TMI Tax Updates - e-Newsletter
October 15, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Rejection of refund claim - excess payment made in terms of Section 54 of GST Act - Period of limitation - The impugned order is not at all a speaking order. No reasons have been assigned for rejecting the refund application of the petitioner. - Matter restored back - HC
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GST:
Inaction of the GST department in opening the portal qua the petitioner - transfer of registration of the dealer pursuant to the death of the proprietor of the firm - The respondents are directed to activate the common portal and allow the petitioner to upload the appropriate information in FORM REG- 16 within next 30 days. As soon as the information is provided, the GSTIN number of the transferee and the transferor shall be linked as per clause 3(b) of the Circular dated 28.03.2019 - HC
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GST:
Seeking grant of regular bail - allegation of issuing fake CA certificates for refund of GST - there is no allegation that the petitioner is in any way the beneficiary of the excess Input Tax Credit, allegedly received by the companies - it is a Magisterial trial, which is yet to commence; thus, - HC
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GST:
GST audit and GST investigation proceedings - simultaneous proceedings - Since the audit proceedings under Section 65 of the Act has already commenced, it is but appropriate that the proceedings should be taken to the logical end. The proceedings initiated by the Anti Evasion and Range Office for the very same period shall not be proceeded with any further. - HC
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Income Tax:
Grant of benefit under Section 10(20) - When even respondent/Assessee never claimed the benefit under Section 10(20) of the Income Tax Act, 1961, the High Court is not justified in dismissing the appeals by granting the benefit to the respondent/Assessee under Section 10(20) of the IT Act. - SC
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Income Tax:
TDS u/s 195 - The agreement between the parties can be specific and its length or pages does not matter. Merely on the length of the agreement, the AO cannot overlook the contents of the agreement. The payment made to the non-resident was at no point of time pointed out by the Revenue that the said is coming under the purview of TDS deduction. - AT
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Income Tax:
TDS liability - the findings of the Ld.CIT(A) that halal certification involved technical knowhow being made available to the assessee, is incorrect on facts. The payment made by the assessee to IFANCA therefore for halal certification and supervision charges, did not qualify as “Included Services” in terms of Article 12(4) of the DTAA with USA and the said payment, we hold, did not qualify for withholding tax in terms of the DTAA - AT
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Income Tax:
Income accrued/taxable in India - Tax Resident - unexplained investment of the assessee made from the undisclosed sources - since, under the terms of the Indo UAE tax treaty, the right to tax the amounts in question, even if that be of income nature in the hands of the present assessee, does not belong to India, all these issues being raised by the learned counsel are wholly academic as of now. - AT
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Income Tax:
Bad debts claimed u/s 36(2)(i) - Assessee debited ‘Amount written off paid against advance of land’ - As per accounting policy and general business practice any nature of loss is booked in books of accounts under specific head. But in IT Return the area of declaration is specific which was compelled the assessee to mention the business loss in bad & doubtful coloumn. But the nature of loss cannot be changed which is supported by basic evidence, books of accounts. - Claim allowed - AT
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Income Tax:
Revision u/s 263 - the Ld. AR has been fair enough to concede that the AO was mandatorily required to refer the same to the TPO and, therefore, we hold that the Ld. PCIT was justified in setting aside the assessment on the issue of non-reference to the TPO in Assessment Year 2017-18. - AT
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Income Tax:
Disallowance of provision made in respect of an anticipated loss being the diminution in the value of Govt. of India Fertilizer Bonds - the methodology adopted by the assessee was a scientific method. It was supported by the rates issued by the Govt. of India itself and the loss was actually determinable, though would be actually incurred at the time of redemption. - AT
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Customs:
Release of seized goods - Unflavoured Supari (Cut Betelnut Product) - The respondents are directed to pass appropriate orders assessing and classifying the goods, based on the report of the Custom House Laboratory, Custom House, Tuticorin, within a period of 10 days from the date of receipt of a copy of this order. - HC
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Indian Laws:
Validity of directions issued by the HC in favor of Adani Ports (APSEZL) - The High Court ought to have taken into consideration that, unless all the three conditions were complied with, the interest of the appellant-CWC, which is a statutory Corporation, could not have been safeguarded. If a settlement was to be arrived at, unless the same was found to be in the interest of both the parties, it could not have been thrust upon a statutory Corporation to its detriment and to the advantage of a private entity. - SC
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Central Excise:
Levy of excise duty or NCCD - Post GST era - The CGST itself contemplates levy of excise duty upon tobacco and tobacco products apart from they being taxed under the provisions of CGST. There is no error in the same. Thus, the respondents are entitled to levy CGST as well as excise duty on tobacco and tobacco products. - The Finance Act, 2001 sought to levy NCCD on the goods as described in the Seventh Schedule. For better clarification, reference is made out in the Central Excise Act. Repealing of the Central Excise Act does not absolve the petitioners paying NCCD as determined under the Seventh Schedule - HC
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Central Excise:
Classification of goods - The end use of MVAC is to produce Chilled Water. The use of heat as one of the sources in the air-conditioning system would not take away the primary or basic function of the MVAC, which is to cool and not heat water. The additional heating capability of the machine thus raises a peculiar dilemma, but then one can be guided by the market parlance test which shows that the machine is perceived and purchased only as a cooling device - it is declared that the product manufactured by the appellants merit classification under Sub-heading 8418.10 of the central excise Tariff Act, 1985, in the category of refrigerating equipmen - SC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (10) TMI 505
Rejection of refund claim - excess payment of GST - rejection of claim on the ground of time limitation - Section 54 of the Central Goods and Services Tax Act, 2017/Telangana Goods and Services Tax Act, 2017 - HELD THAT:- The impugned order is not at all a speaking order. No reasons have been assigned for rejecting the refund application of the petitioner. Respondent No.1 did not advert to the objections filed by the petitioner on 10.03.2022. The matter remanded back to respondent No.1 to pass a fresh order on the refund application of the petitioner dated 14.01.2022 after giving reasonable opportunity of hearing to the petitioner, including personal hearing. Let the said exercise be completed within a period of three months from the date of receipt of a copy of this order - petition disposed off.
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2022 (10) TMI 504
Transfer of registration of the dealer pursuant to the death of the proprietor of the firm - Inaction of the GST department in opening the portal qua the petitioner - GSTIN of the transferee and the transferor were not linked only on account of the information not being provided electronically on the common portal in FORM GST REG-16 - HELD THAT:- This absolute hypertechnical ground cannot be considered valid so as to deny the petitioner from the opportunity to link the GSTIN of his father s firm with the new GSTIN number of the firm. As a matter of fact, the petitioner gave the intimation about the death of the proprietor of the firm which fact establishes his bonafides that he is desirous of removing the anomalies and clearing off the tax liability. The respondents are directed to activate the common portal and allow the petitioner to upload the appropriate information in FORM REG- 16 within next 30 days. As soon as the information is provided, the GSTIN number of the transferee and the transferor shall be linked as per clause 3(b) of the Circular dated 28.03.2019 - writ petition allowed.
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2022 (10) TMI 503
Seeking grant of regular bail - UDIN borrowed from colleague for uploading and issuance of the CA certificate - beneficiary of the excess Input Tax Credit - HELD THAT:- In the present case the investigation has been completed and the challan stands presented; he is not involved in any other case; he is in custody since 17.5.2022; nothing is to be recovered from him; there are a total of 21 PWs; it is a Magisterial trial, which is yet to commence; thus, further incarceration of the petitioner behind bars would not serve any useful purpose, the present petition for grant of regular bail deserves to be allowed. The petitioner is ordered to be released on regular bail, subject to his furnishing bail/surety bonds amounting to Rs.10 lakhs to the satisfaction of trial Court/Duty Magistrate concerned and subject to him not being required in any other case - Petition allowed.
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2022 (10) TMI 502
Seeking grant of regular bail - allegation of issuing fake CA certificates for refund of GST - there is no allegation that the petitioner is in any way the beneficiary of the excess Input Tax Credit, allegedly received by the companies - HELD THAT:- In the present case the investigation has been completed and the challan stands presented; petitioner is stated to be not the beneficiary; he is not involved in any other case; he is in custody since 17.5.2022; nothing is to be recovered from him; there are a total of 21 PWs; it is a Magisterial trial, which is yet to commence; thus, further incarceration of the petitioner behind bars would not serve any useful purpose, the present petition for grant of regular bail deserves to be allowed. The instant petition is allowed. The petitioner is ordered to be released on regular bail, subject to his furnishing bail/surety bonds amounting to Rs.10 lakhs to the satisfaction of trial Court/Duty Magistrate concerned and subject to him not being required in any other case.
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2022 (10) TMI 501
GST audit and GST investigation proceedings - simultaneous proceedings - an audit u/s 65 of the CGST Act, 2017 has been conducted by the department for the same tax period - HELD THAT:- Since the audit proceedings under Section 65 of the Act has already commenced, it is but appropriate that the proceedings should be taken to the logical end. The proceedings initiated by the Anti Evasion and Range Office for the very same period shall not be proceeded with any further. There will be a direction to the first and fourth respondents to issue show cause notice to the appellants within a period of six weeks from the date of receipt of the server copy of this judgment and order and afford a reasonable opportunity to the appellants to submits their reply along with documents - Application allowed.
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Income Tax
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2022 (10) TMI 499
Grant of benefit under Section 10(20) - as conceded by respondent, that Assessee never claimed the benefit under Section 10(20) and according to the respondent, it was a case of Sections 11 and 12 of the IT Act - HELD THAT:- When even respondent/Assessee never claimed the benefit under Section 10(20) of the Income Tax Act, 1961, the High Court is not justified in dismissing the appeals by granting the benefit to the respondent/Assessee under Section 10(20) of the IT Act. Under the circumstances, the impugned judgment and orders passed by the High Court are unsustainable and the matters are to be remanded to the High Court to consider the appeals afresh in accordance with law and on its own merits. The present appeals succeeds. The impugned judgment and orders passed by the High Court are hereby quashed and set aside. The matters are remanded to High Court to consider the appeals afresh.
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2022 (10) TMI 498
TP Adjustment on account of receivables - substantial question of law - HELD THAT:- As decided in Bechtel India Pvt. Ltd. [ 2015 (12) TMI 1560 - ITAT DELHI] assessee is a debt free company. In such circumstances it is not justifiable to presume that, borrowed funds have been utilized to pass on the facility to its AE s. The revenue has also not brought on record that the assessee has been found paying interest to its creditors or suppliers on delayed payments. Disallowance under Section 40(a)(ia) - This Court finds that there is no dispute that the assessee has deducted tax at source under Section 192 of the Act. This Court is in agreement with the opinion of the ITAT that Section 195 of the Act has no application once the nature of payment is determined as salary and deduction has been made under Section 192 of the Act. This Court is further of the view that the judgment in Centrica India Offshore Pvt. Ltd [ 2014 (5) TMI 154 - DELHI HIGH COURT] has no application to the present case as the ITAT has returned a finding that the real employer of the seconded employees continues to be the Indian entity and not the overseas entity. Consequently, this Court is of the view that the issues of receivables as well as disallowance under Section 40(a)(ia) of the Act are essentially questions of fact, which give rise to no substantial questions of law especially when the findings of the ITAT are not perverse. Draft order framed u/s 144(c)(1) of the Act is in the name of a non-existent company - Question No.1 is left open to be agitated in an appropriate matter.
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2022 (10) TMI 497
Disallowance u/s 14A r.w.r. 8D - expenditure incurred for earning dividend income from an overseas company in Oman - as submitted assessee is effectively not paying any tax on the said income either in the source country or in India and thus, dividend income for all purposes is exempted from tax - HELD THAT:- This Court is of the opinion that in view of Section 14A(1), no deduction is to be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. As per Section 2(45) of the Act, total income means the total amount of income referred to in Section 5, computed in the manner laid down in the Act. Therefore, Section 14A pertains to disallowance of deduction in respect of income which does not form part of the total income. Since the dividend received by the assessee from OMIFCO, Oman is chargeable to tax in India under the head Income from other sources and forms part of the total income, the same is included in taxable income in the computation of income filed by the assessee. However, rebate of tax has been allowed to the assessee from the total taxes in terms of Section 90(2) of the Income Tax Act read with Article 25 of the Indo Oman, DTAA and thus, the dividend earned can be said to be in the nature of excluded income and, therefore, the provisions of Section 14A would not be attracted in this case. This Court in the case of CIT vs. M/s Kribhco [ 2012 (7) TMI 591 - DELHI HIGH COURT] has held that provisions of Section 14A are inapplicable as far as deductions, which are permissible and allowed under Chapter VIA are concerned. No substantial question of law arises.
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2022 (10) TMI 496
Assessment u/s 153A - Proof of Incriminating documents or materials had been found and seized at the time of search - HELD THAT:- Where the assessment of the respondents had attained finality prior to the date of search and no incriminating documents or materials had been found and seized at the time of search, no addition could be made under Section 153A of the Act as the cases of the respondents were of non-abated assessment. See Bhadani Financiers Pvt. Ltd. [ 2021 (9) TMI 902 - DELHI HIGH COURT] and Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] - Decided in favour of assessee.
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2022 (10) TMI 495
Provisional attachment to protect revenue in certain cases - Extension of time limit to two years pending assessment or 60 days after the date of order of assessment or reassessment, whichever is later - HELD THAT: - In this case, the order of assessment has been passed on 19.08.2021 and thus the period of 60 days after the date of order of assessment, as per the proviso, would expire on 19.10.2021. There can be no further extension of time in terms of Section 281B and the impugned attachment dated 17.02.2021 has thus elapsed, pending Writ Petition.
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2022 (10) TMI 494
Unexplained cash deposits - HELD THAT:- As gone through the Assessment Order and the order of the Commissioner of Income Tax (Appeals) and the arguments of Assessee that these cash withdrawals are the sources of cash deposits, we noted that the Commissioner of Income Tax (Appeals) has categorically given a finding that the Assessee could not substantiate the linkage of the cash withdrawals of that of the cash deposits. Even before us, the Assessee could not substantiate these cash deposits vis- -vis cash withdrawals and hence we confirm the order of the Commissioner of Income Tax (Appeals) on this issue and this issue in the Assessee s appeal is dismissed.
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2022 (10) TMI 493
Disallowance of depreciation on the Furniture Fixture - Disallowance made u/s 40A(3)(a) - Addition made on account of cash payments exceeding Rs.20,000/- - HELD THAT:- When the appeal is filed before the Tribunal by the assessee himself against the orders of the lower authorities, it is expected that the assessee may put forth some documentary evidences in support of his contentions to decide the appeal as it is the duty of the assessee to lead evidence in support of its claim and for the adjudicating authority to decide upon the sustainability of the claim on the basis of the evidence led by the parties before it. However, the assessee did not appear before the Tribunal despite numerous adjournments allowed and notices issued through RPAD. No material has been placed by assessee to controvert the findings of lower authorities. In this view of the aforesaid facts and in absence of any contrary material brought on record to rebut the findings of lower authorities, we find no reason to interfere with the order of CIT(A) and thus we dismiss the grounds of the assessee.
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2022 (10) TMI 492
Capital gain computation - transfer of property/sale of property for the purposes of capital gains - sale value consideration - HELD THAT:- Hon ble Supreme Court in SH. SANJEEV LAL ETC. [ 2014 (7) TMI 99 - SUPREME COURT] had held that for the purpose of capital gains, an agreement to sell with part payment thereof transfers the ownership in this regard for the purpose of necessary computation in this regard. Though the amendment in Finance Act, 2016 was made from the date referred by the ld. CIT (A) but the decision of Hon ble Supreme Court was prior also wherein it was held that for the purpose of transfer of property/sale of property for the purposes of capital gains, agreement to sell with part payment thereof is sufficient compliance. In this case as already noted, out of consideration of Rs.1.6 crores, assessee had already paid a substantial sum of Rs.1.10 crore at that time. Hence, in our considered opinion, the authorities below action to take circle rate of the year of registration is not sustainable and accordingly set aside the same. Claim of certain expenses relating to registration expenses as cost of improvement - AO had not allowed the same on the ground that no details were furnished before him - HELD THAT:- As assessee referred to his letter in the paper book to the AO wherein all the necessary details were furnished, interest of justice will be served if this issue is re-examined by the AO afresh and decide as per law. We order accordingly. Needless to add assessee should be provided an opportunity of being heard.
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2022 (10) TMI 491
TDS u/s 195 - international transaction for payment made on account of Data Line Charges - HELD THAT:- It is pertinent to note that Section 201(3) specifies the time limit in respect of TDS for residents only. CIT(A) observed that the order dated 25.03.2019 is beyond four years in light in case of NHK Japan Broadcasting Corporation [ 2008 (4) TMI 182 - DELHI HIGH COURT] . The decision of Jurisdictional High Court referred by the CIT(A) is opt in present case as regards to limitation. Further on merit, the assessee before the AO as well as before the CIT(A) has given the details as well as agreement between the assessee and Allscripts USA. The agreement between the parties can be specific and its length or pages does not matter. Merely on the length of the agreement, the AO cannot overlook the contents of the agreement. The payment made to the non-resident was at no point of time pointed out by the Revenue that the said is coming under the purview of TDS deduction. The amount paid to Allscripts USA is on actual cost basis without any element of markup and for the reimbursement of expenses incurred by way of using the network connectivity provided by the service provider and the amount is not chargeable to tax on any accounts. Thus, the CIT(A) has rightly deleted the addition. Decided against revenue.
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2022 (10) TMI 490
Deduction under section 54 and 54F - exemption has been denied to the assessee by observing that it has booked the flat with the builder in earlier year but ultimately took the possession in subsequent years - HELD THAT:- The case of the assessee is covered by Circular No. 471 and 672 of the CBDT, because the assessee has booked the flat, which has not been disputed by the Revenue. The dispute is that deduction ought to be claimed in the year when flat was booked and not in the year when possession was taken. The case of the assessee is that capital gain has been arose in the year in which he took the possession of the flat and, therefore, this capital gain be set off against price of the flat, which ultimately came to his possession. CIT(Appeals) failed to take cognizance of the judgments referred by him in paragraph 5 (extracted supra). The assessee has utilized the capital gain arose within one year from taking possession of the new flat and, therefore, on the basis of the Circulars and the judgments referred by CIT(Appeals), is entitled for the deduction. Accordingly, we allow the claim of the assessee and direct AO to grant deduction under section 54 and 54F - Accordingly, the appeal of the assessee is allowed exparte.
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2022 (10) TMI 489
Assessment u/s 153A - Addition u/s 68 - HELD THAT:- No assessment or reassessment was pending for any of the years under appeal and the AO in the remand report also has not disputed the aforesaid facts. He has further given a finding that no seized document or material pertaining to A.Y. 2009-10 was found during the course of search and the additions that have been made by the AO are not based on any incriminating material found during the course of search. While deleting the additions, CIT(A) has also placed reliance on the decision in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and other decisions cited in the order. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue. Further Revenue has also not placed any contrary binding decision in its support. Considering the totality of the aforesaid facts, we find no reason to interfere with the order of CIT(A) and thus the grounds of Revenue are dismissed.
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2022 (10) TMI 488
Rectification of mistake u/s 154 - Late fee u/s.234E - 529 days for the delay in filing of the quarterly TDS statement - HELD THAT:- Any order passed u/s.154 is an appealable order before the first Appellate Authority. In our considered view, CIT (Appeals) ought to have adjudicated the appeal filed by the Assessee against the order passed u/s.154 of the Act and should have decided the issues involved in this appeal on merits. But, the learned CIT (Appeals) had dismissed the appeal filed by the Assessee by holding that the appeal filed by the Assessee against the order passed u/s.154 of the Act is not maintainable. In our considered view, CIT (Appeals) is grossly erred in dismissing the appeal filed by the Assessee as not maintainable, without discussing the issues involved in the appeal on merits and thus, we set aside the order of CIT (Appeals) and restore the issues to the file of the first Appellate Authority and direct the CIT (Appeals) to decide the issues involved in this appeal on merits including the validity of the order passed u/s.154 by the Assessing Officer and consequent issues involved therein.
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2022 (10) TMI 487
Reopening of assessment u/s 147 - non deduction of TDS - certain payment on which TDS was required to be deducted but was not deducted by the assessee, having not being disallowed while computing the income of the assessee, and thus the income relating to the same escaping assessment - HELD THAT:- No hesitation in concurring with the finding of the ld.CIT(A) that reopening in the present case was not change of opinion at all. The challenge raised by assessee against the validity of the assessment framed under section 147 of the Act in the present case, therefore, has been rightly held to be not sustainable in law by the ld.CIT(A). The order of the ld.CIT(A), upholding the validity of the assessment framed under section 147 of the Act is upheld. Ground no.1 is dismissed. TDS u/s 195 - non-deduction of tax at source as per section 40(a)(ia) on expenses related to certification fees paid to Islamic Food and Nutrition Council of America ( IFANCA ), Chicago - making available technical knowledge to the assessee so as to be treated as included services as per Article 14(2) of the DTAA with USA for the purpose of holding taxes on the same - assessee contended thereafter that IFANCA was division of Islamic Food and Nutrition Council of America, and a non-profit Islamic Organization incorporated in 1982 in the State of Illinois, USA and remittance was on account of payment of Halal supervision and certificate fees in respect of export of Gelatine to USA and European countries - HELD THAT:- To make the assessee halal compliant the assessee is educated about the meaning and implication of the term, its products and process adopted for manufacturing are reviewed to see that they are halal compliant, sanitation and cleaning procedures are reviewed and so on. The end purpose, we may state at the cost of repetition, being to ensure that the product manufactured by the assessee and the process adopted for manufacturing is such that it can be certified as halal . What technicality is involved in halal compliant, has not been pointed out by the Revenue. As per the common meaning of the term halal , as noted above by us, we do not find any technicality involved in halal compliant. Therefore, we hold, that the findings of the Ld.CIT(A) that halal certification involved technical knowhow being made available to the assessee, is incorrect on facts. The payment made by the assessee to IFANCA therefore for halal certification and supervision charges, did not qualify as Included Services in terms of Article 12(4) of the DTAA with USA and the said payment, we hold, did not qualify for withholding tax in terms of the DTAA. The disallowance of the said expenses for non deduction of tax at source is therefore unwarranted. The disallowance therefore of the amount of certification and supervision paid to the IFANCA directed to be deleted. - Decided in favour of assessee.
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2022 (10) TMI 486
Income accrued/taxable in India - Tax Resident - Taxability of investment of unexplained income in properties in India - unexplained investment of the assessee made from the undisclosed sources - investment made in India by the assessee, who is non-resident Indian settled in the United Arab Emirates (UAE) - HELD THAT:- We find that similar issue arose for consideration before Co-ordinate Bench of the Tribunal in assessee s own case in ITO v/s Rajeev Suresh Ghai [ 2021 (12) TMI 697 - ITAT MUMBAI] assessee before us is a tax resident of the United Arab Emirates and is thus entitled to the benefits of the Indo UAE tax treaty. When the rights to tax the income in question. under the applicable tax treaty provisions, are allocated to the residence jurisdiction, it is wholly immaterial whether or not the source jurisdiction has the right to tax that income, and, in any event, India is not even a source jurisdiction for the income in question as no economic activities have been carried out in India- it is at best the jurisdiction in which earnings are invested. That cannot anyway have any bearing on the taxation of income. In our considered view, therefore, since, under the terms of the Indo UAE tax treaty, the right to tax the amounts in question, even if that be of income nature in the hands of the present assessee, does not belong to India, all these issues being raised by the learned counsel are wholly academic as of now. In the present case the assessee has also filed the Tax Domicile Certificate for the relevant Financial Year issued by the concerned authority in Ministry of Finance, UAE, in support of its claim. The learned D.R. could not show us in any reason to deviate from the aforesaid decision and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following aforesaid judicial precedent in assessee s own case, we find no infirmity in the impugned order passed by the learned CIT(A). As a result, grounds raised by the Revenue are dismissed.
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2022 (10) TMI 485
Levy of late fees u/s 234E - belated submission of Tax Deducted at Source statements - HELD THAT:- It is with effect from 01-06-2015 that an amendment was made to section 200A of the Act providing that fees u/s 234E could be computed at the time of processing of return of income and an intimation could be issued specifying the sum payable by the deductor as fees u/s 234E of the Act. Hon'ble Karnataka High Court in the case Fatheraj Singhvi Vs. Union of India [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] has held that the provisions of section 234E of the Act are substantive in nature and the mechanism for computing the late fee was provided by the Parliament only w.e.f. 01-06-2015. Therefore, late fees u/s 234E of the Act can be levied only prospectively w.e.f. 01-06-2015 and not prior to that. Admittedly in all the above eight cases, the Revenue has levied such late fee u/s 234E for F.Y. 2012-13, 2013-14 and 2014-15 which are for the periods prior to 01-06-2015 and hence, we set aside the concerned orders of the National Faceless Appeal Centre and direct the A.O to delete the late fees levied u/s 234E of the Act from the hands of the assessee.Appeal of the assessee allowed.
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2022 (10) TMI 484
Denial of natural justice to revenue - CIT-A deleted the addition - neither an opportunity of cross examination of the concerned persons of broker was granted nor were information/documents furnished pursuant to summons under section 131 of the Act provided to the AO, on the basis of which impugned addition was deleted by the CIT(A) - HELD THAT:- We are of the considered view that the principles of natural justice which applies in favour of assessee also equally applies in favour of the Revenue, since both are parties in appeal before the learned CIT(A). Accordingly, we deem it appropriate to restore the appeal before the learned CIT(A) for de novo adjudication. We further direct the learned CIT(A) to not only share the information received, pursuant to summons under section 131 of the Act, with the AO but also grant opportunity of cross examination of the concerned persons of the broker to the AO. We also direct the AO to file its report/response before the learned CIT(A) pursuant to the above. The assessee shall also be at liberty to file rejoinder, if any, in reply to the report/response of the AO. Needless to mention that no order shall be passed without affording opportunity of hearing to both the sides. Accordingly, grounds raised by the Revenue are allowed for statistical purpose.
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2022 (10) TMI 483
Allowable revenue expenses - licence fee paid to Remfry Sagar Consultants Pvt. Ltd. (RSCPL) - as submitted by assessee being a law firm was using the goodwill of RSCPL being a company prohibited from arguing law in India as per the Advocates Act, 1961 and Bar Council of India Rule - HELD THAT:- As relying on own case [ 2021 (9) TMI 998 - ITAT DELHI ] deduction claimed by the assessee on account of licence fee paid to M/s Remfry Sagar Consultants Pvt. Ltd., is allowable as revenue expenditure u/s 37 of the Act. Consequently, grounds No.1 and 2 of the Revenue being devoid of merits are dismissed. Nature of expenses - disallowance of travelling and entertainment expenses - the personal use element in respect of these expenses cannot be ruled out considering the nature of expenses - CIT-A deleted the addition - HELD THAT:- As relying on assessee own case [ 2021 (9) TMI 998 - ITAT DELHI ] when the AO has not disputed the books of account qua the expenditure claimed by the assessee in any manner ad hoc disallowance of 10% on foreign travel expenses is not sustainable in the eyes of law. Appeal filed by the Revenue is dismissed.
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2022 (10) TMI 482
TP Adjustment - selection of MAM - Assessee selected Transactional Net Margin Method ( TNMM ) as the most appropriate transfer pricing method, with operating profit/operating cost ( OP/OC ) as the profit level indicator ( PLI ) - HELD THAT:- By not taking into consideration the segmental level profitability and calculating margins on entity level basis led to adjustments on the basis of profit allocation instead of segmental costing. More so inspite of availability of audited segmental accounts the DRP failed to take same into consideration. TPO / AO is directed to take into consideration, the audited segmental accounts and thereby make fresh adjustments. Accordingly these grounds are decided in favour of the assessee for statistical purposes. Comparable selection - HELD THAT:- As observed that assessee is dealing exclusively in domain of wastewater treatment facilities while companies included except DRA Consultants Ltd. have varied business interests. Since the assessee has the claim on segmental accounts the functionality test is a vital consequence. As assessee is operating in a very limited sphere of providing ecologically engineer wastewater treatment solutions the companies having diversified areas of interest and with nominal interest in wastewater treatment solutions cannot be said to passing the functionally test. Thus, the AO/ TPO are directed to remove Mitcon consultancy and engineering services, Aakar Abhinav Consultants Pvt. Ltd., Feedback Infra Pvt. Ltd. and Mahindra Consulting Engineers Limited from the comparables and make a fresh adjustments. Accordingly, the ground is decided in favour of the assessee.
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2022 (10) TMI 481
Capital gain computation - sale of immovable property and valued by Stamp Valuation Authority - as per assessee land so sold was out of purview of capital asset being an agricultural land and authorities below failed to give benefit of section 54F of the Act in respect of construction of residential house and also acquiring agricultural land - HELD THAT:- The objection of the assessee regarding purchase of agricultural land and construction of residential house is not adverted. Even the AO has not given any finding regarding investment of sale consideration for acquiring agricultural land and construction of residential property. Therefore, it would sub-serve the interest of justice if both the issues are restored to the file of the AO for decision afresh after verifying the correctness of the claim and if it is found that the sale consideration was invested out of capital gain then the AO would allow deduction to the assessee as available under the law. However, regarding the objection of the assessee that land in question was not a capital asset. It is seen from the records that the assessee had admitted that the Sale Deed was executed and related to the industrial plot. Therefore, see no merit in the submissions of the assessee that the land in question would not fall within the character of capital asset. Thus, grounds raised by the assessee are partly allowed.
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2022 (10) TMI 480
Bad debts claimed u/s 36(2)(i) - Assessee debited Amount written off paid against advance of land - HELD THAT:- The assessee is a real estate developer. The amount was invested for stock in trade related to his business. The loss was incurred for non utilization of the property and the payment would not be realized in this expectation. The assessee took the amounts in the profit and loss account as loss. In the observation of the CIT(A), the expenditure is taken as a business income and treated the loss as a bad and doubtful debts u/s 36(2). There is change of nature of investment was done by the Revenue authorities which is not accepted in the law. There is no question about the genuinity of the transaction of the assessee. As per accounting policy and general business practice any nature of loss is booked in books of accounts under specific head. But in IT Return the area of declaration is specific which was compelled the assessee to mention the business loss in bad doubtful coloumn. But the nature of loss cannot be changed which is supported by basic evidence, books of accounts. The catena of judgments which are mentioned above are in favour of the assessee. It is clear that this particular loss is a business loss and assessee is allowable to claim the loss in profit and loss account. Accordingly, the addition amount is to be deleted.- Decided in favour of assessee.
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2022 (10) TMI 479
Deduction u/s. 10AA - Exclusion of insurance charges from export turnover - HELD THAT:- The additional evidence submitted has to be factually verified to check whether the assessee is billing the customers towards insurance charges or not in order to determine whether the before insurance charges are to be excluded. Whether the insurance charges incurred are attributable to delivery of the articles or things outside India also needs to be verified based on facts and evidences. We therefore remit this issue back to the AO for verification of the facts afresh after giving opportunity of being heard to the assessee. AO is directed to consider the ratio laid down by the coordinate Bench of the Tribunal in the case of Tata Elxsi Ltd. [ 2015 (3) TMI 1220 - ITAT BANGALORE] in this regard. This ground is allowed for statistical purposes. Exclusion of 20% of traveling expenses from export turnover - The reason for adhoc disallowance made by the AO and CIT(A) is that the assessee has not submitted the required details to substantiate the claim that export turnover does not include the travel expenses as the assessee has not charged the customer and also that the travel expenses are largely incurred in INR. There is also a contention of the assessee that the travel expenses incurred in the course of business and not attributable to delivery of the articles or things outside India. These contentions need to be factually verified and the lower authorities have not carried out the verification based facts and evidences. We therefore remit this issue to the AO for fresh consideration, after giving reasonable opportunity of being heard to the assessee. The assessee is directed to submit the relevant details to substantiate its claim and cooperate with the proceedings. This ground is allowed for statistical purposes. Restricting benefit of 10AA deduction to the extent of export revenue brought into India in foreign currency - No reason to uphold the decision of the lower authorities in restricting the export turnover to the consideration received up to the date of filing of the return. In our considered view, the export turnover for the purpose of deduction u/s.10AA should not be restricted to the actual receipt since the legislature has not prescribed any time limit for the receipt in order to be eligible for deduction. We therefore remit the issue back to the AO to take into account the subsequent receipt and consider the entire export turnover to recompute the deduction u/s.10AA accordingly after giving reasonable opportunity of being heard to the assessee. This ground is allowed in favour of the assessee for statistical purposes. Expenses incurred towards brand launch - We notice that the assessee has submitted the details of entries pertaining to reversal of the provision made towards brand launch expenses in the subsequent financial year. We see merit in the submission of the AR that the disallowance of expenditure in the year under consideration would result in double disallowance since the entry is claimed to be reversed in the subsequent year and offered to tax. In this regard it is important to verify the entry pertaining to the reversal of brand expenses in the subsequent year and the additional evidence substantiating the same is not verified by the lower authorities. We therefore remit this issue to the AO with a direction to verify and allow the expenditure so that there is no double disallowance on this count. Needless to say that the assessee be given an opportunity of being heard. This ground of the assessee is allowed for statistical purposes.
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2022 (10) TMI 478
Revision u/s 263 - Allowable revenue expenditure u/s 37(1) - expenditure incurred on distribution of gifts / freebies to doctors and Medical Practitioners in the form of televisions, laptops, electronic goods, mobiles, sponsorship of tours and conferences and distribution of other similar items which have been charged as expenditure in the Profit and Loss Account under the head Business Promotion Expenditure - it is the opinion of PCIT that such expenditure was not allowable in terms of Explanation to section 37(1) of the Act being expenditure for a purpose which was an offence or was prohibited under the law - HELD THAT:- We have no hesitation in holding that the nature of the expenses under the head Business Promotion in all the years under consideration have thoroughly been examined/verified by the Assessing Officer, who framed the search assessments simultaneously and, as such, we are of the considered view that the concerned AO had duly applied his mind on this issue and the records of the various assessment proceedings, both in the original and in search assessment, bear testimony to the fact that, no Freebies/Gifts have been given to the Medical Practitioners/Doctors and that such gifts were only given to the Stockists/Distributors of the company as is evident from the various promotional schemes launched by the assessee company in different years. It would be relevant here to refer to the judgment of CIT vs. Sunbeam Auto [ 2009 (9) TMI 633 - DELHI HIGH COURT] wherein has held that the distinction between the lack of enquiry and inadequate enquiry has to be considered and it has been held that if there was an enquiry, howsoever inadequate that would not give occasion to the Commissioner, who passed an order u/s 263 of the Act, just because he has a different opinion in the matter and under such circumstances, it was held that the assessment cannot be held to be as erroneous and prejudicial to the interest of the revenue. Once there is an application of mind and enquiry has been made by the AO, then in such circumstances, the assessment cannot be branded as erroneous and prejudicial to the interest of revenue and we have no hesitation in setting-aside the orders as passed by the Ld. PCIT u/s 263 of the Act on the issue of Freebies/Gifts to the Medical Practitioners/Doctors in all the 11 years under consideration. In assessment year 2017-18, besides the issue of business promotion expenses, there is another issue of non-reference to the Transfer Pricing Officer (TPO) in respect of Specified Domestic Transactions and the Ld. AR has been fair enough to concede that the AO was mandatorily required to refer the same to the TPO and, therefore, we hold that the Ld. PCIT was justified in setting aside the assessment on the issue of non-reference to the TPO in Assessment Year 2017-18.
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2022 (10) TMI 477
Addition of long-term capital gain - benefit of indexation - actual beneficiary of asset - investments were made by the husband and shown in his books of account - clubbing of income - resultant capital gain was not offered for taxation on the ground that since the said property was purchased by the husband of the assessee in her name and all the funds were arranged and invested by the husband, thus he was the actual owner of the property and, therefore, resultant capital gain was offered by him in his return filed - HELD THAT:- Indexation amount was payable in the hands of the assessee herself. As regards the claim of construction on the said property is concerned, in this regard the claim of the assessee is that the husband of the assessee had taken housing loan from the LIC for this purpose. From the record and the perusal of returns filed by the husband of the assessee, he has specifically shown income from SOP (being the property finder consideration here at 815, Mahaveer Nagar-I) which means this property was self occupied/vacant so to show income on notional basis means that the husband of the assessee had rental income from other property on which the loan could have been taken. CIT (Appeals) after evaluating the facts had also rightly pointed out that in the absence of any such cogent evidence that the amount claimed as loan from LIC was invested in the property at 815, Mahaveer Nagar-1, the benefit of indexation was not allowable to the assessee on this amount which initially the AO had given and the same was denied by t CIT (Appeals). While reaching to this conclusion, CIT (Appeals) has mentioned in his order that this point was never clarified by the Assessing Officer nor examined. Whereas, on the contrary, AR has drawn our attention towards loan was taken from LIC by the husband of the assessee of Rs. 8,00,000 and later on was paid off and in this respect paper book referred. It was also specifically submitted by the learned authorised representative that the balance-sheets of the various years had been enclosed showing construction in the assets side and loan from LIC in the liability side. Apart from that, the statement of repayment and repayment certificate issued by the LIC in the name of Shri Satya Narain Agarwal, husband of the assessee has also been relied upon. Though according to CIT (Appeals), AO had not examined this aspect and had not clarified the factual position by verifying or examining the abovementioned documents. Therefore, we are of the view that it will be proper to remand the matter to the Assessing Officer with the direction to verify and examine the documents relied upon by the assessee and pass order afresh. Denial of deduction claimed under section 54F - property purchased in the name of husband of the assessee - The new property situated at A-33, Jai Shree Vihar, Thekra, Kota was purchased exclusively in the name of the assessee vide Ikrarnama dated October 22, 2009 and pranam patra , i. e., land allotment letter and patta in the name of the assessee. It was also submitted that construction was carried out on the said plot and in this respect construction bills , construction account (ledger) and valuation report has also been referred. In our view, since the Assessing Officer has recorded factually incorrect findings in regard to the property purchased in the name of husband of the assessee, therefore, we are of the view that this issue also requires reconsideration at the end of the Assessing Officer. We, therefore, remand this issue also to the Assessing Officer with the direction to verify this aspect of the matter and pass order afresh. Appeal of the assessee is allowed for statistical purposes.
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2022 (10) TMI 476
Appeal dismissed by CIT(A) as not maintainable un/s 249(4) - CIT-A declined the admission of the appeal of the assessee, for the reason that it had not paid the taxes which is a pre-condition for maintainability of an appeal as per section 249(4) - HELD THAT:- Commissioner of Income-tax (Appeals) losing sight of the fact that the instant case of the assessee was covered by clause (b) of section 249(4) of the Act, which did vest a discretion with him to exempt the assessee for good and sufficient reasons to be recorded in writing from the pre-condition of payment of tax and admit the appeal, had however, without exercising his discretion in the backdrop of the reason given by the assessee dismissed its appeal in limine, for the reason that it had not filed its return of income and paid taxes. In our considered view, as stated by the learned authorised representative, and rightly so, CIT (Appeals) in the present case had failed to exercise the judicial discretion that was vested with him for exempting the assessee from the operation of the provisions of clause (b), despite there being a categorical claim of the assessee that the failure on its part to deposit the tax had occasioned on account of financial difficulties. We are unable to persuade ourselves to subscribe to the dismissal of the assessee's appeal in limine by the Commissioner of Income-tax (Appeals), who in our considered view had misconceived ; or in fact had misconstrued the scope and gamut of the provisions of section 249(4)(b) of the Act as were applicable to the case of the assessee before us. We, thus, in terms of our aforesaid observations, set aside the impugned order of the Commissioner of Income-tax (Appeals) and restore the matter to his file with a direction to reconsider the maintainability of the appeal on the basis of reasons given by the assessee as regards the failure on its part to pay the amount of tax as contemplated in clause (b) of section 249(4) of the Act.
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2022 (10) TMI 475
Commission for providing accommodation entries - Rate of commission - addition has been made in the hands of assessee on protective basis, whereas, substantive addition has been made in the case of Bhanwarlal Jain Group - HELD THAT:- Substantive addition confirmed in the hands of Bhanwarlal Jain Group would ipso facto make protective addition unsustainable. Merely for the reason that the rate of commission determined by the Tribunal at lower rate is not acceptable to Revenue would not give the Revenue key for protracted litigation in the case of assessee wherein the additions were made only on protective basis. A perusal of the impugned order clearly shows that the intention of the Revenue is to keep the issue alive, although on merits the additions in the hands of assessee does not survive. Assessee appeal allowed.
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2022 (10) TMI 474
TP Adjustment - Adjustment towards under utilization of capacity - HELD THAT:- Considering the decisions of Continental Automotive Components India Pvt. Ltd [ 2021 (11) TMI 1059 - ITAT BANGALORE] and Moog Control (India) Pvt. Ltd [ 2019 (8) TMI 1839 - ITAT BANGALORE] we are of the considered view that the adjustment for capacity under utilization needs to looked at afresh and hence, we remit the issue back to TPO/AO. Needless to say that opportunity of being heard should be given to the assessee. The appeal on this ground is allowed for statistical purposes. Adjustment for foreign exchange fluctuations - TPO denied the Adjustment on the ground that the laws in the manufacturing segment has a arisen on account of import cost and the assessee did not suitably negotiate the Purchase cost from its AEs, the computation made by the assessee is not in line with AS11 and the assessee has failed to show the difference between comparables and the assessee in respect of the exchange fluctuation loss - HELD THAT:- We remit this issue to AO/TP with a direction to consider the foreign exchange fluctuation adjustment for computing the ALP of the assessee. This ground is allowed in favour of the assessee for statistical purposes. Adjustment for customs duty - assessee imported 83.12% of its raw materials whereas the comparable companies imported only an average of 15.14% of their raw materials whereby the assessee incurred significant customs duty charges warranting an adjustment for TP comparison - HELD THAT:- We notice that the coordinate bench of the Tribunal in the case of M/s. Continental Automotive Components (India) Pvt. Ltd [ 2021 (11) TMI 1059 - ITAT BANGALORE] has considered the similar issue. Thus we are remitting this issue to the AO/TPO for fresh consideration. This is ground is allowed in favour of the assessee for statistical purposes. Re-computation of operating margins pursuant to the Mutual Agreement Procedure (MAP) resolution covering the transaction between the assessee and its AE Denso Corporation Japan (DNJP) - HELD THAT:- Keeping into consideration the entire conspectus of the facts and circumstances of the case and the additional ground raised, before us we are convinced that its adjudication does not require any fresh investigation of facts and involves substantial question of law. Respectfully following the judgment of the Hon ble Supreme Court in the case of National Thermal Power Company Ltd. [ 1996 (12) TMI 7 - SUPREME COURT] we admit this additional ground for disposal on merits. Computation of operating margin - HELD THAT:- MAP resolution which resulted in the reduction of the cost (thereby reduction in the returned loss) and as contended by the Ld AR will have an impact on the other TP adjustment done with AEs other than Japan. The argument of the Ld AR that the impact of reduced loss which resulted in additional income being offered to tax should be given effect in re-computing the segmental margin requires looking at the matter afresh. Hence we remit the issue back to the AO for re-computation of the operating margins. The AO is directed accordingly. This ground is allowed in favour of the assessee for statistical purposes.
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2022 (10) TMI 463
Disallowance of provision made in respect of an anticipated loss being the diminution in the value of Govt. of India Fertilizer Bonds - CIT-A had followed the decision in assessee s own case for AYs. 2009-10, 2010-11 2014-15 [ 2018 (4) TMI 1581 - ITAT CUTTACK] and [ 2018 (4) TMI 1581 - ITAT CUTTACK] to delete the addition - .HELD THAT:- As the assessee is not fixing the rates in respect of the diminution, which is being fixed by an authority under the Govt. which has a responsibility of fixing the rates in respect of the bonds/security. In lieu of the cash subsidy due from the Govt. of India, the assessee had been forced to accept the fertilizers bonds issued by the Govt. of India - loss in respect of the diminution in the value of the fertilizer bonds was specifically computed on the basis of the rates fixed by the Clearing Corporation of India Limited (CCIL), a corporation under the Govt. of India, which is cast to the duty in respect of the valuation of bonds and other securities - the methodology adopted by the assessee was a scientific method. It was supported by the rates issued by the Govt. of India itself and the loss was actually determinable, though would be actually incurred at the time of redemption. CIT(A) has correctly followed the judicial discipline in following the order of the coordinate bench of the Tribunal in assessee s own case.Case of Tripty Drinks (P.) Ltd [ 1977 (9) TMI 29 - ORISSA HIGH COURT] distinguished - Decided against revenue. Disallowance of leave encashment claimed u/s.43B(f) - HELD THAT:- We have considered the rival submissions. As it is noticed that the issue of liability of leave encashment claimed u/s.43B(f) of the Act is now squarely covered by the decision of the Hon ble Supreme Court in the case of Exide Industries Ltd. [ 2020 (4) TMI 792 - SUPREME COURT] the AO is directed to verify the actual payments of the leave encashment and allow the same on actual payments.
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Customs
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2022 (10) TMI 473
Breach of Regulation 20(4) of the Customs Brokers Licensing Regulations, 2013 - HELD THAT:- There are no reason to interfere with the same in exercise of powers under Article 136 of the Constitution of India - The Special Leave Petition stands dismissed.
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2022 (10) TMI 472
Interest on the refund claimed - HELD THAT:- In the facts and circumstances of the case and considering the fact that from the date of submission of relevant documents as demanded by the show cause notice dated 7-7-2017 and thereafter, the refund was allowed within a period of three months, the High Court has rightly held that the appellant shall not be entitled to the interest on the refund as claimed by the appellant. The appeal stands dismissed.
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2022 (10) TMI 471
Exemption from payment of any additional duty under Section 3 of the Customs Tariff Act - import of capital goods under the valid authorisation under the Export Promotion Capital Goods Scheme (EPCG Scheme) - HELD THAT:- The intention of the Central Government while framing EPCG Scheme was to permit import at zero customs duty. Accordingly, by Notification No. 16/2015-Cus dated 1st April 2015 goods covered by valid authorisation issued under the EPCG Scheme in terms of Chapter 5 of the Foreign Trade Policy were exempted from the whole of the additional duty leviable under Section 3 of the Customs Tariff Act. When the GST regime came into force, Section 3 of the Customs Tariff Act came to be amended by insertion of Sub Section (7) and Sub Section (9) that provided for levy of Integrated Tax and Goods and Services Compensation Cess - It is petitioner s case that during this period, i.e., from 1st July 2017 when Notification No. 16/2015-Cus came into effect and the fresh amendment dated 13th October 2017 came into effect, petitioner paid Integrated Goods and Service Tax (IGST) amounting to Rs.24,94,53,580/- on the capital goods imported by petitioner. The details of the bills of entries are provided in the petition. It would also assist the court if respondents place on record the Minutes of Meeting recorded alongwith discussion notes, file notings, representations received and the agenda placed before the Central Board of Indirect Taxes and Customs (CBI C) that resulted in issuance of Notification No.79/2017 dated 13th October 2017 - Stand over to 20th October 2022.
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2022 (10) TMI 470
Release of seized goods - Unflavoured Supari (Cut Betelnut Product) - 540 Bags viz., 27 MTS of Unflavoured Supari (Split Betelnut Product) of Myanmar Origin Unflavoured Supari imported from Myanmar - HELD THAT:- The import was made as early as in the month of January, 2021. The Bill of Entry for clearance was filed belatedly on 24-3-2021. Though almost a year has lapsed, till date no decision has been taken as to whether the imported goods have to be classified under CTH 2106 90 30 or under CTH 0802 80 20. The goods are natural products and are prone to natural decay due to efflux of time. The respondents are directed to pass appropriate orders assessing and classifying the goods, based on the report of the Custom House Laboratory, Custom House, Tuticorin, within a period of 10 days from the date of receipt of a copy of this order. In case, the imports made by the petitioner and the imports referred to in the communication of the Chief Commissioner of Customs, Tiruchirappalli, dated 10-5-2021 as communicated by the 3rd respondent are the same, the respondents shall consider the same and pass appropriate orders and ensure that there is no discrimination between the two classes of imports and maintain the uniformity - writ petition is disposed off.
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2022 (10) TMI 469
Levy of penalty u/s 112(a) of Customs Act, 1962 and Section 114AA of Customs Act, 1962 - absence of Import Export Code (IEC), mandated under the Foreign Trade (Development Regulation) Act, 1992, in the possession of actual buyers - violation of requirements of the Foreign Trade (Development Regulation) Act, 1992 - HELD THAT:- It is seen that the proceedings were initiated against the goods before the declaration of entry was made under Section 46 of Customs Act, 1962. The bill of lading, which is the basis of the proceedings, is issued by the shipping company at the instance of overseas suppliers and none of the documents prescribed under Foreign Trade (Development Regulation) Act, 1992, or any other law in force, with which the appellant may, at a stretch, be connected with has been filed under Customs Act, 1962. The link between action leading to confiscation of goods and the appellant, is, therefore, not established. Section 112(a) of Customs Act, 1962 and section 114AA of Customs Act, 1962 are not attracted as far as the appellant is concerned - Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (10) TMI 500
Levy of excise duty or NCCD - tobacco and tobacco products - levy under which act after transition to GST regime - grant of exemption by way of N/N. 11/2017 dated 30.06.2017 - HELD THAT:- The levy of excise duty on tobacco and tobacco products is a matter of public policy and this Court in exercise of writ jurisdiction would not interfere with the same. The CGST itself contemplates levy of excise duty upon tobacco and tobacco products apart from they being taxed under the provisions of CGST. There is no error in the same. Thus, the respondents are entitled to levy CGST as well as excise duty on tobacco and tobacco products. Whether when excise duty is exempted, can NCCD be leviable under the provisions of Section 136 of the Finance Act, 2001? - HELD THAT:- NCCD is a surcharge of the excise duty. The case of the petitioners is that, when excise duty is not levied, NCCD cannot be levied and there was no excise duty on tobacco and tobacco products from 01.07.2017 to 06.07.2019 and NCCD could not have been levied during the said period - Surcharge is an additional charge or payment. Section 136 of the Finance Act, 2001 contemplates levying and collecting NCCD, which is considered as a surcharge, a duty of excise. Thus NCCD is not contemplated in Section 136 as a levy on the excise duty levied under the Central Excise Act, but a separate duty being levied on the value of the goods manufactured or produced and it is a type of excise duty. The Finance Act, 2001 sought to levy NCCD on the goods as described in the Seventh Schedule. For better clarification, reference is made out in the Central Excise Act. Repealing of the Central Excise Act does not absolve the petitioners paying NCCD as determined under the Seventh Schedule - NCCD is a surcharge and a type of excise duty which can be levied independently of the excise duty as contemplated under the provisions of Fourth schedule to the Central Excise Act, 1944. Thus levy of NCCD in the absence of levy of excise duty cannot be considered as bad in law. Petition dismissed.
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2022 (10) TMI 468
Classification of goods - heat pump - to be classified under heading 84.18 of the Schedule to the Central Excise Tariff Act, 1985 or not - under notification 155/86-CE dated 1.3.1986, heat pumps falling under Chapter 8418, enjoyed a limited exemption from the levy of excise duty - HELD THAT:- The definition of a product given in the HSN should be given due weightage in the classification of a product for the purpose of levying excise duty. This is because in the Statement of Objects and Reasons of the Bill leading to enactment of Central Excise Tariff Act, 1985, it was clearly stated that the pattern of tariff classification is broadly based on the system of classification derived from the International Convention on the Harmonised Commodity Description and Coding System (Harmonised System) with such contraction or modification thereto as are necessary, to fall within the scope of the levy of central excise duty - The heat pumps by utilizing energy, as per HSN becomes a source of more intense heat. However, since the final output of MVAC is cold/chilled water, the MVAC obviously does not fit into the given definition. The hot water, that is produced for generating chilled condition/ refrigeration, is only an incidental purpose of the MVAC and therefore classification of the appellant s product as a heat pump on this basis, would in our view, be irrational. When the market/common parlance test is applied for the manufactured product, it is seen that the appellant in their website have identified Vapour Absorption Chillers and heat pumps separately. Significantly in the description of the product on the appellant s website, Vapour Absorption Chillers do not mention about its heating capability. Likewise, heat pumps do not mention about the cooling function. This would suggest that the appellants do not themselves recognize the incidental hot water generating capacity of the Vapour Absorption Chillers, to treat it as a heat pump - what is important to keep in mind is that the additional purpose does not alter the primary character/functionality of the product which is to function as a vapour absorption chiller, used to produce chilled water for the purpose of refrigeration and air conditioning. This is how the product is recognized in the market. The incidental output from the machine cannot therefore justify classification of the product in the category of heat pump. Whether Chapter Note 7 to Chapter 84 can have a bearing in the present matter? - HELD THAT:- The present case pertains to heading 84.18 and the expression and phrases must therefore be literally construed to include two commercial classifications within the same heading. For example, a product under heading 84.18 can either be a refrigerator or a freezer or a refrigeration equipment or a heat pump not falling under Chapter 8415. In a situation like this, if we apply Chapter Note 7, the same can act as a tie-breaker mechanism. The resolution can be achieved by looking at the Principal Purpose Test, which if applied, can also resolve the intra-heading dispute. Such mode of interpretation in our understanding will aid in settling, the classification dispute by adhering to the HSN Code. The end use of MVAC is to produce Chilled Water. The use of heat as one of the sources in the air-conditioning system would not take away the primary or basic function of the MVAC, which is to cool and not heat water. The additional heating capability of the machine thus raises a peculiar dilemma, but then one can be guided by the market parlance test which shows that the machine is perceived and purchased only as a cooling device - it is declared that the product manufactured by the appellants merit classification under Sub-heading 8418.10 of the central excise Tariff Act, 1985, in the category of refrigerating equipment. The view of the CESTAT is thus affirmed. Appeal dismissed.
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2022 (10) TMI 467
Doctrine of Promissory Estoppel - withdrawal of exemption N/N. 71 of 2003 dated 09.09.2003 - HELD THAT:- The petitioner(s) to file such review petition making it clear that we are not expressing any opinion either way on the correctness of this submission. If that issue is answered against the petitioner(s), the petitioner(s) may take up the matter before this Court to challenge the view taken by the High Court in review petition and in which proceedings (before this Court), it will be open to the petitioner(s) to urge that the decision of UNION OF INDIA OTHERS VERSUS M/S UNICORN INDUSTRIES [ 2019 (9) TMI 791 - SUPREME COURT] requires reconsideration. We are not expressing any opinion about the correctness of the submission made even in respect of the second point urged before us by the petitioner(s) - The special leave petition is disposed off.
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2022 (10) TMI 466
Clandestine removal - 3996.286 MT formaldehyde (including 262.400 MT found short) - Shortages detected in the stock - HELD THAT:- There is no reasonable explanation in the impugned order and also in the previous order of this Tribunal, whereby the clandestine removal of finished goods have been alleged at 1378.595 MT of formaldehyde. The actual/installed capacity of production have been ignored, which has caused prejudice to the appellant. It is further found that the appellant have already suffered civil consequence by the impugned order in view of duty both on the allegation of clandestine removal as well as on the shortage of finished goods and raw materials. It is further found that not a single instance of clandestine removal have been found by revenue by way of interception of any consignment without proper invoices/challan etc. There is not reasonable basis for imposition of penalty under Section 11AC/Rule 209A of the Central Excise Rules, 1944 - the penalty set aside under Section 11AC on the appellant company and also the penalty imposed on the two directors Shri Promod Lunawat Shri Mukesh Singhaniya under Rule 209A of Central Excise Rules, 1944 are set aside. Appeal allowed.
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Indian Laws
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2022 (10) TMI 465
Validity of directions issued by the HC in favor of Adani Ports (APSEZL) - Approval as a SEZ compliant Unit from the competent authority under the SEZ Act in respect of its Warehouse facility - seeking to obtain a waiver of the conditions to comply with the provisions of SEZ Act as a SEZ Unit - HELD THAT:- It is not in dispute that, after the land was leased to the then GAPL by the GMB in the year 2000-2001, it entered into an agreement with the appellant-CWC on 2nd June 2004 with regard to the area admeasuring 34 acres. It is also not in dispute that the appellant-CWC was put in possession of the said plot and has constructed the warehouse on the same. It is also not in dispute that after the construction of the warehouse, the storage facilities were being utilized by the then GAPL. From a perusal of the communication dated 5th January 2017, it is seen that the appellant-CWC was restrained from continuing with the activities in the said premises. It further states that the appellant-CWC would not be able to get gate passes for the SEZ until the appellant-CWC either (a) obtains a Letter of Approval (LOA) from Development Commissioner (DC) as a SEZ Unit in compliance with the provisions of SEZ Act/Rules; or, (b) obtains specific permission from DC to carry out the activities of warehousing stuffing etc. in the said premises in the SEZ by waiving the requirement of being approved as an SEZ-compliant Unit - The CVC has clearly observed that due to the presence of CWC warehouse, various kinds of developmental activities have been undertaken by other related government undertakings like Railway etc. It has further been observed that by shifting the warehouse to another place, GAPL will be unduly benefited and at the same time, the appellant-CWC will not only lose business but will also have to struggle afresh in creating the same kind of infrastructure at the new location. The CVC further observed that there could be a vested interest in shifting of the CWC warehouse. The High Court ought to have taken into consideration that the appellant-CWC was a statutory body. There are already observations made by the CVC as early as in the year 2010 that the swapping of the warehousing facility from the present site to a changed site would cause serious financial implications and also that there could be various vested interests involved. The CVC had also observed that there was also a possibility of losing business - The High Court ought to have taken into consideration that, unless all the three conditions were complied with, the interest of the appellant-CWC, which is a statutory Corporation, could not have been safeguarded. If a settlement was to be arrived at, unless the same was found to be in the interest of both the parties, it could not have been thrust upon a statutory Corporation to its detriment and to the advantage of a private entity. The best course available with the Division Bench was to direct the learned Single Judge to decide the petition on its merits - the impugned judgment and order of the High Court dated 30th June 2021 is not sustainable in law. The appeals are allowed.
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2022 (10) TMI 464
Direction for disclosure of confidential and sensitive information pertaining to their affairs, their employees and their customers under the Right to Information Act, 2005 - maintainability of writ petition before the SC - right to privacy as a fundamental right - HELD THAT:- having regard to the fact that the order had been passed by a superior court of record in the exercise of its inherent powers, the question about the existence of the said jurisdiction as well as the validity or propriety of the order could not be raised in writ proceedings taken out by the petitioners for the issue of a writ of certiorari under Article 32. It could thus be seen that this Court held that it would be unreasonable to hold that this Court, under Article 32, could correct the judicial orders on the fanciful hypothesis that High Courts may pass extravagant orders in or in relation to matters pending before them and therefore this Court can correct the same by issuance of a writ of certiorari under Article 32. This Court held that though the words used in Article 32 are wide, the order impugned before it could not be brought within the scope of this Court s jurisdiction to issue a writ of certiorari under Article 32. A Nine Judge Constitution Bench of this Court in the case of K.S. Puttaswamy and another [ 2017 (8) TMI 938 - SUPREME COURT] has held that the right to privacy is a fundamental right. No doubt that the right to information is also a fundamental right. In case of such a conflict, the Court is required to achieve a sense of balance. A perusal of the judgments of this Court cited supra would reveal that it has been held that though the concept of finality of judgment has to be preserved, at the same time, the principle of ex debito justitiae cannot be given a go bye. If the Court finds that the earlier judgment does not lay down a correct position of law, it is always permissible for this Court to reconsider the same and if necessary, to refer it to a larger Bench. It has been held that this being the apex court, no litigant has any opportunity of approaching any higher forum to question its decisions. It has further been held that once a judicial satisfaction is reached that the direction was not open to be made and it is accepted as a mistake of the court, it is not only appropriate but also the duty of the court to rectify the mistake by exercising its inherent powers. It has been held that, to err is human, and the Courts including the Apex Court are no exception. The preliminary objection as raised is not sustainable. The same is rejected. - Writ petition also dismissed.
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