TMI Tax Updates - e-Newsletter
October 26, 2023

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• GST:

  Inquiry proceedings - Physical presence for all the times by issuing summons - The provisions of Section 70 of the Act cannot be continued to be used for the purpose of enforcing the presence for all times to come. As noticed, the service is being provided to two Government institutions and there is sufficient record available with the respondents from the said offices. In the peculiar facts and circumstances, no useful purpose would be served to call the petitioner in pursuance of the summons issued under Section 70 of the Act hereafter. - HC
  Visit to Get Source

  ---

• GST:

  Cancellation of GST registration of petitioner - no useful purpose will be served by keeping the dealers/assessees outside the bounds of GST Act as they will continue to carry on the business. - The denial of an opportunity either file an appeal or to revoke the cancellation of registration was held to be a defeating move as the dealer/assessee will still continue to do business and if they are not brought into the mere scheme, the revenue will be the looser. - HC
  Visit to Get Source

  ---

• GST:

  Cancellation of GST Registration - violation of principles of natural justice - Personal hearing - It is admitted that initially 19.08.2022 was not holiday. It was subsequently declared a holiday. - Thereafter, it is not the case of the respondent that they issued any other notice to the petitioner of the date when the petitioner could have appeared before the respondent authority/competent officer. - Both the order and SCN quashed - HC
  Visit to Get Source

  ---

• Income Tax:

  Reopening of assessment - Validity of order u/s 147 r.w.s 144 - Faceless assessment u/s 144B - No doubt there is a failure on the part of the petitioner to have complied with the requirements of Section 176 of the Income Tax Act, 1961 after partnership firm purportedly ceased to exist and discontinued with the business. There is also a failure on the part of the petitioner to give in the details of the account Nos. of the partnership firm while responding to the show cause notice issued u/s 147 - However, the impugned order is bereft of details. - Matter restored back - HC
  Visit to Get Source

  ---

• Income Tax:

  Addition u/s 68 - accommodation entry - additions made on the basis of retracted statements - amount received during the earlier years - assessee has furnished all the details relating to the investors/loan in order to discharge the burden placed upon it u/s 68 - The additions made by the Assessing Officer u/s 68 in all the years, in the facts and circumstances of the case, were not justified. We noticed earlier that some of the cash credits were received in the earlier year and not during the year under consideration. - AT
  Visit to Get Source

  ---

• Income Tax:

  Disallowance u/s 37(1) - sponsorship expenses - business promotional activities - it was not open for Ld. AO to question the commercial wisdom of the assessee as to how the business was to be promoted. - Assessee’s logo has been used on stationary items and other record books which would be used by large number of students and enhance the image of the assessee in the minds of the parents of the students. - 100% of the claim allowed - AT
  Visit to Get Source

  ---

• Income Tax:

  Addition u/s 56(2)(viib) - excessive share premium - determination of the FMV of the shares [unquoted equity] - As per the mandate of law, the option to determine the FMV of unquoted equity shares remains with the assessee as per either of the two methods viz. (i) as per the Net Worth Method; and (ii) as per the Discounted Free Cash Flow (DCF) method remains with the assessee company. - AT
  Visit to Get Source

  ---

• Income Tax:

  TP Adjustment - MAM selection - once TNMM has been accepted under the similar FAR, there is no reason to deviate by adopting CUP Method and other methods admittedly are incapable of capturing the true arm's length result and therefore, we hold that TNMM should be taken as a most appropriate method for benchmarking the said transaction. - AT
  Visit to Get Source

  ---

• Income Tax:

  Unexplained Jewellery - stree dhan - quantity of jewellery as per the status and life of the assessee - The assessee stated that the income for all the years had fallen into the highest tax bracket which shows that the assessee has been earning substantial Income clearly establishing the status. It has time and again been held that due credit of the same has to be allowed by the Assessing Officer looking and appreciating the status, customs, and traditions relating to the family. - AT
  Visit to Get Source

  ---

• Income Tax:

  Nature of expenses - Allowable expenses u/s 37(1) - Interest and late fee on TDS, Late payment & penalty charges, Interest on margin trading facility - There was no basis with the AO/ld.CIT(A) to hold that these expenses were in the nature of penalty/expenses for any purpose being an offence or which is prohibited by law, not allowed in terms of Explanation to section 37(1) - AT
  Visit to Get Source

  ---

• Income Tax:

  TP Adjustment - deemed to be associated enterprises - the contention of the assessee that the status of the enterprise should be examined before entering into the transaction is contrary to the literal meaning of section 92A(2) of the Act which has not restricted the application of the provision, based on prior or subsequent transaction - it makes no difference whether the condition of 51% of the book value of total assets is not fulfilled prior to advancing the loan or subsequent thereto. - AT
  Visit to Get Source

  ---

• Income Tax:

  Addition on outstanding sundry creditors - reason to believe that there was cessation of liability which was income escaped to tax - It is evident from OTS offer that the assessee has paid interest and other charges to ADB as per the letter dated 28.09.2011 and has also undertaken to make payment subsequently. - Additions deleted - AT
  Visit to Get Source

  ---

• Income Tax:

  Penalty u/s 271A and u/s 271B - not maintaining books of account and for not getting the booking of account audited as provided u/s 44AB - Penalties levied u/s 271A for not maintaining books of account and penalty u/s 271B for not getting the books of account audited stand confirmed - AT
  Visit to Get Source

  ---

• Central Excise:

  CENVAT Credit - input service or not - waste treatment services received - the effluent treatment activity is indeed in or in relation to the manufacture of final product, therefore, the cenvat credit cannot be denied. - AT
  Visit to Get Source

  ---

• Central Excise:

  CENVAT Credit - inputs - accessories of the final products cleared along with the final products - The appellants are eligible to avail CENVAT credit on flaps and tubes cleared in a set packing along with the tyres manufactured by them. It is further found that Department’s objection that the assessable value of tubes and flaps is separately shown in the invoices and therefore, CENVAT credit is not available, is not acceptable. - AT
  Visit to Get Source

  ---

• VAT:

  Best Judgement assessment - non-service of SCN - per Section 36(5), what can be assessed by the Prescribed Authority other than confirming the self-assessment is only the amount of tax due and nothing more. - All the assessment orders along with the demand notices are all set aside and quashed - HC
  Visit to Get Source

  ---

Articles

• Analysis of GST Rate Amendments applicable from 20th October 2023 vide Notifications 12-20 Central Tax (R) dt’ed 19th October 2023
• RELATED PARTY TRANSACTIONS WITHOUT TAKING PRIOR APPROVAL OF THE AUDIT COMMITTEE AND THE BOARD AS REQUIRED UNDER THE ‘LODR REGULATIONS’
• GST paid by the Recipient but not remitted to the Government by the Supplier does not provide ground for denying ITC

Notifications

• Customs

• 78/2023 - dated 23-10-2023 - Cus (NT)
  Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

  ---

• GST - States

• 18/2023- State Tax (Rate) - dated 19-10-2023 - Bihar SGST
  Amendment in Notification No. 2/2017- State Tax (Rate), dated the 29th June, 2017

  ---

• 34/2023-State Tax - dated 20-10-2023 - Delhi SGST
  Persons exempted from obtaining registration under DGST Act - Persons making supplies of goods through an electronic commerce operator who is required to collect tax at source under section 52 of the DGST Act specified.

  ---

• 62/GST-2 - dated 20-10-2023 - Haryana SGST
  Amendment of Notification no. 39/ST-2, dated 30.06.2017 under the HGST Act, 2017

  ---

• 61 /GST-2 - dated 20-10-2023 - Haryana SGST
  Amendment of Notification no. 38/ST-2, dated 30.06.2017 under the HGST Act, 2017

  ---

• 60/GST-2 - dated 20-10-2023 - Haryana SGST
  Amendment of Notification no. 36/ST-2, dated 30.06.2017 under the HGST Act, 2017

  ---

• 59/GST-2 - dated 20-10-2023 - Haryana SGST
  Amendment of Notification no. 35/ST-2, dated 30.06.2017 under the HGST Act, 2017

  ---

• 58/GST-2 - dated 20-10-2023 - Haryana SGST
  Amendment of Notification no. 52/ST-2, dated 30.06.2017 under the HGST Act, 2017

  ---

• 57/GST-2 - dated 20-10-2023 - Haryana SGST
  Amendment of Notification no. 50/ST-2, dated 30.06.2017 under the HGST Act, 2017

  ---

• 56/GST-2 - dated 20-10-2023 - Haryana SGST
  Amendment of Notification no. 48/ST-2, dated 30.06.2017 under the HGST Act, 2017

  ---

• 55/GST-2 - dated 20-10-2023 - Haryana SGST
  Amendment of Notification no. 47/ST-2, dated 30.06.2017 under the HGST Act, 2017

  ---

• 54/GST-2 - dated 20-10-2023 - Haryana SGST
  Amendment of Notification no. 46/ST-2, dated 30.06.2017 under the HGST Act, 2017

  ---

• SEBI

• SEBI/LAD-NRO/GN/2023/159 - dated 20-10-2023 - SEBI
  Securities and Exchange Board of India (Infrastructure Investment Trusts) (Third Amendment) Regulations, 2023

  ---

• SEBI/LAD-NRO/GN/2023/158 - dated 20-10-2023 - SEBI
  Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Sixth Amendment) Regulations, 2023

  ---

Circulars / Instructions / Orders

• Income Tax - 19/2023 - dated 23-10-2023
  Condonation of delay under section 119(2)(b) of the Income-tax Act, 1961 in filing of Form No. 10-IC for Assessment Year 2021-22
• Customs - Public Notice No. 20/2023 - dated 13-10-2023
  Conduct of online examination under Regulation 6 of Customs Brokers Licensing Regulations, 2018 by the National Academy of Customs, Indirect Taxes and Narcotics (NACIN), Faridabad - reg.
• Customs - PUBLIC NOTICE NO. 37/2023 - dated 21-9-2023
  Chennai IV Commissionerate — Permission for Inter : CFS movement of LCL export Cargo from other CFS to Chandra CFS and Terminal Operators Pvt Ltd by M/s. Team Global Logistics Pvt. Ltd — Regarding.

News

• Union Minister of Commerce and Industry Shri Piyush Goyal attends 7th Future Investment Initiative in Riyadh, Saudi Arabia

  ---

• Cabinet Committee on Economic Affairs approves inclusion of Jamrani Dam Multipurpose Project of Uttarakhand under Pradhan Mantri Krishi Sinchayee Yojana-Accelerated Irrigation Benefit Programme (PMKSY-AIBP)

  ---

• Delhi Customs Preventive Zone destroys 328 kg narcotic drugs, along with 80.2 lakhs sticks of foreign origin cigarettes, worth Rs. 294 crore in New Delhi under Special Campaign 3.0

  ---

Case Laws:

• GST

• 2023 (10) TMI 1076
  Violation of principles of natural justice - no opportunity of personal hearing, as mandated under Section 75(4) of the Act, was given to the assessee before final order was passed - appeal dismissed as being time barred - whether period of limitation in filing the appeal stood extended pursuant to 52nd Meeting of the GST Council held on 7th October, 2023 and the benefit be passed on to the petitioner? - HELD THAT:- Section 75(4) of the Act provides for an opportunity of hearing to an assessee where a request is received in writing from the person chargeable with tax or penalty or whether adverse decision is contemplated against such person. It is not in dispute that a show cause notice was issued to the petitioner-assessee on 17.02.2022. The notice remained unattended and was not replied. The Taxing Authorities proceeded with the matter and passed order under Section 74(9) on 22.03.2022. The decision relied upon by the assessee in case of M/s Mohan Agencies [ 2023 (2) TMI 933 - ALLAHABAD HIGH COURT] and M/S VISWKARMA FURNITURE VERSUS ADDITIONAL COMMISSIONER GRADE 2 AND ANOTHER [ 2023 (4) TMI 1262 - ALLAHABAD HIGH COURT] are distinguishable in the present set of case, as in both the cases the notice was replied by the assessee but opportunity of personal hearing was not accorded and thus the Court proceeded to quash the order and remanded back the matter for deciding afresh - In the instant case, no reply was given by the assessee, thus, provisions of Section 75(4) would not be attracted as neither any request was made for granting opportunity of hearing nor any explanation was furnished to the contents of notice. Period of extension of limitation for filing the appeal - HELD THAT:- This Court finds that no plausible ground has been taken in the appeal filed by the assessee for condoning the delay except that the earlier counsel, to whom papers were handed over, did not file the appeal and by mistake the delay had occurred. Moreover, Section 107(4) of the Act provides that the Appellate Authority may, if satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three or six months, as the case may be, allow it to be presented within further period of one month. Once it is found that limitation period having been prescribed in the statute had expired, the Appellate Authority rightly proceeded to dismiss the appeal. The order of the Appellate Authority needs no interference by this Court - this Court finds that no interference is required in the notice dated 17.02.2022 issued by respondent No.2 as well as consequential order passed on 22.3.2022 passed by respondent No.2 - Petition disposed off.

  ---

• 2023 (10) TMI 1075
  Validity of Inquiry proceedings - Physical presence for all the times by issuing summons - HELD THAT:- The purpose of summoning the petitioner for the enquiry apparently stands satisfied. It is for the respondents to proceed thereafter, in accordance with law in their wisdom if they still feel that further proceedings are to be initiated by issuance of a show cause notice. The provisions of Section 70 of the Act cannot be continued to be used for the purpose of enforcing the presence for all times to come. As noticed, the service is being provided to two Government institutions and there is sufficient record available with the respondents from the said offices. In the peculiar facts and circumstances, no useful purpose would be served to call the petitioner in pursuance of the summons issued under Section 70 of the Act hereafter. The present writ petition disposed off, giving liberty to the respondents to proceed in accordance with law regarding issuance of show cause notice if so required and to proceed further in pursuance to the material which they have already gathered and the statements of the officials which they have already recorded.

  ---

• 2023 (10) TMI 1074
  Cancellation of GST registration of petitioner - denial of an opportunity either file an appeal or to revoke the cancellation of registration - HELD THAT:- The issue arising out the cancellation of registration was considered in detail by this Court in Tvl.Suguna Cut Piece Centre Vs. Appellate Deputy Commissioner [ 2022 (2) TMI 933 - MADRAS HIGH COURT] , wherein, this Court had concluded that no useful purpose will be served by keeping the dealers/assessees outside the bounds of GST Act as they will continue to carry on the business. The denial of an opportunity either file an appeal or to revoke the cancellation of registration was held to be a defeating move as the dealer/assessee will still continue to do business and if they are not brought into the mere scheme, the revenue will be the looser. This Court is inclined to set aside the impugned order by directing the respondent to revive the GST registration of the petitioner with liberty to the respondent to initiate appropriate proceedings against the petitioner for imposing penalty and for recovering any tax due, to which, the petitioner may have failed to pay during the period, no returns were filed - Petition allowed.

  ---

• 2023 (10) TMI 1073
  Utilisation of input tax credit transitioned under Section 140 of the CGST Act, 2017 - amount not reflected in their electronic credit ledger in the portal, though the credit was allowed u/s 140 of CGST Act - HELD THAT:- Based on the verification report received from the Superintendent of CGST and Central Excise, Thandalam Range, No.42, Trunk Road, Poonamallee, Chennai 600 056 Range Office report vide letter O.C.No.42/2023, dated 23.02.2023 the claim of Rs. 96,92,377/- as inadmissible ITC under Table 7(a)(7A) and the claim of Rs. 7,34,772/- as admissible as CGST for an amount of Rs. 7,27,158/- and inadmissible of Rs. 7,614/- under Table 7(b) of the revised TRAN-1 returns. Petition disposed off.

  ---

• 2023 (10) TMI 1072
  Validity of Recovery Notice - procedural safeguarded prescribed under Rule 88C inserted in the CGST Rules, 2017 vide Notification No.26/2022 dated 26.12.2022 has not been observed - HELD THAT:- This writ petition is disposed at the time of admission by directing the respondents to issue notice that is contemplated in Form GST DRC - 01B if it has not been issued on the common portal, within a period of seven days as is contemplated under Rule 88C of the CGST Rules, 2017 inserted vide Notification No.26/2022 dated 26.12.2022. The impugned recovery notice issued under Rule 79 of the CGST Rules, 2017 is quashed with liberty to the respondents to issue appropriate notice in Form GST DRC 01B before proceedings to recover any amount based on the difference noticed in Form GSTR1 and Form GSTR 3B. Petition allowed.

  ---

• 2023 (10) TMI 1071
  Violation of principles of natural justice - non-service of notice to petitioner - deliberate evasion of notice - HELD THAT:- The arguments that no notice was served on the petitioner and therefore, the respondent should have follow the procedure under Section 169(1)(f) of the Central Goods and Services Tax (CGST) Act, 2017 cannot be countenanced as the notices have been sent on 30.04.2022 in ASMT-14 - the notice in Form GST DRC-01 has also been sent to the petitioner on 30.04.2021. This is after the petitioner evaded service of notice in ASMT-14 on 10.08.2021 and 30.12.2021. The petitioner is not without any remedy. The petitioner can file a statutory appeal before the Appellate Authority under Section 107 of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017. The petitioner was also given an option to go back to the respondent subject to the petitioner depositing 25% of the disputed tax to prove his bona fide or file a statutory appeal. This Writ Petition is disposed of by giving liberty to the petitioner to file a statutory appeal before the Appellate Authority in terms of Section 107 of the TNGST Act within a period of limitation prescribed under the aforesaid provision.

  ---

• 2023 (10) TMI 1070
  Cancellation of GST Registration - Vague SCN issued to petitioner - violation of principles of natural justice - HELD THAT:- On 06.08.2022, a notice was given by the respondent to the petitioner, it is Annexure No. 2. It is definitely vague, it require the petitioner to appear before the undersigned on 19.08.2022 at 12:57. There is no undersigned. Name and designation have not been mentioned in the notice. By reading this document, one cannot ascertain, as to who signed it? It is admitted that initially 19.08.2022 was not holiday. It was subsequently declared a holiday. The notification is Annexure No. 5 to the petition. Thereafter, it is not the case of the respondent that they issued any other notice to the petitioner of the date when the petitioner could have appeared before the respondent authority/competent officer. Simply the order, cancellation of the registration has been passed on 23.08.2022. It is in non-compliance of the provision of Section 29(2) proviso, which requires that such registration may not be cancelled unless the person has been afforded an opportunity of hearing. This Court is of the view that the impugned order dated 23.08.2022 and the notice dated 06.08.2022 are not in accordance with law. They deserve to be set aside - Petition allowed.

  ---

• Income Tax

• 2023 (10) TMI 1098
  Reopening of assessment - Addition on outstanding sundry creditors - reason to believe that there was cessation of liability which was income escaped to tax - information received from the DDIT (Inv) that the assessee has failed to repay the loan availed along with the other banks and has ceased off the liability and, hence, for the reason that income has escaped assessment, the case was reopened - CIT(A) upheld the order of the ld. A.O. for the reason that the assessee has failed to substantiate whether the outstanding liability to sundry creditors has ceased to exist - HELD THAT:- Jurisdictional High Court in the case of CIT vs. Jet Airways (I) Limited [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] wherein it was held that the A.O. has to assess or reassess such income for which reopening was made along with any other income chargeable to tax which comes to the notice during the assessment proceeding and failure to make an addition on the grounds for which the reopening was done while passing the assessment order will make it null and void. AO cannot make an addition on any other income chargeable to tax without making an addition on the grounds for which the reopening was done. In the present case in hand, the ld. A.O. in the last paragraph of the reasons for reopening has belief that income has escaped assessment amounting to Rs. 86.00 crores in the form of cessation of liability along with any other income and the said amount being the loan taken from ADB by the assessee for which the repayment was not made resulting in cessation of liability. As observed that assessee has given the list of Sundry Creditors as on 31.03.2009 and onetime settlement offer given by the assessee to ADB had stated that the outstanding due - It is also evident from OTS offer that the assessee has paid interest and other charges to ADB as per the letter dated 28.09.2011 and has also undertaken to make payment subsequently. Both the A.O. as well as the first appellate authority has failed to elaborate as how they have arrived at the impugned addition - Hence, it is evident that the ld. A.O. has not made addition for the reason for which the reopening was made but had only made addition on the outstanding sundry creditor declared by the assessee. Appeal filed by the assessee is allowed.

  ---

• 2023 (10) TMI 1097
  Penalty u/s 271A and u/s 271B - not maintaining books of account and for not getting the booking of account audited as provided u/s 44AB - HELD THAT:- The object of requiring the assessee to get his books of accounts audited u/s 44AB is to get a clear picture of the assessee's accounts so as to enable the Income Tax Authorities to assess true and correct income of the assessee. The penalty u/s 271B is attracted for failure of the assessee to get the books of account audited. Since, the case in hand, the assessee did not get his books of account audited, therefore, as per the provisions of section 44AB read with section 271B of the Income Tax Act, the Assessing Officer rightly levied the penalty u/s 271B of the Act. We notice that recently similar issue came for adjudication in the case of Rakesh Kumar Jha vs.- ITO [ 2023 (5) TMI 704 - ITAT RANCHI] and this Tribunal after considering the judicial precedence on this issue has decided it against the assessee holding that in case of not maintaining books of account by a person, whose gross business turnover exceeds the prescribed limit under section 44AB of the Act, then both the penalties i.e. u/s 271A and 271B are leviable After going through the decision of the Coordinate Bench, Ranchi, we are of the view that the same is squarely applicable on the facts of the present case and respectfully following the same, we confirm the finding of the ld. CIT(Appeals) and accordingly penalties for A.Y. 2011-12 and 2012-13 levied under section 271A for not maintaining books of account and penalty under section 271B of the Act for not getting the books of account audited stand confirmed. Decided against assessee.

  ---

• 2023 (10) TMI 1068
  Maintainability of appeal in Supreme court on low tax effect - HELD THAT:- In view of the limited notice issued and as the amount of tax involved is low, we are not inclined to decide the present special leave petition. In terms of Circular no. 17/2019 dated 08.08.2019 issued by the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, the tax amount on which notice has been issued, is less than Rs.2 crores. Special leave petition is dismissed.

  ---

• 2023 (10) TMI 1067
  Release the refund - whether notice under sub-section (2) of section 143 authorize AO to withhold the refund till the last date for finalizing the assessment? - HELD THAT:- As assessment order u/s 143(3) of the Income Tax Act, 1961 has been passed. Hence, to some extent the present special leave petition has become infructuous. We would not like to decide the academic question raised, as there have been amendments in the Income Tax Act, 1961. Recording the aforesaid and keeping the question(s) of law open, the present special leave petition stands dismissed as infructuous.

  ---

• 2023 (10) TMI 1066
  Expedite the hearing on stay application - In view of the admitted position that 20% of the amount deposited has neither been deposited nor any request to grant time to deposit the same is being made hearing on stay application cannot be expediated - HELD THAT:- As Authority submits that he has instructions not to press the Special Leave Petition. His submission is placed on record. The Special Leave Petition is dismissed as not pressed.

  ---

• 2023 (10) TMI 1065
  Order of attachment on pension of the petitioner - HELD THAT:- This court perused the bank account statement of the appellant, which makes it clear that the entire pension amount with arrears, is lying in the bank account of the appellant. It is also seen that only a sum of Rs. 1,35,000/- lying in that account relates to other amount. Therefore, the following directions are issued to safeguard the interest of both the parties: (a)the appellant is entitled to operate the pension account and make all transactions with the amount lying therein, excluding a sum of Rs. 1,35,000/-, which according to the appellant, pertains to other amount. (b)The above sum of Rs. 1,35,000/- alone, shall be transferred from the pension account to the other account bearing Account No. 64000304842, which is under attachment. (c)The other account bearing Account No. 64000304842 shall be continued in attachment till the conclusion of the proceedings by the appellate authority. (d)In other respects, the direction issued by the learned Judge in paragraph 14 of the order impugned herein, shall stand confirmed and the Appellate Commissioner shall dispose of the appeals on merits and as per law, within a period of three months from the date of receipt of a copy of this judgment. The interim order passed by us earlier is modified and this writ appeal is disposed of.

  ---

• 2023 (10) TMI 1064
  Revision u/s 263 - Cash deposits during demonetization period - In the perception of the CIT, AO had not examined the sources of cash in hand and that the possibilities of introducing unaccounted income could not be ruled out - ITAT quashing the order u/s. 263 - HELD THAT:- Perusal of the order would indicate that the Income-tax Appellate Tribunal and in our opinion rightly came to the conclusion that since the assessment proceedings were specifically undertaken for the reason of verifying the cash deposits during the demonetization period, it was not the case where no enquiry was made by the A.O. during the course of assessment proceedings. Perusal of the order and reasons would indicate that these are finding of facts arrived at by the Tribunal. Having found that in response to the notice issued by the A.O, details were supplied such as Certificates from the Lakshmi Vilas Bank, certificate from the Allahabad Bank, Bank Statements of the banks concerned, cash books for the financial year 2016-17 etc., based on which the A.O had taken a decision, the Income Tax Tribunal allowed the appeal of the assessee.

  ---

• 2023 (10) TMI 1063
  Validity of reopening of assessment u/s 147 - Validity of order u/s 147 r.w.s 144 - Faceless assessment u/s 144B - petitioner claims to be a partner of firm as constituted with two partners namely, petitioner and petitioner's father who died and thus the partnership stood dissolved on the same day by operation of law - HELD THAT:- No doubt there is a failure on the part of the petitioner to have complied with the requirements of Section 176 of the Income Tax Act, 1961 after partnership firm purportedly ceased to exist and discontinued with the business. There is also a failure on the part of the petitioner to give in the details of the account Nos. of the partnership firm while responding to the show cause notice issued under Section 147 of the Act, vide reply dated 22.03.2022. However, the impugned order is bereft of details. Before confirming the taxable income and the tax due, it was incumbent for the respondent to have given detailed reasons. It merely states that quantum of Rs. 1,79,56,157/- had escaped assessment for the Assessment Year 2017-18 and find faults with the petitioner for not giving proper details. Considering the above, the impugned order is set aside and the case is remitted back to the first respondent to pass a fresh order on merits as expeditiously as possible. The petitioner shall file additional reply/representation if any and upload the same together with the bank details/documents that have been in use after the petitioner's father's death. Petitioner shall also furnish the details of the assessment and documents filed for assessment of his individual income for the relevant assessment years. This exercise shall be carried out by the petitioner within four weeks from the date of receipt of this order or within such time as may be given or extended by the first respondent.

  ---

• 2023 (10) TMI 1062
  Disallowance u/s 14A - absence of any exempt income during the year - DR before us vehemently relied on the amendment brought in Section 14A of the Act by the Finance Act 2022 and argued that the same need to be construed as retrospective in operation as according to him, it was merely clarificatory in nature - HELD THAT:- This argument of the ld. DR had been specifically addressed in the case of PCIT vs Era Infrastructure (India) [ 2022 (7) TMI 1093 - DELHI HIGH COURT] wherein it was held that the amendment made by Finance Act, 2022 to section 14A of the Act by inserting a non-obstante clause and Explanation will take effect from 1-4-2022 and cannot be presumed to have retrospective effect. It further held that no disallowance could be made under section 14A of the Act if no exempt income was earned by assessee during the year under consideration. Respectfully following the aforesaid judicial precedents, the Ground No. 1 raised by the revenue is dismissed. Deferred revenue expenditure - case of the assessee is that as per the Accounting Practice, the assessee was to recognize expenditure on deferred basis but for the purpose of income tax, the entire expenditure was allowable - AO did not agree to this contention of the assessee and proceeded to disallow the sum being the upfront fee attributable to the next year - HELD THAT:- The assessee had only sought to defer the said payment over the period of the loan of two years on a proportionate basis. In our considered opinion, this treatment in the books has got nothing to do with the claim of deduction under the provisions of the Act. For the purpose of income tax, the entire payment of Rs 8 crores, being incurred and paid during the year would become allowable, as long as the loan borrowed is utilized for the purpose of the business. In the instant case, there is no dispute that the term loan availed from Yes Bank is utilized for the purpose of business of the assessee. Hence the upfront fee / facilitation charges paid for the said loan would become squarely allowable as deduction in the year of incurrence itself. No infirmity in the order of the ld. CIT(A) granting relief to the assessee in this regard. Accordingly, the Ground No. 2 raised by the revenue is dismissed. TDS u/s 195 - disallowance u/s 40(a)(i) - non deduction of TDS on brokerage and commission paid at China to foreign agent - HELD THAT:- Once it is accepted that the services are rendered outside India by the commission agent, there is no chargeability to tax for them in India in terms of section 5(2) or section 9(1) of the Act as the commission does not accrue or arise in India. This issue is no longer res integra in view of the decision of Delhi Tribunal in the case of Welspring Universal [ 2015 (1) TMI 736 - ITAT DELHI] We hold that the payment of import commission by the assessee to Shye International Ltd is not eligible for withholding tax and hence the disallowance made u/s 40(a)(i) of the Act is liable to be deleted. Accordingly, the Grounds 1 to 4 raised by the assessee are allowed.

  ---

• 2023 (10) TMI 1061
  Addition relating to making charges and wastage claims - assessee is engaged in the business of manufacture and sale/export of gold jewellery - search officials noticed that the assessee has maintained quantity records in an excel sheet, which was akin to parallel books - AO took the view that the entries found in the seized document is the correct one and accordingly took the view that the jewellery making charges and wastage claim have been recorded in excess in the books of account - HELD THAT:- We notice that identical additions were made in the assessee s group concern named M/s Saurav Jewellers Pvt Ltd and they have been deleted by the coordinate bench [ 2022 (11) TMI 124 - ITAT MUMBAI] on a detailed reasoning. We notice that the co-ordinate bench has accepted the contentions of the assessee that the Excel Sheets cannot be considered as parallel books of account and they are merely controlling sheets maintained by employees for computation of jewellery after giving credit or deduction for standard quota of wastage - Since the facts and circumstances relating to both these additions are same in these cases also, following the above said decision of the co-ordinate bench, we modify the orders passed by Ld CIT(A) and direct the assessing officer to delete the additions relating to Making Charges and Wastage claims in all the years under consideration. Addition on account of profit on unrecorded sales - CIT(A) has deleted above addition - HELD THAT:- We notice that the Ld CIT(A) has also noticed many discrepancies in the Excel Sheet. One of the main discrepancies is that the manufacture and sale of medallions and coins were not recorded in the Excel Sheets, which would make huge difference. Besides the above, the search officials did not find any discrepancy between book stock and physical stock. Accordingly, we are of the view that the order passed by ld CIT(A) in deleting this addition is a well reasoned order and the same does not call for any interference. Accordingly, we uphold the order passed by Ld CIT(A) on this issue. Addition u/s 68 - whether AO could have made addition u/s 68 by relying upon report of investigation wing or the statement given by the alleged accommodation entry providers? - HELD THAT:- Hon ble Bombay High Court has held in the case of CIT vs. Orchid Industries (P) Ltd [ 2017 (7) TMI 613 - BOMBAY HIGH COURT] that the addition u/s 68 could not be made once the assessee had produced the documents to prove the cash credits. It was further held that non-appearance of the share subscriber before the AO will not change this position. It is also apt to refer to the decision rendered in the case of PCIT vs. Paradise Inland Shipping (P) Ltd [ 2017 (11) TMI 1554 - BOMBAY HIGH COURT] Accordingly, following the above said decision, we hold that the additions made by AO u/s 68 in all the years, in the facts and circumstances of the case, were not justified. We noticed earlier that some of the cash credits were received in the earlier year and not during the year under consideration. Accordingly, we confirm the relief granted by Ld CIT(A) for the reasons discussed above and set aside the decisions rendered by the learned CIT(A) in confirming the addition in these years. Accordingly, we direct the AO to delete the additions made under section 68 of the Act in all the years under consideration. Disallowance made u/s 14A - AO noticed that the assessee has held investments, whose income will be exempt. Since the assessee did not make any disallowance u/s 14A and AO computed disallowance u/s 14A of the Act by applying provisions of Rule 8D(2)(iii) of I T Rules towards administrative expenses - HELD THAT:- As in the case of M/s Marg Limited [ 2020 (10) TMI 102 - MADRAS HIGH COURT] has held that the disallowance u/s 14A cannot exceed exempt income. We notice the decision rendered by Ld CIT(A) finds support from the above said decision of Hon ble Madras High Court. Accordingly, we do not find any infirmity in the decision so rendered by Ld CIT(A) on this issue in AY 2014-15 and 2015-16. Appeals of the assessee are allowed and all the appeals of the revenue are dismissed.

  ---

• 2023 (10) TMI 1060
  Interest disallowance u/s 36(1)(iii) - assessee advanced interest free funds to its group concerns - interest on borrowed capital proportional to amount advanced to sister concerns - HELD THAT:- As interest-free funds available with the assessee in the shape of share capital and reserves surplus far exceeds the short term loans and advances adduced by the assessee. The assessee uses mixed funds. In such a case, a presumption would arise in assessee s favor that the advances were made out of interest-free funds available with the assessee and the onus would be on Ld. AO to justify the impugned disallowance. We find that no such exercise has been carried out by Ld. AO and therefore, it was to be presumed that funds were advances first out of interest free funds available with the assessee. The cited case law of CIT Vs. Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] duly supports this view. Another finding rendered by Ld. CIT(A) is that the funds were advanced out of commercial expediency. The said finding remains uncontroverted before us. Also in the case of S.A. Builders Ltd. [ 2006 (12) TMI 82 - SUPREME COURT] held that once nexus was established between the expenditure and the purpose of the business, which need not necessarily be the business of the assessee itself, revenue could not disallow the claim assuming what was reasonable. Therefore, on the facts and circumstances, we concur with the adjudication of Ld. CIT(A) and dismiss the ground raised by the revenue, in both the years. Disallowance u/s 37(1) - sponsorship expenses - HELD THAT:- We find that the assessee has paid sponsorship fees in terms of an agreement to carry out business promotional activities. As per the terms of the agreement, Sri Balaji Charitable and Educational Trust was to carry out various sponsorship activities in assessee s name as sponsor against yearly payment of Rs. 2.50 Crores. The payment is backed by the agreement and invoices and the revenue has no material to doubt the same. The assessee has also furnished the details of actual expenditure incurred on business promotion activities. In such a case, it was not open for Ld. AO to question the commercial wisdom of the assessee as to how the business was to be promoted. Assessee s logo has been used on stationary items and other record books which would be used by large number of students and enhance the image of the assessee in the minds of the parents of the students. Similarly, there is no basis to arrive at a conclusion that 50% of other expenditure was to be considered as an expenditure qualifying the test laid down u/s 37(1). There is no material whatsoever to reach such a conclusion. The case law of Hon ble High Court of Madras in the case of MRF Ltd. [ 2021 (4) TMI 501 - MADRAS HIGH COURT] duly supports our view as held that it was not for Ld. AO to decide what would be good for the assessee in promoting its business and therefore, decision cannot be arrived at by the Assessing Officer based on his own personal perceptions and it should be left to the decision of the assessee, who is the best person, who knows that what would be best for his business activity. Therefore, concurring with the adjudication of Ld. CIT(A) in the impugned order, we dismiss the corresponding grounds in both the years. Decided in favour of assessee.

  ---

• 2023 (10) TMI 1059
  Exemption u/s 11 - Claim denied as assessee has not filed Audit Report in Form 10B along with the return - Later on the assessee filed audit report in Form 10B but since the audit report was filed after filing the return of income, CPC disallowed the exemption claimed while processing the return u/s 143(1) - assessee as filed an application for condonation of delay before the DIT(Exemptions), Hyderabad and since the delay is under consideration, the Ld. CIT(A) allowed the assessee s appeal for statistical purpose - HELD THAT:- As delay in filing the Form No.10B was condoned by the Ld. CIT (Exemptions), the exemption claimed u/s 11 was granted and rectification order to that effect was passed by the Exemption Ward, Visakhapatnam. Now, since the grievance of the assessee is redressed, the assessee pleaded for withdrawal of the appeal. Therefore, have no hesitation to permit the assessee for withdrawal of the appeal.

  ---

• 2023 (10) TMI 1058
  Addition u/s 56(2)(viib) - determination of the FMV of the shares [unquoted equity] - excess premium of Rs. 9/- per equity share that was received by the assessee company - HELD THAT:- On a conjoint reading of Section 56(2)(viib) r.w. Rule 11UA, find that the FMV of the unquoted equity shares would be their value as of the date on which the assessee company receives property or consideration for the same. As against the aforesaid requirement of law, it transpires that on one hand, the A.O had determined the FMV of the unquoted equity shares of the assessee company as per the Net Worth Method on 31.03.2012 at Rs. 91/- per equity share, while the assessee company had determined the same as per the said method as on 29.03.2013 at Rs. 144/- per equity share. Both the A.O and the assessee company had wrongly adopted the date of valuation. I, say so, for the reason that as per the meaning of valuation date as contemplated under Rule 11UA(j), the FMV of the unquoted equity shares shall be the value on the valuation date, i.e., the date on which the assessee company receives property or consideration. Considering the fact that neither the A.O. nor the assessee had taken the correct date for determining the FMV of the unquoted equity 96000 shares as per the method provided in Rule UA r.w Rule 11U, i.e., the value as on the valuation date, therefore, neither of the same merits acceptance. As the specific date/dates on which the assessee company had received consideration are not available on record, in all fairness, restore the matter to the file of the A.O. with a direction to determine the same as per Rule 11UA r.w. Rule 11U applicable to the case of the assessee for the year under consideration. As a word of caution, it may be observed that as Rule 11UA/11U had been subjected to an amendment vide IT(Fifteenth Amendment) Rules, 2012 w.e.f. 29.11.2012, therefore, the A.O while computing the FMV of the aforesaid unquoted equity shares, shall take cognizance of the said fact while working out the valuation on the date on which consideration in lieu of such shares was received by the assessee company. As per the mandate of law, the option to determine the FMV of unquoted equity shares remains with the assessee as per either of the two methods viz. (i) as per the Net Worth Method; and (ii) as per the Discounted Free Cash Flow (DCF) method remains with the assessee company. Accordingly restore the matter to the file of the A.O. for fresh adjudication. Decided in favour of assessee for statistical purposes. Addition of the interest on FDRs to its returned income - recharacterizing the interest receipt as the income of the assessee company from other sources - We concur with the claim of the Ld. AR that as the interest income earned by the assessee company on the funds which were temporarily parked/deposited with the banks as fixed deposits prior to commencement of its business was in the nature of a capital receipt and, hence, was required to be set off against the pre-operative expenses. See Indian Oil Panipat Power Consortium Ltd. Vs. ITO [ 2009 (2) TMI 32 - DELHI HIGH COURT] Accordingly vacate the addition made by the A.O by recharacterizing the interest receipt as the income of the assessee company from other sources.

  ---

• 2023 (10) TMI 1057
  TP Adjustment - MAM selection - substantive adjustment made using the CUP Method pertaining AE s other than Sumitomo Corporation, Japan - assessee use of Transactional Net Margin ( TNMM ) with operating profit/operating expenses ( OP/OPEX ) as the profit level indicator ( PLI ) has been disregarded by the TPO/DRP - HELD THAT:- It is found that in Assessee s own case in the consolidated order [ 2018 (10) TMI 1785 - ITAT DELHI ] and other connected Appeals, (Sumitomo Corporation India Ltd. Vs. ACIT [ 2018 (10) TMI 1785 - ITAT DELHI ], the Coordinate Bench has held that owing to significant differences between the AE and non AE commission transactions in respect of the nature of the goods, volume of transaction and the geographical locations of the markets, average commission rate in the non-AE segment could not be adopted as the ALP for the commission rate of numerous products in the AE segment under CUP method, which warrants a very high degree of similarity between controlled and uncontrolled transactions. Thus we hold that once TNMM has been accepted under the similar FAR, there is no reason to deviate by adopting CUP Method and other methods admittedly are incapable of capturing the true arm's length result and therefore, we hold that TNMM should be taken as a most appropriate method for benchmarking the said transaction. Accordingly, we are inclined to allow the Grounds of Appeal No. 4, 6 7 for statistical purpose and remand the issue to the file of Ld. TPO to examine and bench mark the integration transaction by adopting as most appropriate method by taking Berry ratio as PLI as has been approved by Hon ble High Court. Protective addition under TNMM applying PLI of OP/OPEX - TPO while making the adjustment included the FOB value of the goods transacted under indenting segment in the cost base as well as part of opening revenues of the assessee - HELD THAT:- By respectfully following above said ratio laid down by the Tribunal in earlier years [ 2021 (11) TMI 1173 - ITAT DELHI] we are of the opinion that FOB value of the goods is the cost and revenue of the buyer and the seller and not the commission agent. Therefore, such an adjustment could not have been made. Comparable selection - assessee submitted that the assessee in TP report selected 8 comparable companies, but the TPO has rejected all the 8 comparables and selected fresh comparable set off 8 new Companies - HELD THAT:- Since, the assessee has provided the details of the above said 8 Companies in the TP Study; the Ld. TPO/DRP ought to have analyzed the same in detail. Likewise, the TPO/DRP ought to have given clear finding as to how the above 3 companies selected by the TPO are comparable to the FAR of the Assessee. Therefore, we deem it fit to direct the DRP to consider the above 8 Companies selected by the assessee along with the three comparable companies selected by the TPO on the basis of FAR analysis of the assessee and decide afresh by giving cogent reasons. DRP is further directed to pass a speaking order on those comparable after giving proper opportunity of being heard to the assessee.

  ---

• 2023 (10) TMI 1056
  Addition u/s 69A - cash found from the joint locker of the assessee - survey action u/s 133A - HELD THAT:- The assessee belongs to the upper higher strata of the society and it is very common for the assessee and her family to receive gifts in the shape of cash shaguns on various occasions such as marriages, birthdays, anniversaries, birth of a child, auspicious festivals and other such occasions. AR argued that pin money/Kitty which is very common to be received from the spouse in every family. The assessee's financial status has been substantiated in the shape of returns of income filed by her for the past six years. On going through the taxable income and the arguments of the assessee, realities of Indian society and various judicial pronouncements, we hold that no addition is warranted on the amount, Unexplained Jewellery - stree dhan - HELD THAT:- We hold that CBDT's instruction no. 1916 dated 11.05.1994 and press release dated 01.12.2016 pertains to seizure of jewellery. It postulates that by going through the archetypal Indian family standard, a persons of an Income Tax payee of considerable amount could have had the prescribed amount of jewellery in the circular. It was brought into force after a series of due deliberation and its impact on taxation. It is never envisaged that the Assessing Authority should restrict the amount of eligible jewellery to the quantity mentioned in the circular. The assessee stated that the income for all the years had fallen into the highest tax bracket which shows that the assessee has been earning substantial Income clearly establishing the status. It has time and again been held that due credit of the same has to be allowed by the Assessing Officer looking and appreciating the status, customs, and traditions relating to the family. The Hon ble Delhi High Court in the case of Ashok Chaddha [ 2011 (7) TMI 142 - DELHI HIGH COURT ] held that collecting jewellery of 906.900 gms by a woman in a married life of 25 years in form of stree dhan or on other occasions is not abnormal. As in the case of Vibhu Aggarwal [ 2018 (5) TMI 586 - ITAT DELHI ] held that where Assessing Officer under section 69A made addition on account of jewellery found in search of assessee, since assessee belonged to a wealthy family and jewellery was received on occasions from relatives, excess jewellery was very much reasonable and, thus, no addition u/s 69A. Hence, keeping in view the facts and circumstances of the instant case and also the jewellery found, the total income declared, gifts received, bills produced, and in view of the various judgments cited above, we direct that the addition made on account of jewellery be deleted. Solitaire Ring - The diamonds and the purchase thereof has been duly explained and the difference is due to valuation. The Assessing Officer has accepted the fact that the diamonds have been indeed purchased from Naulakha Jewellers. The size of the diamonds in the valuation report is exactly similar as what has been purchased by the assessee. Hence appeal of the revenue on this ground is dismissed.

  ---

• 2023 (10) TMI 1055
  Assessment of trust - Unexplained expenditure incurred u/s 69C - excess income applied - Assessee prays that excess expenditure is from out of previous surplus balance and 15% balance accumulation as per section 11 and 12 - HELD THAT:- It is pertinent to note that the Current Liabilities mentioned in the annexure-5/schedule of the audited balance sheet of the assessee trust clearly mentioned the name of the said two parties. Thus, the observation of the CIT(A) that the said parties are not mentioned in balance sheet in respect of the borrowing is not correct. Besides this, the assessee trust has also given the details of statement of return of income as well as confirmation of those parties where it appears that the creditworthiness and genuineness has been established by the assessee trust CIT(A) has totally ignored these evidences. Therefore, the addition confirmed by the CIT(A) as relates to Section 69C does not survive. The appeal of the assessee trust is allowed.

  ---

• 2023 (10) TMI 1054
  Revision u/s 263 - Gain on sale of land - nature of land sold - as per CIT no queries in respect of the nature of land were raised by the AO - HELD THAT:- We find that note to Tehsildar cannot be equated to a certificate. But internet search done by ld. CIT (A) is also not conclusive evidence. Moreover, there is conflicting view as to whether there was a certificate from Tehsildar available or a note to him by the assessee as claimed by ld. CIT (A). Be as it may, it is clear that AO has made an enquiry and taken a plausible view. In these circumstances, we are of the opinion that the AO has made necessary enquiries and it is a plausible view that the land involved is agricultural land. Hence, we are of the opinion that the order of PCIT needs to be set aside and the issue is decided in favour of the assessee.

  ---

• 2023 (10) TMI 1053
  Nature of expenses - Allowable expenses u/s 37(1) - Interest and late fee on TDS, Late payment penalty charges, Interest on margin trading facility - AO had made disallowance treating the aforesaid expenses as being penal in nature, not allowable u/s 37(1) in the absence of the assessee being able to furnish any evidence to substantiate its claim that expenses were incurred wholly and exclusively for the purpose of business of the assessee - HELD THAT:- There was no basis with the AO/ld.CIT(A) to hold that these expenses were in the nature of penalty/expenses for any purpose being an offence or which is prohibited by law, not allowed in terms of Explanation to section 37(1) - that we completely agree with assessee that narration of these expenses, as noted by the AO/CIT(A) does not reveal any such nature of the expenses as far as interest on margin trading facility or TDS is concerned. And as for the late payment and penal charges also, the nomenclature mentioning late payment also, there was no basis to arrive at a conclusion that all referred to penalty paid by the assessee, that too infringement of any law. The books of accounts admittedly were all produced before the AO, and the ledger account of these expenses also did not reveal any such fact so as to arrive at a finding that these expenses were disallowable being penalty in nature. The ledger account of these expenses, coupled with the explanation of the assessee that these expenses were incurred for the purpose of business of the assessee substantially substantiated the claim of the assessee. Assessee being in the nature of trading in shares and securities, the expenses incurred on account of interest on margin facility and late payment to brokers is undoubtedly incurred in the course of business. There was no requirement for the assessee to prove they were not in the nature of penalty, disallowable u/s 37(1). We hold that the disallowance of aforementioned expenses holding the same to be penal in nature, is without any basis and without appreciating the facts on record. Decided in favour of assessee.

  ---

• 2023 (10) TMI 1052
  Short term capital gain on conversion of partnership firm into a Private Limited Company - HELD THAT:- AAR ruled in favour of the assessee that no liability towards the capital gain was attracted on the assessee acquiring the full share capital of the company. This was done through its order dated 12-03-2010. Revenue s writ petition before the Hon ble Bombay High Court [ 2016 (12) TMI 360 - BOMBAY HIGH COURT] , thereby, affirming the view point of the AAR. The effect of the affirmation of the ruling by the Hon ble High Court is that no liability is attracted towards the capital gain - whether short term or long term. Resultantly, the depreciation allowed has to be withdrawn. In view of this, Ground No.1 of the assesses appeal against the disallowance of depreciation on the transfer value of the asset is dismissed and Ground No.2 against the gain on transfer of technical know-how being treated as short term capital gain to the extent of Rs. 2.00 crore, as against the without prejudice claim of the assessee of the same being long term capital gain, is also dismissed as having become infructuous. The assessee s additional ground about no liability towards capital gain is allowed.

  ---

• 2023 (10) TMI 1051
  TP Adjustment - deemed to be associated enterprises - international transaction involving payment of interest on non-convertible debentures to DB International (Asia) Ltd - As submitted that assessee and M/s. DB International (Asia) Limited are not the AE and, therefore, the transfer pricing adjustment done by the TPO/DRP are without any merit - HELD THAT:- Section 92A(2) provides that two enterprises shall be deemed to be associated enterprises if at any time during the previous year any condition mentioned in sub-clause (2) is fulfilled. The legislature had deliberately used at any time during the previous year for the purpose of determining the status of an enterprise as AE, if at any time either prior to or thereafter of entering into transactions, the condition is fulfilled. Thus, the contention of the assessee that the status of the enterprise should be examined before entering into the transaction is contrary to the literal meaning of section 92A(2) of the Act which has not restricted the application of the provision, based on prior or subsequent transaction. In view of the above, we are of the opinion that it makes no difference whether the condition of 51% of the book value of total assets is not fulfilled prior to advancing the loan or subsequent thereto. In view of the above, this objection of the assessee is also without any basis and accordingly dismissed. TPO had applied the real estate filter for selecting the comparables - From the reading of the TP study of the assessee (executive summary) and also the submissions made by the assessee before the DRP it is clear that the assessee is in the business of developing building and leasing of life sciences and bio- technological parks which in our view is nothing but a real estate activity and, therefore, the authorities below have committed no error in taking the real estate filter as an appropriate filter for selecting the comparables. In view of the above, this issue is also decided against the assessee. Credit Rating Filter and Tenor Filter - The credit rating of the enterprise like the assessee is an important criteria/factor which determines the eligibility of the borrower and will also impact the interest rate and terms of the funding. The credit rating of GRICL which was AAA/Stable cannot be compared with that of the assessee having credit rating of BB- SO. Therefore, in our view the learned DRP as well as the TP. We find in the case DCIT v JSW Energy Ltd [ 2019 (11) TMI 800 - ITAT MUMBAI] it was held that credit rating is an important factor for quantifying the spread and benchmarking the interest on loan from AE's. The GRICL in our opinion cannot be said to be the comparable with the assessee company on both the counts, namely, on the credit rating and term of the NCD. In view of above, we are of the opinion that the rate of interest paid on the NCD by GRICL cannot be compared with the rate of interest paid by the assessee to M/s. DB International (Asia) Limited. Having held that the interest paid by the GRICL cannot be compared with the interest paid by the assessee on the NCD to M/s. DB International (Asia) Limited, now the question that remained un- answered is at what would be the appropriate interest rate on NCD. Undoubtedly, strictly speaking, Safe Harbour Rules are only applicable if a person exercises a valid option for application of safe harbour rule in accordance with Rule 10TE. Though, in the present case, the assessee had not opted for Safe Harbour Rule, however, Rule 10TD(5) provides that in case the advancing of intra group loans referred to in item No.IV of Rule 10TC exceeds Rs.50,00,00.000/- (fifty crore), then the interest rate declared in relation to the eligible international transaction is not less than base rate of State Bank of India as on 30th June of the relevant previous year +300 basis points. The assessee is engaged in the business of developing, building and leasing of life-sciences and bio- technology parks in India and these activities of the assessee are essentially in the nature of real estate business and, therefore, the RBI circular dt. 01/01/2016 bearing No. RBI/FED/2015-16/2 is not applicable to the activities of the assessee. The finding recorded by the DRP that SBI base rate plus a nominal premium of 50 basis points as ALP, is incorrect as no basis of 50 nominal basis wih was given by the DRP. In fact, the comparable selected by the Assessing Officer namely, Mahua Bharatpur Express Ltd., was paying the interest @ 18% (SBI PLR + 400 basis points). Similarly, Assetz Premium Holdings Pvt. Limited was paying the interest @ 14%. These two comparables selected by the Assessing Officer were excluded by the DRP on the pretext that the NCDs were subscribed by the related parties. As held hereinabove, Gujarat Road Infrastructure Company Limited cannot be compared with the assessee for the reasons mentioned hereinabove and therefore, there is no comparable available with which the rate of the assessee can be compared as DRP has also not relied upon TP Study of TPO as well as assessee for the reasons in conclusive . In this scenario, we deem it appropriate to take a guidance from the Safe Harbour Rule and Section194 LD and hold that 12.275% interest rate (SBI base rate +300 basis points) would be the appropriate ALP for the purposes of benchmarking the interest paid by the assessee on NCD to M/s. DB International as against 13.13%. Thus, the ground nos. 2 to 8 of the assessee are partly allowed. ALP of international transaction involving payment of debenture issue expenses by the Assessee to Deutsche Bank AG (Mumbai Branch) - HELD THAT:- Admittedly, the assessee has benchmarked the expenses paid to its deemed AE as international transaction and therefore, had mentioned in its TP Study. The assessee has paid the interest @ 2.5% to Deutsche Bank, AG, Mumbai Branch for facilitating the issuance of NCD to DB International (Asia) Limited. TPO / DRP both have determined the ALP at 0.5% as against 2.5% on the pretext that the assessee being AE of Deutsche Bank, Mumbai and further, the assessee has not provided any comparable instance of debenture issue for the purposes of benchmarking the expenses / bank charges. Assessee had claimed 2.5% on actual basis whereas the DRP has restricted it to 0.5% on estimate basis. In our view, both the views cannot be approved by us as no person can earn the profit from himself . This principle applies to the fact to the present case as DB International had been held to be AE of the assessee for the reasons mentioned hereinabove, and therefore, to issue the NCD by the branch of DB International, it is highly improbable that they will charge 2.5% as expenses for issuing the debenture / bank charges. In view of the above and also on the account of the fact that the DRP has estimated it at 0.5%, we are of the opinion that a balance is required to be drawn between the rights of the assessee and as well as the Revenue, and therefore, we restrict the determination of ALP by the TPO at 1.5% as against 2.5% paid by the assessee. Addition u/s 56(2)(viia) - TPO rejected the valuation report on the pretext that the terminal value of the cash flow is less than the net wort and benchmarked the transaction as deemed international transaction under Rule 11U and 11UA of Income Tax Rules r.w.s. 56(2)(viia) - HELD THAT:- For the purposes of determining the fair market value, the guiding principle has been provided by the Act for the benefit of the assessing authority i.e., to adopt the valuation as per the balance sheet drawn on the date of transfer subject to it being audited. This should be the basis of making the valuation by the assessing officer for making the addition under section 56(2)(viia) of the Act. Further the law does not expect the assessee to perform the impossible act. It is unimaginable that the assessee will get its accounts audited on the date of drawing up of the balance sheet itself. The accounting standard provides that the accounts of the assessee are required to be audited after the finalization of balance sheet and even it has provided that the subsequent events occurring after the balance sheet date can also be factored in while finalizing the audited accounts. Our above said view is fortified in Electra Paper and Board Private Ltd [ 2022 (1) TMI 1316 - ITAT CHANDIGARH] held that it is justifiable to accept the unaudited balance sheet as on the valuation date when the same has been audited at a later date with no material variance in the financials. In the present case, the audit of balance sheet drawn as on 31.08.2016 was completed on 31.03.2018 after taking into account financials as on 31.08.2016. In view of the above, we hold that the balance sheet as drawn on 31.08.2016 being the closest approximation to the balance sheet on valuation date (date of transfer) should be considered under Rule 11U(b)(ii) read with Rule 11UA(1)(c)(b). The finding of DRP recorded in paragraphs 2.7.2 and 2.7.3 are not in accordance with law and, therefore, we set aside the same. The assessing officer is duty-bound to calculate the fair market value of the shares as per the balance sheet drawn on 31.08.2016. Therefore, the addition made in the hands of the assessee based on the balance sheet as on 31 March 2016, is held to be without any basis and therefore, we quash the same. Value of the land, which is the subject matter of the present dispute, has not been higher as compared to the guidance value. In the present case, the financial statement was drawn up on 30.09.2016 and the audit took place on 31.03.2018. Therefore, as per SA 700, the audit date would be 30.09.2016. In our considered opinion, the impairment of assets has taken place prior to the drawing of the balance-sheet and after the end of the financial year 31.03.2016, therefore, the auditor was obliged to take into account this event while auditing the balance sheet as on 30.09.2016 as per SA-560. Therefore, the valuation arrived by the assessee on the basis of the working and determining the Fair Market Value cannot be faulted with. As on December 12, 2017, the Hon ble National Company Law Tribunal, Hyderabad Bench, sanctioned a scheme of demerger between Takshila Tech Parks and Incubators (India) Private Limited (Demerged Company) and MN Takshshila Industries Private Limited ( Resulting Company ). Pursuant to the scheme, all assets and liabilities pertaining to the demerged business of the Demerged company have been transferred and vested with Resultant company with retrospective effect from October 1 2016. The consideration for the demerger to the equity shareholders of the demerged company has been discharged by issuance of equity shares of the Resulting Company. Pursuant to the provisions of the scheme, the value of investment in the demerged company in the books of the resulting company is to be suitably adjusted considering the net assets transferred pursuant to demerger. In the said scheme of merger, the valuation of the assets were also considered and no objections were raised as to the valuation of the fixed assets acquired by the assessee. The scheme of amalgamation was statutory and therefore, it also shows that the valuation adopted by the assessee was appropriate. For the reasons stated hereinabove, the ground raised by the assessee with respect to Section 56(ii)(via) are allowed. Addition u/s 14A r.w.s. Rule 8D - DRP confirmed the disallowance made by AO on the pretext that 14A is applicable even if there is no exempt income received by the assessee - HELD THAT:- The present case is covered by the decision of Cheminvest Ltd [ 2015 (9) TMI 238 - DELHI HIGH COURT] wherein the Court has held that the expression 'does not form part of the total income' in section 14A of the Act means that there should be an actual receipt of income which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, Section 14A will not apply if no exempt income is received or receivable during the relevant previous year. In the present case, no exempt income has been earned by the assessee from the investment made by it and therefore, no disallowance can be made by the Assessing Officer. Therefore we are of the considered opinion that the ground raised by the assessee is required to be allowed as there is no exempt income for the year under consideration. Disallowance of TDS Credit - assessee submitted that as per Section 199 TDS deducted on the income assessed in the hands of the assessee should be considered as the taxes paid by the assessee and TDS credit should be allowed to the assessee to offer the corresponding income, when the genuineness of TDS credit was not in dispute - HELD THAT:- On perusal of the draft assessment order, we find that during the course of assessment proceedings, though the Assessing Officer had not raised any doubts on the correctness / legitimacy of the TDS credits claimed in the ITR filed by the assessee but however, allowed only the TDS credit appearing in form 26AS of the assessee. In view of the above circumstances, we deem it appropriate to remand this issue to the file of Assessing Officer for the limited purpose of verification of the correctness of the TDS credits claimed by the assessee in its income tax return and thereafter, give a categorical finding in its order. In the light of the above, we remand the issue of TDS claim for re-adjudication to the jurisdictional Assessing Officer. Needless to say that the assessee shall file all the documents as and when called for by the Assessing Officer / TPO. Thus, this ground of the assessee is allowed for statistical purposes.

  ---

• Customs

• 2023 (10) TMI 1050
  Permission to export of non-basmati rice - refusal to grant permission to export the consignment on the ground that the petitioner has not handed over the consignments to the customs on or before 20th July 2023 since on the earlier occasion vide letter dated 22nd July 2023, the petitioner requested for offloading the consignments under the shipping bills and the said request was accepted by the respondents. HELD THAT:- In the instant case, there is no dispute that the export duty with respect to shipping bill under consideration has been paid by the petitioner on 19th July 2023 and, therefore, new condition specified in Notification No. 29/2023 is satisfied. This read with Trade Notice No. 23/2023 which clarifies that each of the conditions is an independent and export is allowed in case of satisfaction of any one of the conditions, the petitioner would be entitled to export the goods as per Notification No. 29/2023. Admittedly, the export duty was paid on 19th July 2023 has not been refunded till today. The petitioner became entitled to export the consignment under the clarificatory notification dated 29th August 2023 when it provided for export on payment of export duty on or before 20th July 2023 which undisputedly has been paid by the petitioner. There appears to be no dispute that the petitioner clearly falls in this category which was added by the clarificatory notification dated 29th August 2023. The respondents themselves have allowed the export of other consignment only on the ground of payment of export duty without goods having been handed over to the Customs and that too under clarificatory notification. Therefore, there cannot be different yardstick to be adopted by the respondents with respect to different shipping bills of the very same petitioner. Hence there can be no question of the petitioner being denied the permission to export the consignment under Shipping Bill Nos. 2465780 and 2486893. The respondents are directed to permit the export of non-basmati rice under Shipping Bill Nos. 2465780 dated 14.07.2023 and 2486893 dated 15.07.2023 before 30th October 2023 - Appeal disposed off.

  ---

• 2023 (10) TMI 1049
  Levy of penalty u/s 112 A of the Customs Act 1962 - import of 475 cartons containing artificial flowers, photo frames, fancy mirrors etc. - goods imported by resorting to undervaluation - wilful mis-declaration - HELD THAT:- No acts of omission or commission, which would render the goods liable for confiscation have been alleged or proved on the part of the appellant. No charge of abetment is also evidenced against the appellant. Penalty imposed on the appellant is set aside - Appeal allowed.

  ---

• 2023 (10) TMI 1048
  Condonation of delay in filing appeal - appeals were not filed within the stipulated time frame of 60 days and also for a further period of condonable 30 days - HELD THAT:- It is found that no physical final assessment order was issued to the appellant.The final assessment was updated online only. Moreover, for the differential duty, the challan was generated only on 11.07.2017. In this position, it is 11.07.2017 when the appellant could notice the final assessment of bill of entry. Therefore, the date 11.07.2017 is the correct date of communication of final assessment to the appellant. The identical issue was considered by this Tribunal in the case of GAIL (INDIA) LTD. VERSUS C.C. -AHMEDABAD. [ 2023 (10) TMI 1044 - CESTAT AHMEDABAD] wherein the Tribunal has held that even though the final assessment has been made but the communication of the final assessment is relevant. In the present case also, the appellant came to know about the final assessment only on 11.07.2017. Accordingly, the appeal was filed well within the time. The impugned order is set aside and appeal is allowed by way of remand to the Learned Commissioner (Appeals) for deciding the appeals before him on merit.

  ---

• 2023 (10) TMI 1044
  Rejection of refund claim - relevant date for claiming refund, is the date of the order of finalization of the provisional assessment, or not - HELD THAT:- The Tribunal as has held that the order of finalization of the provisional assessment is the relevant date for the purpose of claiming refund. In the case of INDIAN OIL CORPORATION LTD. VERSUS CC. (EXPORT), NEW DELHI [ 2014 (12) TMI 1047 - CESTAT NEW DELHI] where it was held that date of service of finalization of provisional assessment is the relevant date for this purpose. There is merit in the argument of the appellants, the appeal is allowed.

  ---

• Insolvency & Bankruptcy

• 2023 (10) TMI 1096
  Existence of vested right to file a Resolution Plan pursuant to the process in published Form G - approval of Resolution Plan - HELD THAT:- The Appellant does not have any vested right in submitting the Resolution Plan in the absence of filing one Plan pursuant to Form G, and taking the right steps at the appropriate time, specifically keeping in view that the Appellant had attended the 5th CoC Meeting when the entire contours of the Resolution Plan was discussed. Reliance on the Judgment of the Hon ble Apex Court in the matter of MAHARASHTRA SEAMLESS LIMITED VERSUS PADMANABHAN VENKATESH OTHERS [ 2020 (1) TMI 903 - SUPREME COURT ] in which the Hon ble Apex Court has held Certain allegations were made by the MSL over failure on the part of the Resolution Professional in taking possession of the assets of the corporate debtor and subsequently in their failure in handing over the same to MSL. These issues are factual. The ratio of the aforenoted Judgment directly contradicts the contention of the Appellant that the bid value has to match the liquidation value. It is significant to mention that the Resolution Plan has already been implemented and we do not wish to set the clock back. This Tribunal is of the considered view that there is no illegality in the Order of the Adjudicating Authority dismissing the Intervention Application - Appeal dismissed.

  ---

• 2023 (10) TMI 1095
  Seeking condonation of delay of 3 days in preferring the Appeal - Condonation sought on the ground that the Impugned Order was passed on 11/04/2023 and the Applicant had tried to apply for the Order copy on the very same date, but was informed by the Registry that the same could be applied after the Order was uploaded - HELD THAT:- From the Report sent by Deputy Registrar of NCLT, it is clear that the Order was uploaded on 19/04/2023 and that the Appellant had applied for the Certified Copy only on 04/05/2023, which was issued to the Counsel Mr. P. Gowthaman on the very same day. Therefore, even if we take into consideration, 45 days from the date of 19/04/2023, the time lapses on 02/06/2023 and this Appeal has been preferred on 06/06/2023, and is clearly barred by limitation. Further the Hon ble Supreme Court in the matter of National Spot Exchange Limited Vs. Anil Kohli, Resolution Professional for Dunar Foods Limited [ 2021 (9) TMI 1156 - SUPREME COURT] held that as per the proviso to Section 61(2) of the Code, the Appellate Tribunal may allow an appeal to be filed after the expiry of the said period of 30 days if it is satisfied that there was sufficient cause for not filing the appeal, but such period shall not exceed 15 days. Therefore, the Appellate Tribunal has no jurisdiction at all to condone the delay exceeding 15 days from the period of 30 days, as contemplated under Section 61(2) of the IB Code. This Appeal is barred by limitation and is dismissed.

  ---

• PMLA

• 2023 (10) TMI 1094
  Seeking grant of bail - bail sought on the ground of sickness - Money Laundering - HELD THAT:- The health report of the petitioner does not appear to be a medical condition which could be taken care only if he is released on bail. That apart, his past conduct, his present position as Minister without Portfolio and the abscondence of his brother Mr.Ashok Kumar, coupled with the attack on the Income Tax Officials, all cumulatively leads to an irresistible conclusion that, certainly, he will directly and indirectly influence or cause deterrence to witnesses, if released on bail. The non-cooperation of the co-accused Mr.Ashok Kumar, who is blood brother of the petitioner also justifies the apprehension of Enforcement Directorate that, there is flight risk causing impediment in progress of trial. This Court is not inclined to grant bail to the petitioner. Accordingly, this Criminal Original Petition is dismissed.

  ---

• Service Tax

• 2023 (10) TMI 1093
  Levy of service tax - consideration towards bare-boat charter of offshore drilling unit to M/s Transocean Drilling Services (India) Pvt Ltd - deemed sales/high seas sale - HELD THAT:- There are no merit in these appeals. The Civil Appeals stand dismissed.

  ---

• 2023 (10) TMI 1092
  Violation of principles of natural justice - opportunity of hearing not provided to petitioner - Exemption from Service Tax - Goods Transport Agency service - petitioner doing the work for FCI, a Food Procurement Agency in agricultural produce - non-production of consignment note(s) - Entry No. 21 of the Notification No. 25/2012-S.T., dated 20-6-2012 - HELD THAT:- Since the impugned order has been passed without any giving opportunity to the petitioner to produce the relevant documents which were in his custody, the present writ petition is allowed and the order dated 30-12-2022 (Annexure P-12) is being set aside and the matter is being remanded back to the Assessing Officer to pass a fresh order after giving one opportunity to the petitioner to produce the consignment note(s) and then pass a speaking order keeping in view the Entry No. 21 of the Exemption Notification, in accordance with law. Petition allowed by way of remand.

  ---

• 2023 (10) TMI 1091
  Levy of service tax - providing the service in the capacity of subcontractor on behalf of the main contractor - suppression of facts or not - SCN dated 18.10.2009, was issued for the period September 2005 to June 2009 - invocation of extended period of limitation - HELD THAT:- The fact of the case is not under dispute that the appellant have provided the service of erection, commissioning and installation and fabrication in the capacity of sub-contractor for the main contractors as named above. The issue that in a case where the service was provided by the sub-contractor whether the sub-contractor is liable to pay Service Tax was under dispute in various cases and finally the same was decided by the Larger Bench in the case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI] . Moreover, on the issue of taxability on the sub-contractor, there were contrary board circulars, in the first circular the board has clarified where the service is provided by the sub-contractor, the main contractor on whose behalf service is provided, is liable to pay the Service Tax and sub-contractor is not liable to pay Service Tax - However, later on taking U-turn, the board has clarified that the sub-contractor being independent service provider in any case is required to pay the Service Tax. Therefore, due to lack of clarity on the issue during relevant time and the issue being finally decided by the Larger Bench, no mala fide intention to evade payment of Service Tax can be attributed to the appellant. In the present case, since the service provision is during period September 2004 to April 2008, the SCN issued on 18.10.2009, the entire period is beyond normal period and hence the demand for the said period is not sustainable on the ground of time bar. This issue particularly on the ground of time bar has been decided in PRAMUKH EARTH MOVERS VERSUS C.C.E. S.T. -VAPI [ 2023 (8) TMI 851 - CESTAT AHMEDABAD] where it was held that the entire demand being issued for extended period i.e. beyond one year from the date of show cause notice shall not sustain on limitation alone. The impugned order is set aside. The appeal is allowed.

  ---

• 2023 (10) TMI 1090
  Works which involve supply of material and service - composite contract - Denial of benefit of abatement on the gross value to the extent of 67% as provided in N/N. 01/2006-ST dated 01.03.2006 - time limitation - Penalties under Section 77 and 78 of FA - HELD THAT:- The service recipient is also admittedly deducted 4% Works Contract Tax TDS under the Punjab VAT Act, 2005 on the payment made to the appellant and this 4% Works Contract Tax TDS is only deducted if the payment is made for a Works Contract in terms of Section 27 of the Punjab VAT Act, 2005. The CBEC has issued a Circular No. B1/16/2007-TRU dated 22.05.2007 and clarified Contracts treated as works contract for purposes of levy of VAT/Sales Tax shall be treated as works contract for purpose of levy of Service Tax. This is clear from the definition under Section 65(105)(zzzza) - The said Circular issued by the Board is binding on the Revenue Authorities as held by the Hon ble High Court of Punjab and Haryana in the case of AMBUJA CEMENTS LTD. VERSUS UNION OF INDIA [ 2009 (2) TMI 50 - PUNJAB HARYANA HIGH COURT] . Time Limitation - HELD THAT:- The substantial demand is barred by limitation because the department has not been able to establish that the appellant had intended to evade the payment of service tax which is essential ingredients to invoke the extended period of limitation. Penalties under Section 77 and 78 of FA - HELD THAT:- Since the Audit raised the objection, the appellant paid the service tax after availing the abatement of 67% alongwith interest and therefore, it can safely be said that there was no intention to evade the payment of service tax, therefore, the penalties under Section 77 and 78 are not liable to be imposed on them. The impugned order is not sustainable in law and the same is set-aside - Appeal allowed.

  ---

• 2023 (10) TMI 1089
  Legality of issuing SCN and levy of penalty - service tax paid before the issuance of show-cause notice - levy of service tax under Banking and Other Financial Services on their act of providing bank guarantees to their group companies. Issuance of SCN and levy of penalty - HELD THAT:- Section 73 (3) provides that the Central Excise Officer shall not serve any notice under sub-Section 1 of Section 73 where the assessee pays the service tax. The only exception to such non-issuance of show-cause notice is provided under sub-Section 4. Sub-Section 4 is attracted when the elements like fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or of the Rules made there under with intent to evade payment of service tax - the Courts and Tribunals have been consistently holding that mere non-obtaining registration, nonpayment of service tax and non-filing of ST-3 Returns cannot be a reason to allege suppression etc. and that a positive act on the part of the assessee with intent to evade payment of tax has to be established. Looking into the facts and circumstances of the case, the extended period is not invocable and hence, penalty cannot be imposed on the service tax which stands paid before the issuance of show-cause notice. Levy of service tax under Banking and Other Financial Services on their act of providing bank guarantees to their group companies - HELD THAT:- The Department has not adduced any evidence to the effect that the appellants have received any consideration in providing bank guarantees. This Bench in the case of appellant s group company in M/S DLF PROJECT LIMITED VERSUS C.C.E S. T- GURGAON I [ 2020 (6) TMI 418 - CESTAT CHANDIGARH] have decided the issue in their favour holding that the appellant is not liable to pay any service tax on corporate guarantee provided by the appellant to various banks/financial institutions on behalf of their holding company/associate enterprises for their loan or over draft facility under Banking and Financial Institutions after or before 01.07.2012. The appeal id allowed.

  ---

• 2023 (10) TMI 1088
  Levy of Service Tax - construction of residential complex service - amounts received from Tamil Nadu Police Housing Corporation for the construction activities carried out by the appellant - period 2005-2006 as well as 2007-2008 to 2009-2010 - HELD THAT:- The Tribunal in the case of K. ELANGO PACKIARAJ VERSUS COMMISSIONER OF CENTRAL EXCISE, MADURAI [ 2020 (2) TMI 291 - CESTAT CHENNAI] has considered a similar issue and held that the demand cannot sustain. In COMMISSIONER OF CENTRAL EXCISE SERVICE TAX CUSTOMS, BANGALORE-II VERSUS NITHESH ESTATES LTD., [ 2018 (7) TMI 1135 - KARNATAKA HIGH COURT] , it was held that the demand under Construction of Residential Complex services cannot sustain, when ultimate owner receives the property for personal use. The Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] held that the demand of service tax under Construction of Residential Complex Service cannot sustain when the nature of construction activities rendered are of composite contracts involving both materials and labour. The said decision was followed in JM/S. JAIN HOUSING CONSTRUCTION LIMITED VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [ 2023 (2) TMI 1044 - CESTAT CHENNAI] . Thus, the demand for the subsequent period 2007-2008 to 2009-2010 also cannot sustain and requires to be set aside - appeal allowed.

  ---

• 2023 (10) TMI 1087
  Levy of service tax - Commercial or Industrial Construction Service (CICS) - appellant while providing construction services had obtained free supplies from the customer and had not discharged service tax liability according to the provisions of law - HELD THAT:- From the definition of Commercial or Industrial Construction Service it can be seen that the said definition speaks only about contract simplicitor which does not involve supply of goods / materials. After the introduction of Works Contracts Service (WCS) w.e.f. 1.6.2007, the definition takes into account, the element of including the value of goods that have gone into the composite contract. The Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] had analyzed the very same issue and held that the demand under WCS in the nature of composite contract (construction of residential complex service, commercial or industrial construction service, erection, commissioning and installation service) cannot sustain when it involves composite contracts which includes both supply of goods / materials as well as rendering of services. The demand under Commercial or Industrial Construction Services (CICS) cannot sustain and requires to be set aside - Appeal allowed.

  ---

• 2023 (10) TMI 1047
  Levy of Service tax - Manpower recruitment or supply service - recovery of charges from the farmers towards sugarcane cutting and paid the same to labour contractors - HELD THAT:- The issue stands squarely covered by the decisions of the Tribunal in the appellants own case for a different period in M/S. ARIGNAR ANNA SUGAR MILLS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, TRICHY [ 2018 (9) TMI 387 - CESTAT CHENNAI] where it was held that The Tribunal on identical set of facts had considered the issue and held that the sugarcane growers themselves are encouraging the harvesting labourers and as a mere facilitation, the amount to be paid to these harvesters are deducted from the price of the sugarcane that is to be paid to the farmers. The Commissioner (Appeals) in a similar set of facts, in the appellant's own case, has set aside the demand. The demand cannot sustain and requires to be set aside - Appeal allowed.

  ---

• Central Excise

• 2023 (10) TMI 1086
  Transfer of accumulated CENVAT Credit of the EOU Unit to the DTA Unit after exit of EOU status - HELD THAT:- As per Rule 10 if a manufacturer shifts the factory to another site or the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the factory to a joint venture then the manufacturer is allowed to transfer the CENVAT credit lying un-utilised in its accounts to the Unit that is sold, merged, leased or amalgamated - In the present case, the Unit has become a DTA after exiting from EOU status. Under Central Excise law both these units are considered as separate entities. The accumulated credit cannot be denied to both the units and the department cannot recover such credit which belongs to the appellant. The issue stands covered by the decision in the case of TECUMSEH PRODUCTS INDIA P. LTD. VERSUS C.C.,C.E. S.T., HYDERABAD-IV [ 2015 (9) TMI 1487 - CESTAT BANGALORE] where it was held that a successor DTA unit can get the transfer credit of the unutilized credit lying with its predecessor unit, which is an EOU in the present case. The demand cannot sustain and requires to be set aside. The impugned order is set aside - Appeal allowed.

  ---

• 2023 (10) TMI 1085
  CENVAT Credit - input service or not - waste treatment services received from Bharuch Enviro Infrastructure Limited, Ankleshwar for treatment of their factory's waste which arises out of the manufacture of final product - HELD THAT:- As per the Hon ble Supreme Court judgment in the case of INDIAN FARMERS FERTILISER COOP. LTD. VERSUS CCE., AHMEDABAD [ 1996 (7) TMI 141 - SUPREME COURT] , it has been held that effluent treatment activity is essential in relation to the manufacture of final product. In the present case, the entire case of the department is that the effluent treatment activity is not in relation to the manufacture of the final product. Following the said Apex court judgment, this Tribunal also taken a view that the effluent treatment activity is indeed in or in relation to the manufacture of final product, therefore, the cenvat credit cannot be denied. The issue is no longer res-integra and same has been decided in favour of the assessee. Accordingly, the impugned order is set aside - Appeal allowed.

  ---

• 2023 (10) TMI 1084
  Levy of penalty under Rule 25 of Central Excise Rules, 2002 - Wrongful availment of Exemption N/N. 6/2022-CE dated 01.03.2022 which was superseded vide N/N. 6/2006-CE dated 01.03.2007 - relaxed drum - suppression of facts or not - extended period of limitation - HELD THAT:- It was a recurring issue and for the previous period also in the appelant s own case this Tribunal in AMBICA ENGINEERING WORKS VERSUS C.C.E. S.T. -SURAT-I [ 2022 (6) TMI 706 - CESTAT AHMEDABAD] , as regard the bonafide of the appellant recorded the submission and given the finding that In the present case the demand for the period 15.04.2004 to February 2008 was raised by the Show cause notice dated 06.04.2009 hence the entire demand is prior to normal period of one year, therefore the same is hit by the limitation. Accordingly we hold that the demand raised in the SCN and confirmed by the Adjudicating Authority is not sustainable being time barred. From the above observation of the Tribunal, it can be seen that on the identical issue in the appellant s own case for the previous period, this Tribunal has taken a view that there is no malafide intention on the part of the appellant and demand for the extended period was set aside. Since the issue being a recurring, the subsequent show cause notice which is in the present case was issued which is for a normal period, therefore, neither Rule 25 nor Section 11AC can be invoked as there is no suppression of fact. Since on the issue of merit, this Tribunal has already taken a view that considering the nature of the case, there is no malafide intention on the part of the appellant, in the present case also the appellant cannot be liable for penalty under Rule 25. The penalty under Rule 25 of Central Excise Rules 2002 is not imposable in the facts of the present case, hence the penalty imposed under Rule 25 is set aside - The duty demand is maintained. Appeal allowed in part.

  ---

• 2023 (10) TMI 1083
  Clearances of Armoured Panels and Stretcher Assembly to HAL, Bangalore - Duty exemption benefit of Notification No. 63/1995-CE dated 16.03.1995 denied - allegation of the Department is that the Notification grants exemption only to the goods manufactured by these units and not for suppliers of the inputs / products by other vendors or contractors or job workers - suppression of facts or not - extended period of limitation. HELD THAT:- This exemption certificate clearly indicates (i) name and address of the supplier (ii) description of the goods to be manufactured and supplied (iii) the items that are required for the production of Advanced Light Helicopter (ALH) against the order of Ministry of Defence, Government of India, and, (iv) these goods are exempted from payment of excise duty leviable under Notification No. 63/1995-CE dated 16.03.1995. A scrutiny of the relevant Notification indicates in respect of other entries, it is specifically mentioned who has to manufacture and where to be utilized. The entries at column Nos. 4 to 7 indicate that certain specified goods are to be manufactured by M/s. HAL or other mentioned units including where they are to be used. In respect of entry No. 16 for items Pistol, Rifle and SLR falling under Chapter 93, the conditions specified include that the goods are to be manufactured by Bharat Dynamics Limited, Hyderabad and before clearance of the said goods, a certificate granting of exemption from the Deputy Secretary of Ministry of Home Affairs is required to be submitted. Whereas in the instant case there is no mention in the impugned Notification regarding who is competent to issue the above duty exemption certificate - it is opined that the Notification is deficient to this extent. It is not known how the practice of issuance of these exemption certificates by the officials of HAL came into practice. In the case of THE COMMISSIONER OF CENTRAL EXCISE BENGALURU-V VERSUS M/S. DATASOL INNOVATIVE LABS [ 2017 (2) TMI 1171 - KARNATAKA HIGH COURT] had held a similar issue in favor of assessee. Though the Department filed appeal against such order before the Hon ble High Court of Karnataka, the Hon ble High Court upheld the order of the Tribunal without rendering any finding on the question of law framed on merits of the case. Moreover, the Hon ble Apex Court in the case of GOVERNMENT OF KERALA ANR. VERSUS MOTHER SUPERIOR ADORATION CONVENT [ 2021 (3) TMI 93 - SUPREME COURT] has observed that an exemption Notification has to be read as a whole so as to give affect for the purpose for which it is issued. Time limitation - HELD THAT:- The Show Cause Notice dated 05.07.2013 was issued demanding duty for the period from 2008-2012 invoking extended period under proviso to Section 11A(1) / 11A(4) of the Central Excise Act, 1944. The appellant has cleared the impugned goods on the basis of the exemption certificates given by the officials of M/s. HAL and all the details were furnished in the invoices and in the ER-1 returns. These exemption certificates have certified that these goods are meant for ALH Project and would be used by HAL for ALH Project and would be supplied to the Ministry of Defence for their use. As such, no suppression with an intent to evade duty is attributable to the appellant. So, the demand of duty invoking extended period is not legal and so not sustainable. The appellant succeeds on merits as well as on limitation - Appeal allowed.

  ---

• 2023 (10) TMI 1082
  CENVAT Credit - inputs - purchase of tubes and flaps from other manufacturers and clearing the same along with the tyres to the original equipment manufacturers and overseas purchasers - Penalty of company and directors. It is the contention of the Department that the said tubes and flaps are not used in the manufacture of the tyres and as such do not qualify to be inputs in view of the definition given under Rule 2(k) of CCR, 2004. HELD THAT:- It is seen that the definition of Inputs as above has a wider connotation and the inputs can be used directly or indirectly and may or may not be contained in the final product. Moreover, they can also be accessories of the final products cleared along with the final products. It is not the case of the Department that these inputs fall under any exclusion clause of the definition. The Courts and Tribunals have been consistently holding that the definition of Inputs is wide and comprehensive. There are number of decisions in favour of the appellants in cases with identical facts. Only one decision of Hon ble Kerala High Court is against the appellants and the same is relied upon in the impugned order. Learned Counsel for the appellants submits that Hon ble Apex Court [ 2011 (11) TMI 881 - SC ORDER ] has stayed the operation of the said decision, of the Hon ble Kerala High Court in COMMISSIONER OF CENTRAL EXCISE VERSUS APPOLLO TYRES LTD. [ 2010 (8) TMI 287 - KERALA HIGH COURT] . Even after the decision of Hon ble Kerala High Court in the above case, Tribunal has been consistently holding that the credit of tubes and flaps is admissible for the manufacturers of tyres. The appellants are eligible to avail CENVAT credit on flaps and tubes cleared in a set packing along with the tyres manufactured by them. It is further found that Department s objection that the assessable value of tubes and flaps is separately shown in the invoices and therefore, CENVAT credit is not available, is not acceptable. Penalty of company and directors - HELD THAT:- As the credit is admissible on merits, penalty imposed on the company and the Directors is not sustainable. The impugned order is set aside - Appeal allowed.

  ---

• 2023 (10) TMI 1081
  Recovery of CENVAT Credit along with interest and penalty - applicability of scheme of neutralisation - trading activity - input service used in common to the extent attributable to ineligible activity - rule 6(3) of CENVAT Credit Rules, 2004. HELD THAT:- The scheme of neutralisation is to be exercised only by the assessee. Furthermore, it is also abundantly clear that rule 6 of CENVAT Credit Rules, 2004 merely sets out the scheme of neutralisation and entirely for the assessee to comply with; any failure thereto was to be set right under the authority of rule 14 of CENVAT Credit Rules, 2004. In re Mercedes Benz India (P) Ltd, [ 2015 (8) TMI 24 - CESTAT MUMBAI] it was held that We also note that trading of goods was considered as exempted service from 2011 only, thus it was initial period. We are also of the view that there is no condition provided in the rule that if a particular option, out of three options are not opted, then only option of payment of 5% provided under Rule 6(3)(i) shall be compulsorily made applicable, therefore we are of the view that Revenue could not insist the appellant to avail a particular option. In the present case admittedly it is appellant who have on their own opted for option provided under Rule 6(3)(ii). Thus, it is clear that exercise of option vests entirely with assessee at any stage and proceedings under rule 14 of CENVAT Credit Rules, 2004 would have to be restricted to that which is least detrimental to the assessee. The demand based on the harshest of the options as ordered by the original authority does not sustain. However, in having taken that extreme step, the claim of the appellant that obligation contemplated in the scheme has been duly complied with was not ascertained. The discharge of the obligation must be in consonance with the computation envisaged in rule 6 of CENVAT Credit Rules, 2004. The matter remanded back to the original authority who shall limit proceedings under rule 14 and rule 15 of CENVAT Credit Rules, 2004, if any, only to deficit, if any, in compliance as set out - impugned order set aside.

  ---

• 2023 (10) TMI 1080
  Clearance of Cement - Benefit of exemption - Valuation - Fixation of MRP - whether the Assessee s goods are covered by the mischief of the third proviso to S.No.2 of the explanation to the exemption notification 4/2007-CE dated 01.03.2007? - time limitation - HELD THAT:- S.No.2 of the explanation defines what constitutes the retail sale price and its third proviso says where the retail sale price of the goods are not required to be declared under Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and thus not declared, the duty shall be determined as is in the case of goods cleared in other than packaged form. In other words, if the retail sale price is not required to be declared and hence also not declared, the goods shall be treated as if they are cleared in other than packaged form and charged to duty accordingly. Such cases are covered by S.No.1C of the exemption notification. In the case of RAIN COMMODITIES LTD. VERSUS COMMISSIONER [ 2011 (4) TMI 1303 - SC ORDER] , the Tribunal made a factual observation that the cement was cleared in bulk and denied the benefit of notification at S.No.1A and instead gave the benefit at S.No.1C. This judgement was followed by the Commissioner in the impugned order. There is another judgement in the case of COMMISSIONER VERSUS SAGAR CEMENTS LTD. [ 2011 (2) TMI 1379 - SC ORDER] in which cement was cleared in 50Kg bags and retail sale price was printed as per the directions of the Controller of Legal Metrology, Govt of Andhra Pradesh. The Assessee relies on this case. Evidently the cement was cleared in large quantities but packed in 50kg bags to institutional buyers, after declaring the retail sale price on each bag even though they were not required to so declare under the Standards of Weights and Measures (Packaged Commodities) Rules 1977. Thus, the present case is similar to the case of Sagar Cements Ltd, which attained finality at the level of Hon ble Supreme Court, except to the extent that there was no letter from the Controller of Legal Metrology requiring the Assessee to declare the retail sale price in the present case. Time Limitation - HELD THAT:- The demand is also time barred as no evidence of fraud, or collusion or wilful misstatement or suppression of facts, with an intent to evade payment of duty has been brought on record. It was only a case of the Assessee s claim Vs the Revenue s claim. In such a case, once the ER-1 returns are filed, it would be reasonable to expect the Revenue officers to assess them and in case of any dispute, raise a demand within the normal period of limitation. Therefore, issue is also in favour of the Assessee on the ground of limitation. As the demand is not sustainable on merits as well as limitation, the question of interest and imposition of penalties on the Assessee do not arise. In view of the above, the Impugned Order needs to be set aside - appeal of assessee allowed.

  ---

• 2023 (10) TMI 1079
  Refund claim of Excess duty paid - modification in the rates of duty on Motor Spirit (MS) and High Speed Diesel (HSD) by issuing two Notifications viz. No.22/2014 and 24/2014 - HELD THAT:- Hon ble High Court of Calcutta in COMMISSIONER OF CGST CX HALDIA COMMISSIONERATE VERSUS M/S INDIAN OIL CORPORATION LIMITED, REFINERY DIVISION [ 2023 (2) TMI 1201 - CALCUTTA HIGH COURT] held that the notification would come into effect only from the date of its publication and the Tribunal rightly allowed the assessee s appeal. The impugned orders cannot be sustained and all therefore set aside. The appeal filed by the Appellant is allowed.

  ---

• 2023 (10) TMI 1069
  Benefits under the budgetary scheme dated 5-10-2017 - Utilization of Cenvat credit for the purpose of payment of taxes with reference to the exemption notification dated 25-7-2007 - stage to pay the taxes by cash after exhausting the Cenvat credit was yet to come - whether the units have availed the benefit under the notification dated 25-7-2007, with reference to the subsequent scheme dated 5-10-2017? HELD THAT:- A reading of the communication dated 22-2-2023 makes it discernible that a decision had been taken that even in respect of those units who had paid their tax dues pursuant to the earlier exemption notification dated 25-7-2007 by utilizing the Cenvat credit, but the stage to pay the further taxes by means of cash was yet to come, would be considered by the authorities to be units who have availed the benefits under the earlier exemption notification dated 25-7-2007 - As the decision contained in the communication dated 22-2-2023 answers the issue that was before the Court that such units should also be considered to be units who have availed the benefits under the exemption notification dated 25-7-2007, having accepted the contents of the communication dated 22-2-2023, no further adjudication is required in these batch of writ petitions. The consequence of such units being considered to be units who have availed the benefits under the exemption notification dated 25-7-2007 would be that such units, including the writ petitioners herein, would be entitled to all such entitlements, legal consequences etc. of being considered to be units who have availed the benefits under the exemption notification dated 25-7-2007 and the respondent authorities may do the needful accordingly. Petition closed.

  ---

• 2023 (10) TMI 1046
  Relevant date for calculation of interest - interest under Section 11BB of the Central Excise Act, 1944 would accrue from the date of expiry of 3 months from the date of receipt of application for refund (or) on the expiry of 3 months from the date of communication of the order of the Appellate authority / Court? HELD THAT:- This Court finds that the present issue viz., whether the liability of the revenue to pay interest under Section 11BB of the Act would accrue/commence from the date of expiry of 3 months from the date of receipt of application for refund (or) on the expiry of 3 months from the date of the order to the adjudicating authority/ Court stands resolved by the judgment of the Supreme Court in RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] reported in 2011 (273) ELT 3 wherein after finding that the appellant s claim for rebate of duty was rejected by the Assistant Commissioner and was subsequently allowed in appeal which was affirmed in further appeal before the Joint Secretary, Government of India it was held that It is manifest from the aforeextracted provisions that Section 11-BB of the Act comes into play only after an order for refund has been made under Section 11-B of the Act. Section 11-BB of the Act lays down that in case any duty paid is found refundable and if the duty is not refunded within a period of three months from the date of receipt of the application to be submitted under sub-section (1) of Section 11-B of the Act, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application. The above judgment of the Hon ble Supreme Court in the case of Ranbaxy has been subsequently followed in the case of MANISHA PHARMO PLAST PVT. LTD. VERSUS UNION OF INDIA [ 2020 (11) TMI 726 - SUPREME COURT] . Following the above judgments of the Hon ble Supreme Court, this Court has no hesitation to hold that interest on refund in terms of Section 11 BB of the Act would accrue in the event of delay in grant of refund beyond 3 months from the date of application i.e., 16.11.1994 in the present case. The respondents are directed to calculate the statutory interest in terms of Section 11 BB of the Act i.e., 3 months from 16.11.1994 (date of application for refund) until 20.02.2020 when the refund was actually granted and pay the same within 4 months from the date of receipt of a copy of this order - Petition disposed off.

  ---

• CST, VAT & Sales Tax

• 2023 (10) TMI 1078
  Best Judgement assessment - non-service of SCN - non-communication of the assessment orders to the Petitioner with the prescribed period. The edifice of the case set out by the Petitioner in the three writ petition is that the Respondent No. 4 could not have exercised the power under Section 37 of the Act of 2003 without issuance of notice as mandated under Section 37(1) of the Act of 2003. HELD THAT:- When a notice is issued under Section 36 in Form-20, the dealer or the assessee is completely at dark as to why the prescribed authority have initiated audit assessment proceedings. Under such circumstances, if any adverse steps are taken in terms with Sub-Section (5) of Section 36, the principles of natural justice has to be followed. The failure to adhere to the same by giving a reasonable opportunity of being heard at a time of exercising power under Section 36(5) which are adversarial to the interest of the dealer/assessee violates the principles of natural justice. This Court further finds it very pertinent that Sub-Section (5) of Section 36 only empowers the Prescribed Authority to either confirm the self-assessment under Section 35 or set aside the self-assessment made under Section 35 and assess the tax amount from the dealer or assess the amount of tax due from the dealer if no assessment has been made under Section 35. Therefore, as per Section 36(5), what can be assessed by the Prescribed Authority other than confirming the self-assessment is only the amount of tax due and nothing more. This Court had decided that the impugned assessment orders dated 21.12.2017, 21.12.2017 and 24.06.2019 are bad in law and stands vitiated for non-compliance of notice. However, this Court further finds it relevant to take note of the second submission made by the learned counsel appearing on behalf of the Petitioner wherein it was mentioned that the assessment orders both dated 21.12.2017 for the Assessment Year 2012-13 and 2013-14 respectively are also bad in law in view of the provisions of Section 39 of the Act of 2003. Whether the non-communication of the assessment orders to the Petitioner with the prescribed period would render the Assessment Orders for the Assessment Year 2012-13 and 2013-14 fatal? - HELD THAT:- In the instant case, it would be seen that though the period as stipulated under Section 39 ended on 31.03.2018 and 31.03.2019 for the assessment years 2012-13 and 2013-14, but the notice of demands were issued in the month of July and August, 2019. There is no mention by way of affidavit or even from a perusal of the records as to why there was a delay in issuance of the said notice for more than two long years - Under such circumstances, this Court taking into account the judgment of the Supreme Court more particularly in the case of M. Ramakishtaiah and Company [ 1994 (2) TMI 260 - SUPREME COURT] is further of the opinion that the impugned assessment orders for the Assessment Years 2012-13 and 2013-14 cannot be presumed to have been passed on 21.12.2017 as the same could have been made after the expiry of the period prescribed. For this reason also, the assessment orders for the period 2012-13 and 2013-14 are set aside. All the assessment orders i.e. 21.12.2017, 21.12.2017 and 24.06.2019 along with the demand notices dated 10.08.2019, 02.07.2019 and 01.07.2019 are all set aside and quashed - petition allowed.

  ---

• Indian Laws

• 2023 (10) TMI 1077
  Outstanding Fee payable to standing counsel - Filing of status report, in the form of an affidavit, on payment of fee to the standing counsel for the Income Tax Department at various courts/tribunals - HELD THAT:- The status report/affidavit will indicate the reason and cause for non-verification of the pending bills; reason for delay in verification; and if there has been or is delay in payment the reason for delay in payment. The status report/affidavit will be filed within eight weeks from today. Response to the status report/affidavit may be filed within four weeks after service thereof.

  ---

• 2023 (10) TMI 1045
  Rejection of petitioner s application for dispensing with his personal appearance under Section 205 of the Criminal Procedure Code - HELD THAT:- Under this Section, the Magistrate is competent to dispense with personal attendance of the accused. While exercising the discretion in this regard, the Magistrate may take into account the nature of controversy. Besides that the Magistrate has to consider whether any useful purpose would be served by the requiring the personal attendance of the accused or whether progress of the trial is likely to be hampered on account of his absence. If any attempt is made to prolong the proceeding, the Magistrate is competent to pass any order as it deems fit and proper. The petitioner is her application for dispensing with her personal appearance under Section 205 of the Code has taken the ground that she is a housewife and has to look after day to day affairs of her house and thus her personal appearance be dispensed with - The question whether the petitioner is a housewife or a businesswoman is not of such material and the only aspect is to be looked into whether her attendance before the Court is necessary in the facts and circumstances of the case. The case of the complainant is based on documents. From the impugned order it is found that the learned Magistrate has not considered whether any useful purpose could be served by requiring the personal attendance of the accused or whether the progress of the trial is likely to be hampered on account of her absence. The personal appearance of the petitioner is dispensed with subject to conditions imposed - the revisional application is allowed.

  ---