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2021 (5) TMI 921 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Seeking direction against the Appellant Banks and Financial Institutions to reimburse all the amounts appropriated by them after the Insolvency Commencement Date - Seeking to resume the working capital limits as available to the ‘Corporate Debtor’ as on the Insolvency Commencement Date.
HELD THAT:- As per Section 17(1)(d) of the I&B Code, the Financial Institutions maintaining the accounts of the ‘Corporate Debtor’ have to act on the instructions of the Interim Resolution Professional in relation to such accounts and furnish all information relating to the ‘Corporate Debtor’. This Tribunal in a catena of Judgements has held that Banks cannot debit any amounts from the account of the ‘Corporate Debtor Company’ after the Order of moratorium, as it amounts to recovery of amount - the Banks cannot freeze accounts nor can they prohibit the ‘Corporate Debtor’ from withdrawing the amount as available on the date of moratorium for its day-to-day functioning. Section 14 of the I&B Code overwrites any other provision contrary to the same and any amount due prior to the date of CIRP cannot be appropriated during the moratorium period. It is seen from the record that payments due under the LCs have been made out of the funds of the ‘Corporate Debtor’ as is established from the reduction of liabilities under non-fund based facilities.
Adjusting of the ‘Claims’ by the Appellant Banks during the CIRP out of the funds of the ‘Corporate Debtor’ results in unjust enrichment of the Banks and further, crediting amounts towards non-fund and fund based accounts during the moratorium period is against the provisions of Section 14 of the Code.
The non-Applicants are directed to release the title deeds for effective implementation of the terms of the ‘Resolution Plan’ as provided for under Section 31 of the Code - application allowed.
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2021 (5) TMI 920 - ITAT DELHI
TDS u/s 194C - disallowance of salary paid to the security guards on the ground that such payments have been made to the contractor without deducting tax - assessee has not disclosed mode of payment of salary - HELD THAT:- We find the assessee in the instant case is a small assessee and has produced confirmation of the persons on the letter head of its firm as proof of payment of salary to these persons. Merely because the assessee has not disclosed mode of payment of salary i.e. either by cheque or cash, the same in our opinion should not doubted by the learned CIT(A) especially when such salary to security guards comes to ₹ 27,000/- per month for four persons. Even, if the payment is made in cash, there will be no violation of section 40A(3) of the Act. We, therefore, hold that the learned CIT(A) is not justified in sustaining the addition paid to four individual persons towards salary to security guards. The first issue raised by the assessee is accordingly allowed.
Disallowance on account of shop rent and on account of godown rent - assessee did not file any reply to the query raised by AO - HELD THAT:- We find the assessee neither at the assessment stage nor at the remand stage has produced sufficient documents or evidence for the allowability of the rent. Considering the totality of facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the AO with a direction to grant one more opportunity to the assessee to substantiate her case and decide the issue as per fact and law. Accordingly, the second issue raised by the assessee in the grounds of appeal is allowed for statistical purpose.
Disallowance being proportionate interest on advance to different persons - HELD THAT:- As in view of the decision of the Hon’ble Supreme Court in the case of S.A. Builders ltd. vs CIT [2006 (12) TMI 82 - SUPREME COURT] no disallowance is called for. However, the learned CIT(A) dismissed the ground holding that no plausible explanation was offered for the query raised on this issue except stating that it was needed for business dealings. From the various details furnished by the assessee, we do not find what was the reason for giving such advance. The commercial expediency of the same has not been established - as not been established as to whether the assessee’s own capital and free reserves are more than the interest free advance extended by the assessee during the impugned assessment year.
Considering all we restore this issue to the file of the AO with a direction to give one more opportunity to substantiate the commercial expediency or to substantiate that her own capital and free reserves is more than the interest free advances given. The AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee.
Disallowance of low house hold expenses - HELD THAT:- We find the AO disallowed of ₹ 25,000/- on estimate basis being probable house hold expenditure on the ground that the assessee’s withdrawal is only ₹ 1,06,000/- and her husband is earning approximate ₹ 2.50 laksh per annum and the family of the assessee consists of the assessee, her husband and two school going children in the age group of 14 and 11 years. It is the submission of the learned counsel for the assessee that contribution of her husband is about ₹ 2 lakhs and the assessee has shown withdrawal at ₹ 1,06,000/- and such combined withdrawal is reasonable for meeting house hold expenses.
We find some force in the above arguments of the learned counsel for the assessee. The addition made by the AO is purely on surmises and conjectures and nothing has been brought on record to show any extravagant expenditure incurred by the assessee during the year. Since, the addition made by the AO is based on surmises and conjectures, which has been upheld by the learned CIT(A), therefore, we set-aside the order of the learned CIT(A) and direct the AO to delete the disallowance.
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2021 (5) TMI 919 - ITAT HYDERABAD
Sale of property - assessee had acquired lease rights over the property on 30.6.1950 by virtue of Settlement and Arrangement deed - Property belongs to the HUF of the assessee Or assessee individual - rights on ancestral property - enactment of Hindu Succession Act, in 1956 - Property acquired by virtue of family settlement deed - HELD THAT:- Prior to the enactment of Hindu Succession Act, in 1956, the ancestral property became the HUF property and after the said Act, the ancestral property becomes the self-acquired property of the person on whom it devolves. In the case before me clearly, the property was inherited by the father of the assessee in 1952 and was also conveyed to the assessee after the death of his father in 1955, i.e. before coming into force of Hindu Succession Act, 1950. Accordingly, the property belongs to the HUF of the assessee and not to the assessee individual. Therefore, the assessment order itself is liable to be quashed. Accordingly, grounds of appeal Nos. 2 and 3 are allowed and the assessment order is set aside.
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2021 (5) TMI 918 - ITAT DELHI
Revision u/s 263 - assessee has been selected for limited scrutiny on two grounds viz. verification of Purchase of property and verification of deduction claimed under the head capital gain and expanding the scope of scrutiny by the way of order u/s 263 - HELD THAT:- As gone through the notice issued by the revenue dated 29.07.2016 wherein the AO mentioned that two issues have been identified for examination which are verification i.e. purchase of property and verification of deduction claimed under the head capital gain.
We find that the complete details pertaining to both the issues have been examined by the AO and the replies of the assessee along with the details of sale of shares, confirmation of the parties, bank statements, purchase of property, registration document and deduction u/ s 54F claimed.
The entire details of the said two transactions which are the subject matter of scrutiny have been duly provided and examined by the AO and duly accepted after examination and verification.
We find that the deduction claimed u/s 54 F was ₹ 6,12 ,10 ,100/- whereas the deduction eligible was ₹ 6,11,19 ,500/-. Thus, there is a computational difference of ₹ 90,600 /- in the claim of deduction u/s 54 F which could have been rectified u/s.154. The provisions of section 263 need not be invoked for computational error for which other provisions of the Act are fairly sufficient. The directions of the ld. PCIT which are beyond the selection criteria of scope of scrutiny for the instant year cannot be held to be legally valid. Appeal of the assessee is allowed.
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2021 (5) TMI 917 - ITAT DELHI
Reopening of assessment u/s 147 - as per the assessment order the notice was returned back with the postal remark that the same was not accepted, thus passed assessment order u/s 144 - cash transaction treated as unexplained deposit and treated the same as income under Section 69A - HELD THAT:- As regards the contention of notice not properly served by the Assessing Officer, the explanation of the postal authorities is that the assessee has refused to take notice is a good service and hence ground Nos. 1 to 7 are dismissed.
Addition u/s 69A - From the perusal of the record presented before the CIT (A), it can be found that the explanation given by the assessee relating to sale of land for ₹ 36,90,000/- was duly reflected in his bank account. The CIT (A)’s stand that no explanation was offered relating to the remaining cash deposit to the extent of ₹ 26,20,000/- is not correct. The cash deposits were made according to the sale deed dated 22.07.2008 and the amount was received on 22.07.2008 and 24.01.2009 which was properly reflected in assessee’s bank account.
Therefore, the CIT (Appeals) was not right in sustaining the remaining amount of cash deposit to the extent of ₹ 26,20,000/-. Therefore, on merits the assessee succeeds and ground Nos. 8 to 13 are allowed.
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2021 (5) TMI 916 - ITAT DELHI
Penalty u/s 271(1)(c) - addition being speculative loss on derivative transactions which according to him cannot be set off against business income and disallowance u/s 14A r.w.r 8D(2)(iii) of the Rules - HELD THAT:- The Hon’ble Supreme Court in the case of CIT vs Reliance Petro Products Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] has held that making of an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. Merely because the assessee claimed deduction which has not been accepted by the Revenue, the penalty u/s 271(1)(c) is not attracted. If the contention of the Revenue is accepted, the assessee would be liable for penalty u/s 271(1)(c) of the Act in every case where the claim made by the assessee is not accepted by the AO for any reason. That is clearly not the intendment of the legislature. In view of the above discussion, we are of the considered opinion that the learned CIT(A) is fully justified in cancelling the penalty levied by the AO u/s 271(1)(c) .
Even otherwise also, a perusal of the notice issued by the Assessing Officer u/s 274 r.w.s 271 of the Act, dated 29.12.2011, a copy of which is placed at page 87 of the paper book shows that it is in only a printed form without striking off the inappropriate words in the said notice.
Therefore, it is not understood as to under which limb of the provisions of section 271(1)(c), the Assessing Officer has initiated penalty proceedings i.e. whether for concealment of income or for furnishing of inaccurate particulars of such income.
The Hon’ble Delhi High Court in the case of PCIT vs Sahara India Life Insurance Company Ltd. [2019 (8) TMI 409 - DELHI HIGH COURT] has dismissed the appeal filed by the Revenue on identical circumstances, the relevant observations of which have already been reproduced in the preceding paragraphs while recording the arguments of the learned counsel for the assessee. We, therefore, hold that the notice issued by the Assessing Officer is bad in law since it did not specify under which limb of section 271(1)(c) of the Act, the penalty proceedings have been initiated i.e. whether for concealment of income or for furnishing of inaccurate particular of income. In this view of the matter, we uphold the order of the learned CIT(A) cancelling the penalty levied by the Assessing Officer. The grounds raised by the Revenue are accordingly dismissed.
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2021 (5) TMI 915 - ITAT HYDERABAD
Validity of Revision u/s 263 - Assessment passed on a dead person - HELD THAT:- Having regard to facts that the order u/s 263 was passed on the assessee, after the death of the assessee and the consequent assessment order u/s 143(3) rw.s. 263 is also passed on a dead person, the said order has no legs to stand. Therefore, we set aside the assessment order dated 5.7.2019 passed on a dead person as not maintainable in law. Assessee’s appeal is allowed.
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2021 (5) TMI 914 - ITAT HYDERABAD
TDS u/s 194A - Disallowance u/s 40(a)(a) on account of non-deduction of tax at source on interest payments - HELD THAT:- As decided in own case [2021 (5) TMI 735 - ITAT HYDERABAD] assessee has deposited the amount with the Court, but, it has not actually paid to the actual recipients directly i.e., pattadars. On analysis of the above cited section and Circulars, it is clear that the assessee is not responsible for deducting tax deduction at source and assessee is also not sure that when the amount shall be paid to the actual recipients/pattadars. In our considered opinion, the addition made in this regard is not sustainable in the eyes of law and, therefore, the addition is deleted.
Depreciation on plant and machinery - AO allowed depreciation @ 10% treating it as ‘building’ as against the assessee’s claim of 15% as plant & machinery - HELD THAT:- As decided in own case [2021 (5) TMI 735 - ITAT HYDERABAD] we allow this ground of appeal of the assessee by holding that the assessee is entitled to charge depreciation @ 15% under the block of assets “plant and machinery”, as against 10% made by the AO. This ground of appeal raised in both the appeals under consideration is allowed.
Disallowance of expenditure by way of penalty or fine for violation of any law for the time being in force - allowable revenue expenditure u/s 37(1) or not? - Since the assessee failed to substantiate the said expenditure with documentary evidence, the AO made the addition, which was confirmed by the CIT(A) - HELD THAT:- The submissions of the assessee is that these are the payments made to various state government departments for delay in submission of form or document or compliance with the procedures, in which case, the payment is not for violation of law but compensation for not complying with law and allowable expenditure as normal business expenditure u/s 37(1) of the Act. We are in agreement with the submissions of the assessee and, therefore, we direct the AO to delete the addition made on this count. Accordingly, this ground of appeal is allowed.
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2021 (5) TMI 913 - ITAT DELHI
Unexplained income - Addition of opening stock of assessee undisclosed - HELD THAT:- The clinching issue which goes in favour of the assessee is that the sales made by assessee out of the alleged undisclosed opening stock on by the assessee has been accepted by the learned AO. The resultant trading profit has also been accepted.
Further on the opening stock allegedly not existing according to the AO amounting to ₹ 51,051,565/–, assessee has shown sales of ₹ 52,851,660/– and has disclosed a gross profit of ₹ 1,800,095 only. From the above gross profit assessee has incurred expenditure of almost ₹ 10 lakh and has shown meager net profit of ₹ 875,491/–. Therefore, it is apparent that assessee has only got capitalization of ₹ 875,491 where the AO has alleged that the opening stock of ₹ 51,051,565/– is nonexistent and bogus. On the factual metrics itself, the allegation of the learned assessing officer seems to be unsustainable because why a person would show and on accounted opening stock of the magnitude of ₹ 51,000,000 just to on a meager net profit of ₹ 875,000/–
No infirmity in the order of the learned CIT – A in deleting the addition made by the learned assessing officer holding that the opening stock of the assessee was an unexplained income of the assessee as such stock in trade was not in existence. In the result, the solitary ground of appeal of the learned AO is dismissed.
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2021 (5) TMI 912 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH, NEW DELHI
Recovery of electricity charges during CIRP - Whether the Appellant was entitled to recover electricity charges being incurred by the Corporate Debtor on month to month basis after the CIRP was initiated against the Corporate Debtor? - HELD THAT:- Regulation 32 makes the distinction clear. If the electricity consumption was for manufacturing and output of the Biscuits which is the normal operation of the Corporate Debtor, in that case dues arising from such supply of electricity during moratorium would have to be paid during moratorium - In present matter the consumption is stated to have been for running of office and security of Corporate Debtor. In that case, the same will be part of the CIRP Costs which can be recovered when the Resolution Plan is approved or would form part of Section 53 if the Liquidation has been initiated.
The electricity charges during CIRP would form part of CIRP Costs - Appeal disposed off.
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2021 (5) TMI 911 - ITAT DELHI
TDS u/s 194J - TDS on royalty - payment of minimum guarantee royalty paid by the assessee was outside of the royalty to sub section (vi) of Section 9(1) - HELD THAT:- We find that CIT(A) while deleting the addition has noted that AO was unable to show as to under which of the clause (v) to Explanation 2 to Section 9(1)(vi) of the Act the payment of royalty for the purpose of Section 194J of the Act was covered and the payment of minimum guarantee royalty paid by the assessee was outside of the royalty to sub section (vi) of Section 9(1) and therefore the provisions of Section 194J were not applicable. We further find that on identical issue in assessee’s own case for A.Y. 2011-12 [2020 (6) TMI 264 - ITAT DELHI].
Before us, Revenue has not pointed any fallacy in the findings of CIT(A) nor has pointed to any distinguishing feature in the facts of the case for the year under consideration and that of AY 2011-12. Revenue has also not placed any material on record to demonstrate that the order of the co-ordinate Bench of the Tribunal in Assessee’s own case for AY 2011-12 has been setaside/stayed/orverruled by higher judicial forum. In such a situation, we find no reason to interfere with the order of CIT(A). We therefore dismiss the ground of the Revenue.
Additions u/s 69A - HELD THAT:- We find that CIT(A) while deleting the addition has given a finding that the AO has made addition merely on the basis of suspicion without having any material against the assessee. He has further given a finding that entire has been received by the assessee, recorded in the Books of account and therefore no addition u/s 69A can be made merely because the receipt was disclosed of in each two different account. No material has been placed by the Revenue to point out any fallacy in the findings of CIT(A). We therefore find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed.
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2021 (5) TMI 910 - ITAT MUMBAI
Disallowing the claim of the appellant to reduce the reversal of provision for bad and doubtful debts from the book profits computed under section 115JB - HELD THAT:- If we apply the purposive test of the enactment being considered here. To recapitulate the provision of the act mandates that if assessee writes back provision for bad debt made in appeal years, the deduction of the same from the book profit is permissible if the provision created in the earlier year has been added back to the book profit. In this regard, the CBDT circular No. 550 explains that such an action in earlier year should have gone to increase the book profit of the said year. We are of the considered opinion that in this regard if the assessee is not called upon to pay any tax on book profit as taxes on normal computation are higher even after the aforesaid exercise of increase of the book profit by the amount of provision for the concerned year, the exercise would be an empty exercise and revenue neutral. This means that the assessee would not have been called upon to pay any extra tax whatsoever had this exercise been done.
The explanation invoked by the authorities below is not applicable on the facts of this case. Even for argument sake, we consider the view that there are two views possible, we are of the considered opinion that the view in favour of assessee is on an overwhelming higher side. In this view of the matter, as expounded by the Hon’ble Court’s Constitution bench in the case of Dilip Gandhi [2018 (8) TMI 271 - ITAT MUMBAI] if two views are possible in a statutory tax provisions, the one in favour of the assessee should be adopted. Accordingly, in the background of the aforesaid discussion and precedent, we are of the considered opinion that the order of the ld. CIT(A) is not sustainable. Accordingly, we set aside the order of the ld. CIT(A) and decide the issue in favour of the assessee.
Interest u/s.234C - As assessee submitted that interest is leviable on returned income and not on assessed income. That this submission was made but not considered by the ld. CIT(A) - HELD THAT:- Upon careful consideration we find that this issue is consequential, the A.O. shall consider the same as per law.
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2021 (5) TMI 909 - CESTAT NEW DELHI
Rectification of Mistake - waiver of penalty under Section 114AA of the Customs Act - reduction of penalty under Section 112 (a) of the Customs Act - HELD THAT:- The scope of an application under Rules 41 for Rectification of Mistakes is only to rectify any mistake apparent on record and not to review any decision already taken even, if any party feels that the decision is not correct. The aggrieved party can take recourse to appellate remedies if it is not satisfied with the Final Order.
The first alleged mistake pointed out by the applicant is that in paragraph 5 of the Final Order, it has been recorded that all the ETAs submitted were fake, while, in fact, as recorded in paragraph 6 of the impugned order in original passed by the Learned Commissioner, only two ETAs were fake and the rest 14 ETAs were issued by DOT but were held to be invalid in the OIO because they were meant for Fitbits manufactured in USA while the Fitbits which were imported were manufactured in China - As clarified in paragraph 2(ii) of the Minutes of the meeting held by Chief Commissioner on 24-11-2016 a copy of which was enclosed as Annexure 20 to the Appeal, the ETAs are valid even if they are of a different country of origin. The two fake ETAs accounted for goods worth ₹ 1,26,69,14/- while the remaining 14 FTAs accounted for goods worth ₹ 1,39,45,581/-. We find that this mistake needs to be rectified in the Final Order.
The second alleged mistake is that they had obtained fresh ETAs in lieu of the fake ones which they had initially submitted, therefore, the goods imported were not liable for confiscation. We find that this submission was made and was recorded in paragraph 3 and the decision was recorded in paragraph 7 of the Final order - this submission was considered and in the Final Order, the appellant was still considered liable to penalty. There is no error apparent on record.
The third submission is that there is no prohibition on import of wireless devices which was not considered by Tribunal in the Final Order - in paragraph 3 of the Final Order, the argument of the appellant that the goods were not liable for confiscation as they were not imported contrary to any prohibition under the Customs Act or any other law for the time being in force was recorded and the submissions by the DR were recorded in paragraph 4 - In the present case, the entire case is built upon this National Treatment under paragraph 2.03. Therefore, we find no force in the argument of the applicant that their import was not in violation of any law and hence the imported goods were not liable for confiscation nor were they liable to penalty.
Penalty imposed on the applicant under Section 112 (a) (ii) of the Customs Act, 1962 - HELD THAT:- The argument of the learned Counsel that the penalty cannot be more than the duty sought to be evaded under Section 112(a)(ii) is untenable since there was neither any allegation of attempt to evade payment of duty by the department nor any arguments were made on this point. We therefore, find that there is no force in this argument. The quantum of penalty, however, needs to be reconsidered, since 14 of the 16 ETAs were genuine with only wrong Country of Origin, which, according to the final clarification of the DOT does not matter and the ETAs are valid.
The application for rectification of mistake is disposed off.
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2021 (5) TMI 908 - CESTAT MUMBAI (LB)
Confiscation - short payment of Customs Duty - valuation of this remnant ATF - cost of transportation - rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - HELD THAT:- An amount should actually be agreed to be paid and a liability created is for such payment, irrespective of actual payment. The use of the word ‘paid’ or ‘payable’ means that it would cover those cases also where actual payment of the agreed amount for cost and services is deferred to be paid on a subsequent date - Even under rule 10(2) of the 2007 Rules, the cost of transport incurred in respect of the imported goods is required to be added to the value of imported goods only if the same has been incurred and does not already form part of the value of the goods that are imported. The first proviso to rule 10(2) of the 2007 Rules contemplates of a situation where the cost of transportation is not ascertainable and it is only in such a situation that 20% of the FOB value of imported goods can be added.
It, therefore, follows that where transportation of goods is involved and cost is actually incurred or is liable to be incurred for such transportation, such cost has to be added to the transaction value, but where there is no transportation of goods nor there is any liability to incur the cost of such transport, the first proviso to section 14(1) of the Customs Act and rule 10(2) of the 2007 Rules would not be attracted.
Transportation - whether the ATF which is filled in the fuel tank of an aircraft is actually being transported through an aircraft? - HELD THAT:- The answer clearly is that the airlines are not transporting ATF for delivery to India. ATF which is filled in the fuel tank of the aircraft is actually required to fly the aircraft and is a consumable for the airlines. It cannot, in such circumstances, be urged that ATF is being transported through the aircraft. A different situation would, however, arise if an oil company specifically imports ATF in large containers/tanker as ‘goods’ or as cargo, for the purpose of selling the same to airlines. There can be no doubt that in such a situation the cost of transportation for import of ATF would have to be included in the transaction value for the purpose of determining the customs duty liability - Thus, if there is no transportation of remnant ATF, the notional cost of freight cannot be included in the value of remnant ATF.
Cost For Transportation - HELD THAT:- If no cost of transportation is incurred/suffered by the airlines, no amount as “cost” is payable in towards transportation of the remnant ATF - In the instant case, it has been found as a fact that neither the ATF is transported nor any cost is incurred. The notional value of transportation under the proviso to rule 10(2) of the 2007 Rules cannot, therefore, be added to the transaction value. The transaction value has to be determined strictly in accordance with section 14(1) of the Customs Act and rule 10(2) of the 2007 Rules.
Notional charges have to be included only in cases where actual invoice price for the remnant ATF is not available or such invoice price does not include the cost of transportation when actually incurred but the amount incurred is not ascertainable. The Instructions further provide that in the absence of such invoice price, the price at which Indian Airlines/ Air India purchase the ATF at the Mumbai Airport i.e. IOCL price for International flights should be taken into consideration. The Instructions do not mandate further addition of insurance charges when IOCL price is to be adapted, even when such charges are not incurred - thus, the inclusion of the cost of insurance or the cost of transport is dependent on the provision of section 14(1) of the Customs Act and rule 10(2) of the 2007 Rules and not on any practice followed by the Customs Authorities/Airlines.
No amount towards alleged transportation cost is required to be included in the value of remnant ATF under rule 10(2) of the 2007 Rules for determining the transaction value under section 14(1) of the Customs Act - reference answered.
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2021 (5) TMI 907 - CESTAT CHANDIGARH
Interest is demanded on account of delayed payment of duty - supplementary invoice during the period 2009-10 for the period 2008-09 to 2010-11 - Penalty - Time Limitation - HELD THAT:- In this case, it is a fact of record that the appellant did not pay interest for the intervening period when they issued supplementary invoices for duty paid thereon. It is also a fact on record that thereafter an audit took place in January-February 2012 for the period 2008-10 and asked the appellant to make the payment of interest for the intervening period, but the appellant did not comply with the said direction. Thereafter, the Revenue was sleeping for more than 3 years and on the morning of 3rd September 2015, a show cause notice was issued to demand interest for the intervening period by invoking extended period of limitation. As it was in the knowledge of the Revenue that the appellant has not paid the interest very well in January-February 2012 despite direction, but no show cause notice was issued to the appellant within one year from the said period. In these circumstances, the show cause notice issued on 03.09.2015 is barred by limitation.
The demand of interest is not sustainable - no penalty can be imposed on the appellant - Appeal allowed - decided in favor of appellant.
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2021 (5) TMI 906 - CESTAT NEW DELHI
CENVAT Credit - CENVAT Credit - Input service distribution (ISD) - input service is attributed to the goods on which excise duty is paid includes the cost of services on which credit was taken - Issuance of Input Service Distributors’ invoice by Parle to its contract manufacturing unit - contract manufacturing is carried out in terms of notification No. 36/2001-CE (NT) - HELD THAT:- The appellant accepted the authorization and agreed to discharge all liabilities under the Excise Act and Rules made thereunder in respect of the goods manufactured from time to time by the appellant on behalf of Parle. The terms and conditions also stipulate that the appellant would work as a job worker for manufacture of “Biscuits” for Parle and that Parle would arrange to send the raw materials and packing materials to the appellant on payment of Central Excise duty and that the appellant would avail CENVAT credit of Excise duty paid on the raw and packing materials and capital goods. It also provides that the appellant would made excise invoice/stock, Transfer Notes to Depots or Wholesalers of Parle and would pay Excise duty on the assessable value as shown in the invoice of Parle - It is in terms of the CENVAT Rules, the Registration Exemption Notification and the aforesaid authorization that it has to be determined whether input service credit is available to the appellant even prior to 01.04.2016.
The Constitution Bench of the Supreme Court in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY & ORS. [2018 (7) TMI 1826 - SUPREME COURT] was constituted to examine what would be the interpretative rule to be applied while interpreting a tax exemption provision/ notification when there is an ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax to be applied. The Supreme Court observed that the core issue to be examined in the event of any ambiguity in an exemption notification is whether the benefit of such an ambiguity should go to the assessee or should be considered in favour of the revenue by denying the benefit of the exemption to the assessee.
CENVAT is a beneficial scheme with the stated purpose of allowing CENVAT credit of all taxes paid on inputs and services so as to avoid cascading effect of taxes and duties - even in terms of the provisions of rule 2(m) and rule 7 of the CENVAT Rules, as they stood prior to 01.04.2016, the appellant could distribute CENVAT credit in respect of the service tax paid on inputs services to its manufacturing units, including a job workers.
Parle was justified in distributing credits on input services attributable to the final product on a pro-rata basis proportionate to the turnover of each unit between the manufacturing plants of Parle and its contract manufacturing units, including the appellant, under rule 7(d) of the CENVAT Rules.
It would not be necessary to answer the issue that whether the appellant would, irrespective of the answer to the first issue, be entitled to avail CENVAT credit when input service is attributed to the goods on which excise duty is paid and includes the cost of services on which credit was taken.
The matter may now be placed before the Division Bench for disposal of the appeal.
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2021 (5) TMI 905 - CESTAT CHANDIGARH
Quantum of Redemption Fine and Penalty - misdeclaration of imported goods - goods declared as heavy melting scrap but was found to be re-rollable scrap - HELD THAT:- Nowhere, the Revenue has come with the evidence that prior to the physical examination of the goods in question, the appellant was having any knowledge of the description of the goods that they are not heavy melting scrap and are re-rollable scrap. In this circumstance, although the goods are liable for confiscation as they were not found as declared but redemption fine imposed is on higher side, accordingly the same is reduced to ₹ 40,000/- and penalty is also reduced to ₹ 10,000/-.
Appeal allowed.
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2021 (5) TMI 904 - ITAT MUMBAI
Addition u/s. 69 based on information received from Australian Tax authorities - HELD THAT:- Addition is solely made on the basis of statement of the assessee’s son before Australian Tax Authorities and affidavit by the assessee before them that fund found in possession of the son were arranged by assessee by hawala transaction. When confronted by the investigation department of the Revenue, the assessee has rebutted the above allegation. The rebuttal or refusal by the assessee has only been referred by the A.O. without bringing on record the actual rebuttal.
There is absolutely no other material in the hand of the A.O. of proving the addition in the hands of the assessee. Despite the assessee’s request, the copy of information received from Australian tax Authority has not been given to the assessee. In these circumstances, the addition made, which is based upon the information from a foreign source, without confronting the same to the assessee and without any corroborative material is not at all sustainable.
Deduction u/s 36(1)(vii) r.w.s. 36(2) - assessee has written off the balance loan outstanding in profit and loss account - company has not returned the loan to the assessee and it has become time barred - HELD THAT:- We find that the assessee’s claim is that the assessee has given a loan to a party in the course of business several years ago. Since, the party has not repaid the loan and it has requested its name to be struck off from the Register of company by ROC, the assessee has claimed it u/s.36(2) as bad debt. The revenue has held that this cannot be allowed as it was not a debt which has been written off. We note that if a loan is no longer recoverable that can be considered as a loss and allowed u/s.37(i) of the Act. Quoting a wrong section is not falal. Hence, the fact that the amount has become irrecoverable needs to be examined. Hence, we remit the issue to the file of the A.O. to examine the case of the assessee in light of our observation as above. Needless to add that the assessee should be given an opportunity of being heard.
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2021 (5) TMI 903 - CESTAT CHANDIGARH
Grant of interest on delayed refund - relevant time for calculation of interest - annual production capacity under Compound Levy Scheme was fixed - HELD THAT:- The appellant filed the refund claim on 14.09.2005. The said application was kept pending by the Revenue and the same was not entertained. It was entertained only after the adjudication order on 31.10.2008 and the amount of refund was adjusted against the demand raised by order dt. 17.10.2008. Again, the litigation continued and finally this Tribunal hold that the said demand is not sustainable and remanded the matter back to the adjudicating authority for fresh adjudication.
In terms of the decision of the Hon’ble Apex Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [2011 (10) TMI 16 - SUPREME COURT], wherein the Apex Court has held that if the assessee filed the refund claim is entitled to claim the interest on delayed refund after three months from the date of filing of the refund claim although there is a litigation in the matter.
In the present case, it is apparent on record that the said refund was sanctioned but was adjusted against the demand which was not sustained - the appellant is entitled to claim interest after three months from the date of filing of the refund claim i.e., after 3 months of date of filing the refund claim i.e., 14.09.2005 till its realization.
Appeal allowed - decided in favor of appellant.
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2021 (5) TMI 902 - CESTAT CHANDIGARH
Levy of redemption fine and penalty - provisional release of goods - goods declared as as heavy melting scrap but was found to be secondary and defected MS Sheets - HELD THAT:- On detection of the goods on being mis-declared by the appellant, the appellant sought provisional release of the goods which was allowed and at that time, the appellant paid differential duty alongwith interest and 15% of duty as penalty in terms of Section 28(5) of the Customs Act, 1962. Later on, the show cause notice has been issued to the appellant to adjust the duty paid by the appellant under Section 18(2) of the Customs Act, 1962.
The provision of Section 18(2) speaks that “when the duty leviable on such goods is assessed finally (or re-assessed by the proper officer) in accordance with the provisions of this Act, then the amount paid by the assessee at the time of clearance shall be adjusted.” On going through the records placed, there is no final assessment order has been placed which means the provisional release of the goods has been treated as final and the duty paid by the appellant has been adjusted under Section 18(2) of the Act. It is very strange that without finalization of the assessment, re-assessment of the bill of entry, how the duty paid by the appellant has been adjusted under section 18(2) of the Act and demanded the interest and imposed the penalty on the appellant.
Without demanding duty under Section 28(1) of the Act, how can it be adjusted under section 18(2) of the Act. Technically speaking the demand of differential duty is also not sustainable in the circumstances till finalization of the assessment; as the appellant has not contested the payment of duty and sought conclusion of the matter under Section 28(5) of the Act. Moreover, when the demand of interest has been made under Section 28 AA of the Act, naturally or consequentially the provisions of Section 28(5) of the Customs Act, 1962 have been attracted in the facts and circumstances of the case. Therefore, the duty, interest and penalty paid by the appellant at the time of clearance of the goods shall amounts to be concluded under Section 28(5) of the Customs Act, 1962 Instead of doing so, the officers of the Revenue has gone beyond that, which is not permissible in law.
The duty, interest and 15% penalty in terms of Section 28(5) of the Customs Act, 1962 paid by the appellant is sufficient - appeal allowed.
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