TMI Tax Updates - e-Newsletter
January 24, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Validity of grant of anticipatory bail by the lower court - fake bills were made for the purchase of the cigarettes - Reversal of ITC - The respondent / accused has clean antecedents and has been co-operating in investigation and has given his statement under Section 70 of the CGST Act. - Both petitions filed by the Directorate General of GST Intelligence (DGGI) seeking cancellation of respondent's anticipatory bail and alleging violation of bail conditions are dismissed. - HC
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GST:
Seeking grant of anticipatory bail - fake bills were made for the purchase of the cigarettes - reversal of ITC - They were evading summons until the grant of anticipatory bail - not entitled to be admitted on anticipatory bail - The court's ruling emphasizes the seriousness of economic offenses and the necessity to consider the larger impact on the public exchequer and taxpayer interests when deciding on matters of anticipatory bail. - HC
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GST:
Classification of Rolls made of Polyester, Nylon Taffeta, Satin etc. - The Rolls made of Polyester, Nylon Taffeta, Satin, etc., with widths ranging from 10 millimeters to 810 millimeters, as described in Table 'A', are classified as articles similar to label of textile material in strips under Chapter Tariff Heading (CTH) 5807, specifically under sub-heading 5807 1020 of the First Schedule to the Customs Tariff Act, 1975. - AAR
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Income Tax:
Additions on account of profit on the sale of machinery of a closed-down unit. - The court held that reducing the block assets by the amount representing the sale of some assets was in accordance with Section 43(6)(c)(i)(B) of the Income Tax Act, 1961. Therefore, the deductions were allowed, and these questions were answered in favor of the assessee and against the revenue. - HC
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Income Tax:
Taxability of salary received by non-resident from an Indian company - The ITAT examined the taxability of this income under Sections 5, 9, and 15 of the Income Tax Act. It was observed that since the assessee rendered services outside India and was a non-resident, the salary and allowances could not be taxed in India. - AT
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Income Tax:
Validity of re-assessment proceedings - jurisdiction to issue notice - Validity of notice u/s 143(2) as issued by the ITO, Ward 33(2)(3) who was not empowered - ITO who issued the jurisdictional notice u/s 143(2) had no jurisdiction and infact was not empowered to make the assessment - inherent defect is not curable - AT
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Income Tax:
Revision u/s 263 - assessment of trust - The income generated by the society, including rental income, was used for its primary objective of education. Therefore, the income was eligible for exemption under Section 10(23C)(vi) of the Act. - the order of the ld. Assessing Officer is neither erroneous nor prejudicial to the interest of the revenue. - AT
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Income Tax:
The Tribunal reinforced the legal principle that admissions made during a survey have limited evidentiary value unless supported by corroborative material. Additionally, for the deeming provisions of Sections 69 and 69A to apply, there must be tangible material demonstrating unexplained investments or cash, and a direct nexus to the assessee's known sources of income must be absent. - AT
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Customs:
Classification of imported goods - when a particular laboratory does not have the testing facilities, the test report of the said laboratory without having facilities of testing the goods cannot be relied upon to decide the classification of the goods. - the appellant's classification of the goods (likely as natural Calcite Powder under CTH 25309030) accepted. - AT
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Indian Laws:
Polluting the stream of administration of justice - contempt of court - husband had filed fabricated document to oppose the prayer of his wife seeking transfer of matrimonial proceedings - The principle of "satya" (truth) is emphasized as a core value in the justice-delivery system. Litigants attempting to deceive the court or pollute the stream of justice are not entitled to relief, interim or final. - SC
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Indian Laws:
Compulsory / premature retirement - Doubting integrity and expressing discontent about the functioning of the Petitioner - The petitioner herein has been given fair opportunity to file his representation against the order of compulsory retirement. Moreover, the First Review Committee, the Representation Committee as well as the Second Review Committee have gone through the entire service record of the petitioner. - There are no merit in the present petition. - HC
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IBC:
CIRP - Principles of natural justice - refusal to give another opportunity to the Appellant to file a reply and the right to reply involving settlement discussions - since the Adjudicating Authority has given sufficient opportunity to the Appellant to file a reply which has not yet been filed, we see no error in the order impugned refusing to give another opportunity to Appellant to file a reply. - AT
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Service Tax:
Refund of the CENVAT Credit - Relevant date - Apex court dismissed the appeal of the revenue against the decision where: he Tribunal has reaffirmed the principle that for exported services, the relevant date for claiming a refund of CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004, is the date of realization of foreign exchange, not the date of the export invoice - SC
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Central Excise:
Expiry of the extended period of limitation - Whether the shows cause notice is barred by limitation of five years also? - In reference to the demand at hand, the entire credit was availed in July, 2008. Therefore, five years should be computed from July, 2008 and according to Rule 8 to the Central Excise Rules, 2002 for date of payment of duty is 6th of every month. Thus, five years commence from 6-8-2008 to 6-8-2013 and show cause notice issued on 7-8- 2013, which is barred by limitation of one day. - HC
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Central Excise:
Maintainability of appeal before High Court - appropriate forum - it clearly transpires that one of the issues involved relates to determination of valuation of excisable goods and/or rate of duty of excisable goods, amongst other things, for the purpose of assessment. - it falls within the exclusive jurisdiction of the Apex Court under Section 35L of the Act - HC
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VAT:
Process amounting to manufacture - blending and packing of tea - after the processing tea remained tea - mere mixing of different types of tea only for the purpose of marketing as tea and not a particular type of tea does not involve any process/manufacture within the meaning of the definition. - SC
TMI Short Notes
Articles
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2024 (1) TMI 977
Validity of grant of anticipatory bail by the lower court - fake bills were made for the purchase of the cigarettes - Reversal of ITC - HELD THAT:- In Choodamani Parmeshwaran Iyer [ 2023 (7) TMI 1008 - SUPREME COURT] , the Supreme Court has observed that if any person is summoned under Section 69 of the CGST Act for the purpose of recording his statement, provisions of Section 438 of the CrPC cannot be invoked. In the said case, the accused persons were not appearing before the authorities despite repeated summons being issued to them and had filed an application seeking anticipatory bail. It was in those circumstances that the Supreme Court made the aforesaid observations. In the present case, it has rightly been contended on behalf of Jitender Kumar that one of the co-accused persons, Manish Goyal, was arrested by the DGGI and therefore, there was a genuine apprehension of arrest. From the material on record, it appears that Jitender Kumar was not the main player involved in the GST fraud and was acting on instructions from the main accused Chirag Goel and Chaman Goel. It is the case of the DGGI itself that out of the receipt of GST refund of Rs.198 crores by M/s Harsha International, Rs.195 crores were transferred to M/s Radiant Traders. Even otherwise, Jitender Kumar has clean antecedents and has been co-operating in investigation and has given his statement under Section 70 of the CGST Act. Though, this Court is confirming the anticipatory bail granted to Jitender Kumar, he is warned that in the future, if he does not appear pursuant to summons issued by the DGGI, his anticipatory bail would be liable to be cancelled. However, the DGGI shall give a notice of at least 48 hours to appear pursuant to the issuance of summons - Liberty is given to the DGGI to seek cancellation of anticipatory bail in the event Jitender Kumar fails to appear in a timely manner pursuant to summons issued. The present petitions are dismissed.
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2024 (1) TMI 976
Validity of grant of anticipatory bail by the lower court - fake bills were made for the purchase of the cigarettes - reversal of ITC - HELD THAT:- In Choodamani Parmeshwaran Iyer [ 2023 (7) TMI 1008 - SUPREME COURT ], the Supreme Court has observed that if any person is summoned under Section 69 of the CGST Act for the purpose of recording his statement, provisions of Section 438 of the CrPC cannot be invoked. In the said case, the accused persons were not appearing before the authorities despite repeated summons being issued to them and had filed an application seeking anticipatory bail. In the present case, it has rightly been contended on behalf of Chirag Goel and Chaman Goel that one of the co-accused persons, Manish Goyal was arrested by the DGGI and therefore, there was a genuine apprehension of arrest. On the basis of the material on record, it appears in the present case that Input Tax Credit has been availed by M/s Radiant Traders on procurement of cigarettes which have been shown to be used as raw material to manufacture smoking mixture . It is hard to believe that tobacco from high value inputs i.e., cigarettes is used to manufacture a low value output i.e., smoking mixture . It appears that this was done only to fraudulently obtain Input Tax Credit - In the present case, the accused persons are involved in fraudulently obtaining Input Tax Credit worth Rs. 200 crores by projecting transactions only on paper and without the actual purchase or sale of goods. As a result, they have duped the government exchequer and the taxpayers of a huge amount of money. Considering the aforesaid facts and circumstances, including the fact that Chirag Goel and Chaman Goel are the beneficiaries in an economic fraud involving a large corpus and were evading summons until the grant of anticipatory bail, the accused Chirag Goel and Chaman Goel were not entitled to be admitted on anticipatory bail. The impugned order has been passed without appreciating the material on record and cannot be sustained and hence is set aside. Application disposed off.
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2024 (1) TMI 975
Seeking grant of regular bail - issue of fake and fictitious invoices - evasion of tax by doing business only on paper - present petitioner submits that final report under Section 173 Cr.P.C. has already been presented by the police - HELD THAT:- As per the record, the petitioner was arrested in the present case on 26.08.2023 and is behind the bars for the last about 04 months. Final report has already been presented before the Competent Court. Even three more cases were ordered to be registered against the present petitioner. However, the petitioner is on bail in all the cases registered against him and in the considered opinion of the Court, further custody of the petitioner will not serve any meaningful purpose. Without commenting any further on the merits, the present petition is allowed and the petitioner is ordered to be released on bail on his furnishing bail bonds/surety bonds to the satisfaction of the learned trial Court/Duty Magistrate/CJM concerned.
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2024 (1) TMI 974
Classification of Rolls made of Polyester, Nylon Taffeta, Satin etc. which are available with width ranges from 10 millimeter to 810 millimeter with printable feature - Rate of IGST - to be classified under CTH 580710 of the First Schedule to the Customs Tariff Act, 1975 or not - entry no. 153 of Schedule II of Notification 1/2017 -IGST (Rate) 28 June 2017 - HELD THAT:- The HSN Explanatory notes to CTH 58.07, subject to the conditions specified, cover the labels of any textile material. These include labels of a kind used for marking wearing apparel, household linen, mattresses, tents, soft toys, or other goods. They are utilitarian labels bearing individual inscriptions or motifs. Such labels include, inter alia, commercial labels bearing the trade name or trade mark of the manufacturer or the nature of the constituent textile ( silk', viscose rayon , etc.) and labels used by private individuals (boarding school pupils, soldiers, etc.) to identify their personal property; the latter variety sometimes bear initials or figures or comprise sometimes a framed space to take a hand written inscription. Condition that these products must not be embroidery. Goods will not have embroidery on them. Due to this explanation in the HSN explanatory notes the proposed imports will get covered under exclusion clause of CTH 5806. In the instant case the goods will be imported without printing of labels on them. Applicant has argued that the textiles labels printed or otherwise are classifiable under HSN 5807 10. Various courts in a plethora of cases have held that HSN explanatory notes have a persuasive effect in deciding the matters of classification. Keeping in view the observation of Apex Court in various decisions referred in forgoing paras as well as the decision of High Court decision in case of BIJAY KUMAR PODDAR VERSUS UNION OF INDIA [ 1999 (9) TMI 106 - HIGH COURT AT CALCUTTA] , it is found that the said products have to be considered as articles similar to labels of textile materials in strips and accordingly are classifiable under heading CTH 58.07.1 do not find any grounds to disagree with the High Court decision in case of M/s Bijay Kumar Poddar vs Union of India on the issue of classification in the instant case. Thus, the Rolls made of Polyester, Nylon Taffeta, Satin etc. which are available with width ranges from 10 millimeter to 810 millimeter with printable feature more specifically described in Table 'A' (supra) collectively referred to as 'Products' proposed to be imported by the applicant merit classification as articles similar to label of textile material in strips under CTH 5807 specifically under sub-heading 5807 1020 of the First Schedule to the Customs Tariff Act, 1975 and also said 'products' are classifiable at 8-digit level under CTH 5807 1010 (Of cotton), 5807 1020 (Of man-made fibre) 58071090 (Other) according to their composition and characteristics and said 'products' are covered by entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) 28 June 2017.
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Income Tax
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2024 (1) TMI 973
Addition u/s 68 - assessee has failed to explain the nature and source of the fund/FCCB proceeds - AO has treated proceeds of FCCB as deemed income of assessee on the ground that assessee has not supplied information about details of actual bond holders and ultimate beneficiaries - HELD THAT:- Tribunal in the case of Reliance Communication [ 2013 (2) TMI 387 - ITAT MUMBAI] while deciding the issue came to a conclusion that assessee was only required to prove the identity, capacity and creditworthiness of the entity that subscribed to its issue of FCCB, which is not in doubt. Assessee having received the amount of subscription of the fund from the said entity, has also not been denied. The fact that global certificate in respect of the bonds was also issued to the said entity, is also not disputed and, therefore, the Tribunal accepted that assessee has adequately discharged the onus cast upon it in terms of Section 68 - Tribunal concluded that assessee did not have an obligation to prove the identity, capacity and creditworthiness of the actual subscriber, i.e., the sources source. The said order in the case of Reliance Communication Ltd passed by the Tribunal was impugned by the revenue in this court u/s 260A of the Act. The same issue as raised in case at hand was raised therein. The appeal was dismissed, against which an SLP was preferred by the revenue. The SLP also came to be dismissed. Tribunal in the case at hand has concluded and rightly so that the facts in the case of Reliance Communication Ltd are similar to assessee s case in the case at hand and the ground raised by revenue were also identical. Therefore, on facts the Tribunal correctly came to the conclusion that the nature and source of funds of FCCB is fully explained and the addition under Section 68 of the Act made by the AO in the reassessment proceedings was not correct. Decided in favour of assessee.
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2024 (1) TMI 972
Nature of receipts - subsidies - revenue or capital receipts - Whether Tribunal erred by not considering that subsides which may be used freely, are operational subsidies and not capital subsides and thus the same are taxable as revenue income? - HELD THAT:- We find that this issue has been decided in favour of the revenue and against the assessee by a judgment and order in Birla Corporation Limited [ 2011 (7) TMI 1171 - ITAT KOLKATA ] Following the aforesaid judgment, the substantial question of law No. 1, as afore-quoted, is answered in favour of the revenue and against the assessee. Disallowance of deduction of proportionate amount of lease hold land written off - HELD THAT:- The amount paid by the assessee was determined by the Collector in terms of the statutory provision of Rajasthan Revenue Act read with the Rajasthan Land Acquisition Act. The event to pay compensation arose to the assessee only on account of damage caused to the surface of the land falling in mining lease area during mining operation/business operation. There was no requirement to pay had there been no damage caused to the surface of the land by mining/business operation. Thus, the payment in question made by the respondent/assessee was in the nature of expenditure for carrying out business operations. No interest in land has been acquired by the respondent/assessee by payment of such compensation. Thus, the payments are in the nature of incidental expenditure to conduct the mining and business operation. Therefore, the expenditure so incurred by the respondent/assessee is revenue in nature. Consequently, the CIT(A) and the Income Tax appellate Tribunal have not committed any error of law to hold the aforesaid expenditure as revenue in nature and accordingly allowed the deduction - substantial question of law no. 2 is answered in favour of the assessee Profit on sale of machinery of a closed down unit - Treatment of accounting profit from sale of certain depreciable fixed assets chargeable of tax on the basis that the accounting treatment - Whether it cannot effect the operation of the statutory provisions contained in Section 43(6) of the said Act and for the purpose of income tax the block of assets concept was followed as per the statutory provisions? - HELD THAT:- Reducing the block assets by the amount in question representing the sale of some of the assets out of the block assets is in terms of the afore-quoted provisions of Section 43(6)(c)(i)(B) of the Act, 1961 which permits reduction of money in respect of any asset falling within that block which is sold or discarded or demolished or destroyed during the previous year together with amount of scrap value, if any, so, however, that the amount of such deduction does not exceed the written down value as so increased. The deduction by the amount in question is undoubtedly under the aforesaid provisions of Section 43(6)(c)(i)(B) of the Act, 1961. Therefore, the CIT(A) and the Income Tax Appellate Tribunal have not committed any manifest error of law to reduce the sale proceeds from the written down value and allowed the depreciation on reduced written down value. The substantial question of law nos. 3 and 4 are answered in favour of the assessee and against the revenue.
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2024 (1) TMI 971
Black Money - Validity of summons issued by Magistrate - territorial jurisdiction of the Magistrate - Accused committed offence under Section 50 of the Act - Petitioner/accused is resident of Mumbai. Complaint is lodged to the learned Magistrate sitting at Panaji - non-compliance of sub section (1) of Section 202 of Cr.P.C. before issuing process/summons - HELD THAT:- Magistrate Compliant is lodged under Section 200 read with Section 50 of the Act. Accused/petitioner is resident of Mumbai that is beyond the jurisdiction of the concerned Magistrate. There is no material to show that Magistrate before issuing process, complied with mandatory requirement of sub-section (1) of Section 202 of Cr.P.C. thus it is clear that learned Magistrate without compliance of such mandatory provision, issued process against the accused. In view of the above observations of the Apex Court in case of Odi Jerang, such order cannot be sustained and accordingly order needs interference. The impugned order of issuing summons to the accused is hereby quashed and set aside. However, matter is remanded to concerned Magistrate for compliance of provisions under sub section (1) of Section 202 of Cr.P.C. before issuing summons.
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2024 (1) TMI 970
Revision u/s 263 - income surrendered during survey operation was not verified in pursuance to the provision of section 69 r.w.s. 115BBE - PCIT held that the assessment has been framed u/s 143(3) of the Act without verification with respect to undisclosed income offered by the assessee in pursuance to the provisions of section 69 r.w.s. 115BBE of the Act which is erroneous and causing prejudice to the interest of revenue - whether there was any inquiry conducted by the AO during the assessment proceeding qua the income offered by the assessee during the survey operation? - HELD THAT:- It is transpired that there was application of mind by the AO during the assessment proceedings. Accordingly, it cannot be said that the assessment has been framed by the AO without conducting inquiries. As such, we hold that the AO framed the assessment after necessary inquiries with respect to the income surrendered by the assessee during the survey operation conducted u/s 133A of the Act. The assessee in the statement recorded during the survey operation has also accepted that it has received onmoney for its real estate project - Due application of mind by the AO during the assessment proceedings and therefore assessment cannot be held as erroneous in so far prejudicial to the interest of revenue on account of non-verification. PCIT in his order has referred the explanation 2 to section 263 of the Act, in holding that the necessary inquiries were not carried out by the AO during the assessment proceedings. However, we find that the Ld. PCIT in the notice issued u/s 263 of the Act has nowhere made any reference to the explanation 2 to section 263 of the Act, and therefore we hold that the Ld. PCIT erred in holding assessment order as erroneous and prejudicial to the interest of Revenue after referring to the explanation 2 of section 263 of the Act. To tax any item of income/ expenditure, unaccounted investment at the specific rate r.w.s. 115BBE of the Act, it is necessary to classify the income under the head deeming provision under section 69, 68, 69B etc. In the present case, the income surrendered was to be classified u/s 69 - As per the direction of the Ld. PCIT, however, we find that the Ld. PCIT has nowhere pointed out any contravention that the income surrendered by the assessee falls within the provision of section 69 of the Act. As such, the assessee in the present case was able to justify the source of income surrendered during survey operation and therefore we are of the view that the same cannot be treated as deemed income u/s 69 of the Act. Once the income goes out of the preview of the deeming provision, the provision of section 115BBE of the Act, cannot be applied. We note that the AO has taken one of the impossible view by treating the income offered during survey operation as income under the head business and profession. The Ld. PCIT cannot substitute the view taken by the AO as per his understanding of facts of the case - Decided in favour of assessee.
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2024 (1) TMI 969
Taxability of salary received by non-resident from an Indian company - Salary income accrued in India - addition on account of salary and allowances as the assessee did not furnish tax residency certificate (TRC) - assessee was an employee of an Indian company, deputed to work in a project awarded by IAEA, Vienna, Austria and stationed at Vienna and is a non-resident - HELD THAT:- As per the provision of Section 9 (1)(ii), the income earned under head Salaries is taxable in India if it is earned in India. The explanation issued for removal of doubts declares that salaries if it is earned meets services rendered in India. In the instant case the assessee neither had any rest period nor leave period which is preceded and succeeded by the services rendered outside India. Since, the assessee has rendered services outside India, the salary cannot be taxable in India. As per the definition the salary paid or the advances received are to be included in the total income of the person when the salary becomes due. From the concurrent reading of Section 5 dealing with scope of total income, Section 15 dealing with computation of total income under the head salary and chargeability thereof and Section 9 dealing with income arising or accruing in India with reference to the salaries and the services rendered in India, we hold that no taxability arises on the salary/allowances received by the assessee since the assessee is a non-resident and has rendered services outside India. Appeals of the assessee are allowed.
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2024 (1) TMI 968
Validity of re-assessment proceedings - jurisdiction to issue notice - Validity of notice u/s 143(2) as issued by the ITO, Ward 33(2)(3) who was not empowered - HELD THAT:- As decided in Ashok Devichand Jain [ 2022 (3) TMI 1466 - BOMBAY HIGH COURT] as also dealt with the Instruction No.1/2011 dated 31/01/2011 issued by the CBDT which is also under consideration before us and notice u/s 148 of the Act is also a statutory and jurisdictional notice and, therefore, goes to the root of the assessment. The Hon ble High Court has clearly held that ITO who had issued the notice u/s 148 of the Act had no jurisdiction over the petitioner. The notice u/s 148 of the Act is a jurisdictional notice and any inherent defect therein is not a curable one. We further observe that Tribunal in the case of Ketan Tokershi Shah [ 2023 (8) TMI 874 - ITAT MUMBAI] also dealt with the identical issue and the Instruction No.1/2011 as well and following the judgment in the case of Ashok Devichand Jain vs UOI Ors [ 2022 (3) TMI 1466 - BOMBAY HIGH COURT] held the assessment completed u/s 143(3) of the Act by issuing notice u/s 143(2) of the Act by the DCIT, Central Circle-2, Thane as without jurisdiction and consequently quashed the assessment. We further observe that the jurisdictional co-ordinate bench in the case of DCIT Vs Parmar Built Tech [ 2022 (9) TMI 1547 - ITAT MUMBAI] also dealt with the identical issue and by following the judgment of Ashok Devichand Jain (supra), quashed the assessment order in the identical facts. As observe that in the case of Bhagyalaxmi Conclave Pvt Ltd [ 2021 (2) TMI 181 - ITAT KOLKATA] also dealt with the notice issued u/s 143(2) of the Act and ultimately held the notice issued by the DCIT as defective and consequently quashed the assessment by holding that the assessing authority, who passed the order u/s 143(3) i.e. DCIT-13(1), Kolkata has not issued notice u/s 143(2) of the Act and also for the reason that the jurisdiction of these cases lies with the ITO and not the DCIT. It is trite to say that as per dictum in the case of ACIT VS Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] the notice under section 143(2) of the Act is mandatory for making the assessment and therefore the same is required to be issued by the Assessing Officer, who has jurisdiction and is empowered to issue the notice under section 143(2) of the Act and to make the assessment. Hence, considering the peculiar facts and circumstances in totality specific to the effect ITO who issued the jurisdictional notice u/s 143(2) had no jurisdiction and infact was not empowered to make the assessment, and therefore respectfully following the dictum laid down by Hon ble High Court in Ashok Devichand Jain case (supra) to the effect that inherent defect is not curable , we do not have any hesitation to quash the assessment proceedings. Consequently, the assessment order itself is quashed.
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2024 (1) TMI 967
Revision u/s 263 - assessment of trust - CIT(E), noticed that the rental income earned during the year is not from carrying out educational activity and only the income which is earned from carrying out educational activity is eligible for exemption u/s 10(23C)(vi) and since the ld. AO has not examined this aspect, the order of the AO is erroneous and prejudicial to the interest of the revenue - HELD THAT:- We notice that buildings constructed by the assessee are from the funds generated by carrying out educational activities and other capital receipts received from time to time given towards the corpus for construction of buildings for imparting education. There are nearly 1500 students and 400 staffs on the payroll of the assessee society. During the year under consideration there was decrease in the flow of students and some part of the buildings remained vacant, however, the fixed expenditure were being incurred regularly. It is claimed by the assessee that to cover up such expenditure, the need was felt to give the building on rent and to earn some revenue and with this intention, the buildings were given on rent. This exercise by the assessee society was for the object of the society and to carry out the activity of education at the institutions. It has been submitted that all these details have been submitted before the AO and also reliance was placed on various judgements including that of DIT(Exemption) vs. Sahu Jain Trust [ 2011 (3) TMI 1355 - CALCUTTA HIGH COURT] as well as the judgment of Madras Stock Exchange Ltd. [ 1976 (4) TMI 47 - MADRAS HIGH COURT] and since two views were possible on the issue in challenge of which one was in favour of the assessee, the ld. Assessing Officer adopted the same considering the judgement of the Hon ble Jurisdictional High Court and allowed the benefit of Section 10(23C)(vi) As decided in New Noble Educational Society [ 2022 (10) TMI 855 - SUPREME COURT] held that if an educational institution has earned income from letting out of properties and utilisation of infrastructure for conducting training programs and seminars such income cannot be considered as income earned incidental to education and, therefore, would be out of the ambit of Section 10(23C)(vi) of the Act. However, held that the judgement will operate from 19/10/2022 and onwards. Thus it brings us to the conclusion that prior to the judgement of the Hon ble Apex Court in the case of New Noble Educational Society (supra), the ratio laid down by the Hon ble Jurisdictional High Court in the case of DIT(Exemption) vs. Sahu Jain Trust (supra), will apply with full force in favour of the assessee and, therefore, even if some rental income was earned with the intention of applying it for charitable purpose and educational activity, the ld. Assessing Officer was justified in accepting the claim of the assessee treating the gross receipts having been earned from carrying out educational activity. Thus, we are of the considered view that the order of the ld. Assessing Officer is neither erroneous nor prejudicial to the interest of the revenue. Accordingly, the impugned order u/s 263 of the Act passed by the ld. CIT(E) is quashed and that of the ld. Assessing Officer u/s 143(3) is restored. Decided in favour of assessee.
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2024 (1) TMI 966
Income surrendered during the course of survey - addition of excess cash, excess stock and unexplained advances found - deemed income u/s 69/69A and to be taxed as per provisions of Section 115BBE - HELD THAT:- Difference in stock - Stock physically found has been valued and then, compared with the value of stock so recorded in the books of accounts and the difference in the value of the stock so found has been offered to tax in the statement so recorded of the assessee. The statement of the assessee thus stands corroborated by the stock physically found at the time of survey. There is also no dispute that there is a commonality in the stock so found and as recorded in the books and in absence of which, the comparison would not have been possible and difference would not have been worked out. The Revenue has not pointed out that the excess stock has any nexus with any other activities other than the business of purchase and sale of chicken, fish and goats being carried on by the assessee. In the instant there is no physical distinction between the accounted stock and unaccounted stock. No such physical distinction was found by the Revenue either. We therefore find that the difference in stock so found out by the authorities has no independent identity and is in terms of value terms only and thus part and parcel of entire stock, therefore, it cannot be said that there is an undisclosed asset which existed independently and thus, what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset and the difference should thus be treated as business income. The income surrendered during the course of survey cannot be brought to tax under the deeming provisions of section 69A of the Act and the same has to be assessed to tax under the head business income as rightly offered by the assessee in the return of income. In absence of deeming provisions, the question of application of section 115BBE doesn t arise and normal tax rate shall apply. The AO is thus directed to assess the income under the head Income from Business/profession and apply the normal rate of tax. Excess cash found physically during the course of survey - Explanation of the assessee that excess cash so found is out of unrecorded sales transaction has not been disputed by the AO. There is a difference between the unrecorded transactions and the unexplained transactions. Once the assessee has explained that the unrecorded cash is out of unrecorded sale transactions, in absence of anything contrary on record in terms of any other activity other than business activity of the assessee, the deeming provisions cannot be attracted. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, the income surrendered during the course of survey cannot be brought to tax under the deeming provisions of section 69A of the Act and the same has to be assessed to tax under the head business income as rightly offered by the assessee in the return of income. In absence of deeming provisions, the question of application of section 115BBE doesn t arise and normal tax rate shall apply. The AO is thus directed to assess the income of Rs 9,96,000/- under the head Income from Business/profession and apply the normal rate of tax. Unexplained advances - There is no tangible material in possession of the Revenue which demonstrate that the assessee has undertaken any such transactions with the so called persons so mentioned in the diary seized during the course of survey. The nature of transactions, the identity of the persons and the date of entering into such transactions are completely absent in the instant case. Even during the course of assessment proceedings, the AO vide show-cause dated 10/02/2021 has asked the assessee to furnish specific particulars of the transactions in terms of particulars of the persons, the date, the amount and mode of making such advances which demonstrate that the AO was not in possession of any tangible material in his possession found either during the course of survey or during the assessment proceedings. Therefore, it is a case where basis the statement of the assessee recorded u/s 131 during the course of survey on a standalone basis and without any corroborative evidence, an incorrect inference has been done by the Assessing officer that there are unrecorded advances made by the assessee. As we have held above, the statement u/s 131 on standalone basis without any corroborative material has no evidentiary value. The assessee has proved from the contents of the diary that the surrender was made on basis of incorrect appreciation of facts and therefore, incorrect and unwarranted and cannot be justified by any stretch of imagination. The entries in the diary are clearly incomprehensible in terms of certain minimum particulars to establish any authenticity of the transactions so claimed to be undertaken by the assessee or corroborated with other material found during the course of survey and/or post survey proceedings which is clearly absent in the instant case and therefore, cannot be made basis of addition in the instant case. In view of the prayer so made and relief so sought, and given that the assessee has suo-moto offered a sum of Rs 35 lacs while filing his return of income and has paid taxes by way of advance tax and self assessment thereon, no interference is called for as far as amount of Rs 35 lacs disclosed in the return of income and taxes paid thereon is concerned. Appeal of the assessee is allowed.
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Customs
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2024 (1) TMI 965
Classification of imported goods - whether goods imported by the appellant is classifiable as natural Calcite Powder under CTH 25309030 under the notification No. 46/2011-Cus dated 01.06.2011 as claimed by the appellant or the goods is precipitated Calcium Carbonate Powder under CTH 28365000 with denial of notification No. 46/2011-CUS as contended by the revenue? The CRCL, Kandla has tested the goods and provided the report but admittedly the said laboratory did not have the facility for testing the goods in question. HELD THAT:- It is admitted that at the relevant time when the CRCL, Kandla has under taken the testing of imported goods in question i.e. Calcite Powder the said laboratory did not have the facilities to test such product. This Tribunal considering the very same fact came to conclusion that, when a particular laboratory does not have the testing facilities, the test report of the said laboratory without having facilities of testing the goods cannot be relied upon to decide the classification of the goods. In the relevant judgment in the case of GAURAV LUBRICANTS INDUSTRIES PRIVATE LIMITED VERSUS C.C. -AHMEDABAD [ 2023 (11) TMI 1209 - CESTAT AHMEDABAD] where it was held that Since the test report of CRCL Vadodara/Delhi cannot be accepted the declaration made by the appellant in respect of nature of goods, classification and also valuation are found to be absolutely correct. In view of the above decision, it can seen that it was consistently held by this Tribunal that if a particular laboratory did not have the facility to test a product and if such laboratory test the same product the test report of such product cannot be relied upon for deciding the classification. Accordingly in the present case also being the same fact involved that the Kandla, CRCL did not have the facility to test calcite powder, the entire case based on the test report of CRCL, Kandla will not sustain. The impugned order is set aside - Appeal is allowed.
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Insolvency & Bankruptcy
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2024 (1) TMI 964
CIRP - Principles of natural justice - refusal to give another opportunity to the Appellant to file a reply and the right to reply involving settlement discussions - HELD THAT:- It is not needed to enter into emails sent by the parties since the Adjudicating Authority has given sufficient opportunity to the Appellant to file a reply which has not yet been filed, we see no error in the order impugned refusing to give another opportunity to Appellant to file a reply. However, it shall be open for the Appellant to make submissions before the Adjudicating Authority and with the leave of the Adjudicating Authority may also file written submissions. There is no merit in the Appeal - The Appeal is dismissed.
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Service Tax
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2024 (1) TMI 963
Refund of the CENVAT Credit - Relevant date - time limitation as provided in section 11B of CEA - the Tribunal [ 2020 (5) TMI 449 - CESTAT NEW DELHI] has reaffirmed the principle that for exported services, the relevant date for claiming a refund of CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004, is the date of realization of foreign exchange, not the date of the export invoice. - HELD THAT:- There are no reason to interfere with the impugned judgment and order passed by the Custom Excise Service Tax Appellate Tribunal. The civil appeal is accordingly dismissed.
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2024 (1) TMI 962
Principles of natural justice - appeal of the department allowed ex-parte - order passed without affording an opportunity of hearing to the appellant - exemption to Health Care Services - HELD THAT:- The Ld. Commissioner (Appeals) has allowed the appeal of the department ex-parte without giving adequate and proper opportunity of hearing to the appellant - the Commissioner in para 4 only mentioned the date of personal hearing but did not record the fact that hearing notices were served on the appellant and in spite of service of the notice the appellant did not appear. Further, the department has also not been able to establish the actual service of notice of hearing by Commissioner (Appeals). Since, the order was passed without affording an opportunity of hearing to the appellant in spite of the fact that Original Authority has allowed the claim of the appellant. This case needs to be remanded back to the Commissioner (Appeals) with a direction to decide the matter afresh on merits after giving proper and adequate opportunity of hearing to the appellant - Appeal allowed by way of remand.
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2024 (1) TMI 961
CENVAT Credit - exempted service namely cash credit, overdraft facilities, discounting of bills, interest on loan etc. - appellant has availed Cenvat credit on common Input service - requirement to pay 6% of the value of exempted service - suppression of facts or not - extended period of limitation - HELD THAT:- The appellant being a Co-operative Bank and registered under Service Tax and paying service tax on the services. They are also availing Cenvat credit of service tax and all the details of payment of service tax and availment of credit declared in the ST-3 returns regularly. The issue is liability of 6% of the value of exempted services i.e. cash credit, overdraft facilities, discounting of bills, interest on loan etc. is well known to public at large which is normally a business of Bank therefore, It cannot be said that appellant have suppressed any fact with intent to evade payment of service tax or availment of credit. On this issue, as pointed out by the learned Counsel, the correspondence was going on since 22.04.2010 and various letters were exchanged. There are no suppression of fact or malafide on the part of the appellant. The period involved is 2008 to 2011, however, the show cause notice was issued beyond the normal period i.e. on 01.03.2013 therefore, the entire period of demand is beyond limitation. Accordingly, in terms of Section 73(1) of Finance Act , 1994 , the demand is not sustainable only on the ground of limitation itself. Hence, the impugned order is set-aside. Appeal allowed.
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Central Excise
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2024 (1) TMI 960
Disallowance of CENVAT Credit - capital goods on which the CENVAT credit was availed were used to manufacture only exempted goods (electricity) - Rule 6(4) of the CENVAT Credit Rules, 2004 - Suppression of facts or not - time limitation - Jurisdiction of the Revenue authority when the show cause notice was issued - HELD THAT:- It is well settled proposition that Section 11A(4) is an exception to the general rule and it should be invoked in exceptional circumstances not in a routine manner and specially when the assessee has disclosed everything which is required to disclose under the statute then it cannot be tainted with fraud of suppression of fact. The monthly return which was filed shows the indisputable fact that the appellant has disclosed about availment of CENVAT credit. In the instant case the appellant way back in the year 2005 filed the return wherein they have disclosed that they have availed the CENVAT credit. In the subsequent return of July, 2008 another availment of CENVAT credit was shown in the return, as the Supreme Court laid down that suppression of fact should not be interpreted as a mere act of omission, therefore, it cannot be held analogous to the fraud. There should have been deliberate act of non disclosure aimed at evading duty. Thus, the extended period under Section 11A(4) would not be available to the department and the show cause should have been issued under Section 11A(1) which permits limitation of only one year, as a result the department should have issued the show cause notice by 6-8- 2009. Whether the shows cause notice dated 7-8-2013 is barred by limitation of five years also? - HELD THAT:- The relevant date in cases not concerning duty on excisable goods shall be date on which duty of excise is required to be paid under the Act or Rules thereunder. In reference to the demand at hand, the entire credit was availed in July, 2008. Therefore, five years should be computed from July, 2008 and according to Rule 8 to the Central Excise Rules, 2002 for date of payment of duty is 6th of every month. Thus, five years commence from 6-8-2008 to 6-8-2013 and show cause notice issued on 7-8- 2013, which is barred by limitation of one day. There is no dispute that monthly statutory return (ER-1) was filed every month by the appellant in the jurisdictional office. The case of the appellant was that when they intend to set up both power plant for manufacture of electricity and plant for dutiable goods, availed the CENVAT credit, which was shown in the return. Jurisdiction of the Revenue authority when the show cause notice was issued - HELD THAT:- The show cause notice was without jurisdiction for the reason that when the show cause notice was issued the amended Rule 14 stipulated that the credit can erroneously availed can be recovered only if it has been taken and utilized. Whether disallowing credit on co- generation power plant which commence production prior to the excisable credit is justified? - HELD THAT:- It cannot be said that revenue was right in disallowing credit on co-generation power plant which commenced production prior to excisable credit as the appellant always has intention to use goods for manufacturing dutiable product. The impugned order set aside - appeal allowed.
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2024 (1) TMI 959
Condonation of delay in filing appeal - appeal barred by 1754 days in re-filing - no sufficient reasons for the delay - denial of CENVAT Credit - inputs - various iron and steel items which had been used for supporting the structures. - HELD THAT:- On merit, the issue has been settled in favour of the assessee and, therefore, it is not felt that in the present case, the issue of limitation and whether there is any suppression as such needs to be gone into, as argued by counsel for the Revenue since on merits the issue stands decided against it. The appeal is also patently time barred and there is no ground to condone the delay in refiling since initially it was filed by a separate counsel way back on 27.06.2015 and had been returned with objections on 10.07.2015. The appeal was re-filed on 18.02.2016 by the earlier counsel and had been returned on 28.03.2016 and re-filed on 11.04.2016. The same was returned on 04.06.2016 to the said counsel which had been re-filed on 09.06.2016 and had been returned on 08.08.2016. In the application for condonation of delay, it has been mentioned that the earlier counsel did not return the original set of documents by saying that the original file has been misplaced and is not traceable and he is no longer on the panel - the fact remains that after the returning of the appeal in August, 2016, the present appeal was filed by preparing a fresh paper book only on 23.05.2022 and there is nothing to show in the application as to what transpired from August, 2016 to 23.05.2022 and, thus, the inordinate delay as such which has occurred in refiling thereafter also cannot be justified in any manner. In the absence of any sufficient cause having been shown, even on the issue of limitation, the delay is not liable to be condoned. Appeal dismissed.
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2024 (1) TMI 958
Maintainability of appeal before High Court - appropriate forum - determination of value of the excisable goods for the purpose of assessment which falls within the exclusive jurisdiction of the Hon ble Supreme Court under Section 35L of the Central Excise Act, 1944 - whether the question of rate of duty or value of the goods are involved or not and not the scope of appeal or questions raised in appeal? - HELD THAT:- The provisions under Section 130 and Section 130E of the Customs Act, 1962 deals with appeal to High Court and Supreme Court respectively which are pari materia to Section 35G and Section 35L of the Central Excise Act, 1944, hence, the ratio of the judgment rendered by different Courts under the Customs Act, 1962 would apply to Central Excise Act, 1944 also. In the case of UNION OF INDIA VERSUS GUWAHATI CARBON LTD. [ 2012 (11) TMI 885 - SUPREME COURT ] it has been held by the Hon ble Apex Court that against the decision of Tribunal regarding assessable value excluding freight, transportation and insurance charges, an appeal therefrom shall lie before Supreme Court. Further, in the case of COMMISSIONER OF SERVICE TAX VERSUS ERNST YOUNG PVT. LTD. AND OTHERS [ 2014 (2) TMI 1133 - DELHI HIGH COURT ], it is held by the Delhi High Court that where the Order-in-Original (Adjudication Order) is relating to several issues or questions and one of the issue or question relates to rate of tax or valuation, the Appeal would lie before the Supreme Court under Section 35L of the Central Excise Act, 1944 and not before the High Court under Section 35G. After going through the judgments including the Board s Circular on the issue of maintainability and the facts of the case wherein the SCN as well as OIO also perused; reference of which are made in the preceding paragraphs, it clearly transpires that one of the issues involved relates to determination of valuation of excisable goods and/or rate of duty of excisable goods, amongst other things, for the purpose of assessment. There are no hesitation in holding both these appeals as not maintainable and the same would lie before the Hon'ble Apex Court under Section 35L of the Act, inasmuch as, the jurisdiction of the High Court in such matters are specifically excluded under Section 35G and it falls within the exclusive jurisdiction of the Apex Court under Section 35L of the Act. Both these appeals are, hereby, dismissed at the admission stage itself.
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CST, VAT & Sales Tax
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2024 (1) TMI 957
Process amounting to manufacture - blending and packing of tea - after the processing tea remained tea - HELD THAT:- The observations of this Court in CHOWGULE CO. PVT. LTD. VERSUS UNION OF INDIA [ 1980 (11) TMI 61 - SUPREME COURT] with reference to order of reference in Nilgiri Ceylon Tea Supplying Co. [ 1959 (7) TMI 40 - BOMBAY HIGH COURT] must be construed in the distinct factual matrix and different goods involved. The order of the Bombay High Court was not applicable to the facts of the case in Chowgule Co. Private Limited as in the former the case concerned blending of tea which is also the subject matter of this case; whereas the goods involved in Chowgule Co. Private Limited was a particular kind of ore contraction which required a mixing up of several type of ores in particular quantities and in a particular manner and a procedure which involved a process and hence the same was covered within the definition of manufacture. However, in the instant case, mere mixing of different types of tea only for the purpose of marketing as tea and not a particular type of tea does not involve any process/manufacture within the meaning of the definition. The High Court rightly answered the questions of law raised before it in favour of the respondent-assessee and consequently, sustained the orders of the Commissioner appeals and Tribunal which had rightly set aside the order of the Assessing officer. Appeal dismissed.
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Indian Laws
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2024 (1) TMI 956
Polluting the stream of administration of justice - contempt of court - husband had filed fabricated document to oppose the prayer of his wife seeking transfer of matrimonial proceedings - HELD THAT:- A perusal of the paper book in second bail application shows that there is a report annexed by the Registry in the matter. It mentioned about the earlier two bail applications filed in the FIR inquestion. The first bail application filed by the appellant was disposed of on 06.03.2023. Bail application filed by the co-accused Gangesh Kumar Thakur was disposed of on 17.01.2023. The next one was the second bail application filed by the appellant. Though Standing Order No.2 of 2023 directed the Registry to annex all the orders passed in the earlier bail applications by different accused in the same FIR, however, the order passed by the High Court in the case of the appellant, rejecting his earlier bail application, does not form part of the bail application before the High Court. Only the order dated 17.01.2023 passed in the bail application, filed by the co-accused Gangesh Kumar Thakur was annexed. The High Court even granted bail to the appellant. In the bail application filed before the High Court, it was not mentioned that the same was second bail application filed by the appellant. This Court cannot comment on the contents of the bail application filed before the Sessions Judge as the copy thereof is not available on record here. The present appeal is, accordingly, dismissed as infructuous.
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2024 (1) TMI 955
Compulsory / premature retirement - Doubting integrity and expressing discontent about the functioning of the Petitioner - Approval of the ACC is a precondition to invoke FR 56 (j) against the officers of SAG or not - correctness of action taken by the respondent compulsorily retiring the petitioner on May 10, 2018 by invoking FR 56 (j) - The petitioner became the Director in the Directorate General of Anti-Dumping ( DGAD , for short) in the year 2014. He was posted as Regional Joint DGFT, Guwahati and Shillong in the year 2017. Thereafter, he was put in the Senior Administrative Grade ( SAG , for short) of ITS, at the level of Joint Secretary, on November 16, 2017 and was promoted on regular basis to SAG on February 27, 2018. HELD THAT:- The Second Review Committee was of the view that in a few APARs of the petitioner, there were remarks which cast doubts on the integrity of the petitioner. Reference was also made, specifically, to the APAR of 2014-2015, which recorded in the integrity column of the petitioner, that there is a room for improvement . Suffice to state, this remark was also disclosed to the petitioner, however, no representation was submitted against the same. The petitioner herein has been given fair opportunity to file his representation against the order of compulsory retirement. Moreover, the First Review Committee, the Representation Committee as well as the Second Review Committee have gone through the entire service record of the petitioner. In fact, when the representation dated June 1, 2018, was in depth examined by the respondent, it remanded the case of the petitioner back to the review committee for a fresh consideration and only thereafter, the Second Review Committee, came to the conclusion that the service of the petitioner, was no more required. The aforesaid judgments relied upon by petitioner shall have no applicability in the facts of the present case and as such, not help the case of the petitioner. There are no merit in the present petition. The impugned order of the Tribunal does not require any interference. The writ petition is dismissed.
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