TMI Tax Updates - e-Newsletter
December 15, 2023

Case Laws in this Newsletter:

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

Articles

1. CSR expenditure is allowable u/s 80G of The Income Tax Act – On the maxim of ‘Expressio Unius Esl Exclusio Alterius’

   By: Vivek Jalan

2. All About Casual Income

   By: Law Legends

3. GST not leviable on sale of unbranded/non packaged Broken Rice

   By: Bimal jain

4. ITC cannot be blocked when no order is issued u/s 74 of the CGST Act or Rule 86A of the CGST Rules

   By: Bimal jain

News

1. Central Goods and Services Tax (Second Amendment) Act, 2023 - As Introduced in Lok Sabha

2. DPIIT releases Report on “Logistics Costs in India: Assessment and Long-Term Framework”

3. Central Public Sector Enterprises procurement through Government e-Marketplace surpasses INR 1 lakh crore in 6.5 months of FY 23-24; marking 166% increase over last year (April to November)

4. Joint Statement of the Co-Chairs of the ‘U.S.-India Anti-Money Laundering and Countering the Financing of Terrorism Dialogue’

5. Provisional Collection of Taxes Act, 2023. - As Introduced in Lok Sabha

6. Government of India and ADB sigh $200 million loan for Uttarakhand climate resilient power system development project

Notifications

GST - States

1. CT/8/0022/2023-Sec-1-05(CT) (57 - dated 8-12-2023 - Madhya Pradesh SGST

Seeks to notify a special procedure for condonation of delay in filing of appeals against demand orders passed until 31st March, 2023

2. F A 3-43/2017/1/V(52) - dated 4-12-2023 - Madhya Pradesh SGST

Amendment in Notification No. F A 3-43/2017/1/V(55) dated the -30th June, 2017

3. F A 3-37/2017/1/V(55) - dated 4-12-2023 - Madhya Pradesh SGST

Amendment in Notification No. FA-3-37-2017/1/V(65) dated the 30th June, 2017

4. F A 3-36/2017/1/V(56) - dated 4-12-2023 - Madhya Pradesh SGST

Amendment in Notification No. FA-3-36/2017/1/V(66) dated 30th June, 2017

5. F A 3-35/2017/1/V(54) - dated 4-12-2023 - Madhya Pradesh SGST

Amendment in Notification No. F A-3-35/2017/1/V(63) dated 30th June, 2017

6. F A 3-33/2017/1/V(53) - dated 4-12-2023 - Madhya Pradesh SGST

Amendment in Notification No. F-A3-33-2017-1-V (42) Dated 29th June 2017

7. F A 3-30/2017/1/V(51) - dated 4-12-2023 - Madhya Pradesh SGST

Amendment in Notification No. F A-330/2017/1/V(51) dated 30th June, 2017

Circulars / Instructions / Orders

GST

1. Instruction No. 05/2023 - dated 13-12-2023

Judgment of the Hon’ble Supreme Court in the case of Northern Operating Systems Private Limited (NOS)

Customs

2. PUBLIC NOTICE NO. 22 / 2023 - dated 31-10-2023

Export of Rice — Requirement of sampling and testing before Let Export Order — Regarding.

Highlights / Catch Notes

GST

• SEZ Unit Wins Right to Refund of Unutilized Input Tax Credit After Initial Rejection Overturned by High Court.

  Case-Laws - HC : Refund of unutilised Input Tax Credit - rejection on the ground that the petitioner is a SEZ unit and they are not entitled to file any refund application, but only the supplier of service - Order of rejection set aside and the refund application allowed. - HC
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Income Tax

• Unexplained Cash Credits: Preference Shares Issued and Redeemed at Premium, Not Bogus Transactions.

  Case-Laws - AT : Addition u/s 68 - unexplained cash credit in the form of share capital with premium - when all these corporate entities are still existing and doing business and have credentials till date, then it cannot be held that they are sham and bogus entities. Here it is a case of issuance of preference shares which has been redeemed on premium by the subscribers and it is not that any kind of share application received and shares have not been allotted or after allotment shares have been sold at face value or less price. - AT
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• Gift from Brother Deemed Undisclosed Income Lacks Evidence; Authorities Fail to Prove Allegations Under Income Tax Act.

  Case-Laws - AT : Addition u/s 68 - Gift received from the brother treated as undisclosed income - Admittedly, the cross transaction between the brothers can create a suspicious but that doubt cannot be treated as gospel truth. As such, it is the onus upon the revenue to prove the allegation framed by it against the assessee. - Additions deleted - AT
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• Tax Penalty Overturned: Officer Failed to Record Reasons for Rejecting Explanation on Misreported Income.

  Case-Laws - AT : Penalty levied u/s 270A - AO has simply recorded that 200% of penalty has been levied for the tax payable on mis-reporting of income. When the assessee has furnished his explanation in response to the show-cause notice, it is the duty of the Assessing Officer to consider and record as to why the reply is not acceptable. - Penalty deleted - AT
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• Penalty Avoided Due to Reasonable Cause for Not Deducting TDS; Income Added u/s 40(a)(i) Ensures Tax Neutrality.

  Case-Laws - AT : Penalty u/s 271C - Reasonable cause - In the substance of this case after the decision of ITAT, the disallowance was sustained but at the same time the assessee was allowed deduction of that income and therefore, the effect was tax neutral. Therefore, the reasonable cause for the assessee not to deduct the TDS which although was added in the income of the assessee u/s 40(a)(i) - Since the effect was revenue neutral assessee has not disputed the levy or addition further in the Hon’ble High Court. - Reasonable cause established - No penalty - AT
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• Tax Dispute Over Joint Property: Assessing Officer Challenges Stamp Duty Valuation Date for Income Tax Purposes.

  Case-Laws - AT : Addition u/s 56(2)(vii) - Joint property purchased - AO directed that the stamp duty value on the date of allotment in the case of the assessee on 16.10.2010 be taken for the purpose of Section 56(2)(vii)(b) of the Act and not stamp value as on the date of registration of sale deed . No merit in the findings of the Ld. CIT(A) that before the registration of the flat only other co-owner i.e. Ajay Kumar Singh husband of the assessee has made payment. Since, it is joint property owned by assessee and her husband and its immaterial who had made payment before the date of registration of the property. - AT
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Customs

• Anti-Dumping Duty Upheld on Extra Clear Glass Imports; Prior Duty Payments Not Accepted as Exemption.

  Case-Laws - AT : Levy of Anti Dumping Duty - import of goods described as Extra Clear Glass - When there were clearly no doubts in the minds of the Revenue as to what was imported was float glass, then necessary consequences ought to follow, inasmuch as the liability to ADD cannot be overlooked just because the appellant has been magnanimous in remitting more duty. If the said theory is accepted, then the same would affect the classification itself! Hence, the theory of the appellant cannot be accepted as the same lacks any merit. - AT
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• Import of Fumigated Used Clothing: Fine and Penalty Upheld, Revenue's Appeal for Enhancement Dismissed.

  Case-Laws - AT : Enhancement of redemption fine and penalty - Import of old and used worn clothing, completely fumigated - restricted item or not - the redemption fine and penalty imposed on the respondents by the adjudicating authority is sufficient to meet the end of justice - Appeal of the revenue dismissed - AT
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• Illegal Removal of Restricted Goods with Forged Passes Leads to Duty Demand and Penalties for Smuggling Air Conditioners.

  Case-Laws - AT : Clandestine removal of goods from ICD, TKD by procuring illegal and forged gate pass - Forgery - smuggling of air conditioners R-22 gas cylinders - restricted goods or not - Demand of duty with penalty on all the appellants confirmed - AT
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IBC

• Dispute Over CIRP Initiation: Transaction Lacks Financial Debt Characteristics Under Insolvency and Bankruptcy Code.

  Case-Laws - AT : Initiation of CIRP u/s 7 - financial debt in terms of IBC or not - The terms and conditions of the Agreement between the Appellant and the Respondent makes it clear that the Appellant was a collaborator and not a financial creditor. There was no disbursement for time value of money by the Appellant within meaning of Section 5(8) of IBC. The Adjudicating Authority has correctly adverted to the real nature of the transaction between the parties to hold that the same cannot become the basis of filing a Section 7 application. - AT
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• CoC's Decision to Replace Interim Resolution Professional Is Binding Under IBC; IRP Cannot Challenge Appropriateness.

  Case-Laws - AT : Replacement of the Appellant with another Resolution Professional - When the Resolution has been passed by the CoC in accordance with the provisions of the IBC deciding to replace the IRP, IRP cannot be heard in questioning the resolution on the ground that present was not a case where IRP could have been replaced by another Resolution Professional. - AT
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Service Tax

• Transit Mixer Services Classified as Goods Transport Agency Due to Consignment Note Issuance for RMC Transport.

  Case-Laws - AT : Classification of services - supply of tangible goods service or GTA service - providing of transit mixers for transportation of Ready Mix Concrete (RMC) by the appellant under agreements with various RMC manufactures - undisputedly for the purpose of transportation of RMC the consignment note was issued - criteria prescribed to classify the activity under “goods transport agency service‟ (GTA) is clearly satisfied. - AT
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Central Excise

• Refund of Excess Duty Allowed if No Unjust Enrichment Proven; Credit Notes Crucial in Decision Under Central Excise Act.

  Case-Laws - AT : Refund of the excess duty paid - principles of unjust enrichment - They have raised a credit note on their customers - Trade facilitation makes true meaning in sensitive handling of such instances. Only if the Department had evidence to show that in spite of the credit note issued to their customer, the appellant in some other way had unjustly enriched himself in this matter, should the refund have been denied. Otherwise, the provisions of Section 11B (2) (d) of the Central Excise Act stand satisfied. - AT
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• Dispute Over Excise Classification: Are Bare Delivery Vans Considered Ambulances u/r 2(a) Interpretation?

  Case-Laws - AT : Classification of goods - OEM delivery vans - What was purchased were bare delivery vans without any fittings. It cannot, therefore, be said that the vans had the essential character of an ambulance. Rule 2(a) of the General Rules for Interpretation would not come to the aid of the department. - AT
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VAT

• Tribunal Overturns Unjustified Turnover Increase Despite Loose Papers Found in Survey.

  Case-Laws - HC : Enhancement of turnover - Best Judgement assessment - The tribunal was not justified in confirming the enhancement of turnover in view of the fact that at the time of survey loose papers were found which have been explained by the revisionist and merely on that ground the books of account can be rejected but enhancement should not be made. - HC
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Case Laws:

• GST

• 2023 (12) TMI 596
  Legality and Jurisdiction of SCN - Whether demand for GST on the annuity received by the petitioner from the National Highway Authority of India has been made in contradiction and violation of an exemption to annuity granted vide notifications dated 28.06.2017, 13.10.2017, 29.06.2017 and 09.11.2017? - HELD THAT:- On perusal of the materials as placed before this Court, it is seen that the writ petitioner has come against a show cause notice issued under Section 74 (1) of the CGST Act, 2017 read with the corresponding Section of the Meghalaya State GST Act, 2017, wherein the petitioner was to show cause within 30 days as to why the stated amount of GST allegedly short paid on the annuity payment received, along with interest and penalty be not realized from it. The petitioner it appears instead of responding to the show cause have chosen to assail the same as has been discussed above. No doubt the writ petition cannot be said to be devoid of merit, but at this stage wherein final orders are yet to be passed by the respondents in the matter, and further with the submissions of the respondents that the matter is yet to be considered finally, this Court at this stage without further going into the merits, is not inclined to entertain the instant writ petition. In the circumstances therefore, this writ petition being premature, the same is disposed of with the direction that the petitioner first pursues and participates in the proceedings initiated vide the impugned show cause notice, by responding to the same and placing the facts and materials which have been placed before this Court. Petition disposed off.

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• 2023 (12) TMI 595
  Cancellation of GST registration of petitioner - non-filing of the returns for a continuous period of 6 months - HELD THAT:- This Court is of the view that since similar such orders have been passed by this Court as well as other Co-ordinate Benches, it will serve no purpose to keep the present writ petition pending. The impugned order dated 20.01.2021 is hereby interfered with and set aside. It is directed that the Respondent No. 5, namely Superintendent of Central Goods Services Tax, Guwahati will intimate the petitioner the total outstanding statutory dues, if any, standing in the name of the petitioner till the date of cancellation of his GST registration - Petition disposed off.

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• 2023 (12) TMI 594
  Refund of unutilised Input Tax Credit - rejection on the ground that the petitioner is a SEZ unit and they are not entitled to file any refund application, but only the supplier of service - HELD THAT:- Both the learned counsel had referred to the following judgments of this Court, wherein this Court allowed the refund application holding that the SEZ unit is entitled to file the refund application. Reliance placed in PLATINUM HOLDINGS PRIVATE LIMITED VERSUS ADDITIONAL COMMISSIONER OF GST CENTRAL EXCISE (APPEALS-II), ASSISTANT COMMISSIONER OF GST CENTRAL EXCISE [ 2021 (10) TMI 630 - MADRAS HIGH COURT ] and M/S. ATC TIRES PRIVATE LIMITED VERSUS JOINT COMMISSIONER OF GST CENTRAL EXCISE (APPEALS), ASSISTANT COMMISSIONER OF CGST AND CENTRAL EXCISE, TIRUNELVELI [ 2022 (4) TMI 1194 - MADRAS HIGH COURT] where it was held that The statutory scheme for refund under the CGST and SGST Acts, permits any entity to seek a refund of taxes or other amounts paid under the provisions of the Act, subject to satisfaction that is it so entitled, and that there is no double claim as against the same amount. Ordinarily, though zero rated supplies are not subject to the levy of taxes, the petitioner, in this case has remitted the same as raised in the invoice, albeit erroneously. Therefore, by following the above orders passed by this Court in similar cases, the impugned orders dated 11.05.2023 and 23.03.2023 are set aside and the refund application dated 07.03.2022 filed by the petitioner is allowed. Further, this Court directs the 1st respondent to refund the amount of Rs. 20,32,325/- for the period from April 2020 to March 2021 and Rs. 5,42,614/- for the period from April 2021 to March 2022 along with interest at 6% p.a. to the petitioner within 60 days from the date of receipt of a copy of this order. Petition allowed.

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• 2023 (12) TMI 560
  Seeking adjournment of the matter - learned Senior Advocate was unable to assist the Court - HELD THAT:- Prayer made is allowed. List this matter on 8.12.2023.

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• Income Tax

• 2023 (12) TMI 593
  Income taxable in India - receipts earned from supply of software - whether taxable in India under Section 9(1)(vi) of the Income Tax Act, 1961, read with Article 12 of the India-USA Double Tax Avoidance Agreement (DTAA) - As petitioner submitted that there is a delay of 334 days in filing and further the issues which arise in this petition are covered by the judgment of this Court in the case of Engineering Analysis Centre of Excellence Private Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] against the Department. HELD THAT:- Following the aforesaid judgment, the special leave petition is dismissed both on the ground of delay as well as on merits.

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• 2023 (12) TMI 592
  Assessment u/s 153A - mandate of satisfaction recorded by the assessing officer of the searched person (153A) - date with reference to which the proceedings for assessment or reassessment of any assessment year - HELD THAT:- In view of the order GALI JANARDHANA REDDY [ 2023 (12) TMI 464 - SC ORDER] and similar issues being raised in the present Special Leave Petition also, following the aforesaid order as well as the judgment of this Court in the case of Commissioner of Income Tax 14 v/s vs. Jasjit Singh [ 2023 (10) TMI 572 - SUPREME COURT] this special leave petition is also dismissed.

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• 2023 (12) TMI 591
  Condonation of delay of 2139 days in filing the Appeal against the order of ITAT - HELD THAT:- Without going into the observations made by the High Court in considering the case(s) seeking condonation of delay of 2139 days in filing the petitions, we find that there was a huge delay which is not condonable. Hence, there is no merit in the special leave petitions. Questions of law, if any, which arise in the matter(s) are kept open.

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• 2023 (12) TMI 590
  Reopening of assessment u/s 147 - non-independent application of mind by AO - information which has been provided to the petitioner under the Right to Information Act relied upon - claim of CSR expenses made by the petitioner - as decided by HC [ 2023 (6) TMI 286 - GUJARAT HIGH COURT] action of issuance of notice u/s 148 of the Act in the background of present facts as erroneous, reflects no subjective satisfaction nor any application of mind - HELD THAT:- SLP dismissed.

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• 2023 (12) TMI 589
  Reopening of assessment u/s 147 - capital reduction and financial statements highlighting the capital reduction in the balance sheet - capital gain transactions filed under Schedule C.G. - Capital Gains - purchase and sale of shares and the conversion of amounts in foreign currency - petitioner categorically mentioned that it had not carried on any business activity since the liquidation/bankruptcy application and also mentioned about the capital reduction - petitioner had incorrectly characterized the transaction and consequently contended that it was not covered under Section 112(1)(c)(iii) and claimed the benefit of computation under Section 48 - as decided by HC [ 2023 (3) TMI 485 - BOMBAY HIGH COURT] as at the time of filing the return of income for the A.Y. 2015-16, the petitioner was not covered by Section 112(1)(c)(iii) as it had transferred the shares of the private limited company, thus assessment is being sought to be reopened in contravention of the law as it stood during the previous year 2014-15 and A.Y. 2015-16 in which the petitioner filed its tax return - a retrospective amendment cannot be the basis for reopening of assessment. In any case, it may be noted that for the A.Y. 2015-16, the four years period has expired on 31st March 2020, and absence any failure to disclose facts by the assessee or any tangible new material, the reopening of assessment proceedings by the respondent is bad in law. The reopening of the assessment based on a different method of computation or application of the section is nothing else but a change of opinion, which is impermissible in law and allowed assessee appeal - HELD THAT:- SLP dismissed.

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• 2023 (12) TMI 588
  Validity of assessment proceeding u/s 153A - as argued no incriminating document or materials have been found in course of search and seizure and impugned assessment proceeding relating to assessment year 2010-11 is barred by limitation on the basis of search and seizure held on 13th April, 2019 - HELD THAT:- Income Tax Authority could not satisfy with his submission or from record that any incriminating documents or materials were found against the petitioner in course of search and seizure in question or that the impugned assessment proceeding has been initiated before the expiry of limitation as provided under Section 153A explanation 1 of the Income Tax Act, 1961 and he also could not distinguish both the aforesaid judgments upon which Mr. Mazumder has relied either on facts or law. Considering the facts and circumstances of the case as appears from record and submission of the parties the impugned proceeding under Section 153A of the Act and all subsequent proceedings relating to assessment year 2010-11 on the basis of search and seizure dated 13th April, 2019 is not sustainable in law and accordingly the same were quashed.

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• 2023 (12) TMI 587
  Reopening of assessment against deceased person - HELD THAT:- Looking to the material available on record, the notice issued by the Assessing Officer (for re-opening of the assessment is invalid on account of fact that same was addressed to a deceased person. Interestingly, another appellate order dated 22.09.2020 is on record and in Form No.35, the factum of death of the deceased assessee on 01.11.2009, is mentioned and it is also stated that the notice issued by the AO was not received by the Legal Heir of the Late assessee. Both of the authorities below did not deal with the issue regarding notice u/s 148 was issued against the dead person and also the impugned assessment order was passed against a dead person. Therefore, in view of these undisputed facts i.e. Late Smt. Kushal Kachwaha had expired on 01.11.2009 itself and the factum of death was duly brought to the notice of the Revenue Authority as stated by the Ld. Counsel for the assessee. Therefore, respectfully following the judgment of Davinder Singh Thapar [ 2022 (6) TMI 695 - DELHI HIGH COURT] . The notice issued u/s 148 are held to be bad in law hence, quashed. Appeal of the assessee is allowed.

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• 2023 (12) TMI 586
  Revision u/s 263 - lack of inquiry v/s inadequate inquiry - assessee has failed to deduct TDS on the expenditure on contract payments and the same is in contravention to the provisions of Sec.40(a)(ia) - as per CIT 30% of the above expenditure was required to be disallowed and added to the total income of the assessee, which the Assessing Officer failed to do so - HELD THAT:- Hon ble Supreme Court in the case of Malabar Industries ( 2000 (2) TMI 10 - SUPREME COURT ) held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law . Therefore, we are of the considered opinion that AO s order cannot be termed as erroneous as well as prejudicial to the interest of the revenue and therefore, jurisdictional condition precedent as prescribed by statute for invoking revisional jurisdiction is absent and therefore, we are inclined to quash the impugned order passed by ld PCIT under section 263 of the Act One has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. Therefore, in the assessee`s case, it cannot be said that it is a case of lack of inquiry . In view of the facts of the case and judicial pronouncements relied upon, it is well established that the impugned order passed u/s 143(3) of the Act, was passed by assessing officer, after calling for relevant information and after detailed examination of the same. The Assessing Officer has passed the assessment order after calling for details on the issue and after considering the reply and documents and after verification of the same and after due application of mind passed the assessment order, so it cannot be termed as erroneous and prejudicial to the interest of the revenue. So, the Ld. PCIT s finding fault, with the order of the Assessing Officer is erroneous as well as prejudicial to the interest of revenue, on account of lack of inquiry, has to fail. Assessee appeal allowed.

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• 2023 (12) TMI 585
  Debt/Corporate guarantee fees taxed in India - DTAA between India and Japan - income chargeable to tax according income tax act, as per distributive rule whether as per Article-7: Business Profits of DTAA between India and Japan, in the absence of PE in India, debt/corporate guarantee fees charged to Indian AE are taxable only in Japan.? - whether the income of the assessee is classified as interest under article 11 or under article 22 of the double taxation avoidance agreement - HELD THAT:- On careful consideration of the decision of learned AO, learned dispute resolution panel and the coordinate bench, we do not find that it gives an answer that whether the income chargeable to tax in the hands of the assessee under which head of income. Whether it is an interest or other income according to the double taxation avoidance agreement, for computation of taxation as per the provisions of the income tax act, it has to fall basically within one of the heads of the income as per section 14 of the act. It may be the case that income may either be chargeable to tax under article 11 or under article 22, according to section 14 of The Income Tax Act such income is chargeable to tax under the head income from other sources . Purpose of Double Taxation Avoidance Agreement is to distribute the tax between the source country and the country of residence whereas the purpose of the domestic tax law is to compute the income under the various heads as prescribed under section 14 of the act. The distributive rule of the Double Taxation Avoidance Agreement only classifies income into various types. This is not relevant for determining the head of income according to section 14 of the act in spite of similarity in terminology. The purpose of both is quite different. However, as for assessment year 2014 15 the issue has been set-aside to the file of the learned assessing officer to first determine whether the income of the assessee is classified as interest under article 11 or under article 22 of the double taxation avoidance agreement. The issue is still not decided. Therefore in the interest of justice, we also set-aside issue back to the file of the learned assessing officer to 1st decide how the income is chargeable to tax according income tax act, as per distributive rule what is the classification of income on what is the tax rate as per the double taxation avoidance agreement, and then compute tax according to income tax act. Ground allowed for statistical purposes. TP Adjustment in respect of interest on external commercial borrowings - arm s-length price of interest charged on external commercial borrowing lent to associated enterprises in India - assessee has advanced a loan to Nipro tube glass India private limited in Indian rupees wherein the assessee has received total interest wherein the assessee receives such interested the rate of 10.50% of the loan amount - HELD THAT:- For determination of the arm s-length price of an international transaction the reserve bank of India guidelines does not have any role to play. However, when the external commercial borrowing is provided by the assessee to its Indian associated enterprises in Japanese yen, adoption of SBI PLR is not relevant. The Transaction is to be benchmarked by taking in to consideration whether any third party would give loan to Indian entity at those interest rates and on those conditions for that tenure. Therefore, taking Foreign AE as tested party is irrelevant. Even otherwise it is not a profit based method applied. It is the borrower whose condition and financial health needs to be ascertained first. That is Indian entity. Further, for determination of Arm s length price of interest received it is necessary to determine the credit rating of borrower. Thereafter the External comparables for benchmarking can be searched on publicly available financial databases, by applying appropriate filters to find comparable loan transactions with the same characteristics such as [1] Currency type, [2] Tenure, [3] Purpose of loan General/Working Capital/Capital Expansion/Re-financing, etc. [4] Tranche Type such as Term Loan/Revolving Credit, [5] Covenants , and [6] Credit Rating. Such Interest rate is further required to be adjusted to meet the economic conditions of the tested loan transaction to Interest Swap Adjustment, Tenor Adjustment and Country Risk Adjustment to factor in the geographical difference. The Assessee or the TPO / ld DRP has not looked in to these basic aspects. Therefore, we remit this issue back to the file of the ld AO with direction to assessee to benchmark interest on loan transaction taking all these issues in consideration. Appeal of the assessee is partly allowed as indicated above for statistical purposes.

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• 2023 (12) TMI 584
  Addition u/s 68 - unexplained cash credit in the form of share capital with premium - main allegation is that, out of 15 parties, 8 of the companies to whom shares were issued were controlled / managed by Shri Praveen Kumar Jain, who was engaged in providing accommodation entries - reason to belief was entertained that amount of Rs. 2 Crores from such parties were subscribed optionally convertible non-cumulative preference shares had escaped assessment - HELD THAT:- Even though some of the parties may not have responded to notice u/s. 133(6) that does not prove that the entire transactions are bogus especially when all other documents to prove the identity and creditworthiness of the parties have been submitted and same has not been examined or enquired by the AO. We also tried to enquire upon the funds available with these parties which we have already incorporated above, and found that all the parties had huge funds including profit and they continue their operations and activities till date. How such corporate entities which are still existing and running their business activities and complying with the statutory requirements can be said to be bogus. Once these parties were allotted redeemable preference shares and have been redeemed much before any search taken place in the case of Shri Pravin Kumar Jain, then we are unable to agree with the contention of the department that simply because, some of the entities belong to Shri Praveen Kumar Jain, the transaction itself is bogus. Is there any evidence or material found qua this transaction showing that right from subscription to redemption something has been found to mere paper formality or some kind of bogus or accommodation entry. At the time of redemption, these parties have redeemed at Rs. 100 + Rs. 10/- and in such case it cannot be held that there was any manipulation at the investment stage by these companies that preference shares were issued with premium by taking cash then assessee bought back by paying extra Rs. 10 which is otherwise taxable in the hands of the investors. Thus, in the peculiar facts when all these corporate entities are still existing and doing business and have credentials till date, then it cannot be held that they are sham and bogus entities. Here it is a case of issuance of preference shares which has been redeemed on premium by the subscribers and it is not that any kind of share application received and shares have not been allotted or after allotment shares have been sold at face value or less price. Thus, CIT (A) rightly held that the identity and creditworthiness has been established and genuineness of the transaction cannot be doubted, simply based on information from Praveen Jain Group unless something specific material has been found. Accordingly, the order of the CIT (A) in so far as merits are concerned as incorporated above is confirmed. In so far as his observation and finding that premium is capital hence not taxable is not accepted as here the issue is taxability of entire credit received including premium. But his findings on merits are confirmed and consequently the appeal of the Revenue is dismissed.

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• 2023 (12) TMI 583
  Addition u/s 68 - Gift received from the brother treated as undisclosed income - creditworthiness for the gift was not proved based on financial capacity of the donor - assessee in response to such gift has filed the copy of PAN of his brother, copy of computation of income and freshly made gift letters - AO found that the income of the brother is not sufficient to grant such a huge amount of gift to the assessee - HELD THAT:- We note that the assessee has furnished details such as copy of gift letter, capital account, bank statement, PAN and return of income of the donor and cash book and bank statement of the assessee which are available on record. On perusal of the cash book of the assessee, we note that there was sufficient cash available with the assessee which was arising out of withdrawal from the bank account. Thus, it can be safely concluded that there was sufficient cash available with the assessee to advance the gift to his brother. This fact has also not been disputed by the authorities below. It is equally important to note that the assessee first has received part of the gift before giving any gift to his brother in cash but what we find is this that there was sufficient fund available in the bank account of the brother and therefore it cannot be said that such gift could be given to the assessee out of unaccounted income. Admittedly, the cross transaction between the brothers can create a suspicious but that doubt cannot be treated as gospel truth . As such, it is the onus upon the revenue to prove the allegation framed by it against the assessee. But, from the preceding discussion, we note that the assessee has furnished the necessary evidence, discussed above, to justify the gift received from the brother, therefore, no addition in the given case is warranted. We direct the AO to delete the addition made by him. Ground of appeal of the assessee is allowed.

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• 2023 (12) TMI 582
  Penalty levied u/s 270A - mis-reporting of income - penalty at 200% levied - assessee reply to SCN not accepted - HELD THAT:- In the draft assessment order, the Assessing Officer has proposed additions to be made and the assessee has accepted the proposed addition and paid the taxes. Further, against the show-cause notice issued under section 270A of the Act, the assessee has furnished the reply, which was considered by the Assessing Officer, but was not accepted. On perusal of the penalty order, we find that the AO has not recorded what the reply was furnished by the assessee against the show-cause notice issued u/s 270A of the Act and why it was not acceptable. Moreover, the Assessing Officer has mentioned any reason for levying penalty at 200%. AO has simply recorded that 200% of penalty has been levied for the tax payable on mis-reporting of income. When the assessee has furnished his explanation in response to the show-cause notice, it is the duty of the Assessing Officer to consider and record as to why the reply is not acceptable. However, in the penalty order, the Assessing Officer has not discussed anything and simply stated that the reply of the assessee is considered and is not acceptable is not correct. We are of the opinion that the penalty order passed by the Assessing Officer and confirmed by the ld. CIT(A) cannot survive. Thus, the penalty levied under section 270A of the Act stands deleted. Assessee appeal allowed.

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• 2023 (12) TMI 581
  Revision u/s 263 - as per CIT AO did not initiate penalty proceedings u/s 271(1)(c) as the same is prejudicial to the interest of the Revenue, if any, has to be proved with reference to the assessment order only - HELD THAT:- Having regard to the contentions on either side, we find the issue that arises for consideration in these appeals is, whether the PCIT, in exercise of power u/s 263 of the Act, while holding the order of the AO to be erroneous and prejudicial to the interest of the Revenue for AO not initiating penalty proceedings while completing assessment u/s 143(3) of the Act. This issue is no longer res integra. In the case of Sri Adithya Homes Private Limited [ 2023 (7) TMI 1330 - ITAT HYDERABAD] a Co-ordinate Bench of the Tribunal having noticed the decision in the case of Rakesh Nain Trivedi [ 2015 (12) TMI 979 - PUNJAB AND HARYANA HIGH COURT] and also the line of decisions following the view of Indian Pharmaceuticals [ 1978 (10) TMI 12 - MADHYA PRADESH HIGH COURT] and ACIT vs. Kantilal Jain [ 1979 (10) TMI 37 - MADHYA PRADESH HIGH COURT] etc., relied on the decision of Vegetable Products Ltd [ 1973 (1) TMI 1 - SUPREME COURT] held the issue in favour of the assessee, stating that in case of more than one interpretation of taxing statute is possible, then the interpretation which favours the assessee, more particularly when it pertains to penalty, has to be adopted. Since the facts are identical, respectfully following the view taken by the Co-ordinate Bench of the Tribunal in the case of Sri Adithya Homes Private Limited [ 2023 (7) TMI 1330 - ITAT HYDERABAD] and the decision of Rakesh Nain Trivedi [ 2015 (12) TMI 979 - PUNJAB AND HARYANA HIGH COURT] we hold the issue in favour of the assessee.

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• 2023 (12) TMI 580
  Penalty u/s 271C - Non deduction of TDS u/s 195 - payment made for supply of software to two USA companies on which no tax was deductible but Id. AO, by treating it as payment for Royalty, made addition under sec. 40(a)(i) - penalty has been levied after 4 years - as argued payer has no PE and no agency agreement, so the sum paid is not chargeable to tax in India - assessee admitted that they have not deducted TDS under bonafide belief - HELD THAT:- Before levying penalty, the concerned officer is required to find out that even if there was any failure to deduct tax at source, the same was without reasonable cause. The initial burden is on the assessee to show that there exists reasonable cause which was the reason for the failure. Thereafter, the officer has to consider whether the explanation offered by the assessee or other person as regards the reason for failure, was on account of reasonable cause or not. Reasonable cause as applied to human action, is that which would constrain a person of average intelligence and ordinary prudence. The cause shown has to be considered and only if it is found to be frivolous, without substance or foundation, would the prescribed consequences follow. Thus in the substance of this case after the decision of ITAT, the disallowance was sustained but at the same time the assessee was allowed deduction of that income and therefore, the effect was tax neutral. Therefore, the reasonable cause for the assessee not to deduct the TDS which although was added in the income of the assessee u/s 40(a)(i) - Since the effect was revenue neutral assessee has not disputed the levy or addition further in the Hon ble High Court. Based on this fact, we are of the view that the assessee was having reasonable cause for not deducting the tax and ultimately the revenue has chosen it to income of the assessee by adding the same in the income of the assessee u/s. 40(a)(i). As noted that there is no deliberate inaction on the part of the assessee. Therefore, in view of decision in the case of CIT vs. Bank of Nova Scotia [ 2016 (1) TMI 583 - SUPREME COURT] wherein the Hon ble Apex Court hold that the assessee has deliberately not avoided TDS and there is no contumacious conduct on the part of the assessee. Therefore, considering that aspect of the fact in this case. The bench feels that in this case levy of penalty is not correct as the assessee has reasonable cause for such failure and the revenue has already disregarded and disallowed the claim of the assessee on account of non deduction of tax. We hold that the levy of penalty is deleted on the ground that there was bona fide and reasonable cause in not deducting TDS. Decided in favour of assessee.

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• 2023 (12) TMI 579
  Addition u/s 56(2)(vii) - Joint property purchased - value determined by the Stamp Duty Authority was more than the agreement value of the property - CIT(A) denying the benefit of Section 56(2)(vii) (b) by stating that Letter of Allotment is not a registered sale deed and thus cannot be considered as date of agreement - assessee has purchased immovable property as a co-owner jointly with her husband - assessee explained that as per the proviso to section 56(2)(vii)where date of agreement fixing amount of consideration for the transfer of immovable property and the date of registration are not the same, the Stamp Duty value on date of agreement may be taken for the purpose of this clause provided that the amount of consideration has been paid by any mode other than cash on or before the date of agreement for the transfer of such immovable property. HELD THAT:- As per proviso to section 56(2)(vii)(b) where the date of agreement fixing amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purpose of the aforesaid provision, provided on or before a part of the consideration has been paid by any mode other than cash. As perused the decision of POONAM RAMESH SAHAJWANI [ 2020 (11) TMI 817 - ITAT MUMBAI] on the similar facts the value of the flat was determined on the date of booking of flat after taking into consideration the payment made by the assessee through banking channel before the registration of the flat as laid down in the proviso to section 56(2)(vii)(b) of the Act. Also case of Sanjay Dattatraya Dapodikar [ 2019 (9) TMI 487 - ITAT PUNE] wherein held that where date of agreement for fixing amount of consideration for purchase of a plot of land and date of registration of sale deed were different but assessee, prior to date of agreement, had paid a part of consideration by cheque, provisos to section 56(2)(vii)(b) being fulfilled, stamp value as on date of agreement should be applied for purpose of said section. We direct the AO that the stamp duty value on the date of allotment in the case of the assessee on 16.10.2010 be taken for the purpose of Section 56(2)(vii)(b) of the Act and not stamp value as on the date of registration of sale deed . No merit in the findings of the Ld. CIT(A) that before the registration of the flat only other co-owner i.e. Ajay Kumar Singh husband of the assessee has made payment. Since, it is joint property owned by assessee and her husband and its immaterial who had made payment before the date of registration of the property. Therefore the grounds of appeals of the assessee are partly allowed.

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• Customs

• 2023 (12) TMI 578
  Refund - Period of limitation - duty paid under protest or not - Importer had preferred an appeal challenging the enhancement of the value of the goods - HELD THAT:- There is delay of 192 days in filing this special leave petition - the matter does not require interference. The special leave petition is dismissed both on the ground of delay as well as on merits.

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• 2023 (12) TMI 577
  Short payment of Customs Duty - Approval of Resolution Plan - extinguishment of claims once resolution plan approved u/s 31 of IBC - overriding effect of IBC over Customs Act - HELD THAT:- Undisputedly, the Supreme Court in ABG Shipyard Liquidator vs. Central Board of Indirect Taxes Customs [ 2022 (8) TMI 1161 - SUPREME COURT ] has unequivocally held that the provisions of the IBC would override and have precedence over the Act. Insofar as the extinguishment of claims is concerned, the said issue too is no longer res integra and stands authoritatively answered by the Supreme Court in Essar Steel India Ltd. Committee of Creditors vs. Satish Kumar Gupta [ 2019 (11) TMI 731 - SUPREME COURT ] and Ghanashyam Mishra Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Pvt. Ltd. [ 2021 (4) TMI 613 - SUPREME COURT ], where it was held that Section 31(1) of the Code makes it clear that once a resolution plan is approved by the Committee of Creditors it shall be binding on all stakeholders, including guarantors. This is for the reason that this provision ensures that the successful resolution applicant starts running the business of the corporate debtor on a fresh slate as it were. The impugned order cannot be sustained - petition allowed.

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• 2023 (12) TMI 576
  Denial of conversion of shipping bills under Advance Authorization scheme to Duty Drawback scheme for realization of export benefits - time limitation specified under Section 149 of the Customs Act or not - HELD THAT:- The Hon ble Gujarat High Court in MESSRS MAHALAXMI RUBTECH LTD. VERSUS UNION OF INDIA [ 2021 (3) TMI 240 - GUJARAT HIGH COURT] has considered Section 149 ibid. in extenso and therefore, the Tribunal, as a lower authority, is bound by the said decision since the very Circular, which has been relied upon by the original authority even in the case on hand, has been clearly struck down by the Hon ble High Court as ultra vires. Hence, the views expressed by the original authority for denying the conversion request of the appellant, not subscribed. The impugned order is set aside - the appeal is allowed.

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• 2023 (12) TMI 575
  Levy of Anti Dumping Duty - import of goods described as Extra Clear Glass - goods imported was Extra Clear Glass or Clear Float Glass? - HELD THAT:- The appellant, by raising a ground that the duty was paid for Extra Clear Glass, is indirectly trying to justify its classification which cannot be permitted. When there were clearly no doubts in the minds of the Revenue as to what was imported was float glass, then necessary consequences ought to follow, inasmuch as the liability to ADD cannot be overlooked just because the appellant has been magnanimous in remitting more duty. If the said theory is accepted, then the same would affect the classification itself! Hence, the theory of the appellant cannot be accepted as the same lacks any merit. Insofar as the Anti-Dumping Duty levy is concerned, the appellant-importer has given a working wherein it has claimed that what was paid as duty by it was more than what was hypothetically worked out by the Revenue, but however, we cannot get into the arithmetics of the same since, the scope of the appeal is limited. There are no merit in the case of the appellant for which reason the appeal is dismissed.

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• 2023 (12) TMI 574
  Enhancement of redemption fine and penalty - Import of old and used worn clothing, completely fumigated - restricted item or not - HELD THAT:- This issue came up before this Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [ 2018 (11) TMI 625 - CESTAT MUMBAI] , wherein this Tribunal has observed the paucity of evidence and the negligible scope for ascertainment at this stage deters us from doing so. In the light of the admitted failure to comply with the licensing requirements, we uphold the confiscation of the goods under Section 111(d) of Customs Act, 1962. However, it is our opinion that the ends of justice would be served by reducing the redemption fine to 10% of the ascertained value and penalty to 5%. Against the confirmed duties and the penalties the Redemption Fine imposed by the Adjudicating Authority, the Respondent has not filed any appeals. Following the cited decision of this Tribunal, it is held that the redemption fine and penalty imposed on the respondents by the adjudicating authority is sufficient to meet the end of justice. Therefore, the redemption fine and penalty confirmed by the adjudicating authority are upheld. There are no infirmity in the impugned order and the same are upheld - appeals filed by the Revenue are dismissed.

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• 2023 (12) TMI 573
  Clandestine removal of goods from ICD, TKD by procuring illegal and forged gate pass - Forgery - smuggling of air conditioners R-22 gas cylinders - restricted goods or not - HELD THAT:- From the entire evidence on record, it is clear that all the above names persons have acknowledged that they knew about Customs manual gate passes have been forged by Shri Rohit Sakhuja and Shri Ajit Singh Chadha for clandestine removal of containers from ICD,TKD. They knew that the goods are illegally imported by Shri Rohit Sakhuja and Shri Ajit Singh Chadha by adopting such modus operandi so as to defraud the competent authority. All the concerned i.e. employees, transporters, the labourers/contractors, CHA the dummy proprietors of firms Shri Rohit Sakhuja and Shri Ajit Singh Chadha have acknowledged that they knowingly indulged in impugned fraudulent act of removing illegally imported goods from customs area. Their statements have already been appreciated above - there are nothing which may falsify testimony of any of these witnesses. There are no infirmity in the findings where all these people are held responsible for abetting and facilitating impugned fraud committed for clandestine removal of the goods and improper importation of such goods also. Shri Kamal Virmani also has acknowledged about knowingly storing, distributing and selling illegally imported air conditioners and prohibited R-22 gas cylinders. Shri Satish Kumar also acknowledged about knowingly purchasing R-22 gas cylinders that those restricted goods have been illegally imported. Similarly Mr.Dilip Singh Jain and Vijay Kumar Sharma were found in possession of illegally imported goods with full knowledge in that respect. Penalty upon Shri R.K.Mahapatra, Junior Executive (Commercial Operations) CONCOR,ICD,TKD, New Delhi and and Shri S.K.Dubey, Senior Executive (Commercial Operation), CONCOR, ICD, TKD, New Delhi are also found rightly imposed for issuing the CONCOR job orders without verifying the particulars of the bills of entry. There are no reason to differ from the finding of the adjudicating authority. There is sufficient evidence even against shipper, K Line Singapore Pvt. Ltd. for colluding and abetting the impugned illegal import of goods - there are no infirmity in the order demanding differential duty from Shri Rohit Sakhuja and Shri Ajit Singh Chadha nor with the order penalizing all the other appellants - appeal dismissed.

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• 2023 (12) TMI 572
  Forfeiture of security deposit - non-initmation of change in the Board of Directors within 60 days as is required under Regulation 14 of CHALR, 2004 - HELD THAT:- There was enough evidence to show that the delay was not deliberate and was only because of the illness of the Appellant s farther. It is seen that no case has been made out against the Appellant that the delay in submission of the change in Board of Directors was deliberate on his part. The impugned order set aside - appeal allowed.

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• Insolvency & Bankruptcy

• 2023 (12) TMI 571
  Maintainability of section 7 application - initiation of CIRP - profit-sharing loan given by the Appellant to the Respondent - financial debt in terms of IBC or not - whether Appellant could claim the status of a Financial Creditor for the purposes of filing Section 7 application? - HELD THAT:- The Adjudicating Authority has returned the finding that the Section 7 application filed by the Appellant was not maintainable since the Appellant neither fell in the category of a financial creditor nor the alleged transaction fell within the ambit of financial debt in terms of the statutory provisions enshrined in the IBC. The above findings of the Adjudicating Authority have been predicated on the terms of Agreement entered between the Appellant and the Respondent. It has been held by the Adjudicating Authority that both parties being involved in the joint development of the subject property for which purpose they have entered into a collaborative agreement and hence the amount paid by the Appellant in terms of the financial arrangements outlined therein, is an investment for making profits which cannot be treated as a financial debt qua the Respondent. A plain understanding of a joint venture is a combination of two or more parties/entities that seeks the development of any enterprise or project for profit and entails sharing the risks associated with its development. Applying the above to the facts of the present case, from a perusal of the terms and conditions of the Agreement, when read in a composite and holistic manner, it can well be said that the Appellant and Respondent had entered into a particular business arrangement of accomplishing development of the subject property in which they had agreed to pool their resources proportionately in an agreed upon ratio of 25:75 and in the process share the profits, losses and costs associated with it - There are unmistakable signs of reciprocal rights and obligations contained therein besides evidence of common participation as well as sharing of profits and losses in the construction and development of the subject property. This spirit of being profit-sharing partners is well engrained in the Agreement and therefore we are of the considered opinion that the Adjudicating Authority has committed no error in holding that the Appellant by virtue of the funds invested by them in terms of the Agreement cannot claim the status and benefits of a Financial Creditor as defined under Section 5(7) of the IBC. The present transaction is in the nature of investment for profit and not disbursement for time value of money and hence does not fall within the canvas of financial debt as defined under Section 5(8) of the IBC. The essential elements of financial debt in the context of IBC consists of disbursal accompanied by consideration for time value of money. The terms and conditions of the Agreement between the Appellant and the Respondent makes it clear that the Appellant was a collaborator and not a financial creditor. There was no disbursement for time value of money by the Appellant within meaning of Section 5(8) of IBC. The Adjudicating Authority has correctly adverted to the real nature of the transaction between the parties to hold that the same cannot become the basis of filing a Section 7 application. The findings of the Adjudicating Authority agreed upon that the Appellant is not a Financial Creditor in terms of Section 5(7) of IBC and that there was no financial debt in terms of Section 5(8) of IBC and hence the application under Section 7 of the IBC could not be entertained - there are no error in the impugned order. Appeal dismissed.

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• 2023 (12) TMI 570
  Replacement of the Appellant with another Resolution Professional - HELD THAT:- This Tribunal in a recent Judgment delivered in Kairav Anil Trivedi, IRP of Parenteral Drugs India Ltd. Vs. State Bank of India Anr. [ 2023 (12) TMI 255 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] has examined the similar contentions raised on behalf of the Resolution Professional/IRP which was replaced by the CoC. In the said case, Resolution was passed by CoC on 06.10.2023 to replace the IRP with another RP which was approved by the Adjudicating Authority on 17.10.2023 which order was challenged by the IRP in this Tribunal. The above judgment fully supports the submissions of the Counsel for the Respondents. When the Resolution has been passed by the CoC in accordance with the provisions of the IBC deciding to replace the IRP, IRP cannot be heard in questioning the resolution on the ground that present was not a case where IRP could have been replaced by another Resolution Professional. Submission of the Appellant that in the Resolution dated 01st September, 2023 name of Anil Goel was mentioned whereas the Adjudicating Authority has approved the replacement with Resolution Professional- Ankit Goel - HELD THAT:- Suffice it to say that name of Ankit Goel was clearly mentioned in the Joint Lenders Meeting dated 28th August, 2023 when Joint Lenders Meeting decided to replace the Appellant with Ankit Goel. Further it was the Appellant who in the minutes dated 01st September, 2023 has mentioned Anil Goel. Registration No. of Ankit Goel and that of Anil Goel mentioned in the minutes is same as submitted by Learned Counsel for the Respondent. The mere fact that the name of RP who is to be appointed after replacement is spelled as Anil Goel instead of Ankit Goel in the minutes which was produced by the Appellant shall have no effect on the resolution for replacement and we do not find any merit in the above submission of the Appellant that although Appellant was decided to be replaced by Anil Goel but ultimate order is of Ankit Goel - there is no error in replacement of the Appellant by Ankit Goel as RP. There are no error in the order passed by the Adjudicating Authority approving the Replacement of the Resolution Professional - there is no merit in the Appeal - the Appeal is dismissed.

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• Service Tax

• 2023 (12) TMI 569
  Rejection of refund of Cenvat Credit - ineligible input services - General Insurance service - Security Insurance service - Restaurant facility service - HELD THAT:- It is settled position that denial of Cenvat credit can be done by issuing notice u/r 14 ibid and it cannot be rejected solely u/r 5 ibid. Rule 14 provides for recovery of Cenvat credit wrongly taken or erroneously refunded. In the instant appeals, there are no document on record to establish that any notice under Rule 14 of Cenvat Credit Rules, 2004 has been issued to the appellant for recovery of irregularly availed Cenvat credit. From the language of Rule 5 ibid it is clear that it merely provides for refund of Cenvat credit and it nowhere talks about the correctness/recovery of availment of Cenvat Credit, which is the mandate of Rule 14 ibid only. Admittedly in the instant matter no such steps had been taken. The instant appeal is allowed by setting aside the impugned order.

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• 2023 (12) TMI 568
  Levy of service tax - Business Support service or not - amount accounted as net-operating income in the financial accounts of the appellant is a consideration received by the appellant for providing services - extended period of limitation - HELD THAT:- The appellant being a freight forwarder has discharged the service tax on the amount received for providing freight forwarding services. The amount accounted under net operating income is now brought to levy of service tax under BSS. This amount is only excess of the freight charges. The differential freight earned by the appellant is not consideration for services rendered by them to their client. The issue as to whether the difference in the freight charges is a consideration for services and is liable to service tax was analysed in various decisions. In the case of GREENWICH MERIDIAN LOGISTICS (INDIA) PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX MUMBAI [ 2016 (4) TMI 547 - CESTAT MUMBAI ], the very same issue came up for consideration and the Tribunal held that the notional amount earned by the assessee from purchase and sale of cargo space cannot be subject to levy of service tax. In the case of COMMISSIONER OF SERVICE TAX, NEW DELHI VERSUS M/S. KARAM FREIGHT MOVERS [ 2017 (3) TMI 785 - CESTAT NEW DELHI ] it was held that demand of service tax on the income earned by the assessee is profit earned out of sale of cargo space and cannot be subjected to levy under BAS. After considering the submissions and following the decisions, it is opined that the demand of service tax cannot sustain and requires to be set aside. Time Limitation - HELD THAT:- Demand has been raised after the verification of the accounts of the appellant by Audit Group. The quantification of demand has been arrived from the accounts maintained by appellant - there are no positive act of suppression with intent to evade payment of tax established by department Further, the issue is contentious and there are several decisions in favour of assessee - the SCN issued invoking extended cannot sustain. The issue on limitation is also answered in favour of appellant. The impugned orders are set aside - Appeal allowed.

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• 2023 (12) TMI 567
  Levy of Service Tax - Brand Promotional Activities or not - amounts received from M/s.India Cements Ltd. under the IPL Playing Contract entered by the appellant with M/s.ICL as well as the BCCI - HELD THAT:- From the agreement, it can be seen that the appellant is under the control and supervision of the M/s.ICL during the period of agreement. The appellant is restricted from playing cricket match for any other team. So also, it is obligatory for the appellant to inform any medical condition which affects his ability to play. The appellant has to undergo medical examination as required by M/s.ICL. Again, the appellant is under obligation to attend training, coaching etc. These terms of the contract strongly indicate that the contract is in the nature of an employment contract. Though the appellant may be an independent professional player his services are taken up by M/s.ICL for playing IPL under the team Chennai Super Kings . So also, the remuneration paid to the appellant is fixed. If he is not able to play by reasons stated in the agreement, the appellant is to be compensated and thus is taken care of by M/s.ICL. Even though the appellant takes part in the promotional activities, the remuneration received remains fixed and is not based on the profit earned by M/s.ICL from such advertisements - The appellant is hired to play cricket and has not been hired to do only the promotional activities. The appellant being a professional cricketer, M/s.ICL has hired the appellant to play cricket which is the dominant activity of the contract. Merely because the appellant engages in some promotional activities of the employer, as part of playing cricket by way of wearing the shirt showcasing the logo and name of M/s. ICL etc., it cannot be said that the entire payment is for brand promotional activities. The Tribunal in the appellant s own case CCE ST, CHENNAI VERSUS L. BALAJI, S. BADRINATH, DINESH KARTHICK, MURALI VIJAY, VIDYUT SIVARAMAKRISHNAN, ANIRUDA SRIKKANTH, SURESH KUMAR, YO MAHESH, HEMANG BADANI, ASHWIN R,C. GANAPATHY, ARUN KARTHIK KB, KAUSHIK GANDHI, PALANI AMARNATH C, ABHINAV MUKUND (VICE-VERSA) [ 2019 (5) TMI 377 - CESTAT CHENNAI] while disposing a batch of cases had perused the agreement and held that it is in the nature of an employment contract - So also, in the case of YUSUFKHAN M PATHAN AND IRFANKHAN PATHAN VERSUS C.C.E. S.T. -VADODARA-II [ 2023 (1) TMI 938 - CESTAT AHMEDABAD] the issue was analysed. The Tribunal held that the relationship between the cricket player and the franchisee is that of an employer-employee relationship. The demand of service tax cannot sustain and requires to be set aside. The impugned order is set aside - appeal allowed.

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• 2023 (12) TMI 566
  Classification of services - supply of tangible goods service or GTA service - providing of transit mixers for transportation of Ready Mix Concrete (RMC) by the appellant under agreements with various RMC manufactures - charges were recovered on per Cubic Meter of RMC + per KM of transportation basis with minimum monthly load commitment for transportation by manufacturers. The entire case of the department is that since the manner of payment is fixed and assured minimum amount, the activity cannot be treated as transportation of goods, but it is supply of tangible goods for use to service recipient. HELD THAT:- The contention of the revenue cannot be agreed upon that merely on the basis of manner of payment the category of service can be decided. There is no doubt that the appellant have been assigned the job by the service recipient exclusively to transport of Ready Mix Concrete which is paramount. The manner of payment of consideration towards service cannot be the criteria to decide the classification of service. Since undisputedly for the purpose of transportation of RMC the consignment note was issued therefore the criteria prescribed to classify the activity under goods transport agency service is clearly satisfied. Therefore, on the basis of the fact of the present case, there are no doubt that the activity of the appellant is clearly falls under the definition of goods transport agency service . In such case there is no tax liability on the service provider as the service recipient is required to discharge the Service Tax on reverse charge mechanism in terms of Rule 2(d) of Service Tax Rules, 1994. In the case of GUNESH LOGISTICS VERSUS COMMISSIONER OF C. EX. SERVICE TAX, JAIPUR-I [ 2019 (9) TMI 1419 - CESTAT NEW DELHI] , the Principal Bench has held the Appellant has been rendering GTA service by transporting RMC from one place to another as per the directions of the service recipient. The finding to the contrary recorded in the impugned order by the Commissioner that the Appellant was not performing GTA service but was performing STG service cannot be sustained. In the case of SHRIPAD CONCRETE PVT. LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, SURAT-I [ 2023 (8) TMI 707 - CESTAT AHMEDABAD] , this Tribunal has held that the appellant s service is correctly classifiable under Goods Transport Agency service for which service recipient M/s. Ultratech Cement Limited have discharged the service tax as required under Rule 2(d) of Service Tax Rules, 1994 under reverse charge basis. Therefore, the demand under the category of Supply of Tangible Goods service shall not sustain. Thus, the activity of the appellant is classified under goods transport agency services . Accordingly, the demand raised under supply of tangible goods for use service is not sustained - the alternate pleadings made by the appellant that even if the service is not classifiable under GTA, then also the activity being a deemed sale not liable to service tax under supply of tangible goods for use service not addressed. The impugned order set aside - appeal allowed.

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• Central Excise

• 2023 (12) TMI 565
  Clandestine removal - grant of opportunity to cross-examine - Relevancy of statements - Violation of the provisions of section 9D of the Central Excise Act, 1944 - non-compliance of the principles of natural justice - HELD THAT:- The appellant has been given sufficient opportunity in terms of Section 9D of the Act and that is how, Sh. Ajay Singh, Advocate cross examined four witnesses and though opportunity was granted for cross examination of other witnesses but they did not avail the same. Thus no fault can be found with the order of the Adjudicating Authority on this ground. The learned Counsel for the appellant has pointed to decision in M/S ARYA FIBRES PVT. LTD., M/S NOVA PETROCHEMICALS LTD. AND OTHERS VERSUS CCE AHMEDABAD-II [ 2013 (11) TMI 626 - CESTAT AHMEDABAD ], where the Tribunal held that rejection of request for cross examination of witnesses, whose statements were relied upon, amounts to violation of principles of natural justice. The said decision is clearly distinguishable as in that case the request for cross examination was rejected by the Adjudicating Authority on the reasoning that no justifiable and tangible reasons have been furnished for cross examination whereas in the present case on the request for cross examination of the witnesses on behalf of the appellant, the same was allowed, and the four witnesses, who appeared were cross examined. The appellant themselves are not certain about the goods seized from the four godowns and has therefore taken different and contradictory stand. The other limb of submissions is that the goods were seized earlier during the search in the month of April 2008 and were provisionally released on 4.6.2008, which were stored in the four godowns, which has now become the subject matter of the show cause notice - as recorded by the adjudicating authority that when the details of the seized goods with the details of the goods seized from various godowns of the appellant in the month of April 2008, were tallied, it was found that not a single entry was common in both the cases and the goods seized from the above mentioned four godowns were different from the goods that were seized from various godowns of the appellant in the month of April 2008 which were provisionally released by the department. Having rejected the contentions of the appellant and considering the seizure in the present case of large quantity of raw material, packing material ready to pack Gutka, also finished Gutka showing the names of various brands of other units and other inputs like Zarda, Lime, Cardamom, Katha, Tobacco, Menthol, Perfume, Clove oil etc. and some other material worth Rs.1,17,04,930/-, and packed Gutka of various brands, having a total MRP of Rs.48,90,854/- along with 1600 kgs. of loose Gutka having market value of Rs.12,00,000/-, I have no hesitation in upholding the findings that the appellant had indulged in clandestine manufacture and clearance of goods of various brands. The unaccounted gutka and stock of raw material was stored in these godowns without any documentation and any declaration in that regard, solely with intent to use the same for clandestine removal - It is a settled law that it is not necessary to establish mens-rea in tax matters as non compliance of statutory provisions is sufficient. The authorities below are justified in imposing penalty under the provisions of section 11 AC of the Act, relying on the decision of the Apex Court in the case of SEBI VERSUS SHRIRAM MUTUAL FUND [ 2006 (5) TMI 191 - SUPREME COURT ] that mens rea is not an essential element for imposing penalty. The impugned order holding that the excise duty amounting to Rs. 21,48,030/ is recoverable in terms of proviso to section 11A(1) along with interest under section 11AB and penalty under section 11AC of the Act and also the Gutkha seized from the four godowns is liable for confiscation needs to be affirmed. The appeal, is accordingly dismissed.

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• 2023 (12) TMI 564
  Refund of the excess duty paid - principles of unjust enrichment - issuance of credit note by the appellant at a later date to the customer - post-clearance activity or not - section 11B of CEA - HELD THAT:- The question arises whether the incidence of duty which has been passed on to customers can be neutralized by the assessee issuing a credit note so as not to attract the bar of unjust enrichment - the issue has been examined and decided by a Coordinate Bench of this Tribunal in its decision pertaining to COMMISSIONER OF CENTRAL EXCISE, RAIPUR VERSUS IBP LTD. [ 2013 (10) TMI 263 - CESTAT NEW DELHI] . In the instant case goods were cleared to M/s. Kalpataru Power Transmission Ltd. without payment of duty availing the benefit under Notification No. 108/95-CE dated 28.8.1995. They had paid excise duty to the tune of Rs.6,08,053/- during November 2010 on five consignments made in respect of the additional quantities, due to delayed receipt of amendment certificate. Having subsequently received the certificate which entitles them to duty exemption they have raised a credit note on their customers and sought a refund. In the circumstances it becomes the duty of the Department to facilitate such an assessee caught in difficult circumstances and not to put him to financial hardship especially when he has shown proof of having neutralized the passing of the tax burden. Trade facilitation makes true meaning in sensitive handling of such instances. Only if the Department had evidence to show that in spite of the credit note issued to their customer, the appellant in some other way had unjustly enriched himself in this matter, should the refund have been denied. Otherwise, the provisions of Section 11B (2) (d) of the Central Excise Act stand satisfied. The impugned order is hence set aside - Appeal allowed.

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• 2023 (12) TMI 563
  Area Based exemption - new unit in the state of Himachal Pradesh - late filing of declaration - exemption under N/N. 50/2003-CE dated 10.06.2003 denied on the ground that the appellant had filed the declaration for availing the exemption on 22.03.2010 whereas exemption was claimed with effect from 20.06.2009 - period of 20.06.2009 to 21.03.2010 - HELD THAT:- The appellant vide his letter dated 25.08.2012 informed the Commissioner of Central Excise, Chandigarh that if the department has got any doubt regarding the genuineness of the declaration then the same can be verified from the relevant post office and the complete address of the post office was also supplied to the officer. But the department did not make any effort to verify the same and simply ignored the request of the appellant and has denied the exemption for the relevant period only on the ground of non receipt of declaration. Further, it is found that subsequently, the appellant filed declaration on 23.03.2010 under the belief that every year declaration is required to be filed. This issue of non filing/late filing of declaration to avail exemption under Notification No. 50/2003-CE dated 10.06.2003 has come up before this Tribunal in the case of Controls and Switchgears company Ltd. Vs. Commissioner of Central excise Meerut and Vice-versa [ 2017 (4) TMI 847 - CESTAT NEW DELHI] wherein also the exemption was denied to the assessee on the ground that assessee did not file the option for claiming benefit of exemption notification. It was held by the Tribunal that intimation to the department about the option for claiming benefit of exemption appears to be only a procedural requirement, and a liberal attitude, therefore as to be taken in this regard when the assessee otherwise is entitled to the benefit of exemption notification with effect from the date when the department was informed by the assessee on their claim of benefit of the notification. Further, in the case of Vasantham Enterprises Vs. Commissioenr of C. Ex. Chandigarh [ 2014 (12) TMI 953 - CESTAT NEW DELHI] it was held by the Tribunal that it is a settled law that though exemption notification generally should be strictly interpreted but beneficial exemption for encouragement or promotion of certain activities should be liberally interpreted once eligibility criteria is satisfied. We find that in the present case the appellant is entitled to area based exemption being located in specified area, and incomplete declaration does not totally debar him from eligibility to above exemption otherwise it would defeat the object of area based exemption. The denial of benefit of notification 50/2003-CE dated 10.06.2003 for the period from 20.06.2009 to 21.03.2010 is not sustainable in law - Appeal allowed.

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• 2023 (12) TMI 562
  Classification of goods - OEM delivery vans - merit classification as delivery vans falling under Excise Tariff Item [ETI] 8704 21 90 or as ambulance under ETI 8703 33 92 of the Central Excise Tariff Act 1985? - penalty - HELD THAT:- It needs to be noted that the effective rate of central excise duty on Traveller Van is lesser then Traveller Ambulance Van and it is for this reason that the department alleges that Force Motors with an intent to evade payment of duty connived with GVK Research Institute and mis-classified the vehicles as Traveller Delivery vans instead of ambulance vans - On the basis of the tenders received and after the tender Committee scrutinized the bids, Bafna Healthcare Pvt. Ltd., Faridabad was found to be the lowest bidder and accordingly purchase orders dated 30.03.2009, 04.05.2009, 12.08.2009 and 17.09.2009 were placed on them. Copies of the purchase orders placed on Bafna Healthcare for conversion of Force Traveller Van No. 3350 mm WB into Emergency Response Van have been enclosed. The Commissioner, after noticing that though the vehicles at the time of delivery could not be used as ambulances and they had been modified subsequently, proceeded to hold that the vehicles supplied by Force Motors were incomplete or unfinished vehicles having the essential characters of complete or finished ambulance and thus would be classifiable under ETI 8703 33 92 in view of the provisions of rule 2(a) of the General Rules of Interpretation. The Commissioner was not justified in drawing such a conclusion. As observed earlier, the goods have to be assessed in the form in which they are presented at the time of clearance and not in the form they may ultimately take. The vehicles at the time of clearance did not have the essential character of an ambulance. What was purchased were bare delivery vans without any fittings. It cannot, therefore, be said that the vans had the essential character of an ambulance. Rule 2(a) of the General Rules for Interpretation would not come to the aid of the department. The order passed by the Commissioner classifying the vehicles under ETI 8703 33 92 of the First Schedule to the Tariff Act cannot, therefore, be sustained. Penalty - HELD THAT:- The penalty imposed upon the other appellants also cannot be sustained. It would not be necessary to examine the contention raised by the learned counsel for the appellant that the extended period of limitation could not have been invoked in the facts and circumstances of the case The order dated 28.06.2021 passed by the Commissioner is set aside - Appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (12) TMI 561
  Enhancement of turnover - Best Judgement assessment affirmed - rejection of books of accounts - first appellate authority has not given any basis of fixing the turnover - undisclosed purchase of cloth and tailoring material - benefit of ITC not given - HELD THAT:- From perusal of the finding recorded by the Tribunal, it is evident that the Tribunal being the last court of fact has recorded a finding that authorities have not given any substantial reason for enhancing the turnover. On the said finding, the books of account can be rejected but it is not necessary to enhance the turnover. Again this Court in the case of RATAN HARI ROLLING MILLS LTD. VERSUS COMMISSIONER OF TRADE TAX, UP., LUCKNOW [ 2007 (1) TMI 539 - ALLAHABAD HIGH COURT] have categorically held that estimate for whole year is not justified when suppression was found in a particular period. Once the findings of fact has been recorded in favour of the petitioner, there is no cogent reason for enhancing the turnover. The tribunal was not justified in confirming the enhancement of turnover in view of the fact that at the time of survey loose papers were found which have been explained by the revisionist and merely on that ground the books of account can be rejected but enhancement should not be made. The revision is partly allowed and the order of the tribunal is modified to the extent that taxable turnover of the revisionist relating to the assessment year in question, is hereby accepted.

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