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2022 (1) TMI 1353 - TELANGANA HIGH COURT
Assessment u/s 144C - AO empowered u/s 144C to frame draft assessment order - depreciation claimed on goodwill disallowed - Respondent No. 1 while passing the draft assessment order had completely overlooked the decision in the petitioner's own case [2019 (11) TMI 803 - ITAT HYDERABAD] - petitioner seeks quashing of the order passed by respondent No. 1 and seeks a direction to respondent No. 1 to pass a speaking and reasoned order dealing with all the objections raised by the petitioner - HELD THAT:- Dispute Resolution Panel is a high-powered body constituted under the Act as an oversight body for the guidance of the AO. The object behind constitution of the Dispute Resolution Panel appears to be to ensure that the assessment proceedings are kept within the bounds of law while adhering to the principles of natural justice. Though the Assessing Officer has been empowered u/s 144C to frame draft assessment order, the same is however subject to confirmation by the Dispute Resolution Panel.
As already noticed that under sub-section (5), the Dispute Resolution Panel has the mandate to issue directions for guidance of the AO while framing the assessment and under sub-section (8) the Dispute Resolution Panel may confirm or reduce or enhance the variations proposed in the draft assessment order. Both sub-sections (5) and (8) have to be read together, and from a conjoint reading of the two provisions it is clearly discernible that the final say, in so far as the assessment is concerned, rests with the Dispute Resolution Panel.
The approach of the AO as manifest in clauses (a) to (d) as extracted above, to our mind is problematic. In so far as the decision of the Income-tax Appellate Tribunal, Hyderabad "A" Bench, Hyderabad in respect of petitioner's own case for the assessment year 2014-15 [2019 (11) TMI 803 - ITAT HYDERABAD], the Assessing Officer has stated that the Department has not accepted the said decision. The views of the Income-tax Appellate Tribunal is not acceptable to the Department, and therefore, it has been appealed before the High Court. As such, the issue of addition of depreciation claimed on goodwill has not attained finality.
We are afraid such a view taken by the Assessing Officer can be justified. Rather, it is highly objectionable for an Assessing Officer to say that the decision of the Income-tax Appellate Tribunal is not acceptable ; and that since it has been appealed against, the issue of allowability of depreciation on goodwill has not attained finality. Unless there is a stay, order/decision of the jurisdictional Income-tax Appellate Tribunal is binding on all Income-tax authorities within its jurisdiction.
Giving a restricted meaning to the above words would intrude into, rather curtail, the jurisdiction of the Dispute Resolution Panel which could not have been the intent of the Legislature. While the Dispute Resolution Panel shall not set aside any proposed variation, it certainly has the power and jurisdiction to reduce the variations proposed in the draft order.
Following the above decisions of the Supreme Court KRISHNA SALES (P) LTD. [1993 (9) TMI 124 - SUPREME COURT] a Division Bench of the Bombay High Court in Ganesh Benzoplast Ltd. v. Union of India [2020 (9) TMI 180 - BOMBAY HIGH COURT] held that non-compliance of orders of the appellate authority by the subordinate original authority is disturbing to say the least as it strikes at the very root of administrative discipline and may have the effect of severely undermining the efficacy of the appellate remedy provided to a litigant under the statute.
The second view expressed by the Assessing Officer vis-a-vis the decision of the Supreme Court in Smifs (2012 (8) TMI 713 - SUPREME COURT] is still more problematic. It is not open to the Assessing Officer to try to evade from the binding effect of a Supreme Court decision by trying to find out "distinguishing features". Though unnecessary, we are still compelled to refer to article 141 of the Constitution of India which says that the law declared by the Supreme Court shall be binding on all courts within the territory of India. Therefore, it is the bounden duty of all authorities whether administrative or quasi judicial or judicial to follow the law declared by the Supreme Court.
While we agree with the learned standing counsel that the draft assessment order has not yet attained finality as it still has to be placed before the Dispute Resolution Panel and therefore, in the circumstances, we feel that interfering at this stage may not be justified as it would pre-empt decision-making by the high-powered Dispute Resolution Panel. However, we hope and trust that the Dispute Resolution Panel shall look into all aspects of the matter, more particularly, the discussions made above while passing appropriate order(s) under sub-section (8) of section 144C of the Act, and if necessary further personal hearing shall be afforded to the petitioner.
DRP shall look into and consider the objections raised by the petitioner more particularly, about the decision of the Income-tax Appellate Tribunal in its own case for the assessment year 2014-15 and the judgment of the Supreme Court in Smifs (supra) keeping in mind the discussions made above.
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2022 (1) TMI 1352 - SUPREME COURT
Seeking disposal of appeal - Resolution Plan approved by the Committee of Creditors has been finally upheld by this Court - it was brought to the notice of the Court that the appellant had preferred some appeal before the National Company Law Appellate Tribunal (NCLAT) and it was still pending at the relevant time - HELD THAT:- This Court directed that the said appeal shall proceed on merits. Pursuant to that liberty, the concerned appeal has now been decided by the NCLAT vide impugned judgment. In our opinion, it was sufficient for the NCLAT to dispose of the appeal before it by restating the factual position noted while considering the Plan submitted for approval before the Committee of Creditors.
The appeal needs to be disposed of by restating the said fact with liberty to the parties to pursue all contentions available to them in the proceedings pending at the relevant time, if any - It is stated that some arbitration proceedings were pending between the parties. If so, all contentions available to both sides be decided in the said proceedings on its own merits in accordance with law.
Appeal disposed off.
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2022 (1) TMI 1351 - ITAT COCHIN
Assessment u/s 153A - Undisclosed income - Credits Transferred from Nagaland based entities - sufficient incriminating material found n search or not? - HELD THAT:- As AR submitted that in the absence of any incriminating material on record, no such additions could have been made by AO. This plea could not be accepted since this is not a case wherein no incriminating material has been found. Rather, it is the finding of CIT(A) that several incriminating materials were seized which include blank letter head of Nagaland based persons / entities, blank cheques, notes / diaries containing details of payments received and transferred. The evidence relating to unexplained investment made in cash towards purchase of immoveable properties was also seized. Thus, this is a case where sufficient incriminating material has been found by investigation team which indicates undisclosed income of the assessee - Decided against assessee.
Best judgement basis u/s 144 - As alleged by assessee no notice u/s 143(2) was issued - Assessment Proceedings for AY 2018-19 - HELD THAT:- As it was to be held that none of the conditions for invoking jurisdiction u/s 144 was satisfied by Ld. AO which would vitiate the assessment proceedings. Further, the assessee has filed valid return of income and no notice u/s 143(2) has ever been issued before making assessment. The non-issuance of notice u/s 143(2), in non-curable defect and therefore, assumption of jurisdiction and subsequent order passed u/s 144 becomes bad-in-law. The case laws as cited above clearly support the legal ground raised by the assessee. Therefore, we hold that the assessment order passed for this year fails on legal grounds and the consequential additions made therein become unsustainable. We order so. This being so, no further adjudication is required in the appeal for AY 2018-19. The assessee’s appeal stand allowed on this ground alone.
Addition based on statements recorded by investigation wing during the course of search operations from various persons - HELD THAT:- The pre-existing statements recorded by the Investigation Wing could not form the sole basis of assessment. It could also be seen that Shri G.K. Rengma retracted the statement vide affidavit dated 01.04.2019 wherein he clarified that the statement was recorded incorrectly. The said retraction was supported by the audited financial statements of Shri G.K. Rengma as placed on record. The total turnover of Shri G.K. Rengma as reflected in these financial statements is much higher than the figures recorded in the statement. Under these circumstances, the third-party statements recorded from Shri G.K. Rengma as well as from other persons would lose evidentiary value. The statements of remaining persons i.e., land owners / various other contractors have never been independently examined by Ld. AO. The copies of statement were never confronted to the assessee and no opportunity of cross-examination was ever provided to the assessee. Accordingly, the ratio of decision of Hon’ble Apex Court in Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] would apply to the facts of the case and support the case of the assessee. Considering the same, no much weightage could be given to such statements and the same, on standalone basis, would not be sufficient to support the impugned additions.
Addition under provisions of Sec.68 or 69 or 69A to 69D - as argued additions have been made merely on the basis of surmises, conjectures and on borrowed satisfaction without specifying the relevant sections under which additions have been made - HELD THAT:- The onus of the assessee has to remain confine to the extent of credits received by the assessee in his own books of accounts and not any further. To hold any contrary position, Ld. AO must establish this fact otherwise no such debits / credits appearing in bank accounts of other parties could be deemed to be the income of the assessee. The assessee’s onus u/s 68 in respect of entries in books / bank accounts of other persons is only secondary i.e., consequential upon the successful discharge of the primary onus by the A.O of establishing the assessee to be the actual owner of the books of account / bank accounts held in the names of other persons. This position has been held by Hon’ble Supreme Court in the case of CIT Vs. Daulat Ram Rawatmull [1972 (9) TMI 9 - SUPREME COURT].Therefore, the credits appearing in the other bank accounts could not be held to be income of the assessee.
Adjudication on Merits - Credit Entries Received from Nagaland bases entities / individual - HELD THAT:- As we find that the debit / transfer entries aggregating to Rs.243.19 Crores have been treated to be the assessee’s income on the allegation that assessee’s unaccounted income has been routed through these accounts for the benefit of group as a whole. However, in para 7.10, we have already taken a position that the credit transfer received by the other family members and group concerns could not be assumed to be assessee’s undisclosed income since it is nowhere been established by the lower authorities that the assessee was de-facto owner of either Nagaland based bank accounts or the owner of bank accounts of various recipients. The other family members and group concerns of the assessee were separate Income Tax assessee and subjected to separate assessment. Therefore, the credit received in those accounts could not be held to be the assessee’s income. Under these circumstances, the assessee’s onus would remain confine to explain the credit received by it in his own bank accounts. Further, the assessment proceedings for AY 2018-19 have already been quashed by us on legal grounds. Therefore, at the outset, the addition, to that extent, could not be sustained in the hands of the assessee.
Assessee’s onus to prove the ingredients of Sec.68 with respect to unsecured loan received from Shri G.K. Rengma and M/s Excellence Associates - Undisputedly the transactions have taken place through banking channels. On the basis of all these documentary evidences, it could be said that the requisite onus as required to be discharged u/s 68 was duly discharged by the assessee and it was the onus of the revenue to dislodge the same - upon perusal of orders of lower authorities, we find that no cogent material or evidences are on record to dislodge the claim of the assessee rather the additions are based more on allegations, surmises, conjectures and mere suspicion. In such a case, these amounts could not be considered to be the assessee’s undisclosed income. We order so. In the result, the addition to the extent of Rs.5,44,90,000/- is sustained under this head and the balance additions stand deleted. The corresponding grounds raised by the assessee in all the years stands partly allowed.
Cash deposit in the bank accounts of the assessee - Since the assessee group has incorporated the alleged cash payment of Rs.16.10 Crores for purchase of immoveable properties in these cash flow statements, the separate addition made to that extent would also not be sustainable. Even otherwise, the properties have not been purchased by the assessee rather this addition is subject matter of consideration in other family members / entities which are separate taxable entities and therefore, the addition for those entities would not be sustainable in the hands of the assessee.
Other Credit Entries in Bank Account of the assessee and other family members / entities - Since the assessment for AY 2018-19 has been quashed by us, the additions to that extent are otherwise not sustainable. The remaining credit entries for Rs.353.64 Lacs pertain to AYs 2012-13 & 2017-18. Out of this amount, the assessee has identified amount of Rs.88.50 Lacs being the entries which are lacking complete details / supporting evidences. The remaining entries are either not in the nature of income and a part of these entries has already been disclosed under IDS 2016. Few of the entries have already been disclosed in the Income Tax Returns of the assessee. The complete details of these entries have been placed by the assessee on page numbers 58 and 59 of Paper Book No.3A. We have perused the same. We find that all the other credit entries are in the nature of maturity proceeds of LIC, Chit money received by the assessee, directors loan withdrawn, mutual funds proceeds from UTI, refunds etc. These entries are not in the nature of assessee’s income. Therefore, the additional amount of Rs.88.50 Lacs as worked out by the assessee is found to be correct and therefore, sustained in the hands of the assessee. The remaining addition stands deleted since the same is not the in nature of income.
Credit for income disclosed under IDS 2016 has not been given to the assessee - We find that this credit was not given in the absence of requisite declarations / certificates forthcoming form the assessee. The assessee has now placed all these documents in the paper book which has been detailed in Table 35 of written submissions. Further, the assessee has already considered such declaration while working out additional income which has also been accepted by us. Therefore, the assessee is left with no grievance on this account.
Non consideration of additional evidences / documents as filed by the assessee before Ld. CIT(A) on 15.03.2021 and 16.09.2021 - Since, we have substantially accepted the working of the assessee which has been considered after incorporating all these evidences, the assessee is left with no grievance on this issue. The remaining grounds are either general or consequential in nature which does not require any specific adjudication on our part.
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2022 (1) TMI 1350 - CALCUTTA HIGH COURT
Eligibility of the respondent assessee to be entitled for being considered under the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 - only reason for rejection of the application of the appellant was that wrong particulars in respect of the order-in-original were uploaded while applying under the said scheme but the fact remains that the appellant furnished the necessary documents including the order-in-appeal as well as the order in original before the Designated Committee well before the last date for applying under the said scheme.
HELD THAT:- In the facts of the instant case it was incumbent upon the Designated Committee to offer an opportunity to the appellant to rectify such technical error within a stipulated time. Since admittedly the order of rejection was communicated to the appellant after expiry of the last date stipulated under the said scheme for submission of the application and also that the relevant materials are available with the Designated Committee, this Court is of the considered view that the Designated Committee should be directed to consider the claim of the appellant as to the entitlement of the appellant to the benefits of the said scheme.
In the case of M/s. Sobha Limited vs. Union of India & Anr. [2020 (10) TMI 208 - PUNJAB AND HARYANA HIGH COURT] the Hon'ble Division Bench of Punjab and Haryana High Court at Chandigarh had considered an identical issue and the order of rejection of the declaration filed in Form SVLDRS-1 was set aside and direction was issued to the designated authority to decide the application afresh. Identical direction was issued in the case of Vaishali Sharma vs. UOI & Anr. reported in [2020 (8) TMI 81 - DELHI HIGH COURT]. In the said decision the Court went a step further to observe that an opportunity of hearing must have been given to the assessee before rejecting the declaration.
It is evidently clear that Central Board is alive of the situations faced by the assessee. Hence there would be no difficulty in extending relief to the assessee. In any event the correction to be made is trivial in nature, hence, technicalities should not come in the way of the assessee being disentitled for his declaration to be considered on merits.
It is safely observed that several High Courts in the country have been issuing directions and the bottom line of all the directions and observations is that the spirit of the scheme should not be defeated on account of technicalities - the order of rejection dated 05.02.2020 requires to be set aside.
Application disposed off.
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2022 (1) TMI 1349 - KARNATAKA HIGH COURT
Allowable deduction u/s 37 - donation given to Bellary DC for construction of ring road - assessee is a company engaged in the business of extraction of minerals such as bauxite and limestone etc. - HELD THAT:- The substantial questions of law involved in this appeal have already been answered in favour of the assessee by Supreme Court in 'SRI.VENKATA SATYANARAYANA RICE MILL CONTRACTORS CO. VS. COMMISSIONER OF INCOME TAX' [1996 (10) TMI 2 - SUPREME COURT]mere fact that making of a donation for charitable or public cause or in public interest results in the government giving patronage or benefit can be no ground to deny the assessee a deduction of that amount u/s 37(1) of the Act when such payment had been made for the purpose of assessee's business - Also see KARNATAKA STATE INDUSTRIAL INFRASTRUCTURE DEVELOPMENT CORPORATION LTD., [2021 (3) TMI 1343 - KARNATAKA HIGH COURT] - Decided in favour of assessee.
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2022 (1) TMI 1348 - CALCUTTA HIGH COURT
Unexplained credits - reliance on statement recorded from the CFO - HELD THAT:- From the statement recorded from the CFO the tribunal found on facts that the reconciliation and the explanation was duly supported by evidence which were on record. That apart, the assessee was called upon to explain various details which formed part of the addition made u/s 68 by AO and the Tribunal has recorded that the assessee has explained before it in entirety the reconciliation and also explained all the discrepancies.
Tribunal said that the AO ought to have asked to produce the bills and evidence of delivery of materials such as road challan and accepted challan copy etc. and no enquiry was made by the assessing officer in this regard and he has been swayed entirely by the statement of the CFO who was not allowed to be cross-examined.
Tribunal on facts, concluded that the reconciliation is supported by evidence which is on record and there is no difference in the balance sheet and in the books of accounts of the assessee and accordingly dismissed the appeal filed by the revenue.
The above factual discussion has been set out by us in the preceding paragraphs to demonstrate that the case on hand involves adjudication and re-adjudication into facts. This exercise has been done by the CIT(A) as well as the tribunal and we are precluded from doing such an exercise in an appeal filed u/s 260A of the Act where we are required to decide the question of law which in our considered opinion does arise in the instant case. Appeal filed by the revenue is dismissed.
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2022 (1) TMI 1347 - SUPREME COURT
Complicity of charges - Failure to discharge the duty to maintain the subsidy register - depositing subsidy in the account of twelve fictitious beneficiaries - Misappropriation of the entire loan and subsidy amount in connivance with Sri Subhendu Kumar Das and Sri Madan Mohan Saha - Charge relating to removal of documents - Transferring amounts through three demand drafts from the account of Sri Madan Mohan Saha to Joint S.S. Account of Sri Haradhan Bera on 28.06.94 - It is argued on behalf of the bank that the High Court re-appreciated the evidence and altered the finding on facts of the disciplinary authority on the ground of insufficiency of evidence.
Failure to discharge the duty to maintain the subsidy register - HELD THAT:- MW 1, the management witness, who deposed about the procedure in the bank, for recording entries in the subsidy register, clearly stated that at the relevant time, some entries were made by the Respondent, and some by Sri Madan Mohan Saha, who "used to maintain the subsidy register on most occasions." He also deposed that it was Sri Madan Mohan Saha's duty as the cashier to maintain the subsidy register. Saha failed to discharge that duty. In view of this evidence, and no contrary documentary evidence casting the primary responsibility to maintain the subsidy register on the Respondent, the impugned judgment, in this Court's opinion, cannot be faulted with in concluding that there was no material to prove the first charge against the employee.
Depositing subsidy in the account of twelve fictitious beneficiaries - HELD RHAT:- The enquiry officer did not Rule on this. The impugned judgment concluded that in the absence of proof of Sri Haradhan Bera's identity, and any independent material, with respect to the seven alleged beneficiaries, their identity was not independently proved. Additionally, there had to be some material, linking the employee (Respondent) with the applications, introducing the borrowers, etc. MW-1, the subsequent manager, clearly deposed in reply to a query (question No. 8) as to who used to "identify the borrowers" before sanction and disbursement of IRDP loans, that the "Pradhan/Member of Gram Panchayat" used to identify the beneficiaries. Such being the case, the involvement of the Respondent employee had to be shown by more definitive evidence. It is again a matter of record, that the then Pradhan of the Gram Panchayat, Sri Subhendu Kumar Das, identified the borrowers. In these circumstances, even in departmental proceedings, there had to be some overt evidence, and not mere suspicion, to support a valid finding of complicity of the Respondent. In these circumstances, the impugned judgment cannot be faulted with in its findings on the second charge.
Misappropriation of the entire loan and subsidy amount in connivance with Sri Subhendu Kumar Das and Sri Madan Mohan Saha - HELD THAT:- In the present case, the confessional statement was not by the Respondent. Those who authored the confession, did not depose in the enquiry. Furthermore, no witness who heard the authors of the confession, deposed to it. At best then, that document bound the authors, not third parties, like the Respondent. The enquiry officer clearly erred by relying on such extraneous matters, as the Respondent could not be made a scapegoat for the confession of others, especially with regard to his role. The bank's charge about his complicity had to be proved by evidence. This document, containing others' confession, could not have been used against him.
Charge relating to removal of documents - HELD THAT:- There was no evidence to show that the Respondent had removed the documents, from the bank. Importantly, he was charged seven years after the alleged incident; by that time other managers had taken over the branch.
Transferring amounts through three demand drafts from the account of Sri Madan Mohan Saha to Joint S.S. Account of Sri Haradhan Bera on 28.06.94 - HELD THAT:- The enquiry officer noted that, "Sri Haradhan Bera in his evidence avoided the matter for some reasons best known to him." In the absence of any other material, the finding that the amounts had been misappropriated by the Respondent, who in connivance with Sri Madan Mohan Saha, and Sri Subhendu Kumar Das, ensured that the loan component was returned to the bank, cannot be said to have been established.
An interesting side is this-Sri Madan Mohan Saha, who confessed to the misconduct, was charged and proceeded with departmentally. The confession of guilt, which he owned up to, nevertheless resulted in a mild penalty of withholding of increments. However, the Respondent, who did not admit his guilt, or confess to it, and in respect of whom there was no credible evidence, even going by the lower standards of acceptable proof in departmental inquires, was held to be guilty and visited with the penalty of dismissal. A reading of the disciplinary authority's order reveals that his past record of minor misconduct played a major role in determining his guilt, despite lack of evidence, and the extreme penalty of dismissal.
The impugned judgment cannot be faulted with. The appeal is unmerited.
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2022 (1) TMI 1346 - GUJARAT HIGH COURT
Reopening of assessment u/s 147 - notice issued to a dead assessee - HELD THAT:- The issue raised in the present writ application is no longer res integra in view of the decision of this High Court in the case of Bhupendra Bhikhalal Desai Vs. Income Tax Officer [2021 (3) TMI 892 - GUJARAT HIGH COURT] - We are informed that the aforesaid decision of this Court has been affirmed by the Hon’ble Supreme Court with the dismissal of Special Leave Petition filed by the Revenue [2021 (9) TMI 1474 - SC ORDER]
This writ application succeeds and is hereby allowed. The impugned notice is hereby quashed and set aside. Decided in favour of assessee.
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2022 (1) TMI 1345 - ITAT BANGALORE
Eligibility of exemption as per section 10(2A) - share of profit received from the partnership firm - assessee (LLP) is deriving income from business in the form of running of plant and machineries and share of profit from partnership firm - HELD THAT:- Assessee (LLP) is a partner in M/s. M.S. Enterprises and assessee has claimed exemption u/s 10(2A) of the Act on the share of profit received from M/s. M.S. Enterprises. The section 10(2A) of the Act grants exemption to a person being a partner of firm which is separately assessed as such, his share in the total income of the firm. The firm has been defined in section 2(23) of the Act, which includes LLP also. The Act is very clear that the LLP is to be treated as a firm. A firm can be a partner in other partnership firms. There is no restriction in the income tax Act for becoming partner by firm in other partnership firms. The assessee is a LLP and has received share of profit from other partnership firm which has been claimed as exempt income.
As relying on case of Radha Krishna Jalan [2007 (8) TMI 42 - HIGH COURT , GAUHATI] we hold that the assessee is eligible for exemption u/s 10(2A) of the Act from the share of profit received from the partnership firm. No much weightage on the case law relied by the ld. DR. Accordingly, allow the appeal of the assessee.
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2022 (1) TMI 1344 - CUSTOMS AUTHORITY FOR ADVANCE RULINGS, NEW DELHI
Classification of imported goods - parts of electronic toy cars” i.e. battery driven motor, on-off switch, small speakers for sound, LED indicator lights with its PCB, garari (pulley i.e. small plastic wheel with grooved rim) and plastic base - classifiable as “Parts of electronic Toy cars” under Customs Tariff Head 9503 or under Schedule I to the Customs Tariff Act, 1975 - benefit of concessional rate of 5% provided under Serial Number 592 of Notification No. 50/2017-Cus. (Tariff), dated 30-6-2017 - Whether such “parts of electronic Toy cars” as described above, imported in a single consignment would be eligible to be constituted or having the essential character of a complete or finished article as an “Electronic Toy Car” to fall under the category of “Electronic Toy Cars” instead of its “parts” under Customs Tariff Head 9503 attracting a higher rate or duty?
HELD THAT:- Chapter 95 of Schedule I to the Customs Tariff Act covers Toys, Games and Sports Requisites; Parts and Accessories thereof; and Heading 9503 covers Tricycles, scooters, pedal cars and similar wheeled toys; dolls’ carriages; dolls; other toys .. Further, it is observed that Chapter Note 3 of Chapter 95 provides that subject to Note 1 of Chapter 95, parts and accessories which are suitable for use solely or principally with articles of the Chapter are to be classified with those articles. The goods under reference (as depicted by IMAGE ‘A’ and IMAGE ‘B’, above), are parts of electronic toy cars in semi-assembled condition. Though they have not reached the stage of completion to be considered as electronic toy cars, these parts, in the assembled stage that have been presented, have acquired the essential characteristics of electronic toy car.
However, at this intermediate stage, the semi-assembled unit, as presented, have acquired a new character distinct of the various parts namely, battery driven motor, on-off switch, small speakers for sound, LED indicator lights with its PCB, garari (pulley i.e., small plastic wheel with grooved rim) and plastic base, which have gone into the making of the semi-assembled unit. This semi-assembled unit has acquired sufficient features to be considered as “parts of electronic toy car”. Therefore, the item under import should appropriately be considered as part of a toy, and the same is classifiable under Heading 9503 in terms of Chapter Note 3 of Chapter 95.
Eligibility of the said “parts of electronic toy car” for benefit under Notification No. 50/2017-Cus., dated 30-6-2017 - HELD THAT:- Serial Number 591 of the said notification provides for concessional rate of duty to “parts of electronic toys for manufacture of electronic toys falling under Heading 9503, subject to condition No. 9, viz. if the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. Therefore, having concluded that the “parts of electronic toy car” as presented are classifiable under Heading 9503, it follows that the said goods would be eligible for concessional rate of duty prescribed under S. No. 591 of Notification No. 50/2017-Cus., dated 30-6-2017, subject to the condition prescribed therein.
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2022 (1) TMI 1343 - SUPREME COURT
Unfair trade practice - physical possession of the flat or an alternative flat of the same size and dimension - seeking to restrain the developer from alienating flat - whether the developer had indulged in unfair trade practice, whether they were prejudicial to the interest of the complainant and / or the public in general? - HELD THAT:- From the impugned order, it is evident that the Tribunal accepted the explanation of Citibank that since the Pay Order in question had become stale, its proceeds / funds were moved to its ‘Unclaimed Sundry Account’, and did not attract any interest in terms of the RBI directions. The bank had also deposed that the Pay Order was cancelled on the request of the developer through its letter dated 26th May 2016 and that the funds were credited back to the account of the developer on 16th June 2016. It was further noticed that the amount for issuing the Pay Order was deducted from the current account of the developer. After noticing these facts, the Tribunal appears to have been swayed by the circumstance that the developer was held liable for unfair trade practice, and directed to pay compensation (in terms of the previous orders of the COMPAT) affirmed by this court, i.e., 15% compound interest on ₹ 4,53,750/-.
The impugned order has not rested its findings on any principle of law, much less any statutory provision. The Tribunal appears to have been completely swayed by the complainant's plight. In doing so, it did not give due consideration to the fact that ₹ 4,53,750/- was debited from the account of the developer. The complainant, for reasons best known to her, filed the original Pay Order due to perhaps lack of proper advice or instruction. Apparently, no order contemporaneously was sought from the MRTP Commission, which would have protected the interests of the complainant with respect to the money received even while ensuring that her contentions on the merits with respect to entitlement towards the flat were preserved. Many avenues / alternatives were available.
The provisions of Order XXI are applicable to decrees of civil court. However, they embody a sound policy principle, that if the amount is deposited, or paid to the decree holder or person entitled to it, the person entitled to the amount cannot later seek interest on it. This is a rule of prudence, inasmuch as the debtor, or person required to pay or refund the amount, is under an obligation to ensure that the amount payable is placed at the disposal of the person entitled to receive it. Once that is complete (in the form of payment, through different modes, including tendering a Banker’s Cheque, or Pay Order or Demand Draft, all of which require the account holder / debtor to pay the bank, which would then issue the instrument) the tender, or ‘payment’ is complete.
In the present case, the complainant was aware that the Pay Order had been tendered by the developer to her; nevertheless she filed the original Pay Order with her complaint, and did not seek any order from the MRTP Commission at the relevant time. The pleadings in the complaint did not disclose that the Pay Order was filed in the Commission, to enable the developer to respond appropriately. In these circumstances, the developer’s argument that the rule embodied in Order XXI, Rule 4 CPC, is applicable, is merited. The developer cannot be fastened with any legal liability to pay interest on the sum of ₹ 4,53,750/- after 30th April 2005.
This court is of the opinion that all courts and judicial forums should frame guidelines in cases where amounts are deposited with the office / registry of the court / tribunal, that such amounts should mandatorily be deposited in a bank or some financial institution, to ensure that no loss is caused in the future. Such guidelines should also cover situations where the concerned litigant merely files the instrument (Pay Order, Demand Draft, Banker’s Cheque, etc.) without seeking any order, so as to avoid situations like the present case. These guidelines should be embodied in the form of appropriate rules, or regulations of each court, tribunal, commission, authority, agency, etc. exercising adjudicatory power.
Appeal allowed.
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2022 (1) TMI 1342 - BOMBAY HIGH COURT
Restoration of CENVAT Credit/Input tax credit - lack of opportunity given by the Tribunal when the Tribunal had taken up an issue of law suo moto, which was also not the case of the Respondents before the Tribunal and the Appellant had no opportunity to deal with the same.
Whether the Tribunal could have given an opportunity to the parties before coming to the conclusion that in the event refund of service tax was not due, the Appellant was entitled to restoration of Cenvat Credit/ Input Tax Credit for transition under section 140 of the Central Goods & Services Tax Act, 2017 and when this case was not put before the Tribunal by either of the parties whether remand to the Tribunal on this count is necessary?
HELD THAT:- From the facts and the arguments before the Tribunal and the reasoning given by the Tribunal, it is clear that the ground on which the Tribunal has remanded the proceeding was neither the case of the Appellant nor of the Respondent nor any opportunity was given to the parties to meet this case. This assertion of the learned counsel for the Appellant is not denied by the learned counsel for the Respondent.
There is a consensus that a new ground is made out by the Tribunal while passing the impugned order. The grievance of the Appellant, that when on the completely new ground order was to be passed then the Appellant should have been given an opportunity of being heard, is not merit-less. In view of the admitted position that the ground on which the Tribunal has passed the impugned order was not the case of the Appellant or the Respondent and both were not given an opportunity of hearing, there are no option but to set aside the impugned order and restore the matters to the file of the Tribunal to decide it as per law.
The issue is answered in favour of the Appellant - appeal allowed.
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2022 (1) TMI 1341 - DELHI HIGH COURT
Seeking a direction to be issued to the Respondent No. 1 to provide information in terms of his Right to Information Act, 2005 - whether the search conducted by the Ministry of Corporate Affairs (MCA) prior to registering the said company, reflected the ‘World Book Company Private Limited’ name or not? - HELD THAT:- The search report in this case has been provided by the First Appellate Authority as an annexure, showing the three companies i.e. ‘World Book India Private Limited’, ‘World Book Company Private Limited’ and ‘World Hotel Booking Centre India Private Limited’ - Admittedly, the entity by the name World Book Company Private Limited was incorporated on 23rd May, 2012 and, thereafter, World Book India Private Limited was incorporated on 24th August, 2012. Thus, when the application for the World Book India Private Limited was processed by the MCA, the name of the earlier registered company ought to have come up in the search report.
The Petitioner is already stated to have filed WORLD BOOK INC & ORS VERSUS WORLD BOOK COMPANY (P) LTD. [2014 (10) TMI 1065 - DELHI HIGH COURT] seeking reliefs under the Trademark Act, 1999 and Passing off. The said suit is stated to be at the stage of trial before the Original Side of this Court.
Accordingly, it is directed that the above details of incorporation of the companies shall be noted in the said suit. Secondly, if any further information is needed from the MCA, the Petitioner may summon the records or a witness from the MCA in the said suit - Petition disposed off.
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2022 (1) TMI 1340 - BOMBAY HIGH COURT
Money Laundering - proceeds of crime - provisional attachment order - rights of a secured creditor under SARFAESI Act would prevail over an order of attachment under the PMLA Act, or not - security created in favour of a bonafide lender who has exercised due diligence can be adversely impacted by an order of attachment under the PMLA Act - HELD THAT:- Prima facie, considering the appeal memo and interim application, it does appear that properties of additional respondent no.1 and additional respondent no.2, have been charged / mortgaged to appellant. It is possible that additional respondent nos.1 and 2 may argue that action by respondents under the provisions of PMLA was incorrect or malafide but that is a separate issue and that cannot deny the fact that the property has been secured to appellant.
These are issues which requires consideration. But until these issues are considered, if the property which has been attached under the provisions of PMLA, which are also secured to appellant are not disposed, the property may get wasted or encroached upon and the value would also get eroded. It would be to nobody's benefit. Therefore, purely by way of an interim adhoc arrangement, we pass the following order:
(a) The properties which are mortgaged / charged to appellant may be sold by appellant under the provisions of SARAFESI Act. The sale proceeds shall be deposited with the Registrar, Appellate Side, Bombay, of this court within one week of receiving the sale proceeds to be disbursed in accordance with any final order this court may pass in the appeal.
(b) As and when appellant deposits the money with the Registrar, the registrar shall invest the amount in a fixed deposit with a nationalised bank for a minimum period of 13 months to be renewed for the same period until the disposal of the appeal unless otherwise ordered.
(c) Since this is only an adhoc arrangement, we clarify that we have not expressed any opinion on appellant’s case that they rank higher in priority as compared to respondent.
Interim Application disposed.
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2022 (1) TMI 1339 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA
Classification of goods - rate of tax - all types of jaggery are covered under the Notification No. 6/2022-Central Tax (Rate) dated 13-07-2022 or not? - HELD THAT:- The Applicant states that they are selling commission agents of Jaggery; that the jaggery is loosely wrapped and stitched in gunny bags or loosely wrapped in plastic covers for easy transport and to avoid unnecessary wastage in transportation, but not pre packed or labeled.
The Applicant states that agriculturist manufacture the jaggery mainly with sugar cane juice by mixing necessary chemicals in minor portion; that the boiled sugar cane juice will be put in approximately 5kg, 10kg and 30kg pots and it will be in the form of lump (jaggery). The weight of none of the lumps are similar to each other; that the jaggery will be brought to APMC Yard wherein it will be examined by APMC Authority. In APMC Yard it will be handed over to the godown of selling commission agent and after bidding, the goods will be given to purchaser and there after weighment is made before the purchaser.
The entry 91A says Jaggery of all types including Cane Jaggery (gur), Palmyra Jaggery, pre-packaged and labelled; Khandsari Sugar, pre-packaged and labeled is exigible to CGST at 2.5%. which means all types of jaggery which are prepackaged and labeled is exigible to CGST at 2.5%.
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2022 (1) TMI 1338 - ITAT BANGALORE
TP adjustment - grant of mark-up on recovery transactions - assessee argued before the lower authorities that there was mark-up on these expenses which are incurred at the instance and behest of the AE and expenses by the assessee for administrative convenience are recovered on a cost to cost basis - AR alternatively argued the additional grounds stating that as per OECD guidelines and Indian Transfer Pricing provisions, aggregation of transactions could be made - HELD THAT:- As considering the alternative submissions of the ld. AR, the issue is covered by the Pune Bench of the Tribunal in the case of Cummins India Ltd. [2015 (1) TMI 520 - ITAT PUNE] export value was less and these parties were one of customers and therefore, the risk involved was high. Further, the frequency of such transactions was very low. In view of the above facts and circumstances, the comparison between the export to associated enterprises and export to third parties would not provide accurate results as economic value of the transactions, risk involved were different. We find merit in the plea of the assessee in this regard. We uphold the aggregation of transactions in the TP study carried on by the assessee where the said transactions after benchmark were at arm's length price, no adjustment was to be made. In view thereof, we find no merit in the analysis carried out by the TPO by benchmarking the transactions of exports to third parties with exports to associated enterprises resulting in addition. In view of our discussion herein above, we delete the addition.
Deduction u/s. 10AA - travelling and conveyance expenses and other expenditure incurred in foreign currency from the export turnover while computing the deduction u/s. 10AA of the Act and making a corresponding reduction in the total turnover - HELD THAT:- This issue is covered in favour of the assessee in the case of CIT v. HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT] wherein it was held that when object of formula in section 10A for computation of deduction is to arrive at profit from export business, expenses excluded from export turnover have to be excluded from total turnover also; otherwise, any other interpretation makes formula unworkable and absurd and hence, such deduction shall be allowed from total turnover in same proportion as well. Hence this issue is decided in favour of the assessee and against the revenue.
Short grant of MAT credit u/s. 115JAA - HELD THAT:- AO is directed to give appropriate tax credit.
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2022 (1) TMI 1337 - ITAT MUMBAI
Short Term Capital Gains - premium received by assessee for transferring Redeemable Cumulative Convertible Preference Share and Fully Compulsory Convertible Preference Shares to equity shares during the year - AO allowed the appeal filed by the assessee on this issue and held that the transfer in respect of preference shares is in the hand of the shareholder - HELD THAT:- As in case Anarkali Sarabhai [1982 (6) TMI 50 - GUJARAT HIGH COURT] redemption of preference shares will result in transfer within the meaning of section 2(47) of the Act was held to be in the hands of the shareholder, which in the present case is M/s Satguru Constructions. The Hon’ble Supreme Court in Anarkali Sarabhai [1997 (1) TMI 5 - SUPREME COURT] upheld the aforesaid findings of the Hon’ble Gujarat High Court. Further, the aforesaid decision of the Hon’ble Gujarat High Court was followed in Kartikeya V. Sarabhai [1981 (8) TMI 36 - GUJARAT HIGH COURT] which was affirmed by the Hon’ble Supreme Court in Kartikeya V. Sarabhai vs CIT, [1997 (9) TMI 2 - SUPREME COURT] relied upon by the learned DR.
In the present case, it is to be appreciated that the conversion of preference shares into equity shares is in the hands of the shareholder, i.e. M/s Satguru Constructions. Thus, gain, if any, arising from such a conversion will only be taxable in the hands of the shareholder. Therefore, in view of the above, we find no infirmity in the findings of the learned CIT(A) on this issue. As a result, ground No. 1 raised by the Revenue is dismissed.
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2022 (1) TMI 1336 - CESTAT AHMEDABAD
Levy of Service tax - supply of Work-wear on rent/ lease basis as per the requirement of each customer - supply of tangible goods service or not - declared service or not - HELD THAT:- From the decision in M/S LINDSTROM SERVICE INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX [2019 (8) TMI 427 - CESTAT CHANDIGARH], it is observed that the CESTAT’s two benches have taken a consistent view that the service in question is not taxable under supply of tangible goods for use or under the declared service. Therefore, following the aforesaid decision in the present case also, the issue deserve to be decided in the favour of the assessee.
As regard, the submission of learned Authorized Representative that against the aforesaid two Chennai Tribunal’s order, the Revenue has filed appeal bearing No. Civil Appeal No. 6459 of 2021, we find that as of now either side could not produce any stay order staying the operation of the Chennai Tribunal’s Order, therefore, mere filing of appeal before the Hon’ble Supreme Court will not of any help to the Revenue.
Appeal of assessee allowed.
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2022 (1) TMI 1335 - MADRAS HIGH COURT
Money Laundering - untainted property - proceeds of crime - sin of having recklessly granted housing loans and personal loans to Vijayakumar and others - to be prosecuted under Section 3 read with Section 4 of the PML Act or not? - HELD THAT:- The explanation to Section 3 of the PML Act, cannot have the effect of expanding the horizons of the mother penal provision. The 'explanation' by itself cannot create a new offence. As held by the Supreme Court in Bihar Cooperative Development Cane Marketing Union Ltd. and Another Vs Bank of Bihar and Others [1966 (10) TMI 145 - SUPREME COURT], the explanation must be read as to harmonise with and clear up any ambiguity in the main section and that it should not be so construed as to widen the ambit of the section. The interpretation proffered by the learned Special Public Prosecutors that mere generation and possession of the proceeds of a crime by the commission of a criminal activity, would attract the penal provisions of PML Act, would lead to disastrous results, which we propose to demonstrate with the following illustration. Section 392 IPC-Robbery, is a scheduled offence under the PML Act. A person commits robbery of Rs.1 crore at knife point from the cashier at a bank and decamps with the booty.
The Enforcement Directorate had not registered 2023 ECIRs under the PML Act because, they are aware that mere generation of proceeds of crime via a criminal activity without anything more, cannot attract PML Act. In the above illustration, the robber should have projected the sum of Rs.1 crore, being the proceeds of crime, as untainted property. The Enforcement Directorate cannot be heard to say that every robber would be liable under the PML Act, but, that they would pick and choose only the best amongst them to prosecute under the PML Act. Thus, when a robber cannot be prosecuted under the PML Act for the offence of robbery simpliciter, his accessories like conspirators and abettors, cannot also be prosecuted under the PML Act, in the absence of any material to show that they had projected the fruits of the crime as untainted property.
Chandrasekaran is being prosecuted for the offence under Section 3 read with Section 4 of the PML Act, for having sanctioned the housing loans and personal loans to the co-accused in violation of banking rules. He is now facing seven prosecutions that have been launched against him by the CBI in the Special Court for CBI Cases, for having sanctioned the loans. In the absence of any material to show that Chandrasekaran had directly or indirectly assisted the borrowers in projecting the total loan amount of Rs.19.69 crores (Rs.5.21 crores + Rs.14.48 crores) as untainted property, the impugned complaints against Chandrasekaran under the PML Act are, in our opinion, an abuse of process of law.
Petition allowed.
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2022 (1) TMI 1334 - CESTAT MUMBAI
Levy of penalty under section 114A, Customs Act, 1962 on the appellant, who is not the importer - HELD THAT:- Section 114A ibid deals with imposition of mandatory penalty in certain cases. As per the Customs Act it is the importer who is to file the bill of entry to the proper officer u/s. 46 ibid while importing the goods and the assessment has to be made on that bill of entry and on such assessment, the duty is levied. Thereafter on payment of duty so assessed goods are cleared u/s. 47 ibid. If there is any non-levy or short levy on the goods so cleared then the procedure as contemplated by section 28 ibid is initiated and the competent officer of the department issues notice to the person chargeable with duty or interest requiring him to show cause why he should not pay the amount specified therein. Whereas Section 114A contemplates penalty for shortlevy or non-levy of duty on the person who is liable to pay the duty or interest as determined u/s.28 ibid. The language of the aforesaid section is plain and clear.
From the case records it is clear that no duty or interest has been demanded from the appellant herein nor any duty or interest has been determined against him. It is the settled legal position that it is the importer who is liable to pay the duty not even its director or proprietor as the case may be and this view finds support from the decision of this Tribunal in the matter of NIPPON AUDIOTRONIX LTD. VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [2000 (5) TMI 96 - CEGAT, COURT NO. I, NEW DELHI] where it was held that The penalty contemplated by Section 114A can only be on the person liable to pay the duty and not to any other person.
Penalty u/s. 114A is attracted only for the person who is liable to pay duty or interest under section 28 and not on anyone else. Therefore the imposition of penalty on the appellant herein under Section 114A ibid is without authority of law. The appellant could have been held liable for penalty under some other provision of the Act but not under Section 114A as the language of the said section is very clear and unambiguous.
Appeal allowed.
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