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Showing 501 to 520 of 1557 Records
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2025 (1) TMI 1058
Disallowance of transportation expenses which is excessive and unjustified in light of the past history of the appellant's business and the evidence provided - HELD THAT:- Disallowance of an expenditure claimed by the assessee as a deduction as per the mandate of section 37 can only be disallowed in case of satisfaction of either of the conditions set out in the said section, which are required to be spelt out by the A.O in the body of the assessment order, viz. (i) the claim of expenditure raised by the assessee is found to be bogus; (ii) the expenditure is in the nature of a capital expenditure or personal expenditure of the assessee; or (iii) that the expenditure had been incurred for any purpose which is an offence or which is prohibited by law.
A.O had failed to place on record any material which would prove to the hilt that the assessee had either raised a bogus claim of expenditure; or that the said expenditure was not incurred wholly and exclusively for the purpose of business; or that the expenditure so claimed as a deduction did not fall within the four parameters of Section 37 therefore, unable to persuade myself to subscribe to the summarily disallowance to the said effect so carried out by the A.O.
Similar claim for deduction as was raised by the assessee firm in the preceding year had been allowed by the department, but also the fact that the GP/NP rates of the assessee firm are progressive as in comparison to the preceding year.
Thus, vacate the disallowance sustained by the CIT(Appeals). Decided in favour of assessee.
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2025 (1) TMI 1057
Delay of 125 days - non-compliance of the assessee in appellate proceedings and the delay in filing the appeal - HELD THAT:- As the assessee despite having been intimated about the fixation of hearing of the appeal had neither put up an appearance nor any application seeking adjournment has been filed before us, therefore, we are constrained to proceed with and dispose off the appeal as per Rule 24 of the Appellate Tribunal Rules, 1963.
As stated by the DR, and rightly so, the present appeal involves a delay of 125 days. As the assessee had not filed any application seeking condonation of the delay involved in filing of the present appeal, therefore, we are constrained to dismiss the appeal on the said count itself. Appeal filed by the assessee is dismissed.
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2025 (1) TMI 1056
Correct head of income - income derived from leasing of the property - “income from house property” or “business income” - revenue Not granting of deduction u/s 24(a) as claimed by the assessee by computing the income from house property - applicability of section 161 - intimation u/s. 143(1)(a) -assessee’s income was assessed at Rs. 6,69,38,890/- as against “Nil” income by treating the income from house property as business income - HELD THAT:- Since assessee being the owner of the property which was given on rent without any service or any other amenities, therefore, the rent received was declared under the head income from house property and such “income from house property” has been shown in all the earlier years, and there was never any dispute by the department.
It is well settled principle, in view of the judgment of Raj Dadarkar & Associates [2017 (5) TMI 586 - SUPREME COURT] that rental income derived from leasing of the property is to be assessed under the head “income from house property” as not a “business income”. Thus, income was liable to be assessed under the head income from house property only and not as business income.
Applicability of section 161 - It is now well settled that if income being taxed in individual hands of beneficiaries, the same cannot be assessed u/s 161 as “Representative Assessee’s in the hands of the trust.
This view is squarely covered by the judgment of Alfred Herbert (I)(P) Ltd. [1986 (2) TMI 47 - CALCUTTA HIGH COURT] and Smt. Ushaben Trust [1990 (6) TMI 21 - BOMBAY HIGH COURT]. Accordingly, we hold that firstly, income from rental income received from letting out property is to be assessed under the head “income from house property”; and secondly, once, the beneficiaries have included the trust income in their individual return of income and paid the tax at higher rate of tax, the assessee trust cannot be assessed at rate of assessee u/s 161. Accordingly, on this issue all the grounds raised by the assessee are allowed.
Non granting of credit for TDS deducted from house property to the beneficiaries - Once the TDS has been deducted on the rental income and all the 5 beneficiaries have declared this income in their individual return as income from house property, then income received by the trust is also entitled for proportionate TDS credit in the hands of all the beneficiaries.
Appeal filed by the assessee is allowed.
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2025 (1) TMI 1055
Bad debt written off - basis for this claim was due to the stoppage of the trading in National Spot Exchange Limited (‘NSEL”) - AO came to the conclusion that the assessee had not produced any documents which shows that the assessee has made any effort for recovery of said bad debts - HELD THAT:- It is an undisputed fact that the assessee entered into the contract prior to the action of EOW and suspension of NSEL.
When the contract was finally settled, the assessee could not recover the amount due to it and hence was left with no choice but to write off the same. The assessee has actually written off the debt as is evident from the copy of the ledger account placed in the paper book.
In our considered opinion, the assessee satisfies the claim in the light of the decision of TRF Ltd [2010 (2) TMI 211 - SUPREME COURT] which has been accepted by the Board vide Circular No.12/2016. No reason to interfere with the findings of the CIT(A). All the appeals filed by the Revenue are dismissed.
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2025 (1) TMI 1054
Unexplained cash credit u/s 68 - source of the cash cannot be accepted and it is held that the assessee has introduced his unaccounted cash during the period of demonetization in the books in the guise of cash sales and proceeds of debtor realization - AO and CIT(A) both have mentioned that the assessee did not produce books of account and assessee has not filed even “Cash Flow Statement”, only Cash Summaries have been filed.
HELD THAT:- The collection from debtors, forming part of opening balance, is miniscule. Even for collection from one debtor M/s Sati Polyweave Ltd., the assessee has filed Ledger A/c and Sale Bills issued under VAT laws. The non-compliance of summon u/s 131 by the said debtor is not a fault of assessee and the assessee cannot be penalized for that. The higher amount of cash balance held by assessee as opening balance is also substantiated from the fact that there was high scale of business during August, 2016 to October, 2016 on account of Diwali festival. Thus, we find that the source of impugned deposits is sufficiently explained by assessee.
Also once the AO has rejected books of assessee u/s 145, the addition u/s 68 cannot be made. Their Lordship in Dulla Ram [2013 (12) TMI 253 - PUNJAB & HARYANA HIGH COURT] have approved this proposition as held as books of accounts were rejected in their entirety, the Assessing Officer could not rely upon any entry in the books of accounts for making an addition
Addition made by AO in present case is neither tenable on merit nor on legal provisions of section 68. Decided in favour of assessee.
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2025 (1) TMI 1053
TP Adjustment of Loans to AE - assessee granted interest free loan to its AE M/s Sundaram International Inc., USA - TPO proposed benchmarking the same on LIBOR+200 bps - HELD THAT:- This issue has been adjudicated by Tribunal [2016 (3) TMI 1486 - ITAT CHENNAI]Tribunal directed Ld. AO to verify the actual surplus funds available with the assessee.
AO was also directed to verify whether there was any nexus between the borrowed loans and advances made to the AE. AO was directed to re-examine the matter in the light of aforesaid observation and re-adjudicate the issue. Since facts are similar in this year, we issue similar directions. The corresponding grounds as raised by the assessee stand allowed for statistical purposes.
TP adjustment of Corporate Guarantee - assessee provided corporate guarantee for its AE but did not charge any fees - TPO benchmarked the same @2.55% which was nothing but average rate of guarantee fee charged by the bank - HELD THAT:- This issue has been adjudicated by Tribunal in [2024 (11) TMI 1419 - ITAT CHENNAI]. In para-4.2 of the order, the bench directed AO to benchmark the same @0.5%. Facts being pari-materia the same, we direct Ld. AO to adopt benchmarking rate of 0.5%. The corresponding grounds stand partly allowed.
Depreciation on right to use leasehold property - depreciation was claimed @12.5% i.e., half of 25% depreciation. The same was on the ground that the rights were shown as intangible assets which would be eligible for 25% depreciation - HELD THAT:- This issue has been adjudicated by Tribunal in [2024 (11) TMI 1419 - ITAT CHENNAI] for AYs 2015-16 and 2016-17 considering the order of Hon’ble High Court of Madras in assessee’s own case [2021 (3) TMI 1471 - MADRAS HIGH COURT] the bench remitted this matter back to the file of Ld. AO. Facts being pari materia the same, we issue similar directions to Ld. AO. The corresponding grounds stand allowed for statistical purposes.
Claim of Deduction u/s 80G - assessee made CSR expenses - HELD THAT:- As we deem it fit to remit this issue back to the file of Ld. AO for de novo adjudication. AO shall consider the nature of donations as well as subsequent amendment to the law. The various judicial decisions as rendered on this issue may also be reconsidered. It appears that only part of CSR expenditure has been claimed u/s 80G which may also be considered on facts. The assessee is directed to substantiate its claim. Consequently, the corresponding grounds stand allowed for statistical purposes.
Disallowance u/s 14A - HELD THAT:- This issue has been adjudicated by Tribunal in [2024 (11) TMI 1419 - ITAT CHENNAI] wherein bench directed Ld. AO to compute disallowance u/r 8D(2)(ii) by considering only those investments which have yielded exempt income during this year. Facts being pari-materia the same, we issue similar directions. The amendment, in our opinion is applicable only w.e.f. 01.04.2022 and the same would not have retrospective application. The corresponding ground stand allowed for statistical purposes. The appeal stand partly allowed in terms of our above order.
TP adjustment of interest on debentures - HELD THAT:- As the assessee has subscribed to debentures of a UK-based entity and therefore, the ALP rate as applicable to that entity, would be more suitable benchmarking rate. As per facts, the foreign AE was able to raise overdraft facility in independent situation at the rate of 1.76% as against rate of 2.43% as paid to the assessee. In such a situation, we direct Ld. TPO to benchmark the same based on comparable international transactions and not on the basis of comparable domestic transaction. The assessee is directed to provide the requisite data. The corresponding grounds stand allowed for statistical purposes.
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2025 (1) TMI 1052
Validity of reassessment proceeding - non granting approval from the correct authority as mandated by section 151(ii) - HELD THAT:- Accordingly the notice issued on 04.04.2022 by the AO is issued beyond three years and therefore the approval should have been obtained by the authorities as specified under section 151(ii) Principle Chief Commission.
As already stated the approval in assessee's case is obtained from CIT(IT) and therefore we are inclined to agree with the contention of the assessee that the notice under section 148 has been issued without obtaining the approval from the correct authority as specified under section 151.
As relying on Vodafone Idea case [2024 (2) TMI 1408 - BOMBAY HIGH COURT] we hold that the notice issued by the AO under section 148 without obtaining approval from correct appropriate authority is invalid and the assessment done under section 147 r.w.s. 144(13) of the Act is liable to be quashed. Decided in favour of assessee.
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2025 (1) TMI 1051
Rejection of application for registration of trust u/s 12AB and 80G - CIT(E) dismissed the assessee’s applications on the ground that supporting documents were not provided - assessee submitted that there was no requisition of supporting documents, hence, assessee could not provide the same, thus prayed an opportunity may be granted to the assessee to provide the necessary documents and submissions before the CIT (E) in the interest of justice - HELD THAT:- As DR did not have any serious objection to the proposition made by assessee, we deem it fit and proper to remit back the issues in both the appeals to the file of the Ld. CIT (Exemption), Lucknow with the directions to decide the same, afresh - Assessee’s appeals are allowed for statistical purposes.
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2025 (1) TMI 1050
Undisclosed sale - difference in WIP stock account during the year - addition on account of undisclosed sales on the basis of figures as appearing in respect of opening and closing of WIP for this year vis-à-vis the sales as disclosed in the P&L account - HELD THAT:- It is a settled position of law that once the method of accounting has been accepted by the Revenue in the earlier years it cannot be rejected in the subsequent year without bringing anything on record to show that the fact was different during that year. No such discrepancy was recognized and brought on record by the Revenue.
The accounting method adopted by the assessee was a recognized method of accounting as per the Accounting Standards issued by ICAI and the percentage completion method was consistently followed by the assessee in all the years to recognize its revenue, which was also accepted by the Revenue.
AO was not correct in rejecting the method of accounting regularly followed by the assessee and in working out the income on the basis of actual sales made during the year.
Revenue cannot be allowed to flip-flop the method of accounting regularly followed by the assessee without pointing out any defect in the accounts of the assessee. As rightly pointed by the assessee, the profit out of the sales were already substantially accounted for by the assessee in the earlier years on the basis of percentage completion method and the addition made in the current year on the basis of actual sales had led to double addition.
Hon’ble Supreme Court has held in the case of Bilahari Investment P Limited [2008 (2) TMI 23 - SUPREME COURT] that every assessee is entitled to arrange its affairs and follow the method of accounting which the Department has earlier accepted.
CIT(A) has rightly upheld the method of accounting regularly followed by the assessee and has correctly deleted the addition as made by the AO. The addition made by the AO was not only incorrect but was based on wrong presumption which had led to double addition.
As explained by the assessee the work-in-progress credited to P&L account comprised of cost-plus profit on percentage completion method and the closing balance of WIP was accordingly disclosed in the accounts.
Thus, the profit was already disclosed in closing WIP every year and this fact has not been controverted by the Revenue. Therefore, the Ld. CIT(A) has correctly deleted the addition made by the AO in the current year. Decided against revenue.
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2025 (1) TMI 1049
Rejection of the application for registration u/s 12A on tecnical error - denying the application for approval in Form No.10AB under clause (ii) of first proviso to sub-section (5) of section 80G - HELD THAT:- We find that the assessee trust was required to file the application for registration u/s 12A of the IT Act in Form No.10AB u/s 12A(1)(ac)(iii) of the IT Act but due to typographical error the application was filed in Form No.10AB u/s 12A(1)(ac)(ii) of the IT Act.
Respectfully following the decision of Vir Sewa Mandir [2024 (9) TMI 1510 - ITAT DELHI] we find force in the arguments of assessee and accordingly deem it appropriate to set-aside the order passed by CIT, Exemption, Pune and remand the matter back to him with a direction to decide the issue afresh after treating the original application as filed by the assessee under correct/desired section i.e. section 12A(1)(ac)(iii) of the IT Act.
The assessee is also hereby directed to respond to the notices issued by Ld. CIT, Exemption, Pune in this regard and produce specific documents/evidences desired by CIT, Exemption, Pune in support of application for registration u/s 12A without taking any adjournment. Thus, the grounds of appeal raised by the assessee in this appeal are partly allowed.
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2025 (1) TMI 1048
Denial of exemption u/s 11 & 12 - whether or not the assessee society per the “1st proviso” of sub-section (2) of section 12A of the Act, based on the registration granted u/s 12A is entitled for exemption u/ss. 11/12 for the reason that its application for registration filed u/s 12A was pending prior to the disposal of its appeal by CIT(A)/ NFAC, Delhi, who had disposed of the same vide his order dated 30.05.2024?
HELD THAT:- Accordingly, Sec.12A(b) [as was available on the statute during the year under consideration i.e AY 2017-18] had for claiming of exemption u/s 11 or Sec. 12, inter alia, set out a pro- condition, as per which the trust or institution was statutorily required to cumulatively satisfy two conditions, viz. (i) to get its accounts audited by an accountant defined in the “Explanation” below sub-section (2) of Sec. 288; and (ii). to furnish alongwith the return of income for the relevant assessment year the report of audit in the prescribed form
As the present assessee society had not filed any return of income for the year under consideration i.e AY 2017-18, therefore, the pre-condition is not satisfied by it. In fact, it transpires on a perusal of the CIT(A) order that the assessee society had in its written submissions filed before him stated that it had filed its audited financial statements only in the course of the assessment proceedings.
As it is a matter of fact borne from the record that the assessee society had failed to file its return of income as required per the mandate of section 12A(1)(b) (as was applicable during the year under consideration), therefore, for the said reason it would stand disentitled for claiming exemption u/s 11 and 12 of the Act.
The assessee society is disentitled from claiming exemption u/ss. 11/12 of the Act, therefore, we refrain from looking into the scope of “1st proviso” to section 12A. The Ground of appeal No. 1 is dismissed.
Entitlement for claim of depreciation on its “fixed assets” despite the fact that it had not raised a claim for the same in its return of income for the year under consideration i.e AY 2071-18 - HELD THAT:-Though the assessee society is not entitled for claiming exemption under Sec. 11 and Sec. 12 of the Act, but, at the same time, as per “Explanation 5” to Sec. 32(1) of the Act, the deduction for depreciation on the “fixed assets”, though not claimed, ought to be allowed while computing its income in a commercial manner. Accordingly, the A.O is directed to allow depreciation on the “fixed assets”, though, after verifying satisfaction of the requisite conditions contemplated in Sec. 32(1) of the Act. The Ground of appeal No. 2 is allowed in terms of my aforesaid observations.
Enhancement of the income of the assessee society by CIT(A) without affording an opportunity to the assessee to put forth an explanation - We are unable to concur with the same. As the CIT(A) had taken the net income/surplus disclosed by the assessee society in its “Income and expenditure account” for the subject year for computing its taxable income, therefore, the same cannot be construed as enhancement of income as canvassed by the Ld. AR before me. The Ground of appeal No. 3 of the appeal is dismissed.
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2025 (1) TMI 1047
Delay in adjudicating the Show Cause Notice (SCN) issued by the Directorate of Revenue Intelligence (DRI) - HELD THAT:- The issue raised in the petition is no longer res-integra. Section 28(9) of the Act, unamended and amended, have been considered in detail by the Coordinate Benches of this Court in SWATCH GROUP INDIA PVT LTD & ORS. VERSUS UNION OF INDIA & ORS. [2023 (8) TMI 864 - DELHI HIGH COURT] as also M/S. VOS TECHNOLOGIES INDIA PVT. LTD. [2024 (12) TMI 624 - DELHI HIGH COURT] where it was held that 'A statute enabling an authority to conclude proceedings within a stipulated period of time “where it is possible to do so” cannot be countenanced as a license to keep matters unresolved for years. The flexibility which the statute confers is not liable to be construed as sanctioning lethargy or indolence. Ultimately it is incumbent upon the authority to establish that it was genuinely hindered and impeded in resolving the dispute with reasonable speed and dispatch. A statutory authority when faced with such a challenge would be obligated to prove that it was either impracticable to proceed or it was constricted by factors beyond its control which prevented it from moving with reasonable expedition. This principle would apply equally to cases falling either under the Customs Act, the 1994 Act or the CGST Act.'
The impugned SCN, which was issued way back in 2014, due to repeated placing in the call book has not been adjudicated for so long. Repeated placing and removing from the call book is not a valid justification for non-adjudication of the impugned SCN for about 9 years. Moreover, the gaps between the said periods is also inexplicable. Hearing notices have been given to the Petitioners but there is no reason for non-adjudication of the impugned SCN for long period.
Conclusion - The statutory timelines for adjudication must be adhered to, and failure to do so without valid justification results in the lapsing of the SCN. The delay in adjudication was unjustified, and the SCN was quashed.
Petition allowed.
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2025 (1) TMI 1046
Absolute Confiscation of gold - levy of penalty u/s 112(b) of the Customs Act, 1962 - seizure on the ‘reasonable belief’ that the said gold was contraband in nature and was smuggled from Bangladesh - burden of proof - Gold was procured legally from domestic sources.
Reasonable belief - HELD THAT:- The seizure was effected by a team of officers comprising of the Superintendent (Prev.) Circle Kishanganj and Preventive Officers assisted by SSB officials and G.R.P./R.P.F. personnel on the 'reasonable belief' that the said gold was contraband in nature and was smuggled from Bangladesh. However, in the present case, we observe that no reasonable belief has been formed by the officers that the gold is of smuggled in nature. No evidence has been brought on record by the Revenue to substantiate the allegation that the gold is of foreign origin and smuggled in nature. The seizure of the gold without following the 'reasonable belief' that the gold is of smuggled in nature, is not sustainable.
Applicability of Burden of Proof as envisaged under Section 123 of Customs Act,1962 - HELD THAT:- Section 123 of the Customs Act clearly stipulates that a 'reasonable belief' that the gold is of smuggled in nature is mandatory for invocation of the said provision. However, in the present case no reasonable belief has been formed by the officers that the gold is of smuggled in nature and hence the provisions of Section 123 are not applicable in this case and the burden lies on the department to prove that seized gold is of smuggled in nature. However, no evidence has been brought on record by the Revenue to substantiate the allegation that the gold is of foreign origin and smuggled in nature - the provisions of Section 123 are not applicable to indigenously procured gold.
Reliance placed upon the decision in the case of BALANAGU NAGA VENKATA RAGHAVENDRA AND BALANAGU VENKATA SIVA KANAKA RATNAM VERSUS COMMISSIONER OF CUSTOMS, VIJAYAWADA [2021 (2) TMI 612 - CESTAT HYDERABAD], wherein it has been held that the burden under section 123 will not shift on the Appellants when the seizure of gold without foreign markings are seized from city.
Gold was procured legally from domestic sources - HELD THAT:- The failure to produce documents in respect of the goods carried by a person does not ipso facto prove that the goods are contraband in nature. The allegation of smuggling needs to be proved with cogent reasoning and corroborative evidence thereof. Subsequently, if the appellant could produce documents for its legal purchase, the same cannot be ignored to conclude that the gold is of smuggled in nature.
The evidence provided by M/s. Akshay Kripa Jewellers (Pvt.) Ltd. and M/s. Supreme Gold, Delhi, in the course of follow up action indicate that both jewellers purchased and sold gold with the markings Rand Refinery and Credit Swisse which they had acquired from M/s. Atma Ram Amar Nath and M/s. Lawat Jewellers, Delhi, who had acquired the same from the HDFC Bank, Delhi. This fact has been confirmed by HDFC bank vide their letter's dated 3.12.2013 and 18.01.2014 with annexures, which indicate that the imported gold which was indeed sold with the marking Rand Refinery and Credit Swisse during the said period when the appellant dealt with the jewellers viz. M/s. Akshay Kripa Jewellers (Pvt.) Ltd. and Ms. Supreme Gold of Delhi.
Conclusion - The burden under Section 123 of Customs Act, to prove that the gold is not smuggled one, does not lie on the appellant, in this case. The onus is on the departmental officers that the gold is of smuggled in nature. However, the officers of the Department could not establish that the gold is of smuggled in nature. Accordingly, the confiscation of the gold is not sustainable. Since the confiscation of the gold is not sustainable, the penalties imposed on the appellant are also not sustainable.
Appeal allowed.
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2025 (1) TMI 1045
Refund of Countervailing Duty (CVD) and Additional Customs Duty (ACD) - rejection of refund on the ground that CVD and ACD was recoverable as the appellants have a chance to pass it off or to avail the CENVAT credit of the same - HELD THAT:- The original authority, whose order was upheld by the appellate authority records self-contradictory findings; on one hand, the original authority accepts the Chartered Accountant certificate which shows that the appellants have not passed on the incidence of duty paid by them at the time of release of the goods; on the other hand, the authority seeks to deny the same as the importer-appellant has an opportunity to take credit of the same in their Returns.
The refund cannot be rejected on the basis of a mere apprehension. The Chartered Accountant having gone into the accounts of the appellants has certified that the incidence of duty is not passed on. It also implies that CENVAT credit has not been taken. Learned Counsel for the appellant makes a statement before the Bench that such credit has not been taken till date also. In view of the same, a part of refund has been rejected on mere apprehension and therefore such rejection cannot be upheld.
Conclusion - Refunds should not be denied based on speculative grounds or potential future actions, such as taking CENVAT credit. Part of refund has been rejected on mere apprehension and therefore such rejection cannot be upheld.
Appeal allowed.
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2025 (1) TMI 1044
Maintainability of section 7 petition - powers of the Adjudicating Authority of recall under Rule 11 of NCLT Rules - non-compliance with the requirements under 2nd proviso to Section 7(1) of the IBC - It is the contention of the Appellant that the statutory provisions of the IBC do not permit the Adjudicating Authority to revisit its own findings of fact or law in any order delivered by it.
HELD THAT:- It would be useful at this juncture to examine the findings of the Adjudicating Authority as returned in the order of 04.06.2024. A plain reading of the order clearly indicates that only the Counsel for the present Appellant-Corporate Debtor who was present before the Adjudicating Authority on 04.06.2024. The order also records the submission made by the Counsel for the Corporate Debtor that the Marvel Isola J Building Housing Project had 282 unit holders and that there is no record to show that the applicants had complied with the eligibility laid down in the amended provision of the IBC. Basis these submissions made by the Counsel for the Corporate Debtor, the Adjudicating Authority had returned the finding that the Company Petition stands disposed since the Respondents lacked the requisite number/percentage of unit holders to be eligible to continue the Company Petition.
After perusing the order of 04.06.2024, there is no ambiguity in mind that the Adjudicating Authority in passing the order on 04.06.2024 had preponderantly relied on the submissions made by the Counsel of the Corporate Debtor on whether the Appellants were compliant with the 2nd proviso to Section 7(1) of the IBC to file the Company Petition No. 4320 of 2019. Per contra, looking at the material on record placed, it is found that the Respondents in the said Company Petition had categorically informed the Corporate Debtor on affidavit that they were in compliance with the 2nd proviso to Section 7(1) of the IBC.
The Adjudicating Authority was misled by the present Appellant-Corporate Debtor for they suppressed the fact that the present Appellants-Homebuyers in their Reply affidavit to the Rejoinder filed by the Corporate Debtor had clearly articulated that they were compliant with the eligibility terms laid down in the 2nd proviso to Section 7(1) of the IBC along with supporting documents including MAHARERA certificate to buttress their claim. Instead, the Corporate Debtor wrongfully apprised the Adjudicating Authority during the hearing that the said project consisted of 282 flats and there being only 12 allottees as Respondents, they did not meet the requisite percentage of allottees required to file the Company Petition.
A misrepresentation was made to the Adjudicating Authority by the Corporate Debtor for inspite of being aware that their submission before the Adjudicating Authority was not based on correct facts which tantamount to feeding of misleading facts to the Adjudicating Authority - In the present circumstances, where the Adjudicating Authority has been made to rely on distorted facts which the Adjudicating Authority became aware of belatedly, the Adjudicating Authority can always invoke its inherent powers in order to protect itself and to prevent an abuse of its process.
Conclusion - Power of recall is not power of the Tribunal to rehear the case to find out any apparent error in the judgment which is the scope of a review of a judgment. Recall of the order dated 04.06.2024 upheld, finding it was not on merits and was influenced by misrepresentation and procedural errors.
Appeal disposed off.
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2025 (1) TMI 1043
Admission of Section 7 application filed by Bank of India - no competent authorization to one who had initially filed Section 7 application - application barred by limitation due to the date of default.
Proceedings by an unauthorized person - HELD THAT:- The Board on 27.06.2019 has authorized all the officers in the rank of Assistant General Managers and Deputy General Managers to sign/ execute applications, appeals, vakalatnama before NCLTs, NCLATs, High Court and Supreme Court, hence, the application under Section 7 which was filed by Assistant General Manager on 28.06.2019 cannot be said to be without a proper authorization. Hence, there are no substance in the submission of the Appellant that application was not filed by authorized person. Further after the liberty was granted by the Adjudicating Authority, the form was amended with regard to date of default which form was signed by officials who are authorized at relevant time when form was signed which also does not suffer from any infirmity.
Application barred by time - HELD THAT:- The letter issued by the Bank asking the Corporate Debtor to deposit overdue amount immediately and regularize the account. On the record NPA was declared only on 31.07.2013 hence, the default can at best be three months before NPA i.e. 30.04.2013. The finding has been returned by the Adjudicating Authority that OTS was given by the Appellant from December 2015 to April 2018, hence, the OTS proposal which was given by the Appellant was within three years from the date of default as is claimed by the Financial Creditor. It is not satisfying that the application was barred by time and ought not to have been admitted. Appellant has given OTS proposal which was also approved by the financial creditor, however, corporate debtor failed on the terms of the OTS which has been noticed by the Adjudicating Authority in paragraph 4 (B). OTS proposal from December 2015 to April 2018 were given and the application was filed by the financial creditor in the year 2019 which cannot be said to be beyond time.
Conclusion - i) The application under Section 7 which was filed by Assistant General Manager on 28.06.2019 cannot be said to be without a proper authorization. ii) OTS proposal from December 2015 to April 2018 were given and the application was filed by the financial creditor in the year 2019 which cannot be said to be beyond time.
There are no substance in any of the submissions of the Appellant - The Appeal is dismissed.
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2025 (1) TMI 1042
Money Laundering - seeking to set aside the order, principally on the ground that prima facie no offence whatsoever is made out under Sections 406, 418, 420 read with 120B Indian Penal Code, 1860 - HELD THAT:- In the present case, it is seen that case of the Enforcement Directorate (ED) is that Applicant No. 1 on behalf of M/s. Kamala Developers received an amount of Rs. 4,27,16,900/- as ‘proceeds of crime’ from M/s. Sadguru Enterprises. The second charge of ED to attribute this amount to ‘proceeds of crime’ is that M/s. Sadguru Enterprises has not delivered any of its services / obligations to the Complainant (Respondent No. 2) under the Renovation Agreement and therefore the amount received from him and routed to M/s. Kamala Developers is alleged as ‘proceeds of crime’. Apart from the above two charges there is no other case made out by ED. To understand levy of this charge, one needs to understand what ‘proceeds of crime’ means under the PMLA. As delineated herein above, Section 2 (1)(u) of PMLA refers to ‘proceeds of crime’ as “any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence”. The explanation to this definition provides that such property would include any property relatable to the scheduled offence mentioned in the PMLA.
The fallacy in ED’s charge / claim is that after receiving the above amount M/s. Sadguru Enterprises has not provided any services to Respondent No. 2. This charge of ED clearly falls flat because Respondent No. 2 has himself clearly acknowledged that M/s. Sadguru Enterprises having delivered its obligations under the said Agreement dated 16.04.2007 for which Respondent No. 2 agreed to pay the amount of Rs. 4,57,84,400/- in three installments on fulfillment of the additional amenities to be specifically provided under its various conditions as agreed between them. Evidence on record acknowledged by Respondent No. 2 clearly shows that save and except an amount of Rs. 30,67,500/- Respondent No. 2 has paid the entire above amount to M/s. Sadguru Enterprises intermittently in three installments for having delivered under the very Agreement as per the schedule of installments when the works under the Renovation Agreement were accomplished and completed by M/s. Sadguru Enterprises. Works to the extent of Rs. 30,67,500/- having remained incomplete, Respondent No. 2 has specifically acknowledged it in his own correspondence and he has withheld this amount under the original Agreement to be given to M/s. Sadguru Enterprises after which a No-claim Certificate is issued to him.
In the present case, it is clearly seen that there is no case made out by Respondent No. 2 against M/s. Sadguru Enterprises for non-compliance and breach of the Renovation Agreement except for some works for which he did not pay the balance amount, which was accepted by M/s. Sadguru Enterprises and a No-claim Certificate was issued. It is not his case that there was never any intention since inception not to carry out the Renovation / additional amenities works agreed under the various conditions of the Agreement. Once that is the case, ingredients of cheating are completely non-existent - Rather this is a case of the Complainant himself acknowledging the works done by M/s. Sadguru Enterprises under the said Agreement and only on being satisfied he paid the second and the third truncated installments to complete the payment schedule. According to Complainant’s own letter dated 09.07.2007 appended at page No. 407, he has himself admitted that the subject premises were almost ready.
This is a fit case for imposition of exemplary costs on the Complainant and ED for invoking criminal action in the present facts and harassing the Developer with criminal action.
Conclusion - The civil disputes should not be converted into criminal cases and emphasized the need for clear evidence of criminal intent for IPC and PMLA charges. The criminal proceedings are quashed.
Application dismissed.
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2025 (1) TMI 1041
Levy of service tax - Support Services of Business or Commerce - receipt collected from the clients towards ocean freight - eligible documents under Rule 9 of Cenvat Credit Rules, 2004 or not - imposition of consolidated penalties under Section 76, 77 & 78 of the Act - extended period of limitation - it was held by CESTAT that the transactions in question were not liable to service tax and that procedural irregularities should not result in the denial of Cenvat credit.
HELD THAT:- There are no good ground and reason to interfere with the impugned judgment; hence, the present appeals are dismissed.
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2025 (1) TMI 1040
Taxability - services of construction of road by the appellant as a sub-contractor - construction and fixing of tiles in water reservoir by the appellant as a sub-contractor - service tax under reverse charge mechanism on the transportation service received from individual truck owners - interest - penalty.
Services of construction of road by the appellant as a sub-contractor - HELD THAT:- The submission of the appellant that service tax cannot be demanded for the pre-negative list period without classifying the service deserves to be accepted. In fact, the impugned order mentions the service tax as being demanded under construction services/ works contract services. The demand is vague and deserves to be set aside on this ground alone.
Construction and fixing of tiles in water reservoir by the appellant as a sub-contractor - HELD THAT:- There is nothing on record in the show cause notice or in the submissions made by the department to establish that these two services were rendered as services simpliciter. It has been held by the Supreme Court in Larsen & Toubro [2015 (8) TMI 749 - SUPREME COURT] that the charge of service tax under various heads of section 65 (105) other than section 65 (105) (zzzza) is only a charge of services simpliciter. Therefore, there cannot be any demand of service tax under any head other than under works contract services. There is no specific demand under works contract services - This charging section specifically excludes “works contracts in respect of roads” as well as the “works contracts in respect of dams”. Therefore, the demand of service tax either on the construction of roads or on the tiling of the reservoir for dams cannot be sustained.
Demand of service under reverse charge mechanism on GTA service - HELD THAT:- Section 65 (50a) defines goods transport agency as any person who provides service in relation to transportation of goods by road and issues a consignment note, by whatever name called. Section 65 (105)(zzq) defines “goods transport agency service” as a service provided to any person by “goods transport agency” in relation to transport of goods by road in a goods carriage. Unless the service provider is a “goods transport agency”, its services are not taxable either at the hands of the service provider or at the hand of service recipient because such services are out of the purview of the charging section. In order for an organisation to be a goods transport agency it must issue consignment notes. It is a well settled legal position that individual truck owners who do not issue consignment notes are not covered by the definition of goods transport agency and the services rendered by them are not exigible to service tax.
Interest and penalty - The demand of service tax under reverse charge mechanism on roads transport agency services on the services rendered by the individual truck owners also cannot be sustained. Since the demand of service tax cannot be sustained, the demand of interest and penalty also need to be set aside.
Conclusion - The demand of service tax either on the construction of roads or on the tiling of the reservoir for dams cannot be sustained. The demand of service tax under reverse charge mechanism on roads transport agency services on the services rendered by the individual truck owners also cannot be sustained. Since the demand of service tax cannot be sustained, the demand of interest and penalty also need to be set aside.
The impugned order is set aside - appeal allowed.
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2025 (1) TMI 1039
Liability of Ex-Servicemen Resettlement Society to pay service tax - no consideration is retained from the bills raised on the clients - exemption from service tax payment in view of the Notification No.14/2004-ST dated 10.09.2004 till 30.06.2012 - HELD THAT:- It is found from the documentary evidence that the Medical Colleges are required to run hospitals which are for the public welfare as well as provide facility of internship to the Medical College students. Therefore, the view of the Revenue not ascribed that the appellant would be eligible for exemption only if the security service is fully or wholly covered by the college. All the above colleges are eligible for exemption and no service tax is required to be paid when the Security Services are rendered to these colleges.
The appellant is periodically engaged in the welfare activities of the ex-servicemen and is providing job opportunities coordinating with RSB for such placements. For such activities, they do not get any considerations. The amounts received on actual of salary, PF etc., are directly credited to the accounts of such employees.
Conclusion - Services provided to educational institutions, including hospitals, are exempt from service tax. Reimbursements are not subject to service tax. Non-commercial activities of a society aimed at resettlement are not taxable.
The confirmed demand of Service Tax is not legally sustainable - Appeal allowed.
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