TMI Tax Updates - e-Newsletter
November 27, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Highlights / Catch Notes
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GST:
Levy of penalty levied u/s 122 - delay in depositing the tax so collected beyond a period of three months - In the facts of case, the maximum penalty imposable was Rs. 10,000/- or the tax evaded, whichever was more; there being no allegation of tax evasion, the maximum penalty that could have been imposed was Rs. 10,000/- which could even be lower than the said amount if the Taxing Authority as well as the Assessing Authority had considered the mandate of Section 126(2) of the Act read with Notification dated 01.06.2021. - HC
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GST:
Refund claim - Transfer of amount paid as GST Cess - it appears that the petitioner has not been vigilant in responding to the notices issued to the petitioner, inasmuch as the notice of March 2021 remains unanswered by him. Considering this fact, the petitioner should pay the interest from 01.04.2021 to 31.07.2022 and is entitled to get a refund for the remaining period of interest paid by the petitioner. - HC
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GST:
Refund of GST - wrongful payment of tax @ 18% IGST instead of 5% - the first respondent is entitled for refund as per the order passed by the second respondent and the first respondent is also entitled for interest at the rate of 9% per annum of the refund amount for the delay period in terms of Section 56 of the GST Act. - HC
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GST:
Availment of excess input tax credit - difference between Form GSTR 2A and Form GSTR 3B for the tax period 2017-18 - Taking into consideration Circular dated 27.12.2022, the present writ petition is allowed. - HC
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GST:
Condonation of delay of 59 days in filing appeal before the Appellate Authority - there is no dispute that appeal is filed after expiry of 60+30 days. - The period prescribed under Section 107 cannot be condoned under Article 226 of the Constitution of India. - HC
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GST:
Right to make application either cancellation for revocation or by filing appeal - Registration Cancellation order not available - The petitioner cannot be a remediless for the fault in the system of the department and petitioner can’t be deprived of its right to make application either cancellation for revocation or by filing appeal - HC
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Income Tax:
Export income - The expressions “derived from” and “since” are used in multiple instances in the Act. - Deduction u/s 80HHC - Unless the context does not permit, the construction of the expression “derived from” must be consistent. - The strict interpretation is in line with a few relative words, namely, manufacturer, exporter, purchaser of goods, etc. adverted to in Section 80HHC - Including other income as an eligible deduction would be counter-productive to the scope, purpose, and object of Section 80 HHC - Appeal of the assessee dismissed - SC
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Income Tax:
Validity of Reassessment order u/s 147 - Non-service of notice u/s 143(2) - Considering the provisions of Sections 292B and 292BB of the Act, when the petitioner had participated in the proceedings in pursuance to the notice issued in Annexure-R(a), the petitioner, after finalisation of the assessment orders, cannot take the plea that the assessment orders are incorrect on the ground of non-mentioning of the provision of Section 142(3) in the notice. - HC
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Income Tax:
Validity of Reopening of assessment - The mere submission of books of accounts and the certificate issued by the Statutory Auditor would not amount to the fact that the petitioner has disclosed fully and truly all material facts - The reasons recorded by the Principal Commissioner of Income Tax to accord sanction for the issue of notice u/s 148 cannot be said that the sanction was granted mechanically and without application of the mind. - HC
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Income Tax:
Penalty u/s 271(1)(c) - debatable issue - Since the assessee-respondent had not suppressed the amount in question and had disclosed it in its return, merely because he declared it under a particular “head of income”, and the AO chose to treat the same under some other head, the assessee-respondent cannot be accused of furnishing incorrect particulars of income or suppressing facts. - HC
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Income Tax:
Validity on assessment order u/s 153C r.w.s. 143(3) in the absence of notice u/s 143(2) - defective assessment order - whether curable defect u/s 292BB? - For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself. - HC
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Income Tax:
Maintainability of appeal before HC - ITAT dismissed the appeal of the Revenue on the ground that tax effect does not exceed the monetary limit, i.e. tax effect of Rs. 50 lakhs as per the CBDT Circular - there is no iota of doubt that the order passed u/s 254(2) cannot be construed to be an order within the meaning of Section 260A to make it appealable before this Court. Rather, the order passed u/s 254(2) is not appealable one and the remedy is available by invoking Article 226 of the Constitution of India. - HC
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Income Tax:
Reopening of assessment u/s 147 - reasons to believe - roving enquiry - accommodation entries - The exercise undertaken by revenue and the reasons to reopen the assessment indicated that under the guise of reopening of the assessment, AO wanted to have a roving inquiry which is not permissible in exercise of powers under Sec.148 of the Income-Tax Act. - HC
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Income Tax:
Allowable revenue expenditure - Uphaar Cinema fire case - compensation liability - nature lo liability - There is no doubt that the compensation so granted by way of restitution was out of civil consequences only and had nothing to do with any criminal liability, which any of these parties may have incurred. - Tax Authorities and especially learned CIT(A) had fallen in error to failing to distinguish the two components of the damages. First being by way of restitution and second being negative restitution. The former is allowable as business expenditure allowable u/s 37(1) - AT
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Income Tax:
LTCG on 'Sale of Co-ownership Land' - Having adopted the DVO’s valuation in one of the co-owners case who is the brother of the assessee for the assessment year i.e. 2011-12 for computing the long term capital gain, we see no justifiable reason to adopt a different valuation in assessee’s case for computing long term capital gain for his 1/6th share for the very same assessment year i.e. 2011-12. - AT
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Income Tax:
TP Adjustment - TPO did not propose any adjustment. - AO deviated from the order of TPO. - where TPO has not proposed any adjustment and valuation has been adopted by the AO without verifying the true and correct facts qua the assets, we are unable to sustain such erroneous finding both on legality and facts. - AT
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Income Tax:
Disallowance of salary expenses u/s 40A(2)(b) to relatives of the Directors - AO cannot sit on the arm chair of the assessee-company`s Board of Directors and decide that who is reliable persons and how much salary is to be paid for the loyalty. - Payment of salary by assessee does not exceed the fair market value prevailing in the market - Additions deleted - AT
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Income Tax:
Write back of sundry creditors - assessee claimed relief of write back of sundry creditors on account of sanction granted by the BIFR - The assessee made Miscellaneous Application before the CBDT which was ultimately rejected. Therefore, the CIT(A)’s action in allowing the same would be in contravention of the order passed by the higher authority u/s. 119 - AT
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Income Tax:
Unexplained cash deposits in bank account - The claim of the assessee remained as a bald claim only followed by no evidence. Why the depositors will deposit their funds in an account of other person for increasing the deposits of a bank. The depositors can make deposit in their names by themselves. There is no necessity to increase the bank deposit by depositing funds in other’s bank account. - Additions confirmed - AT
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Income Tax:
Addition u/s 40A - cash purchases - Once the genuineness of the cash payment for purchasing the movie rights have been considered by the revenue authority with respect to the other transaction namely, for the other part of the amount which was paid through the banking channel , then the transaction cannot be doubted by the revenue authorities. - Additions deleted - AT
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Income Tax:
Revision u/s 263 - Agricultural income - the assessee has only proved that the land is an agricultural land. The assessee in order to prove the agricultural income had to furnish evidence regarding sale of agricultural products which was ignored by the Ld. AO. - Revision proceedings sustained - AT
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Income Tax:
Disallowance of construction expenditure incurred after the issue of occupation certificate (OC) - It is seen that the nature of work which was incurred by the assessee during the year are not of such type which can affect the occupancy of the building by the occupants. There are certain expenditures which assessee had stated that although bills and evidences and bills related to earlier date, however, the expenditure has been booked and incurred in the year under consideration since the bills were belatedly received and some of the bills were received on a later date where the work had completed which was subject to defect liability period. - Claim allowed - AT
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Income Tax:
Additions against Suppressed sales - huge variance in sale price of flats - ld. AO is directed to give consequential relief by applying this weighted average rate - AT
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Income Tax:
Estimation of income - Taxability of entire receipt from Facility Management Services (FMS) - Though the Revenue challenged this estimate very vehemently, contending that the assessee did not incur any expenditure to render this service, we cannot accept the same because no service earning revenues could be rendered without expenditure. - Estimation of income @15% sustained - AT
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Income Tax:
Revision u/s 263 - The assessment order is very cryptic without speaking about the verifications made by the AO for which the return filed by the assessee was selected for “Scrutiny” - PCIT has correctly observed that no proper examination/verification was done by the AO - Revision order sustained - AT
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Customs:
Computation of period for filing appeal as time granted by the High Court - the word “today” mentioned in the order - within a period of two weeks from today, i.e., 26.03.2013 - since, the order copy was received by the petitioner only on 25.04.2013, the appeal, which was filed on 29.04.2013, was filed well within the period of limitation prescribed by the Hon'ble Division Bench of this Court. - HC
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Customs:
Revocation of Customs Broker License - at the given premises the said firm was found to be “non-existent” - The inherent contradiction made by the Department is self evident, when the department with all the wherewithal at its command, itself fails to take note of the alleged non-existent address, it cannot shoot off the blame for a similar lapse, if any, onto the Customs Broker. - The order of revocation of Customs Broker Licence is set aside and the same is restored - AT
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Customs:
Refund of duty paid - iron ore fines were exempted from payment of duty - Determination of date of export - Claiming Benefit of exemption Notification dated 7-12-2008 - It is undisputed fact that let export order cannot be issued before payment of full duty by the assessee, in that circumstances, it cannot be said that let export order was issued to the appellant on 06.12.2008. Therefore, the date of let export order is to be taken as 08.12.2008. - Benefit of exemption and refund allowed - AT
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Service Tax:
Refund of amount retained without authority of law - It is well settled that once such amounts were deposited by the petitioner and were retained by the department without the authority in law, the claim of the petitioner for refund could not have been denied. In such circumstances, it was appropriate for the petitioner to invoke the jurisdiction of this Court under Article 226 of the Constitution praying for writ for directing refund of money illegally retained / withheld. - HC
Articles
Notifications
News
Case Laws:
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GST
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2023 (11) TMI 1021
Service of SCN not made - no reply to SCN - contention of the petitioner is that the petitioner had not received any show cause notice and hence, they are not in a position to file their reply - HELD THAT:- In the present case, it appears that the show cause notice was issued to the petitioner and the petitioner had received the same. Thereafter, the assessment order was passed on 17.07.2023. However, the petitioner is not in agreement with the same, since there was an error in the said assessment order. Hence, the petitioner had filed a rectification application through online on 17.08.2023 and physically on 29.08.2023. Though this writ petition has been filed challenging the impugned order dated 17.07.2023, it will be sufficient to meet out the case of the petitioner if the rectification application of the petitioner is disposed of by the respondent - this Court directs the respondents to dispose of the rectification application filed by the petitioner dated 17.08.2023 and 29.08.2023 on or before 31.12.2023. Petition disposed off.
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2023 (11) TMI 1020
Challenge to order of penalty levied under Section 122 of GST Act - delay in depositing the tax so collected beyond a period of three months - HELD THAT:- There is no material on record or even an allegation against the petitioner that the amount was collected but not paid or evaded, but only allegation is that the amount was not pad within the time prescribed and was paid after a delay. Even if the said allegation for the sake of argument is treated to be correct, the only penalty imposable against the petitioner would be Rs. 10,000/- as no amount of tax has admittedly been evaded by the petitioner. Even otherwise, the Appellate Authority or even the Assessing Authority has failed in following the general disciplines relating to penalty, specifically the mandate of Section 126(2) of the Act. In the present case, in terms of the Notification dated 01.06.2021, the Government in exercise of its powers under Section 128 of the Act had issued guidelines waiving the late fee for filing the returns, this factor had to be validly considered while imposing the penalty in terms of mandate of Section 126(2) of the Act. In the facts of case, the maximum penalty imposable was Rs. 10,000/- or the tax evaded, whichever was more; there being no allegation of tax evasion, the maximum penalty that could have been imposed was Rs. 10,000/- which could even be lower than the said amount if the Taxing Authority as well as the Assessing Authority had considered the mandate of Section 126(2) of the Act read with Notification dated 01.06.2021. The said exercise clearly has not been done. The petitioner states that the petitioner is ready and willing to accept the penalty of Rs. 10,000/- to give quietus to the litigation - Considering the scope of the provisions as discussed herein above as well as the offer made by the petitioner, the orders impugned are set aside. The petitioner shall pay a penalty of Rs. 10,000/- in both the cases within a period of two weeks from today by depositing the same with the department - Petition disposed off.
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2023 (11) TMI 1019
Principles of Natural Justice - Jurisdiction - power of Assessing Authority to issue SCN - tax liability with interest against the petitioner for conducting the business without registration - HELD THAT:- The order impugned cannot be said to be without jurisdiction and has not been passed in violation of the principles of natural justice. The Assessing Authority has the power to issue a show cause notice under Section 63 and pass the Assessment Order in accordance with the law in respect of the receipts received by the petitioner for providing services. Therefore, the said order cannot be said to be without jurisdiction. The petitioner was afforded the opportunity to file a reply and was also personally heard in the matter, and thereafter, the impugned order was passed. While exercising the writ jurisdiction, the Constitutional Court would confine only to the decision making process of the authority. If the decision has been taken as per the prescribed procedure, in observance of the principle of natural justice, even if the decision is rendered by the authority on an erroneous question of law and a statutory appeal is available against such an order, the Writ Court would not interfere with the decision and the remedy would be for filing the statutory appeal. Thus, the present writ petition cannot be entertained against the impugned assessment order, which has been passed in accordance with the law - The writ petition is dismissed.
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2023 (11) TMI 1018
Service of SCN demanding GST on some allegedly taxable services - petitioner submits that the GST which has been demanded in the show cause notice for the services which are not taxable under the GST regime - HELD THAT:- Since the petitioner has approached this Court only against the show cause notice, this Court is not inclined to interfere this writ petition when the petitioner has opportunity to raise objections on all possible grounds against the demand of GST in the show cause notice before the authority concerned. In view thereof, the petitioner is provided ten days opportunity to file a reply in response to the show cause notice and participate in the adjudication proceedings. Since one of the High Courts has reserved the judgment as per learned counsel for the petitioner, it would be appropriate and in the interest of justice that the adjudicating authority shall not pass final order for a period of one month. Petition disposed off.
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2023 (11) TMI 1017
Refund claim - Transfer of amount paid as GST Cess in the GSTR-3B filings towards Cess dues under the Kerala Flood Cess - seeking permission to Petitioner to file Exhibit P-9 KFC-A form manually with the 1st Respondent - seeking declaration that the petitioner is not liable to pay interest on the Cess dues already paid as GST Cess - initial period of GST regime. HELD THAT:- The case is of the initial period of the GST regime. There were genuine difficulties faced by the assessees/dealers and even tax experts in understanding the GST regime. The petitioner has committed a bona fide mistake of depositing the KFC in the wrong account along with its GSTR-3B instead of filing a KFC-A return for payment of the KFC. The petitioner has been refunded the said cess by the 3rd respondent on direction issued by this Court. However, the fact remains that the State was denied KFC from 1st August 2019 to 04.08.2022 - it appears that the petitioner has not been vigilant in responding to the notices issued to the petitioner, inasmuch as the notice of March 2021 remains unanswered by him. Considering this fact, the petitioner should pay the interest from 01.04.2021 to 31.07.2022 and is entitled to get a refund for the remaining period of interest paid by the petitioner. The present writ petition is disposed of with a direction to the 1st respondent to refund the interest portion to the petitioner after adjusting interest for the period from 01.04.2021 to 31.07.2022.
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2023 (11) TMI 1016
Refund of tax wrongly paid due to absence of inverted duty structure - wrongful payment of tax @ 18% IGST instead of 5% - HELD THAT:- In the present case, there is no dispute on the fact that the vendor of the first respondent had paid 18% duty on the goods supplied to the first respondent. It is also not in dispute that the output or final product of the first respondent is chargeable at 5% IGST. The fact remains that the input is chargeable to duty at the rate of 5% and the same was admitted by the petitioner as well as the first respondent and it was also stated in the impugned order by the second respondent. In terms of Section 54(3)(ii) of the GST Act, if the rate of tax on input is higher than the rate of tax on output, certainly, the person can claim the refund - Accordingly, in the present case, the duty paid on input is 18% though it is chargeable at 5%. Therefore, this Court is of the considered view that the petitioner is entitled for refund in terms of the provision of the Section 54(3)(ii) of the GST Act and the said view was also held by the second respondent in the impugned order. Hence, this Court does not find any error or illegality in the order passed by the second respondent on this aspect. This Court is of the view that the first respondent is entitled for refund as per the order passed by the second respondent and the first respondent is also entitled for interest at the rate of 9% per annum of the refund amount for the delay period in terms of Section 56 of the GST Act. Petition dismissed.
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2023 (11) TMI 1015
Non-filing of statutory GSTR-3B returns for the months from May 2018 to January 2019 - non-discharge of GST liability - demand in respect of the IGST, CGST and SGST and Cess alongwith interest and penalty - no jurisdiction issue nor violation of principles of natural justice - HELD THAT:- This Court does not exercise appellate jurisdiction, but only exercise limited jurisdiction of judicial review. The order, Ext.P4, passed by the first respondent cannot be said to be without jurisdiction or in violation of the principle of natural justice. The order passed is well within the jurisdiction of the first respondent. There has been full compliance of the principle of natural justice, that the petitioner was afforded opportunities of response to the show cause notice and of having been heard, and thereafter the impugned order has been passed. There are no ground to entertain the present writ petition and the same is hereby dismissed.
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2023 (11) TMI 1014
Maintainability of appeal - time limitation - appeals have been rejected being barred by period stipulated in sub-section (1) read with sub-section (4) of Section 107 of the OGST/CGST Act - availability of alternative remedy provided under Section 112 of the said Act. HELD THAT:- During pendency of these writ petitions, the Ministry of Finance, Department of Revenue (Central Board of Indirect Taxes and Customs) has issued Notification No.53/2023-Central Tax [S.O.4767(E)], dated 2nd November 2023, by which it has been notified that taxable persons, who could not file an appeal on or before the 31st day of March, 2023 against the order passed under section 73 or 74 of the Central Goods and Services Tax Act, 2017 by the proper officer within the time period specified in sub-section (1) of section 107 read with sub-section (4) of section 107 of the Act, and the taxable persons whose appeal against the said order was rejected solely on the grounds that the said appeal was not filed within the time period specified in section 107, as the class of persons, shall follow certain special procedure for filing appeals in such cases. In view of the aforesaid Notification, the impugned orders, against which the writ petitions are filed, are set aside and the matters are now remanded to the Appellate Authority to proceed with it in accordance with law. Petition disposed off by way of remand.
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2023 (11) TMI 1013
Entitlement to CENVAT Credit - case of petitioner is that he made a claim under column 7(d) inadvertently, instead of making a TRAN-1 claim under column 7(b) - HELD THAT:- The petitioner makes claim that he ought to have filed returns under by making a claim under Column 7(b) and erroneously he made a claim under Column 7(d). Since the petitioner has claimed that he has necessary invoices and documents to support his claim under column 7(b) , this Court is of the view that the impugned order is to be set aside and matter is remitted to respondent No.1. Respondent No.1 shall consider the claim of the petitioner under Column 7(b) of CGST Rules, 2017, if there are supporting documents to make claim under Column 7(b). If the claim is established then the consequential relief should follow - Petition disposed off.
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2023 (11) TMI 1012
Availment of excess input tax credit - difference between Form GSTR 2A and Form GSTR 3B for the tax period 2017-18 - HELD THAT:- The Government of India, Department of Revenue, Central Goods Indirect Tax and Customs considered the difficulties faced by the assessees in the initial year in respect of difference in input tax availed in Form GSTR-3B as compared to that received in form GSTR 2A for the financial year 2017- 18 and 2018-19 and has issued clarification vide Circular No. 183/15/2022-GST dated 27.12.2022, and it has been said that where the supplier has filed GSTR-1 as well as return in Form GSTR-3B for a tax period, but has declared the supply with the wrong GSTIN of the recipient in Form GSTR-1, the difference regarding the input tax credit claim by the recipient dealer in its Form GSTR-3B, but it is not reflected in Form GSTR-2A because of the wrong GSTIN of the recipient, the procedure has to be followed as amended in paragraph 4 of the Circular dated 27.12.2022. Taking into consideration Circular No. 183/15/2022-GST dated 27.12.2022, the present writ petition is allowed. The impugned Exts. P5 and P5(a) orders dated 14.06.2023 and 16.06.2023 are set aside. The matter is remitted back to the Assessing Authority to reconsider the case of the petitioner irrespective of the Form GSTR 2A for the petitioner s claim of the input tax credit. However, the petitioner shall deposit 10% of the amount assessed within a period of fifteen days and appear before the Assessing Authority with all the documents and evidence in his possession for passing fresh orders in accordance with the law. Petition allowed by way of remand.
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2023 (11) TMI 1011
Condonation of delay of 59 days in filing appeal before the Appellate Authority - appeal preferred beyond the period of one month as prescribed under Section 107(1) of KGST Act, 2017 - HELD THAT:- Under the KGST Act, the appeal under Section 107 has to be preferred within 60 days. After expiry of 60 days, the appellate authority has discretion for an additional period of 30 days. In the event sufficient reasons are assigned by the aggrieved party, it is well within the jurisdiction of the appellate authority to condone the delay. In the present case on hand, there is no dispute that appeal is filed after expiry of 60+30 days. The statutory provision governing the right of an appeal under Section 107 clearly leads to an inference that Tribunal lacks jurisdiction to condone the delay after 60+30 days. The appellate authority was justified in refusing to condone the delay. he question that requires consideration is, as to whether this court is bound to follow the principles laid down by Division Bench in an unreported judgment in the case of Simplex Infrastructures [ 2022 (1) TMI 761 - KARNATAKA HIGH COURT] . If the State is placing reliance on the judgment of the Apex Court then this court cannot rely on an unreported judgment rendered by Division Bench. In the hierarchy of courts, the law declared by the Apex Court under Article 141 is binding on all the courts within the territory of India. The Constitutional courts while exercising discretion under Article 226 do not have liberty under this rule of discipline, to take a different view or to rely upon supposedly conflicting decisions, where Apex Court has laid down clear law on the subject. The High Courts are not to contradict the law declared by the Apex Court. If under Section 107, an appeal has to be preferred within a period of 60 days with additional period of 30 days, it was well within the jurisdiction of respondent No. 2-appellate authority to dismiss the appeal only on the count of delay. The judgment rendered by Division Bench of this court in the case of Simplex Infrastructures does not come to the aid of the petitioner herein, as the appellate authority lacks jurisdiction to condone the delay. The period prescribed under Section 107 cannot be condoned under Article 226 of the Constitution of India. Petition dismissed.
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2023 (11) TMI 1010
Maintainability of petition - availing statutory remedy of appeal - non-constitution of Tribunal - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Petition disposed off subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves, and other conditions imposed.
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2023 (11) TMI 1009
Seeking permission to withdraw the petition in view to avail the remedy under Section 107 of the CGST Act - HELD THAT:- Permission is granted. The petition stands disposed of as withdrawn.
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2023 (11) TMI 1008
Seeking permission of this Court to withdraw the bail application with the liberty to approach the learned trial court, to which learned counsel for the respondent has no objection - HELD THAT:- The bail application is dismissed as withdrawn with the liberty as prayed for - The next date of hearing i.e 13.09.2023 stands cancelled.
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2023 (11) TMI 1007
Right to make application either cancellation for revocation or by filing appeal - Registration Cancellation order not available - fault in the system of the department - HELD THAT:- The order of cancellation of registration of the petitioner is neither available in the portal nor the respondent has been able to hand over a copy of the same to the petitioner nor the petitioner has produced the hard copy of the same before the Court also. The petitioner cannot be a remediless for the fault in the system of the department and petitioner can t be deprived of its right to make application either cancellation for revocation or by filing appeal - Petition is disposed of by directing the respondent CGST authority concerned to hand over the hard copy of the order in original cancelling the petitioner s registration and if it is furnished to the petitioner, petitioner will be entitled to file application for revocation of the same on the basis of the aforesaid hard copy to be supplied within fifteen days.
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Income Tax
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2023 (11) TMI 1022
Applicability of MAT Provisions on assessee bank - corresponding new bank - case of the assessee is that clause (b) of sec.115JB(2) is made applicable to banking companies, since banking company is included in sec. 211 of the Companies Act. However, it is the contention of the assessee that it is not a banking company , i.e., it is a corresponding new bank - HELD THAT:- On going through the above decision of coordinate Bench in [ 2022 (3) TMI 134 - ITAT BANGALORE] , the issue has been decided as stating provisions of sec. 51 of the Act specifically states that only certain provisions of BR Act are applicable to Corresponding new bank . We noticed earlier that the Ld CIT(A) has proceeded to decide this issue by observing that all provisions of BR Act are applicable to the Company. We notice that the Ld CIT(A) did not consider the effect of provisions of sec. 51 of the BR Act upon the assessee. Hence the decision taken by him under the impression that all the provisions of BR Act are applicable to the assessee is faulted one. In our view the Ld CIT(A) should considered the effect of provisions of sec. 51 of BR Act and accordingly he should have appreciated the contentions of the assessee on the definition of banking company , provisions of sec. 211(2) of the Companies Act etc. Since these aspects go to the root of the issue, in our view, this issue needs to be examined at the end of Ld CIT(A) afresh. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to his file for examining it afresh - Thus we remit this issue also to the file of CIT(A) for fresh consideration and decision as per law in the same terms. Deduction u/s. 36(1)(viia) - advances made and not advances outstanding as on 31 st March, 2014 and deduction u/s. 36(1)(viia) is only on the incremental advances - HELD THAT:- We note that the issue of allowance u/s. 36(1)(viia) has been settled in the case of CIT, LTU v. Canara Bank [ 2023 (1) TMI 291 - KARNATAKA HIGH COURT] calculating average aggregate advances of rural branches under section 36(1)(viia), both advance outstanding as well as fresh advances are to be considered. Addition to book profit u/s. 115JB on provisions / write off - Since the issue regarding the applicability of section 115JB of the Act is restored to the files of the CIT(A), the additions made u/s 115JB of the Act by the A.O. and sustained by the CIT(A) is also restored to the files of the CIT(A) for examining of the same afresh.
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2023 (11) TMI 1006
Deduction u/s 80HHC - as per revenue gains from foreign currency fluctuation are not a profit derived from exporting goods/merchandise outside India, thus disallowed deduction - scope and meaning of the words derived from - assessee claims to be a 100% Export-Oriented Unit (EOU) - ITAT set aside the disallowance of the deduction claimed - HC allowed appeal of Revenue resulting in restoring the disallowance of the deduction u/s 80 HHC - HELD THAT:- The case at hand is of a credit of a certain percentage of foreign exchange earnings in an EEFC account, and the credited amount has appreciated in Rupee convertibility at the end of the financial year. The findings of fact on the nature of the investment and the circumstances in which gains are earned by the dealer, disallowing the deduction under Section 80 HHC, in the facts and circumstances of the case, are valid and tenable. The interpretation is by the strict legalistic method. With wisdom and experience, the Parliament used the words derived from in Section 80 HHC to indicate the extent to which the deduction is permitted. The expressions derived from and since are used in multiple instances in the Act. Unless the context does not permit, the construction of the expression derived from must be consistent. In interpreting Section 80 HHC, the expression derived from has a deciding position with the other expression viz., from the export of such goods or merchandise . While appreciating the deduction claimed as profits of a business, the test is whether the income/profit is derived from the export of such goods/merchandise. As we read the very relevant words in Section 80 HHC of the Act, namely, derived by the assessee from the export of such goods or merchandise , in the background of interpretation given to the said expression by this Court. The Section enables deduction to the extent of profits derived by the assessee from the export of such goods and merchandise and none else. The policy behind the deductions of profits from the business of exports is to encourage and incentivise export trade. Through Section 80HHC, the Parliament restricted the deduction of profit from the assessee's export of goods/merchandise. The interpretation now suggested by the assessee would add one more source to the sources stated in Section 80 HHC of the Act. Such a course is impermissible. The strict interpretation is in line with a few relative words, namely, manufacturer, exporter, purchaser of goods, etc. adverted to in Section 80 HHC of the Act. From the requirements of sub-sections (2) and (3) of Section 80 HHC, it can be held that the deduction is intended and restricted only to profits of the business of export of goods and merchandise outside India by the assessee. Therefore, including other income as an eligible deduction would be counter-productive to the scope, purpose, and object of Section 80 HHC of the Act. In Topman Exports [ 2012 (2) TMI 100 - SUPREME COURT] a converse case is available, where a receipt, pursuant to or in terms of a statutory provision, is treated as income derived from the export business. The instant case is not proved or stated as falling within a statutory requirement/benefit. At foremost, by applying the meaning of the words derived from , as held in the catena of cases, we are of the view that profits earned by the assessee due to price fluctuation, in the facts and circumstances of this case, cannot be included or treated as derived from the business of export income of the assessee. The assessee can be correct that the computation shall be as per Sections 28 to 44 of the Act if the receipt or income is from an export business. As the controversy between the assessee and the Revenue is whether the profit earned on the foreign exchange falls under business income or income from other sources, the interpretation of Clause (baa) in Section 80 HHC is not attracted to the case on hand. Hence, for the above reasons, we hold that the gain from foreign exchange fluctuations from the EEFC account does not fall within the meaning of derived from the export of garments by the assessee. The profit from exchange fluctuation is independent of export earnings, and the impugned judgment correctly answers the point. We agree with the reasoning and the view recorded in the Judgment under Appeal. Consequently, Civil Appeal fails
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2023 (11) TMI 1005
Maintainability of writ petition - validity of reopening of assessment on Non-service of notice u/s 143(2) - non-mentioning of the provision of Section 142(3) in the notice - as per revenue once the petitioner has challenged the assessment orders in appeals before the CIT(A) u/s 246 of the Act, there was no occasion for him to approach this Court challenging the very same assessment orders - HELD THAT:- This Court had permitted only to cure the technical defects, if any, and to file writ petitions afresh. However, this Court had not granted any liberty to the petitioner to withdraw the appeals filed before the CIT(A). Withdrawal of the appeals by the petitioner filed before the CIT(A) against the assessment orders, was not because of the liberty granted by this Court, but on his own volition. The petitioner could have challenged the assessment orders on merits, but it wanted to advantage of some technical issues and, therefore, instead of contesting the assessment orders on merits, the petitioner approached this Court. Hence, do not find that these writ petitions are maintainable. Non-service of notice u/s 143(2) of the Act is also liable to be rejected. In as much as the petitioner was issued notice in Annexure-R(a) and in pursuance to the said notice, the petitioner had participated in the proceedings for re-opening of the assessment orders, which is evident from the order sheet maintained before the assessing officer. Therefore, if the notice, Annexure-R(a) did not mention the provision under Section 143(2) of the Act, the same would not become invalid because of non-mentioning of the provision of Section 143(2). What is relevant is notice of hearing and the petitioner was issued notice of hearing. In substance, the notice in Annexure-R(a) was a notice under Section 143(2). Therefore, find no substance in the submission of petitioner that the petitioner was not served with notice under Section 143(2) of the Act, and therefore, the subsequent proceedings and assessment orders had become bad in law and are liable to be set aside. The judgment cited by the learned counsel for the petitioner in the case of Hotel Blue Moon (supra) is distinguishable on the facts of the present case. The technical issue raised by the petitioner is also not present in the facts of these cases. Therefore, these writ petitions are not maintainable and are liable to be dismissed. Considering the provisions of Sections 292B and 292BB of the Act, when the petitioner had participated in the proceedings in pursuance to the notice issued in Annexure-R(a), the petitioner, after finalisation of the assessment orders, cannot take the plea that the assessment orders are incorrect on the ground of non-mentioning of the provision of Section 142(3) in the notice. The assessment orders cannot be challenged on just technical ground, in view of the express provision of Sections 292B and 292BB of the Act. No substance in these writ petitions, which are hereby dismissed.
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2023 (11) TMI 1004
Validity of Reopening of assessment - income in respect of the transfer of the petitioner s shares while acquiring National Woods Products had escaped assessment u/s 56(2)(viib) - whether the re-assessment proceedings initiated are vitiated in any manner inasmuch as the same is said to be based on a change of opinion? - HELD THAT:- The petitioner had not filed the return of his income under Section 56(2)(viib) of the IT Act. Considering the provisions of Explanation 1 to Section 147 of the IT Act, the mere submission of books of accounts and other material would not discharge an assessee from the obligation of disclosing fully and truly all material facts necessary for the assessment of the income. The reasons recorded by the AO would disclose that the AO has formed an opinion and has the belief that the income in respect of the transfer of the petitioner s shares while acquiring National Woods Products had escaped assessment u/s 56(2)(viib). The reasons recorded by the Principal Commissioner of Income Tax to accord sanction for the issue of notice u/s 148 cannot be said that the sanction was granted mechanically and without application of the mind. The mere submission of books of accounts and the certificate issued by the Statutory Auditor would not amount to the fact that the petitioner has disclosed fully and truly all material facts in his returns for completion of the assessment proceedings in respect of his income. Therefore, find that there is no error of jurisdiction committed by the authorities by re-opening the assessment. The petitioner has participated in the re-assessment proceedings, and now the final order has been passed. The petitioner has the remedy of approaching the Appellate Authority under Section 246A of the IT Act against the said assessment order. WP dismissed.
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2023 (11) TMI 1003
Penalty u/s 271(1)(c) - determination of correct head of income - debatable issue - Allegation that, assessee had deliberately claimed the income received from sale of shares as Long Term Capital Gain instead of Profit and Gains of Business - bonafide of the contention raised by the assessee to protect levy of penalty - ITAT deleted penalty levy - HELD THAT:- Merely making incorrect claim under a particular head of income, while furnishing full information about the transactions in question, would not amount to furnishing inaccurate particulars. This is because no statement made or detail supplied was found to be factually incorrect. See Reliance Petroproducts Private Limited [ 2010 (3) TMI 80 - SUPREME COURT] . This is also the view taken in M/s Anant Overseas P Ltd [ 2014 (9) TMI 432 - DELHI HIGH COURT] reiterated therein that the question whether the shares were held as investment or stock in trade is highly debatable and a difficult call in many a case, and that merely because the assessee made an incorrect claim in law, it would not tantamount to furnishing inaccurate particulars inviting penalty. Since the assessee-respondent had not suppressed the amount in question and had disclosed it in its return, merely because he declared it under a particular head of income , and the AO chose to treat the same under some other head, the assessee-respondent cannot be accused of furnishing incorrect particulars of income or suppressing facts. Decided in favour of assessee.
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2023 (11) TMI 1002
Validity on assessment order u/s 153C r.w.s. 143(3) in the absence of notice u/s 143(2) - defective assessment order - whether curable defect u/s 292BB? - whether the absence of notice u/s 143(2), before framing the assessment order would render the assessment order defective, having regard to the provisions of Section 292BB? HELD THAT:- The argument advanced on behalf of the appellant/revenue that the absence of notice u/s 143(2) would not render the assessment order u/s 143(3) defective does not impress us as the import of Section 292BB is to remedy infirmities that arise in the service of notice under the Act. However, this is a case, where no notice under Section 143(2) was issued, as noted by the CIT(A) and affirmed by the Tribunal; which is different from saying that a notice was issued which was deficient. This issue is no longer res integra, as is demonstratable by the decision of Laxman Das Khandelwal [ 2019 (8) TMI 660 - SUPREME COURT ] as said that the scope of the provision of section 292BB is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself. Decided in favour of assessee.
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2023 (11) TMI 1001
Maintainability of appeal before HC - Exemption u/s 10(38) - Tax evasion activities through bogus LTCG/STCL on penny stocks - ITAT dismissed the appeal of the Revenue on the ground that tax effect does not exceed the monetary limit, i.e. tax effect of Rs. 50 lakhs as per Circular No.3/2018 dated 20.08.2018 and Circular No.17/2019 dated 08.08.2019 -HELD THAT:- Coming to the merits of the case and on perusal of the orders passed by the Assessing Officer, CIT (A) and the ITAT, this Court finds that the claim for the benefit under Section 10 (38) of the Act had not been considered in its proper perspective and the ITAT is justified in accepting the plea of the respondent-assessee. Therefore, the ITAT has rightly denied to interfere with the same. CBDT circular that permitted to the assessee to file revised returns if he omitted to make a claim, was also not noticed by the Assessing Officer. Therefore, the ITAT has not committed any error in concurring with the view of CIT (A) by dismissing the revenue s appeal. As such, no substantial question of law arises from the impugned order passed by the ITAT so as to call for interference by this Court. Apart from the same, the present ITA is not maintainable in view of the fact that the Miscellaneous Application was filed by the Revenue on 11.11.2019 basing on the Circular dated 06.09.2019 and 16.09.2019 for consideration of the case on merit. ITAT dismissed the Miscellaneous Application of the Revenue on the ground that original appeals were dismissed by the ITAT on 26.09.2019 on account of low tax effect and the CBDT issued special Circular No.23/2019 dated 06.09.2019 and special order dated 16.09.2019 before passing the order by the Tribunal. Whether against the order passed in the Miscellaneous Application the present ITA is maintainable before this Court or not? - There is no dispute that M.A for the Assessment Year 2014-15, which was disposed of by the ITAT [ 2019 (9) TMI 1714 - ITAT CUTTACK] on account of low tax effect. Certainly, the order passed in ITA[ 2019 (9) TMI 1714 - ITAT CUTTACK] is appealable, but as against the order [ 2022 (3) TMI 1562 - ITAT CUTTACK] passed in the Miscellaneous Application filed in the ITA, which was disposed of the present appeal does not lie before this Court. Even if ITAT had granted liberty for filing Miscellaneous Application, after withdrawal of the monetary limit pursuant to CBDT Circular, but that ipso facto cannot make the said order appealable. An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law. The order dated 30.03.2022, which is under consideration, has been passed in Miscellaneous Application filed under Section 254 of the Income Tax Act, 1961. This Court in the case of M/s. Radha-Govindo [ 2019 (4) TMI 2131 - ORISSA HIGH COURT] did not entertain the ITA and dismissed the same as withdrawn with liberty for the appellant to challenge the order of rejection of review by way of filing a writ petition. Therefore, there is no iota of doubt that the order passed under Section 254 (2) of the Income Tax Act, 1961 cannot be construed to be an order within the meaning of Section 260A to make it appealable before this Court. Rather, the order passed under Section 254 (2) is not appealable one and the remedy is available by invoking Article 226 of the Constitution of India.
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2023 (11) TMI 1000
Benefit of Foreign Tax Credit (FTC) u/s 90/91 - delay in filing Form-67 - Scope of procedure under Rule 128 - mandatory or directory - petitioner initially worked at Kenya and subsequently, he became the resident of Indian from the assessment year 2018-2019 and 2019-2020 - HELD THAT:- The petitioner has filed his return including his Kenya income along with his Indian Income tax and claimed the benefits of FTC. However, the petitioner would submit that it is not mandatory. The Rule cannot make anything mandatory and it can be directory in nature, that too before the Assessment, the claim to avail the benefits of FTC is filed. Therefore, it would be the amounts to due compliance under the Act. As decided in the case of Commissioner of Income-Tax, Maharashtra v. G.M.Knitting Industries (P) Limited in Civil [ 2015 (11) TMI 397 - SC ORDER] wherein it was held that Form 3AA is required to be filed along with the return of income to avail the benefit and even if it is not filed, but the same is filed during assessment proceedings but before the final order of assessment is made that would amount to sufficient compliance. The law laid down by the Hon'ble Apex Court in Commissioner of Income-Tax, Maharashtra v. G.M.Knitting Industries (P) Limited. [ 2015 (11) TMI 397 - SC ORDER] would be squarely applicable to the present case. In the present case, the returns were filed without FTC, however the same was filed before passing of the final assessment order. The filing of FTC in terms of the Rule 128 is only directory in nature. The rule is only for the implementation of the provisions of the Act and it will always be directory in nature. When the returns were filed without furnishing Form 3AA and the same can be filed the subsequent to the passing of assessment order. Further, in the present case, the intimation under Section 143(1) was issued on 26.03.2021, but the FTC was filed on 02.02.2021. Thus, the respondent is supposed to have provided the due credit to the FTC of the petitioner. However, the FTC was rejected by the respondent, which is not proper and the same is not in accordance with law. Therefore the impugned order is liable to be set aside. Accordingly the impugned order is set aside. While setting aside the impugned order, this Court remits the matter back to the respondent to make reassessment by taking into consideration of the FTC filed by the petitioner on 02.02.2021. The respondent is directed to give due credit to the Kenya income of the petitioner and pass the final assessment order.
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2023 (11) TMI 999
Reopening of assessment u/s 147 - reasons to believe - scope of roving enquiry - accommodation entries in the form of unsecured loan given to the assessee company - HELD THAT:- Perusal of the record would indicate that the petitioner s case was selected for scrutiny and the issue as to unsecured loans was considered threadbare. The statement of audit produced in Form 3CA and 3CD together with the petition indicated that the company accepted unsecured loan from Directors / Shareholders of the company and relatives, names thereof were listed in their statement of accounts. Perusal of the notice would indicate that the revenue had sought for details and supporting material to establish the genuineness of source and creditworthiness in respect of receipt and refund of unsecured loans during the year. Even while responding to the notice it was specifically pointed out by the assessee-petitioner that in context of unsecured loans, the details of 25 parties confirming the copies of the accounts of the Directors and Shareholders from whom such loans were taken was attached. What is therefore evident from perusal of the material and the disclosure of income and the questions which were asked and respondend to by the petitioner in the scrutiny assessment would indicate that there was ample justification brought out by the petitioner in the context of unsecured loans. Perusal of the reasons would indicate that except making a statement that the petitioner had an access with Shri Kamal Zaveri and that the tainted concerns, namely, Jay Traders and Shubham Enterprise were conduits for securing unsecured loans. No material came forth in terms of any statement or details to pin-point a live link or a nexus of the petitioner with the transaction in question. Apparently, the reasons were suggesting that it was a case where the revenue merely entered into a roving and fishing inquiry without any material on record. It was merely based on suspicion, especially when the exercise has been undertaken in light of the scrutiny assessment so done. There was no tangible material so as to come to a conclusion or reason to believe that the income chargeable to tax has escaped assessment . The exercise undertaken by revenue and the reasons to reopen the assessment indicated that under the guise of reopening of the assessment, AO wanted to have a roving inquiry which is not permissible in exercise of powers under Sec.148 of the Income-Tax Act. Decided in favour of assessee.
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2023 (11) TMI 998
Validity of final assessment order u/s 144C as not conforming binding directions of ld. DRP - upward adjustment in ALP of international transactions - DRP s directions could not be complied with as the order giving effect of the TPO was not received by the AO at the time of the passing of the order - HELD THAT:- As final assessment order is without incorporating of DRP s directions. As stated above, the reason is that DRP has given certain directions which were to be given effect by the TPO. The AO till passing the final assessment order has not received the order giving effect by the TPO. In the case of Anand NVH Products Pvt. Ltd. [ 2021 (8) TMI 1262 - DELHI HIGH COURT ] we noted that assessment order has been passed under section 143(3) read with section 144C of the Act without waiting for the decision of the DRP, thus in this case set aside the final assessment order along with notice of demand and restored the matter to the level of DRP. In the case of SRF Ltd. [ 2021 (7) TMI 1298 - DELHI HIGH COURT ], the final assessment order was passed without incorporating the DRP s directions. Thus in such a situation, quashed the final assessment order and the demand of notice and remitted the matter to DRP for consideration u/s 144C. Also in Fibrehome India Pvt. Ltd. [ 2021 (12) TMI 944 - DELHI HIGH COURT ] the final assessment order was passed without incorporating the directions of the DRP, thus as referring to cases of Anand NVH Products Pvt. Ltd. and SRF Ltd. [ 2021 (8) TMI 1262 - DELHI HIGH COURT ] remitted the matter to DRP keeping in view of the scheme of section 144C. Thus, it is emanating that in the final assessment order passed without incorporating the DRP s directions, the matter has been remanded to the DRP by the Hon ble High Court to give effect to the scheme of section 144C of the Act. The above case laws are binding upon us. We remit the issue to the file of AO. AO shall pass an order incorporating DRP s directions which has been given effect by the TPO. Assessee appeal is allowed for statistical purposes.
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2023 (11) TMI 997
Validity of the orders passed by DRP without quoting DIN - HELD THAT:- After analyzing the clauses of the CBDT Circular No. 19/2019 dated 14.08.2019, as decided in Brandix Mauritius Holdings Ltd. [ 2023 (4) TMI 579 - DELHI HIGH COURT] that the orders/communications issued without quoting the DIN on the body of the order are not valid orders. Similar issue has been considered by the Tribunal recently in the case of Smt. Sharda Devi Bajaj Ors. [ 2023 (11) TMI 645 - ITAT DELHI] Thus directions/orders passed by the DRP for the assessment years 2019-20 and 2020-21 under Section 144C(5) are bad in law. Consequently, the final assessment orders passed by the AO u/s 143(3) r.w.s.144C(13) pursuant to such directions/orders of the DRP are also bad in law - Assessee appeal allowed.
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2023 (11) TMI 996
Allowable revenue expenditure - Uphaar Cinema fire case - compensation liability - nature lo liability - whether was not punitive, therefore, allowable deduction? - HELD THAT:- We are of the considered view that the judgment of the Hon ble Supreme Court in the case of Municipal Corporation of Delhi Vs. Association of Victims of Uphaar Tragedy Ors. [ 2011 (10) TMI 712 - SUPREME COURT] is of vital consequence to understand as to what was the nature of compensation directed to be paid to the victims of Uphaar Tragedy. It further comes up that thereafter the Hon ble Supreme Court examined the question of damages beyond the tortuous liability for granting punitive damages wherein the Hon ble Supreme Court took into cognizance the illegal profits derived by the theatre owner by selling tickets in regard to extra seats unauthorizedly and illegally sanctioned by the Authorities and installed by the licensee. There is no doubt in the mind of this Bench that the compensation as granted by the hon ble Supreme court and as paid by the assessee was by way of restitution as well as punitive, in terms of the rights of the victim under the Private Law. The remedy that was availed was by way of writ jurisdiction of Hon ble Delhi High Court, as determined finally by Hon ble Supreme Court. The damages were ordered against the theatre owner, Delhi Vidyut Boart, Municipal Corporation of Delhi, Fire Force and the Licensing Authority for their alleged callous disregard to their statutory obligations and to the fundamental inducible rights guaranteed under Article 21 of the Constitution of India, of the theatre coming public in failing to provide safe premises free from reasonably forcible hazards. There is no doubt that the compensation so granted by way of restitution was out of civil consequences only and had nothing to do with any criminal liability, which any of these parties may have incurred. Expression punitive implies involving or inflicting punishment. It is matter of common understating that damages awarded by the courts are different from fines, which are prescribed under law for any act or omission giving rise to penal consequences. Damages, liquidated or unliquidated, generally arise out of acts or omission giving rise to civil consequences. They are primarily based on principle of restitution or reasonable and adequate compensation but are not punitive in nature. The essential condition of allowance is that the expenditure should have been laid out or expended wholly and exclusively for the purpose of such business. The view of the Hon ble Supreme Court in the case of Haji Aziz Abdul Shakoor Bros. [ 1960 (11) TMI 15 - SUPREME COURT] was that no expense which is paid by way of penalty for breach of the law can be said to be an amount wholly and exclusively laid for the purpose of the business. Thus in present assessee, Hon ble Supreme Court had reasoned that punitive damages could be granted only in very limited circumstances. In the pertinent part of the judgment, Hon ble Apex court stated: Punitive damages can be awarded when the wrongdoers' conduct 'shocks the conscience' or is 'outrageous' or there is a willful and 'wanton disregard' for safety requirements. Normally, there must be a direct connection between the wrongdoer's conduct and the victim's injury. This punitive damages of Rs. 25 lacs, paid by the assessee, is one which cannot be said be one which was out of natural course of events of business activity. Rather Hon ble Supreme Court has said that this punitive damage is being allowed as negative restitution for the reason what Hon ble Supreme Court said was by way of least be denied the profits/benefits out of their illegal act . Thus Tax Authorities and especially learned CIT(A) had fallen in error to failing to distinguish the two components of the damages. First being by way of restitution and second being negative restitution. The former is allowable as business expenditure allowable u/s 37(1). As if any assessee is directed to make payment under law or orders of courts by way of compensation arising out of civil consequence the same has to be considered to be allowable business expenditure. However, the Punitative damages as awarded cannot be allowed as expenditure. Legal and professional charges - Whether were in relation to the business activity of the assessee for the current financial year? - The bald assertion of the learned CIT(A) that assessee could not prove that legal and professional expenses have been incurred wholly and exclusively for the purpose of business of the appellant company is not sustainable. The AO had made observation that legal and professional expenses claimed in P L A/c are in respect of closed-down business activities which has no relation with the income of the assessee. Thus, first thing is there is apparent diversion of opinion for making the disallowance. Secondly when the assessee company s business was closed due to loss of the theatre due to fire then there could have been no business as such the business was closed due to force majeure which cannot be attributed to any commercial decision to not work and claim expenses. As pointed above the fact of assessee litigating in courts is not disputed so legal and professional expenditure in absence of any business, needed to be allowed. Tax authorities below have not taken a prudent approach to understand the nature of litigation faced by the assessee that ran over the years and at different forums. Even if the business activities were stopped, the upcoming financial liabilities and even penal consequences required the assessee company to continue defending the cases in the courts and other forums. Thus, legal and professional expenses were erroneously disallowed by the learned tax authorities. Issue is decided in favour of the assessee.
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2023 (11) TMI 995
LTCG on 'Sale of Co-ownership Land' - valuation report given by the DVO rejected - AO adopted the fair market value of the property sold for the purpose of computing capital gains - different valuation for the purpose of computing capital gains in each co-owners case - assessee submitted that in one of co-owners brother s case reference was made to the DVO to ascertain the fair market value of the property sold and the DVO valued the property which value was adopted by AO accepting the valuation done by the DVO and assessment was completed u/s 143(3) r.w.s. 147 - CIT (Appeals) rejected the claim of the assessee on the ground that the valuation report given by the DVO is not correct as he has reduced 50% value of the property for the reason that the size of the property was large in extent and there were no buyers for such plot. HELD THAT:- In the case of the assessee, Assessing Officer adopted the fair market value of the property sold at Rs. 6,46,80,000/- for the purpose of computing capital gains ignoring the valuation report of the DVO and the assessment made in assessee s brother s case wherein the valuation of the DVO was adopted for computing long term capital gains. The ld. CIT (Appeals) also did not accept the contention of the assessee for adopting the DVO valuation in assessee s case also for the purpose of computing the long term capital gain which in our view, is not justified. Having adopted the DVO s valuation in one of the co-owners case who is the brother of the assessee for the assessment year i.e. 2011-12 for computing the long term capital gain, we see no justifiable reason to adopt a different valuation in assessee s case for computing long term capital gain for his 1/6th share for the very same assessment year i.e. 2011-12. Even the case of the Revenue that the valuation of the DVO was not accepted by the Revenue in the case of Late Krishan Kant Chahal and the CIT had initiated proceedings under section 263 of the Act. The Revenue could not place before us any proceeding pending under section 263 in the case of co-owner and brother of the assessee Late Shri Krishan Kant Chahal. The valuation adopted by the Revenue as per the DVO s report became final in the co-owners case and, therefore, the same valuation should be adopted in assessee s case also for the purpose of computing long term capital gain. Thus, we direct the Assessing Officer to adopt the valuation report of the DVO dated 16.12.2006 which formed the basis for computing long term capital gain in the case of the other co-owner, Late Shri Krishan Kant Chahal, who is also the brother of the assessee for the purpose of computing 1/6th share of capital gains, in the case of the assessee also. Assessee appeal allowed.
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2023 (11) TMI 994
TP Adjustment - Assessment u/s 144C - addition on account of short term capital gain calculated by the AO adopting a different sale consideration as against declared by the assessee - Allegation of violation of natural justice as AO exceeded his jurisdiction by not following the finding of the TPO as well as the direction of the learned DRP as AO interpolated his own figure of sale consideration which is not justified - whether the AO is bound by the order of TPO passed u/s 92CA(3) even in the situation when the material evidence was not brought on record by the assessee in T.P. proceedings? HELD THAT:- It is stated that the fair market value (FMV) was computed as per DCF methodology and was duly supported by a valuation report obtained from an independent Chartered Accountant. AO substituted the sale consideration on the basis of the sale of shares of Wormhole by the assessee in the next financial year i.e. F.Y. 2017-18. The assessee claimed before the ld. DRP that the total assets of Wormhole also included the assets (situated outside India) other than investment in Orbgen and, therefore, the AO grossly erred in deriving the value of shares of Orbgen on the assumption that 100% value is relatable to its investment in Orbgen. There is no dispute that the ld. TPO did not propose any adjustment. As per Section 92CA(4) of the Act, the AO is required to compute the Arm s Length Price in conformity with the ALP so determined by the TPO. But in the present case, the AO deviated from the order of TPO. Such deviation is not permissible under law in the light of the statutory provisions and judicial pronouncements as relied by the assessee in its written submissions - See M/S. CUSHMAN AND WAKEFIELD (INDIA) PVT. LTD. [ 2014 (5) TMI 897 - DELHI HIGH COURT] Thus where TPO has not proposed any adjustment and valuation has been adopted by the AO without verifying the true and correct facts qua the assets, we are unable to sustain such erroneous finding both on legality and facts . The grounds raised by the assessee are allowed.
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2023 (11) TMI 993
Penalty u/s 271(1)(c) - addition on sale of land and not granted benefit of u/s.54F - AR submitted that the assessee under bonafide belief has made the claim u/s 54 of the Act in respect of Long Term Capital Gain since the assessee has purchased land for the construction of residence - HELD THAT:- It is pertinent to note that the assessee has under bonafide belief claimed the exemption u/s 54 in respect of Long Term Capital Gain as the assessee has made investments during the year. The same was disclosed by the assessee in the details of return of income as well as during the assessment proceedings and thus the element of concealment of particulars of income does not get attracted in assessee s case. The decision of Hon ble Apex Court RELIANCE PETROPRODUCTS PVT. LTD. [ 2010 (3) TMI 80 - SUPREME COURT] is squarely applicable in assessee s case. The decisions relied by the DR will not be applicable in the present case as the limb under which Section 271(1)(c) of the Act was invoked is missing in the present assessee s case, in fact, the quantum thereafter has been deleted in assessee s case and, therefore, the very basis of the penalty does not survive. Appeal of assessee allowed. Condonation of delay - delay of 1823 days in filing the present appeal - HELD THAT:- In the present case, the circumstances are perused, as the assessee is not staying in India and during the said period he was under the bonafide belief that his brothers will be able to co-ordinate with the Tax Consultant regarding Income Tax matters. In the exceptional circumstances, in the present case, it is appropriate to condone the delay as held in various decisions of Hon ble Apex Court that when delay is explained in detail and appears to be genuine and bonafide, the same should be condoned. Hence, the delay in the present case was genuinely explained by the assessee and, therefore, we are condoning the delay.
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2023 (11) TMI 992
Disallowance u/s 14A - CIT(A) deleted addition observing assessee has own sufficient funds for making investments which generate exempt income - HELD THAT:- This ground raised by the Revenue is squarely covered in assessee s own case, by the order of the Tribunal [ 2019 (7) TMI 2002 - ITAT SURAT] as held assessee is having a owned funds to the extent of 436 crores as on 31.03.2013 investments made by the assessee to generate the exempt income only to the extent of 8.05 crores. Therefore, the ld.CIT(A) reasonable presumed that assessee has invested only own funds no borrowed funds. By considering the facts and circumstances of the case, we find that there is no error passed in the order passed by ld.CIT(A), therefore ground raised by the Revenue is dismissed. Disallowance of salary expenses u/s 40A(2)(b) to relatives of the Directors - No substantial educational qualification of 4 lady members who have been given the salaries[shareholders of company] - also they do not have substantial educational qualification and do not have special skill related to diamond, except the long association with assessee-company - HELD THAT:- We note that assessee is in the business of manufacturing of polished diamond out of rough diamonds and for that skill is acquired by virtue of experience only. Thus, AO put more emphasis only on education, however, we note that education is different than the experience. In most of the Industries, a person is paid higher salary by virtue of his experience in that Industry. Besides, we note that the payment of salary was made by assessee month-to-month basis and subject to TDS deduction. The salary is paid by cheque. Employees to whom the salaries are being paid are taxed in the higher bracket of 30 % tax rate hence there is no motive to reduce the tax of the company by paying the said salaries. We note that diamond business is a peculiar nature of business and for that confidential and reliable persons are very much required, therefore, assessee would decide that who is reliable persons for his business and how much salary is to be paid. AO cannot sit on the arm chair of the assessee-company`s Board of Directors and decide that who is reliable persons and how much salary is to be paid for the loyalty. Hence, we note that payment of salary by assessee does not exceed the fair market value prevailing in the market. Therefore,payment of salary is fully justified, and addition sustained by ld CIT(A) is reasonable. Decided against revenue.
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2023 (11) TMI 991
Unabsorbed depreciation for set off without any time limit - Scope of provisions of section 32(2) of the Act as amended by the Finance Act, 2001 - HELD THAT:- We note that now it is a settled position of law that the unabsorbed depreciation pertaining to A.Ys. 1997-98 to 2000- 01 could be carried forward and set off against the profits and gains of subsequent years without having 8 years of limit. Further, we note that the CIT(A) directed the AO to verify record and determine the correct allowable unabsorbed depreciation pertaining to A.Ys. 1997-98 to 2000-01, to allow the same to be carried forward for set off with income for the year under consideration and also to carry forward unabsorbed depreciation for set off in the subsequent years. In view of the decision of Hon ble Supreme Court Petrofils Co-operative Ltd. [ 2021 (3) TMI 1092 - SC ORDER] as referred by the CIT(A) we do not find any infirmity in the reasons recorded by the CIT(A) and we agree with the same. Decided against revenue. Nature of receipt - write back of onetime settlement of loans treating the same as capital receipt in nature, not liable to tax - applicability of provisions u/s. 41(1) - HELD THAT:- . In the present case, loans were availed from ARCIL, Bank of India, Corporation Bank and Canara Bank - AO allowed waiver of loan amount availed from ARCIL stating it to be utilized for acquisition of capital assets. For remaining, he held used for working capital. The contention of the assessee is that, the loans were obtained for the said financial institutions for acquisition of fixed assets from 1997-98 to 2002-03 and contended the AO erred in stating the remaining amount as working capital. On perusal of the impugned order at page 48, held the same as capital receipt and not a revenue receipt. Therefore, in our opinion, the provisions u/s. 41(1) of the Act is not applicable for the reason that the assessee did not have the benefit of any allowance or deduction in respect of the said amount. Coming to the provisions u/s 28(iv) - We note that no evidences were furnished about the utilization of loan amounts before CIT(A), showing said loans utilized for acquisition of fixed assets etc. The CIT(A) mainly relied on the statements made by the assessee and also case laws. Further, we note that the DIT(R) addressed a letter to BIFR stating that no relief u/s. 28(iv) of the Act was considered by the Department. Further, the fact remains admitted that the assessee itself admitted that no relief u/s. 28(iv) of the Act is provided in the sanction scheme. since, the waiver is not in the nature of cash or money, condition provided u/s. 28(iv) of the Act is satisfied, Therefore, in the absence of any evidences showing that the loans availed, utilized for acquisition of fixed assets which are in capital in nature,we find the order of CIT(A) is not justified and restore the order of AO. Thus, the order of CIT(A) is set aside and the ground No. 2 raised by the Revenue is allowed. Provision of additional liability made in respect of Thane Worker which is later on write back under rehabilitation scheme of BIFR - HELD THAT:- We note that for year under consideration, the assessee failed to prove any such liability provided in the books of account and disallowed over and above the amount of final settlement - Therefore, we find force in the contention of ld. DR as to when no such provision remained standing in the accounts of the assessee, there is hardly any balances to be returned back. We also note that a similar findings were also noted by the CIT(A), however, while adjudicating the issue under consideration, he has carried away by aggregating the balance disallowance u/s. 43B of the Act by turning blind eye to section 43B allowance for the respective assessment year claimed by the assessee. Faced with this situation, the action of CIT(A) allowing the additional claim, in our considered opinion, deserves to be cancelled. We also note that the assessee vide its Miscellaneous Application applied to the CBDT for the claim of aforestated allowance which came rejected and this fact has been rightly travelled throughout both the remand reports of AO which are placed on record. Once, the claim for additional relief of reconsideration against the impugned ground was rejected by CBDT vide its order dated 10-09-2013, therefore, allowing such claim of assessee overstepping the order of rejection of higher authority, in our considered opinion, is not justified . In the light of our aforestated discussion, we reverse the allowance and ground No. 3 raised by the Revenue is allowed. Provision of interest which was later on write back under rehabilitation scheme of BIFR - In the Financial Year 2009-10 this outstanding accumulated amount of interest accrued but not due was merged with other loans which was subjected to concession - HELD THAT:- Once, this liability of interest accumulated but not due was clubbed and treated in accordance with the relief sought and granted, therefore, the question of reversing the same or writing back the same in the impugned year separately does not arise. No merits in allowing this additional claim to the appellant in the First Appellate proceedings. As assessee vide its Miscellaneous Application applied to the CBDT for the claim of aforestated allowance which came rejected and this fact has been rightly travelled throughout both the remand reports of AO which are placed on record. Once, the claim for additional relief of reconsideration against the impugned ground was rejected by CBDT vide its order dated 10-09-2013, therefore, allowing such claim of assessee overstepping the order of rejection of higher authority, in our considered opinion, is not justified. In the light of our aforestated discussion, we reverse the allowance and ground No. 4 raised by the Revenue is allowed. Write back of sundry creditors - assessee claimed relief of write back of sundry creditors on account of sanction granted by the BIFR - HELD THAT:- Taking into account the CIT(A) while allowing the ground raised by the assessee but directed the AO to verify whether such waiver is not allowed earlier and it is not on capital account as mandated by the DIT(R). This amount of sundry creditors beyond the iota of doubt represents a outstanding payment towards the expenditure incurred, claimed and allowed in the preceding assessment years. Therefore, the subsequent remission thereof which is credited in the books of account rightly, fails to prove the test of non-taxability. We also note that alongwith preceding two claims (i.e. ground Nos. 3 and 4) the claim for this additional amount, the assessee made Miscellaneous Application before the CBDT which was ultimately rejected. Therefore, the CIT(A) s action in allowing the same would be in contravention of the order passed by the higher authority u/s. 119 - Decided in favour of revenue.
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2023 (11) TMI 990
Unexplained cash deposits in bank account - as submitted appellant has been just the name holder and the bank account has been operated by her husband which was also accepted by the AO - husband of the assessee claimed that he borrowed funds from the known customers of the bank and deposited that borrowed fund in his wife s account in order to meet the targets of the Bank - HELD THAT:- Assessee has failed to prove her claim. We observe that the assessee failed to produce the persons who deposited cash into her bank account. No evidence regarding the loan given to the husband of the assessee by the known customers of the bank so as to achieve the target of the bank were furnished by the husband of the assessee. The identity of such persons, their capacity to give loan, their sources of income etc. were not proved by the husband of the assessee before the lower authorities. The confirmation letters were also not furnished by the persons by whom cash deposit were made in the account of the assessee. The claim of the assessee remained as a bald claim only followed by no evidence. Why the depositors will deposit their funds in an account of other person for increasing the deposits of a bank. The depositors can make deposit in their names by themselves. There is no necessity to increase the bank deposit by depositing funds in other s bank account. If the depositor deposits funds in his account, then also, deposit of a bank will increase. Therefore, the claim of the assessee is totally unbelievable. The Ld. CIT(A) rightly observed that the claim of the assessee is her afterthought.Appeal of the assessee is dismissed.
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2023 (11) TMI 989
Addition u/s 40A - cash purchases for purchase of movie satellite rights, which the assessee had paid to the producers of movies - AR submitted that as the movie industry is volatile, assessee has to purchase / sell satellite rights only in cash and that the same is evident from the agreements entered into by the assessee with various vendors and further contended that the sellers insist the assessee to make payment in cash - HELD THAT:- Assessee has to deal with the agreements with the purchases of Film Rights which were not disputed by the Assessing Officer and rather the additions were sought to be made on the basis of said agreements. The agreement with the purchaser and the cash payment made by the assessee after receiving it from the purchaser to the seller are not disputed by the revenue authorities. Thus, the genuineness of the transactions has not been doubted by the revenue authorities. Once the genuineness of the cash payment for purchasing the movie rights have been considered by the revenue authority with respect to the other transaction namely, for the other part of the amount which was paid through the banking channel , then the transaction cannot be doubted by the revenue authorities. In our view, once the transaction has not been doubted by the revenue authority, then for the purposes of violation of provision of section 40A(3), we may fruitfully rely upon on the decisions of Basu Distributor (P) Ltd[ 2012 (2) TMI 307 - DELHI HIGH COURT] , HONEY ENTERPRISES [ 2015 (12) TMI 519 - DELHI HIGH COURT] and CPL TANNERY [ 2008 (8) TMI 356 - CALCUTTA HIGH COURT] we hereby allow the appeal of assessee and direct the Assessing Officer to delete the addition - Assessee appeal allowed.
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2023 (11) TMI 988
Revision u/s 263 - As per CIT claim of interest expenses had been allowed erroneously by the AO and also has not examined genuineness and creditworthiness of the fund borrowed for advancing loan - HELD THAT:- We find that the Ld. PCIT has no where asked for examination of the genuineness or creditworthiness of the funds borrowed for advancing. During the course of the hearing on 19.07.2013 and 24.08.2013, the Ld. DR was asked to furnish necessary evidence in support that opportunity of being heard was given to the assessee on the issue of genuineness of examination of the borrowed fund. During hearing dated 04.09.2023, the Ld. DR filed a copy of the relevant folder of the Ld. PCIT including order sheet and submitted that as per the record no such opportunity was appeared to be have given. In aforesaid circumstances of the case, the order u/s 263 passed by the Ld. PCIT cannot be sustained. Since, we find that on the first issue, the Assessing Officer has already made disallowance of the interest and therefore, order cannot be revised on that count . In absence of any opportunity provided by the Ld. PCIT on the second issue, the assessment order cannot be revised on the second issue also therefore, on both these counts, order of the Ld. PCIT cannot be sustained. Accordingly, we quash the order passed u/s 263 of the Act by the Ld. PCIT. Assessee appeal allowed.
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2023 (11) TMI 987
Addition u/s 68 in hands of NRI - economic activities carried out in India - tax treaty provisions - non-matching of currency notes withdrawn and deposited - assessee is an NRI who is a resident of Kuwait - demonetization of currency notes of withdrawal of the cash and denomination of currency notes deposited by the assessee are different - HELD THAT:- Issue involved in this case relating to Non-Resident of India and also there is no doubt on the issue of source of income and assessee has a right to claim the benefit under the treaty between Indo Kuwait. Assessee has relied on the decision of RAJEEV SURESH GHAI [ 2021 (12) TMI 697 - ITAT MUMBAI] wherein the similar facts involved were considered relating to the issue of addition made under unexplained investment wherein as held that the assessee is a tax resident of United Arab Emirates and thus is entitled to the benefit of Indo-UAE tax treaty. When the rights to tax the income in question, under the applicable tax treaty provisions, are allocated to the residence jurisdiction, it is wholly immaterial whether or not the source jurisdiction has the right to tax that income , and, in any event, India is not even a source jurisdiction for the income in question as no economic activities have been carried out in India. Thus remit this issue to the file of the Assessing Officer to consider the facts in this case and re-decide the issue - Appeal filed by the assessee is allowed for statistical purpose.
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2023 (11) TMI 986
Condonation of delay - huge delay of 2366 days - Default on behalf of Advocate / Counsel of the assessee - Bonafide reason for delay - HELD THAT: - As explained by assessee AR Shri Manish Panwar who was entrusted with the filing of appeal had left India, and assessee was on a bonafide belief that Shri Manish would have filed the appeal before the Tribunal on time until it was recently found out that he omitted to do so. We are inclined to condone the delay and note that assessee after realizing the omission on the part of Shri Manish Panwar to file timely the appeal, immediately appointed a new Ld. AR and filed the appeal on 27.02.2023 along with condonation of delay. Therefore, the delay caused in filing of appeal cannot be attributed to any lapse on the part of assessee; and assessee should not suffer for the omission on the part of the Ld. AR. Disallowance of write-off of VAT receivable - assessee has claimed as written off of VAT re-fund not received from Maharashtra VAT Department on account of excess input tax credit over-output tax payable for purchases and sale made during AY. 2009-10 AY. 2010-11 - HELD THAT:- This amount of VAT Refund which was written off in this year (AY. 2012-13), was received/refunded to assessee in Nov, 2014. And it was offered by assessee for taxation along with interest in AY. 2015-16 and has already been taxed. In order to demonstrate that assessee has already offered the refund VAT AR drew our attention to the profit loss account which shows that assessee has claimed administrative expenses which included VAT paid/written off. In order to show that assessee had received VAT Refund of FY 2008-09 2009-10 which has been written off by assessee in AY. 2012-13 AR drew attention to profit loss account for AY. 2015-16, which shows that assessee has offered which includes VAT Refund and interest on VAT refund - Thus, it is found that the assessee has offered for tax the VAT refund of Rs. 13,03,839/- which assessee had written off in the relevant assessment year i.e. AY. 2012-13. Therefore, according to the assessee since the assessee has already offered the VAT refund along with interest for taxation in AY. 2015-16 when assessee received it, the action of the AO in this assessment year (AY. 2012-13) disallowing the same and taxing it would tantamount to double taxation which is not permissible. Since we have noticed assessee has offered the sum subsequently in AY. 2015-16, the action of AO/Ld. CIT(A) disallowing the same amount in this AY. 2012-13, cannot be sustained. However, since this fact has not been verified by AO, the impugned order of Ld. CIT(A) is set aside for the limited purpose to the AO to verify whether assessee has offered this amount ( refund of VAT disallowed this year) for taxation in AY. 2015-16 as discussed supra, and if it is found that assessee has offered the same for taxation then, no disallowance of the same amount this year is not warranted. Appeal of the assessee is allowed for statistical purposes.
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2023 (11) TMI 985
Income from house property - Interest paid on loans borrowed for purchase of Surat Property which was given on Rent - claim rejected by the AO on the ground that the assessee did not produce the interest certificate in support of his claim as per proviso to section 24(b) and so, he disallowed the claim and added it under the head income from the house property - HELD THAT:- As per sub-clause (b) of section 24 of the Act, assessee in order to succeed on this issue has to prove by adducing evidence to show that the property in question (Surat) has been acquired with borrowed capital and the interest claimed by him was in respect of such borrowed capital. DR submitted that assessee has borrowed un-secured loan from several persons and has incurred interest expenses, but failed to satisfy before AO that the interest claimed as deduction was for capital borrowed for acquiring/construction/re-construction of the shop at Surat. Be that as it may, it is admitted fact that the relevant documents were not filed before the AO/Ld. CIT(A) and for the first time some additional evidences has been filed. Therefore, this issue is restored back to the file of the AO for denovo adjudication to consider to whether, the deduction claimed u/s 24(b) of the Act is allowable or not. Addition on account of deemed rent of the flat at Borivali - assessee replied that his employees are occupying the flat - AO noted assessee that he had more than one house property and he is not offering the deemed lettable value (ALU) of this property - AO noted that the assessee failed to produce any supportive evidences which proves that house was occupied by his employees and he further noted that assessee has not debited any expenses in Profit and Loss account for perquisite in the form of rent- free accommodation provided to the employees and also assessee has failed to establish employer-employee relationship about the person who was supposed to be residing in that apartment - HELD THAT:- AO found that assessee has not debited any expenses in P L for perquisites provided to employee. So, AO computed the ALV of the house property. On appeal, the Ld. CIT(A) observed that only one property can be claimed by assessee as self-property under the Act and noted that assessee s claim that flat was occupied by employees was not accepted by AO because the assessee failed to prove the fact by filing any supporting evidence. The action of AO/Ld. CIT(A) cannot be faulted because before this Tribunal also the assessee failed to produce any evidence to substantiate that Star Apartment was occupied by the employee of the assessee. And since the ALV computed by AO has not assailed, in the absence of any evidence as discussed, the impugned action of Ld. CIT(A) is confirmed and this ground of appeal of assessee is dismissed. Disallowance of business expenses as personal expenses - AO s reason for disallowance was that in the entire year assessee has only transacted once in bullion on a single day and has claimed expenses of telephone, mobile, conveyance, car etc for entire year, which according to him was unreasonable; and that expenses are not incurred wholly and exclusively for business purpose - HELD THAT:- One of the reason given by AO/Ld. CIT(A) to disallow the expenditure cannot be countenanced for the simple reason that expenditure in course of the trade which is un-remunerative is a proper deduction, if wholly and exclusively made for the purpose of the business [Refer Hon ble Supreme Court decision in CIT Vs. Rajendra Prasad Moody [ 1978 (10) TMI 133 - SUPREME COURT] . However, assessee is a proprietor of a proprietary concern, so personnel element in expenses claimed by assessee viz telephone, mobile, conveyance etc cannot be ruled out in the absence of evidence to show that the expenditure claimed was incurred wholly and exclusively for the purpose of business. So out of expenses listed out taking into consideration the fact that the personal expenditure may have been incurred for the aforesaid expenses, the disallowance made by the AO is restricted to 20% of such expenses. Balance amount is directed to be deleted and assessee s ground is partly allowed. Disallowing of interest paid on unsecured loan - assessee failed to prove the nexus of borrowing with earning from amenities FD, therefore, he disallowed the interest claim - HELD THAT:- The assessee before this Tribunal could not demonstrate by adducing any evidence to show that the borrowing from the aforesaid three (3) persons were laid out or expended wholly and exclusively for the purpose of making or earning of income other sources i.e. amenity charges and FD interest. Unless assessee shows that purpose of borrowing from three persons was for making or earning amenity income or interest from FD, the claim of interest expenses to these persons cannot be allowed and so it is confirmed. Alternate contention assessee that since the AO in the assessments made u/s 147/143(3) of the Act for earlier years ie. AY. 2008-09 and AY. 2009-10 has accepted the interest deduction u/s 57(iii) of the Act and as per Rule of consistency the claim should be allowed , cannot be accepted for the reasons that in those orders [passed by the AO u/s 147/143(3) of the Act] which were re-assessments made after re-opening the assessment pursuant to the search happening in premises of Mukesh Chokshi, and the AO had looked into the accommodation entry in the form of purchase of shares of M/s. Alchemist Ltd. From perusal of the order, it is not discernable as to whether the AO has scrutinized the deduction claimed u/s 57(iii) of the Act and unless the AO had securitized the claim which fact assessee failed to demonstrate before this Tribunal, such a contention of the assessee cannot be accepted. Therefore, ground nos. 4 5 are dismissed.
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2023 (11) TMI 984
Revision u/s 263 - Agricultural income - As per CIT AO accepted the claim of the assessee that his agricultural income for the relevant financial year despite there was no supporting materials/ documents before him about the earning as income from agriculture - HELD THAT:- AO did not sought any evidence from the assessee on the claimed income as agricultural income. Land revenue records as was submitted by the assessee cannot be the proof of earning from the agricultural activities during the relevant assessment year although there might be some agricultural income from that agricultural land. But examining only the revenue documents as submitted by the assessee it cannot be said that there was an income to the assessee during that relevant assessment year. By furnishing the land revenue record, the assessee has only proved that the land is an agricultural land. The assessee in order to prove the agricultural income had to furnish evidence regarding sale of agricultural products which was ignored by the Ld. AO. Hence, we agree to the finding of the learned PCIT that the ld. AO did not make any enquiry on the agricultural income as was claimed by the assessee. Accordingly, we decide this ground of appeal against the assessee. Sundry Creditors the assessee only disclosed the name and relation of Mr. Ragul who is one of the sundry creditors. No PAN, confirmation letters, address of the creditors, their creditworthiness were insisted / obtained by the ld. AO during the assessment proceeding. As the assessee borrowed money from some of the persons, the Ld. AO ought to enquire about the creditworthiness of the creditors. He ought to see whether the creditors confirm the credits given by them to the assessee. No such exercise was done by the Ld. AO. PCIT has rightly observed that the Ld. AO had to obtain the PAN, confirmation letters, addresses, creditworthiness of the sundry creditors before completion of the assessment. Accordingly, we decide this ground also against the assessee. Depreciation on the machineries assessee explained that the same is the opening written down value and he had produced all the bills with ledger account copy to the Income Tax Officer for the assessment year 2014-15 during an enquiry. Therefore, we reject the observation of the PCIT that the AO did not verify the details of machineries. As a result, we decide this ground of appeal in favour of the assessee. Appeal of the assessee is partly allowed.
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2023 (11) TMI 983
Levy of penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of clear charge - penalty was levied for concealment of income when the proceedings were initiated for furnishing inaccurate particulars of income - HELD THAT:-Though the ld. AO initiated the penalty for furnishing inaccurate particulars of income, however, he levied the penalty for concealment of income. It is settled principle that whenever ld. AO initiate the levy of penalty either for furnishing inaccurate particulars of income or for concealment of income, he should specify the same and bring to the notice of the assessee so that the assessee would be in a position to give reply to the levy of penalty under which circumstances penalty has been levied. In our opinion, AO has not applied his mind while passing the penalty order and not given fair opportunity of hearing to the assessee to show cause as to why the penalty cannot be levied for concealment of income and since he has initiated the penalty only for furnishing inaccurate particulars of income. This action of the ld. AO cannot be upheld. Penalty should be clear as to the limb for which it is levied and the position being unclear here, the penalty is not sustainable. See Manjunatha Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] . Decided in favour of assessee.
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2023 (11) TMI 982
Characterization of income - Agricultural Income or income from Other Sources - leased income generated from the agricultural land - as per CIT(A) appellant has not proved the facts of giving agricultural land on lease and has not proved that agricultural land was used for agricultural purposes and agricultural income as it claimed by the appellant is not substantiative - HELD THAT:- As to the extent of 17 acres 35.58 guntas of land, income of Rs. 55.30 Lakhs was submitted to be generated. Admittedly the total land holding by the assessee is 45.25 acres. The argument of AR is that proportionately the agricultural income declared by assessee at Rs. 76,79,150/- commensurate to the total land holding. This argument of the assessee has not been verified by the authorities and also not supported by evidence. The arguments of the Ld.DR also cannot be brushed aside regarding the certificate dated 20.09.2016 issued by the Tehsildhar to be relatable to the year under consideration. All these things deserves to be verified in detail by the Ld.AO. In the interest of justice, we remand this issue to the Ld.AO for denovo consideration. Assessee is directed to file RTC documents in respect of each land revealing the cultivation that was carried out during the year under consideration. Accordingly, the Ld.AO is directed to verify all the relevant details and to consider the claim of assessee in accordance with law. Grounds raised by assessee stands allowed for statistical purposes.
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2023 (11) TMI 981
Additions against Suppressed sales - huge variance in sale price of flats - Assessee had sold its units at a varied prices ranging from Rs. 13,513/- per sq. ft to Rs. 27,951/- per sq. ft in the same project - Such a huge variation prima facie was not found to be justifiable by the ld. AO who has given a very detailed analysis and the reasons to rebut the explanation of the assessee, whereas the ld. CIT (A) without any much factual analysis has accepted the contention of the assessee. HELD THAT:- Weighted average rate for A.Y.2011-12 comes to Rs. 17,172/- per sq.ft. However, we find that there is one unit which is a shop cum garage and definitely it cannot be compared with other units where the agreement rate was very low and therefore, the same rate of Rs. 17,172/- cannot be applied. Firstly, this was a major area of 5091 sq.ft for agreement value of Rs. 8 Crores. Accordingly, in the weighted average this particular unit sold to Deonar Weight Bride Pvt. Ltd. Unit No.G-1 shop / garage is directed to be excluded from while calculating the weighted average and actual price should be taken. Accordingly, for all other 12 units the rate for estimating the sales is taken at Rs. 17,172/-. Thus, ld. AO is directed to work out the consequential relief and accordingly, the appeal of the Revenue is partly allowed. Similarly, for A.Y.2012-13 and 2013-14 also the weighted average rate is Rs. 17,636 and Rs. 18,136/- respectively. Thus, ld. AO is directed to give consequential relief by applying this weighted average rate and our finding given will apply mutatis mutandis for these two years also. Accordingly, the appeal of the Revenue on this issue is partly allowed. Disallowance of construction expenditure - expenses have been incurred after the issue of occupation certificate (OC) hence, these expenses cannot be allowed - According to the AO, once the OC has been issued, the construction of the building is said to be completed and that after the said date, there cannot be any expenditure - HELD THAT:- The expenses are mostly for maintaining building and during the course of defect liability period assessee was responsible to replace any damages in the building construction work. Moreover, if some work is completed but it is not of proper quality or specifications, then the assessee builder is responsible to again make it - most of the expenses are also in the nature of butler services, housekeeping and cleaning services which are in the nature of maintenance expenses. It is seen that the nature of work which was incurred by the assessee during the year are not of such type which can affect the occupancy of the building by the occupants. There are certain expenditures which assessee had stated that although bills and evidences and bills related to earlier date, however, the expenditure has been booked and incurred in the year under consideration since the bills were belatedly received and some of the bills were received on a later date where the work had completed which was subject to defect liability period. Thus, it cannot be held that since these expenses have been incurred after the OC and therefore, same cannot be allowed. One of the issues raised by the ld. AO that construction cost was on a higher side which has no base because assessee had submitted the working of the construction cost for which entire details were filed before us in the paper book. That apart, assessee had also earned huge profit from such activity and thus, it cannot be presumed that the construction expenses are on higher side. Thus, the finding and observation of the ld. CIT (A) in deleting the addition is confirmed and accordingly, this ground raised by the Revenue is dismissed. Disallowance of interest expenditure - Interest-bearing funds were diverted by the assessee to its sister concern at a lower interest rate - As per AO assessee had taken secured loans from various parties at the interest rate ranging from 14.50% to 23% p.a. and unsecured loans taken at the interest rate ranging from 12% to 15% pa as compared to given ICDs to its sister concern at interest rate of 9% p.a. - HELD THAT:- We find that differential interest rate on loans advances to sister concern cannot be disallowed because the loan given to the said party was to the tune of Rs. 7.40 Crores, whereas interest rate by the assessee to various parties in respect of loan aggregating to Rs. 50.27 Crores which has been considered by the ld. AO. The ld. AO has disallowed interest of all the loans where interest was charged more than 9% ignoring that advances made to the sister concerns were only to the tune of Rs. 7,40,39,682/- in the interest of other loan to the tune of Rs. 60,27,55,727/- cannot be disallowed. Thus, disallowance in such a case at the most can be made in respect of differential interest rates of loans given to sister concern of Rs. 7.40 Crores. Thus, the action of the ld. CIT (A) in restricting the disallowance is justified which does not warrant any interference. Accordingly, this ground raised by the Revenue is dismissed. Disallowance of interest made u/s. 14A - HELD THAT:- CIT (A) has correctly deleted the disallowance on the ground that assessee has sufficient own funds to make the investment which were to the extent of 53.61 Crores as against value of investment of Rs. 33.5 Crores. This issue now stands covered by the decision of the Hon ble Supreme Court in the case of South Indian Bank Ltd [ 2021 (9) TMI 566 - SUPREME COURT] - Accordingly, the action of the ld. CIT(A) deleting the said disallowance is upheld. Disallowance u/s. 40(a)(ia) - Assessee had not deducted TDS on interest paid to Kotak Mahindra Prime Ltd. - CIT(A) restricting the disallowance to 30% - HELD THAT:- However, the order of the ld. CIT(A) while confirming the disallowance by restricting to 30% of the expenditure u/s. 40(a)(ia) is not correct, because the said amendment was brought in the statute w.e.f. 01/04/2015 and is applicable prospectively. This has been held so in the case of Shree Choudhary Transport Co. [ 2020 (8) TMI 23 - SUPREME COURT] - Hence, the action of the ld. CIT(A) in restricting the disallowance to 30% is not correct. Thus, this ground raised by the Revenue is allowed.
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2023 (11) TMI 980
Allowing depreciation after estimation of income - AO did not allow any depreciation claimed by the assessee, stating that such a claim for depreciation was taken care by the lower percentage of estimation - HELD THAT:- While dealing with this issue for the assessment year 2013-14, learned CIT(A) referred to the decision of the Third Member in assessee s own case for the assessment year 1991-92 and 1992-93 wherein it was held that depreciation was allowable as a deduction after estimation is resorted to. He also referred to the Circular No. 29-D/XIX-14 in F.No. 45/239/65-ITJ dt 31/08/1965 issued by the CBDT. Learned CIT(A), then, followed the binding precedent of the Hon'ble jurisdictional High Court in the case of Y. Ramachandra Reddy [ 2014 (9) TMI 205 - ANDHRA PRADESH HIGH COURT] and granted relief to the assessee allowing depreciation after rejection of books of accounts and estimating the income. For this year, learned CIT(A) followed this view taken for the assessment year 2013-14 by his predecessor and allowed depreciation to the assessee. We, therefore, do not find anything illegality or irregularity in the order of the learned CIT(A), granting depreciation to the assessee by following the binding precedent. We, therefore, uphold the findings of the learned CIT(A) and dismiss this ground of appeal for all these years. Deduction u/s 80-IA - AO recorded that the assessee did not fulfil the essential conditions to be a developer like investment, entrepreneurial risk and using of facility and, therefore, the assessee is only a work contractor - HELD THAT:- Tribunal in [ 2012 (5) TMI 181 - ITAT HYDERABAD] , discussed the facts at length in the light of the case law available on this issue and reached to a conclusion that even where the assessee had carried out the development of infrastructure work in consortium or jointly with any other agency and not as a sub-contractor still the assessee is entitled for deduction under section 80-IA of the Act. Decided against revenue. Estimation of income - Receipts relating to the FMS as income from other sources - as contended by the assessee before the learned CIT(A) that the assessee had to incur expenditure for deriving such an income and when the income earned from other projects was estimated, the income from FMS also needs to be estimated - CIT(A) held that expenditure in this service constitutes 90% and income is only at 10%, learned CIT(A) estimated the income from FMS at 15% - HELD THAT:- Though the Revenue challenged this estimate very vehemently, contending that the assessee did not incur any expenditure to render this service, we cannot accept the same because no service earning revenues could be rendered without expenditure. At the same time, no material is placed before us to show as to how this estimate went wrong. Hence, we find it difficult to hold that the estimate made by the learned CIT(A) suffers no infirmity. Exclusion of works allotted to subcontractors and other project works while estimating the income on contracts - HELD THAT:- There is no denial of the fact that in assessee s own case for the earlier assessment years, AO and FAA held that the gross receipts shall be reduced by the recoveries were to be considered for estimation and also the works allotted to the subcontractors in respect of the SPVs. CIT(A) recorded as a matter of fact, on perusal of the orders of the assessment for the earlier assessment years for this purpose, that the Department is consistently adopting this procedure and there is no reason for deviating from the same. Since the CIT(A) followed the consistent view adopted by the Revenue for the earlier assessment years and also the binding precedent of the decision of Brij Bhushan Lal [ 1978 (10) TMI 2 - SUPREME COURT] we do not find anything illegality or irregularity in the findings returned by the learned CIT(A) and, accordingly, uphold the same. Adoption of profit rate of 12.5% on contract receipts and to tax the interest income as income from other sources - HELD THAT:- As Profit percentage of an assessee with high financial charges cannot be compared with that of an assessee having zero financial charges or very less/negligible financial charges. Since in the case on hand, the finance charges have drastically gone up from 3.78% in assessment year 2007-08 to 19.72% in assessment year 2014-15, therefore, estimation of profit @ 11.5% as against 12.5% directed by CIT (A) for these years will be fair and reasonable estimation. We, therefore, modify the order of the learned CIT (A) accordingly and direct ao to estimate the profit @ 11.5% before depreciation on contract work executed by the assessee itself. Grounds raised by the assessee are accordingly allowed in part. Taxability of interest income as income from other sources - HELD THAT:- As relying on own case [ 2013 (12) TMI 19 - ITAT HYDERABAD] uphold the order of the learned CIT(A) confirming the action of the learned Assessing Officer in treating the interest income from Fixed Deposits as income from other sources . The ground raised by the assessee on this issue is dismissed.
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2023 (11) TMI 979
Condonation of delay in filing of appeal - delay of 3080 days - HELD THAT:- The assessee explained that all the records of the college were in custody of the office of the Superintendent and during the period, health of the Chairperson/Secretary of the college had considerably be fallen and he had to undergo cardiac treatment in Super Speciality Hospital at Jammu. The assessee prayed for condonation of delay. AR further argued that the grounds of appeal of the assessee were covered in its favour in assessee s own case by the order of ITAT-Amritsar Bench. The ld. DR had not made any strong objection against the assessee s submission. Accordingly, the delay for 3080 days is condoned. Exemption u/s 11 - eligibility for the deduction u/s 10(23C) (iiiad) on turnover exceeding 1 Crore - advance to the trustee is violation of section 13(1)(c)(ii) and section 13(d) (i) r.w.s. 13(2) and 13(3), so, the exemption available u/s 11 is denied - HELD THAT:- Form evidence it reveals that the turnover of assessee during impugned assessment year is with in the limit specified u/s 10(23C)(iiiad). So, the assessee eligible for deduction u/s 11/12 of the Act. Advance to the trustee which is violation of section 13(1)(c)(ii) and section 13(d)(i) r.w.s. 13(2) and 13(3) - The issue is squarely covered by the assessee s own case [ 2022 (6) TMI 1444 - ITAT AMRITSAR] by the order of ITAT-Amritsar Bench. The assessment order is quashed, and the addition is deleted. The exemption claimed by the assessee is restored.
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2023 (11) TMI 978
Unexplained money taxable u/s. 69 - unexplained cash deposits in specified bank notes during demonetization period - extent of land held by the assessee and deriving income from agricultural operations during demonetization period - HELD THAT:- When the assessee is having sufficient land holding and also proved carrying out agricultural operations, then in our considered view the AO ought to have accepted the explanation of the assessee regarding source of income for cash deposits during demonetization period, more particularly when the Assessing Officer has accepted partial explanation of the assessee and allowed relief to the extent of Rs. 2,50,000/- towards cash deposits during demonetization period. Just because, the assessee did not file his return of income for earlier assessment years, the available source in the form of agricultural income cannot be disputed . The filing of return in earlier years is hardly depending upon the taxable income of the assessee for those assessment years. In case the assessee does not have any taxable income, he need not to file income tax returns for those assessment years, even if he had earned agricultural income. Therefore, rejection of explanation furnished by the assessee, by the AO on the basis of non-filing of income tax return for earlier period is not acceptable. Coming back to the evidences filed by the assessee in support of claim for source for cash deposits. Although, the assessee claims to have filed details of land holding, cash receipts for sale of agricultural products, but could not file complete details to explain cash deposits of Rs. 11,54,500/-. Since, neither the AO nor the assessee could prove their case with relevant evidences and reasons, we are of the considered view that the only option left with us is to settle the dispute between the assessee and the Assessing Officer, by estimating source for cash deposits during demonetization period. We, therefore considering the extent of land held by the assessee and other evidences filed during the course of assessment proceedings, we are of the considered view that, credit for agricultural income to the extent of Rs. 6,54,500/- needs to be given to the assessee. Thus, we direct the Assessing Officer to allow credit for source to the extent of Rs. 6,54,500/- out of agricultural income earned by the assessee for the impugned assessment year and balance amount of Rs. 5,00,000/- to be treated as unexplained money taxable u/s. 69 of the Act. Assessee gets partial relief .
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2023 (11) TMI 977
Assessment of trust income - set off of excess application of income - Exemption u/s 11 allowed - excess application of income in the earlier assessment years against the current year s surplus found - AO after allowing accumulation of income u/s. 11(1)(a) at 15% noted that there was a taxable surplus which the assessee adjusted against the excess utilization in the preceding years - HELD THAT:- The books of accounts are audited and Form 10B has been filed and we do not find any adverse comments for the AY 1999- 2000 to 2001-02. On going through the assessment order, the claim made by the assessee for the previous three assessment years excess application has been denied stating that it is not permissible, but the AO has not disputed the figures claimed by the assessee. We note that similar issue has been decided by the assessee in favour of the assessee in the case of ACIT v. City Hospital Charitable Trust [ 2015 (6) TMI 235 - ITAT BANGALORE] and it is held that excess application of income of the previous years can be set off from the subsequent year s surplus income. The judgment of Jyothy Charitable Trust [ 2015 (11) TMI 1295 - ITAT BANGALORE] also supports the case of the assessee. Thus assessee is eligible for set off of excess application of income of AYs 1999-2000 to 2001-02 from the current year s income. Accordingly, we allow the appeal of the assessee.
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2023 (11) TMI 976
Revision u/s 263 - return filed by the assessee was selected for limited scrutiny through CASS - difference in closing stock compared to the return of income of the previous year and cash deposits reported in SFT-14 - HELD THAT:- As on perusal of the assessment order, we find that during the course of assessment proceedings, AO has questioned about the correct valuation of stock alone. In the assessment order, AO has not made any mention towards enquiry about the cash deposit as reported in SFT 14. Thus, we are of the opinion that the assessment order is very cryptic without speaking about the verifications made by the AO for which the return filed by the assessee was selected for Scrutiny . Against the notice u/s 263 of the Act, before the ld. PCIT, the assessee has explained that the assessee was engaged in real estate business and sold plots during the year for a total consideration and the same has not been reflected in the bank account of the assessee for the reason that the sale proceeds of the plots are cash sales only. On an overall examination of the records, PCIT has correctly observed that no proper examination/verification was done by the AO while passing the assessment order u/s 143(3) on the above issue and the AO had passed the order without application of mind. We find no reason to interfere with the order passed by the PCIT and accordingly, the appeal filed by the assessee is dismissed.
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Customs
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2023 (11) TMI 975
Computation of period for filing appeal as time granted by the High Court - whether the word today mentioned in the order passed by the Hon'ble Division Bench refers to the date on which the order was passed or to the date on which the order was issued to the petitioner (i.e., the date on which the order was made ready)? - Appeal dismissed on the ground of time limitation HELD THAT:- This Court is of the considered view that the petitioner will be able to file the appeal only when the order copy is received by them, otherwise, the respondent will not entertain the appeal. Therefore, for all practical purposes, the word today in the order passed by the Hon'ble Division Bench has to be construed as the date on which the order was ready to issue. In such view of the matter, the word today mentioned in the said order refers to the date on which the order copy was issued to the petitioner . Hence, in the present case, since, the order copy was received by the petitioner only on 25.04.2013, the appeal, which was filed on 29.04.2013, was filed well within the period of limitation prescribed by the Hon'ble Division Bench of this Court. The submission of the respondent that the impugned order, which was passed on the ground that the appeal is barred by limitation, is not sustainable. Hence, this Court is inclined to set aside the impugned order passed by the first respondent on the aspect of limitation. Petition disposed off.
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2023 (11) TMI 974
Revocation of Customs Broker License - at the given premises the said firm was found to be non-existent - non-adherence to the prescriptions concerning KYC norms - HELD THAT:- There are absolutely no merit in the plea of the Department alleging failure on the part of the appellant for meeting out their obligations in fulfilment of the KYC requirements. The inherent contradiction made by the Department is self evident, when the department with all the wherewithal at its command, itself fails to take note of the alleged non-existent address, it cannot shoot off the blame for a similar lapse, if any, onto the Customs Broker. It is opined that no action as initiated in the present matter, was made out in the first place. The order of the adjudicating authority is certainly without a toehold of legitimacy and therefore, needs to be set aside. The order of revocation of Customs Broker Licence is set aside and the same is restored - appeal allowed.
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2023 (11) TMI 973
Refund of SAD - certificate issued by the Chartered Accountant was not authentic - principles of unjust enrichment - HELD THAT:- It is found that identical issue came up before this Tribunal in the case of M/S. SKYLARK OFFICE MACHINES VERSUS COMMISSIONER OF CUSTOMS (PORT) , KOLKATA [ 2023 (11) TMI 877 - CESTAT KOLKATA] , wherein this Tribunal observed On perusal of records, we find that no ulterior motive of the appellant towards production of the earlier certificate has been proved. They have produced a fresh Chartered Accountant s Certificate dated 06.10.2023. Therefore, following the ratio of the cited case law, we remand the matter to the adjudicating authority. As on the identical facts, this Tribunal has remanded the matter back to the adjudicating authority, observing that no ulterior motive of the appellant towards production of the earlier certificate has been proved and they have produced a fresh Chartered Accountant s Certificate. Therefore, following the precedent decision on the identical issue, matter remanded back to the adjudicating authority with the direction to check the veracity of the certificate issued by the Chartered Accountant and other relevant documents. Appeal allowed by way of remand.
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2023 (11) TMI 972
Discharge of education cess and secondary higher education cess that had been debited against scrip issued under the Merchandise Exports from India Scheme (MEIS) in the Foreign Trade Policy (FTP) - HELD THAT:- In terms of the decision of Hon ble High Court of Bombay in LA TIM METAL INDUSTRIES LIMITED VERSUS THE UNION OF INDIA AND ORS. [ 2022 (11) TMI 1099 - BOMBAY HIGH COURT ], it would appear that the proposal for recovery itself was flawed inasmuch as any cess collectible as percentage of duty liability, and which is exempted thereof under any notification, could not be computed in the absence of any duty liability. It is also on record that circular no. 3/2022 dated 1st February 2022 of Central Broad of Indirect Taxes Customs (CBIC) relates to social welfare surcharge and it is quite likely that lack of specific reference to this surcharge precluded acceptance of the submission in the impugned order. The Hon ble High Court of Madras in M/S. KTV HEALTH FOOD PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS (PREVENTIVE) , TIRUCHIRAPALLI [ 2021 (10) TMI 119 - MADRAS HIGH COURT ] had held that When such a circular was issued by the Customs Department and the same having been implemented in respect of various people like the petitioner, the benefit of the said circular cannot be denied to the petitioner on the alleged reason that, the education cess or the higher and secondary education cess being a different component cannot be treated as customs duty or additional customs duty and therefore, the benefit conferred under Clause 11 of the said circular cannot be made available to the petitioner. In view the decisions cited supra and the clarification of Central Board of Indirect Taxes Customs (CBIC), nothing survives in this matter - the impugned order is set aside - appeal is allowed.
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2023 (11) TMI 971
Valuation of imported goods - Mulberry Raw Silk in hanks 20/22 D 3A/4A grade and above - enhancement of value on the basis of contemporaneous import - HELD THAT:- It is found that description declared by the appellant as Mulberry Raw Silk in hanks 20/22 D 3A/4A grade and above , whereas the description of the Bill of Entry which has been relied upon by the adjudicating authority is Mulberry Raw Silk yarn 20/22 D 3A/4A grade and above . It is found that the description of the goods is altogether different as the description declared by the appellant is Silk in hanks whereas the adjudicating authority relied on Silk yarn, therefore, the goods imported by the appellant are not identical or similar goods as relied upon by the adjudicating authority. It cannot be accepted that the value enhanced by the adjudicating authority in the absence of any other supporting evidence - it is held that the value declared by the appellant is the correct value of the impugned imported goods - impugned order set aside - appeal allowed.
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2023 (11) TMI 970
Refund of duty paid - iron ore fines were exempted from payment of duty - Determination of date of export - Claiming Benefit of exemption Notification dated 7-12-2008 - rejection of refund on the ground that as the Shipping Bill was assessed on 06.12.2008 and the let export order (LEO) was given on 06.12.2008 and on the said date, the appellant was liable to pay duty on export of Iron Ore Fines, in that circumstances, refund claim is not maintainable. HELD THAT:- On going through the Shipping Bill, it is found that it is clearly mentioned that differential cess of Rs.29,499/- was debited from the PLA vide Entry Sl.No.13 dated 08.12.2008, the said fact has been verified by the Inspector putting his initial dated 08.12.2008. Further, on going through the order of let export order, which is having some fabrication on face of it where some cutting is there thereafter signature was put and date of 06/12 was mentioned. It is undisputed fact that let export order cannot be issued before payment of full duty by the assessee, in that circumstances, it cannot be said that let export order was issued to the appellant on 06.12.2008. Therefore, the date of let export order is to be taken as 08.12.2008. In that circumstances, as iron ore fines were exempted from payment of duty vide Notification No.129/08 dated 07.12.2008, no duty was payable on 08.12.2008, therefore, the appellant was not liable to pay duty. Accordingly, the appellant is entitled for the refund claim of the duty paid. Appeal allowed.
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Corporate Laws
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2023 (11) TMI 969
Oppression and mismanagement - Reduction of shareholding of the Appellant No. 1 - sale of properties of the Respondent NO. 1 Company without the consent of the Appellant No. 1 - jurisdictional error - mutual settlement of disputes between parties - HELD THAT:- The Tribunal passed the impugned order after duly considering that the jurisdiction of the Tribunal cannot be invoked for giving effect to a compromise between the parties. The impugned order does not suffer from any jurisdictional error and the Tribunal, by passing of the impugned order, ensured that there is no multiplicity of proceedings between the parties. The Tribunal comprehensively dealt with the issues mentioned in the Company Petition. The impugned order was passed on the ground that the parties had already mutually settled their disputes. In view of the mutual settlement, the Company Petition ought to have been dismissed which the Tribunal rightly did by way of the impugned order. The Appellants contention that till the amounts mentioned in the minutes dated 31.05.2018 are not paid, there is a continuous cause of oppression and mismanagement is completely misconceived and unsustainable. The Tribunal and this Appellate Tribunal are not the appropriate forums for adjudicating as to whether the parties have acted in terms of the compromise deed dated 11.04.2018 and whether the alleged minutes dated 31.05.2018 are binding or not - The Hon ble High Court being seized of the matter, the present Appeal is liable to be dismissed. Further, it has been rightly noted by the tribunal that in the light of the compromise deed dated 11.04.2018, if at all there is any remedy available to the Appellant then it is before the Hon ble Punjab Haryana High Court and Civil court at Gurugram. Thus, the Tribunal while passing the impugned order had rightly taken note of the fact that in view of the settlement between the parties, the said allegations cannot be gone into further and in the circumstances in view of the compromise arrived at outside the Tribunal and nothing survives in the Company Petition. Appeal dismissed.
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Insolvency & Bankruptcy
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2023 (11) TMI 968
Seeking a direction under Section 60 (5) of the Code to declare the Appellant as the Financial Creditor and include the Appellant s name in the list of Creditors of the Corporate Debtor. It is the case of the Respondent / RP of the Corporate Debtor Company that the Appeal is barred by the principle of Res Judicata as initially ARCIL had challenged the Order, on the ground that the Appellant is not a Financial Creditor. HE;D THAT:- While allowing C.A. (AT) (Ins) 633/2018, this Tribunal noted that there is a dispute as to whether Mahal Hotel Pvt. Ltd. comes within the meaning of Financial Creditor or not, and has concluded that further, once a decision was taken by the Committee of Creditors to call for a Meeting for removal of Mr. Koteswara Rao Karuchola as RP, it was improper for him to include Mahal Hotel Pvt. Ltd. as Financial Creditor of the Member of the Committee of Creditors. Further, money laundering case having been initiated against Mahal Hotel Pvt. Ltd., the said Hotel cannot be allowed to be Member of Committee of Creditors . It was also observed in paras 11 and 12 that the Adjudicating Authority had failed to notice the aforesaid facts and circumstances and without going into the question of delay in inclusion of Mahal Hotel Pvt. Ltd. as Financial Creditor, has decided the Claim and this Tribunal has set aside the Order dated 04/10/2018, whereby the Adjudicating Authority has directed the RP to revise the Claim submitted by Mahal Hotel Pvt. Ltd.. Therefore, it is crystal clear that the Order of this Tribunal dated 18/11/2019 has set aside the finding of the Adjudicating Authority revising the Claim of the Appellant herein without granting any liberty to once again approach the Adjudicating Authority for adjudication of its Claim. The Hon ble Apex Court in the matter of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT ] has observed that the clean slate theory is to prevent hydra heads popping up, preventing any past Claims from resurging and thereby leading to any uncertainty regarding the amounts payable by the Resolution Applicant who successfully takes over the business of the Corporate Debtor. Appeal dismissed.
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2023 (11) TMI 967
Section 9 Application not admitted - pre-existing dispute between the parties - Disputed reply to the notice - HELD THAT:- The Appellant submits that the Reply to the Demand Notice was not correct reply and it was duly explained in the Rejoinder by Corporate Debtor - On looking into the Reply to the Demand Notice, the notice is clearly notice of dispute. When the Corporate Debtor immediately after first design was submitted said that it was not complete and refund of Rs.3 Lakhs was claimed, the dispute was raised immediately after 31.07.2019, which was much prior to the Demand Notice. The averments made in the Reply to Demand Notice clearly indicate that dispute was raised which cannot be a moonshine or not supported by any material. The Adjudicating Authority did not commit any error in rejecting Section 9 application on the ground of pre-existing dispute - there is no merit in the Appeal - appeal dismissed.
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Service Tax
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2023 (11) TMI 966
Business Auxiliary Service - failure to discharge service tax - charitable concern - it was held by CESTAT that it is seen prior to 1.5.2006, the services rendered to a client by a commercial concern would only qualify as BAS. The services rendered to any person did not fall within the ambit of 'Business Auxiliary Service'. HELD THAT:- There are no reason to interfere in the matter. The Civil Appeal is hence dismissed.
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2023 (11) TMI 965
Refund of amount retained without authority of law - Interchange income - amount deposited under protest - tax leviable or payable by the petitioner or not - period from October, 2007 to June, 2012 - Principles of unjust enrichment. The petitioner has contended that such amount was deposited by the petitioner with the respondents, to buy peace, in the event of any prospective demand towards service tax and interest on interchange income . HELD THAT:- When clearly such amounts were deposited by the petitioner under protest and categorically not accepting any liability to pay service tax on such count, the department was not precluded from taking an appropriate position at the relevant time, and/or surprisingly it was not advised to do so, to raise a demand against the petitioner in the manner known to law, in contesting the position taken by the petitioner by issuance of a show cause notice. In the absence of such steps being taken, the legal character of the deposit of the said amounts, as made by the petitioner with the department, would continue to remain as amounts deposited under protest and retained by the department not as a tax or under an authority in law. Such rejection of the refund application is squarely hit by the provisions of Article 265 of the Constitution, as the action of the department results in withholding/retaining amounts, not levied in accordance with law or collected under authority of law. Also it was not unjustified for the petitioner to invoke the writ jurisdiction of this Court and more particularly, when the petitioner contends violation of its rights under Article 265 read with provisions of Article 14 - There is nothing on record to suggest that in the event any recovery is initiated against the petitioner, the department would not be in a position to recover any lawful dues. The principles of law as enunciated in the decision of THE SALES TAX OFFICER, BANARAS AND OTHERS VERSUS KANHAIYA LAL MAKUND LAL SARAF AND OTHERS [ 1958 (9) TMI 57 - SUPREME COURT ] are squarely applicable in the facts of the present case, inasmuch as, it was certainly on the basis of the audit objection and on a forfituous circumstance, that the petitioner may face a levy on the interchange income, the petitioner had deposited the amount in question under protest. However, this would not ipso facto mean that any deposit of the amount under protest would partake the character of a lawful levy, so as to bring about a legal consequence of the appropriation of amounts, so deposited as a levy. It would be too far-fetched for the department to take such position to retain the amounts. For such reason, even assuming that the deposit of the said amount is under a mistake of law, even in that event, the department would not have any authority to withhold the said amounts. The petitioner time and again had made its position clear pointing out to the department, that the said amounts were deposited/paid under protest. The petitioner had pursued its claim and that too by making a proper refund application - ex-facie the department has no authority to retain such amount. In fact, retaining such amount would amount to an unjust enrichment. Also, the case of the petitioner being hit by the case of unjust enrichment, is not the case of the department. It is well settled that once such amounts were deposited by the petitioner and were retained by the department without the authority in law, the claim of the petitioner for refund could not have been denied. In such circumstances, it was appropriate for the petitioner to invoke the jurisdiction of this Court under Article 226 of the Constitution praying for writ for directing refund of money illegally retained / withheld. The law in this regard is well settled. Thus, it is limpid that the respondents have retained the amounts in question without authority in law. Such amounts are required to be refunded to be petitioner along with interest - petition allowed.
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Central Excise
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2023 (11) TMI 964
Recovery of refund - Exemption to new industrial units which commenced its commercial production on or after 24.12.1997 - goods cleared from units located in Export Promotion Industrial Parks (EPIP) in the State of Assam - benefit of N/N. 32/99-CE dated 08.07.1999 - HELD THAT:- Similar issue in the case of M/s Ozone Pharmaceuticals Limited Vs Commissioner of Central Excise and service Tax, Guwahati [ 2023 (9) TMI 1371 - CESTAT KOLKATA] , wherein the appeal filed by the Appellant was allowed - it was held in the said case that the refund claim of the appellants for the subsequent period, could not be rejected on the ground that the appellant has taken excess refund for the period prior to 22.12.2002, therefore, no demand is sustainable against the appellant as demanded in view of the letter dated 03.06.2003 by the Deputy Commissioner and the refund for the period August, 2006 to October, 2006 were not required to be appropriated. The ratio of the above cited decision is squarely applicable in this case as the facts and circumstances of the present case on hand is same as the case cited above. Thus, by following the ratio of the above cited decision, it is held that the demand confirmed in the impugned order is not sustainable. Appeal allowed.
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2023 (11) TMI 963
Valuation of goods - captive consumption - determination of transfer price, which is much lower than value that should have been determined as per Rule 8 9 of Central Excise (Determination of Price of Excisable Goods) Valuation Rules, 2000 and CAS-4 - Extended period of limitation as per proviso to Section 11A(1) of the Central Excise Act - demand on duty imposing equivalent penalty - HELD THAT:- Appellant have already paid an amount of Rs.85,25,918/- towards central excise duty and Rs.37,843/- towards education cess. From this chart it is quite evident that appellant has admitted and paid the entire differential duty liability for the year 2003-04 and 2005-06. There is a short payment only in the year 2004-05. It is also noted that the appellant sister concern was taking the CENVAT Credit of the differential duty paid by them on the basis of the supplementary invoice. Computation of period of limitation - HELD THAT:- As per the procedure followed by the appellant they were paying the differential duty on the basis of the Cost Accountant Certificate issued on the basis of finalized/ audited financial/ cost records, the relevant date for computation of period of limitation under section 11A of the Central excise Act, 1944 should be as per clause (iv) of Explanation 1 (b) of the said section which reads in case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof. Accordingly the show cause notice has to be treated as one being issued within the normal period of limitation for making the demand. Levy of penalty - HELD THAT:- It is observed that the appellant was following the procedure as laid down by making the payment of duty on the basis of the cost of production determined on the basis of the finalized accounting records of the previous year and subsequently paying the differential duty on the basis Cost Accountant certificate issued on the basis of the finalized accounting records of current year. When this is prescribed and also is an accepted procedure for payment of duty on the goods consumed captively, there are no merits in the findings recorded by the Commissioner for imposing penalty under Section 11AC read with Rule 25. The penalties under section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002 set aside Appropriation of duty paid Rs 56,55,637/- + Rs 72,186/- by the Appellant for the period 2003-04, 2005-06 respectively, towards the demand made in the show cause notice and confirmed by the impugned order - demand of differential duty for the year 2004-05 is modified to Rs 66,13,705/- (Rs 65,48,222/- (C Ex Duty) + Rs 65,482/- (Edu Cess). Amount of Rs 27,98,055/- paid by the appellant for this period is appropriate against this amount upheld - differential duty for the year 2004-05 to the extent of this amount not paid by the Appellant is upheld - demand for interest under Section 11AB is upheld. Appeal allowed in part.
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