TMI Tax Updates - e-Newsletter
October 18, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. First return of income of newly incorporated company or firm for period from date of incorporation to 31st March of calendar year situation in which there is no income or loss and there is no source of income- mandatory provision to file ITR for each year by a company or firm.

   By: DEVKUMAR KOTHARI

2. GST IMPLICATIONS OF EXCHANGE OF CRYPTOCURRENCY WITHREGULAR CURRENCY – WHAT IT IS; WHAT IT SHOULD BE

   By: Dhanush Thonaparthi

3. No Service Tax for Copyright Services on Original Artistic Works

   By: Bimal jain

4. PENALTY FOR CONVERSION OF LOAN INTO EQUITY SHARES

   By: DR.MARIAPPAN GOVINDARAJAN

5. Extended period of Limitation cannot be invoked universally, depends on peculiar facts

   By: Bimal jain

News

1. Indian Institute of Corporate Affairs (IICA) and National Institute of Communication Finance (NICF) sign MoU for Academic and Research Collaboration to synergise professional capabilities of both institutions

2. Auction for Sale (re-issue) of (i) “New GS 2028”, (ii) ‘7.18% GS 2033’, and (iii) ‘7.30% GS 2053’

Notifications

GST - States

1. 9/2023 – State Tax (Rate) - dated 16-10-2023 - Jharkhand SGST

Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017

2. 8/2023 – State Tax (Rate) - dated 16-10-2023 - Jharkhand SGST

Amendment in Notification No. 13/2017- State Tax (Rate), dated the 29th June, 2017

3. 7/2023 – State Tax (Rate) - dated 16-10-2023 - Jharkhand SGST

Amendment in Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017

4. 6/2023 – State Tax (Rate) - dated 16-10-2023 - Jharkhand SGST

Amendment in Notification No. 11/2017- State Tax (Rate), dated the 29 th June, 2017

5. 10/2023 – State Tax (Rate) - dated 16-10-2023 - Jharkhand SGST

Amendment in Notification No. 26/2018-State Tax (Rate), dated the 24th January, 2019

Income Tax

6. 89/2023 - dated 16-10-2023 - IT

Amendment in rule 37BB - Furnishing of information for payment to a non-resident, not being a company, or to a foreign company - Income-tax Amendment (Twenty-fifth Amendment), Rules, 2023

Money Laundering

7. G.S.R. 745(E) - dated 17-10-2023 - PMLA

Change in Principal rules - PML(Maintenance of Records) Rules, 2005

Highlights / Catch Notes

GST

• Court Rules Second Refund Application Timely; Initial Application Filed Within Two-Year Limit Validates Claim.

  Case-Laws - HC : Refund of excess amount paid by mistake - time limitation - relevant date - removal of defects - keeping in view the fact that the petitioner has filed the refund application within a period of two years i.e on 18.10.2019, his second application dated 05.11.2019 after removing the deficiency, could not have been rejected on the ground that it was time barred. - HC
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Income Tax

• High Court Stresses Need for Evidence in Salary Disallowance u/s 40A(2)(b) of Income Tax Act for Related Persons.

  Case-Laws - HC : Disallowance of salary u/s 40A(2)(b) - Payment of salary and interest to specified (related) persons - The provision u/s 40A(2)(a) clearly shows that before recording disallowance, AO has to form an opinion; and that opinion has to be having regard to inter alia legitimate needs of the business or benefit derived or even what would be the fair payment outgo for services rendered. Such an opinion cannot be arrived at without adducing necessary evidence - HC
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• Income Tax Offense Compounding Fee Error: Should Be 3% Not 5% for First-Time Applications Under Direct Tax Laws 2019.

  Case-Laws - HC : Compounding of offence(s) - determination of compounding fee - first occasion - 5% or 3% of the amount of tax in default - Since a common application had been filed for the aforementioned FYs for the first time, it would fall within the expression “first occasion”, as indicated in the guidelines for compounding of offences under Direct Tax Laws, 2019. - the compounding fee should have been calculated at the rate of 3%, and not at 5% - HC
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• Madras High Court Can't Hear Tax Appeal on Transfer Pricing; Jurisdiction Lies in Hyderabad Due to Assessment Location.

  Case-Laws - HC : Territorial Jurisdiction of Madras High Court against TP Adjustment - AO at Hyderabad have issued the order - this tax case appeal cannot be maintainable within the High Court of judicature at Madras, as the entire assessment proceedings including the final assessment order un/s 143(3) r/w section 92CA(3) r/w section 144C(5) of the Act, were done / completed by the authorities at Hyderabad and the amalgamation of the appellant company got approval from the Central Government only on 25.07.2017. - HC
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• Taxpayer Corrects Audit Report Error u/s 154, Highlighting Discrepancies in Section 11(1)(2) Claims of Income Tax Act.

  Case-Laws - AT : Rectification u/s 154 - The ld. AR invited our attention in ITR 7 where it is mentioned that the correct figures in claim of section 11(1)(2) of the Act. The assessee submitted the Form No. 10 and modified Form where the rectification was done by the auditor. It is very clear that there is no mistake in the return of income but mistake was occurred in the audit report which was duly rectified by the said auditor. - AO directed to rectify the mistake - AT
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• Assessing Officer's Unjustified Rejection of Evidence Leads to Deletion of Additions on Cash Deposits During Demonetization.

  Case-Laws - AT : Source of cash deposit during demonetization period - AO has not refuted or discredited these evidences and documents. AO does not mention why he is not accepting these evidences. On the contrary, the AO has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. - Additions deleted - AT
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• Court Upholds Penalties for Cash Loans u/ss 271D and 271E; Ignorance Defense by Directors Rejected.

  Case-Laws - AT : Penalty u/s. 271D and u/s. 271E - taking and paying loan in Cash - the innocence pleaded on account of ignorance of law of Directors who are claimed to be non-resident is insignificant. There is no question of any benefit to the assessee company on the basis of claim of bona fides of the Directors. The provisions of Section 269SS and 269T of the Act imposed statutory liability and cannot be said to held to be mere technical violation in case of companies. - Levy of penalty confirmed - AT
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• Cash Ownership Dispute Resolved: Company's Books and Family Statements Confirm Validity, No Extra Financial Adjustments Needed.

  Case-Laws - AT : Cash found during search from the residential premises of the appellant - Estimation of expenses is also without any basis. Hence the argument put forth by the CIT(A) that cash do not belong to the company and some expenses must have been incurred is not tenable and hence rejected. Owing to the availability of the cash in the accepted books of accounts of the company as well as accepted statement affairs filed by the family members, no further addition is required - AT
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• Unexplained Share Capital: Directors' Absence Can't Harm Assessee's Case u/s 68. Beyond Control of Assessee.

  Case-Laws - AT : Addition u/s 68 - unexplained share capital received by the assessee - Even if the directors of the subscriber companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. - AT
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• CIT Upholds Revision u/s 263 Due to AO's Failure to Investigate Assessee's Alleged Conduit Role.

  Case-Laws - AT : Revision u/s 263 by CIT - It is the duty of the AO to ascertain the truth of the facts stated / submitted by the assessee especially when the circumstances of the case are such as to provoke an inquiry and the word "erroneous" in section 263 includes the failure to make such an inquiry. - Yhere is lack of enquiry on the part of the AO as far as one leg of the transaction is concerned where assessee is claimed to be the conduit. - Revision order sustained - AT
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• CIT's Revision Order u/s 263 Quashed Over Debatable Disallowance of Shareholders Account in Insurance Income Assessment.

  Case-Laws - AT : Revision u/s 263 on Insurance business - in the original assessment the Assessing Officer has clearly segregated the Shareholders Account and Policyholders Account and made the disallowances treating income from Shareholders Account as not part of income from life insurance business of the assessee. CIT holding the order of re-assessment as erroneous for the reason that the disallowances made by the Assessing Officer has not been considered is not well-founded and is debatable. - Revision order quashed - AT
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• Eligibility for Deduction u/s 80IC Confirmed: New Machinery and First Export Dispatch Validate Claim for Assessee.

  Case-Laws - AT : Deduction u/s 80IC - new industrial undertaking nor not - It is a fact on record that 1st export dispatch has taken on 05.05.2009. The old machinery has not been used as indicated by the invoices of the new machinery which was purchased from the third party. The evidences proves that it is a case where new plant & machinery has been acquired which was not previously used. Hence, the conditions for the eligibility of claim u/s 80IC in the case of a new industrial undertaking stands satisfied. Decided in favour of assessee. - AT
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• Assessing Officer Rightly Classifies Income as Trading Activity Due to Lack of Evidence for Commission Agent Claim.

  Case-Laws - AT : Determination of income - Commission income or trading activity - addition to the returned income by taking 8% net profit on turnover - in case the assessee would have rendered services as a commission agent then it would have merely acted as a facilitator and not carried out purchase/sale transactions on its own account. As the assessee had failed to substantiate its aforesaid claim of having rendered services merely in the capacity as that of a commission agent, therefore, the A.O in our considered view had rightly rejected its said claim. - AT
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SEBI

• Allegations of Violating SEBI Buyback and PFUTP Regulations Unproven; Company Cleared of Fraudulent Conduct.

  Case-Laws - AT : Violation of Buyback Regulations and PFUTP Regulations 3 and 4 of the SEBI - There is nothing on record to indicate that the Company instructed the intermediaries to prefer one Stock Exchange over another. The Company utilized Rs. 1225.45 crores in the buyback process and in our view this is not a paltry sum to invest for a non-serious effort to buyback the shares. The above indicates that it cannot be conclusively proved that the Company showed no intent to successfully complete the buyback and there by acted fraudulently. - Violations are not proved against the Company - AT
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VAT

• VAT on Works Contracts: Tax Levied on Entire Contract Value, Not Immovable Property Sale. Legal Interpretation Clarified.

  Case-Laws - HC : Payment of tax at compounded rates - Levy of VAT / Tax on immovable property or works contract - The imposition of tax on the whole contract value, the State cannot be seen as imposing tax on the sale of immovable property; on the contrary, it has to be seen as levying tax on the works contract undertaken by the petitioner, albeit on a value that stood enhanced by the cost incurred for the completed construction. - HC
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• Tribunal Upholds Assessing Officer's Estimations Despite Unscientific Gross Profit Calculations; Penalty Doubled for Alleged Tax Evasion.

  Case-Laws - HC : Levy of penalty on the petitioner being double the amount of tax allegedly evaded by the petitioner - No doubt, in circumstances where the gross profit estimated by the revenue authorities is significantly higher than what is conceded by the assessee, and it is apparent that the estimation itself was done in an unscientific manner, it may be open to an assessee to challenge the same inter alia based on the decisions mentioned. On the facts of the instant case, however, Tribunal order is reasonable accepting the additions made by AO - HC
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Case Laws:

• GST

• 2023 (10) TMI 715
  Provisional attachment of the Petitioner s Bank Account - availment of ineligible input tax credit - no opinion formed on the tangible materials by the Commissioner - HELD THAT:- The order dated 6th April 2023 that proceedings have been launched against the Petitioner under Section 67 and Section 74 of the CGST Act so as to determine the tax or any other amount due from the Petitioner. The order records that in the course of investigation it was revealed that the Petitioner had indulged in availment and in passing on ineligible Input Tax Credit (ITC). The order also records that as per the reports received from various CGST Commissionerate, the Petitioner had already availed ineligible ITC of a substantial amount of Rs. 3.21 crores from non-existing/non genuine persons in contravention of Section 16 of the CGST Act and further investigation in this regard is in progress. In so far as the Petitioner s reliance on the decision in M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH ORS. [ 2021 (4) TMI 837 - SUPREME COURT] is concerned, there can be no two opinions on the position in law as laid down in the said decision. However, the question would be whether the same would become applicable in the facts and circumstances of the present case. It is also noted that the facts of the case before the Supreme Court were completely in variance to the facts in the present case, in as much as, the appellant therein, as observed by the Supreme Court in para 12 of the said decision, had made a representation and had denied the liability. The appropriate remedy for the Petitioner would be to invoke sub-rule (5) by raising an objection to the orders of attachment in question as the rule itself would permit. Thus, considering such stage of the proceedings, in the facts and circumstances of the case, the discretionary jurisdiction under Article 226 of the Constitution of India not exercised to interfere in the impugned attachment orders. Petition dismissed.

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• 2023 (10) TMI 714
  Refund of excess amount paid by mistake - time limitation - relevant date - removal of defects - Constitutional Validity of procedure under Rule 90 (3) of the Central Goods and Service Tax Rules, 2017 - HELD THAT:- The petitioner does not press the challenge of validity of Rule 90 (2) of CGST Rules, 2017 and has referred to judgment of Delhi High Court in a case of BHARAT SANCHAR NIGAM LIMITED VERSUS UNION OF INDIA ORS. [ 2023 (4) TMI 495 - DELHI HIGH COURT ] wherein the petitioner impugned the validity of Rule 90 (3) of CGST Rules, 2017. The petitioner was aggrieved by the denial of its request for refund of GST. The claim of the petitioner was that the excess tax was paid for the month of December, 2017 and the petitioner is entitled to refund of the said amount. The above judgment is directly applicable to the facts of the present case, as in the present case, the petitioner initially filed the form GSTR-3B for the month of September on 20.10.2017. But since excess amount was paid by mistake, the petitioner filed refund application dated 18.10.2019 (P-1) i.e within a period of two years and on 01.11.2019, the deficiency memo was issued after two years of filing of the form GSTR-3B. Thus, keeping in view the fact that the petitioner has filed the refund application within a period of two years i.e on 18.10.2019, his second application dated 05.11.2019 after removing the deficiency, could not have been rejected on the ground that it was time barred. The matter is remanded back to the Adjudicating Authority to consider afresh in the light of the observations made by this Court - Petition allowed by way of remand.

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• 2023 (10) TMI 713
  Violation of principles of natural justice - incomplete SCN - Availment of input tax credit - obtaining registration by means of fraud, wilful misstatement or suppression of facts - HELD THAT:- The notice while making allegation of having obtained registration by means of fraud, willful misstatement or suppression of facts clearly states that the petitioner does not conduct any business from declared place of business and has availed Input Tax Credit (ITC) in violation of the provisions of Section 16 of the Central Goods and Services Tax Act, 2017 or the rules made thereunder. The show cause notice need not be interfered as the petitioner has right to reply to the show cause notice. In case, the petitioner seeks any document, it will be open for him to move an application before the concerned authority. Petition dismissed.

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• Income Tax

• 2023 (10) TMI 712
  Deduction u/s 80IB - some of the flats constructed in Tower A of its housing project had exceeded the area of 1000 sq.ft. - structural changes noticed in the building as on the date of survey - HC [ 2022 (11) TMI 1303 - BOMBAY HIGH COURT] allowed deduction stating completion certificate could not have been issued by the competent authority, as rightly held by the Tribunal, if there was any violation of the approved plans by the municipal authorities. HELD THAT:- We are not inclined to interfere with the judgment and order impugned in this petition. The special leave petition is, accordingly, dismissed.

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• 2023 (10) TMI 711
  Disallowance of salary u/s 40A(2)(b) - Payment of salary and interest to specified persons - appellant/assessee could not substantiate the nature of work done by concerned people mentioned - HELD THAT:- As examined the explanations advanced on behalf of the appellant/assessee at different stages of the proceedings, whereby the appellant/assessee tried to justify payment of salaries to the persons concerned. But we find the same no better than mere curriculum vitae. No evidence at all was adduced before any of the authorities by the appellant/assessee as regards the educational qualification, experience and work profile of any of the persons concerned, which could be taken as their contribution in the growth of business of the appellant/assessee. The provision u/s 40A(2)(a) clearly shows that before recording disallowance, AO has to form an opinion; and that opinion has to be having regard to inter alia legitimate needs of the business or benefit derived or even what would be the fair payment outgo for services rendered. Such an opinion cannot be arrived at without adducing necessary evidence. That being so, AO was duty bound to provide an opportunity to the appellant/assessee to place on record the requisite evidence to justify its claim. But all that the Assessing Officer did was to ask the appellant/assessee to justify the salaries paid, and without seeking relevant evidence, simply rejected claim. To our mind, therefore, the best way forward would be to grant an opportunity to the appellant/assessee to adduce appropriate evidence documentary or otherwise before the AO in order to establish its claim regarding educational qualification, experience, the work profile and in particular the duties discharged by the concerned persons to justify claim of the appellant/assessee qua payment of salary to the persons concerned. The orders impugned in the present appeals are set aside and matters are remanded to the Assessing Officer with liberty to the appellant/assessee to adduce evidence on the lines indicated above

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• 2023 (10) TMI 710
  Block assessment - Undisclosed income - unaccounted expenses towards medical expenses, purchase of jewellery and other purchases assessed by the A.O.- Addition on the basis of statement of appellant - retraction of statement after a sufficient long gap - ITAT CIT(A) confirmed part addition - HELD THAT:- As we find that there is no dispute that the assessee has contended that the loose papers do not belong to him, therefore, the quantum of expenditure noted therein be not taken cognizance thereof inasmuch as, the medical expenses incurred on his daughter s delivery were met by her husband and father in law and not by the assessee. The revenue has placed no material on record to show that the loose papers are in the hand-writing of the assessee or the notings made therein are belonging to the assessee. There is no corroborative material on record to prove that the expenditure recorded in the said loose papers is incurred by the assessee. The AO has not recorded any statement of the assessee s daughter or her husband or her father-in-law Perusal of the order of CIT(A) as well as Appellate Tribunal, shows that the contentions raised by the appellant have been considered and detailed reasons have also been recorded by the Appellate Tribunal while passing order. Appellate Tribunal had considered the grounds raised as well as submissions made on behalf of the appellant and recorded the detailed reasons for its conclusion. Question of law on which the present appeal is filed is factual in nature and finding of facts, which was already considered by the Appellate Tribunal. Therefore, we do not find any reason to interfere with the order passed by the Appellate Tribunal. The Appeal thus fails and deserves to be and is accordingly dismissed.

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• 2023 (10) TMI 709
  Offence u/s 276B r.w.s. 278B - Economic Offence - delay in depositing the TDS amount by seven days - plea of the petitioner is that the entire TDS amount has been deposited even before the issuance of receipt of notice - HELD THAT:- Whether there existed a reasonable ground for not depositing the said amount is a matter which can be looked into only by the learned Trial Court. The Income Tax Department in the counter-affidavit has not disputed that the TDS amount has been deposited, although after a delay of 12 months. This Court is of the view that pendency of BIFR proceeding against the company due to industrial sickness of the company, delay in deposit of the TDS amount within the stipulated time was a reasonable cause. In view of the reasonable cause, Section 278 AA of the Income Tax will apply. Thus entire criminal proceeding is quashed against the petitioners.

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• 2023 (10) TMI 708
  Recovery proceedings - conditional stay order passed - petitioner is directed to pre-deposit 20% of the demanded tax for entertaining the Appeal - HELD THAT:- As the petitioner is engaged in the manufacturer of Handloom Sarees, this Court is of the view that the impugned order passed by the first respondent/Appellate Authority requiring the petitioner to pay 20% of the tax demand is on the higher side. Therefore, this Court directs the petitioner to deposit Rs. 10,00,000/- instead of 20% (which come around Rs. 47,89,456/-) of the impugned demand ordered by the Appellate Authority within a period of eight weeks, which starts from today. Upon such payment made by the petitioner, the third respondent/Commissioner of Income Tax (Appeals) is directed to entertain the appeal. Writ Petition is disposed of on the aforesaid terms.

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• 2023 (10) TMI 707
  Penalty u/s 271D - notice u/s. 158 BC was issued requesting assessee to file Block return of income for the taxable income including the undisclosed income for the block period - HELD THAT:- A Block Assessment Order would indicate that there was no mention in the said order regarding initiation of penalty proceedings under Section 271D of the Act. As decided in M/S JAI LAXMI RICE MILLS [ 2015 (11) TMI 1453 - SUPREME COURT] when the original assessment order itself was set aside, the satisfaction recorded therein for the purpose of initiation of the penalty proceedings under Section 271E would also not survive. This according to us is the correct proposition of law stated by the High Court in the impugned order. As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding u/s 271E of the Act, though in that order the Assessing Officer wanted penalty proceeding to be initiated u/s 271(1)(c) of the Act. Thus, insofar as penalty under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied.

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• 2023 (10) TMI 706
  Compounding of offence(s) - determination of compounding fee - first occasion - 5% or 3% of the amount of tax in default - petitioner-company, informs us that the additional amount, albeit at the rate of 3% of the amount of tax in default by taking into account the offence(s) committed by all four Directors concerning the three Financial Years i.e. 2016-17, 2017-18 and 2018-19, has been deposited. HELD THAT:- Since a common application had been filed for the aforementioned FYs for the first time, it would fall within the expression first occasion , as indicated in the guidelines for compounding of offences under Direct Tax Laws, 2019. Therefore, in our view, the compounding fee should have been calculated at the rate of 3%, and not at 5%. Given this position, we are inclined to set aside the impugned communication. Respondents will thus pass the necessary orders compounding the offences, in view of the fact that the entire compounding fee has been paid.

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• 2023 (10) TMI 705
  Assessment u/s 153C - Addition u/s 68 - incriminating material found or not? - CIT(A) had deleted the additions made both on protective and substantive basis also affirmed by ITAT - HELD THAT:- As decided in Jay Fe Cylinder Ltd. [ 2022 (9) TMI 1330 - DELHI HIGH COURT] no incriminating material was found qua the investment companies vis- -vis which search was conducted by the appellant/revenue. Thus the appeal of the appellant/revenue need to be dismissed according to us, no substantial question of law arises for our consideration.

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• 2023 (10) TMI 704
  Validity of Revision u/s 264 - assessee sought to trigger the provisions of Section 264 as enabling him to claim a loss on Future and Option contracts, which according to him, resulted in a loss as he had carried on non-speculative business during the period in issue - HELD THAT:- PCIT has committed a material irregularity in not exercising the jurisdiction conferred on him under Section 264 of the Act. As correctly submitted PCIT was invested with the necessary revisionary powers to correct the intimation issued under Section 143(1) of the Act, even if the said intimation was a product of a mistake made by the assessee in not claiming set off concerning a loss which according to him, was available under the provisions of the Act. The rationale behind conferring such revisionary power is that the revenue ultimately is entitled to assess the real income of an assessee; albeit as per the provisions of the Act. Therefore, if a particular deduction is amenable within the periphery of the Act and inadvertently an assessee has not claimed the same, Section 264 can be triggered for making such correction. Thus, for the foregoing reasons, we are inclined to set aside the impugned order. PCIT will re-examine the application filed by the petitioner/assessee (which is now sought to be progressed by his legal heirs),

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• 2023 (10) TMI 703
  Powers of Income Tax Settlement Commission to examine issues - obligation to pay tax amounting to Rs. 10 lakhs or above not met - ability to examine issues concerning transfer pricing - HELD THAT:- As petitioner to the effect that it has transferred its business and that since then, it has not engaged in any business activity requires to be examined as if the business activity had stopped, then certainly the petitioner cannot possibly carry forward cumulative losses and depreciation coupled with the fact that the petitioner has paid by way of additional tax an amount equivalent to Rs. 1,41,44,457/-. Given this position, the Commission in its new avatar i.e., Interim Board, would have to examine whether the petitioner meets the threshold criteria prescribed u/s 245C(1)(ia)(B)(ii) of the Act. Ground which persuaded the Commission not to entertain the petitioner s application that it was not vested with powers concerning the TP issues does not survive any longer as the petitioner on its own showing has accepted the upward adjustment made by the TPO - we are of the opinion that the matter requires re-examination by the Commission [now, the Interim Board]. Accordingly, the impugned order is set aside with a direction to the Interim Board to re-examine the application filed by the Petitioner, albeit on merits, for the periods in issue i.e., AYs 2012-13 to 2016-17.

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• 2023 (10) TMI 702
  Territorial Jurisdiction of Madras High Court against TP Adjustment - AO at Hyderabad have issued the order - HELD THAT:- As per section 127 of the Act read with section 260A of the Act and also from the order of the Hon ble Apex Court ABC Papers Limited [ 2022 (8) TMI 863 - SUPREME COURT] stating that the High Court, under whose jurisdiction the assessing officer has passed the order, will have the jurisdiction to entertain the appeal. We are of the opinion that this tax case appeal cannot be maintainable within the High Court of judicature at Madras, as the entire assessment proceedings including the final assessment order un/s 143(3) r/w section 92CA(3) r/w section 144C(5) of the Act, were done / completed by the authorities at Hyderabad and the amalgamation of the appellant company got approval from the Central Government only on 25.07.2017. At this juncture, the learned counsel for the appellant sought liberty to the appellant to go before the jurisdictional High Court of Telangana to work out their remedy. Granting such liberty to the appellant, this tax case appeal stands disposed of.

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• 2023 (10) TMI 701
  Nature of land - deduction u/s 54B denied - AO accepted the sale of agricultural land but denied to allow the claim for purchase of agricultural land with persuasion of section 54B - CIT(A) denied the assessee s claim that the said agricultural land is non functional, so, it cannot be accepted as a nature of agricultural land, hence, the entire claim of deduction u/s 54B was duly rejected - AR placed that the assessee had purchased and sold the land which both are agricultural in nature, there is no dispute that the said land is not an agricultural land. HELD THAT:- AR vehemently claimed that the assessee submitted her affidavit before the ld. CIT(A) but the ld. CIT(A) had not confronted or rejected the affidavit. The ld. CIT(A) is silent in appeal order against the affidavit filed by the assessee to substantiate the claim related agricultural land. We respectfully relied on the order Mehta Parikh Co, [ 1956 (5) TMI 4 - SUPREME COURT] wherein held no further scrutiny was made by the Income-tax Officer or the Appellate Assistant Commissioner of the entries in the cash book of the appellants. The cash book of the appellants was accepted and the entries therein were not challenged. No further documents or vouchers in relation to those entries were called for, nor was the presence of the deponents of the three affidavits considered necessary by either party. Thus it was not open to the Revenue to challenge the correctness of the cash book entries or the statements made by those deponents in their affidavits. The revenue has not acted in proper manner to verify the nature of land and had not confronted the affidavit filed by assessee. The ld. DR was unable to submit any contrary judgment against the submission of the assessee. In our considered view, the revenue has not taken any pain to complete the verification or has not confronted the affidavit of the assessee during the appeal stages. So, the ground of the assessee is accepted by the bench. We set aside the appeal order and the addition amount is quashed. Assessee appeal allowed.

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• 2023 (10) TMI 700
  Rectification u/s 154 - During filing in audit report in Form No. 10 amounts are interchanged, and the form was filed with mentioning the wrong amount by mistake - demand in intimation u/s 143(1) - accumulation of income u/s 11(2) restricted - computing the total income of the appellant institution more as against NIL returned income on the reasoning that the accumulation of income u/s 11(2) has correctly been allowed instead of amount as claimed by the appellant - HELD THAT:- The issue is well settled, and the ld. DR has also accepted that the mistake occurred only in the audit report and the claim of the assessee is genuine. The ld. AR invited our attention in ITR 7 where it is mentioned that the correct figures in claim of section 11(1)(2) of the Act. The assessee submitted the Form No. 10 and modified Form where the rectification was done by the auditor. It is very clear that there is no mistake in the return of income but mistake was occurred in the audit report which was duly rectified by the said auditor. Accordingly we accept that the said mistake is apparent from the record which has covered u/s 154 of the Act. The ld. DR was not able to submit any contrary judgment or fact against the assessee s submission. Accordingly, we accept the ground of the assessee and sent back the matter to the file of the ld. AO with direction, the ld. AO rectified the intimation u/s 143(1) and pass the order accordingly. Assessee appeal allowed.

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• 2023 (10) TMI 699
  Income accrued in India - existence of a DAPE in form of Adobe India and further attribution to the alleged PE - attributing a sum as business profits to the alleged PE of the Assessee in India - HELD THAT:- Considering the factual matrix of the case and respectfully following the decisions of the Co-ordinate Bench of the Tribunal for earlier AYs order [ 2023 (1) TMI 14 - ITAT DELHI] AND [ 2023 (9) TMI 1015 - ITAT DELHI] as well as decision of Morgan Stanley Co. Inc [ 2007 (7) TMI 201 - SUPREME COURT] and E-Funds IT Solution Inc [ 2017 (10) TMI 1011 - SUPREME COURT] we are of the considered view that once transfer pricing analysis of Adobe India has been undertaken and the ALP has been determined which has been accepted by the Ld. AO, nothing further would be left to be attributed to Adobe India as the alleged PE of the assessee in India and that accordingly would extinguish the need for attribution of any additional profits to the alleged PE of the assessee. It is however to be noted that the issue relating to the existence or otherwise of the DAPE of the assessee in the form of Adobe India is left open following the decision (supra) of the Co-ordinate Bench for AY 2018-19 and 2019-20. Accordingly, ground Nos. 1 to 2.5 of the assessee is allowed to the extent indicated above. Higher rate of tax imposed on the interest income on the income tax refund - AO levied tax on interest on the income tax refund received by the assessee during the relevant AY @ 40% (plus surcharge and cess) as per the provisions of the Act as opposed to beneficial rate of tax of 10% as per the provisions of Article 11 of the India-Ireland DTAA - HELD THAT:- Claim of the treaty benefit made by the assessee is not in dispute at all at this stage and hence no verification is required by the Ld. AO with respect to the same. In the light of the above legal position and factual matrix of the case, we set aside the order of the Ld. AO on the impugned issue and direct him to apply the tax rate of 10% on interest on income tax refund as per the provisions of Article 11 of the India-Ireland DTAA. Accordingly, ground No. 3 is decided in favour of the assessee. Short credit of TDS whilst computing the tax liability of the assessee for the year under consideration - We direct the Ld. AO to verify the claim of the assessee and grant TDS credit accordingly as per the law. Levy of an additional tax on Special Income other than Section 115BBE whilst computing the tax liability of the assessee for the year under consideration - AR submitted that no such income exists and that no discussion regarding the same has been made in the assessment order - HELD THAT:- Perusal of the assessment order supports the contention of the assessee. Accordingly, we direct the Ld. AO to verify the said claim of the assessee and grant relief to the assessee subject to the outcome of his verification.

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• 2023 (10) TMI 698
  Cash deposited during the demonetization period unexplained - huge credits appearing in the bank accounts of the assessee - HELD THAT:- As during the assessment stage, the assessee has submitted enough documents and evidences to prove the cash deposit, such as, Copy of PAN, Copy of bank account, Copy of first page (BDCC Bank Dena Bank account), Certificate of incorporation, Audit report for A.Y. 2017-18, Members list in Mandli and written submission to explain the source of the source. AO did not find any fault in these documents and evidences so submitted by the assessee, except to say that explanation of the assessee is not acceptable. AO has not refuted or discredited these evidences and documents. AO does not mention why he is not accepting these evidences. On the contrary, the AO has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. Assessee-trust has received subscription/donation and the same was amount collected/received from its members. As stated that this Mandali has 3150 women members and each member has taken share of Rs. 100/- to Rs. 500/- according to their capacity. Thereafter, these savings are collected by the President and Secretary. The amount so collected is deposited in the Bank Account. Assessee (Mandli) provide loan facilities to its members @ 12% and the dividend is distributed to its member annually during the Annual General Meeting of every year. Therefore, based on these facts and circumstances, delete the addition. Assessee appeal allowed.

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• 2023 (10) TMI 697
  TP Adjustment - MAM - most appropriate method selection - RPM or Other method - DRP upheld the most appropriate method as the resale price method - assessee has raised new plea of adopting other method as the most appropriate method - HELD THAT:- Assessee is a limited risk distributor. Based on this FAR, assessee in its transfer pricing study report placed at page number 35 of the report stated that out of the 52,215 companies [ capitaline] the only company which could be considered a similar to the assessee was Brahmos aerospace private limited which was also rejected for non-availability of the latest available data in public domain. One more reason was given that company owned significant intangible and technology of developing missiles. Also stated to be a full-fledged manufacturer. In the end it was stated that the gross profit margin of the assessee at 7.84% is stated to be at arm s-length for the reason that the contract is in essence between two governments therefore it was held to be reasonable to conclude that the international transactions entered into by the associated enterprise with its associated enterprise is at arm s-length. We find that even if the resale price method is adopted, in absence of comparable, the comparability analysis fails. Thus there is no use of adoption of most appropriate method as resale price method. Assessee has also stated that in such cases the other method is the most suitable method for benchmarking the international transaction by considering the last purchase price of the similar items which are negotiated between the two governments. Considering the facts and circumstances of the case, we set-aside the whole issue back to the file of the learned TPO/assessing officer to benchmark above international transaction by adopting either resale price method , if adequate comparability data is available, or other method as the most appropriate method. Also duty of the assessee to substantiate before the AO/TPO to show that the international transaction entered into with its associated enterprise are at arm s-length based on certain credible information.

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• 2023 (10) TMI 696
  Addition u/s. 69A - cash deposits in the bank accounts as unexplained income - gap of one year in cash deposits - assessee produced and explained the cash deposits by producing books of accounts, the same were rejected by the Assessing Officer on the sole ground that the assessee has not filed original Return of Income u/s. 139(1) of the Act and regular Return were filed only from the AY 2015-16 onwards. HELD THAT:- It is well settled principle of law that addition u/s. 69A of the Act cannot be made in respect of those assets/moneys/entries which are recorded in the assessee s books of accounts. See SMT. TEENA BETHALA [ 2019 (9) TMI 3 - ITAT BANGALORE] held where the entries are recorded in the assessee s books of account, addition made u/s 69A of the Act is bad in law. In the case of ACIT vs Baldev Raj Charla [ 2008 (12) TMI 241 - ITAT DELHI-C] also held that merely because there was a time gap between withdrawal of cash and cash deposits explanation of the assessee could not be rejected and addition on account of cash deposit could not be made particularly when there was no finding recorded by the assessing officer or the Commissioner that apart from depositing this cash into bank as explained by the assessee, there was any other purposes it is used by the assessee of these amounts. In view of above facts, the ground number 1 of the appeal of the assessee is allowed.

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• 2023 (10) TMI 695
  Penalty u/s. 271D and u/s. 271E - assessee company has taken loan in cash on different dates repaid the same in cash in contravention of section 269SS 269T - HELD THAT:- Violation was of Section 269SS of the Act which deals with the modes of accepting certain loans deposits and specified sums and Section 269T of the Act which deals with the modes of repayment of certain loans for deposits are violation which are not to be examined from the perspective the person who has given the loan or to whom the loan was returned but from the perspective of the recipient of the loan. Thus, the innocence pleaded on account of ignorance of law of Directors who are claimed to be non-resident is insignificant. There is no question of any benefit to the assessee company on the basis of claim of bona fides of the Directors. The provisions of Section 269SS and 269T of the Act imposed statutory liability and cannot be said to held to be mere technical violation in case of companies. Appeal dismissed.

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• 2023 (10) TMI 694
  Cash found during search from the residential premises of the appellant - unexplained money u/s 69A - rejecting the explanation that the said amount of cash belonged to family members of the assessee and of the company Easy Trip Planners Pvt. Ltd., of which the assessee is a director and some cash collected from agents and clients for the company - HELD THAT:- The details of cash in hand as on 10.08.2017 as per the books of accounts of the company and cash in hand as per the statement of affairs filed by the family members. Hence, the argument of the ld. CIT(A) that if at all the cash is kept at residence, then the same must be kept separately and not mixed with cash of the family members cannot be accepted. Estimation of expenses is also without any basis. Hence the argument put forth by the CIT(A) that cash do not belong to the company and some expenses must have been incurred is not tenable and hence rejected. Owing to the availability of the cash in the accepted books of accounts of the company as well as accepted statement affairs filed by the family members, we hold that no further addition is required on account of cash found at the premises. Appeal of the assessee allowed.

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• 2023 (10) TMI 693
  Accrual of income - income of the assessee company towards de-recognition of income pertaining to consumer s portion over achievement of minimum target or efficiency gain - HELD THAT:- The assessee is in business of electricity which was transferred to the company in terms of agreement dated 31.05.2002 as per the policy direction issued by GNCTD (Govt. of National Capital Territory) governing the transfer of business of erstwhile Delhi Vidyut Board (DVB) to the company, the company is entitled to an assured return of 14% plus a supply margin up to 2% p.a. on DERC approved Equity subject to achievement of Aggregate Transmission and Commercial (AT C) loss reduction targets. In the event of over-achievement of AT C loss reduction targets, the Company is entitled to retain a portion of such additional revenue realised which is in addition to the assured return of 16% p.a. on DERC approved Equity. The balance additional profits from overachievement, after adjustments for any amounts recoverable by the Company through future tariffs are required to be transferred to the contingency reserve account or as directed by DERC for utilization in future tariff determinations. This issue is covered in favour of the assessee by the decision in assessee s own case [ 2020 (3) TMI 719 - DELHI HIGH COURT]. MAT Computation - Addition being interest liability on additional consumer security deposits under the normal provisions of the Act as well as in the computation of book profit u/s 115JB - HELD THAT:- As seen that the interest is payable by the assessee as a discharge of its statutory obligation. Further, the Hon ble Delhi High Court pursuant to the Writ had passed an interim order by directing the petitioner (i.e. assessee ) to continue to refund the security deposit and pay interest to consumer in accordance with law. The assessee herein had merely discharge its statutory obligation in consonance with the provisions of section 47 of the Electricity Act, 2003 and in consonance with the directions of the Hon ble Delhi High Court. This certainly would become an expenditure incurred wholly and exclusively for the purpose of business of the assessee and hence, allowable as deduction. Accordingly, ground raised by the assessee are allowed. Late payment of surcharge as offered to tax consistently on receipt basis by the assessee but subjected to tax by revenue on accrual basis - HELD THAT:- Under these circumstances, the assessee company thought it fit as a measure of prudence to recognize revenue on account of late payment of surcharge on receipt basis which was in consonance with revenue recognition prescribed in accounting standard 9 issued by ICAI. AR also submitted that this contention of the assessee was accepted by the AO for all the earlier years and also for the subsequent years. Only for the year under consideration i.e. AY 2011-12 AO had taken a divergent stand. In any event, we find that the similar issue was adjudicated by the coordinate bench of Delhi Tribunal in the case of Dakhin Haryana Bijli Vitran Nigam Ltd [ 2012 (7) TMI 340 - ITAT, DELHI] wherein, this tribunal by placing reliance on the order passed for AY 2006-07 and 2008-09 had held that there is nothing wrong in this revenue getting recognized in the books of account on receipt basis as the realization of it is doubtful in nature especially in state, charges are waived off pursuant to the recognition and the pursuant to the orders of the Courts. Enhancement of claim of deduction u/s 80IA on additions made to the income of the eligible unit towards commission, maintenance charges and miscellaneous income - HELD THAT:- As in view of the decision of the Hon ble Delhi High Court in assessee s own case. [ 2020 (3) TMI 719 - DELHI HIGH COURT]. and also by the CBDT Circular No. 37/2016 dated 02.11.2016 wherein, it had been categorically stated that any disallowance and additions to the total income of an eligible unit would only give rise to enhancement of profit of the eligible unit and hence consequentially would be eligible for deduction u/s 80IA of the Act. Thus we direct the ld AO to grant enhanced deduction u/s 80IA. Grant of deduction u/s 80IA on account of late payment of surcharge collected - We find that that the said late payment of surcharge collected by the assessee pertains to the eligible unit of the assessee. We have already narrated the purpose behind the collection of late payment of surcharge by the assessee. The only purpose of making this recovery is to ensure collection of electricity dues in time and hence this receipt is also having possible nexus with the profit derived by the eligible unit and consequentially eligible for deduction u/s 80IA. Deduction u/s 80IA for late payment of surcharge collected and rebate on power purchase - Both these receipts, as their names suggest, are having first degree nexus with the profits by the eligible unit and accordingly would be eligible for deduction u/s 80IA - CIT(A) had rightly granted relief in this regard, which, in our considered opinion, does not call for any interference. Accordingly, ground raised by the revenue is dismissed.

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• 2023 (10) TMI 692
  Addition u/s 68 - unexplained share capital received by the assessee - subscriber companies have not come personally in response to the summons issued by the AO - as per AO identity and creditworthiness of the share applicants and genuineness of the transactions were not proved - HELD THAT:- As on perusal of the Assessment order would reveal that the AO has duly acknowledged the receipt of the relevant documents/evidences not only from the assessee, but also from the subscriber companies. However, he insisted for personal appearance of the directors of the subscriber companies without even going through and discussing about the discrepancies, if any, in the documents furnished by the assessee as well as by the share subscriber companies to prove the identity and creditworthiness of the subscribers and the genuineness of the transaction. AO has not pointed out in the Assessment Order as to what further enquiries he wanted to make from the directors of the subscribers to insist for their personal presence. AO, in our view, could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the subscriber companies. Even if the directors of the subscriber companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. AO in this case has not made any independent enquiry to verify the genuineness of the transactions. The assessee having furnished all the details and documents before the AO and AO has not pointed out any discrepancy or insufficiency in the said evidences and details furnished by the assessee before him. As observed above, the assessee having discharged initial burden upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, the burden shifted upon the AO to examine the evidences furnished and even made independent inquiries and thereafter to state that on what account he was not satisfied with the details and evidences furnished by the assessee and confronting with the same to the assessee. In view of this, even applying the ratio laid down by the Hon ble Supreme Court in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd [ 2019 (3) TMI 323 - SUPREME COURT] impugned additions are not warranted in this case. No justification on the part of the lower authorities in making the impugned additions - Assessee appeal allowed.

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• 2023 (10) TMI 691
  Revision u/s 263 by CIT - additional professional income surrendered by the assessee - As per CIT AO had failed to make necessary enquiries and take note of the aforesaid statements of the assessee made during the survey action - HELD THAT:- We find that the statement of the assessee as well as the said surrender letter of the assessee, are of the same date i.e. 26.09.2016, therefore, it cannot be said that the said letter issued by the assessee is an after-thought. Rather, if we read both the statement as well as letter together, the sum and substance of the entire conversation would be that the assessee had offered the said amount of Rs. 70 lacs as his additional professional income. There is no case of the Department that the assessee has any other source of income. AO during the assessment proceedings, had made adequate enquiries in this respect and accepted the explanation offered by the assessee. We, therefore, do not find any justification on the part of PCIT in holding the assessment order as erroneous and prejudicial to the interests of the Revenue. The exercise of revisionary jurisdiction u/s 263 of the Act, in this case is held to be not justified and therefore, the revision order passed u/s 263 of the Act is hereby quashed. Appeal of the assessee stands allowed.

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• 2023 (10) TMI 690
  Revision u/s 263 by CIT - addition u/s 68 treating the entire share capital subscribed as unexplained cash credit - AO concluded the assessment u/s 143(3) r.w.s. 254 in which he has estimated the commission @1% on the entire amount of share capital an accordingly made an addition - HELD THAT:- From the perusal of the details submitted by the assessee it is noticed that the assessee has submitted a reconciliation linking the amount received as share capital to an excel sheet seized during the search of Shri Shirish C Shah. It is relevant here to mention that the AO in the original proceedings u/s 143(3) had issued notices under section 133(6) to check the source of the capital contribution and had received a reply from the parties that they had not made any capital contribution - Given this, in our considered view, AO in the remanded proceedings ought to have looked into further details based on the reconciliation to verify how each line in the bank statement relates to the seized material of Shirish C Shah. The reconciliation statement as it is does not establish the fact that the source for the capital contribution is from material seized without further enquiry or verification of details. Therefore we are inclined to agree with the finding of the PCIT that there is lack of enquiry on the part of the AO as far as one leg of the transaction is concerned where assessee is claimed to be the conduit. It is the duty of the AO to ascertain the truth of the facts stated / submitted by the assessee especially when the circumstances of the case are such as to provoke an inquiry and the word erroneous in section 263 includes the failure to make such an inquiry. The decisions relied on by the AR cannot be directly applied to assessee s case since the findings are based on facts specific to each case. PCIT while invoking the explanation has given a clear finding with regard to the lack of enquiry on the part of the AO and has accordingly held the order to erroneous and prejudicial to the interest of the revenue. We therefore see no infirmity in the action of the PCIT. We hold that the PCIT was justified in assuming the jurisdiction by invoking explanation (2) to section/s 263 of the Act and setting aside the assessment order. Appeal filled by assessee dismissed.

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• 2023 (10) TMI 689
  Revision u/s 263 on Insurance business - validity of reassessment proceedings - AO assessed the income based on the surplus declared as per actuary report and also made addition towards deficit from Pension Schemes - CIT directed the AO to adjust the amount of capital contribution transferred from shareholders account to policy holders account against the surplus as per the actuary report - HELD THAT:- We see merit in the contention of the ld AR that the AO during the re-assessment the AO has merged the entire proceedings by assessing the total income of the assessee afresh. It is also noticed that the AO has analysed the provisions of section 44 along with relevant rules, has taken into consideration the various submissions of the assessee and also has relied on a plethora of judgements while completing the re- assessment. Therefore the revenue s contention that the assessing officer has not applied his mind while completing the re-assessment is not tenable. Computation of income of the assessee engaged in the business of life insurance business shall be taken to be the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation not with standing sections 28 to 43B and also the provisions relating to the computation of income chargeable under the head Interest on securities , Income from house property , Capital gains or Income from other sources . On perusal of the original order of assessment u/s. 143(3) we notice that the AO in the original assessment has made the disallowance considering the Shareholders Account separately from the Policy Holders Account and the plea of the assessee before the AO was that only for presentation purposes, the assessee prepares policyholders account and shareholders account and that shareholders account cannot be treated as other regular business carried out by the assessee. This issue is no longer res integra in view of the decision of ICICI Prudential Insurance Co. Ltd. [ 2015 (7) TMI 1259 - BOMBAY HIGH COURT ] in terms of section 44 of the Act, such income has to be taxed in accordance with First Schedule as provided therein. None of the authorities under the Act nor even before us is it urged that the assessee is carrying on separate business other than life insurance business. Accordingly, the impugned order holding that the income from shareholders account is also to be taxed as a part of life insurance business cannot be found fault with in view of the clear mandate of section 44. From the facts of the assessee s case it is clear that in the original assessment the Assessing Officer has clearly segregated the Shareholders Account and Policyholders Account and made the disallowances treating income from Shareholders Account as not part of income from life insurance business of the assessee. CIT holding the order of re-assessment as erroneous for the reason that the disallowances made by the Assessing Officer has not been considered is not well-founded and is debatable. Also AO has made a fresh assessment of the income of the assessee considering the provisions of the Act along with the various judicial proceeding and therefore excise of the revisionary powers u/s. 263 for this reason is not justifiable . Appeals of the assessee are allowed.

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• 2023 (10) TMI 688
  Assessment u/s 143(3) r.w.s. 144C(13) r.w.s. 144B pursuant to the directions of DRP - final assessment order passed by the Ld.AO as barred by limitation as it is passed beyond the maximum time prescribed u/s. 144C(13) - HELD THAT:- DRP directions were received by the faceless assessment unit that had the jurisdiction to pass the assessment order on 04.07.2022. We also note that an email was sent from the office of the DRP-1, Bengaluru to the DCIT, Transfer Pricing (1)(1)(1), Bangalore on 01.07.2022. Thus in our view, the Ld.AO has passed the impugned assessment order as contained in section 153 i.e., within one month from the end of the month in which such direction is received. Comparable selection - application of turnover filter by adopting the upper turnover filter of Rs. 200 crores - This Coordinate Bench in case of Altair Engineering India Pvt. Ltd [ 2023 (4) TMI 674 - ITAT BANGALORE] has noted that the turnover of the four comparables sought for exclusion by assessee in the present case exceeds Rs. 200 crores whereas the assessee s turnover under ITeS segment is only Rs. 78.66 crores. Respectfully following the above, Infosys BPM Services Pvt. Ltd., Motif India Infotech Pvt. Ltd., Eclerx Services Ltd. and MPS Ltd. stands excluded. Domex E Data (P.) Ltd. has been treated to be a KPO whereas the assessee before us is a contract service provider with limited risks. Manipal Digital Systems (P.) Ltd.- As no segmental details available in respect of this comparable, in order to understand the earnings of the company from ITeS segment, it cannot be considered to be a comparable with that of assessee. Respectfully following the view expressed by Hon ble Delhi High Court in case of Rampgreen Solutions (P.) Ltd [ 2015 (8) TMI 931 - DELHI HIGH COURT] we direct the Manipal Digital Systems (P.) Ltd. to be excluded from the final list. Vitae International Accounting Services (P.) Ltd is carrying on business of data processing, handling back office functions and rendering ITeS to their clients abroad using computer software. The present assessee before us is also the contract service provider with absolutely minimal risk. The only segment with which this company earns income is from sale of services being processing fees. This comparable carries out the basic ITeS services similar to that of assessee and therefore is held to be comparable. Accordingly, we direct this comparable to be included in the final list. Exclusion of Ultramarine Pigment Ltd. company has spent an amount of Rs. 3821.72 lakhs (page 61 of the AR) as against total revenue of Rs. 28252.99 lakhs which comes to 13.52%. Thus, the company fails the employment cost filter adopted by the TPO Exclusion of I Services India (P.) Ltd.as it was not reflected in the search matrix of the TPO - Merely because the comparable does not appear in the search process by the TPO, it cannot be excluded if assessee is able to file the annual reports which are verifiable. As relying on Prism Networks [ 2022 (2) TMI 1296 - ITAT BANGALORE] we accordingly, remand this comparable to the Ld.AO/TPO to reconsider it in the light of the annual reports that will be filed by assessee. In the event they are found to be functionally similar with that of assessee, the same may be included in the final list.

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• 2023 (10) TMI 687
  Deduction u/s 80IC - new industrial undertaking not formed - Claim denied as assessee was using the tool of forming a new firm in the same name at the same premises beyond the time limit permissible as per the law - AO alleged that the assessee went on changing the firm structure only to claim deduction u/s 80IC and the assessee could not have had a turnover of Rs. 75 Cr. at the beginning of the business and the entire new business is the changed form of the old business - HELD THAT:- The old Firm was dissolved vide deed of dissolution dated and effective from 01.04.2009, as per the copy of dissolution deed. The assessee firm came into existence on 01.01.2009 which is evident from the copy of deed of partnership dtd. 01.01.2009 as per records which the A.O. wrongly noted in the assessment order as 01.04.2009. The said partnership deed has also been got registered with the Registrar of Firms vide certificate in Form-A dated 12.04.10. In this registration certificate, the date of joining has been specified as 01.01.2009 . It shows that during the period 01.01.09 till 31.03.09, the old as well as the appellant firm, simultaneously existed. This construction of the dates persuaded him to reach to a diabolic conclusion that the old firm got closed and immediately new firm got started. It is a fact on record that 1 st export dispatch has taken on 05.05.2009. The old machinery has not been used as indicated by the invoices of the new machinery which was purchased from the third party. The evidences proves that it is a case where new plant machinery has been acquired which was not previously used. Hence, the conditions for the eligibility of claim u/s 80IC in the case of a new industrial undertaking stands satisfied. Decided in favour of assessee. 80-IC on Duty Draw Back - As per the A.O., these incentives may be attributable to the business activity, but they are not the profits derived by an industrial undertaking from an eligible business therefore no deduction u/s 80IC was allowable on duty drawback - HELD THAT:- In view of the decision in the case of Meghalaya Steel [ 2016 (3) TMI 375 - SUPREME COURT] where the transport and interest subsidies were held to be eligible for deduction as they were held to have been derived from the business of the undertaking and thus an argument was made that the said decision has widened the scope of deduction. The case of Meghalaya Steels Limited dealt with transport subsidy, interest subsidy and power subsidy and the Hon ble Apex Court [ 2009 (8) TMI 63 - SUPREME COURT] held that since these subsidies directly affect the cost of manufacturing, they have a direct nexus with the profits and gains of the undertaking and since these subsidies have a direct nexus, they can be said to be derived from the industrial undertaking. While dealing with the decision in the case of Liberty India [ 2009 (8) TMI 63 - SUPREME COURT] distinguished Duty Entitlement Pass Book and Duty Drawback Schemes and specifically observed that the DPEB/Duty Drawback Scheme is not related to the business of an industrial undertaking for manufacturing or selling its products and the DEPB entitlement arises only when the undertaking goes on to export the said product. The same view has been reiterated in the case of Saraf Exports Vs CIT. Hence, respectfully following the judgment of Hon ble Supreme Court in various cases as mentioned above, we hereby affirm the decision of the ld. CIT(A). As the assessee has opted for VSV for the years before us. In the result, the appeals of the assessee are dismissed.

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• 2023 (10) TMI 686
  Assessment u/s 153A - requirements of approval u/s 153D - As argued approval granted for framing assessment order is contrary to provision of Section 153D - HELD THAT:- In the instant case, it is a matter of record by the own admission of JCIT that the approval granted is merely technical and without appraisal of evidences or enquiries. Thus fact thus need not be traversed any further. In the backdrop of the unequivocal observations made by the JCIT, approval granted u/s 153D apparently does not meet the requirement of law and hence assessment orders passed in consequence of such non-est approval is a nullity in law. The assessment order thus passed is vitiated in law which illegality cannot be cured. As discernible from the conjoint approval memo, the sanctioning authority (JCIT) has, in fact, under the force of circumstances, relegated his statutory duty to the subordinate AO, whose action the JCIT, was supposed to supervise as per the scheme of the Act. Manifestly, the JCIT, without any consideration of factual and legal position in proposed additions/disallowances and without contents of appraisal report before him or incriminating material collected in search etc. has buckled under statutory compulsion and proceeded to grant a simplicitor approval with caveats and disclaimers. This approach of the JCIT has ipso facto rendered the impugned approval to be a mere ritual or an empty formality to meet the statutory requirement and can not thus be countenanced in law. We are unhesitatingly disposed to hold that the assessment order for AY 2014-15 in question, in pursuance of a hollow cosmetic approval accorded u/s 153D and undeniably without application of mind, is rendered unenforceable in law and hence quashed. Appeal of the Assessee is allowed.

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• 2023 (10) TMI 685
  Determination of income - Commission income or trading activity - addition to the returned income by taking 8% net profit on turnover - as per AO assessee was engaged in the business of trading of vegetables and fruits and determined its income u/s.44AD @8% of the turnover - HELD THAT:- Assessee had admittedly carried out purchase/sale of fruits and vegetables in its own name and had deposited the cash sale proceeds in its own bank account. Apart from that the purchase consideration was paid by the assessee to the parties from whom purchases were made from its own bank account. As observed by the A.O and, rightly so, in case the assessee would have rendered services as a commission agent then it would have merely acted as a facilitator and not carried out purchase/sale transactions on its own account. As the assessee had failed to substantiate its aforesaid claim of having rendered services merely in the capacity as that of a commission agent, therefore, the A.O in our considered view had rightly rejected its said claim. Decided against assessee.

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• Customs

• 2023 (10) TMI 684
  Classification of goods - Liquid Crystal Display (LCD) panels - to be classified under Chapter Heading 8259 9090 as decided by the Revenue or under Chapter Heading 9013 8010 as claimed by the appellant? - HELD THAT:- The matter is no longer res integra as the issue has been already settled in appellant s own case M/S. XIAOMI TECHNOLOGY INDIA LIMITED VERSUS THE COMMISSIONER OF CUSTOMS, BANGALORE [ 2023 (7) TMI 325 - CESTAT BANGLORE] . Further, the Apex Court in the case of CCE, AURANGABAD VERSUS M/S VIDEOCON INDUSTRIES LTD. THR. ITS DIRECTOR [ 2023 (3) TMI 1338 - SUPREME COURT] on interpreting the General Rules of Interpretation and the Section Notes and Chapter Notes observed The CESTAT s reasoning and conclusions, in both cases, that the LCD sets were under Chapter 90, Entry 9013.8010, is sound and unexceptionable. Thus, the LCD Panels are to be classified under Chapter Heading 9013 8010 - appeal allowed.

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• Securities / SEBI

• 2023 (10) TMI 683
  Violation of Buyback Regulations and PFUTP Regulations 3 and 4 of the SEBI - Fraudulent and Unfair Trade Practices relating to Securities Market - allegation of misleading public announcement designed to influence the decisions of investors - Company wrote to SEBI informing that it could not ensure buyback of 50% of the amount earmarked as required under Regulation 14(3) of the Buyback Regulations. It requested SEBI to release the cash Escrow amount containing 2.5% of buyback size u/r 15B of the Buyback Regulations HELD THAT:- The investigation report clearly held that the Company had complied with relevant provisions of Regulation 15B (8) of Buyback Regulations (for release of amount deposited in Escrow account by the Company) holding that No major impact on price / volume was observed on the basis of any of the corporate announcement made by Cairn during the investigation period . The Company could not have foreseen or predicted that the stock markets would witness this bullish trend at the time when the decision for going for a buyback was taken nor could the Company be aware at the time of making the public announcement that the traded price of the scrip would be above the maximum buyback price on 68 days out of 123 trading days. Thus, allegation that the Company had made misleading public announcement on January 14, 2014 designed to influence the decision of investors and to induce sale or purchase of its securities is not proved. Company failed to show intent towards completing the buyback by not putting enough buy orders at appropriate time and therefore acted fraudulently - As we find that out of 123 trading days available to the Company to conclude the buyback, on 55 days at BSE and 54 days at NSE, the closing price of the scrip was lesser or equal to maximum buyback price of Rs. 335/-. Closing price was more than maximum buyback price of Rs. 335/- per share from April 2, 2014 to April 23, 2020 and from May 12, 2014 to July 22, 2014 - out of 123 days available to the Company to complete the buyback, it placed buy orders on 82 days on NSE and on all 123 days on BSE. It is also noted that the SEBI (Buyback of Securities) Regulations, 1998 do not lay down any method or procedure for conducting the buyback. The Company appointed professional merchant bankers and brokers for the buyback transaction and deposited Rs. 143.12 crores in an Escrow account. It cannot be faulted for adopting a prudent and cautious approach by placing few buy orders at the initial stage of the buyback period. Placement of large buy orders at the initial stage could have affected the price of the scrip and possibility of the price going above the maximum price even earlier could not be ruled out. The Company could not have perceived that in last 2-3 months of the buyback period the price would not be favourable. There is nothing on record to indicate that the Company instructed the intermediaries to prefer one Stock Exchange over another. The Company utilized Rs. 1225.45 crores in the buyback process and in our view this is not a paltry sum to invest for a non-serious effort to buyback the shares. The above indicates that it cannot be conclusively proved that the Company showed no intent to successfully complete the buyback and there by acted fraudulently. Thus, we hold that the violations of provisions of Regulations 3(a), (b), (c), (d) and 4(1), 4(2)(K) and (r) of the PFUTP Regulations and Regulations 19(1)(a) of the Buyback Regulations are not proved against the Company.

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• Insolvency & Bankruptcy

• 2023 (10) TMI 682
  Interim relief not granted - HELD THAT:- The appeal has been heard and orders were reserved by the NCLAT on 21 September 2023. However, while reserving orders, the NCLAT has directed the parties to maintain status quo as was available prior to EOGM dated 03.05.2019 till the judgement is delivered. No reasons have been indicated by the NCLAT even prima facie for issuing the interim order, particularly in the context of the fact that there was no interim relief operating since the dismissal of the application for interim relief on 31 December 2019. It is admitted that no relief was obtained by the first respondent in the proceedings before the Bombay High Court, as well. The interim direction is vacated - The Annual General Meeting (AGM) of the company, Finolex Cables Limited is to take place on 29 September 2023. Any action which is taken on proposed resolution No 4 pertaining to the appointment of the Executive Chairperson shall be subject to the outcome of the appeal which is pending before the NCLAT. The impugned order is set aside - Appeal allowed.

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• PMLA

• 2023 (10) TMI 681
  Money Laundering - seeking release of petitioner - Use of forged identification documents and falsified addresses by Chinese shareholders of GPICPL, while projecting itself to be a subsidiary company of Vivo, China - it is argued by learned Senior Counsel that the said ingredient of Section 19 is missing in the present case since the investigating officer has not recorded any such satisfaction. HELD THAT:- This Court has carefully considered the decision of Hon ble Apex Court in case of Pankaj Bansal [ 2023 (10) TMI 175 - SUPREME COURT ] and has perused the remand order impugned before this Court. This Court is of the opinion that the impugned order takes note of the allegations leveled against the accused persons in the FIR as well as the investigation conducted so far by Directorate of Enforcement. The learned Sessions Court had also perused the written grounds of arrest placed on record and had also taken note of the fact that the grounds of arrest in writing had been supplied to the accused persons in compliance of judgment of the Hon ble Apex Court in case of Pankaj Bansal. After perusing the records of the case, the learned Sessions Court has categorically recorded that prima facie there was no violation of Section 19 of PMLA since the investigating officer, from the material and investigation conducted so far, had formed an opinion that the accused persons were guilty of offence of money laundering and had affected their arrest accordingly. The impugned order also mentions that the custody of the accused persons was sought not only due to their non-cooperation and evasive replies, but also due to the deliberate attempts to evade/mislead investigation and to find out the deep rooted conspiracy for the commission of offence under PMLA. Only after considering the abovementioned facts, the remand order impugned before this Court was passed. This Court notes that the present remand order is clearly distinguishable from the remand order which was challenged before the Hon ble Apex Court in case of Pankaj Bansal in which the concerned Sessions Judge had failed to even record a finding that he had perused the grounds of arrest to ascertain as to whether Directorate of Enforcement had recorded reasons to believe that the accused persons therein were guilty of an offence under PMLA and the order had merely recorded that the custodial interrogation of the accused was required in view of the seriousness of the offences and the stage of investigation. Having also considered the judgment of Hon ble Apex Court in case of V. Senthil Balaji, this Court notes that the investigating agency i.e. Directorate of Enforcement had satisfied the learned Sessions Court with adequate material for the need of custody of the accused and the learned Sessions Court had arrived at a conclusion that Section 19 of the Act was duly complied with and it is only thereafter that the accused persons including petitioner had been remanded to the custody of Directorate of Enforcement. This Court does not find any infirmity in the order of remand dated 10.10.2023 challenged before this Court as the same takes into account the mandate of compliance of provisions of Section 19 of PMLA as well as Section 45 of PMLA. Petition dismissed.

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• Service Tax

• 2023 (10) TMI 680
  Extended period of limitation - demand under construction of residential complex service for the period from 01.02.2007 to 31.01.2012 - requirement of payment of Service Tax by the principal contractor on behalf of the appellant or not - N/N. 01/2006-S.T. dated 01.03.2006 - HELD THAT:- The appellant had undoubtedly carried out construction activity, by virtue of indivisible works contract involving supply of goods and construction activity. Hence, the Revenue has proceeded on a wrong premise to confirm the impugned demand. Moreover, it is also clear, by virtue of there being no rebuttal by the Revenue, that the main contractor namely, M/s. Southern Properties and Promoters, had remitted Service Tax on the project, for which the appellant was only a sub-contractor. No doubt, the sub-contractor cannot claim immunity from Service Tax just because the liability was on the main contractor, but once we agree that what was involved was indivisible works contract which was not at all amenable to Service Tax in the hands of a builder, at least up to the date of insertion of Explanation i.e., 1.07.2010, there cannot be any liability in the hands of the appellant up to 01.07.2010 under construction of complex service - For the subsequent period, however, even though the work was carried out by virtue of indivisible works contract, the authority below has chosen to confirm the demand only under construction of residential complex service, which is not in accordance with law since, apparently, the tax is demanded under a wrong classification which is not permissible in view of the decision of the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] . The demand in the impugned order cannot sustain, for which reason the same is set aside - Appeal allowed/

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• 2023 (10) TMI 679
  Rejection of Refund claim - service tax paid to various persons for facilitating the export of goods - CHA Services - Foreign Based Commission Agent - Transport of Goods by Road and By Rail. CHA Services - rejection on the ground that the Appellant provided the documents in the shape of Expense Vouchers/Debit Notes/Invoices issued by M/s Baid International Services, M/s NSL Agency (India) Pvt. Ltd., M/s Orchid Shipping Pvt. Ltd., and M/s Transmarines, whereas the services are provided by M/s United Custom House Agency Pvt Ltd., M/s Speed Impex, M/s R.N. Orange Overseas Pvt. Ltd. and M/s Reliable Travel Cargo Ltd. - HELD THAT:- In this case the Customs House Agent has entered into agreement/contract with other parties to provide the said services on their behalf and the copies of agreements between service providers and the Custom House Agent and the certificates from the CHAS for acting as pure agents have been furnished by the appellant but the same were not considered by the Ld. Commissioner (Appeals) while rejecting the refund claim - the appellants are entitled to refund of service tax paid on CHA Services subject to verification by lower authorities. Foreign Based Commission Agent - rejection on the ground that no agreement/contract was provided showing the payment of commission to foreign agent - HELD THAT:- Ld. Commissioner failed to consider the confirmation of contract which has been produced by the appellant - the condition laid down in the notification are satisfied and the appellant is entitled to get the refund on this service subject to verification by the lower authorities. Transport of Goods by Road and By Rail - rejection on the ground that the details of exporter invoices are not mentioned in lorry receipts and the appellant has not provided any proof of payment of service tax - HELD THAT:- The Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, INDORE VERSUS GRASIM INDUSTRIES LTD. [ 2011 (7) TMI 944 - CESTAT, NEW DELHI] has held that the debit notes contain all the details which are required to be mentioned in the invoice and except for its name. Therefore, it can be treated as equivalent to invoice - thus, the refund on this ground has wrongly been rejected and the appellants are entitled to refund of service tax paid on the impugned services subject to verification by the lower authorities. The appeals are allowed by way of remand, directing the original authorities to verify the documents and thereafter, allow the refunds.

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• 2023 (10) TMI 678
  Levy of Service Tax - Business Auxiliary Service - incentive/commission received by the appellant from M/s.Galileo India Pvt. Ltd. for using CRS service - HELD THAT:- The said issue has been settled by the Larger Bench of this Tribunal in the case of KAFILA HOSPITALITY TRAVELS PVT. LTD. VERSUS COMMISSIONER, SERVICE TAX, DELHI [ 2021 (3) TMI 773 - CESTAT NEW DELHI (LB) ], which has been followed by this Tribunal in the case of M/S. ASVEEN AIR TRAVELS (P) LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2022 (4) TMI 1035 - CESTAT CHENNAI] , wherein this Tribunal has observed the said incentive is not subject to levy of service tax. The issue is no more res integra in the light of the decision of the Larger Bench as well as followed by this Tribunal in the case of Asveen Air Travels (P) Ltd., it is held that the incentive/commission received by the appellant from M/s. Galileo India Pvt. Ltd. is not liable to service tax, in terms of section 65(19) of the Finance Act, 1994. The impugned order set aside - appeal allowed.

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• Central Excise

• 2023 (10) TMI 677
  Reversal of cenvat credit on certain amounts written off by the vendor - Rule 3(5B) of Cenvat Credit Rules, 2004 - HELD THAT:- The credit is required to be reversed only in the circumstances when inputs or capital goods on which credit has been taken is written off fully or partially - In the instant case, the appellant have vehemently asserted that the goods have been used in the manufacture of final products. This assertion was also made before the lower authorities as well as in the present appeal. No evidence has been produced by Revenue to show that the said goods were not used in the manufacture of final product. In this background the Rule 3(5B) itself cannot be invoked for recovery of cenvat credit. The primary condition for invoking Rule 3(5B) is non use of inputs/ capital goods on which credit has been taken. The instant case is only of non-payment / waiver of the price which the appellant were require to pay to the vendor. It is apparent that the recovery provisions for amount recoverable under Rule 3(5B) was introduced only w.e.f. 01.03.2013. The present dispute is for the period prior to the said date. In these circumstances, notification of Rule 14 to recover these amounts is doubtful. There are no merit in the impugned order. The same is set aside and appeal is allowed.

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• 2023 (10) TMI 676
  Reversal of CENVAT Credit - Trading activity - exempt services - services under the head of Management Consultancy Service received by a foreign person - HELD THAT:- It is seen that the management consultancy service is covered under sub clause (r) of Clause 105 of Section 65 of the Finance Act and therefore, included within the mischief of Rule 6(5) of Cenvat Credit Rules, 2004. A perusal of the impugned order shows that the Commissioner has relied on certain decisions of Tribunal holding that the trading activity is neither an output service nor a manufactured product liable to central excise duty, therefore, cenvat credit availed in respect of Trading Activity can be denied. Since rule 6(5) of the Cenvat Credit Rules, 2004 excludes the credit availed on Management Consultancy Service from the application of Rule 6(1), 6(2) and 6(3) of the Cenvat Credit Rules, 2004, no reversal of cenvat credit is required. The impugned order cannot be sustained. The appeal is allowed.

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• 2023 (10) TMI 675
  Reversal of CENVAT Credit - denial on the grounds that the moulds and dyes were not purchased by the appellants but were simply supplied by the OEMs along with the credit thereof - Opportunity of being heard not provided - Violation of the principles of natural justice - HELD THAT:- The appellants not being the owners of the goods cannot avail credit.We find that the requirement for availing CENVAT credit on inputs and capital goods is that the same should have been received in the factory and that the credit availableshall be of the duties specified therein and barring the exclusions mentioned therein in the Rules and following the conditions mentioned therein. It is found that there is no condition, whatsoever, that the capital goods should necessarily be purchased or owned by the assessee. The stress of the Rules is on the use of inputs and capital goods rather than the ownership. It is on record that the appellants have reversed the credit availed, whenever such moulds and dyes have been returned back to the OEMs, in terms of Rule 5 of CENVAT Credit Rules. The crux of the argument of the Department is that the appellants have not purchased the capital goods and as such are not the owners of the capital goods and hence, the credit availed by them is incorrect - there is no provision in the CENVAT Credit Rules prescribing that the ownership of capital goods is a precondition for availing CENVAT credit - the appellants have satisfied the conditions required for availment of CENVAT credit under the Rules and as such, the credit cannot be denied for the reason that they have not purchased the capital goods and hence are not owners of the said capital goods. Violation of the principles of natural justice - Opportunity of being heard not provided - HELD THAT:- The appellants have demonstrated that opportunity of being heard has not been given to them even though; they have approached the office of the Commissioner on the dates on which personal hearing was fixed. There are no cognizance of the Letter dated 13.10.2011 has been taken by the Adjudicating Authority. There is nothing on record to show whether that letter has been replied or otherwise. The learned Counsel for the appellants also submits that the show-cause notice is time-barred. Considering the facts of the case and particularly, the fact that the appellants have been filing ER-1 Returns regularly, there is merit in the argument of the learned Counsel for the appellant - as the appellant has a strong case on merits, there is no need to go into the issue of limitation. The impugned order is set aside and the appeal is allowed.

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• 2023 (10) TMI 674
  Exemption benefit of N/N. 15/2010 CE dated 27.02.2010 denied - inability to to produce the amendment certificate. Denial of exemption on the ground that the appellant have violated the condition of Notification No 15/2010-CE in as much as the address of the Superintendent/ Assistant Commissioner/ Deputy Commissioner was wrongly mentioned as Changodhar whereas the good were supplied from their Odhav unit. HELD THAT:- It can be seen that in the certificate the address of Superintendent/ Assistant Commissioner /Deputy Commissioner of Central excise was wrongly mentioned as Changodhar, Ahmedabad under which the appellant unit does not fall, however, the certificate was issued in favour of the Appellant s Odhav Unit which can be seen from the annexure which is the part of the certificate in column 1 against the name and address of the manufacturer. In the same annexure the name and the address of the project for which goods have been supplied to the project is also mentioned. The said annexure bears the seal and signature of the project i.e. Waa Solar India Pvt Ltd as well as the appellant s Odhav Unit. These details clearly show that the goods were supplied by the appellant s Odhav Unit to the concern project. From the invoices it can be seen that the invoice was raised by the appellant s Odhav unit and the concerned project name was clearly given as Waa Solar India Pvt Ltd. With the given details, it is absolutely clear and beyond any doubt that the goods were supplied by the appellant s Odhav unit to the concerned project for which the certificate was issued. Therefore, the condition of the notification is clearly fulfilled and the address of the Superintendent/ Assistant Commissioner/Deputy Commissioner given in the certificate was inadvertently mentioned. Only on that basis, the fact that the Certificate was indeed issued in favour of the Appellant s Odhav unit for supply of goods by the Odhav unit to the Project Waa Solar India Pvt Ltd I not in dispute. Therefore, merely for the small error in the certificate, the benefit of Notification No 15/210-CE cannot be denied. Therefore, the impugned order is not sustainable - appeal allowed.

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• 2023 (10) TMI 673
  CENVAT Credit of service tax paid by the job workers - denial on the ground that the job worker should not have paid the service tax - exemption under N/N. 08/2005-ST and 25/2012-ST - whether the job worker has option to pay the service tax or compulsorily avail the exemption Notification No 08/2005 and 25/2012? HELD THAT:- In terms of subsection (1A) of Section 5A of CEA for the purpose of central excise if an exemption is granted absolutely the manufacturer of excisable goods shall not have option to pay excise duty whereas the Notification necessarily to be availed by the assesse. Unlike sub section (1A) of Section 5A, there is no provision in the Finance Act, 1994 to compulsorily avail the exemption granted absolutely. Therefore, Notification No. 08/2005-ST and 25/2012-ST even though they grant absolute exemption but in absence of provision such as Sub section (1A) of Section 5A of Finance Act, 1994 the assessee has option either to pay service tax or to avail the exemption. When the job worker has paid the tax without availing the exemption Notification there is no illegality in payment of such service tax. If this be so, then the service recipient, in the present case, the appellant are legally entitled to avail the cenvat credit as there is no dispute that the input services is directly used in or in relation to manufacture of their final product. There are nothing illegal or wrong on the part of the appellant in availing the cenvat credit on the input services provided by the job worker to the appellant - the impugned order is not sustainable - appeal allowed.

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• 2023 (10) TMI 672
  Refund of accumulated credit in CENVAT credit - rejection on the grounds that claim filed beyond the period of limitation of one year from the date of exports - no justification of inability to utilize the said credit - HELD THAT:- It is settled law that relevant date for the purpose of section 11B of Central Excise Act, 1944 would be the date of export/date on which the application could have been preferred/ date on which the last of the repatriation for the export of that quarter was received. This aspect has not been examined by the lower authorities. The claim has also been held liable to be rejected for not having justified the inability to utilize the CENVAT credit towards domestic clearance. We do not find any such condition in the said notification or, for that matter, in rule 5 of CENVAT Credit Rules, 2004. The eligibility for availment of the scheme, though elaborating upon the non-utilization of accumulated CENVAT credit, has not designed a mechanism for such segregation save proportionality with exports which is not in dispute. Such entitlement for claim of refund has not been examined and, having been disposed off at the threshold, lacks scrutiny on merits. It is necessary for the application for refund to be restored to the original authority for determination of the amount of refund eligible in accordance with the said notification - matter remanded to the original authority for fresh decision. Appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2023 (10) TMI 671
  Estimation of taxable turnover - restaurant - unaccounted sale only for one day previous to the date of search - Whether on the facts and circumstances of the case the Commercial Tax Tribunal were legally justified in estimating the taxable turnover at Rs. 35.51 lakh especially when in the previous and in subsequent assessment year accepted sales of the applicant of Rs. 2098,250/- and Rs. 21,42,450/-? HELD THAT:- On perusal of the record, it reveals that the revisionist has disclosed turnover at Rs. 20,05,100/- and admitted the tax liability of Rs. 2,83,917/-. The books of account were rejected on various grounds and the Assessing Authority has fixed the same at Rs. 65,05,100/-, against which a first appeal was filed, which was rejected. Still feeling aggrieved, the revisionist preferred second appeal, which was partly allowed fixing taxable turnover to Rs. 4,51,648/-. The only basis of enhanced taxable turnover was the survey dated 25.02.2016, where some bills were found pertaining to the last night, i.e., 24.02.2016. It is categorically argued before the Tribunal that the previous day of survey being a festival day, therefore, the said sale found at the time of survey, which cannot be the only determining factor as held by this Court in the case of M/s Bhagwati. It is also noticed that in the business of restaurant, there is always fluctuation in sale and therefore, the same cannot be on a higher side throughout the year as fixed by the authorities below. The revision is partly allowed.

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• 2023 (10) TMI 670
  Revision of assessment order - Time Limitation - demand raised on the ground that the appellant is a lumpsum contractor and validity of Section 9 read with Rule 49 of HVAT Act/Rules - assessee was liable to lumpsum payment of tax? - HELD THAT:- The delay of less than three months in passing of the revisional order has been explained satisfactorily. In this backdrop, the Tribunal has rightly held that the case fell in the exceptions of extending the period of limitation by invoking the provision of Section 34 of the HVAT Act. Hence, finding with regard to the extension of limitation has been rightly given by the Tribunal keeping in view that the assessee had sought a number of adjournments before the Revisional Authority. The second ground for challenge to the order passed by the Tribunal is that the assessee was not liable to lumpsum payment of tax. Even this argument is liable to be rejected as Section 9 read with Rule 49 of the HVAT Act already had a provision for payment option by a contractor/developer to pay lumpsum tax - Hence, the appellant was liable to pay lump sum tax upto 16.05.2010. Thus, no ground is made out to interfere in the findings recorded by the Tribunal while passing the impugned order. No substantial question of law arises for consideration - appeal dismissed.

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• 2023 (10) TMI 669
  Payment of tax at compounded rates under Section 8 of the Kerala Value Added Tax Act - Deduction of certain amounts from the gross contract value received by him from the customers and applied the rate of tax prescribed under Section 8 to the said reduced contract value - benefit of sub-contractor deduction evidenced by consolidated Forms 20H issued for multiple years - HELD THAT:- Athough the provision for payment of tax on compounded basis for works contractors provides that the contractor has an option of paying tax at 3% of the whole contract amount instead of paying tax in accordance with the provisions of Section 6 of the KVAT Act, the expression whole contract amount for the purposes of the Section is clarified as not including the amount paid to sub-contractors for execution of a portion of works contract if the sub-contractor is a registered dealer liable to pay tax under sub section (1) or sub section (1A) of Section 6, and the contractor claiming deduction in respect of such amount furnishes certificates in such form as may be prescribed. The provisions of a taxing statute have to be read in the backdrop of Article 265 of the Constitution of India, which clearly mandates that there shall be no levy and collection of tax except by the authority of law. Read in the backdrop of the constitutional provision, therefore, Section 8 of the KVAT Act cannot be taken as authorising the levy of tax on any amount that does not bear nexus with the construction activity involved in a works contract in the instant case. Statutory levies and amounts paid by the petitioner as pure agent of the customer, who is legally obliged to bear the burden of those levies and expenses, cannot be included in the contractual receipts of the petitioner for computing the whole contract amount for the purposes of Section 8 of the KVAT Act. It is no doubt true that if there was a separate agreement for the sale of the incomplete structure, the consideration shown under such agreement would have been for the purchase of an item of immovable property and no KVAT would have been levied on the said consideration amount. In the instant case, however, there is a situation where in the single agreement that was entered into between the petitioner and his customer, the consideration for the construction activities undertaken by the petitioner for the unfinished portion of the building, at the time of entering into the agreement with the customer, includes not only the amount towards construction of the unfinished portion but also an amount towards the completed portion of the building up to the date of the agreement - Since there was only a single indivisible agreement, for which consideration flowed from the customer to the petitioner, the petitioner cannot be heard to contend that the whole contract value in respect of the works contract undertaken for the customer would not include the consideration attributable to the portion of the building that was already constructed at the time of entering into the agreement. The imposition of tax on the whole contract value, the State cannot be seen as imposing tax on the sale of immovable property; on the contrary, it has to be seen as levying tax on the works contract undertaken by the petitioner, albeit on a value that stood enhanced by the cost incurred for the completed construction. These O.T. Revisions are disposed off.

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• 2023 (10) TMI 668
  Validity of assessment order - correctness of re-computation of the gross profit - levy of penalty on the petitioner being double the amount of tax allegedly evaded by the petitioner - HELD THAT:- While it may be a fact that an estimation of gross profit has to be done on a scientific basis, inter alia by taking into account the profit earned through the sale of the various brands of IMFL dealt with by the petitioner, in the instant case, it is found firstly, that the estimation done by the Intelligence Officer in the penalty proceedings was not challenged by the petitioner in further proceedings. The Assessing Authority has merely adopted the same gross profit as was estimated by the Intelligence Officer and it is found difficult to accept an argument against such estimation in the assessment proceedings when there was no such dispute raised by the assessee against the estimation done for the purposes of penalty. Secondly, the estimation of gross profit by the Intelligence Officer/Assessing Authority has not resulted in the adoption of an unreasonably higher rate of gross profit than what was already conceded by the petitioner towards sales of IMFL and Beer. No doubt, in circumstances where the gross profit estimated by the revenue authorities is significantly higher than what is conceded by the assessee, and it is apparent that the estimation itself was done in an unscientific manner, it may be open to an assessee to challenge the same inter alia based on the decisions mentioned. On the facts of the instant case, however, there are no reason to interfere with the impugned order of the Tribunal. Revision dismissed by answering the questions of law raised therein against the assessee and in favour of the revenue.

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• Indian Laws

• 2023 (10) TMI 667
  Smuggling - violation of the mandatory provisions of Section 52A (2) of the NDPS Act - procedure not followed in drawing the samples and seizing the alleged narcotic substance - HELD THAT:- It is an admitted position on record that the samples from the seized substance were drawn by the police in the presence of the gazetted officer and not in the presence of the Magistrate. There is no material on record to prove that the Magistrate had certified the inventory of the substance seized or of the list of samples so drawn. In the absence of any material on record to establish that the samples of the seized contraband were drawn in the presence of the Magistrate and that the inventory of the seized contraband was duly certified by the Magistrate, it is apparent that the said seized contraband and the samples drawn therefrom would not be a valid piece of primary evidence in the trial. Once there is no primary evidence available, the trial as a whole stands vitiated. The failure of the concerned authorities to lead primary evidence vitiates the conviction and as such, the conviction of the appellant deserves to be set aside. The impugned judgment and order of the High Court as well as the trial court convicting the appellant and sentencing him to rigorous imprisonment of 10 years with fine of Rs.1 lakh and in default of payment of fine to undergo further imprisonment of one year is hereby set aside - the appellant has already undergone more than 6 years of imprisonment out of 10 years awarded to him. He is on bail and has been granted exemption from surrender by this Court. Therefore, his bail bonds, if any, stands cancelled. Appeal allowed.

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