TMI Tax Updates - e-Newsletter
December 14, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Levy of GST - renting of temporary residential rooms for consideration to the devotees and renting of space for shops and stalls for the purpose of religious programmers where the predominant object is not to do business but for advancement of religion - Liable to tax only if the room rent per day is ₹ 1,000/- or more as per Entry 13 of Notification 12/2017. - AAR
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Income Tax:
Revision u/s 263 by CIT - when the assessee's case was that the CIT had ignored the explanation and submission therefore, if the tribunal was of the view that the CIT did not consider the explanation, it would have been well justified to accept the explanation, submission and record a finding. The other option open would have been to send the mater back to CIT for re- examination of the explanation and submission of the assessee. Either of the two options had not been chosen by the tribunal but merely concluded by stating that the explanation offered by the assessee is acceptable without assigning any reasons therefore. - matter is remanded to the CIT for fresh consideration. - HC
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Income Tax:
TDS u/s 194H OR 194G - the assessee purchased lottery tickets from the State of Kerala and claims to have sold to the retail vendors - Admittedly, the government after affecting TDS has paid the amount to the assessee towards prize incentive etc. The assessee has collected the amount and claims to have made over the incentive to the end retailers. Section 194G, as rightly held by the Commissioner of Income Tax and the Tribunal, is not attracted to the instant payment inasmuch as assessee is not under obligation to pay towards commission etc to any of these persons. - HC
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Income Tax:
Addition u/s 68 - unexplained cash credit - Unsecured loan - departmental representative stated that the learned Commissioner of Income tax (Appeals) should have given a direction for making an addition of the above sum in the year in which such sum was received. We fail to appreciate this argument because of the reason that the learned Assessing Officer raises no such ground of appeal. - AT
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Income Tax:
Professional income V/s Salary income - When an assessee insists that he is rendering professional / technical services to a company, the burden is on him to prove the same. - Only such expenditure which has been incurred wholly and exclusively to earn a particular income is allowable as a deduction from such income. In the instant case, there is no relation whatsoever between the interest expenditure from a mortgaged loan and the payment received for rendering certain services. Advancing interest free loans to the employer company cannot be a ground for claiming deduction of interest expenditure from the salary income received from it. - AT
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Income Tax:
Penalty levied u/s 271B - not getting the books of account audited u/s 44AB - The assessee society is also running an educational institution and was under the bonafide belief that since it is not carrying out any business or commercial activity, provisions of section 44AB of the Act are not attracted. In the instant case penalty u/s 271B of the Act was not leviable and we accordingly delete the penalty levied u/s 271B of the Act. - AT
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Income Tax:
Estimation of income - Bogus purchases - The assessee is engaged in reselling of ferrous and non-ferrous metals and in such circumstances we have to apply profit rate suitable to the trade. In this nature of business, i.e. reselling of ferrous and non-ferrous metals, VAT is at 5% and assessee might have made purchases from the grey market for which assessee might have saved some element of profit. Hence, we estimate the profit rate at 5% of the bogus purchases - AT
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Customs:
Levy of penalty u/s 114A of Customs Act, 1962 - In the present case, the appellant has been allowed to redeem the goods on payment of payment of duty. The appellant has later at the time of hearing of the appeal opted to abandon the goods. This does not in any way absolve the allegations of misdeclarations confirmed and upheld by the impugned order. The appellant imported prohibited goods which were absolutely confiscated. The goods which were allowed to be redeemed were also found to be undeclared / misdeclared for which penalty is imposable under Section 114A of the Customs Act. - AT
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Customs:
Classification of imported goods - items imported for deployment in their ‘motorcycle’ production lines - Usage as determinant, or subsuming within broader descriptions, must have specific sanction of the notes as laid down in rule 1 of the General Rules for the Interpretation of Import Tariff. It is also clear from the Rules that the comparison should be at ‘heading’ level before proceeding within the more appropriate of the two for identification of the applicable sub-heading and tariff item - the proposed heading is that of ‘parts and accessories’ of vehicles. - AT
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Corporate Law:
Disqualification of the petitioners as Directors - repayment of deposits - In view of the exemption under the 1975 Rules, more specifically Rules 2(b)(ix) and (xi) of the same, no liability within the contemplation of Sections 164 and 167 could have been imposed on the Company and/or the petitioners - the disqualifications envisaged under Section 164 and Section 167 of the Act were not applicable to the petitioners and, as such, the decision disqualifying the petitioners' DIN and the consequential vacation of office were illegal and bad in the eye of law. - HC
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IBC:
CIRP proceedings - private sale of assets - failure to e-auction process - even though this is a private sale as opposed to sale by a government authority, we are of the opinion that the standards and norms of transparency, fairness and responsibility should be adopted without any qualification or reservation and all prospective bidders should get sufficient notice and time to enable them to participate in the bidding in an effective manner. The process should be taken up after proper notice to prospective buyers and not limited to chosen few. - AT
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Service Tax:
Levy of Service tax alongwith interest and penalty - interchange fee - notices covered periods prior to 01.07.2012 and also thereafter - double taxation - Split Judgement:- Justice K.M. JOSEPH allowed the revenue appeal based on detailed discussion. - Justice S. RAVINDRA BHAT Dismissed the revenue appeal based on detailed discussion. - SC
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Central Excise:
Effect of superceded notification - Whether the Customs, Central Excise and Service Tax Appellate Tribunal ought to have followed its own decision - merely because a particular argument was not raised when the earlier proceedings were decided would not be a sufficient ground to disregard an earlier adjudication made on merits. - HC
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Central Excise:
Levy of penalty u/r 26 on the Appellant/Managing Director of the assessee - Whether the Tribunal is correct in holding that Fatty Acid, Waxes, Soap Stock, Spent Earth and Gum generated during the processing of Refined Oil are waste and cannot be subjected to Central Excise Duty? - In the light of the statutory embargo, the issue cannot be decided by this Court and the appeals are not maintainable. - HC
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VAT:
Whether the amount deposited under protest prior to an order of assessment can be adjusted against the mandatory pre-deposit required for filing an appeal? - Section 26(6A) of the Maharashtra Value Added Tax Act 2002 - The amount which has been deposited by the appellant anterior to the order of assessment cannot be excluded from consideration, in the absence of statutory language to that effect. A taxing statute must be construed strictly and literally. There is no room for intendment. - SC
Articles
Notifications
GST - States-
17/2021– State Tax (Rate) - dated
6-12-2021
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Bihar SGST
Amendment in Notification No. 17/2017-State Tax (Rate), dated the 29th June, 2017
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16/2021– State Tax (Rate) - dated
6-12-2021
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Bihar SGST
Amendment in Notification No. 12/2017-State Tax (Rate), dated the 29th June, 2017
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15/2021– State Tax (Rate) - dated
6-12-2021
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Bihar SGST
Amendment in Notification No. 11/2017-State Tax (Rate), dated the 29th June, 2017
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14/2021– State Tax (Rate) - dated
6-12-2021
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Bihar SGST
Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017
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06/2021 – State Tax (Rate) - dated
29-11-2021
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Jharkhand SGST
Amendment in Notification No. 11/2017- State Tax (Rate), dated the 29th June, 2017
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (12) TMI 521
Input tax credit - credit is overlooked on account of non-payment of the tax due - HELD THAT:- The adjustment on account of the orders passed in the appeals referred to above and on account of ITC, if any, will be only against the last installment - In default of payment of any installment within the time permitted, the balance amount then due will become automatically payable and it will be open to the CGST authorities to proceed for realization thereof in accordance with law. It is made clear that the interest that is required to be paid by this order and after the completion of the installments payment in terms of this order will be calculated on reducing balance basis in respect of the tax due component and not in any respect of the penalty or interest already added into the figure of ₹ 43,49,50,071/- - Immediately upon the first installment payment being made in terms of this order, the order cancelling the GST registration of the appellant assesse dated February 10, 2021 will stand annulled and the respondent authorities should immediately restore the assesse s access to the relevant portal and all other facilities as in any normal case. Let a copy of the letter dated December 3, 2021 be retained in the records.
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2021 (12) TMI 520
Rate of GST - in relation to any function entrusted to a Panchayat under article 243G of the Constitution of India or in relation to any function entrusted to a Municipality under Article 243 W of the Constitution of India - pure services (Cleaning) to the Nagar Parishad - HELD THAT:- The notice dated 25.01.2020 (Annexure-5) is quashed with the direction to the assessing officer to issue a fresh notice in the light of the statutory provisions and pass an appropriate order in accordance with law. All proceedings be positively complied with in these matters. Petition allowed.
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2021 (12) TMI 519
Levy of GST - renting of temporary residential rooms for consideration to the devotees and renting of space for shops and stalls for the purpose of religious programmers where the predominant object is not to do business but for advancement of religion - renting of temporary residential rooms as per the following categories, to the devotees to stay for the purpose of religious programs where charges per room is less than one thousand per day - renting of space for stalls, where the predominant object is not to do business but for advancement of religion - HELD THAT:- The applicant is a religious institution and is temporarily renting residential rooms for consideration and similarly they are also renting space for stalls for consideration. The understanding of the applicant is based on the pronouncement of Hon ble Apex Court of India in the case of Commissioner of sales tax Vs Sai publication fund [ 2002 (3) TMI 45 - SUPREME COURT ] wherein it was held that, where the main activity is not business, then any incidental or ancillary transaction, unless established by the revenue department to be an independent business transaction, will also be considered as charitable only and not business. Further it was also held that, where the main and dominant activity of the assesse trust in that case was to spread message of Sai baba, then brining out publications and sale thereof by the assesse trust to its devotees at cost price did not amount to business. The (5) member constitutional bench of Hon ble Supreme Court of India in the case of PANKAJAKSHI VERSUS CHANDRIKA [ 2016 (2) TMI 1063 - SUPREME COURT ] has held that general things do not derogate from special things. The Apex Court of India in a catena of case law has held that the statute laying down general scheme of operation has to make room for a special statute for which a separate and exclusive field is carved out by the legislature itself. Therefore the special entry 13 will prevail while determining the eligibility for exemption for services supplied by a person registered under Sec 12AA of the Income Tax Act. Thus, a. Renting of rooms where charges from ₹ 1000/- or more per day are taxable. b. Renting of shops for business where charges are ₹ 10,000/- or more per month are taxable.
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Income Tax
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2021 (12) TMI 518
Deduction u./s 10A - Set-off of losses of STP/SEZ units against other income - Whether losses of 10A units cannot be set off against income of non-10A units? 0 principles of red-judicata - Whether High Court has erred in holding that deemed export, reimbursement of expenses, expenses incurred in foreign currency, delayed export proceeds and VAT/GST will form part of export turnover for the purpose of computation of deduction U/s. 10A - HELD THAT:- This Special Leave Petition challenges the judgment and final order [ 2020 (12) TMI 1300 - KARNATAKA HIGH COURT] which was disposed of in terms of the judgment passed [ 2020 (12) TMI 687 - KARNATAKA HIGH COURT ] which in turn was disposed of in terms of the judgment passed [ 2020 (12) TMI 678 - KARNATAKA HIGH COURT] issues covered by decisions of this Court in M/s. WIPRO Ltd. [ 2015 (10) TMI 826 - KARNATAKA HIGH COURT] and Commissioner of Income Tax Another v. TATA Elxsi Ltd.,[ 2016 (3) TMI 460 - KARNATAKA HIGH COURT] are pending adjudication at the instance of the revenue before the Supreme Court. In view of the aforesaid submission needless to state that the Assessing Officer shall decide the issues in accordance with the decision which may be rendered by the Supreme Court. As held no interference is called for with the order passed by the tribunal. The Supreme Court in Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] has held that even though principles of res judicata do not apply to income tax proceedings, but where a fundamental aspect permeating through the different Assessment Years has been found as the fact one way or the other and the parties have allowed the position to be sustained by not challenge the order, it would not be at all appropriate to allow the position to be changed in subsequent year. For this reason also, in the facts of the case, a different view cannot be taken. In the instant case, the tribunal has answered all the substantial questions of law in favour of the assessee In view of the observations made by the High Court, we dispose of the instant petition by reiterating the observations and clarifying that as and when the decisions with respect to the Questions No.(i), (ii) and (viii) are rendered by this Court, the matters shall be governed in terms of directions issued by the High Court. Expenses of corporate office are to be allocated on ad hoc percentage of 20% and not based on turnover of various undertakings/business for the purpose of deductions U/s. 10A, 80-IB and 80-IC - Whether High Court has erred in holding that deemed export, reimbursement of expenses, expenses incurred in foreign currency, delayed export proceeds and VAT/GST will form part of export turnover for the purpose of computation of deduction U/s. 10A? - HELD THAT:- Matter was disposed of in terms of the judgment passed by the High Court in [ 2020 (12) TMI 678 - KARNATAKA HIGH COURT] stating all the remaining issues covered by decisions of this Court in WIPRO Ltd. [ 2015 (10) TMI 826 - KARNATAKA HIGH COURT] and Commissioner of Income Tax Another v. TATA Elxsi Ltd.,[ 2016 (3) TMI 460 - KARNATAKA HIGH COURT] are pending adjudication at the instance of the revenue before the Supreme Court. In view of the aforesaid submission needless to state that the Assessing Officer shall decide the issues in accordance with the decision which may be rendered by the Supreme Court.
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2021 (12) TMI 517
Reopening of assessment u/s 147 - Notice issued after four years - eligibility of reasons to believe - HELD THAT:- As stated in the reasons that giving amount received towards corpus fund has to be treated as income of the current year and brought to tax but it remained to be added to the income. It then says after perusal of the case reference revealed that the assessee is having income from holding of exhibition and other related activity from members and non-members; the assessee has received ₹ 3,50,00,000/- on account of education fund, Trade Industry Development Fund, Research Fund, RSDC Skill Development Fund; these funds were not routed through Income and Expenditure Account and directly credited to corpus fund. As per the details available on record, the assessee has been denied the benefits of trust etc. Therefore, there is nothing in the reasons recorded to show that petitioner had failed to disclose all material facts. Moreover, petitioner has annexed to the petition a copy of the audit query or revenue audit, DCIT (Exemption) which indicates that decision to re-open the assessment is purely based on this audit query. Income Tax Officer must determine for himself what is the effect and consequence of the law mentioned in the audit note and whether in consequence of the law which has come to his notice he can reasonably believe that income had escaped assessment. The basis of his belief must be the law of which he has now become aware. The opinion rendered by the audit party in regard to the law cannot, for the purpose of such belief, add to or colour the significance of such law. The true evaluation of the law in its bearing on the assessment must be made directly and solely by the Income Tax Officer. This is not the case with the matter at hand. We found support for this view in Ananta Landmark (P) Ltd. vs. Deputy Commissioner of Income-tax, Central Circle 5 (3), Mumbai[ 2021 (10) TMI 71 - BOMBAY HIGH COURT] When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of opinion to commence proceedings for reassessment. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to re-open the assessment based on the very same material with a view to take another view.
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2021 (12) TMI 516
Revision u/s 263 by CIT - additions on account of additional depreciation, suppression of sale and disallowance in case of depreciation - HELD THAT:- While deciding the controversy and rendering a finding, the tribunal in paragraph-9 held that the assessee has given an explanation which is acceptable and there was nothing to disturb the concluded assessment for the assessment year 2009-10. In our considered view such conclusion appears to be without sufficient reason. We say so because when the assessee's case was that the CIT had ignored the explanation and submission therefore, if the tribunal was of the view that the CIT did not consider the explanation, it would have been well justified to accept the explanation, submission and record a finding. The other option open would have been to send the mater back to CIT for re- examination of the explanation and submission of the assessee. Either of the two options had not been chosen by the tribunal but merely concluded by stating that the explanation offered by the assessee is acceptable without assigning any reasons therefore. Thus our considered view would be an incorrect manner of rendering a conclusion which revolves entirely on facts and documents which were placed by the assessee before the CIT. Therefore, we are of the view that such finding of the tribunal requires to be set aside and the matter has to be remanded back to the Commissioner of Income Tax for fresh consideration on the said aspect. So far as the issue with regard to the claim for direction under Section 80IB is concerned, it is submitted by the Counsel on either side that such issue does not arise in the assessment year 2009-10. In the result the appeals in so far as the assessment years 2008-09, 2010-11, 2011-12 and 2013-14 are dismissed on the ground of low tax effect. Consequently, the substantial questions of law raised in this appeal in so far as the assessment years, as indicated above, are left open. So far as the order of the tribunal pertaining to the assessment year 2009-10 on two issues, namely, sales bill and depreciation on lorries is set aside and the matter is remanded to the CIT for fresh consideration after giving an opportunity of hearing to the respondent assessee. Since we have remanded the matter for fresh consideration by the CIT, we give liberty to the respondent assessee to raise all issues and more particularly the argument which has been placed before us that seized documents are not incriminating materials including the merits of the matter as well. Consequently, the order passed by the CIT for the assessment year 2009-10 is also set aside and the matter is remanded to the CIT for fresh consideration.
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2021 (12) TMI 515
Reopening of assessment u/s 147 - Validity of reason to believe - deduction u/s 43B - HELD THAT:- In this case a regular assessment order was passed under Section 143 (3) of the said Act. In reply to the Director of Audit, two Assessing Officers had disagreed with the view expressed by the Revenue Audit. One of the two officers who had disagreed with the view of Revenue Audit, inspite of his disagreement has reopened assessment. It is therefore obvious that he has not formed his own opinion that income has escaped assessment. Similar situation had arisen in Il and Fs Investment Managers Ltd.[ 2006 (11) TMI 181 - BOMBAY HIGH COURT ] In view of the above it is not a case that petitioner has not disclosed anything to respondents and a pre-condition for reopening assessment as per proviso to Section 147 of the Act not having been complied, we will hold that the impugned notice to reopen has been issued without jurisdiction.
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2021 (12) TMI 514
Reopening of assessment u/s 147 - Notice after expiry of four years - assessee company is showing its income of rent from shops under the head income from house property and income from other services mainly common area maintenance income, Electricity Income, Parking income etc. under the head income from business and profession - onus to prove that income chargeable to tax has escaped the assessment - HELD THAT:- The figures and details are available not only in the return of income, profit and loss and balance sheet filed by petitioner but all these points have been raised and considered in the original assessment order passed. According to respondent no.1, independent field inquiries were conducted to verify the information as disclosed above. The details above are those details which were available in the profit and loss account and the balance sheet.Specimen agreement annexed to the petition indicate separate arrangement disclosed in the agreement. Agreements have also been provided to the Assessing Officer before the original assessment order was passed giving the break up as well. We are satisfied that petitioner had fully and truly disclosed all material facts necessary for the purpose of assessment which are wrongfully alleged as not disclosed fully and truly. Not only material facts were disclosed by petitioner truly and fully but they were carefully scrutinized and figures of income as well as deduction were reworked carefully by the Assessing Officer. In the reasons for re-opening, the Assessing Officer has in fact relied upon the annual report and audited P L A/c and balance sheet and he admits various information/material were disclosed. But according to the new Assessing Officer, the fact that other service charges were inseparably connected to the letting out of the building of the assessee is not acceptable. When on consideration of material fact one view is exclusively taken by the Assessing Officer it would not be open to re-open the assessment based on the very same material with a view to take another view. - Decided in favour of assessee.
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2021 (12) TMI 513
Deduction u/s 80P - HELD THAT:- As in assessee's own case [ 2016 (5) TMI 1164 - KERALA HIGH COURT ] this Court has considered the standing of the assessee vis-a-vis Section 80P(2) of the Act and denied the claim for deduction as a Co-operative Society. The said judgment is in appeal before the Supreme Court. In Mavilayi Service Co-operative Bank Ltd.[ 2021 (1) TMI 488 - SUPREME COURT] from the paragraphs excerpted above, it is argued by refering to additional details, brought on record that the assessee is entitled to the claim as Co-operative Society registered under the Kerala Co-operative Societies Act, 1969 and merits acceptance of its claim for deduction under Section 80P(2) of the Act. There is consensus in the arguments of both sides that even for applying the principle of Mavilayi Service Cooperative Bank Ltd. case, independent of the judgment a few details are examined, a finding recorded and then the principle laid down in Mavilayi Service Co-operative Bank Ltd. case could be applied. We are of the view that instead of following the assessee's own case and dismissing the appeals of the assessee or alternatively follow Mavilayi Service Co-operative Bank Ltd. without examination of a few details and grant the status of Society for enabling the assessee for deduction under Section 80P(2), the matter requires to be reconsidered by the Tribunal. These questions could be answered in favour of the assessee to the limited extent that the matter requires reconsideration by the Tribunal on the claim of assessee as a Co-operative Society and the entitlement to deduction under Section 80P(2) of the Act. The assessee and the Department are given liberty to place additional materials, now brought on record in the appeals before the Tribunal for decision and consideration.
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2021 (12) TMI 512
Revision u/s 263 by CIT - reassessment direction issued to the AO - issue noted by the CIT (Exemptions) arises under Section 11(1)d and the utilization of corpus donation for revenue expenditure allegedly incurred by the assessee - HELD THAT:- The participation of the assessee is not an empty formality as could be appreciated from the language employed in Section 263 of the Act. Had the assessee placed reply, deliberated on the nuances involved in the circumstances noted by the Commissioner, then, legitimately it could be argued that an adverse order was passed by the Commissioner dehors the objections of the assessee. But the assessee having become an onlooker or complacent of the ongoing procedure, now raises grounds on the findings recorded by the Commissioner before the Tribunal, on the material placed before the Tribunal. This Court is not observing that the Tribunal ought not to have received material sought to be relied on by the assessee. The material brought on record before the Tribunal and a case for reconsideration u/s 263 is made out, the Tribunal would be doing well by sending the matter back to the Commissioner for consideration and decision afresh, instead of adjudicating on the merits of the conclusions recorded by the CIT (Exemptions). By referring to the materials brought on record by the assessee and for allowing the appeal, the reasons recorded by the Commissioner are set aside. The exercise virtually amounts to upsetting the satisfaction recorded by the Commissioner on the material examined by the Tribunal. The material should be allowed to be considered by the Commissioner as the Commissioner is vested with the revisional power against the proceedings made under the Act for exercising his jurisdiction. Though an attempt has been made to independently justify the conclusions recorded by the Tribunal, the mistake we have noticed in the approach of the Tribunal ought not to be ignored by us while examining the legality of the order under appeal and pursue the same approach. In cases like the present, what constitutes the subject matter of appeal before the Tribunal is the correctness or legality of the opinion formed by the Commissioner from the material on record and the reply of the assessee. The conclusion of the Commissioner is the subject matter of appeal, but the Tribunal recorded, in the case on hand, primary satisfaction under Section 263 of the Act. Such a course is impermissible. Hence, we are of the view that the orders of the CIT (Exemptions) and the Tribunal in Annexures-B and C are set aside and the matter is remitted to the Commissioner for consideration and decision afresh in accordance with law.
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2021 (12) TMI 511
TDS u/s 194H OR 194G - assessee purchases lottery tickets from the agencies referred to above and claim to sell the lottery tickets to the retailers - the assessee purchased lottery tickets from the State of Kerala and claims to have sold to the retail vendors - According to the assessee, there is no relationship of Principal and Agent between the assessee and the end sellers of lottery tickets to the general public and the retailers have become eligible for receiving their entitlement as successful agents' prize money/commission, etc. - HELD THAT:- The assessee acts as a post-office by receiving counterfoils of prize winning tickets sold by different retailers in the organisation of lottery business presented to the State government and the prize/incentive/bonus received from the government is transferred to retailers. In the circumstances of the case our attention has been drawn to the flow of counterfoils into the hands of assessee and presentation of counterfoils to government and receipt of incentive by assessee and subsequent transfer of incentive to retailers. The person responsible for making the payment is the government. Admittedly, the government after affecting TDS has paid the amount to the assessee towards prize incentive etc. The assessee has collected the amount and claims to have made over the incentive to the end retailers. Section 194G, as rightly held by the Commissioner of Income Tax and the Tribunal, is not attracted to the instant payment inasmuch as assessee is not under obligation to pay towards commission etc to any of these persons. The substantial questions of law framed by the Revenue are examined by keeping in perspective the confirming order of the Tribunal. And the findings of facts recorded by the Tribunal on which no exception is pointed out to the effect that Sections 194H and 194G are not attracted. It is definitely a case for consideration of substantial questions of law, had the Revenue established the basic ingredients required for attracting any one of the sections to the controversy covered by the appeal. We are of the view that the assessee being a wholesale dealer/Stockist of lottery has purchased from the government and sold to the retailers. It is accepted as a purchase from the organizing agency of lottery and sale to retailers. The amount covered is incentive payable by the organizing department to the agent and none of the ingredients required for adding the disputed amount is established. The questions, in our view, do not arise for consideration particularly having regard to the findings appreciated by the CIT (Appeals) and the Tribunal and accordingly the questions are answered in favour of the assessee and against the Revenue.
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2021 (12) TMI 510
Addition u/s 68 - unexplained cash credit - Unsecured loan - CIT- A deleted the addition - AO as per ground 1(b), has stated that even the carry forward of unsecured loans are required to be added under section 68 - HELD THAT:- On plain reading of provisions of section 68 of the Act, we do not agree with the above contention - departmental representative stated that the learned Commissioner of Income tax (Appeals) should have given a direction for making an addition of the above sum in the year in which such sum was received. We fail to appreciate this argument because of the reason that the learned Assessing Officer raises no such ground of appeal. Even otherwise, what order the learned Commissioner of Income tax (Appeals) should have passed, could not be the matter of argument before us unless the same is raised in the grounds of appeal. We are also not empowered to suggest to the parties about what grounds should have been raised by them. Commissioner of Income tax (Appeals) has reached to the above conclusion after obtaining the remand report of the AO. DR could not show us the argument of LD AO before LD CIT (A) to give him direction to make addition in the year in which it is received. In view of this, we find no infirmity in the order of the learned Commissioner of Income tax (Appeals). Accordingly, ground 1 raised by the learned Assessing Officer is dismissed.
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2021 (12) TMI 509
Rectification of mistake u/s 154 - scope of alternate remedy - deduction u/s. 57(iv) i.e. @ 50% of interest on compensation as received on acquisition of his agricultural land by Land Collector, Rohtak - HELD THAT:- As per the clear mandate of law, an intimation or a deemed intimation under sub-section (1) of Section 143 falls within the realm of clause (b) to sub-section (1) of Section 154 of the Act, therefore, a mistake emanating therefrom, as long as the same is apparent from record, is beyond any doubt rectifiable under the said statutory provision. As regards the view taken by the CIT(A) that the remedy for claim of the aforesaid deduction can be traced in Sec. 119(2)(b) of the Act, the same too does not find favour with us. Where a remedy available to an assessee falls within the four corners of a specific statutory provision, then, the same cannot be declined to him, for the reason, that an alternative remedy is available elsewhere. Be that as it may, we are of a strong conviction that as the A.O remains under a statutory obligation to deduce the true income of an assessee, therefore, the entitlement of the assessee before us towards deduction u/s 57(iv), which is inextricably interwoven or in fact intertwined with the corresponding interest income which had duly been disclosed by him in his return of income, could not have been declined by the A.O on the basis of hyper technical reasons. Our aforesaid view is fortified by the Judgment of the Hon ble Supreme Court in the case of Anchor Pressings (P) Ltd.[ 1986 (7) TMI 1 - SUPREME COURT] as observed, that where an assessee who was entitled to claim a deduction had omitted to raise such claim in his return of income or in the course of the assessment proceedings, then, he was entitled to make such claim by moving an application u/s. 154 of the Act. We are unable to persuade ourselves to subscribe to the view taken by the lower authorities that the omission on the part of the assessee to claim deduction u/s. 57(iv) in his return of income was not in the nature of a mistake rectifiable under Sec. 154 of the Act. We, thus, set-aside the order of the CIT(A) and direct the A.O to allow the assessee s claim for deduction u/s. 57(iv) i.e. @ 50% of the interest on compensation that was disclosed by him in his return of income for the year under consideration. - Decided in favour of assessee.
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2021 (12) TMI 508
TP Adjustment - Comparable selection - Functional dissimilarity - considering Info Edge (India) Ltd. as a comparable company - HELD THAT:- We find that CIT(A) after considering the nature of services provided by the M/s. Info Edge (India) Ltd. has given a finding that its primarily in the business of internet services where anyone on payment basis can have access to their websites as against the activities of assessee which is stated to be engaged in providing the administrative/facilitation assistance, providing product support and training to dealers and customers; assistance in relation to marketing/new business developments; communicating new business opportunity to AE; and providing assistance in negotiating the price of the products/terms of the contract with the customers. CIT(A) after considering the nature of activities had thus given a finding that nature of activities carried between the assessee and M/s. Info Edge (India) Ltd. are completely different services and the two cannot be considered to be a comparables and he therefore directed its exclusion. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue. In such a situation, we find no reason to interfere with the order of CIT(A) for directing its exclusion. Thus the ground of Revenue is dismissed. Excluding CDSL Ventures Ltd. as a comparable - CIT(A) after considering the business profile and the details, has given a finding that it belongs to ITES segment, more than 80% of its income is by way of on-line data charges and therefore, it cannot be considered as comparable companies to that of assessee. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue. In such a situation, we find no reason to interfere with the order of CIT(A) and therefore upheld the order of CIT(A) for its exclusion as a comparable company. Thus the ground of Revenue is dismissed.
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2021 (12) TMI 507
Professional income V/s Salary income - as per AO appellant did not provide details and nature of professional and technical services rendered to the company - whether the receipt from company is to be assessed as professional income or salary income - appellant failed to proof nexus between providing the loan taken on his name to the company - HELD THAT:- The assessee has not submitted the details of nature of professional and technical services rendered to the company. Even before the Tribunal, no efforts were made by the learned AR to substantiate the claim that the amount received by the assessee from the company are professional charges. A director may have duel capacity. He may be both director as well as employee. This principle is enumerated in the judgment of the Hon ble Apex Court in the case of Ram Prashad v. CIT [ 1972 (4) TMI 1 - SUPREME COURT] When an assessee insists that he is rendering professional / technical services to a company, the burden is on him to prove the same. As mentioned earlier, the assessee has not furnished any evidence to prove that the services rendered by him to the company are of professional in nature. The treatment in the company s books of account that the remuneration paid to the assessee are professional charges and deduction of tax at source is made u/s 194J of the Act is not the determinative factor to decide in the hands of the assessee whether the remuneration is salary income or income from business or profession. Therefore, we have no hesitation to hold that the receipt from company is nothing but salary income. Moreover, the interest expenditure cannot be deducted from the amount received from the company because there is no nexus between them. Only such expenditure which has been incurred wholly and exclusively to earn a particular income is allowable as a deduction from such income. In the instant case, there is no relation whatsoever between the interest expenditure from a mortgaged loan and the payment received for rendering certain services. Advancing interest free loans to the employer company cannot be a ground for claiming deduction of interest expenditure from the salary income received from it. In the instant case, it is not established that funds borrowed and diverted to SML are out of commercial expediency and for the purpose of assessee s business. For the aforesaid reasoning, the common issue raised for assessment years 2013-2014 to 2015-2016, is dismissed. Disallowance u/s 14A - CIT(A) restricted the disallowance u/s 14A of the Act to the exempted income earned during the relevant assessment year - HELD THAT:- CIT(A) has relied on various judicial pronouncements in granting relief to the assessee. The assessee has not made out a case that the CIT(A) s order is erroneous. Therefore, we confirm the CIT(A) s order as correct and in accordance with law. It is ordered accordingly.
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2021 (12) TMI 506
Correctness of deduction claimed u/s.54F - purchase of residential flat by the assessee on 09.05.2016 at Mumbai whether it amounts to purchase of a new asset or construction of a new asset - AO regarded the acquisition of the flat as amounting to purchase of a new flat as purchased beyond the period of 2 years from the date of sale of the industrial lands and hence, the assessee had not complied with the conditions for grant of exemption since the purchase was made 5 days after the period of 2 years had expired - HELD THAT:- The date of purchase of the new asset is admittedly on 09.05.2016 which falls within the previous year relevant to Assessment Year 2017-18. The date of transfer is on 05.05.2014 falling within the previous year 2015- 16. In terms of proviso to section 54F(4) of the Act, the non-utilisation of net consideration deposited in the capital gain scheme account can be considered only in Assessment Year 2018-19. We are therefore of the view that the directions given by the CIT(A) holding that the purchase of a new flat will not amount to putting up construction and therefore the benefit of deduction will not be available to the assessee is a finding which is not necessary to be given in the appeal for AY 2015-16. The question whether the acquisition of flat by the assessee would amount to construction or purchase, is a issue which ought to have been left open by the CIT(A) for consideration in AY 2018-19. We leave this issue open for decision in Assessment Year 2018- 19. DR, however submitted that directions may be given to the AO, to take appropriate remedial action in Assessment Year 2018-19. We are of the view that it would be just and appropriate to make an observation that the AO will take appropriate measures as is open to the Revenue in law. With these observations, we allow the appeal of the assessee. Assessee appeal allowed.
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2021 (12) TMI 505
Delayed Employees contribution to PF and ESI - Deposit beyond the due date prescribed under relevant Act and deposited within due date by filing the return on u/s 139(1) - HELD THAT:- We find no merit in the argument of the ld.DR since the explanation as provided in Finance Act 2021 prescribes that the amendment in both sec.36(va) as well as 43B by inserting corresponding explanation that although impugned PF comes in the form of provision and the same is applicable from 1/4/2021 onwards only. In the present case we are concerned with the asst. year 2017-18 and the amended provision could not be applied retrospectively as it is only applicable w.e.f 1/4/2021. Being so no disallowance could be made by the AO in respect of PF/ESI paid within the due date of filing return of income. Though, it was beyond the date mentioned in the respective Act. This view of ours is supported by various judgment relied on by the ld.AR. Accordingly the appeal of the assessee is allowed.
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2021 (12) TMI 504
Penalty levied u/s 271B - not getting the books of account audited u/s 44AB - HELD THAT:- As stated that an indemnity bond was filed by the society with the Punjabi University, Patiala for getting affiliation of course in the college run by the society. Also on perusal of the income and expenditure account of Guru Nanak Dev Khalsa Girls College as dated 01.12.2021 we find that the gross receipts mainly includes the fees received from college students for various educational courses imparted by the college. Prima facie the particulars of income and expenditure account looks to be from the activity not in the nature of any business or commerce and purely looks of an educational institutions. This fact asserts the submission made by the Ld. Counsel for the assessee that the society was under a bonafide belief that since it is an education institute, its income was exempt u/s 10(23C)(iiad) of the Act and as it was not carrying out any business activity, it was not required to get its books of account audited u/s 44AB. We are of the view that the finding of this Tribunal in the case of Sant Baba Rangi Ram Charitable Trust, Hoshiarpur [ 2012 (8) TMI 1121 - ITAT AMRITSAR.] is squarely applicable on the isuses raised in the instant appeal so much so that the assessee society is also running an educational institution and was under the bonafide belief that since it is not carrying out any business or commercial activity, provisions of section 44AB of the Act are not attracted. In the instant case penalty u/s 271B of the Act was not leviable and we accordingly delete the penalty levied u/s 271B of the Act. Accordingly all the effective grounds raised in the instant appeal are allowed.
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2021 (12) TMI 503
Deduction u/s 80(P)(2)(d) - appellant is a Cooperative Housing Society registered under Registrar to the Society - HELD THAT:- We note that the issue on merits is in favour of the assessee by the decision of Hon'ble Apex Court in THE CITIZEN CO-OPERATIVE SOCIETY LIMITED, THROUGH ITS MANAGING DIRECTOR, HYDERABAD[ 2017 (8) TMI 536 - SUPREME COURT] and THE MAVILAYI SERVICE COOPERATIVE BANK LTD. ORS. VERSUS COMMISSIONER OF INCOME TAX, CALICUT ANR. [ 2021 (1) TMI 488 - SUPREME COURT] . We find that the ITAT in the case of M/s. Ramaraja Kshatriya Cooperative Credit Society Limited [ 2021 (3) TMI 662 - ITAT MUMBAI] . Since in the present case no case has been made out by the Revenue or learned PCIT that the Cooperative bank referred in the impugned issues are licensed by RBI the provision of section 80P(4) cannot be imported. Hence, from the above it is evident that issue on merits is in favour of the assessee. When the issue on merits is in favour of the assessee, there is no point of PCIT exercising jurisdiction under section 263 of the Act on that issue. Hence the order of learned PCIT is not sustainable. Hence, we set aside the same and decide the issue in favour of the assessee.
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2021 (12) TMI 502
Addition u/s 68 - cash deposits in bank account - whether Assessee had failed to discharge its initial onus to prove the genuineness of source of cash deposited in the bank during the course of assessment proceedings? - HELD THAT:- In the present Assessment Year i.e. 2012-13, the Original return of income filed u/s 139(1) on 30.09.2012 declaring income of ₹ 5,10,548/-. The revised return was filed u/s 139(5) on 10.02.2013. The notice u/s 143(2)/148(1) was issued on 30.03.2013. Thus, the assessee filed its revised return of income prior to issuance of notice u/s 143(2) of the Act which is within the prescribed time limit as per Section 139(5). The assessee revised its return of income on 12 February 2013 declaring wherein the income which was not disclosed in the original return of income. Thus the total income was revised at ₹ 15,50,213/- declaring the additional commission income of ₹ 10,39,665. The assessment was not framed by the time assessee revised its return of income. Therefore, the revised return filed by the assessee is within the time allowed u/s 139 (5) of the Act. Neither the assessee nor the CIT (A) has held that the revised return filed by the assessee is not bona fide and is not on account of any error or omission in the return of income filed originally. Therefore, the revised return filed by the assessee has to be accepted which was done in earlier year i.e. A.Y. 2011-12. The Ld. DR could not point out any distinguishing facts. Therefore, the appeal of the Revenue is dismissed.
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2021 (12) TMI 501
Determination of income - determining the commission income - Addition on the basis of rough notings in seized papers - HELD THAT:- Since the Tribunal has taken a view in the other entities cases to that of present assessee s case, in present appeal also the commission has to be determined at 0.50% as the assessee herein also is part of Tarun Goyal Group as there is no material brought on record by the DR as to the grounds raised in Revenue s appeal. Thus, the issue is identical in the present assessee s case as well and no distinguishing facts were pointed out by the Ld. DR at the time of hearing. Hence, appeal of the assessee is allowed.
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2021 (12) TMI 500
Assessment u/s 153A - Unexplained investment - HELD THAT:- No evidence for any other investment was found during the course of search. The revenue officers also did not make any inventory at the time of search for any such renovation, etc. Nothing is mentioned in the orders of the authorities below in this regard. Thus, no reliance can be placed on the said statement which is not corroborated with any incriminating material found at the time of search. Thus in view of decision of Hon ble Jurisdictional High Court in the case of CIT vs Harjeev Aggarwal [ 2016 (3) TMI 329 - DELHI HIGH COURT] . Such statement cannot be taken adversely. Once it is admitted that no incriminating material was found in respect of the same, then no addition can be made. Here, the original return of income was filed on 15/10/2010 and the search took place on 17/01/2014 and therefore, it is a case of completed assessment and not abated and no adverse material or facts are on record. Therefore, relying on CIT vs Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and CIT vs Harjeev Aggarwal [ 2016 (3) TMI 329 - DELHI HIGH COURT] we hold that no addition is warranted and should be deleted. Addition for l/5th share of the assessee in a godown - CIT(A) made this addition, though not made by the Assessing Officer, by picking up the above figure only from the audited balance sheet of the assessee as above and from nowhere else. Thus, since the above investment is duly disclosed in the regular books of account, no adverse cognizance is permitted. Accordingly, the additions which has been made by the Assessing Officer and ld. CIT(A) are beyond the scope of Section 153A as per law and principle laid down by the Hon ble Delhi High Court cited supra wherein it has been held that in the case where assessment has attained finality and not abated in term of 2nd proviso to Section 153A the addition cannot be made without there being any incriminating documents found during the course of search. Here, in this case, as noted above there is no such incriminating document found during the course of search albeit the addition has been made on the basis of disclosures made in the regular balance-sheet and bank accounts. Therefore, the additions made are deleted and to that extent the order of the AO and ld. CIT(A) is bad in law. Appeal of the Assessee is allowed.
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2021 (12) TMI 499
Assessment u/s 153C - Unexplained income as determined - CIT-A enhanced the assessment as there was unaccounted cash which was not at all explained by the assessee at any point of time - HELD THAT:- It is pertinent to note that despite giving proper opportunity before the Assessing Officer as well as before the CIT(A), the assessee preferred not appear before the authorities. Therefore, the CIT(A) has rightly proceeded in the appeal filed by the assessee by taking cognizance of the material available at the time of appellate proceedings. The CIT(A) has given a detailed finding relating to the additional evidence filed and held that in light of the findings of the search in Thapar Dhingra Group, the textile trade transactions claimed by the various entities of the group have been found to be sham and mere artificial entries in their books of account. The working of peak submitted by the assessee before the CIT(A) also appears to be incorrect. Thus, all the aspects were properly determined by the CIT(A) and there is no need to interfere with the findings of the CIT(A). Thus, the appeal of the assessee is dismissed.
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2021 (12) TMI 498
Revision u/s 263 by CIT - disproportionate purchase of structural steel - HELD THAT:- Show cause notice related to the purchases was for the entire purchases and not for the specific purchase. In fact the assessee s submissions to the show cause notice revealed that the details were presented before the Assessing Officer as there were specific purchases and the same was properly taken into account by the Assessing Officer. Thus, Section 263 of the Act does not attract, as the Pr. CIT has taken divergent view on particular issue which is not contemplated while invoking the provisions of Section 263 of the Act, hence appeal of the assessee is allowed.
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2021 (12) TMI 497
Estimation of income - bogus purchases - detailed verification of the parties were considered as bogus based on the statement of Shri Dilip S. Doshi based on the information from Investigation Wing, Mumbai - AO found that four parties who were supplied the material to the assessee are bogus and accordingly he disallowed 100% of the purchases from these parties and assessee has partly claimed the expenditure in the profit and loss account and partly charge to work-in-progress - HELD THAT:- CIT(A) analysed the findings of the Assessing Officer and submissions of the assessee in detail and he came to conclusion that the Assessing Officer has taken note of the transactions as bogus. However, AO failed to acknowledge that the assessee has declared corresponding sales. CIT(A) came to the proper conclusion that only profit element embedded in the purchases alone should be disallowed not the whole purchases, since the assessee has already declared corresponding income in its financial statement - CIT(A) has disallowed the suppressed profit on the purchases claimed by the assessee to the extent of 12.5%. The decision of the Ld. CIT(A) is supported by the decision in the case of CIT Vs. Simit P. Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] proposed that only profit element embedded in such purchased could be added to the assessee s income. Therefore, we do not see any reason to interfere with the findings of the Ld. CIT(A). Accordingly, the grounds raised by the Revenue is dismissed.
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2021 (12) TMI 496
Estimation of income - Bogus purchases - AO received information from Maharashtra Sales Tax Department that certain parties are issuing accommodation entries/bogus bills which were availed by various assessee - AO estimated the profit rate at 12.5% of the bogus purchases - CIT- A enhanced the addition of bogus purchases to 100% as against the addition made by the Assessing Officer at 12.5% - HELD THAT:- We noted that the assessee could not produce the parties or the addresses given by the assessee of the parties from whom assessee had made purchases remained unverified. The Income Tax Department issued notices under Section 133(6) of the Act to the parties from whom purchases were made, but same returned unserved. As noted that neither the Assessing Officer nor the CIT(A) tried to carry out any exercise of verification of these parties from the Sales Tax Department or by issuing notices by other modes despite the fact that a plethora of information was available with the Assessing Officer/CIT(A) as noted above. In such situation, the only remedy left is, even though we hold that assessee has received bogus bills from the parties, application of profit rate. The assessee is engaged in reselling of ferrous and non-ferrous metals and in such circumstances we have to apply profit rate suitable to the trade. In this nature of business, i.e. reselling of ferrous and non-ferrous metals, VAT is at 5% and assessee might have made purchases from the grey market for which assessee might have saved some element of profit. Hence, we estimate the profit rate at 5% of the bogus purchases and reverse the orders of the authorities below to that extent. Thus, the appeal of the assessee is partly allowed.
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2021 (12) TMI 495
Reopening of assessment u/s 147 - eligibility of reason to believe - bogus purchases addition - HELD THAT:- The reasons recorded for issuing notice provide the link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer must disclose in the reasons as to nature of fact and material not disclosed by the assessee fully and truly which was necessary for assessment for that assessment year. On perusal of reasons recorded by AO which are we find that the AO has not specified that there was failure on the part of assessee to disclose all material facts necessary for its assessment during the course of regular assessment proceedings. As mentioned in Para 9 10 above, it is evident that a specific query was raised by the Assessing Officer with respect to purchases claimed by the assessee and the same was appropriately replied to by the assessee. The reply having been found satisfactory the assessment was completed accepting the claim of purchases. Once again the very same issue is sought to be raised for the purpose of reopening which is otherwise not permissible in law as the same is based on a change of opinion. It cannot be said that there was any failure on the part of the assessee to fully and truly disclose all the material facts. The present case, in our opinion, could be said to be squarely covered by the decision of the Supreme Court rendered in the case of CIT vs. Kelvinator India [ 2010 (1) TMI 11 - SUPREME COURT] No case for Revenue that assessee had failed to disclose all material facts fully and truly, the impugned notice under Section 148 of the Act issued to the assessee for the purpose of reopening of the assessment beyond the period of four years is not sustainable in law. Therefore, the case of the assessee is covered by proviso to section 147 of the Income Tax Act, and the reopening being bad in law, we hereby quash the assessment order passed u/s 143(3) r.w.s 147 of the Act. The ground nos.1 2 raised by assessee are allowed.
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2021 (12) TMI 494
Disallowance of Interest u/s 36(1) (iii) - admission of additional evidence which was rejected by the CIT(A) - HELD THAT:- Additional evidences and the paper book filed in support of non submission of the evidence due to reasons beyond the control of the assessee. We find the reasonable cause explained by the assessee in respect of the death of the father of the CA/ AR who appeared before the Assessing officer cannot be overruled. Accordingly we are of the opinion that the assessee should not suffer for non filing of material information, as the evidences played vital role and we admit the additional evidence. Accordingly, to meet the ends of justice and considering the principles of natural justice, we set aside the order of the CIT(A) and restore the entire disputed issue along with the additional evidence to the file of the CIT(A) to adjudicate fresh on merits and the assessee should be provided adequate opportunity of hearing. The assessee should cooperate in filling the information for early disposal of the appeal and allow the grounds of appeal of the assessee for statistical purposes.
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Customs
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2021 (12) TMI 493
Import of exotic animals - Prohibited or restricted item - basic contention of the petitioners is that they are breeders of exotic species of animals and birds and purchased the seized birds and animals from Imphal where they are freely available in open market - Section 135(a) and (b) of the Customs Act, 1962 - HELD THAT:- The seized birds and animals are not included in any of the Schedule of the Wild Life (Protection) Act, 1972 and as such, the same is not within the purview of Foreign Trade (Development and Regulation) Act, 1992 and the Schedule 1- Import Policy. Therefore, the seizure of the birds and animals, in the instant case, has no approval of any law relevant for the purpose of the offence alleged in the instant case. This Court is, however, not in agreement with the learned counsel for the respondent so far applicability of the decision in OM PRAKASH BHATIA VERSUS COMMISSIONER OF CUSTOMS, DELHI [ 2003 (7) TMI 74 - SUPREME COURT] is concerned in the given fact of the instant case as we have already indicated in the foregoing paras that the seized birds and animals are not notified to be prohibited goods under any law as required under Section 2(33) of the Customs Act, 1962. Petition disposed off.
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2021 (12) TMI 492
Levy of penalty u/s 114A of Customs Act, 1962 - for transfer of the matter to the Single Member Bench - Absolute confiscation - assessment of duty - HELD THAT:- Sub-section (4) of Section 17 provides that if the assessment is not done correctly, the proper officer may, without prejudice to any other action which may be taken under this Act, reassess the duty on the goods. It is expressly and specifically stated in sub-section (4) that the reassessment under Section 17 is without prejudice to any other action which may be taken under the Act. When there is suppression of facts in the nature of undeclared goods and misdeclared goods , the demand of duty consequent to the confiscation made under Section 28 (4), is valid and proper. In the present case, the appellant has been allowed to redeem the goods on payment of payment of duty. The appellant has later at the time of hearing of the appeal opted to abandon the goods. This does not in any way absolve the allegations of misdeclarations confirmed and upheld by the impugned order. The appellant imported prohibited goods which were absolutely confiscated. The goods which were allowed to be redeemed were also found to be undeclared / misdeclared for which penalty is imposable under Section 114A of the Customs Act. There are no grounds to interfere with the penalty imposed under Section 114A of the Customs Act, 1962 - appeal dismissed.
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2021 (12) TMI 491
Determination of the legality of confiscation of the impugned goods under section 111(d) of Customs Act, 1962 to be redeemed - levy of penalty - goods did not match the documents of clearance and section 123 of Customs Act, 1962 - HELD THAT:- The appellant had obtained clarifications from the supplier that, in their local market, synthetic yarn was available or marketed under certain denierage which was adopted for the purpose of invoice and other documents on the basis of which the declaration was made in the bill of entry. The clarifications received from the overseas supplier was not within the possession of the adjudicating authority who appeared to have been influenced only by the discrepancy of the denierage and by the endorsement on the bill of entry produced by the appellant. The notings about availment of CENVAT credit as demonstrating transfer may well be a hypothesis that could have been tested from available records. It cannot be concluded whether the adjudication was carried out after affording the appellant of every opportunity of pleading their defence. It would be in the interest of justice for the adjudicating authority to take a fresh decision on the mater after giving an opportunity to the appellant to refute all allegations and also to consciously discharge the onus imposed on them under section 123 of Customs Act, 1962 - appeal allowed by way of remand.
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2021 (12) TMI 490
Classification of imported goods - items imported for deployment in their motorcycle production lines - to be classified under tariff item 8483 9000 of First Schedule to Customs Tariff Act, 1975 or heading 8714 of First Schedule to Customs Tariff Act, 1975? - legality of discarding a tariff item, and whose description is not contested for inaccuracy, on the finding that the intent of the exclusion in sections XVI of First Schedule to Customs Tariff Act, 1975 accords primacy to end use for determining classification or not - HELD THAT:- The resolution of adversarial conflict in classification of imported goods by comparison of the claimed classification and counter-proposal of assessing authorities can be undertaken only after establishing that the distinction between the two is only one of degree. It is, therefore, not sufficient that the assessing authority demonstrate the claim to be wrong; the proposed classification should be shown to be correct failing which the claim shall, by default, prevail. Except where an exclusion is specific, the notes can only afford guidance in isolating the appropriate tariff item in the First Schedule to Customs Act, 1975 to which the test of rule 3 of the General Rules for the Interpretation of Import Tariff appended to Customs Tariff Act, 1975 is applied. One of the fundamental principles of classification is that the identified tariff item should describe, as nearly as possible, the goods as presented. Usage as determinant, or subsuming within broader descriptions, must have specific sanction of the notes as laid down in rule 1 of the General Rules for the Interpretation of Import Tariff. It is also clear from the Rules that the comparison should be at heading level before proceeding within the more appropriate of the two for identification of the applicable sub-heading and tariff item - the proposed heading is that of parts and accessories of vehicles. The aptness of this heading can be elicited only from the scope of the description corresponding to heading 8714 of First Schedule to Customs Tariff Act, 1975 which pertains to motorcycles, bicycles and carriages for disabled persons. It is apparent that the imported goods are not solely or principally employable only for the production of motorcycles and, except for familiarity with the business activities of the importer or the elaboration in the invoice, is not easily ascribable to usage in motor vehicles. The absence of a finding that the impugned goods are, from their description, best described as parts and accessories of motorcycles invalidates the proposed classification by failing to discharge the onus of determining the appropriate tariff item to qualify as a rival to the claimed classification. The exclusion note is not a tenable alternative to fulfillment of this obligation on the part of customs authorities. The classification under heading 8714 of First Schedule to Customs Tariff Act, 1975 fails the test of law and is, therefore, set aside to uphold heading 8483 of First Schedule to Customs Tariff Act, 1975 as declared by the appellant in the bills of entry - Appeal allowed in part.
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2021 (12) TMI 489
Jurisdiction - Power of Additional Director General, DRI to issue SCN - sections 28 of the Customs Act 1962 - HELD THAT:- This precise issue was examined by the Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] . The Supreme Court observed that the nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import is a power that has been conferred to review the earlier decision for assessment. This power which has been conferred under section 28 of the Customs Act on the proper officer, must necessarily mean the proper officer who, in the first instance, assessed and cleared the goods. Thus, the Additional Director General, DRI did not have the jurisdiction to issue the show cause notice. It would thus be seen that the Supreme Court in Canon India held that the entire proceedings initiated by the Additional Director General, DRI by issuance of a show cause notice was without any authority of law and was, therefore, liable to be set aside. Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 488
Jurisdiction - Power of Additional Director General, DRI to issue SCN - sections 28 of the Customs Act 1962 - HELD THAT:- This precise issue was examined by the Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] . The Supreme Court observed that the nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import is a power that has been conferred to review the earlier decision for assessment. This power which has been conferred under section 28 of the Customs Act on the proper officer, must necessarily mean the proper officer who, in the first instance, assessed and cleared the goods. Thus, the Additional Director General, DRI did not have the jurisdiction to issue the show cause notice. It would thus be seen that the Supreme Court in Canon India held that the entire proceedings initiated by the Additional Director General, DRI by issuance of a show cause notice was without any authority of law and was, therefore, liable to be set aside. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2021 (12) TMI 487
Disqualification of the petitioners as Directors - Section 164(2)(b) of the Companies Act, 2013 - HELD THAT:- As per Section 74(1)(b) of the Act, the Company shall repay, within three years from the commencement of the Act or on or before expiry of the period for which the deposits were accepted, whichever is earlier. The said provision has to be read in context and in conjunction with Section 74(2), which clearly provides that the Tribunal may, on an application made by the Company, after considering the financial condition of the Company, the amount of deposit or part thereof and the interest payable thereon and such other matters, allow further time as considered reasonable to the Company to repay the deposit. In the event of renewal in compliance with the said sub-section, it could not be said that the Company or, for that matter the petitioners, were guilty of any offence within the ambit of Section 164(2)(b) of the Act. The term deposits , as defined in Section 2(31) of the Act, envisages the same to include any receipt of money by way of deposit or loan or in any other form by a Company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India - Sections 73 and 74 of the Act, on the other hand, prohibit acceptance of deposits from the public. Section 74, read in conjunction with Section 73, would have included the money taken by the Company unless, as discussed above, the exemptions were applicable to the withdrawals. In view of the exemption under the 1975 Rules, more specifically Rules 2(b)(ix) and (xi) of the same, no liability within the contemplation of Sections 164 and 167 could have been imposed on the Company and/or the petitioners - the disqualifications envisaged under Section 164 and Section 167 of the Act were not applicable to the petitioners and, as such, the decision disqualifying the petitioners' DIN and the consequential vacation of office were illegal and bad in the eye of law. Petition allowed.
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2021 (12) TMI 486
Seeking permission to file the Additional Documents in the main Appeal - oppression and mismanagement - siphoning of funds - grievance of the Applicant/Appellant is that he is the only shareholder depending wholly on the dividend, while others are benefited by the fat remuneration and commission packages - HELD THAT:- It cannot be forgotten for filling up the gaps either in evidence or factual matrix of the case, the admission of Additional Documents/evidence is not to be permitted. Also that an Appellate Forum ought not to receive Additional Documents, as a matter of course - The real test is whether an Appellate Forum is able to pronounce judgement/pass orders in main case on the materials available before it, without taking into consideration the Additional Documents/evidence sought to be produced. In the absence of the Additional Documents sought to be projected, this Tribunal is of the considered opinion that the Lis in TA No.18/2021 can be determined, of course, based on the available materials on record - Application dismissed.
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Insolvency & Bankruptcy
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2021 (12) TMI 485
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute between the Operational Creditor and the Corporate Debtor or not - HELD THAT:- There are material substances in the appeal and the appeal deserves to be allowed. Matter remanded to the Adjudicating Authority to initiate CIRP against the Corporate Debtor after allowing a period of 30 days to the parties to settle the matter failing which to initiate CIRP against the corporate debtor - appeal allowed by way of remand.
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2021 (12) TMI 484
CIRP proceedings - private sale of assets - failure to e-auction process for the composite assets of the Corporate Debtor was taken up by the liquidator. - HELD THAT:- It comes out from a reading of Section 35 of IBC and Regulation 8 of Liquidation Regulations is that the proviso that any such consultation shall not be binding on the liquidator is ostensibly so to enable the liquidator to perform its duties in a fair, impartial and judicious manner for realising the maximum value from the disposal of assets of the Corporate Debtor. In our opinion the views of the stakeholders regarding the sale of assets are both desirable and valuable, especially as they are the ultimate beneficiaries of the liquidation process and also because substantial period of time (over two years and seven months) has already been spent in the liquidation process without any fruitful results. The specific context in which an auction is carried out can only elucidate the aspect of arbitrariness and favouritism or otherwise. Thus, in the present appeal where the Impugned Order challenging the stoppage of second Swiss Challenge Process and taking up a fresh private sale process has been challenged, it is seen that the decision of the stakeholders and the liquidator, upon which the Adjudicating Authority has based its order does not grant any particular party any favour. It is driven by the stakeholders wish to get the liquidation process concluded early without losing sight of maximization of value of assets. Also, even though this is a private sale as opposed to sale by a government authority, we are of the opinion that the standards and norms of transparency, fairness and responsibility should be adopted without any qualification or reservation and all prospective bidders should get sufficient notice and time to enable them to participate in the bidding in an effective manner. The process should be taken up after proper notice to prospective buyers and not limited to chosen few. The impugned order directs the Liquidator to complete the entire private sale (relating to the assets contained in the WSRPL offer) within three weeks from the date of Adjudicating Authority s order - it is directed that in partial modification of the impugned order, that while the second Swiss Challenge Process stands cancelled, the private sale process should be undertaken in accordance with the directions contained in the preceding paragraph of this judgment as per relevant legal provisions. Appeal disposed off.
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Service Tax
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2021 (12) TMI 483
Levy of Service tax alongwith interest and penalty - interchange fee - notices covered periods prior to 01.07.2012 and also thereafter - double taxation - evidence to show that the acquiring bank had paid tax on the amount which was earned as interchange fee by the Respondent or not - case of interchange fee being interest and a transaction in money was rejected - inter se provision of service between the parties or not - deliberate intention on the part of the assessee to not disclose correct information or not - time limitation. Split Judgement: Justice K.M. JOSEPH allowed the revenue appeal based on detailed discussion. Justice S. RAVINDRA BHAT Dismissed the revenue appeal based on detailed discussion.
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2021 (12) TMI 482
CENVAT Credit - Club and Association services - Outdoor Catering services - period prior to 2011 - HELD THAT:- The issue is squarely covered in respect of Club and Association services in the case of M/S OVERSEAS INFRASTRUCTURE ALLIANCE (INDIA) PRIVATE LIMITED VERSUS COMMISSIONER OF CGST, MUMBAI EAST [ 2020 (10) TMI 478 - CESTAT MUMBAI] in favour of the appellant where credit on are allowed and credit on Outdoor Catering Services denied. The appeals are partially allowed to the extent of cenvat credit in respect of Club and Association services.
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2021 (12) TMI 481
Refund of unutilized CENVAT Credit - Intermediary Services - Rule 9 of the Place of Provision Rules, 2012 - export of services as per Rule 6A of the Service Tax Rules, 1994 - transfer pricing (Softex Form, Transfer Pricing Documents, Form 3 CB, and other related documents and information) - HELD THAT:- A person to be said to be intermediary, there should be two distinct services and three persons involved. The intermediary should be the person who is facilitating the provision between the other two persons. While considering the issue on the ground of intermediary services both the authorities have at no stage identified the three persons, and have solely relied upon certain analysis, transfer pricing document prepared by EY, in respect of appellants. Interestingly Commissioner (Appeal) observes I agree that transfer pricing is sometimes a means adopted by companies to reduce its tax liability. OECD in its report on Developing Capacity in BEPS and Transfer Pricing - TASK FORCE ON TAX DEVELOPMENT WORK ON BEPS AND TRANSFER PRICING has stated that In Transfer pricing rules raise the question as to whether an arm s length price has been set between the producing, intermediary and selling companies , however he too do not speaks of the relevance of this document for determination of the issue of intermediary services under consideration. The authorized representative has vehemently argued stating that Commissioner (Appeal) has not considered the refund claim and issue on merits and have remanded back the matter to be decided by the original authority for consideration of issue. From the perusal of the decisions which have been referred by the authorized representative, we find that the decisions, were in the case where the appeals have been dismissed by the Commissioner (Appeal) on the ground of limitation or for failure to comply with the requirements of pre-deposit. However from the observations reproduced from the order of Adjudicating Authority and Commissioner (Appeal), it is quite evident that the only issue under consideration by both the authorities was in respect of the intermediary services . Appellant has filed this appeal challenging the impugned order claiming that the services provided by them do not qualify as intermediary services . To dispel the fears expressed by the learned Authorized Representative, it is made clear that the impugned order and allowing the appeal vis a vis the issue in respect of the intermediary services only. Our order should not be construed as allowing the refund claims made by the appellant, which are completely in the jurisdiction of the jurisdictional Assistant/ Deputy Commissioner and need to be examined and decided by him. Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (12) TMI 480
Maintainability of appeal - non-compliance with the mandate of pre-deposit - Section 35-F of the Act - HELD THAT:- As per sub-clause (1) to Section 35-F, it is made mandatory that the Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal if the appellant has not deposited 7 per cent of the duty demanded or 10% of the duty, as the case may be. If the deposit is not made by the appellant as mandated in the said section, the Commissioner or the Tribunal is justified in dismissing the same in limine. In this case, admittedly, the appellant has not remitted the pre-deposit as stated in Section 35-F of the Act. Even though the order of the CESTAT is sustained, the appellant is granted three months time from today to comply with the condition of payment as mandated under Section 35F of the Act - Appeal disposed off.
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2021 (12) TMI 479
Effect of superceded notification - Whether the Customs, Central Excise and Service Tax Appellate Tribunal ought to have followed its own decision in Mahindra Engineering Services Ltd. vs. Commissioner of Central Excise, Pune-I [ 2015 (1) TMI 457 - CESTAT MUMBAI ] especially when the same was after considering the effect of Notification No.9/2009 which now has been superceded by Notification No.12/2013 which is applicable in the facts of the present case? - HELD THAT:- The Tribunal in M/S MAHINDRA ENGINEERING SERVICE LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2015 (1) TMI 457 - CESTAT MUMBAI ] while considering the effect of Notification No.09/2009 held that said Notification did not require the approval from the Approval Committee to be obtained prior to providing the services in question. It also noted that the refund claimed therein had been filed after approval was granted by the Approval Committee. This was held to be sufficient compliance with the requirements of Notification No.09/2009. The appellant before the Tribunal had also raised a contention that the conditions of Notification No.09/2009 were similar to the conditions in Notification No.12/2013. The impugned order of the Tribunal does not consider the latter contention raised by the appellant for if that contention were to be accepted by the Tribunal, it either ought to have followed its earlier view in Mahindra Engineering Services Ltd. [ 2015 (1) TMI 457 - CESTAT MUMBAI ] or if it was not inclined to do so, it ought to have referred the question to a larger bench as held in Mercedes Benz (India) Pvt. Ltd. [ 2010 (3) TMI 300 - BOMBAY HIGH COURT ]. Even otherwise we find that merely because a particular argument was not raised when the earlier proceedings were decided would not be a sufficient ground to disregard an earlier adjudication made on merits. Re-consideration of the proceedings by the Tribunal is warranted - proceedings are remanded to the Tribunal to decide the appeal afresh on its own merits and in accordance with law - Appeal allowed by way of remand.
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2021 (12) TMI 478
Levy of penalty u/r 26 on the Appellant/Managing Director of the assessee - Whether the Tribunal is correct in holding that Fatty Acid, Waxes, Soap Stock, Spent Earth and Gum generated during the processing of Refined Oil are waste and cannot be subjected to Central Excise Duty? - HELD THAT:- The Tribunal referred to the decision of the Lager Bench of the Tribunal in the case of M/S RICELA HEALTH FOODS LTD., M/S J.V.L. AGRO INDUSTRIAL LTD., M/S KISSAN FATS LIMITED VERSUS CCE, CHANDIGARH, ALLAHABAD [ 2018 (2) TMI 1395 - CESTAT NEW DELHI] where it was held the removal of unwanted materials resulting in products like gums, waxes and fatty acid with odour cannot be called as a process of manufacture of these gums, waxes and fatty acid with odour. The process of manufacture is for refined rice bran oil. and allowed the appeals filed by the assessees. Correctness of the order passed by the Tribunal setting aside the penalty on the company and the Directors - HELD THAT:- These appeals have been preferred under Section 35G of the Central Excise Act, 1944. In terms of sub-section (1) of Section 35G, an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment, if the High Court is satisfied that the case involves a substantial question of law. The appeals are dismissed as not maintainable giving liberty to the appellant/Revenue to file an appeal before the Hon'ble Supreme Court.
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CST, VAT & Sales Tax
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2021 (12) TMI 477
Maintainability of appeal - whether the amount deposited under protest prior to an order of assessment can be adjusted against the mandatory pre-deposit required for filing an appeal? - Section 26(6A) of the Maharashtra Value Added Tax Act 2002 - HELD THAT:- Under the provisions of Section 26(6A), the aggregate of the amounts stipulated in the sub-clauses of the provision has to be deposited and proof of payment is required to be produced together with the filing of the appeal. Both clauses (b) and (c) employ the expression an amount equal to ten per cent of the amount of tax disputed by the appellant . The entirety of the undisputed amount has to be deposited and 10 per cent of the disputed amount of tax is required to be deposited by the appellant. In the present case, the appellant disputes the entirety of the tax demand. Consequently, on the plain language of the statute, 10 per cent of the entire disputed tax liability would have to be deposited in pursuance of Section 26(6A). The amount which has been deposited by the appellant anterior to the order of assessment cannot be excluded from consideration, in the absence of statutory language to that effect. A taxing statute must be construed strictly and literally. There is no room for intendment. If the legislature intended that the protest payment should not be set off as the deposit amount, then a provision would have to be made to the effect that 10 per cent of the amount of tax in arrears is required to be deposited which is not the case. The High Court, while rejecting the petition, placed reliance on the fact that there has to be a proof of payment of the aggregate of the amounts, as set out in clauses (a) to (d) of Section 26(6A). The second reason which weighed with the High Court, is that any payment, which has been made albeit under protest, will be adjusted against the total liability and demand to follow. Neither of these considerations can affect the interpretation of the plain language of the words which have been used by the legislature in Section 26(6A) - There is no reason why the amount which was paid under protest, should not be taken into consideration. It is common ground that if that amount is taken into account, the provisions of the statute were duly complied with. The rejection of the appeal was not in order and the appeal would have to be restored to the file of the appellate authority, subject to due verification that 10 per cent of the amount of tax disputed, as interpreted by the terms of this judgment, has been duly deposited by the appellant. The appeal shall stand restored to the file of the appellate authority.
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2021 (12) TMI 476
Scope of 'dealer' as per section 2(15) of the TNVAT Act, 2006 - sale of repossessed vehicle - contractual agreements specifically states the Petitioner/Appellant as not the owner of the Vehicle - Resale of Plant and Machinery, Furniture and Fittings and Fixed Asset by the Petitioner/Appellant - HELD THAT:- The identical questions of law were already decided against the assessee by a Division Bench of this Court, in Tax Case (Revision) Nos.2 to 9 of 2019 on 25.09.2019 in the case of Cholamandalam Investment v. The State of Tamil Nadu [ 2019 (9) TMI 1597 - MADRAS HIGH COURT ] where it was held that Tax case dismissed.
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