TMI Tax Updates - e-Newsletter
November 1, 2023

Case Laws in this Newsletter:

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

Articles

1. ANALYSIS OF GST ON PERSONAL GUARANTEE AND CORPORATE GUARANTEE UNDER GST FROM OCTOBER 2023

   By: Vivek Jalan

2. GST LIABILITY IN CASE OF TRANSFER OF BUSINESS (PART-1)

   By: Dr. Sanjiv Agarwal

3. बैंक वाले संयुक्त खातों में क्रम परिवर्तन की सुविधा बाबत

   By: G Binani

4. INITIATION OF CORPORATE INSOLVENCY RESOLUTION PROCESS UNDER SECTON 10 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016

   By: DR.MARIAPPAN GOVINDARAJAN

5. Tax Invoices, E-way bills, and Goods Receipts are not sufficient proof to avail ITC

   By: Bimal jain

News

1. Auction for Sale (issue/re-issue) of (i) ‘7.37% GS 2028’, (ii) ‘7.18% GS 2033’, and (iii) ‘New GS 2073’

Notifications

Companies Law

1. S.O. 4744(E) - dated 30-10-2023 - Co. Law

Appointed date for provisions of section 5 to come into force - 30th day of October, 2023

GST - States

2. 67/GST-2 - dated 31-10-2023 - Haryana SGST

Amendment of Notification no. 44/GST-2, dated 29.08.2023 under the HGST Act, 2017

3. 66/GST-2 - dated 27-10-2023 - Haryana SGST

Haryana Goods and Services Tax (Fourth Amendment) Rules, 2023

4. 65/GST-2 - dated 27-10-2023 - Haryana SGST

Haryana Goods and Services Tax (Third Amendment) Rules, 2023

5. MGST-1023/C.R.56/Taxation-1 - dated 25-10-2023 - Maharashtra SGST

Appointed member of Advance Ruling Authority

SEZ

6. S.O. 4721(E) - dated 27-10-2023 - SEZ

IT/ITES SEZ - Central Government notifies the 0.9190 hectares area to set up an IT/ITES SEZ at Ramapuram Village, Maduravoyal Taluk, Chennai and constitute an Approval Committee

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS-PoD-2/P/CIR/2023/174 - dated 31-10-2023

Revision in manner of achieving minimum public unitholding requirement – Infrastructure Investment Trusts (InvITs)

GST

2. 205/17/2023 - dated 31-10-2023

Clarification regarding GST rate on imitation zari thread or yarn based on the recommendation of the GST Council in its 52nd meeting held on 7th October, 2023

3. 206/18/2023 - dated 31-10-2023

Clarifications regarding applicability of GST on certain services

Customs

4. PUBLIC NOTICE 19 / 2023 - dated 7-10-2023

Implementation of ex-bond shipping bill in ICES – reg

Highlights / Catch Notes

GST

• Court Dismisses Petition to Condone Delay in Appeal Against Assessment Order Under Article 226; Time Limit Expired.

  Case-Laws - HC : Condonation of delay in filing appeal - validity of assessment order - this Court cannot entertain the writ petition under Article 226 of the Constitution of India after limitation for filing an appeal has expired. Therefore, this writ petition is liable to be dismissed. - HC
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Income Tax

• High Court Rules Circular Allowing Principal Commissioner to Evaluate Refund Claims u/s 119(2)(b) is Illegal.

  Case-Laws - HC : Condoning the delay in preferring the refund application - Delegation of power - The circular authorises the Principal Commissioner to consider even the merits of the refund claim while exercising the delegated power u/s 119(2)(b) of the Act. This is plainly illegal for the mandate of the Act cannot be circumvented through any administrative circular issued by the Board. - HC
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• Court Rules Entire MAP Funds as Income, Not Just the Difference: Assessing Officer's Approach Overturned.

  Case-Laws - HC : Accrual of income - Money received under Marketing Assistance Programme [“MAP”] - It is also surprising that the AO chose to treat only the difference between the amounts received and spent, as income. In our view. if the amount received was income of the respondent/assessee, then the entire amount should have been treated as income. - HC
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• Court Limits Revenue Authority: Notice u/s 274 Must Be Timely as Per Section 275(1)(c) for Valid Penalty.

  Case-Laws - HC : Penalty u/s 271E - period of limitation as prescribed u/s 275 (1)(c) - The appellant/revenue, as noticed above, cannot extend the period of limitation by deciding at its whim and fancy when the notice has to be issued. The notice u/s 274 should have been issued before the period of limitation, as discussed above. - HC
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• Reassessment u/s 147 valid without prior sanction; jurisdiction remains even if some claims are dropped.

  Case-Laws - HC : Reopening of assessment u/s 147 - Plainly, in the facts as noted above, no sanction was required to be obtained at the stage of initiation of reassessment proceedings. Therefore, initiation of reassessment proceeding was well founded on satisfaction as to escapement of income, from tax. The fact that some part of the allegation of escapement is being dropped or not pursued at the stage of quantification of income, may not nullify the assumption of jurisdiction, by now invoking section 149. - HC
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• Scrutiny of Income Tax Assessment Reopening: Section 147 and Validity of Approvals u/s 151 Questioned for Lacking Due Diligence.

  Case-Laws - AT : Reopening of assessment u/s 147 - Validity of approval granted u/s 151 - without examining the facts on record, both the Additional CIT and CIT have granted approval under Section 151. Granting approval under Section 151 of the Act is not an empty formality. Approval has to be granted with caution and proper application of mind to the facts and material on record to prevent miscarriage of justice - AT
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• Reopening Tax Assessment u/s 147 Requires New Material; No Fresh Evidence Means No Reopening Allowed.

  Case-Laws - AT : Reopening of assessment u/s 147 - Reopning after 4 years - As per the mandate of law, even where a concluded assessment is sought to be reopened by the A.O within a period of 4 years from the end of the relevant assessment year, it is a must that the A.O has fresh material or information with him, that had led to the formation of belief on his part that the income of the assessee chargeable to tax has escaped assessment. - AT
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• Interest on Tax Refund Not to Be Added to Book Profit for MAT Calculation, Says Section 115 JB Ruling.

  Case-Laws - AT : MAT computation - Book Profit - addition of interest on income tax refund to the Net Profit - As there is no dispute on the fact that assessee has offered interest on income tax refund to tax while filing its return of income and same has also been assessed under the normal provisions of the Act. Accordingly, we find no merits in addition of interest on income tax refund for computing the book profit u/s 115 JB - AT
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• Final Assessment Order Void: AO Failed to Follow Mandatory Section 144C Procedure; Error Not Fixable u/s 292B.

  Case-Laws - AT : AO has failed to follow the mandatory procedure laid down u/s 144C at the stage of passing draft assessment order, therefore, final assessment order passed is null and void as the mistake committed in passing the draft assessment order is not curable us/ 292B - AT
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• Taxpayer Wins: LTCG Exemption on Shares Upheld, Brokerage Disallowance Removed u/s 10(38) of Income Tax Act.

  Case-Laws - AT : Exemption u/s 10(38) - bogus LTCG on purchase and sale of shares - disallowance brokerage expense - penny stock transaction - ssessee has successfully proved the genuineness of the transaction of purchase and sale as well as holding of the shares - addition made by the AO on account of long term capital gain claimed as exempt u/s 10(38) of the Act and consequently, the disallowance of brokerage expenses is deleted - AT
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Customs

• Compounded Rubber with Less Than 5 Parts Carbon Black Classified Under CTH 4005 1000 for Duty Exemption Benefit.

  Case-Laws - AAR : Classification of goods intended to be imported - Compounded Rubber - Compounded rubber formulation 1 (with less than 5 parts of Carbon Black) mentioned in para 5.1 merits classification under CTH 4005 1000 Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip - compounded with carbon black or silica and is eligible for duty exemption benefit - AAR
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Indian Laws

• High Court Dismisses ICAI's Disciplinary Action Against 77-Year-Old Accountant Due to 19-Year Delay in Proceedings.

  Case-Laws - HC : Professional Misconduct - Chartered Accountant (CA) - Delay of 19 years for completion of Proceeding on the part of ICAI - Respondent is presently 77 years of age and save and except a period of five years for which he himself had surrendered his certificate of practice, he has been professionally active and no other complaint is found to have been made against him. The Institute has offered no explanation whatsoever for the inordinate delay in initiating and concluding the disciplinary action against Respondent. - Recommendation of ICAI discarded - HC
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Service Tax

• Refund Claim Granted: Limitation u/s 11B Inapplicable as Service Tax Was Unpaid Due to Non-Rendered Services.

  Case-Laws - AT : Refund - Period of Limitation - service tax paid under the reverse charge mechanism (RCM) - Later since services were not rendered, assessee claimed refund of the same. - Since service tax not payable at all, period of limitation u/s 11B is not appliable. - AT
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Central Excise

• CENVAT Credit Recovery Compromised Due to Adjudicating Authority's Non-Compliance with Section 9D Procedures.

  Case-Laws - AT : Recovery of CENVAT Credit alongwith interest and penalty - second stage dealers were issuing invoices without actually supplying goods - Examining the records of each of this individual companies/ firms and recording their statements can only reveal the complete truth. If such an investigation requires statements to be recorded and if revenue proposes to use such statements in the proceedings against the assessee the procedure prescribed under the section 9D has to be followed. Otherwise, such statements are not only NOT admissible but are not even relevant to the proceedings. In this case, all the statements are rendered irrelevant as the Adjudicating Authority had not followed the procedure prescribed under section 9D. - AT
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• Interest Demand on Differential Duty Overturned; Extended Limitation Period Unjustified; Case Remanded for Re-Quantification.

  Case-Laws - AT : Interest on differential duty by invoking extended period of limitation - Invoking the extending period of limitation is not sustainable and the demand of interest by invoking the extended period of limitation is not justified and the same is set aside by remanding the matter to the Original authority to re-quantify the demand only for the normal period - AT
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• CENVAT Credit Allowed for Stock Transfers; Restrictions on Supplementary Invoices Apply Only to Sales per Rule 9(1)(b) & Section 2(h.

  Case-Laws - AT : CENVAT Credit - Supplementary invoices - stock transfer - alleged duty paid on account of suppression, etc. - the combined reading of Rule 9 (1)(b) and Section 2(h), it is clear that only in a case of sale of goods, the restriction of CENVAT Credit on supplementary invoice is applicable. In the present case, the transaction being not a sale transaction the restriction shall not apply. - Credit allowed - AT
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• Appellant's Yarn Dyeing by Job Worker Exempt from Duty Under Export Provision; Notification No. 67/95-CE Not Applicable.

  Case-Laws - AT : Captive Consumption - Benefit of exemption - Since the appellant has got their goods manufactured/yarn dyed from job worker; in these circumstances, the job worker is the manufacturer of dyed yarn and if any duty is to be paid it is to be paid by the job worker. The dyed yarn by the job worker is not captively manufactured by the appellant and in that circumstance, the Notification No. 67/95-CE have no relevance to the facts of the present case - But since goods have been exported, benefit of exemption allowed - AT
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Case Laws:

• GST

• 2023 (10) TMI 1332
  Petition to be entertained for the purposes of condoning the delay in filing the appeal or not - Excess Input Tax Credit claimed - order passed without opportunity of being heard - violation of principles of natural justice - HELD THAT:- It will be open for the petitioner to file an appeal with an application for condonation of delay in filing such appeal explaining the circumstances which are available to suggest to the appellate authority that the petitioner was prevented by way of a sufficient cause in filing such an appeal. This is observed in light of the recommendations of the 52nd GST council which so as to facilitate measures of trade has opined that the time period for filing appeals under Section 107 will be allowed in case such appeals are filed against orders which have been passed on or before 31.03.2023 up to 31.01.2024. As far as the counsel s submissions that the appellate authority will not be in a position to undertake exercise of remedy in light of sub-section 11 of section 107 of the Act, while filing an application for condonation of delay, the applicant petitioner can suggest in what manner there has been a violation of principles of natural justice in light of the fact that while issuing notice on 03.12.2021, the assessment order indicates a discrepancy in figures inasmuch as the show-cause notice initially under DRC-01 indicated a figure of Rs. 46,85,584/- whereas the assessment order indicates discrepancy of Rs. 35,02,643/- whereas in the final order again a figure of Rs. 46,91,684/- is indicated. All these circumstances shall be taken into consideration by the appellate authority in the application for condonation of delay which otherwise can be decided in accordance with law. The petition is disposed of.

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• 2023 (10) TMI 1331
  Condonation of delay of 59 days in filing appeal - HELD THAT:- The impugned order dated 12th December, 2022 passed by Respondent No. 3 is certainly bereft of any reasons. Respondent No. 3 has not considered the written submissions filed by the Petitioner dated 14th November, 2022 and 24th November, 2022 and the form in which the Appeal is filed, wherein it was specifically pleaded that the limitation would start from 28th August, 2022, that is the date of the petitioner receiving knowledge of the passing of O-I-O. In our view, Respondent No. 3 Appellate Authority ought to have considered the submissions of the Petitioner on this issue and ought to have given his reasons in the impugned order while deciding the limitation issue. There is no consideration of these submissions by Respondent No. 3 in the impugned order. The impugned order suffers from infirmity and therefore, requires to be quashed and set aside - Petition disposed off.

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• 2023 (10) TMI 1330
  Seeking grant of Regular Bail - obtaining illegal Input Tax Credit by entering into large scale financial transactions and thereby cheating the State exchequer - HELD THAT:- In the facts and circumstances of the case and considering the nature of allegations, this Court is of the opinion that, discretion is required to be exercised to enlarge the applicant on regular bail. This Court, prima facie, is of the opinion that, this is a fit case to exercise the discretion and enlarge the applicant on regular bail. Hence, present application is allowed and the applicant is ordered to be released on regular bail in connection with the FIR being C.R. No. 11210015220162 of 2022 registered with DCB Police Station, Dist. Surat on executing personal bond of Rs. 10,000/- (Rupees Ten thousand only) with one surety of the like amount to the satisfaction of the learned Trial Court and subject to the conditions imposed - application allowed.

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• 2023 (10) TMI 1329
  Violation of principles of natural justice - opportunity of hearing granted to the petitioner could not be availed by petitioner - HELD THAT:- The petitioner could not also avail the virtual hearing, since he was not having such facilities. The petitioner has not preferred any statutory appeal within time. Therefore, this Court is of the considered opinion that the petitioner ought to be granted an opportunity and hence it would be deem fit to direct the petitioner to file statutory appeal before the appellate authority. Therefore, the petitioner is directed to file an appeal within a period of four (4) weeks from the date of receipt of a copy of this order, by paying 7.5% of the assessed amount. The appellate authority shall consider the appeal without insisting on limitation. Writ petition disposed off.

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• 2023 (10) TMI 1328
  Denial of opportunity of hearing - notice in the proceedings issued to the petitioner on 12.07.2021 seeking his reply within 30 days - HELD THAT:- There is complete agreement with the view taken by the coordinate bench in Bharat Mint Allied Chemicals [ 2022 (3) TMI 492 - ALLAHABAD HIGH COURT ]. Once it has been laid down by way of a principle of law that a person/assessee is not required to request for opportunity of personal hearing and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified No in the column meant to mark the assessee s choice to avail personal hearing, would bear no legal consequence. The impugned order itself has been passed on 14.09.2021. The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created - Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required. The matter is remitted to the respondent no.3/Assistant Commissioner, State Tax, Sector-6, Varansi to issue a fresh notice to the petitioner within a period of two weeks from today - Petition allowed by way of remand.

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• 2023 (10) TMI 1327
  Condonation of delay in filing appeal - validity of assessment order - failure to respond to SCN and appear for personal hearing - HELD THAT:- The petitioner should have filed an appeal against the impugned Assessment order dated 08.08.2022 before the Appellate Commissioner under Section 107 of the GST Act, 2017 on or before 08.11.2022 or by 08.12.2022 with an application to condone the delay of 30 days. The learned counsel for the petitioner has attempted to make out a case on merits. The fact remains that the present writ petition has been filed only on 03.08.2023 long after the impugned order came to be passed on 08.08.2022 followed by issuance of a summary in GST DRC-07 dated 10.08.2022. As per the decision of the Hon ble Supreme Court in the case of Assistant Commissioner (CT) LTU, Kakinada and others Vs. Glaxo Smith Kline Consumer Health Care Limited [ 2020 (5) TMI 149 - SUPREME COURT] , this Court cannot entertain the writ petition under Article 226 of the Constitution of India after limitation for filing an appeal has expired. Therefore, this writ petition is liable to be dismissed. Petition dismissed.

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• 2023 (10) TMI 1326
  Cancellation of GST registration of petition - non-constitution of Tribunal under Bihar Goods and Services Tax Act - HELD THAT:- It is seen from the Bihar Goods and Services Taxes Rules, 2017, GST REG-19 has a specific column where reasons have to be assigned. However, the Assessing Officer seems to be laboring under the belief that when an assessee does not appear or an objection is not filed, no reasons have to be assigned - the said order cannot be countenanced, especially when there is absolutely no reason stated regarding the cancellation of registration. Reliance placed in the judgment of another Hon ble Division Bench of this Court passed in Manoj Kumar Sah versus The State of Bihar and Anr. [ 2023 (1) TMI 791 - PATNA HIGH COURT] wherein it has been held that the authority ought to have at least referred to the contents of the show cause and the response thereto, which was not done. Not only the order is nonspeaking, but cryptic in nature and the reason of cancellation not decipherable therefrom. Principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences - The impugned order in the instant writ petition also suffers from the very same illegality which has been pointed out by the Division Bench. Petition allowed.

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• Income Tax

• 2023 (10) TMI 1325
  TP Adjustment - AMP expenses - International transaction - whether the assessee, which is a wholly owned subsidiary of its AE is required to be compensated AMP expenses incurred by it on behalf of its AE? - Tribunal had concluded that the AMP expenses incurred by the respondent/assessee did not amount to an international transaction as relying on decision of this court passed in Maruti Suzuki India Ltd.[ 2015 (12) TMI 634 - DELHI HIGH COURT] - HELD THAT:- Given the position and the fact that there has been no change in the circumstances concerning the respondent/assessee (something which has been noted by the Tribunal) according to us, in this matter, the principle of consistency would apply. Therefore, we are not inclined to interfere with the impugned order passed by the Tribunal.

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• 2023 (10) TMI 1324
  Validity of faceless assessment - violation of principles of natural justice and non-affording an opportunity of personal hearing - in personal hearing through video conferencing petitioner joined the VC but there were issues in the audio but used the chat box in order to communicate with the authority concerned - as per assessee conversation in the chat box reveals that owing to technical glitches, the petitioner did not get an effective opportunity of explaining the case orally since conversation took place through chat box and requests for rescheduling the video conference were turned down - HELD THAT:- Issuing of a show cause notice and personal hearing is necessary before passing any adverse order against a person. It is a trite law that when the statute is silent, with no positive words in the Act or the Rules spelling out the need to hear the party whose rights or interests are likely to be affected, requirement to follow fair procedure before taking a decision must be read into the statute, unless the statute provides otherwise. The principles of natural justice operate in areas not covered by any law. They do not supplant the law of the land but only supplement it. They are not embodied rules and their aim is to secure justice or to prevent miscarriage of justice. The principles of natural justice need to be adhered in each and every case. It is a settled law that it is not permissible for any authority to jump over the compliance of natural justice on the ground that even if opportunity of hearing had been afforded, it would have served no fruitful purpose. As decided in VASUPUJYA INFRASTRUCTURES LLP [ 2022 (8) TMI 1455 - GUJARAT HIGH COURT] it is not in dispute that in facts of the case no draft assessment along with show cause notice as required under section 144B(1) and section 144B(7) is given to the petitioner so as to enable the petitioner to give explanation for proposed addition during the hearing before the National Faceless Assessment Centre. Section 144B(1)(xii) provides that on receipt of show cause notice, assessee may furnish his response to the National Faceless Assessment Centre and as per clause (xiv), assessment unit shall make a revised draft assessment order after considering the response of the assessee and send it to the National Faceless Assessment Centre. As per the provisions of section 144B(7) in case of variation prejudicial to the assessee as proposed in the draft assessment order, the assessee is entitled to request for personal hearing and upon such request, the personal hearing may be provided by the authority, if the case of the assessee is covered by circumstances provided therein in exercise of powers under sub-clause (h) of clause (xii) of section 144B(7) of the Act, 1961. It can be safely be said that the impugned order was passed by the respondent in violation of principles of natural justice without affording an opportunity of personal hearing by not following the prescribed procedure laid down as per the provisions of section 144B of the Act, 1961 for Faceless assessment. In the result, this petition succeeds and is accordingly allowed. The impugned order of assessment passed by the respondent under Section 147 r.w.s.144B and demand notice under section 156 of the Act are quashed and set aside.

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• 2023 (10) TMI 1323
  Condoning the delay in preferring the refund application - Principal Commissioner s delegated power under Section 119(2)(b) - HELD THAT:- Section 119(2)(b) only empowers the Board to admit an application or claim for exemption, deduction, refund or any other relief under the Act, after the expiry of the period specified by or under the Act for making such application or claim and deal with the same on merits in accordance with law. No doubt, the Board may authorise the Principal Commissioner to exercise the said discretion on its behalf, but such authorisation cannot confer on the Principal Commissioner a greater discretion than what is contemplated under the Act in favour of the Board. In the instant case, we find that Ext.P10 circular authorises the Principal Commissioner to consider even the merits of the refund claim while exercising the delegated power under Section 119(2)(b) of the Act. This is plainly illegal for the mandate of the Act cannot be circumvented through any administrative circular issued by the Board. Whether or not there was any justifiable reason for the delay in preferring the refund application was not considered by the Principal Commissioner on merits ? - The present refund claim preferred by the appellant, whose late husband was the earlier assessee, is in respect of the tax deducted at source from the enhanced compensation amount pertaining to the same land. When the earlier refund was found admissible by considering the land in question as agricultural land, we fail to see how the very same land can cease to be agricultural land when it comes to a claim for refund of the tax deducted at source from the enhanced compensation amount paid to the assessee. At any rate, we feel that the issue on merits is something that has to be considered by the assessing authority to whom the matter must necessarily be relegated if the Principal Commissioner finds that there are justifiable reasons offered by the appellant for the delay in preferring the claim for refund. Since a decision on the merits of the delay condonation application under Section 119(2)(b) has not been taken by the Principal Commissioner, we are compelled to remit this matter to the said authority for fresh consideration, strictly in accordance with Section 119(2)(b) of the Act. We therefore allow this writ appeal by setting aside the impugned judgment of single Judge and direct the 1st respondent/Principal Commissioner to consider the application u/s 119(2)(b) preferred by the appellant afresh, solely for the purpose of determining whether or not justifiable reasons have been made out for condoning the delay in preferring the refund application.

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• 2023 (10) TMI 1322
  Accrual of income - Money received under Marketing Assistance Programme [ MAP ] - HELD THAT:- A perusal of the clauses would show, as noted by the Tribunal, even for AY 2011-12 [ 2018 (10) TMI 1888 - ITAT DELHI] , that the amount received by the respondent/assessee in his capacity as a distributor was passed on to sub-contractors as and when they lifted the goods in issue. Clause 6 of the MAP agreement, would show that the amount received under the MAP agreement by assessee was conditional and was liable to be returned to Exxon in certain situations, as indicated in sub-clauses (a) to (f) of clause 6. It is also surprising that the AO chose to treat only the difference between the amounts received and spent, as income. In our view. if the amount received was income of the respondent/assessee, then the entire amount should have been treated as income. AO has noted that the aforementioned amount is treated as gross receipt of the respondent/assessee. AO, by treating sum as the gross receipts has, in a sense, indicated that the amount did not bear the attribute of income - no substantial question of law arises for consideration.

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• 2023 (10) TMI 1321
  Penalty u/s 271E - period of limitation as prescribed u/s 275 (1)(c) - HELD THAT:- If the limitation period is connected to when the concerned officer issues notice, then the appellant/ revenue can extend the period of limitation, way beyond the timeline prescribed in Section 275 (1)(c). We are clearly of the view that the notice issued by the JCIT on 13.06.2011 could not have extended the period of limitation, as prescribed under Section 275 (1)(c). In this case, what is required to be brought to the forefront is that the AO had taken prior approval of the ACIT, who is equal in rank to the JCIT, before triggering the penalty proceedings. Thus, although the decision to initiate penalty proceedings is found embedded in the assessment order dated 31.12.2010 and approval to frame the assessment order was given prior to the said date, the notice was issued only on 13.06.2011. Even though this may be an additional factor in this particular case, our reasons for holding the limitation period as prescribed u/s 275 (1)(c) had expired latest by 30.06.2011, is not confined only to this aspect of the matter. The appellant/revenue, as noticed above, cannot extend the period of limitation by deciding at its whim and fancy when the notice has to be issued. The notice u/s 274 should have been issued before the period of limitation, as discussed above. Decided in favour of assessee.

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• 2023 (10) TMI 1320
  Reopening of assessment u/s 147 - Reason to believe - scope of amended law - accommodation entry receipts - As per assessee no reassessment proceedings may have been initiated against the petitioner after 31.3.2017 if the component of income alleged to have escaped assessment was less than 50 Lakhs - HELD THAT:- Neither under the unamended law nor under the amended law, it was ever obligatory on the assessing authority to proceed to make assessment of component of escaped income with respect to entire information/reason to believe that may have given rise to reassessment proceedings. That satisfaction/reason to believe has always been relevant only for the purpose of assumption of jurisdiction. Once jurisdiction was validly assumed by recording appropriate reason to believe , issuance of the notice thereafter, threw open entire assessment of the subject assessee. It enabled the assessing authority to pass a reassessment order both with respect to information that may have given rise to reason to believe , as also on other issues that may arise during the course of reassessment proceedings. Similarly, AO was not bound in law to bring to tax all income commensurate to the information/ reason to believe , recorded by him, to assume jurisdiction. It was always open in law (for the assessing authority), to drop whole or any part of such allegations of escapement of income (drawn at the initial stage). Even under the amended law, no change has been brought as may compel the assessing authority to subject an assessee to tax on entire information giving rise to reassessment proceedings. In short, even after the amendment made to the Act, the issue as to assumption of jurisdiction and passing of assessment order in exercise of that order remain two separate and largely independent exercise. While no reassessment order may be passed unless jurisdiction is shown to have been validly assumed, reassessment order giving rise to tax liability is not sine qua non of valid assumption of jurisdiction. The fact that in the present case, the assessing authority has reconsidered his position and now reached a conclusion that there exists only one accommodation entry of Rs. 27 lakhs and not two such entries, may only impact the quantum of reassessment order to be made. The effect of section 149 has to be seen in the context of facts that obtained at the stage of initiation of reassessment proceedings. Insofar as at that stage the quantum of income alleged to have escaped assessment was quantified at Rs. 54 lakhs, allowed the assessing authority of the petitioner to take benefit of Section 149(b) of the Act, at that stage. Almost one year has passed since then, before present challenge has arisen. At present, even the reassessment order has come into existence. There is no reason available to this Court to infer, there is no escapement of income of Rs. 27 lakhs (arising from the other accommodation entry). Subsequent development emerging in the course of reassessment proceedings wherein a fact conclusion may be drawn by the assessing authority indicating escapement of income below 50 lakhs cannot relate back to have any material bearing on the initiation of the reassessment proceedings and it cannot undo that initiation of proceeding. There is no principle of law (statutory or otherwise) to reach that conclusion. Plainly, in the facts as noted above, no sanction was required to be obtained at the stage of initiation of reassessment proceedings. Therefore, initiation of reassessment proceeding was well founded on satisfaction as to escapement of income, from tax. The fact that some part of the allegation of escapement is being dropped or not pursued at the stage of quantification of income, may not nullify the assumption of jurisdiction, by now invoking section 149. Accordingly, we refuse to exercise jurisdiction under Article 226 of the Constitution of India. Writ petition is dismissed

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• 2023 (10) TMI 1319
  Deduction u/s 80IB(10) - Assessee allotted more than one residential unit of his housing project to an individual - CIT(A) allowed deduction - HELD THAT:- It is the claim of the assessee that he had as regards the aforesaid property, viz. Flat No. A-102 executed the agreement to sell in favor of Shri Mahendra Sethiya, HUF, but the same, in our considered view, would not take his case beyond the realm of the infraction contemplated in clause (f) of sub-Section (10) of Section 80IB. Thus for the reason that as Smt. Usha Basant Sethiya (individual ) vide a registered deed executed in her favor by the assessee got vested with both the rights and title as that of an allottee for Flat No.A-102; therefore, there is no merit in the claim of the assessee that he had transferred the said property to Shri Mahendra Sethiya, HUF. Also, the claim of the Ld. AR that HUF, had signed as a consenting party in the aforesaid registered deed executed by the assessee in favor of Smt. Usha Basant Sethiya (supra) would by no means come to his rescue. Our conviction that the aforesaid property, viz. Flat No. A-102 was allotted by the assessee to Smt. Usha Basant Sethiya (supra) can also be gathered from the fact that the profit/income accruing on the transfer of the same had been recognized by the assessee only pursuant to the execution of the aforesaid registered sale deed by him. We are unable to bring ourselves to agree with the view taken by the CIT(Appeals), who held a conviction that as Smt. Usha Basant Sethiya (supra) was neither Karta nor a member of Mahendra Sethiya, HUF; therefore, the assessee had carried out independent sale transactions of. Flat No. A-101 A-102 to two different entities. We, thus, set aside the order of the CIT(Appeals) to the extent he had vacated the disallowance u/s. 80IB(10) Flat No. A-101 and A-102 sold by the assessee to one individual, viz. Smt. Usha Basant Sethiya (supra). Decided in favor of revenue, partly.

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• 2023 (10) TMI 1318
  Reopening of assessment u/s 147 - Validity of approval granted u/s 151 - reason to believe - non filling of ROI - HELD THAT:- On going through the reasons recorded, we are of the view that they are replete with various factual misstatement/inaccuracies and silly mistakes. Though, AO has reopened the assessment for assessment year 2013-14, however, the heading of the reasons recorded refers to assessment year 2014-15. Even, the name of the assessee has been wrongly mentioned. In paragraph 3 of the reasons recorded, the AO has very clearly and categorically stated that, though, the assessee had filed TDS return u/s 194E and u/s 195 however, it didn t file any return of income. As a result of which, genuineness of financial transaction business activities of the assessee could not be ascertained. In reasons recorded, AO has mentioned filing of return of income by M/s. Cricket Australia. Whereas, admitted facts are, the assessee has not filed any TDS returns whatsoever under Section 194E or section 195 of the Act. In fact, there is no reason for the assessee to file any TDS returns in India as it has not remitted any amount out of India to any other party. On the contrary, the assessment order itself would reveal, instead of making any payment, assessee had receipts from Taj Cricket Ltd., another non-resident entity. Thus, the reasons recorded by the Assessing Officer for reopening of assessment under Section 147 of the Act clearly reveals that the formation of belief has no live link or nexus with any tangible material available on record. Rather the reasons recorded are based on either non-existent or completely irrelevant facts. In fact, while disposing of the objections of the assessee questioning the validity of the reopening of the assessment, the Assessing Officer has clearly admitted/owned up various factual inaccuracies in the recorded reasons. Reasons recorded by the Assessing Officer certainly do not make out a case for reopening of assessment under Section 147 of the Act. Also without examining the facts on record, both the Additional CIT and CIT have granted approval under Section 151. Granting approval under Section 151 of the Act is not an empty formality. Approval has to be granted with caution and proper application of mind to the facts and material on record to prevent miscarriage of justice, as, reopening of assessment involves reopening of an already concluded assessment. Therefore, it should not be used as a tool for harassment to the assessee. Most unfortunate part in the entire exercise is the approach adopted by learned DRP. As could be seen from the observations of learned DRP, they have disposed of the objections of the assessee, being completely oblivious of the factual position, as, the DRP has referred to non-filing of TDS return and related transactions as the reasons for reopening. This, in our view, is totally unacceptable. When the Assessing Officer, while disposing of the objections of the assessee has admitted errors committed by him, it is surprising that learned DRP has fallen into the same error while referring to non-filing of TDS return and related transaction as the cause for reopening of assessment. Decided in favour of assessee.

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• 2023 (10) TMI 1317
  Reopening of assessment u/s 147 - reassessment beyond 4 years - Undisclosed investment u/s. 69 - performance guarantees/deposits - deductions towards performance guarantee and other deposits by the PWD were in the nature of deposits that were refundable after a period of time as mutually agreed upon by the parties, thus, the same should have been shown by the assessee as deposits on the asset side of his balance sheet - HELD THAT:- When the assessee s claim as regards the allowability of performance guarantee/other deposits, which the assessee accounted for under the head Contract expenses, had been looked into by the A.O in the course of original assessment proceedings, therefore, we find substance in the claim of the Ld. AR that in the absence of any fresh material coming to the notice of the A.O after the culmination of the original assessment proceedings that had culminated vide order passed u/s. 143(3) same could not have been reopened merely on the basis of a change of opinion on the basis of the same set of facts as were available on record in the course of the original assessment proceedings. As per the mandate of law, even where a concluded assessment is sought to be reopened by the A.O within a period of 4 years from the end of the relevant assessment year, it is a must that the A.O has fresh material or information with him, that had led to the formation of belief on his part that the income of the assessee chargeable to tax has escaped assessment. Our aforesaid view is fortified by the judgments of NYK Lime (India) Ltd [ 2012 (2) TMI 283 - BOMBAY HIGH COURT] and Purity Tech Textile Pvt. Ltd.[ 2010 (2) TMI 26 - BOMBAY HIGH COURT] As the case of the assessee had been reopened by the A.O merely on the basis of change of opinion and not on the basis of any fresh tangible material coming to his notice after the conclusion of the original assessment proceedings which would reveal any income of the assessee chargeable to tax had escaped assessment, therefore, in light of the aforesaid settled position of law, quash the assessment framed by the A.O u/s. 143(3)/147 of the Act dated Nil for want of valid assumption of jurisdiction. Decided in favour of assessee.

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• 2023 (10) TMI 1316
  Penalty u/s 271(1) - estimation of income on bogus purchases - HELD THAT:- Disallowance in the instant case is on estimated basis on the presumption that expenditure incurred is excessive having regard to nature and business activity of assessee and also having regard to the non-availability of cogent evidences to support purchases. Significantly, the assessee, in the instant case, has inter alia pointed out that the purchases do not belong to the Assessment Year 2012-13 in question but the amount outstanding against the respective suppliers are opening balances during the year therefore, no expenditure has been incurred towards bogus purchases in the year. We observe that on this point alone, the imposition of penalty towards disallowance of bogus purchases affected during the year is unsustainable in law. Also see Vijay Proteins Ltd. [ 2015 (1) TMI 828 - GUJARAT HIGH COURT] and Sanjay Oil Cake Industries [ 2008 (3) TMI 323 - GUJARAT HIGH COURT] wherein the penalty imposed u/s 271(1)(c) was struck down in similar circumstances of estimated disallowance towards bogus purchases. Decided in favour of assessee.

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• 2023 (10) TMI 1315
  Employees contribution to PF/ESIC u/s 36(1)(va) r.w.s. 43B - default in timely depositing contribution qua the due date - Assessee submitted that mere approval of liability towards payment of salary without actual disbursement would not fastened obligation for deposits of employees contribution under the Labour Act - HELD THAT:- We find merit in such alternative plea towards timely deposit of employees contribution to PF/ESIC qua the due date prescribed under relevant legislations and regulations. Thus while the action of the Revenue for making adjustments towards belated payment to employees contribution is endorsed on first principles, the matter is restored back to the file of the designated Assessing Officer for the purposes of ascertaining whether there is any delay in deposit of such contributions qua the due date in the light of the Kanoi Papers [ 2001 (5) TMI 139 - ITAT CALCUTTA-E ] It shall be open to the assessee to place all factual matrix before the Assessing Officer and take all pleas for evaluation and determination of the issue by the Assessing Officer. The Assessing Officer shall examine this alternative aspect and pass a fresh order in accordance with law after giving proper opportunity to the assessee of being heard. Denial of deduction u/s 80JJA - claim disallowed as prescribed Form 10DA for the purposes of deduction under Section 80JJA has not accompanied the return of income - Assessee submitted claim of deduction was duly made in the original return of income but however same was not reported in the Tax Audit Report and on realizing mistake, the Tax Audit Report was revised and also Form 10DA required for claiming such deduction was also filed albeit after the filing of original return of income but before the date of intimation - HELD THAT:- We find that the Bangalore Bench in Jeans Knit [ 2022 (3) TMI 244 - ITAT BANGALORE ] has taken a view that filing of such prescribed form is directory requirement and hence would stand satisfied if the Accountant s report is furnished during the course of assessment. In consonance with the view taken by the Co-ordinate Bench, the denial of deduction under Section 80JJA solely for reasons of belated filing of the prescribed form is not justified. Consequently, the action of the CIT(A) is set aside and the Assessing Officer is directed to grant relief by way of deduction as claimed. Ground No.1 is accordingly allowed. Eligibility of deduction u/s 80JJAA - HELD THAT:- On consideration of the counter submissions of the Revenue and assessee on the eligibility of deduction on merits, we consider it expedient to restore the matter back to the file of the CIT(A). It shall be open to the assessee to demonstrate that the criteria for eligibility of deduction under Section 80JJAA has been duly met for the purpose of such claim. CIT(A) shall adjudicate the issue of eligibility of deduction under 80JJAA on merits after giving proper opportunity to the assessee to demonstrate its case. Appeal of the assessee is allowed in part for statistical purposes.

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• 2023 (10) TMI 1314
  Additions towards unexplained advance paid to land owner for development of the land - AR submitted that the assessee invested impugned amount towards irrevocable advance for development of site at Pedagantyada out of the accumulated savings, agricultural income of the HUF and also amounts from HUF - AR submitted that she had not maintained any books of account and that the income from the construction business was admitted on estimate basis HELD THAT:- Assessee had advanced an amount towards development of site at Pedagantyada and the source being agricultural income from Ac.27.50 cents. AO found that the assessee is having only Ac.16.77 cents and accordingly estimated the agricultural income of Rs. 1,67,000/- @Rs.10,000/- per acre and brought the difference amount of Rs. 3,33,000/- to tax as unexplained expenditure u/s 68 which was upheld by the Ld.CIT(A). It is observed that the assessee has not furnished any supporting evidences for substantiating her claim that the advance is given out of her past accumulated savings, agricultural income and income received from HUF, either before the revenue authorities or before me. When the assessee claims to admit the source, the onus is on the assessee to prove the source with cogent evidence. In the absence of any proper documentary evidence, no reason to interfere with the orders passed by the lower authorities and hence, dismiss the appeal of the assessee on this ground. Unexplained agricultural income - AR submitted that the assessee had admitted agricultural income of Rs. 3,10,000/- in her return of income and the AO is not justified in estimating the agricultural income at Rs. 1,67,000/- - HELD THAT:- As after survey u/s 133A, when the evidence of undeclared advance made by the assessee was unearthed, the assessee filed ITR admitting agricultural income in response to notice u/s 148 on 30.05.2016, which appears to be an afterthought to explain the source of advance subsequent to the survey conducted by the department. It is observed from the receipts and payment account that the agricultural income of Rs. 3,00,000/- was credited on account of transfer from HUF against the agricultural income of Rs. 3,10,000/- as shown in the ITR filed by the assessee in response to notice u/s 148. This discrepancy was not explained by the assessee and moreover, no supporting evidences have been filed to support the claims of receipt on account of transfer from HUF in the receipts and payment account - no reason to interfere with the order passed by the lower authorities, hence, dismiss the appeal filed by the assessee on this ground.

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• 2023 (10) TMI 1313
  Deduction of Scientific Research Expenses claimed u/s 35(2AB) - Claim disallowed as DSIR has not approved the above said expenditure in Form No.3CL - approval of expenses by DSIR has been made compulsory after the amendment carried out in Rule 6(7A) of Income tax Rules w.e.f. 01.07.2016 - HELD THAT:- As provisions of sec.35(3) provides for making a representation to the prescribed authority. In the instant case, the question is about quantifying the expenditure, i.e., whether the expenses incurred in the in-house scientific research facility is would fall under the category of scientific research expenses or not as specified in sec.35(2AB) of the Act. Since the DSIR has not certified part of the expenses incurred by the assessee and since it did not furnish any reason for doing so, we are of the view that there is violation of principle of natural justice. Unless the prescribed authority furnishes the reason for not certifying the reasons, it will not be possible for us to adjudicate this issue. Accordingly, we restore this issue to the file of the AO to take appropriate action to ascertain the reasons for non-certification. Depreciation made in respect of capital asset purchased from certain entities - HELD THAT:- The facts are that the assessee had capitalized steel purchased by it from P K Agarwal in the year relevant to AY 2003-04. The AO had held that those purchases are not genuine in nature and accordingly disallowed the depreciation claimed thereon. Consequent thereto, the AO has been disallowing the proportionate amount of depreciation relatable to the above said purchases in all the subsequent years. We notice that the said disallowance has since been confirmed by the co-ordinate benches of Tribunal in the earlier years. Accordingly, we do not find any infirmity in the decision of Ld CIT(A) in confirming the proportionate amount of depreciation relatable to the steel purchases claimed by the assessee in both the years under consideration - Decided against assessee. Disallowance u/s 14A r.w. Rule 8D - mandation of recording dissatisfaction by AO - assessee had computed disallowance u/s 14A by allocating specific expenses to the exempt income - AO held that he was not satisfied with the workings given by the assessee, thus computed disallowance as per Rule 8D(2) - HELD THAT:- We notice that the AO did not examine the workings furnished by the assessee before him. For arriving at the dissatisfaction over the correctness of the expenditure claimed by the assessee, it is required for the AO to examine the workings furnished by the assessee vis- -vis the accounts, find fault therein, i.e., identify the deficiencies in the workings furnished by the assessee. There should not any dispute that the dissatisfaction contemplated in sec. 14A of the Act is objective dissatisfaction . Since these observations have been made by the AO without examining the workings furnished by the assessee, we are of the view that the AO has not arrived at the objective satisfaction as contemplated in sec. 14A of the Act. AO could not have resorted to the provisions of rule 8D for computing disallowance u/s 14A of the Act in both the years. Decided in favour of assessee. Addition u/s 115JB in respect of expenses relating to exempt income - HELD THAT:- As decided in the case of Vireet Investments P Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] that the disallowance computed u/s 14A of the Act cannot be adopted for the purpose of making addition under clause (f) of Explanation 1 to sec.115JB of the Act, meaning thereby, the disallowance to be made for computing book profit u/s 115JB, the expenses relatable to the exempt income has to be computed on the basis of expenses claimed in the relevant Profit and Loss account. Hence the Ld CIT(A) was justified in holding that the disallowance computed u/s 14A of the Act cannot be adopted verbatim for the purpose of clause (f) of Explanation 1 to sec. 115JB Also CIT(A) was not right in law in directing the AO to restrict the addition to be made under clause (f) of Explanation 1 to sec.115JB of the Act to the amount of disallowance computed by the assessee for the purposes of sec.14A of the Act, since the disallowance made by the assessee also u/s 14A could not have been imported in sec.115JB of the Act. MAT computation - addition of interest on income tax refund to the Net Profit while computing book profit of the assessee u/s 115JB - HELD THAT:- We notice that this issue has been decided in favour of the assessee by the Co-ordinate bench in AY 2016-17,..[ 2022 (10) TMI 827 - ITAT MUMBAI] as held once assessee s accounts have been maintained in accordance with Companies Act and the same have also been scrutinised and audited by the statutory auditor, in absence of any material to negate these facts, the AO has limited power under section 115 JB of the Act to make adjustment to book profit only in respect of the items provided in Explanation 1 to section 115 JB (1) of the Act. As there is no dispute on the fact that assessee has offered interest on income tax refund to tax while filing its return of income and same has also been assessed under the normal provisions of the Act. Accordingly, we find no merits in addition of interest on income tax refund for computing the book profit under section 115 JB of the Act and the AO is directed to delete the same - Decided in favour of assessee. LTCG arising on compulsory acquisition of land - new claim made - Land acquired as per section 96 of the Right to Fair compensation and Transparency in land Acquisition, Rehabilitation and Resettlement Act, 2013 - HELD THAT:- Since the above said claim of the assessee has been raised for the first time before the Tribunal and since the AO did not have occasion to examine the above said claim, we are of the view that it requires verification at the end of AO in both the years. Accordingly, we restore this issue in both the years to the file of AO for examining the same in the light of contentions raised by the assessee and also accordance with law. Short grant of foreign tax credit - CIT(A) confirmed the action of AO in both the years, but accepted the alternative plea of the assessee that the above said amounts are allowable as deduction u/s 37(1) - AO has not given any reasons for giving short credit - HELD THAT:- As the decision rendered in the case of Wipro Ltd [ 2015 (10) TMI 826 - KARNATAKA HIGH COURT] is applicable to the facts of the present case. Accordingly, we set aside the order passed by Ld CIT(A) on the main claim of the assessee and restore the same to the file of AO for examining the above said main claim of the assessee afresh. ALP adjustment - share application money returned back, by re-charcterising the same as loan - assessee had made investment in preference shares issued by its subsidiary company - HELD THAT:- As it is held that there is no merit in imputing interest thereon by way of transfer pricing adjustment. Since the transfer pricing adjustment made in this year is a continuation of earlier year s action of TPO and since the earlier year s T P adjustment has been deleted by the Tribunal, following the said decision, we direct the AO to delete the Transfer pricing adjustment that was confirmed by Ld CIT(A). Disallowance of part of depreciation claim, on account of reduction of WDV by thrusting depreciation upon the assessee in the earlier years, when the claim of depreciation in those years was optional in nature - HELD THAT:- CIT(A) has granted relief to the assessee on this issue following earlier orders of ITAT, wherein it was held that the depreciation, which was not claimed by the assessee in the earlier years when the claim was optional in nature, cannot be thrust upon the assessee so as to reduce the WDV of assets. We notice that the disallowance of depreciation made by the AO in both the years under consideration are consequential to the stand taken by him in the earlier years, which has since been rejected by the ITAT in those years - we uphold the order of learned CIT(A) passed on this issue. Deduction claimed u/s 10AA by computing profits and gains of Refinery SEZ unit and PP SEZ unit as per Chapter VI-D, instead of adopting gross profit of the said units - assessee had claimed deduction u/s 10AA of the Act on the gross profit reasoning that the Profits and Gains of undertaking for the purpose of sec. 10AA of the Act should be taken as the gross profits as commercially understood and hence the AO should not resort to the provisions of Chapter IV of the Act for computing profits of undertaking - HELD THAT:- Deduction to be allowed u/s 10AA of the Act shall be allowed from the total income and further the said deduction shall not exceed such total income. Hence there is merit in the contentions of the assessee that the above said Explanation specifies the stage at which the deduction u/s 10AA of the Act should be allowed (i.e. from the total income) and also states that quantum of deduction should be restricted to the amount of Total income - we agree with the contentions of the assessee that sec.80AB and Explanation inserted in sec. 10AA operate in different fields. Decision rendered by Ld CIT(A) on this issue does not require any interference. Deduction claimed u/s 80G - donations given under Corporate Social Responsibility - HELD THAT:- In the case of Naik Sea foods P Ltd [ 2021 (11) TMI 1168 - ITAT MUMBAI] as followed the decision rendered of M/s FNF India P Ltd ( [ 2021 (1) TMI 205 - ITAT BANGALORE] which in turn followed the decision rendered in the case of Allegis Services (India) Pvt. Ltd [ 2020 (5) TMI 378 - ITAT BANGALORE] and held that the assessee is eligible for deduction u/s 80G of the Act in respect of certain payments included in CSR Expenses. Disallowance u/s 42(1)(b) in respect of KG-DWN- 98/3 (KGD6 bloc) and Coal Bed Methane Sohagpur (CBM) - reasoning given by the AO is that, as per PSC), the assessee has an option to exercise either Article 17.2.3 or Article 17.2.4 of PSC to compute correct profits of KGD6 and CBM units - AO allowed 10% of expenses claimed by the assessee and accordingly disallowed 90% of expenses in both the blocks - HELD THAT:- Option to claim expenses incurred prior to the date of commercial production in ten instalments is available only in KGD-6 Block, vide clause 17.2.4 and not in CBM Block, i.e., as per PSC in CBM block, expenditure incurred prior to the commercial production shall be aggregated and the loss so assessed as well as loss, if any, incurred in the assessment year relevant to the year in which Commercial production commences or in any subsequent assessment year shall be carried forward to succeeding assessment years for being set off as provided in the Income tax Act. Accordingly, in the absence of any clause for allowing expenses in installments in CBM block, the AO was not justified in restricting the deduction to 10% of expenses claimed by the assessee. Accordingly, we are of the view that the Ld CIT(A) was justified in directing the AO to allow entire expenses claimed in CBM block. KGD-6 block, we notice that the Ld CIT(A) has given a categorical finding that all the expenses claimed by the assessee have been incurred post Commercial production. As per clause 17.2.4 of PSC of KGD-6 block, the option to claim expenses in installments is available to the expenses incurred prior to the date of Commercial Production. Since the impugned expenses are Post Commercial production expenses, the clause 17.2.4 of PSC will not apply. Accordingly, we are of the view that the Ld CIT(A) was justified in directing the AO to allow entire expenses claimed in KGD-6 block. TP Adjustment - addition by imputing Interest on delayed receipts - assessee had benchmarked interest income on delayed receipts of sale proceeds at LIBOR plus 200 basis points - TPO, however, adopted weighted average borrowing cost of the assessee (including long term and short term domestic and foreign borrowings) plus mark up based on Bloomberg date - HELD THAT:- We notice that the ALP adopted by the assessee at LIBOR plus 200 basis points has been accepted by the Tribunal in the earlier years. No distinguishing feature was pointed out by the revenue in these two years, which may compel us to take a different view. Accordingly, we uphold the view taken by Ld CIT(A) on this issue in both the years. Disallowance of long term and short term capital loss on sale of Non-cumulative compulsorily convertible preference shares (NCCPS) - AO noticed that the TPO had characterized the above said investment as loan in the earlier years and hence held that the loss is not allowable as deduction - HELD THAT:- Since an identical issue has been decided in favour of the assessee by the Tribunal in AY 2016-17 [ 2022 (10) TMI 827 - ITAT MUMBAI] and since the decision rendered by Ld CIT(A) on this issue is identical with the view taken by the Tribunal, we uphold the view taken by Ld CIT(A) on this issue in AY 2017-18 also. Addition u/s 50C - addition on the basis of information not shared with the appellant - CIT(A) deleted the addition on the reasoning that the said addition was made on presumptions, since no information was provided by the AO to the assessee - HELD THAT:- It is settled principle of law that the AO is required to confront the material relied upon by him with the assessee before using the same against the assessee. In the instant case, it is the contention of the assessee that it was not aware that the stamp duty valuation was more than the sale consideration and further the AO did not confront the material with the assessee. Accordingly, we are of the view that this issue may be restored to the file of AO with the direction to confront the material that was relied upon by him. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO. After examining the reply given by the assessee, the AO may take appropriate decision in accordance with the law. TP adjustment in respect of Management consultancy services (MCS), technical services and business support services (BSS) rendered to AE - Comparable selection - HELD THAT:- ANJ POWER TECHNOLOGIES P LTD - TPO has considered only turnover of this company, but did not examine as to whether it is functionally comparable. We notice that the ld CIT(A) has given categorical finding that it is not functionally comparable. No material was placed before us to contradict above said finding of Ld CIT(A). Accordingly, we are of the view that the Ld CIT(A) was justified in rejecting this company. 1 to 1 Help P Ltd - TPO has simply mentioned that the business of this company is comparable with that of assessee. On the contrary, the ld CIT(A) has noticed that the functions of this company is not comparable at all with the assessee. No material was placed before us to contradict the findings given by Ld CIT(A). In view of the above said discussions, we are of the view that this company s functions are not comparable with that of the assessee. Accordingly, we are of the view that the Ld CIT(A) was justified in excluding this company. Inmacs Management Services P Ltd - We notice that the TPO has considered the description of services provided by this company, but ignored the fact of development of specialized software. No segmental result is given. Further, the turnover of this company is Rs.1.34 crores only, where as the assessee s turnover is Rs.13.99 crores. Hence, it fails in turnover filter of 10% also. Accordingly, we are of the view that the Ld CIT(A) was justified in excluding this company. Spectrum Business Solutions Ltd - As description of nature of services provided by this company would show that it is functionally comparable. Further, the turnover of this company is Rs.5.53 crores, while the transaction value of the assessee company is 13.99 crores. Hence it would not fail in turnover filter of (+)/(-) 10%. Accordingly, we are of the view that the Ld CIT(A) was justified in directing the AO/TPO to include this company. Allsec Technologies Ltd - As this company has been accepted as comparable in the years relevant to AY 2012-13 to 2015-16 by the Tribunal. In AY 2016-17, the TPO has accepted this company as good comparable. It was submitted that there is no change in facts in this year also. In view of the foregoing discussions, we are of the view that the Ld CIT(A) was justified in directing the AO/TPO to include this company. Since we have rejected the claim of the revenue in respect of above said five companies, the assessee does not have objection in inclusion/exclusion of remaining three companies, i.e., the assessee does not object to the exclusion of two other companies (MCI Management India P Ltd and ICRA Management Consulting Services Ltd) and inclusion of M/s JPS Associates P Ltd. Accordingly, we restore this issue to the file of AO/TPO for redetermining the ALP of this international transaction in the light of discussions made supra. TP adjustment in respect of Guarantee commission given to the Associated Enterprise (AE) - assessee followed Yield spread approach method for calculating the Guarantee commission to be charged on the above said Corporate guarantee given by the assessee - HELD THAT:- We noticed that the decision rendered by the learned CIT(A) on this issue is in line with the decision rendered by the Tribunal in A.Y. 2011-12 to 2016-17. We noticed earlier that the Tribunal has been consistently upholding the yield spread approach and also splitting of differential interest in the ratio 50:50 between the assessee and its AE. Hence, we do not find any reason to interfere with the decision rendered by the learned CIT(A) on this issue. TP adjustment in respect of the business support services availed from its AE - adjustment relates to Specified domestic transactions (SDT) - Comparable selection - HELD THAT:- BVG India Ltd. company is engaged in diversified business activity, thus we uphold exclusion of this company by the learned CIT(A). Empire Industries Ltd. assessee has considered relevant business segment for the purpose of benchmarking analysis. However, the TPO has missed this vitas aspect. Further this company has been accepted as comparable company by the ITAT in A.Y. 2013-14 to 2016-17. Accordingly, we do not find any infirmity with the decision of the learned CIT(A) in including this company as comparable one. ICRA Management Consultancy Services justification in including this company as comparable one as functionally similar. Spectrum Business Solutions Ltd. -. Since we have applied turnover filter in respect of other comparable companies, we are of the view that the learned CIT(A) was not justified in directing for inclusion of this company. Accordingly, we set aside the order passed by the learned CIT(A) and direct for inclusion of this company. Arms Length price adjustment made in respect of money realized on transfer of electricity generated by one undertaking to other undertakings - assessee is running a captive power plant which is eligible unit for deduction u/s 80IA - CIT(A) noticed that the Tribunal has accepted the internal CUP in A.Y. 2013-14 to 2015-16. Accordingly, he reversed the order of AO and deleted the addition - HELD THAT:- Since the Tribunal is consistently upholding the practice of adopting internal CUP in respect of transaction of sale of power to non-eligible undertaking and since the learned CIT(A) has followed the order so passed by the ITAT in earlier years, which has been upheld by Hon ble Bombay High Court in one of the years, we uphold the order passed by the learned CIT(A) on this issue. TP adjustment in respect of Management Consultancy Services (MCS), technical services and Business support services (BSS) rendered to AE - Comparable selection - HELD THAT:- Spectrum Business Solutions Ltd -description of nature of services provided by this company would show that it is functionally comparable. Further, the turnover of this company is Rs.6.75 crores, while the transaction value of the assessee company is 10.33 crores. Hence it would not fail in turnover filter of (+)/(-) 10%. Accordingly, we are of the view that the Ld CIT(A) was justified in directing the AO/TPO to include this company. Allsec Technologies Ltd - CIT(A) was justified in directing the AO/TPO to include this company as services provided by this company is akin to the services provided by assessee. Also this company has been accepted as comparable in the years relevant to AY 2012-13 to 2015-16 by the Tribunal. In AY 2016-17, the TPO has accepted this company. ANJ Power Technologies P Ltd., 1 to 1 Help P Ltd. - CIT(A) was justified in rejecting this company as it is not functionally comparable. Inmacs Management Services P Ltd - TPO has considered the description of services provided by this company, but ignored the fact of development of specialized software. This company also holds inventories of Rs.1.12 crores, meaning thereby, it is also a product company. No segmental results is provided. Accordingly, we are of the view that the Ld CIT(A) was justified in excluding this company.

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• 2023 (10) TMI 1312
  Validity of proceedings / orders without DIN - Absence of DIN on the directions issued by DRP - assessee is a foreign company incorporated in France and is a tax resident therein - HELD THAT:- As relying on BRANDIX MAURITIUS HOLDINGS LTD. [ 2023 (4) TMI 579 - DELHI HIGH COURT] and circular No. 19/2019 dated 14.08.2019,the impugned DRP order is invalid and shall be deemed to have never been passed. Accordingly, we quash the impugned assessment order which has been passed pursuant to the DRP order.

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• 2023 (10) TMI 1311
  Validity of the re-assessment proceedings - reasons to believe - reopening beyond periods of four years - Addition u/s 68 - HELD THAT:- Since the issue for reopening was same and during the course of original assessment proceedings, ld. Assessing Officer has issued notices u/s 133(6) to all the share subscribers, who have duly received the same and replied to the said notice u/s133(6) based on which AO was satisfied with the nature and source of the alleged sum. Thus we find that there was no failure on the part of appellant to disclose fully and truly all material facts necessary for reassessment during the course of original scrutiny proceedings. Therefore, the first proviso to section 147 of the Act which requires for recording the reasons to believe is not satisfied because the reasons for reopening have already been addressed by the assessee in the course of original assessment proceedings and such reopening is only based on the change of opinion. As noticed that during the course of original assessment proceedings, the appellant had disclosed all the preliminary facts, which were necessary for completing the assessment. CIT(Appeals) further held that if at the time of original assessment proceedings, the AO has raised wrong inference from the facts disclosed by the appellant, then, appellant cannot be penalized for the wrong inference of facts and law by AO and the assessment of the appellant cannot be reopened after four years from the end of relevant A.Y. once again under section 147 of the Act. In support of this finding, reliance was placed by ld. CIT(Appeals) on the judgment of M/s. Techspan India Private Limited Another[ 2018 (4) TMI 1376 - SUPREME COURT] and M/s. Kelvinator India Limited[ 2010 (1) TMI 11 - SUPREME COURT] - Decided in favour of assessee.

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• 2023 (10) TMI 1310
  Assessment u/s 144C - demand payable was determined on the basis of draft assessment order for which the impugned demand notice as referred above was issued to the assessee - whether curable defect u/s 292B? - HELD THAT:- As perused the decision of Cisco Systems Services B.V. ( 2023 (3) TMI 416 - KARNATAKA HIGH COURT ) wherein held that at stage of passing draft assessment order, the ACIT also issued a demand notice, procedure followed by ACIT was contrary to law and said mistake could not be cured u/s 292B We find that assessing officer has failed to follow the mandatory procedure laid down u/s 144C of the Act at the stage of passing draft assessment order, therefore, we are of the considered view that final assessment order passed is null and void as the mistake committed in passing the draft assessment order is not curable us/ 292B of the Act - Decided in favour of assesse.

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• 2023 (10) TMI 1309
  Addition u/s 68 - Denial of Exemption u/s 10(38) - bogus LTCG on purchase and sale of shares - disallowance brokerage expense - penny stock transaction - HELD THAT:- In the case in hand the assessee has produced all the evidences to prove the purchase of the shares as well as sale of the shares and holding all these shares in the Demat account and also recorded in the books of account. The purchase consideration was paid through banking channel by account payee cheque and the sale transaction is carried out through stock Exchange from the Demat account of the assessee. Once the assessee has discharged its onus to show that the transaction of purchase and sale is a real and genuine transaction then the burden is shifted to AO to disprove the claim of the assessee by some tangible material brought on record. The AO has held these transactions as bogus only on the basis of suspicion and not on the basis of conclusive evidence whereas the assessee has produced all the relevant evidence to establish that the transaction is genuine and assessee is eligible for claim u/s 10(38) We hold that the assessee has successfully proved the genuineness of the transaction of purchase and sale as well as holding of the shares which is also not disputed by the AO and therefore, in absence of any material brought on record to controvert these facts substantiated by the evidence produced by the assessee the claim of the assessee cannot be held as bogus - addition made by the AO on account of long term capital gain claimed as exempt u/s 10(38) of the Act and consequently, the disallowance of brokerage expenses is deleted. Decided in favour of assessee.

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• Customs

• 2023 (10) TMI 1308
  Undervaluation of goods - whether the allegation of undervaluation against the respondents is substantiated by the evidence that has been put forth by the investigation? - it was held by CESTAT that Antecedents cannot be an evidence for the alleged undervaluation of the goods. At best antecedents may be a reason for creating a suspicion and be a reason for causing an enquiry or Investigation. Mere propensity of the respondent is not enough proof of undervaluation. HELD THAT:- This Court is of the opinion that the impugned order(s) does not call for interference. The Civil appeal is accordingly dismissed.

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• 2023 (10) TMI 1307
  Valuation of imported consignments - Linen Yarn, Ramie Yarn and other misc. items from various overseas suppliers, based in China - rejection of declared value - redetermination of the rejected value - retraction of relied statements - Section 28 of Customs Act,1962 - it was held by CESTAT that it is evident that none of the evidences relied upon by the department, to allege the under valuation resorted to by the appellants, stand the scrutiny of Law. HELD THAT:- There are no merit in these appeals and the same accordingly stand dismissed.

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• 2023 (10) TMI 1306
  Classification of goods intended to be imported - Compounded Rubber - to be classified under CTH 4005 1000 or not - HELD THAT:- In view of scope of tariff headings under CTH 4005 of the first schedule to the Customs Tariff Act, 1975 Compounded rubber formulation 2 (without Carbon Black but with less than 5 parts of SBR -Styrene butadiene rubber) and Compounded rubber formulation 3 (without Carbon Black but with less than 5 parts of clay) merit classification under CTH 4005 99 90: Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip - Other and are not eligible for duty exemption benefit under serial number 503 of the notification 46/2011-Cus. dated 1-6-2011 amended from time to time. However, they are eligible for partial duty exemption benefit under serial number 504 of the notification 46/2011-Cus. dated 1-6-2011 amended from time to time subject to the fulfilment of conditions of the said notification. It is to mention that the presence of zinc oxide and stearic acid in this formulation requires sample testing post-importation from the point of view of checking whether this formulation is still in a unvulcanized state or not. Applicant has categorically submitted that the presence of zinc oxide and stearic acid in this formulation is not as an active agent or vulcanizing agent. Claim of applicant is required to be objectively proved by way of an outcome of the chemical test conducted at the time of importation. This aspect of product testing is a part of Customs Compliance Verification (CCV) process after importation of goods - the utility of the claim of applicant that the presence of zinc oxide and Stearic acid in this formulation is not as an active agent or vulcanizing agent is limited only to support applicant s contention, during advance ruling process, that the goods will not be in a vulcanized state. It is thus concluded that: a. Compounded rubber formulation 1 (with less than 5 parts of Carbon Black) mentioned in para 5.1 merits classification under CTH 4005 1000 Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip - compounded with carbon black or silica and is eligible for duty exemption benefit under serial number 503 of the notification 46/2011- Cus. dated 1-6-2011 amended from time to time subject to the fulfilment of conditions of the said notification as well as notification 189/2009-Cus. (N.T.) dated 31-12-2009 amended from time to time, b. Compounded rubber formulation 2 (without Carbon Black but with less than 5 parts of SBR -Styrene butadiene rubber) mentioned in para 5.1 merits classification under CTH 4005 99 90 Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip -Other and is eligible for duty exemption benefit under serial number 504 of the notification 46/2011-Cus. dated 1-6-2011 amended from time to time subject to the fulfilment of conditions of the said notification as well as notification 189/2009-Cus. (N.T.) dated 31-12-2009 amended from time to time. c. Compounded rubber formulation 3 (without Carbon Black but with less than 5 parts of clay) mentioned in para 5.1 merits classification under CTH 4005 99 90 Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip -Other and is eligible for duty exemption benefit under serial number 504 of the notification 46/2011 -Cus. dated 1-6-2011 amended from time to time subject to the fulfilment of conditions of the said notification as well as notification 189/2009-Cus. (N.T.) dated 31-12-2009 amended from time to time.

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• Insolvency & Bankruptcy

• 2023 (10) TMI 1305
  Categorization of the respondent Kanoria Chemicals and Industries Ltd. under one of the categories of operational creditors - HELD THAT:- The learned Senior Advocate appearing for the respondent - Kanoria Chemicals and Industries Ltd. states that in view of the order passed today, they will not press the contempt petition. Appeal disposed off.

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• Service Tax

• 2023 (10) TMI 1304
  Recovery of service tax on premium received towards marine policy - exemption provided under N/N. 3/1994 related to premium collected on insurance of export of goods from India - HELD THAT:- In the facts and circumstances of the case, it would be appropriate that the proceedings instead of being remanded to the adjudicating officer, as done by the tribunal ought to be remanded to the CESTAT, so as to consider these issues on which the questions of law have been posed for our consideration. Once these issues are examined and decided by the tribunal, the other issues if they arise, can be gone into, in regard to which all contentions of the parties would be required to be kept expressly open - the impugned order set aside - appeal disposed off.

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• 2023 (10) TMI 1303
  Refund - Period of Limitation - service tax paid under the reverse charge mechanism (RCM) - Later since services were not rendered, assessee claimed refund of the same. Refund rejected on the ground that it was filed after one year from the date of payment of the service tax and hence it was hit by limitation under section 11B of the Central Excise Act, 1944 as made applicable to the service tax by section 83 of the Finance Act, 1994. HELD THAT:- Section 11B applies to service tax matters, so far as may be. In other words, wherever necessary, the references to excise duty, manufacture, manufacturer, etc. must be read as corresponding terms with reference to service tax. Otherwise, application of section 11B to service tax itself becomes absurd and impossible. The term manufacturer in central excise corresponds to service provider in service tax, i.e., the one carrying out the taxable event which is manufacture in the case of excise and the provision of service in case of service tax - In this case, since the services rendered by OPHJ to the respondent were unsatisfactory, it waived the invoices in March 2014. In other words, the sale and purchase of services had not taken place at all. Therefore, the relevant date had not yet begun when the appellant filed the refund application on 8 September 2014. The Commissioner (Appeals) has correctly held that the claim of refund is not hit by limitation. Revenue sought to distinguish this case from M/S. OSWAL CHEMICALS FERTILIZERS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BOLPUR [ 2015 (4) TMI 352 - SUPREME COURT] . on the ground that this is a service tax matter. This submission cannot be accepted. If section 11B applies to service tax matters, as far as may be, there is no reason why the ratio of this judgment does not apply. The impugned order is upheld and Revenue s appeal is dismissed

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• 2023 (10) TMI 1302
  Levy of service tax on the value of goods sold to their clients since no record were maintained for buying and selling of such goods - maintenance and repair service - 67% of gross value is towards the value of goods used in providing the service - HELD THAT:- There is no dispute that the appellant have raised invoices for sale of material and service charge separately, towards the sale of material they have taken 67% as deemed sale price and even discharge the VAT on the said amount and in respect of the service they have paid service tax on 33% on the gross value, the appellant have taken this ratio on theoretical basis. However the chartered accountant in its certificate given the actual bifurcation of the material and service charge. From the chartered accountant certificate it is seen that even though the appellant have taken the 33% of the service charge, however, as per the certificate it comes to less than 30% and if this is taken as correct the appellant is required to pay service tax on the actual service charge which is much below 33% on which the service tax was discharged. Therefore, there is no value escaped from payment of service tax and the appellant has paid the service tax even in excess. Therefore there is no short payment of service tax. The impugned order set aside - appeal allowed.

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• Central Excise

• 2023 (10) TMI 1301
  Recovery of CENVAT Credit alongwith interest and penalty - second stage dealers were issuing invoices without actually supplying goods - opportunity of cross-examination not provided - principles of natural justice - HELD THAT:- The show cause notice is based on 9 relied upon documents of which one is a set of the invoices in dispute (RUD-9). These are alleged to be ineligible for CENVAT credit based on five statements of Sudarshan Singh of Aditya Enterprises (RUD-2), Ajay Sharma of Hari Om Steel (RUD-5), Vakil Luhar of M/s Mahalaxmi Scrap (RUD-6), Manoj Vijay authorized signatory of M/s Mahalaxmi Scrap (RUD-7) and Dharamveer Singh, Director of the assessee (RUD-8) - all the statements become irrelevant and, therefore, also inadmissible to the present proceedings. The cross-examination of one of the persons Manoj Vijay was allowed in which he asserted that the goods were transported not to his premises but were transported directly to premises of the respondent. Once we ignore all these statements, the only evidence left are the letter of the Additional Director, DGCEI indicating that intelligence was received, the letter of the Additional Commissioner, Dhanbad, which is an alert notice indicating that Ganpati Enterprises was found to be non-existent and the letter of superintendent of Central Excise, Burdwan indicating that M/s Vedic Chemicals Pvt Ltd is also closed - It is true that if the manufacturer had not manufactured the goods they could not have been supplied by the manufacturer to the first stage dealer and further to the second stage dealer and to the respondent. It certainly creates enough reasons to doubt but the issue can only be decided through a thorough investigation. If the assessee says that it had received the goods, the question is, if the second stage dealer had supplied the goods. In this case, he says he had supplied the goods. The next question is to enquire if the first stage dealer had sold the goods to the second stage dealer. The third stage of investigation is ascertaining if the manufacturer had supplied to the goods to the first stage dealer. Examining the records of each of this individual companies/ firms and recording their statements can only reveal the complete truth. If such an investigation requires statements to be recorded and if revenue proposes to use such statements in the proceedings against the assessee the procedure prescribed under the section 9D has to be followed. Otherwise, such statements are not only NOT admissible but are not even relevant to the proceedings. In this case, all the statements are rendered irrelevant as the Adjudicating Authority had not followed the procedure prescribed under section 9D. There are no reason to interfere with the impugned order. The impugned order is upheld and the appeal filed by the Revenue is dismissed.

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• 2023 (10) TMI 1300
  Interest on differential duty by invoking extended period of limitation - suppression of facts or not - Impugned order passed by not properly appreciating the facts and the law - violation of principles of natural justice - HELD THAT:- The appellant deposited the duty on supplementary invoices as and when the supplementary invoices were issued. It is also found that the appellant has deposited the interest under protest and has submitted that in the present case invoking the extended period of limitation to demand the interest alleging suppression is not sustainable because during the relevant period there were divergent views on the issue of liability of interest on payment of central excise duty while issuing supplementary invoices under the Central Excise Act, 1944. This Tribunal in the case of SUPER THREADING INDIA PVT LTD VERSUS COMMISSIONER OF CE ST, LUDHIANA [ 2021 (5) TMI 907 - CESTAT CHANDIGARH] and M/S. KEC INTERNATIONAL LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [ 2022 (3) TMI 692 - CESTAT NEW DELHI] had held that extended period of limitation cannot be invoked as there is no fraud/mis-statement with intent to evade payment of duty. Thus, invoking the extending period of limitation is not sustainable and the demand of interest by invoking the extended period of limitation is not justified and the same is set aside by remanding the matter to the Original authority to re-quantify the demand only for the normal period and any amount deposited over and above the normal period of one year should be returned back to the appellant as he has paid the entire disputed demand of interest under protest. Appeal allowed by way of remand.

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• 2023 (10) TMI 1299
  Captive Consumption - Benefit of exemption - Time Limitation - requirement to pay Central Excise duty on intermediate goods, i.e. dyed yarn - manufacture for captive consumption or not - benefit of Notification No. 67/95-CE dated 16.03.1995 denied - HELD THAT:- There is no dispute with regard to the fact that entire finished products were exported under bond/LUT and there was no domestic sale by the appellant. The appellant has exported their final product without payment of duty under letter of undertaking and bond executed by them and accepted by the jurisdictional Assistant Commissioner of Customs, New Delhi and the show cause notice dated 05.08.2004 issued by Commissioner of Customs (Preventive) New Delhi was withdrawn in the light of CBEC s circular No. 19/05-Cus dated 21.03.2005. Since the appellant has got their goods manufactured/yarn dyed from job worker; in these circumstances, the job worker is the manufacturer of dyed yarn and if any duty is to be paid it is to be paid by the job worker. The dyed yarn by the job worker is not captively manufactured by the appellant and in that circumstance, the Notification No. 67/95-CE have no relevance to the facts of the present case - the original authority has held that since the finish goods manufactured by the appellant are chargeable to nil rate of duty under heading 5702.09 the benefit of Notification No. 67/95-CE is not available in view of the proviso to the said notification. But in the present case entire quantity of goods manufactured was exported and these clearances cannot be considered as clearance for home consumption. The appellants are entitled to the benefit of exemption Notification No. 67/95-CE. Further, when the appellants are entitled to exemption, the imposition of penalty on the director is bad in law. The impugned order is set aside - Appeal allowed.

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• 2023 (10) TMI 1298
  CENVAT Credit - credit availed by the appellant job worker based on supplementary invoices issued by Hindustan Unilever Ltd paying differential duty on the Bulk Detergent Powder, stock transferred to the appellant M/s. Indu Home Care Product - deniable on the ground of payment of such additional duty by Hindustan Unilever Ltd allegedly on account of suppression, etc. under Rule 9(1)(b) of CENVAT Credit Rules, 2004 - penalties under Section 11 AC(1)(c) of Central Excise Act upon the appellant - penalties under Rule 26 (2) upon HUL. HELD THAT:- From Rule 9 (1) (b) of CENVAT Credit Rules 2004, it can be seen that the restriction of availment of credit on supplementary invoice is applicable in a case where the manufacturer supplier of inputs or capital goods not paid the duty or short paid the duty by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any provision of the Excise Act or of the Customs Act or the Rules made thereunder with intend to evade payment of duty only when such clearance is in the nature of sale of goods - In the present case the appellant is a job worker and they have received the goods on which CENVAT Credit was taken as a job worker, for the purpose of job work on behalf of M/s Hindustan Unilever Ltd. In this fact, the goods were received on returnable basis which does not involve the sale of goods as defined under Section 2(h) of Central Excise Act. The ownership of goods remained with supplier M/s. Hindustan Unilever Ltd. As against the supply of goods there is no consideration paid by the appellant to M/s. Hindustan Unilever Ltd. Therefore, the transaction is clearly not covered under sale of goods by M/s. Hindustan Unilever Ltd to the appellant. Therefore the combined reading of Rule 9 (1)(b) and Section 2(h), it is clear that only in a case of sale of goods, the restriction of CENVAT Credit on supplementary invoice is applicable. In the present case, the transaction being not a sale transaction the restriction shall not apply. From the consistent view taken by the Tribunal and the courts it is settled that in a case where there is no sale of goods and only a stock transfer the restriction of availment of CENVAT Credit on supplementary invoice in case of non-payment or short payment of duty by the supplier unit shall not apply - Reliance placed in COMMISSIONER OF CUS. C. EXCISE, HYDERABAD-IV VERSUS JAIRAJ ISPAT LIMITED [ 2008 (2) TMI 440 - ANDHRA PRADESH HIGH COURT] and UNITED PHOSPHORUS LTD. VERSUS COMMISSIONER OF C. EX. S.T., SURAT-II [ 2013 (11) TMI 1530 - CESTAT AHMEDABAD] where it was held that when there is simply a stock transfer the prohibition under Rule 7(1)(b) will not be applicable. Penalties - HELD THAT:- The appellants are entitled to the CENVAT Credit on the strength of supplementary invoices issue by M/s. Hindustan Unilever Ltd. consequently the penalties on the appellant as well as on the Hindustan Unilever Ltd shall also not sustain - Moreover, as regard the penalty on Hindustan Unilever Ltd as per the nature of the present case, there is no involvement of M/s. Hindustan Unilever Ltd in alleged wrong availment of CENVAT Credit by the appellant M/s. Indu Home Care Products. M/s. Hindustan Unilever Ltd rightly issued the supplementary invoice towards the payment of differential duty and the said issuance of the supplementary invoice is not illegal or incorrect. It is upto the appellant M/s. Indu Home Care Products, whether to avail CENVAT Credit or otherwise. Therefore, in any case, in the facts of the present case M/s. Hindustan Unilever Ltd cannot be fastened with any penalty under Rule 26 (2) of Central Excise Rules, 2002. The impugned order is not sustainable, hence the same is set aside - Appeal allowed.

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• 2023 (10) TMI 1297
  100% EOU - clearance of Spent Sulphuric Acid to the fertilizer companies in DTA - eligibility for payment of nil rate of duty Notification No.2/2008-CE dated 01.03.2008 for clearance of Linear Alkyl Benzene Sulphuric Acid - Notification No.4/2006-CE dated 01.03.2006 for clearance of Spent Sulphuric Acid to fertilizer companies - HELD THAT:- In view of the decision in SATYA METALS VERSUS UNION OF INDIA [ 2013 (8) TMI 161 - HIMACHAL PRADESH HIGH COURT] , which is applicable to the facts of this case, the charging section for duty on DTA clearance is under the provisions of Section 3(1)(b)(ii) of the Central Excise Act, 1944 and as per the said provisions, the duty is to be levied and collected from a 100% EOU, would be the duty of Customs payable if the goods produced and manufactured outside India and the same have been imported into India. This is the basic charging section of duty leviable on a 100% EOU when clearing the goods to DTA. As per the said provisions, the duty of excise shall be levied and collected on any excisable goods, which are produced and manufactured by a 100% EOU and brought to any other place in India, shall be an amount equal to the aggregate of duties of customs which would be leviable under the Customs Act, 1962 or any other law for the time being in force, on like goods produced and manufactured outside India if imported into India and where the said duties of excise are chargeable with reference to their value, the value of such excisable goods shall, notwithstanding anything contained in any other provisions of this Act, be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975. Therefore, the duty payable in accordance with this Notification in respect of the said goods shall not be less than the duty of excise leviable on the like goods produced or manufactured outside EOU Unit, which is specified in the said Schedule read with the any other relevant Notification issued under Section 5A(1) of the Central Excise Act, 1944 - the appellant is entitled to pay the duty in terms of Notification No.2/2008-CE dated 01.03.2008 and Notification No.04/2006-CE dated 01.03.2006. There are no merit in the impugned orders and the same are set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (10) TMI 1296
  Rejection of application, partly, under Vera Samadhan Yojna, 2019 (Amnesty Scheme- 2019) for A.Y. 2011- 12 and A.Y. 2012-13 - issuance of C-Forms or not - HELD THAT:- In this case, the respondent verified the C form through TINXSYSY website resulting into allowing the C forms of Rs. 1,45,87,986/- (without tax) and disallowing the amount of Rs. 1,85,82,948/- (without tax). Thus, the verification by the respondents was made prior to the passing of the order dated 15.2.2020 for A.Y. 2011-2012, and for A.Y. 2012-13. Since, the order under Amnesty-2019 Scheme was to be passed latest by 15.2.2020, the authority passed an order on 15.2.2020 after verification of the C forms which was available on record and therefore, in our opinion there is no illegality committed. Moreover, heavy reliance placed by the petitioner on the certificate dated 17.2.2020 at Annexure G is of no consequences since the same was made available after 15.2.2020 i.e. after the cutoff date to pass the order. Therefore, accepting the request or the prayer made by the petitioner would amount to extending the benefit of the scheme beyond the due date which is not permissible under law and, therefore, we do not find any error in the order passed by the authority dated 15.2.2020. Further, the rectification application was rightly rejected by observing that there is no error apparent on the face of the record which requires rectification. There are no illegality in the orders dated 15.2.2020 and 29.5.2020 - petition dismissed.

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• Indian Laws

• 2023 (10) TMI 1295
  Seeking grant of Default bail - chargesheet or a prosecution complaint be filed in piecemeal without first completing the investigation of the case or not? - filing of such a chargesheet without completing the investigation will extinguish the right of an accused for grant of default bail or not - remand of an accused can be continued by the trial court during the pendency of investigation beyond the stipulated time as prescribed by the CrPC - HELD THAT:- It pertinent to mention that in the present case, this Court is not dealing with the merits of the case and as such is not inclined to make any observations regarding the same. Every court, when invoked to exercise its powers, must be mindful of the relief sought, and must act as a forum confined to such relief. In the present case at hand, this Court is not a court of appeal, but a court of writ, and therefore is inclined to limit its jurisdiction only to the personal liberty of the writ petitioner s husband and the impugned points of law. Under Section 167 of the Code of Criminal Procedure, 1898, which was the Act that governed criminal procedure before the enactment of CrPC presently in force, an accused, either under judicial or police custody, could be remanded only for a maximum period of 15 days. Reliance placed in SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION ANR. [ 2021 (10) TMI 1296 - SUPREME COURT ], wherein it was held that Section 167(2) of the Cr.P.C. is a limb of Article 21 of the Constitution of India, and as such, the investigating authority is under a constitutional duty to expedite the process of investigation within the stipulated time, failing which, the accused is entitled to be released on default bail. It is also to be noted that as per the scheme of Cr.PC, an investigation of a cognizable case commences with the recording of an FIR under Section 154 Cr.PC. If a person is arrested and the investigation of the case cannot be completed within 24 hours, he has to be produced before the magistrate to seek his remand under Section 167(2) of the Cr.PC during continued investigation. There is a statutory time frame then prescribed for remand of the accused for the purposes of investigation, however, the same cannot extend beyond 90 days, as provided under Section 167(2)(a) (i) in cases where the investigation relates to an offence punishable with death, imprisonment for life or imprisonment for a term of not less than 10 years and 60 days, as provided under Section 167(2)(a)(ii), where the investigation relates to any other offence. Without completing the investigation of a case, a chargesheet or prosecution complaint cannot be filed by an investigating agency only to deprive an arrested accused of his right to default bail under Section 167(2) of the CrPC - Such a chargesheet, if filed by an investigating authority without first completing the investigation, would not extinguish the right to default bail under Section 167(2) CrPC. In the instant case, it is clear from the facts that during the pendency of the investigation, supplementary chargesheets were filed by the Investigation Agency just before the expiry of 60 days, with the purpose of scuttling the right to default bail accrued in favour the accused - The Investigating Agency and the trial Court, thus, failed to observe the mandate of law, and acted in a manner which was manifestly arbitrary and violative of the fundamental rights guaranteed to the accused. It is pertinent to mention that the right of default bail under Section 167(2) of the CrPC is not merely a statutory right, but a fundamental right that flows from Article 21 of the Constitution of India. The reason for such importance being given to a seemingly insignificant procedural formality is to ensure that no accused person is subject to unfettered and arbitrary power of the state - it becomes essential to place certain checks and balances upon the Investigation Agency in order to prevent the harassment of accused persons at their hands. The interim order of bail passed in favour of the accused is made absolute, and the present writ petition is, accordingly, disposed of.

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• 2023 (10) TMI 1294
  Professional Misconduct - Chartered Accountant (CA) - Delay of 19 years for completion of Proceeding on the part of ICAI - fabrication of bogus payment challans by putting forged stamp of Dena Bank, Vile Parle (W) Branch - allegation to have collected account payee cheques for making payment of sales tax dues which he misappropriated by depositing in his own bank account - HELD THAT:- The sequence of events clearly indicate that firstly the complaint itself was made after 10-12 years of the incident having taken place. Thereafter, it took the Council as many as 14 years to complete the procedure prescribed under the Act and reach a finding of guilt of Respondent. Another almost two years were spent in the process of filing the Reference and finally, about four more years were spent in removing office objections to get the Reference registered. Thus, the Council has prolonged the procedure for as many as 19 years and kept Respondent in the dock for the entire period. Considering the nature of accusation against Respondent, the finding of guilt by the Committee and the Council and the consequent penal recommendation of such grave ramification, it is surprising that the Institute took such a long time to complete the procedure of indictment. The attitude of the Institute appears to be completely casual and negligent - Respondent is presently 77 years of age and save and except a period of five years for which he himself had surrendered his certificate of practice, he has been professionally active and no other complaint is found to have been made against him. The Institute has offered no explanation whatsoever for the inordinate delay in initiating and concluding the disciplinary action against Respondent. The Supreme Court in its decision in the matter of State of Madhya Pradesh v Bani Singh [ 1990 (4) TMI 286 - SUPREME COURT ] has quashed the charge memo and the departmental enquiry against an officer of the SAF, Gwalior on the ground of inordinate delay of 12 years to initiate departmental proceedings with reference to an incident that took place in 1975-76 and held that since there was no satisfactory explanation for the delay, it will be unfair to permit departmental enquiry against the officer to continue. In the present case no explanation is offered by the Institute for the inordinate delay of as many as 19 years. Respondent has inasmuch suffered the agony of the sword of Damocles hanging over his head for so many years. In any case, we do not find that the Committee has found any substantial justification in the form of unrebutted evidence against Respondent as much as to hold him guilty to the extent that his name should be removed for a period of one year and Respondent be compelled to face an ignominy of the tag of other misconduct at this stage in his professional career and at an age of 77 years - even the Council has merely reproduced the report of the Committee without giving its own independent findings. There is neither any analysis by the Council nor any justification recorded to explain the quantum of punishment recommended to this Court. The view of Council is wholly untenable and the recommendation of the Council as prayed cannot be accepted. In view thereof, there is no need to take any further action against Respondent - Reference disposed off.

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• 2023 (10) TMI 1293
  Murder - Scope of exception Under Section 84 of Indian Penal Code or not - issue of insanity - reversal of order of acquittal - HELD THAT:- The fact that the Appellant had committed murder of the deceased have been found established concurrently by the Trial Court as well as the High Court, therefore, we would discuss the evidence in this regard very briefly - Basing upon the evidence of PW-1 and PW-13 and the medical evidence adduced, it is fully proved that the Appellant-Accused had attacked the deceased with sharp-edged weapon causing his death. Issue of insanity - HELD THAT:- It is settled that the standard of proof to prove the lunacy or insanity is only reasonable doubt - In Surendra Mishra v. State of Jharkhand [ 2011 (1) TMI 1586 - SUPREME COURT] , HARI SINGH GOND VERSUS STATE OF M.P. [ 2008 (8) TMI 1012 - SUPREME COURT] and Bapu v. State of Rajasthan [ 2007 (6) TMI 557 - SUPREME COURT] this Court has held that an Accused who seeks exoneration from liability of an act Under Section 84 of Indian Penal Code has to prove legal insanity and not medical insanity. Since the term insanity or unsoundness of mind has not been defined in the Penal Code, it carries different meaning in different contexts and describes varying degrees of mental disorder. A distinction is to be made between legal insanity and medical insanity. The court is concerned with legal insanity and not with medical insanity. It is settled that the judgment of acquittal can be reversed by the Appellate Court only when there is perversity and not by taking a different view on reappreciation of evidence. If the conclusion of the Trial Court is plausible one, merely because another view is possible on reappreciation of evidence, the Appellate Court should not disturb the findings of acquittal and substitute its own findings to convict the Accused - In the case at hand, the High Court had reversed the finding of acquittal and convicted the Appellant mainly on reappreciation of evidence by holding that the Trial Court erred in extending the benefit of Section 84 of Indian Penal Code, without even recording a finding that the Trial Court s finding is perverse. In the light of the evidence discussed by the Trial Court including the medical evidence about the mental illness of the Appellant-Accused and his abnormal behaviour at the time of occurrence, it does not appear that the view taken by the Trial Court was perverse or that it was based on without any evidence - the High Court erred in setting aside the judgment of acquittal rendered by the Trial Court. The Appellant-Accused of the charge Under Section 302 Indian Penal Code acquitted - appeal allowed.

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