TMI Tax Updates - e-Newsletter
January 24, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Highlights / Catch Notes
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GST:
Conditions of delay in filing appeal before the first Appellate Authority - Appeal belated by two years and one month - person concerned looking after the affairs of the company, had passed away - delay condoned - The cancellation of registration is revoked - HC
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Income Tax:
Rate of TDS - Non-availability of PAN - Benefit of treaty - in case of payments made to non-residents, the assessee was entitled to deduct taxes at source at the rates applicable in the respective Tax Treaties in case PAN of non-resident payee is not available - In the instant facts, the assessee has deducted taxes at the beneficial rate of 10% as applicable in the respective Tax Treaties in respect of all payments made to non-resident payees - No further demand can be made - AT
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Income Tax:
Assessment u/s 144C - it is for the revenue to devise its own means and ways to correct the software and pass the final assessment order in accordance with the law. In the present case, the AO had straight way passed the assessment order instead of passing the draft assessment order as per section 144C(1) of the Act and further, the Assessing Officer has not passed the final order as per section 144C(10) of the Act. - AT
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Income Tax:
TDS u/s 195 OR 192 - the payment made by the assessee towards reimbursement of expenses is in the nature of salary cost of the assigned employees subject to TDS u/s 192 of the Act, hence, cannot be treated as FTS u/s 9(1)(vii) of the Act and Article 12 of the tax treaty - No TDS liability u/s 195 - AT
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Income Tax:
Deduction u/s. 80(P)(2)(a)(i) - Due date for filing the return of income u/s 139(1) - The assessee cannot be denied deduction under Section 80P(2)(a)(i) of the Act if the assessee filed the return of income on or before 31.10.2018 and the same has been disclosed in the return of income as required in ITR-5 stating that assessee is liable to audit under Cooperative Society Act and mentioned the date of audit in the return of income filed by the assessee. - AT
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Income Tax:
Exemption u/s 11 - donation received - if it is taken that the said fund was for infrastructural development or to say it was towards corpus fund of the trust, still as per the amended provisions of section 2(24)(iia) as amended vide Finance Act 1987 and further amended vide Amendment Act 1989, the trust being not registered u/s. 12A for the year under consideration, the corpus donation will form part of the taxable income of the assessee trust. - AT
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Income Tax:
Penalty u/s. 271D - contravention to Section 269SS - reasonable cause - staff filled the name of the depositor correctly but the account number was wrongly mentioned - Assessee has proved a reasonable cause of wrongly coating the bank account number of the sister concern which was rectified the next day itself. Thus it is not a fit case for imposition of penalty u/s. 271D r.w.s. 273B of the Act. - AT
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Customs:
Freezing of Bank Account of petitioner - non-release of the export shipment made by the petitioner - Since the petitioner has not given separate representation for de-freezing of its bank account by the respondents, this Court is of the considered view that the petitioner will have to send a fresh comprehensive representation to the respondents requesting them to release the subject export consignment of the petitioner as well as for de-freezing of the petitioner's bank account. - HC
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Customs:
Jurisdiction of Customs Officers for seizure or recovery of material in a search carried out in a DTA - Smuggling - In the case on hand, the search and seizure have occasioned in DTA. Therefore, the Officers of the Customs Department, vis-à-vis the alleged illegality noted against both the importer and the individuals who handled the gold moved out of SEZ, have jurisdiction under Act 1962. The denial of jurisdiction to the Officers of the Customs Department for offences or violations noticed in DTA would enhance the area of an SEZ and diminish the jurisdiction of the Act 1962. - HC
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Customs:
EPCG scheme - Failure to fulfill the conditions of the Notification - the appellant had applied for the issuance of the Certificate on November 09, 2016 before the expiry of ten years but it was issued to the appellant by the DGFT only on December 09, 2016. The appellant cannot be blamed for delay of three days since the appellant had admittedly applied for issuance of the certificate on November 09, 2016.- AT
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Corporate Law:
Validity of prosecution against the petitioner/director - The responsibility of an Additional Director being the same as that of a director (but different from an independent director) they remain responsible, as the statute provides for the same - Thus to quash the proceedings by exercising this Courts inherent powers would amount to an abuse of the process of Court and would also amount to serious miscarriage of justice. - HC
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IBC:
Fraudulent/wrongful trading - It is clear from the language of section 66(1) that unlike application provided under section 43, section 45, section 50 and section 47 or avoiding of such transaction and dehors these provisions. - An application contemplated exclusively under section 66(1) is not made for avoidance of any transaction. Even if fraudulent but to fix the liabilities of the persons reasonable for conducting the business of corporate debtor which is fraudulent or wrongful, that too an application made by resolution professional during the CIRP or a liquidation process. - HC
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IBC:
Delay in filing appeal - Period of limitation - There are no delay in filing of the application and as Counsel for the Appellant has submitted that the Application for condonation of delay has been filed with abundant caution, in case there is any delay, the Appellant has been successful in providing the sufficient cause for condonation of delay - Ultimately result is that the application is allowed. - AT
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Service Tax:
Short payment of service tax - Renting of Immovable Property Services - When the property is not owned by the appellant and they have not received the rent, the demand of service tax raised on the appellants alone, therefore, cannot be sustained. - AT
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Central Excise:
Lapse of Cenvat Credit - Carry forward of Cenvat credit - In terms of strict provision of Rule 11(3) of Cenvat Credit Rules, 2004, the bar of lapsing of credit is applicable only when the assessee avail the absolute exemption notification. Therefore, in the present case exemption notification No. 30/2004-CE, being a conditional one, bar of lapsing of credit shall not apply. - AT
Articles
Notifications
Companies Law-
G.S.R. 40 (E) - dated
20-1-2023
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Co. Law
Companies (Accounts) Amendment Rules, 2023
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G.S.R. 39 (E) - dated
19-1-2023
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Co. Law
Companies (Authorised to Register) Amendment Rules, 2023
GST - States-
80-F.T. - dated
17-1-2023
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West Bengal SGST
Seeks to amend notification No. 1136-F.T., dated 28th June, 2017 regarding Nil rated services relating to renting of residential accommodation.
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79-F.T. - dated
17-1-2023
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West Bengal SGST
Seeks to amend notification No. 1128-F.T., dated 28th June, 2017 regarding reverse charge on certain specified supplies of goods under section 9(3) regarding essential oils.
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78-F.T. - dated
17-1-2023
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West Bengal SGST
Seeks to amend notification No. 1126-F.T., dated 28th June, 2017 regarding exempted goods namely, husk of pulses and aquatic feed.
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77-F.T. - dated
17-1-2023
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West Bengal SGST
Seeks to amend notification No. 1125-F.T., dated 28th June, 2017 regarding rates of taxable goods like ethyl alcohol supplied to oil marketing companies and petroleum refineries for blending with petrol, husk of pulses, fruit pulp and fruit based drinks etc.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (1) TMI 916
Service of SCN - SCN served on portal and no hard copy served - Validity of ex-parte order passed without following principles of Natural Justice - HELD THAT:- It is not disputed that the personal hearing had not been granted in the instant case. It is an ex-parte order in Form GST DRC-07 passed on 14.04.2022 by making the addition of huge amount of tax, interest and penalty of Rs. 2.40 crores (rounded off). The decision of this Court in case of GRAZIANO TRASMISSIONI INDIA PRIVATE LIMITED VERSUS STATE OF GUJARAT [ 2022 (7) TMI 752 - GUJARAT HIGH COURT] and other decisions will need to come to the rescue of the petitioner which insist on providing the opportunity of personal hearing when any adverse decision is contemplated, even without any request for personal hearing on the part of the party concerned. The impugned order of assessment with all consequential proceedings are set aside - petition allowed.
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2023 (1) TMI 915
Attachment of debtors and immovable property of the petitioner - whether the provisional attachment order of the property of the petitioner passed under Sections 79 and 83 of the Act, was liable to continue after filing of the statutory appeals in terms of Section 107 of the Act? - HELD THAT:- As per above Chart given by the petitioner in its rejoinder, so far as the assessment year, 2017-18 is concerned, the entire amount demanded by the respondent-Department has already been deposited/recovered. However, there is some deficiency with regard to the assessment year, 2018-19. So far as the assessment years, 2019-20, 2020-21 and 2021-22 are concerned, petitioner has preferred appeals under Section 107 of the Act and it is the case of the petitioner that the requisite amount as per Section 107(6) of the Act has already been deposited with the Department. The said submission made by learned Senior Advocate for the petitioner so far as the appeal preferred by the petitioner with regard to the assessment years, 2019-20 and 2020-21 is concerned, is duly corroborated by the order passed by the appellate authority (Annexure P-6). In the present case, it is the case of the petitioner that for three assessment years, i.e., 2019-20, 2020-21 and 2021-22, petitioner has preferred appeals and has deposited the requisite amount as per Section 107(6) of the Act. Under these circumstances, the recovery proceedings qua the balance amount are deemed to be stayed. Hence, the appellate authority by passing order (Annexure P-6) by only directing to de-freeze the bank account of the petitioner is against the provisions of Section 107(7) of the Act. In fact, the attachment order of the debtors as well as immovable property of the petitioner was also liable to be re-called. This petition is disposed of with a direction that in case the petitioner clears the entire amount due so far as the assessment years, 2017-18 and 2018-19 are concerned, within ten days from today and in case the petitioner has also made the pre-deposit under Section 107(6) of the Act, vis- -vis, assessment year, 2021-22, then the attachment order of the immovable property of the petitioner as well as attachment of the debtors shall be revoked forthwith by the respondents.
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2023 (1) TMI 903
Seeking permission to the petitioner to submit Form GST ITC-01 after due date as there was error in the portal on the due date - HELD THAT:- Petitioner was bonafide and prompt in making complaint to the GSTN on failing to submit form GST ITC-01 just after the prescribed date i.e. 12.08.2018. In that event, as per the petitioner, he loses ITC to the tune of Rs. 5.00 lakh if such switch over is not permitted. Proviso to Rule 40(1)(b) of JGST Rules, 2017, brought into force with effect from 01.07.2017 vide Notification dated 18.08.2017 bearing S.O. No. 64, issued by the Commercial Taxes Department, does confer the power upon the Commissioner of State Tax to extend the time limit - Respondents have interpreted the proviso as being a power conferred upon the Commissioner, State Tax for extension of time in a class of cases in general and not confined to the individual taxpayer, though no such restriction is apparently made out in the enabling provisions. The petitioner should approach the Commissioner, State Taxes with a request for extension of time limit for submission of Form GST ITC-01, which may be considered in accordance with law - Petition disposed off.
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2023 (1) TMI 902
Conditions of delay in filing appeal before the first Appellate Authority - Appeal belated by two years and one month - person concerned looking after the affairs of the company, had passed away - Cancellation of registration of petitioner company - HELD THAT:- There has been no calculation of the tax even after filing of SCN. This when came to the notice of the petitioner, the time had already lapsed for filing the appeal and as per section 107, since 30 days had already lapsed, the petitioner company could not upload the application on the common portal seeking revocation application in Form GST REG 21 and, manually, it was not permissible. The order of appellate authority has come, which says that the authority, if is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the period of three months or six months as the case may be, it can further allow the period of one month to be condoned. However, the appeal was belated by two years and one month and, hence, it is not empowered to condone the delay, even when there is justifiable cause as in the instant case as the person concerned looking after the affairs of the company, had passed away, nobody else was deputed and the email had gone into spam folder. It is to be noted that the decision of AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] rendered by this Court is subsequent to the filing of issuance of show cause notice as also the order of cancellation of registration. Therefore, what needs to be done is to quash and set aside the impugned order of the authority concerned for it to issue the show cause notice with requisite details and after following due procedure of law, it shall determine the same. The order of the appellate authority is also quashed. The cancellation of registration is revoked. The show cause notice dated 24.05.2019 issued under Rule 22 of the Rules is also quashed and set aside - petition allowed.
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Income Tax
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2023 (1) TMI 926
Rate of TDS - Non-availability of PAN - Benefit of treaty - Non-Resident - recipients satisfied conditions of the treaty and can be treated as resident of respective countries as per the DTAA - whether section 206AA of the Income Tax Act, 1961 do not override the provisions of Double Taxation Avoidance Agreement entered into by the Government of India under section 90? - HELD THAT:- Issue was discussed at length by the ITAT in the case of Serum Institute of India Ltd. [ 2015 (6) TMI 26 - ITAT PUNE] wherein the ITAT held that TDS on payments made to non-residents who did not furnish their PAN can be deducted as per rate prescribed in DTAA and section 206AA cannot be invoked to insist on tax deduction at rate of 20 per cent. In the case of Danisco India (P.) Ltd. [ 2018 (2) TMI 1289 - DELHI HIGH COURT] the Delhi High Court held that where assessee, an Indian remits payments to company located in Singapore which is not a tax assessee in India, and tax relationship between two countries is regulated in terms of Indo-Singapore DTAA, rate of taxation would be as dictated by provisions of treaty and not under section 206AA. In the case of Jyoti Ltd. [ 2021 (3) TMI 1001 - ITAT AHMEDABAD] held that section 206AA does not override provision of section 90 and, thus, TDS had been rightly deducted by assessee on payment made to non-resident by applying tax rate prescribed under DTAA and not as per section 206AA. CIT(Appeals) has not erred in facts and in law in holding that in case of payments made to non-residents, the assessee was entitled to deduct taxes at source at the rates applicable in the respective Tax Treaties in case PAN of non-resident payee is not available. In the instant facts, it is not the allegation of the Department that taxes have not been deducted at source by taking recourse to relevant clauses of the Tax Treaty enabling the assessee not to deduct tax at source in respect of payments made to non-resident payees. In the instant facts, the assessee has deducted taxes at the beneficial rate of 10% as applicable in the respective Tax Treaties in respect of all payments made to non-resident payees. In light of the above observations, the appeal of the Department is hereby dismissed.
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2023 (1) TMI 925
Addition u/s 68 - Bogus LTCG claimed by the assessee - CIT-A Allowed the appeal of the assessee - HELD THAT:- AO has not doubted the purchase of shares were through banking channels. The assessee has placed on record copies of contract memos in connection with purchase and sale of shares. Appellant has held the shares for over 3 years and it would be incorrect to treat sale of shares as bogus merely on the basis of suspicion and on account of fact that a substantial quantum of capital gains has been made by the assessee or that the trading in respect fo the said share was suspended for some time on the stock exchange. In the present case, no material has been brought on record to suggest that purchase and sale of shares were bogus. AO has not brought any material to support his finding that there has been collusion or connivance between the broker and the assessee for the introduction of his own unaccounted money. In the present case, despite the assessee s specific request, no opportunity of cross examination was provided to the assessee on the basis of whose statements reliance has been placed to hold that the sale of shares was sham / bogus -CIT(A) has not erred in law and in facts in allowing the assessee s appeal.
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2023 (1) TMI 924
Reopening of assessment u/s 147 - reasons to believe - addition on account of cash deposit in the bank account - as per AO since, the assessee neither filed his return of income nor furnished any evidence/documents/explanation in regard to such commodity transaction therefore reasons to believe that the transaction were made out of his undisclosed income and profit/loss on such transaction remained explained by the assessee - HELD THAT:- AO has not made addition on the issue recorded in the reasons for reopening the case of the assessee but has made addition altogether on a different account by holding that the assessee could not explain the source of cash deposit in the bank account and in this regard as per provisions of section 147, the AO can assess or reassess any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had reason to believe to be so, then only, in addition, he can also put to tax the other income chargeable to tax, which has escaped assessment and which has come to his notice subsequently, in the course of proceedings under section 147 of the Act. Once the AO came to the conclusion, that the income, with respect to which he had entertained reason to believe to have escaped assessment, was found to have been explained, his jurisdiction came to a stop at that, and he did not continue to possess jurisdiction, to put to tax, any other income, which subsequently came to his notice, in the course of reassessment proceedings, which were found by him, to have escaped assessment. In the case of CIT vs. Dr. Devendra Gupta [ 2008 (8) TMI 125 - HIGH COURT RAJASTHAN] held Reassessment-Scope-Addition in respect of items other than the one on which notice in given-Income alleged to have escaped assessment in reasons recorded not having been actually found to. Thus on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under section 148 setting out the reasons for the belief that income had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the Assessing Officer could not make an assessment or reassessment on another issue which came to his notice during the proceedings. This interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance Act (No. 2) of 2009. Explanation-3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. Section 147 has this effect that the Assessing Officer has to assess or reassess the income ( such income ) which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. - Decided in favour of assessee.
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2023 (1) TMI 923
Assessment u/s 144C - Reference to Dispute Resolution Panel - AO passed the draft assessment order by designating it as the 'Assessment Order' under section 143(3) of the Act and also issued demand notice u/s 156 and initiated penalty proceedings - As argued AO had not passed any assessment order pursuant to the order of the DRP - As per assessee AO failed to follow the procedures prescribed under section 144C for passing draft assessment order and passed a draft assessment order along with demand notice and initiated penalty proceedings and issued penalty notice - HELD THAT:- In the present case, instead of passing the draft assessment order under section 144C(1) Assessing Officer had passed the assessment order, in derogation of the mandatory provisions of the Act. Assessing Officer in his communication had acknowledged that the Assessing Officer was to pass the draft assessment order instead of the assessment order passed by him. In our view the law with respect to the passing of the assessment order pursuant to the direction of the ld.DRP is fairly settled and is no more res integra. Section 144C(10) r.w.s. 144(13) mandates the AO to pass the assessment order after receiving a direction. Further, in our opinion, the law mandates that if an Act is required to be done in the particular manner, it should be done in that manner or not. Further, during the course of argument, it was submitted that the draft assessment order/assessment order dated 26.02.2021 was passed by NFAC and window was not opening for passing the final assessment order and thereby giving effect to the directions of the DRP. In our view, it is for the revenue to devise its own means and ways to correct the software and pass the final assessment order in accordance with the law. In the present case, the AO had straight way passed the assessment order instead of passing the draft assessment order as per section 144C(1) of the Act and further, the Assessing Officer has not passed the final order as per section 144C(10) of the Act. In view of the above, we find that the assessee has made out a case on quashing the entire assessment order being passed in violation of the mandatory provisions of the law. See Aker Powergas Pvt.Ltd [ 2022 (6) TMI 1118 - ITAT MUMBAI] - Decided in favour of assessee.
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2023 (1) TMI 922
TDS u/s 195 OR 192 - payment made by the assessee to certain persons is in the nature of salary as claimed by the assessee or FTS as held by the AO - HELD THAT:- Facts and materials placed on record, including the terms of the assignment agreement clearly establish that for all practical purposes the concerned persons assigned by the parent company to the assessee were working as employees of the assessee and receiving salary income. The primary factor which influenced the departmental authorities in treating the payment made as FTS for secondment of employees by the parent company to the assessee is the fact that the parent company made the payments to the concerned employees and the assessee reimbursed the cost against debit-notes issued by the parent company. In our view, nothing much can be read into this arrangement as such payments made by the parent company on behalf of the assessee is as per the contractual terms of the assignment agreement. We hold that the payment made by the assessee towards reimbursement of expenses is in the nature of salary cost of the assigned employees subject to TDS under section 192 of the Act, hence, cannot be treated as FTS under section 9(1)(vii) of the Act and Article 12 of the tax treaty. Accordingly, there was no obligation on the part of the assessee to withhold tax at source u/s 195 of the Act. We delete the addition made by the AO. This ground is allowed. Delayed payment of employees contribution to Provident Fund (PF) within the due date prescribed under the PF Act held that the assessee has violated the provisions of section 36(1)(va) - HELD THAT:- There is no dispute that the assessee has not paid employees contribution to PF within the time limit prescribed under the PF Act. It is the case of the assessee that the deduction should be allowed as the payment has been made before the due date of filing of return under section 139(1) - In our view, the aforesaid claim of the assessee is not acceptable, as now the issue stands decided against the assessee by the Hon ble Supreme Court in case of Checkmate Services Pvt. Ltd [ 2022 (10) TMI 617 - SUPREME COURT]
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2023 (1) TMI 914
Addition u/s 68 - cash deposited in bank account unexplained - HELD THAT:- Assessee was not provided adequate opportunity by the ld. CIT(A) while disposing off the case. It will be in the interest of equity and justice to restore the matter to the file of the AO to verify the revised computation filed by the assessee before us and give the relief in accordance with law. The assessee is also directed to produce the documentary evidences concerning the issue in question and will cooperate the AO. Thus the appeal of the assessee is allowed for statistical purposes.
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2023 (1) TMI 913
Disallowing the bogus loss incurred by the assessee in trading of penny stocks - information received from the Investigation Wing, Kolkata - Necessity of independent application of mind by AO - HELD THAT:- In the present case, it is evident that the assessee is engaged in the business of shares and stocks broking. Profit and loss account, wherein the assessee has duly credited the consideration from the sale of shares and speculation gain. Assessee has also debited the Demat charges, Securities Transaction Tax, loss on future shares, purchase of shares, and other charges. During the year, the assessee traded in shares of NCL Research and M/s Shreenath, on which the assessee incurred a loss - On the basis of information received from Investigation Wing, Kolkata, the shares of the aforesaid companies were treated as penny stocks by the Revenue and therefore the loss was disallowed. As per the assessee, he has been trading regularly in recognised stock exchanges through the brokers registered under the SEBI. As per the assessee, the aforesaid transaction was also done through a SEBI register broker, and in support of his claim, the assessee furnished contract notes, broker notes, and Demat account before lower authorities. AO made the impugned addition merely on the basis of information received from the Investigation Wing, Kolkata without conducting any independent inquiry or doubting the evidence furnished by the assessee in support of its claim. It is also evident that the AO has not examined or issued summons or notice under section 133(6) of the Act to the broker through whom the assessee has traded in shares of aforesaid companies From the perusal of statements of persons, who are alleged to be the promoter of NCL Research and M/s Shreenath, we find no mention of the name of the aforesaid companies or the assessee. Further, there is no evidence on record that the assessee has engaged in any manipulative activities with respect to the purchase and sale of shares of aforesaid two companies. The lack of enquiry on the part of the AO and non-appreciation of facts on record is also evident from the fact that the loss incurred by the assessee as a trader of shares has been considered to be the short-term capital loss when such shares were not even held as an investment by the assessee. No infirmity in the impugned order deleting the addition made by the AO. As a result, both the grounds raised by the Revenue are dismissed.
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2023 (1) TMI 912
Revision u/s 263 by CIT - unsecured loan transactions of the assessee - Unexplained cash deposits - HELD THAT:- Anomalies noted by the ld.Pr.CIT with respect to the unsecured transactions being demonstrated by the ld.counsel for the assessee to be non-existent, whatever verification the ld.Pr.CIT wanted to carry out, should have been done at his end only, and only thereafter, he could have arrived at a finding, whether the order of the AO was erroneous or not. In case, verification of the bank statements revealed that these transactions were not actually reflected in the bank account of these two parties, the contentions of the ld.Pr.CIT of error in the order of the AO, would then have been correct. But, if found otherwise, then there couldn t be said tobe any error in the order of AO. Without carrying out the verification exercise itself, the ld.Pr.CIT clearly had no case for holding the assessment order to be erroneous on account of non-verification of the genuineness of these two unsecured loans. We hold that as far as anomaly noted by the ld.Pr.CIT, with regard to these two unsecured loans taken by the assessee from Kalpana Shah and Monali Shah on certain transactions relating to the said loans, not being reflected in their bank accounts, CIT has not arrived a conclusive finding of the error and has only restored the issue to the AO for verification that too when the assessee had clearly demonstrated the anomalies to be non existent. Therefore, with respect to these anomalies noted in the said transactions, there is no error in the order of the AO. Credit-worthiness of the Kalpana Shah not being established - The ledger account of the Kalpana Shah whichwas part of the books of accounts, and part of the record of the assessment also, clearly revealed that entire transaction with her related to amounts transferred to her by the assessee, and subsequently paid back by her to the assessee. Therefore, out of total amount of Rs.31,18,882/- noted by the ld.Pr.CIT to have been received by the assessee from Kalapan Shah, the source of Rs.29,61,194/- can be attributed to the amounts transferred by the assessee to her, which is evident from the copy of the ledger account also. It is only the difference of Rs.1,50,000/- which can be said to be credit given by the Kalpana Shah to the assessee, which we agree with ld.counsel for the assessee as too minor amount to invite exercise of revisionary jurisdiction by the ld.Pr.CIT for non-verification of the genuineness of unsecured loans received by the assessee from Ms. Monali Shah and Kalpana Shah, the assessee having clarified all anomalies noted by the ld.Pr.CIT in the said transaction with documentary evidences, and the Pr.CIT having accepted the same, but restoring the issue to the AO only for the purpose of verification. Also with respect to the credit-worthiness of Kalpana Shah, we have noted that net unsecured loans received from her is too minor an amount of Rs.1.5 lakhs to have invoked revisionary jurisdiction from the ld.Pr.CIT - Appeal of the assessee is allowed.
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2023 (1) TMI 911
Penalty u/s 271(1)(c) - non compliance of notices u/s 142(1) - HELD THAT:- Provisions of Section 271(1)(b) can be invoked only for non compliance of notice u/s 115WD (2) or Section 115WE(2) or Section 142(1) or 143(2) or directions issued Under section 142(2A) of the Act. Therefore, other than the default committed by the assessee specified in clause (b) of section 271(1) the non compliance to the other notices or directions would not attract the penalty Under section 271(1)(b) of the Act. Further, we perused the documentary evidence of the assessee s reply notices on 14.06.2022, 20.06.2022 and 04.08.2022 for requesting to treat as compliance of reply of notice in which there was a reasonable cause to treat. In our considered opinion, that the assessee was served with the notices issued by the AO and subsequently reply of notices were sent by the assessee is also on record. Reasons explained by the assessee were bonafide and reasonable before the CIT (A) where the ld. CIT(A) has not taken into consideration. We set aside the order passed by ld. CIT(A) and the penalty imposed Under section 271(1)(b) of the Act for non compliance of Section 142(1) is deleted. The appeal of the assessee is allowed.
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2023 (1) TMI 901
Capital gain computation - determination of the FMV as on 1.4.1981 - adoption of market value as on 01-04-1981 while computing capital gains on sale of a plot, in which both the assessees herein are co-owners - case of the assessees that they have adopted the value as determined by a registered valuer - HELD THAT:- It may not be correct to adopt the average increase in the DLC value between 1983 and 1986 as the discounting factor, since it is in the common knowledge of every one that the increase in plot value is usually more on the occurrence of development activities. Hence, we are unable to accept the methodology adopted by the ld. CIT(A) on the basis of increase happening in the periods subsequent to 1983. We noticed that the approved valuer has arrived at the value of Rs.42/- per sq. Ft by adopting discounting factor as Rs.9/- per sq.ft, i.e., he has discounted the value at Rs.60/- per sq. ft determined by the Registrar for 1983 in order to arrive at the value as on 1.4.1982. Approach of the approved valuer is more acceptable in the facts and circumstances of the case. Accordingly, we are of the view that FMV as on 01- 04-1981 should be adopted at Rs.42 per sq. ft. Accordingly, we set aside the orders passed by the ld. CIT(A) in both the cases and direct the AO to recompute LTCG by adopting FMV as on 01-04-1981 at Rs.42 per sq. Ft. Deduction u/s 54 - assessee did not claim deduction u/s 54 of the Act in the return of income, but claimed the same for the first time before the ld. CIT(A) - HELD THAT:- Since the assessee did not produce any documentary evidence with regard to the said claim, the ld. CIT(A) dismissed the same. In our view, the assessee may be given an opportunity to produce necessary documents in support of the claim of deduction u/s 54 of the Act. Accordingly, we set aside the order of the CIT(A) on this issue and restore the same to the file of the AO for examining the said claim. The assessee is also directed to furnish necessary evidences in support of his claim and the AO after examining them may take appropriate decision in accordance with law.
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2023 (1) TMI 900
Denial of the benefit u/s 11 and 12 - appellant has violated the provision of Section 13(1)( c), 13(1)(d) - HELD THAT:- The submission of the assessee is that there is no such violation of provisions of the Act as alleged by the AO.As submitted that there is no violation of Section 11(5) as making investment in immovable property is one of the modes prescribed under the Act and further, the investment in agricultural land, though made in the name of his employees and others, yet the assessee is actually the beneficial owner of the land. It was also contended that the income that is falling within the violations of Act alone could be subjected to tax instead of rejecting the claim for exemption in respect of entire income of the assessee. It is also the contention of the assessee that the addition made by the AO with regard to notional interest and addition made u/s 40A(3) of the Act are liable to be deleted, once the assessee is held to be eligible for exemption u/s 11 of the Act. However, it is the contention of the ld. DR that various submissions and contentions raised by the Ld A.R require fresh examination. In the rejoinder to the submissions made by Ld D.R, the counsel of the assessee agreed that all the matters may be restored to the file of Ld CIT(A), as they involve examination of legal and factual aspects.Accordingly, we set aside the order passed by the ld. CIT(A) in respect of the addition confirmed by him and restore all those issues to his file for adjudicating them afresh. The assessee should be provided adequate opportunity of being heard. Appeal filed by the assessee is treated as allowed for statistical purposes.
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2023 (1) TMI 899
Assessment u/s 144B - appropriate authority to have jurisdiction of the present assessee to pass assessment - assessment order passed by AO of NEAC, New Delhi - transfer of case - HELD THAT:- Actual jurisdiction of the present assessee for the present assessment year lies with the DCIT, Central Circle 3(1), Chennai by virtue of notification No.119/2020-21 dated 19.03.2011. It is also noted from this very notification that it is the duty of the AO transferring the file shall inform the assessee of the change in jurisdiction and not the other way round. The date of assessment order is 20.04.2021 that means, there is almost one month time gap was available for transferring the file from AO, ITO, Non- Corporate Ward 10(3), Chennai to DCIT, Central Circle 3(1), Chennai. It means that the assessment framed is without jurisdiction because the assessment order passed by AO of NEAC, New Delhi is not having any jurisdiction because the matter was centralized much prior to the date of passing of order on 20.04.2021. The jurisdiction of the assessee w.e.f. 19.03.2021 lies with the DCIT, Central Circle 3(1), Chennai and only, he was authorized to make assessment in the case of assessee for the relevant assessment year.
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2023 (1) TMI 898
Assessment u/s 153C - undisclosed investment u/s 69 - Whether any incriminating documents relating to the assessee were found and seized and the AO formed a belief that the case of the assessee falls within the four walls of section 153C? - HELD THAT:- Page 3 is the receipt cum agreement to sell wherein a consideration of Rs. 1.10 crores is mentioned. It is true that the name of the assessee is not mentioned in the said receipt. In our considered opinion, assuming that the said receipt pertained to the assessee but does not belong to the assessee as per section 153C of the Act as they stood at that point of time. The said receipt is dated 28.03.2009 and as per the Certificate of Incorporation, the appellant company came into existence on 08.04.2009. Therefore, ld. CIT(A) has rightly deleted the addition holding that a non existing person cannot earn undisclosed income. The seized document referred to by the AO in his assessment order and which are made basis for the impugned addition do not belong to the assessee. It would be pertinent to refer to the observations of the Hon'ble High Court of Delhi in the case of Ankit Gupta [ 2017 (9) TMI 670 - DELHI HIGH COURT ] - Appeal of assessee allowed.
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2023 (1) TMI 897
Addition of payment of on money for Purchase of Shop - Difference in consideration shown by the assessee and accepted by the Stamp Valuation Officer and DVO report - HELD THAT:- Actual sale of value shown by the three co-purchasers including the assessee was at Rs. 1,99,20,000/- whereas the Departmental Valuation Officer report vide dated 24.04.2018, valuated the market value of the property at Rs. 2,08,22,000/- and there was a difference of Rs. 9.02 lakh which was picked up by the Ld. CIT(A) for making for restricted the addition made by the A.O. As per third proviso to section 50C of the Act, where the value adopted or assessed or assessable by the stamp valuation authority does not exceed 10% of the consideration received the consideration so received of accruing as a result of transfer shall for the purpose of section 48 deemed to be value of consideration. Even as per order of Joseph Mudaliar [ 2021 (9) TMI 701 - ITAT MUMBAI] as relied by the Ld.AR, third provision of section 50C of the Act the difference less than 10% from the consideration shown by the assessee and accepted by the Stamp Valuation Officer and DVO report has to be ignored and no addition is called in the situation. In the present case the amount of Rs. 9.02 lakh is less than 5% of total sale consideration of Rs. 1,99,20,000/- shown by the assessee. Therefore, no further addition is required to be made in the hands of the assessee u/s. 69B or any other provision of the Act. Accordingly ground no. 1 of the revenue is dismissed. Unexplained cash deposits in the saving bank account - CIT-A deleted the addition - HELD THAT:- It is pertinent to mentioned that the assessee has declared an income of Rs. 41,55,470/- for A.Y. 2015-16 and the impugned amount is only Rs. 9 lakh which is also less than the cash balance available in the proprietary firm of the assessee. Therefore the Ld. CIT(A) was right in deleting the addition of Rs. 9 lakh made by the A.O. u/s. 69A of the Act. Finally we are unable to see any valid reason to interfere with the findings arrived by the Ld. CIT(A), therefore we confirm the same. Resultantly ground no 2 of revenue is also dismissed. Difference of On Money paid in cash at the rate of 60% of the shop, for allotment of shops - Addition based on documentary evidence found and seized from the premises of the assessee - HELD THAT:- Cash payment pertaining to shop no GF 289 be deleted by observing that no mention of shop no. GF 289 found has been found in the seized material in respect of cash payment by the assessee to the builder. Addition u/s 69A - on money for Purchase of unit - Payment in cash out of books of accounts from the income earned from undisclosed sources - HELD THAT:- In the case of Saamag Developers (P.) Ltd. [ 2018 (1) TMI 1596 - ITAT DELHI] held that when the Assessing Officer has not made any independent enquiry from such persons and in the absence thereof no addition can be made. Especially when the Assessing Officer did not bring any adverse material on record or gave a finding with cogent evidence contrary to the explanation of the assessee and has not brought any independent corroborative material suggesting that the assessee has purchased such land/property and has made payment as recorded in the seize paper. In the present case AO has made addition merely on the basis of so called agreement which has not been signed by the assessee and the A.O. has not brought on record any other positive or corroborative material to show that the assessee has actually purchased property under this agreement and made payment of Rs. 54,00,000/- in cash out of books of accounts from the income earned from undisclosed sources. Therefore, we reach to a logical conclusion that the addition made by the A.O. and confirmed by the Ld. CIT(A) u/s. 69A of the Act, is not sustainable hence we direct the A.O. to delete the same.
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2023 (1) TMI 896
Unexplained credit u/s 68 - unexplained share premium and share capital - HELD THAT:- In respect of all the parties/investors, they are regularly filing the return of income and the copies of the same are also brought on record. Assessee has also furnished the share application form, copy of the investors companies, bank account statement, showing the debit entry, copy of the acknowledgment of the return of income for AY 2015-16 along with the computation of income, copy of the auditor report, balance sheet and trading profit and loss account as on 31/03/2015 and the copy of the shares certificate of investors company issued by the assessee company. The assessee has produced every document to prove the identities of the parties and the creditworthiness of the parties along with genuineness of the transaction as required u/s 68 o We find no merit in the argument of the Ld. DR to hold that the assessee has failed to establish the ingredients of Section 68 of the Act. The Hon'ble Supreme Court in the case of CIT Vs. Lovely Export Pvt. Ltd. [ 2008 (1) TMI 575 - SC ORDER] observed that even if the share capital money is received by the assessee from alleged bogus share holders, whose names are given to the A.O. The Department is free to proceed to reopen their individual assessment in accordance with law. But cannot regarded undisclosed income of the assessee Company. In the present case apart from giving the details of the investors, the assessee has substantially provided materials to prove the genuineness of the share holders apart from giving the Pan Card, name and ROC details. Therefore, we delete the addition made u/s 68 of the Act. Accordingly, the Ground No. 2 of the Assessee is allowed. Enhancement of income by CIT AR argued that the Ld.CIT(A) enhanced the income without giving a mandatory notice as required u/s 250(1) - HELD THAT:- In our opinion, when the CIT(A) deem it fit to enhance the assessed income, shall give mandatory notice u/s 250(1) - In the present case, the Ld. DR has not brought anything on record to prove that the CIT(A) has issued notice u/s 250(1) of the Act before enhancing the income of the assessee. Therefore, the action of the Ld.CIT(A) in enhancing the income of the assessee is found to be erroneous. Therefore, Ground No. 3, 5 6 of the assessee requires to be allowed. Enhancing the income invoking Section 56(2) (viib) - rejecting valuation method taken by the assessee - value of the shares issued to the parties are very high in comparison to fair market value of such shares - HELD THAT:- We are inclined to follow the ratio laid down in the case of Cinestan Entertainment P. Ltd.[ 2019 (6) TMI 1367 - ITAT DELHI] and hold that the Ld. A.O and CIT(A) has committed an error in rejected the valuation done by the assessee from prescribed expert as per the prescribed method. We inclined to allow the Ground No. 4 of the assessee by deleting the addition made by the Lower Authorities.
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2023 (1) TMI 895
Addition u/s 68 - credit of share capital and share premium in the books of account of the assessee - CIT-A deleted the addition - HELD THAT:- Section 68 of the Act applies to the facts of this case as a sum of money was credited, in the books of the assessee and the assessee could not prove the genuineness of these credits as well as the creditworthiness of the creditor. Hence in our view the addition has rightly been made by the A.O. We find ourselves in agreement with the view expressed by the Kolkata Bench of the Tribunal in M/s. Blessings Commercial Pvt. Ltd. [ 2017 (6) TMI 1284 - ITAT KOLKATA] - Respectfully following the same, we hold that on the facts and in the circumstances of the case the Ld. AO was perfectly justified in making the impugned addition. Accordingly we set aside the order of the Ld. CIT(A) and restore the order of the Ld. AO. Appeal of the Revenue is allowed.
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2023 (1) TMI 894
Exemption u/s 11 - addition of corpus fund donation /contribution - AR argued that the corpus donation is not taxable - HELD THAT:- The assessee is not clear in its stand, whether, they received corpus donation.First, the assessee must clarify whether or not they received any such corpus donation, then if received if it is exempted under which provisions of law, particularly in absence of registration under section 12AA, which is condition precedent for seeking such exemption after amendment in section 12A by Finance Act 2007 applicable w.e.f. 01.06.2007. Thus, we do not find any merit in the stand of the assessee. The ratio of case laws relied by the ld AR for the revenue is not helpful to the assessee after the decision of Hon ble Supreme Court in U.P. Forest Corporation [ 2007 (11) TMI 303 - SUPREME COURT ] The Hon ble Apex Court clearly held that conjoint reading of section 11,12 12A makes it clear that registration under section 12A is a condition precedent for availing benefit under section 11 12. Similar view was taken by Chennai Tribunal in Veeraval Trust [ 2021 (7) TMI 1084 - ITAT CHENNAI ] holding that where assessee trust charitable trust was not registered under section 12AA, voluntary donation received by it with a specific direction to be formed part of corpus of trust would fall within the ambit of Income of trust. In the result, ground No.2 of the appeal is dismissed. Addition of unexplained unsecured loan - HELD THAT:- We find that, though the assessee has proved the identity of the lenders and their capacity by filing the record of agriculturists holding, showing sufficient land holding in their names. However, the entire transaction of unsecured loan is received in cash. Not a single instance of receiving loan through banking transaction is shown to us, the assessee has shown alleged unsecured loan on daily basis. From the figure of unsecured loan ranging from Rs. 10,000/- to 19,000/- on more than 50 occasions is shown only to avoid the rigorous of section 269SS, therefore, such transaction dos not inspire our confidence, hence, we are in agreement with the submission of ld. CIT-DR for the revenue that the genuineness of transaction is doubtful. Thus, all three conditions of Section 68 are not substantiated simultaneously by the assessee. Disallowance of expenses - assessee urged that the disallowance of 10% on limited item are on higher side and may be reasonably restricted - HELD THAT:- We have perused each and every item of expenses, in our view, the ld. CIT(A) after considering each and every item of expenses has already granted sufficient relief and reasonably restricted the disallowance only those expenses which are not verifiable, thus we do not find any justification for further reducing the disallowance. Thus, ground No. 4 is also dismissed.
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2023 (1) TMI 893
Deduction u/s. 80(P)(2)(a)(i) - Due date for filing the return of income under Section 139(1) - AO denied the deduction u/s. 80(P)(2)(a)(i) observing that the credit co-operative society is eligible for availing the exemption under Section 80P(20(a)(i) of the Act only if the return of income is filed with the due date - HELD THAT:- A conjoint reading of Section 139(1) of the Act read with the Explanation 2(ii) of the section and Section 63 of the Karnataka Co-Operative Societies Act, 1959 makes it clear that the assessee s books are required to be audited under the Co-Operative Societies Act, the extended time is available to the assessee upto 31.10.2018 to the file the return of income for the AY 2018- 19. Admittedly in the present case the assessee filed the return of income on 31.10.2018. The assessee cannot be denied deduction under Section 80P(2)(a)(i) of the Act if the assessee filed the return of income on or before 31.10.2018 and the same has been disclosed in the return of income as required in ITR-5 stating that assessee is liable to audit under Cooperative Society Act and mentioned the date of audit in the return of income filed by the assessee. If it is so, the assessee could avail the benefit of circular issued by CBDT cited supra and the assessee has to be granted with the deduction under Section 80P(2)((i)(a). As discussed earlier in the present case assessee has filed return of income on 31.10.2018, which is within the extended time limit in the case of the present assessee whose books are to required to be audited under the relevant Co-operative Societies Act and Explanation 2(ii) of Section 139(1) of the Act is applicable to the assessee s case. We find no force in the argument of the learned D.R. Accordingly, direct the AO to grant deduction claimed by the assessee under Section 80P(2)(i)(a) of the Act if the assessee establish that it has disclosed the fact that assessee is liable to audit under Cooperatives Societies Act and mentioned the date of furnishing audit report in the return of income filed by the assessee on 31.10.2018 for the impugned AY 2018-19. Accordingly the issue in dispute is remitted to the file of AO for fresh consideration in the light of above observations - Appeal filed by the assessee is partly allowed for statistical purposes.
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2023 (1) TMI 892
Penalty u/s 271(1)(c) - disallowance of commission expenses - HELD THAT:- AO had merely proceeded on the basis of confirmations without making any inquiry about the nature of business of the assessee and the services rendered by the respective parties to justify the payment of commission. He only proceeded on the premises of genuineness of the parties. Ld. CIT(A) after giving due notice seeking explanation from the assessee as to what were the sort of services rendered to justify payment of commissions proceeded to enhance the addition. As inspite of several effective opportunities no evidence was led by the assessee, enhancement was made. The findings arrived by Ld. CIT(A) require no interference. The grounds raised have no substance, the same is dismissed. As in spite of opportunity assessee had failed to substantiate the commission expenses, the findings of Ld. CIT(A) levying penalty on the ground of inaccurate claim requires no interference, so ground also stands dismissed.
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2023 (1) TMI 891
Income deemed to accrue or arise in India - Royalty receipt - Taxability of an amount received from sale of licence to various Indian customers as royalty under Article 12(3) of Indian USA Double Taxation Avoidance Agreement (DTAA) - HELD THAT:- It is evident, the assessee had entered into End User Licence Agreement (EULA) with customers in India in terms of which the assessee has granted licence to use certain standardized software to the customer. The licences provided to the end users are non-exclusive and non-transferable. The end users of the licnese do not have any access to the source code, nor there was any transfer of right in process or use of any process. The limited right granted to the customers under EULA is to use the software for their own internal purposes. There is no dispute that factually the issue stands on the same footing as assessment year 2014-15 [ 2022 (6) TMI 344 - ITAT DELHI] . Therefore, respectfully following the decision of the Coordinate Bench in assessee s own case, as referred to above, we hold that the receipt in dispute is not in the nature of royalty, hence, not taxable in India. The Assessing Officer is directed to delete the addition. These grounds are allowed. Fee for Included Services (FIS) under Article 12(4)(a) of Indian USA DTAA - AO held that the amount received by the assessee towards granting licence under EULA is in the nature of royalty, hence, taxable in India - HELD THAT:- Annual maintenance charges are ancillary and subsidiary to the grant of licence for right to use software, which is treated as royalty, the Assessing Officer concluded that receipt from annual maintenance charges is in the nature of FIS under Article 12(4)(a) of India USA DTAA as well as under section 9(1)(vii) of the Act. However, while deciding the issue of taxability of receipts from granting of licence, we have held that they are not in the nature of royalty under the treaty provisions. That being the case, the receipt from annual maintenance charges being not ancillary or subsidiary to any royalty income cannot be brought to tax under Article 12(4)(a) of the tax treaty. Therefore whether it can come within the purview of Article 12(4)(b) of the tax treaty. As could be seen, to be considered as FIS under Article 12(4)(b) under the tax treaty, the make available condition has to be satisfied. In the facts of the present appeal, the Departmental Authorities have failed to demonstrate that while rendering the services, the assessee had made available technical knowledge, experience, skills, knowhow etc. to the recipient of such services. That being the case, the amount received cannot be treated as FIS under Article 12(4)(b) of the tax treaty. The entire case of the revenue is, the amount received falls under Article 12(4)(a) of the treaty. In view of the aforesaid, we hold that the amount received is not taxable in India as it cannot be treated as FIS under Article 12(4) of the tax treaty. Accordingly, we direct the Assessing Officer to delete the addition. Erroneous application of tax at the rate of 40% instead of 10% under section 115(1)(b)(B) of the Act, with regard to the income offered to tax in the return of income - It is an agreed position before us that the Assessing Officer has not, at all, considered the issue. Therefore, it was submitted before us to restore this issue to the Assessing Officer.
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2023 (1) TMI 890
Exemption u/s 11 - Nature of donation - corpus fund or not - assessee was not registered u/s 12A during the relevant year - addition being the amount of donation received from Association Akshy Patriarca, San Jose, CA, US - As per assessee main aim and objectives of the trust is to help the weaker section of the society, children, women and old people who are in very bad economical conditions, mainly through education and other development projects - HELD THAT:- Firstly it has been mentioned that the said donor has agreed to extend financial support and sponsor the program and project of the assessee and to be utilized exclusively for the purpose of the trust activities. However, in the second part, it has been mentioned that 80,000 euros (equivalent to Rs. 57,25,000) were sent by way of donation for infrastructural development and other development work and in case of other necessity, the trustee in consultation with the Chairman can use the fund for the development of trust activities. Therefore, it has been provided that the trustees in consultation with the chairman can use the fund for trust activities. Hence, it cannot be said that it is a clear direction that the donation will form part of the corpus fund, rather, a liberty has been given to use it for trust activities in consultation with the chairman. Under such circumstances, even otherwise, the said donation, in our view, does not strictly conform as the donation towards corpus fund. Even, for the sake of arguments, if it is taken that the said fund was for infrastructural development or to say it was towards corpus fund of the trust, still as per the amended provisions of section 2(24)(iia) as amended vide Finance Act 1987 and further amended vide Amendment Act 1989, the trust being not registered u/s. 12A for the year under consideration, the corpus donation will form part of the taxable income of the assessee trust. In view of the above decision, Ground Nos. 1 to 7 of the assessee's appeal are hereby dismissed. Disallowance @ 20% out of expenditure incurred under the head 'food and beverages' - HELD THAT:-Assessee has pleaded that the Assessing Officer has not made any query with regard to the aforesaid expenses. However, no bills and vouchers have been furnished in respect of the aforesaid claim of expenditure. Since no bills and vouchers have been maintained for the aforesaid expenditure, we do not find any infirmity in the order of the CIT(A) on this issue also. Accordingly, Ground No. 8 is hereby dismissed.
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2023 (1) TMI 889
Admission of additional evidences by CIT - Claim of deduction u/s.35D in regard to pre-operative charges - Addition of unsecured loans - CIT-A deleted addition - whether CIT(A) after considering additional evidences as noted by him, deleted the addition without confronting the same to the AO? - HELD THAT:- As admitted that the assessee has filed the evidences before the CIT(A) for the first time on both the issues and he has no objection in case, the matter goes back to the file of the AO for verification. We are of the view that whatever evidences were produced by assessee before CIT(A), the same be produced before AO who will verify the same and will decide the claim accordingly. The appeal of the Revenue is allowed for statistical purposes.
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2023 (1) TMI 888
Addition based on seized documents in search - Double addition - treat the cash outflow made by the assessee based on the said seized documents of pen drive / excel sheet wherein cash payments was reflected as unexplained expenditure made by the assessee - application before the Hon ble Income Tax Settlement Commission (ITSC) and in that application, the transactions reflected in the said pen drive had been duly considered by them and income offered thereon - HELD THAT:- All the seized documents that were found during the course of search in Kamala group cases which includes the transactions belonging to the assessee in the form of excel sheet which is reproduced supra have been subject matter of detailed consideration by the PCIT in Rule 9 report filed before the Hon ble ITSC. It is a fact on record that the said excel sheet had been duly considered by Shri Ravi S Bhandari in his application filed before the Hon ble ITSC u/s.245C(1) of the Act and the same has been accepted by the Hon ble ITSC vide their order u/s.245D(4) of the Act dated 20/09/2016. When these facts are staring on us, we do not find any justifiable reason to sustain the very same addition emanating out of the very same seized documents in the hands of the assessee company herein. In other words, taxing a sum in the hands of the assessee company would only result in double addition. When Shri Ravi S Bhandari had already owned up the impugned transactions together with the said seized documents, there is absolutely no case for making addition in the hands of the assessee company herein. Hence, we have no hesitation in directing the ld. AO to delete the addition made in the hands of the assessee company herein. Accordingly, the ground Nos. 2 3 raised by the assessee are allowed.
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2023 (1) TMI 887
Addition u/s 68 - unexplained cash credits - unsecured loans though the assesses has filed the requisite details before the lower authorities - HELD THAT:- A.O has failed to make further enquiries and relied on the statement recorded, overlooking the factual aspects that the assessee has discharged the initial burden placed by furnishing the details. The information submitted by the assessee satisfied the three ingredients of provisions of Sec. 68 - A.O. has not allowed the interest on unsecured loans in the F.Y.2011-12, as the loan transactions are not believed and alleged as non genuine and treated as unexplained cash credit U/sec 68 of the Act and these unsecured loans were repaid through account payee / banking channels in the current financial year and subsequent year which is not disputed. AR submitted that the assessee has substantiated the stand by submitting the details before the A.O. and CIT(A) and discharged the burden. We considering the facts, circumstances and judicial decisions set-aside the order of the CIT(A) and direct the Assessing officer to delete the addition of unsecured loans and allow this ground of appeal in favour of the assessee. A.O has disallowed the interest on unsecured loans - Since we have directed the A.O to delete the addition of unsecured loans in the above Para-7, therefore the interest on the unsecured loans are to be allowed. Accordingly, we direct the A.O to delete the addition and allow the interest claim of the assessee on the unsecured loan creditors. Appeal filed by the assessee is allowed.
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2023 (1) TMI 886
Disallowance u/s.14A under normal provisions of the Act as well as in the computation of book profits u/s.115JB - HELD THAT:- This issue is no longer res integra in view of the decision of the Hon ble Supreme Court in the case of Maxopp Investments [ 2018 (3) TMI 805 - SUPREME COURT] wherein it was held that disallowance u/s.14A of the Act could not be made in the absence of any exempt income. We find that the provisions of Section 14A of the Act had been amended by the Finance Act 2022 w.e.f. 01/04/2022 - This explanation has been held to be operative prospectively from A.Y.2022-23 onwards as per the Explanatory Memorandum to the Finance Act as well as the decision of Era Infrastructure India Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] . In view of the aforesaid judicial precedents, the ground Nos. 1 2 raised by the assessee are hereby allowed. Addition of debenture redemption reserve while computing book profits u/s.115JB - HELD THAT:- No infirmity in the order of the ld. CIT(A) dismissing the ground of the assessee. Accordingly, the ground No.3 raised by the assessee is dismissed.
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2023 (1) TMI 885
Assessment u/s 153A - Whether incriminating material was found during the search action and that as per the settled law in the case of completed assessment (not abated) on the date of search? - HELD THAT:- We find that the issue is squarely covered in favour of the assessee by the decision in the case of CIT Vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and decision of case of 'Principal CIT Vs. Meeta Gutgutia Prop M/s. Ferns 'N' Petals ,[ 2017 (5) TMI 1224 - DELHI HIGH COURT] have been unanimous to hold that in relation to the assessments which have already been concluded, the AO is precluded from making additions on any other issue except relating or concerning to the incriminating material found during the search action. AO cannot disturb the assessment order or reassessment order which has attained finality, unless the material gathered in the course of proceedings u/s. 153A of the Act establishes that relief granted under the final assessment/reassessment was contrary to the fact unearthed during the course of 153A proceedings. Appeal of the Revenue stands dismissed.
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2023 (1) TMI 884
Penalty u/s. 271D - contravention to Section 269SS - assessee borrowed unsecured loans from related parties - staff filled the name of the depositor correctly but the account number was wrongly mentioned - HELD THAT:- Section 273B has provided a statutory fetter to the automatic application of Section 271D. It provides that no penalty shall be imposable on a person under these provisions for any violation, if the person could establish the existence of any reasonable cause . It is only where a person could not explain any reasonable cause for the failure in complying with the provisions of Section 269SS, then the penalty under section 271D would follow. The assessee has explained the circumstances under which the cash deposit, which was in the nature of mistaken bank challan entry was received by the assessee. The staff filled the name of the depositor correctly but the account number was wrongly mentioned - The same was rectified by the assessee on the very next day i.e. on 25.08.2012 by remitting the said amount of Rs. 4,78,000/- by issuing Cheque No. 2623 to M/s. Om Ceramics to prove the genuineness. The assessee also produced the banking challan of cash deposits and certificate from Bank of Baroda, as well as the bank statement and an affidavit filed by assessee s staff. Assessee also produced before us the Income Tax Returns filed by M/s. Om Ceramics which carry the same address that of the assessee herein. Assessee has proved a reasonable cause of wrongly coating the bank account number of the sister concern which was rectified the next day itself. Thus it is not a fit case for imposition of penalty u/s. 271D r.w.s. 273B of the Act. We therefore cancel the penalty levied and allow the grounds of appeal raised by the assessee.
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Customs
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2023 (1) TMI 910
Freezing of Bank Account of petitioner - non-release of the export shipment made by the petitioner - representation requesting for de-freezing of his bank account as per the provisions of the section 110A of the Customs Act, 1962 not been considered - HELD THAT:- No prejudice would be caused to the respondents, if the petitioner's representations seeking for release of the subject export consignment as well as for de-freezing the petitioner's bank account is considered on merits and in accordance with law, within a time frame to be fixed by this Court. This Court is not expressing any opinion on the merits of the petitioner's representations as it is contended by the learned Standing Counsel appearing for the respondents that Air Customs Investigating Unit is investigating the subject export consignment of the petitioner as well as the previous exports made by the petitioner - Since the petitioner has not given separate representation for de-freezing of its bank account by the respondents, this Court is of the considered view that the petitioner will have to send a fresh comprehensive representation to the respondents requesting them to release the subject export consignment of the petitioner as well as for de-freezing of the petitioner's bank account. The bank accounts and goods are directed to be released - petition disposed off.
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2023 (1) TMI 909
Jurisdiction of Customs Officers for seizure or recovery of material in a search carried out in a DTA - Smuggling - Clandestine movement of gold - search and seizure proceedings - HELD THAT:- Section 21 of SEZ Act deals with the notified offence or offence occasioning in an SEZ. The circumstances stated in the show cause notice are accepted as true and correct; it cannot be said that the subject violations happened in SEZ and were terminated in SEZ. Therefore, only the authorities under the SEZ Act have jurisdiction to act against the importer. In a situation as the present, this Court is of the view that for alleged unauthorized movement of goods/gold, the Development Commissioner etc., would have jurisdiction on the establishment and continuance of a unit in an SEZ and for importing goods/gold into DTA without paying customs duty, the Customs Department have jurisdiction on the information gathered in a DTA in the search carried by them. The CESTAT reasons that when two interpretations are possible, the interpretation favourable to a taxpayer must be accepted is entirely out of context. Jurisdiction, in fact, or law, irrespective of the nature of the enactment, has different manifestations. In the case on hand, the search and seizure have occasioned in DTA. Therefore, the Officers of the Customs Department, vis- -vis the alleged illegality noted against both the importer and the individuals who handled the gold moved out of SEZ, have jurisdiction under Act 1962. The denial of jurisdiction to the Officers of the Customs Department for offences or violations noticed in DTA would enhance the area of an SEZ and diminish the jurisdiction of the Act 1962. There are two aspects for independent and objective consideration: search and seizure in DTA and, conversely, an investigation into commissions or omissions in an SEZ. The circumstance is that 4 Kg of gold was imported by the AGPL/importer when it had authorization and permission. The imported gold was lying in an uncleared area at the Air Cargo Complex at Nedumbassery, Cochin Airport. Stock, goods or gold lying in an uncleared area cannot be confiscated on the ground that upon completion of import, the said goods could also be used for a purpose otherwise provided for by law - the Order-in-Original, in anticipation of the 4 Kg of gold being misused or moved out of CSEZ, has been confiscated. It is considered that the reasoning of the CESTAT, insofar as 4 kg gold is concerned, is contextual, correct and tenable. Hence, to this limited extent, the said finding does not warrant interference. Application disposed off.
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2023 (1) TMI 908
EPCG scheme - Failure to fulfill the conditions of the Notification as the Export Obligation Discharge Certificate [the EODC] was not submitted within the stipulated time - HELD THAT:- It is not in dispute that the license that was issued to the appellant under the EPCG Scheme mentions the export obligation period is twelve years. This fact has neither been disputed in the show cause notice nor in the two orders passed by the Additional Commissioner and the Commissioner (Appeals). The show cause notice, in fact, does not even mention the obligation period and only makes a general allegation that the appellant had failed to fulfill the conditions of the notification and submit the requisite evidence within the prescribed period regarding fulfillment of export obligation - It is non-submission of the Certificate of fulfillment of export obligation that has been stressed by the Additional Commissioner since the order holds that despite time having been granted to the appellant to submit the Certificate it was not submitted. It appears that show cause notice was issued to the appellant treating the total export obligation period to be eight years from the date of issuance of the license - It is also not disputed that the appellant had applied for the issuance of the Certificate on November 09, 2016 before the expiry of ten years but it was issued to the appellant by the DGFT only on December 09, 2016. The appellant cannot be blamed for delay of three days since the appellant had admittedly applied for issuance of the certificate on November 09, 2016. It cannot be said that the appellant had violated any of the conditions of the notification - Appeal allowed.
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Corporate Laws
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2023 (1) TMI 883
Validity of prosecution against the petitioner/director - post held by the petitioner on the date of filing the report - Non-furnishing of furnish fullest information and explanation by the Board of Directors in their Director s report with respect to the Auditors in their report on Balance Sheet for the year ending on 31st March, 2014 - rejection of prayer of the petitioner for discharge, inter alia, on the ground that the proceedings being Summons triable he is not empowered to direct discharge of the accused persons. What post was being held by the petitioner on the date of filing the report? - main contention of the petitioner is that he was not attached to the company in the financial year 2013-2014 and as such he is not liable in any manner what so ever - HELD THAT:- An Additional Director is a director having the same powers, responsibilities and duties as other directors. The only difference between them is regards to their appointing authority and their term of office - Though appointed on a temporary basis, an additional director is vested with the same powers of a director. Moreover, they are subject to all obligations and limitations of a director. They are also entitled to seek appointment as a permanent director at the Annual General Meeting. The additional director must utilize his/her powers in the best interest of the company and the shareholders. Many people claim that the ROC knows about this director, as the company had already filed DIR 12 at the time of his appointment as additional director. So, following regularization DIR 12 is not required to be filed, which is absolutely a wrong understanding. Since he is now a director, and not an additional director. Therefore, ROC must be informed by filing a new DIR 12 that the additional director has been regularized as a director in the Company - additional directors are on equal footing, in terms of, of power, rights, duties, and responsibilities, as other directors are. Yet, tenure of additional director is up to the date of forthcoming AGM unlike directors which are duly appointed by shareholders in the general meeting. If the company wishes to continue with an additional director beyond the AGM, then it will have to go for his/her regularization. Whether the petitioner is responsible/liable for the offence alleged? - HELD THAT:- In the present case the petitioner as seen from the documents was an Additional Director on the date the board report was filed. To counter the same evidence is required to be adduced during trial so also to decide as to whether the petitioner at the relevant time of filing the report was a Director, Additional Director or an Independent Director. The responsibility of an Additional Director being the same as that of a director (but different from an independent director) they remain responsible, as the statute provides for the same - Thus to quash the proceedings by exercising this Courts inherent powers would amount to an abuse of the process of Court and would also amount to serious miscarriage of justice. Application dismissed.
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Insolvency & Bankruptcy
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2023 (1) TMI 921
Fraudulent/wrongful trading - Constitutional Validity of Section 66(1) of the Insolvency and Bankruptcy Code, 2016 - defrauding the gullible creditors to siphon off public money - Jurisdiction in course of winding up of company against the persons responsible for fraudulent conduct of the business of the company - HELD THAT:- As evident from the precedence Section 339 or Companies Act, 2013 and pari material, the provisions of section 542 of Companies Act, 1956 was aimed at conferring jurisdiction in the course of winding up of company to proceed against the persons responsible for fraudulent conduct of the business of the company. Both these provisions were aimed at making such persons personally liable for such fraudulent trading to recouping losses incurred thereby and to relief the company of the liabilities incurred by fraudulent trading. That Section 66(1) also directed towards making such persons personally liable for such fraudulent trading to recouping losses incurred thereby and to provide that the NCLT can pass order holding such persons liable to make such contributions to the assets of the corporate debtor as it may deem fit. No power has been conferred on NCLT to pass such orders against other organizations/legal entities (other than corporate debtors) with whom such business was carried out against any person responsible in such other organizations/legal entities for carrying on business with corporate debtor. Regulation certified preferential or other transaction All the insolvency and bankruptcy Board of India (Insolvency resolution process for corporate persons) regulations 2016 stipulates strict time limits for formation of requisite action by the resolution professional by any transaction to be hit Sections 43, 45, 50 and 66 for making determination thereof under the intimation to the Board and also for applying to NCLT for appropriate relief - IBC contains adequate measures to make appropriate application by liquidator or resolution professional or by creditor or member or partner of corporate debtor for avoiding certain transaction under appropriate provisions of sections 43, 45, 47, and 50. It is clear from the language of section 66(1) that unlike application provided under section 43, section 45, section 50 and section 47 or avoiding of such transaction and dehors these provisions. An application contemplated exclusively under section 66(1) is not made for avoidance of any transaction. Even if fraudulent but to fix the liabilities of the persons reasonable for conducting the business of corporate debtor which is fraudulent or wrongful, that too an application made by resolution professional during the CIRP or a liquidation process. In SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT ] that the primary focus of the legislature to ensure revival and continuation of corporate debtor by protecting it from its own management and from a corporate by liquidation. Even its long title does not in any manner refer to liquidation which is only availed of as a last resort. If there is either no resolution plan or the resolution plan submitted are not upto the mark. The IBC is a beneficiary legislature which puts the corporate debtor back on its feet not being a mere recovery legislature for creditors. There is no arbitrariness, matchless manifest arbitrariness in section 66(1) of IBC to entertain the instant petition to declare the said provisions as ultra vires of Article 14 and unconstitutional as alleged or otherwise. There is no merit in the submission of the petitioner and the prayers made cannot be considered. Petition dismissed.
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2023 (1) TMI 920
Delay in filing of appeal - Time Limitation - Avoidance of transactions - extension of prescribed period in certain cases in respect of delay caused in filing of the appeal or application within the prescribed period - Section 5 of the Limitation Act, 1963 - HELD THAT:- In normal circumstances, as per the provision of Article 120 of the Limitation Act, 1963, after the death of Respondent No. 1 on 26.04.2021 the application for impleadment for LRs could have been filed up to 26.07.2021 but in the present case the death of Respondent was not within the knowledge of the Appellant (Liquidator) and it cannot also be presumed that he knew about his death until and unless some cogent evidence is produced rather the factum of the death was brought before the Tribunal as well to the notice of the Applicant for the first time on 12.07.2021 without disclosing the details of LRs of the Respondent No. 1. It has been urged by the Appellant that it tried to find out from the available record of the Corporate Debtor about the LRs of the deceased of R1 but when he could not find the same, filed the application i.e. I.A. No. 2693 of 2021 on 29.11.2021. The said application was ultimately decided on 24.08.2022 by this Tribunal and the information was given by Counsel for Respondent No. 1 to the Appellant on 08.09.2022 and thereafter, the application was filed on 12.09.2022. In the integrum, because of order of the Hon ble Apex Court, in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (3) TMI 497 - SC ORDER ] the period from 15.03.2020 to 28.02.2022 was excluded with further grace period of 90 days. In that manner, the limitation provided under Article 120 of the Limitation Act, 1963 became non-operative and can be stated to have again started from 28.05.2022 but during this period application i.e. I.A. No. 2693 of 2021 filed by the Appellant on 29.11.2021 for seeking the details of the LRs of Respondent No. 1 was pending which ultimately decided on 24.08.2022 without there being any fault on the part of the Appellant and as soon as when the particulars were provided by Counsel for Respondent No. 1 to the Appellant on 08.09.2022 through email the necessary application i.e. I.A. No. 3473 of 2022 was filed within four days. There are no delay in filing of the application and as Counsel for the Appellant has submitted that the Application for condonation of delay has been filed with abundant caution, in case there is any delay, the Appellant has been successful in providing the sufficient cause for condonation of delay - Ultimately result is that the application is allowed.
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2023 (1) TMI 907
Scope of Liquidation Estate - auction - immovable property being AC 44.65 Cents of Industrial Land at Nidadavole Village and Mandal, West Godavari District, Andhra Pradesh being unrelinquished, as communicated to the Liquidator - principles of Balance of Convenience - HELD THAT:- It transpires that the Liquidator through an E-mail on 06.09.2021 had claimed possession of the property to be handed over to him and that the Applicant / Appellant had failed to sell over the possession of the properties to and in favour of the Liquidator and hence, the Applicant / Appellant was perforced to prefer IA(IBC)/857(CHE)/2021 in CP/1053/IB/2018 before the Adjudicating Authority, (National Company Law Tribunal, Division Bench I, Chennai) seeking extension of Three Months period. This Tribunal on going through the impugned order passed in IA(IBC)/857(CHE)/2021 in CP/1053/IB/2018 by the Adjudicating Authority, (National Company Law Tribunal, Division Bench I, Chennai) dated 21.10.2022 is of the earnest opinion that the Adjudicating Authority, (National Company Law Tribunal, Division Bench I, Chennai) had taken into account of the Judgment / Decision rendered by this Appellate Tribunal and, ultimately, had directed the Applicant / Appellant to hand over the possession of Assets of the Corporate Debtor, being an immovable property, admeasuring Acres 44.65 Cents of Industrial Land at Nidadavole Village and Mandal, West Godavari District, Andhra Pradesh to the Liquidator, within a period of 7 Days on the date of receipt of this Order. The Adjudicating Authority, (National Company Law Tribunal, Division Bench I, Chennai) had directed the Applicant / Appellant to pay a sum of Rs.31,07,500/-, as Liquidation Cost to the Liquidator, as per the order passed by the Adjudicating Authority, (National Company Law Tribunal, Division Bench I, Chennai) dated 04.06.2021. The said Order is free from any material irregularity and does not suffer from any Patent Legality, in the eye of Law, as opined by this Tribunal. This Tribunal, is in Complete Agreement with the view arrived at by the Adjudicating Authority, (National Company Law Tribunal, Division Bench I, Chennai) in disposing of the aforesaid IA(IBC)/857(CHE)/2021 in CP/1053/IB/2018 dated 21.10.2022 and by issuing necessary Directions in the considered opinion, do not require any interference in the hand of this Tribunal, sitting in an Appellate Jurisdiction - Appeal dismissed.
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2023 (1) TMI 906
Maintainability of second application on the same cause of action - exactly similar application had earlier been filed as I.A. No. 3431-3433 of 2022 which was argued for sometime and withdrawn with liberty to avail any other remedy but for the remedy before this Tribunal - Prayer for revival and relisting of CA (AT) (Ins) No. 627 of 2019 and to adjudicate the same upon the questions of facts and law as raised therein, except upon the question of limitation - seeking to direct Respondent No. 2 not to proceed with the CIRP till disposal of present application - how a second application on the same cause of action is maintainable? HELD THAT:- Such a procedure cannot be followed as it is against the judicial propriety and public policy in as much as it will breed an unending litigation before the Courts of Law. Even otherwise, liberty was not granted by the Hon ble Supreme Court to the Applicants to file the application rather the Applicants themselves proposed to file a fresh application before this Tribunal and withdrew the application filed before the Hon ble Supreme Court. There are no reason to entertain the present application and hence the same is hereby dismissed.
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2023 (1) TMI 905
Withholding of professional fees of petitioner - whether the Fee for Professional Services, constituted as an Operational Debt? - reimbursement of Travelling Expenses, would not an amount of payment to Professional Fee - Invoice was not appreciated in proper Direction - HELD THAT:- Considering the fact that the Insolvency Bankruptcy Code, 2016, is a summary proceeding and the Code is an inbuilt and self-contained one and the Proceedings are not to be decided, like that of a Suit, before a Competent Civil Court, taking note of the fact that the Respondent, at any cost, is not accepting the case of the Appellant, in regard to the Fees required by him and the plea of the Respondent is not moonshine, this Tribunal, at this juncture, simpliciter deems it fit that directing the Appellant to resort to approach the Competent Forum for redressal of its grievances, in regard to the amount, claimed by the Appellant, for the services rendered, if he so desires / advised. This Tribunal is not inclined to interfere in the impugned order - Appeal dismissed.
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2023 (1) TMI 904
Service of order - listing of the application on the same day through email - before the application could have been decided, the impugned order was passed - opportunity for hearing not provided - violation of principle of audi alteram partem (principles of natural justice) - HELD THAT:- There is a total fallacy on the part of the Adjudicating Authority in passing the impugned order as it hits the salutary principle of audi alteram partem. The presence of the Appellant was shown in the order dated 01.09.2022 when the order was reserved and at the same time, the order of correction has been passed by the Adjudicating Authority when IA No. 4453 of 2022 was allowed on 22.09.2022 which means that the Appellant was not present when the matter was heard and order was reserved, therefore, there was no representation on behalf of the Appellant before the Adjudicating Authority so that the Appellant could have put forward its case against the admission of the application filed by the Respondent herein. The impugned order is set aside. The matter is remanded back to the Adjudicating Authority to decide the application again after giving an opportunity of hearing to the Appellant - appeal allowed.
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PMLA
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2023 (1) TMI 919
Money Laundering - generation of proceeds of crime or not - alleging perpetration of criminal activities in the sanction and disbursement of credit facility to the company - role of petitioner in the commission of offence - HELD THAT:- The requirement of projecting the proceedings of crime as untainted property may be one of the modes by which the offence is committed and is no longer a sine qua non for constituting the offence of money-laundering under Section 3 of the PML Act. The predicate offence against the petitioner is that he fraudulently sanctioned and disbursed the loan. The loan is, therefore, the proceeds of crime. It is necessary to notice that the scope of Section 3 is wide enough to cover all persons who 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 . It is clear that even a person who knowingly assists in any process or activity connected with the proceeds of crime would also be caught within the net of Section 3. In the case on hand, on a reading of the complaint, the allegation is that, but for the role played by the petitioner, the loans could not have been sanctioned and disbursed to A-1. Prima facie , these allegations would attract Section 3 of the PML Act. The conclusion have been arrived at in the light of a recent decision of the Supreme Court in DIRECTORATE OF ENFORCEMENT VERSUS PADMANABHAN KISHORE [ 2022 (11) TMI 53 - SUPREME COURT] , wherein, it was observed that By handing over money with the intent of giving bribe, such person will be assisting or will knowingly be a party to an activity connected with the proceeds of crime. Without such active participation on part of the person concerned, the money would not assume the character of being proceeds of crime. The relevant expressions from Section 3 of the PML Act are thus wide enough to cover the role played by such person. The case set up in paragraph 10.6 of the complaint is that, A-5 had sanctioned and disbursed the credit facilities/loan. But, for the alleged active participation and assistance of the petitioner/A-5 the money so disbursed would not have assumed the character of proceeds of crime. Consequently, it cannot be said that the alleged role played by the petitioner does not come within the net of the definition of proceeds of crime under Section 3 of the PML Act. There are no ground to interfere with the criminal prosecution of the petitioner/A-5 - petition dismissed.
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Service Tax
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2023 (1) TMI 918
Short payment of service tax - Renting of Immovable Property Services - clubbing of amount received by individual owner (39 individual owners) for renting of their immovable property - HELD THAT:- The rented property are owned by 39 individual in their name individually and separately and they had entered into lease agreement with the State Bank of India to provide their individual property collectively to the Bank through single lease agreement. The Appellants also placed on records a copy of Lease deed signed by each individual owner, copies of Municipal Tax Bills issued in the name of each owner separately. It is also found that in the present matter individual owner received the rent separately and independently. As per the payment terms, Bank paid different amount of rent to individuals as per their property. Therefore irrespective of associations of the property, the important aspect is that who are the parties in the agreement and who have received the payment on account of renting of immovable property and who is the service provider. The amount received by individual owner for renting of their immovable property cannot be clubbed for the purpose of service tax demand. Therefore, the demand is apparently not sustainable. It is very much brought out by the documents that the appellant is not the absolute owner of the rented property. The lease deed as well as the related documents shows that the property is owned by the individual owners and it is not disputed that the income by way of rent is received by individual owners separately and reflected in their income-tax returns separately. When the property is not owned by the appellant and they have not received the rent, the demand of service tax raised on the appellants alone, therefore, cannot be sustained. Appeal allowed.
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2023 (1) TMI 917
Refund claim - rejection on the ground that balance in the CENVAT register should not be taken into consideration for the purpose of grant of refund benefit and that certain input services were not considered for refund inasmuch as those services have no nexus with the output services provided by the appellant - HELD THAT:- The CBE C vide Circular No. 120/01/2010 dated 19.01.2010 has clarified that the closing balance of the previous quarter can be considered for utilization towards export as opening balance for the subsequent quarter. Establishment of nexus between the input services and the export of services - HELD THAT:- The Department has not initiated any proceedings for recovery of the irregular credit of input services under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 73 of the Finance Act, 1994. Since availment of CENVAT credit has not been questioned at the material time, subsequent claim of refund under Rule 5 on fulfillment of conditions laid down therein cannot be questioned by the Department at a later stage for denying the refund benefit. The issue arising out of the present dispute is no more res integra in view of the decisions of the Tribunal in the case of NESS TECHNOLOGIES (INDIA) PRIVATE LIMITED VERSUS COMMISSIONER OF SERVICE TAX DIVISIONV, MUMBAI [ 2015 (11) TMI 53 - CESTAT MUMBAI] , ACCELEYA KALE SOLUTIONS LTD. VERSUS COMMISSIONER, CGST, THANE [ 2018 (7) TMI 1217 - CESTAT MUMBAI] passed in the case of M/S. TPG CAPITAL INDIA PVT. LTD. VERSUS COMMISSIONER OF CGST, MUMBAI. [ 2019 (9) TMI 1592 - CESTAT MUMBAI] passed in the case of M/S M. NET PARTNER TECHNOLOGIES PVT. LTD. VERSUS COMMISSIONER OF C.G. ST, MUMBAI EAST [ 2020 (1) TMI 73 - CESTAT MUMBAI] . The ratio laid down in the said orders of the Tribunal is to the effect that while granting the refund benefit under Rule 5 ibid read with the notification issued thereunder, the Department cannot object to such claim of the assessee on the ground that there was no nexus between the input services and exportation of the output service. There are no merits in the impugned order, insofar as the Commissioner (Appeals) has denied the refund benefit to the appellant - appeal allowed.
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Central Excise
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2023 (1) TMI 882
Carry forward of Cenvat credit after the date of availment of exemption Notification No. 30/2004-CE dated 09.07.2004 - whether the said credit can be utilised for payment of duty - HELD THAT:- The entire case of the department is that since the appellant have availed the exemption Notification No. 30/2004- CE dated 09.07.2004, they are not entitled to carry forward the accumulated Cenvat credit as on date of exemption Notification. Accordingly, the same was not eligible for utilisation for payment of duty. In the facts of the present case the notification No. 30/2004-CE is admittedly a conditional one. In terms of strict provision of Rule 11(3) of Cenvat Credit Rules, 2004, the bar of lapsing of credit is applicable only when the assessee avail the absolute exemption notification. Therefore, in the present case exemption notification No. 30/2004-CE, being a conditional one, bar of lapsing of credit shall not apply. The issue was considered in the case of M/S PATODIA FILAMENTS PVT. LTD., SHIVKARAN CHOUDHARY VERSUS C.C.E. S.T., -VAPI (VICE-VERSA) [ 2019 (4) TMI 435 - CESTAT AHMEDABAD] where it was held that In the present case all the conditions enumerated under sub rule 3 (i) has been followed by the Appellant and he is not required to reverse the entire credit lying in balance on the date of opting notification No. 30/2004 CE dated 09.07.2004. Therefore, the balance credit is not liable to be reversed. For the same reason the credit utilised by him for clearance of finished goods or capital goods. The issue is no longer res integra - Appeal allowed.
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