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TMI Tax Updates - e-Newsletter January 23, 2023 Case Laws in this Newsletter: GST Income Tax Customs PMLA Central Excise CST, VAT & Sales Tax Highlights / Catch Notes GST: Permission to rectify the GST Return filed for the period September, 2017 and March 2018 in Form-B2B instead of B2C as was wrongly filed under GSTR-1 in order to get the Input Tax Credit (ITC) benefit - The letters of rejection dated 19th June and 23rd September, 2020 are hereby set aside - The Court permits the Petitioner to resubmit the corrected Form-B2B under GSTR-1 for the aforementioned periods September, 2017 and March, 2018 and to enable the Petitioner to do so a direction is issued to the Opposite Parties to receive it manually. - HC Visit to Get Source GST: Cancellation of registration certificate of petitioner - petitioner did not remain present on stop during inspection - In absence of any intimating during the spot visit, if it was difficult for him to remain present because of the shift in the office, the cancellation of registration with the retrospective date is fully impermissible. - HC Visit to Get Source GST: Rejection of refund claim - Period of limitation - the Notification dated 5.7.2022 issued by the Central Government in exercise of powers u/s 168A of the CGST, which excludes the time limit specified for computing of period of limitation in filling the refund application, the claim of the petitioners for refund was filed within such excluded period. - Revenue directed to process the refund application - HC Visit to Get Source Income Tax: Validity of assessment and demand - Notice u/s 153C against deceased assessee - would the Revenue be justified in contending that they, having no knowledge about the death of the assessee, are entitled to plead that the notice is not defective. In my considered view, the answer to the question should be definitely against the Revenue. - HC Visit to Get Source Income Tax: Stay of demand - Recovery of Income-Tax arrears - Request for payment of 20% of the demand - For reasons best known to him, CIT(A) is yet to decide the said matter. It is only upon examining the case of the petitioners by the CIT(A), it can be concluded whether petitioner is an association of person, who is liable to tax or not. Under the circumstances, it is not appropriate to demand 20% of the alleged dues as late as in the year 2022 and the same is liable to be set aside. - HC Visit to Get Source Income Tax: Addition u/s 28 - difference between receipts as per 26 AS and as per books of accounts - The assessee is maintaining regular books of accounts audited by independent chartered accountant which normally to be taken as correct unless there are adequate reason to indicate that the same is incorrect or unreliable. It is not the case of the A.O. that there are a specific defect or discrepancies in the books of accounts of the assessee. - No additions - AT Visit to Get Source Income Tax: Disallowing credit for tax deducted at source - section 199 read with Rule 37BA(2) - Merely because the assessee’s wife did not furnish declaration to the bank in terms of proviso to Rule 37BA(2), the amount of tax deducted at source, which is otherwise with the Department, cannot be allowed to remain with it eternally without allowing any corresponding credit to the person who has been subjected to tax in respect of such income. - AT Visit to Get Source Income Tax: Denial of exemption u/s.11 - assessee earned huge margin on performance of the activity, which is in the nature of business - the contention is devoid of merit because pendency of a review petition does not dilute or alter in any manner the binding force of the judgment in terms of Article 141 of the Constitution of India. We, therefore, approve the ultimate conclusion drawn by the authorities in rejecting the claim of the exemption to this extent. - AT Visit to Get Source Income Tax: Reopening of assessment u/s 147 - Additions u/s 68 - Ld. AO recorded reasons without applying mind independently but based on surmises and conjectures out of financial status of the assessee. While Ld. CIT(A) and Ld. AO have both ignored the factual aspects of purchase of shares five years prior to the sale for substantial amount and have tried to paint its findings based on modus operandi of tainted Kayan brothers, with whom actually there was no dealing by the assessee. - Demand set aside - AT Visit to Get Source Income Tax: Higher rate of depreciation - machinery is put on hire in the business - the assessee has not shown any hire charges in respect of heavy earth moving machineries used by the assessee in its business of the contract of road building. - The assessee has not hired heavy earth moving machinery in the business of the assessee. - assessee is not entitled to the higher rate of depreciation in respect of said plant and machinery - AT Visit to Get Source Income Tax: Exemption u/s.10(23)(vi) - The assessee-trust does not have profit motive, the small profit generated while carrying out charitable activities, does not mean that assessee is engaged in the commercial activities. Such small profit so earned is again utilised for charitable activities by the assessee-trust - assessee-trust deserves certificate, u/s 10(23C) (vii) - AT Visit to Get Source Income Tax: Demand raised u/s 200A - inadvertent mistake in mentioning wrong TAN - While depositing the TDS deducted, the assessee has wrongly mentioned the TAN allotted for Delhi office instead of Bina Madhya Pradesh Office. This fact was also brought to the notice of the Department immediately but the defect could not be cured in the absence of any provision for such type of rectification. - CIT(A) has taken a just and fair decision and reversed the demand u/s 200A - AT Visit to Get Source Customs: Refund of SAD - It is apparent from the copy of receipt for filing refund claim that the appellant had filed the copy of sale invoices and also summary of sale invoices etc. Thus, the refund claim has been rejected without any reason and on flimsy ground. Further, such rejection of refund is bad in law - AT Visit to Get Source Central Excise: Wrongly availed Cenvat credit - the activity in question is the activity undertaken by the buyer of the manufacturer that too to ensure his right as he got reserved between the contracting parties for not receiving the damaged goods. From no stretch of imagination, said activity performed by the buyer can be called as the service which is eligible for Cenvat credit in terms of either Rule 2(l) of Cenvat Credit Rules or Rule 3 of Cenvat Credit Rules, 2004. - Credit not available - AT Visit to Get Source Central Excise: Maintainability of appeal - Jurisdiction under service tax vs central excise - Revenue has filed the appeal under Section 84 of the Finance Act, 1994 and the said appeal was entertained and disposed of by the learned Commissioner (Appeals) under such statutory provisions. Since, the impugned order was passed under a statute which does not deal with the subject issue, the submissions made by the learned Consultant for the appellant merit consideration for the purpose of maintainability of such appeals by the Commissioner (Appeals). - AT Visit to Get Source Articles INTEREST IS TO BE LEVIED ON NET GST LIABILITY ONLY Open Letter to Hon. Fin. Minister Installation services for illumination of roads cannot be construed as “Construction Services” Notice to be served to the assessee before carrying out physical inspection of the business premises News EPCG Scheme Relaxed for Sectors Affected by COVID-19 Pandemic Case Laws: GST 2023 (1) TMI 881 Permission to rectify the GST Return filed for the period September, 2017 and March 2018 in Form-B2B instead of B2C as was wrongly filed under GSTR-1 in order to get the Input Tax Credit (ITC) benefit - HELD THAT:- The fact remains that by permitting the Petitioner to rectify the above error, there will be no loss whatsoever caused to the Opposite Parties. It is not as if that there will be any escapement of tax. This is only about the ITC benefit which in any event has to be given to the Petitioner. On the contrary, if it is not permitted, then the Petitioner will unnecessarily be prejudiced. In similar circumstances, the Madras High Court in M/S. SUN DYE CHEM VERSUS THE ASSISTANT COMMISSIONER (ST) , THE COMMISSIONER OF STATE TAX [ 2020 (11) TMI 108 - MADRAS HIGH COURT] accepted the plea of the Petitioner and directed that the Petitioner in that case should be permitted to file the corrected form. The letters of rejection dated 19 th June and 23rd September, 2020 are hereby set aside - The Court permits the Petitioner to resubmit the corrected Form-B2B under GSTR-1 for the aforementioned periods September, 2017 and March, 2018 and to enable the Petitioner to do so a direction is issued to the Opposite Parties to receive it manually. Petition disposed off. 2023 (1) TMI 880 Cancellation of registration certificate of petitioner - cancellation on the ground that the petitioner did not remain present even though, admittedly, the petitioner submitted the reply and no opportunity of hearing was given - HELD THAT:- It is quite apparent from the material, which is placed on the record that the cancellation of registration certificate is contrary to law. It is a non-speaking order, which cancelled the registration on the ground that he did not remain present even though he did submit the reply. Thus, cancellation of registration without assigning any reason is wholly mechanical and stereotyped. He has explained that it is already on record that he has shifted to another premises from 01.01.2022. The day the premises was visited, he was not intimated and assuming that it may not be necessary, the fact remains that he has explained and when he appeared before the respondent authority along with the documents so far as the financial transactions are concerned. It needs to be pointed out that the petitioner concerned had shifted to another premises and, hence, he simply cannot be found at the old address. In absence of any intimating during the spot visit, if it was difficult for him to remain present because of the shift in the office, the cancellation of registration with the retrospective date is fully impermissible. Petition allowed. 2023 (1) TMI 879 Rejection of refund claim - Period of limitation - ground raised by the authorities in not sanctioning the refund was that the refund applications were belatedly filed under section 54 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- When the petitions come up for consideration, learned advocates for the parties are ad idem that in view of the Notification dated 5.7.2022 bearing No. 13/2022 issued by the Central Government in exercise of powers under section 168A of the Central Goods and Services Tax Act, 2017, which excludes the time limit specified for computing of period of limitation in filling the refund application, the claim of the petitioners for refund was filed within such excluded period. The competent authority of the respondents is directed to process in accordance with law the claim of refund of the petitioners treating it within time and grant refund with statutory interest, if the petitioners are found eligible. Petition disposed off. Income Tax 2023 (1) TMI 873 Revision u/s 264 - income in question was exempted from tax and not liable to tax under The Income Tax Act, 1961, which according to the petitioner was included in her return as taxable income due to bonafide mistake - original return u/s 139 (5) was filed beyond the specified date - petitioner is an old lady of advancing age and being unaware of the technicalities of the income tax law, committed mistake in her return by including the exempted income in question relating to dividend and long term capital gain as income payable to tax and such mistake was realised by her only upon receipt of the orders passed under Section 143 (1) - Assessee case that since the filing of original return itself was delayed no revised return could be filed by her under Section 139 (5) for claiming deduction of the income exempted from income tax which was included as taxable income due to bonafide mistake and having no other recourse like filing of revised return or appeal, she filed revision applications u/s 264 before the Commissioner of Income Tax concerned - HELD THAT:- Commissioner of Income Tax concerned in the facts and circumstances of the case has committed error in law in dismissing the revision applications of the petitioner filed under section 264 by refusing to consider the claim of the petitioner on merit that the income in question was exempted from tax and not liable to tax under The Income Tax Act, 1961, which according to the petitioner was included in her return as taxable income due to bonafide mistake and which she could not rectify by filing revised return since original return itself was belatedly filed and petitioner had no other remedy except taking recourse to filing of revision application under section 264 of The Income Tax Act, 1961. Commissioner in refusal to consider the aforesaid claim of the petitioner has misinterpreted and misconstrued the judgment of Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] as well as the scope of jurisdiction conferred upon him under section 264 of The Income Tax Act, 1961 by equating the same with that of the jurisdiction of the Assessing Officer in considering the claim of any allowance / deduction by an assessee in return or without filing any revised return. The impugned orders u/s 264 are not sustainable in law and accordingly the same set aside and the matters are remanded back to the Commissioner of Income Tax concerned to reconsider and dispose of the applications in question under Section 264. 2023 (1) TMI 872 Notice u/s 153C issued against deceased assessee - HELD THAT:- As decided in Alamelu Veerappan [ 2018 (6) TMI 760 - MADRAS HIGH COURT ] the settled legal principle being that a notice issued in the name of the dead person is unenforceable in law. If such is the legal position, would the Revenue be justified in contending that they, having no knowledge about the death of the assessee, are entitled to plead that the notice is not defective. In my considered view, the answer to the question should be definitely against the Revenue. 2023 (1) TMI 871 Penalty u/s 270AA - unabsorbed depreciation and business losses concerning earlier AYs - HELD THAT:- Our attention has been drawn to page 247 wherein the information with regard to the unabsorbed depreciation and business losses concerning earlier AYs is set forth. We are of the view that the best way forward would be to set aside the order and remand the matter to the concerned officer for carrying out a de novo exercise. It is ordered accordingly. This exercise will be completed by the concerned officer within the next eight weeks. Pending the exercise which we have directed the concerned officer to carry out, no precipitate steps will be taken against the petitioner. 2023 (1) TMI 870 Assessment u/s 143(3) read with 144B - Penalty u/s 271AAC imposed - Denial of personal hearing was sought by the assessee - denial of principles of natural justice - HELD THAT:- In response to the notice dated 25.8.2022, the assessee filed its detailed reply on 2.9.2022 and also made a request of video conference hearing with reason that the matter requires explanation due to complexity of the facts. The screen shot of web portal indicates the video conference hearing sought for by the assessee. However, the record shows that the same was not acceded to, by the respondent and no opportunity of video conference hearing was provided to the assessee. The reply affidavit dated 22.12.2022 does not dispute the above factual aspect. In view of above facts, the order of assessment under section 143(3) read with 144B deserves to be quashed and set aside and hereby quashed and set aside. The demand notice under Section 156 dated 20.9.2022 and penalty notice under Section 274 read with Section 271AAC(1) is also quashed and set aside. The assessment proceedings are restored to the file of the authority from the stage of providing personal hearing to the assessee as sought for. Once the personal hearing has been given to the assessee, the assessee is expected to cooperate and assessing officer is at liberty to pass an order in accordance with law as expeditiously as possible but not later than ten weeks from the date of receipt of the order. 2023 (1) TMI 869 Income deemed to accrue or arise in India - amount received by the Intelsat Corporation, USA for lease of transponder facility - ITAT held as not chargeable to tax under section 9(1)(vi) read with Article 12(3) of the DTAA between India and USA as royalty - whether ITAT has erred in not appreciating that amount received by Intelsat Corporation, USA represented income by the way of royalty as defined in Explanation 2 read with Explanation 5.6 to Section 9(l)(vi) of the Act as well as Article 12(3) of the India-USA DTAA.- HELD THAT:- Admittedly, the questions of law urged in the present appeal are covered by the decision of this Court in assessee s own case[ 2019 (10) TMI 1541 - DELHI HIGH COURT] pertaining to the Assessment Year 2013-14, wherein this Court dismissed an appeal of the Revenue on similar grounds relying on the decisions in M/s Asia Satellite Telecommunications Co. Ltd. [ 2011 (1) TMI 47 - DELHI HIGH COURT] and Director of International Taxation Vs. New Skies Satellite BV, [ 2016 (2) TMI 415 - DELHI HIGH COURT] Appellant states that the Revenue has not accepted the aforesaid decisions and has preferred SLPs against the same. Though the appeals in the aforementioned cases are pending adjudication, yet there is no stay of the said judgments till date. Consequently, in view of the judgments of the Supreme Court in Kunhayammed and Others Vs. State of Kerala And Another. [ 2000 (7) TMI 67 - SUPREME COURT] and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras [ 1992 (4) TMI 183 - SUPREME COURT] the issues raised in the present appeals are covered by the judgment passed by the learned predecessor Division Bench. No substantial question of law arises. 2023 (1) TMI 868 Stay of demand - Recovery of Income-Tax arrears - Request for payment of 20% of the demand - Income liable to be taxed for the assessment year 2012-2013 - petitioner No.1 an association of person or not? - As contended petitioner No.1 does not constitute an association of person and cannot be taxed and that the consideration received by petitioner No.1 has been completely distributed between petitioner Nos.2 and 3 as per the joint venture agreement and that it is petitioner Nos.2 and 3 who are liable to be taxed - HELD THAT:- Income Tax Appellate Tribunal has remanded the matter back to the Commissioner of Income Tax (Appeals)-6, respondent No.3 herein, on 28.02.2018 itself. For reasons best known to him, he is yet to decide the said matter. It is only upon examining the case of the petitioners by respondent No.3, it can be concluded whether petitioner No.1 is an association of person, who is liable to tax or not. Under the circumstances, it is not appropriate for respondent No.4 to demand 20% of the alleged dues as late as in the year 2022 and the same is liable to be set aside. The demand of respondent No.4 as against petitioner No.1 is hereby set aside - Respondent No.3 Commissioner of Income Tax (Appeals)-6 is hereby directed to dispose of the case of the petitioners as expeditiously as possible - petitioners will have to pay such tax as determined by respondent No.3 subject to further challenges if any and the petitioners shall not be entitled to claim the benefit of limitation in this regard. 2023 (1) TMI 867 Disallowance expenditure u/s 37(1) - as perusing the details of other expense AO noted that assessee has claimed expenditure on account of claims/bills submitted but not acknowledged - CIT-A deleted addition - HELD THAT:- CIT(A) while deciding the issue in favour of the assessee has given a finding that the additional claims lodged by the assessee with various parties were not admitted by those parties and therefore no income can be said to have accrued to the assessee as no right have been vested in the assessee to recover the amount and accordingly under the law no debt can be said to have created in favour of the assessee. He therefore held that the entries made by the assessee was only a hypothetical income and not a real income. Before us Revenue has not pointed to any fallacy in the finding of the Ld. CIT(A) nor has placed on record any contrary binding decision in its support. Appeal of revenue dismissed. 2023 (1) TMI 866 Addition u/s 28 - difference between receipts as per 26 AS and as per books of accounts - CIT-A deleted the addition - HELD THAT:- The assessee has explained to the A.O. that some of the differences are overlapping due to different years in which the assessee and the deductor have considered the respective income/expenses and corresponding income tax deducted at source and also clarified the difference in income could be due to amount in correctly reported by the deductor while filing the quarterly TDS statements/returns or due to adhoc on account statement made by the customer from time to time. From the said reconciliation it can be seen that cumulative during the four years commencing from Financial Year 2010-11, the assessee disclosed income and applicable service tax thereon aggregating in the audited financials as against the income and service tax thereon reported in Form No. 26AS i.e. the assessee has cumulatively offered to tax income and disclosed service tax thereon in its books of accounts in excess of income and service tax reported in Form No. 26AS for the Financial Year 2007-08 through Financial Year 2010-11. The assessee is maintaining regular books of accounts audited by independent chartered accountant which normally to be taken as correct unless there are adequate reason to indicate that the same is incorrect or unreliable. It is not the case of the A.O. that there are a specific defect or discrepancies in the books of accounts of the assessee. Therefore, in our opinion, the Ld.CIT(A) has committed no error in deleting the disallowance - Ergo, we find no merit in the Ground No. 1 of the Revenue. Accordingly, Ground No. 1 is dismissed. Disallowance u/s 40(a)(ia) of the Act on account of non deduction of tax at source on the amount paid for its expat employees - HELD THAT:- The social security contribution do not constitute income from salary in the hands of expatriate employees and the employees do not have any right over such contributions. The same will not take care the character of salary in the year of contribution. Therefore in our opinion, the deletion of the disallowance made by the CIT(A) made by the A.O. u/s 40(ia) of the Act on account of non deduction of tax at source on amounts paid for the expat employees and we do not find merit in the Ground No. 2 of the Revenue. Accordingly, Ground No. 2 of the Revenue is dismissed. 2023 (1) TMI 865 Penalty levied u/s. 271C - order passed u/s. 201(1)/201(1A) for default for short/non-deduction - HELD THAT:- On careful and logical analysis of the basis taken by the AO for imposing penalty u/s. 271C and findings recorded by the CIT(A) for deleting said penalty. First of all we are in agreement with the CIT(A) that the AO himself was not sure at all as to with regard to what payments the assessee failed to deduct TDS at source. When the AO himself was not sure about the omission or non-compliance of TDS provision by the assessee then the penalty u/s. 271C of the Act cannot be held as sustainable. In the case of CIT vs. Bank of Nova Scotia [ 2016 (1) TMI 583 - SUPREME COURT] held that when the appellant s conduct is not contumacious then the penalty cannot be levied. This preposition has been consistently followed by lower authorities and in the case of CIT vs. ITOCHU Corp [ 2004 (5) TMI 53 - DELHI HIGH COURT] and CIT vs. Mistui Co. Ltd [ 2004 (5) TMI 17 - DELHI HIGH COURT] . Therefore we are unable to see any valid reason to interfere with the findings arrived by the Ld. CIT(A) and thus uphold the same resultantly appeal of revenue. 2023 (1) TMI 864 Reopening of assessment u/s 147 - validity of notice issued u/s.143(2) within the stipulated time period - investment towards purchase of the properties as sourced from the cash refund of loans from his relatives - HELD THAT:- As the assessee had impliedly filed his return of income in compliance to the notice u/s.148 of the Act, dated 07.08.2006 therefore, the notice issued u/s.143(2) dated 13.11.2006 was well within the stipulated time period. In our considered view the Ld. AR had confused the time period that was available for issuing notice u/s.143(2) in case of a simplicitor assessment, wherein such notice for the year under consideration i.e. A.Y.2004-05 could not have been issued beyond 31.03.2006. Be that as it may, as notice u/s.143(2) dated 13.11.2006 had validly been issued within the stipulated time period from the date of filing of return of income by the assessee u/s. 148 of the Act, i.e. on 07.08.2006 (supra), we, therefore, finding no substance in the aforesaid claim of the Ld. AR, dismiss the same. Addition u/s 69A - As the assessee had failed to substantiate on the basis of irrefutable documentary evidence that the cash withdrawals made from his aforesaid bank account were utilized for making investment of Rs.5 lac in in question, therefore, we are unable to concur with the claim of the Ld. AR that both the lower authorities had erred in making/sustaining the addition of the said amount u/s.69A in the hands of the assessee. We, thus, in terms of our aforesaid observation, finding no merit in the claim of the assessee, uphold the order of the CIT(Appeals). Grounds of appeal No.(s) 1 to 3 raised by the assessee are dismissed. 2023 (1) TMI 863 Grant of approval u/s 10(23C)(vi) - application for approval for claiming exemption was filed beyond the prescribed period as enshrined in the Act - CIT (Exemption), Bhopal vested with any power to condone the delay involved in filing of the application by the assessee society under Sec. 10(23C)(vi) - HELD THAT:- We are of the considered view that as the Commissioner of Income-Tax (Exemption), Bhopal was not vested with any power to condone the delay involved in filing of the application by the assessee society under Sec. 10(23C)(vi), therefore, the same had rightly been rejected by him. We, thus, finding no infirmity in the view taken by the Commissioner of Income-Tax (Exemption), Bhopal who had rightly rejected the assessee s application for approval under Sec. 10(23C)(vi), uphold the same. Grievance of the assessee that as the assessee s application for approval under Sec. 10(23C)(vi) was disposed off by the Commissioner of Income-tax (Exemption), Bhopal vide his order dated 30.09.2020, therefore, for the said reason the assessee was precluded from reapplying for the aforesaid approval for the immediately succeeding year i.e. A.Y. 2019-20 and onwards - It is a matter of fact borne from record that as the assessee s application for approval under Sec. 10(23C)(vi) for A.Y. 2018-19 was pending disposal on 30.09.2019, and the order came to be passed only on 30.09.2020, therefore, the assessee could not have made an application for the subsequent assessment year i.e A.Y. 2019-20. Considering similar facts which had came up before the Hon ble high Court of Madras in the case of All Angels Educational Society [ 2016 (8) TMI 156 - MADRAS HIGH COURT] had though rejected the assessee s request for condonation of delay involved in filing of its application for approval under Sec. 10(23C)(vi) for A.Y. 2012-13, but accepting its alternative contention that as its application for the said year i.e. A.Y. 2012-13 was pending consideration and the impugned order came to passed only on 13.11.2013, therefore, it could not have filed an application for the subsequent assessment year i.e. A.Y. 2013-14, had remanded the matter to the file of the CIT, Exemption with a direction to consider the same as the assessee s application for the succeeding year i.e. A.Y. 2013-14. As the facts and the issue involved in the case of the present assessee before us are in parity with those as were there in the aforesaid cases before the Hon ble High Court, therefore, we respectfully follow the same and remand the matter to the file of the Commissioner of Income-Tax (Exemption), Bhopal with a direction to consider the present application filed by the assessee for approval under Sec. 10(23C)(vi) as that filed for the immediate succeeding year i.e. A.Y. 2019-20 and onwards - Appeal filed by the assessee is partly allowed for statistical purposes. 2023 (1) TMI 862 Disallowing credit for tax deducted at source - assessee s wife did not furnish declaration to the bank in terms of proviso to Rule 37BA(2) - HELD THAT:- The crux of section 199 read with Rule 37BA(2) is that if the income, on which tax has been deducted at source, is chargeable to tax in the hands of the recipient, then credit for such tax will be allowed to such recipient. The proviso to Rule 37BA(2) is just a procedural aspect of giving effect to the mandate of section 199 for allowing credit to the other person in whose hands the income is chargeable to tax. The entire purpose of this exercise of allowing credit to the other person is to ensure that the benefit of tax deducted at source is availed once and that too, by the right person, who is chargeable to tax in respect of such income. It is just to streamline the procedure for giving effect to this intent and rule out the possibility of taking any inappropriate credit for the amount of tax deducted at source, firstly, by the recipient who is not chargeable to tax and secondly, by the person who is rightly chargeable to tax in respect of such income, that the procedural provision has been put in place in Rule 37BA(2). One needs to draw a line of distinction between substantive provision [section 199 read with Rule 37BA(2) without proviso] and the procedural provision [proviso to Rule 37BA(2)]. Adverting to the facts of the extant case, it is seen that out of total interest income credited to assessee s wife as per Form No.26AS amounting to Rs.39.26 lakh, she included interest from SBI in her total income to the extent of Rs.1,84,212/-. The assessee included the remaining interest of Rs.37.42 lakh in his income because of the applicability of section 64 - assesse and his wife claimed proportionate tax credit, which totals up to Rs.2,94,474/-. This deciphers that the total interest income received by the assessee s wife got taxed partly in her own assessment and partly in the assessment of her husband, the assessee in question, as per the mandate of section 64. The benefit of TDS has also been claimed accordingly. Merely because the assessee s wife did not furnish declaration to the bank in terms of proviso to Rule 37BA(2), the amount of tax deducted at source, which is otherwise with the Department, cannot be allowed to remain with it eternally without allowing any corresponding credit to the person who has been subjected to tax in respect of such income. As the substantive provision of section 199 talks of granting credit for tax deducted at source to the other person, who is lawfully taxable in respect of such income, we are satisfied that the matching credit for tax deducted at source must also be allowed to him. In view of the fact that the tax of Rs.2,80,656/- has actually been deducted at source on the interest income of Rs.37.42 lakh, we hold that the credit for such TDS should be allowed to the assessee, who has been subjected to tax in respect of such income. This ground is allowed. 2023 (1) TMI 861 Denial of exemption u/s.11 - assessee is a Trust claimed to be engaged in highlighting life of Chatrapati Shree Shivaji Maharaj - AO observed that the assessee was mainly engaged in organizing drama `Janta Raja on commercial basis under the head Historical Education and received an income on this count - HELD THAT:- Assessee performed the drama for various institutes/companies earning revenue of Rs.1.96 crore. The costs incurred for performing such activity are only Rs.1.16 crore. This transpires that the profit element in the performance of the drama is more than 40% of the gross receipts. Such profit rate patently falls in the category of `significant mark-up cases and hence business activity. No further break-up of the revenue into cost-to-cost basis or nominal mark-up por una parte and significant mark-up por otra parte , has been brought to our notice. This deciphers that the activity of the drama was done in a uniform way on significant margin of 40%. Considering the fact that the assessee earned huge margin on performance of the activity, which is in the nature of business, it ceases to fall within the domain of charitable purpose , as the business receipts exceed 20% of the total receipts. We thus hold that the assessee does not satisfy the condition of advancement of any other object of general public utility so as to be covered u/s.2(15) and, ex consequenti , becoming eligible for the benefit of exemption u/s.11 of the Act. As a last weapon in arsenal, the ld. AR urged that a review petition has been filed in Ahmedabad Urban Development Authority [ 2022 (11) TMI 255 - SUPREME COURT] which is still pending and hence the Bench should not get influenced with its ratio and decide the matter as per the other existing law de hors the apex judgment. In our opinion, the contention is devoid of merit because pendency of a review petition does not dilute or alter in any manner the binding force of the judgment in terms of Article 141 of the Constitution of India. We, therefore, approve the ultimate conclusion drawn by the authorities in rejecting the claim of the exemption to this extent. Appeal of assessee dismissed. 2023 (1) TMI 860 Weighted deduction u/s 35(2AB) - absence of requisite approval u/s 35(2AB) - As per AO recognition of R D facilities is different from the requisite approval as envisaged u/s 35(2AB) - whether the respondent-assessee is entitled for deduction u/s 35(2AB) of the Act in respect of expenditure incurred on R D under the provisions of section 35(2AB) of the Act or not? - HELD THAT:- Material on record clearly indicates that there was no requisite approval as envisaged u/s 35(2AB), which is condition precedent for availing the benefit of deduction u/s 35(2AB) of the Act. It is also settled principle of construction while construing the provisions of exemption, the provisions should be construed strictly as laid down by the Constitution Bench of the Hon ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai Vs Dilip Kumar Company Others [ 2018 (7) TMI 1826 - SUPREME COURT] CIT(A) had fell in serious error in allowing the deduction u/s 35(2AB) in the absence of requisite approval u/s 35(2AB) of the Act. The ld. CIT(A) lost sight of the fact that the recognition of R D facilities is separate and distinct from approval of R D facilities for the purpose of deduction u/s 35(2AB) of the Act. Therefore, the order of the ld. CIT(A) is perverse and passed in perfunctory manner. In the circumstances, we set-aside the order of the ld. CIT(A) and restore the order of the Assessing Officer. Thus, the ground of appeal filed by the Revenue stands allowed. 2023 (1) TMI 859 Deemed dividend addition u/s 2(22) - day on which BTB Retail Pvt. Ltd., advances to assessee the company was having reserve surplus more than the amount advanced, therefore the A.O. was right in holding that all the conditions stipulated u/s. 2(22)(e) are fulfilled to the impugned loan/advance given to the assessee - HELD THAT:- We may note that the assessee has repaid an amount of Rs. 50,00,000/- during the relevant financial period leaving balance of Rs. 44,00,000/-only. In the present it is also not dispute that the company has paid market rate of interest by the assessee on the amount of advance and in the real sense the assessee did not drive any benefit from the funds of the company so as to attract rigour of the provision of section 2(22)(e) of the Act, it is clearly observed that the transaction of loan to which the assessee provided collateral security to M/s. BTB Marketing Pvt. Ltd., and BTB Retail Pvt. Ltd., to secure capital for expansion of company business, and the transaction was pure of commercial transaction under running account. These facts have not been controverted by the Authorities below or Ld. Sr. DR before us. Therefore, as per judgment of Pradip Kumar Malhotra[ 2011 (8) TMI 16 - CALCUTTA HIGH COURT] wherein it was held that the phrase by way of advance or loan appearing in section 2(22)(e) of the Act must constitute to mean impugned advances or loans, which is enjoyed by the shareholder for merely because on account of being a partner or a Director in the company, which the beneficiary owner of shares. A position differs if such loan or advances given to such shareholder as a consequence of any further consideration, which is beneficial to the company received from such shareholder then in such advance or loan cannot be said to be deemed dividend within the ambit of section 2(22)(e) - Identical and similar situation is present in the case in hand. Therefore addition made by the A.O. and confirmed by the Ld. CIT(A) cannot be held as sustainable and thus we direct the A.O. to delete the same. Appeal of the assessee is allowed. 2023 (1) TMI 858 Appeal was completed before the CIT(A) ex-parte - Deduction claimed u/s 80P - interest income earned - return was processed under section 143(1) - HELD THAT:- On appeal before the CIT(A), the CIT(A) issued various notices on different dates and before enhancing the income of the assessee, he also issued notices to the assessee on 12.04.2022 and 3 other occassions for giving opportunity to the assessee but he assessee did not avail any opportunity before the CIT(A). Accordingly, the CIT(A) as per section 80AC of the Act not accepted the deduction claimed by the assessee. Since, the appeal was completed before the CIT(A) ex-parte, therefore in the interest of the justice and considering the submissions of the AR of the assessee, this file is remitted back to the CIT(A) for a fresh consideration after giving 3 effective opportunity to the assessee. The assessee is directed to appear before him with cogent materials for substantiating his case and also directed to avoid unnecessary adjournments for early disposal of the case. Appeal of the assessee is allowed for statistical purposes. 2023 (1) TMI 857 Revision u/s 263 by CIT - Addition u/s 68 - as per CIT creditworthiness of unsecured loan not proved AND certain expenditure which were not examined during the assessment proceedings - HELD THAT:- A.O. had made enquiry by issuing questionnaires u/s 142(1) which has been replied by the assessee vide letter dated 07/03/2014. Therefore, in our opinion, the finding of the CIT(A) that the Assessing Officer did not examine the facts of the case and thus, the assessment order passed by the A.O. is erroneous and prejudicial to the interest of the Revenue is erroneous and contrary to the facts. It is not in dispute that the case was transferred on 29/03/3014 to the A.O. who has passed the assessment order on 30/03/2014 and the A.O. had only one day time to pass the assessment order since the case was getting time barred on 31/03/2014. The said facts cannot be ground for the PCIT to excise power conferred u/s 263 of the Act. In the present case, the assessment proceedings admittedly started on 28/08/2012 and it went on till 18/03/2014 for a period of 16 months and the A.O. has issued questionnaires, which have been answered by the assessee. The main ground for entertaining u/s 263 is that, the Assessing Officer who passed the assessment order did not make any enquiry who received the file on 29/03/2014 and passed the order on the very next day. The assessment proceedings are a continuous one and we find that the A.O. had made enquiries vide letter dated 07/03/2014 and based on the reply given by the assessee the A.O. who has passed order has satisfied himself by accepting the return income of the assessee. We are of the opinion that the Ld.CIT (A) has committed an error in exercising power u/s 263. Assessee appeal allowed. 2023 (1) TMI 856 Validity of the reopening of the assessment - addition of difference of valuation of the property - HELD THAT:- Reasons recorded for reopening furnished to your good self earlier are well founded on facts and on the basis of new information received. So the satisfaction of AO was proper and based on relevant information. Addition made on account of difference in the value of assets declared by the assessee and the value of the same as per the DVO s report - There was no contest on behalf of the assessee before the ld.CIT(A) despite several opportunities being given to the assessee, as noted by the ld.CIT(A) in his impugned and mentioned by us above. Even in further appeal before the Tribunal, as order-sheet reveals the assessee has been given as many as five opportunities to prosecute its appeals, but all the while, the assessee remained absent and did not participate in the proceedings before us, despite service of notices. Therefore, it is clear that the assessee except coming forward to file appeals before the appropriate authorities, is not interested in following up with its matter. We also find that the authorities below have given concurrent finding of fact and on that basis the ld.CIT(A) maintained the addition made by the AO. In the absence of any representation from the assessee, and in the absence of any material on record to support the case of the assessee, the concurrent findings of the authorities below remain uncontroverted before us. The order of the ld.CIT(A) upholding the validity of the assessment framed u/s 147 and also the addition made on account of unexplained investment u/s 69 of the Act, accordingly calls for no interference. Assessee appeal dismissed. 2023 (1) TMI 855 Reopening of assessment u/s 147 - Additions u/s 68 - penny stocks - information which was received from the Investigation Wing and refers to the 10 penny stocks, and from which in one Konarak Commerce Industries Limited, assessee has invested and claimed LTCG - HELD THAT:- In the reasons there is not iota of words of assessee having transactions with Kayan brothers. There is no discussion as to how the investment of assessee in the scrip has resulted into escaping income. Apparently the Ld. AO has merely expressed reason to suspect and not cited reason to believe that income chargeable to tax has escaped assessment. AO has no power to review; he has the power to re-assess. The part of reasons reproduced above show that there was merely an attempt to review on basis of view that financial position of assessee is not very sound . This, however, was not a valid ground for invoking the provisions of section 147. Information received from the investigation wing as reproduced in the reasons had no substance qua the assessee and there was non application of mind by Ld. AO, away and apart from the information. The bench is of considered view that tax authorities below have fallen in error as Ld. AO recorded reasons without applying mind independently but based on surmises and conjectures out of financial status of the assessee. While Ld. CIT(A) and Ld. AO have both ignored the factual aspects of purchase of shares five years prior to the sale for substantial amount and have tried to paint its findings based on modus operandi of tainted Kayan brothers, with whom actually there was no dealing by the assessee. Assessee appeal allowed. 2023 (1) TMI 854 Unexplained cash credit u/s 68 - cash deposits in bank by treating the same as unexplained - contention of the learned AR was that the impugned cash deposit was made out of the agriculture income - HELD THAT:- Assessee before the authorities below has not furnished any documentary evidence suggesting that the assessee has earned from the source of agricultural operation. Also observed by the authorities below that the assessee was not even in the possession of agricultural land. Agricultural land as evident from form 8-A, it was noticed that such piece of land admeasuring 5.5 vigha was owned by her father-in-law along with 6 other co-owners. Three co-owners of the impugned land have already claimed to have deposited cash in their bank accounts out of the income from the agricultural operations from such piece of land. In such facts and circumstances, it is hard to believe the version of the learned counsel for the assessee. The onus lies upon the assessee to justify her contention based on the materials/documents on record about the agricultural operations carried out by her. Accordingly, no reason to interfere in the order of the learned CIT-A as far as this contention of the learned AR is concerned. Assessee has received cash from two parties for making the investment in the IPO which was deposited in the bank account of the assessee - This contention was raised by the assessee 1st time before the learnedCIT(A) in the rejoinder filed by her against the remand report furnished by the AO. As such this contention was not raised by the assessee during the assessment and remand proceedings. Documents filed by the learned AR were considered by the learned CIT-A as the documents prepared afterthought to justify the deposit of cash in the bank account and therefore the same were rejected. However, in the interest of justice and fair play, we inclined to give one more opportunity to the assessee by setting aside this issue to the file of the AO for fresh adjudication as per the provisions of law. Even at the time of hearing, the learned DR did not oppose if the matter is set aside to the file of the AO for fresh adjudication as per the provisions of law. Thus, the contention raised by the learned AR is set aside to the file of the AO for fresh adjudication as per the provisions of law. Contended by the learned AR that there was opening cash balance as on 1st April 2009 which was utilized for depositing the bank account in the year under consideration - Admittedly, there was no documentary evidence furnished by the assessee in support of the opening cash balance therefore it is hard to believe that there was cash balance available with the assessee. But, considering the amount involved as the opening balance, the possibility of having the same out of the past savings cannot be ruled out. Accordingly, we direct the AO to give the benefit of opening balance if any addition is sustained in the hands of the assessee on account of cash deposits in the year under consideration. Alternate contention of the learned AR to take the peak balance of cash deposit as the income of the assessee - Authorities below denied the benefit to the assessee on the reasoning that there was no cash withdrawal. It is the factual matter which can be established based on the documentary evidence. As such the assessee is directed to justify the withdrawal of cash from the bank account based on the documentary evidence. It is for the reason that once the cash has been withdrawn by the assessee then a presumption can be drawn that such cash was available with the assessee for depositing the same in the bank account until and unless it was held by the revenue based on the documentary evidence that such cash has been utilized for incurring the personal expenses or for making the investment. But no such finding was provided by the revenue about the utilization of such cash withdrawal from the bank. Thus, we hold that such cash withdrawal was available with the assessee for depositing the same in the bank account provided that the assessee furnishes the documentary evidence during the set-aside proceedings before the AO. Hence this contention of the learned AR is also set aside to the AO for fresh adjudication - Appeal filed by the assessee is partly allowed for the statistical purposes. 2023 (1) TMI 853 Revision u/s 263 by CIT - interest on the TDS was alleged to have not been disallowed - HELD THAT:- As it is noticed that the interest of the TDS has already been added back by the assessee in its computation of total income, the revision proceedings in respect of this issue stands quashed. Details of liability for expenses and the provision for salary had not been examined by the AO - As it is noticed that the said provision is not in respect of the salary but it is in respect of the income tax and it is carried forward from the earlier years, admittedly, this issue is not one which can fall within the purview of revision u/s.263 of the Act and consequently the revisionary proceedings on this issue stands quashed. Net profit from the business of the assessee appears to be low but was not examined by the AO - A perusal of the query raised by the AO in the course of original assessment clearly shows that he has looked into the purchases, sales and the expenses thereto. The same have not been disturbed except for an addition in respect of telephone expenses. Thus, once the expenses have been accepted and the purchases and sales figures have already been accepted, the result in net profit cannot be tinkered with. This being so, we are of the view that the issue has already been considered by the AO and the revisionary proceeding on this issue is unsubstantiated and consequently the same is quashed. Software expenses, whether was capital or revenue in nature, had not been examined by the AO - As it is noticed that the issue has already been considered by the AO in reply to the query No.12 and also as it is noticed that the expenses in relation to the renewal of the tally software license, the same is purely revenue in nature also. The figure is only Rs.23,750/- and not Rs.6,86,817/- as proposed by the ld. Pr.CIT. Consequently, the revisionary proceeding on this issue stands quashed. Puja expenses did not relate to business of the assessee and the same need to be disallowed - The facts in the present case clearly show that the issue was part of the reply to the query No.12 raised by the AO in the course of original assessment. When the said query has been addressed and answered, it is to be presumed that this issue has also been looked into by the AO in the course of assessment. Just because there is no specific finding of the AO in respect of each of the issues, does not mean that the issue has not been examined by the AO. In fact the disallowance under the head telephone Internet charges, are the expenses under selling, distribution and administration overheads. Thus, it must be presumed that the AO has examined each of the expenses mentioned therein. This being so, we are of the view that the revision proceedings on this issue is unsubstantiated and consequently the same is quashed. Propriety of the claim of interest under the house property had not been examined by the AO - A perusal of the facts of the present case clearly shows that this amount has been specifically shown in the computation of the total income and is also supported by the return of income filed by the assessee. Admittedly this issue has not been examined by the AO nor any specific query has been raised by the AO in the assessment proceedings. This being so, we are of the view that the ld. Pr.CIT is right in invoking his powers u/s.263 of the Act on this issue. Consequently, the revisionary proceeding on this issue stands upheld. Nature of the business of the partnership firm and the relation to the assessee s business had not been examined by the AO - It is noticed that when passing the assessment order u/s.143(3) of the Act, the AO has adopted the total income as per the return of income. This is supported by the computation of total income wherein the interest on the capital, remuneration from the firm and profit of the firm in respect of the two partnership firm are also included. This being so, we are of the view that this issue has also been considered by the AO and the revisionary proceeding on this issue is unsubstantiated and consequently, the same stands quashed. Here we may also mention that though the ld. Pr.CIT mentions that no reply has been filed by the assessee, the facts evident that replies have been filed to the shows cause notice. Though clearly on this ground itself the revisionary proceedings would have been quashed, still as we noticed that one of the issues have not been examined by the AO, the revisionary proceedings is to be upheld only to in respect of that single issue being the propriety of the claim of the interest under house property not examined by the AO. Appeal of the assessee stands partly allowed. 2023 (1) TMI 852 Addition u/s 68 - information received in IDS system that the assessee has made huge cash deposit in her bank account - HELD THAT:- Assessee vehemently tried to justify that the assessee was having sufficient cash balance of Rs. 6,75,000/- on 16/06/2009. Assessee has received a gift of Rs. 3.50 lacs from her bother in law. To substantiate the genuineness of such gift, assessee filed confirmation of donor. In the confirmation, the donor has confirmed that such gift was given to assessee to meet out the education expenses of her daughter in law. AO has not investigated fact independently before disallowing the claim of Gift from close relative. Considering the confirmation of the donor we allow the Gift as genuine. So far as other deposits and withdrawal of cash is concerned, the explanation given by the assessee does not inspire confidence, as the assessee on one hand took stand that the money was deposited for the education of her daughter in law and on other hand that her son was remitting money to her. However, still keeping in view the age, status and family back ground of the assessee, further allow benefit of doubt of Rs. 2.00 lacks, which the assessee may have received from her close relative and other family member on various occasions. Thus, the assessee is given further relief of 5.50 lacks and remaining addition of Rs. 4,88,785/- (10,38,785 5,50,000) is upheld. In the result, the original ground No.1 of the appeal is partly allowed. 2023 (1) TMI 851 Disallowance of alleged bonus paid by applying the provisions of section 43B - HELD THAT:- A perusal of the profit and loss account of the assessee showing employee benefit expenses shows that there is labour payment to the extent of Rs. 2.29 crores, staff salary of Rs. 10.80 lakhs and bonus has been shown at Rs. 24.92 lakhs. Admittedly, no statutory bonus is applicable to the labourers. These payments of bonus @ Rs. 8000/- per labour for 284 labourers, admittedly would not be statutory bonus but ex-gratia payment. As it is not statutory bonus, the provisions of section 43B also would not apply. The issue by the AO is whether the bonus is liable to be allowed or disallowed u/s. 43B. The issue is not in respect of payment of the bonus to the said labourers. This being so, we are of the view that the issue cannot be restored to the file of the AO for verification of the payment. As the payment is not statutory payment of bonus under Bonus Act, obviously, the provisions of section 43B would not apply to the same. Consequently, the disallowance as made by the AO and confirmed by the ld. CIT(A) by applying the provisions of section 43B on the bonus paid stands deleted. Ground No. 3 of the assessee stands allowed. Higher rate of depreciation - HELD THAT:- A perusal of the profit and loss account clearly shows that as specifically mentioned by ld. DR that the assessee has not shown any hire charges in respect of heavy earth moving machineries used by the assessee in its business of the contract of road building. The higher rate of depreciation admittedly is permissible when heavy earth moving machinery is put on hire in the business of the assessee. The assessee has not hired heavy earth moving machinery in the business of the assessee. This being so, we are of the view that the assessee is not entitled to the higher rate of depreciation in respect of said plant and machinery. Ground No. 4 is held against the assessee and addition made by the AO and confirmed by ld. CIT(A) stands confirmed. Disallowance u/s 40(a)(ia) - Explanation to the provisions of section 40(a)(ia) of the Act has been introduced w.e.f. 1.6.2015, wherein, the disallowance has been reduced from 100% to 30% - HELD THAT:- A perusal of the Explanation to Section 40(a)(ia) of the Act clearly shows that the disallowance on account of non-deduction of tax is restricted to 30%. Consequently, the Assessing officer is directed to restrict the disallowance to 30% as against 100% made by the AO. Ground No. 5 stands partly allowed. 2023 (1) TMI 850 Exemption u/s.10(23)(vi) - assessee is an education trust and made an application in Form 56D on 26.09.2018 seeking approval u/s 10(23C)(vi) - HELD THAT:- From the documents and evidences, it is vivid that Profit and loss account of the assessee-trust contains the activity, stating fee received from students, bus transportation fee and books fees etc. received from students, whereas in the expenses side, we note that there are transportation expenses, educational expenses, expenses to purchase the books, salary payment to teachers and staffs. Therefore, from the above Profit and loss account of the assessee trust it is clearly established that assessee trust is engaged in the educational activities and there is nominal profit which are earned by the assessee while conducting these charitable activities. The assessee-trust does not have profit motive, the small profit generated while carrying out charitable activities, does not mean that assessee is engaged in the commercial activities. Such small profit so earned is again utilised for charitable activities by the assessee-trust. From these documents and activities, it is clearly established that assessee -trust is engaged solely in the educational activities. Therefore, we are of the view that assessee-trust deserves certificate, under section 10(23C) (vii) - Hence, we direct the Ld CIT(Exemption) to grant registration/certificate, to the assessee-trust under section 10(23C) (vii) - Appeal of the assessee is allowed. 2023 (1) TMI 849 Estimation of income - bogus purchases - CIT(A) restricting the addition to the extent of profit percentage embedded in the value of disputed purchases @12.5% - HELD THAT:- AR had placed on record the copy of the decision of this Tribunal in the case of Shri Prateek Gupta [ 2019 (9) TMI 1067 - ITAT MUMBAI] - AR also stated that Shri Prateek Gupta is a relative of the assessee. In the said order, this Tribunal under similar facts and circumstances, by considering the profit percentage earned by the assessee on disputed purchases as well as the overall purchases, had estimated the profit percentage to 2% of value of disputed purchases. AR before us also placed on record the statement showing gross profit earned by the assessee in percentage terms both on disputed purchases and overall purchases for the A.Y. 2009-10 and 2010-11. As the factual matrix is exactly identical with the facts prevailing in the case of Shri Prateek Gupta we direct the ld. AO to estimate the profit percentage at 2% of value of disputed purchases. Accordingly, the grounds raised by the assessee as well as by the Revenue are disposed of in the above mentioned manner. 2023 (1) TMI 848 Demand raised u/s 200A - inadvertent mistake in mentioning wrong TAN while applying lower percentage of tax rate u/s 194C - CIT(A) thus directed the AO to grant relief from the demand arising for wrong mention of TAN after due verification of facts - HELD THAT:- We find that the order of the CIT(A) in granting relief to the assessee is founded on fair play and natural justice. In the instant case, the assessee has obtained two TAN from the Department in its name, one is taken for office at Bina Madhya Pradesh and another one is taken at Delhi. The assessee has deducted TDS on contractual payments to its holding company u/s 194C of the Act @0.25% as per the lower deduction certificate issued u/s 197 to the holding company of the assessee company. Based on the certificate issued, the assessee has deducted TDS @ 0.25% as mandated in the certificate. While depositing the TDS deducted, the assessee has wrongly mentioned the TAN allotted for Delhi office instead of Bina Madhya Pradesh Office. This fact was also brought to the notice of the Department immediately but the defect could not be cured in the absence of any provision for such type of rectification. CIT(A), in the factual matrix, has taken a just and fair decision and reversed the demand under Section 200A attributable to merely wrong mention of TAN in the TDS deposit challan. We see no error in the relief granted by the CIT(A) on equitable grounds. Consequently, the order of the CIT(A) is upheld. Appeal of the Revenue is dismissed. 2023 (1) TMI 847 Disallowing payment made to ESI/PF being employees share of contribution under section 36(1)(va) - whether this amendment brought by Finance Act, 2003 to the first and second proviso of section 43B was prospective or retrospective? - HELD THAT:- Section 36(1)(va) and Section 43B(b) operate on totally different equilibriums and have different parameters for due dates, i.e., employee's contribution is linked to payment before the due dates specified in the respective Acts and employer's contribution is linked to payment before the due dates specified in the respective Acts and employer's contribution is linked to the payment before the prescribed due date for filing of return u/s. 139(1) - The result of any failure to pay within the prescribed dates also leads to different results. In the case of employee's contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer's claim for deduction permanently forever u/s.36(1)(va). Delay in payment of employer's contribution is visited with deferment of deduction on payment basis u/s.43B and is therefore not lost totally. This legal distinction between employees' contribution and employer's contribution under the Act was duly recognised by the Courts also. Some judicial pronouncements are to the effect that employees contribution paid belatedly but within due date prescribed u/s.139(1) of the Act should be allowed as deduction on payment basis u/s 43B at par with employers' contribution to PF/ESI. Question whether the employees contribution to Provident Fund and Employees State Insurance which the employer deducts and pays over to the concerned authorities beyond the date prescribed for payment of such contribution but nevertheless the contribution has been paid within the due date prescribed for filing return of income u/s.139(1) of the Income Tax Act, 1961, can be allowed as deduction by applying the second proviso to Sec.43B of the Act, prior to 1.4.2021 was a controversy as the aforesaid amendments were not retrospective Amendments. The said issue (period prior to 1.4.2021) was subject matter of appeal before Hon ble Supreme Court in the case of CHECKMATE SERVICES PVT LTD [ 2022 (10) TMI 617 - SUPREME COURT] In view of the law laid down by the Hon ble Supreme Court, we hold that Section 36(1)(va) and Section 43B(b) operate on totally different equilibriums and have different parameters for due dates, i.e., employee's contribution is linked to payment before the due dates specified in the respective Acts and employer's contribution is linked to payment before the due dates specified in the respective Acts and employer's contribution is linked to the payment before the prescribed due date for filing of return u/s. 139(1) of Income Tax Act, 1961.The result of any failure to pay within the prescribed dates also leads to different results. In the case of employee's contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer's claim for deduction permanently forever u/s.36(1)(va). Decided in favour of the Revenue. 2023 (1) TMI 843 Miscellaneous applications filed u/s.254(2) seeking to recall tribunal s ex-parte order - HELD THAT:- It emerges during the course of hearing that the assessee trust could not represent before the tribunal since it had not been served notice of hearing at all. There is no rebuttal from the Revenue side to this effect. Faced with the situation, we are satisfied that the assessee trust could not appear before the tribunal since it was not aware of the date of hearing of the main appeal hereinabove. We, therefore, recall our ex-parte order 04.05.2022 and direct the registry to post the appeal for fresh hearing on 18.01.2023. Announced in the open court. No fresh notice will be sent to the parties. Customs 2023 (1) TMI 878 Refund of SAD - non-submission of Calculation-Cum-Co-relation sheet, Sale invoices for respective Bills of Entry, VAT/CST challan and returns, Summary of sale invoices and Authority letter - CA certificate not available - HELD THAT:- The issue herein is squarely covered by the interpretation of the Larger Bench of this Tribunal in the case of CHOWGULE COMPANY PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE [ 2014 (8) TMI 214 - CESTAT MUMBAI (LB)] in favour of the appellant-assessee where it was held that A trader-importer, who paid SAD on the imported goods and who discharged VAT/ST liability on subsequent sale, and who issued commercial invoices without indicating any details of the duty paid, would be entitled to the benefit of exemption under Notification 102/2007-Cus, notwithstanding the fact that he made no endorsement that credit of duty is not admissible on the commercial invoices, subject to the satisfaction of the other conditions stipulated therein. It is apparent from the copy of receipt for filing refund claim that the appellant had filed the copy of sale invoices and also summary of sale invoices etc. Thus, the refund claim has been rejected without any reason and on flimsy ground. Further, such rejection of refund is bad in law and also ignoring the binding judgment of this Tribunal in the case of Chowgule Company Pvt Ltd. The Adjudicating Authority is directed to grant the refund within a period of 60 days from the date of receipt of the copy of this order, alongwith interest as per rules - Appeal allowed. PMLA 2023 (1) TMI 846 Provisional attachment order - case of petitioner is that Madura Chemicals Pvt. Ltd. was acquired by the petitioner in the year 2015 and that the petitioner was never put on notice either after the provisional attachment order was passed or when the confirmation order was passed by the Adjudicating Authority - HELD THAT:- Madura Chemicals Pvt. Ltd. has been specifically added as a party before the Adjudicating Authority and it is represented by the above said Mathesh. We are dealing with a legal persona in the present case and it is enough if notice is issued to the company. The grievance of the petitioner that he did not personally know about this case is a matter to be resolved with Mathesh, who had received money from the petitioner enabling the petitioner to acquire the company. Hence, we are not satisfied with the contention raised by the learned counsel for the petitioner that Madura Chemicals Pvt. Ltd. was never put on notice by the Adjudicating Authority while confirming the provisional attachment order. In any event, we cannot get into this factual issue for the first time while dealing with this writ petition and such factual disputes cannot be adjudicated in a writ petition. Jurisdiction of the second respondent to pass the confirmation order beyond the period of 180 days - HELD THAT:- The second respondent apart from dealing with the merits of the case, has justified the passing of the Adjudication Order beyond 180 days by relying upon the various orders passed by the Apex Court extending the period of limitation. In the Apex Court has explained the scope of the order passed in S.Kasi case [ 2020 (6) TMI 727 - SUPREME COURT] and has categorically held that the same cannot be applied in a matter involving proceedings before a Court. The second respondent was exercising a quasi-judicial function and the ratio in S.Kasi case cannot be applied to such a quasi-judicial authority. In any case, we keep this issue open to enable the petitioner to agitate the same before the Appellate Tribunal. This Writ Petition is dismissed and liberty is granted to the petitioner to approach the Appellate Tribunal u/s.26 of the PMLA and work out his remedy in accordance with law. Central Excise 2023 (1) TMI 877 Irregular availment of CENVAT Credit - Inputs (steel) can be treated as any input used for the manufacture of their finished goods i.e. MS Ingot or not - demand of CENVAT Credit alongwith penalty - HELD THAT:- The manufacturer has taken entire credit in respect of inputs used in or in relation to the manufacture of the final products. It is seen that the suppliers are registered Central Excise dealers. The invoices under which the consignment was received by the Appellant is not in dispute. The said invoices clearly indicate duty-paid character of the said goods. It is also undisputed that the said inputs were received in the factory of the Appellants and consumed therein. It is the case of the Revenue that inputs being of prime quality the Appellants could not have used the same for melting. There is no restriction in the CENVAT Credit Rules that the Appellants should not use the prime quality materials for the manufacture of final products. As long as there is no dispute regarding the receipt and consumption of the inputs, dutypaid character thereof, the benefit of the CENVAT Credit cannot be denied to the Appellant. The facts of the present case are squarely covered by the decision of the Tribunal in the case of GUPTA METAL INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI [ 2004 (9) TMI 218 - CESTAT, NEW DELHI] and BHAGWATI STEEL CAST LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NASIK [ 2007 (10) TMI 57 - CESTAT, MUMBAI] where it was held that Credit cannot be denied as there is no restriction in Cenvat Rules to use prime quality material in manufacture of final product - In the present case there is no dispute as regards the payment made by the Appellant to the supplier and therefore the benefit of CENVAT Credit cannot be denied. Appeal allowed. 2023 (1) TMI 876 Wrongly availed Cenvat credit - service related to manufacturing activity of the appellant in terms of defects of import services contained under Rue 2(l) of Cenvat Credit Rules, 2004 or not - HELD THAT:- The place of providing services is not relevant for availment of Cenvat credit. Place, no doubt can be the place of manufacture or it can be any other place including the place of buyer. No doubt the after sale service can also be eligible for Cenvat credit as was held by this Tribunal in the case of M/S CASE NEW HOLLAND CONSTRUCTION EQUIPMENT (I) PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, UJJAIN [ 2021 (8) TMI 963 - CESTAT NEW DELHI] but the basic requirement is that the service should have been provided by the manufacturer or by any other person on his behalf to the consumer. Thus, even post removal service can be eligible to Cenvat credit, however, if and only if, those are provided in relation to the manufacture either directly or indirectly. From the facts of the present case, the activity in question is not provided by the appellant nor by anybody else on his behalf. It is rather the buyer of the appellant who himself has undertaken the responsibility of segregating such defective pieces where defect was not arising out of mis-handling and has charged the compensation in form of penalty from the appellant for undertaking such an activity. This particular fact is sufficient to hold that the activity was performed by the buyer for himself, as such cannot be called as eligible input service in terms of section 2(l) of Cenvat Credit Rules. The activity in question also do not qualify Rule 3 of Cenvat Credit Rules 2004. Any service to be eligible for Cenvat credit under this Rule is to be the one which has been received by the manufacturer for manufacturing final product. But the activity in question is the activity undertaken by the buyer of the manufacturer that too to ensure his right as he got reserved between the contracting parties for not receiving the damaged goods. From no stretch of imagination, said activity performed by the buyer can be called as the service which is eligible for Cenvat credit in terms of either Rule 2(l) of Cenvat Credit Rules or Rule 3 of Cenvat Credit Rules, 2004. There are no infirmity in the findings given by the adjudicating authority below - appeal dismissed. 2023 (1) TMI 875 Maintainability of appeal - Maintainability of appeal - Jurisdiction under service tax vs central excise - Appropriate authority to file claim - Commissioner (Appeals) under section 35A of the Central Excise Act, 1944 or Section 85 of the Finance Act, 1994 in Form S.T.4. - recovery of the inadmissible Cenvat Credit under Rule 14 of the Cenvat Credit Rules, 2004 read with the provisions of Section 11A(4) of the Central Excise Act, 1944 - HELD THAT:- The relevant provisions contained in Section 35A ibid should be applicable for filing the appeal before the Commissioner (Appeals). However, in this case, Revenue has filed the appeal under Section 84 of the Finance Act, 1994 and the said appeal was entertained and disposed of by the learned Commissioner (Appeals) under such statutory provisions. Since, the impugned order was passed under a statute which does not deal with the subject issue, the submissions made by the learned Consultant for the appellant merit consideration for the purpose of maintainability of such appeals by the Commissioner (Appeals). The Tribunal in the case COMMISSIONER OF C. EXCISE CUS., VAPI VERSUS GUARDIAN PLASTICOTE LTD. [ 2010 (6) TMI 472 - CESTAT, AHMEDABAD] has held that appeal filed under Service Tax statute in respect of the Central Excise matter is not maintainable and accordingly, rejected the appeal filed by the Commissioner of Central Excise. Since, the Co-ordinate Bench of this Tribunal has taken a view that appeal under the ground of jurisdiction is an important aspect for consideration, contrary stand cannot be taken in deciding the present issue differently. Further, it is not the case of Revenue that against the order passed by the Tribunal in the case of Guardian Plasticote Ltd., the Department has filed any appeal in the higher forum or that order of the Tribunal has been set aside and overruled by the higher courts. The impugned order is not sustainable on the ground of maintainability - appeal filed by the appellant is allowed on limited ground of jurisdiction only. CST, VAT & Sales Tax 2023 (1) TMI 874 Maintainability of petition - availability of alternative remedy of appeal - exercise of extraordinary and discretionary jurisdiction of this Court under Article 226 of the Constitution of India, when there this alternative remedy available - Whether the material used in the project was received by the MRPL at its site in Mangaluru or by the assessee whilst the goods were in transit? - Seeking cross-examination of Transport Companies who had transported the goods from various places to Mangaluru - HELD THAT:- The Hon'ble Single Judge has taken note of one of the Assessment Orders and held that entertaining the writ petitions prematurely would cause serious prejudice not only to the assessee but also to the Revenue, who will loose their chance to argue before the two appellate forums provided in the Act and accordingly relegated the assessee to the Appellate Authority. The matter requires appreciation of evidence with regard to facts of the case and that can be done before the Appellate Authority. It is settled that ordinarily writ petition shall not be entertained, where there exist an alternative and efficacious remedy - this is not a fit case to exercise the extraordinary and discretionary jurisdiction of this Court under Article 226 of the Constitution of India. Appeal dismissed. 2023 (1) TMI 845 Exemption from Entry tax - Whether the applicant was covered within the expression 'Manufacturing Dealer' as used in the Notification dated 18.2.2003 (Annexure-2 to the Revision Application) issued under Section 4-B of the Uttar Pradesh Tax on Entry of Goods Act, 2000? HELD THAT:- The words Manufacture and Manufacturer have not been defined under the Entry Tax Act either of the year 2000 which was repealed and subsequently, enacted by the Act of 2007. The word Manufacturer has been defined under the Act of 1948 which means in relation to any goods, the dealer who makes the first sale of the goods in State after their manufacture. The Notification dated 18.02.2003 which provides benefit to a manufacturing dealer of entry on capital goods, plant, machinery and spare parts into local area from any place outside the local area for use in their manufacturing has to be construed in harmony with the Act of 2000/2007 read with Act of 1948 - Dealer encompasses any person who carries on in the State the business of buying, selling, supplying or distributing goods directly or indirectly, for cash or deferred payment or for commission, remuneration or other valuable consideration and includes the persons mentioned in Section 2(c)-i to viii. This Court in Bulbu Prasad Amarnath [ 1963 (10) TMI 19 - ALLAHABAD HIGH COURT ] way back in 1963 while considering that converting oilseeds into oil which was a manufacturing process has been done at the instance of manufacturer dealer by another owner of the mill. The Court held the owner of mill to be not a manufacturer because he did not own the oilseeds or oil produced by him, as he did not buy the oilseeds from the Assessee nor sold the oil to him, but only charged the labour of crushing the oilseeds into oil. The Court held that in order to be a manufacturer, it is not necessary that person himself must manufacturer. In the instant case, the Assessee had brought capital goods inside the State, which was used for manufacture of catalyst on basis of job work done by M/s ICI, who was manufacturing catalyst only for the Assessee and for no other party. M/s ICI was charging for the manufacture of catalyst from the Assessee and was not making the sale and thus, cannot be termed as manufacturer defined under Section 2(ee) of the Act, 1948. It is the Assessee who had made the first sale and shall be deemed to be a manufacturer dealer and liable to claim benefit of the exemption Notification dated 18.02.2003. The reasoning given by the Tribunal and argument raised by the State counsel cannot be accepted, as it would amount to doing injustice and interpreting the word Manufacture defined under the Act. The finding recorded by the Tribunal is unsustainable in the eye of law and the Assesseee-revisionist is entitled for the benefit claimed by him. Revision allowed. 2023 (1) TMI 844 Maintainability of appeal for rectification before the Trade Tax Tribunal - error apparent on the face of record or not - order in assessment proceedings have been upheld in a revision before the Hon'ble High Court under Section 11 of the U.P. Trade Tax Act - Tribunal is competent to rectify the order of assessment by exercising powers under Section 22 of the U.P. Trade Tax Act, 1948 on the basis of declaration of law by the Hon'ble Supreme Court at a later stage or not - maintainability of application under Section 22 of the U.P. Trade Tax Act, 1948 for rectification of its own order passed under Section 11 of the U.P. Trade Tax Act, 1948. Whether in the garb of rectification under Section 22, the judgment and order of the Tribunal, having been confirmed by the High Court, can be set aside on merit? - HELD THAT:- It is not in dispute that the assessment order upheld by the Tribunal on 31.8.2004 was confirmed by this Court on 09.11.2004 in the revisions filed by the assessee. As no challenge was made to the order passed by this Court, it attained finality. Reopening of the case by the assessee in garb of Section 22 of Act of 1948 cannot be permitted as there is no error apparent on the record. Language employed in Section 22 is clear and authorises the officers of authority, Tribunal or High Court to rectify the mistake on its own motion or on application of the dealer within the period prescribed therein - In Thungabhadra Industries Ltd. vs. The Government of Andhra Pradesh [ 1963 (10) TMI 25 - SUPREME COURT ], the Apex Court held that a review is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected, but lies only for patent error. Similarly, in Satyanarayan Laxminarayan Hegde and Ors. vs. Millikarjun Bhavanappa Tirumale [ 1959 (9) TMI 52 - SUPREME COURT] , the Apex Court held that an error apparent on the face of the record for acquiring jurisdiction to affect rectification must be such an error which may strike one on a mere looking at the record and would not require any long-drawn process of reasoning. The rectification under Section 22 of the Act of 1948 was maintainable. The language used in Section 22 is plain and simple and there is no ambiguity so as to give a different meaning, which only provides that in case of error apparent on the record an order for rectification of such mistake can be passed. This Court finds that no interference is required in the order of the Tribunal dated 23.09.2009 - revision dismissed.
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