TMI Tax Updates - e-Newsletter
December 6, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Cancellation of registration of petitioner, with retrospective effect - Relance upon the decision in case of [2022 (4) TMI 864 - GUJARAT HIGH COURT] - Applying the same principles particularly on the ground that the show cause notice as well as the order rejecting application seeking revocation of cancellation is without assigning any reasons and thereby there is a clear violation of principles of natural justice, the writ petition is allowed. - HC
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GST:
Reimbursement / Compensation with the additional IGST liability - Supplies to BHEL for export - extension of time limit for export under LUT - Since such extension of time has been granted now by the competent authority under CGST in terms of Rule 96A(1) (a) of CGST Rule, 2017 in respect of LUTs made under seven export invoices, the instant grievances raised before this court do not survive. It is now upto the petitioner to approach its jurisdictional GST authority for refund of the tax deposited and / or its reversal, which he may do so. - HC
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GST:
Job-work or not - The premises / the plant has been given on lease to the Appellant for 15 years - The activities undertaken in the Appellant ‘s premises or production plant do not qualify for ‘Job Work’ under section 2(68) of the Central Goods and Service Tax Act, 2017 (CGST Act) - the Appellant is a simple lease agreement’ and not a ‘job work agreement’ - AAAR
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GST:
Supply or not - subsidized canteen service - In the instant case the supplies by employer to employee are not free of charge. The applicant is recovering consideration for supply which is deducted from the salary on a monthly basis, hence the press release will not aide the case of the applicant. - The subsidized deduction made by the applicant, from the employees who are availing food in the factory, would be considered towards "supply" of canteen service - Chargeable to GST - AAR
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Income Tax:
Nature of expenditure - business of development of software solution and management - admittedly, the product which was sought to be developed, never came into existence and the same was abandoned. No new asset came into existence which would be of an enduring benefit to the assessee, and therefore, in these circumstances, the expenditure could only be said to be revenue in nature. - HC
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Income Tax:
Reopening of assessment u/s 147 - notice against dead assessee - no notice issued to legal representative - No notice whatsoever was issued to the legal representative/s of the assessee before undertaking the reassessment proceedings. Thus, the impugned re-assessment and the assessment order having been passed against the dead assessee, is invalid and the same cannot be sustained in the eyes of law. - HC
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Income Tax:
Addition on account of unexplained money u/s 69A - unaccounted cash - When the cash is found with an assessee, it is the duty of the assessee to prove the source of such cash by providing sufficient evidence to come to a conclusion to satisfy the source of such cash. In the absence of such proof, the Revenue Authorities are bound to make additions. Mere reflecting the unexplained cash in the books of accounts in absence of any supportive documents, cannot be ground for deletion of the addition - AT
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Income Tax:
Addition u/s. 56(2)(viib) - premium on issue of shares of the company - since the company was incorporated on 07.11.2012 and cut off date of valuation of share was 16.11.2012 and the said acquisition of wholly owned subsidiary and step down subsidiary companies was after the cut off date of valuation of share, therefore as on 16.11.2012, the fair market value of the equity share capital remains at Rs. 10/- and that of the preference share capital remains at Rs. 100/-. - Share premium in excess of FMV held as taxable - AT
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Income Tax:
TDS u/s 195 - Fees or Technical Services (FTS) - Remittances made towards general training services - Article-12 of DTAA - the services as availed by the assessee is covered in none of these clauses. Therefore, the assessee could not be obligated to deduct TDS on the same - AT
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Income Tax:
Income from house property - deduction (Vacancy allowance) - Notably the words used in section 23(1)(c) of the Act are “the property is let and was vacant during the whole…of the year”, which necessarily implies that the same property cannot be “let out” and yet remain “vacant” during the same assessment year. Therefore, as noted above, the reasonable construction/interpretation of section 23(1)(c) would be that if the property has been let out in any of the previous years, but the same could not be let out despite the best efforts by the assessee, the assessee would be entitled to avail the benefits of section 23(1)(c) of the Act - AT
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Income Tax:
Disallowance of depreciation - Demerger - the value of the assets has to be written off this year and to be claimed as loss in the statement of income (instead of depreciation). Therefore, we are inclined to direct the Assessing Officer to treat the opening balance of the assets to the extent of assets, which was already transferred to the demerged company as loss of assets or discarded. - AT
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Income Tax:
Character of income - Served from India Scheme Scrips - SFIS credit available through a specific certificate as furnished to each vendor has been utilized to make purchases of capital goods at net of Excise prices. Those capital assets have then been capitalized at the purchase value. Clearly therefore, SFIS credit is not in the nature of income. SFIS credit goes to reduce the cost of capital goods purchased by the Assessee - AT
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Customs:
Refund claim - Auction - seized Betel Nuts - Whether respondent petitioner can take shelter under Section 150 and Section 14 of the Customs Act, 1962 for the purpose of claiming approximate value assigned in the seizure report or not? - The respondent-petitioner cannot have any assistance in terms of the aforesaid Sections for the reasons that he has not questioned the validity of the auction proceedings undertaken by the appellant-Department - HC
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IBC:
Constitutional validity - Regulation 36A of IBC - splitting of the CIRP into inviting expression of interest and then seeking resolution plans - Since Regulation 36A has been amended and passed in accordance with law by the IBBI, the NCLT did not have the power to declare the same as being ultra vires merely on the ground that the two stage process provided in it i.e., of inviting an expression of interest first and then the financial bids, would be contrary to the speedier resolution of the Insolvency Resolution Process - HC
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IBC:
Recovery proceedings of debts - attachment of movable/immovable property of the petitioners - as per the settled legal position, it cannot be said that the orders passed by the DRT as well as Recovery Officer are in any manner contrary to the provisions of IBC more particularly when judgment and award passed by the DRT has achieved finality in absence of any challenge thereto. - HC
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IBC:
Jurisdiction - condonation of delay beyond the period of 45 days - We have no doubt in our mind that the Appellant has missed the bus by causing delay in filing the appeal beyond the period of 45 days and cannot take the plea of an innocent litigant because it is not the jurisdiction of the Appellate Tribunal to look into the sufficient cause or otherwise while hearing the Application which has been filed under Section 5 of the Act for seeking condonation of delay beyond the period of 45 days. - AT
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IBC:
Liquidation of Corporate Debtor - section 33 of IBC - This Appellate Tribunal is very conscious of the fact that Liquidation should be the last resort as this virtually tantamount to death knell of the Corporate Debtor, However, it is also to be considered that the Corporate Insolvency Resolution Process proceedings are required to be completed within stipulated period - the Adjudicating Authority has no jurisdiction and/ or authority to analyse or evaluate the decision of the Committee of Creditors to enquire into the justness of the rejection of the Resolution Plan by the dissenting Financial Creditors. - AT
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IBC:
Financial Debt or not - related parties - Approval of Resolution Plan - The basic element of the Financial Debt that such disbursement should be for consideration of Time Value of Money is not directly evident here. Admittedly, the Appellants have brought in more than Rs. 17 Crore, however it will not automatically fall in the definition of debt and more so of financial debt in relation to the Corporate Debtor. Since it cannot be classified as financial debts, the Appellants cannot be treated as financial creditor - AT
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PMLA:
Money Laundering - proceeds of crime - Petitioner claimed as being whistle blower made an accused - In the case in hand, this petitioner has tried to scandalize the judiciary, ED officials and Government officials particularly considering that Hare Street P.S. Case was registered with the police station, which was not within the jurisdiction of resident or office of the petitioner, which suggests that there is larger conspiracy to malign the image of judiciary, ED and other officials including the Court staff, which is a serious matter and this all has come in the investigation of the ED. - HC
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PMLA:
Money Laundering - Onus on Chartered Accountant (CA) for giving certificate - Even on a demurrer, on a perusal of Form 15CB, we find that a Chartered Accountant is required to only examine the nature of the remittance and nothing more. The Chartered Accountant is not required to go into the genuineness or otherwise of the documents submitted by his clients. This could be compared with the legal opinion that are normally given by panel lawyers of banks, after scrutinizing title documents without going into their genuinity. - HC
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Service Tax:
Levy of penalty - The entire demand is held to have wrongly been confirmed. Once the very basis of confirmation of demand goes, the question of legality of enhancement and question of competence to enhance thereof without affording opportunity of hearing to the appellant becomes redundant. Similarly the question of invoking Section 80 waiving off the penalties of Section 70, 76 and 77 of the Finance Act, 1994, becomes redundant. No purpose left anymore for remanding the matter. - AT
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Service Tax:
Rejection of refund claim - Ideally, credit should be reversed as and when export takes place; however, with eligibility for refund arising only upon receipt of proceeds of export and the scheme having provided for filing of claim within a year thereafter, the dilution of ideal by shift to the quarter in which the claim is preferred is acceptable approximation. - the appellant is, squarely and singularly, responsible for failure to furnish proof of the required availability of credit till the date of write off and, in the absence of any such evidence even at this stage of appeal or even assurance of being ready and willing to do so, there is no scope for further ascertainment. - AT
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Central Excise:
Interest on refund claim - The tribunal, in its Order impugned wrongly applied the judgement of the Apex Court supra for purposes of denying the benefit of interest on delayed refund by holding that it was not entitled to the same from the date of the application under Section 11B(1), but only after the expiry of three months from the date of the Order of the tribunal dated 10 February 2016, if such applications were fled in terms of the said Order and were disposed of within three months thereof.- HC
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Central Excise:
Refund of deposits - Requirement to issue SCN - Section 11AC (1)(d) of CEA - time limitation - the amount deposited by the appellant-assessee pursuant to audit letter, was in the nature of revenue deposit. Admittedly, the appellant have done the self-assessment at the time of clearance of the goods without including the freight element. In the facts and circumstances, there cannot be any subsequent self assessment. Further, admittedly no revised return was filed - the limitation prescribed under Section 11B is not applicable - the appellant-assessee is entitled to refund of the amount deposited - AT
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VAT:
Concessional rate of tax (CST) 3% or 2% of CST - oxygen gas used as raw material - when it has been found that the oxygen gas is used as a ‘refining agent’ and its main function is to reduce the carbon content as per the requirement, the oxygen gas cannot be said to be a “raw material” used in the manufacture of the end product – steel - the respondents are not entitled to the concessional rate of tax @ 2% treating the same as “raw material” in the manufacture of the end product and are liable to pay tax @ 3% on the sale thereof. - SC
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VAT:
Levy of Entertainment tax on the 'costume' - Renting of costume - It is well settled that the tax can be levied only when specially provided for and not by intendment. If the legislation was of the view that the renting of the costume should be included for the purpose of determination of the taxes, it could have specifically provided for under the Act which has not been done - demand of levy of tax as well as the penalty is without authority of law. - HC
Articles
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (12) TMI 197
Permission for withdrawal of petition - it is submitted that the grievance of the petitioner has been redressed as the amount recovered during pendency of the appeal has been reversed - HELD THAT:- In view of the submissions made by learned counsel for the petitioner, writ petition is dismissed as withdrawn.
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2022 (12) TMI 196
Seeking grant of Anticipatory bail - evasion of GST - availment of false input tax credit - bogus sale of goods without payment of GST - bailable offence as per the provisions of Section 132 of GST Act or not - HELD THAT:- In this manner, the accused persons caused loss worth Rs.19219675/- to the Government exchequer. As has been contended by the counsel for the petitioner such type of evasion to the extent of Rs.5 crore under GST Act, amounts to a bailable offence. Further in the present case, the petitioner has cooperated with the police and has handed over his laptop, voice sample and sample of his signatures to the police and is not required by the police for any further investigation. This Court is of the opinion that the petitioner can be granted concession of anticipatory bail - the present petition is allowed and order granting interim bail 27.04.2022 to the petitioner is hereby made absolute subject to the condition envisaged under Section 438(2) Cr.P.C.
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2022 (12) TMI 192
Supply or not - subsidized canteen service - subsidized deduction made by the applicant from the employees who are availing food in the factory - GST is applicable on the nominal amount being recovered by the Applicant or not - eligibility for ITC of the GST charged by the Service Provider - HELD THAT:- It is an undisputed fact that the applicant is a manufacturer and thus then-activity is covered under Section 2(17)(a) of the CGST Act. Further Section 2(17)(b) stipulates that any activity/transaction in connection with sub-clause (a) i.e. Section 2(17)(a), is included in the business. In the instant case, the applicant is running the canteen in connection with the manufacturing activity. Thus providing canteen facility is incidental to their main activity of manufacture, and therefore covered in the definition of 'business' in terms of Section 2(17)(b) - the activity of provision of canteen facility by the applicant to supply the food amounts to supply in terms of Section 7(1)(a) of the CGST Act 2017. The applicant, quoting entry No.1 of Schedule III to Section 7(2) of the CGST Act 2017 in support of their argument contends that the services by an employee to the employer in the course of or in relation to his employment shall be treated neither as supply of goods nor a supply of services. This provision is not applicable to the instant case as the issue pertains to the services being provided by the employer to the employee and not vice-versa - In the instant case the supplies by employer to employee are not free of charge. The applicant is recovering consideration for supply which is deducted from the salary on a monthly basis, hence the press release will not aide the case of the applicant. Section 15(1) supra deals with the valuation of the taxable supply where the supplier and the recipient are not related and the price is the sole consideration for the supply. In the instant case the supplier and the recipients are related and price is not the sole consideration and thus Section 15(1) of the Act is not relevant to the instant case. Further Section 15(4) of the Act stipulates that in the cases where the value of the supply of goods or services or both cannot be determined under section 15(1), the same shall be determined in such manner as may be prescribed. The applicant has to discharge the GST liability on the impugned services on determination of the value of the said supply in terms of either rule 30 or 31, at the applicant's option - the services of the applicant are covered under services provided in canteen and other establishments and merit classification under SAC 996333. The said services attract GST @ 5%, without ITC in terms of SI. No. of the Notification 11/2017-Central Tax (Rate) dated 28.06.2017, as amended. Thus the applicant is not entitled to ITC of the GST paid on manpower supply services that are used for providing canteen facility.
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2022 (12) TMI 195
Cancellation of registration of petitioner, with retrospective effect - It is the case of the petitioner that despite following the mandate under the law, it received a show cause notice for cancellation of registration - reasonable opportunity of hearing provided or not - principles of natural justice - HELD THAT:- In the opinion of this Court, it is a settled legal position of law that reasons are heart and soul of the order and noncommunication of the same itself amounts to denial of reasonable opportunity of hearing, resulting in miscarriage of justice. More so, in this case even the appeal order also does not reflect application of mind by the competent authority. In the decision of AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] , this Court after considering the scheme of Act as well as the procedure contemplated under the provisions of the Act for cancellation of registration has held that we notice that it is settled legal position of law that reasons are heart and soul of the order and non communication of same itself amounts to denial of reasonable opportunity of hearing, resulting in miscarriage of justice. Applying the same principles particularly on the ground that the show cause notice as well as the order rejecting application seeking revocation of cancellation is without assigning any reasons and thereby there is a clear violation of principles of natural justice, the writ petition is allowed. The show cause notice dated 28.2.2022 and consequential order dated 9.3.2022 as also the order rejecting the application of the petitioner seeking revocation dated 26.4.2022 and appeal order dated 12.10.2022 are set aside - petition allowed.
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2022 (12) TMI 191
Seeking grant of anticipatory bail - fraudulent availment of ITC without receipt of goods in contravention of provision Section 16 of CGST Act - issuance of invoices without supplying of goods - HELD THAT:- As the accused has been summoned by the department therefore there is apprehension to accused of arrest and in view of the judgment of Hon ble High Court of Delhi in SATISH KUMAR SHARMA VERSUS DELHI ADMINISTRATION AND ORS. [ 1990 (9) TMI 363 - DELHI HIGH COURT] , Delhi courts has jurisdiction to deal with the matter. As per submissions of Ld. Counsel for department the accused has joined investigation during interim protection and has handed over documents, main accused. Vimal Alawadhi has already been granted bail on 15.10.2022 and he has already deposited the amount of 10% as per order dated 15.10.2022 as informed by Ld. Counsel for department. There is nothing on record to show that present applicant has mis-used the interim protection granted by Court on 15.11.2022 or has not cooperated in the investigation, accordingly, in these facts and circumstance, the present applicant/accused Raman Kumar is admitted to anticipatory bail and in the event of his arrest, he be released on bail upon filing personal bond in the sum of Rs. 50,000 with two sureties bond in the like amount and subject to conditions imposed. Application allowed.
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2022 (12) TMI 194
Reimbursement / Compensation with the additional IGST liability - Supplies to BHEL for export - extension of time limit for export under LUT in terms of Rule 96A (1) (a) of CGST Rules, 2017 for the delay caused in export made - violation of of Article 14, Article 19(1)(g) and 300A of the Constitution of India - HELD THAT:- The original dispute for which the petitioner came before us was the incidence of tax liability that had fallen upon the petitioner on account of delay in making export within the specified time in terms of the notification dated 23rd October, 2017. Petitioner had to deposit considerable amount of tax in absence of such extension of time as has been taken note of in the order dated 23rd February, 2022. Since such extension of time has been granted now by the competent authority under CGST in terms of Rule 96A(1) (a) of CGST Rule, 2017 in respect of LUTs made under seven export invoices, the instant grievances raised before this court do not survive. It is now upto the petitioner to approach its jurisdictional GST authority for refund of the tax deposited and / or its reversal, which he may do so. Writ petition is accordingly disposed of.
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2022 (12) TMI 193
Job-work or not - sending of inputs (Naphtha, DM water, Power, Cooling water, service water and instrument air) by the Appellant to M/s. Praxair India Private Limited and receiving back of industrial gases (Hydrogen gas, Nitrogen gas and HP steam) under the lease agreement - levy of GST on all the payments under the lease agreement - HELD THAT:- The job work charges are not mentioned in the invoices raised to the Appellant for the service rendered, During the Personal Hearing, we put this question to the authorized representatives again and again, but the authorized representatives could not clarify the said deficiency properly nor could they produce any agreement or part of the agreement clearly explaining about the job work charges in the invoice. As per Section 2(68) of CGST Act, 2017 read with section 143 of CGST Act, 2017 defines the meaning of the term job work and explains Job Work procedure . However, on this procedural part as defined under the said provision, Advance Ruling Authority, Odisha has not raised any questions on the subject issue; But the Advance Ruling Authority, Odisha has objected that in addition to the procedural part, there should be specific job work agreement and job work charges should be clearly mentioned and raised in their invoices. The activities undertaken in the Appellant s premises or production plant do not qualify for Job Work under section 2(68) of the Central Goods and Service Tax Act, 2017 (CGST Act) - Ruling of the Advance Ruling Authority, Odisha, is in tune with legal provisions of the Act and it needs no interference. Appeal allowed.
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Income Tax
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2022 (12) TMI 190
Nature of expenditure - expenditure in connection with the development of new products / software - revenue or capital expenditure - question of larger context of business necessity or expediency - HELD THAT:- The issue as to whether a particular expenditure incurred was of capital or revenue in nature has been the subject matter of legal debate before various Courts in the Country. As held by the Apex Court in the case of Empire Jute Co. Ltd. [ 1980 (5) TMI 1 - SUPREME COURT] since there does not exist an all-embracing formula which can provide a ready solution to the problem; no touchstone has been devised and that every case has to be decided on its own facts keeping in mind the broad picture of the whole operation in respect of which the expenditure has been incurred. The appellant is admittedly in the business of development of software solution and management, and therefore, it s endeavour to develop a new software was nothing but an endeavour in its existing line of business of developing software solutions. Admittedly, the product which was sought to be developed, never came into existence and the same was abandoned. No new asset came into existence which would be of an enduring benefit to the assessee, and therefore, in these circumstances, the expenditure could only be said to be revenue in nature. We are of the view that the view already expressed by the ITAT in the order impugned requires no interference. - Decided in favour of assessee.
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2022 (12) TMI 189
Validity of faceless assessment u/s 144B - denial of the principles of natural justice to the Petitioner by not affording her a hearing through video conferencing - HELD THAT:- We are of the opinion that the Respondent has not afforded to the Petitioner a fair hearing in the matter. Respondents ought to have either responded to the Petitioner s request for extension of time till 25.02.2022 for filing her reply, by rejecting her request or at least responded to the Petitioner s request on 19.02.2022 for an online hearing of her case by video conferencing. Having not given to the Petitioner an opportunity of personal hearing as was required to be done under the provisions of Section 144B of the Act as specified in the show-cause notice dated 03.02.2022 itself, we find that the Respondents have acted in arbitrary manner. Consequently, we set aside the order of assessment, the notice of demand under Section 156 and show-cause notice initiated penalty proceedings under Section 270 read with Section 270A of the Act of the same date, passed by the Respondent assessing officer.
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2022 (12) TMI 182
Addition on account of unexplained money u/s 69A - unaccounted cash - assessee vehemently argued that the assessee has withdrawn the cash from the bank and accumulated the same to the total tune of Rs. 1 crore which has been carried by the employee of the assessee - HELD THAT:- Assessee has not made available of any documentary proof before Lower Authorities such as bank statement withdrawing such huge sum. Further at no point of time such transactions of cash through imprest account has taken place in the past in the cash book which can prove cash purchase of raw material, wheat straw. The assessee has only relied on the cash book which cannot be believed in the absence of corroborative evidence such as bank statement, audited balance sheet, profit and loss account along with tax audit report for the year under consideration. When the cash is found with an assessee, it is the duty of the assessee to prove the source of such cash by providing sufficient evidence to come to a conclusion to satisfy the source of such cash. In the absence of such proof, the Revenue Authorities are bound to make additions. Mere reflecting the unexplained cash in the books of accounts in absence of any supportive documents, cannot be ground for deletion of the addition. In our considered opinion, CIT(A) has committed an error in deleting the addition. Therefore, the order of the CIT(A) is deleting the addition is herby set aside and the addition made by Ld. A.O. is hereby sustained. - Decided in favour of revenue.
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2022 (12) TMI 171
Revision u/s 263 by CIT - Claim of exempt income u/s. 10(38) - HELD THAT:- As assessee has shown long term capital loss and secondly and most importantly as mentioned elsewhere the return was selected for limited scrutiny and the reasons are mentioned elsewhere and the claim of exemption is not one of the reasons for scrutiny selection of the return, therefore, this point is beyond the jurisdiction of PCIT as the AO could not have made any enquiry in respect of this issue as the same was not part of the limited scrutiny. Sale of 8 properties during the year under consideration - As categorically explained that the circle rate is not applicable on rights in the property without title as all the cost in flat in question were in the nature of booking amount for flats and the developer did not register the title in the flats of the assessee. It is also made very clear that these properties need not have been registered as they were mere rights in the property without title, and there is no designated registering authority for these at the time of sale and purchase of these properties.These facts have not been controverted by the PCIT and it is settled proposition of law that for assumption of jurisdiction u/s. 263 of the Act the impugned assessment order should not only be erroneous but also pre judicial to the interest of the revenue. The error can be of facts or of law. On the given facts discussed here in above there is no error in facts and there is no error in law also. Variation in the opening stock, opening bank balance, opening capital - View of the PCIT is erroneous in as much as vide reply dated 16.10.2017 the assessee has given a detailed explanation in respect of stock valuation, sales turnover mismatch, mismatch in income/ capital gain/ on sale of land or building, increase in capital, tax credit mismatch alongwith copies of ledger accounts which have been duly examined by the AO before framing the Assessment Order u/s. 143 (3) of the Act. Exhibit 50 to 56 of the paper book clearly show that to the specific querry of the AO specific reply was furnished by the assessee. Thus we did not find any merit in the order of the PCIT. We, therefore, set aside the same and restore that of the AO framed u/s. 143 (3) of the Act. - Decided in favour of assessee.
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2022 (12) TMI 188
Reopening of assessment u/s 147 - notice issued to the Petitioner-Assessees u/s 148-A(1)(b) - personal hearing was not given to the Assessee prior to the passing of the said order - HELD THAT:- Having carefully examined the said decisions in light of the order passed by the Supreme Court in Anshul Jain v. Principal Commissioner of Income Tax [ 2022 (10) TMI 3 - SC ORDER ] this Court is of the considered view that the above order cannot be considered to be one which does not decide any issue or which has been passed without considering the issue involved in the case. This Court is unable to agree with the submission that the aforementioned order of the Supreme Court is not a binding precedent as far as this Court is concerned. Petitioners have also assailed both the notice u/s 148-A(1)(b) as well as the consequential order u/s 148-A(1)(d) on several grounds including the ground of limitation, not considering the objections filed, not providing a personal hearing, non-application of mind to the peculiar facts of each case and several other grounds. Following the decision of the Supreme Court in Anshul Jain v. Principal Commissioner of Income Tax (supra), all these grounds could be urged at a stage when an order is passed u/s 148 in the reassessment proceedings and if it warrants challenge by these Petitioners/Assessees. This Court would hasten to add that not only will all the grounds urged before this Court in these proceedings be available to the Petitioners to be urged at such a stage of challenge, but all other grounds which may not have been urged before this Court and which may be found necessary to be urged at that stage in accordance with law. When such challenge is raised, all such grounds will have to be dealt with in accordance with law by the Authority which is expected to pass an appropriate order under Section 147 read with Section 148.
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2022 (12) TMI 181
Penalty u/s 271C - TDS was not made on payment of External Development Charges (EDC) - Assessee argued provisions of section 194C were not applicable on payment, of EDC because the payment was made to the Government and not to the HUDA - HELD THAT:- As decided in own case for the Assessment Year 2014-15 [ 2022 (7) TMI 737 - ITAT DELHI] as relying on TDI Infrastructure [ 2022 (7) TMI 388 - ITAT DELHI] clarification memo no DTCP/ACCFTS/AO(AQ) /CAO/2894/2018 dated 19.06.18 issued by the Directorate of Town and Country Planning, Haryana which made it very obvious that receipts on account of EDC are being deposited in the Consolidated Fund of the State, accordingly directions were issued to colonizer like present assessee, to not deduct TDS. Once the fact of receipt of amounts received by HUDA being deposited in Consolidated Fund of State is established, there can be no second opinion that Assessee was rightly directed by DTCP, Haryana to not deduct the TDS. Even otherwise no intentional default is attributed to assessee and the default, if any, was on account of ambiguity which had arisen out of a direction contained in a statutory document, so no penalty can be justified u/s 271C of the Act, which is meant to address contumacious conduct. As a wholesome effect of above, the Bench is of considered opinion that levy of penalty u/s 271C of the Act cannot be sustained. - Decided in favour of assessee.
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2022 (12) TMI 180
Addition u/s. 56(2)(viib) - premium on issue of shares of the company - receiving consideration against share issued in excess of fair market value - As per assessee valuation report has been obtained from registered valuer on 14.03.2018 which justifies the share premium charged by the assessee on the issue of equity share capital and preference share capital - Revenue has pointed out the fact that the assessee company was incorporated on 07.11.2012 and the cut off date for the valuation of share was 16.11.2012 - HELD THAT:- Since the input needed for preparing the valuation report dated 14.03.2018 were not supplied correctly to the expert (CA), the results arrived at in the said valuation report dated 14.03.2018 cannot be accepted. Under these given facts and circumstances of the case we are of the considered view that since the company was incorporated on 07.11.2012 and cut off date of valuation of share was 16.11.2012 and the said acquisition of wholly owned subsidiary and step down subsidiary companies was after the cut off date of valuation of share, therefore as on 16.11.2012, the fair market value of the equity share capital remains at Rs. 10/- and that of the preference share capital remains at Rs. 100/-. Therefore, share premium of Rs. 2.50 per share on issue of equity share capital totalling to Rs. 5 lakh and share premium of Rs. 8 Cr received on issue of preference share capital at Rs. 25 per share along with face value of each equity share at Rs. 10/- and each preference share at Rs.100/- is in excess of the fair market value of Rs. 10/- per equity share and Rs. 100/- per preference share for preference and therefore, provisions of Section 56(2)(viib) of the Act have rightly been invoked by ld. AO for making the addition of Rs. 8.05 Cr received towards share premium in the hands of the assessee. Thus, the finding of ld. CIT(A) is reversed, addition at Rs.8.05 Cr. made by ld. AO is confirmed and ground of the Revenue s appeal are allowed.
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2022 (12) TMI 179
Disallowance of interest expenses as well as disallowance of proportionate interest rate on the interest free loan given - AO made disallowance of interest expenses by taking a view that the assessee could furnish copy of ledger and bank statement to prove that the transactions were genuine - HELD THAT:- Once the transaction of loan is considered as genuine, the interest on such loan cannot be disallowed. CIT(A) further held that P.K. Enterprises was not part of 19 parties and the assessee had explained the genuineness of said loan during the assessment. Thus, the interest cannot be disallowed. Considering the facts that on similar interest disallowance in A.Y. 2017-18 and similar deletion of interest disallowance was upheld by this Bench in A.Y. 2017-18 - Therefore, we do not find any illegality or irregularity in the order passed by the ld. CIT(A) which we affirm the same qua the issue under consideration. Disallowance of interest expenses paid on unsecured loan - AO disallowed the interest expenses by taking a view that the lender parties have not responded to the notice u/s 133(6) - HELD THAT:- We find that no finding was given by Assessing Officer on various documentary evidences furnished by assessee, which consists of confirmation of parties, return of income of lender parties, ledger account of assessee and parties books of account, bank statement of parties and financial statement of lenders. The assessee has also filed copies of reply in response to notice u/s 133(6) - We find that the ld. CIT(A) allowed relief to the assessee by clearly holding that the reply of lender party in response to notice under Section 133(6) is seen on ITBA Website. Similar interest expenses were allowed in earlier assessment years and was never disallowed. We find that the ld. CIT(A) granted relief on appreciation of fact that the assessee made compliance. As earlier noted that tao has not given any finding on the various documentary evidences to substantiate the genuineness of interest expenses. Assessing Officer has not controverted the fact that in earlier years, similar interest expenses were allowed. In view of the aforesaid factual discussion, we do not find any merit in the grounds of appeal raised by the Revenue and we delete the same. Accordingly, grounds No. 2 and 3 of the appeal are dismissed. Addition of notional interest - nexus between the interest bearing loan and loan advanced - assessee borrowed interest bearing funds and on the other hand, the assessee was providing interest free loans to its group concerned - AO Disallowed and added 6% interest on such loan paid to group concerns - HELD THAT:- As there is no direct nexus between the interest bearing loan and loan advanced by assessee. Most of the interest free advances were made prior to 2010-11. The interest bearing loan was given by assessee after that period. Moreover, the interest free reserve and surplus are in far excess, which is not controverted by the ld Sr DR for the revenue. Therefore, we do not find any illegality or irregularity in the order passed by the ld. CIT(A) which we affirm the same qua the issue under consideration. Hence, this ground of appeal of the revenue is also dismissed.
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2022 (12) TMI 178
Reopening assessment u/s 148 - allegation of failure of the assessee to disclose the material for assessment - HELD THAT:- All the issues were examined in the original assessment proceedings by the AO by issuing notice to the assessee along with questionnaire as well as to the investors u/s 133(6) of the Act. We note that both the assessee as well the investors have filed the details/information as called for by the AO and thereafter the AO made an addition of Rs. 2,57,00,000/- to the income of the assessee in respect of share premium and share capital. Therefore the assessee cannot be attributed to have not disclosed any material fact which has led to escapement of income. In our considered view, the AO invalidly reopened the assessment u/s 147 as there was no valid reason to re-open the assessment u/s 147 of the Act. Accordingly the reassessment proceedings is held to be invalid in law and quashed. Unexplained amount of share capital and share premium - Assessee has issued shares to 5 parties who were allotted equity shares on 31.03.2012 and the said amounts were also paid through bank RTGS and all parties in response to notices issued u/s 133(6) confirmed the investments. CIT(A) misconstrued the facts in respect of two investors as stated above and wrongly noted the investments were taken two times in the table and this has attributed to the difference of Rs. 33,00,000/-.Therefore we find that the addition partly confirmed by the CIT(A) is without any basis. We have even examined the balance-sheet of both the investors placed in the paper book and found that the investments shown by the parties at sr. 3 was Rs. 55,00,000/- whereas investments at Sr. 4 5 was Rs. 30,00,000/- which was taken double the amount by taking the investment amount of Rs. 30,00,000/- two times at sr. 4 and 5. Considering these facts, we hold that even on merit that the addition was wrongly sustained by the Ld. CIT(A) upon wrong appreciation of facts on record. Accordingly the appeal of the assessee is allowed. Unexplained cash credit u/s 68 - HELD THAT:- We are of the considered view that addition cannot be made on the ground that the investors were not personally produced or did not comply with the summons, when the evidences qua the transactions were filed before the AO. Therefore, considering the facts of the case in the light of the aforesaid decisions, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Appeal of assessee allowed.
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2022 (12) TMI 187
Reopening of assessment u/s 147 - Capital gain on sale of property - year of assessment - crux of the objections of the assessee to the proposed reopening was that firstly the transaction was not of the sale, but was an agreement for development. Secondly, the transfer did not take place in the previous year corresponding to the assessment year 2015-16, but the transfer took place during previous year 2015-16, that is, relevant to assessment year 2016-17 and it was the case that the gain arising out of the transaction was offered to tax for the assessment year 2016-17 and that no tax had thus escaped assessment - HELD THAT:- When the amount received by the petitioner assessee by way of cash was pursuant to development agreement and the transfer had not taken place in the year of receipt, when the sale deed was executed in the subsequent year, the transfer took place at that point of time. The assessee had offered the amount of capital gains to tax in the next corresponding assessment year, that is, 2016-17. The income by way of capital gain is chargeable in the year of capital assessment even though the consideration may be realised earlier or later or or there may not be realisation at all. In the present case, as explained above, the execution of development agreement with Gokulesh Infra did not give rise to transfer within the meaning of section 2(47)(v) of the Act in the year 2014-15. Therefore, the entire basis of reopening was erroneous of facts and misconceived in law. In such working of facts, the opinion formed by the assessing that he had reasons to believe about escapement of income in the assessment year 2015-16 was misconceived and without foundation of facts and without foundation in law. The present petition deserves to be allowed. Notice issued by the respondent under section 148 of the Act, is set aside. - Decided in favour of assessee.
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2022 (12) TMI 177
Disallowance u/s.40A(2)(a) - property purchase transaction between assessee and son, who is the managing director of the assessee company - fair market value of the property - HELD THAT:- As noted that the payment made for purchase of land is fair market value of land and none of the authorities below have considered this issue whether payment made is excessive or unreasonable in term of section 40A(2)(a) - Once the payment made is found to be reasonable in term of the perspective of businessman, unless a contrary finding given by the authorities below, the addition cannot be sustained. Accordingly, we allow this issue of assessee s appeal.
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2022 (12) TMI 176
Addition u/s 40A - cash purchases in excess of Rs.20,000/- to a single person in a single day in respect of dhall purchase and purchase of oil - HELD THAT:- As before us the ld.counsel could not file any details that the assessee s case falls under any of the exception as provided under the Rule 6DD of the Income Tax Rules, 1962. In view of the above provision of sub-section (3) to section 40A which has been amended w.e.f. 01.04.2009 by the Finance Act, 2008 provides that the provisions of sub-section (3) of section 40A of the Act shall be attracted where the aggregate of the payments made to a single party otherwise by an account payee cheque drawn on a bank or account payee bank draft exceeds Rs.20,000/- in a day. It means that the provisions of section 40A(3) of the Act is very clear and assessee is unable to prove that his case falls under any of the exception as provided under Rule 6DD of the Income Tax Rules, 1962. Hence, we confirm the disallowance. - Decided against assessee.
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2022 (12) TMI 175
TDS u/s 195 - Remittances made towards general training services treated as Fees or Technical Services (FTS) - taxability in India remittances made to the nonresident SCB, Singapore - clause of 'make available' - whether the assessee could be held as assessee-in-default for want of tax deduction at source (TDS) on certain payments? - HELD THAT:- It is admitted position that the services are availed by the assessee for its employees to improve their soft skill in the areas of leadership and general management which is not specific to functions being performed by the employees. This training may improve the skills of the employees but it does not involve transfer of any technology which is made available to the assessee for its future use. In terms of Article-12 of DTAA, fees for technical services include managerial, technical or consultancy services if such services are ancillary and subsidiary to the application or enjoyment of the right, property or information or it make available technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein or it consist of the development and transfer of a technical plan or technical design but excludes any service that does not enable the person acquiring the service to apply the technology contained therein. We find that the services as availed by the assessee is covered in none of these clauses. Therefore, the assessee could not be obligated to deduct TDS on the same. The cited decision of Ahmedabad Tribunal rendered on similar factual matrix squarely supports the case of the assessee. Accordingly, the impugned demand could not be sustained. We order so. No other ground has been urged before us. Assessee appeal allowed.
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2022 (12) TMI 174
Validity of reopening of assessment u/s 147 - whether any new or tangible material came to the notice of the Assessing Officer to verify the same or not? - HELD THAT:- Considering the landmark judgement of the Hon ble Supreme Court in the case of CIT v. Kelvinator India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] CIT(A) has held that the reopening is bad in law and quashed the reassessment order passed by the Assessing Officer. In view of the judgement of the Hon ble Supreme Court in the case of CIT v. Kelvinator India Ltd. (supra) as well as the judgement of the Hon ble Jurisdictional High Court in the case of TANMAC India v. DCIT. [ 2017 (1) TMI 122 - MADRAS HIGH COURT] we find no reason to interfere with the order passed by the ld. CIT(A). Accordingly, the ground raised by the Revenue is dismissed.
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2022 (12) TMI 173
Penalty u/s 271(1)(c) - addition u/s 36(1)(vii) on the basis that the conditions laid down in section 36(2) are not satisfied - HELD THAT:- We find that in respect of each party, to whom advances/payments were made, the assessee provided its explanation for non-realisation of the amount resulting in its decision of writing off the same during the year under consideration. We find that the AO did not agree with the aforesaid factual explanation and made the addition disallowing the claim under section 36(1)(vii) r/w section 36(2) vide its order passed under section 143(3) - neither the AO nor the learned CIT(A) in the penalty proceedings, found the assessee s explanation to be incorrect or without any basis. Revenue also did not bring anything on record to controvert the aforesaid submission. There is no dispute on the fact that the assessee has not challenged the addition made vide the assessment order. At the same time, it is well established that quantum proceedings and penalty proceedings are separate in nature. Even if, for any reason, the assessee has not challenged the addition made in quantum proceedings, while deciding the issue of imposition of penalty regard must be had to the reasonable explanation furnished by the assessee. This is not a fit case for the levy of penalty under section 271(1)(c) - Decided in favour of assessee.
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2022 (12) TMI 172
Income from house property - deduction (Vacancy allowance) - property remain vacant - Annual value how determined - Addition on account of annual lettable value (ALV) as income from house property - AO observed that the assessee had shown income from house property from various properties in different years, however, in some of the years, income from some of the properties were not shown/ shown at Nil - HELD THAT:- As assessee has submitted that the properties under question were let out in earlier years, but due to reasons beyond the control of the assessee, the same could not be let out during the year under consideration. The counsel for the assessee placed on record various documents in support of the contention that the assessee had made substantial efforts by way of newspaper advertisements etc. to lease out the properties, however, despite best efforts, the properties could not be let out during the year under consideration. Thus the provisions of section 23(1)(a) of the Act cannot be invoked in case the properties have been let out in some earlier year, however, the same were lying vacant for the entire year under consideration, despite efforts being made by the assessee. The provisions of section 23(1)(a) of the Act can be invoked in the event the properties are lying vacant all throughout and have not been let out either in the prior or succeeding assessment years and also the assessee has made no effort to let out the same. Notably the words used in section 23(1)(c) of the Act are the property is let and was vacant during the whole of the year , which necessarily implies that the same property cannot be let out and yet remain vacant during the same assessment year. Therefore, as noted above, the reasonable construction/interpretation of section 23(1)(c) would be that if the property has been let out in any of the previous years, but the same could not be let out despite the best efforts by the assessee, the assessee would be entitled to avail the benefits of section 23(1)(c) of the Act. Accordingly, in our considered view, the Ld. CIT(Appeals) has not erred in facts and in law in allowing the assessee s appeal on this issue. Disallowance of Interest Expenditure - AO observed that in respect of amounts taken from individuals/HUF/companies, the assessee has not furnished any documentary evidence to show that the same interest bearing borrowed amount had been given as loan to third party to earn interest - CIY-A deleted the addition - HELD THAT:- CIT(Appeals) has granted relief to the assessee on the basis firstly that income under section 56 is more than the expenses claimed under section 57 and secondly, on identical facts Ld. CIT(Appeals) has granted relief to the previous assessment years AY 2010-11 and AY 2012-13. However, there is no discussion in the order regarding the interest expenditure claimed by the assessee and how and where such interest-bearing funds were utilised for earning interest income. CIT(Appeals) has not discussed how the facts in earlier years were identical/applicable to the facts of the present year i.e. no enquiry/ discussion is done with respect to parties from whom the interest bearing loan was taken and to which parties, the loan was given on interest to earn interest income. Further, Ld. CIT(Appeals) has not controverted the specific findings made by AO in the assessment order under consideration. In view of the above facts, in the interest of justice, we are restoring the file to Ld. CIT(Appeals) so as to conduct an acceptable enquiry into the nexus between the interest-bearing loans and how the same were utilised to earn interest income, so as to examine the eligibility of claim made by the assessee - Department s appeal is allowed for statistical purposes.
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2022 (12) TMI 186
Reopening of assessment u/s 147 - Scope of new provision section 148A - conducting of enquiries or issuance of show-cause notice or passing of order u/s 148A - Scope of amendment by the Finance Act, 2021 which has amended Income Tax Act by introducing new provisions i.e. sections 147 to 151 w.e.f. 1st April, 2021 - violation of the judgment passed by Hon ble Supreme Court in the case of Union of India and others vs. Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] - HELD THAT:- The Section 246 of the Income Tax Act, 1961 provides an appeal. Therefore, the petitioner is having a remedy to challenge the order/notice by way of filing an appeal and the ground raised by him with respect to jurisdiction of the authorities can always be considered by the authorities. Even otherwise, a writ petition against a show cause notice is not maintainable in view of the law laid in the case of Kunishetty Satyanarayan [ 2006 (11) TMI 543 - SUPREME COURT] The Hon ble Supreme Court while modifying the judgment has granted two weeks time to reply to show cause notice. This Court refrains to interfere in the impugned orders/notices passed by the authorities as the same is issued in pursuance to judgments passed by the Hon ble Supreme Court. The present petition is held to be not maintainable in view of the law laid down by the Hon ble Supreme Court in the case of Kunishetty Satyanarayan (supra) and in view of availability of alternative efficacious remedy to the petitioner.
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2022 (12) TMI 170
Exemption u/s 54B - cost of acquisition and cost of improvement - AO in this case rejected the assessee s claim and held that in the absence of agreement to sell the rights acquired by provisional booking of the property did not meet the requirements spelt out u/s 54 of the Act i.e. acquisition of new capital asset - HELD THAT:- Delhi High Court in the case of CIT Vs. Ram Gopal [ 2015 (2) TMI 500 - DELHI HIGH COURT ] allowed the claim for exemption/deduction u/s 54 of the Act referring to the decision of the Delhi High Court in the case of Gulshan Malik [ 2014 (3) TMI 474 - DELHI HIGH COURT] . We noticed that the Hon ble Delhi High Court observed that the decision of SURAJ LAMP INDUSTRIES PVT. LTD. [ 2011 (10) TMI 8 - SUPREME COURT] is of no consequence because the Hon ble Apex Court had dealt with whether a sale transfer based upon confirming a GPA amounted to sale/conveyance but the Hon ble Apex Court did not consider and had no occasion to deal with section 2(14) and section 2(47) of the Act in the context of a claim of acquisition of rights of property and interest in a capital asset for the purpose of Income tax. The principles of this decision of the Delhi High Court in the case of CIT Vs. Ram Gopal [ 2015 (2) TMI 500 - DELHI HIGH COURT] applying to the facts of the present case, we hold that there is no infirmity in the order passed by the Ld.CIT(Appeals) in allowing the exemption claimed u/s 54B of the Act as claimed by the assessee. Thus, we sustain the order of the Ld.CIT(A) and reject the grounds of Revenue.
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2022 (12) TMI 169
Exemption u/s 11 - denial registration u/s 12AA(1)(b)(ii) - HELD THAT:- We find that there is a clear mandate of the legislation to pass an order in writing accepting or rejecting the application seeking registration by the assessee society. CIT(E) therefore has to speak through his order reflecting his satisfaction or otherwise about the objects and the activities of the assessee society and basis of arriving at such a satisfaction which in turn will allow the assessee to claim and the AO to examine the claim of exemption u/s 11 and 12 in the respective assessment years and in an event of an adverse order, allow the assessee to challenge such an order before the higher appellate authority. We are unable to accede to the contention of the AR and agree with the contention of the CIT-DR that in absence of any specific finding recorded by the Ld CIT(E), there cannot be any presumption regarding the findings of the CIT(E) regarding the objects and activities of the assessee society. Regarding non-filing of return of income for the financial year F.Y. 2018-19 relevant to A.Y. 2019-20, AR has stated at the Bar that it is a fact that the assessee has not filed the return of income for the said assessment year but at the same time, it was submitted that merely non-filing of the return of income cannot be a basis to challenge the genuineness of the activities actually been undertaken by the assessee society in that year and extrapolating that to all subsequent years - As submitted that even where the return of income was not filed, the assessee society is maintaining its regular books of accounts accounting for its receipts and expenditure relating to various charitable activities which were carried out by the assessee society and given that CIT(E) has not called for the books of accounts, there was no occasion for the assessee society to furnish the same and where so permitted, the assessee society shall produce its books of accounts for necessary examination by the Ld CIT(E). Taking into consideration the entirety of facts and circumstances of the case, we deem it appropriate that the matter be set-aside to the file of the CIT(E) to examine the matter a fresh after calling for books of accounts and other documents as so desired and pass a speaking order recording his satisfaction or otherwise regarding the objects and genuineness of the activities of the assessee society after providing reasonable opportunity to the assessee society - Appeal of the assessee is allowed for statistical purposes.
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2022 (12) TMI 168
TP adjustment in relation to security support services provided to AE - Comparable selection - HELD THAT:- We observe that the comparables selected by the TPO i.e., Rites Ltd, Vapi Waste and Wapcos are government owned entities and the companies are held to be functionally different to the assessee by the Coordinate Bench in the group concern of the assessee in Novartis Healthcare Pvt. Ltd. [ 2015 (7) TMI 42 - ITAT MUMBAI] We direct the TPO/AO to recompute/determine the arms length price after exclusion of three companies as discussed in the above decision. The assessee has claimed that after the exclusion of these three companies the mean margin of the remaining comparables comes to 17.92% in comparison to the segmental level margin of the assessee at 15% which is in the tolerance range of + 5%, therefore it is claimed that no adjustment is called for. The TPO/Assessing Officer is directed to consider this aspect at the time of recomputation of the arms length price. Accordingly, ground raised by the assessee is allowed for statistical purpose. Disallowance of depreciation claimed on assets vested to CIBA Specialty Chemicals (India) Ltd pursuant to Demerger - HELD THAT:- As the assets in the block has to be evaluated every assessment year and as per provision 43(6)(C)(B), it clearly indicates that the value has to be reduced of the moneys payable in respective of any assets falling within that block which is sold/discarded/demolished or destroyed. In the given case, the block does not consist the assets, which are transferred in the demerger in the A.Y. 1997-98. However, these particular assets are not in existence in the beginning of the year and it can be considered as discarded in the provisions with NIL value. This issue needs to end some point of time. In that case, the value of the assets has to be written off this year and to be claimed as loss in the statement of income (instead of depreciation). Therefore, we are inclined to direct the Assessing Officer to treat the opening balance of the assets to the extent of assets, which was already transferred to the demerged company as loss of assets or discarded. Accordingly, this ground of appeal filed by the assessee is partly allowed. Disallowance of expenditure on incurred on production of advertisement films - HELD THAT:- On a careful reading of the above order of the Tribunal, we observe that Coordinate Bench decided the issue in favour of the assessee by following the decision of the Hon'ble Bombay High Court in the case of Geoffrey Manners Co. Ltd. [ 2009 (2) TMI 13 - BOMBAY HIGH COURT] Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee s own case for the A.Y. 2001-02, we allow the ground raised by the assessee. Disallowance of expenditure incurred on computer software/license fees - HELD THAT:- We further observe that on identical issue Coordinate Bench decided the issue in favour of the assessee in assessee s own case for the A.Y. 2001-02 [ 2021 (4) TMI 1346 - ITAT MUMBAI] Addition of secondary freight to the closing stock - Adhoc disallowance of 25% of foreign travel expenses, Disallowance of incremental liability on account of pension payable under the erstwhile Voluntary Retirement Scheme - HELD THAT:- Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee s own case for the A.Y. 2001-02 [ 2021 (4) TMI 1346 - ITAT MUMBAI] and also following consistent stand of the Tribunal, we allow the ground raised by the assessee. Adjustment of excess and short year-end provision - AR submitted that the assessee makes provisions in its books of accounts based on various services/benefits received by it - HELD THAT:- We observe that there are two types of provisions accounted at the year end, first is the related expenses for the year under consideration without ascertaining the portion/head of expenses or the actual value. In the second type of provisions, the portion/head of expenses are ascertained but the actual value of the expenses are estimated. The assessee regularly follows the procedure of creating provisions and suomoto disallows the expenditure which are excessive in the next assessment year. The historical data shows that the assessee makes the adjustment every year which are in the range of 7-8% and it consistently follows the same and if there is short, it accounts the same in the with next assessment year. It will have tax neutral effect considering the fact that the same rate of tax are applicable. We observe that in the case of Rotork Controls India (P) Limited [ 2009 (5) TMI 16 - SUPREME COURT] the ground raised by the assessee is allowed. Disallowance under section 14A read with rule 8D - AR submitted that Assessing Officer has not recorded satisfaction even though assessee has suomoto disallowed certain expenditure - HELD THAT:- We observe from the Assessment Order that Assessing Officer has clearly considered the submissions of the assessee relating to the 14A. AO has clearly discussed the issue relating to 14A disallowance and discussed specifically why he has imposed 14A in this case. There is no specific format for recording satisfaction. In the case of Mak Data P. Ltd. [ 2013 (11) TMI 14 - SUPREME COURT] held that Assessing Officer is not required to record his satisfaction in a particular manner or reduce it with writing (even though on the issue of section 271(1)(c) of the Act). In our considered view, as per the Assessment Order, the reasons recorded by the Assessing Officer for invoking Rule 8D are proper satisfaction and the cases relied by the assessee are distinguishable. Accordingly, this ground is dismissed. Short grant of TDS Credit - assessee has filed rectification application under section 154 [against the assessment order under section 143(3) read with section 144C(13) and [against intimation under section 143(1) of the Act - HELD THAT:- We observe that AO has completed Assessment under section 143(3) r.w.s 144C(13) of the Act. Therefore, certain informations were not available with him at the time of completion of the final Assessment Order. Assessee has filed rectification application u/s. 154 of the Act and it is the duty imposed on the Assessing Officer to complete the rectification process within six months. Even otherwise the Assessing Officer should have intimated the same. Therefore, we are inclined to remit this issue back to the file of the Assessing Officer to verify the claim of the assessee as per the Act after giving them a proper opportunity of being heard and we direct the Assessing Officer to complete the rectification within one month on receipt of this order. Accordingly, ground raised by the assessee is allowed for statistical purpose.
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2022 (12) TMI 167
Maintainability of appeal on low tax effect - Reliance on CBDT Circular No. 17 of 2019 by concluding that the appeals of the department are not maintainable as the monetary limit in these appeals was less than Rs. 50,00,000/- - HELD THAT:- Merely granting of stay does not mean that the prosecution launched by the Department has come to an end. The requirement of the Circular is very clear wherein as per clause (f) it has been categorically mentioned that cases where prosecution has been filed by the department and is pending in the Court , then in that eventuality this condition falls in exception to Circular No. 3 of 2018 dated 11.07.2018. Thus in our view, since assessment year 2010-11 regarding which prosecution has already been launched by the Department falls under the exception clause and thus the appeal for A.Y. 2010-11 bearing ITA No. 592/JP/2015 could not have been dismissed on account of low tax effect, therefore, in our view, the decision to dismiss the appeal of the revenue on low tax effect by ignoring the exception clause of CBDT Circular is an error which is apparent on record. Therefore, we recall the order [ 2019 (8) TMI 1848 - ITAT JAIPUR] and restore the appeal filed by the department with a direction to the Registry to list the appeal in the regular course and notice be issued to both the parties.
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2022 (12) TMI 166
Revision u/s 263 - Reopening of assessment u/s 147- capital gain - transaction under JDA - execution of joint development agreement amounts to transfer of the capital asset and therefore, the assessee was liable to pay capital gains tax which is escaped assessment - HELD THAT:- Each and every document which has been produced before the Registration Authority and which is subject to stamp duty cannot be regarded as a transfer deed or conveyance deed. In this case, the stamp duty has been levied in respect of Joint Development Agreement at a fixed rate and the same has not been treated by Registration Authority/Stamp Duty Authority as conveyance deed or to say transfer deed of the property. Merely, because the JDA has been registered with the registering authority and stamp duty has been paid at applicable rates for JDA, that does not ipso facto attract the provisions of section 43CA of the Income Tax Act especially when neither as per the terms of the JDA the same can be treated as transfer of an asset, nor the registering authority/stamp duty authority has treated the JDA as transfer/conveyance. No profits have been earned by the assessee either actual or hypothetical in this case. AO after examination of the facts and circumstances of the case and considering the reply of the assessee has rightly passed the assessment order, and the same in our view, is neither erroneous nor prejudicial to the interest of revenue. The impugned revision order, being bad in law, is hereby quashed. The appeal of the assessee stands allowed.
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2022 (12) TMI 165
Rectification u/s 154 - not setting off the unaccounted commission income determined by the Tribunal against the commission income offered by the assessee - HELD THAT:- CIT(A) has considered the case records of the assessee properly and observed that there was no mistake apparent on record so as to rectify u/s 154 of the Act. Being so, we do not find any infirmity in the order of Ld. CIT(A) and the same is confirmed. Appeal of the assessee is dismissed.
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2022 (12) TMI 164
TDS u/s 192 - Contribution towards PF - short deduction of TDS - allowability of deduction u/s. 80C(2) of Act for contributions to PF - assessee had failed to deduct TDS on salary payments - contribution towards PF constituted u/s. 61 of the Kerala Co-operative Societies Act 1969 is a statutory PF - as per AO notification/document was produced by Assessee nor any documents were produced to show that PF satisfies the other conditions mentioned in Sec. 80C(2) - HELD THAT:- The assessee has explained before us that on bonafide belief that contribution towards PF maintained by assessee which falls in category of statutory PF as per section 2(e) of PF Act, 1925 and deducted the sum while computing deduction of TDS on salary of the employees that resulted in short deduction of TDS and there was malafide intention. Because of considering the contribution to PF maintained by the assessee, there was wrong estimation of the salary of its employees. That was resulted in short deduction of TDS and in our opinion, the explanation given by the assessee is bonafide. As such, holding the assessee in default u/s. 201(1) of the Act is unwarranted, thereby including provisions of section 201(1) 201(1A) of the Act is also unwarranted. See MAHATMA GANDHI UNIVERSITY AND (VICE-VERSA) [ 2019 (5) TMI 1373 - ITAT COCHIN] Thus short deduction of TDS is bonafide and invoking provisions of section 201 of the Act is unjustified - Decided in favour of assessee.
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2022 (12) TMI 185
Stay of demand - petitioner submitted that this Court may direct the first respondent to pass the final order in the aforesaid appeal without any further delay and serve the copy of the order on the petitioner - HELD THAT:- Considering the facts and circumstances of the case and the final order passed nothing survives in this writ petition for further adjudication. Hence, this writ petition stands dismissed with a liberty to the petitioner to work out the remedy in the manner known to law.
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2022 (12) TMI 184
Reopening of assessment u/s 147 - notice against dead assessee - no notice issued to legal representative - asseessee had expired about 6 years back. - HELD THAT:- he assessment order was passed taking into account the fact that the assessee had expired. - The plea of the respondent authorities that they were not intimated regarding the death of the assessee Smt. Shobha Mehta, is factually incorrect. It is not in dispute that the notice of re-assessment u/s 148 was issued to the assessee Smt. Shobha Mehta who had expired about 6 years back. No notice whatsoever was issued to the legal representative/s of the assessee before undertaking the reassessment proceedings. Thus, the impugned re-assessment and the assessment order having been passed against the dead assessee, is invalid and the same cannot be sustained in the eyes of law. WP allowed.
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2022 (12) TMI 163
Revision u/s 263 by CIT - unaccounted income taxed u/s 69 - assessee during the survey proceeding has admitted the unaccounted income - As per CIT, AO had not verified this issue while finalizing the assessment proceeding and hence, the AO had not levied the tax as per the provision of section 115BBE - HELD THAT:- As it is not the case that the AO has not made any enquiry. Indeed the Pr. CIT initiated proceedings under section 263 on the ground that the AO has not made enquiries or verification which should have been made in respect of applicability of section 115BBE of the Act. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the AO had made enquiries and after consideration of material placed on record accepted the genuineness of the claim of the assessee. PCIT in his order passed under section 263 of the Act has made reference to the explanation 2 of section 263 of the Act. It was attempted by the learned PCIT to hold that there were certain necessary enquiries which should have been made by the AO during the assessment proceedings but not conducted by him. Therefore, on this reasoning the order of the AO is also erroneous insofar prejudicial to the interest of revenue PCIT has not invoked the explanation 2 of section 263 of the Act in the show cause notice about the same. Therefore, the opportunity with respect to the explanation 2 of section 263 of the Act was not afforded to the assessee. Thus, on this count the learned PCIT erred in taking the course of such provisions while deciding the issue against the assessee. Secondly, the learned PCIT has also not specified the nature and the manner in which the enquiries which should have been conducted by the AO in the assessment proceedings. Thus, in the absence of any specific finding of the learned PCIT with respect to the enquiries which should have been made, we are not convinced by his order passed under section 263 Thus we hold that there is no error in the assessment framed by the AO under section 143(3) of the Act, causing prejudice to the interest of revenue. Thus, the revisional order passed by the learned PCIT is not sustainable - Decided in favour of assessee.
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2022 (12) TMI 162
Benefit u/s 10(23C)(iiiad) - Disallowance at the rate of 10% out of total salary when EPF was also deducted from salary of the staff - HELD THAT:- As in the case of Vijay Kumar Grover vs. ITO [ 2022 (6) TMI 1101 - ITAT AMRITSAR] and Ajay Kumar Grover vs. ITO [ 2022 (7) TMI 478 - ITAT AMRITSAR] We find that the AO had purely made addition by making ad hoc disallowance out of expenditure @ 10%. The ld. AO had not specified the specific lacuna related disallowance of expenditure. CIT-DR was not able to point out any contrary view in relation to submission of ld Counsel. AO is hereby directed to delete this disallowance made amount to Rs.146100/- and 293100/-. As argued that van rent amount was duly deleted by the ld. CIT(A). This particular van rent was taken twice both debit and credit side income of expenditure account for F.Y. 2014-15. Both the entries of van rent per contra. So, both the entries are deleted from income and expenditure account. The ld. Counsel has annexed the audit report with income and expenditure account. Accordingly, the assessee is an educational society and the gross receipt is calculated after deduction of van rent - Accordingly the assessee is eligible for benefit u/s 10(23C)(iiiad) r.w.s rule 2BC of the I.T. Rule 1962. We consider the submission of ld AO. The fact is that van rent is in contra entry in both side of I E accounts. After deduction of same amount from both the sides, the Turn Over of assessee is coming below 1cr. CIT-DR had not made any strong objection against the ground of the assessee. We direct for considering the turnover amount in I E A/c to allow the benefit u/s 10(23C) of the Act.
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2022 (12) TMI 161
Reopening of assessment u/s 147 - Addition u/s 68 - bogus loan creditworthiness of creditors was not proved - DR argued that the assessee s instant application under Rule 27 is not maintainable since the CIT(A) has nowhere decided the reopening issue against him - HELD THAT:- We find that hon ble jurisdictional high court s decision in Peter Vaz [ 2021 (4) TMI 605 - BOMBAY HIGH COURT] has already rejected Revenue s identical pleas in para 38 thereof. We accordingly admit assessee s foregoing Rule 27 petition. Validity of the impugned reopening - A perusal of the Assessing Officer s reassessment herein suggest that he had initiated section 148/147 proceedings regarding the assessee s time deposits, cash deposit in bank accounts and interest income having figures respectively totaling to Rs.1,58,56,948 whereas he ended up in adding section 68 unexplained cash credits in the nature of unsecured loans/ land advances amounting to Rs.2,64,31,847/- only. The CIT(A) which has partly reversed the impugned additions in his lower appellate discussion. It is in view of forgoing admitted factual position that we hold that the Assessing Officer had not made any addition pertaining to his three folded reasons of reopening. That being the case, we quote CIT Vs. Jet Airways India Ltd. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] holding that such a reopening is not sustainable in law - Decided against revenue.
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2022 (12) TMI 160
Disallowance of interest expenses incurred by the assessee on availing the bank overdraft facility which was debited in the profit and loss account and claimed in the return of income - Sufficiency of own interest free funds - HELD THAT:- It is observed that the law is well settled that where assessee is having mixed i.e. interest free/interest bearing funds both, but the interest free funds are larger than the interest free advances than there will be a presumption that the interest free advances were given out of the interest free funds (but not out of interest bearing fund/OD) and hence, no interest can be disallowed. As noticed that this year also the assesse continued maintaining account with the Canara Bank having Overdraft Account facility on the strength of the FDRs. A careful perusal of bank Overdraft account summary, bank FDR summary submitted along with the written submission as also perusal of the other materials placed in the Assessee s Paper Book (APB) shows that all types of business receipts and all types of payments are routed through the bank Overdraft Account. This proves the fact that the assessee was having mixed funds both in form of business receipts and borrowings in the form of overdraft from the bank from time to time. It is also an admitted fact that apart from the overdraft account based on the FDR of the assesse, the assesse did not make any other borrowing or taken loan from any source as no such account appear in the balance sheet and annual statement of accounts of the assessee - all the outgoing being the investment in the mutual fund, purchases of plot, construction of building, interest free loan advances given to faculties or to some other charitable organisation (as may be noted in the next grounds of appeal), in the year before us, were made from the OD Account only or in other words, from the mixed funds being the interest free funds as also the interest bearing. The AO failed to establish the necessary nexus between the borrowings and the investment so made. We find that the controversy involved in the present case is directly covered by the case of ACIT v/s Ram Kishan Verma [ 2012 (5) TMI 417 - ITAT, JAIPUR] wherein the factual matrix is also the same. In fact, the cited case also of a coaching institute of Kota itself and there also the assessee used to receive the entire fees at the beginning of the year/session whereas it had to incur recurring expenditure on monthly basis. As a part of financial management/planning and to maximize its income, that assessee also used to deposit the entire fees in the FDRs and got OD A/c from which funds were utilized as per need. This way, it was claimed that it was assessee s own money only who did not borrow any fresh money. The disallowance made by the AO u/s 36(i)(iii) was fully deleted. However, we find the decision cited by the ld. DR in the case of CIT v/s Abhishek Industries Ltd. [ 2006 (8) TMI 123 - PUNJAB AND HARYANA HIGH COURT] has already being distinguished in this context by the above decisions. In light of above discussions and in the entirety of facts and circumstances of the case, we are of the view that the lower authorities were not justified in disallowing interest expense in the hands of the assessee. Hence Ground No. 2 of the assessee is allowed. Advances for business purposes - HELD THAT:- The facts and circumstances of the case are similar to the one which we have examined in detail in Ground no. 2 above. Apart from what has already been stated and held in preceding paras, it is noticed that the incremental outgoings in the shape of investment in mutual fund, investment in construction, loans and advances etc. totalling to Rs. 18.56 Crores as also the closing balances of the interest free outgoings up to 31.03.2010, were far below the current year s profit of Rs. 50.76 Crores and net profit before depreciation at Rs. 53.02 crores. A table submitted by the assesse in its written submission (not controverted by the Ld. DR) and reproduced somewhere in this order, support this conclusion. Our findings and directions contained in Ground No. 2 shall mutatis mutandis to these grounds of appeal as well. Thus the Grounds No. 3 and 4 of the assessee s appeal are allowed. Allowability of the claim deduction on account of the Scholarship Scheme being run by the assessee - disallowance was made mainly on the ground that it was a contingent and unascertained liability, which was based on condition of completion of 4 year course and moreover, it was a mere provision which was not allowable under the provisions of the Act - HELD THAT:- As liability towards the amount payable under the scholarship scheme was rightly claimed and authorities below were not correct in disallowing the same. Hence, the disallowance so made is fully deleted. Therefore, this ground is allowed. Disallowances of various expenses - connection charges, electricity lines, supervision charges, CTPT set cost and meter cost - HELD THAT:- A careful perusal of the facts and the material on record shows that the claimed expenditure with, AO was on account of connection charges, electricity lines, supervision charges, CTPT set cost and meter cost as contended such expenditure did not create any new asset and the facts as stated, remaining uncontroverted by the revenue, no disallowance was called for. The authorities below were not justified in making the disallowance hence, the same is hereby is deleted. Therefore, this ground is allowed. Addition on account of Internet Networking expenses - We feel that Revenue has completely failed to establish as to how such expenditure has resulted into the creation of a new asset therefore, the authorities below were not correct in making the disallowance and hence the same is also deleted. Hence, this ground is allowed. Disallowance on account of Name Transfer Fee - A careful consideration of the orders of the authorities below, rival contentions and the material placed on record, clearly shows that it was the case where the property was already purchased in CP-7, Indra Vihar, Kota. However, it was only a procedural formality of transferring the name was done whereupon, this amount was paid to the concerned authority i.e. Nagar Nigam, Kota, as evident from a copy placed at APB 151. The AO has not established that such expenditure resulted into creation of a new property or the assessee got an advantage of an enduring nature and hence, such a disallowance was wrongly made. Hence impugned disallowance is hereby deleted in full. Therefore, this ground is allowed. Construction Expenses of boundary wall - A reference has been made by the Ld. AR to the copy of invoice however it is a fact on the record that the height of the building was raised from the existing level. In that view of the matter, therefore we find the authorities below were justified in considering the expenditure as capital expenditure and in allowing depreciation therefrom to assessee hence no interference is called for. This ground of appeal is therefore dismissed. Expenditure on Regularisation of the construction of Old Building - The disallowance has been made because there has been a violation of building by laws, hence, penalty was imposed by the Urban Improvement Trust, Kota, on account of unauthorised construction made. The Ld. CIT(A) also confirmed the disallowance. Looking at the undisputed facts of the case, that it was case of penalty, it was not allowable. The authorities below were justified in disallowing the claimed expenditure. Hence, this ground of the appeal is dismissed.
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2022 (12) TMI 159
Disallowance u/s 14A - No receipt of exempt income during the relevant assessment year - HELD THAT:- Admittedly, for the relevant year, the assessee was not in receipt of any exempt income on the investments made by it. When the assessee is not in receipt of any exempt income, no disallowance u/s 14A is warranted. Disallowance u/s 43B(f) - provision made in earlier years - disallowance should have been restricted to the amount claimed in the profit and loss account - HELD THAT:- On a perusal of the orders of the A.O. and the CIT(A), it is seen that the assessee had not taken this contention before them. Therefore, in the interest of justice and equity, the matter is restored to the files of the A.O. The A.O. shall consider the claim of the assessee and shall take a decision in accordance with law. It is ordered accordingly. Appeal filed by the assessee is partly allowed.
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2022 (12) TMI 158
Addition of the interest claimed treating the loans on which interest paid as used for non business purposes - Sufficiency of interest free funds - HELD THAT:- The assessee has sufficient interest free funds and the revenue has not co-related the interest bearing fund used for non interest bearing purpose. Not only that the in the subsequent year the interest is also not disallowed in the proceedings u/s. 143(3). Thus, the facts of the case on hand and cited by the ld. AR of the assessee similar respectfully following Jurisdictional High Court decision RAM KISHAN VERMA [ 2016 (1) TMI 223 - RAJASTHAN HIGH COURT] the disallowance of interest sustained by the CIT(A) to the extent is here by vacated and in terms of these observations the Cross objection filed by the assessee is allowed.
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2022 (12) TMI 157
character of income - Served from India Scheme Scrips - addition on account of revenue receipt i.e. SFIS scrips - available and utilized for capital goods - revenue receipt or otherwise - HELD THAT:- SFIS is a credit receipt used for making payment of excise duty on domestic purchases. Scrips under SFIS are enticements which can be set off against excise duty while making purchase / import of capital goods. In no case has any amount been received by the Assessee under SFIS. All the purchases have been capitalized and hence new assets have come into existence. Assessee has not reckoned SFIS credit in its Profit Loss account, since such credit for its nature as well as built-in conditions, could never have been an item on revenue account. Wherever it has made purchases of eligible capital goods however, it has corresponded with vendors as to availability of SFIS credit against Excise / Customs liability against the said purchases, obtained certificates from Excise / Customs authorities against provisional Invoices from vendors, and has purchased the said capital goods net of Excise / Customs duty, against SFIS credit. The capital goods as purchased have been brought into Assets at the net-of Excise / Customs value in the Balance Sheet. Details of utilization of SFIS credit during the year are are examined. Documents in respect of 17 transactions of purchase, referencing the SFIS credit and its accounting are perused. The first 16 transactions are for purchase of rakes of 30 - 45 wagons, while last one is in respect of purchase of Slack less draw bar(SLDB), which is the joint between railway wagons. The rake enters the Assessee s business and the Assessee s accounts as a fixed asset, and is capitalized at the cost of acquisition - All that the SFIS credit has done therefore, is to reduce the value of a capital asset brought into the books, by the amount of excise duty thereof. Had the SFIS credit not been included, the Assessee would have paid the duty and added the same to the asset cost while capitalizing the same. There is therefore no element of revenue or income in the SFIS credit, even from the point of view of the Assessee s accounting. SFIS credit available through a specific certificate as furnished to each vendor has been utilized to make purchases of capital goods at net of Excise prices. Those capital assets have then been capitalized at the purchase value. Clearly therefore, SFIS credit is not in the nature of income. SFIS credit goes to reduce the cost of capital goods purchased by the Assessee and the SFIS credit given to the assessee can be utilized only against purchase of capital goods and to set off a portion of excise duty and customs duty only and do not constitute taxable income of the assessee as per the Clause (xviii) to section 2(24) of the Income tax Act 1961 - Appeal of the assessee is allowed.
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2022 (12) TMI 156
Transfer Pricing adjustment. - international transaction of the assessee-company with its AEs representing the sale of resins - HELD THAT:- Restriction of Transfer Pricing adjustment only in respect of the relevant international transaction of the assessee-company with its AEs representing sale of resins is squarely covered by various judicial pronouncements including the decision of Delhi Bench of this Tribunal in the case of Aithent Technologies (P.) Ltd. [ 2015 (2) TMI 535 - ITAT DELHI] relied upon by the Ld.CIT(A) in his impugned order. DR has also not been able to dispute this position. He has also not cited any case-law which is in favour of Revenue on this issue. We, therefore, respectfully follow the decision of Coordinate Bench of this Tribunal in the case of Aithent Technologies (P.) Ltd. (supra) and uphold the impugned order of the Ld.CIT(A) directing the Assessing Officer to restrict the Transfer Pricing adjustment only in respect of international transaction of the assessee-company with its AEs representing the sale of resins. Appeal of the Revenue is dismissed.
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2022 (12) TMI 183
Validity of reopening of assessment u/s 147 - violating principles of natural justice - sufficient opportunity was not granted to object to the proposed assessment - HELD THAT:- This Court has been noticing a disturbing pattern on the part of the Income Tax department by granting minimal time to assessees to explain or answer showcause notices. The principles of natural justice mandate reasonable time to be given to the assessees to reply to showcause or other notices issued under the statute. The purpose of a showcause notice is to provide an opportunity to explain the allegations in the notice. Several steps precede the reply noticecollection of materials, verification of documents, appreciation of the allegations raised in the showcause notice, consultation with professionals etc. The aforesaid attributes that precede the preparation of response alone make an effective reply. When even minimal time to initiate the above mentioned steps is denied to assessees, this Court will be justified in exercising its extraordinary jurisdiction under Article 226 of the Constitution of India to interfere with such orders violating principles of natural justice. Adequacy of notice has to be determined on the basis of facts in each case. In the instant case, petitioner cannot complain of violation of the principles of natural justice because, though short, petitioner utilised the limited opportunity granted to him and filed an effective reply. In such circumstances, remedy of the petitioner, if any, is to move the Appellate Authority challenging Ext.P9.
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2022 (12) TMI 198
Validity of reopening of assessment u/s 147 - issuance of notice u/s 143(2) - Period of limitation - non serving statutory notice u/s 143(2) of the Act within statutory period - whether issuance of notice u/s 143(2) of the Act is mandatory after filing of return of income in response to the notice issued u/s 148? - HELD THAT:- We find that the Ld. Commissioner thoroughly considered the factual positions of the case and even examined the assessment record and also called for the comments of the AO and thereafter only came to the conclusion, on which we are having concurrence that no notice u/s 143(2) was served upon the Assessee within the statutory period prescribed in the Act and notice u/s 143(2) issued on dated 12.08.2009 is time barred and no assessment can be made on such notice and consequently the Assessment order held to be null and void and deserves to be annulled. Even otherwise we do not find any reason and material to controvert the findings of the Ld. Commissioner and therefore are not inclined to interfere with the impugned order consequently, the appeal filed by the revenue department stands dismissed.
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Customs
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2022 (12) TMI 154
Fixation of the minimum price for importation of betel nuts? - authority of the Central Government to regulate the importation of betel nuts otiose resulting in creating a precedence by which the Central Government shall not have the power to regulate and/or control the importation of any item - power and competence of the DGFT to issue notification restricting the importation of betel nuts below the CIF value fixed by the DGFT - Whether the Learned Tribunal failed to appreciate that the tariff value fixed by the importer and duty paid thereunder is not at all applicable in the facts and circumstances of the case nor the same has any legal validity in view of the fact that the tariff value fixed by the importer in its shipping bill has been annulled and/or overridden due to the notification issued by the DGFT in fixing the CIF value of betel nuts for the purpose of importation? HELD THAT:- The issue involved in this appeal is as regards the effect of the notification issued under the provisions of the Foreign Trade (Development and Regulation) Act, 1992. The learned Tribunal had followed the decision of the Co-ordinate Bench of the Tribunal in the case of M/S INTERNATIONAL SEAPORT DREDGING LTD. VERSUS CC ST, VISAKHAPATNAM-CUS [ 2016 (11) TMI 176 - CESTAT HYDERABAD ] and held that the betel nuts which were imported by the respondent by declaring the prices which were less than the minimum import price specified by the DGFT cannot be held as import of prohibited goods. Consequently, the order of confiscation was set aside along with the order for payment of redemption fine and penalty. As rightly pointed out by the learned standing counsel for the revenue, the law on the subject as settled by this Court and subsequently by the Hon ble Supreme Court could not be placed before the Tribunal for its consideration, the first of the decisions being the Hon ble Division Bench of this Court in the case of UNION OF INDIA VERSUS NAVIN KR. JHA, ARUP KUMAR GARAI, M/S. SHEROWALI VANIJYA PVT. LTD., SOUMEN DAS, MOHAMMED SABEER, SUNIL AGARWAL, ANGKITA DHAR, RAHUL SOMANI, ARJUN KUMAR CHAUDHURY, MOHAMMED RAZA, M/S. S.S. TRADING CO., AMIT KUMAR, M/S. MAA BARA SHYAMA ENTERPRISES, BIMAL KUMAR MODI, M/S. STAR EXIM AND KANIKA DHAR @ KANIKA DEY DHAR [ 2016 (2) TMI 1350 - CALCUTTA HIGH COURT ] . An identical issue arose for consideration in the said case where the intra-court appeal by the Union of India was against an order passed in a batch of writ petitions whereby the notification dated 13th May, 2013 imposing price restrictions by exercising the powers under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 was set aside. The matters are remanded back to learned Tribunal for fresh consideration, to take note of the decision referred to above as well as the decisions and submissions which may be placed before the Tribunal during the course of hearing and a reasoned and speaking order be passed by the learned Tribunal in accordance with law. Appeal allowed by way of remand.
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2022 (12) TMI 151
Levy of redemption fine and penalty - misdeclaration of quantity and value of imported Polished Granite Slabs - appellant have declared 465.000sqm as against the actual quantity of 520.752sqm - HELD THAT:- As per Public Notice No. 17/2010 dated 29.06.2010, it is absolutely clear that even if variation is up to 5% or more than 5%, value of the excess weight has to be added in the bills of entry and duty shall be recovered. In case of variation is above 5% not only value shall be added but the same will be adjudicated with redemption fine and penalty. Therefore, both the impugned orders were passed in accordance with the Public Notice 17/2010 dated 29.06.2010. The judgments relied upon by the appellant in GE INDIA INDUSTRIAL PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [ 2009 (9) TMI 808 - CESTAT CHENNAI ] and GM EXPORTS VERSUS COMMR. OF CUSTOMS, BANGALORE [ 2008 (2) TMI 691 - CESTAT, BANGALORE ] are on different facts therefore same are not applicable in the present case. There are no infirmity in the impugned orders hence the same are upheld and appeals are dismissed.
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2022 (12) TMI 153
Refund of IGST - initiation of fresh proceedings/filing of appeals by the respondents - HELD THAT:- Learned senior standing counsel for the respondents fairly submits, on instructions, that immediate steps will be taken by the respondents to withdraw the appeals, stated to have been filed against the IGST refund order/s dated 04.05.2021, and further expeditious steps will also be taken to forthwith withdraw the consequential protective show cause notice/s stated to have been issued to the petitioners. It is assured that the necessary steps in this regard shall be taken latest within a period of four weeks from today.
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2022 (12) TMI 152
Maintainability of petition - refund claim - Auction - seized Betel Nuts - Whether respondent petitioner can take shelter under Section 150 and Section 14 of the Customs Act, 1962 for the purpose of claiming approximate value assigned in the seizure report or not? - HELD THAT:- The writ petition filed by the respondent - petitioner is not maintainable for the reasons that there are three materials in respect of value of the seized betel nuts namely self declaration made by the respondent dated 13.01.1999 and he had valued at Rs. 8,59,125/- and the same amount is supported by Annexure 3 series. On the other hand, approximate value has been assigned by the seizure of the goods authority on 22.01.1999 and it is valued at Rs. 21,68,100/- - thus, it is a clear case of disputed facts hence, writ petition is not maintainable, however, having regard to the fact that alleged incident relates back to of the year 1999 read with writ petition filed in the year 2005 and L.P.A. filed in the year 2011 and we are in the year, 2022, we thought that matter is warranted for giving quietus . The respondent - petitioner cannot have any assistance in terms of the aforesaid Sections for the reasons that he has not questioned the validity of the auction proceedings undertaken by the appellant Department. As long as respondent petitioner has not questioned the validity of the auction proceedings, he cannot contend that there is a violation of Section 14 and Section 150 of the Customs Act, 1962. The appellant - Department have made out a prima facie case so as to interfere with the order of the learned Single Judge dated 25.01.2011 passed in C.W.J.C. No. 2221 of 2005 and the fact that during pendency of the present lis , the respondent petitioner has been extended a sum of Rs. 8,59,125/- along with 10% interest - the respondent petitioner is entitled to refund of sum of Rs. 8,59,125/- in terms of self declaration dated 13.01.1999 read with receipts dated 19.01.1999, since self declared value has been paid along with interest, nothing remains in the present lis . Application allowed.
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2022 (12) TMI 155
Interest for delayed remittance of refund on account of IGST - HELD THAT:- The Special Leave Petition under Article 136 of the Constitution not entertained. The Special Leave Petition is accordingly dismissed.
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Insolvency & Bankruptcy
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2022 (12) TMI 150
Failure on the part of IRP to discharge his duties or not - levy of penalty on IRP - HELD THAT:- Prima facie, having read the provisions of Sec.12 (2) of the I.B.C and the contents of the order under challenge which extensively quoted the observations of the adjudicating authority, it is evident that there cannot be any negligence attributed to the petitioner who was to follow the provisions of Sub-sec.2 of Sec.12 of I.B.C. On this count, on a condition that the petitioner deposits Rs.2 lakhs as envisaged under the order by way of a penalty in the registry, on or before 09.12.2022, issue notice to the respondents, returnable on 17.01.2023. There shall be ad-interim relief in terms of para 49(c), till then.
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2022 (12) TMI 147
Jurisdiction - Whether Corporate Debtor had no authority to make any expenditure after initiation of the CIRP? - Section 19(2) of IBC - HELD THAT:- The Adjudicating Authority erred in rejecting the said transaction by observing that there is no proof that expenditure was for towards the diesel consumption. When explanation was given in the reply, for running two DG sets the expenditure of Rs.1,60,000/- towards diesel ought to have been accepted by the Adjudicating Authority. Further the Adjudicating Authority did not even advert to the explanation - there is no occasion for imposing any fine in the facts of the present case. The Adjudicating Authority has itself observed that the Corporate Debtor has cooperated with the IRP and RP, in para 23. We, thus, are satisfied that the direction to deposit Rs.1,60,000/- and fine of Rs.1,00,000/- deserved to be deleted and is hereby deleted. The law that after initiation of the CIRP the Directors are not entitled to operate any account and use any assets of the Corporate Debtor is well settled and present is a case where no appeal has been filed by the Resolution Professional challenging the order in which other two transactions have been accepted.
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2022 (12) TMI 149
Constitutional validity - Regulation 36A of IBC - splitting of the CIRP into inviting expression of interest and then seeking resolution plans - Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - ultra vires of Section 240(1) of the Insolvency and Bankruptcy Code, 2016 or not - HELD THAT:- A perusal of the IBC would show that Section 3(1) of the IBC defines `Board as the Insolvency and Bankruptcy Board of India established under Section 188(1) of the IBC. The Board is inter alia, entrusted the functions of registration of insolvency professional agencies, promotion and development of such agencies, supervision of insolvency professional agencies and insolvency professionals, investigation for insolvency professionals, the maintenance and publication of information and data as may be provided in the regulations, conduct periodic studies, alliances with other statutory authorities etc. The IBC also specifies a mechanism for issuing Regulations after doing a public consultation process - A perusal of the powers and functions of the Board shows that the overall supervision and functions under the IBC are to be carried out by the Board. Section 196(2) of the IBC also vests with the Board, the power to make model bylaws to be adopted by the insolvency professional agencies. The Board s power to issue Regulations are recognized in Section 240 of the IBC. Insofar as the present case is concerned, there was no challenge to Regulation 36A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 before the NCLT. Therefore, in an application seeking extension of time to complete the CIRP process, the NCLT has gone ahead and declared the Regulation 36A as ultra vires. In the present case, a conjoint reading of the provisions of the IBC clearly shows that the NCLT is the adjudicating authority under the IBC. Under Section 60(5) the categories of cases which can be adjudicated have been clearly enumerated. The jurisdiction to deal with the validity and legality of the Regulations framed under the IBC is not conferred upon the NCLT. The NCLT being a creature of the IBC, cannot assume to itself the power of declaring any provisions of the IBC or the Regulations as illegal or ultra vires. This is the clear view even of the NCLAT in M/s Mohan Gems Jewels Pvt. Ltd. [ 2021 (8) TMI 1000 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ]. Since Regulation 36A has been amended and passed in accordance with law by the IBBI, the NCLT did not have the power to declare the same as being ultra vires merely on the ground that the two stage process provided in it i.e., of inviting an expression of interest first and then the financial bids, would be contrary to the speedier resolution of the Insolvency Resolution Process - Petition disposed off.
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2022 (12) TMI 148
Recovery proceedings of debts - attachment of movable/immovable property of the petitioners - section 19 of the Recovery of Debts and Bankruptcy Act, 1993 - HELD THAT:- It appears that the petition filed by the petitioners is nothing but adopting delay tactics for not permitting the respondent banks to recover the outstanding dues or to give effect to the sale confirmation made by the Recovery Officer by impugned order dated 28.11.2019. It is not in dispute that the petitioners have not challenged the judgment and award dated 13.12.2018 passed by the DRT in OA No. 184/2017 before the Debts Recovery Appellate Tribunal as per the provisions of section 20 of the RDB Act and therefore, judgment and award dated 13.12.2018 has achieved finality - This contention of the petitioners cannot be accepted in view of facts emerging from the record to the effect that there is no order on record to show that moratorium period was extended by NCLT after passing of the order on 21.12.2017. The DRT passed order on 13.12.2018 and as per section 14 of the IBC, moratorium period is only for 180 days which would have been over in month of June 2018. In such circumstances, contention of the petitioners that judgment and award passed by DRT is contrary to the provisions of IBC is required to be rejected in absence of challenge to such judgment and award by the petitioners. Consequential recovery proceedings before the recovery officer therefore, cannot be said to be without jurisdiction. If the petitioners are aggrieved by the impugned order dated 28.11.2019 and consequential notice for possession dated 3.12.2019, are required to challenge the same before the presiding officer of the DRT as per the aforesaid provision of section 30 of the RDB Act. In the facts of the case as per the settled legal position, it cannot be said that the orders passed by the DRT as well as Recovery Officer are in any manner contrary to the provisions of IBC more particularly when judgment and award passed by the DRT has achieved finality in absence of any challenge thereto. The petition is not entertained and is accordingly dismissed.
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2022 (12) TMI 146
Jurisdiction - power of Tribunal to entertain and decide an application for condonation of delay beyond the period of 45 days - Section 61 of I B Code - HELD THAT:- Section 61(1) provides that any person who is aggrieved by the order of the Adjudicating Authority can prefer an Appeal to the NCLAT. Section 61(2) says that every appeal preferred under Section 61(1) has to be filed within 30 days before the Appellate Tribunal. Proviso to 61(2) says that the Appellate Tribunal may allow the appeal after expiry of 30 days if it is satisfied that there is a sufficient cause in not filing the appeal in time but such period should not exceed 15 days. There is no other proviso in the Code, which is complete in itself, for the purpose for providing a window for filing the appeal beyond the period of 45 days. The plain reading of the aforesaid provision that the Appellant has a statutory right without any hindrance to file an appeal within 30 days before the Appellate Tribunal. But in case the appeal is filed by the Appellant, because of sufficient reason, within a further period of 15 days, it can seek condonation of delay in not filing the appeal by filing an Application under Section 5 of the Act. In these circumstances, the judgment relied upon by the Appellant in the case of Sesh Nath Singh [ 2021 (3) TMI 1183 - SUPREME COURT ] would be helpful to him but when the appeal has been filed beyond the period 45 days, then the decision rendered in the case of National Spot Exchange Limited Vs. Anil Kholi [ 2021 (9) TMI 1156 - SUPREME COURT ] would be applicable by which the Hon ble Supreme Court has held t he Appellate Tribunal has no jurisdiction at all to condone the delay exceeding 15 days from the period of 30 days, as contemplated under Section 61(2) of the IB Code. We have no doubt in our mind that the Appellant has missed the bus by causing delay in filing the appeal beyond the period of 45 days and cannot take the plea of an innocent litigant because it is not the jurisdiction of the Appellate Tribunal to look into the sufficient cause or otherwise while hearing the Application which has been filed under Section 5 of the Act for seeking condonation of delay beyond the period of 45 days. The appeal is hopelessly time barred and the same is hereby dismissed.
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2022 (12) TMI 145
Liquidation of Corporate Debtor - section 33 of IBC - HELD THAT:- This Appellate Tribunal notes that from the reading of the Impugned Order dated 02.06.2022, it is quite evident that the Adjudicating Authority did everything under its command and available options within its purview under I B Code, 2016 and Insolvency Bankruptcy Board of India (Corporate Insolvency Resolution Process) Regulations, 2016 to avoid Liquidation of the Corporate Debtor. The Adjudicating Authority gave fair and equal chances to both the Resolution Applicants to the extent that a Resolution Plan in tandem and in co-operation of both the Parties could be submitted, however both the Parties could not do so. Towards the end of the Corporate Insolvency Resolution Process, a Resolution Applicant proposes a Resolution Plan which is placed before the Committee of Creditors by the Resolution Professional and upon several deliberations by Committee of Creditors, the crucial decision pertaining to the approval or rejection of a Resolution Plan is taken. Thereafter, if a rejected plan is placed before the Adjudicating Authority, the Adjudicating Authority is expected to do nothing more, but to initiate the Liquidation process under section 33(1) of I B Code, 2016, but if the plan is approved by at least 66% Voting Share of Committee of Creditors and is placed before the Adjudicating Authority for its approval, the Adjudicating Authority has to look into two basic check boxes, only then the Plan stands approved and binding on all the Stakeholders. This Appellate Tribunal is very conscious of the fact that Liquidation should be the last resort as this virtually tantamount to death knell of the Corporate Debtor, However, it is also to be considered that the Corporate Insolvency Resolution Process proceedings are required to be completed within stipulated period as stipulated in Insolvency Bankruptcy Board of India (Corporate Insolvency Resolution Process) Regulations, 2016, herein this case the Adjudicating Authority has taken all the precaution and action to ensure that the Corporate Debtor is kept as a going concern - the Adjudicating Authority has no jurisdiction and/ or authority to analyse or evaluate the decision of the Committee of Creditors to enquire into the justness of the rejection of the Resolution Plan by the dissenting Financial Creditors. The Adjudicating Authority was right in ordering Liquidation of the company, as per Section 33(1) of the I B Code, 2016 - Appeal dismissed.
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2022 (12) TMI 144
Financial Debt or not - related parties - Appellant claim denied on the ground that the amounts were only for Equity, when admittedly, no shares were Transferred, Allotted or the Appellants were recognized as Equity Holders - Whether the debt claimed by appellants can be considered as financial debt u/s 5(8) of the I B Code 2016? - HELD THAT:- The financial debt is an inclusive and non-exhaustive definition given under Section 5(8) of the I B Code to mean a debt alongwith interest, if any, which is disbursed against the consideration for time value of money. Financial creditors have relationship with the entity as financial contract, like loan or security etc. Whereas, an operational debt as defined under section 5(21) of I B Code, 2016 signifies a claim in respect of the provisions of goods or services. We are not in position to treat the money brought it as Financial Debt. The basic element of the Financial Debt that such disbursement should be for consideration of Time Value of Money is not directly evident here. Admittedly, the Appellants have brought in more than Rs. 17 Crore, however it will not automatically fall in the definition of debt and more so of financial debt in relation to the Corporate Debtor. Since it cannot be classified as financial debts, the Appellants cannot be treated as financial creditor - the Resolution Professional s reason are directed to not include claims of the Appellants in the Resolution Plan as Financial Debt and also due to the fact that the Appellant being related party which has been confirmed by the Adjudicating Authority in the impugned order is found to be correct. Whether the impugned order passed by the Adjudicating Authority was incorrect holding the Appellants as related parties keeping in view provisions on I B Code 2016 and IBBI rules and regulations? - HELD THAT:- In the present Appeal, it is clear that the Appellants have been handling day-to-day operations of the corporate debtor. The Appellant No. 2 was working as Key Managerial Personnel of the Corporate Debtor, the Appellants were also relative of one of the Director in Board of Directors (albeitly for a short period and further not on the date of Corporate Insolvency Resolution Process) - The Appellant also falls in provision of Section 5(24)(h), 5(24)(m)(i) 5(24)(m)(iv) as mentioned herein above due to their day to day involvement in operation of the Corporate Debtor. The Interim Resolution Professional was right in holding the Appellant as Related party which was upheld by the Adjudicating Authority. There are no error in the impugned order . Whether the Resolution Plan was approved correctly when no provision had been made for the claims of the Appellants? - HELD THAT:- The term claim is defined under section 3(6) of the code. A claim, according to this clause, is a right to payment as well as a right to redress. So basically, a claim only exists if there is a right to payment, and if there is no right to payment, there is no claim at all. Thus, the right to payment will emphasize the concept of a claim whether or not the right is fixed, disputed, undisputed, legal, equitable, secured, or unsecured and similarly, the right to redress falls within the claim category - If the Resolution plan is approved by CoC, then it stands binding for all. This Tribunal does not find any error in the impugned order as regards the Approval of the Resolution Plan - this Tribunal consciously notes the fact that the I B Code, 2016 is commercial beneficial legislation with sole intent for earlier Resolution in Insolvency Cases and facilitate environment for putting back the Corporate Debtor on its legs. The I B Code, 2016 is consciously not meant for recovery mechanism for Debt Enforcement Procedure which other remedies are available as per law and in the manner known to law. Appeal dismissed.
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PMLA
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2022 (12) TMI 143
Money Laundering - proceeds of crime - Petitioner claimed as being whistle blower made an accused - The mens rea behind the accused / petitioner was to check and hamper the ongoing PIL which has further come in the investigation - registration of the ECIR case is condition precedent and commission of scheduled offence - grant of interim bail - HELD THAT:- The Court has gone through the materials on the record and finds that admittedly only the ECIR is under challenge in this petition, which is internal document of the ED and that might have been communicated to the Court and this aspect of the matter has been considered by the Hon'ble Supreme Court about internal document of the ECIR in Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT] , where it was held that since the inquiry in due course ends in identifying the offender who is involved in the process or activity connected with the proceeds of crime and then to prosecute him, it is possible for the department to outline the situations in which that course could be adopted in reference to specific provisions of 2002 Act or the Rules framed thereunder; and in which event, what are the options available to such person before the Authority or the Special Court, as the case may be. Such document may come handy and disseminate information to all concerned. Looking into Section 3 of Prevention of Money Laundering Act, it is crystal clear that whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering. Admittedly, this petitioner has handed over the sum of Rs.50 Lakhs to Mr. Rajeev Kumar. Section 7A of the Prevention of Corruption Act speaks that giver and taker of bribe, both are liable to be prosecuted, which comes under scheduled offence in light of Section 2(1)(u) of the Prevention of Money Laundering Act - In the case in hand, serious allegation is there against this petitioner, who tried to malign the image of judiciary and high officials of the Government and ED. Thus, that case is not helping the petitioner. Thus, the argument of Mr. Nigam, learned senior counsel appearing for the petitioner with regard to jurisdiction is not accepted by this Court and the same is negated. The prayer of the petitioner with regard to release on interim bail under Article 226 of the Constitution of India is not made out and that prayer is rejected. Whether the accused would have any say in selecting the method of inquiry or the investigating agency? - HELD THAT:- It is well settled that the High Court under Article 226 of the Constitution and the Hon'ble Supreme Court under Article 32 of the Constitution can direct the CBI to investigate into any specific case or to conduct an inquiry against a person. It can do so only when there is sufficient material before the Court to come to a prima facie conclusion that there is a need for such an inquiry. There is no doubt that such inquiry cannot be ordered as a matter of routine or merely because a party makes an allegation and if after considering the materials on record the Court concludes that such materials disclose a prima facie case calling for investigation by the CBI, the Court can pass necessary order. In the case in hand, this petitioner has tried to scandalize the judiciary, ED officials and Government officials particularly considering that Hare Street P.S. Case was registered with the police station, which was not within the jurisdiction of resident or office of the petitioner, which suggests that there is larger conspiracy to malign the image of judiciary, ED and other officials including the Court staff, which is a serious matter and this all has come in the investigation of the ED. Such type of allegation brought to the knowledge of the Court cannot be allowed to go unattended - Once the preliminary inquiry report is submitted, the Director, CBI shall be at liberty to choose further course of action, in accordance with law. Petition dismissed.
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2022 (12) TMI 142
Money Laundering - Onus on Chartered Accountant (CA) for giving certificate - scheduled offences - whether mere issuance of five numbers of Form 15CB at the request of client, would by itself, brings the CA into the net of conspiracy to indulge in money laundering? - HELD THAT:- As regards the requirements for submission of Form 15CB, we find from the records that only the State Bank of Travancore had insisted upon the said certificates and not the other six banks through which, foreign remittances were made by Kiyam Mohammed [A7] and Abdul Haleem [A8]. The complaint and the accompanying background show that Abdul Haleem [A8] had operated the bank accounts and Kiyam Mohammed [A7] had facilitated the opening of the bank account and preparation of various documents by availing the services of various persons including Murali Krishna Chakrala, an Auditor, for the limited purpose of obtaining Form 15CB for transferring monies from State Bank of Travancore, Mount Road Branch. A reading of paragraph Nos.81 and 143 of the impugned complaint, which have been extracted supra, shows that Murali Krishna Chakrala had issued five numbers of Form 15CB in favour of B.K.Electro Tool Products, which were handed over by him to his client Kiyam Mohammed [A7] for which, a sum of Rs.1,000/- per certificate was given to him as remuneration. Even on a demurrer, on a perusal of Form 15CB, we find that a Chartered Accountant is required to only examine the nature of the remittance and nothing more. The Chartered Accountant is not required to go into the genuineness or otherwise of the documents submitted by his clients. This could be compared with the legal opinion that are normally given by panel lawyers of banks, after scrutinizing title documents without going into their genuinity. A Panel Advocate, who has no means to go into the genuinity of title deeds and who gives an opinion based on such title deeds, cannot be prosecuted along with the principal offender. Applying the same anomaly, we find that the prosecution of Murali Krishna Chakrala, in the facts and circumstances of the case at hand, cannot be sustained. This Criminal Revision is allowed.
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2022 (12) TMI 141
Seeking grant of anticipatory bail - Hawala transactions - proceeds of crime - predicate offence/scheduled offence or not - allegations are that the accused on the basis of forged documents, obtained illegally, a total number of 263 Reliance WLL PCO phone connections which were activated during the period between 18.04.2011 and 30.07.2011 and through the said phone connections, earned illegal money by making calls on certain pre-fixed international numbers and putting on hold such calls in the manner described in the complaint. HELD THAT:- The role of Shri Shafaat Ejaz Siddiqui was found to be clearly covered by the definition of offence of money laundering as defined under Section 3 of the PML Act. The proceeds of crime was projected in the form of two immovable properties and bank balance available in various accounts in which proceeds was received from abroad - Shri Tabish Mansoor was found to be involved in running of 112 out of 263 numbers of Reliance WLL phones in association with Shri Shafaat Ejaz Siddiqui and he was found to be in possession of proceeds of crime in cash worth Rs.10,20,000/- which was concealed by him for the purpose of money laundering. Rigors of Section 45 of the PMLA have to be applied while considering the prayer for grant of anticipatory bail. This court is of the view that there is sufficient documentary evidence available on record to substantiate involvement of the accused-applicants in the offence of money laundering. Economic offences constitute a class apart and need to be visited with a different approach in the matters of bail. The proceedings of predicate offence and that of money laundering are separate and mere grant of bail in predicate offence does not become basis to grant of bail in case of money laundering. Details of proceeds of crime have been mentioned in the complaint which would disclose crores of rupees was transferred in the accounts of the accused-applicants and they utilized the said proceeds of crime for their own purposes or some other purposes - Trial court has noted that the accused-applicants have been avoiding due process of the court and, therefore, their anticipatory bail applications had been rejected by the learned trial court. These applications for anticipatory bail are hereby rejected.
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2022 (12) TMI 140
Seeking grant of anticipatory bail - predicate offence - proceeds of crime - allegation is that the accused-applicant took 30% commission in cash from the said company, inter alia, and passed the bills and he was instrumental in awarding the tender to the said company from where the medicines were purchased on exorbitant rates - HELD THAT:- It would be apt to take note of the relevant paragraph of the judgement/order passed by the Supreme Court in the case of Parvathi Kollur and another Vs. State by Directorate of Enforcement [ 2022 (8) TMI 1256 - SC ORDER ] where it was held that the High Court was not right in setting aside the discharge order despite the fact that the accused No. 1 had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence. This Court is of the view that the accused-applicant is entitled to be enlarged on anticipatory bail - Let accused-applicant, Mehar Singh be enlarged on anticipatory bail with the conditions imposed - application allowed.
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Service Tax
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2022 (12) TMI 138
Eligibility for benefit of abatement under N/N. 15/2004- S.T. dated 10.09.2004 as amended by N/N. 19/2005- S.T. dated 07.06.2005 and N/N. 01/2006-S.T. dated 01.03.2006 - Composite services or not - construction services - construction of commercial and industrial buildings - civil structure services - construction of complex services - services to the non-commercial concerns - time limitation - HELD THAT:- The services in question were actually the work contracts as stands under Section 65 (105)(zzzza) of Service Tax Act. Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ], it was held that: there was no charging section specifically, prior 01.07.2007, for levying service tax only on works contracts, and measure of tax with service element derived from gross amount charged for works contract less value of property in goods transferred in execution of works contract. Section 65(105)(g), 65 (105)(zzd), 65(105)(zzh), 65(105)(zzq) and 65(105)(zzzh) ibid were not sufficient for levying Service Tax on indivisible composite works contracts. Exemption notifications for impugned services were immaterial, and had to be disregarded, since levy itself of Service Tax was non-existent, no question of any exemption would arise. Hence, we are of the opinion that the question of demanding service tax on such contracts does not at all arises. These findings are sufficient for us to hold that the entire demand for the period prior to July 2007 is liable to be set aside. For the period post July 2007, works contracts could be changed only under Works Contract Service [Section 65 (105) (zzzza)] and there is no demand under this head at all. Therefore, the demand for this period also cannot be confirmed. Extended period of limitation - HELD THAT:- The demands also need to be set aside for the reason that the revenue has failed to produce any evidence to prove a positive act on the part of the appellant to have an intent to evade the payment of tax. The appellant rather is a government undertaking being managed by the Government Officers itself, there can be no intent to evade its own revenue. The extended period is therefore held to have been wrongly invoked by the adjudicating authority below. Demand for normal period - HELD THAT:- The admissions/undisputed facts on record are sufficient to show that the appellant has not provided any service at all. The services were being provided by the sub-contractor appointed by the appellant. In the said circumstances, the service tax liability cannot be fastened upon the appellant that too for such services which were purely for non-commerce/industry purposes - the services in question are alleged to involve both supply of goods and services and hence cannot be changed under CICS at any rate. The entire demand is held to have wrongly been confirmed. Once the very basis of confirmation of demand goes, the question of legality of enhancement and question of competence to enhance thereof without affording opportunity of hearing to the appellant becomes redundant. Similarly the question of invoking Section 80 waiving off the penalties of Section 70, 76 and 77 of the Finance Act, 1994, becomes redundant. No purpose left anymore for remanding the matter. The order of imposition of duty has been set aside as being not warranted for services being rendered for non-commerce purpose and otherwise were not reduced by appellant, question of remanding the matter does not arise - Appeal disposed off.
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2022 (12) TMI 137
Rejection of refund claim - non-availability of balance in cenvat credit - non-compliance with condition of debit of amount equivalent to refund claim in CENVAT credit account - rule 5 of CENVAT Credit Rules, 2004 - HELD THAT:- There is no doubt that the remand order takes note of the evidence furnished by the appellant to substantiate the claim of having complied with condition of debit of the CENVAT credit account by directing the original authority to scrutinise this submission once again. There is also no doubt that the lower authorities, in proceedings pursuant to the remand order, have come to the conclusion that not carrying forward the balance of credit in the returns pertaining to the said period is not sufficient for accepting the claim of the appellant that procedural requirements had been complied with. The provisions in the notification for operationalizing of rule 5 of CENVAT Credit Rules, 2004 include debiting of the claim amount before submission of application for the same. There is a purpose behind this mandate: that the claimed amount would be erased from the credit account and, thus, not utilised even temporarily once monetization has been sought. Ideally, credit should be reversed as and when export takes place; however, with eligibility for refund arising only upon receipt of proceeds of export and the scheme having provided for filing of claim within a year thereafter, the dilution of ideal by shift to the quarter in which the claim is preferred is acceptable approximation. Therefore, the submission of the appellant would meet the test of sufficiency only by evincing continuous availability of such balance from the date of filing of the claim for refund till the date on which the opening balance reflected write-off of the entire credit as claimed by them - the appellant is, squarely and singularly, responsible for failure to furnish proof of the required availability of credit till the date of write off and, in the absence of any such evidence even at this stage of appeal or even assurance of being ready and willing to do so, there is no scope for further ascertainment. The decision of the Tribunal in SILICON IMAGE INDIA RESEARCH DEVELOPMENT PVT. LTD. AND ORS. VERSUS CCE ST, HYDERABAD-IV AND ORS. [ 2017 (8) TMI 1686 - CESTAT HYDERABAD] and in BA CONTINUUM INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX-II, MUMBAI [ 2018 (6) TMI 1011 - CESTAT MUMBAI] have, no doubt, enumerated the principle that a rectifiable lapse in procedure should not lead to denial of refund but the outcome therein has been decided on the fact of post-claim rectification. While concurring with the principle, we find that, on the facts made known in this appeal, material presented before us does not support extending that outcome in this dispute. There are no reason to hold the impugned order as contrary to the terms of the remand ordered in the first round of appeal - appeal dismissed.
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2022 (12) TMI 139
CENVAT Credit - input services or not - construction of immovable properties - works contract services - Section 2(1)(ii) of the Cenvat Credit Rules, 2004 - HELD THAT:- An identical issue stands dealt with by a Division Bench of this Court in COMMISSIONER CENTRAL EXCISE COMMISSIONERATE, DELHI-III VERSUS M/S BELLSONICA AUTO COMPONENTS INDIA P. LTD. [ 2015 (7) TMI 930 - PUNJAB HARYANA HIGH COURT] - In the aforesaid case the assessee had availed Cenvat credit for service tax paid on civil work of constructing a plant/factory in the premises, namely, the manufacturing plant and for rental of the immovable property leased by it on which the plant was erected. The dictum laid down in Bellsonica Auto Components India P. Ltd. would squarely apply in the facts of the present case as well. There are no patent infirmity in the findings returned by the Tribunal - appeal dismissed.
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2022 (12) TMI 136
Grant of proper interest under Section 35 FF of the Central Excise Act - calculation of interest from the date of deposit instead of 3 months after the order of the Tribunal or not - HELD THAT:- The order of the Court below is contrary to the provisions of Section 35 FF. The said Section provides for grant of interest from the date of deposit till the date of grant of refund. Accordingly, this appeal is allowed. The impugned order-in-appeal is set aside. Further, this Tribunal allowed the interest @12% per annum, following the ruling of the Division Bench in the case of Parle Agro Ltd. [ 2008 (3) TMI 67 - CESTAT NEW DELHI ] - The Adjudicating Authority is directed to grant differential interest from the date of deposit till the date of refund within a period of 60 days from the date of receipt of copy of this order. Application disposed off.
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Central Excise
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2022 (12) TMI 135
Interest on refund claim - interest is to be granted from the expiry of three months from the date of fling of the initial refund claimed or from the date of the order of the authority finally granting refund? - section 11BB of CEA - HELD THAT:- The date of fling of application for refund before the Authority is not in dispute. Assuming that the Assistant Commissioner of Central Excise, in the present case, had proceeded to accept the claim of the Appellant for refund and proceeded to pass an Order in terms of Section 11B(2) of the Act, then in case the amount was not refunded despite such an Order, the Appellant would be entitled to interest on the delayed payment of the refund after the expiry of three months from the date of such an Order. Section 11B, therefore, does not at all envisage an application to be fled seeking refund. The only application, which Section 11B envisages is an application for refund in terms of Section 11B(1) and the only Order that the said Section 11B envisages is an Order under Section 11B(2), where if satisfied, the Assistant Commissioner of Central Excise or Deputy Commissioner may make an Order for refund of the whole or any part of the duty of excise and interest if any paid on such duty paid by the Appellant. The explanation appended to Section 11BB clearly takes care of a situation, where an Order of refund is made by the Commissioner of Appeals, the Appellate Tribunal or any Court against an Order of the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise under sub-section (2) of Section 11B, such an Order would be deemed to be an Order passed under the said sub-section (2) of Section 11B for the purposes of Section 11BB, that is payment of interest on delayed refund. The tribunal, in its Order impugned wrongly applied the judgement of the Apex Court [ 2011 (10) TMI 16 - SUPREME COURT] for purposes of denying the benefit of interest on delayed refund by holding that it was not entitled to the same from the date of the application under Section 11B(1), but only after the expiry of three months from the date of the Order of the tribunal dated 10 February 2016, if such applications were fled in terms of the said Order and were disposed of within three months thereof. Appeal allowed - decided in favor of appellant.
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2022 (12) TMI 134
CENVAT Credit - dutiable as well as exempted goods by using cenvated inputs - reversal of 6% of the value of exempted goods in terms of Rule 6(3) of Cenvat Credit Rules, 2004 - Whether after such compliance, there is any contravention of condition of Notification No. 30/2004-CE dated 09.07.2004 which in order to avail it, stipulates that assessee should not avail Cenvat credit? HELD THAT:- From the above sub-rule (3D) of Rule 6, it is clear that even though assessee availed Cenvat credit but in compliance of Rule 6(3), they reversed the credit which will amount to non-availment of credit. With this statutory provision once the appellant complied with the provision of Rule 6(3) by reversing the credit, the condition of the notification automatically stand met. Therefore, it cannot be said that the appellant have violated the condition of notification. Since the penalty is consequential to demand in the present case and the said demand is not sustainable, the penalty on the appellant is also not sustainable. Hence there is no merit in the Revenue s appeal. Appeal allowed - decided in favor of appellant.
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2022 (12) TMI 133
Valuation - Short payment of Central Excise duty - inclusion of cost of transportation incurred from the factory to the place of removal (destination) for arriving at the assessable value during the relevant period or not - factory gate - place of removal - period August, 2016 to June, 2017 - levy of interest and penalty as well - HELD THAT:- Under the similar facts and circumstances, the Apex Court in COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. [ 2015 (10) TMI 613 - SUPREME COURT] distinguishing its earlier ruling in the case of COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. [ 2015 (4) TMI 857 - SUPREME COURT] , have held that the place of removal referred to in Section 4 r/w Rule 5 and Rule 7 of Central Excise Valuation Rules, clearly indicates, that the place of removal refers to only the sellers premises (factory gate, warehouse, depo, consignees premises). It is nowhere stated that the buyer s premises can be place of removal. Hon ble Apex Court also observed that in the Roofit case, it did not have occasion to examine the provisions of Section 4, since it was enacted and amended from time to time in the Central Excise Act r/w the Valuation Rules. After examining Section 4 r/w the rules, the Apex Court observed that the cost of transportation from the place of removal up to the place of delivery of excisable goods is excluded from Assessable value for the computation of excise duty - Appeal allowed. Valuation - inclusion of freight and transit insurance in assessable value or not - period from August 2016 to July 2017 - HELD THAT:- The cost of freight and transit insurance need not be included in assessable value - appeal allowed. Rejection of Refund claim - determination of assessable value for the purpose of payment of duty - HELD THAT:- The issue of inclusion of freight in the assessable value, under the admitted facts and circumstances, has already been held in favour of the appellant-assessee relying on the ruling of the Apex Court in the COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. [ 2015 (10) TMI 613 - SUPREME COURT] - demand set aside. Requirement to issue SCN - Section 11AC (1)(d) of CEA - time limitation - HELD THAT:- In absence of the condition precedent, that is issue of show cause notice, no proceedings/dispute can be concluded. Also there is no provision for waiver of SCN, under Section 11AC (1) (d).Further, admittedly, no letter of closures was issued by the revenue as requested by the appellant-assessee. Thus, the amount deposited by the appellant-assessee pursuant to audit letter, was in the nature of revenue deposit. Admittedly, the appellant have done the self-assessment at the time of clearance of the goods without including the freight element. In the facts and circumstances, there cannot be any subsequent self assessment. Further, admittedly no revised return was filed - the limitation prescribed under Section 11B is not applicable - the appellant-assessee is entitled to refund of the amount deposited totaling Rs. 4,23,81,640/- alongwith interest as per rules. Appeal allowed - decided in favor of appellant.
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2022 (12) TMI 132
CENVAT Credit - capital goods - Cement, TMT bars, MS angles, channels, beams, racks, plates, etc. used for making foundation of machineries installed in the factory premises and for making structure for support of the plant and machinery - period April 2008 to April, 2010 - Rule 2(a) of Cenvat Credit Rules, 2004 - credit was denied mainly on the ground that the amendment in Rule 2(a) brought by notification no. 16/2009-CE (N.T.) barred the availment of cenvat credit on the goods in question from retrospective effect - HELD THAT:- Reliance placed in larger bench judgment of the tribunal in the case of VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] . In this regard, we find that much water was flown on this issue and not only the VANDANA GLOBAL LTD. larger bench judgment was upset by the Hon ble Chhattisgarh High Court in the case of M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [ 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] but also by various subsequent judgment mainly by jurisdictional high court in the case of MUNDRA PORTS AND SPECIAL ECONOMIC ZONE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS [ 2015 (5) TMI 663 - GUJARAT HIGH COURT] . In view of the legal position, the amendment of notification no.16/2009-CE (N.T.) was held to be inapplicable for the period prior to the date of notification i.e. 07.07.2009. On this ground, the denial of cenvat credit by the adjudicating authority is not legal and correct. Period post 07.07.2009 - it is the submission of the appellant that the credit subsequent to this date was already taken prior to 07.07.2009 - HELD THAT:- The credit was already accrued before the amendment of Rule 2(a) of Cenvat Credit Rules, 2004 therefore, the amendment of notification no. 16/2009-CE (N.T.) shall not apply on such credit which was accrued prior to 07.07.2009. Moreover, the appellant have claimed the credit under capital goods. Such capital goods were as parts and components used as support structure for plant and machinery erected and installed in the factory of the appellant. On this ground also the credit is admissible to the appellant accordingly, we are of the considered view that appellant are entitled for cenvat on the goods in question as per the settled legal position in the various judgments cited by them particularly in the case of Hon ble Chhattisgarh High Court judgment in VANDANA GLOBAL LTD. and Hon ble Gujarat High Court in the case of MUNDRA PORTS SPECIAL ECONOMIC ZONE LTD. The impugned order is not sustainable hence, the same is set aside - Appeal allowed.
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2022 (12) TMI 131
Method of Valuation - manufacture of multi layer Printed Plastic Film and cleared to various District Co-operative Milk Producers Union (DCMPU for short) and also to the associated members affiliated to Gujarat Co-operative Milk Marketing Federation Limited - whether price at which the goods were sold to DCMPU is not normal transaction value where the price is sole consideration? - applicability of Rule 8 of Central Excise Valuation (determination of price of excisable goods) Rules, 2000. HELD THAT:- In the appellant s own case, in the transaction with the same buyers DCMPU, the issue has been decided vide order dated 08.09.2022 in [ 2022 (9) TMI 430 - CESTAT AHMEDABAD] , where it was held that there are no evidence to hold that the appellant and the dairies are related in terms of Section 4(3)(b) of Central Excise Act. It is observed that in the same set of facts between the same parties, this Tribunal has held that the seller (appellant) and the buyers are not related in terms of Section 4. Hence, the price at which the goods were sold is the transaction value in terms of Section 4. The issue is settled in favour of the appellant - appeal allowed.
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2022 (12) TMI 130
Wrongful availment and utilization of cenvat credit - input services or not - Air Travel Agency Service - Works Contract Service - Construction Service - manufacture of soft ferrite parts/components falling under Tariff Heading No.85051110 of the First Schedule to the Central Excise Tariff Act, 1985. Air Travel Agent/Rail Travel Agent Services - HELD THAT:- If the Travels were for personal purpose or consumption of an employee, it would not be provided by the Appellant Company and will not be debited to their Books of Accounts. Unless and until, the Travel is for business exigencies, the Company would not include the expenditure and debit the same in the Books of Accounts. The entire order of the Adjudicating Authority is very cryptic and there is no discussion to justify the conclusion drawn in the adjudication order. He has simply proceeded to confirm the demand as proposed in the show-cause notice. Works Contract Service - HELD THAT:- This Notification is applicable to individual/partnership firm and Hindu Undivided Family (HUF). It is not applicable to corporate assessee. The Appellant herein is a Private Limited Company and the services are supplied by Private Limited Company. Accordingly, this Notification is not applicable to the present case. Further, the Ld.Commissioner (Appeals) has also referred to Notification No.26/2012-ST dated 01.07.2012 for valuation of service and abatement. This Notification is also not applicable to the facts of the present case. Therefore, the credit disallowed under the Works Contract Service cannot be sustained and the same is set aside. Commercial and construction service - HELD THAT:- Ld.Commissioner (Appeals) has observed that the service recipient is required to make payment of the service value on service along with the service tax within three months from the date of issuance of invoice - It is the submission of the Ld.Advocate for the Appellant that this aspect was never raised either in the show-cause notice or in the Order-in-Original and the ld.Commissioner (Appeals) has travelled beyond the scope of the Show-cause notice and this issue has been raised for the first time - the disallowance on this count is set aside. Air Travel Service - HELD THAT:- The said services were used only for the Company s Executives to travel to achieve the business objective and has not been used for employees personal necessity, the credit of service tax paid on such services, cannot be denied in view of the decisions in the cases of Arkema Paroxides India Pvt. Ltd. Vs. CCEx., Pondicherry [ 2016 (9) TMI 435 - CESTAT CHENNAI] , Goodluck Steel Tubes Ltd. Vs. Commissioner of Central Excise, Noida [ 2014 (1) TMI 37 - CESTAT NEW DELHI] and Innovasynth Techologies (I) Ltd. Vs. CCE, Raigad [ 2015 (3) TMI 127 - CESTAT MUMBAI] . The impugned order cannot be sustained and accordingly, the same is set aside - appeal allowed.
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2022 (12) TMI 126
Fraudulent CENVAT Credit - issue of invoices without supplying the inputs - levy of penalty u/r 26 (2) of Central Excise Rules, 2012 - HELD THAT:- In the present case the penalty was imposed on the appellants under Rule 26 (2) of Central Excise Rules, 2002. In connection with fraudulent passing of cenvat credit on the invoices issued by M/s Accord Industries Limited to M/s Archon Engicon Limited. The fact is not under dispute by the Revenue as well as by the appellant that the appellant have admittedly provided the blank LRs to M/s Accord which were used for passing of fraudulent cenvat credit . Accordingly the act of giving blank LR books itself clearly falls under purview of Rule 26(2) of Central Excise Rules, 2012. It is immaterial that whether the appellants were handling the goods or otherwise. Even providing blank LRs establish the abatement in passing of fraudulent cenvat credit. There are no hesitation to view that the act of the appellants clearly falls under the four corners of Rule 26 (2) of Central Excise Rules, 2012 - penalty upheld - appeal dismissed.
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CST, VAT & Sales Tax
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2022 (12) TMI 129
Concessional rate of tax - oxygen gas used as raw material - would be taxed at the rate of 2% of the sales tax, which otherwise is chargeable @ 3% on the sale thereof - Whether the oxygen gas supplied by respondent No.1 to respondent No.2 is used as raw material in the manufacturing process of steel, so as to entitle respondent No.1 to pay concessional rate of tax on the same under Section 13(1)(b) of the Bihar Finance Act, 1981? HELD THAT:- As per the settled position of law, the High Court in exercise of powers under Article 226 of the Constitution of India is not sitting as an appellate court against the findings recorded on appreciation of facts and the evidence on record. The High Court ought to have appreciated that there was a detailed inspection report by a six members committee who after detailed enquiry and inspection and considering the process of manufacture of steel specifically came to the conclusion that the work of oxygen is only of a refining agent and its main function is to reduce the carbon content as per the requirement. The said findings accepted by the assessing officer and confirmed up to the Joint Commissioner Revisional Authority were not required to be interfered with by the High Court in exercise of powers under Article 226 of the Constitution. The High Court lacks the expertise on deciding the disputed questions and more particularly the technical aspect which could have been left to the Committee consisting of experts. In the case of DEPUTY COMMISSIONER OF SALES TAX (LAW) BOARD OF REVENUE (TAXES) ERNAKULAM VERSUS THOMAS STEPHEN CO. LTD. [ 1988 (3) TMI 59 - SUPREME COURT] , the cashew shells had been used as fuel in the kiln. It was found that cashew shells did not get transformed into the end product. The same was not used as raw material in the manufacture of the goods and it was found that these have been used only as an aid in the manufacture of the goods by the assessee. Applying the law laid down by this Court in the case of DEPUTY COMMISSIONER OF SALES TAX (LAW) BOARD OF REVENUE (TAXES) ERNAKULAM VERSUS THOMAS STEPHEN CO. LTD. [ 1988 (3) TMI 59 - SUPREME COURT] to the facts of the case on hand and the findings by the committee consisting of six expert members recorded in the detailed inspection report and when it has been found that the oxygen gas is used as a refining agent and its main function is to reduce the carbon content as per the requirement, the oxygen gas cannot be said to be a raw material used in the manufacture of the end product steel - the respondents are not entitled to the concessional rate of tax @ 2% treating the same as raw material in the manufacture of the end product and are liable to pay tax @ 3% on the sale thereof. The High Court has seriously erred in holding contrary and by interfering with the concurrent findings recorded by all the three authorities below. The impugned judgment and order passed by the High Court is unsustainable. The impugned judgment and order passed by the High Court is hereby quashed and set aside and the assessment order passed by the assessing officer, confirmed up to the revisional authority Joint Commissioner is hereby restored - Appeal allowed.
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2022 (12) TMI 128
Whether the Regular Departmental Enquiry , which admittedly was instituted against the claimant-respondent under Rule 7 of the Rules of 1999 was conducted as per the law enunciated? - misbehavior with the superior officer - punishment of Stoppage of One Increment for One Year and Censure - HELD THAT:- We took note of the enquiry report dated 19.06.2018 (at page 106 of paper book) and we find from the same that to prove the charges and documents in support thereof the statements of witnesses indicated in charge-sheet were not recorded by the Enquiry Officer after fixing date, time and place for the said purpose. In other words, the witnesses mentioned in the charge-sheet were not examined during the enquiry. Accordingly, no opportunity was given to the claimant-respondent to cross-examine the witnesses. Further, in the writ petition, it has not been pleaded that for recording oral evidence, the date, time and place was fixed under intimation to the charged official - the Regular Enquiry under Rule 7 of the Rules of 1999 was not conducted as per the settled view on this aspect and being so, the Regular Enquiry in our view is vitiated. Whether the impugned orders dated 17.09.2018 and 11.01.2019 before the Tribunal were speaking or not? - HELD THAT:- It is in view of the fact that the impugned order(s), are based on enquiry report and we have already observed that enquiry report is vitiated and keeping in view the same as well as the maxim Sublato Fundamento Cadit Opus (a foundation being removed, the superstructure falls), we are of the view that the impugned orders, referred above, cannot be upheld. Whether in not remanding the matter before the Disciplinary Authority to hold the enquiry afresh from the stage it was found vitiated, the Tribunal has committed an error? - HELD THAT:- If an Authority/Court sets aside the order of punishment on technical ground then the matter may be remanded to the Disciplinary Authority and employee should not be reinstated, however, whether or not the Disciplinary Authority should be given an opportunity to complete the enquiry afresh depends upon the gravity of delinquency involved. Thus, for coming to the conclusion the Authority/Court concerned must take into consideration all the relevant aspects and facts of the case including the charges and magnitude of misconduct alleged and examine the same. The Regular Departmental Enquiry under Rule 7 of the Rules of 1999 against the claimant-respondent was initiated vide order dated 05.12.2017 regarding an incident alleged to have taken place on 10.10.2017. The writ petition is dismissed.
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2022 (12) TMI 127
Principles of natural justice - contention of the petitioner is that very foundation for charging entertainment tax on the 'costume' as alleged against the petitioner is wholly illegal, inasmuch as, in terms of the mandate of Section 2(l)(iii) of the 1979 Act - whether the orders impugned which are without any opportunity of hearing, satisfies the tax under Section 12 of the 1979 Act? - HELD THAT:- The payment for admission, includes any payment made for loan or use of any 'instrument' or 'contrivance' which enables a person to get a normal or a better view or hearing or enjoyment of the entertainment which without the aid of such instrument or contrivance such person would not get. Thus to include any amount under Section 2(l)(iii), it is essential that there should be a use of 'instrument' or 'contrivance' which enables the person to use the benefits and without which such entertainment or enjoyment is not possible - there is no material to state that such costume enhances the enjoyment of the persons to enjoy the entertainment of water park and further there is no material on the record to state that without such costume being provided, the person entering into the water park would not in a position to enjoy the entertainment. In the present case, the costume used in the water park would neither fall within the definition of words 'instrument' or 'contrivance', thus I am inclined to accept the submission of the Counsel for the petitioner that the renting on 'costumes' cannot be included in the term 'payment for admission' as defined under Section 2(l), thus on that score alone, the assessment order is beyond the authority of law and is violative of Article 265 of the Constitution of India. It is well settled that the tax can be levied only when specially provided for and not by intendment. If the legislation was of the view that the renting of the costume should be included for the purpose of determination of the taxes, it could have specifically provided for under the Act which has not been done, thus, I have no hesitation in holding that demand of levy of tax as well as the penalty is without authority of law. Petition allowed.
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