TMI Tax Updates - e-Newsletter
January 14, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
-
Income Tax:
Validity of reopening of assessment u/s 147 - notice sent to entity, which no longer exists and it is merged (amalgamation) - In view of all notice itself is not sustainable under the law. Petition stands allowed quashing and setting aside the notice issued under section 148 with all consequential reliefs. - HC
-
Income Tax:
Reopening of assessment u/s 147 - Section 148A of IT Act kicked in - The argument that post logical end of Section 148 legal drill if the writ petitioner comes to this Court alternate remedy rule will be put against the writ petitioner is going beyond the realm of surmises and conjectures also. It all has to be dealt with on a case to case basis and it is clearly premature to interfere at this stage - HC
-
Income Tax:
Criminal proceedings - late filing of return of income (ITR) - The appellants cannot be made to suffer and face the rigorous of criminal trial when the same cannot be sustained in the eyes of law because the entire prosecution in view of a conclusive finding of the Income Tax Tribunal that there is no concealment of income becomes devoid of jurisdiction and under Section 254 of the Act, a finding of the Appellate Tribunal supercedes the order of the AO - HC
-
Income Tax:
Validity of Assessment u/s 144B - not giving a personal hearing - The requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory. It was further held that the classification made by the Respondent between the matters involving disputed questions of fact and questions of law by way of the Circular dated 23rd November, 2020 is not legally sustainable. - HC
-
Income Tax:
Addition on protective basis u/s 69A - genuineness and ownership of fine gold - The seller confirmed to have made sale to the assessee vide tax invoice dated 26 October 2017 and received payment against such sale. Therefore, merely for the reason that the seller behind the back of the assessee stated that he physically handed over the gold to the assessee instead of making courier, the documentary evidences in the form of tax invoice, proof of payment, and recording of transactions in books of account cannot be brushed aside. - Additions deleted - AT
-
Income Tax:
Disallowance of interest expense paid u/s. 57 - nexus between the funds withdraw from the Partnership Firm and funds used for acquiring immovable property - if we apply the reasoning given in the immediate preceding paragraph that had the assessee not borrowed the money from the partnership firm on interest basis and would have taken the money out of the deposits made with the companies, there would not have been any question of the interest expenses whether capital or revenue in nature. - Claim allowed - AT
-
Income Tax:
Revision u/s 263 by CIT - AO’s order allowing claim of exemption is in error on account of the transfer of land not having been by way of compulsory acquisition alone.The issue of whether used for agricultural purposes or not prior to transfer therefore becomes only academic for adjudicating whether the order passed by the Ld.PCIT holding the assessment order to be erroneous was in accordance with law. - Revision order sustained - AT
-
Income Tax:
Royalty receipt - receipt from uplinking services - The customers are not granted the use of or the right to use any process by the assessee during the course of providing various satellite-based telecommunication services which means that the customers are merely availing a service from the assessee and are not bearing any risk with respect to exploitation of the assessee’s equipment involved in the provision of such service. - the amount received by the assessee from its customers in India as consideration for the provision of a service cannot be characterized as royalty for the use or right to use of a process. - AT
-
Income Tax:
TDS u/s 194J - Disallowance u/s 40(a)(ia) - the services rendered by the processing agency, i.e., tabulation, checking and preparation of mark sheets and other computer assisted work provided to the assessee could not be brought within the meaning of “professional services” and thus, the assessee could not have been saddled with any obligation to deduct tax at source on the payments made to the processing agency u/s.194J. - AT
-
Income Tax:
Levy of penalty u/s 271(1)(c) - Computation of capital gain - assessee cannot be made subject levy of penalty under section 271(1)(c) of the Act merely for reason that the consideration shown in the computation of capital was less than the value adopted for stamp duty or the value determined by the DVO under the provision of section 50C.- AT
-
Income Tax:
Deduction u/s 80P - It is a co-operative society which also carries on the business of lending money to its members which is covered under section 80P(2)(a)(i) of the Income-tax Act, 1961, i.e. carrying on the business of banking for providing credit facilities to its members. It is entitled to the special deduction under section 80P. - AT
-
Income Tax:
Foreign tax credit under the provisions of section 91 - the foreign tax credit to the extent not allowed under section 91 of the Act will eligible for deduction under section 37 of the Act as business expense. - AT
-
Customs:
Levy of penalty - hort-landing of goods loaded in a conveyance for importation into India - Prima facie there appears to be a practice of holding an enquiry to ascertain whether it is the steamer agent who has filed the IGM should be held liable for the penalty in the case of short-landing or the liability should be fixed on the slot agent. There are no reason on record why this course of action is adopted in this case when the Petitioner has been consistently demanding the same. - The Revisional Authority will take the necessary decision in the revision as per the findings - HC
-
Corporate Law:
Vicarious liability of Directors who resigned - Non-submission of annual return and holding of annual general meeting in the relevant year - non-submission of financial statement within the stipulated time with Registrar of Companies - Once, he resigned in the year 1995, then he cannot be fastened with any liability for a period of 2008-2009 and 2009-2010 - HC
-
Indian Laws:
Dishonor of Cheque - rebuttal of presumption under Section 139 of the N.I. Act or not - Putting unnecessary burden on the complainant and not raising presumption under Section 139 of the N.I. Act needs to be considered as error in the eyes of law. - HC
-
PMLA:
Seeking grant of Regular Bail - Money laundering - when the question of liberty of an individual is involved, it is not possible for me to ignore the fact that the chargesheet filed in the present case, as of now, does not relate to any scheduled offence which would give rise to “proceeds of crime”, which in turn, would make out an offence of money-laundering under Section 3 of the PMLA, 2002. - Bail allowed - HC
-
Service Tax:
Price reduction clause - levy of service tax on liquidated damages - declared services or not - applicability of CBIC vide circular no.178/10/2022-GST dated 3rd August, 2022 - The circular was not available to the adjudicating authority when the matter was decided and he could not examine the issue in the light of the aforesaid circular. The issue in dispute can be decided in the light of the aforesaid circular. - AT
-
Service Tax:
Nature of activity - Management or Business Consultant Service or not - The entire case of the Revenue rests on the fact that in the books of account the appellant has recorded the amounts received on account of job work as per the agreement under the head “Management Fees”. Even if such entries are made by the appellant, it does not convert what is essentially an agreement for manufacture and sale of Razors and Blades into an agreement for rendering services. - Demand set aside - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
-
GST
-
2023 (1) TMI 539
Seeking grant of Regular Bail - evasion of tax by wrongly utilization of input Tax Credit for disposal of out tax liabilities without actual payment of tax, resulting into loss of huge revenue to the State exchequer - HELD THAT:- Keeping in view the facts and circumstances of the case, custody period of the petitioner and also the fact that the petitioner had already deposited an amount of Rs.9,99,480/- as tax under the GST Act vide intimation dated 14/18.10.2022 (Annexure P-5) in terms of notice served upon him by the Excise and Taxation Department, but without commenting on the merits of the case, the petitioner deserves the concession of regular bail. The present petition is allowed and the petitioner-Bajrang Lal Sharma, is ordered to be released on regular bail subject to furnishing his bail/surety bonds to the satisfaction of the trial Court/Duty Magistrate/Chief Judicial Magistrate concerned.
-
Income Tax
-
2023 (1) TMI 538
Validity of reopening of assessment u/s 147 - notice sent to entity, which no longer exists and it is merged - HELD THAT:- Noticing the decision of the Apex Court in the case of CIT vs. Maruti Suzuki India Ltd,[ 2019 (7) TMI 1449 - SUPREME COURT] where it has been held that the amalgamating entity would cease to exist against the approved scheme of amalgamation. In Gayatri Microns ltd.[ 2019 (12) TMI 1241 - GUJARAT HIGH COURT] this Court had followed the Apex Court s decision of Maruti Suzuki India Ltd (supra) to hold that the jurisdictional notice issued in the name of the company, which has been amalgamated is illegal and without jurisdiction, since the amalgamating entity ceases to exist and cannot be regarded as person under sub-section (31) of section 2 of the Act against whom the assessment proceedings can be initiated. In view of all notice itself is not sustainable under the law. Petition stands allowed quashing and setting aside the notice issued under section 148 with all consequential reliefs. - Decided in favour of assessee.
-
2023 (1) TMI 537
Reopening of assessment u/s 147 - Section 148A of IT Act kicked in on and from 01.04.2021 vide Finance Act, 2021, a notice u/s 148A(b) was issued - first respondent called upon the writ petitioner-assessee to file objections for the purpose of legal drill under Section 148A(d) - As argued Dissemination Note between the authorities of the Department i.e., inter se department wrongly refers to cash deposits as Rs.169921/- lakhs instead of Rs.1,699.21 lakhs - HELD THAT:- The letter of the Additional Commissioner dated 21.07.2022, it is clearly an inter-office communication where the Additional Commissioner has written to the Principal Chief Commissioner of Income Tax, who admittedly is the 'Specified Authority' within the meaning of Section 148A(d) read with Section 151 of IT Act. Therefore, this 21.07.2022 letter is not from the 'Specified Authority' and it is an inter-office mail. The Specified Authority on 30.07.2022 has clearly opined that it is a fit case for issuing notice under Section 148. That puts an end to the argument predicated on the letter dated 21.07.2022 from the Additional Commissioner to the Principal Chief Commissioner of Income Tax. Writ petitioner submitted that once the order is made and once Section 148 legal drill is carried to its logical end, if it goes against the writ petitioner, the writ petitioner will have to make 20% deposit for stay. This Court refrains itself from expressing any opinion on this aspect of the matter as it is premature and as rightly pointed out by learned Revenue counsel, it is in the realm of surmises and conjectures and in any event, this submission does not persuade this Court to interfere at this stage. The argument that post logical end of Section 148 legal drill if the writ petitioner comes to this Court alternate remedy rule will be put against the writ petitioner is going beyond the realm of surmises and conjectures also. It all has to be dealt with on a case to case basis and it is clearly premature to interfere at this stage. This Court is of the considered view that Section 148A is a codified mechanism that has been put in place for the benefit of the assessee and if that is stretched to the levels to which the writ petitioner wants to carry the matter, the very objective of a pre-notice drill qua Section 148 read with section 147 will become counter productive. In the light of the discussion and dispositive reasoning thus far, this Court is not inclined to interfere qua impugned order and impugned notice, both dated 31.07.2022. Before concluding, though obvious it is made clear that Section 148 legal drill shall proceed without being impeded by this order and it will not in any manner serve as impetus either.Sequitur is captioned writ petition fails and the same is dismissed.
-
2023 (1) TMI 536
Criminal proceedings arising out of orders of penalty - Penalty u/s 271(1)(a), 271(1)(c) and 273(b) for late filing of return for Assessment Year 1983-84 vide separate orders cancelled and allowed all appeals - criminal proceedings under Section 276-C of Income Tax Act initiated simultaneously remained in existence - HELD THAT:- As decided in judgment passed by Supreme Court in K.C. Builders and anothers [ 2004 (1) TMI 7 - SUPREME COURT] levy of penalties and prosecution under Section 276C are simultaneous. Hence, once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution under Section 276C is automatic. The appellants cannot be made to suffer and face the rigorous of criminal trial when the same cannot be sustained in the eyes of law because the entire prosecution in view of a conclusive finding of the Income Tax Tribunal that there is no concealment of income becomes devoid of jurisdiction and under Section 254 of the Act, a finding of the Appellate Tribunal supercedes the order of the Assessing Officer under Section 143(3) more so when the Assessing Officer cancelled the penalty levied. The facts of the present case are squarely covered by the judgment in K.C. Builders (supra) and the above ratio will also cover the position of law with regard to criminal proceedings arising out of orders of penalty. In view of above, the application is allowed. The orders passed by Special Chief Judicial Magistrate, Varanasi and order passed by Sessions Judge, Varanasi as well as proceedings under Sections 276, 277 of Income Tax Act, are hereby quashed.
-
2023 (1) TMI 535
Validity of Assessment u/s 144B - not giving a personal hearing in violation of Section 144B(6)(vii) and (viii) and the principle of natural justice - scope of Expression may in Section 144B(7)(viii) - HELD THAT:- This Court is of the view that the issue involved in the present writ petition is no longer res integra. This Court in the case of Bharat Aluminium Company Ltd. vs. Union of India Ors; Ors. [ 2022 (1) TMI 658 - DELHI HIGH COURT] has held that the use of the expression may in Section 144B(7)(viii) is not decisive. Where discretion is conferred upon a quasi judicial authority, whose decision has civil consequences, the word may which denotes discretion should be construed to mean a command. Consequently, the requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory. It was further held that the classification made by the Respondent between the matters involving disputed questions of fact and questions of law by way of the Circular dated 23rd November, 2020 is not legally sustainable. In any event, the statutory amendment in Section 144B puts the controversy beyond doubt. Consequently, this Court is of the opinion that an assessee has a vested right to personal hearing and the same has to be given, if an assessee asks for it. Accordingly, the impugned assessment order passed by the Respondent No.1 under Section 143(3) read with Section 144B of the Act for the assessment year 2020-21 and the consequential proceedings are set aside and the matter is remanded back to the Assessing Officer for a fresh decision.
-
2023 (1) TMI 534
Disallowance of foreign tax credit in case of delay in filing Form 67 - due date of filing of return - HELD THAT:- No doubt, as per the extant Rule, Form 67 in support of claim of foreign tax credit is to be filed within the due date of filing of return of income u/s 139(1) - The due date of filing of return for the impugned assessment year was 31.10.2020. It is a fact that the assessee filed the original return of income before the due date. However, Form 67 was filed along with the revised return of income was filed on 3105.2021. To prevent spread of COIVD-19 Pandemic, the Government imposed various restrictions. Taking note of the difficulties faced by litigants in complying with the legal requirement of filing petitions/suites/applications/appeals/other proceedings due to COVID-19, Hon'ble Supreme Court took suo motu cognizance and vide order dated 20.03.2020 extended the period of limitation in filing petitions/suites/applications/appeals etc. till 08.03.2021. On 08.03.2021, Hon'ble Supreme Court passed an order bringing to end the extension of limitation. However, due to recurrence of COVID-19 and drastic surge in number of COVID cases across the country, the Hon'ble Supreme Court again, vide order dated 10.01.2022, restored its earlier order extending the period of limitation and observed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purpose of limitation and all persons shall have a limitation period of 90 days from 01.03.2022 to comply with legal requirements. Thus, in view of the aforesaid decision of Hon'ble Supreme Court, it has to be concluded that the assessee has filed Form 67 within the extended period of limitation as per the order of Hon'ble Supreme Court. That being the case, assessee s claim of foreign tax credit has to be allowed. Thus assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income Tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income. Accordingly, ground of the appeal of the assessee is allowed.
-
2023 (1) TMI 533
Addition made u/s 56(2)(viib) - excess premium allegedly received by the assessee, made on the ground that the assessee company did not have financial worth or capacity to issue shares at premium of Rs.100.90 per shares - HELD THAT:- CIT(A) has given valid reason for rejecting both the valuations of the shares at Rs.1137.27 per share and at Rs.122.64 per share, pointing out that valuation at Rs.1137.22 per share, done on the basis of discounted cash flow method was based on projected profits of the assessee for the subsequent year which projections did not have any solid basis. There is nothing before us to counter this finding of the ld.CIT(A). Therefore, his order rejecting the valuation of shares at Rs.1137.27 per share is found to be in order, and upheld. With regard to the rejection of valuation of shares at Rs.122.64 per share, the ld.CIT(A) found that though the valuation was done on the basis of book value, the land was valued after indexation ,which he noted was not as per the prescribed method. There is nothing before us to controvert this finding of the ld.CIT(A). Therefore, even rejection of the valuation done by the assessee at Rs.122.64 per share calls for no interference. No merit in the grounds raised by the assessee against order of the ld.CIT(A) upholding the addition made under section 56(2)(viib) - Decided against assessee.
-
2023 (1) TMI 532
CIT(A) dismissed the appeal of assessee in ex parte proceedings - Addition on account of deposits in bank account by treating it as unexplained investment - NFAC/Ld. CIT(A) concluded that assessee is not interested to pursue his appeal and has not filed any materials available on record against the addition made by AO - HELD THAT:- Considering the fact that assessee remained unrepresented before the lower authorities and substantial addition was made in the ex-party assessment, which was again confirmed in ex-party order by ld CIT(A), therefore keeping in view the principle of natural justice, we inclined to give one more opportunity to the assessee to contest his case on merit. Thus, the appeal is restored back to the file of assessing officer to decide the issue afresh. One more reason to restore the case to the file of assessing officer that entire cash was added in the income of assessee and the NFAC/Ld. CIT(A) has not decided the case as per the mandate to Section 250(6) of the Act, which mandates that the while deciding the appeal, the ld CIT(A) is required to pass order on points of determination (grounds of appeals), decision therein on and reasons for such decision. The grounds of appeal raised by assessee is restored back to the file of AO to adjudicate the issue of addition afresh in accordance with law. Needless to direct before passing the order, the Assessing Officer to provide reasonable opportunity to assessee. Appeal of the assessee is allowed for statistical purposes.
-
2023 (1) TMI 531
Addition on protective basis u/s 69A - genuineness and ownership of fine gold - whether the impugned gold seized by the Revenue belongs to the assessee and sent to assessee on account of purchases or for job work? - HELD THAT:- Admittedly, the facts brought on record by the AO are crucial but we note that such mismatch was never confronted to the assessee for his rebuttal. Thus, it appears to us that some details has been used by the AO against the assessee behind his back which is not desirable under the provisions of law. There were various documents which have been furnished by the assessee during the proceedings before the respective authorities as elaborated in the preceding paragraph. With respect to the same, no iota of doubt was raised by the revenue. In fact, the assessee has shown payments against the purchases which were duly recorded in the books of accounts and reported in GST return by both the parties i.e assessee and seller M/s Brij Mohan Jewellers. In the absence of any infirmity in all these details, it seems to us that the assessee is being faced certain difficulties. On one hand, the assessee has made the payment against the purchases but failed to take the delivery of the gold which was purchased by him. One of the party being Seller has denied to have made sales to the assessee whereas in the case on hand both the buyer and the seller have admitted to have carried out the transaction of purchase and sales. Thus, what appears is this that the case on hand is stronger than the case cited above. It is for the reason that the transaction on hand for the purchase and sale is duly supported based on the documentary evidence which have not been disputed or doubted by the authorities below. It is the settled law for the additions made under the provisions of section 69A of the Act, the onus lies upon the Revenue to establish that the assessee is found owner of money, bullion, jewellery or other valuable article which is not recorded in the books of accounts. Assessee failed to offer an explanation about the nature and source of acquisition of such money, bullion, jewellery or other valuable article. In the case on hand no cogent material brought on record suggesting that impugned gold is unaccounted and assessee failed to offer an explanation. As such both the assessee and the seller duly recorded the transaction of sale and purchase of fine gold weighing 949.18 gram. The seller confirmed to have made sale to the assessee vide tax invoice dated 26 October 2017 and received payment against such sale. Therefore, merely for the reason that the seller behind the back of the assessee stated that he physically handed over the gold to the assessee instead of making courier, the documentary evidences in the form of tax invoice, proof of payment, and recording of transactions in books of account cannot be brushed aside. n view of the above and after considering the facts in totality and in the light of the principles laid down in RAKESHKUMAR BABULAL AGARWAL [ 2022 (3) TMI 527 - GUJARAT HIGH COURT] we are inclined to hold that the assessee is the owner of the gold. Hence, the ground of appeal of the assessee is allowed.
-
2023 (1) TMI 530
Registration u/s 80G(5) denied - Non adjudication of appeal by assessee - HELD THAT:- This appeal was fixed for hearing for the first time on 19/10/2022, none appeared on behalf of the assessee. Hence adjournment to 08/12/2022, again none appeared on behalf of the assessee, though notice was served by RPAD. Even though the appeal is adjourned to 09/01/2023. Again none appeared on behalf of the assessee. We find no authorization is given by the Assessee Trust to any Authorized Representative and no details has raised in the grounds of appeal, relevant documents or Paper Book not filed before us. In the absence of the same, we are not in a position to adjudicate the grounds raised by the assessee. Though the assessee is given ample opportunities, the assessee is not chosen to adjudicate its appeal. Therefore the same is dismissed in limine. Appeal filed by the Assessee is hereby dismissed.
-
2023 (1) TMI 529
Rectification of mistake u/s 154 - Addition u/s 69A - cash found from the assessee s premises during the search proceedings - CIT-A deleted the addition - HELD THAT:- In the case on hand, the AO in the rectification proceedings u/s 154 of the Act, has made independent addition which was not consciously made while framing assessment u/s 143 of the Act. Thus, can such mistake be said as a mistake apparent from the record? Admittedly, a long drawn process is required to be adopted to reach to the conclusion where the cash found from the premises of the assessee representing the unexplained money u/s 69A of the Act, in the given facts and circumstances. Even on merit, we note that the assessee in the statement furnished u/s 132(4) of the Act, has categorically stated about the documents found during the search proceedings that the same represent the undisclosed transaction of the firm namely M/s. M.K. Ceramics based on that undisclosed income of the firm was determined. Therefore, the AO has taken one of the possible view for holding that such undisclosed cash represent the application of undisclosed income determined in the hands of the firm. No reason to interfere in the order of the Ld. CIT(A). Hence, the ground of appeal of the Revenue is hereby dismissed.
-
2023 (1) TMI 528
Unexplained money u/s 69A - absence of establishing the business activity and non-submission of the purchase/sales bills/invoices etc. - HELD THAT:- Since the AO has accepted the profit declared by the assessee u/s 44AD, therefore, the source of cash deposit to the extent of turnover at Rs.44,28,000/- in the Bank A/c is accepted as explained. However, the balance amount of Rs.38,91,058/- is sustained in absence of any proper explanation given by the assessee to explain the source of such cash deposit. The explanation of the learned Counsel for the assessee that part of the amount is from the previous withdrawals from the Bank cannot be accepted. It is also not understood as to why the assessee who is not maintaining any books of account, shall withdraw the money from the Bank, keep it with herself and then again deposit a part of the same in the Bank A/c. Similarly, the amount being the amount received from the son of the assessee cannot be accepted without any evidence and explanation/confirmation from the son. Under these circumstances, we direct the Assessing Officer to delete the amount of Rs.44,28,000/- out of the addition of Rs.83,19,058/- and the balance amount is sustained. The grounds raised by the assessee on this issue are partly allowed. Disallowance of deduction claimed u/s 80C 80DDB for want of evidence - HELD THAT:- Undisputedly, the assessee did not file any evidence either before the Assessing Officer or before the learned CIT (A) or even before us for such claim. Under these circumstances, the disallowance made by the Assessing Officer and sustained by the learned CIT (A) is confirmed and the grounds raised by the assessee on these issues are dismissed.
-
2023 (1) TMI 527
Disallowance of interest expense paid u/s. 57 - nexus between the funds withdraw from the Partnership Firm and funds used for acquiring immovable property - whether the interest expense may be allowed to be capitalized and added to the cost of acquisition of the immovable property? - HELD THAT:- Merely the assessee has taken a decision that instead withdrawing money from deposit made to make investment in land property, has borrowed the money from the partnership firm on interest basis, the assessee could not be made suffer to tax. In simple words, there might be a possibility that the company in which the assessee has made deposit, it was not having any liquid fund and therefore it was not in a position to return the money to the assessee for the purpose of the investment. In such a situation, the assessee prudently decided to borrow the money from the partnership firm on interest as there was no loss to the assessee. We are of the view that in the given facts and circumstances the assessee should not be penalized by way of making the disallowance of interest expenses. Whether the impugned interest expense was capital in nature and therefore the same cannot be allowed as deduction under section 57(iii)? - We note that the order of the authorities below is silent. Nevertheless, what is gathered from the preceding discussion is that the assessee has not capitalized the interest expense incurred by him. It is for the reason that the assessee has claimed the interest expense against the interest income which evidences that the assessee has not claimed any interest expenses as capital in nature. Moreover, if we apply the reasoning given in the immediate preceding paragraph that had the assessee not borrowed the money from the partnership firm on interest basis and would have taken the money out of the deposits made with the companies, there would not have been any question of the interest expenses whether capital or revenue in nature. The lower authorities have not disputed the claim of the assessee that the deposit made with the impugned parties were made out of withdrawal from the partnership. The lower authorities also failed to consider the fact that assessee incurred interest expenses on the total outstanding liability of Rs. 10,52,07,072/- whereas the alleged investment in land property out of borrowing money was of Rs. 3,61,85,825/- only. Thus, it shows that the AO made addition with prejudice mind without properly considering the materials made available on record before him. We set aside the finding of the CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.
-
2023 (1) TMI 526
Deduction u/s.80P(2)(a)(1) - assessee is a primary agricultural cooperative credit society registered under the TamilNadu Cooperative Societies Act - Whether associate members are not entitled to claim of deduction - HELD THAT:- We noted that this issue is squarely covered by the decision of Hon ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd., 2021 (1) TMI 488 - SUPREME COURT wherein this Tribunal is consistently following the issue of regular members as well as associated members because the Tamil Nadu Co-operative Societies Act permits so. This issue has been considered by this Tribunal in the case of ITO vs. The Tiruchengode Agricultural Producers Cooperative Marketing Society Ltd. 2022 (7) TMI 679 - ITAT CHENNAI wherein we have considered the decision of Hon ble Madras High Court decision in the case of S-1308, Ammapet Primary Agricultural Co-operative Bank Ltd. 2019 (1) TMI 116 - MADRAS HIGH COURT we are of the view that the provision of Section 80P(4) of the Act is to be read as a proviso, which proviso now specifically excludes co-operative banks which are co-operative societies engaged in the banking business, i.e. engaged in lending money to members of the public, which have a license in this behalf from the Reserve Bank of India. Clearly, therefore, the Assessee s case is out of the provisions of Section 80P(4) of the Act. In relation to the Associate members, we are of the view that the provisions of Section 22 read with Rule 32 of the Tamil Nadu Co-operative Societies Act, 1983 and Tamil Nadu Co-operative Societies Rules clearly determine the procedure to admit Associate members and accordingly in the present case, the Assessee s Co-operative Society has admitted the same. In view of the above finding, we hold that the Assessee is entitled for the claim of deduction u/s.80P(2)(a)(i) of the Act. Thus, we reverse the orders of the lower authorities and allow these three appeals of the Assessee. Ground of Revenue are dismissed.
-
2023 (1) TMI 525
Addition of non-existing liability as unexplained cash credit u/s.68 of the Act as well as u/s.41(1) - HELD THAT:- We noted that neither AO nor CIT(A) is sure whether this is a transaction of unexplained loan or credit or this is a cessation of liability to be added u/s.41(1) of the Act or it is a business receipt to be added u/s.28(iv) of the Act, as noted by CIT(A). During the year the assessee received a sum as confirmation filed by assessee and this entry has routed through banking transactions and none of the authorities below i.e., CIT(A) or AO could not understand the nature of transaction and treated that as cessation of liability u/s.41(1) of the Act as well as unexplained credit u/s.68 . CIT(A) moved a further step and treated this amount as profit chargeable to tax u/s.28(iv) of the Act as profits and gains of business or profession in view of decision of T.V.Sundaram Iyengar Sons Ltd [ 1996 (9) TMI 1 - SUPREME COURT] . Admittedly, this is a simple transaction of loan received by assessee s wife in the books and therefrom she has advanced this amount and assessee is able to prove the sources by filing confirmation from the third party and assessee s wife, although Trimex Resources Pvt. Ltd., does not file return of income for these years i.e. assessment year 2014-15 to 2016-17. But the AO has not taken any step to verify from the accounts of the company. In our view, the Revenue is not clear under which provisions this addition is to be made and hence, once this is not established the addition cannot be sustained. We delete the addition and allow the appeal of assessee.
-
2023 (1) TMI 524
Revision u/s 263 - computation of gain on slump sale - CIT directing the AO to treat the negative net worth for the purpose of computation of capital gains arising out of slum sale of Medical Ventilator Division of assessee company, as the assessment framed is erroneous and prejudicial to the interest of Revenue - HELD THAT:- Admittedly the slump sale consideration declared by assessee is 0 i.e., nil and admittedly there is negative net worth because the assessee had incurred loss continuously. The negative net worth is Rs.1,82,93,317/- and even if we reduce this from the slump sale consideration of zero, the ultimate capital gain will be zero. Hence, we are of the view that the revision passed by PCIT is right to the extent that negative net worth is to be considered while computing capital gains but in case of positive consideration. In the present case, the slump sale value is zero and hence, computation will fail and secondly, there is no prejudice caused to the Revenue by the order of the AO. Hence, the revision order passed by PCIT has not fulfilled the two condi tions which the Revenue itself admitted in its written submissions as under:- 2. To invoke the powers under 263 the twin conditions to be met are (i) the order of AO is erroneous and (ii) the order is prejudicial to the interests of revenue. Once the second condition of prejudice caused to Revenue is not fulfilled, the revision order has to fail. We quash the revision order and allow the appeal of assessee.
-
2023 (1) TMI 523
Revision u/s 263 by CIT - assesses claim of exemption of capital gains earned on transfer of land u/s 10(37) - assessee s case was selected for compulsory scrutiny for the purpose of verifying large income claimed as exempt under the head capital gains and other sources - PCIT found the claim to be wrongly allowed by the AO without examining /inquiring eligibility to claim exemption u/s 10(37) and correct computation of capital gains HELD THAT:- The computation of capital gains having been called to question by the Ld.PCIT noting that the assessee had computed capital gains only in relation to the component of agreed consideration actually received during the year i.e 75%. The fact that the land was initially notified for acquisition under the Land Acquisition Act,1894 which got repealed before the grant of any award to these lands under the law and a new law was notified in its place i.e RFCTLAAR Act,2013, whose Rules since were not notified, GIDC went ahead to purchase the land vide these banakhats at rates agreed earlier in the LAA Act, does not grant the color of compulsory acquisition to this transaction. Undoubtedly the transaction between the assessee and GIDC is mutually agreed transaction and there was no compulsion on the assessee to transfer the land to GIDC. The initial notification of acquisition of these lands under the LAA no longer existed in law once the Act got repealed In the present case though the assessee s lands may have qualified for transition under the new law on account of acquisition being notified under old LAA Act but no award being made therein but the fact remains that it was not acquired even under the new law. As per the transitory provisions the acquisition could very well have been continued with as per the new law. Whatever may have been the compulsions, that the Rules were getting delayed to be notified for acquisition of land under the new law, but the fact remains that the land was not acquired by the State even under the new law. There is no reason nor scope for deeming the acquisition of the lands under the RFCTLAAR Act. The banakhat entered into between the assessee and GIDC is on mutually agreed terms where there is nothing to the effect that the assessee has to compulsorily transfer its land and has no choice in the matter. Nothing to this effect was pointed out to us. Nor is this the case of the Ld.Counsel for the assessee. The assessee on its own volition agreed to transfer the land to GIDC. The assessee was well within its rights to have refused to do so. Therefore there arises no question at all of giving this transaction the color of compulsory acquisition at all. The findings of the Ld.PCIT therefore that the assessee did not qualify for exemption u/s 10(37) of the Act since the lands were not compulsorily acquired, we find is correct. And therefore his findings that the AO s order was erroneous for having granted exemption without examining eligibility on this count is also we hold correct. Having found the assessee failing to fulfill one of the cumulative conditions required to be fulfilled for claiming exemption u/s 10(37) we do not consider it necessary to deal with the other failure noted by the Ld.PCIT of the land having not been used for agricultural purposes. AO s order allowing claim of exemption is in error on account of the transfer of land not having been by way of compulsory acquisition alone.The issue of whether used for agricultural purposes or not prior to transfer therefore becomes only academic for adjudicating whether the order passed by the Ld.PCIT holding the assessment order to be erroneous was in accordance with law. Alternate contention of the Ld.Counsel for the assessee that no transfer in fact had taken place during the impugned year since the banakhat was not registered - We find that this is of no relevance while adjudicating upon the order of the Ld.PCIT. The reason being that this was never the issue before the Ld.PCIT whose order u/s 263 impugned before us finds the assessment order to be erroneous for having wrongly allowed the assesses claim of exemption u/s 10(37) - That was the limited issue considered by the Ld.PCIT. The assesses claim never was to the effect that no capital gain accrued during the year at all. He had voluntarily returned capital gain as exempt during the impugned year. Nor do we find that the assessee ever made such claim before the PCIT during impugned revisionary proceedings. The order of the PCIT having been found by us to be in accordance with law on the issue raised therein, it cannot be set aside on an issue which was never there before the PCIT. Though needless to add that the assessee is at full liberty to raise this plea or any other plea in the set aside proceedings before the AO. We uphold the order passed u/s 263 - Decided against assessee.
-
2023 (1) TMI 522
Interest charged u/s. 234B - adjustment of the tax liability against the cash seized - since the assessee do not have liquid funds to pay the tax dues the tax liability should be adjusted from the seized amount lying with the department since 01.12.2018 - HELD THAT:- In our considered opinion once the assessee has repeatedly asked the revenue to adjust the tax liability against the cash seized on 01.12.2018 the AO should have adjusted the tax liability immediately on framing the assessment order. In our understanding of law the cash seized by the department should have been adjusted with self assessment tax payable with the return of income in accordance with section 132 B - A similar view was taken by the coordinate Bench Kolkata Tribunal [ 2015 (11) TMI 62 - ITAT KOLKATA ] . The communication of the assessee with the department mentioned elsewhere clearly suggest that the assessee was not asking to adjust the seized cash towards advance tax but was praying the adjustment towards self assessment tax. On these peculiar facts of the case we do not find any merit in charging the interest u/s. 234B of the Act the AO is accordingly directed to delete the interest charged u/s. 234 B of the Act. Penalty u/s. 271AAB - cash was seized by the revenue officers and the assessee was penny less and could not pay the requisite taxes but filed his return of income - AO found that the sum of Rs. 88 lacs which was offered voluntarily for taxation u/s. 69 A was not shown in the return of income by the assessee - HELD THAT:- Assessee has already surrendered Rs.88 lacs being cash amount in the locker as undisclosed income to be taxed u/s. 69 A of the Act and offered the same for taxation. Therefore, it can be safely concluded that the assessee declared on or before the specified date as per the definition of undisclosed income given in clause C of section 271 AAB (2) of the Act Assessee offered the income in the letter filed during the course of the assessment proceedings as the return could not have been revised electronically for want of tax payment and the amount of Rs.88 lacs was lying with the department since 01.12.2018 the assessee was helpless and was not in a position to pay the taxes. Since the income was offered for taxation even before the search was conducted, therefore, it cannot be said that Rs.88 lacs was found and seized as a result of search. Considering the peculiarity of the facts we do not find any merit in the levy of penalty u/s.271 AAB of the Act. We accordingly direct the AO to delete the penalty so levied. - Decided in favour of assessee.
-
2023 (1) TMI 521
Bogus Purchases - Estimation of income - HELD THAT:- We note that concise and summarized ground no.1 of Revenue is covered by the judgment of the Co-ordinate Bench in the case of Pankaj K. Chaudhary [ 2021 (10) TMI 653 - ITAT SURAT] Hence, respectfully following the judgment of co-ordinate Bench, we direct the Assessing Officer to sustain the addition at the rate of 6% of bogus purchases. Addition on account of unrecorded commission - HELD THAT:- We note that findings of ld CIT(A) states that such additions has been made merely on presumption that the assessee must have paid commission to accommodation entry provider. The assessing officer has not proved with cogent evidence that assessee has paid commission, hence such addition is not sustainable in the eye of law. Therefore, we note that conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss the ground raised by the Revenue.
-
2023 (1) TMI 520
Addition made u/s 69A r.w.s. 115BBE - cash deposited in the bank account during the demonetisation period - unexplained money on account of cash deposited in the bank account with Kotak Mahindra Bank, Mumbai - HELD THAT:- From the copy of the bank statement of Kotak Mahindra Bank, we find that assessee had deposited Rs.6 lakh in cash in 600 old currency notes of Rs. 1000 denomination on 01/12/2016. At a glance, it may appear that since the assessee had sufficient cash in hand amounting to Rs. 6,36,031, therefore, the aforesaid deposit of cash would have been made on 01/12/2016, out of the said balance. At the same time, we cannot be oblivious to the fact that the assessee had also incurred certain expenses in cash. From the perusal of the cash book of the assessee for the year under consideration,we find that as on 01/11/2016, the assessee had an opening balance of Rs.5,25,114. It cannot be disputed that the demonetisation was declared on 08/11/2016, and therefore the cash available with the assessee till that day can only be in old currency notes. As on 01/12/2016, the assessee had an opening balance of Rs.6,09,661. It is pertinent to note that after 08/11/2016, the old currency notes were not legal tender and thus any cash which was withdrawn by the assessee after that date can only be in the new currency or the valid currency. Therefore, the cash withdrawn after 08/11/2016, cannot be said to have been in old currency notes which were available for deposit with the assessee on 01/12/2016. Hence, cash in hand till 08/11/2016, can only be in old currency notes which can be considered to have been deposited by the assessee on 01/12/2016. As per the cash book, the opening balance as on 01/11/2016 was only Rs.5,25,114. Since the assessee had deposited Rs.6 lakh in cash in 600 old currency notes of Rs. 1,000, denomination on 01/12/2016, therefore, we are of the considered view that the source of deposit of only Rs.5,25,114, in old currency notes can be said to have been satisfactorily explained by the assessee. Therefore, to this extent, the AO is directed to delete the addition. As regards the balance amount of Rs.74,886, the assessee has not given any satisfactory explanation and thus, the addition is upheld to an extent of Rs.74,886. Accordingly, the sole ground raised by the assessee is partly allowed.
-
2023 (1) TMI 519
Royalty receipt - whether receipt from uplinking services construe royalty as per Article 12(3) of the DTAA? - HELD THAT:- We are of the considered view that the assessee provides services to its customers using its equipment outside India. Various satellite based telecommunication services provided by the assessee to its customers are standard services, provided by various other service providers in the industry. Thus, it can be safely stated that there is no know how or intellectual property involved in the provision of such services by the assessee. Moreover, various satellite-based telecommunication services nowhere envisage granting the use of, or the right to use any technology or process to the customers. The assessee is responsible for maintaining the continuity of the service using its own equipment and facilities since the possession and control of equipment is with the assessee. It is merely making an entrepreneurial use of its own equipment to provide services and it cannot be said that customers have a right to use the process, if any, involved or applied by the assessee in its capacity as a service provider. The customers are not granted the use of or the right to use any process by the assessee during the course of providing various satellite-based telecommunication services which means that the customers are merely availing a service from the assessee and are not bearing any risk with respect to exploitation of the assessee s equipment involved in the provision of such service. Therefore, in our considered opinion, the amount received by the assessee from its customers in India as consideration for the provision of a service cannot be characterized as royalty for the use or right to use of a process. Heavy emphasis has been made on retrospective amendment brought by the Finance Act with special reference to Explanation 6 of section 9(1)(vi) of the Act.This issue has been well settled by the Hon'ble Jurisdictional High Court of Delhi in the case of New Skies Satellite 2016 (2) TMI 415 - DELHI HIGH COURT as held unless the said DTAAs are amended jointly by both parties to incorporate income from data transmission services as partaking of the nature of royalty, or amend the definition in a manner so that such income automatically becomes royalty. It is reiterated that the Court has not returned a finding on whether the amendment is in fact retrospective and applicable to cases preceding the Finance Act of 2012 where there exists no Double Tax Avoidance Agreement - question of law framed is accordingly answered against the Revenue. Also in the case of Asia Satellite Telecommunications Co. Ltd 2011 (1) TMI 47 - DELHI HIGH COURT Tribunal was not justified in holding that the amount paid to the assessee by its customers , represented, income by way of royalty, as the said expression is defined in the Explanation 2 to section 9(1)(vi). Receipts from Disaster Recovery Playout Services being treated as FTS - HELD THAT:- We find that the terms managerial , technical and consultancy appearing in the definition of fees for technical services have not been specifically defined in the treaty and the Act. Managerial service signifies a service for management of affairs or services rendered in performing management functions. It involves controlling, directing, managing or administrating the business of the service recipient and can be rendered only with the application of human mind and must involve human interface/ human intervention. Similarly, technical service means a service requiring expertise in technology. Services are of a technical nature when special skills or knowledge related to technical field3 are required for provision of such services. Only those services which involve application of any expert technical education or skill can be classified as technical service and routine services, which do not require application of any technical knowledge or skill cannot be classified as technical service. Playout service is nothing but the broadcasting and/ or transmission of channels by the assessee for its customers, without any involvement in decision-making with respect to the playlists and the content being broadcasted. Moreover, the assessee does not have a right to edit, mix, modify, remove or delete any content or part thereof as provided by the customer. The disaster recovery playout service merely involves provision of uninterrupted availability of the playout service at a predetermined level. Therefore, receipts from disaster recovery playout services are not in the nature of FTS as envisaged under Article 12(4)(a) of the DTAA as they are not ancillary or subsidiary to disaster recovery uplinking and allied services. We are of the considered view that service must be related to application or enjoyment of the right, property, or information for which a payment in the nature of royalty is received and predominant purpose of the arrangement under which payment of service fee is received must be application or enjoyment of the right, property, or information in respect of which the royalty is received. Thus, both conditions must be cumulatively satisfied for services to be considered as ancillary or subsidiary to the payment of royalty. Therefore, in our considered view, receipts from disaster recovery playout services are not in the nature of FTS as they do not make available any technical knowledge, experience, skill, knowhow, or process or consist of the development and transfer of any technical plan or technical design. The facts of the case in hand clearly show that the assessee has provided Disaster Recovery Playout services to its customers through its facility in Singapore and the customers are not provided with any technology knowledge, experience, skill, know-how or processes as envisaged under Article 12(4)b of the DTAA. Further, receipts are also not in the nature of FTS as per Explanation 2 of section 9(1)(vii) of the Act. In light of the decisions referred to hereinabove, payments received by the assessee as consideration for providing disaster recovery playout services are not taxable as FTS and the Assessing Officer is directed to delete the same. Ground No. 3 with its sub-grounds is allowed.
-
2023 (1) TMI 518
Exemption u/s.11 - Disallowance in respect of consultancy fee received by the assessee - Scope of guidelines of UGC and AICTE notification - HELD THAT:- AR drew our attention to the objects of the University Grants Commission Scheme imposing guidelines of Incentives for Resource Mobilisation wherein under the caption objectives of the scheme , we find that UGC had specifically provided in encouraging University to provide consultancy on payment basis not only to the industries but to the Government and other bodies and society at large on vital issue of national importance. This categorically goes to prove that the assessee institution is mandated / advised to provide consultancy on payment basis. We find from the notification issued by All India Council for Technical Education (AICTE) dated 05/03/2010, it also provides for consultancy training for which AICTE shall work out suitable model for the purpose of revenue sharing between Institutions and consultant teachers providing in the Indian Institution of Technology, Indian Institute of Management and other Institutions may be taken into consideration. The copy of said notification is enclosed in pages 88-118 of the paper book. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove in assessee s own case [ 2020 (1) TMI 689 - ITAT MUMBAI] we deem it fit to restore this appeal to the file of the ld. AO to decide the issue. In the light of the aforesaid guidelines of UGC and AICTE notification and in accordance with law. The assessee is also at liberty to furnish further evidences, if any, in support of its contentions. Needless to mention that the assessee be given reasonable opportunity of being heard. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
-
2023 (1) TMI 517
TDS u/s 194J - Disallowance u/s 40(a)(ia) - nature of payments - professional services or not - services rendered, viz. tabulation, checking and preparation of marksheets etc. which involved usage of computers and online services - HELD THAT:- The services rendered by the processing agency to the assessee, i.e., tabulation, checking and preparation of mark sheets and other computer assisted work could not have been brought within the meaning of professional services as contemplated in Explanation (a) of Section 194J. As observed hereinabove, term professional services had been specifically defined in Explanation (a) of Section 194J - On a perusal of the aforesaid definition, it transpires that the same either refers to certain specified services, i.e., services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section. The services in order to fall within the meaning of professional services for the purpose of triggering the provisions of Section 194J are either to be those which finds a specific mention in the Explanation (a) of the said section; or had been notified by the CBDT either for the purpose of Section 44AA or Section 194J of the Act. Not able to concur with the view taken by the lower authorities that the services rendered by the processing agency requires any professional expertise or skill, much the less those specified in Explanation (a) of Section 194J, AND also is unable to persuade myself to conclude that the services in question could be brought within the meaning of technical consultancy [as forms part of the definition of professional services in Explanation (a) of Section 194J], therefore, the same in my considered view could not have been brought within the meaning of Section 194J - We set-aside the order of the CIT(A) to the extent he had concluded that the assessee was liable to deduct tax at source on the payments made to the processing agency u/s.194J. As concluded that the services rendered by the processing agency, i.e., tabulation, checking and preparation of mark sheets and other computer assisted work provided to the assessee could not be brought within the meaning of professional services and thus, the assessee could not have been saddled with any obligation to deduct tax at source on the payments made to the processing agency u/s.194J.
-
2023 (1) TMI 516
Levy of penalty u/s 271(1)(c) - Computation of capital gain - whether any addition made because of legal fiction created under the Act i.e. to say addition made u/s 50C will amount furnishing inaccurate particular of income? - HELD THAT:- In this connection, we note that the Hon ble Courts have held that there cannot be any penalty on the amount representing the deemed consideration. In this regard, we find support and guidance from the judgment in case of PCIT vs. Sun on Peak Hotel (P) Ltd [ 2018 (6) TMI 1055 - GUJARAT HIGH COURT] We are of the opinion that the assessee cannot be made subject levy of penalty under section 271(1)(c) of the Act merely for reason that the consideration shown in the computation of capital was less than the value adopted for stamp duty or the value determined by the DVO under the provision of section 50C. Therefore, we hereby set aside the finding of the CIT(A) and direct the AO to delete the penalty levied under section 271(1)(c) of the Act. Hence the ground of appeal of the assessee is hereby allowed.
-
2023 (1) TMI 515
Deduction u/s 80P - Assessee is a Cooperative Society registered under Karnataka Souharda Sahakari Act, 1997 - AO held that assessee does not fall in the definition of a 'Cooperative Society' u/s 2(19) of the Act and is not eligible for deduction u/s 80P - HELD THAT:- We are of the opinion that this issue is squarely covered by case of M/s. Pavagada Souharda Multi-Purpose Co-operative Ltd. [ 2021 (9) TMI 806 - ITAT BANGALORE] as held assessee should be allowed deduction under section 80P(2)(a)(i) of the Act and the CIT(A) was justified in doing so. Except the ground that the Assessee was not a co-operative society entitled to deduction u/s.80P(2)(a)(i) of the Act, no other reasons were given for denying the benefit of the said deduction to the Assessee. Hence, the order of CIT(A) is upheld. Also in SHREE MAHILA CREDIT SOUDHARDHA SAHAKARI LTD. [ 2016 (6) TMI 1226 - KARNATAKA HIGH COURT] held if the assessee is not a co-operative bank carrying on exclusively banking business and if it does not possess a license from the Reserve Bank of India to carry on business, then it is not a co-operative bank. It is a co-operative society which also carries on the business of lending money to its members which is covered under section 80P(2)(a)(i) of the Income-tax Act, 1961, i.e. carrying on the business of banking for providing credit facilities to its members. It is entitled to the special deduction under section 80P. Thus we inclined to decide the issue in favour of the assessee in allowing the claim u/s 80P of the Act. TDS u/s 194A - payment of interest to its members - non-deduction of TDS for invoking provisions of section 40(a)(ia) - HELD THAT:- In the present case, there is no allegation that the assessee paid interest on deposits other than its members. Hence, the issue is to be decided in favour of the assessee in respect of payment of interest to its members regarding which section 194A of the Act is not applicable in respect of payment of interest to its members. To that extent, the assessee s claim is to be allowed.
-
2023 (1) TMI 514
Foreign tax credit under the provisions of section 91 - assessee submitted that provisions of section 91 of the Act have referred the income and not overseas net profit, net income or proportionate income, therefore the rate of tax in the foreign country should be worked out after considering the gross receipts and the amount of TDS deducted which comes out at 7% which is lower than the rate of tax in India - HELD THAT:- Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier years A.Y. 2012-13 [ 2020 (3) TMI 1170 - ITAT AHMEDABAD] nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in own case of assessee the we hold that the foreign tax credit to the extent not allowed under section 91 of the Act will eligible for deduction under section 37 of the Act as business expense. Thus, the ground of appeal raised by the assessee is hereby partly allowed.
-
Customs
-
2023 (1) TMI 513
Levy of penalty - liability of the Carrier - short-landing of goods loaded in a conveyance for importation into India - HELD THAT:- As per Section 116 of the Customs Act, the person in charge of the conveyance is responsible for short-landing. This has to be read with Section 148, which deals with the liability of an agent appointed by the person in charge of a conveyance. It lays down that where the Act requires anything to be done by the person in charge of a conveyance, it may be done on his behalf by his agent. An agent appointed by the person in charge of a conveyance and any person who represents himself to any officer of customs as an agent of any such person in charge, and is accepted as such by that officer, shall be liable for the fulfillment in respect of the matter in question of all obligations imposed on such person in charge including penalties and confiscations which may be incurred. The Petitioner in response to the show cause notice has taken this defence and had even given the details of the slot agents M/s. Liberty Marines Syndicate Pvt. Ltd., Globe Link W.W. India Pvt. Ltd. and M/s. Schenker India Ltd. These slot agents were directed to remain present for the hearing before the Assistant Commissioner, and the Assistant Commissioner (Customs) had given them the opportunity and heard the slot agents as well. Thereafter, the Commissioner (Customs) passed an order wherein there was no bifurcation of liability though the order was sent to the Petitioner and these three slot agents. It is the Petitioner who took up the challenge to the order, as according to the Petitioner, since the Petitioner is a reputed firm, it did not want the stigma of the order of penalty. The factual aspect as to the role of enquiry thereafter was not undertaken, and by the order in Appeal and the Revisional orders, the Order-in-Original was confirmed. Prima facie there appears to be a practice of holding an enquiry to ascertain whether it is the steamer agent who has filed the IGM should be held liable for the penalty in the case of short-landing or the liability should be fixed on the slot agent. There are no reason on record why this course of action is adopted in this case when the Petitioner has been consistently demanding the same. Thus, the appropriate course of action would be to set aside the impugned order and restore the Revision. The impugned order dated 9 May 2012 passed by the Joint Secretary, Revisional Authority, is quashed and set aside, and the revision filed by the Petitioner is restored to the file.
-
Corporate Laws
-
2023 (1) TMI 512
Vicarious liability of Directors who resigned - Non-submission of annual return and holding of annual general meeting in the relevant year - non-submission of financial statement within the stipulated time with Registrar of Companies - not having registered office capable of receiving and acknowledging the communication - AGM has not been held proceedings has not been forwarded to Registrar - HELD THAT:- This is a case where admittedly petitioner worked as Director of the Company between the period 30th September, 1992 till 13th March, 1995 and then resigned. In 2011, under the mistaken belief, complaint was filed against present petitioner also for alleged non-compliance of Section 220 of Act, 1956 for which penalty is provided under Section 162 of the Act, 1956 - Admittedly, alleged non-compliance is for the period 2008-2009 and year 2009-2010 where some defaults on the part of the Company are made. Admittedly, petitioner resigned w.e.f. 13th March, 1995. Much thereafter, alleged defaults have been committed. In the case of State of Haryana Vs. Bhajanlal [ 1990 (11) TMI 386 - SUPREME COURT ], seven parameters were prescribed under which court can interfere for resorting to extraordinary jurisdiction. Here contingency No.5 is attracted and same states that Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. It appears that petitioner made out his case for interference. Once, he resigned in the year 1995, then he cannot be fastened with any liability for a period of 2008-2009 and 2009-2010 - Petition allowed.
-
Insolvency & Bankruptcy
-
2023 (1) TMI 511
Seeking to withdraw the Section 7 application - default in execution of the Deed of Assignment between the Respondent and one Abhinandan Holdings Pvt. Ltd. (intending assignee) - HELD THAT:- The settlement has failed since March 2020 and the Agreement is also only till March 2020. Hence, no case for setting aside the order dated 02.02.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench, Kolkata) in RST. A. No. 842/KB/2020 in CP (IB) No. 04/KB/2019 is made out as the Section 7 Application bearing CP (IB) No. 04/KB/2019 filed by the Respondent No. 1 was directed to be listed for hearing on 16.03.2021 by the Adjudicating Authority, therefore, there is no ground for interference. The instant Appeal is disposed off with request to the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench, Kolkata) to hear all the parties i.e. Appellant, Respondent No. 1 Respondent No. 2 and after hearing the parties, the Adjudicating Authority may pass appropriate orders in CP (IB) No. 04/KB/2019 in accordance with law expeditiously. Keeping in view that the matter is pending before the Adjudicating Authority since 2019, the parties are at liberty to raise all the relevant issues both in fact and in law before the Adjudicating Authority.
-
PMLA
-
2023 (1) TMI 510
Seeking grant of Regular Bail - Money laundering - settlement of the commission and the betting amount was done mainly through hawala operators in cash or through crypto currency with each individual player and the Union Head, by their respective club managers - offences under Sections 3 and 4 of Goa Gambling Act - no scheduled offences against any of the Accused including Applicant Nos. 1 and 2 - HELD THAT:- From definition of proceeds of crime, it clear that when any property, either directly or indirectly, is derived or obtained as a result of any criminal activity relatable to a scheduled offence, it would be proceeds of crime . Therefore, for there to be any proceeds of crime , the property must be derived or obtained as a result of any criminal activity relatable to a scheduled offence. If any property is obtained or derived as a result of any criminal activity, but which is not relatable to a scheduled offence, then the same cannot be termed as the proceeds of crime . When one reads Section 3 of the PMLA, 2002 [offence of money-laundering] together with the definition of the words proceeds of crime [Section 2(1)(u)] and scheduled offence [Section 2(1)(y)], it is clear that for charging a person with the offence of money-laundering, there has to firstly be a scheduled offence. When any property is derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence, then such property would be the proceeds of crime . When a person directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime, he is guilty of the offence of money-laundering. Therefore, the sine qua non for Section 3 of the PMLA, 2002 to apply would be the commission of a scheduled offence. If there is no scheduled offence, then Section 3 cannot be pressed into service. As of now, the scheduled offences against the Accused have admittedly been dropped in the chargesheet filed by the Goa Police Crime Branch before the JMFC F Court at Mapusa, Goa and the matter is registered as Criminal Case No.AOA/572/2022/F. If there is no scheduled offence, there is no question of any generation of any proceeds of crime , and consequently, there can be no offence of money-laundering. In these circumstances, I am satisfied that Applicant Nos. 1 and 2 have made out a case for grant of bail. This decision squarely answers the argument of Mr. Karpe that because there is no order of a court of competent jurisdiction absolving Applicant Nos. 1 and 2 of the scheduled offences, the judgment of Supreme Court in the case of VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. [ 2022 (7) TMI 1316 - SUPREME COURT] ) is not applicable. This Court correctly held that when the question of liberty of an individual is involved, it is not really possible to completely ignore the acceptance of the C-Summary Report which has the effect of bringing to an end the proceedings registered with the Yellow Gate Police Station pursuant to the filing of the FIR dated 28.10.2020 - Even in the facts of the present case, when the question of liberty of an individual is involved, it is not possible for me to ignore the fact that the chargesheet filed in the present case, as of now, does not relate to any scheduled offence which would give rise to proceeds of crime , which in turn, would make out an offence of money-laundering under Section 3 of the PMLA, 2002. Applicant is allowed to be released subject to conditions imposed - bail application allowed.
-
2023 (1) TMI 502
Seeking grant of Bail - existence of offence of Money Laundering or not - scheduled offences punishable under Sections 402, 406, 465, 467, 468, 471 and 120-B of the Indian Penal Code, 1860 - predicate offence - filing of C-Summary report - whether filing of C-Summary report and acceptance by the Magistrate take away the seriousness of the offence as independent proceedings are registered and as charge- sheet is already filed in the PMLA case? - HELD THAT:- It is pertinent to note that in the present case, the complainant at whose instance the proceedings were initiated submitted his no objection to the acceptance of the C-Summary report. The MMRDA which is alleged to have suffered losses has not filed any complaint of breach of contract or that they are defrauded. Of course, these are matters to be taken into consideration by the Special Court trying the PMLA case and my observations therefore, may be construed as prima facie in nature for the purpose of considering the request for releasing the applicants on interim bail. Once the C-Summary report has been filed and accepted by the Court of competent jurisdiction, in view of the observations of the Supreme Court in Vijay Madanlal Choudhary and ors. [ 2022 (7) TMI 1316 - SUPREME COURT] , prima facie, there can be no offence of money laundering against the applicants. There are no force in the submission of Mr. Venegaonkar that till the period of 90 days for filing the Revision challenging the order of the Metropolitan Magistrate accepting the C-Summary report is over, the application for bail is not tenable. The question is of liberty of an individual which is valuable. The period of 90 days for filing the Revision challenging the acceptance of the C-Summary report cannot be read to mean as an automatic stay to the order accepting C-Summary report. The Revision is but a statutory remedy provided by law to challenge the impugned order (acceptance of C-Summary). The limitation prescribed for filing the Revision cannot be construed as a stay to the order of the Metropolitan Magistrate. The applicants are in custody for more than 2 years. The maximum punishment for the offence under Section 4 is 7 years imprisonment. The applicant-Marath is 71 years of age and a retired officer of the Indian Navy who has roots in the society. The applicant-Amit is an entrepreneur. There are no criminal antecedents reported against the applicants. In my opinion, subject to the challenge, if any, to the order of C-Summary and subject to further orders that may be passed thereon, the prayer of the applicants for grant of interim bail needs to be considered - on filing of a C-Summary report in the EOW case, in the light of the observations quoted abbove in Vijay Madanlal Choudhary and ors., the rigours of Section 45 of the PMLA will not apply. The charge-sheet has been filed. The investigation is complete. Application allowed.
-
Service Tax
-
2023 (1) TMI 509
Price reduction clause - levy of service tax on liquidated damages - declared services or not - applicability of CBIC vide circular no.178/10/2022-GST dated 3rd August, 2022 - HELD THAT:- CBIC has issued a circular No.178/10/2022-GST dated 3rd August, 2022 in which it has stated its stand on the issue of taxability of various transactions claimed to be liquidated damages . At the time of adjudication by commissioner and hearing before tribunal, this circular was not available on record and therefore, the adjudicating authority could not take benefit of the same. While the issue of levibility of service tax on liquidated damages is a debatable issue, the CBIC has vide Circular No. 178/10/2022-GST clarified its stand on the subject in respect of GST. The circular was not available to the adjudicating authority when the matter was decided and he could not examine the issue in the light of the aforesaid circular. The issue in dispute can be decided in the light of the aforesaid circular. The impugned order is set aside and the matter is remanded to the original adjudicating authority to decide the issue afresh - Appeal allowed by way of remand.
-
2023 (1) TMI 508
Levy of penalty - service tax alongwith interest have been paid on being pointed out - service tax liability discharged after availing the benefit of sub-section (2) of Section 67 of the Finance Act, 1994 - tax not paid on the ground o doubt regarding their liability to service tax in terms of CBEC Circular No. 108/02/2009-ST-F.No. 137/12/2006-CX.4 dated 29.01.2009 - no intent to evade tax - entitlement for benefit under section 73(3) of FA or not - HELD THAT:- Section 67(2) clearly provided for treating the amount charged by the service provider as inclusive of service tax payable unless it is specifically mentioned in the documents - In the instant case no evidence has been produced by the revenue to hold that the amount collected by the appellant is exclusive of service tax or it has been separately collected by the appellant. In view of the above, there are no merit in the department s stand that benefit of Section 67(2) could not be extended. The appellant discharged the entire service tax along with interest soon after the same was pointed out and in this circumstances the benefit of Section 73(3) should not have been denied. The appeal is allowed to the extent that the penalty imposed on the appellant are set aside.
-
2023 (1) TMI 507
Nature of activity - Management or Business Consultant Service or not - appellant received Management Fees and other recoverable expenses on monthly basis from M/s Gillette India Ltd., Bhiwadi - demand alongwith interest and penalty - extended period of limitation - HELD THAT:- The amounts in question, were received undisputedly in terms of Annexure I to the purchase agreement between M/s Gillette India Ltd. and the appellant. The nature of the agreement makes it clear that it was an agreement for sale of goods by the appellant to M/s Gillette India Ltd. as per the specifications of the latter. To sell these goods the appellant manufactured them on which the appellant has been paying appropriate central excise duty - In any contract of job work, an agreement is entered into whereby an amount is paid to the job worker by the principal. If the job worker undertakes an activity which amounts manufacture, it has to pay appropriate central excise duty. In this case, the appellant has paid central excise duty. Thereafter, the appellant sold the goods to M/s Gillette India Ltd. in terms of the purchase agreement. Such sale or purchase is not a taxable service and no service tax can be charged on it. The entire case of the Revenue rests on the fact that in the books of account the appellant has recorded the amounts received on account of job work as per the agreement under the head Management Fees . Even if such entries are made by the appellant, it does not convert what is essentially an agreement for manufacture and sale of Razors and Blades into an agreement for rendering services. Thus, none of the elements required for levying service tax viz., a service provider, a service recipient, a taxable service and a consideration are present in the case. The impugned order is set aside and the appeal is allowed.
-
Central Excise
-
2023 (1) TMI 506
Availability of Cenvat Credit - Input services - Management Consultancy services - Legal and Professional services of / and services used mainly in erection and commissioning, laying of foundation and making structure in support of capital goods/ machinery - rent-a-cab - hotel services - insurance services - architectural services - period 2012-14 - HELD THAT:- The appellants are engaged in manufacture of steel, coils. The appellants were setting up their new plants and while setting up their new plant, the appellant availed various services. The revenue has sought to deny input credit of various services used by the appellant on the ground that the definition of input service was amended with effect from 01.04.2011 to exclude the services used for setting up of factory premises of output service provider or office relating to such factory or premises. It is seen that the definition of input service was amended with effect from 01.04.2011 - It is seen that the order of Commissioner examines the omission of words in initial setting up in the inclusive part of the definition of input service, but fails to examine the admissibility of input services credit of these services under the main part of the definition of input service. The impugned order does not examine the admissibility of Cenvat Credit of these services in the main part of the definition, but relies solely on the changes made in the inclusive part of definition - In terms of the decision in the case of Pepsico India Holdings (Pvt.) Ltd [ 2021 (7) TMI 1094 - CESTAT HYDERABAD] , it is apparent that if the services provided in relation to setting up in unit would be covered under the main part of the definition. Unless specifically excluded by exclusion clause. It is seen that the impugned order does not examine which service would fall under which exclusion clause. The order in this regard is vague and not a speaking order. There are no option but to set aside the impugned order and remand the matter back to the original Adjudicating Authority to pass fresh order in the light of the Tribunal decisions in the case of Pepsico India Holdings (Pvt.) Ltd - Moreover, the Commissioner has expected to identify the specific exclusion clause of definition of input service under which he seeks to deny the credit of or of the service - He will also examine the cases relied by the appellant in support of its claim - matter remanded to the original Adjudicating Authority for fresh adjudication.
-
2023 (1) TMI 505
Computation of proportionate credit determined under rule 6(3A) of the 2004 Credit Rules - by taking the value of common input services used in both taxable and exempted services OR total credit taken on all input services, including the common input services - goods sold to related persons or not - HELD THAT:- Reliance placed on the decision in the case of COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT VERSUS M/S. RELIANCE INDUSTRIES LIMITED [ 2019 (3) TMI 784 - CESTAT AHMEDABAD ], the Tribunal observed that for the purpose of calculation of Cenvat credit reversal, in the formula, total Cenvat credit shall mean credit of only common input service and not of input service exclusively used for the manufacture of dutiable product on which the Cenvat credit is eligible to the respondent in its entirety. It needs to be noted that in the present case also, the appellant has not taken credit on the input and input services used in provision of exempted services. Thus, the decision of the Tribunal in M/S NATIONAL STEEL AGRO INDUSTRIES LIMITED VERSUS PRINCIPAL COMMISSIONER, CENTRAL GOODS SERVICE TAX CENTRAL EXCISE - UJJAIN [ 2021 (6) TMI 60 - CESTAT NEW DELHI ] rendered for the period prior to 2016 will apply to the facts to the present case, where it was held that Since the appellant has followed Rule 6(2) and has not taken any CENVAT credit on the input services which were used exclusively for providing exempted services, the formula under Rule 6(3A) can only be used to only proportionately divide the credit taken on common input services and deny credit to the extent it is attributable to the exempted service viz., trading during the periods relevant to both appeals, viz., 2015-16 and April 2016 to June 2017. The order passed by the Commissioner (Appeals), therefore, deserves to be set aside to the extent it has confirmed the demand attributed to input services used in clearance of exempted products with penalty, and is set aside - appeal allowed.
-
CST, VAT & Sales Tax
-
2023 (1) TMI 504
Penalty under Section 54(1)(14) of U.P.V.A.T. Act, 2008 - change in the quantum of penalty by rectification proceedings - revisionist submitted that the Assessing Authority has erred in law in passing the rectification order dated 26.12.2012 under Section 31 of the Act of 2008 after the order of the first Appellate Authority, as the order of the Assessing Authority merged in the order of the first Appellate Authority - HELD THAT:- It is clear that the goods were intercepted by the mobile squad on 17.5.2010 while it was in transit. Form 38, which was being used for carrying the goods, only mentioned about two bills being Bill No.260 and 194 and not Bill No.195. The Taxing Authorities as well as Tribunal had categorically recorded findings that there was an intention to evade tax by the assessee as the third bill was deliberately not mentioned in From 38 and column was left blank - the first Appellate Authority had reduced the quantum of penalty imposed by the Assessing Authority and only penalty have been imposed on the goods which has been transported through the Bill No.195 and has not been entered in From - 38. The argument of learned counsel for the revisionist to the extent that order passed by the Assessing Authority under Section 48(5) of the Act of 2008 merged after the order passed by first Appellate Authority and no rectification order could have been passed under Section 31 has no legs to stand as the rectification proceedings are initiated for error apparent on the face of the order and the Assessing Authority has rightly proceeded to pass order and rectified its order. The nature of the penalty proceedings cannot be changed by rectification order under Section 31 of the Act and the penalty proceedings was rightly carried out against the assessee-revisionist as description of goods and Bill No.195 was not entered in Form -38 while the goods were in transit. There are no case for interference is made out - The revision being devoid of merit is hereby dismissed.
-
Indian Laws
-
2023 (1) TMI 503
Dishonor of Cheque - legally enforceable debt or not - whether preponderance of probabilities established that the complainant was indulging with money lending activities without any licence? - rebuttal of presumption under Section 139 of the N.I. Act or not - HELD THAT:- Since framing of points for determination by the First Appellate Court at the time of passing of the judgment or at the most at the time of hearing parties, assumes significance as in case the points for determination are framed in wrong manner, the reasoning is also going to affect. In the present matter, the learned First Appellate Court after hearing of the arguments and after perusing the entire records of the trial Court, framed the points for determination in paragraph 26 of the impugned judgment. Thus, it presumed that the learned First Appellate Court was entirely aware of the facts as well as defence raised by the accused before the learned Magistrate and even before the First Appellate Court. Paragraph 10 of the impugned judgment shows the arguments advanced on behalf of the accused thereby categorically state that in his reply to the demand notice he stated that he repaid the entire amount along with interest by making payment on monthly basis. Thus, it is clear from the record of the trial Court as well as arguments advanced before the First Appellate Court that the accused never disputed about issuing signed cheques in favour of the complainant. Though it was his defence that he handed over such blank signed cheque as a security. It is now well settled that even a cheque duly signed by the accused for the purpose of security of any loan, attracts the provisions of Section 138 of the N.I. Act. It is also well settled that blank signed cheque issued by the accused is presumed to have been handed over to the complainant with a understanding or the condition that blank portions on the cheque would be filled up before presenting it. Hence, now in the present matter there is absolutely no dispute about the issuance of cheque by the accused in favour of the complainant. In the present matter,, there is absolutely no material to show that the activity of giving loan by the complainant to the accused is by way of charging any interest and that too when both parties are related to each other. Each transaction has to be considered in the light of definition of loan as defined in Section 2(k) of Goa Money Lenders Act, 2001. Thus, the observations in paragraphs 36 to 40 of the impugned judgment are erroneous and without considering the definition of loan as defined in Section 2(k) of the Act of 2001. Simply because the complainant advanced loan to 4 to 5 persons and that too without charging any interest, it cannot be presumed that such activity is covered under the Money Lenders Act and, therefore, recovery of it is barred. - onus to prove which accused asserted about repayment certainly lies on the accused himself. Though he had an opportunity to prove it by stepping into the witness box or by examining any witness regarding such repayment as alleged, he failed to avail such opportunity. In such circumstances, instead of recording any adverse inference, the contention of the accused has been accepted by putting undue burden on the complainant himself by the First Appellate Court and more so on the basis of so called letter written by the accused. The observations of the first Appellate Court in reversing the judgment of the learned Magistrate are required to be considered as perverse. Putting unnecessary burden on the complainant and not raising presumption under Section 139 of the N.I. Act needs to be considered as error in the eyes of law. Thus, such findings required interference as it cannot be construed that the view taken by the learned First Appellate Court is a plausible view in the facts and circumstances of the case in hand - Appeal allowed
|
