327 entered into a conspiracy, aided by their active role in commission of the offence of acquisition of disproportionate property. Judgment of conviction of these accused persons on the basis of Section 109 of the IPC for engaging in criminal conspiracy with the principal accused Anosh Ekka and aiding him in acquiring the disproportionate assets by different contrivances punishable under Section 13 (1)(e) of the PC Act is affirmed.
Sentence - HELD THAT:- Under Section 13(2) of the PC Act,1988, before coming into force of 2014 amendment, the minimum sentence of imprisonment was one year and the maximum was seven years and the convict shall also be liable for fine. Further, Section 16 the Act of 1988 provides that where a sentence of fine is imposed the Court shall take into consideration the amount or value of property, if any, which the accused person has obtained or the pecuniary resources the accused person is unable to account for satisfactorily. Considering the crime test, criminal test and comparative proportionality test laid down Hon’ble the Supreme Court, the sentence of imprisonment and fine imposed to the appellant Anosh Ekka and Menon Ekka does not require any interference by this Court and is accordingly affirmed.
The argument questioning the power of the trial Court to order confiscation under Section 452 Cr.P.C. does not merit consideration in view of the law settled by Hon’ble the Supreme Court in State of Karnataka v. J. Jayalalitha, (2017) 6 SCC 263 at para 565, wherein it has been held that in the absence of any provision in the Prevention of Corruption Act, excluding its operations to effect confiscation of the property involved in any offence thereunder the trial Court had power of confiscation under Section 452 of the Cr.P.C. Disproportionate assets were acquired by the accused person by commission of offence under the Prevention of Corruption Act, and there are no infirmity in the order of confiscation of the disproportionate asset by the learned Court below.
The Judgments of conviction and sentence against Anosh Ekka and Smt Menon Ekka is affirmed. With regard to other appellant accused namely Jaykant Bara and Deepak Lakra and Gidyon Ekka, Roshan Minz and Ibrahim Ekka the Judgment of conviction is affirmed with modification of sentence.
Appeal dismissed.
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2023 (1) TMI 1034
Reopening of assessment u/s 147 - allocation of costs and the characterization thereafter has been deliberately camouflaged leading to a disclosure which is neither full nor true - characterization of the expenses to determine whether there has been a claim of ineligible pre-operative capital expenditures in respect of the years prior to 2015-16, when the Vizag unit of the petitioner commenced commercial production - HELD THAT:- Details in regard to the expenditures incurred in connection with the Vizag segment and the manner of characterization of the same have been provided before the officer and in my view, the assessee has made a full disclosure of primary as well as secondary materials before both the Assessing and the Transfer Pricing Officers.
There are instances where re-assessments are initiated based on information obtained from different units/sources with the Income Tax Department including the Criminal Investigation Department or All India Information. Queries may have been raised by those Departments and material may have been placed by assessee for their consideration.
In such cases a probable view is that such materials as produced before those Departments have not come into the notice of the Assessing Authority for the determination of full and true disclosure. However, in this case all materials have admittedly been placed before the TPO who is integral to the conduct of assessment proceedings. All materials filed by an assessee before the TPO are well available as part of the assessment records.
There has been a full and true disclosure by the petitioner as a result that proceedings for re-assessment beyond a period of four years must fail. The impugned order rejecting the objections of the petitioner to assumption of jurisdiction under Section 147, has taken recourse to Explanation 1 to Section 147 of the Act. Reiterating the view in M/s.Asianet Star Communications Private Limited [2019 (6) TMI 356 - MADRAS HIGH COURT] hold that Explanation 1 cannot override the statutory condition under the proviso to Section 147.
Explanation 1 would apply only in a situation where the materials filed by an assessee are so voluminous as make a proper verification nugatory, and the revenue establishes conscious intent on the part of the assessee to camouflage materials in the hope that such materials escape the attention of the authority. This is not the case of the revenue before me in the present matters. Thus the impugned orders and notices are set aside and these writ petitions are allowed.
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2023 (1) TMI 1033
Addition made u/s 56(2)(viib) - excess consideration received on allotment of shares - CIT(A) issued notice for enhancement u/s 251(2) as allotment of shares to the promoter director of the assessee company on which excess share consideration of Rs. 59 per share was also charged by the assessee was not considered while invoking the provisions of section 56(2)(viib) - fair market value of the shares arrived on the basis of the valuation report by using the DCF method was Rs.341 per share - HELD THAT:- Out of the 5 individuals to whom the shares were allotted by the assessee, one person viz. Mr. Mark Anthony De Boer, was a non-resident and therefore both the AO as well as CIT(A) accepted that provision of section 56(2)(viib) of the Act is not applicable in respect of shares allotted to a non-resident.
In respect of the other 4 individuals to whom shares allotted by the assessee in excess of the price determined by the valuation report were held to be covered within the ambit of section 56(2)(viib) of the Act. As per the provisions of section 56(2)(viib) in the case of a company, in which the public is not substantially interested, receipts from any person being a resident as a consideration for the issue of shares in excess of the face market value of such shares is to be considered as the income of the assessee under the head ‘income from other sources’.
Since there is no material available on record that the assessee has disputed the valuation of shares at Rs.341 per share vide valuation report dated 15/09/2012, therefore, we find no infirmity in the impugned order directing the disallowance being the excess consideration received by the assessee over and above the fair market value of the shares. As a result, grounds raised by the assessee are dismissed.
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2023 (1) TMI 1032
Revision u/s 263 - mandatory Form No. 10CCB not been electronically filed by the assessee along with the return of income - As per CIT assessee has failed to comply with the provisions of section 80IE(6) r/w section 80IA(7) of the Act and therefore the AO ought to have disallowed the assessee’s claim of deduction under section 80IE - HELD THAT:- Assessee filed the audit report physically in Form No. 10CCB duly signed and verified by the Chartered Accountant along with the profit and loss account in respect of Assam undertaking before the jurisdictional AO on 27/10/2017.
From the perusal of the submission dated 27/10/2017, forming part of the paper book it is evident that it is not the case wherein accounts of the undertaking, in respect of which deduction under section 80IE of the Act was claimed, were not audited by an accountant and audit report was not prepared in Form No. 10CCB. Only due to technical impediment, the said audit report in Form No. 10CCB could not be filed electronically, which was physically filed by the assessee on 27/10/2017 before filing the return of income on 28/10/2017. As per the assessee, only from the next year Form No.10CCB under section 80IE of the Act can be furnished electronically. Nothing has been brought on record to controvert the aforesaid claim of the assessee.
Therefore, merely on a technical ground, it cannot be held that the assessment order allowing the claim of deduction under section 80IE of the Act is erroneous, particularly in view of the fact that the AO had raised queries regarding the said deduction, which were duly responded by the assessee. Thus, we find no basis in upholding the impugned order passed under section 263 of the Act on the basis of aforesaid allegations. As a result, ground No. 2 raised in assessee’s appeal is allowed.
Unexplained cash deposits - AO did not make any enquiry regarding the cash deposits by the assessee in SBN during the demonetisation period - HELD THAT:- From the perusal of relevant portions of ITR 6, filed by the assessee, for the year under consideration, we find that the assessee had duly made the disclosure regarding the cash deposited from 09/11/2016 to 30/12/2016. Further, in auditor’s report we find that requisite disclosure was made in the financial statements regarding dealings in SBN during the period from 08/11/2016 to 30/12/2016 - Assessee has also provided the denomination of the cash deposited in SBN during the demonetisation period. It cannot be denied that the return of income along with audited financial statements was sought by the AO during the assessment proceedings and the same was also duly submitted by the assessee. Therefore, when the assessee had made all the disclosures in its income tax return as well as in its audited financials regarding the cash deposited in SBN during the demonetisation period, we do not find any merit in the allegation made in the impugned order passed under section 263 of the Act. As a result, ground No. 3 raised in assessee’s appeal is allowed.
Whether Assessment Order passed by the ACIT 9(2)(2), Mumbai u/s 143(3) is erroneous and prejudicial to the interest of the revenue? - Clauses (a) of Explanation–2 to section 263 of the Act is not applicable to the facts of the present case and thus the revision order passed by the learned PCIT under section 263 of the Act is set aside. As a result, ground No. 1 raised in assessee’s appeal is allowed.
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2023 (1) TMI 1031
Special audit U/s. 142(2C) - time limit for submission of Special Audit Report as required u/s. 142(2C) - HELD THAT:- In the instant case, the Ld. AO failed to pass such order in both the circumstances to extend the time limit. AO merely communicated the decision of the Ld. Pr. CIT (Central), Visakhapatnam on 6/6/2019 which is beyond the limitation period of the second extended time. Even assuming a moment that it is a valid extension, we find that the extension as per the Limitation Act should have been granted before the expiry of the time limit permitted in the earlier extension ie., on 25/5/2019.
We find force in the arguments of the Ld. AR that mere communication of extension by the Ld. AO instead of passing an order U/s. 142(2C) is not valid in law. The case law relied on by the Ld. AR, the judgment of the Hon’ble Supreme Court in the case of State of Punjab & Ors vs. M/s. Shreyans Indus Ltd i[2016 (3) TMI 331 - SUPREME COURT] is pertinent to mention here with respect to grant /order of extension of time limit should be given before the time for passing any order expires as prescribed under the Act or before the expiry of the original period of limitation prescribed in the original order. On this issue, the Hon’ble Apex Court observed that once the period of limitation expires, the immunity against being subject to assessment sets in and the right to make assessment gets extinguished. Therefore in our considered opinion, the ratio laid down by the Hon’ble Supreme Court squarely applies to the instant case also. In the instant case on hand, the Ld. AO ought to have passed an order U/s. 142(2C) of the Act on or before 25/5/2019 ie., expiry of the first extension.
Case law relied on by the Ld. AR in ACIT Vs Soul Space projects Limited [2020 (6) TMI 696 - ITAT DELHI] is also relevant to the issue which was also considered by the Ld. CIT(A)
We find that the Ld. CIT(A) has discussed the issue at length and rightly concluded the matter and therefore we are of the considered view that no interference is required in the order of the Ld. CIT(A) on this issue.
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2023 (1) TMI 1030
Revision u/s 263 - Addition u/s 68 - unsecured loan received by the assessee firm from shell companies circulated by ITD/SEBI was to be treated as an unexplained cash credits u/s.68 - repayment of unsecured loans made by the assessee company during the year to 7 companies - HELD THAT:- A.O might have examined the loans transaction of the assessee with the aforementioned party, viz. M/s. Alipore Vinimay Private Limited, Kolkata, but in the backdrop of the very fact that the information circulated by the ITD/SEBI revealed that the name of the said lender party figured in the list of shell companies therefore, it was rightly observed by the Pr. CIT that the order of the A.O accepting the loan transaction under consideration had rendered his order passed u/s.143(3) as erroneous in so far as it was prejudicial to the interest of the revenue u/s.263 of the Act.
Admittedly, there is no denying the fact that the A.O had looked into the loan transactions under consideration, but the same was to the extent of the material which was therefore before him. Also, it is not the case of the Ld. AR that the observation of the Pr. CIT that the name of the aforementioned investor company, viz. M/s. Alipore Vinimay Pvt. Ltd., Kolkata figured in the list of the shell companies as was circulated by the ITD/SEBI was ill-founded or incorrect.
Pr. CIT had set-aside the matter to the file of the A.O with a direction to re-adjudicate the same after affording sufficient opportunity to the assessee, therefore, no infirmity could be attributed to his directions considering the totality of the facts and material as was there before him at the time of passing of the order u/s.263
No infirmity in the view taken by the Pr. CIT who had rightly set-aside the order passed by the A.O u/s.143(3) dated 27.12.2019, i.e., to the extent he had accepted the loan transaction received by the assessee from M/s. Alipore Vinimay Private Limited, for re-adjudication, i.e., after affording a reasonable opportunity of being heard to the assessee, therefore, uphold his order to the said extent. Appeal of the assessee is partly allowed in terms of our aforesaid observations.
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2023 (1) TMI 1029
TP adjustment with respect to the international transaction of 'Payment of Royalty' - segregation of Royalty transaction from the 'Manufacturing segment' - HELD THAT:- We note that the facts of the instant case are similar to those of Magneti Marelli (2016 (11) TMI 123 - DELHI HIGH COURT] inasmuch as the assessee therein also paid royalty to its AE for use of Technical support for the manufacture of its products, and the Hon'ble High Court did not approve clubbing of payment of technical fees with other transactions under the Manufacturing segment. In view of the foregoing discussion, it is held that the international transaction of payment of Royalty by the assessee for use of technical support cannot be clubbed with other international transactions under the Manufacturing segment.
ALP determination of the Royalty transaction - "Other method" for determining the ALP - TPO has emphasized on the expression "similar" uncontrolled transaction used in Rule 10AB for considering these three companies as comparable despite the fact that the licensed products by them were quite different from that of the assessee. At this stage, we want to emphasize that Rule 10AB talks of considering the price paid or that would have been paid "for the same or similar uncontrolled transaction". The words "the same" appear in the language of the rule prior to the word "similar" joined by the words "uncontrolled transaction". It thus indicates that similar uncontrolled transactions are to be considered only if same uncontrolled transactions are not available.
Preference in Rule 10AB has to be given to "same" uncontrolled transactions over "similar" uncontrolled transactions. As against the comparable uncontrolled transactions considered by the TPO, recognized as similar, the assessee brought on record "same" uncontrolled transactions, namely, the licensing of technical know-how by the assessee's same AE to two independent entities in Korea and China for the manufacture of same Diesel engines. Not only the assessee placed on record invoices issued by the assessee's AE to these independent entities in China and Korea, but Agreement for licensing of technical know-how to Korean party has also been produced. This Agreement, a copy placed at page 10 onwards of the additional paper book, is between MAN Diesel and Turbo Denmark (being same entity which licensed the technical know-how to the assessee also) and STX Engine Company Ltd., Republic of Korea (an independent unrelated party). Enclosure-1 to the Agreement shows that the technical know-how was given to the Korean party for manufacturing Diesel Engines, being, the same product for which the assessee was licensed with. This indicates that the technical know-how provided under this Agreement is of the "same" product in an uncontrolled transaction.
Rates of Royalty charged by the assessee's AE from the assessee as well as the Korean party - The assessee's Agreement with its AE shows the rates of Royalty at 19.50 Euro per KW, which was charged for the year at 19.92 Euro per KW. The Agreement between the assessee's AE and Korean party gives the rate of Royalty at 23.80 Euro per KW. This explains that not only the product for which the assessee's AE charged Royalty from the assessee is similar to that for which technical know-how was supplied to a Korean independent third party, but the rate charged from the assessee is also relatively lower. Similarly, the invoices of the assessee's AE raised on another independent Chinese party also show that the rate charged for the similar product is higher than that charged from the assessee. When "same" uncontrolled transaction is pitted against the "similar" uncontrolled transaction, there is no prize for guessing that the preference has to be given to the "same" uncontrolled transaction. The ld. DR, after going through the Agreement between the assessee's AE and Korean party, could not point out any substantial difference between the terms of the Agreement with that of the assessee except for certain cosmetic changes. As the Royalty for same product charged by the assessee's AE from another Korean party in terms of Euro per KW is more than that charged from the assessee, we hold that the transaction of payment of Royalty is at ALP. The addition of Rs. 12.98 crore and odd is, therefore, directed to be deleted.
Transfer pricing adjustment in the segment of "Design Engineering Services" - assessee in this segment is aggrieved only by the inclusion of Aabsys Information Technology Pvt. Ltd. in the list of comparables by the TPO - The principal business activities of this company include Database Services with Data processing and Tabulation Services, Online Information and Data Retrieval Services, Electronic Data Interchange Services, Web search Portal Content Services, Code and Protocol Conversion Services etc. Total revenue of this company, as appearing in its Profit and loss account, is Rs. 11,12,78,745/-, whose break up is given in Note No. 15 as consisting of 'GIS/CAD and Software Services'.
As opposed to this, the assessee is not rendering any Software services to its AE. The only services rendered by it are Engineering. It is further observed from the Annual report of this company that no segmental information is available, which could throw light on the operating costs in respect of the revenues of this company from Engineering services de hors Software services. Since the assessee is not providing any Software services and the software services of this company constitute around 78% of its revenue and further that no segmental information is available, we hold that this company cannot be treated as comparable. We, therefore, order to exclude it from the list of comparables. The impugned order on this issue is set-aside and the matter is remitted to the file of the AO/TPO for re-determining the ALP of the international transaction of 'Design Engineering Services' by excluding Aabsys Information Technology Pvt. Ltd. from the list of comparables.
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2023 (1) TMI 1028
Seeking return of money recovered / taken away during search - It is contended by the petitioner that the concerned officers could have no reason to believe that any goods liable for confiscation were lying in the premises of the petitioners - whether cash can be seized by the officers under Section 67(2) of the GST Act? - HELD THAT:- Prima facie, a plain reading of Section 67(2) of the GST Act indicates that the seizure is limited to goods liable for confiscation or any documents, books or things, which may be “useful for or relevant to any proceedings under this Act”. Clearly, cash does not fall within the definition of goods. And, prima facie, it is difficult to accept that cash could be termed as a ‘thing’ useful or relevant for proceedings under the GST Act. The second proviso to Section 67(2) of the GST Act also provides that the books or things so seized would be retained by the officer only so long as may be necessary “for their examination and for any inquiry or proceedings under the Act.”
Clearly, the petitioners had not handed over the cash to the concerned officers voluntarily. Undisputedly, the action taken by the officers was a coercive action. There are no provision in the GST Act that could support an action of forcibly taking over possession of currency from the premises of any person, without effecting the same. The powers of search and seizure are draconian powers and must be exercised strictly in terms of the statute and only if the necessary conditions are satisfied - In the present case, the GST officers have dispossessed the petitioners of the currency found in their premises during search operations conducted under Section 67(2) of the GST Act but have not seized the currency under the said provision. Plainly, their action in doing so is without authority of law.
Insofar as the action of the officers of dispossessing the petitioners of their currency is concerned; it is clear that the said action of taking away currency was illegal and without any authority of law. The amount of ₹18,87,000/- has already been returned to petitioner no.1. The respondents are directed to forthwith return the balance amount along with the interest accrued thereon to the petitioners. The bank guarantee furnished by petitioner no.1 for release of currency is directed to be released forthwith.
List on 20.02.2023.
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2023 (1) TMI 1027
Validity of impugned order passed without granting personal hearing - breach of principles of natural justice (audi alterem partem) - non-application of mind - HELD THAT:- From perusal of the impugned order dated 23/09/2022, it can be seen that it is one of those blatant cases of breach of principles of natural justice and total non-application of mind. The only reason assigned in the impugned order is that the reply filed by the petitioner is not acceptable and no tax has been deposited by the petitioner, therefore, the reply is rejected.
Admittedly, as per Section 75(4) of the Act, personal hearing is mandatory before passing any adverse order against the assessee. In the circumstances, there are no reason why to wait for the respondents to file the reply and prolong the agony of the petitioner and also waste precious judicial time. If the Assessing Officer had only considered the file properly and dealt with the reply filed by the petitioner, then the need for the petitioner to approach this Court would not haven arisen.
The order is set aside - petition disposed off.
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