TMI Tax Updates - e-Newsletter
November 17, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Central Goods and Services Tax (Third Amendment) Rules, 2022 - Amendments in FORM GSTR-9 - Notification
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GST:
Refund claim of un-utilized Input Tax Credit (ITC) - Export - Intermediary Services or not - place of provision of services - A bare perusal of the recitals and relevant clauses of the MSA do not in any manner indicate that petitioner is acting as an “intermediary” so as to fall within the scope and ambit of the definition of “intermediary” under Section 2 (13) of the IGST Act. Such clauses cannot also be interpreted to conclude that the petitioner has facilitated the services. - HC
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GST:
Right to file appeal - aggrieved person - Though the adjudication proceeding was initiated and passed against the driver/in-charge of the vehicle in question, the petitioner’s concern being the consignee of the goods, had a reason to be aggrieved by the said order of the adjudicating authority. - HC
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Income Tax:
Assessment u/s 153A - incriminating material is found during search under Section 132 or not? - the issue does not arise for consideration unless it can be demonstrated by the Appellant-Revenue that the statements recorded under Section 132(4) disclose some incriminating material on the basis of which orders under Section 153A have been passed. - HC
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Income Tax:
Offence u/s 276C(2) r/w 278B - Wilful attempt to evade tax, etc - Conduct of the petitioners itself would indicate that it was a case of delayed payment of tax or deferred payment. The tax along with interest and penalty was accepted by the department without any reservations. Such delay in the payment will not amount to willful attempt to evade tax - the continuation of the proceedings against the petitioners would an abuse of process of the Court. - HC
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Income Tax:
Levy of penalty u/s 271B - default u/s 44AB - failure to get accounts get audited - Contradictory stand of the appellant when he contended that due to seizure of books by the sales tax authorities, audit of accounts under Section 44AB of the Act got delayed. Additionally, Tribunal held that appellant did not file the income tax return voluntarily but it was in response to a notice under Section 148 of the Act. - Penalty confirmed - HC
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Income Tax:
Disallowance of depreciation on lease hold land claimed u/s 32(1)(ii) - “right to mine” and the “surface right” falls within the definition of intangible assets as defined in Section 32(1)(ii) and Explanation 3 to Section 32(1(ii) - AO directed to treat this as “Capital Expenditure”, which is in enduring nature and grant applicable rate of depreciation on it as appliable to commercial rights of similar nature. - AT
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Income Tax:
Reopening of assessment u/s 147 - notice u/s 148 issued on non-existent entity as the assessee was dissolved - the name of assessee was struck off from the Registrar of Company - the AO passed the re-assessment order against the non-existent entity. Thus, the assessment order is void-ab initio - AT
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Income Tax:
Expenses as claimed u/s. 57(iii) - old dues not payable shown as Income from other sources - If the advance was taken from a Person who is now expired as per submissions made before the CIT(A) by the assessee, the assessee has not shown any measures taken by him as to whether in legal heirs of the said party are present to whom the dues can be repaid. Merely writing off the dues cannot allow the claim of the assessee. - Additions confirmed - AT
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Income Tax:
Revision u/s 263 by CIT - Bogus LTCG - Penny stock purchases - He merely makes general reference to the investigation report of the Department stating to have contained information regarding these shares. With the assessee having sufficiently demonstrated genuineness of the transaction of trading in shares of VIL and also that it was not a mere penny stock traded in - There is no error in AO accepting the assessee’s claim of the transactions being genuine - AT
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Income Tax:
Addition u/s 28(iv) - salary paid to expatriates - there cannot be a benefit accruing to the Korean company when the Indian PE of the assessee company does not reimburse its Korean company, because the assessee itself is the Korean company and the transaction in question is a wholly non-business and internal transaction of the Korean company - AO directed to delete the impugned disallowance - AT
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Income Tax:
Income from house property - excluding of service tax whereas in Form 26AS it is inclusive of service tax - assessee has deducted TDS on rent inclusive of service tax instead of exclusive service tax which has been duly reconciled by the assessee - the addition, is not found to be sustainable - AT
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Income Tax:
Penalty u/s 271(1)(c) - estimation of income u/s 44AD - addition made on credit summation made by the assessee - revenue had not come out with clear case of suppression of turnover and, penalty had been imposed merely on basis of enhancement of estimated income where impugned penalty would not sustain. - AT
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Income Tax:
Unexplained cash deposits during demonetization period u/s 69A - The cash deposited in the bank by the assessee during the demonetization period was out of the cash sales and the realization from the trade debtors duly shown in the book of accounts which were accepted by the A.O. - the additions made by the AO on the basis of surmises and conjectures was rightly deleted by the Ld. CIT(A). - AT
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Customs:
Maintainability of appeal before the HC or SC - territorial jurisdiction - the dispute also is with respect to breach of condition of notification which may ultimately lead to subsequent demand of duty or imposition, but that itself cannot be said to be a dispute with respect to valuation - the High Court is wrong in not entertaining the appeal on the ground that the same was not maintainable - SC
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Customs:
Applicability of Doctrine of Merger - The doctrine of merger would not apply in this case. This is because the Apex Court while permitting leave to withdraw the appeal has not passed any order on merits. The appeal had not even been admitted. The order of the Apex Court is also not an order rejecting the appeal and, therefore, the said order cannot be said to be an order of affirmance of the order of CESTAT. - HC
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Customs:
Demand of differential duty - classification of imported goods - fire sprinklers - It cannot be concluded from the aforesaid Circular that fire sprinklers are excluded from sprinklers. In fact ‘sprinklers’ and ‘drip irrigation system including laterals’ are separated by a semi colon - AT
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DGFT:
Allocation of quantity 5841 MT (raw/refined) Sugar by EU for export from India under TRQ for the year 2022-23 & allocation of quantity 8606 MTRV raw cane sugar by USA for export from India under TRQ scheme for US fiscal year 2023 - Public Notice
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Corporate Law:
Seeking restoration of name of the Company in the Register of the Companies - shell Company - Section 252(1) of the Companies Act, 2013 - Order of NCLT rejecting the application sustained - AT
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State GST:
Guidelines for verifying the Transitional Credit in light of the order of the Hon’ble Supreme Court in the Union of India vs. Filco Trade Centre Pvt. Ltd., SLP(C) No. 32709-32710/2018, order dated 22.07.2022 & 02.09.2022. - West Bengal SGST
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State GST:
Clarification on refund related issues - refund of unutilized input tax credit in cases where credit is accumulated on account of rate of tax of inputs being higher than the rate of tax on output supplies i.e. on account of inverted duty structure.
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Indian Laws:
Dishonor of Cheque - FIR against the misuse of blank cheques - Undisputedly seven numbers of blank cheques were handed over to the Finance company at the time of disbursement of loan. It is also found that the cheque in question was placed for encashment after the demise of one of the drawer of the cheque and an inflated value has been incorporated in the cheque which is at variance to the amount demanded by way of notice under the SARFAESI Act. - Through investigation is required - Petition dismissed - HC
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Indian Laws:
Illegal gratification/bribe - allegation against the person working in Income Tax Office as Tax Assistant - Tax Assistant had no role in the refund of income tax to the assessee except processing the same to the I.T.O - no work was pending with the appellant for which there was no occasion on his part to raise any demand of bribe - the impugned judgment and order of conviction and the sentence passed is hereby set aside - HC
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IBC:
Recovery of past dues of Maharashtra State Electricity Distribution Company Limited (MSEDCL) - There is a completely unexplained failure on MSEDCL’s part to lodge its claim within the RP in time. It really had to do very little except lodge its claim. There is the Supreme Court finding in Ghanashyam Mishra [2021 (4) TMI 613 - SUPREME COURT] regarding other claims including from tax authorities standing extinguished after the 2019 amendment. That simply cannot be ignored. - HC
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Service Tax:
SVLDRS - This scheme is for recovery of duty as also to recover tax and arrears of deficit amount. The scheme has been enacted with an object and purpose to minimize the tax disputes and to realise the arrears of tax by way of tax in exceptional manner. The scheme is a step towards the settlement or deciding disputed tax/liability. Therefore, the Respondent should consider the Application as filed so that litigation is minimized. - HC
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Service Tax:
Classification of services - canteen services with the factory - outdoor catering services - On plain reading of entry 19A in the Notification dated 22.10.2013 it clearly reveals that the canteen maintained in a factory has been provided with the exemption from payment of service tax. The said Notification nowhere provided that canteen maintained by or run by the factory can only be considered for the benefits of such exemption. - AT
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Service Tax:
CENVAT Credit availed based on the debit note - A perusal of Annexure-3, which is the so-called debit note, which is placed on record, reveals that it does not contain the nature of taxable service per se provided by the other party to the appellant, which is the condition precedent in terms of the proviso to Rule 9(2) ibid. Hence, in the present scenario, the debit note, which is incomplete, cannot be considered as a document specified in Rule 9 ibid. - AT
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Central Excise:
Levy of Excise Duty - all types of scraps sold by the appellant value of which is reflecting in the balance sheet - It is clear that the appellant have cleared the scrap which is neither generated from the manufacturing nor generated from the cenvatable input or capital goods. Therefore, the same is clearly not liable to any duty. - AT
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VAT:
Violation of principles of natural justice - proof of inter-State trade - submission of C-Forms - In a writ proceeding under Article 226 of the Constitution of India, legality and validity of the assessment proceedings are not ordinarily examined when the statute provides for adequate and efficacious alternative remedy. - HC
Articles
Notifications
GST-
22/2022 - dated
15-11-2022
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CGST
Central Goods and Services Tax (Third Amendment) Rules, 2022
GST - States-
S.O. 411 - dated
7-11-2022
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Bihar SGST
Corrigendum - Notification No. S.O. 192, dated the 29th September, 2022
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38/1/2017-Fin(R&C)(236)/981 - dated
10-11-2022
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Goa SGST
Seeks to bring in force provisions of section 13 of the Goa Goods and Services Tax (Amendment) Act, 2022
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ERTS(T) 65/2017/Pt.III/312 - dated
20-10-2022
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Meghalaya SGST
Amendment in Notification No. ERTS(T) 4/2019/424, dated 30th September, 2017
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ERTS(T) 65/2017/Pt.III/311 - dated
20-10-2022
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Meghalaya SGST
Amendment in Notification No. ERTS(T) 65/2017/23, dated 29th June, 2017
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ERTS(T) 65/2017/Pt.III/310 - dated
20-10-2022
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Meghalaya SGST
Amendment in Notification No. ERTS(T) 65/2017/20, dated 29th June, 2017
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ERTS (T) 65/2017/Pt.III/313 - dated
20-10-2022
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Meghalaya SGST
Exempts the supplies of unintended waste generated during the production of fish meal (falling under heading 2301), except for fish oil, during the period commencing from the 1st day of July, 2017 and ending with the 30th day of September, 2019 (both days inclusive)
SEBI-
SEBI/LAD-NRO/GN/2022/106 - dated
15-11-2022
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SEBI
Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2022
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SEBI/LAD-NRO/GN/2022/105 - dated
15-11-2022
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SEBI
Securities and Exchange Board of India (Alternative Investment Funds) (Fourth Amendment) Regulations, 2022
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SEBI/LAD-NRO/GN/2022/104 - dated
15-11-2022
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SEBI
Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Second Amendment) Regulations, 2022
SEZ-
S.O. 5312 (E) - dated
15-11-2022
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SEZ
Special Economic Zone for IT/ITES - de-notifies an area making the resultant area as 5.0600 hectares at Pune, Maharashtra
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (11) TMI 743
Refund claim of un-utilized Input Tax Credit (ITC) - zero rated supplies of services without payment of Integrated Goods and Service Tax - Intermediary Services - export of services or not - place of provision of services. Whether the petitioner would be covered under the expression intermediary as defined under the provisions of the IGST Act and consequently the BPO services rendered by the petitioner under the MSA be treated as intermediary services ? HELD THAT:- Section 2 (6) of the IGST Act lays down the conditions which need to be fulfilled for qualification of a service as export of services . A conjoint reading of Section 13 (2) and Section 13 (8) clarifies the manner for determining the place of supply of services where location of supplier or location of recipient is outside India. Generally, place of supply of services is the location of the recipient, except in case of certain specified services. For intermediary services, the place of supply is the location of the supplier - Section 54 of the CGST Act prescribes the manner in relation to claiming refund by tax payers, mainly covering the eligibility and prescribed timelines for filing the refund claim application. A tax payer engaged in export of services without payment of GST is eligible to claim refund of unutilized input tax credit. A bare perusal of the recitals and relevant clauses of the MSA do not in any manner indicate that petitioner is acting as an intermediary so as to fall within the scope and ambit of the definition of intermediary under Section 2 (13) of the IGST Act. Such clauses cannot also be interpreted to conclude that the petitioner has facilitated the services. The said clauses are in relation to the modalities of how the actual work would be carried out and do not in any manner establish that the petitioner was required to arrange/facilitate a 3rd party to render the main service which has actually been rendered by the petitioner. The impugned order dated 15.02.2021 (Annexure P-18) holding the petitioner to be an intermediary under Section 2 (13) of the IGST Act, cannot sustain - Petition allowed.
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2022 (11) TMI 742
Cancellation of GST registration of petitioner - appeal has been dismissed on the ground of same being time-barred - HELD THAT:- It cannot be denied that the petitioner herein would not be able to continue with his business in absence of GST registration and thus, would be deprived of his livelihood which amounts to violation of right to life and liberty as enshrined in Article 21 of the Constitution of India. The order dated 28.09.2022 is set aside. The petitioner is given liberty to file appeal against the cancellation of GST registration to the competent authority within ten days from today. Upon such appeal being filed, the same shall be considered and decided on all aspects in accordance with law excluding the bar of limitation in preferring the appeal by the petitioner. The writ petition is disposed off.
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2022 (11) TMI 741
Right to file appeal - aggrieved person - Levy of tax and the penalty under Section 129 (3) of the West Bengal Goods and Service Tax Act, 2017 - appeal under Section 107 of the West Bengal Goods and Service Tax Act, 2017 - HELD THAT:- Section 107 of the West Bengal Goods and Services Tax Act, 2017 makes it clear that any person aggrieved by any decision or order passed under the Act may appeal to the appellate authority within the time limit prescribed in the Statute - Though the adjudication proceeding was initiated and passed against the driver/in-charge of the vehicle in question, the petitioner s concern being the consignee of the goods, had a reason to be aggrieved by the said order of the adjudicating authority. Therefore, the impugned dated December 30, 2021, cannot be sustained. Accordingly, the same is set aside - Application disposed off.
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Income Tax
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2022 (11) TMI 738
Assessment u/s 153A - incriminating material is found during search under Section 132 or not? - HELD THAT:- It is to be noted that the Appellant-Revenue has not placed reliance or even referred to any statement recorded under Section 132(4) of the Act, 1961. No such statement has been produced before this Court. Therefore, in the facts of the present case, the issue does not arise for consideration unless it can be demonstrated by the Appellant-Revenue that the statements recorded under Section 132(4) disclose some incriminating material on the basis of which orders under Section 153A have been passed. This Court in the case of CIT v. Harjeev Aggarwal [ 2016 (3) TMI 329 - DELHI HIGH COURT ] in the context of erstwhile provisions of Block Assessment, has held that the statement recorded during the course of search, on a standalone basis, without any reference to material found/discovered during the search would not empower the AO to make block assessment merely because of any admission made by Assessee during the search operation. Similarly, this Court in CIT v. Sunil Aggarwal [ 2015 (11) TMI 286 - DELHI HIGH COURT ] has held that when a statement recorded under Section 132(4) of the Act, 1961 is retracted, then, the AO would require some corroborative material before making any additions/disallowances on the basis of the statement. This Court in the following decisions has considered and distinguished the decision of Dayawanti (supra) holding that the decision of Dayawanti [ 2016 (11) TMI 211 - DELHI HIGH COURT ] was rendered in the peculiar facts and circumstances of that case and the ratio of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] has not been diluted. EFFECT OF JUDGMENT OF THE PUNJAB HARYANA HIGH COURT AND THE SUPREME COURT - Insofar as the judgment [ 2004 (7) TMI 359 - HIGH COURT OF PUNJAB AND HARYANA] of the Punjab Haryana High Court is concerned, the said judgment is prior to the search.A special audit under Section 142(2A) of the Act, 1961 was also made in the case of Respondent in the original assessment proceedings for AY 1998-99, which has also not been produced by the Appellant citing unavailability. Given the fact that the Assessing Officer has not even referred to the judgment of the Punjab Haryana High Court nor has he relied upon the conclusions of the High Court and that the SEBI Order, High Court judgment and the Special Audit report were made before the date of search, it can be concluded that assessment has not been framed on the basis of incriminating material culled from the decision of the High Court or found during search. Judgment of the Supreme Court [ 2013 (3) TMI 390 - SUPREME COURT ] cannot be said to incriminating material found during search conducted on in 2005 and, therefore, cannot form the basis of the assessment order passed in 2007. The Supreme Court in the said decision has only directed the Income tax Department to examine any wrong doings by the respondent. At best, such directions could constitute material for initiating proceedings under Section 148 the Act, 1961 provided some material was found as a result of the enquiry conducted by the Income Tax Department pursuant to the decision of the Supreme Court. However, such findings of the Supreme Court in 2013 cannot constitute incriminating material found during search in 2005 which would validate assessment order under Section 153A passed in 2007. Given the facts and circumstances of the present cases, no substantial question of law arises for consideration of this Court. Accordingly, the present appeals are dismissed.
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2022 (11) TMI 737
Reopening of assessment u/s 147 - change of opinion - reason to believe - Onus to prove - receipt of share application money from the four entities alleged to be unexplained - HELD THAT:- When the issue and aspect on the basis of which the reassessment was sought to be acted upon, were considered in course of the regular assessment and the details were supplied by the assessee in that regard, the entire onus would shift on the department to examine the details in light of the income tax law to be applied to ensure that those details were properly offered for tax. When such material was considered and the assessment was concluded resulting into assessment order, reopening was not permissible in law on the basis of similar or same information. The purported exercise of powers to reopen the concluded assessment, the Assessing Officer is not permitted to just proceed to re-verify the facts or to undertake a fishing inquiry into the issues examined and concluded in the original assessment. Such kind of exercise of powers would partake abuse of powers to reopen the assessment The ground of receipt of share application money from the four entities alleged to be unexplained by the Assessing Officer to proceed to exercise powers of reassessment, was the very issue considered by the Assessing Officer by calling for the relevant information in that regard in course of regular assessment undertaken for the year under consideration. As the details from record indicated, the assessee had supplied all the relevant material in the nature of accounting entries, resolution passed, names of the allottees and their addresses and PAN numbers, which had satisfied the Assessing Officer at the relevant time about the genuineness of the entities and the transactions. There was not reason to doubt the same at the subsequent juncture by seeking further inquiry on the basis of changed opinion. The exercise undertaken seeking to reopen the assessment and issue of notice under section 148 of the Act and the decision to reject the objections of the assessee, both render unacceptable in law, liable to be set aside as illegal. As a result of above reasons and discussions, the present petition deserves to be allowed.
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2022 (11) TMI 736
Offence u/s 276C(2) r/w 278B - Wilful attempt to evade tax, etc - whether requisite mens rea was present to infer a willful attempt at evading tax? - HELD THAT:- Unless a person with dishonest intention tries to conceal facts and consequently attempts at evading the tax, which he is liable to pay are the requisite ingredients to prosecute person u/s 276C of the Income Tax Act. It is not the case of the Income Tax department that the self assessment tax returns which were filed had an element of concealment on any factual aspects and tried to evade tax, which is liable to paid. There is no dispute regarding the claims made by the petitioners in their income tax returns. Having received the notice, the petitioners have paid additional amoun towards interest and other charges, apart from the assessed tax. It was stated that due to financial difficulties beyond control, the amount could not be paid in time. This is not a case wherein false declaration is made or that the department has found that there is a deliberate attempt to evade tax by suppressing material information. Whether there is willful delay or not are discernible from the facts of the case. Conduct of the petitioners itself would indicate that it was a case of delayed payment of tax or deferred payment. The tax along with interest and penalty was accepted by the department without any reservations. Such delay in the payment will not amount to willful attempt to evade tax. Cogent reasons are given stating that tax could not be paid due to financial difficulties. It cannot be inferred from the facts of the present case that any attempt was deliberately made to evade the tax payment. For the said reasons, the continuation of the proceedings against the petitioners would an abuse of process of the Court. It is a fit case wherein this Court has to exercise its inherent powers under Section 482 of Cr.P.C to quash the proceedings against the petitioners. Accordingly the proceedings against the petitioners on the file of Special Judge for Economic Offences, Hyderabad are hereby quashed and the Criminal Petition is allowed.
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2022 (11) TMI 735
Levy of penalty u/s 271B - default u/s 44AB - failure to get accounts get audited - appellant had not complied with the provisions of Section 44AB of the Act i.e., by submitting audited accounts - HELD THAT:- Tribunal noticed that subsequent to notice issued by the assessing officer for levy of penalty u/s 271B of the Act, appellant had claimed that he was under a genuine belief that his turnover had not crossed Rs.40 lakhs and therefore he need not get his accounts audited. It may be mentioned that the entertainment tax return of the appellant showed his turnover at Rs.3,37,70,270.00. Contradictory stand of the appellant when he contended that due to seizure of books by the sales tax authorities, audit of accounts under Section 44AB of the Act got delayed. Additionally Tribunal held that appellant did not file the income tax return voluntarily but it was in response to a notice under Section 148 of the Act. Tribunal confirmed the levy of penalty. We do not find any error or infirmity in the view taken by the Tribunal. No substantial question of law.
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2022 (11) TMI 734
Nature of expenditure - expenses on repairs/ renovates - revenue or capital expenditure - HELD THAT:- The judgement of Hi Line Pens [ 2008 (9) TMI 25 - HIGH COURT DELHI] discusses the nature of expenses which are substantially similar to those of the appellant. The Judgement of M/s instalment Supply [ 1983 (9) TMI 67 - DELHI HIGH COURT] states that in the absence of a capital asset being created the nature of the expense for business has to be of a revenue nature. Keeping in view the aforesaid judgments the expenses indicated are held to be expenses of revenue nature and allowable revenue expenditure to the appellant. We find that the findings recorded by the CIT (Appeal) as affirmed by the Income Tax appellate Tribunal are findings of fact based on consideration of relevant material on record. The CIT (A) and the Tribunal have came to the conclusion that by incurring the aforesaid expenditure no new asset has come into existence. No substantial question of law.
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2022 (11) TMI 733
Disallowance of depreciation on lease hold land claimed u/s 32(1)(ii) - Rights and liabilities of a holder of prospecting licence or mining lease - A.R. submitted that the assessee has entered into a Mining Agreement with the Government of Maharashtra vide Mining Agreement ( Mining Agreement ) for a period of 30 years - HELD THAT:- Mining Lease being right to undertake mining activity and the acquisition of surface rights thereon falls with the purview of the term business or commercial right . The lease granted to the assessee is nothing but a license under the Mines and Minerals (Development Regulation) Act, 1957 to undertake mining of coal. Without the mining lease, no person can undertake any mining activity. Further, the license/lease holder is also required to acquire the surface rights of the area falling within the mining area. This right to mine and the surface right falls within the definition of intangible assets as defined in Section 32(1)(ii) and Explanation 3 to Section 32(1(ii). The term Business and Commercial Rights has been dealt by the Hon ble Delhi High Court in the case of CIT vs Hindustan Coca Cola Beverages (P.) Ltd. [ 2011 (1) TMI 30 - DELHI HIGH COURT] In the case of ONGC Videsh Ltd. Vs. Deputy Commissioner of Income-tax [ 2009 (10) TMI 76 - ITAT DELHI-F] wherein the Coordinate Bench of Delhi Tribunal considered similar issue that the Commercial rights of exploration of minerals, oil, by entering into production sharing agreement with Russian Government fall under the expression any other business or commercial rights on similar nature , same being akin to licenses as stipulated in section 32(1)(ii) of the Act and therefore, they are in the nature of intangible assets, eligible for depreciation at the prescribed rate. We are of the opinion that the amount expended by the assessee to acquire the right of mining the coal, therefore, to be considered as Capital Expenditure and the assessee is entitled for depreciation. In view of this, we direct the AO to treat this as Capital Expenditure , which is in enduring nature and grant applicable rate of depreciation on it as appliable to commercial rights of similar nature. Disallowance claimed u/s 35E - HELD THAT:- If the assessee claims any depreciation on this expenditure incurred for excavation of coal prior to commencement of production by capitalizing the same, the assessee is not entitled for deduction u/s 35E - On the other hand, if the assessee has not claimed any depreciation on this expenditure, the claim of assessee u/s 35E of the Act is to be granted. Accordingly, the issue is remitted to AO for fresh consideration. AO has to decide the issue after giving opportunity of hearing to the assessee. Disallowance being depreciation on intangible assets claimed u/s 32(1)(ii) - HELD THAT:- The amount pertains to depreciation claim on the acquiring of additional/new land/mining rights during the period under consideration, the AO has disallowed the assessee's claim for the same reasons as elucidated in respect of the claim at his para-4, with regard to the same issue of depreciation on lease-hold rights, which has been disallowed - CIT(A) confirmed the disallowance of depreciation on the same reasons adduced in ground No.1 of this order and disallowed the depreciation claim held to be inadmissible. The assessee's grounds of appeal are therefore disallowed by the CIT(A). Disallowance being the interest on TDS made by the assessee u/s 37 - After hearing both the parties, we are of the opinion that this issue is squarely covered by earlier decision in the case of CIT Vs. Oriental Insurance Company Ltd. [ 2008 (10) TMI 230 - KARNATAKA HIGH COURT] held that the levy of interest for delay payment of TDS is not in the nature of penalty but it is a compensatory in nature and the same is allowable u/s 37 of the Act. Accordingly, this issue is decided in favour of the assessee.
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2022 (11) TMI 732
Reopening of assessment u/s 147 - notice u/s 148 issued on non-existent entity as the assessee was dissolved - HELD THAT:- On the detailed written submissions of assessee, CIT(A) called remand report from AO. On the remand report, the assessee was asked to give its comments. The assessee filed his reply to the said remand report. CIT(A) after considering the assessment order, submission of assessee, remand report filed by AO and rejoinder of assessee held that reopening of case is bad in law on two issues. Firstly, the name of assessee was struck off from the Registrar of Company on 06.07.2011. And an intimation was sent to assessing officer vide letter dated 03.01.2013, informing the cancellation of PAN. CIT(A) specifically noted that vide order of Ministry of Corporate Affairs, Government of India dated 06.07.2011 informed the dissolution of assessee-company and that such letter was forwarded to Chief Commissioner of Income-tax, Surat and Income-tax Officer. On such observation CIT(A) held that notice u/s 148 issued on non-existing entity and quashed the assessment order. CIT(A) also held that in the remand report dated 29.12.2017 AO confirmed the reopening was on account of audit objection and such fact corroborated the assessee s submission that reopening was mere change of opinion which is not permissible under law. We find that second finding of CIT(A) is not challenged by Revenue while raising its grounds of appeal. The Ld. Sr-DR for the Revenue while making his submission, though raised the plea that appeal of assessee was filed after gap of three years from the date of assessment order and that CIT(A) allowed the condonation of delay in filing appeal before CIT(A). it was also argued that he may be allowed to made his submissions against the finding of ld CIT(A), which is against revenue. We find that no such ground was raised by AO while filing appeal before Tribunal, in our view, the revenue in now precluded to raise such submission, on such pleas which has been accepted by assessing officer. Thus, the submission of Ld. Sr-DR for the Revenue has no substance. We find that the AO passed the re-assessment order against the non-existent entity. Thus, the assessment order is void-ab initio and the same is setaside. Hence, we affirm the order of ld CIT(A). In the result, ground No. 1 of the appeal is dismissed.
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2022 (11) TMI 731
Exemption u/s 54F 54EC - capital gain computation - reliance on reports of the Government approved valuer - addition by estimating the value of land @ Rs.750/- per square meter as on 01-04-1981 instead of adopted by the assessee @ Rs. 1,500/- per square meter on the basis of the Valuation Report - HELD THAT:- DVO has mentioned the rates of comparable instances of property at Rs. 598/-, Rs, 643/- Rs. 263/- respectively. Still the DVO suggested the rate of property under consideration (PUC) at Rs. 880/- per square meter - we find no logic in suggesting such rate. DVO has also recorded that railway station and bus stand is only 2.0 to 2.5 Km away. The DVO despite giving such details has not justified the rate suggested at Rs. 880/- per square meter. Thus, in our view such report of DVO does not provide desired result. Report of Government approved valuer - The built in teak polished cupboards are made in walls. The kitchen on first floor is made of marble with shelves and dado up to lintel level. Wooden staircase is also provided to transit to upper level. The property is having good potential value. The rates of various instances are ranging from Rs. 126/- to 2500/- per square meter. In our view the report of Government approved valuer is based on minute details and supported with various comparable. Still considering the entire facts and circumstances, as find that the value suggested by Government approved valuer is on little higher side. No other cost of improvement is claimed by the assessee. Therefore, considering all the facts, the reports of the Government approved valuer and the instances recorded therein and taking holistic view, we direct the assessing officer to take value of land @ Rs. 1200/- per square meter and the rate of RCC and wooden structure @ 800/- per square meter and to re-compute the capital gain. The assessing officer shall allow the exemption under section 54F 54EC, which was otherwise not disputed by him during assessment. Considering the facts, as given considerable relief in directing the assessing officer to adopt the rate of land and construction, therefore, consideration and adjudication of other submissions of the assessee have become academic. In the result, the grounds of appeal raised by the assessee are partly allowed.
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2022 (11) TMI 730
Addition u/s 68 or 69A - Addition representing cash deposits made in the bank account - cash deposits in the bank account as unexplained cash credit under section 68 - Commissioner (Appeals) while deciding the appeal has unilaterally changed the provision to section 69A of the Act while confirming the addition - HELD THAT:- The conditions and situations for applicability of section 68 and section 69A of the Act are different. Therefore, unless the conditions of the specific provision are fulfilled, no addition can be made. In the facts of the present appeal, the first appellate authority has accepted that conditions of section 68 of the Act are not fulfilled. That being the position, he should have deleted the addition. Instead of doing so, he has confirmed the addition under section 69A of the Act without providing an opportunity to the assessee to explain whether the conditions of section 69A are attracted or not. As per the decision of Aar Pee Apartments (P.) Ltd. [ 2009 (8) TMI 256 - DELHI HIGH COURT] when the scope and ambit of the two separate provisions are altogether different, the addition cannot be changed to another provision. Following the aforesaid decision of the Hon ble Jurisdictional High Court, the coordinate bench in the case of Toffee Agricultural farms Pvt. Ltd. [ 2022 (4) TMI 869 - ITAT DELHI] had expressed the view that the first appellate authority unilaterally has no power to change the section under which the Assessing Officer has assessed an item of income. Thus, respectfully following the ratio laid down in these decisions,hold that the addition made confirmed under section 69A of the Act deserves to be deleted. - Decided in favour of assessee.
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2022 (11) TMI 729
Adjustment of the income in processing of return u/s 143(1) - addition of total turnover of business by a back calculation with the total income of the assessee - addition made on basis of the reflection in 26AS plea of the counsel of the assessee is that only the net profit - @ 8% will be added as per the provision of section 44AD of the Act - HELD THAT:- The jurisdiction of the assessing authority for processing of return u/s 143(1) is only restricted for certain conditions which is designated in the CBDT Instruction no. 1814 dated 04.04.1989. The Act is very clear in this issue, there is no such any ambiguity in the Act related to processing u/s 143(1). The income which was reflected in the 26AS is a gross turnover. So, the addition made on basis of the reflection in 26AS without allowing reasonable opportunity to the assessee. But the ld. AO suo motu added back the amount which is violation of the natural justice. After respectfully considered the catena of judgment as mentioned above, the addition amount is arbitrary and bad in law. The ld. AO had acted beyond the jurisdiction related to this addition. Here, the order passed u/s 143(1) is bad in law. So the addition made by the ld. AO amount is liable to be quashed.
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2022 (11) TMI 728
Unexplanied cash deposits - undisclosed income - HELD THAT:- It is pertinent to note that the assessee has only submitted before the authorities that the assessee made withdrawal of unsecured loan lying in the company Excel Health Care Pvt. Ltd. but the assessee never explained as to the ledger of loan given or taken alongwith rate of interest charge/paid alongwith details TDS deducted and documentary evidences. The assessee did not explain the relationship of the persons such as friends and relatives while deducting loan which was deposited in Axis Bank. In fact, M/s. Excel Health Care Pvt. Ltd. were also asked the details but it clearly stated that no interest has been paid to the assessee in F.Y. 2007-08 and company did not made any transaction with the assessee in cash except the transaction entered into F.Y. 2007-08. Thus, from the perusal of the records it can be seen that the assessee has not given the evidence related to cash deposits before the AO as well as before the CIT(A) and the explanation by the assessee during the assessment proceedings as well as during the appellate proceedings were inadequate. The ledger account of Excel Health Care Pvt. Ltd. is inadequate to show as to why the cash deposits have been made by the assessee. Hence, the appeal of the assessee is dismissed.
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2022 (11) TMI 727
Expenses as claimed u/s. 57(iii) - old dues not payable shown as Income from other sources - AO observed that the expenses claimed has no nexus with the income from offered and therefore, made addition which was claimed under Section 57(iii) - HELD THAT:- Assessee has shown in the return in respect of old dues not payable as income from other sources and was never shown the same as debts and liabilities by the assessee in the previous year.This fact was not denied by the assessee at any juncture. Merely stating that it is wrongly treated under income from other sources cannot show the genuineness of the assessee related to old dues. The assessee has not brought on record in particular instant where the assessee has right to approach Shri Rasik C. Patel. If the advance was taken from Shri Rasik C. Patel who is now expired as per submissions made before the CIT(A) by the assessee, the assessee has not shown any measures taken by him as to whether in legal heirs of the said party are present to whom the dues can be repaid. Merely writing off the dues cannot allow the claim of the assessee. CIT(A) rightly said that the old dues not payable is rightly shown as income from other sources . The CIT(A) has rightly placed the total expenses which reveals that no expenses were related to the advances against purchase received from Mr. Rasik Shah. Therefore, the same also cannot be allowed from the income. There is no need to interfere with the finding of the CIT(A). Hence, the appeal of the assessee is dismissed.
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2022 (11) TMI 726
Assessment order passed u/s 143(3) r.w.s. 142(2A) - admission of Company Petition under Insolvency and Bankruptcy Code, 2016 - Hon ble NCLT has admitted the Company Petition and declared the Moratorium period under section 13(1)(a) of the IBC prohibiting certain acts - HELD THAT:- As relying on M/S. STERLING LAM LIMITED VERSUS THE DY. CIT S.K. CIRCLE HIMATNAGAR [ 2022 (7) TMI 1343 - ITAT AHMEDABAD] Appeal filed by the Revenue in the present circumstances, cannot be proceeded with. Till the completion of moratorium period or upon the revival of corporate debtor as per the Resolution Plan approved by the adjudicating authority. Therefore the appeal filed by the Revenue is treated as dismissed in limini. However, liberty is given to the Revenue to revive/restitute after the moratorium period expires or as approved by the adjudicating authority.
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2022 (11) TMI 725
Addition u/s 68 - assessee not established the identity, creditworthiness and genuineness of the transactions - HELD THAT:- Assessee has established the identity, creditworthiness and genuineness of the transactions by submitting all the details such as confirmation cum contra account the name, address, PAN details, I.T. Return, balance sheet and profit and loss account, audit report, bank statement etc. From the perusal of the record it can be seen that no loans has been taken by the assessee during the year under consideration but it was the opening balance as on 01.04.202013 which was carried forward and thus, the genuineness of cash credits were established by the assessee. The CIT(A) has given a detail finding and there is no need to interfere with the same. Ground No. 1 of Revenue s appeal is dismissed. G.P. addition - HELD THAT:- As assessee has duly furnished all the details to establish the correctness of the books of accounts and also furnished ITR, Audit Report, balance sheet and Profit Loss Account. The detail of G.P. ratio and N.P. ratio for last three years also was shown to the Assessing Officer. It is pertinent to note that the Assessing Officer while rejecting the books of accounts has not recorded any proper satisfaction/reasons and therefore, the rejection of books of accounts was not justifiable. The G.P. and N.P. rate was prejudicially decrease in the present year but the turnover has increased and therefore, the same was rightly accepted by the CIT(A). Hence, Ground No. 2 of Revenue s appeal is dismissed.
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2022 (11) TMI 724
Revision u/s 263 by CIT - Bogus LTCG - Penny stock purchases - HELD THAT:- In the present case, in fact the margin of gain varies from shares bought at the rate of Rs.50/- being sold at Rs.100/- almost hundred percent margin throughout the year with numerous transactions being taking place; that even in the last sale of VIL shares at very high rate of Rs.125/- per share is demonstrated to be genuine by the fact that the assessee subsequently purchased these shares at this very high rate and held on to them. If the assessee was indulging in taking accommodation entry, he would not have subsequently purchased these shares at a very high rate, because, that would have defeated the purpose of introducing his own unaccounted money into his own books of accounts. Based on the evidence that were furnished before the AO, we find that the AO had taken a plausible view that the impugned transaction was not a penny stock trading, but in fact was a genuine trading transactions of VIL shares and accordingly allowed the claim of short term capital gain returned by the assessee. CIT has not controverted any of the facts which the assessee has demonstrated before the AO in support of its claim of genuineness of the transactions. In fact, he does not even point out what exact information was there with the AO which he should have used against the assessee. He merely makes general reference to the investigation report of the Department stating to have contained information regarding these shares. With the assessee having sufficiently demonstrated genuineness of the transaction of trading in shares of VIL and also that it was not a mere penny stock traded in, and the ld.Pr.CIT having not pointed out insufficiency in the explanation and the evidence filed by the assessee, and also not specificying what information was there with the AO against the assessee, there could be no finding of error at all in the order of the AO accepting the assessee s claim of the transactions being genuine. The order passed by the Pr.CIT therefore, we hold, is without any basis and is therefore set aside. The grounds of appeal of the assessee are allowed.
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2022 (11) TMI 723
Deduction claimed u/s.10A - AO assessed income from course material under the head income from other sources and also denied deduction claimed u/s.10A on the ground that the receipts are not in the nature of profits gains derived from export unit - HELD THAT:- There is no error in the reasons given by the AO and the Ld.CIT(A) to assess income from course material under the head income from other sources , because, it is nothing to do with main business activity of the assessee i.e. export of software products services from STP Units and thus, we confirm the action of the AO in assessing income from course material under the head income from other sources and also denial of deduction u/s.10A. This issue is also covered against the assessee by the decision of ITAT Chennai Benches, in the assessee s own case, for the AY 1996-97 where the Tribunal after considering relevant facts has rightly held that income derived from training fee and related course material, is not entitled for deduction u/s.10B of the Act. Therefore, consistent with view taken by the co-ordinate bench, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the assessee. As regards alternate claim of the assessee, the AO is directed to verify the claim and if found correct, the assessed net income under the head income from other sources . Rental income under the head income from other sources - AO has assessed rental income under the head income from other sources on the ground that said income is not in the nature of profits gains derived from export unit and thus, denied deduction claimed u/s.10A - HELD THAT:- The issue needs to be set aside to the file of the AO for further verification. In case, the assessee derived rental income from lease of land building, then definitely said income is assessable under the head income from house property and consequent action needs to be followed. But, in case, rental income is derived from lease of plant machinery or equipment, then same needs to be assessed under the head income from other sources and consequent action needs to be followed. Further, if at all the assessee is in the business of letting out properties or plant machinery, then same needs to be assessed under the head income from business or profession as considered by the Ld.CIT(A) and consequent action needs to be followed like allowing expenses relatable to said income. Since, facts are not clear, we set aside the issue to the file of the AO and direct the AO to re-consider the issue in light of our discussion given hereinabove and decide the issue in accordance with law. Depreciation on non-compete fee - AO has disallowed depreciation on the ground that the non-compete fee/good will is not depreciable asset, eligible for depreciation u/s.32(i)(ii) nor the expenditure on acquisition of goodwill, is eligible item for deduction u/s.35D(2) - HELD THAT:- Depreciation on non-compete fee whether it is an intangible asset eligible for depreciation u/s.32(1)(ii) of the Act, is no longer res integra. CIT(A) allowed depreciation on non-compete fee by following the decision of ITAT in the assessee s own case for the AYs 2001-02 2002-03, where the Tribunal held that non-compete fee is an intangible asset eligible for depreciation u/s.32(1)(ii) of the Act. The matter reached to the Hon ble Madras High Court and the jurisdictional High Court of Madras had considered an identical issue in the case of Pentasoft Technology Ltd. [ 2013 (11) TMI 1057 - MADRAS HIGH COURT] and held that non-compete fee is in the nature of intangible asset in terms of sec. u/s.32(1)(ii) of the Act, and would be a capital asset entitled for depreciation. Thus the assessee is entitled for depreciation on non-compete fee and thus, we direct the AO to allow depreciation on non-compete fee as claimed by the assessee. Computation of deduction u/s 10A - exclusion of software development expenses and exchange fluctuation loss from export turnover but not from total turnover - HELD THAT:- The issue of computation of deduction u/s.10A of the Act, in light of definition of export turnover and total turnover, has been resolved by the Hon ble Supreme Court in the case of HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] where it was held that expenses deducted from export turnover needs to be deducted from total turnover - AO CIT(A) is erred in not excluded expenses deducted from export turnover from total turnover and thus, we direct the AO to exclude expenditure incurred towards software development and foreign exchange loss from total turnover also. Depreciation on IPR - HELD THAT:- As in the assessee s own case for the AY 2002-03 where the Tribunal after considering relevant facts held that IPR is eligible for depreciation u/s.32(1)(i) of the Act. Therefore, consistent with view taken by the co- ordinate Bench, we are of the considered view that there is no error in the reasons given by CIT(A) to delete additions made towards disallowance of depreciation on IPR and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue. Nature of expenditure - expenditure on purchase of software - Revenue expenditure or capital expenditure - HELD THAT:- Although, the assessee has purchased software to replace with existing software in a computer system, but same does not give any enduring benefit, because the life of software is very short. Therefore, the same cannot be considered as capital in nature. We find that the jurisdictional high Court of Madras in the case of Southern Roadways Ltd., [ 2006 (10) TMI 82 - MADRAS HIGH COURT] has considered an identical issue and held that there is an enduring benefit, it does not result in acquisition of any capital asset and merely enhanced the productivity or efficiency of the system and thus, it cannot be considered as capital in nature. CIT(A) after considering relevant facts and also by following the decision in the case of Southern Roadways Ltd., (supra) has rightly deleted the additions made by the AO. Unexplained credit - assessee could not furnish full details in respect of balance payable to M/s.Penta Media Graphics Ltd. - CIT(A) allowed relief to the assessee on the basis of reconciliation filed by the assessee along with ledger account of M/s.Penta Media Graphics Ltd., in the books of the assessee and vice-versa - HELD THAT:- Although, the assessee has filed reconciliation and further evidences first time before the Ld.CIT(A), the Ld.CIT(A) has allowed relief to the assessee without confronting those evidences to the AO for his rebuttal. No doubt, the assessee has filed details of ledger account along with confirmation from the party and explained the credit.CIT(A) should have confronted those evidences to the AO for his comments before allowing the relief to the assessee - Issue needs to go back to the file of the AO to verify additional evidences filed by the assessee including confirmations from the party and reconciliation of difference between the ledger account of party in the books of accounts of the assessee and in the books of creditors. In case, the assessee is able to explain credit with necessary evidences, then the AO is directed to delete additions made towards credits in the name of M/s.Penta Media Graphics Ltd. Additions towards creditors in absence of confirmation form the party - CIT(A) deleted the additions made by the AO on the basis of subsequent payment made by the assessee to the creditors - HELD THAT:- We find that confirmation of settlement of credit subsequently from creditors were already produced before the Ld.CIT(A). Notices by the AO being returned/unserved cannot be the reason to hold the credit, is not genuine. Creditors are carried over from FY 2001-02 and are not credits/appearing for the first time during the year. Therefore, we are of the considered view that there is no error in the reasons given by the Ld.CIT(A) to delete the additions towards credits in the name of M/s.RS Co. Inc. and M/s.Pentafour Software Solution Inc., and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue. Allocation of disallowance of expenses among STP Units and non-STP Units in the ratio of 90% and 10% on the basis of income of the assessee - allocation of disallowance on said expenses is whether it should be on the basis of income or turnover - AO has disallowed certain liabilities u/s.43B as per Tax Audit Report and allocated said disallowances to STP Units and non-STP Units on the basis of income derived by the assessee - HELD THAT:- In our considered view, turnover would be the appropriate ratio for allocation of expenses to STP Units non-STP Units instead of income. Because, income of STP Units non-STP Units may depend upon various factors including fixed overhead expenses and other parameters. Therefore, we are of the considered view that there is no error in the reasons given by the Ld.CIT(A) to allocate disallowance of expenses u/s.43B of the Act, to STP Units non-STP Units on the basis of export turnover and domestic turnover and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue.
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2022 (11) TMI 722
Disallowances of Mattipuran land leveling expenses - short term capital computation - AO, computed the amount of short term capital gain by disallowing mattipuran expenses or the land filing expenses only for the reason that the alleged payee denied to have carried land filling work - HELD THAT:- No ambiguity to the fact that the genuineness of the land filling expenses has been accepted by the learned CIT(A) in the case of co-owner. Therefore, in my considered view when, the short term capital gain and expenses claimed by the co-owner has been accepted, then the assessee cannot be treated indifferently. See M. Ambalal Desai [ 2021 (2) TMI 345 - ITAT SURAT] Thus we accept the contention of ld. AR for the assessee that once, the similar STCG offered by the co-owner has been accepted by the Revenue, then the assessee is also entitled for similar relief. We find convincing force in the submissions of the learned AR for the assessee - Appeal of the assessee is hereby allowed.
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2022 (11) TMI 721
Addition u/s 68 - Unexplained cash credits - HELD THAT:- The provision of section 68 of the Act fastens the liability on the assessee to provide the identity of the lenders, establish the genuineness of the transactions and creditworthiness of the parties. These liabilities on the assessee were imposed to justify the cash credit entries under section 68 of the Act by the Hon ble Calcutta High Court in the case of CIT Vs. Precision finance (p) Ltd [ 1993 (6) TMI 17 - CALCUTTA HIGH COURT] We proceed to understand the identity of the party. The identity of the party refers to the existence of such party which can be proven based on the evidences. As such the identity of a party can be established by furnishing the name, address and PAN detail, bank details, passport and other details of the Government agencies. Genuineness of the transaction - It the duty of the assessee to establish that creditor party has capacity to advance such loan and having requisite fund in its books of account. The capacity to advance loan can be established by the showing sufficient income, capital and reserve or other fund in the hand of creditor. It is required by the AO to find out the financial strength of the creditor to advance loan with judicious approach and in accordance with materials available on record but not in arbitrary and mechanical manner. We proceed to adjudicate the issue in hand. With respect to the identity of the party, we find that the AO in his order has given categorical finding that the assessee has furnished the details such as copy of ledger confirmation along with the copy of PAN except one party namely Smt. Kalpanaben Desai from whom the assessee has taken the loan of Rs. 2,50,000.00 only. The ledger copies contain the name and address of the loan parties. From the above, there remains no doubt that the identity of the loan parties has been established by the assessee beyond doubt. Genuineness of transaction - The undisputed fact that the assessee paid interest on loan after deducting TDS which was not doubted except one party namely Smt. Kalpanaben Desai from whom the assessee has taken the loan of Rs. 2,50,000.00 only. Thus, the Revenue accepted the amount of interest on the loan but doubted the genuineness of the impugned amount of loan. As such the stand of the Revenue is contrary to the facts on record. Thus, we can assume that the impugned transaction was the business transactions between the assessee and the loan parties. Thus we are of the view that the assessee has discharged its onus cast under section 68 of the Act, therefore, we direct the AO to delete the addition made by him except one party namely Smt. Kalpanaben Desai from whom the assessee has taken the loan of Rs. 2,50,000.00 only. Hence, the ground of appeal of the assessee is hereby allowed. Addition u/s 2(24)(x) on account of late payment of PF - HELD THAT:- We note that the issue on hand is squarely covered against the assessee by the order of CIT vs. Gujarat State Road Transport Corporation India Limited [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] - However, we also note that the above referred order of the Hon ble Gujarat High Court has been challenged before the Hon ble Supreme Court and outcome of the same is pending. In our considered view, the issue is covered against the assessee at this stage and deserve to be dismissed. Thus the ground of appeal of the assessee is hereby dismissed. Addition on account of commission expense relating to prior period - HELD THAT:- We note that the genuineness of the expenses and proximity of such expenses with the business of the assessee has not been doubted by the authorities below. Thus, it can be inferred that the impugned expenses were incurred wholly and exclusively by the assessee for the purpose of its business. But the only drawback is that the same was not claimed in the year to which it pertains. However, we also note that there was no change in the rate of tax under the Act. Thus, there cannot be any loss to the revenue even if the assessee claimed such expenses in the year under consideration - we are of the view that the assessee is entitled to claim the deduction of the impugned expenses. Accordingly, we set aside the order of the Ld. CIT (A) and direct the AO to delete the addition made by him. Disallowance of interest paid on late payment of TDS - HELD THAT:- In the present case, we note that the assessee itself conceded before the ld. CIT-A for the disallowance of the impugned expense. Therefore, we dismiss the ground of appeal of the assessee. Unexplained advances from customers and unexplained liabilities - HELD THAT:- As considering the minuscule amount involved in the dispute and the fact that the amount was received through banking channel, the same cannot be assumed as unexplained cash credit under section 68 of the Act. It is for the reason that the assessee has furnished the name and address of the party, therefore the identity cannot be doubted without necessary verification which has not been done by the AO in the instant case. Likewise, the transaction was carried out through the banking channel and therefore genuineness of the transaction cannot be doubted in the instant case. Similarly, the amount of advance is of negligible value and therefore the question of creditworthiness of the party does not arise. Thus, in the given facts and circumstances, considering the minuscule amount involved in the dispute, we do not find any reason to disturb the finding of the learned CIT-A. Hence the ground of appeal of the revenue is hereby dismissed. Addition u/s 41(1) - remission and cessation of liability for expenses, admittedly the assessee has not written back the impugned liabilities in the books of accounts - HELD THAT:- It is necessary to write back the liabilities in the books of accounts by crediting the profit and loss account. But, in the present case, the assessee has not done so, rather the assessee in the later years has discharged part of the liabilities by making payments which is evident from the submission of the assessee before the learned CIT-A on page 9 of the appellant order. Accordingly, we are of the view that the liabilities shown by the assessee against the expenses cannot be treated as income under the provisions of section 41(1) of the Act. Hence, we decline to interfere in the finding of the learned CIT-A. Thus the ground of appeal of the revenue is hereby dismissed.
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2022 (11) TMI 720
Deduction u/s 36(1)(viia) r.w.r. 6ABA - computation of aggregate monthly average advance made by the rural branch of scheduled Bank - outstanding advances including opening balances upon which the assessee bank has already claimed such deduction in earlier years or the same has to be allowed in respect of incremental advances made during the year - HELD THAT:- Respectfully following the aforesaid decisions of M/S. CITY UNION BANK LTD. [ 2022 (4) TMI 113 - MADRAS HIGH COURT] and UTTARBANGA KSHETRIYA GRAMIN BANK [ 2018 (5) TMI 903 - CALCUTTA HIGH COURT] we decide the question referred for our adjudication in favour of the assessee and held that the deduction under section 36(1)(viia) r/w Rule 6 ABA is to be allowed on the total outstanding advances at the end of each month considering the opening balance. - Decided against revenue.
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2022 (11) TMI 719
Income deemed to accrue or arise in India - benefit of the Article 24 of the DTAA - denial of benefit of the non-discrimination clause of the India-Korea Double Taxation Avoidance Agreement ('DTAA') and taxing the Appellant's income at the rate 40% (plus surcharge and education cess) instead of at the rate applicable to a resident tax payer (i.e 30% plus surcharge and education cess) - HELD THAT:- This issue is now covered, against the assessee, by a coordinate bench decision in the assessee's own case for the assessment year 2007-08 [ 2022 (6) TMI 1329 - ITAT MUMBAI] thus hold that the applicable rate of taxation, under the Income Tax Act 1961, for the assessee company cannot be read down in the light of the provisions of a double taxation avoidance agreement, as is the specific mandate of Explanation 1 to Section 90 or even on the first principles without the benefit of this Explanation. We confirm the action of the Assessing Officer and the DRP and decline to interfere in the matter. Addition u/s 28(iv) - salary paid to expatriates - salary paid by the Shinhan Bank - Head office to expatriates exclusively working for India operations/branch during the year under consideration - HELD THAT:- There cannot be any purpose of expenses incurred by the HO, which are relatable to the Indian PE, being allowed as a deduction in the computation of income of the PE when non-reimbursement of that expenditure by the PE is treated as a source of income of the foreign company itself- particularly when, from the income tax perspective, the taxable unit is the foreign company and not the PE. It is also important to bear in mind the fact that, in the light of the five-member bench decision of this Tribunal, in the case of Sumitomo Mitsui Banking Corp Vs DDIT [ 2012 (4) TMI 80 - ITAT MUMBAI ] the intra-organization transactions, as non-reimbursement of employee costs by the PE to HO, is, are tax neutral. In any case, there cannot be a benefit accruing to the Korean company when the Indian PE of the assessee company does not reimburse its Korean company, because the assessee itself is the Korean company and the transaction in question is a wholly non-business and internal transaction of the Korean company. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assesse on this point. The Assesing Officer is thus directed to delete the impugned disallowance - The assessee gets the relief accordingly. As we have upheld the plea of the assessee on the short ground explained above, all other pleas of the assessee are dismissed as infructuous as of now, but these contentions shall remain open for adjudication in a fit case. Transfer pricing adjustment with respect to interest paid to Head Office - HELD THAT:- We deem it fit and proper to delete the impugned ALP adjustments for the short reason that the LIBOR, even amongst the independent banks, cannot always be the rate at which the intra-bank transactions must take place, and it cannot be open to the TPO to reject the independent party transactions, which are valid input for application of Comparable Uncontrolled Price Method (CUP), simply because the transactions are entered at a rate higher than LIBOR. Such a simplistic approach cannot meet any judicial approval. The ALP adjustment in respect of taking loans at a rate higher than LIBOR is thus deleted. As regards the ALP adjustment in respect of the loans given, the amount involved is only Rs 17,896, and looking to the smallness of the amount, we treat this grievance as not pressed. Addition treating the interest paid by Indian branch of the Bank to its overseas branches as taxable in the hands of the Indian branch - HELD THAT:- As per assessee own case [ 2022 (6) TMI 1329 - ITAT MUMBAI] we uphold the plea of the assessee that the interest paid by the PE to the GE cannot be brought to tax in the hands of the assessee company, even though it is to be allowed as a deduction in the computation of profits attributable to the permanent establishment. The Assessing Officer is directed to grant the relief accordingly. The assessee has already offered to tax the interest income received from its head office, and there is no surviving dispute in respect of the same.
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2022 (11) TMI 718
Reopening of assessment u/s 147 - addition in respect of an altogether new issue - whether the AO is entitled to make addition on the basis of a new issue, when he has not made any addition on the issues for which the assessment was reopened? - HELD THAT:- In the instant case, the AO has not made any addition on the issues for which the assessment was reopened. However, he has made addition of an item, which was not stated in the reasons for reopening. Hence, under these set of facts, the AO could not have made the addition of interest income received on income tax refund as per the ratio of the decision rendered in Jet Airways Ltd [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] . Accordingly, we direct the AO to delete the addition so made. The order passed by Ld CIT(A) on this issue stands set aside - Appeal filed by the assessee is allowed.
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2022 (11) TMI 717
Addition u/s 68 - unexplained share capital and share premium - non compliance to summons issued u/s. 131 of the Act or non appearance of the directors of the subscribing companies before the AO - nature and source of application money received were not furnished and even proved before the AO nor any remand report was called for by ld. CIT(A) - CIT(A) allowed the appeal of the assessee by holding that the assessee has proved genuineness of transactions and creditworthiness of the investors - HELD THAT:- Non compliance to summons issued u/s. 131 of the Act or non appearance of the directors of the subscribing companies before the AO can not be basis for making addition as the assessee has filed all the necessary documents before the authorities below proving the identities, creditworthiness of the investors and genuineness of the transactions. The case of the assessee is squarely covered by the decisions of Crystal Networks Pvt. Ltd. [ 2010 (7) TMI 841 - KOLKATA HIGH COURT] wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions, the fact that summon issued were returned un-served or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. Assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has commented on these evidences filed by the assessee. Under these facts and circumstances and considering underlying facts in the light of ratio laid down in the decisions as discussed above, we are inclined to uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue.
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2022 (11) TMI 716
Disallowance u/s 43B - leave encashment - Disallowance made on the basis of observation of tax audit report u/s 44AB of the Act and the assessee fail to give proper explanation on that count - HELD THAT: It is found that the Ld. A.O has not raised the query on the said issue but suo-moto disallowed the claim of the expenditure. In our opinion, it has to be seen whether the assessee has paid this expenditure before the due date of filing of the return u/s 139(1) of the Act. If the same is paid within the due date filing of return there cannot be any disallowance on this count. AO cannot make addition only based on the figure picked from the Tax Audit Report which is contrary to the existing facts. Since in the present case, the actual disallowance has been added back to the computation by the assessee, we are of the opinion that, the addition/disallowance made u/s 43B is deserves to be deleted. Accordingly, we allow the Ground No. 1 of the assessee. Disallowance u/s 40A(7) - amount of provision for gratuity debited in the profit and loss account and which was credited to the provision of gratuity account - HELD THAT:- We find force in the contention of the Ld. Counsel for the assessee that the Ld. AO as well as Ld. CIT(A) could not understand the tax audit report and made the addition which has been confirmed by the Ld. CIT(A). The Lower Authorities have disallowed total closing balance at the end of the previous year (i.e. 31/03/2015) u/s 40A(7) of the Act without understanding the tax audit report in proper sense. A.O. and the CIT(A) ought to have appreciated the tax audit report in proper sense the computation. The Lower Authorities ought to have appreciated the fact that the amount of provision for gratuity debited in the profit and loss account and which was credited to the provision of the gratuity account is only Rs. 24,27,081/- and should not have made disallowance u/s 40A(7) of the Act. Therefore, the Ground of the Assessee is deserves to be allowed.
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2022 (11) TMI 715
Penalty imposed u/s 271(1)(c) - AO levied penalty after feeling satisfied that the assessee has concealed its income and thus furnished inaccurate particulars of its income - CIT-A deleted the penalty - HELD THAT:- A s quantum addition on the basis of which penalty proceedings were initiated, has been deleted. Therefore, we do not see any good reason to interfere in the finding of the learned CIT(Appeals) and the same is hereby affirmed. Revenue s appeal is dismissed.
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2022 (11) TMI 714
Revision u/s 263 - disallowance u/s 40(a)(ia) in respect of loan processing fee paid by the assessee AND disallowance of interest on account of charging of interest at lower rate on the loan given to a related party - HELD THAT:- A careful perusal of the definition of the term interest given in sec. 2(28A) would show that it uses the expression service fee or other charge . Hence it is possible to contend that the loan processing fee would fall under the category of service fee or other charge . A careful perusal of the definition would show that the the said payments (service fee or other charge) should also be in respect of moneys borrowed or debt incurred . Hence, any type of payment made after the borrowing of money or incurring of debt alone would be covered by the definition of sec.2(28A) of the Act. Hence, we are of the view that there is merit in the contentions of the Ld A.R that the loan processing fee cannot qualify as interest within the meaning of sec.2(28A) of the Act. We are of the view that the interpretation given by Ld PCIT in respect of this issue is not sustainable and hence the Ld PCIT was not justified in initiating revision proceedings in respect of this issue. Addition u/s 40A(2)(a) - We notice that the Ld PCIT initiated enquiry on the ground that the provisions of sec.40A(2)(a) are attracted to the transaction of loan given to the related party. However, he concluded that the provisions of sec.40A(2)(a) are not attracted. However, he concluded that a part of interest paid to GRUH Finance Ltd should be disallowed. We are unable to understand as to how a part of interest expenditure paid to GRUH Finance Ltd could be disallowed merely on the reasoning that the assessee has charged lower interest on the loan given to a related party - PCIT has also not cited any of the provisions of the Act, which would warrant such a disallowance. Hence, we do not find any rationale in the view taken by PCIT in respect of this issue and hence the Ld PCIT was not justified in initiating revision proceedings in respect of this issue. As in the case of CIT vs. Nagesh Knitwears (P) Ltd [ 2012 (6) TMI 65 - DELHI HIGH COURT] has held that the CIT should conduct necessary enquiries and come to the conclusion that the assessment order is erroneous and the view taken by the AO is unsustainable in law, i.e., the view expressed by Ld PCIT should be in accordance with law and then only, he could hold that the assessment order is erroneous. When the view taken by Ld PCIT itself is not in accordance with law, then the revision order passed by Ld PCIT could not be sustained. From the foregoing discussions, it can be noticed that the view taken by Ld PCIT in respect of the first issue is not sustainable in law. With regard to the second issue, the Ld PCIT has misdirected himself and in fact, there is no clarity at all in his directions. Hence, we are of the view that the view taken by Ld PCIT in respect of both the issues is not sustainable in law, in which case, the impugned revision order is liable to be quashed. Accordingly, we quash the impugned revision order passed by Ld PCIT. Appeal of the assessee is allowed.
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2022 (11) TMI 713
Income from house property - excluding of service tax whereas in Form 26AS it is inclusive of service tax - Difference in regard to the service tax computed by the assessee and shown in Form 26AS by the assessee - HELD THAT:- Service tax was included in the income from house property computed by the assessee but the amount mentioned in Form 26AS in inclusive of service tax. This is because the reason that assessee has deducted TDS on rent inclusive of service tax instead of exclusive service tax which has been duly reconciled by the assessee with sufficient evidence adduced before the authorities below as it appears from materials available before us, in our considered opinion, which has not been taken into consideration with its proper perspective. Thus, the addition, is not found to be sustainable. Hence, deleted. Assessee s appeal is allowed.
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2022 (11) TMI 712
Penalty u/s 271(1)(c) - estimation of income u/s 44AD - addition made on credit summation made by the assessee - Debatable issue - whether Merely difference of opinion does not construe that the assessee has furnished inaccurate particulars of return? - HELD THAT:- Undisputedly, assessee s income has been estimated considering the deposits made in the bank account under section 44 A.D. of the Income Tax Act. In our view, penalty under section 271(1)(c) based on estimation of income is not justified. It was noted that Assessing Officer himself had found that said deposit was not made on a single day and, thus, it could not be said that assessee had failed to furnish complete particulars. Even otherwise, revenue had not come out with clear case of suppression of turnover and, penalty had been imposed merely on basis of enhancement of estimated income where impugned penalty would not sustain. Thus the penalty imposed by the AO u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income and confirmed by the Ld. CIT(A) is deleted. - Decided in favour of assessee.
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2022 (11) TMI 711
Unexplained cash deposits during demonetization period u/s 69A - CIT-A deleted the addition - HELD THAT:- In the present case it is not in dispute that the books of accounts maintained by the assessee in the regular course of its business were audited and accepted by the AO while framing the assessment through deep scrutiny under section 143(3) - AO did not point out any specific defect in the books of account maintained by the assessee, no inflated purchases or suppressed sales were found. In the instant case, even the Investigation Wing asked the assessee to furnish the details which were submitted, on those details, no adverse comment was made by the Investigation Wing. As also noticed that the assessee is having cash sales in all the years which is evident from page no. 4 of the impugned order passed by the Ld. CIT(A). For the year under consideration the assessee was having cash sales of Rs. 4,12,59,227/- out of total sale of Rs. 13,82,27,373/-, the cash sale was about 1/3rd of the total sales, similar was the position there in the preceding year. The assessee was also having cash realized from the debtors and it was not the case of the AO that the debtors of the assessee were bogus or those were not related to the business of the assesee. The cash deposited in the bank by the assessee during the demonetization period was out of the cash sales and the realization from the trade debtors duly shown in the book of accounts which were accepted by the A.O. In the present case, in the month of October 2016 and November 2016 the assessee was having cash sales of Rs. 1,04,97,098/- and Rs. 62,00,849/- which had not been doubted by the AO who had also not commented on the claim of the assessee that the balance of the amount which was deposited in the bank account was out of the realization of cash from the debtors which for the year under consideration was at Rs. 3,09,78,586/-. In the present case the AO accepted the trading results and had not doubted opening stock purchase sales and closing stock as well as GP rate shown by the assessee. Therefore, the additions made by the AO on the basis of surmises and conjectures was rightly deleted by the Ld. CIT(A). We do not see any valid ground to interfere with the detailed and logical findings given by the Ld. CIT(A) in the impugned order. - Decided in favour of assessee.
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Customs
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2022 (11) TMI 710
Maintainability of appeal before the HC or SC - territorial jurisdiction - appeal filed by the Department under Section 130 of the Customs Act is dismissed as not maintainable by observing that as the dispute can be said to be a dispute with respect to valuation and therefore the appeal would not lie to the High Court but an appeal would lie to this Court - HELD THAT:- The issue involved is whether with respect to the dispute in question, the appeal would be maintainable before the High Court or before this Court is squarely covered by a recent decision of this Court in the case of M/S. ASEAN CABLESHIP PTE. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2022 (3) TMI 760 - SUPREME COURT] where it was held that In the facts and circumstances of the present case the High Court is right in observing that the principal question in the present case is not in relation to the rate of duty but determining whether vessel AE is a foreign going vessel or not, and if the vessel AE is a foreign going vessel, Section 87 of the Act will be applicable or not. Therefore, with respect to such an issue, against the order passed by the CESTAT, the appeal would be maintainable before the High Court under Section 130 of the Act. In the present case, the dispute also is with respect to breach of condition of notification which may ultimately lead to subsequent demand of duty or imposition, but that itself cannot be said to be a dispute with respect to valuation. Therefore, the High Court is wrong in not entertaining the appeal on the ground that the same was not maintainable - The impugned judgment and order passed by the High Court dismissing the appeal as not maintainable is hereby quashed and set aside. The appeal before the High Court was maintainable. The appeal before the High Court is ordered to be restored to the file which shall be considered by the High Court in accordance with law and on its own merits - Appeal allowed.
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2022 (11) TMI 709
Validity of SCN - Seeking quashing the impugned show cause notice dated 19th October, 2012 primarily on the ground that there has been an inordinate delay in adjudicating the show cause notice - HELD THAT:- The Affidavit-in-Reply does not indicate when the show cause notice first transferred to the call book. Moreover the High Court dismissed the Appeal of Respondents in Greenwich on 6th September, 2018. The Hon ble Apex Court dismissed Respondent s Appeal on 1st April, 2019. Only on 22nd November, 2019, the show cause notice, it is stated, was taken out of the call book, but still Respondents did nothing - Moreover, it is Respondents own case in the Affidavit-in-Reply that the issue in the show cause notice issued to Petitioner is squarely covered by the order passed by CESTAT in the matter of Greenwich. The Appeal was dismissed by High Court and the Hon ble Apex Court has also dismissed the Appeal of Respondents. Therefore the order in Greenwich passed by CESTAT has attained finality. Since in the Affidavit-in-Reply Respondents accept that the order of CESTAT covers the issue in this matter as well, it would, in our view serve no purpose in adjudicating the show cause notice. It would be a futile exercise. The show cause notice dated 19th October, 2012 is hereby quashed - Petition disposed off.
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2022 (11) TMI 708
Applicability of Doctrine of Merger - Rejection of petitioner s application to recall its order - correctness of classification and consequent rate of duty adopted by the Assessing Officer - HELD THAT:- The order dated 4th October 2016 is a common order and if the application of three other applicants/appellants is allowed on the ground that certain documents placed on record have not been considered and those are not party specific documents, certainly that benefit, should also be extended to petitioner in this case. Another point is CESTAT, after hearing those appeals and considering the Government of India notification, has allowed those appeals in favour of other three parties. CESTAT took up the appeal filed by Fortune Marketing Pvt. Ltd. for final hearing (post the recall of the order dated 4th October 2016) and passed final order dated 4th April 2017 allowing the appeals and deciding the issue in favour of Fortune Marketing Pvt. Ltd. - the reason for allowing the rectification application to those appellants is because CESTAT accepted that it had not considered the clarification issued by the Department of Electronics and Information Technology, Government of India though it was produced before CESTAT. The doctrine of merger would not apply in this case. This is because the Apex Court while permitting leave to withdraw the appeal has not passed any order on merits. The appeal had not even been admitted. The order of the Apex Court is also not an order rejecting the appeal and, therefore, the said order cannot be said to be an order of affirmance of the order of CESTAT. That being the position, in our view, the doctrine of merger cannot be applied to the facts and circumstances of this case. The impugned order dated 26th August 2019 is set aside - petition disposed off.
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2022 (11) TMI 707
Fixation of minimum price for importation of betel nuts - power to regulate and/or control the importation of any item - competence of the DGFT to issue notification restricting the importation of betel nuts below the CIF value fixed by the DGFT - tariff value fixed by the importer in its shipping bill has been annulled and/or overridden due to the notification issued by the DGFT in fixing the CIF value of betel nuts for the purpose of importation - Foreign Trade (Development and Regulation) Act, 1992. HELD THAT:- The Hon ble Supreme Court in Union of India and Others vs. Raj Grow Impex LLP and Others, [ 2021 (6) TMI 778 - SUPREME COURT] while considering the effect of the notification issued by the Central Government under the FTDR Act and also consequential Trade notices issued by the DGFT held that the goods in question are to be held liable to absolute confiscation but with a relaxation of allowing re-export, on payment of the necessary redemption fine and subject to the importer discharging other statutory obligations. The above decision are of much relevance to the case on hand. However, as observed earlier, they could not be placed before the Tribunal because these decisions were rendered much after the order was passed by the Tribunal. The matter should be re-heard by the Tribunal and a fresh decision should be taken on merits after taking note of the legal position - Appeal allowed by way of remand.
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2022 (11) TMI 706
Demand of differential duty - classification of imported goods - fire sprinklers - to be classified under Customs Tariff Heading 84249000 or not - applicable rate of IGST, 12% or 18% - applicability of Serial No. 325 of Schedule III to the Notification dated 28.06.2017 or Serial. No. 195B of Schedule-II of the said notification dated 28.06.2017? - HELD THAT:- Sprinklers have not been included in the description of goods contained at Serial No. 325 of the notification dated 28.06.2017 and in fact they seek to exclude what is contained at Serial No. 195B of the said notification. It is also clear that Serial No. 195B of the notification does not restrict the sprinklers to any category. Reliance placed by the learned authorized representative on the Circular dated 31.12.2018 is misconceived. The said Circular is in connection with the doubts that had arisen in certain cases wherein a view had been taken that entry at Serial No. 195B would not cover laterals or sprinklers and sprinklers irrigation system and it is in this connection that it was stated that the term sprinklers in the said entry 195B would cover sprinkler irrigation system also. It cannot be concluded from the aforesaid Circular that fire sprinklers are excluded from sprinklers. In fact sprinklers and drip irrigation system including laterals are separated by a semi colon. The conclusion drawn by the Commissioner (Appeals) is, therefore based on a correct interpretation of the Circular and the relevant entries of the notification dated 28.06.2017 - Appeal dismissed.
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Corporate Laws
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2022 (11) TMI 705
Anti-competitive conduct - allegation of bid rigging was in the tenders invited by the Department of Agricultural, Govt of UP for soil sample testing in respect of e-tender - contravention of provisions of Section 3(1) read with 3(3)(d) of Competition Act - HELD THAT:- The Commission has correctly and legally held the appellant responsible for violation of Section 3(3)(c) and 3(3)(d) reading with Section 3(1) of the Act and there is no error in respect of order passed under Section 27(a) whereby the appellant was directed to cease and desist from such act from indulging in the practices which were found in contravention of the provisions contained in Section 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act. So far as imposition of penalty is concerned it is evident that appellant was a proprietor firm. Of course imposition of penalty was entirely within the discretion of the CCI and in respect of exercising discretion same may not be interfered with. However, it is also settled that discretion is to be exercised not indiscreet manner. In peculiar facts and circumstances of the present case particularly the fact that the appellant was found by the Commission that he being a Member of the Cartel the appellant was providing cover for the success of the bidder, Yash Solutions, it would be difficult to consider penalty on the basis of relevant turn over and as such total turn over which has been considered by the Commission may not termed as erroneous. However, considering the fact that the appellant was a proprietorship firm the Commission may consider to reduce the percentage of average income of the appellant. While approving the order of Commission in respect of holding the appellant guilty under Section 3(3)(c) and 3(3)(d) read with Section 3(1) and order passed under Section 27(a) regarding cease and desist order it is felt appropriate to remit back the matter to Commission to reconsider imposition of penalty which has been imposed under Section 27(b) of the Act - appeal disposed off.
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2022 (11) TMI 702
Seeking restoration of name of the Company in the Register of the Companies - shell Company - Section 252(1) of the Companies Act, 2013 - HELD THAT:- After hearing the parties and going through the pleadings made on behalf of the parties, the Appellants have neither fact in issue nor question of Law and any ground raised with the legal provisions does not assail the finding of the Tribunal wherein the Tribunal held that the Appellant Company appears to be a shell Company. Therefore, the Impugned Order dated 11.12.2020 passed by the National Company Law Tribunal (New Delhi Court-III) is hereby affirmed. Appeal dismissed.
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Insolvency & Bankruptcy
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2022 (11) TMI 704
Recovery of past dues of Maharashtra State Electricity Distribution Company Limited (MSEDCL) - MSEDCL s role and standing within the framework of the Resolution Plan - statutory creditor or not - stand that MSEDCL is that unless its past dues are cleared, it cannot and will not provide a new connection to NRC Ltd at its units. Have its claims for past dues been written off or reduced upon the sanction of the Resolution Plan? - Can these past dues be said to have been extinguished upon approval of the Resolution Plan? - Is it permissible for MSEDCL, whatever its description as a creditor to whom amounts are owed, to stand outside the Resolution Plan and raise its demands? HELD THAT:- Two things are apparent. MSEDCL s demands are not person- or entity-specific. If one entity applies for a connection and then leaves the premises to which the connection provided, MSEDCL is not required to follow that entity to whatever location it chooses to migrate. It can recover from the successor. But it is equally clear, at least at this stage, that MSEDCL has no enforceable charge in specie over the premises themselves, and to which the connection is given. What the Regulation says is that whoever succeeds to the use of an enjoyment of the premises, to get the benefit of the electricity connection, is liable to pay MSEDCL dues. That is all that Regulation 12.5 says. It does not create a statutory charge and MSEDCL cannot under that Regulation, for example, recover dues by purporting to attach or sell the premises to which the connection is given - But this Regulation does not permit MSEDCL to stand outside an approved Resolution Plan for the simple reason that its claim is for past dues, and these have been dealt with by the Resolution Plan. There is a completely unexplained failure on MSEDCL s part to lodge its claim within the RP in time. It really had to do very little except lodge its claim. There is the Supreme Court finding in Ghanashyam Mishra [ 2021 (4) TMI 613 - SUPREME COURT ] regarding other claims including from tax authorities standing extinguished after the 2019 amendment. That simply cannot be ignored. The only course that is available in these circumstances, is to direct MSEDCL to process the NRC Ltd s application for the connection at the four villages without insisting on payment of the previous demand for past arrears, but on the clear understanding that this creates no equities in favour of NRC Ltd in regard to MSEDCL demand. Second, that if NRC Ltd pursues its application for a connection at the four villages, it does so on the footing that that application will be processed, and the connection provided by MSEDCL subject to the outcome of this Petition. This must necessarily be so. The applications by NRC Ltd for the reconnection and the new connection will be processed by MSEDCL on this basis. For its own internal records and even otherwise MSEDCL must be permitted to continue to show the amount of arrears and any claim for interest in the bills. This is needed for MSEDCL book keeping purposes and to safeguard against a possible future argument that MSEDCL s claim is barred by limitation etc. - MSEDCL cannot, therefore, either refuse the new connection/restoration, nor disconnect until further orders only on the basis that its past dues have not been paid.
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2022 (11) TMI 703
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - Demand notice also not replied - non-speaking order - violation of principles of natural justice - HELD THAT:- It is an admitted fact that the genesis of their relationship as a developer and consultant is the agreement dated 09.03.2016 as per which the Respondent was liable to pay consultation charges to the Appellant for the booking of the unit(s) in terms of the clauses of the agreement much less clause 6 and 10. The Appellant has claimed separate amount in separate applications on the basis of number of units booked in the separate projects and also claimed their dues by way of a demand notice before filing the application under Section 9 of the Code. Not only that the demand notice in the case of Xrbia Eiffel City II i.e. CA (AT) (Ins) No. 1029 of 2021 is not replied by the Respondent but also reply to the other demand notices were filed much after the period prescribed under the Code. Be that as it may, the Adjudicating Authority has dismissed the application, filed under Section 9 of the Code by the Appellant, on the ground that there was a pre-existing dispute which was raised before filing the petition and was clearly intimated in the email dated 01.03.2017. The perusal of the said email dated 01.03.2017 does not make out any head or tail and there is no specific finding recorded by the Adjudicating Authority explaining as to how it has reached to the conclusion that the said email raised a dispute already existing between the parties. The impugned order is in violation of the principle of natural justice because the impugned order is a non-speaking order - the matter is remanded back to the Adjudicating Authority to decide them afresh by giving reasons and passing a speaking order - appeal allowed.
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2022 (11) TMI 701
Application filed by a minority shareholder as well as a director holding 7.29% of the total issued, paid up and subscribed share capital in the Respondent No. 1 company - prayer for exemption under the proviso to Section 244(1)(a) of the Companies Act, 2013 for enabling him to initiate action against the Respondent No. 1 Company and its Directors - Section 213, 241, 242 and 244 of the Companies Act, 2013 - HELD THAT:- On going through the record that the matter is still pending before the Tribunal, the instant Appeal is disposed off with the following observations without entering into the merit of the case:- i) The National Company Law Tribunal (Kolkata Bench, Kolkata) is requested to expedite the matter and dispose of at an early date and ii) The parties are at liberty to raise all the issues before the Tribunal and after hearing the parties, the Tribunal to pass appropriate orders. Appeal disposed off.
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2022 (11) TMI 700
Seeking permission to Applicant to intervene in the present Company Petition - seeking direction to the Operational Creditor to supply to copies of the pleadings to the Applicant - Appellant s case in the application was that the Appellant has 99.19% exposure in the debt of the Corporate Debtor and any order of admission will have impact on the Applicant/Appellant - HELD THAT:- From the facts which have been brought on the record, it is clear that Appellant are Financial Creditor who had exposure to extent of 99.19% debt owed by the Corporate Debtor. Learned counsel for the Respondent is right in his submission that in Section 9 proceedings Financial Creditor has right to intervene only after Section 9 application is admitted, then they can file claim and be part of the CoC. After stating the facts, especially the fact that Appellant has exposure of 99.19% to the debt of the Corporate Debtor and further it initiated proceedings under SARFAESI Act, 2002 and has taken possession of the assets of the Corporate Debtor, in the application it is stated that it is entitled to have knowledge of the affairs of the Corporate Debtor including proceedings initiated by or against the Corporate Debtor. In the circumstances, it has prayed for intervention and in alternative has prayed for Applicant s counsel be permitted to advance its submissions at the time of final hearing. The fact that the Corporate Debtor had filed an application seeking direction to the Operational Creditor to bring materials on record regarding insurance claim and its disbursement itself indicate that in the Section 9 application filed by the Operational Creditor no details regarding claim lodged before the Insurance Company and disbursement have been brought on record - From the facts of the present case, especially the document brought on record by the Appellant i.e. Claim Discharge and Subrogation Form dated 04.12.2017, the Appellants be permitted to intervene in the proceedings initiated under Section 9 by the Operational Creditor. Appeal allowed.
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2022 (11) TMI 699
Liabilities towards Bank Guarantee - whether the Appellant and other member banks of consortium were entitled to payment towards live Bank Guarantees related to large projects under Resolution Plan invoked prior to the Transfer Date by the Successful Resolution Applicant - HELD THAT:- It is noteworthy that the two asterisks (**) that appear below the table of Summary of Utilisation of Funds states that the utilisation of funds will be in the manner as provided under this Resolution Plan. Further in the note that in the footnote with $ sign it is stated that this amount also includes the amount equivalent to 52.50% of the invoked bank guarantees issued by the secured financial creditors pertaining to large projects, to be paid to such respective Secured Financial Creditors whose bank guarantees are invoked - It becomes clear from perusal of the definitions of Closing Date and Transfer Date that the management and control of the corporate debtor will devolve to the board constituted by the Resolution Applicant on the Transfer Date which will be within 15 days of the Closing Date. The Transfer Date relates to the date when the management/ corporate debtor goes in the hands of the board of the Successful Resolution Applicant. It is not disputed that the said bank guarantees were invoked vide letters dated 18.10.2021 (attached at Page- 169- 173 of the Appeal Paper Book) and the SRA replied to these invocation letters stating that it was not liable to pay any amount post such invocation, as the Bank Guarantees were invoked prior to Transfer Date i.e 04.01.2022. Hon ble Supreme Court in the matter of Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. [ 2021 (4) TMI 613 - SUPREME COURT ] and Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta Ors. [ 2019 (11) TMI 731 - SUPREME COURT ] wherein it is clearly held that Successful Resolution Applicant cannot be subjected to surprise claims which are not part of Resolution Plan. Any purported liability falling on the Successful Resolution Applicant prior to Transfer Date in respect of invocation of bank guarantees shall not be payable by the SRA - Appeal dismissed.
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2022 (11) TMI 698
Seeking liquidation of Corporate Debtor - section 33 of Insolvency and Bankruptcy Code, 2016 (IBC) - HELD THAT:- In view of the satisfaction of the conditions provided under Section 33 of the Code, the Corporate Debtor i.e. M/s. Sohrab Textile Mills Ltd., is directed to be liquidated in the manner as laid down in Chapter III of the Code. The Corporate debtor is liquidated with immediate effect in the manner provided under Chapter III Part II of the IBC 2016 - Application allowed.
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Service Tax
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2022 (11) TMI 697
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - It is Petitioner s case that no amount is payable and for that relies on Form SVLDRS-1 that Petitioner had filed - HELD THAT:- Considering the Scheme, which is a beneficial piece of legislation, a party is entitled to file a consolidated declaration for all amounts which are, according to parties, payable to revenue. Just because the amounts payable would have come under the different categories does not mean the party should be made to pay something more than what would have been paid if a consolidated Application was filed. This scheme is for recovery of duty as also to recover tax and arrears of deficit amount. The scheme has been enacted with an object and purpose to minimize the tax disputes and to realise the arrears of tax by way of tax in exceptional manner. The scheme is a step towards the settlement or deciding disputed tax/liability. Therefore, the Respondent should consider the Application as filed so that litigation is minimized. In the circumstances, Respondents are directed to consider the declaration as filed by Petitioner as a valid declaration and dispose the same in accordance with law - petition disposed off.
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2022 (11) TMI 696
Classification of services - canteen services with the factory - outdoor catering services attracting the service tax, as claimed by the department or said services is in nature and scope as described at Sr. No. 19A of the Mega Exemption No. 25/2012 ST dated 17.03.2012 as amended vide Notification No. 14/2013-ST dated 22.10.2013 and therefore exempted from payment of service tax, as claimed by the Appellant? HELD THAT:- Undisputedly facts of the case are that the appellant has been outsourced by various factories for supply of foods and beverages to the employees of factory as per the agreement between them. In this regard appellant claim the benefit of entry 19A of mega exemption Notification as applicable for the service provided during the period January 2013 to March 2016 and did not discharge the liability of Service tax being considered as exempted from payment of service tax by virtue of said Notification. The taxable services in relation to provisions of Outdoor Caterer is defined under Section 65 of the Finance Act 1994 and attracting payment of service tax on the provisions of such services. However it is found that there is Exemption vide Entry 19 in the Notification No. 25/2012- ST .dated 20.06.2012 that service provided in relation to serving food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year. The said Notification Entry was amended vide Notification No. 14/2013-ST dated 22.10.2013 by inserting Entry No. 19A in the basic Notification - On plain reading of entry 19A in the Notification dated 22.10.2013 it clearly reveals that the canteen maintained in a factory has been provided with the exemption from payment of service tax. The said Notification nowhere provided that canteen maintained by or run by the factory can only be considered for the benefits of such exemption. In the present matter, it is also found that appellant provided the list of factories alognwith declaration from the factories that they are covered under the Factories Act. 1948 and copy of ledger in case they claimed the exemption. Out of total service tax demand of Rs. 58,35,451/- an amount of Rs. 57,35,420 is pertaining to the said entities only. Therefore to that extent only the service tax demand alongwith interest and penalty is dropped - As regard the rest of service tax demand of Rs. 1,00,031/- it is found that appellant agree for the said service tax liability and paid the same alongwith interest and penalty. Hence the impugned order in-appeal to the extent of service tax demand of Rs. 1,00,031/- alongwith interest is upheld. However in the facts and circumstances of this case, appellant has made out a fit case for waiver of penalty, hence the penalty is set aside. The appeal is partly allowed.
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2022 (11) TMI 695
Refund claim - nexus exists between inputs and export outputs or not - Club or Association Services - Services by Airconditioned Restaurants - Sponsorship Services - Event Management Services - Short Term Hotel Accommodation Services - Mandap Keeper Services - Convention Services - Cable Operator Services - HELD THAT:- The issue concerning rejection of refund against credits on inputs taken by the Appellant engaged solely on export of services is not required to be decided again in evaluating the eligibility of availment of such input credits by the Appellant since judicial precedent set by this Tribunal would rule the field in the absence of any contradictory finding by the Appellate Court. Therefore, in reiterating what has been observed by me in respect of Appellant s earlier appeal that was decided on 05.07.2019 in WARBURG PINCUS INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX-II, MUMBAI [ 2019 (7) TMI 337 - CESTAT MUMBAI] that judicial precedent is to be carried forward for maintenance of certainty and predictability in the decision making process that has already held the input services availed by the Appellant as eligible credits and in view of the fact that Notification No. 27/2012-CE (NT) permits refund of such unutilised credits of the exporters, the following order is passed. The order is hereby modified in holding that the Appellant is eligible also to get refund of the unutilised CENVAT Credit to the tune of Rs.13,55,221/- with applicable interest and the Respondent-Department is directed to pay the same within two months of receipt of this order - appeal allowed.
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2022 (11) TMI 694
Levy of Service Tax - deposit taken by the appellant from their customers as security deposit against towards trading of shares which is subsequently refunded without utilizing the same - HELD THAT:- This issue in the appellant s own case only for a different period has been decided MARWADI SHARES FINANCE LTD VERSUS C.C.E. S.T. -RAJKOT [ 2022 (4) TMI 705 - CESTAT AHMEDABAD] where it was held that In view of the facts that department could not bring on record any clinching evidence that the deposit has influenced the service charges, the demand is not sustainable. The issue is no longer res integra and following the same, the impugned order is not sustainable - Appeal allowed.
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2022 (11) TMI 693
Refund of excess service tax paid - CENVAT Credit - Debit Note - Duty paying document - valid document as per Rule 9 of the CENVAT Credit Rules, 2004 or not - whether the judgement in the case of M/s. Modular Auto Ltd. [ 2018 (8) TMI 1691 - MADRAS HIGH COURT] and the order in M/s. Gates Unitta India Co. Pvt. Ltd. [ 2021 (9) TMI 688 - CESTAT CHENNAI] cover the case at hand? - HELD THAT:- The facts in M/s. Modular Auto Ltd. may be appreciated. BSNL and Reliance Communications Ltd. rendered Multi-protocol Label Switching (MPLS) services to BIL, a company for whom the assessee was a job worker. BIL used these services for communicating with and retrieving data from its job workers such as the assessee therein. BIL raised tax invoices on the assessee therein (M/s. Modular Auto Ltd.) seeking that it be reimbursed for the amounts paid by it to BSNL and Reliance Communication - the facts of the present case are clearly distinguishable from those before the Hon ble High Court. In M/s. Modular Auto s case, there was no dispute that the service provider had been assessed to tax in respect of the services in question. In the present case, beyond the debit note, which, particularly concerning the Appellant and the other party, which are related parties, can be treated as a self-serving document, there is no evidence on the record to demonstrate that the relevant amounts had been offered to tax in the hands of the other party. There are also clear findings to this effect by both the lower authorities. Further, in M/s. Modular Auto s case, the document raised by BIL was a tax invoice. Therefore, the Hon ble High Court was never called upon to consider the question of whether input tax credit could be claimed on the basis of a debit note. This Tribunal s order in M/s. Gates Unitta India Co. Pvt. Ltd. held at paragraph 5 that CENVAT credit cannot be denied when the credit is availed on debit notes if such note contains all the mandatory particulars as prescribed in the Service Tax Rules - while M/s. Gates Unitta India has, undoubtedly held that credit can be availed on the basis of debit notes, again, in that case, no dispute was raised as to whether services were rendered at all. Neither M/s. Gates Unitta India nor M/s. Modular Auto Ltd. does away with the requirement that services must be rendered to the assessee so that the assessee may claim input tax credit. These two decisions do not directly cover the case in hand. Whether the Order-in-Original traverses beyond the Show Cause Notice? - HELD THAT:- The very foundation, as could be seen from the Show Cause Notice, was the satisfaction of Rule 9 ibid. When a claim for refund is made, it is but natural for the authorities to meticulously examine such claim and compliance of the claim with the statutory requirements because their primary duty is to safeguard the interest of the Revenue. Hence, while examining such claims, the authorities below here, in this case, have explored the available options in the context of the requirements of Rule 9 ibid - the final conclusion by the lower authorities are concurrent inasmuch as they have only held that there has been violation of Rule 9, i.e., the document relied upon by the claimant is not one prescribed under the said Rule - no finding of the lower authorities has gone beyond the Show Cause Notice. Whether there was any violation of Rule 9 of the CCR, 2004? - HELD THAT:- The document in the case on hand, i.e., the debit note, should contain inter alia the details of Service Tax payable, taxable service, etc., but here, as rightly pointed out by the Learned Departmental Representative, in the Particulars column, it is mentioned as being reimbursement of expenses incurred on behalf of A A Dukaan Insurance Web Aggregator Private Limited . A perusal of Annexure-3, which is the so-called debit note, which is placed on record, reveals that it does not contain the nature of taxable service per se provided by the other party to the appellant, which is the condition precedent in terms of the proviso to Rule 9(2) ibid. Hence, in the present scenario, the debit note, which is incomplete, cannot be considered as a document specified in Rule 9 ibid. Whether the Appellant is otherwise entitled to credit? - HELD THAT:- From the facts, it is seen that the debit note is alleged to have been raised on 31.03.2017. However, in the original return filed on 23.08.2017, there is no reference to this debit note. It finds mention for the first time in the Appellant s revised return of 08.09.2017. The debit note is said to find its strength from an agreement dated 14.09.2017, drawn up with retrospective effect after both the returns were filed. This state of the facts does not inspire confidence as to the legitimacy of the debit note, and also as to whether the debit note in fact existed on 31.03.2017 at all - There are concurrent findings of the authorities below that the debit note was not reflected in the returns filed by the other party. The Appellant and the other party are, admittedly, related parties. Also, no rental agreement between the Appellant and the other party is placed. The preponderance of probability is that the debit note is a self-serving document which was not executed (as it purports to have been) on 31.03.2017. No material is placed on record to dislodge the concurrent findings of the lower authorities that the other party did not, in fact, render any services to the Appellant, and therefore the requirements of Rule 3 of the CCR, 2004 have not been met. There are no reasons to interfere with the findings in the impugned order, for which reason the appeal stands dismissed.
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2022 (11) TMI 692
Refund claim - burden of tax has been passed on or not - applicability of unjust enrichment - HELD THAT:- In the facts and circumstances, the appellant have not passed on the burden of tax to any third person or to the buyer of the flats. In the facts and circumstance, it is the appellant who has borne the burden of tax. It does not make any difference whether the amount is debited in the profit and loss account or it is shown as amount receiveable on the asset side in the balance sheet, in either case the burden falls on the appellant-assessee only. The appellant has passed the test of unjust enrichment - Appeal allowed.
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Central Excise
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2022 (11) TMI 691
Levy of Excise Duty - all types of scraps sold by the appellant value of which is reflecting in the balance sheet - appellant submits that the Show Cause Notice has demanded the Excise Duty despite the appellant clarified that they have not paid duty on the scrap which is other than manufacturing scrap and cenvateable scrap - HELD THAT:- The appellant while giving the information, as asked by the department vide their letter dated 06.03.2013, in their letter dated 11.03.2013 categorically stated that they have paid the excise duty on manufacturing scrap and cenvatable scrap, they also stated that on the general scrap which is neither manufacturing scrap nor cenvatable scrap, they have not paid the duty. As per this submission of the appellant the duty is clearly not payable. Moreover, the Show Cause Notice was baldly issued without carrying out any investigation that whether the appellant have availed the Cenvat Credit in respect to the scrap which were cleared without payment of duty and also the manufacturing scrap. In absence of any such investigation the allegation made in the Show Cause Notice is bald and without any support of any evidence. It is clear that the appellant have cleared the scrap which is neither generated from the manufacturing nor generated from the cenvatable input or capital goods. Therefore, the same is clearly not liable to any duty. The identical issue was raised in the appellant s own case only for the different period wherein taking a consistent view it was held that scrap, other than manufacturing and non cenvatable is not liable to duty - reliance can be placed in the case of ALEMBIC GLASS INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., VADODARA-I [ 2006 (2) TMI 322 - CESTAT, MUMBAI] where it was held that Since the entities on which duties have been recovered are not emerging otherwise then skilful manipulation of raw materials, appellants by manufacture of medicaments, the levy of duly, as arrived at cannot be upheld. Thus, in the facts of the present case, it is clear that the demand raised in the SCN is not sustainable - appeal allowed - decided in favor of appellant.
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2022 (11) TMI 690
CENVAT Credit - fake documents or not - documents did not contain the registration number of the service provider and correct address of the appellant - input service or not - ineligible credit availed on the portion of money retained by the appellant. Fake documents or not - denial on the ground that the invoices are addressed to the Mettur Plant-II and not to the address of the appellant at Cuddalore - HELD THAT:- Though it is alleged that the invoices are mentioned in the name of the Mettur Plant, the Department does not have a case that the services have been availed by the Mettur Plant. The appellant has submitted that the name of the unit was wrongly mentioned by the vendor. Taking note of this aspect, the denial of credit on this ground to the tune of Rs.958/- is allowed. Denial of credit on the ground that the Service Tax registration number of the service provider is not mentioned in the invoices - HELD THAT:- When the registration number of the service provider is available for verification, the credit ought not to have been denied merely because it is not mentioned as a part of the invoice when the same has been included later - the denial of credit on this ground cannot be justified. CENVAT Credit - credit was availed on the debit notes issued by the Input Service Distributor - denial on the ground that the same is not a prescribed document as per Rule 9 of the CENVAT Credit Rules, 2004 - HELD THAT:- In case of any doubt, the Assistant Commissioner or Deputy Commissioner, as the case may be, can verify and call for further information. In the present case, the appellant has stated that the credit has been availed on the debit notes which have been issued by their Head Office, which has taken ISD registration. When there is no doubt with regard to the services availed and the tax paid, the credit ought not to have been denied - the credit is eligible. CENVAT Credit - denial on the ground that the appellant had not furnished the necessary documents - HELD THAT:- The credit in respect of the services provided by M/s. SMK Construction, M/s. Madras Chemicals Polymers, etc., has been denied alleging that the appellant has not produced the necessary documents in this regard. The total credit disallowed in this regard is to the tune of Rs. 43,739/- and Rs.91,926/- respectively. It is seen that with regard to the amount of Rs.43,739/-, the appellant had produced documents and it is noted by the Original Authority that these documents were addressed to the registered Head Office - the issue with respect to non-production of documents and documents issued in the name of the Head Office to the tune of Rs.43,739/- and Rs.91,926/- requires to be remanded back to the Original Authority for verification. Helipad Repair and Maintenance services - credit has been availed by the appellant prior to 01.04.2011 - input services or not - HELD THAT:- During the said period, the definition of input service had a wide ambit as it included services in relation to business activities. It is seen that almost all the services would be covered during this period and for this reason, the denial of credit alleging that the said services do not have nexus with the manufacturing activity is erroneous. The credit is eligible. Credit in respect of Banking Charges - Credit denied by the Department stating that these amounts incurred by the appellant are with regard to the reimbursement of travel expenses - HELD THAT:- The Banking Charges along with Service Tax were paid by the appellant on the amount that has been transacted through the bank. The credit on such Banking Charges is eligible and is, therefore, allowed. It is noted that a major portion of the disallowance of credit is in respect of the input Service Tax credit with regard to retention of money by the appellant - the appellant has paid Service Tax on the entire consideration. Only ten per cent has been deducted from the consideration and this amount does not include the Service Tax element. For example, if the consideration paid is Rs.48,000/-, the appellant has paid 10% Service Tax plus applicable cesses [Rs.4,800/- + Rs.96/- + Rs.48/-] (invoice at page 53, Annexure-C to the Appeal Memorandum). The grand total including the consideration plus Service Tax is mentioned as Rs.52,944/-. The appellant has retained 10% i.e., Rs.4,800/- and not 10% of Rs.52,944/-. Thus, the entire consideration has suffered Service Tax even though 10% of the consideration has been retained by the appellant. The credit in respect of all the services are eligible, except for those which have been denied on the allegation that documents have not been produced, to the tune of Rs.43,739/- and Rs.91,926/- which are remanded to the Original Authority. The impugned order is modified to the extent of setting aside the disallowance of credit on all the services, except those services in regard to the amounts of Rs.43,739/- and Rs.91,926/-. Appeal allowed in part and part matter remanded.
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CST, VAT & Sales Tax
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2022 (11) TMI 740
Vehicle Tax - Seeking modification in the condition of deposit of the amount of Rs. 5,00,000/- - What is pleaded in the Civil Application is that the vehicle-car in question is in break-down condition since last more than two years and the condition of deposit of the amount is very harsh - HELD THAT:- The court finds substance in the submission of learned advocate for the applicant about the modification of the condition when the car is not usable and expenses of repair is indicated to be very high. The condition requiring the petitioner to deposit Rs. 5,00,000/- deserves to be recalled. The said condition is hereby modified by directing the petitioner to furnish the bond of an amount of Rs. 5,00,000/- before the competent authority - Application allowed.
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2022 (11) TMI 739
Validity of assessment order/best judgemnet assessment - alleged difference in sales turnover as per invoices - alleged difference in consideration on sales of old vehicles - penalty under Section 27(3) of the Tamilnadu Value Added Tax Act - HELD THAT:- The mere fact that the assessment was made to the best of judgment of the authority would not be sufficient for the imposition of penalty, as the degree of proof required for imposition of penalty is quite different from, and much higher, than that required for the purpose of framing a best judgment assessment. It is an admitted position that none of the assessment orders or, for the matter, the show cause notices, reveal any application of mind to the aspect of wilful suppression. The officer merely proceeds on the fact that there was a difference in turnover between the books of accounts and the monthly returns and this, according to him, justifies the invocation of Section 27(3). An additional factor in this matter is that the petitioner has admittedly remitted the difference in tax along with interest even at the time of inspection. This aspect of the matter is not disputed by the learned Government Advocate. Bearing in mind the conspectus of facts and available precedents, the conclusion arrived at by the appellate authority, that the imposition of penalty under Section 27(3) is automatic, is erroneous in law. Petition allowed.
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2022 (11) TMI 689
Input tax credit - non-quoting of Section 16(2)(c) of the CGST Act in the show cause notice - It is the case of the petitioner that all conditions prescribed under Section 16 of the CGST/GGST Act are fulfilled and the claim is made of the Input Tax Credit (ITC) on the supplies by the petitioner - HELD THAT:- Issue Notice returnable on 24.11.2022. Learned Assistant Government Pleader waives service of notice for and on behalf of respondent no.3. Qua rest of the respondents, over and above the regular mode of service, service through speed post is permitted.
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2022 (11) TMI 688
Inter-state sales/branch transfers or not - requirement of production of various documents - Stock Register - audited balance sheet - DVAT-31 Form - C and F Forms in original - copies of bank statements showing transactions and relevant extracts from party ledger - HELD THAT:- The intent, with which reference is made to the material that the petitioner needs to produce, is to enable the petitioner to establish its claim, that the subject interstate sale transactions took place, and thus assist the assessing officer to reach a conclusion, as to whether or not the said assertion is factually correct. - The assessing officer will permit the petitioner to place on record, all such evidentiary material, which will enable it to establish its stand - Illustratively, the petitioner can, if deemed necessary, also place affidavits of the transporters and the recipients of the subject goods. The assessing officer would be free to summon the affiants, if such affidavits are placed on record - The assessing officer will complete this exercise, within the next eight weeks. For this purpose, the petitioner s authorized representative will appear before the assessing officer on 11.11.2022, at 12:00 PM - writ petition is disposed off.
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2022 (11) TMI 687
Violation of principles of natural justice - Seeking declaration that the action of the respondents in not considering the various documents submitted by the petitioner as proof of inter-State trade in dals and pulses and insisting on submission of C-Forms as illegal - HELD THAT:- It is evident that if a dealer seeks to avail concessional rate i.e., 2% of the tax on his turnover he has to produce/file Form-C. If he fails to furnish Form-C, subsection (2) of Section 8 of CST Act would be attracted and the dealer would be liable to pay tax at the rate applicable to the sale or purchase of goods inside the appropriate State under the sales tax law of that State - It is true that State Government had exempted furnishing of C-Forms for the period upto 31.3.2015. But there is no such exemption for the period thereafter till coming into force of GST regime with effect from 1.7.2017. In the absence of such exemption, petitioner is bound to furnish the C-Forms if it wants to avail concessional rate of tax under sub-section (1) of Section 8. Since it failed to do so, for whatever reason, the rigour of sub-section (2) of Section 8 comes into play. Mere submission of representation cannot confer any right on a dealer to seek waiver of filing C-Forms. Principle of legitimate expectation cannot be invoked in a taxing statute. That apart, if the petitioner is aggrieved by the orders of assessment dated 11.3.2019 and 31.3.2019, petitioner had the remedy under Section 9 (2) of the CST Act read with Section 31 of the VAT Act to file appeal. In a writ proceeding under Article 226 of the Constitution of India, legality and validity of the assessment proceedings are not ordinarily examined when the statute provides for adequate and efficacious alternative remedy. It is not a case of violation of the principles of natural justice or violation of any law to invoke the writ jurisdiction in spite of having adequate and efficacious alternative remedy. That apart, there cannot be any equitable consideration in so far taxation statutes are concerned. There are no merit in the writ petition - petition is dismissed.
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2022 (11) TMI 686
Validity of assessment order - additions were made based on the slips and books recovered from the petitioner - sale suppression of rubber thread - addition of 50% to taxable turnover - HELD THAT:- The petitioner has not made out any case for interference of the order of the Tribunal, upholding the order of the Assessing officer, by reversing the order of the Appellate Commissioner, in so far as addition of Rs.1,95,000/- and therefore to that extent we are not inclined to interfere with the order of the learned Tribunal. However, as far as addition of 50% of the Assessing Authority is contrary to the law settled by this Court in the Judgment THE STATE OF TAMILNADU REP. BY THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES VERSUS SRI VINAYAGA AGENCIES [ 2009 (8) TMI 1072 - MADRAS HIGH COURT] where it was held that The Tribunal has rightly applied its mind, verified the contents, compared the details and finally given a finding that the stock verification was arrived at only on the basis of money value of the goods and not on the quantitative basis, which has not at all been taken into consideration either by the Assessing Officer or the first appellate authority in deciding or in coming to the conclusion in so far as the stock variation is concerned - thus in the present case, the deletion of 50% as ordered by the Assessing authority is upheld. The Second Respondent is directed to issue a fresh order calculating the tax liability and a proportionate penalty within a period of three months from the date of receipt of a copy of this order - petition allowed in part.
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2022 (11) TMI 685
Validity of assessment order - sales suppression - Tamil Nadu General Sales Tax Act, 1959, read with the relevant rules - HELD THAT:- The order passed by the Appellate Tribunal is well considered and requires no interference. This Court, in exercising the power under Article 226 of the Constitution of India, is only concerned with decision making process and not decision per se. The fact on record also indicates that the attempt of the petitioner to distance himself from the liability was made only before the Appellate Commissioner by producing few affidavits of persons whose names were in the slip. This is long after the assessment notice was issued on 31.12.1998. Further, Section 38B clearly stipulates that reasons has to be recorded in writing by the Appellate Assistant Commissioner that he has considered such document as genuine and failure to produce the same before the Assessing Authority was beyond the control of the dealer. Thus, the Appellate Assistant Commissioner committed an error in allowing the petitioner's appeal based on affidavits of so called persons whose name were there in the slips - the order of the Tribunal does not warrant any interference. The Writ Petition is dismissed.
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Indian Laws
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2022 (11) TMI 684
Illegal gratification/bribe - allegation against the person working in Income Tax Office as Tax Assistant - demand of rupees eight thousand from the complainant for processing the refund claim of the income tax assessee Smt. Sundaramani Singh for the financial year 2010-11 - HELD THAT:- In view of the prevaricating and inconsistent statement given by P.W.11 at different stages, it is very difficult to accept him as a truthful and reliable witness and his evidence becomes unworthy of credence. In the case of Suraj Mal [ 1979 (2) TMI 203 - SUPREME COURT] , it is held that where witnesses make two inconsistent statements in their evidence either at one stage or at two stages, the testimony of such witnesses becomes unreliable and unworthy of credence and in the absence of special circumstances, no conviction can be based on the evidence of such witnesses. Since the prosecution relies only upon the version of P.W.11 regarding the demand aspect of Rs.8,000/- (rupees eight thousand) prior to the date of trap, it cannot be said that the same has been proved beyond all reasonable doubt. There is difference in evidence as to what was the exact conversation between P.W.11 and the appellant outside the office. When as per the evidence of the T.L.O. (P.W.13), it was decided at the pre-trap proceeding that after reaching the Income Tax Office, P.W.11 would proceed to the office of the appellant inside the office and P.W.6 would follow him closely, it is not known why P.W.11 called the appellant outside over phone and handed over the tainted money to him outside and who had given instruction to him to do that and when, after they left C.B.I. Office, Rourkela - P.W.11 has not stated that it was P.W.6 who accompanied him to the office of the appellant in a motor cycle and overheard the conversation between himself and the appellant and saw the transaction. In view of the available materials on records, it is very difficult to hold that the prosecution has successfully established that on the date of trap also, there was demand made by the appellant to P.W.11. When the appellant as Tax Assistant had no role in the refund of income tax to the assessee except processing the same to the I.T.O. Sri K.C. Barik (P.W.8), which he had already done as per the evidence of P.W.4, I am of the humble view that there is substantial force in the contention of the learned counsel for the appellant that no work was pending with the appellant for which there was no occasion on his part to raise any demand of bribe - there is force in the submission of the learned counsel for the appellant that P.W.3 is not the competent authority to accord sanction for launching prosecution against the appellant, which is very much essential under section 19 of the P.C. Act and that the sanction order (Ext.8) is a defective one which was mechanically prepared without any application of mind. When the prosecution has not successfully established the demand aspect of bribe by the appellant beyond all reasonable doubt, the defence plea put forth by the appellant has been established by preponderance of probability and there is defect in the sanction order (Ext.8), it would not be legally justified to hold the appellant guilty of the offences charged - the impugned judgment and order of conviction of the appellant under section 7 and section 13(2) read with section 13(1)(d) of the 1988 Act and the sentence passed thereunder is hereby set aside - appeal allowed.
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2022 (11) TMI 683
Dishonor of Cheque - FIR against the misuse of blank cheques against the MD of the Finance Company - legally enforceable debt or not - specific role has been ascribed to the petitioner attaching vicarious liability on his part or not - proceeding under Section 138 and 141 of the Negotiable Instruments Act, 1881 - HELD THAT:- On going through the averments made in the petition under Section 156(3) of the Code it is found that the complainant along with her husband availed loan facilities in the name of partnership firm namely Shree Techno Services. However upon death of the husband of the complainant on 30.07.2019 the aforesaid firm and its current account in Axis Bank were closed. Admittedly, at the time of availing credit facilities the original deeds of property within mouza-Thiknikata, Matigara, District-Darjeeling as well as seven numbers of blank cheques were delivered to the HDB Financial Services Limited of which the petitioner is the Managing Director Chief Executive Officer. The HDB Financial Services Limited on 03.09.2020 contending of non-payment of outstanding loan amount issued notice under Sections 13(2) read with Section 13(13) of the SARFAESI Act demanding a sum of Rs. 34,86,706/-. In reply dated 21.10.2020 to the aforesaid notice the complainant, in addition to other relevant facts, informed the death of one of the partners who was also one of the drawer of the cheque namely Indrajit Mukherjee, to HDB Financial Services Limited. In the case at hand it is found that the complaint disclose a cognizable offence and therefore bearing in mind the aforesaid observation of the Hon ble Court in order to unearth the veracity of the allegation made in the complaint thorough investigation is required and as such there cannot be any justification to stop the investigation at a nascent stage. Accordingly, the argument advanced on behalf of the petitioner falls short of merit. Undisputedly seven numbers of blank cheques were handed over to the Finance company at the time of disbursement of loan. It is also found that the cheque in question was placed for encashment after the demise of one of the drawer of the cheque and an inflated value has been incorporated in the cheque which is at variance to the amount demanded by way of notice under the SARFAESI Act. In view of the distinctive facts involved in the present case, whether there was any act of forgery on the part of the petitioner being the Managing Director Chief Executive Officer requires to be thoroughly investigated by the investigating agency. Although Section 139 of the Act provides a statutory presumption that on issuance of a cheque there is presumption that it is issued in discharge of existing debt or liability yet one cannot be oblivious to the peculiar facts noted above with regard to the cheque in question. It is settled principle of law that at the stage of quashing FIR or complaint it is not justified in embarking upon an enquiry as to the probability, reliability or genuineness of the allegations made therein unless they are so absurd and inherently improbable that no prudent man can ever reach to just conclusion - It is placed on record that there is neither any absurd or inherent improbability noted in the facts of the present case nor the facts alleged in the complaint on its face value fails to disclose an offence. As it is already found that there are primary materials to proceed, hence invoking inherent power will lead to stifling of a legitimate litigation. Revision dismissed.
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2022 (11) TMI 682
Seeking appointment of an Arbitrator - Dispute between the partners in partnership firm - Withdrawal of the amount unilaterally from the account of the Firm and misappropriated the same for his personal benefit without the consent of the petitioner - HELD THAT:- During the course of hearing, it was submitted by Mr. Arora that the respondent No. 1 has no objection to the appointment of an Arbitrator for adjudicating disputes inter se him and the petitioner. The same is also reflected in the order of this Court dated May 19, 2022 - That apart, even in the order of this Court dated December 14, 2021 in OMP (I) (COMM) 362/2021 which is a petition initiated by the petitioner herein under Section 9 of the Arbitration and Conciliation Act, 1996, it has been recorded that the counsel for the petitioner had stated that the petitioner has no objection to appointment of an Arbitrator in this present petition. So, the prayers to the extent of appointment of an Arbitrator, insofar as the dispute between the petitioner and the respondent No.1 is concerned, need to be granted. The stand of the petitioner that even respondent No. 3, i.e., Rugs Enterprises Private Limited needs to be referred to arbitration - HELD THAT:- The Doctrine of Group of Companies shall not be applicable to the facts of this case. The doctrine can be invoked in certain circumstances, to bind non-signatory affiliates to an arbitration agreement. However, here the petitioner was a partner in a partnership firm and is trying to bind a company, i.e., respondent No.3 to the arbitration agreement between him and respondent No.1, which is clearly impermissible as a partnership in its very nature cannot be equated with a company to invoke the Doctrine. As the name suggests, the Doctrine of Group of Companies is applicable in cases where the arbitration agreement is entered into by one of the companies in a group and the non-signatory affiliate, or sister/parent company is held to be bound by the arbitration agreement when the facts indicate the mutual intension of all the parties to bind the non-signatory affiliate to the agreement - the respondent No.3 cannot be referred to arbitration along with the petitioner and the respondent No.1. Which claims of the parties are required to be referred to arbitration? - HELD THAT:- The claims of the petitioner are broadly those relatable to the business of the partnership firm, siphoning off of goods and monies, and fraud / forgery - As regards the claims of the petitioner set out in paragraph 51 above, Claim No. (ii) is towards the amounts owed to the creditors of the Firm and Claim No. (iii) is towards the respondent No. 1 s share of the debts owed to Union Bank of India. These claims are with regard to the performance of the partnership deed and arise from the business of the Firm. These come directly under the purview of the arbitration agreement between the petitioner and the respondent No. 1, and as such, need to be referred to arbitration. Justice Asha Menon (Retd.) (Mobile No. 9910384664), a Former Judge of this Court, is appointed as the Arbitrator to adjudicate the disputes between the parties - petition disposed off.
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