TMI Tax Updates - e-Newsletter
December 27, 2023

Case Laws in this Newsletter:

GST Income Tax Customs PMLA Service Tax Central Excise

Highlights / Catch Notes

• GST:

  Seeking release of vehicle and the goods - invoice showing different detail - Keeping in view the settled position and the fact that the matter has to be gone into by the competent authority, the present writ petition is disposed off with liberty to the petitioner to file his response to the said notice. It is open to the authorities to take action in accordance with law. - HC
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• GST:

  Validity of recovery notice - Denial of benefit of exemption - This Court is of the considered opinion that, especially in the peculiarities of this case, the third respondent, to sustain the proposed demand, had to examine whether failure to furnish the details of the GSTIN, notwithstanding the other circumstances, could justify denial of exemption. - HC
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• Income Tax:

  Admissibility of deduction under Section 10A - Whether the petitioner assessee has failed to “disclose fully and truly all material facts necessary for assessment? - The conclusion arrived at by the Assessing Officer for the Assessment Years 2005-2006, 2006-2007 and 2007-2008, when examined from the point of view of the Circular would strengthen the case of upholding deduction under Section 10A of the I.T. Act and would indicate that the resort to a review by recourse to Section 148 of the I.T. Act in the guise of reassessment would be a futile exercise. - HC
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• Income Tax:

  Reopening of assessment u/s 147 - constitutional validity of Section 115BBE questioned - at this stage, Section 115BBE of the Act cannot be held unconstitutional on the ground that there is an apprehension of misuse of the said provision. - HC
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• Income Tax:

  Nature of expenses - purchasing software licenses - revenue or capital expenditure - Fine tuning business operations to enable the management to run its business effectively, efficiently and profitably; leaving the fixed assets untouched would be an expenditure in the nature of revenue expenditure even though the advantage may last for an indefinite period. Test of enduring benefit or advantage would thus collapse in such like cases. It would in our view be only truer in cases which deal with technology and software application, which do not in any manner supplant the source of income or added to the fixed capital of the assessee - HC
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• Income Tax:

  Assessment against deceased/non existent assessee - it can be seen that the AO has passed the Assessment Order in the name of deceased person which is non-existent person and when the order passed on the non-existent person despite represented by the Legal Heir, the same cannot be curable under Section 292B. - AT
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• Income Tax:

  Taxability of Income in India - The receipt of IUC charges cannot be taxed as Royalty under Article 13 in India of India-France DTAA. The payment received by the non-resident assessee amounts to be the business profits of the assessee which is taxable in the resident country and is not taxable in India under Article 5 of the DTAA as there is no case of permanent establishment of the assessee that has been made out by the revenue in India.- AT
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• Income Tax:

  Assessment order passed on an non- existent entity - Fact of amalgamation was not disclosed in the business/organization column and the assessment order indicated the name of both the amalgamation and the amalgamating company and during the assessment proceedings, the assessee made the Assessing Officer believe that the amalgamating company was still in existence. All these facts before the Hon'ble Supreme Court are in favour of the assessee which facts are completely absent in the case in hand. - AT
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• Income Tax:

  Income taxable in India - existence of dependent agent PE - here is no gainsaying that factually the issue stands on identical footing in relation to preceding assessment years, as, both the Assessing Officer and learned DRP have decided the issue following their earlier decisions. That being the case, respectfully following the decision of the coordinate Bench, as referred to above, we hold that the amount received by the assessee from supply of software and automated services, are not taxable in India. - AT
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• Income Tax:

  Scope of limited scrutiny - mandation of recording satisfaction before extending/expanding scope of scrutiny - the Assessment framed by the Assessing Officer on the issues which are not inconsonance of the instruction of CBDT are liable to be quashed. The additions made by the Assessing Officer being beyond the scope of the limited scrutiny and the same is deleted. - AT
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• Income Tax:

  Addition u/s 68 - receipt was not declared in the ROI and the receipt remain unexplained - taxation of additional income u/s 115BBE - The said income is already offered in the revised return, therefore has to be taxed as income from business, and therefore the provisions of section 115BBE of the Act are not applicable with reference to the said income. - AT
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• Customs:

  Depriving duty credit under RoDTEP on exports - In view of the Notifications issued by the Government from time to time permitting export of sugar, the basic objective of the RoDTEP scheme is to grant benefit of rebate to the exporter as an incentive or exporting product. - Directions issued - HC
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• Customs:

  Classification of imported goods - T4 Fingerprint Time & Attendance System and K200 Proximity Time & Attendance System - the product is rightly classifiable under Chapter 8543 - AT
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• Service Tax:

  CENVAT Credit - Trading activity - Merely because the appellant trading unit had mentioned the service tax registration number of the service unit while issuing invoices, the department has assumed that the appellant trading unit must be availing credit on input services also - The department has failed to establish the allegation in the SCN that credit on common input services have been availed in regard to trading - the demand raised being factually and technically incorrect cannot be sustained. - AT
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• Central Excise:

  Exemption under N/N. 67/95-CE - Clearances of acetylene gas for captive consumption - the use of railway tracks are meant for production of goods. The acetylene gas used in 30 shops/departments for repair and maintenance of machineries was also used in connection with the manufacture of the finished goods for the Appellant - the Appellant is eligible for the benefit of exemption notification no. 67/95-CE. - AT
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Articles

• CUSTOMS BROKER’S LICENCE
• RECENT DEVELOPMENTS IN GST
• BOARD OF DISCIPLINE CONSITUTE BY ‘ICAI’ - A TRIBUNAL?

Notifications

• GST - States

• G.O.Ms. No. 561 - dated 24-11-2023 - Andhra Pradesh SGST
  Andhra Pradesh Goods and Services Tax (Fourth Amendment) Rules, 2023

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• G.O.Ms. No. 551 - dated 16-11-2023 - Andhra Pradesh SGST
  The Andhra Pradesh Goods and Services Tax Rules, 2017 - To notify a special procedure for condonation of delay in filing of appeals against demand orders passed until 31 March, 2023 — Orders - Issued.

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• G.O.Ms. No. 550 - dated 16-11-2023 - Andhra Pradesh SGST
  Andhra Pradesh Goods and Services Tax (Third Amendment) Rules, 2023.

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• 51/2023- State Tax - dated 1-10-2023 - Gujarat SGST
  Gujarat Goods and Services Tax (Third Amendment) Rules, 2023

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• 50/2023- State Tax - dated 1-10-2023 - Gujarat SGST
  Amendment in Notification No. 66/2017-State Tax, dated the 15th November, 2017

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• 49/2023- State Tax - dated 1-10-2023 - Gujarat SGST
  Supply of online money gaming, supply of online gaming other than online money gaming and supply of actionable claims in casinos under section 15(5) of GGST Act notified

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• 48/2023-State Tax - dated 1-10-2023 - Gujarat SGST
  Seeks to bring in force provisions of section 2, 7, clause (a) of section 26 and section 27 of Gujarat Goods and Services Tax (Amendment) Act, 2023

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• 11/2023- State Tax - dated 1-10-2023 - Gujarat SGST
  Amendment in Notification No. 1/2017-State Tax (Rate), dated the 30th June, 2017

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• 28/2023 – State Tax - dated 12-12-2023 - Jharkhand SGST
  Seeks to bring in force various sections of Jharkhand Goods and Services Tax (Amendment) Act, 2023

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Circulars / Instructions / Orders

• DGFT - Trade Notice No. 36/2023-24 - dated 26-12-2023
  Extension of Date for Mandatory electronic filing of Non-Preferential Certificate of Origin (CoO) through the Common Digital Platform to 31st December 2024
• Customs - Public Notice No. 103 of 2023 - dated 1-12-2023
  Pilot Project on use of videography in cases requiring 100% examination of cargo-reg.

News

• 2023 Year End Review for Department for Promotion of Industry and Internal Trade

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Case Laws:

• GST

• 2023 (12) TMI 1138
  Maintainability of petition - availability of efficacious and alternative remedy of appeal - Services of storage and warehousing of food grain - Exemption from levy of tax as per Notification No. 12/2017 Central Tax (Rate), dated 28.06.2017 - agreement with APSCSCL for providing storage, warehousing services involving loading, unloading, stacking, packing, care, custody and security etc., of food grains - HELD THAT:- Admittedly, the petitioner has an efficacious and alternative remedy to file appeal. The said fact is also mentioned in the impugned order to the effect that an appeal lies against the impugned order before the Appellate Joint Commissioner (ST), Tirupathi. In view of the decision in ASSISTANT COMMISSIONER (CT) LTU, KAKINADA ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [ 2020 (5) TMI 149 - SUPREME COURT] wherein the Hon ble Apex Court held that the High Court ought not to have entertained the writ petition when an efficacious and alternative remedy of appeal is available to the petitioner, without expressing our opinion on the merits of the petitioner s case, it is deemed apposite to give liberty to the petitioner to file an appeal against the impugned order. The writ petition is disposed of giving liberty to the petitioner to file an appeal against the impugned order dated 10.07.2023 passed by the 2nd respondent before the concerned Appellate Authority within four (4) weeks from the date of receipt of a copy of this order, in which case, the Appellate Authority shall admit the appeal and after affording an opportunity of hearing to both parties, pass an appropriate order on merits in accordance with governing law and rules expeditiously.

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• 2023 (12) TMI 1137
  Seeking release of vehicle and the goods - invoice showing different detail - petitioner was ready to pay the penalty and fine - HELD THAT:- The exigency of the situation regarding the vehicle and the goods is over and the petitioner who is a consigner will necessarily have to reply to the show cause notice whether the circumstances spelled out in the show cause notice had any substance. The show cause notice shows the reference to invoice no. 201 dated 16.08.2023 in favour of Durga Multimetals Pvt. Ltd. for a sum of Rs. 12,75,885/- had a grand total of Rs. 15,05,545/- dated 16.08.2023, the date when the vehicle was detained. The invoice which has been placed on record as Annexure P-1 would go on to show that the goods had been consigned by Rajan Trading Corporation at Rajkot to the petitioner and carries a separate detail. The genuineness of the facts and transit would require further verification and it has specifically been mentioned that it was entrusted from M/s Rajan Trading Corporation at Rajkot and Section 16(2)(c) of the Act needs verification from the books of account. The Apex Court in THE STATE OF PUNJAB VERSUS M/S SHIV ENTERPRISES ORS. [ 2023 (1) TMI 842 - SUPREME COURT] has held that it is not for this Court to entertain the writ petition against the show cause notices and has set aside the order of this Court while not interfering in the order whereby the goods had been released. Keeping in view the settled position and the fact that the matter has to be gone into by the competent authority, the present writ petition is disposed off with liberty to the petitioner to file his response to the said notice. It is open to the authorities to take action in accordance with law.

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• 2023 (12) TMI 1136
  Validity of recovery notice - Denial of benefit of exemption - - refund claim - petitioner has discharged tax under wrong head - importing Bulk Simulator Training Services to the Helicopter pilots from Indian Air Force, Indian Army, Indian Navy and other defence establishments including some of the departments of the State Government - Absebnce of GSTIN and PAN - HELD THAT:- The second and the third respondents impugned orders are perused. These authorities have elaborately referred to the provisions of IGST Act as also the CGST/KGST Act and they have also referred to the details of the recipient establishments. There is obvious reference in the impugned orders to the details furnished by the petitioner after being served with the notice in GST DRC-02, but the proceedings are concluded in the premise that the petitioner has raised Invoices without mentioning the necessary details. This Court must opine that this consideration in the peculiarities of the case will not suffice, and if it is undisputed that the recipient establishments are based in Delhi, Jharkhand and Uttar Pradesh and the petitioner s supply [imparting of training] is exempt, significance of the same should also have been considered. This Court is of the considered opinion that, especially in the peculiarities of this case, the third respondent, to sustain the proposed demand, had to examine whether failure to furnish the details of the GSTIN, notwithstanding the other circumstances, could justify denial of exemption. The proceedings are restored to the third respondent to reconsider the merits of the petitioner s response in the light of this Court s observation - the recovery notice dated 17.10.2023 is also quashed - Petition allowed in part.

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• Income Tax

• 2023 (12) TMI 1135
  Validity of reopening of assessment u/s 147 - reasons to believe - change in opinion - Whether the petitioner assessee has failed to disclose fully and truly all material facts necessary for assessment ? - admissibility of deduction under Section 10A - Whether the petitioner assessee has failed to disclose fully and truly all material facts necessary for assessment? - HELD THAT:- There has been declaration including of expenditure relating to providing technical services. Once such primary facts have been declared and the assessee had made the declaration and claimed deduction under Section 10A of the I.T. Act, there was no further obligation on the assessee. If the Assessing Officer was of the view that details furnished would fall within Section 80HHE and not under Section 10A of the I.T. Act and accordingly, assessee was not entitled to claim such expenditure under Section 10A of the I.T. Act, the non-drawing of such legal inference by the assessing officer at the relevant point of time cannot result in holding that there is no true and full disclosure of primary facts. Whether the re-assessment notice u/s 147 r/w Section 148 of the I.T. Act is merely a product of change in opinion and accordingly is impermissible in law? - A perusal of Section 148 of I.T. Act, the notice along with the reasons for reopening make it clear that the tangible material relied upon are the MSA s, Works contracts/SCW s, Invoices and other details relating to the deduction claimed under Section 10A of the I.T. Act. All of which is stated to have come to the notice of the Department relating to the Assessment Year 2008-2009. However, even on a perusal of para-2.10 of the Assessment Order relating to the Assessment Year 2008- 2009, the assessee as has been asked on innumerable occasions to submit MSAs and SOWs that it had with its clients the assessee has only been able to provide some of the sample MSAs and SOWs . Similar observation is made at para-2.12, which reads as follows, the assessee has not been able to submit all the SOWs and MSAs entered for software contract services . The finding by the Assessing Authority is by placing the burden on the assessee regarding correlation between the MSA, SOW/ work order vis-a-vis work carried out by STP/SCZ unit. Thus the tangible material sought to be relied upon itself not being complete, it cannot be held that the MSAs and SCWs would demonstrate that the declaration made by the assessee leads to a conclusion that there has been escapement of income. It is also a settled position that reassessment proceedings cannot be in the nature of review and accordingly, the material as has come to light in the assessment proceedings for the Assessment Year 2008- 2009 cannot be a sufficient ground to resort to reassessment proceedings. Whether the re-assessment notice u/s 147 r/w Section 148 amounts to borrowed satisfaction as it places reliance on findings recorded in the assessment proceedings recorded in the Assessment Year 2008-2009? - The jurisdictional requirement under Section 147 of the I.T. Act for re-assessment requires the assessing officer to entertain reasons to believe that income chargeable to tax has escaped assessment . It is clear that the reason to believe has to be entertained by the Assessing Officer by forming an opinion himself. Clearly, reasons for reopening rests on the satisfaction of the Assessing Officer who has passed an Assessment Order for the Assessment Year 2008-09 which would amount to substitution of the assessment orders of reasons to believe by borrowed satisfaction of the Assessing Officer who has passed an order for the year 2008-09 which is impermissible in law. Whether the bar under third Proviso to Section 147 of the I.T. Act is a legal impediment insofar as the present re-assessment notice is concerned? - In the above context and looking into the bar under the third proviso to Section 147, the object being to prohibit proceedings u/s 148, when appeal/revision/reference is pending, in the present case, taking note of the details in the Table above, more particularly, noticing pendency of appeals in Column No.(4) as on the date of Section 148 notice, clearly, notice under Section 148 was hit by the bar under third proviso to Section 147 of I.T. Act. Computation of deduction u/s 10A - Assessment Year 2006-2007 - HELD THAT:- The nexus between the technical services rendered and the STP which is necessary for an allowable deduction u/s 10A is a legal requirement and existence of such nexus is a conclusion to be arrived at by the AO. Once the primary facts regarding providing of technical services outside India is made out, there would end the duty of the assessee and the question of nexus is a matter that the Assessing Officer ought to have clarified by further investigation. The reliance on documents that has come out as regards the proceedings for the Assessment Year 2008-2009 by way of MSAs, Work Contracts, SCWs and Invoices cannot be sufficient by itself to initiate proceedings for deduction under Section 10A of the I.T. Act in light of absence of nexus. If that were to be so, as the reliance on such documents for the purpose of reducing Section 10A of I.T. Act, the deduction for Assessment Year 2008-2009, itself has not attained finality and is subject to appeal as averred by the petitioner in the pleadings which remains uncontroverted. If that were to be so, the material relied upon in assessment proceedings for the Assessment Year 2008-2009 not having been finally adjudicated so as to indicate requirement to reduce Section 10A deduction, the same cannot be made use of for reassessment proceedings. The requirement that there must be true and full disclosure cannot be stated to have been breached by taking recourse to the material produced during the Assessment Year 2008-2009 as such conclusion for the Assessment Year 2008-2009 leading to reduction in Section 10A deduction itself is a subject matter of further adjudication. Implication of Circular No. 1/2013 [F.No.178/84/2012 - ITA.I - Government of India, Ministry of Finance, Department of Revenue, CBDT dated 17.01.2013.] - It is clear that the clarification stipulates that the benefits under Section 10A deductions can be availed of, if there exists a direct and intimate nexus or connection between the development of software abroad with the eligible units setup in India. Though the clarification is issued on 17.01.2013, whereas the said circular is only clarificatory and does not confer any new benefit and hence can be made use of to interpret the scope of deduction under Section 10A of the I.T. The conclusion arrived at by the Assessing Officer for the Assessment Years 2005-2006, 2006-2007 and 2007-2008, when examined from the point of view of the Circular would strengthen the case of upholding deduction under Section 10A of the I.T. Act and would indicate that the resort to a review by recourse to Section 148 of the I.T. Act in the guise of reassessment would be a futile exercise.

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• 2023 (12) TMI 1134
  Reopening of assessment u/s 147 - constitutional validity of Section 115BBE questioned - HELD THAT:- It is settled law that Statutory Acts and their provisions are not to be declared unconstitutional on the fanciful theory that power would be exercised in an unrealistic fashion or in a vacuum or on the ground that there is an apprehension of misuse of Statutory Provision or possibility of abuse of power. It must be presumed, unless the contrary is proved, that administration and application of a particular law would be done not with an evil eye and unequal hand . Consequently, at this stage, Section 115BBE of the Act cannot be held unconstitutional on the ground that there is an apprehension of misuse of the said provision. Further, it is settled law that the Act provides a complete machinery for assessment/re-assessment of tax and the assessee is not permitted to abandon that machinery to invoke jurisdiction of the High Court under Article 226 of the Constitution [See Commissioner of Income Tax Ors. vs. Chhabil Dass Agarwal,[ 2013 (8) TMI 458 - SUPREME COURT] . Consequently, the present writ petitions and pending applications are dismissed.

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• 2023 (12) TMI 1133
  TP Adjustment - comparable selection - HELD THAT:- Rejection of comparables as functional dissimilar as covered against the appellant/revenue by the decision rendered by this Court in the matter of Principal Commissioner of Income Tax vs. ST Microelectronics Private Limited [ 2017 (11) TMI 266 - DELHI HIGH COURT ] Nature of expenses - purchasing software licenses - revenue or capital expenditure - HELD THAT:- There is no dispute that the respondent/assessee had purchased licensed software, of which, it did not have ownership or title. It is also not in dispute that the license had a duration that did not exceed one (1) year. Assessee s stand that the licensed software was used for business operations was also not disputed by the appellant/revenue. That said, the test employed by the AO and the DRP, that is enduring benefit is not, in our view, a conclusive test to determine the nature of the expense [See Empire Jute Company Limited vs. Commissioner of Income Tax 1980 (5) TMI 1 - SUPREME COURT ]. The ratio of the judgment rendered in the Asahi India Safety Glass Ltd. [ 2011 (11) TMI 2 - DELHI HIGH COURT ] as held that the expenditure which is incurred, which enables the profit-making structure to work more efficiently leaving the source of the profit-making structure untouched, would in our view be an expense in the nature of revenue expenditure. Fine tuning business operations to enable the management to run its business effectively, efficiently and profitably; leaving the fixed assets untouched would be an expenditure in the nature of revenue expenditure even though the advantage may last for an indefinite period. Test of enduring benefit or advantage would thus collapse in such like cases. It would in our view be only truer in cases which deal with technology and software application, which do not in any manner supplant the source of income or added to the fixed capital of the assessee In our view, would apply to the facts of this case, and therefore, no substantial question of law arises with regard to the said issue. Amount expended on training its employees - capital or revenue expenses - ITAT Ruled in favour of the respondent/assessee - HELD THAT:- In our view, qua this issue as well, the test employed, i.e., the advantage of enduring nature is not the correct one. Training accorded to employees, which may have a lasting impact, is not determinative of the fact that the expenditure should be treated as one incurred on the capital account. In determining the treatment to be given to expenses, it has to be seen whether the profit structure of the assessee is altered. It is well established that if the profit structure is left undisturbed, such an expense is to be treated as one incurred on the revenue account. The mere fact that employees' efficiency improves with learnings acquired through seminars, conferences, and other forms of training, cannot be the reason to treat such expenses as capital expenditure. As noted by the Tribunal, it is not as if the employees stay with the employer (in this case, the respondent/assessee) for all times to come. It is quite possible that the employees may shift to another employer.no substantial question of law arises.

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• 2023 (12) TMI 1132
  Exemption u/s 11 denied - sum offered for tax and Form No. 10 was filed during the reassessment proceedings as conditions provided in Section 11(2) of the Act, for accumulation of income, had not been fulfilled - as stated that due to an inadvertent error, the respondent/assessee had failed to show this in its original ROI - CIT(A) also held that the AO had not returned a finding that the conditions provided in Section 11(2) of the Act, for accumulation of income, had not been fulfilled - whether a revised Form No. 10 could have been filed by the respondent/assessee during the reassessment proceedings? - HELD THAT:- To claim the benefit of the provisions of sub-Section (2) of Section 11, the respondent/assessee had to file a statement in the prescribed form, i.e., Form No. 10. The Tribunal has noted that there is no adverse finding by the AO concerning the fulfillment of conditions subject to which the accumulation of income was allowed under Section 11(2). Insofar as the issue concerning the timing of the filing of Form No. 10 is concerned, i.e., in the course of reassessment proceedings, this stands covered by a decision of a coordinate Bench of this court rendered in Association of Corporation Apex Societies of Handlooms case [ 2013 (1) TMI 317 - DELHI HIGH COURT] Clearly, the respondent/assessee is not precluded from filing a revised Form No. 10 during reassessment proceedings. The record also shows that the appellant/revenue had carried the judgment rendered in Association of Corporation Apex Societies of Handlooms in appeal to the Supreme Court. The appeal preferred by the appellant/revenue, i.e., Civil Appeal 2020 (1) TMI 1664 - SUPREME COURT] was dismissed as withdrawn, on account of low tax effect. Given this position, according to us, no substantial question of law arises for our consideration.

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• 2023 (12) TMI 1131
  Validity of reopening of assessment - denial of natural justice - order passed on last date for exercising power of reassessment without supplying the reasons pursuant to notice u/s 148 despite request by the petitioner to furnish reasons for reopening - HELD THAT:- Division Bench of this Court in SHRI JANAK SHANTILAL MEHTA [ 2020 (12) TMI 991 - MADRAS HIGH COURT] wherein while examining as to whether failure to furnish the reasons for reopening on a request made would vitiate the assessment proceedings, it was held that it was mandatory for the Assessing Authority to furnish reasons and if the Assessing Authority fails to do so, the re-assessment proceedings is liable to be set aside. Further, after referring to the judgment of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] it was held that non-furnishing of reasons would cause serious prejudice and would vitiate the proceedings, resultantly the impugned proceeding was quashed The impugned order under Section 147 of the Act is made contrary to and in gross disregard/ non-compliance with the procedure laid down for reassessment by the Hon'ble Supreme Court inasmuch as the assessment order is passed without furnishing the reason for reassessment despite a specific request. The impugned order stands vitiated and is thus set aside. Decided in favour of assessee.

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• 2023 (12) TMI 1130
  Revision u/s 263 - Tribunal upheld the order passed by the Principal Commissioner of Income Tax, in directing the Assessing Officer to recompute the taxable capital gain u/s 54F and pass revised assessment order, after providing opportunity to the assessee - as submitted on the side of the appellant / assessee that the appeal filed against the order of assessment passed by the Assessing Officer is pending adjudication before the appellate authority - HELD THAT:- This court is of the view that the parties need not agitate the factual matrix in this appeal and it would be appropriate to raise all the grounds raised herein before the appellate authority, with whom the appeal is pending, in order to avoid multiplicity of proceedings. Substantial questions of law involved herein are left open to be decided by the appellate authority with whom the appeal against the assessment order passed under section 144 is pending. Accordingly, the appellate authority shall consider the same along with the grounds raised in the appeal and pass appropriate orders, on merits and in accordance with law, after providing due opportunity of personal hearing to the appellant / assessee, without being influenced by any of the observations made by the Tribunal, within a period of twelve (12) weeks from the date of receipt of a copy of this judgment. The appellant / assessee is at liberty to raise all the grounds before the appellate authority with supportive materials, at the time of personal hearing.

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• 2023 (12) TMI 1129
  Reopening of assessment u/s 147 - petitioner has failed to support documentary evidence regarding the purchase of immovable property and the post office deposit - HELD THAT:- Petitioner is categorical that he has not participated in any sale transaction or availed the benefit of the deposit with the Post Office in the subject assessment year to be served with notice under Section 148A[b] of the IT Act. Secondly , the petitioner asserts that because of his peculiar circumstances he had no knowledge of the notice and as such, he has not filed any response to the notice issued u/s148A[b]. Thirdly , when a show cause notice under Section 142[1] of the IT Act is issued, the petitioner has responded asking for details and an opportunity of hearing. This Court must further observe that the necessary details will be provided when notice under Section 148A[b] of the IT Act is issued, but the notice under Section 148A[b] of the IT Act in the present case does not contain all the necessary details, and it could be that such information could not be sought for at the stage of Section 144B of the IT Act but an opportunity of hearing is contemplated at this stage under these provisions. The petitioner has not received the notice under Section 148A[b] of the IT Act and an opportunity of personal hearing is not extended before the impugned assessment order, and therefore, this Court must opine that there is a definite lack of opportunity and failure to comply with the requirements of putting the assessee on notice for reasons to commence proceedings under Section 148 of the IT Act. As such, there must be interference quashing the assessment order dated 13.03.2023 and the adjudication order dated 28.03.2022 u/s 148A[d] and restoring the proceedings to the stage where the petitioner could show cause against adjudication under Section 148A[d] - Further, the second respondent must be called upon to furnish to the petitioner information such as the details of the sale deed and the deposits with the postal department upon receipt of a certified copy of this order with due opportunity to the petitioner to file a response. The petition is allowed in part. The impugned assessment order and the consequential computation, demand and penalty notices are quashed. The adjudication order under Section 148A[d] of the IT Act is also quashed and the proceedings restored for reconsideration.The second respondent shall furnish the reasons recorded for initiation of proceedings under Section 148 of the IT Act before proceeding further consequent to this order.

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• 2023 (12) TMI 1128
  Scope of limited scrutiny - Addition u/s. 69A - Addition towards Interest paid to Bank of Baroda - HELD THAT:- It is a fact that the assessee maintains a cash credit account with Bank of Baroda which is in the nature of current account. From the bank statement we observe that the opening balance as on 1/4/2017 is Rs. 9,67,51,144.25 and the closing balance as on 31/3/2018 is Rs. 8,28,19,048.25. It is also noticed that the amount debited for Rs. 4,52,58,180/- on 29/12/2017 and even after such debit, the balance is within the limits which indicates that the assessee has serviced the interest portion. It is also seen from the paper book submissions of the Ld. AR that the bank has issued a Certificate dated 27/5/2022 regarding the receipt of interest from the CC Account. In view of the above facts of the case, we have no hesitation to delete the addition made by the Ld. Revenue Authorities u/s. 43B of the Act. We therefore allow this ground raised by the assessee. Limited scrutiny proceedings for examining business loss - In case, if the Ld. AO wants to take up the case for complete scrutiny, first the Ld. AO has to convert the limited scrutiny into complete scrutiny case and then he may take up the case for complete scrutiny with the prior approval of the Ld. Pr. CIT / CIT concerned after being satisfied about the issue of converting it into a complete scrutiny. In the instant case, we find that no such approval has been granted to the Ld. AO. We therefore find that the Ld. AO has travelled beyond his jurisdiction in treating the cash deposits u/s. 69A of the Act which is not valid in law and therefore we are inclined to delete the addition made by the Ld. Revenue Authorities and allow the ground raised by the assessee.

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• 2023 (12) TMI 1127
  Treatment of advance received in respect of sale of agricultural land jointly executed with co-owner - Treating partial advance received against agreement to sell of an ancestral joint agricultural land as sale consideration - Whether no transfer of possession of land in the year under consideration? - only argument of the assessee is that the land in question was only advance and it could not be treated as sale consideration and since no possession of land was given, therefore, there was no transfer - HELD THAT:- AO did not discard completely the contention regarding source of deposit being advance/sale consideration. However, he made addition on the basis that no capital gain was offered by the assessee. We find merit into the contention of learned counsel for the assessee that the amount was merely advance payment and the transfer was completed in the year 2020. Our attention was drawn towards sale deed and settlement agreement executed. As per these documents the possession was handed over on 15.02.2020. Therefore, hereby direct the AO to delete the impugned addition. The AO would be at liberty for taxing the capital gain arising out of sale of capital asset in the relevant year in accordance with law, Grounds of appeal are allowed.

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• 2023 (12) TMI 1126
  Estimation of income - unaccounted purchases - grievance of the Revenue is that since the assessee has not properly explained the sources for the cash purchases the decision of the Ld. AO by making an addition u/s. 69A of the Act treating it as unexplained cash holds good and therefore the same may be sustained - HELD THAT:- We are of the opinion that the entire unaccounted purchases cannot be treated as income of the assessee and only the profit element should be considered as income for the purpose of computing the tax on sales. Hence, we are inclined to allow 8% on the sales made by the assessee as income of the assessee. Accordingly, the Ld. AO is directed to work out the income of the assessee and tax the same in accordance with law.

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• 2023 (12) TMI 1125
  Penalty u/s. 270A - under reporting of income by not reducing the insurance claim received by the assessee from the block of assets which has in fact resulted in excess claim of depreciation - assessee in the present case has stated that it was not in an advantageous position to claim higher depreciation as it was adverse for the assessee in subsequent years and that there was no question of reducing the tax liability where the assessee s return of income declared a huge loss during the year under consideration - CIT(A) deleted penalty levy - HELD THAT:- CIT(A) had relied on the decision of Reliance Petro Products Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] where it has held that furnishing inaccurate claim of expenditure would not amount to giving inaccurate particulars of such income. Assessee has relied on various other decisions which have reiterated the proposition that the claim of higher depreciation would not amount to concealment of income. It is also observed that the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Somany Evergreen Knits Ltd. [ 2013 (4) TMI 154 - BOMBAY HIGH COURT] has held that excess claim of depreciation was a bona fide mistake on the part of the assessee which attracts no levy of penalty. By respectfully following the above said decision, we deem it fit to hold that there is no infirmity in the order of the ld. CIT(A) in deleting the penalty levied by the ld. A.O. Decided in favour of assessee.

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• 2023 (12) TMI 1124
  Assessment against deceased/non existent assessee - Whether any proceedings which could have been taken against the deceased if he had survived may be taken against the legal representative in terms of section 159(2)(b)? - HELD THAT:- As seen that the AO despite having knowledge of the deceased assessee, except mentioning in the show cause notice, the name of the Legal Heir has not incorporated the deceased assessee either in the Assessment Order or in the subsequent demand notice or show cause notice for imposing/ proposing to impose penalty u/s 271AAC(1) of the Act. In the decision of Hon ble Punjab And Haryana High Court in the case of Swaran Kanta [ 1988 (11) TMI 91 - PUNJAB AND HARYANA HIGH COURT ] AO therein has acknowledged the Legal Heir of the deceased assessee and, therefore High Court has held that the title of the Assessment Order which was not correctly worded would not make the Assessment Order invalid as was sought to be declared by the Revenue Authorities and the Tribunal was fully justified in restoring the order of assessment in exercising power under Section 292B of the Act. But in the present case, the Assessing Officer, despite having knowledge, has not recognised the Legal Heir while passing the final order as well as the subsequent demand order/notice and notices relied to imposing of penalty. From the perusal of records, it can be seen that the AO has passed the Assessment Order in the name of deceased person which is non-existent person and when the order passed on the non-existent person despite represented by the Legal Heir, the same cannot be curable under Section 292B. AO has consciously chose the name of the deceased assessee. In the eyes of law, if the assessee is deceased and Assessing Officer is very well aware about the same, then order has to be passed in the name of the Legal Heir of the deceased assessee. But the AO chose otherwise and, therefore, this defect is not curable as later on notices for demand as well as for imposing of penalty was issued in the name of the deceased assessee and thus the Assessment Order itself becomes void-ab-initio. CIT(A) has taken proper cognisance of the same and allowed the plea of the assessee and held the Assessment Order invalid. Appeal filed by the Revenue is dismissed.

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• 2023 (12) TMI 1123
  Allowability of Employee Stock Option Plan [ESOP] expenses - allowable revenue expenses or not? - AO who was of the firm belief that there is no specific section under which ESOP expenditure is allowable under the Income tax Act, 1961 and the only section under which the said claim can be made is section 37, but even u/s 37 of the Act, claim of ESOP expenses cannot be allowed and added the same - HELD THAT:- It is the say of assessee that now this issue is no more res integra as the same has been decided in the case of Lemon Tree Hotels [ 2015 (11) TMI 404 - DELHI HIGH COURT] similar question was answered in favour of the Assessee by holding that the cost of ESOP could be debited to the profit and loss account of the Assessee. This Court has also in its decision in Oswal Agro Mills Ltd.[ 2015 (11) TMI 301 - DELHI HIGH COURT] held that the expenditure incurred in connection with issue of debentures or obtaining loan should be considered as revenue expenditure. Decided in favour of assessee. Disallowance u/s 40a(ia) - non deduction of TDS on reimbursement of circuit expenses - During the course of scrutiny assessment proceedings, AO noticed that the assessee has reimbursed to Ameriprise Financial Services Inc [AFSI] on behalf of the assessee but assessee has not deducted - HELD THAT:- As considered the invoice and find that though the AT T has raised invoice on AFSI, but it is for the service provided to the assessee at Gurgaon. The said notice for an amount and AFSI has raised the invoice of the same amount on the assessee and this amount has been reimbursed to the assessee. Thus we are convinced that the amount reimbursed by the assessee is towards circuit expenses to which provisions of section 40a(ia) do not apply. We, therefore, decline to interfere with the findings of the ld. CIT(A). Ground No. 2 is also dismissed. Addition of employees contribution to the Provident Fund deposited beyond the due date - HELD THAT:- This issue is now well settled in favour of the Revenue and against the assessee in the case of Checkmate Services [ 2022 (10) TMI 617 - SUPREME COURT] Disallowance u/s 14A - as been strongly contended that during the year under consideration, the assessee did not earn exempt income. Therefore, no disallowance is called for u/s 14A - HELD THAT:- We are of the considered view that if no exempt income is earned by the assessee, no disallowance can be made u/s 14A r.w.r 8D of the Rules as held in the case of Cheminvest Ltd [ 2009 (8) TMI 126 - ITAT DELHI-B] affirmed in CORRTECH ENERGY PVT. LTD. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT]

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• 2023 (12) TMI 1122
  Income taxable in India - interconnectivity utility charges (IUC) received by the assessee as Royalty / FTS in India - HELD THAT:- On perusal of the agreement between the assessee and the end users, it is noted that the installation and operation of sophisticated equipments are with the view to earn income by allowing the users to avail the benefits of such equipments or facility and does not tantamount to granting the use or the right to use the equipment or process so as to be considered as royalty within the definition of royalty as contained in clause 3 of Article 13 of India-France DTAA. We note that the issue has now been settled pursuant to the decision of in a group of cases between M/s. Vodafone Idea Ltd. (Formerly known as M/s. Vodafone Mobile Services Ltd. vs. DDIT(IT) Ors. [ 2023 (7) TMI 1164 - KARNATAKA HIGH COURT] In case of Vodafone Idea Ltd [ 2023 (7) TMI 1164 - KARNATAKA HIGH COURT] also observed that the equipments and submarine cables are situated overseas and that Vodafone Idea Ltd. had availed certain services from the non-resident telecom operators and that such agreements would not create a permanent establishment of such non-resident telecom operators in India. Thereafter Hon'ble High Court after verifying the facts of the case having regards to the decision of Hon'ble Supreme Court in case of Engineering Analysis Centre of Excellence (P.) Ltd [ 2021 (3) TMI 138 - SUPREME COURT] . We hold that payments received by assessee towards interconnectivity utility charges from Indian customers/end users cannot be considered as Royalty/FTS to be brought to tax in India under section 9(1)( vi )/( vii ) of the Act and also as per DTAA. We also note that in the present facts of the case, at no point of time, any possession or physical custody, control or management over any equipment is received by the end users/customers. It is also noted that the process involved in providing the services to the end users/customers is not secret but a standard commercial process followed by the industry players. Therefore the said process also cannot be classified as a secret process , as is required by the definition of royalty mentioned in clause 3 of Article 13 of India-France DTAA. The receipt of IUC charges cannot be taxed as Royalty under Article 13 in India of India-France DTAA. The payment received by the non-resident assessee amounts to be the business profits of the assessee which is taxable in the resident country and is not taxable in India under Article 5 of the DTAA as there is no case of permanent establishment of the assessee that has been made out by the revenue in India. Even Hon'ble High Court has in para 25, held that the non-resident service providers do not have any presence in India. Appeal filed by the revenue stands dismissed.

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• 2023 (12) TMI 1121
  Assessment order passed on an non- existent entity - status of assessee - Pvt Ltd. Company or LLP - appellant company has been converted from the existing private limited company into a Limited Liability Partnership ('LLP') in accordance with the provisions of Limited Liability Partnership Act - say of the ld. DR that the facts of the present case is neither of amalgamation nor of merger/demerger, but a simple case of change in the status of the assessee from a private limited company to a limited liability partnership, therefore, assessment cannot be quashed as the status of the assessee continued for the year under consideration. HELD THAT:- The undisputed fact is that the status of the assessee changed from private limited company to a limited liability partnership on 22.04.2019. It is also not in dispute that immediately the assessee informed not only the jurisdictional Assessing Officer but also the PCIT. Also undisputed fact that subsequent to the change of status, all the notices were replied by the assessee in the name of LLP. Therefore, it can be stated that the change of status was brought to the knowledge of the Assessing Officer in all possible ways. Yet, the Assessing Officer chose to frame the final assessment order in the name of a no-existent entity. The ratio laid down by the Hon'ble Supreme Court in the case of Maruti Suzuki Ltd [ 2019 (7) TMI 1449 - SUPREME COURT] squarely applies and has been rightly followed by the NFAC. In the case of Mahagun Realtors [ 2022 (4) TMI 347 - SUPREME COURT] , no intimation about merger was brought to the notice of the Assessing Officer and the return filed after amalgamation was still in the name of the amalgamated company and fact of amalgamation was not disclosed in the business/organization column and the assessment order indicated the name of both the amalgamation and the amalgamating company and during the assessment proceedings, the assessee made the Assessing Officer believe that the amalgamating company was still in existence. All these facts before the Hon'ble Supreme Court are in favour of the assessee which facts are completely absent in the case in hand. Therefore, we do not find any reason to interfere with the findings of the ld. CIT(A).

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• 2023 (12) TMI 1120
  Income taxable in India - existence of dependent agent PE - amount received by the assessee from supply of software and automated services - HELD THAT:- The issue in question in AY 2017-18, the Co-ordinate Bench of the Tribunal in assessee own case [ 2023 (1) TMI 14 - ITAT DELHI] as held we find that the issue of attribution to profit when the transaction has been found to at Arm's Length between foreign party and the Indian AE, then no further attribution is required has already been decided by the decision of the Hon'ble Supreme Court in the case of DIT v. Morgan Stanley Co. Inc [ 2007 (7) TMI 201 - SUPREME COURT] As it follows that the finding of PE is also without cogent basis. Be that as it may issue of PE becomes academic and we are not engaging further into it. We have already found that functions performed by Adobe India are actually not different than the agreement and transfer pricing documentation. There is no gainsaying that factually the issue stands on identical footing in relation to preceding assessment years, as, both the Assessing Officer and learned DRP have decided the issue following their earlier decisions. That being the case, respectfully following the decision of the coordinate Bench, as referred to above, we hold that the amount received by the assessee from supply of software and automated services, are not taxable in India. The Assessing Officer is directed to delete the additions. Levying tax on interest on the income-tax refund received by the Appellant during the year under consideration - India-Ireland Double Taxation Avoidance Agreement - Revenue has not brought to our notice any binding precedent on this issue. Therefore, the Assessing Officer is directed to tax the interest @10% as prescribed in the Indo-Ireland Tax Treaty. Credit of TDS whilst computing the tax liability of the Appellant for the year under consideration - We hereby direct the Assessing Officer verify the claim and grant the credit of taxes deducted at source in accordance with law. Levying interest u/s 234A whilst computing the tax liability of the Appellate for the year under consideration - When the return of the income has been held to be validly filed then all consequent action related to levy of interest u/s. 234A would follow as prescribed under the law. We therefore direct the AO to verify and levy the interest u/s. 234A as per the provisions of the Act as if it is a valid return. This ground of the assessee appeal is allowed in terms indicate above.

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• 2023 (12) TMI 1119
  Disallowance u/s 14A - if there are funds available with the assessee as a common pool of interest free and interest bearing funds, the assessee cannot be granted the benefit of the presumption - HELD THAT:- We find that on the issue of applicability of Section 14A of the Act, the co-ordinate Bench had decided the issue that when the assessee is holding investment as stock-in-trade, no disallowance under Section 14A of the Act can be made. The co-ordinate Bench decided the issue for A.Y. 2012-13, relying on the decision of PCIT Vs. Punjab National Bank [ 2022 (6) TMI 85 - DELHI HIGH COURT] where in it has been held that where the assessee bank is holding investment as stock-in-trade no disallowance under Section 14A of the Act can be made. Decided in favour of assessee. Refund adjusted first against the interest payment and then on taxes - HELD THAT:- This issue has been decided by the learned CIT (A) in favour of the assessee by relying upon several judicial precedents of the co-ordinate Benches. No contrary decision was produced before us. Therefore, we uphold the order of the CIT (A).when the refund is due to the assessee, the amount refunded has to be adjusted towards interest payment to assessee first and the balance any shall be adjusted towards tax - Decided in favour of assessee.

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• 2023 (12) TMI 1118
  Excess depreciation claimed on crawler cranes - depreciation @ 30% OR 15% - assessee company is engaged in the business of material handling and erection of heavy equipment on contract basis and providing equipment on hire during the year under consideration - whether the cranes are to be considered as 'Motor lorries' and be allowed depreciation @ 30% or be treated as machinery and allowed depreciation @ 15%? - HELD THAT:- As relying on Gujco Carriers vs. CIT [ 2002 (2) TMI 48 - GUJARAT HIGH COURT] assessee can claim higher depreciation on cranes @ 30%, therefore, we do not find any infirmity in the conclusion reached by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.

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• 2023 (12) TMI 1117
  Scope of limited scrutiny - mandation of recording satisfaction before extending/expanding scope of scrutiny - case of the Assessee was selected for limited scrutiny for the purpose of verifying Large interest expenses relatable to exempt income (u/s 14A) and High interest expense as compared to business turnover, but the additions have been made other than the reasons for which the limited scrutiny has been selected for, which is not only illegal, arbitrary but also contrary to the circulars of the CBDT - HELD THAT:- As found that the AO travelled beyond the issues involved in the limited scrutiny and made enquiries and the additions u/s 68 on account of unsecured loan, on account of unaccounted expenditure and further made addition on account of interest expenses. We find it handy to refer the instructions of CBDT issued in respect of examination of issue other than the reasons taken up in limited scrutiny case. Assessment order passed by the Assessing Officer disregarding the instructions of the CBDT are liable to the set aside and no substantial of law arises. CBS International Projects Pvt. Ltd. [ 2019 (2) TMI 1748 - ITAT DELHI] and Best Plastics Pvt. Ltd. [ 2006 (4) TMI 53 - HIGH COURT, DELHI] Considering CBDT Circular and the Judicial Precedents, we hold that the Assessing Officer can widen the scope of scrutiny even the case is selected for limited scrutiny under CASS, however, the condition precedent for such widening of the scope is that the Assessing Officer has to seek prior approval of the authorities mentioned. Such prior approval and the permission of the PCIT is lacking in the instant case. There was no satisfaction about the merits of the issue which necessitated complete scrutiny in the instant case. Hence, the Assessment framed by the Assessing Officer on the issues which are not inconsonance of the instruction of CBDT are liable to be quashed. The additions made by the Assessing Officer being beyond the scope of the limited scrutiny and the same is deleted. Decided in favour of assessee.

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• 2023 (12) TMI 1116
  Addition u/s 68 - receipt was not declared in the ROI and the receipt remain unexplained - taxation of additional income u/s 115BBE - additional income disclosed during the course of Survey in the revised return - Counsel stated that assessee did not have any other source of income other than the income which is generated from the hospital owned by the assessee company - HELD THAT:- In spite of offering this additional income found undisclosed during the course of Survey, the assessee returned loss in both the revised returns only because of claim of deduction u/s 35AD of the Act. Thus, if the assessee has already offered the additional income disclosed during the course of Survey in the revised return filed, there was no reason to add the same again in the assessment. AO has brought it to tax u/s 68 r.w.s 115BBE of the Act. During the course of Survey in the hospital premises, unaccounted receipts of the hospital in the name of certain doctors were found. As the receipts in question are relating to the business operations of the assessee's hospital. Therefore, such income should be brought to tax as the business income u/s 28 of the Act. Therefore, we note that additional income earned in the course of business ought to be taxed as regular income and not u/s 68. CIT(A) has rightly noted that the assessee is in the business of running of the hospital. During the course of survey u/s 133A of the Act, some loose papers were found showing unaccounted hospital receipts. Since the hospital receipts are part of the business receipts, therefore CIT(A) held that the provisions of section 68 cannot be made applicable, in view of the decision of Shilpa Dying Printing Mills Pvt. Ltd [ 2015 (7) TMI 691 - GUJARAT HIGH COURT] . Section 68 of the Act can be invoked only if no explanation is offered by the assessee about the nature and source of income / receipts and such explanation is not found to be satisfactory in the opinion of the AO. However, in the instant case, the loose papers found during the course of Survey and the statements of the directors recorded during the course of Survey showed that the undisclosed receipts were pertaining to the undisclosed income of the hospital ran by the assessee- company. CIT(A) held that the undisclosed hospital receipts found during the course of Survey need to be taxed as income from business and are to be brought to tax as per the normal provisions of the Act. The said income is already offered in the revised return, therefore has to be taxed as income from business, and therefore the provisions of section 115BBE of the Act are not applicable with reference to the said income. Based on above reasoning, the ld CIT(A) deleted the addition made by the assessing officer - We have gone through the above findings of ld CIT(A) and noted that there is no infirmity in the order of ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal Nos.1 and 2 of the Revenue are dismissed. Disallowance of deduction of capital expenditure u/s 35AD - We note that during the course of Appellate Proceedings, the assessee submitted all the details of capital expenditure. As the capital expenditure details were not furnished before the assessing officer, the details furnished during Appellate Proceedings were in the nature of additional evidence under Rule 46A and hence, were forwarded by CIT(A) to the assessing officer for verification and remand report. The assessing officer vide letter dated 05.09.2018 has submitted the remand report wherein he has stated that the assessee has only 92 beds as against 100 beds as required for eligibility u/s 35AD of the Act. The assessee submitted a rejoinder dated 10.10.2022 before ld CIT(A). In the said rejoinder, the assessee has stated that the Inspector from the assessing officer's office who visited the hospital has not counted the second beds in the twin sharing rooms under the presumption that the second bed is for the patient's attendant. The assessee has also submitted before ld CIT(A), the photographs of the twin sharing rooms with bed numbers in support of his claim. It was further submitted sharing rooms the attendants are provided small sofas and not the beds. The assessing officer during remand proceedings has recorded the statement of Mr. Kirit N Panchal, from Yogesh Surgicals, the firm which has supplied the beds and other equipments to the assessee's hospital. In the said statement, Mr. Kirit Panchal has stated that he has supplied 64 semifaller beds and 36 ICU beds and 3 hydraulic emergency trolley beds. Thus, the supplier has also confirmed that he has supplied more than 100 beds to the assessee hospital which fulfills the eligibility that the assessee has more than 100 beds to claim deduction u/s 35AD of the Act. All these beds and other capital goods to the tune of Rs. 3,16,29,353/- were purchased by the assessee before the date of commencement of the hospital and hence, was found to be eligible for deduction u/s 35AD of the Act. Whether the claim of deduction u/s 35AD of the Act, which is not made in the original return can be made in the revised return filed ? - In the assessee's case, as the assessee has filed the original return in time as per the provisions of section 139(1) of the Act, the revised return filed as per the provisions of section 139(5) of the Act, claiming the deduction u/s 35AD of the Act for the first time needs to be allowed to the assessee. Therefore, the deduction u/s 35AD being 150% of the capital expenditure incurred before the commencement of business has to be allowed to the assessee. Therefore, ld CIT(A) has allowed the deduction u/s 35AD of the Act. No valid reason to interfere with the decision and findings of the Ld.CIT(A), hence we dismiss ground Nos. 3 to 8 raised by the Revenue.

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• 2023 (12) TMI 1115
  Unaccounted interest receipts - Survey action u/s 133A of the Act was carried out in the premises of one Vatika Group/ third party - AO on the basis of the seized documents, it emerged that the assessee company alongwith the other group entities had actually entered into the loan agreements with the entities of Vatika Group, whereas such transactions were otherwise camouflaged as transactions of sale and purchase of properties - CIT(A) deleted addition - HELD THAT:- Evidences relied upon by the AO could not be considered to indicate that the property transactions between the Vatika group and the assessee were actually loan transactions. Thus, the Tribunal has upheld the action of the CIT(A) in deleting the addition made by the Assessing Authority on account of interest income as being misplaced. In view of the similarity of the case set up by the AO in the present case viz-a-viz that in the case of M/s SEH Realtors Pvt. Ltd, following the decision of our Coordinate Bench [ 2023 (4) TMI 1276 - ITAT DELHI] we hereby affirm the findings of the CIT(A) on the issue in dispute and accordingly the Appeal of the Revenue for Assessment Year 2006-07 is hereby dismissed. Assessment u/s 153A - disallowance u/s. 14A - CIT(A) deleted addition as observed that there is no incriminating material unearthed during the search, on the basis of which, the said disallowance has been made by the AO - HELD THAT:- In our view, in the absence of any material to dislodge the factual finding of the CIT(A) that the disallowance u/s. 14A is not based on any incriminating material found during search, the action of the CIT(A) in applying the ratio of the judgement of the Hon ble Delhi High Court in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] cannot be faulted. Moreover, the judgment in the case of Kabul Chawla (supra) has since been approved by the Hon ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] Accordingly, the order of the CIT(A) on this issue is also affirmed, and the Ground No. 5 raised by the Revenue in AY 2011-12 is also dismissed.

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• Customs

• 2023 (12) TMI 1114
  Depriving duty credit under RoDTEP on exports - exports fall under the restricted category or not - prior period i.e. 01.01.2021 to 31.05.2022 - subsequent period i.e. 01.06.2022 to 13.12.2022 - HELD THAT:- Having considered the facts of the case which are identical to the case of M/s. Shree Renuka Sugars Ltd. [ 2023 (4) TMI 789 - GUJARAT HIGH COURT] , it is opined that the respondents could not have denied the benefit of rebate under the RoDTEP scheme to the petitioners, more particularly, when the petitioners have exported product after fulfilling the conditions as prescribed by the Directorate of Sugar as well as the Notifications issued by the Central Government from time to time. The Coordinate Bench of this Court has also passed the order permitting rebate to the petitioner of the said case. As per the Government circular dated 5th November 2022, the schedule quantity of sugar for export in Sugar Season for 2022-23 was also issued with various conditions, whereby the quantity for export of sugar to various mills was also quantified - By Notification dated 21st October 2022, the Government has also issued export release order for sugar from Somalia. In view of the Notifications issued by the Government from time to time permitting export of sugar, the basic objective of the RoDTEP scheme is to grant benefit of rebate to the exporter as an incentive or exporting product. The respondents are directed to grant benefit of rebate under the RoDTEP scheme to the petitioners who have exported sugar with specific permission under the specific condition prescribed by the Directorate of Sugar as per Notification No. 19/2015-20 dated 17th August 2021 and Clause 3 of paragraph 2 of the Notification No. 76/2021-Customs (N.T.) dated 23rd September 2021 - petition allowed.

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• 2023 (12) TMI 1113
  Clearance of warehoused Goods - Seeking clearance to export the consignment of Crude Palmolein imported by the petitioner and warehoused for its own consumption - HELD THAT:- The question for consideration would be whether an importer of a warehoused consignment could, pending investigation as regards the previous imports and when the clearance is not issued under Section 68 of the Customs Act, have recourse to the right to export as contemplated under Section 69 of the Customs Act without paying import duty, and the concerned must examine this question simultaneously with the question whether the petitioner, even if it does not derive any profit from export of the warehoused consignment, would be liable to pay import duty, and conversely, whether the Revenue would be entitled to recover import duty. These aspects will have to be considered recording reasons for the conclusion to enable complete adjudication. In view of the exigent circumstance viz. that the consignment is a perishable commodity with a shelf life which expires on 21.12.2023 and the petitioner proposes to export the consignment within this time filing shipping bills and other documents to demonstrate that it cannot receive a price which is more than the price at which the consignment is imported, the proper officer must consider these questions and take a decision within a reasonable time, and this Court must observe that if the petitioner is permitted to export upon furnishing a Bank Guarantee, and the Bank Guarantee is so furnished, the same will be subject to the final decision on the questions as aforesaid. The petition is disposed of with liberty to the petitioner to file a request to export the warehoused consignment of Crude Palmolein imported and warehoused under Section 69 of the Customs Act with the shipping bills and such other documents to demonstrate the price that it will receive on export of crude Palmolein.

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• 2023 (12) TMI 1112
  Classification of imported goods - T4 Fingerprint Time Attendance System and K200 Proximity Time Attendance System - to be classified under Customs Tariff Heading 8471 4190 or under 8543 7099? - crossing over the remand directions or not - HELD THAT:- The claim of the appellant that the authorities have gone beyond the remand directions is baseless in as much as from the orders it is seen that the authorities have limited themselves to the directions in deciding the classification. The Tribunal while remanding the case also observed that He will not be hindered in the exercise by our views on the issue appearing in the order . Therefore the authorities have only restricted themselves in analysing the impugned item as per its features to arrive at the correct classification. As noted by the Original Authority, the device captures the data from the employee s card or the data of the particular employee who key in the PIN into the device. The device does not do anything except for collecting the data at the time of entry or exit and this data is transmitted to a central server for further processing like marking the attendance, preparation of payroll or for other purposes. These facts are not in dispute. Based on the General Rules of Interpretation and the Chapter Notes, the item needs to be classified in the heading akin to it or where the specific description is provided. In this case, the data collection device imported by the appellant is nothing but a card reader working in conjunction with the server. Thus, this device functions as proximity readers/badge readers, which are specifically classified under Chapter Heading No.8543. Since the specific function of the imported item is to mark attendance or to take note of the persons of the employees for the purpose of attendance or payroll or leave, they cannot be classified under Chapter 84 as it excludes from this Chapter as per the Chapter Note 5(E). This Tribunal, recently, in the case of COMMISSIONER OF CUSTOMS, BANGALORE VERSUS M/S. KRONOS SYSTEMS INDIA PVT. LTD. [ 2023 (10) TMI 1006 - CESTAT BANGLORE] , in an identical issue held the product to be rightly classifiable under Chapter 8543. Thus, by following the decisions of this Bench, it is found that the product is rightly classifiable under Chapter 8543 - the impugned order is upheld and the appeal is dismissed.

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• PMLA

• 2023 (12) TMI 1111
  Validity of remand orders made by the learned trial Judge concerned - whether the arrest of the petitioners was terms of the relevant provisions embodied in Sections 17-A, 18(1), and, in Section 19(1) of the Prevention of Money Laundering Act, 2002? - HELD THAT:- It has but clearly emerged rather from the evident fact, qua the accused, thus respectively accompanying the officials of the E.D., on 27.10.2023, respectively in the seized car or in the car belonging to them. Therefore, the said manner of the accused accompanying the E.D. officials, does tantamount to theirs being then unlawfully restrained, and, as such, the accompanying of the accused in the said vehicles, thus on 27.10.2023 but also becomes the actual date of theirs being, thus arrested then. However, when on the said date the accused were not supplied with the grounds of arrest or the reasons to believe, that they have committed offences punishable under the Act of 2002. Consequently, thereby pervasive breach is caused to the mandatory provisions. The argument, if any, as addressed before this Court by the learned ASG concerned, that the said accompanying of the accused in the vehicles, was only in pursuance to summons, becoming issued upon them, for ensuring that thereby, they are interrogated at the E.D. headquarters located at Delhi, is but also liable to be rejected - The reasons for rejecting the above argument, but is again planked, upon the trite evident fact, that unless the accused had willingly accompanied the E.D. officials concerned, thus in their private vehicles or in the vehicle of their relatives, thereupon theirs in the above mode of theirs accompanying the E.D. officials to the E.D. headquarters, located at Delhi, would be construed to be theirs thereby then, thus becoming unlawfully restrained. The above argument, cannot become accepted by this Court, in view of the mandate recorded by the Hon ble Apex Court in case titled as V. Senthil Balaji V. State Represented by Deputy Dikrector and Others [ 2023 (8) TMI 410 - SUPREME COURT] , wherein, it has been expostulated, that when material, does emerge rather suggestive that the parameters laid thereins, relating to application of judicial mind by the learned trial Judge concerned, to the makings of the relevant statutory breaches but become infringed, thus in his making the impugned order of remand, as such, upon, the vice of non-application of mind rather emerging, thus planked, upon breach being caused to the mandate of Section 19 of the Act of 2002, thereby the orders of remand are illegal. This Court quashes the order of remand, and, in the exercise of writ jurisdiction, declares the arrest of the petitioners to be non-est and void. In consequence, after allowing the instant petitions, this Court quashes the impugned order of remand (Annexure P-1 in both petitions), and, orders that the petitioners be released from judicial custody, but subject to theirs furnishing personal, and, surety bonds in the sum of Rs. 5,00,000/- each, before the learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned, and, to his satisfaction, and, also subject to theirs not tampering with prosecution evidence, and, also theirs not influencing prosecution witnesses - Petition allowed.

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• Service Tax

• 2023 (12) TMI 1110
  Waiver of demand for service provided by the appellant as a sub-contractor for the period prior to the Board Circular No. 23/3/97-ST dated 13.10.1997 - Circular prescribes that when the Service Tax on the entire value was discharged by the main contractor the sub-contractor is not required to pay service tax - applicability of clarification via Circular No. 96/7/2007-ST dated 23.08.2007 - HELD THAT:- It is found that this case can be decided even without going into merit of the case that whether the service provided by the sub-contractor is liable to Service Tax or otherwise. It is found that including the case laws cited by the respondent this Tribunal taking consistent view that during the period prior to 2007 when the Circular No. 23/3/97-ST dated 13.10.1997 dated 23.08.2007, was in force which clarified that sub-contractor is not required to pay Service Tax when the main contractor has discharged the Service Tax. In this case this fact is not under dispute - on this similar fact this Tribunal has taken view that there is no mala fide on the part of the assessee. The demand for extended period was set aside - appeal of revenue dismissed.

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• 2023 (12) TMI 1109
  Levy of service tax - construction of complex service - construction of flats at Uttar Pradesh Awas Vikas Yojna - demand dropped by the Commissioner on the ground that they were constructed by the Government for their personal use and hence were exempted from service tax - HELD THAT:- The assessee did not pay service tax on the plea that there were not more than 12 dwelling units in one block constructed by them. According to the Revenue, block and complex are not one and the same. As per the letter issued by the UP Awas Vikas Yojna to the assessee there were five separate agreements for construction of 42 blocks comprising 504 residential units in total at different locations in Gonda District for providing accommodation to weaker sections. There was no specific exemption to the services rendered by the assessee and, therefore, the Commissioner should have confirmed the demand on the services under construction of complex service. Business of construction of civil structures either residential or commercial - demand dropped holding that the income declared to the income tax department has no co-relation with the service provided - HELD THAT:- The land in question was agricultural land. It was not converted into non-agricultural land. In some cases the agreements specifically provided that the site formation was meant for agricultural purposes. It, therefore, appears that the assessee had rendered these services on agricultural land for the real estate developers. The case of the assessee is that the intention of the client is irrelevant to taxability and as long as the service is rendered on agricultural land, it is non-taxable. On the other hand, according to the revenue, the demand on site formation service has been correctly confirmed in the impugned order because although the land was agricultural land during the relevant period, the nature of the contracts makes it abundantly clear that it was rendered to real estate developers for investment purpose which is undisputed. Whether the services rendered by the appellant are excluded as being provided in relation to agriculture? - HELD THAT:- Nothing in the records suggests that the service recipient builders were engaged in agriculture, although the land was during the relevant period was agricultural land. Evidently, the land was meant for developing into real estate although such development can take place only after the land was is got converted into non-agricultural land by the land revenue authorities. Unsurprisingly, the contracts do not mention that the site formation must be done by the appellant for non-agricultural purposes because non-agricultural activities could not have been taken up on the land before it was converted to non-agricultural land. Seeing the contracts as a whole, it is evident that the purpose of site formation was for the builder to develop it into real estate and it was not for agricultural purposes - the demand cannot be sustained and hence needs to be set aside. Dropping of service tax under three heads. Under commercial or a industrial construction service - demand was dropped on the construction of three buildings for Aligarh, Muslim University, hostels at IIT Roorkee and construction in respect of Tehri Hydro development corporation - HELD THAT:- Section 65 (25b) is very clear. Commercial or Industrial construction means the service which is rendered for construction, prepare alteration etc., of a building which is used or is to be used, occupied or is to be occupied or engaged or is to be engaged primarily in commerce and industry or works intended for commerce or industry . By no stretch of imagination can we call the amounts collected by the Aligarh Muslim University when the buildings are used for campus recruitment as commercial activity. Even if it is considered as a commercial activity, the building is not primarily for commerce or industry. Similarly universities, as a matter of course, provide consultancy services as a part of their extension programmes and do collect some consultancy fee when such services are provided. That does not make them organizations primarily engaged in commerce or industry nor can a building which is used for providing such consultancies be considered as a building primarily for commerce or industry. The contention of the Revenue that the hostels in IIT constructed by the assessee should be considered as buildings primarily for commerce or industry simply because some hostel fees is collected from students by the IITs. Similarly, Tehri Hydro Electric Development Corporation is national project meant for generating hydro electricity and supplying it - The buildings in hydro electric project cannot, therefore, also be considered as buildings primarily meant for commerce or industry - there are no error in the Commissioner s order dropping the demand with respect to the commerce or industrial construction service. Construction of complex service - demand to the extent the services were rendered to Uttar Pradesh Avas Vikas Yojna for construction of residential complexes for weaker sections dropped - HELD THAT:- If there are several buildings and each one fewer than 12 residential units and the total number of residential units in all the buildings together is more than 12, such complexes does not fall under section 65(91a). Therefore, no service tax can be levied on such complex - It is found that the Commissioner committed no error in dropping the demand on construction of complex services on the buildings which the appellant constructed for UP Avas Vikas Yojna. Demand of service tax on the declaration made to the income tax during survey operation - HELD THAT:- According to the Revenue, the Commissioner had erred in not appreciating the declaration by the Director of the appellant that the amount was collected from various investors for real estate projects to be launched. However, this statement was not considered is not correct as the balance sheet of the noticee for the relevant period revealed that they were into construction of business only and were not developers. Further, even if the statement of the Director is held to be correct, the amounts so collected would have been squarely covered as amounts collected for service to be provided under section 65 (105) of the Finance Act, 1994 - Several services were rendered by the appellant which were exempted from payment of service tax. If Revenue alleges the service tax has to be paid on this income received by the appellant, it has to establish that this income is earned by rendering a taxable service. Revenue has not done so, therefore, the demand was correctly dropped under this head by the Commissioner in the impugned order. Appeals disposed off.

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• 2023 (12) TMI 1108
  CENVAT Credit - input tax credit availed on common input services such as advertisement, banking and finance, courier service, manpower service, renting of immovable property service, security service, telecommunication service etc. for trading also - non-maintenance of separate accounts as contemplated under Rule 6 (2) - HELD THAT:- There is nothing to show that the department has verified as to whether the trading units have availed credit on input services. It is merely stated that the trading units have provided installation services for which they have collected service tax and paid to the Government and so is engaged in services also - such installation services are output services of the trading unit and not input services. Credit cannot be availed on the service tax paid on output services viz; installation charges. On perusal of records, in the invoices issued for sale of products, the trading unit while collecting service tax on installation charges has mentioned the service tax registration number of the service unit of the appellant. This might have created confusion to the department to assume that the trading unit has availed credit on input services. Merely because the appellant trading unit had mentioned the service tax registration number of the service unit while issuing invoices, the department has assumed that the appellant trading unit must be availing credit on input services also. The department has made a conclusion that the trading units are also to be considered as service units and the demand has been raised alleging that the appellant has availed credit in regard to activity of trading. It also requires to be mentioned that while quantifying the duty demand the turnover of the trading units has been applied against the total credit availed by the service units. Thus, the appellant has been required to pay 6% of the value calculated by such formula. The department has failed to establish the allegation in the SCN that credit on common input services have been availed in regard to trading - the demand raised being factually and technically incorrect cannot be sustained. The impugned order is set aside, the appeal is allowed.

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• Central Excise

• 2023 (12) TMI 1107
  Adjustment of excess amount deposited by the petitioner towards the amount demanded - SVLDR provide for adjustment or not - Circular No. 1074/07/2019-CX dated 12.12.2019 - HELD THAT:- The finding of the writ court is that SVLDR was introduced to provide amnesty and resolution of disputes by making mutual adjustment with regard to the disputed pre-deposit made by the petitioner. It is further held that merely because the assessee has to file a separate declaration for each period, in the absence of a specific bar or prohibition for consolidating or clubbing two cases and making mutual adjustment, it cannot be said that mutual adjustment in respect of the very same assessee in relation to same subject matter or commodity for the two different periods is impermissible. The petitioner has not claimed refund. Merely for the reason that SVLDR does not provide for adjustment, in view of circular issued by the department, adjustment is permitted. It is to be noted that declarant is always one person and the declarations are for different periods. So any money deposited by a declarant in respect of demand for one period can be adjusted in respect of demand for another period. There are no infirmity in the impugned order. Hence writ appeal is dismissed.

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• 2023 (12) TMI 1106
  Clandestine removal - Acoustic Enclosures - manufacture and clearance without payment of duty or the said goods were manufactured on job-work basis by other manufacturers and cleared to the customers directly - relevant period i.e. 01/04/2000 to 04/06/2002 - HELD THAT:- The Revenue could be able to establish that even though the appellant claimed to have manufactured the acoustic enclosures on job work basis from M/s. SBN Engineering Works and M/s. Steel Engineering works, in fact the same were manufactured in their premises during the relevant period and cleared without payment of duty. The claim of the evidence from the stage of procurement of raw-materials, receipt in the factory, manufacture using their labour force adduced by the Department in the demand notice and confirmed in the impugned order by learned Commissioner (Appeals), the owner shifts to the appellant to establish that the goods acoustic enclosures manufactured on job-work basis. It is found that the submissions advanced by the appellant are of general in nature and devoid of rebuttal of evidences brought on record indicating procurement of raw materials, processing of the same in the factory premises, stock of the glass wool etc. used in the manufacture of acoustic enclosures found in their factory, low conversion charges reflected in the invoice of job-worker etc. overwhelmingly indicate that the acoustic enclosures were manufactured and cleared without payment of duty from their factory. The appeal of the appellant is rejected and order of the Commissioner(Appeals) is upheld.

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• 2023 (12) TMI 1105
  Wrongful availment of SSI Exemption - use of brand name BASANT owned by another person - BASANT is the name inherited by both BMW and the appellant - whether the use of the brand name BASANT-KS by suffixing the letters KS (abbreviation for Kanwarjit Singh, Partner of the appellant firm) to the inherited name BASANT is entirely fortuitous and is not a case of use of brand name belonging to the other person? HELD THAT:- On an identical issue regarding the brand name BASANT this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE ST, LUDHIANA VERSUS M/S. BASANT PRESSES (INDIA) [ 2017 (6) TMI 805 - CESTAT CHANDIGARH] had held that the trademark BASANT was being used by BMW and the same even if used by M/s Basant Presses (India), they were still eligible for SSI exemption. The impugned order denying the benefit of SSI exemption is not sustainable in law - Appeal allowed.

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• 2023 (12) TMI 1104
  Valuation - includability of the sales tax concession retained by the Appellant in the assessable value for the purpose of levy of Central Excise duty - extended period of limitation - penalty - HELD THAT:- The issue is no more res integra as the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [ 2014 (3) TMI 42 - SUPREME COURT] , has held that the sales tax concession retained by the assesses is required to be added in the assessable value for the purpose of levy of Central Excise duty. By relying on the above decision of the Hon ble Supreme Court, it is held that the sales tax concession retained by the Appellant is required to be added in the assessable value for the purpose of levy of Central Excise duty - the demand for the normal period is to be computed by taking the amount collected as cum-duty. Extended period of limitation - penalty - HELD THAT:- It is observed that there were decisions of the Tribunals that the sales tax concession retained by the assesses is not required to be added in the assessable value for the purpose of levy of Central Excise duty. Thus, the appellant cannot be faulted for not including the same in the assessable value. In the impugned order, the adjudicating authority while agreeing that extended period not invocable in this case, imposed penalty equal to the duty confirmed under Section 11AC of the CEA, 1944 - the adjudicating authority has not given any proper finding for imposing penalty under Section 11AC. Accordingly, the penalty imposed under Section 11AC not tenable - Further, Board has issued Circular No. 1063/2/2018- CX dated 16.02.2018, clarifying acceptance of some of the orders passed by the Hon ble Supreme Court, High Courts etc, wherein no review petition has been filed - In the said clarification, the order passes by the Hon ble Supreme Court in the case of Super Synotex has also been included and it has been categorically stated that extended period not invocable in such cases. In the present case, we observe that the Adjudicating Authority has failed to show any positive act of suppression on the part of the Appellant. The details of VAT collected and retained by the Appellant are reflected in the audited Profit Loss account and balance sheet of the impugned periods. Accordingly, by following the above Circular issued by the Board, the extended period not invocable in this case and for the same reason penalty under Section 11AC of the CEA, 1944 also not imposable. Appeal allowed in part.

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• 2023 (12) TMI 1103
  Exemption under N/N. 67/95-CE - Clearances of acetylene gas for captive consumption - benefit denied merely on the ground that the acetylene gas is not used in the repair and maintenance of machinery directly, rather the same is being used via intermediate products - HELD THAT:- Notification 67/95 exempts from payment of duty all goods specified therein manufactured in a factory and used within the factory of production in or in relation to manufacture of final products. The scope of this notification is wide enough to cover the acetylene gas manufactured by the Appellant and used in the traffic department for repair and maintenance of railway track, wagons etc., and the acetylene gas used in 30 shops/departments for repair and maintenance of machineries. The issue of whether railway tracks used in the plant form a part of manufacture is no longer res-integra since the Hon ble Supreme Court in the case of Jayaswal Neco Limited v. Commissioner of Central Excise, Raipur [ 2015 (4) TMI 569 - SUPREME COURT ] held It is clear from the above that the use of railway tracks inside the plant not only form the process of manufacturing, but it is inseparable and integral part of the said process inasmuch as without the aforesaid activity for which railway tracks are used, there cannot be manufacturing of pig iron. Thus, the use of railway tracks are meant for production of goods. The acetylene gas used in 30 shops/departments for repair and maintenance of machineries was also used in connection with the manufacture of the finished goods for the Appellant - the Appellant is eligible for the benefit of exemption notification no. 67/95-CE. Hence, the demand confirmed in the impugned order by denying the benefit of exemption notifications 65/95 or 67/95 is not sustainable - appeal allowed.

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