TMI Tax Updates - e-Newsletter
November 8, 2023

Case Laws in this Newsletter:

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

Articles

1. What are the Roles of Registrar of Companies (ROC) in India?

   By: Ishita Ramani

2. RE-EXPORT OF IMPORTED GOODS - WHETHER PAYMENT OF PENALTY IS A PRE-REQUISITE CONDITION?

   By: DR.MARIAPPAN GOVINDARAJAN

3. GST APPEALS UNDER SECTION 107 AND AMNESTY SCHEME

   By: Dr. Sanjiv Agarwal

4. No Service Tax Leviable on Amount Collected as Advance Fee from Applicants for Membership of Club

   By: Bimal jain

News

1. DGGI Meerut Officials bust a massive syndicate involving 102 fake entities with a staggering turnover of Rs. 1,481 crore, four held

2. India is moving towards massive investments in infrastructure to meet the aspirations of its growing population and steel is vital to achieving this goal: Union Minister Shri Piyush Goyal

3. Repayment of ‘4.56% GS 2023’

4. Union Government authorises release of tax devolution of ₹72,961.21 crore to all State Governments for November, 2023; three days ahead of the usual date of 10th November

5. NITI Aayog Organised Workshop on Inclusive Trade for Growth & Prosperity

6. Union Finance Minister Smt Nirmala Sitharaman addresses G20 Webinar on ‘Strong, Sustainable, Balanced and Inclusive Growth’, held in New Delhi

7. Auction for Sale (issue/re-issue) of (i) ‘New GS 2030’, (ii) ‘7.18% GS 2037’, (iii) ‘7.25% GS 2063’ and (iv) ‘New GOI SGrB 2028’

Notifications

GST - States

1. 1143/XI-2–23-9(47)-17-T.C.232-U.P.Act-1-2017-Order (291)-2023 - dated 21-9-2023 - Uttar Pradesh SGST

Persons supplying goods through electronic commerce operators, specified

2. 1139/XI-2–23-9(47)-17-T.C.228-U.P.Act-1-2017-Order (288)-2023 - dated 21-9-2023 - Uttar Pradesh SGST

Provisions of Sections 2 to 23 of the Uttar Pradesh Goods and Services Tax (Amendment) Act, 2023 will come into force on October 1, 2023, and Sections 14 to 18 on August 1, 2023.

Income Tax

3. 98/2023 - dated 6-11-2023 - IT

Exemption from specified income U/s 10(46) – ‘Press Council of India’ notified

4. 97/2023 - dated 6-11-2023 - IT

Exemption from specified income U/s 10(46) – ‘Punjab Infrastructure Regulatory Authority’ notified

Circulars / Instructions / Orders

DGFT

1. TRADE NOTICE NO. 32/2023-24 - dated 6-11-2023

Introduction of Centralized Video Conference Facility at DGFT Headquarters

Highlights / Catch Notes

GST

• Input Tax Credit Claim Challenged Due to Verification Lapse in GST Portal Data; Orders Found Unsustainable.

  Case-Laws - HC : Claiming benefit of input tax credit when compounding is filed and is accepted - initiation of proceedings u/s 74 - Under the GST regime all details are available in the portal of GST department. The authorities could have very well verified as to whether after filing of GSTR-1 and GSTR 3 B how much tax has been deposited by the selling dealer i.e. Rohit Coal Traders but the authorities have failed to do so. Thus looking to the said facts, the impugned orders cannot be sustained in the eyes of law. - HC
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Income Tax

• Settlement Commission Proceedings Invalidated Over Improper Declaration Under Income Tax Act Section 245D.

  Case-Laws - HC : Validity of Settlement Commission proceeding - Once there is a clear finding recorded that there was a failure on the part of the petitioners to make proper declaration as is contemplated Section 245D of the Income Tax Act, 1961, question of the first respondent, Settlement Commission proceeding further cannot be countenanced. - HC
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• Penalty for Misreporting Income u/s 270A Dismissed as Premature Filing Occurred Before Accounting Year End.

  Case-Laws - HC : Penalty levied u/s 270A - misreporting of income un/s 270A(8) and 270A(9) or not - Assessee filed the ITR after search conducted on third party but before the due date of filing of ITR - Since the return of income was not due as on the date of search carried out on 10.08.2016 and the accounting year was not ended also therefore the books of accounts were not up-dated. Therefore, the assessee's case does not fall under the category of misreporting of income. - No penalty - HC
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• High Court Rules Revisionary Powers Unnecessary for Loan Repayment Under Income Tax Act Sections 263 and 68.

  Case-Laws - HC : Revision u/s 263 - addition u/s. 68 r.w.s. 115BBE - Assessee has submitted before the AO that the repayment of unsecured loan was made from sell proceeds - the Tribunal was right in holding that it was not a case where there was lack of inquiry and therefore there was no ground on which revisionary powers under Section 263 could have been invoked - HC
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• Undisclosed Plot Investment Leads to Addition u/s 69 for Unrecorded On-Money Payment by Taxpayer.

  Case-Laws - AT : Addition u/s 69 - unexplained investment made in purchase of plot - Transaction found during the survey was neither recorded in the books of account for the year nor any satisfactory explanation was given - the authorities below were perfectly justified in making the addition u/s 69 towards on-money paid by the assessee in the year under consideration - AT
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• Assessing Officer Cannot Apply Section 40A(2) Without Proof of Excessive Service Charges in Cost Reimbursement Case.

  Case-Laws - AT : Addition u/s 40(A) - service charges paid to division of the holding company - assessee has been able to demonstrate that the services were charged by SCS to the assessee only by way of reimbursement of costs and no excessive sum was charged to the assessee - AO cannot invoke Sec. 40A(2) without demonstrating excessive & unreasonable expenses. - AT
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• Debate on Income Taxable in India: Is It Royalty or Business Profit? Industry Standards Challenge Royalty Definition.

  Case-Laws - AT : Income taxable in India - TDS u/s 195 - Royalty or Business Profit - the process involved in providing the services to the end users / customers is not “secret” but a standard commercial process followed by the industry players. Therefore the said process also cannot be classified as a “secret process”, as is required by the definition of “royalty” mentioned in clause 4 of Article 12 of India-Netherlands DTAA. - AT
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• Interest Calculation u/s 234C to Focus on Returned Income, Not Assessed Tax, as Directed by Assessing Officer.

  Case-Laws - AT : Computation of interest u/s 234C - i it is pertinent to note that section 234C refers to the term “returned income” in comparison to section 234B which refers to the term “assessed tax” for imposing interest. - AO directed to compute the interest u/s 234C on the “returned income” of the assessee. - AT
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• Capital Gain Tax Interpretation: Transfer of Property and Consent Terms in Sale Agreement Dispute.

  Case-Laws - AT : Capital Gain - Transfer of property u/s 2(47) - Scope of Consent Terms (Agreement) - Nothing has been brought on record by the AO to show that the Purchaser was willing to perform his part of contract. The Consent Terms were agreed upon only after the Appellant filed suit for seeking specific performance of the Agreement for Sale. Therefore, we hold that the transaction under consideration did not attract provisions of Section 53A of the TPA. - AT
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• Compensation from compulsory acquisition of agricultural land under RFCTLAAR Act is exempt from income tax.

  Case-Laws - AT : Benefit of exemption u/s 10(37) - the exemption provided u/s 96 of the Act is wider in scope than the tax exemption provided in the existing provisions of the Income Tax Act. This clearly indicates that since the assessee company has received compensation under the RFCTLAAR Act and the case of the assessee does not fall under section 46 of the RFCTLAAR Act, no income tax is leviable on the award received on the compulsory acquisition of agricultural land. - AT
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• Dispute Over TDS Applicability: Section 192 vs. 195 for Reimbursed Salaries of Seconded Employees in India.

  Case-Laws - AT : TDS u/s 192 or 195 - reimbursement of salary of employees seconded - The employees to whom the part salary were paid by Serco UK on behalf of the Assessee, have admittedly offered such salary amount as income by filling their Returns of Income in India and duly paid the income tax applicable and ITRs filled by said employees have also been accepted - by treating the salary amount as “FTS” provided, shall jeopardize the rights of Assessee and its employees - AT
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Customs

• Customs Broker License Revoked for Unauthorized Transfer and Failing Client Due Diligence Under Regulations 10(k) and 10(n.

  Case-Laws - AT : Revocation of Customs Broker License - the appellant has transferred his license to Shri Souvik Guha Sarkar to transact the business in appellant’s name. The said act is highly impermissible - Futehr, the appellant has failed to make the appropriate enquiries of their clients prior transacting the business in customhouse station. Hence, the findings confirming the violation of Regulation 10 (k) and 10 (n) are held sustainable. - AT
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• Penalty Deemed Unjust Due to Lack of Intent; Goods Exempt from Duty, Making Punishment Disproportionate.

  Case-Laws - AT : Levy of penalty - there is no mens rea or any premediated thought in non-complying with the statutory requirements, as no duty was actually payable upon import, being exempted goods. Thus, under the circumstances, imposition of penalty on any of the appellants would be unduly harsh and not in proportion to the nature of omission/offence particularly when no mens rea can be imputed on part of any of the parties concerned. - AT
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• Misdeclaration of Imported Goods Leads to Penalty Due to Discrepancy in Declared Values Compared to Exporter's Records.

  Case-Laws - AT : Levy of penalty - The appellant had, undisputedly, mis-declared the quantity of the goods imported in the Bill of Entry dated 9.2.2010. - Further, in respect of four of the past Bills of Entry, the values declared by the exporter before the Chinese authorities was much higher than the values declared in the Bills of Entry by the appellant - Demand with penalty confirmed - AT
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IBC

• Resolution Plan Approval Upheld: Commercial Wisdom of CoC Prevails Over Appellant's Challenges on MSP for Homebuyers.

  Case-Laws - AT : Rejection of the Resolution Plan approved by the Committee of Creditors (CoC) - When the plan is approved with requisite vote, it has to be assumed that the said approval is in the commercial wisdom. More so, fixation of MSP for allotment of flats to homebuyers is a commercial decision. - There are no substance in any of the submissions raised by the Appellant challenging the approval of the Resolution Plan by the CoC - AT
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Central Excise

• Refund Claims Not Time-Barred When No Payment or Credit Occurs Before Application Filing Under Central Excise.

  Case-Laws - AT : Refund claim - relevant date - Period of limitation - In the case of refunds arising as result of finalization of assessment will be the date when either that amount is paid to the appellant or credited to the fund. In the present case neither has been done till date, nay, on the date when the application for the refunds have been filed under Section 11 B. That being so the refund claim cannot have been held as time barred for the reason that the relevant date for counting the period of limitation has not even started - AT
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• Converting Plastic Film to Metalized Dielectric MPP Film Classified as Manufacturing, CENVAT Credit Allowed.

  Case-Laws - AT : CENVAT Credit - process of making electronic capacitor grade metalized dielectric plastic film (MPP film) - The process of making MPP Films, capacitor grade from plain plastic film would amount to manufacturing process and the MPP classifiable under CETH 3920 2090 would be a manufactured good. Once the process is considered as manufacturing process, the credit becomes admissible - AT
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Case Laws:

• GST

• 2023 (11) TMI 295
  Cancellation of part of E-way bill - Intent to evade tax present or not - HELD THAT:- The High Court has remanded the matters to the appellate authority, in order to consider afresh as to whether there was any willful intention on the part of the petitioners to evade payment of duty. Since, the matters have been remanded, it is needless to observe that all contentions on both side are left open to be agitated before the appellate authority. SLP dismissed.

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• 2023 (11) TMI 294
  Claiming benefit of input tax credit when compounding is filed and is accepted - initiation of proceedings under Section 74 of UP GST Act - HELD THAT:- It is not in dispute that the petitioner has opted for compounding which has been accepted by the respondent authorities for a period of 1.10.2017 to 21.3.2019. The disputed purchase as shown by the petitioner from Rohit Coal Trader pertains to May 2018 to June 2018, which falls under the aforesaid period of composition. The petitioner in support of his contention has adduced evidence such as tax invoice, e-way bill, G.R., payment receipts etc. to show that the purchases have been made from the registered dealer. It is also admitted that the registration of Rohit Coal Traders has been cancelled vide order dated 24.10.2019 in other words at the time of transaction in question, the seller i.e. Rohit Coal Traders was registered firm under the G.S.T. Act - On the contrary an observation has been made that the petitioner has failed to bring on record any cogent material to show that Rohit Coal Traders has deposited the tax and therefore proceedings were held to be justified. Under the GST regime all details are available in the portal of GST department. The authorities could have very well verified as to whether after filing of GSTR-1 and GSTR 3 B how much tax has been deposited by the selling dealer i.e. Rohit Coal Traders but the authorities have failed to do so. Thus looking to the said facts, the impugned orders cannot be sustained in the eyes of law. The matter is remanded to the first appellate authority, who shall pass a fresh order in accordance with law, expeditiously, preferably within a period of two months from the date of producing a certified copy of this order, without granting any unnecessary adjournment to the parties - Petition allowed.

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• Income Tax

• 2023 (11) TMI 293
  Deduction u/s 80IC - interest received on a fixed deposit, created pursuant to an order of the court to secure payment of entry tax - HC held [ 2023 (8) TMI 292 - DELHI HIGH COURT] interest accrued on fixed deposits, furnished to secure payment of liability towards entry tax, cannot, by any stretch of imagination, be construed as income derived from eligible business i.e., profit and gains derived by an undertaking or an enterprise which is relatable to manufacturing or production of articles, thus it is not income qua which deduction u/s 80IC can be claimed by the appellant/assessee. HELD THAT:- We are not inclined to interfere with the judgment and order impugned in this petition. The special leave petition is, accordingly, dismissed.

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• 2023 (11) TMI 292
  Penalty u/s 271(1)(c) - Defective notice u/s 274 - non striking off the inaccurate particular of income portion in the notice under section 274 making it defective as per HC 2022 (10) TMI 987 - CALCUTTA HIGH COURT] - HELD THAT:- We are not inclined to interfere in the impugned judgment and order of the High Court. The special leave petition is dismissed.

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• 2023 (11) TMI 291
  Validity of reopening of assessment - Reasons to believe - HELD THAT:- Having regard to the terms of the agreement which has been pointed out by learned ASG to us, we do not think that this is a fit case where the notice under Section 148 of the Income Tax Act should have been issued to the respondent(s) for reopening the assessment. Hence, Special Leave Petition stands dismissed.

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• 2023 (11) TMI 290
  Validity of Settlement Commission proceeding - splitting and fragmenting of unaccounted amounts between the petitioners - scope for dismissing the application based on the report filed u/s 245D(2B) read with Rule 6 of the Income Tax Settlement Commission (Procedure) Rules, 1997 - as submitted that whether the petitioners are indeed to settle their cases eventually or not has to be adjudicated by the first respondent Settlement Commission under Sub-Section 4 of Section 245D (4) of the Income Tax Act, 1961 - petitioner has offered interest under Section 234A only from 22.10.2019 when indeed, the petitioners should have offered interest from 26.11.2018 - HELD THAT:- Petitioners have failed to pay tax on the unaccounted income and are recalcitrant and have shown no remorse after indulging in evasion tax. Cumulatively, these petitioners have offered only 17.79% of the gross receipt for tax before the first respondent Settlement Commission. Thus, it is clear that the petitioners have not made and full and true disclosure of the income before the first respondent, Income tax Settlement Commission . The impugned order records that during the search, meticulous accounts of the daily collection sheet containing the details of names of patients, date of collection, heads of collection and amount collected were seized from the applicant s business premises which indicated receipts received in cash and through cards for the Assessment Years 2012-13 to 2018-19. These collection sheets/folders also contain the details of investment made in immovable properties including unaccounted investment thereon. In these sheets as well as in other documents found during the search, no details of any unaccounted expenditure were found. Application before the first respondent, Settlement Commission is expected to be made in good faith with full true and disclosure. Merely because, a portion is offered without proper disclosure does not mean, the first respondent, Settlement Commission has to continue with the proceedings after it was brought to its knowledge of attempt of the petitioners to still evade tax before the Settlement Commission. The purpose for which Chapter XIX A of Income Tax Act, 1961 has been provided is to allow assesses to settle the dispute with the department by giving an opportunity to a defaulting assessee to make a clean breast of all the past lies and misdeeds by giving an opportunity to pay tax that was not paid earlier together with interest. Once there is a clear finding recorded that there was a failure on the part of the petitioners to make proper declaration as is contemplated Section 245D of the Income Tax Act, 1961, question of the first respondent, Settlement Commission proceeding further cannot be countenanced. Thus, there is no scope for allowing an application to be proceeded where a party refuses to make a correct declaration viz ., true and full disclosure of income before the Settlement Commission.

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• 2023 (11) TMI 289
  TP Adjustment - MAM selection - RPM v/s TNMM - Tribunal rejecting the Transactional Net Margin Method (TNMM) as used by TPO in ascertaining ALP - As per assessee it should be Resale Price Method (RPM) as it is a distributor which did not make any value addition to the goods received by it from its principal - HELD THAT:- Having regard to the findings of fact returned by the Tribunal and the principle of law enunciated by the coordinate bench of this court in Matrix Cellular International Services (P.) Ltd [ 2017 (11) TMI 1655 - DELHI HIGH COURT] held that once the ITAT, on considering the relevant facts as well as the order of the TPO, had concluded that the business of the assessee was merely that of a pure trader, and there was no value addition made before re-selling the particular products (i.e. the SIM cards), its consequent finding that RPM is the Most Appropriate Method, is irreproachable. Decided in favour of the assessee.

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• 2023 (11) TMI 288
  Penalty levied u/s 270A - misreporting of income un/s 270A(8) and 270A(9) - assessee had sold the land along with his brother for the sale consideration over and above amount as per registered sale documents - AO concluded that this unaccounted cash receipts were shared by the assessee and his brother had worked out the LTCG - Tribunal deleted penalty levy - HELD THAT:- As per ITAT income assessed was not greater than the income determined in return processed u/s. 143(1)(a) - As per provisions of section 270A(3)(i)(a) of the Act as there was no difference between the amount of income assessed and amount of income determined u/s. 143(1)(a) of the Act, there was no case of under reporting of income as per provisions of section 270A(2) and (3) of the Act. With regard to misreporting of income as per provisions of section 270A(9), the Tribunal observed that the case of the assessee does not fall in any of the clauses specified at (a to f). Neither any misrepresentation of suppression of facts has occurred nor there was any false entries in the books of accounts as mentioned in various clauses of 270A(9). During the year under consideration search was carried out at the premises of the third party where from on the basis of seized documents the assessee s on-money transactions were found. These transactions were duly offered for taxation by the assessee and his brother in their return of income filed u/s. 139 - Since the return of income was not due as on the date of search carried out on 10.08.2016 and the accounting year was not ended also therefore the books of accounts were not up-dated. Therefore, the assessee s case does not fall under the category of misreporting of income. Tribunal therefore held that the provisions of Section 270A(9) are inapplicable as it is neither the case of misreporting of income nor the case of under reporting of income. No substantial question of law.

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• 2023 (11) TMI 287
  Revision u/s 263 - addition u/s. 68 r.w.s. 115BBE - Tribunal justification in quashing the order u/s. 263 - HELD THAT:- Assessee had submitted an explanation that the repayment of unsecured loan was made from sell proceeds from one of the debtors and therefore adequate inquiry was done and it was not a case of lake of inquiry. In context of applicability of Section 69C it was held by the Tribunal that the section would apply to unsecured expenditure, source of which remains unexplained. Tribunal held that in the assessee s case, repayment of loan does not constitute any expenditure and as the source of such repayment was also explained before the AO as well as the Principal Commissioner of Income Tax, Section 69C could not have invoked. It was also further observed that the receipts had already been taxed in the hands of the assessee and the assessee had filed an appeal against the order which was finally closed under the Vivad se Vishwas Scheme . Accordingly, in our opinion, the Tribunal was right in holding that it was not a case where there was lack of inquiry and therefore there was no ground on which revisionary powers under Section 263 could have been invoked. Decided in favour of assessee.

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• 2023 (11) TMI 286
  Undisclosed income offered for tax during survey - Addition on account of bad debts and unaccounted expenditure towards renovation and repairs and also the unverifiable amount of deduction from customers - HELD THAT:- Tribunal has rightly considered the alternative claim of the assessee to grant depreciation and remanded the matter back to the Assessing Officer to verify such claim which the assessee has already disclosed the unaccounted expenditure towards renovation and repairs by capitalizing the same during the year under consideration. Addition confirmed by the CIT(A) under the head of Miscellaneous Receivables or Suppressed Sales, the Tribunal remanded the matter back to the Assessing Officer as the CIT(A) did not adjudicate the said ground and therefore to verify the claim of the assessee that average profit rate is to be adopted on such Suppressed Sales. The Tribunal also noted that the Departmental Representative was also on agreement for a remand to the Assessing Officer for correct verification. Such findings arrived at by the Tribunal by remanding the matter back to the Assessing Officer, we are of the opinion that no question of law much less substantial question of law arises. Addition of bad debts u/s 36(1) (viii) - As in view of concurrent findings arrived at by the Tribunal with regard to the undisputed facts that the assessee has debited the amount of bad debts in the books of account and considering the provisions of Section 36(1)(vii) r.w.s.32 of the Act which makes it clear that even a part of the income accounted for in the current year also can be claimed as bad debts, we are of the opinion that no question of law much less substantial question of law arises.

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• 2023 (11) TMI 285
  Estimation of income - bogus purchases - CIT(A) estimated the profit derived by the assessee at 7.5% of the total purchase - HELD THAT:- CIT(A) considered the assessee s Gross Profit rate at 9.52% and Net Profit at 2.09% and considering the probable savings in the cost of purchase of goods in grey market by avoiding burden of VAT at 5% and then determined the profit made by the assessee at 7.5% on the purchase from M/s. Chauhan Suppliers. This decision arrived by CIT(A) by following decision in the case of Sandeep Kumar Chandak [ 2019 (10) TMI 1424 - ITAT AHMEDABAD] and Sun Steel [ 2004 (6) TMI 236 - ITAT AHMEDABAD-B] which were later confirmed by the High Court of Gujarat in Sandeep Kumar Chandak [ 2020 (10) TMI 95 - GUJARAT HIGH COURT] . Thus the finding arrived by the Ld. CIT(A) does not require any interference and Revenue could not produce before us any document in support of its claim to sustain the entire addition made by the AO. The Case law relied by Ld. D.R. is clearly distinguishable. Thus no hesitation in confirming the order passed by the Ld. CIT(A). Decided against revenue.

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• 2023 (11) TMI 284
  Addition u/s 69 - unexplained investment made in purchase of plot - Survey action 133A at the premises of Mahalaxmi divulged that they sold plots to various persons [including assessee] accepting on-money - HELD THAT:- As borne out from the assessment order that some other plot purchasers, who had paid on-money to Mahalaxmi during such period as transpired from the impounded documents found during the course of survey, disclosed the payment of such on-money in Income Declaration Scheme, 2016 (IDS). This fact has been recorded on page 9 of the assessment order. There is no loose end in the entire transaction of the assessee having paid on-money, which was received by Mahalaxmi and also admitted for taxation. Authorities below were fully justified in making and confirming the addition u/s 69 on account of such on-money paid in cash to Mahalaxmi during the year under consideration. AR made a without prejudice submission to the effect that the addition, if at all, could have been made in the succeeding year when sale deed was registered. This contention is sans merit because section 69 provides that where the assessee has made investments in the financial year immediately preceding the assessment year and these are not recorded in the books of account and further no/unsatisfactory explanation is offered about the nature and source of investments, etc., the value of investments is deemed to be the income of the assessee of such financial year. In other words, section 69 is attracted in the year of making unrecorded investments and not when connecting transaction gets completed later on. The point of incidence of addition is making of the unrecorded investment. As the assessee and Shri Gitesh Manoharlal Wadhwa paid total on-money of Rs. 37 lakh in the year under consideration for purchase of plot No.14 which was neither recorded in the books of account for the year nor any satisfactory explanation was given, the addition is correctly called for in the year of payment, which is the year under consideration. To sum up, it is held that the authorities below were perfectly justified in making the addition u/s 69 towards on-money paid by the assessee in the year under consideration. Decided against assessee.

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• 2023 (11) TMI 283
  Estimation of income - bogus purchases - estimation of gross profit at 12.5% by CIT(A) - HELD THAT:- It is seen from the assessment order that the assessee after providing different addresses in invoices and ITR s in the case of M/s. Prince Sales Corporation and M/s. Perfect Steel Corporation. Though the assessee requested to issue notices u/s. 133(6) to the additional two addresses, however the A.O. has not issued summons to the parties. Even in case the sellers who failed to furnish reply to the notices issued by the AO, that cannot be a ground to hold that the genuine purchases made by the assessee from them to be treated as bogus purchases. It is seen from the appellate order, the Ld. CIT(A) has correctly considered the above issue in detail and then following judgments of Jurisdictional High Court and Tribunal made an average disallowance of 12.5% on the alleged bogus purchases made by the assessee. This conclusion arrived by the Ld. CIT(A) in our considered view is found to be reasonable, since the average Gross Profit for the three years comes to 10.77%. CIT(A) has exhaustively discussed the matter and decided the appeal on the basis of finding of the Gujarat High Court in the case of CIT Vs. Simit Sheth ( 2013 (10) TMI 1028 - GUJARAT HIGH COURT ) and other case laws. No distinguishable material has been produced before us by the Revenue, thus the factual position remains the same. Thus we are of the considered view that the Ld. CIT(A) has passed the order judiciously and correctly which does not require any interference and the estimation of gross profit at 12.5% is hereby confirmed.

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• 2023 (11) TMI 282
  Addition of corporate services charges paid - assessee paid service charges to its holding company for advisory services on corporate matters being provided by the management and senior executives of the holding company - AO disallowed the claim on the ground that the details of services rendered were not provided - CIT(Appeals) allowed the appeal of the assessee on the ground that this issue was covered in favour of the assessee for earlier assessment year - HELD THAT:- CIT(Appeals) has correctly allowed the appeal of the assessee on this issue for the following reasons: firstly, the assessee has filed comparative chart for assessment year 2003-04 to strengthen its claim that these expenses are charged to all group companies every year and that the basis of charge every is the same; secondly, the assessee has furnished the relevant agreements providing authority for such charge in which it has been clearly mentioned that the basis of charge is the ratio of turnover of each group company and that the costs would be allocated based on such turnover key; thirdly, with respect to direction of the ITAT to give a comparison, the assessee has duly furnished the comparison with assessment year 2003-04, wherein similar payments as for the impugned assessment year were made and therefore, in our considered view Ld. CIT(Appeals) has correctly observed that the directions of ITAT have been met and lastly, it is also fact that this matter is very old pertaining to assessment year 1994-95 and owing to floods at that time, it was not possible for the assessee to produce the complete factual records. Decided in favour of assessee. Addition u/s 40(A) - service charges paid to division of the holding company - According to the AO, these details were not submitted and he therefore made a lump sum addition of Rs. 1 crore, holding that the service charges were unreasonable - second round of appeal before Ld. CIT(Appeals), he allowed the appeal of the assessee - HELD THAT:- CIT(Appeals) has correctly pointed out that the assessing officer has not brought anything on record to show/demonstrate that SCS has charged an unreasonable amount to the assessee for the aforesaid services - assessee has given a comparative basis for similar services charged by SCS to another group company and the said services were charged on the same rate to the assessee as well. Further, there is no basis for the assessing officer to make an ad hoc disallowance of Rs. 1 crore and the same was made on a purely ad hoc basis. In our view, CIT has also taken into consideration the fact that the assessee has been able to demonstrate that the services were charged by SCS to the assessee only by way of reimbursement of costs and no excessive sum was charged to the assessee for the aforesaid services. The assessing officer has not been able to bring anything conclusive to controvert the aforesaid findings made by Ld. CIT(Appeals) in the first round of appeal as well. In the recent case of Technip Energies Italy [ 2023 (3) TMI 204 - ITAT DELHI] as held that AO cannot invoke Sec. 40A(2) without demonstrating excessive unreasonable expenses. Decided in favour of assessee. Unaccounted production and sale of Streptomycin and Tetracycline - assessee could not produce any evidence before the AO to prove the captive consumption as directed by the Hon ble ITAT - CIT(A) deleted the addition - HELD THAT:- Assessee has correctly submitted that the aforesaid details of captive consumption have been duly certified by the auditors of the company and the details thereof were filed before the assessing officer for his consideration. The aforesaid company being a pharmaceutical company, the accounts of the company are subject to audit under the Companies Act, Tax Audit and also there is Cost Audit of the accounts of the company. CIT(Appeals) in the instant facts has given a categorical finding that the assessing officer has confirmed the disallowance on the basis of an incorrect assumption of facts. While allowing the relief to the assessee on this issue, Ld. CIT(Appeals) made a specific observation that the reconciliation of quantities of 2 products was as per Encl 3 to Sch K of the TAR, which was filed along with original return - Decided in favour of assessee. Disallowance being salaries of employees deputed to the assessee by its holding company - assessee submitted that copies of secondment letters were produced on sample basis before the assessing officer for his verification - HELD THAT:- As employees had not been deputed to the assessee company during the impugned year under consideration but the employees had been seconded to the assessee company during the earlier assessment years, following the principles of consistency, disallowance cannot be made for the impugned year under consideration since the employees had not been seconded during this year but had been seconded in the earlier years and they continue to be employed by the assessee during the impugned year under consideration. Also observed that the assessee had furnished copies of secondment letters on sample basis before the assessing officer for his verification. The contents of the aforesaid secondment letters have not been disputed by the assessing officer. Accordingly, assessee has reasonably discharged its onus, wherein copies of secondment letters were furnished before the assessing officer for his verification. Further, the matter being very old pertaining to assessment year 1994-95, it would not be possible for the assessee to produce complete records, especially in the light of the fact that during the impugned year under consideration the records of the assessee were destroyed owing to floods - Decided in favour of asssessee.

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• 2023 (11) TMI 281
  Income taxable in India - TDS u/s 195 - non-deduction of tax at source on payments made to its Non-Resident Telecom Operators ( NTOs ) for provision of bandwidth capacity and for provision of interconnect services - default u/s. 201 - AR submitted that DTAA will prevail over the Income- Tax Act and also submitted that there is No use of process or any use of equipment . Hence, the entire assumption of process royalty / equipment royalty does not arise in the case of the assessee - HELD THAT:- Characterization of payments received by assessee towards interconnectivity utility charges - By insertion of Explanation 5 6, meaning of word Process has been widened. As per these explanations, the word Process need not be secret , and situs of control possession of right, property or information has been rendered to be irrelevant. However, in our opinion, all these changes in the Act, do not affect the definition of Royalty as per DTAA. The word employed in DTAA is use or right to use , in contradistinction to, transfer of all or any rights or use of , in the domestic law. As per Explanation 5 6 , the word process includes and shall be deemed to included, transmission by satellite (including up-linking, amplification, conversion for down-linking of any signal), cable, optic fibre or by any other similar technology, whether or not such process is secret. Payments made by the assessee in lieu of services provides by the assessee cannot fall within the ambit of Royalty u/s 9(1)(vi) Explanation 5 6. We also note that the Explanations 5 and 6 to section 9(1)(vi) are not found in the definition of Royalty under India Netherlands DTAA. The definition of Royalty under the DTAA is much more narrower in its scope and coverage, than the definition of Royalty contained in section 9(1)(vi) r.w. Explanations 2,5 and 6 of the act. On perusal of the agreement between the assessee and the end users placed at pages 228 238 of paper book, it is noted that the installation and operation of sophisticated equipments are with the view to earn income by allowing the users to avail the benefits of such equipments or facility and does not tantamount to granting the use or the right to use the equipment or process so as to be considered as royalty within the definition of royalty as contained in clause 4 of Article 12 of India- Netherlands DTAA. Also in the present facts of the case, at no point of time, any possession or physical custody, control or management over any equipment is received by the end users / customers. It is also noted that the process involved in providing the services to the end users / customers is not secret but a standard commercial process followed by the industry players. Therefore the said process also cannot be classified as a secret process , as is required by the definition of royalty mentioned in clause 4 of Article 12 of India-Netherlands DTAA. Therefore Receipt of IUC charges cannot be taxed as Royalty under Article 12(4) in India of India- Netherlands DTAA. Thus as per case of Vodafone Idea Ltd. [ 2023 (7) TMI 1164 - KARNATAKA HIGH COURT] and the discussions hereinabove, we hold that payments received by assessee towards interconnectivity utility charges from Indian customers / end users cannot be considered as Royalty to be brought to tax in India under section 9(1)(vi) of the Act and also as per DTAA. The payment received by the non-resident assessee amounts to be the business profits of the assessee which is taxable in the resident country and is not taxable in India under Article 12(4) of the DTAA as there is no case of permanent establishment of the assessee that has been made out by the revenue in India. Even Hon ble High Court has in para 25, held that the non-resident service providers do not have any presence in India. Decided in favour of assessee.

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• 2023 (11) TMI 280
  Rectification of mistake - MAM selection in TP Adjustment not noticing the subsequent order - applying Comparable Uncontrolled Price (CUP) and other methods as against the Transactional Net Margin Method (TNMM) - AR submitted that though the Bench took cognizance of the order passed in the first round of litigation, an inadvertent mistake had crept in, in not noticing the subsequent order which was followed in assessee s own cases for the assessment years HELD THAT:- There is no denial of the fact that by order ZUARI CEMENT LIMITED [ 2015 (5) TMI 861 - ITAT HYDERABAD] the matter was remanded to the file of TPO to re-consider the entire matter afresh by determining the MAM and then to analyse the transaction under the provisions of the transfer pricing; and when the AO/TPO repeated the same action taken earlier and the matter travelled again to the Tribunal, in the second round of litigation, the Bench ZUARI CEMENT LIMITED [ 2021 (10) TMI 605 - ITAT HYDERABAD] by order accepted the aggregation as well as TNMM and left it open for the learned TPO to finalise the consequential computation as per law. Having heard the counsel on either side, we are satisfied that a mistake has crept in in not noticing the subsequent order and not noticing the view taken by a Co-ordinate Bench of the Tribunal in assessee s own case for an earlier assessment year, constitutes mistake apparent on the face of record. Miscellaneous Applications are allowed accordingly.

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• 2023 (11) TMI 279
  Determination of transfer price - deduction of excise duty - international transactions of sale of goods with the Associated Enterprises - HELD THAT:- We note that the excise duty is not to be deducted from the export turnover for determining the Arm s Length Price of the goods supplied by the assessee to its AEs abroad. As submitted before us the issue needs examination at the end of the AO and accordingly, we restore this issue to the file of the AO with the direction to re-adjudicate it - Ground allowed for statistical purposes. TP Adjustment of international transactions of payment of royalty to the AEs - HELD THAT:- We note that the issue is squarely covered by the decision of the Coordinate Benches wherein the issue of transfer pricing has been decided in favour of the assessee by deleting the adjustment to transfer price of the assessee with the AEs abroad. We have specifically perused the decision of the Coordinate Bench [ 2018 (6) TMI 1843 - ITAT KOLKATA] and find that the transfer pricing adjustment on account of royalty payment has been deleted. Accordingly, we direct the AO to delete the addition. Disallowance of leave encashment u/s 43B - assessee submitted before us that out of the said amount the assessee has paid on account of provisions for leave encashment on accrual basis following the decision of Exide Industries Ltd. Vs. Union of India [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT] - HELD THAT:- We note that during the year the assessee has made certain payments in respect of leave encashment which apparently has to be allowed to the assessee on the basis of actual payment during the year. Accordingly, we restore this issue to the file of the AO to verify this amount. Needless to say that the amount paid against the provisions for leave encashment has to be allowed as deduction. Hence, ground is allowed for statistical purposes. Disallowance of club expenses made for the welfare of the employers u/s 40A(9) - HELD THAT:- The issue is squarely covered by the decision in assessee s own case [ 2018 (9) TMI 2130 - ITAT KOLKATA] for AY 2013-14 and [ 2018 (6) TMI 1843 - ITAT KOLKATA] for AY 2010-11 2011-12 wherein held that the provisions of Section 40A(9) of the Act are not attracted where the claim is made u/s 37(1) of the Act pertaining to the club expenses. As these are the expenses which are wholly and exclusively made for the purpose of business of the assessee, we direct the AO to allow the deduction in respect of club expenses. Decided in favour of assessee. Disallowance of commission expenditure u/s 69C - As submitted that though the issue has been decided in favour of the assessee by the DRP by giving a specific direction - HELD THAT:- As DRP has given specific direction to the AO however, the same has not been given effect to by the AO, we direct the AO to give effect to and decide the same in terms of the DRP direction. Ground allowed for statistical purposes. Disallowance of interest income - difference in interest income as per books of accounts and as per Form 26AS - HELD THAT:- We are of the view that the issue needs to be examined at the level of the AO and accordingly, we restore the issue to the file of the AO with the direction to decide the same after providing sufficient opportunity to the assessee of being heard. Therefore, this ground is allowed for statistical purposes. Wrong calculation done by the AO of business loss available for set off - HELD THAT:- We are of the view that the issue needs to be examined at the level of the AO and the AO is directed to decide the same and compute the business loss available for set off correctly. Therefore, ground raised by the assessee is allowed for statistical purposes.

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• 2023 (11) TMI 278
  Computation of Income from business or profession - taxable income for computing the total demand payable - overstating the total income of the assessee in the computation sheet forming part of the final assessment order - HELD THAT:- We find that pursuant to the DRP s direction the total transfer pricing adjustment was reduced to Rs. 12,01,75,576 from the original adjustment of Rs. 12,42,61,908, accordingly the total taxable income as proposed by the AO vide draft assessment order of Rs 218,87,79,753, was reduced to Rs. 218,46,93,421, vide final assessment order. Since while computing the total demand payable by the assessee, the AO has considered the total taxable income of 218,87,79,755, therefore, we direct the AO to consider the correct amount of total taxable income for computing the total demand payable. Accordingly, ground no.2, raised in assessee s appeal is allowed for statistical purposes. TP adjustment in relation to the provision of IT support and related services (ITeS) segment - Comparable selection - TPO objected to the selection of filter of turnover less than Rs. 1 crore and introduced three new filters - HELD THAT:- Comviva Technologies Ltd company is earning income from various business activities including income from the sale of products/license fees without any operating segment which is functionally comparable to the assessee. Accordingly, we direct the TPO/AO to exclude Comviva Technologies Ltd while benchmarking the international transaction pertaining to Provision of IT support and related services . XS Cad India Private Limited company treats its complete operations as a single segment, i.e. Information Technology Services . As noted above, the assessee has made relevant segment reporting in the notes to its financial statements. Since this company is earning revenue from various streams, therefore, in the absence of relevant segmental information, this company cannot be said to be functionally comparable to the assessee. Accordingly, we direct the TPO/AO to exclude it. Nihilent Ltd. company is engaged in the development of applications across a wide range of hardware and software platforms, develop solutions to integrate various applications across platforms, provide migration, re-engineering, and software maintenance services and as services rendered by the assessee under the ITeS segment are primarily in the nature of database administration and management, operating systems, and network administration, therefore, Nihilent Ltd cannot be said to be functionally comparable to the assessee. Accordingly, we direct the TPO/AO to exclude it. Infobeans Technologies Ltd. - absence of relevant segmental information, this company cannot be held to be functionally comparable to the assessee. Cygnet Infotech Pvt. Ltd. company has determined its business segment as Software Development , which is the only reportable segment and there are no other primary reportable segments. The services rendered by the assessee are in the nature of ITeS and the same cannot be compared with software development. Therefore, we are of the view that in the absence of relevant segmental information, this company cannot be held to be functionally comparable to the assessee. TP adjustment in relation to the provision of facilitation support services (Marketing Support Services) - Comparable selection - HELD THAT:- Axience Consulting Private Ltd. company is in market research and public opinion polling, while the assessee is engaged in providing Marketing Support Services to its associated enterprises. Therefore, we find no infirmity in orders passed by the AO/TPO/learned DRP in treating Axience Consulting Private Ltd to be functionally similar to the assessee. Further, since 100% of the turnover of Axience Consulting Private Ltd is only from one stream, i.e. market research and public opinion polling, therefore we find no merit in the submission of the assessee that no segmental information pertaining to various services rendered by this company is available. Accordingly, we uphold the inclusion of Axience Consulting Private Ltd for benchmarking the international transaction of Provision of Facilitation Support Services . MCI Management India Private Ltd. company is also engaged in marketing support services, we are of the view that it is functionally comparable to the assessee. TP Adjustment in relation to the provision of engineering and related services segment - as per TPO aggregation approach followed by the assessee is flawed - SCN asking why the transactions of Provision of Engineering and related services be benchmarked separately for FCEC, EEC, and EIC divisions? - HELD THAT:- As it is undisputed that this issue is recurring in nature and the ground raised is similar to that of earlier years. Further, the learned DR could not show us any material to deviate from the conclusion so reached by the coordinate bench in the preceding year. Thus respectfully following the judicial precedent in assessee s own case ITA No.6098 and 531/Mum./2018 [ 2019 (6) TMI 1444 - ITAT MUMBAI] we direct the TPO/AO to benchmark the international transaction pertaining to Provision of Engineering and related services by adopting an aggregate approach for all three divisions. As a result, ground no. 5 raised in assessee s appeal is allowed. Disallowance of expenditure u/s 14A r.w.r. 8D - HELD THAT:- As decided in Cheminvest Ltd. v. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] held that section 14A will not apply if no exempt income is received or receivable during the relevant previous year. Thus disallowance of expenditure under section 14A read with Rule 8D is not sustainable. Also decided in M/s Era infrastructure (India) Ltd, [ 2022 (7) TMI 1093 - DELHI HIGH COURT] held that the amendment by Finance Act, 2022 in section 14A is prospective and will apply in relation to the assessment year 2022 23 and subsequent assessment years. Thus, even in view of the aforesaid amendment also, the disallowance under section 14A read with Rule 8D is not permissible in the present case. Decided in favour of assessee. Delay in payment of Provident Fund (P.F) u/s 36(1)(va) r/w section 2(24) - HELD THAT:- This issue is covered against the assessee by the decision of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] as held that payment towards employee s contribution to P.F. / E.S.I.C. after the due date prescribed under the relevant statute is not allowable as a deduction under section 36(1)(va) - Accordingly, ground raised in assessee s appeal is dismissed. Incorrect computation of interest u/s 234C - interest u/s 234C should be computed on the returned income or assessed income ? - HELD THAT:- As per provisions of section 234C interest is levied either on failure to pay the advance tax by the assessee or on shortfall in payment of advance tax as compared to tax due on returned income. Thus, it is pertinent to note that section 234C refers to the term returned income in comparison to section 234B which refers to the term assessed tax for imposing interest. Accordingly, we direct the AO to compute the interest under section 234C of the Act on the returned income of the assessee.

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• 2023 (11) TMI 277
  Validity of reassessment proceedings - jurisdiction of AO to frame assessment u/s 143(3) r.w.s.147 - reasons to believe - HELD THAT:- As decided in Rajesh Jhaveri Stock Brokers Private Limited [ 2007 (5) TMI 197 - SUPREME COURT] where intimation is issued to an assessee u/s143(1) of the Act on processing of the return of income, the failure of the AO to take steps u/s 143(3) of the Act would not render the AO powerless as the AO would be free to initiate proceedings u/s 147/148 of the Act provided the ingredients of Section 147 of the Act are fulfilled. What is required to be considered is whether the Assessing Officer had the relevant material on which a reasonable person could have formed requisite belief that income has escaped assessment. Whether the materials would conclusively prove the escapement of income and/or whether the material is sufficient or not does not require consideration at that stage. In our view, in the facts and circumstances of the present case, the Assessing Officer had sufficient tangible material to form belief that income has escaped assessment for the Assessment Year 2009-10. Further, in our view, the provisions contained in Clause (b) of Explanation 2 to Section 147 of the Act would also get attracted in the case of the Appellant and income would be deemed to have escaped assessment. Thus, we hold that the order passed by CIT(A) on this issue does not suffer from any infirmity. Addition of capital gains - As per AO Appellant had not offered to tax capital gains income arising from transfer of the Property - whether the transactions undertaken between the Appellant and Purchaser resulted in transfer of the Property from the Appellant to Purchaser in terms of Section 2(47)? - HELD THAT:- On perusal of Clause 4(b) of the Agreement, it can be seen that the Appellant continued to in the physical possession of the Property till the Consent Terms were recorded and granted only license and right of entry to the Purchasers by way of the aforesaid Consent Terms. Further, on perusal of Clause 11 of the Consent Terms it emerges that it also dealt with handing over of only the constructive possession of limited area occupied by the tenants/occupants and a small portion of the area of the building. In our view, Clause 11 of the Consent Terms when read with Clause 4(b) of the Agreement for Sale, supports the contention of the Appellant that the Purchaser was not put in possession of the Property. Nothing on record to support the contention of the Revenue that the Purchaser had possession of the Property. The provisions of Section 2(47)(v) of the Act defines transfer in relation to capital assets to include any transaction involving the allowing of possession of any immovable property to be taken or retained in part performance of the contract of the nature referred to in Section 53A of the TPA. Since in the facts of the present case we have concluded that the possession of the Property was not taken by the Purchaser, the provisions of Section 2(47)(v) of the Act are not attracted. It is admitted position that the Agreement for Sale, dated 01/04/2008 is not a registered document. Further, nothing has been brought on record by the Assessing Officer to show that the Purchaser was willing to perform his part of contract. The Consent Terms were agreed upon only after the Appellant filed suit for seeking specific performance of the Agreement for Sale. Therefore, we hold that the transaction under consideration did not attract provisions of Section 53A of the TPA. We also do not find any merit in the contention advanced on behalf of the Revenue that there was relinquishment of any right by the Appellant in the Property. There being no transfer in terms of Section 2(47)(v) of the Act, the question of any capital gains arising in the hands of the Appellant does not arise. Accordingly, addition on account of Long Term Capital Gains is deleted. Advance received and retained in relation to transaction of sale of Property - While computing capital gains the Assessing Officer had taken into consideration the amount of INR 5 Crores paid by the Purchaser to the Appellant which has, admittedly, being retained by the Appellant - Agreement to Sale has not resulted in transfer of the capital assets - HELD THAT:- There is no transfer of the Property during the relevant previous year and therefore, the amount cannot be brought to tax as income during the relevant previous year. The receipt of such an advance received and retained in relation to transaction of sale of Property has been brought to tax as Income from Other Sources by way of an amendment to Section 56(2)(ix) of the Act made vide Finance (No. 2) Act, 2014 (effective from 01/04/2015). Further, the definition of income under section 2(24) of the Act was also amended by the said Finance (No. 2) Act, 2014 (w.e.f. 01/04/2015) to include any sum of money referred to in Clause 56(2)(ix) of the Act. Therefore, prior to 01/04/2015, the amount of INR 51,00,000/- received by the Appellant for transfer of capital asset and retained by the Appellant could not have been brought to tax as income. However, as per Section 51 of the Act, the aforesaid amount would have to be reduced from the cost for which the Property was acquired while computing the cost of acquisition of the Property during the previous year in which provisions of Section 51 of the Act are attracted. Advance in relation to the sale of the Varsova Property - Assessee argued that relevant agreement was not duly signed by all the parties and the full amount of consideration was not received. Therefore, the transaction could not be completed and amount represented refundable advance and therefore, was not liable to tax as income in the hands of the Appellant - AO was not convinced as he concluded that even after expiry of more than four years the amount was still standing as advance received and was no longer refundable as the recovery has become time barred - HELD THAT:- Since amount has been lying with the Appellant; there is no material on record to show that steps for recovery by the other party; and in the Balance Sheets also the Appellant does not admit that such amount as payable/refundable to any specific party as the aforesaid amount has been reflected against the name of the property (i.e. Varsova ). Nothing prevented the Appellant to refund the amount over these years. Therefore, we concur with the authorities below that the amount has been received and retained by the Appellant. Though the aforesaid amount is not liable to tax in income in the hands of the Appellant during the relevant previous year, however, the aforesaid amount would have to be reduced from the cost for which the Varsova Property was acquired while computing the cost of acquisition of the Property during the previous year in which provisions of Section 51 of the Act are attracted.

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• 2023 (11) TMI 276
  Benefit of exemption u/s 10(37) denied - gains arising on account of acquisition of agricultural land by the Central Government - adjustments of treating the compensation received for acquisition of land as taxable income - as per assessee award of the land compensation was received under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 RFCTLARR Act ), thus exempt HELD THAT:- There is no private negotiation on the part of the assessee and it is purely a case where the rural agricultural land held by the assessee has been acquired by the central government and the compensation to the assessee has been given under the RFCTLAAR Act. Now going through Section 96 of the RFCTLAAR Act, the same provides exemption from income tax, stamp duty and fees on any award or agreement, made except those covered u/s 46 of the RFCTLAAR Act (which we have already held to be not applicable on the assessee). Now after dealing with Section 96 of the RFCTLAAR Act, and going to the CBDT circular referred supra, we notice that no distinction has been made between the compensation received for compulsory acquisition of agricultural land and non-agricultural land in the matter of providing exemption from income tax under the RFCTLAAR Act, the exemption provided u/s 96 of the Act is wider in scope than the tax exemption provided in the existing provisions of the Income Tax Act. This clearly indicates that since the assessee company has received compensation under the RFCTLAAR Act and the case of the assessee does not fall under section 46 of the RFCTLAAR Act, no income tax is leviable on the award received on the compulsory acquisition of agricultural land. As respectfully following the decision of M/s. Ganga Developers [ 2022 (10) TMI 599 - ITAT MUMBAI] and under the given facts and circumstances of the case are inclined to hold that the alleged sum of compensation received by the assessee is exempt from Income tax. Decided in favour of assessee.

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• 2023 (11) TMI 275
  TP Adjustment - ALP of the International transactions pertaining to the provisions of ITES - comparable selection - HELD THAT:- TCS and eClerx are not comparable with the Assessee in any mode such as Revenue Turnover, Fixed Assets, Brand Value, Brand Contribution, Risk, Nature of Services, Related Party Transaction etc., hence for the just decision of case and for the ends of justice, we are inclined to direct the Ld. AO, to exclude TCS and eClerx from comparables companies and determine the ALP accordingly, hence directed accordingly. TDS u/s 192 or 195 - Disallowance u/s 40(a)(i) - non deduction of TDS on reimbursement of salary of employees seconded - HELD THAT:- The meaning assigned to a particular word in a particular statute cannot be imported to a word used in a different statute. Taxation depends upon the language of the charging section and what is brought to tax within the four corners of the charging section. Therefore, one should be careful and cautious when applying the ratio of judgments relating to one tax enactment as a precedent in a case relating to another tax enactment. This rule of caution is important and should not be overlooked, more so when the language of the enactment and the object and purpose of the enactment are different. It is also well- settled that ratio decidendi of a case from one enactment, cannot be applied to an altogether different legislation. From the facts and circumstances as demonstrated by the parties, the observations made by Ld. DRP and the points as summarized in the said charts and on examination by us independently, we are of the considered view that the facts and issues involved in the cases of Centrica and Northern Operating Systems [ 2022 (5) TMI 967 - SUPREME COURT] were altogether different and distinct from the facts and issues involved in the Assessee s case, as the Hon ble Apex Court, in those cases dealt with different facts, issues and Acts and therefore dictum laid down in those case, is not applicable to the instant case. We also observe that the CBDT, vide its Circular No. 720 dated 30-08-1995(PB-703) has clarified that payment of any sum, shall be liable for deduction of tax, only under one section and therefore are in concurrence with the Assessee to the effects that as the Assessee deducted TDS u/s 192 on such expenses debited as salaries paid to the ex-patriate employees and therefore in view of the above Circular No. 720, not liable to deduct the TDS under any other section. The employees to whom the part salary were paid by Serco UK on behalf of the Assessee, have admittedly offered such salary amount as income by filling their Returns of Income in India and duly paid the income tax applicable and ITRs filled by said employees have also been accepted and therefore by treating the salary amount as FTS provided, shall jeopardize the rights of Assessee and its employees and Serco as well and also amount to double taxation. Hence we are inclined to hold that the Assessee has reimbursed the salaries amount paid to its employees seconded through Serco UK and not the Fees for any Technical Service (FTS) and therefore was not liable to deduct the TDS u/s 195 of the Act and thus in our considered view, correctly deducted the TDS u/s 192 of the Act and therefore no addition/disallowance is warranted. Thus delete the addition as made on account of disallowance under section 40(a)(i) of the Act, for non- deduction of TDS u/s 195 Assessee appeal allowed.

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• Customs

• 2023 (11) TMI 274
  Maintainability of appeal - principle of low tax effect - Valuation of imported goods - white poppy seeds 99% purity - Tribunal has discarded the valuation and demand on the basis of Public Ledger price - HELD THAT:- These Civil Appeals are dismissed on account of the principle of low tax effect.

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• 2023 (11) TMI 273
  Seeking grant of regular bail - recovery of contraband item - Heroin - narcotic substance - proper sampling procedure or not - it was held by Delhi High Court that it is premature at this stage to say that the samples drawn are not true representative samples of the contraband seized. In the present case, at the time of examination of case property, the learned Special Judge can satisfy himself with regard to the correctness of the procedure followed. HELD THAT:- The Special Leave Petition is dismissed.

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• 2023 (11) TMI 272
  Maintainability of appeal - low tax effect - Classification of Acrylic fiber vis-a-vis soft waste - Order of Commissioner (appeals) confirmed by the tribunal - HELD THAT:- The appeal is dismissed on account of low tax effect.

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• 2023 (11) TMI 271
  Provisional Attachment of bank accounts of the Petitioners - legality of letter dated 19th October 2023, in terms of Section 110(5) of the Customs Act, 1962 or not. Petitioner submitted that the letter addressed to the bankers were not communicated to the Petitioners and furthermore the said letter cannot be termed as an order under Section 110(5) of the Customs Act, 1962. HELD THAT:- The letter dated 19th October 2023 can be construed as an order for the purpose of Section 110(5) of the Customs Act, 1962. The total purchase is from the three parties referred to herein-above by the Petitioners aggregates to Rs. 22 crore and the duty calculated at 10% on the said amount would be Rs. 2 crore, assuming the Respondents are correct in their contentions. At the same time, the Petitioners have attended the summons and they are cooperating with the investigation. The Respondents also need to be protected in case of any demand arising on account of the investigation. The Petitioners business should also not to be affected by the attachment of the bank account and at the same time, the interest of the revenue should also be protected, therefore, looking at the facts of the present case and to protect the revenue, following order can be passed to meet the ends of the justice. The Petitioners to keep a sum of Rs. 1.50 crore as a fixed deposit and the said fixed deposit and a lien would be marked in favour of the revenue with respect to the said fixed deposit of Rs. 1.50 crore - Petitioners would execute bond to protect the revenue from liability arising out of the any order-in-original to be passed - petition disposed off.

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• 2023 (11) TMI 270
  Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - mastermind of the impugned offence of availing undue draw-back by means of fraudulent export - HELD THAT:- With the apparent and corroboratively admitted facts alongwith the absence of the proprietor of the present appellant Shri Ram Pratap, there are no reason to differ from the said findings of the original adjudicating authority that the appellant has transferred his license to Shri Souvik Guha Sarkar to transact the business in appellant s name. The said act is highly impermissible in terms of Regulation 1(4) of CBLR, 2018. In the light of absence of appellant to bring evidence to falsify the evidence brought against him or to cross-examine the witnesses who had deposed about using his license and authority to facilitate a fraudulent export transaction, the findings arrived at by the adjudicating authority cannot be faulted. Violation of Regulation 10 (a) of CBLR - HELD THAT:- Apparently no authorization letter in favour of the appellant from M/s. Linwood Sales could be produced on record. Hence, there are no infirmity when violation of Regulation 10 (a) of CBLR has been confirmed against the appellant. Violation of Regulation 10 (b) of CBLR - HELD THAT:- The G card holder of the custom broker has admitted that he was signing the blank papers required to transact the business in customhouse and was handing over the same to M/s. Guha Sarkar. These observations since have not been refuted by the appellant who rather opted to remain absent are sufficient to confirm the violation of Regulation 10 (b) of CBLR of 2018 by the appellant. Violation of Regulation 10 (d) of CBLR of 2018 - HELD THAT:- Since the custom broker is responsible for all acts and means of his employees during their employment as per Regulation 13 (12) of CBLR of 2018, it was mandatory for the appellant to advice the exporter to comply with the provisions of the Customs Act, else to have brought to the notice of the Dy. Commissioner Customs about the non-compliance. But neither the appellant nor his G card holder has ever brought the impugned fraud to the notice of the competent authorities - there are no reason to differ from the findings arrived at against the appellant. Violation of Regulation 10 (k) and 10 (n) of CBLR of 2018 - HELD THAT:- The address as was declared as the address of Directors of M/s. Linwood Sales pvt Ltd in the IEC details was found to be the residential address of Directors/Proprietors of other Companies/ Firms. Though it was noticed that an account was opened in the name of M/s. Linwood Sales Pvt. Ltd in February, 2015 but the Directors shown were Shri Krishan Chandra Dey and Shri Dayal Singh. However, the later got substituted by Shri Pradeep Singh alias Anil Singh in August, 2017. The Articles of association of the said company were also found to be forged. No evidence could be brought on record to falsify these findings. In the circumstances, there are no reason to differ from the findings that the appellant has failed to make the appropriate enquiries of their clients prior transacting the business in customhouse station. Hence, the findings confirming the violation of Regulation 10 (k) and 10 (n) are held sustainable. There are no reason to differ with the decision under challenge revoking the licence of the appellant which was otherwise valid up to 05.09.2023 alongwith forfeitures of the security deposit - appeal dismissed.

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• 2023 (11) TMI 269
  Levy of penalty - Confiscation of goods - item classifiable under tariff heading 89.01 of Custom Tariff Act 1975 and where no duty is involved - other requisite permissions/approvals/intimation for post import activity were all in place - HELD THAT:- For the unintended omission on the part of the Steamer Agent, the tug Century Star-1 cannot be confiscated under Section 115(2) of the Customs Act, in as much as nothing has been brought on record to implicate the appellant or his agent or the person in-charge of any prior knowledge or connivance with regard to non-filing of the requisite documents by the steamer agent. For the reason, the confiscation of tug Century Star-1, cannot be upheld and is liable to be set aside. Moreover, there is no finding in the order under appeal, that the Captain of tug Century Star-1, or the person in-charge was associated with the alleged illegal import of cruise vessel Pandaw-IV. Further, there is no finding recorded in the impugned order so as to implicate the tug Century Star-1 as well as M/s. Century Shipping Ltd. of any wrongdoing in law with regard to the lapse of non-filing of IGM for vessel Pandaw-IV. Moreover, there is nothing to even remotely connect them with any omission, aiding or abetting or to impute any previous knowledge on their part hence. Under the circumstances no case can be made out for imposition of penal liability under Section 112(a)/112(b) of the Customs Act on the appellants. Given the fact, that all approvals and permission for promoting inland river tourism with the help of cruise vessel Pandaw-IV were duly applied for and obtained from all concerned government agencies, as well the Kolkata Port Trust, and presented to the authorities, to impute the charge of smuggling for non-compliance of IGM formalities, at best can be merely theoretical. It is evident that there is no mens rea or any premediated thought in non-complying with the statutory requirements, as no duty was actually payable upon import, being exempted goods. Thus, under the circumstances, imposition of penalty on any of the appellants would be unduly harsh and not in proportion to the nature of omission/offence particularly when no mens rea can be imputed on part of any of the parties concerned. It is settled law that to subject the steamer agent to imposition of penalty, it has to be demonstrated that he was acting as the agent of the owner vehicle and unless so established no penalty can be imposed thereon. It was well-settled that in the matter of imposition of redemption fine and/or penalty, mens rea and/or conduct and/or attendent extenuating circumstances are material and relevant. Imposition of fine, in effect, amounted to awarding a punishment to the person held liable to pay the same and a person can be held liable to punishment only if he is found to be responsible for some act of omission or commission with reference to the law and the goods in question. It was emphatically held by the Hon ble High Court that to impose or inflict punishment on a person who is not guilty is against all canons of natural justice and fairplay - there are no merit in the order passed by the lower authority which is liable to be set aside. Appeal allowed.

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• 2023 (11) TMI 268
  Undervaluation - rejection of declared value on the basis of such inadmissible documents - Whether the Export Declarations received from China are genuine documents to be read into evidence? - HELD THAT:- Nothing has been produced by appellant to Show that these documents were incorrect or that the declarations made before the Chinese Authorities were different. The mode of procuring the documents during investigation and the absence of any other Export Declarations with the appellants is therefore sufficient for us to hold that the appellant has failed to rebut the presumption of correctness attached to these documents in terms of section 139 of the Customs Act. Appellant has not produced any other cogent document to show that price as was declared to the Chinese Customs was different from the price which is mentioned in the export declaration obtained by the department from China through Consulate General of India The Export Declarations as received from China are, therefore, admissible in the evidence - there appears no doubt about the authenticity of documents as these were obtained by DRI through the Government channel and were obtained from the concerned Department of the exporting country. Whether appellant mis-declared the goods imported under the Bills of Entry? - HELD THAT:- The appellant had admitted the presence of five different rolls of Reflecting Sheets of different series TM 18 100 to have been sent by the exporter as samples, but still had not shown the same in the Bills of entry. This admission corroborates the Department s stand that the appellant despite having knowledge of the content of his consignment and the correct/export value of the goods in the said consignment, has failed to declare the same - vide letter dated 25.02.2010 the Chinese exporter has certified that appellant is their Customer for years for reflective sheets under Sablite brand. This document confirms the alleged mis-declaration as the said brand has not been declared in Bill of Entry. Though the price in said certificate is mentioned to be @ USD 0.48 per Sq. Mtr. but simultaneously the exporter has rescued itself from any responsibility due to any problem with reference to the grade ordered. The defence taken by appellant that Chinese declarations are merely the photocopies is also not acceptable - appellant mis-declared the goods while importing them - appellant mis-declared the goods while importing them. This issue also stands decided in favour of the Revenue. Whether in the Bills of Entry the goods were undervalued and if so, whether the re-determination of the value and demand of differential duty and the confiscation of the goods imported under the Bill of Entry dated 9.2.2010 and the redemption fine and the penalties imposed can be sustained? - HELD THAT:- If the transaction value is rejected under Rule 12, then it must be determined sequentially under Rules 4 to 9. Rule 4 provides for the valuation to be done on the basis of identical goods. Rule 5 provides for the valuation to be done on the basis of the value of similar goods. Rule 6 states if Rules 4 and 5 cannot determine the value then they must be done as per Rule 7 and thereafter Rule 8 but this sequence can be reversed at the option of the importer - Thus, if the officer has reason to doubt the truth and accuracy of the transaction value, he can call for information including documents and evidence. If the information and evidence is presented and after examining it or if no information or evidence as called for is presented, if the proper office has reasonable belief then it shall be deemed that the value cannot be determined as per Rule 3 (i.e., based on transaction value with additions, if necessary). The grounds on which the proper officer may raise doubts about the truth and accuracy of the transaction value have been illustrated in explanation 1 (iii) to Rule 12. The Commissioner confiscated goods imported under the Bill of Entry dated 9.2.2010 which were seized and provisionally released on execution of a bond under section 111(m) but she refrained from confiscating the goods imported under the past Bills of Entry. Since the undisputed fact is that the goods imported in the Bill of Entry were not fully declared and five additional rolls were imported but not declared and also since we found that the value declared in this Bill of Entry was correctly rejected under Rules 12 and re-determined under Rule 4, we find that there was mis-declaration of the goods both in terms of value and quantity and the confiscation under section 111(m) must be upheld. The redemption fine of Rs. 5,00,000/- imposed under section 125 on the goods valued at Rs.64, 86,108/- is very fair and reasonable and calls for no interference. The appellant had, undisputedly, mis-declared the quantity of the goods imported in the Bill of Entry dated 9.2.2010. Shri Varinder Singh admitted in his statement that he had not declared five rolls of a different type which were also imported. Further, in respect of four of the past Bills of Entry, the values declared by the exporter before the Chinese authorities was much higher than the values declared in the Bills of Entry by the appellant - the appellant was liable to penalty under section 114AA and the penalty of Rs. 10,00,000/- was just and fair in the factual matrix of this case. The findings of the adjudicating authority below agreed upon - appeal dismissed.

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• Insolvency & Bankruptcy

• 2023 (11) TMI 267
  Doctrine of promissory estoppel - Resolution Plan, which is submitted by Resolution Applicant and approved by the CoC in its commercial wisdom - RP has admitted its claim of 10 flats - HELD THAT:- Acceptance or admission of the claim of a Financial Creditor including homebuyers is one aspect of the scheme under the IBC. Subsequent steps in the IBC including the preparation of Resolution Plan are based on the list of creditors, admitted claims of the creditors etc. as per the scheme of the IBC, but the principle of promissory estoppel cannot be pressed against the Resolution Applicant, who submits Resolution Plan on the basis of relying on the Information Memorandum, the list of creditors and other aspect of the matter. The Resolution Applicant has not extended any promise to the Financial Creditors of the Corporate Debtor that the claim submitted by Financial Creditor or any other creditor shall be accepted in toto. The mandatory contents of the Resolution Plan are laid down in the CIRP Regulations, 2016. If a Resolution Plan is compliant with the provision of Section 30, sub-section (2) of the IBC and the provisions of the Regulations, 2016, the Plan cannot be faulted on the ground of the promissory estoppel, which the Appellant is pressing against the Resolution Professional, who has admitted the claim. The submission of the Appellant based on the doctrine of promissory estoppel cannot be pressed into service in reference to the Resolution Plan, which has been submitted by a Resolution Applicant and approved by the CoC in its commercial wisdom. The Adjudicating Authority did not commit any error in rejecting the objections filed by the Appellant to the Resolution Plan. There is no merit in the Appeal. The Appeal is dismissed.

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• 2023 (11) TMI 266
  Rejection of the Resolution Plan approved by the Committee of Creditors (CoC) - HELD THAT:- The clauses contained in Resolution Plan referred only empower the Resolution Applicant/ Corporate Debtor to alter the layout and the building plan including the height, location and common area. It goes without saying that the said alteration and modification has to be taken after obtaining necessary approval from the Competent Authority which fact is clearly mentioned in Clause 8.20. The clauses cannot be read to mean that the Resolution Plan empowers the Resolution Applicant to alter the layout and modifying the building plan on its own. No exception can be taken to the said clauses. The approval of the CoC of the Resolution Plan cannot be faulted on the ground that MSP has been fixed @ Rs.33,000/- per sq. ft. which is different from the amount at the rate of Rs.13,500/- to Rs.21,000/- per sq. ft. which was initially promised by the Corporate Debtor. The clause in the Resolution Plan effectively modify all earlier contract between the parties and under the Scheme of the IBC, it is fully permissible to provide for new arrangement and clauses for revival of the Corporate Debtor which is the object of the IBC. The submission of the Appellant is that CoC has not exercised its commercial wisdom and has not looked into the relevant cost for construction and fixation of the MSP of Rs.33,000 per sq. ft. When the plan is approved with requisite vote, it has to be assumed that the said approval is in the commercial wisdom. More so, fixation of MSP for allotment of flats to homebuyers is a commercial decision. Further, escalation for prices of allotment of flats can very well be undertaken to revive the Corporate Debtor and Appellant cannot insist that the Resolution Applicant should also make the allotment of flats on the same price on which the Corporate Debtor has promised to make. There are no substance in any of the submissions raised by the Appellant challenging the approval of the Resolution Plan by the CoC - appeal dismissed.

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• 2023 (11) TMI 265
  Principles of natural justice - CIRP - Corporate debtor in liquidation - Appellant is situated in the property of Corporate debtor - mis-appreciation of the facts by the Adjudicating Authority in concluding that the Appellant was actually served and did not choose to appear - HELD THAT:- The entire case of the Appellant, set up in the appeal is that the notice of the application I.A. No. 836 of 2021 should have been served at the registered office address instead of branch address. The Appellant has not denied the fact that the reply to the notice dated 26.04.2021 served by the Liquidator at the branch address was given by the branch of the Appellant. Meaning thereby, the Appellant knew about the proceedings initiated by the Liquidator which was triggered with the issuance of demand notice. Otherwise also from the perusal of the evidence on record, it is clear that service of the notice at the branch office was effected, therefore, it does not lie in the mouth of the Appellant to raise an issue that service was not effected at the registered office and in this regard it cannot take advantage of the averments made in the lease deed about the service of notice at the address given in the lease deed when it had been reacting to the notices, issued to and received at branch office of the Bank. This is not a fit case for interference - appeal dismissed.

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• 2023 (11) TMI 264
  CIRP proceedings - right to proceed against the subsidiary company as well even if the holding company is in CIRP - HELD THAT:- In the light of the judgments of the Hon ble Supreme Court in the matter of Jaypee Kensington Boulevard Apartments Welfare Association Ors. ( 2021 (3) TMI 1143 - SUPREME COURT ) and this Tribunal in Alok Industries (supra), we are of the clear view that now there is no bar to hear the section 7 application filed by Yes Bank, which is now being pursued by its assignee J.C. Flowers Asset Reconstruction Pvt. Ltd., which can be considered and adjudicated upon. The present appeal has been filed by the Appellant being aggrieved that his application has kept in abeyance by recording reasons which are not germane to the issue involved but once the proceedings has again been started, it is deemed appropriate to dispose of this appeal with the observation that the finding recorded in the impugned order shall not come in way either of the parties for the purpose of decision of Section 7 application and all the issues shall remain open.

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• PMLA

• 2023 (11) TMI 263
  Grant of anticipatory bail - Seeking quashing of ECIR against the petitioner - Money Laundering - schedule offences/predicate offence - person who is not named in the ECIR has locus to seek relief such as quashing of ECIR or not - HELD THAT:- The power conferred upon the authorities by virtue of Section 50 of PMLA empower them to summon any person whose attendance may be crucial either to give some evidence or to produce any records during the course of investigation or proceedings under PMLA. The petitioner herein has been summoned vide impugned notice dated 06.10.2023 whereby he has been called upon to submit certain documents and records, which are deemed necessary by the Directorate of Enforcement for the purpose of investigation in the Railway Job for Land Scam case, for which the present ECIR has been registered. A perusal of the chargesheet filed by the CBI in the predicate offence, and the reply filed by Directorate of Enforcement in another writ petition i.e. W.P.(C) 16957/2022 preferred by the petitioner in some other case for seeking permission to travel abroad, both of which have been placed on record by the petitioner, throws light on the position of the petitioner in the alleged Railway Job for Land Scam - the investigation in the present ECIR is still continuing and the petitioner has merely been summoned to appear and submit certain documents. Even as per the own case of petitioner, he has joined investigation in the present ECIR upon being summoned by the Directorate of Enforcement on six occasions in past, between March till August 2023. Thus, no tenable grounds have been shown now as to why the impugned summons deserve to be quashed. Even otherwise, as held in several judicial precedents, this Court cannot throttle the investigative process at the stage of issuance of summons to the petitioner. This Court notes that the petitioner herein in the past has been summoned by the Directorate of Enforcement on about six occasions, as per the own case of petitioner, and has not been arrested till date. It is also not in dispute that the petitioner has also not been arrested by the CBI in the RC pertaining to predicate offence. Merely because once again a summon has been issued under Section 50 of PMLA, no case for grant of no-coercive steps can be made out. It is also clear as per the scheme of PMLA that power to issue summons under Section 50 of PMLA is different from the power to arrest under Section 19 of PMLA, and the issuance of summons to join investigation and give some evidence or document to the investigation agency cannot be presumed to culminate into the arrest of person being so summoned. This Court is not inclined to quash the impugned summons or the ECIR against the petitioner or to grant any relief of no-coercive steps as prayed by the petitioner - Petition dismissed.

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• Service Tax

• 2023 (11) TMI 262
  Condonation of delay in filing appeal - appeal filed beyond the period of 32 days after the expiry of condonable period of limitation under section 85 of the Finance Act, 1994 - delay on the ground that petitioner was out of country - sufficient reason for delay or not - HELD THAT:- The order passed by the first respondent Appellant Commissioner cannot be faulted in view of the decision of the Hon ble Supreme Court in ASSISTANT COMMISSIONER (CT) LTU, KAKINADA ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [ 2020 (5) TMI 149 - SUPREME COURT] where it was held that Be that as it may, since the statutory period specified for filing of appeal had expired long back in August, 2017 itself and the appeal came to be filed by the respondent only on 24.9.2018, without substantiating the plea about inability to file appeal within the prescribed time, no indulgence could be shown to the respondent at all. However, at the same time, it has to be considered that the petitioner was not in a position to file an appeal prior to the date as is evident from the documents filed by the petitioner indicating that the petitioner was out of country between 24.11.2022 to 26.02.2023 - this Court is inclined to set aside the impugned order and remits the case back to the first respondent to dispose the appeal on merits and in accordance with law without reference to the limitation. Petition disposed off.

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• 2023 (11) TMI 261
  CENVAT Credit - input services - GTA (outward transportation) services for clearance - Commission Agent Service - Banking Financial Services - Business Auxiliary Service (Terminal Handling Services) - Courier Services - Storage Warehouse Service - Enviro Legal Consultancy Services - services in question have nexus to the manufacturing activity and overall business activity of the appellant - HELD THAT:- The issue is no longer res integra as in respect of all the services, there are one or other judgments whereby it was held that all these services are admissible input service. GTA (outward transportation) services for clearance - HELD THAT:- Reliance can be placed in the case of COMMISSIONER OF C. EX. CUSTOMS VERSUS PARTH POLY WOOVEN PVT. LTD. [ 2011 (4) TMI 975 - GUJARAT HIGH COURT ] where it was held that main body of the definition of term input service is wide and expansive and covers variety of services utilized by the manufacturer. By no stretch of imagination can it be stated that outward transportation service would not be a service used by the manufacturer for clearance of final products from the place of removal. Commission Agent Service - HELD THAT:- Reliance can be placed in the case of M/S ESSAR STEEL INDIA LTD. VERSUS COMMISSIONER OF C. EX. SERVICE TAX, SURAT-I [ 2016 (4) TMI 232 - CESTAT AHMEDABAD] where it was held that The definition of the input services includes services used in relation to sales promotion and these activities can rightly be described as sales promotion activities. Sales promotion activities undertaken at given point of time also aims at sales of goods which are to be manufactured and cleared on future. Banking Financial Services - HELD THAT:- Reliance can be placed in the case of LUPIN LTD VERSUS COMMISSIONER OF CENTRAL EXCISE ST (LTU) [ 2014 (1) TMI 55 - CESTAT MUMBAI ] where it was held that There is no evidence on record to show that these services are not in relation to the goods manufactured and exported by the appellant. Business Auxiliary Service (Terminal Handling Services) - HELD THAT:- Reliance can be placed in the case of LAMTUF PLASTICS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, HYDERABAD-II [ 2013 (12) TMI 1640 - CESTAT, BANGALORE ] where it was held that the credit taken up to the stage where goods have reached from the place of removal would be admissible if the same can be related to business of manufacture. Courier Services - HELD THAT:- Reliance can be placed in the case of JOHN DEERE INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE III [ 2015 (9) TMI 261 - CESTAT MUMBAI ] where it was held that Service tax paid by the service provider are on the hiring charges on forklift, which were hired out to appellant for movement of materials within the factory premises. Storage Warehouse Service - HELD THAT:- Reliance can be placed in the case of HUHTAMAKI PPL LTD (FORMERLY THE PAPER PRODUCTS LTD.) VERSUS C.C.E. S.T. -SURAT AND HUHTAMAKI PPL LTD (FORMERLY THE PAPER PRODUCTS LTD.) VERSUS C.C.E. S.T. -DAMAN [ 2021 (4) TMI 1158 - CESTAT AHMEDABAD ] where it was held that In the present case there is no dispute that the warehouse / godown outside the factory premises was taken on rent for storage of input which is meant for production of final product, therefore, there is a direct nexus of warehousing / storage service with the manufacturing activity of the appellant. Enviro Legal Consultancy Services - HELD THAT:- Reliance can be placed in the case of M/S HEIDELBERG CEMENT INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, BANGALORE [ 2016 (9) TMI 677 - CESTAT BANGALORE ] where it was held that the service tax paid for providing Consultancy Services in relation to greenhouse gas emission reduction and carbon credit management service as per guidelines under the Koyoto Protocol falls under the definition of input service and the appellants are entitled to Cenvat credit and the impugned order denying the Cenvat credit on the said services on account of lack of nexus is wrong and not sustainable in law. From the above judgments against each service, it can be seen that the Tribunal has taken a view that all the above services are admissible input service and credit is available. CENVAT Credit on Commission Agent Service - HELD THAT:- The issue is pending before Hon ble Gujarat High Court in the case of Essar Steel India Limited. [ 2016 (6) TMI 1305 - GUJARAT HIGH COURT] . However there were conflicting judgments on this issue. The issue involved is of interpretation of cenvat provision. In these circumstances, since many litigations against many parties are pending before Hon ble Gujarat High Court and this Tribunal, it cannot be said that the appellant has any malafide intention for wrong availment of credit in respect of Commission Agent Service, therefore, this particular demand of cenvat credit on Commission Agency Service is not sustainable on the ground of time bar alone. The impugned order is set aside - Appeal is allowed.

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• 2023 (11) TMI 260
  Non-payment of service tax - Renting of Immovable Property Services - receipt of payouts on account of against transfer fee, forfeit charges, tamir izazat, annual lease, rent of shops and other rent - recovery alongwith interest and penalty - benefit of section 80 of FA. One of the grounds of appeal is that the Revenue has failed to consider the fact that the appellant is a municipality and its duties are well covered under the provisions of Section 66D of the Finance Act (the negative list). HELD THAT:- Initially this Tribunal vide its Final Order No. 53436- 53500/2017 dated 25.05.2017 in the case of M/s. Krishi Upaj Mandi Samiti [ 2017 (5) TMI 1465 - CESTAT NEW DELHI] has decided the issue of taxability and held that the appellants are not liable to service tax on shops/ sheds/platforms/land leased out in the notified market area for traders for temporary storage of agricultural produce traded in the market. In respect of shops, premises, buildings, etc. rented/leased out for any other commercial purpose other than with reference to agricultural produce (like bank general shop etc.), the same shall not be covered by the negative list and the appellants shall be liable to service tax. Otherwise also, it is observed that the appellant had admitted their tax liabilities. In view of the said settled provision and the admission of the appellant for his liability, there are no infirmity in the order confirming the impugned demand. Since the appellant had never declared the fact of the income received by renting of immovable property which was purely and admittedly for the purposes of commerce, there are no infirmity in the order imposing penalties under Section 75, 76, 77 and 78 of the Finance Act. Benefit u/s 80 of FA - HELD THAT:- Though the appellant claimed the benefit under Section 80 but we do not find any reasonable cause with the appellant justifying the non-payment of service tax on the income which was being received for a long period of 5 to 6 years from renting of immovable properties, also the amount of service tax as confirmed against the appellant was not paid along with the interest in full within the stipulated time. Hence, there are no reason to extend the benefit of Section 80 of the Act to the appellant. Appeal dismissed.

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• 2023 (11) TMI 259
  Refund of accumulated CENVAT credit - export of service or not - electronically received data is physical goods or not - HELD THAT:- The original authority has held such data as physical goods and, therefore, held that place of provision of services is India. It cannot be appreciated that the contention of original authority that intangible goods are made physically available - It is noted that data is electronically received by the Appellant. The resultant product is export to United States of America and they received their remuneration in convertible foreign exchange. In view of this fact and in view of the clarification issued by the CBIC on 04.05.2018, the services involved in the present set of appeals is export of services. The appeals are allowed with a direction to the original authority to allow subject refund within a period of four weeks from passing this order.

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• 2023 (11) TMI 258
  Maintainability of appeal - time limitation - appeal dismissed solely for the reason that it was filed beyond the period prescribed in section 85(3A) of the Finance Act, 1994 - HELD THAT:- Under section 85(3A) of the Finance Act, an appeal has to be presented within two months from the date of receipt of the decision, but the Commissioner (Appeals), if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of two months, allow it to be presented within a further period of one month. In the present case, the appellant has claimed that the order was received from 06.10.2020 when the appellant contacted to the department after the appellant received a recovery order dated 24.09.2020 from the State Bank of India. The appeal was therefore filed within a period of two months from the date of receipt of the decision. The impugned order dated 25.02.2021 passed by the Commissioner (Appeals), therefore, deserves to be set aside and is set aside. The Commissioner (Appeals) shall now decide the appeal on merits - appeal allowed.

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• 2023 (11) TMI 257
  Non-payment of service tax - works contract service for the period April 2013 to September 2013 - applicability of N/N. 25/2012 dated 20.06.2012 - HELD THAT:- A perusal of the work orders, leaves no manner of doubt that the services were provided by the appellant to a local authority by way of construction, erection, commissioning of pipeline or water supply. Thus, the services provided by the appellant would be exempted under the Notification dated 20.06.2012, keeping in mind the definition of a local authority under section 65B (31) of the Finance Act. The aforesaid position emerges from a perusal of the show cause notice and the order passed by the Commissioner. Thus, even if the appellant had not filed any reply to the show cause notice, the aforesaid fact would have to be taken into consideration for arriving at a conclusion as to whether the services provided by the appellant to the local authority would be exempted from payment of service tax under the Notification dated 20.06.2012. Such being the position, the impugned order dated 31.3.2015 passed by the Commissioner cannot be sustained and is set aside - Appeal allowed.

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• 2023 (11) TMI 256
  Principles of natural justice - denial of opportunity of hearing - whether the Principal Commissioner was justified in passing the ex-parte order on 11.08.2015? - HELD THAT:- A perusal of the order passed by the Principal Commissioner would indicate that opportunity of personal hearing was granted to the appellant on 11.12.2014, 24.04.2015 and 11.02.2015 (should be 11.05.2015) and the last opportunity was provided on 15.06.2016. The facts stated leave no manner of doubt that an opportunity of hearing was denied to the appellant. The department has not contested the endorsement made by the Principal Commissioner on the application dated 06.07.2015 that the matter was being adjourned to 10.08.2015. The appellant did appear before the Principal Commissioner on 10.08.2015, but was informed that the next date would be communicated. What also needs to be noted is that the appellant, after it came to know of the order dated 11.08.2015 passed by the Principal Commissioner, immediately moved an application for rectification of mistake bringing to the notice of the Principal Commissioner the correct facts. Rectification of mistake - HELD THAT:- The application filed by the appellant for rectification of mistake should have been decided on merits and should not have been disposed of merely by stating that the Officer who had passed the order had, in the meantime, been transferred even before the filing of the application. The power given under section 74(1) of the Finance Act cannot be rendered infructuous if the Officer who passed the order is transferred. What has to be decided is whether there is a mistake apparent from the record. In a case where the Officer has not been transferred, of course it should be the same Officer who should decide the application, but in a case where the Officer has been transferred, the Officer who has been posted would have the jurisdiction to pass the order - It is, therefore, evident from the facts of the present case that an opportunity of personal hearing was denied to the appellant as even after adjourning the matter from 06.07.2015 to 10.08.2015 the Principal Commissioner did not hear the appellant nor did he examine the documents filed by the appellant. Tt is considered appropriate to remit the matter to the adjudicating authority to pass a fresh order on the basis of the evidence submitted by the appellant and after granting an opportunity of personal hearing to the appellant. For this purpose the appellant shall appear before the adjudicating authority on November 20, 2023, on which date the adjudicating officer may either hear the matter or fix another date for personal hearing - Appeal allowed.

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• Central Excise

• 2023 (11) TMI 255
  Area based exemption - new and different marketable article is emerging at the said ESO having distinctive name, classification, character - Department contended that appellants are manufacturing HSRP Blank and multi layer labels stickers in their unit in Himachal Pradesh, however, are transferring the same to the ESOs installed by the appellants in the States / UTs under challan without payment of Central Excise Duty - extended period of limitation. What is the product in question, when it is cleared from Himachal Pradesh and whether it gets changed when it is sold to the vehicle owner in Rajasthan? - HELD THAT:- The product is the high security registration plate, but blank, when it gets cleared from the factory in Kala Amb, Himachal Pradesh. It is blank for the reason that at that time the appellant is not aware about the registration number of the vehicle which has to be affixed on a particular plate. This registration number gets issued to the vehicle owner by the RTO in State of Rajasthan. While data entry at ESO in Rajasthan this registration number is entered against the specific alpha numeric PIN embossed on the HSRP blank at the manufacturing unit in Kala Amb, Himachal Pradesh. Finally, the said registration number gets embossed on said HSRP in the ESO of appellant established in Rajasthan. Hence what is cleared from Rajasthan is high security registration plate only except with the specific number embossed on it - It is observed from the record that SPV (RMRPL) is duly registered with the Service Tax Department and they are discharging their liability considering embossing to be a service. In addition, they are discharging their VAT liability while selling the individual HSRP to a particular vehicle owner. What is the meaning of manufacture to understand (as to whether the activity done at ESO in State of Rajasthan can be called as the part of manufacturing process which is otherwise done in State of Himachal Pradesh)? - HELD THAT:- The product manufactured by the appellant is high security registration plate prior as well as post embossing / printing of the registration No. of the vehicle on it. Since no change in the commodity/product happens post performing the activity of embossing, this activity done at ESO in Rajasthan cannot be called as the part of manufacture. Otherwise also the burden of proving the fact of manufacture lies on the Revenue if it claims the same - manufacture of TLP also gets complete at Kala Amb, Himachal Pradesh. Printing on these stickers at ESO in Rajasthan was merely a service being provided by the appellant to the vehicle owner for which appellant is charging service tax and is duly discharging its liability. As already observed above, the said service could be provided by anyone other than the manufacturer subject to being the successful bidder. Can the demand of excise duty be sustained? - HELD THAT:- Duty is payable on removal of goods from each manufacturing facility. For instance, if a company has its head office in, say Mumbai, where activities which do not amount to manufacture only take place and it has factories manufacturing excisable goods, in Chennai, Indore and Surat, the office in Mumbai need not register, pay duty or file returns but the Chennai, Indore and Surat factories need to do so and each of these is treated as a separate assessee. Duty amount be demanded from Mumbai Office for manufacture in Chennai or Surat. Therefore, the entire show cause notice issued to the appellant s Himachal Pradesh falls flat if the Revenue s argument that it is not manufacturing is accepted. Extended period of limitation - HELD THAT:- Department had no opportunity to detect the non-payment of Central Excise duty from their monthly Service Tax Returns. No ER 1 Return reflecting the sale of HSRP plates has been filed is held as suppression of facts and reasons to invoke the extended period of limitation. However, we do not agree with those findings - In the present case the product manufacturer is known to market as HSRP and it has saleability except that under the statutory mandate the HSRP manufacturer has not to be sold by the manufacturer but by the person who succeeds the bid of State Transport Authority (RTA) to emboss the vehicle registration number allotted by the said RTA on the said HSRP. It is apparent on record that vide letter dated 22.07.2009 all these facts were conveyed to the department. Giving such information was a pre-requisite of the impugned notification. There is no suppression of facts. Appellant had already intimated the concerned Commissionerate about his option to exercise the said area based exemption with all requisite particular in the said application dated 22.07.2009. In the state of Rajasthan the appellant is discharging the service tax liability qua his activity of embossing registration No. on the HSRP manufactured in Himachal Pradesh. VAT liability is also being discharged by the appellant. Thus the Department has wrongly invoked the extended period. The confirmation of demand is liable to be set aside on this score also. There appears no evasion of tax liability and that the product of appellant gets manufactured in Himachal Pradesh to which area based exemption is available. Above all the Commissionerate in Himachal Pradesh has no jurisdiction to confirm any duty liability in case the manufacturing of HSRP would have completed in State of Rajasthan - the order by Himachal Pradesh Commissionerate confirming the demand of excise duty is hereby set aside. Appeal allowed.

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• 2023 (11) TMI 254
  Valuation of excisable goods - sale by assessee to buyer who is not related - price not being consideration for the sale - section 4(1)(a) of Central Excise Act, 1944 - HELD THAT:- None of the mechanisms in Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 that relate to sale may be invoked in the present dispute thus ruling out rule 6 as well as rule 9 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 leaving only rule 8 and rule 11 among those that may be. There are no doubt that the decision of the Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, ROHTAK VERSUS MERINO PANEL PRODUCT LTD. [ 2022 (12) TMI 453 - SUPREME COURT] has held that exercise of statutory power is not vitiated by any error in citing the source of that power. However, the proposition of Learned Authorized Representative fails to find advancement with the requirement of sale appended to the rule urged by him to be invoked. Furthermore, from a perusal of the judgement, it would appear that the privilege of deviating from facts in the notice is not extended even if the provisions may be; principles of natural justice dictates that the facts, as detailed in the show cause notice, alone may be utilized for detrimental consequence to assessee even if the provision that applies had not been invoked in the notice. Within that restricted framework, it is permissible, in the light of the decision in re Merino Panel Product Ltd, to examine the applicability of the two remaining rules available. The appellant has also failed to establish that rule 8 has been conformed to even while contending that formulation in the decision of the Hon ble Supreme Court, pertaining to a time when these rules did not exist, had been. It is necessary to determine the assessable value for the purpose of discharge of duty liability in accordance with section 4 of Central Excise Act, 1944 and the rules framed thereunder. The appellant must, needless to state, be accorded opportunity to contest facts and inferences that may be to their detriment. To enable such, the impugned order is set aside and matter remanded to the original authority for fresh determination as to the correct duty liability - appeal allowed by way of remand.

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• 2023 (11) TMI 253
  CENVAT Credit - denial on the ground that activity of the Appellant i.e., the process of making electronic capacitor grade metalized dielectric plastic film (MPP film), falling under Chapter 3920 2090 of the CETA, 1985, does not amount of manufacture - HELD THAT:- The issue whether the process of making MPP film amounts to manufacture or not is no longer res integra as amendment to the CETA, wherein, in Chapter Note 16 to Chapter 39, was added - under similar facts and circumstances, the Coordinate Bench of this Tribunal at Mumbai in the case of THE PAPER PRODUCTS LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2014 (3) TMI 521 - CESTAT MUMBAI] have distinguished the ruling of Hon ble Supreme Court in the case of METLEX (I) PVT. LTD. VERSUS COMMISSIONER OF C. EX., NEW DELHI [ 2004 (2) TMI 387 - SUPREME COURT] and have held that under similar facts and circumstances, the process amounts to manufacture. The Coordinate Bench in Chandigarh in the case of DHRUV INDUSTRIES LTD. VERSUS CCE, DELHI-III (VICE-VERSA) [ 2018 (4) TMI 1492 - CESTAT CHANDIGARH] have also, under similar facts and circumstances, distinguished the ruling of Metalex (supra) and held that a new product comes into existence by use of the various raw materials viz., Poly Propylene, Polyester Films of Aluminium Zinc, which is coated and further the process required use of capital goods/ machinery involving substantial cost and such process of manufacture takes about 36 hours. It was held that a new product comes into existence. The process of making MPP Films, capacitor grade from plain plastic film would amount to manufacturing process and the MPP classifiable under CETH 3920 2090 would be a manufactured good. Once the process is considered as manufacturing process, the credit becomes admissible. Accordingly, Appellant is entitled to Cenvat credit, which has been disallowed by the Impugned Order. Appeal allowed.

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• 2023 (11) TMI 252
  Refund claim - rejection on the ground of time limitation - relevant date for filing the refund claim under Section 11B on the basis of the date of finalization of assessment - Section 11 B of the Central Excise Act, 1944 - rejection also on the ground of unjust enrichment - HELD THAT:- From the perusal of the Section 11 B (1) along with explanation at (eb) it is quite evident that relevant date in the cases of the finalization of assessment, is not the date of finalization of provisional assessment but is the date of adjustment of duty after the final assessment thereof. In the case of refunds arising as result of finalization of assessment will be the date when either that amount is paid to the appellant or credited to the fund. In the present case neither has been done till date, nay, on the date when the application for the refunds have been filed under Section 11 B. That being so the refund claim cannot have been held as time barred for the reason that the relevant date for counting the period of limitation has not even started - the rejection of three refund claims on the ground of time bar cannot be upheld. Unjust enrichment - HELD THAT:- The duty in this case is paid by the appellant on the normal transaction value and not the actual transaction value. The actual transaction value at which the goods were sold by the appellant may be different from the normal transaction value determined on the basis of maximum aggregate quantity of sale value. Further it was for the reason that correct assessable value could not have been determined at the time of clearance of the goods from the factory gate, the assessment were ordered to be provisional. The actual assessable value is as per the finalization order and duty determined accordingly. Appellants have produced a certificate dated December 15, 2021 from the Chartered Accountant, G Ganesh to establish that they have not passed on the burden of the duty to their customers - in view of the Certificate of Chartered Accountant it is abundantly evident that appellant have rebutted the presumption of having passed on the burden of duty claimed as refund to the consumer. Hence the rejection of the refund claims on this ground also is not justified. There are no merits in the impugned order and the same is set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (11) TMI 251
  Interest on refund - relevant period - interest for the period commencing from the date when two months elapsed [which in turn would commence from the date when the return was filed], and running till the date when the refund was paid, or not - It was held by Delhi High Court that In the instant matter, since the revised return was filed on 10.07.2015, the refund in terms of Section 38(3)(a)(ii) of the 2004 Act accrued in favour of the assessee on 10.09.2015. HELD THAT:- There are no requirement to interfere with the judgment and order(s) impugned in these petitions. The Special Leave Petitions are dismissed.

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• Indian Laws

• 2023 (11) TMI 250
  Dishonour of Cheque - documentary evidence not produced - admissions elicited during cross-examination - HELD THAT:- The cross-examination of the complainant shows that the cheque amount exceeded the outstanding amount. The complainant stated that it was subsequently decided in the agreement that 90% of the amount would be paid at the time of dispatching machinery from his premises. However, this agreement was not placed on record - The evidence of the complainant further revealed that the total cost agreed between the complainant and the accused for dairy equipment was Rs. 10,25,000/-. The invoice (Exh.42) also establishes this fact. It is not in dispute that Rs. 7,40,000/-was paid by the accused to the complainant, and only Rs. 2,85,000/-was due from the accused. The cheque (Exh.39) is Rs. 4,95,000/-which is more than the outstanding amount from the accused. The complainant admitted this fact in his cross-examination. The complainant s case is not substantiated by documentary evidence. The total amount due of Rs. 12,93,875/-could not be proven by any bill on record. The complainant s admission during cross-examination that the cheque amount exceeded the outstanding amount was also to be taken into consideration. Given the circumstances, the observations of the Magistrate cannot be considered erroneous, especially when there is no documentary evidence and the admissions were elicited during cross-examination. Appeal dismissed.

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• 2023 (11) TMI 249
  Dishonour of settlement - amicable settlement between the parties - compromise also arrived at - HELD THAT:- Since the parties are entering into compromise at the stage of revision, therefore, law laid down by the apex Court in the case of DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT ] will be applicable in this case where it was held that In view of the legislative vacuum, we see no hurdle to the endorsement of some suggestions which have been designed to discourage litigants from unduly delaying the composition of the offence in cases involving Section 138 of the Act. In view of the aforesaid judgement, and considering the fact that the parties have amicably settled their dispute and have entered into compromise before this Court in the revision and decided to avoid further litigation, hence, the applicant is liable to pay 2% of the cheque amount i.e. Rs. 36,000/-by way of cost to be deposited with the State Legal Services Authority Indore - Subject to payment of cost at the rate of 2% of the cheque amount with the State Legal Services Authority Indore, within a period of 15 days from today, the applicant be released from the jail and if not in jail, the applicant shall be treated as acquitted from the charges under Section 138 of N.I. Act on the basis of compromise. Revision disposed off.

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