TMI Tax Updates - e-Newsletter
February 16, 2023

Case Laws in this Newsletter:

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

Articles

1. UPLOADING OF SHOW CAUSE NOTICE AND ORDER ON PORTAL WAS ITSELF VALID COMMUNICATION TO THE REGISTERED PERSON

   By: DR.MARIAPPAN GOVINDARAJAN

2. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

3. Mere non-reply to SCN cannot be ground for cancellation of GST Registration

   By: Bimal jain

4. Principles of estoppel do not apply to Income Tax proceedings

   By: Bimal jain

News

1. DRI seizes 11.94 Kg heroin and nabs 3 persons involved

2. Conference on Financial Literacy in Amrit Kaal - Empowering Investors to be held at Vanapa Hall , Aizawl, Mizoram

3. Cabinet approves signing of Memorandum of Understanding between the Institute of Chartered Accountants of India (ICAI) and The Institute of Chartered Accountants in England & Wales (ICAEW)

4. SPMCIL signs MoU with TERI under CSR initiatives

5. CBDT notifies Income Tax Return Forms for Assessment Year 2023-24 well in advance

Notifications

DGFT

1. 58/2015-2020 - dated 14-2-2023 - FTP

Amendment in Export Policy of Biomass

2. 57/2015-2020 - dated 14-2-2023 - FTP

Amendment in import policy and policy condition of ITC (HS) Code 080280 of Chapter-08 and ITC (HS) Code 2106 90 30 of Chapter-21 of ITC (HS), 2022, Schedule-I (Import Policy)

Income Tax

3. 05/2023 - dated 14-2-2023 - IT

Income-tax (Second Amendment) Rules, 2023

SEBI

4. SEBI/LAD-NRO/GN/2023/122 - dated 14-2-2023 - SEBI

Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2023

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/PoD-1/P/CIR/2023/29 - dated 15-2-2023

Introduction of Issue Summary Document (ISD) and dissemination of issue advertisements

DGFT

2. 57/2015-2020 - dated 14-2-2023

Procedure for allocation of quota, for year 2023-24, for import of (i) Calcined Pet Coke for Aluminium Industry and (ii) Raw Pet Coke for CPC manufacturing industry

Highlights / Catch Notes

GST

• Court Upholds Detention and Penalties for Undervaluation of Goods to Avoid E-way Bill Requirements; Dealer's Appeal Denied.

  Case-Laws - HC : Detention of goods alongwith the vehicle - undervaluation of goods (roughly one-tenth of the value) to avoid download of E-way bill - it can be safely said that the action of the State Authorities in detaining the goods and imposing tax and penalty, which have been affirmed by the first Appellate Authority, needs no interference of this Court as the dealer cannot be permitted to take shelter of the fact that no E-Way bill is required in case of goods valued less than Rs.50,000/-. - HC
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• Court Orders Restoration of Registration After Cancellation Due to Default; Respondents Ignored Petitioner's Response to Show Cause Notice.

  Case-Laws - HC : Cancellation of petiitoner's registration - default in filing the returns for more than six months - it is apparent that the impugned order cancelling the petitioner’s registration is unsustainable as it does not consider the petitioner’s response to the Show Cause Notice - The respondents are directed to restore the petitioner’s Registration - HC
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• Court Awards 6% Interest on Refund Due to Incorrect Conclusion on Bank Guarantee Encashment Dates.

  Case-Laws - HC : Interest on Refund - claim of interest from the date of encashment of bank guarantees till grant of refund - The 3rd respondent has committed an error in recording an erroneous finding that the aforesaid amount encashed under the bank guarantees was available with the petitioner during the aforesaid period from 29.03.2019 till 05.01.2022; this finding recorded by the 3rd respondent in the impugned order is clearly and factually incorrect and contrary to the material on record - interest to be allowed @6% - HC
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Income Tax

• Court Rules on Tax Refund in Block Assessment; Limits Interpretation of "Is Received" u/s 153(3) of Income Tax Act.

  Case-Laws - HC : Refund of Tax paid - Block assessment - as per Section 153(3) of the Act the time limit for completion of such assessment proceedings viz. nine months had elapsed - Period of limitation after remanding back the order to AO - Revenue did not receive the order - We are unable to accede to the contention of the respondent to construe the words “is received” in section 153(3) to mean “till its received” and thereby extend the limitation in perpetuity. It has to be a reasonable period of time especially when the respondents are a party to the proceeding. - HC
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• Court Rules ACIT in Bhubaneswar Lacked Jurisdiction for Section 148 Notices, Quashes Notices and Proceedings.

  Case-Laws - HC : Jurisdiction of ACIT Bhubaneswar consequent to transfer of case - the Department has not been able to explain the legal basis for Opposite Party No.1 i.e. ACIT at Bhubaneswar exercising jurisdiction over the Petitioner and issuing the impugned notices u/s 148 - The Court, therefore, concludes that the impugned notices were issued by O.P. No.1 without jurisdiction and, therefore, are unsustainable in law. The impugned notices and all proceedings consequent thereto are hereby quashed. - HC
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• Charitable Trust's Pharmacy Business Income Qualifies for 15% Accumulation Exemption u/s 11 of Income Tax Act.

  Case-Laws - AT : Exemption u/s 11 - enhancing the addition - accumulation of income - it is the only profits and gains derived from the incidental business of the assessee charitable-trust i.e. its pharmacy business, which would qualify as income for the purpose of computing the statutorily allowed accumulation at the rate of 15% in terms of section 11(1)(a) of the Act. - AT
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• CIT's Section 263 Revision Over Export Sales Mismatch Set Aside for Violating Natural Justice Principles.

  Case-Laws - AT : Revision u/s 263 by CIT - Discrepancy in the claim of imported purchases as per the books and as per the CBEC data - assessee was only put to notice about the mismatch in import purchases. The issue of mismatch in export sales never being confronted to the assessee, the Ld.PCIT’s order holding the assessment order erroneous on this count is against all principles of natural justice and accordingly is set aside on this count. - AT
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• Interest on Income Tax u/ss 234A and 234B Applies Until Self-Assessment Tax Payment Date u/s 147 Order.

  Case-Laws - AT : Levying the interest u/s 234A and 234B up to the date of the assessment order u/s 147 - the interest under section 234A and 234B of the Act can be levied in the given facts and circumstances up-to the date of self-assessment tax paid by the assessee along with the interest and not to the period beyond that date. - AT
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• Appeal Dismissed Due to Incorrect PAN Use; CIT(A) Should Allow Error Correction for AOP's Legal Maintainability.

  Case-Laws - AT : Validity of Appeal filed by AOP having PAN issued as Individual - CIT(A) did not adjudicate the issue on merits in accordance with the provisions of section 250(6) of the Act, rather dismissed the appeal of the assessee, stating that AOP has used Individual PAN Number. We note that defect in form no. 35 is a curable defect. The ld. CIT(A) should have asked the assessee to correct form no.35, and remove the defect. With these facts, we are of the view that appeal of the AOP is maintainable in law. - AT
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• Web Hosting Income Classified as Fees for Technical Services u/s 9(1)(vii) of Income Tax Act.

  Case-Laws - AT : FTS u/s 9(1)(vii) - the amount received by the assessee from web hosting services is ancillary to domain name registration services. That being the position emerging on record, the amount received has to be treated as FTS. - AT
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• Domain Name Registration Fees Classified as Royalties u/s 9(1)(vi) of Income Tax Act; Taxable in India and USA.

  Case-Laws - AT : Income deemed to accrue or arise in India - Chargeability of receipt from domain name registration as royalty under the domestic law as well as India-USA Double Tax Avoidance Agreement (DTAA) - the consideration received by the assessee from registration of domain names is in the nature of royalty under section 9(1)(vi) of the Act and is taxable as such - AT
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Customs

• Court Finds Violation of Natural Justice: Show Cause Notice Not Served as Required by Customs Act Section 153(1.

  Case-Laws - HC : Violation of principles of natural justice - SCN not issued - Since there is no material to indicate that the Show Cause Notice was sent by speed post with acknowledgement due or had been served by any of the modes as specified under Section 153(1) of the Customs Act, there are no hesitation in accepting the petitioner’s contention that it was not served with the Show Cause Notice in question. - HC
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• Revisional Authority Failed to Verify Amendments in Brand Rates for Duty Drawback per Circular 18 September 2003, Clause 3(c).

  Case-Laws - HC : Duty drawback - Re-fixation of brand rates - the Revisional Authority was under a duty to scrutinize this aspect carefully. Except referring to the language of the Circular dated 18 September 2003, the Revisional Authority has not examined whether any amendment, addendum or corrigendum was carried out or that order existed even what is stated in clause 3(c) of the Circular dated 18 September 2003. - Matter restored back - HC
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• Mosquito Swatters Confiscated as Prohibited Items; Redemption Denied, Case Reconsidered Under Customs Act Section 112.

  Case-Laws - AT : Absolute Confiscation - redemption of goods denied on the ground of it being prohibited goods - Mosquito swatter/bat - since the policy was amended when the shipment was in process their mala fide intention cannot be proved without any additional evidence to invoke penal clause under section 112 of the Customs Act 1962 - Matter restored back for reconsideration - AT
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• Customs House Agent Cleared of Penalty Due to Lack of Evidence in Complex Classification Case.

  Case-Laws - AT : Levy of penalty on CHA - allegation of abatement in export of restricted items - There is no allegation or evidence to establish that the appellant had indulged in any overt act or played any role in any manner so to assist the exporter in his attempt to export the goods. The issue of classification is of complex nature. - No penalty - AT
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Corporate Law

• Court Rules Optional Gown Dress Code for Advocates Outside Supreme or High Court Doesn't Violate Natural Justice or Equity.

  Case-Laws - HC : Public Interest Litigation - imposition of dress code for advocates for appearance before the Tribunal - wearing of “gown” is only optional and not mandatory before any courts other than the Supreme Court or the High Court - Further, the power conferred under Rule 51 of the NCLT Rules, is for the purpose of discharging its functions under the Act in accordance with the principles of natural justice and equity and is not an enabling provision to be read along with Section 432 of the Companies Act, 2013, which deals only with right to legal representation, and cannot be meant to confer upon it the power to prescribe the dress code, more so when it is contrary to the Bar Council of India rules. - HC
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• Foreign Arbitral Award Rejected: Concealed Documents, FEMA Violations, and Fraudulent Share Valuation by Petitioners.

  Case-Laws - HC : Enforcement and execution of the final Award passed by Foreign Arbitral Tribunal - The petitioners have concealed various documents and failed to produce the same - the foreign award is suffered with the infirmities - Therefore, the enforcement of the award is liable to be rejected for the reason that violation of the FEMA Regulations coupled with commissions of fraud on part of the petitioner in valuing the SGAH shares, which are not curable in nature, apart from the other instances that are narrated. - HC
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Indian Laws

• Chartered Accountant Reprimanded for Misconduct in Client Solicitation During Club Elections, High Court Rules on Proportionality.

  Case-Laws - HC : Professional and other Misconduct by Chartered Accountant - Soliciting their clientele in the guise of canvassing for votes during the club’s Executive Committee elections - The order of the reprimand (to tell somebody officially that he/she has done something wrong) of the respondent will serve the ends of justice and will be proportionate to the acts of misconduct of which the respondent has been held guilty - HC
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IBC

• Court Orders Liquidation; Rejects Committee's Resolution Plan for Corporate Debtor; CoC Failed to Follow CIRP Regulations.

  Case-Laws - AT : Liquidation of the Corporate Debtor - the Adjudicating Authority vide order dated 28.09.2021 gave opportunity to the Resolution Professional and the CoC to take steps to revive the Corporate Debtor. The Adjudicating Authority is right in its observation that the CoC ought to have taken steps in accordance with provisions of CIRP Regulations. - The order of the Adjudicating Authority insofar as it disapproves the CoC decision dated 30.12.2021 is affirmed and application seeking approval of the Resolution Plan rejected. - AT
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Service Tax

• Commissioner (Appeals) Can Proceed Without Show Cause Notice for Interest Recovery; No Legal Barrier Exists.

  Case-Laws - AT : Jurisdiction of Commissioner (Appeals) - absense of protective show cause notice for recovery of interest - the non issuance of protective show cause notice does not create any estoppels to the Learned Commissioner (Appeals) for passing the Order in Appeal.- AT
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• Rule 3 Governs Service Provision for Export Activities: Focus on Recipient Location, Not Physical Presence.

  Case-Laws - AT : Export - Place of Provision of services - undertaking the activities in relation to the accounting and management reporting services, the data in the incorporeal form is provided, which do not have any physical presence and hence not covered under Rule 4 ibid and the same is covered under Rule 3 ibid i.e. location of recipient of services which is overseas. The after sales support service or Engineering Support service are services which the appellant is doing in respect of providing technical parameters of the products, design and it in no way require the goods to be made physically available to the appellant i.e. service provider, therefore, for these services also place of provision has to be determined in terms of Rule 3 ibid and not under Rule 4 - AT
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• Penalties u/ss 76 and 78 not applicable for Section 73(A) demands; Rs. 10,000 penalty u/s 77 imposed.

  Case-Laws - AT : Levy of penalty - in case of confirmation of demand u/s 73(A) there is no application of Section 76 and 78 for imposition of penalty. Therefore, the adjudicating authority has rightly not imposed the penalty u/s 76 & 78. - However, the respondent has not followed the provision such as non-obtaining the service tax registration nor deposited the service tax collected from their customer on their own therefore, in terms of Section 77 they are liable to pay penalty of Rs.10,000/-. - AT
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Case Laws:

• GST

• 2023 (2) TMI 542
  Detention of goods alongwith the vehicle - undervaluation of goods (roughly one-tenth of the value arrived by the detaining authority) to avoid download of E-way bill - transporting huge quantity of Pan Masala and Tobacco showing negligible value of goods - monetary limit for requirement of E-way bill. Whether in the garb of certain protection given under Rule 138 dispensing requirement of E-Way bill for goods valuing below Rs.50,000/-, a dealer who is a manufacturer, can be allowed to send his goods to different consignees undervaluing the goods and the Tax Authorities not to proceed taking action under the Act? HELD THAT:- 60 Cartoons of Pan Masala contained 3,84,000 pouches. The printed price on each pouch is Rs.4/-. Accordingly, the total value of goods is Rs.15,36,000/-. The detaining authority, after giving discount of 25% and deducting the tax and Cess, arrived at the basic value at Rs.6,12,766/-. If the argument of petitioner s counsel is taken to be correct that the dealer was new in the business and to survive and establish, he was giving heavy discount, then it cannot be assumed and expected that the value of Pan Masala for 60 Cartoons, as disclosed by the dealer, would be Rs.69,600/- i.e. roughly one-tenth of the value arrived by the detaining authority on the basis of declaration made on the pouch of each Pan Masala. This Court finds that it is a case of grossly undervaluing the 3,84,000 pouches of Pan Masala being sent by the dealer disclosing its price as Rs.69,600/-. The only conclusion, which can be drawn is that to avoid downloading E-Way bill and brining the transaction on record that the goods were undervalued to such an extent. Moreover, the Taxing Authorities have also found that one of the consignee situated at Jharkhand was actually registered with the Taxing Authorities disclosing his nature of business as Works Contract and Suppliers of Services and not in the business of trading. These actions of the dealer lead to the only conclusion that the transactions being not recorded with the Revenue so as to escape payment of due tax in the garb that E-Way bill is only required in case value of goods is more than Rs.50,000/- - Thus, it can be safely said that the action of the State Authorities in detaining the goods and imposing tax and penalty, which have been affirmed by the first Appellate Authority, needs no interference of this Court as the dealer cannot be permitted to take shelter of the fact that no E-Way bill is required in case of goods valued less than Rs.50,000/-. It is clear case of undervaluation of goods by the dealer who was transporting huge quantity of Pan Masala and Tobacco showing negligible value of goods - petition dismissed.

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• 2023 (2) TMI 541
  Levy of penalty - driver could produce the e-way bill but failed to produce the tax invoice and delivery challans - according to the petitioner no adjudication was made by the adjudicating authority - reply to SCN not given - HELD THAT:- Since there is factual dispute inasmuch as according to the petitioner no adjudication was made by the adjudicating authority and as per the learned Advocate for the respondents, a show-cause notice was served but as the petitioners has not given any reply to such show-cause notice, the adjudication has not been made till date and no tax is also imposed as on this date. In view of such submission and considering the fact that the learned Advocate for the respondents has served a copy of the show-cause notice to the learned Advocate for the petitioners, the petitioners are directed to submit a reply to the adjudicating authority within 3 days from this date and the adjudicating authority thereupon shall adjudicate as to whether that petitioner is liable to pay any penalty or not after giving opportunity to the petitioners or their authorized representative of hearing within a fortnight thereafter - Petition disposed off.

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• 2023 (2) TMI 540
  Cancellation of petiitoner s registration - default in filing the returns for more than six months - HELD THAT:- Although the impugned order dated 28.12.2020 refers to the petitioner s response to the Show Cause Notice, it does not indicate as to the contents thereof or reflects any discussion in respect of the petitioner s explanation - there are merit in the petitioner s contention that the impugned order cannot be sustained. It is also relevant to note that there is no dispute that the petitioner has filed its returns, albeit belatedly, and has also paid the tax and penalty in accordance with the Act. This Court may also note that the Madras High Court in TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST), THE ASSISTANT COMMISSIONER (CIRCLE), SALEM BAZAAR [ 2022 (2) TMI 933 - MADRAS HIGH COURT ] had also observed that it is not the intention of the authorities to debar and de-recognise assessees from coming back into the Goods and Service Tax (GST) fold. This was in the context of petitions where GST registrations of dealers had been cancelled and they had not availed of the alternate remedy seeking revocation of the cancellation orders within the time prescribed - it was held by Madras HC that Since, no useful will be served by not allowing persons like the petitioners to revive their registration and integrate them back into the main stream, the impugned orders are liable to be quashed and with few safeguards. It is not necessary for this Court to examine whether the time period as stipulated under Section 30 of the Act is mandatory in this case. This is because it is apparent that the impugned order dated 28.12.2020, cancelling the petitioner s registration is unsustainable as it does not consider the petitioner s response to the Show Cause Notice. The respondents are directed to restore the petitioner s Registration - petition allowed.

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• 2023 (2) TMI 539
  Validity of summons issued - simultaneous proceedings initiated by Central Authority as well as the second respondent, being the State Authority, under the GST Act against the petitioner in respect of the same subject matter - compliance with the provisions of Section 6(2)(b) of the GST Act 2017 or not - HELD THAT:- The petitioner has submitted a reply dated 18.01.2023 to the impugned summons dated 03.01.2023 to the first respondent. Even before a decision is taken by the first respondent with regard to the contentions raised in the reply filed by the petitioner, the petitioner has filed this writ petition prematurely. The petitioner will have to necessarily await the outcome of the decision of the first respondent. However, it is mandatory on the part of the first respondent to consider the reply submitted by the petitioner expeditiously and take a call as to whether the subject matter is one and the same. This writ petition is disposed of by directing the first respondent to consider the petitioner s reply dated 18.01.2023 to the impugned summons dated 03.01.2023 and decide as to whether the subject matter of the proceedings initiated by the second respondent as well as the proposed proceedings of the first respondent under the GST Act 2017 against the petitioner are one and the same, within a period of four weeks from the date of receipt of a copy of this order.

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• 2023 (2) TMI 538
  Imposition of SGST and penalty - seeking release of seized vehicle alongwith goods - expired E-way bill - HELD THAT:- Section 129 of the Central Goods and Services Tax Act, 2017 empowers the statutory authority to detain the vehicle and seize the goods. The goods shall be released only on payment of penalty equal to 200% of the tax payable on such goods. Under the fact and circumstances of the case this Court finds that the respondent authority is lawfully permitted to impose penalty under Section 129 as well as the SGST as the goods were found to be detained in the territory of the State. The ratio laid down in M/s Hanuman Ganga Hydroprojects Private Limited [ 2022 (7) TMI 603 - CALCUTTA HIGH COURT ] are not applicable in the instant case as in that case it was held that This Court already held that there is no lack of bona fide on the part of the writ petitioner in the instant case for not extending the validity period of the E-Way bill within the short period of time. It is also not a case of willful attempt on the part of the writ petitioner to evade payment of tax - It is the admitted position that the petitioner has paid the amount of penalty levied by the adjudicating authority and the vehicle was also released thereafter. Petition dismissed.

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• 2023 (2) TMI 537
  Rejection of proposal of the petitioner to replace provisionally attached movable property in the form of Fixed Deposits and Current Bank Accounts - whether in wake of the earlier order of this Court in Special CA No.188 of 2022 on 27.01.2022, the request of the petitioner to replace the properties should be permitted or not? - HELD THAT:- Order of provisional attachment passed under Section 83 of the CGST Act by the respondent authorities on 25.11.2021. The CBIC issued the circular dated 23.02.2021 laying down the guidelines for provisional attachment of the property under Section 83 of the CGST Act. Guidelines No.3.4.6 provides that any movable property including bank account belonging to the taxable person when has been attached, the same can be released when the taxable person offers in lieu of it any other immovable property, if the same is sufficient to protect the interest of the revenue and such immovable property should be of the value not less than the tax amount in dispute. The same should be free from any charges, liens, mortgaged or encumbrance, the property s tax also needs to be fully paid up and the same is not to be involved in any legal dispute. The respondent No.3, having realized that it is only the property belonging to a taxable person that can be provisionally attached under Section 83 of the Act and the partner of an LLP not being a taxable person in the case on hand, thought fit to take the aid of Section 90 and Section 137 resply of the Act for the purpose of provisionally attaching a property owned by the partner of the LLP. Whether Section 90 of the Act has any application to the case on hand? - HELD THAT:- What Section 90 of the Act, 2017 conveys is the very same principle as enunciated under Section 25 of the Partnership Act. In future, as and when the liability of the LLP as a taxable person is determined and fixed, such liability would be joint and several liability of all its partners. In the case on hand, the respondent No.3 committed a serious error in invoking Section 90 of the Act for the purpose of provisionally attaching a property owned by a person of the LLP under Section 83 of the Act - Sub-section (84) of Section 2 of the Act, 2017 defines the term person to include an individual, a Hindu Undivided Family, a company, a firm, a limited liability partnership, etc. Therefore, the Act recognizes a firm as a dealer and as a person. The legislature having treated an LLP as a taxable entity, distinct from the individual partners constituting it, it was not open for the respondent No.3 to provisionally attach the immovable property owned by a partner of the firm. This Court, thus, has been very clear that the respondent No.3 was unjustified in provisionally attaching the personal property owned by the partner of the firm under Section 83 of the CGST Act, as she is not a taxable person for being the partner of the firm. The property offered by the petitioner is unencumbered. The property valuation of which, as given by the State, is Rs. 10,48,84,200/- being the market value, whereas, the value of the very property offered in substitution being the plots No.7,8,9,10 and 11 of Revenue Survey No.49/1/ P3, Maruti Park, 150 Ft.Ring Rad, Village-Ronki, Taluka- Dist.Rajkot, as per the Government Approved Valuer Mr. Suresh Mistry is Rs.13,01,92,000/-. There are no reason to disregard the valuation given by the Government Approved Valuer on a higher side in absence of any other material or the reason for rejecting the same. Therefore, we direct respondents No.2 and 3 to substitute the same with the amount of fixed deposit provisionally attached, except the amount of fixed deposit of Rs.2,24,99,844/- lying in the current account. The fixed deposit of Rs.2,24,99,844/- lying in the current account shall continue to be in the provisional attachment. The remaining amount, which has been provisionally attached, shall be immediately released on receiving the copy of this order along with an undertaking on the part of the petitioner and the partner-cum-owner of the property. The provisional attachment made of the amount of Rs.2,24,99,844/- i.e. fixed deposit in the current accounts shall continue to be in the fixed deposit, remaining amount shall be released on receiving the copy of this order and the undertaking on the part of the petitioner - petition allowed in part.

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• 2023 (2) TMI 536
  Rejection of claim of the petitioner of payment of interest from the date of encashment of bank guarantees i.e., 29.03.2019 till grant of refund on 05.01.2022 - It is the grievance of the petitioner that despite submitting a detailed reply dated 14.07.2022 and producing all relevant documents, the 3rd respondent proceeded to pass the impugned order denying refund of interest in favour of the petitioner - Rate of interest to be awarded in favour of the petitioner - HELD THAT:- The undisputed material on record discloses that the petitioner has been wrongly and without any fault on its part been deprived of the use, utilisation and benefit of the amount of Rs.4,73,26,512/- during the period from 29.03.2019 up to 05.01.2022, during which period, the respondents illegally withheld and retained the said amount as declared by the Bombay High Court. Under these circumstances also, by applying the principles of restitution and by way of compensation for the loss caused to the petitioner on account of illegal and wrongful deprivation of the aforesaid amount by the respondents, the petitioner would be entitled to interest for the aforesaid period and consequently, the impugned order deserves to be set aside on this ground also. The 3rd respondent has committed an error in recording an erroneous finding that the aforesaid amount of Rs.4,73,26,512/- encashed under the bank guarantees was available with the petitioner during the aforesaid period from 29.03.2019 till 05.01.2022; this finding recorded by the 3rd respondent in the impugned order is clearly and factually incorrect and contrary to the material on record, which indicates that pursuant to encashment of the 8 bank guarantees, the respondents had appropriated the said amount and prevented the petitioner of its use and benefit till the same was actually refunded only on 05.01.2022 and as such, even this finding recorded by the 3rd respondent in the impugned order deserves to be set aside. The aforesaid facts and circumstances and the material on record clearly indicate that the impugned order passed by the 3rd respondent rejecting the interest refund claim of the petitioner is contrary to law and facts and the same deserves to be quashed. Rate of interest to be awarded in favour of the petitioner - HELD THAT:- The interest of justice would be met if the respondents are directed to pay interest in favour of the petitioner on the aforesaid amount of Rs.4,73,26,512/- at the rate of 6% p.a. for the period from 29.03.2019 when the bank guarantees were illegally encashed by the respondents up to 05.01.2022 when the aforesaid amount of Rs.4,73,26,512/- was refunded back to the petitioner. Petition allowed in part.

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• Income Tax

• 2023 (2) TMI 535
  Exemption u/s 11 - income from newspapers, which included advertisement revenue and surplus from its activities in Delhi - interpretation of charitable objects under Section 2 (15) - As submitted activity of generating income through advertisement is only incidental and income from advertisement cannot be called part of the main object of the trust but rather necessary for it to attain its charitable objectives - HELD THAT:- Appellate Commissioner, the ITAT and the High Court merely followed the judgment of the Delhi High Court in India Trade Promotion Organisation [ 2015 (1) TMI 928 - DELHI HIGH COURT ] However, the law with regard to interpretation of Section 2 (15) has undergone a change, due to the decision in Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT ] As a result, this court is of the opinion, that matter should be remitted for fresh consideration of the nature of receipts in the hands of the assessee, in the present case. As a result, the matter requires to be re-examined, and the question as to whether the amounts received by the assessee qualify for exemption, under Section 2 (15) or Section 11 needs to be gone into afresh. The revenue s appeal succeeds in part. AO shall examine the documents and relevant papers and render fresh findings on the issue whether respondent is a charitable trust, entitled to exemption of its income.

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• 2023 (2) TMI 534
  Reopening of assessment u/s 147 - reason to belive - reopening beyond period of four years - reliance on internal audit objection - HELD THAT:- As gone through the reasons, it is clear that on account of the internal audit objection that a remedial action of reopening the assessment by an action u/s 148 of the Act was taken with a view to settle the audit objection as more particularly stated in reply. The basic facts that were canvassed and brought on record by the petitioner were neither disputed / controverted in the reasons recorded. The position in law as contended by the Petitioner is not in dispute. By virtue of a proviso to section 147, no action can be taken for reopening after four years unless the AO has reason to believe that income has escaped assessment by reason of the failure on the part of the assess to disclose fully and truly all material facts necessary for assessment. The affidavit clearly evinces that the department has purported to reopen the assessment only on the basis of change of opinion. The reasons do not spell out failure on the part of the assessee to disclose fully and truly all material facts. The Petitioner has disclosed all primary facts. We are required to consider whether the pre-condition for issue of a valid notice u/s 148 has been fulfilled or not. We are satisfied that the reopening is sought on the basis of change of opinion as apparent from the reply and there is nothing in the reasons to indicate that reopening is sought on the ground of failure on the part of the Petitioner to disclose truly and fully all material facts. This case is clearly covered by the judgement of this Court in the case of Ananta Landmark Pvt. Ltd [ 2021 (10) TMI 71 - BOMBAY HIGH COURT ] and we are in agreement with the same. - Decided in favour of assessee.

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• 2023 (2) TMI 533
  Block assessment u/s 158BC - Period of limitation after remanding back the order to AO - as per Section 153(3) of the Act the time limit for completion of such assessment proceedings viz. nine months had elapsed - Revenue did not receive the order - petition for seeking refund of the tax paid and return of the jewellery seized - HELD THAT:- It is not in dispute that the DCIT Central Circle 2(2) Pune received the letter from the Petitioner as more particularly stated in paragraph 4.4 of the reply and that a letter was sent on 9th February 2022 to the ITAT requesting for a copy of the ITAT order dated 18th February 2010. We are unable to agree with the respondent s Counsel s contention that they have not received the order dated 18th February 2010. Section 254 (3) itself provides for ITAT to send a copy of the order to both the assessee and to the Commissioner; therefore, the onus would lie on the respondent to prove that they had not received the said order. If we had to accept the contention of the Respondent it would have led to extending the time for compliance with the order dated 18th February 2010 for almost 12 years at least in this case. Further, it would lead to shifting the onus on the assessee to oversee that the Principal Commissioner or Commissioner, as the case may be, receives the copy of the order. We don t agree as it does not appear to be the intention of the legislature. We are unable to accede to the contention of the respondent to construe the words is received in section 153(3) to mean till its received and thereby extend the limitation in perpetuity. It has to be a reasonable period of time especially when the respondents are a party to the proceeding. Respondents who were party to the proceedings could have requested for a copy of the order from the ITAT at least a month after the order was passed on 18th February 2010. One would have at least expected that after receiving the letter from the Petitioner on 6th March 2018 the respondent could have requested for a copy from the ITAT, as they eventually did on 9th February 2022 or could have requested the assessee to forward a copy of the said order pursuant to the receipt of the letter dated 6th March 2018. Having failed to take steps to comply with the order and even within 9 months after receipt of the letter addressed by the Petitioner we direct the respondents to issue a refund plus additional interest (under section 244A of the Act) till date of payment to the Petitioner and to release the jewellery seized within two weeks from the date of this order.

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• 2023 (2) TMI 532
  Reopening of assesssment u/s 147 - addition of 100% of alleged bogus purchases u/s 68 - difference between the gross profit rate on genuine purchases and gross profit rate on hawala purchases - CIT(A) restricted the addition to 25% of the amount of purchases made - HELD THAT:- In the present case, the order of the Tribunal is certainly not the one where the AO had been directed to carry out a fresh examination on any issue rather the Tribunal had clinched the issue by holding that the addition could only be made to the extent of difference between the gross profit rate on genuine purchases and gross profit rate on hawala purchases. Tribunal remitted the matter to the file of AO for applying the ratio laid down by this Court in the case of Mohommad Haji Adam Co. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] The reason why the Tribunal did not specify the amount based upon the afore-stated principle was that specific details were not readily available from various ARs/DRs for facilitating the calculation of such rates. In our opinion, the Action of the respondent No.4 in issuing Form No.3 based upon FAQ No.7 issued by the CBDT is unsustainable and accordingly set aside. The said respondent shall proceeded to issue Form No.3, keeping in view the provisions of section 2(1)(j)(B) of the Act of 2020 and determine the disputed tax by giving effect to the orders of the Tribunal. Needful be done within a period of three months.

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• 2023 (2) TMI 531
  Jurisdiction of ACIT Bhubaneswar consequent to transfer of case - Opposite Party No.1 can exercise jurisdiction over the Petitioner-VRL which is a non-resident company incorporated in UK - ACIT at Bhubaneswar exercising jurisdiction over the Petitioner - HELD THAT:- A perusal of Section 127 (2) indicates that it envisages transfer of cases of an Assessee to an AO not subordinate to the same Commissioner, who originally exercises jurisdiction over the Assessee. In the present case, it is CIT (IT)-1, New Delhi who would have to pass orders transferring jurisdiction of the cases of VRL to O.P. No.1 in Bhubaneswar. The latter is not subordinate to the CIT (IT)-1, New Delhi, but to his counterpart in Kolkata. In such event u/s 127(2)(a), no such transfer of jurisdiction can take place without affording the Assessee a reasonable opportunity of being heard in the matter. Department in the present case has not been able to produce any such order, transferring the jurisdiction vis- -vis VRL from the CIT (IT)-1, New Delhi to Opposite Party No.1 in Bhubaneswar. While in terms of Section 120 of the Act, it might be possible for the CIT (IT), New Delhi to transfer jurisdiction from one Assessing Officer to another within his jurisdiction, there is no power u/s 120 of the IT Act to transfer jurisdiction to an AO who is not subordinate to the CIT (IT), Delhi. For that purpose, it is only Section 127(2)(a) of the IT Act that could apply. In similar circumstances, the Delhi High Court in an order in Louis Dreyfus Company Asia Pte. Ltd. v. Commissioner of Income Tax (International Taxation-2 [ 2022 (5) TMI 1505 - DELHI HIGH COURT] quashed the notices issued to the Petitioner by the DCIT in Mumbai when in fact that case was subject to the jurisdiction of the DCIT (IT) in New Delhi. For the aforementioned reasons, the Court is not satisfied that the Department has been able to explain the legal basis for Opposite Party No.1 i.e. ACIT at Bhubaneswar exercising jurisdiction over the Petitioner and issuing the impugned notices under Section 148 - The Court, therefore, concludes that the impugned notices were issued by O.P. No.1 without jurisdiction and, therefore, are unsustainable in law. The impugned notices and all proceedings consequent thereto are hereby quashed. This will however not preclude the Department from proceeding hereafter in accordance with law.

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• 2023 (2) TMI 530
  Correct head of income - gain on sale of shares - LTCG or income from other sources - AO has treated the LTGC said to have been earned by the petitioner, as income from other sources, and, accordingly, brought it to tax u/s 56 - AO was of the view that mandatory steps for transfer of shares had not been taken by the petitioner i.e., the assessee AND no responses to notices being issued under Section 133(6) - HELD THAT:- The record shows that insofar as Mr. Pradeep Sharma [Petitioner shareholder] was concerned, the very same transaction, which involved almost the same number of shares and the same price, was accepted, and the said person was allowed to claim deduction/exemption under Section 54F - Furthermore, even in Mr. Pradeep Sharma s case, consideration was received prior to the aforementioned execution of the sale purchase agreement. It seems. rather curious that, in the petitioner s case, the AO has taken a decision that because part of the consideration was received before the agreement to sell, the income had to be treated as income from other sources, whereas in Mr. Pradeep Sharma s case, the income earned was not only been offered for tax under the head capital gains , but deduction was also claimed under Section 54F of the Act; a position which was accepted by the respondent/ revenue. A perusal of the impugned assessment order does not reveal that, the fact that RTPL and ISL did not respond to the notices issued under Section 133(6) of the Act, was put to the petitioner. The least that the AO could have done is that he could have brought this aspect to the notice of the petitioner, who could then, perhaps, have them represented via their authorized representative before the AO. We are inclined to set aside the impugned order, with liberty to the AO to pass a fresh order after giving due opportunity to the petitioner. AO will issue a notice in this behalf to the petitioner, which would indicate the date and time, when hearing would be accorded in the matter.

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• 2023 (2) TMI 529
  Stay of demand - grant of stay of demand till the disposal of the First Appeal on payment of 15% of the disputed demand - respondent refused to refund the excess amount adjusted beyond 20% of the demand raised by the respondent - petitioner specific grievance that adjustment, which has been made against the refund to be granted as high as 65% of the demand raised, which is more than 20% prescribed by the said instructions dated 31.07.2017, HELD THAT:- This is a classic case where even before this Court at the time of filing of affidavit-in-reply, the instructions given to the counsel is to the effect that there was a complete absence of any application when in fact at the time of filing of the appeal, the application has been made and assuming the application was prior in point of time, the gap is only of two days and that kind of a hyper technicality would hardly be expected when otherwise the assessee has fulfilled all other requirements for him to be entitled to the benefit of these circulars. In fact, even the date of 28.04.2015 he is not to be amplified in as much as the endorsement of the authority concerned is indicative of the same being of 30.04.2015. There has been an application for rectification of the Assessment Order on 31.03.2015 that may not be treated as an application for the purpose of exercise of the powers given under the circular. The petitioner s express request to the respondent to keep the demand in abeyance till the time the appeal of the assessment year 2012-13 is disposed of ought to have been considered. As noticed that the adjustments which have taken place over the period of time by disregarding such a request has adjusted the refund to the tune of nearly 65%. When, in fact, 20% of the amount would come to Rs.4,10,67,754/- rounding the same that of to Rs.4.11 Crore, the remaining amount could not have been continued to be adjusted against the demand which is yet to be adjudicated by the CIT (Appeals). Accordingly, this petition preferred by the petitioner deserves to be allowed quashing and setting aside the order whereby the respondent refused to refund the excess amount adjusted beyond 20% of the demand raised by the respondent for the assessment year 2012-13. The only reason one could notice in the communication dated 11.01.2022 for denying and not acceding to the request of the petitioner is that the adjustment of the refund against the demand is done by the CPC system in accordance with the total outstanding demand. This has no reference whatsoever of both the CBDT Office Memorandums referred to hereinabove. This highhanded approach on the part of the respondent is neither palatable nor endorsable. Therefore, it deserves interference at the ends of the Court. Resultantly, this petition is allowed. The respondent authority is directed to refund the excess amount of Rs.4.11 Crore (rounded of) adjusted beyond 20% demand raised by the respondent for the assessment year 2012-13. We also direct further the assessee to cooperate in the early disposal of the appeal. If the assessee fails to cooperate in the disposal of the appeal, the respondent shall be at liberty to approach this Court for review its order.

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• 2023 (2) TMI 528
  Reopening of assessment u/s 147 - whether no notice was served upon the assessee? - Treating the bank deposits as the business receipts of the assessee - HELD THAT:- Undisputedly the authorized representative of the assessee attended the proceedings before the assessing authority. As recorded by the AO that the learned authorized representative had sought adjournment and no objection was raised regarding non-service of the notice, the fact that authorized representative of the assessee attended the proceedings. As pointed out by the Revenue that vakalatnama was duly executed in favour of the said authorized representative of the assessee. Therefore, it cannot be inferred that no notice was served upon the assessee. Revenue has also placed on record the dispatch register of the notice. Therefore, there is no infirmity into the action of the AO in reopening of the assessment. Grounds 2 3 according stand rejected. Deposits in bank acoount - CIT(Appeals) has failed to advert to the objection of the assessee. On the other hand before the authorities below the assessee has categorically stated that amount was out of the funds received from mother and father. The bank statement of father is placed on record which suggest cash withdrawal of Rs. 25,00,000/- and the amount of Rs. 82,00,000/- was deposited in the bank account of the assessee. Therefore, considering the evidences placed, the authorities below failed to appreciate the evidences in right perspective and treated the deposit as business receipts, which is contrary to the records. Therefore,we hereby delete the impugned addition. This ground of the assessee s appeal is allowed.

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• 2023 (2) TMI 527
  Addition on account of peak credit in bank accounts - HELD THAT:- CIT(A) has given considerable relief to the assessee without the assessee establishing the existence of any business. The huge deposits and withdrawal in the bank account have permitted to be taken out the ambit of taxation on peak theory and only two peak have been added. In this process the CIT(A) has deleted addition made by the AO. Revenue has not filed any appeal in this regard. In our considered opinion, the assessee has been granted sufficient relief by authorities below and in our considered opinion the assessee does not need any more relief. We affirm the order of the Ld. CIT(A) in this regard. Estimated business profit - assessee has not co-operated and after adding the cash deposits, estimated the income - HELD THAT:- We find ourselves in agreement with this proposition that when the Ld. CIT(A) has already granted relief on cash deposits and added only peak credit, there is no justification of further addition of business profit. Hence, we set-aside the order of the authorities below on this issue and decide the issue in favour of the assessee. Appeal of the assessee is partly allowed.

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• 2023 (2) TMI 526
  Disallowance of development expenses - assessee could not produce the supporting evidences - grievance of the assessee is that the authority erroneously disallowed the expenses purely on estimation basis - HELD THAT:- Undisputedly, the Assessing Authority has made the impugned addition on the basis of estimation. Coupled with the fact that the Valuation Report was not supported by the relevant evidences. The assessee has filed Valuation Report by Sabharwal Associates who has computed total cost of construction at Rs.44,44,000/-. AO has recorded the finding that the assessee failed to produce complete vouchers/bills in support of his claim. Looking to the facts of the present case where the assessee has claimed to have incurred expenses on development for claiming deduction of such expenditure, it was incumbent upon the assessee to produce complete vouchers and other credible evidence for proving the veracity of expenses. Therefore, do not see any infirmity into the impugned order of authorities below. Thus, Ground No.1 raised by the assessee is therefore, dismissed. Valuation of stock at a higher rate - HELD THAT:- AO has valued stocks at the rate of Rs.2,500/- per square meter and Rs.466/- per square meter on development charges. The assessee failed to controvert the finding of lower authorities.Ground Nos. 2 3 raised by the assessee are dismissed.

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• 2023 (2) TMI 525
  Exemption u/s 11 - enhancing the addition - accumulation of charitable income as per section 11(1)(a) on the income from the pharmacy business of the assessee trust - interpretation of the term income from property held for charitable purposes in the relation to businesses qualifying as such properties - whether to be calculated on its gross receipts or on the net profits gains of the business? - CIT (Appeals) calculating deduction u/s 11(1) of the Act based on net income of pharmacy store instead of gross receipts - HELD THAT:- Income from properties held for charitable purposes are exempt from tax to the extent utilized for the said purposes. Also 15% of such income is allowed to be set apart or accumulated for the said purpose and treated as deemed application/utilization for charitable purposes. We uphold order of the ld.CIT(A) holding that it is the only profits and gains derived from the incidental business of the assessee charitable-trust i.e. its pharmacy business, which would qualify as income for the purpose of computing the statutorily allowed accumulation at the rate of 15% in terms of section 11(1)(a) of the Act. Decided against assessee.

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• 2023 (2) TMI 524
  Undisclosed investment u/s.69 being cash deposit during demonetization period - HELD THAT:- As in light of the cash withdrawals of Rs.15.25 lac a/w. cash in hand that would have been available with the assessee, a salaried person both out of his savings and current years income, it can safely be held that an amount of Rs.3 lac (out of cash withdrawals of Rs.6,25,000/- made by the assessee on 30.08.2014) and Rs.50,000/- (out of cash in hand available with him from his savings account and current years income) could safely be held to have been available with him for making the cash deposits by him during the year under consideration in his aforesaid bank account with Canara Bank - we scale down the addition made/sustained by the lower authorities to an amount of Rs.13,50,000/-[ Rs.17 lac (-) Rs.3.50 lac]. - Appeal of the assessee is partly allowed.

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• 2023 (2) TMI 523
  TP Adjustment - International transaction - corporate guarantee furnished by the assessee to a bank on behalf of the assessee s step-down subsidiary - HELD THAT:- The said transaction comes under the purview of international transaction and which thus calls for the calculation of upward adjustment towards corporate guarantee fee. Computation of corporate guarantee fee - TPO applied 2% rate and on the other hand, the assessee has given an alternate submission applying 0.25% rate. We, however, find that under similar set of facts and circumstances of the case, we have sustained the addition for corporate guarantee fee applying 0.5% rate. We draw support from the decision of coordinate Bench, Guwahati in the case of Greenply Industries Limited [ 2022 (7) TMI 1045 - ITAT GUWAHATI] wherein the issue has been examined at length and Arm s Length fee has been restricted @ 0.5%. Thus we direct ld. AO to compute the corporate guarantee fee @ 0.5% of the outstanding loan at the year end as against 2% charged in the assessment proceedings. Thus, ground no. 2 raised by the assessee is partly allowed. Disallowance u/s 14A r.w.r. 8D - suo moto disallowance offered by the assessee - HELD THAT:- As relying on H.T. Media Ltd case [ 2017 (8) TMI 962 - DELHI HIGH COURT] considering the fact that most of the investments held by the assessee are brought forward from preceding year and also the major portion of the investment is in the sister/group concerns of the assessee and thus, reverse the finding of ld. CIT(A) and delete the disallowance made by ld. AO and accept the suo moto disallowance offered by the assessee. Addition of disallowance u/s 14A for the purpose of computing book profit u/s 115JB - HELD THAT:- Issue is well-settled by the judgment of Hon ble Jurisdictional High Court in the case of CIT vs. Jayshree Tea Industries Ltd [ 2014 (11) TMI 1169 - CALCUTTA HIGH COURT] wherein held that provisions of Section 115JB of the Act in the matter of computation is a complete code in itself and resort need not and cannot be made to Section 14A of the Act. Similar view was also taken by ACIT vs. Vireet Investments Pvt. Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] as well as Hon ble Bombay High Court in the case of CIT vs. Bengal Finance Investments Pvt. Ltd [ 2015 (2) TMI 1263 - BOMBAY HIGH COURT] Respectfully following the same, common ground no. 4 raised by the assessee are allowed. Disallowance of deduction u/s 80G - HELD THAT:- As assessee gave donation to Assam Investment Advisory Society considering it to be a donation eligible for deduction u/s 80G of the Act but till the time of completion of assessment proceedings, the donee was not in the process of getting the required eligibility certificate which the assessee is in the process to receive from the donee. Thus, considering the prayer made by the assessee, we set aside this issue to ld. AO to examine the veracity of the claim of deduction on account of donation u/s 80G of the Act and if found in order, may be allowed to the assessee in accordance with law. Computing the tax liability and MAT credit - also claimed that the MAT has been erroneously computed @ 18.3% instead of @ 18.50% of book profit - HELD THAT:- Considering the prayer of the assessee, we direct ld. AO to recompute the tax liability and also recompute the available MAT credit and grant it in accordance with law. Thus, ground no. 9 is allowed for statistical purposes.

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• 2023 (2) TMI 522
  Foreign tax credit - claim disallowed on the grounds that filing of form 67 within due date is a pre-condition for claiming foreign tax credit - HELD THAT:- After going through the entire submissions from the both the sides, as noticed that a similar issue has been decided by the coordinate bench of this Tribunal in the case of Vinodkumar Lakshmipathi [ 2022 (10) TMI 87 - ITAT BANGALORE] direct the AO to give foreign tax credit as per Form No.67 filed on 20.8.2020 before the ld. CIT after due verification and appeal is accordingly allowed for statistical purposes.

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• 2023 (2) TMI 521
  Deemed dividend u/s 2(22)(e) - opening balance for the A.Y 2011-12 is to be allowed for working deemed dividend u/s 2(22)(e) is incorrect since in A.Y 2010-11, the entire credit balance was set off and resultant working of deemed dividend u/s 2(22)(e) was accepted by the assessee - HELD THAT:- As submission of the learned D.R. that in A.Y 2010-11 the entire credit balance was set off and resultant working of deemed dividend u/s 2(22)(e) was accepted by the assessee. CIT (A) has held that the opening credit balance for A.Y 2011-12 is to be allowed for working of the deemed dividend u/s 2(22)(e). We find some force in the above argument of the DR. A perusal of the order of the learned CIT (A) shows that he has not at all referred to the assessment order for the A.Y 2010-11 wherein the entire credit balance was set off and the resultant working of deemed dividend u/s 2(22)(e) was accepted by the assessee. Under these circumstances, we deem it proper to restore the issue to the file of the learned CIT (A) with a direction to adjudicate the issue afresh and in accordance with law by giving due opportunity of hearing to the assessee. He shall give a categorical finding as to whether in A.Y 2010-11 the entire credit balance was set off and the resultant working of deemed dividend u/s 2(22)(e) was accepted by the assessee or not. We hold and direct accordingly. The grounds raised by the Revenue are accordingly allowed for statistical purposes.

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• 2023 (2) TMI 520
  Deduction u/s 54F - CIT (A) upholding the assessment order passed by the AO by relying on evidences collected by him behind the back and using them without confronting them to the assessee and affording an opportunity to cross examine witnesses and rebut them - HELD THAT:- Assessee is submitting that material collected by the AO were not confronted by the assessee and straightaway taken into the assessment order. In this regard, we accede to the request of assessee that assessee should be given chance to rebut these evidences and assessee should be permitted to bring the necessary submissions in this regard before the AO. Ld. DR for the Revenue did not have any objection to this proposition. Accordingly, we also remit the merits of addition to the file of AO. AO is directed to consider the issue afresh after giving the assessee an opportunity of making necessary submissions and allowing the assessee to confront with the evidences of Tehsildar and Inspector s report collected by the AO. Needless to add, assessee should be granted an opportunity of being heard. Appeal by the assessee stands allowed for statistical purposes.

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• 2023 (2) TMI 519
  Penalty u/s.271(1)(c) - Addition u/s 69 - unexplained investment - addition with respect to investment made during the year only could be made - HELD THAT:- Source of investment made in immoveable property was furnished by the assessee ,as invested by Sh.Rashmikant C. Patel. The same has not been found to be false or untrue by the Revenue. Even particulars pertaining to the explanation of the assessee as to why payment was made by the other coowner has not been found to be false by the Revenue. The assesses explanation of the payment made by the other co-owner on account of advance given by the assessee, we find, is not disputed by the Revenue with respect to the factum of advance given by the assessee. The only reason for rejecting the explanation is that it was found unacceptable since advance was given in preceding year. Therefore clearly all particulars relating to the source of investment were furnished by the assessee which were not found to be inaccurate or even incorrect by the Revenue. Even the explanation of the source of investment was not found to be false by the Revenue. As merely found to be unacceptable since advance was given by assessee to co-owner in preceding year. It is settled law that mere rejection of a claim of the assessee will not invite levy of penalty u/s 271(1)(c) - The assessee in such circumstances, we hold, cannot be charged with having furnished any inaccurate particulars of income or concealed any particulars of income so as to attract levy of penalty u/s 271(1)(c) - Assessee appeal allowed.

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• 2023 (2) TMI 518
  Disallowances of engineering expenses paid by the assessee to its head office - Expenditure duly and exclusively for the purpose of business of PE - HELD THAT:- As the name of the employees along with the nature of duties and number of hours apportioned have been have been made part of the debit note. Tax Authorities below have over stressed on non-production of time log sheets without finding any shortcoming and fallacy into the information already available and provided. The bench is of considered opinion that to discredit an expense questioning whether it was duly and exclusively for the purpose of business of PE the information that was available should be considered deficient before questioning intention of the assessee to not have produced time log sheet. When the Tax Authorities below are not questioning that execution of projects as PE then discrediting one of the expenses of the nature of engineering expenses crucial to the accomplishment of the project was not justified. Particularly in regard to Assessment Year 2005-06 when transactions were reported to be at arm s length by the ld TPO and the ld TPO study included examination of engineering services than that all the more required material reasons to discredit the debit note for lack of corroboration. The bench is of considered opinion that findings of the ld Tax Authorities below in regard to the disallowance of engineering expenses cannot be sustained. - Decided in favour of assessee.

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• 2023 (2) TMI 517
  Rectification of mistake u/s 154 - Addition u/s 69A - cash found during the course of search and seizure operation as unexplained money by ad-hoc estimation of expenses incurred - HELD THAT:- Section 154 enables the AO to rectify a mistake apparent on record. A reading of the assessment order and the order u/s 154 nowhere speaks of any mistake which has occurred in the assessment order. The order passed by the AO is as if he is sitting into the shoes of ld. CIT and passing an order u/s 263 of the Act, which is not actually correct. How these additions of cash have been done u/s 154 claiming that there was a mistake apparent from record in the original order, is not borne out anywhere in the records. We note that assessee has filed return under presumptive taxation regime of section 44ADA in which books of accounts were not required. Assessee s submissions in explanation of cash-in-hand are sufficiently cogent. The estimate of cash by the ld. CIT (A) was also not done on correct basis. CIT (A) himself stated that claim of the assessee in respect of non-cash expenses cannot be ruled out. However, the assessee has not provided details of such expenses. This is a strange observation and ld. CIT (A) has on ad hoc basis held that on some non-cash expenses, 1/3rd of the expenses calculated by AO in this regard i.e. Rs.5,21,650/- (1/3rd of Rs.15,64,650/-) is allowed. This is solely on the basis of surmises and conjectures. The estimate of cash under the presumptive regime by the AO as well as CIT (A) is flawed. The same is based on surmises and conjectures and the same is not sustainable on merits also. So, to conclude, this estimate of cash in order passed u/s 154 is jurisdictionally not permissible and secondly, on merits also, we note that the addition is based on surmises and conjectures which cannot be sustained.Appeal filed by the assessee stands allowed.

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• 2023 (2) TMI 516
  Deduction u/s 80IC - Claim denied as assessee had not filed Form 10CCB along with return of income - Whether audited report in Form 10CCB is mandatory to the filed along with return of income as per the provision of section 80IA(7) which is pre-condition of claiming the deduction - CIT-A allowed deduction - HELD THAT:- CIT(A) while deciding the issue in favour of the assessee has given the finding that though there was delay in upholding Form 10CCB but the same was uploaded before the return of income was processed u/s 143(1) - For allowing the ground of assessee, CIT(A) had relied on the decision of Contimeters Electricals (P.) Ltd. [ 2008 (12) TMI 4 - HIGH COURT DELHI] and other decisions. We find that Hon ble Apex Court in the case of CIT vs. G. M. Knitting Industries (P.) Ltd. [ 2015 (11) TMI 397 - SC ORDER] has held even though Form 10CCB was not filed along with the return of income but when the same was filed before the final order of assessment was made, assessee was entitled to claim deduction. Before us, Revenue has not pointed to any contrary binding decision in its support nor has pointed to any fallacy in the findings of CIT(A). We, therefore, find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed.

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• 2023 (2) TMI 515
  Revision u/s 263 by CIT - notional foreign exchange loss - As per CIT AO not having duly verified assesses claim of foreign exchange loss on notional entries in the computation of its income returned for taxation, despite no expense of foreign exchange loss being debited in its Books of accounts and it was a artificial loss not allowable otherwise. HELD THAT:- What we have gathered from contents of the ledger account of foreign exchange fluctuation, which were produced before us, we find that what the assessee was probably attempting to state was that it was following the practice of claiming only actual gain or loss on foreign exchange fluctuation, but in the ledger account it had debited both actual and notional gain or loss on foreign exchange following probably the Accounting Standards prescribed by the Institute of Chartered Accountants of India, AS-11, as per which it was mandatorily required to maintain its books of accounts. In the return of income, since the assessee wanted to restrict its claim only on the actual amount gain or loss on foreign exchange, it had netted off the notional gain or loss so booked in the account which accordingly was claimed in the return of income. But we find that this explanation was not clearly given by the assessee to the AO nor to the Ld.Pr.CIT, and even before us. The ld.counsel for the assessee did not explain likewise and did not come out in clear terms even before us. No infirmity in the order of the ld.Pr.CIT holding that vis- -vis the issue of claim of notional foreign exchange fluctuation loss the claim apparently relating to notional loss which otherwise is not allowable under the Act and the issue being not examined by the AO, therefore there was an error in the order of the AO causing prejudice to the Revenue by allowing such claim to the assessee. The order of the ld.Pr.CIT is accordingly upheld on this count. Discrepancy in the claim of imported purchases as per the books and as per the CBEC data - There has to be a finding of error in the order of the AO for the PCIT to exercise his revisionary powers ,as also the error causing prejudice to the Revenue. On the impugned issue of mismatch in purchase as per CBEC data and that booked by the assessee, the Ld.PCIT finding the assesses explanation for the same to be prima facie correct he was largely satisfied with the explanation of the assessee, and therefore clearly there is no error in the order of the AO as per the Ld.PCIT also. When all facts and evidences were there before the Ld.PCIT ,he was required to go through the same and thereafter arrive at his finding of error. Subject to the verification of the evidences by the AO, clearly as per the Ld.PCIT there was no error in the order of the AO. In view of the same, on the issue of discrepancy in the claim of import purchases, we find there is no error in the claim of the assessee, and therefore, the assessment order cannot be said to be erroneous for not having examined the said claim of the assessee. To this extent, the order of the ld.Pr.CIT is set aside. PCIT has stated that the issue of mismatch in CBEC data of export sales and that booked by the assessee has also remained unexplained to the AO and even to him. But we find that this issue was never confronted to the assessee during revisionary proceedings - assessee was only put to notice about the mismatch in import purchases. The issue of mismatch in export sales never being confronted to the assessee, the Ld.PCIT s order holding the assessment order erroneous on this count is against all principles of natural justice and accordingly is set aside on this count. Appeal of assessee partly allowed.

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• 2023 (2) TMI 514
  Deduction u/s 80P(2)(d) - interest received from Co-operative banks - HELD THAT:- As decided in assessee own case 06.10.2022 [ 2022 (10) TMI 257 - ITAT SURAT] assessee is a co-operative society and therefore is entitled to claim deduction in respect of interest received from another co-operative bank under section 80(P)(2)(d) of the Act. Therefore, respectfully following the binding precedent of Hon ble jurisdictional High Court of Gujarat in the case of Surat Vankar Sahakari Sangh Ltd [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] we confirm the order passed by the ld CIT(A) and dismiss the appeal of Revenue.

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• 2023 (2) TMI 513
  Levying the interest u/s 234A and 234B up to the date of the assessment order u/s 147 - as per the assessee interest shall be chargeable up-to the payment of self-assessment tax paid 19-3-2015 - HELD THAT:-The issue, however, is no longer res-integra. The Hon ble Supreme Court and Various Hon ble High Court thorough judgements have well settled that when the statute says interest, which would be compensatory in nature, would be levied upon happening of a particular event or action. It has been held in the case of CIT v. Prannoy Roy [ 2001 (12) TMI 68 - DELHI HIGH COURT] that the interest under section 234A of the Act on default in furnishing return of income shall be payable only on the amount of tax that has not been deposited before the due date of filing of the income-tax return for the relevant assessment year. The impugned provisions are only compensatory in nature and no part thereof is penal in character. Also see ANAND PRAKASH [ 2009 (2) TMI 30 - DELHI HIGH COURT] as held argument raised on behalf of the revenue that such payment of tax did not strictly comply with the meaning of advance tax and would therefore, have to be disregarded for the purposes of charging interest u/s 234A, was rejected. The Court also held that interest u/s 234A was compensatory in nature and unless any loss was caused to the revenue, the same could not be charged from the assessee. Thus we are of the opinion that the interest under section 234A and 234B of the Act can be levied in the given facts and circumstances up-to the date of self-assessment tax paid by the assessee along with the interest and not to the period beyond that date. Hence, we set aside the order of the learned CIT-A with the direction to the AO to delete the interest charged by him. Thus, the ground of appeal of the assessee is allowed.

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• 2023 (2) TMI 512
  Deduction u/s 80P - interest income earned from various co-operative banks - HELD THAT:- We find that the grounds of appeal raised by assessee is squarely covered by the decision of Division Bench of this Tribunal in a series of decisions, including the decision in Bardoli Vibhag Gram Vikas Co.Op. Credit Society Ltd. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT ] wherein the assessee-cooperative society is held eligible for deduction under section 80P(2)(d) in respect of gross interest received from co-operative bank without adjusting interest paid to said bank, we conclude that the order passed by assessing officer is not erroneous. Hence, the grounds of appeal raised by assessee are allowed - We direct the Assessing Officer to allow deduction u/s 80P(2)(d) - In the result, the grounds of appeal raised by the assessee are allowed.

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• 2023 (2) TMI 511
  Assessment u/s 144C - Addition u/s 69A - direction of learned DRP is to delete the addition made in the draft assessment order - HELD THAT:- Sub-section (10) of section 144C makes it clear that every direction issued by learned DRP shall be binding on the AO. Sub-section (13) of section 144C provides that after receiving the direction of learned DRP, AO shall in conformity with the direction complete the assessment without providing any further opportunity of being heard to the assessee. The requirement of providing a personal hearing to the assessee at the final assessment stage has been dispensed with only for the reason that the AO has no other scope but to implement the direction of learned DRP. In the facts of the present appeal, the only direction of learned DRP is to delete the addition made in the draft assessment order. Therefore, the clear mandate given to the AO by learned DRP is to restrict himself to delete the addition - Whereas, the Assessing Officer has travelled beyond the direction given by learned DRP and made addition which he himself accepted as explained in the draft assessment order. Thus, the impugned assessment order has been passed in clear violation of the directions of learned DRP. Therefore, the assessment order is a nullity in the eyes of law as it is against the provisions contained under sub-section (10) and (13) of section 144C of the Act. That being the factual and legal position, we quash the final assessment order.

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• 2023 (2) TMI 510
  Addition u/s 68 - Bogus share transactions - penny stock purchases - HELD THAT:- We find that both the authorities have recorded exhaustive finding of fact narrating the circumstances as to how investment made by the assessee in the shares of M/s. Unno Industries Limited was a bogus penny stock company, which has artificially enhanced the value of shares in a short span of time. This aspect is fully covered by the latest decision of the Hon ble Calcutta High Court rendered in the case of Swati Bajaj Others [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] . We respectfully following the decision of the Hon ble Calcutta High Court, we do not find any merit in this ground of appeal, hence, it is rejected. Estimated payment of commission for getting bogus long-term capital gain @ 2.5% - Since we have confirmed the conclusions of the revenue authorities that the total claim of long-term capital gain was a bogus one, therefore, this commission payment is also to be disallowed and required to be added back. The ld. Assessing Officer has rightly made the addition, which has been confirmed by the ld. 1st Appellate Authority. We do not find any merit in this ground of appeal also. It is rejected. Appeal of the assessee is dismissed.

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• 2023 (2) TMI 509
  Revision u/s 263 by CIT - Undisclosed sundry debtors - HELD THAT:- The simple reason for such embargo is that there should not be contradictory orders at the level of identical authorities. CIT(Appeals) has co-terminus power of the ld. AO. In case it noticed any irregularity or illegality in an assessment order that can be taken care by the ld. 1st Appellate Authority by exercising his power for enhancement of income. Therefore, on such items, no supervision at the end of the ld. Commissioner under section 263 is contemplated in the Scheme of the Act. Addition of Rs.1,02,00,000/- is already subject matter of appeal before the ld. CIT(Appeals) and the ld. CIT(Appeals) would always look forward whether it required to be charged to tax under section 115BBE @ 60% or at normal rate. It is yet to be determined how much addition stands and what is the source of such addition to the income of the assessee. Therefore, all these subject matter can easily be looked into by the ld. 1s t Appellate Authority. The ld. CIT under section 263 has no jurisdiction on such a claim. TCS credit - It is to be appreciated that this aspect has been considered by the ld. Assessing Officer before allowing the credit. There is no apparent error in the order of the ld. Assessing Officer on this point. Therefore, we are of the view that ld. Commissioner has erred in invoking jurisdiction under section 263 of the Income Tax Act. Assessee appeal allowed.

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• 2023 (2) TMI 508
  Addition u/s 68 - bogus share capital and share premium - HELD THAT:- Considering the facts on record and the provisions of section 68 of the Act, no addition is called for in respect of amount received by the assessee during the preceding year which has been duly accounted and reported in its audited balance sheet - We direct the ld. AO accordingly to delete the addition so made in this respect. In respect of the balance amount received during the impugned year, we note that Ld. AO without even going through and discussing the details submitted by the subscriber companies, insisted for personal appearance to prove the identity, creditworthiness of the subscribers and the genuineness of the transactions. To our mind, Ld. AO could have taken an adverse view only if he could point out the discrepancies or insufficiency in the evidence and details furnished in his office and also as to get further investigation was needed by him by way of recording of statement of the directors of the assessee and the subscriber companies. Hon ble Bombay High court in the case of PCIT v. Paradise Inland Shipping Pvt. Ltd. [ 2017 (11) TMI 1554 - BOMBAY HIGH COURT] held that once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Going by the records placed by the assessee of all the share subscribing companies, it can be safely held that the assessee has discharged his initial burden and the burden shifted on the AO to enquire further into the matter which he failed to do so. It is also noted that all the investing companies have sufficient own funds available with them to make investment in the assessee. Assessee has discharged its onus to prove the identity and creditworthiness of the share subscribing companies and the genuineness of the transactions received during the impugned year - direct the ld. AO to delete the addition made towards share capital and share premium u/s. 68 - Decided in favour of assessee.

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• 2023 (2) TMI 507
  Unexplained investment in the jewellery - as jewellery weighted 1,796 grams found during the course of search and seizure from the resident of the assessee - assessee explained the source of acquisition of gold jewellery as it belongs to the assessee, her two daughters and some of the jewellery belongs to her mother Smt. Indra Devi - HELD THAT:- We consider the explanation supported by undisputed evidences such as the gold bar weighting 623 grams which were received by the husband of the assessee under tax free Gold Bond Scheme, 1998 for which the assessee has produced a certificate issued by the Reserve Bank of India giving the details of gold bond for 623 grams of 0.995 purity. Therefore, once the assessee explained the acquisition of the gold bar weighting 623 grams belonging to the husband of the assessee received in respect of the Gold Bond Scheme, 1998 then the addition sustained by the CIT(A) in respect of 499.85 grams will not survive. Even otherwise the AO and CIT(A) has allowed the credit of only 500 grams jewellery on account of stridhan of the assessee whereas as per the CBDT Circular No. 1916 dated 11th May, 1994, the gold jewellery and ornaments to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family need not to be seized. While considering this Circular of CBDT the Hon ble Rajasthan High Court in the case of CIT vs. Satya Narain Patni [ 2014 (5) TMI 1002 - RAJASTHAN HIGH COURT] If the full benefit of this Circular is given in the case of the assessee then the gold jewellery of 1100 grams falls in the ambit of the jewellery and ornaments not to be seized and consequentially not required any explanation of source of acquisition. If the undisputed quantity of the jewellery / gold bars of 623 grams as well as the benefit of the CBDT Circular dated 11th May, 1994 in respect of 250 grams Gold jewellery of each daughter and 100 grams for the husband of the assessee is given then no addition on account of unexplained investment in the jewellery is called for. Hence, the addition sustained by the CIT(A) on account of 499.85 grams jewellery is liable to be deleted. Addition made on account of cash found during the search - AO did not accept the explanation of the assessee and after allowing the cash balance as on 25th August, 2009 of Rs. 5475.50/-, as per the books of accounts, made the addition of the balance amount of Rs. 100,625.50/- as income from undisclosed sources - HELD THAT:- Though the assessee has explained the source of cash to the extent of the sales of Rs. 28,006/- dated 26.8.2009 and collection from the debtors of Rs. 20,000/-. However, the CIT(A) has rejected the said explanation on the ground that the assessee has not furnished the name of the debtor from whom the collection is made and also did not furnish the copy of the debtors account as well as the books of accounts of M/s Gupta Traders to substantiate this explanation. Accordingly, in the facts and circumstances of the case, we do not find any error or illegality in the impugned order of the CIT(A) except the mistake regarding the quantum of addition sustained by it as already discussed in the foregoing part of this order. Ground no. 5 is dismissed. Excess stock of Kimam - excess stock of 260 kg of kimam found at the time of survey at the factory premises which was out of stock register - AO issued notice under section 142(1) seeking explanation from the assessee about the stock position as found on the date of search in comparison to the stock recorded in the stock register and the books of accounts - HELD THAT:- Though, the assessee explained before the AO that the said stock was not finished stock but it was unfinished under process stock and would be recorded in the stock register only when converted into finished product of kimam. Therefore, the assessee submitted that there is no discrepancy in the stock found during the survey as well as recorded in the stock register. The controversy is only regarding whether the 260 kg of kimam was found during the survey was a finished product or unfinished product. The assessee has not produced any material to show that the said stock was not finished product whereas the AO has considered the stock inventory prepared at the time of survey / search which was compared with the stock register maintained by the assessee. Therefore, in the absence of anything contrary to the details recorded in the stock inventory prepared at the time of survey / search, we do not find any reason to interfere with the orders of the authorities below. - Decided against assessee.

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• 2023 (2) TMI 506
  Addition u/s 68 - share capital and share premium, treated as undisclosed cash credit - assessee failed to prove the genuineness of transaction and creditworthiness of the subscribers - non appearance of Director of the subscriber company before AO - CIT-A deleted addition - HELD THAT:- Assessee having discharged its initial burden casted upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, it shifted on the Ld. AO to examine the evidences furnished and even make independent inquiries and thereafter to state that on what account he was not satisfied with the details and evidences furnished by the assessee by confronting with the same to the assessee. In view of this, the aforesaid decision of the Hon ble Supreme Court in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] in our humble view, is not applicable to the facts and circumstances of the case in hand. As we find that assessee has discharged its onus to prove the identity and creditworthiness of the share subscribing companies and the genuineness of the transactions. Accordingly, considering these facts and in the light of the judicial precedents referred above, we find no reason to interfere with the fact-based findings given by the Ld. CIT(A) and uphold his decision to delete the addition made by the Ld. AO towards share capital and share premium u/s. 68 of the Act. Accordingly, grounds taken by the revenue in this respect are dismissed.

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• 2023 (2) TMI 505
  Revision u/s 263 - cash deposits and sources of properties purchased/sold and working of capital gain in respect of properties sold - case was selected under Computer Aided Scrutiny Selection (CASS) for Limited scrutiny for the reason Large Cash deposits in bank account and the assessee has also purchased / sold one or more properties during the year - HELD THAT:- AO as per the limited scrutiny inquired every detail and evidences before the AO. He had examined them and had then passed the assessment order u/s.143(3) of the Act. There is no error committed by the AO either on fact or on law. When such is the position, the assessment cannot be held to be erroneous so as to be prejudicial to the interest of the Revenue. PCIT, on the other hand, has not brought out any satisfaction in his order as to why the assessment order should be held erroneous so as to be prejudicial to the interest of the Revenue. This is so because the PCIT has not given any finding regarding the detailed inquiry already completed by the AO which is evident in the assessment order itself. Without giving such finding regarding the entire evidences furnished by the assessee, vis- -vis the sources of income of the assessee, merely pointing out some discrepancies which is also not coming out from the admitted facts of the case, is nothing but an action that the ld. PCIT resorted to passing order u/s.263 only for the purposes of roving enquiry not permissible within the Act. We are of the considered view that the order passed by the ld. PCIT u/s.263 is misplaced in the present facts of this case. It is not a fit case for assumption of revisionary jurisdiction and passing order u/s.263 of the Act which is held to be devoid of any merits. The order of the ld. PCIT is setaside and the appeal of the assessee is allowed.

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• 2023 (2) TMI 504
  TP adjustment - ALP adjustment - international transaction of corporate guarantee given in favour of the overseas associate enterprises AE s - HELD THAT:- The issue of a corporate guarantee between AE s foregoing international transaction is no more res-integra in light of the statutory amendment in section 92B as well as hon ble madras high court s decision M/S. REDINGTON (INDIA) LIMITED [ 2020 (12) TMI 516 - MADRAS HIGH COURT] . The assessee s argument(s) that such a price could not be super imposed on Nil value declared goes against the very applicability of Chapter-X which has been inserted in the act by the legislature by way of an anti-avoidance provision. The same would not be allowed to be frustrated mainly because an assessee does not adjust any international transaction. This tribunal s Special Bench s decision in M/s.Instrumentatirum Corporation [ 2016 (7) TMI 760 - ITAT KOLKATA] has already settled the instant issue against the assessee and in favour of the department that such an international transaction has to carried at the arm s length price computed as per the corresponding most appropriate method MAM as per law. We thus reject all these assessee s arguments challenging correctness of the learned lower authorities action to this effect and direct the learned TPO at the same time to re-compute the impugned adjustment @0.5% only. These assessee s substantive ground nos.2 to 2.2 are partly accepted in very terms. Interest on Loan Given to Associated Enterprise - adjustment relating to the international transaction of receipt of interest on loan given by the Appellant to its associated enterprises by determining its arm s length rate of interest at LIBOR + 5% instead of LIBOR + 0.875% - HELD THAT:- Learned senior counsel took us through the assessee s paper book wherein the latter had claimed to have availed loans from third parties @4.5 to 5%; which in turn, stood advanced to the AE s @ 5 to 5.5%. Learned counsel s case is that these third parties are internal comparables in assessee s case in the very segment since involving back to back element qua loans availed and advances to AEs. The fact however remains this back to back aspect has nowhere been considered in detail either in the TPO s order or in the DRP s directions as it is evident from perusal of the case file. Faced with this situation, we deem it appropriate to restore the instant second issue back to the TPO for his fresh appropriate adjudication as per law. These assessee s ground nos.3 to 3.2 are allowed for statistical purposes in very terms. Export of Goods to Associated Enterprise - assessee had inter-alia sold PVC Sheets, different varieties of onions and fruit products and in varying quantities, totaling to 89,08,234 kgs to AEs as against that to non AE s weighing 116125 kgs only - HELD THAT:- There is no precedent before us which gives any discretion to interfere with the impugned adjustment determined in light of CUP method already held as direct most appropriate method MAM in nature. We make it clear that this tribunal s decision Tecnimont ICB Pvt. Ltd. [ 2013 (9) TMI 595 - ITAT MUMBAI] [ has settled the law that the price arrived at between two AE s themselves could hardly from an uncontrolled price for the purpose of determining ALP since not involving uncontrolled transactions. We follow the very reasoning herein as well to hold that the assessee could not claim its impugned volume based discounts to the AE s open market trends only since they form an uncontrolled transaction only. The assessee s last arguments based on UN s TP manual as well as ICAI guidelines and loss figures to AE s hardly form any material to reverse the impugned adjustment which has been computed after adopting CUP method only in accordance with Chapter-X of the Act which is in the nature of an anti avoidance provision (supra). We further wish to quote sec 92(3) of the Act wherein the legislature has made it clear that these Chapter-X s provision would not apply in the specified circumstances only whose scope cannot be allowed to be expanded . We thus uphold the impugned adjustment. Disallowance of depreciation of intangible assets claimed @25% which in turn, stand rejected under section 40(a)(i) - HELD THAT:- Revenue could hardly dispute that such a depreciation claim could not be rejected under section 40(a)(i) as held in PCIT Vs. Tally solutions P. Ltd. [ 2020 (12) TMI 1160 - KARNATAKA HIGH COURT ] - This issue is accordingly decided in assessee s favour and against the department. Nature of receipt - sale of renewable energy certificate - revenue or capital receipt - HELD THAT:- We note that herein as well that the issue is no more res-integra once various judicial precedents i.e. My Home Ltd [ 2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] , Veda Spinning Mills P. Ltd. [ 2021 (5) TMI 93 - MADRAS HIGH COURT] and L.H.Sugar Factory P. Ltd [ 2016 (9) TMI 152 - ALLAHABAD HIGH COURT] have settled the issue in assessee s favour and against the department that such receipts are not taxable under the provision of the Act. The legislature has also inserted sec 115BBG in the Act vide Finance Act 2017 w.e.f 01.04.2018 with prospective effect whereas we are in A.Y. 2013-14 only. Faced with this situation, we reverse the lower authorities action treating the assessee s receipts in issue as taxable income. Allowed accordingly. Treating its incentive receivables as per the Rajasthan Investment Promotion Scheme 2010 as a revenue receipt - same admittedly found as in the nature of sales tax incentive only - HELD THAT:- We note in this factual backdrop that case law PCIT Vs. Nitin Spinners Ltd. [ 2021 (9) TMI 430 - SC ORDER] has already upheld honourable Rajasthan high court s decision treating similar subsidy of sales tax as per the above scheme for the year 2003, as capital receipt in nature only. We thus adopt the very reasoning mutatis-mutandis to accept the assessee s instant 10th substantive ground. Ordered accordingly. Difference between the stock figures submitted to bank authorities for hypothecation vis- -vis the actual figures as per the duly audited books of accounts - HELD THAT:- CIT(DR) could hardly dispute that the assessee s former figures nowhere claimed to have been submitted after physical verification as is the case with its duly audited books of accounts. We thus quote CIT Vs. Apcom Computers (P) Ltd. [ 2006 (10) TMI 124 - MADRAS HIGH COURT] to delete the impugned addition for this precise reason alone. Ordered accordingly. Adoption of draft assessment s figure - Section 35(2AB) weighted deduction disallowance - HELD THAT:- We prima-facie find merit in the assessee s pleadings as it is evident from a perusal of the Assessing Officer s above stated draft assessment. We thus quote section 144C(3) that such a course of action going against draft assessment is no more available with the Assessing Officer at the time of final assessment which has to be framed as per the DRP s directions under section 144C(13) of the Act. We thus partly affirm the impugned disallowance only to the extent of the foregoing draft assessment s figure of Rs.59,32,799/- by adopting stricter interpretation(supra). Necessary computation shall follow as per law.

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• 2023 (2) TMI 503
  TDS u/s 194C OR 194I - Default u/s 201(1) - CAM charges by licensee Assessee - short deduction of tax at source on Common Area Maintenance Charges paid - HELD THAT:- The decision of in Kapoor Watch Co. Pvt. Ltd. vs. ACIT [ 2021 (1) TMI 209 - ITAT DELHI] wherein the Tribunal examined the issue of short deduction of tax and held that the assessee cannot be regarded as the assessee in default u/s 201(1). The action of the assessee for deduction of TDS at 2% of CAM charges u/s 194C cannot be faulted per se. We thus reverse the action of the Revenue Authorities and restore the position taken by the assessee. The assessee thus cannot be regarded as assessee in default u/s 201(1)/201(1A) of the Act. - Decided in favour of assessee.

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• 2023 (2) TMI 502
  Disallowance u/s 14A - HELD THAT:- As respectfully following the decision of ITAT in assessee s own case for A.Y. 2010-11 [ 2018 (2) TMI 428 - ITAT MUMBAI ] we direct the learned Assessing Officer to restrict the disallowance under Section 14A of the Act to the extent of exempt income only. Accordingly, the ground no.1 of the appeal is partly allowed. Credit for TDS - HELD THAT:- Though, nothing is argued before us but we direct the learned Assessing Officer to verify the claim of the assessee, if substantiated before him and decide in accordance with the law. TP Adjustment - claim of the assessee is that at least 50% of deduction should be granted to the assessee on account of research cost and volume cost if CUP method is applied - HELD THAT:- Respectfully following the decision of the co-ordinate benches in assessee s own case, where assessee is granted 40% deduction on account of research cost volume adjustment, we direct the learned Transfer Pricing Officer/ Assessing Officer to grant the deduction on this count at the rate of 40% instead of 29.50% allowed by him. The contention of the assessee with respect to ground is rejected in view of the decision of the co-ordinate Bench in assessee s own case for earlier years. DRP direction to adopt a weighted average methodology in computing the arithmetic mean of non-Associated Enterprises transaction for arriving at Arm s Length Price of brokerage charged for clearing house and DVP trades - HELD THAT:- Only arithmetic mean of the prices of brokerage should be taken and not weighted average of such prices todetermine Arm s length price of the International Transaction. Directions of the LD DRP are unsustainable in law.

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• 2023 (2) TMI 501
  Levy of penalty u/s 271C - failure to deduct tax on the payment made for External Development Charges (EDC) to HUDA - HELD THAT:- As decided in M/s Vipul Ltd [ 2022 (8) TMI 34 - ITAT DELHI] 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. Ground is allowed in favour of assessee/appellant.

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• 2023 (2) TMI 500
  Maintainability of Appeal before CIT-A - Status of appellant AOP - AOP has used Individual PAN Number - Penalty u/s 271(1)(c)and 271(B) - CIT(A) held that Association of Person (AOP) was different entity than the case of the individual and it was wrong on the part of the said AOP to use the PAN of the individual in filling the appeals of the said AOP - HELD THAT:- CIT(A) noted that appeals have been filed by the AOP by using the PAN of the individual and as AOP is a separate entity assessed as such by the AO, therefore, ld. CIT(A) did not admit these three appeals for adjudication and dismissed these three appeals. We note that ld. CIT(A) did not adjudicate the issue on merits in accordance with the provisions of section 250(6) of the Act, rather dismissed the appeal of the assessee, stating that AOP has used Individual PAN Number. We note that defect in form no. 35 is a curable defect. The ld. CIT(A) should have asked the assessee to correct form no.35, and remove the defect. With these facts, we are of the view that appeal of the AOP is maintainable in law. We direct the Ld. CIT(A) to issue defect memo to the assessee to remove the defect in Form No.35 filed before the ld. CIT(A) and in turn assessee should remove the defect. Therefore, we set aside the order of ld. CIT(A) and remit this matter back to the file of ld. CIT(A) to adjudicate assessee s (AOP) appeal on merit. For statistical purposes, these three appeals filed by the assessee are allowed.

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• 2023 (2) TMI 499
  Reopening of assessment u/s 147 - Reasons to belive - case can be reopened after expiry of four years from the end of the relevant Assessment Year - HELD THAT:- We have perused the reasons recorded u/s 148(2) of the Act and find that nowhere the Assessing Officer has stated that there is failure on the part of the assessee to disclose any material fact. It is apparent from the reasons that there is no satisfaction or mention of any failure on the part of the assessee. Therefore, on this count itself, the order passed by the Assessing Officer u/s 147/143(3) of the Act is liable to be quashed as the same is nullity in the eyes of law - Decided in favour of assessee.

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• 2023 (2) TMI 498
  TP Adjustment - Rate of corporate guarantee fee - TPO rejected the contention of the assessee that the corporate guarantee was a shareholder activity and treated the same as an international transaction - HELD THAT:- The Tribunal in assessee s own case for assessment year 2016-2017 [ 2022 (6) TMI 660 - ITAT BANGALORE] had held that 0.50% of the amount of loan for which the assessee stood as guarantee would be appropriate arm s length guarantee commission the assessee ought to have earned, and accordingly, restricted the addition of corporate guarantee commission to 0.50% of the total loan amount. Thus we direct the AO / TPO to restrict the rate of corporate guarantee commission to 0.50% of the total loan amount for which the assessee stood as a guarantor. It is ordered accordingly. Interest on outstanding receivables (TP Adjustment) - adjustment on interest on delayed receivables - TPO treated the delayed receivables as international transaction and impugned interest, making TP adjustment - HELD THAT:- The Tribunal by following the assessee s own case for assessment year 2016-2017 [ 2022 (6) TMI 660 - ITAT BANGALORE] had restored the matter to the AO / TPO to consider the issue afresh in line indicated by the Tribunal in the order passed for assessment year 2015-2016 [ 2021 (11) TMI 1076 - ITAT BANGALORE] - Thus AO / TPO is directed to decide the issue afresh in the light of the directions issued by the Tribunal in assessee s own case for assessment year 2015-2016. Disallowance u/s 14A - HELD THAT:- It is claimed that the assessee had earned exempt income during the relevant assessment year. If the assessee proves that it had not earned any exempt income during the relevant assessment year, no disallowance u/s 14A of the I.T.Act can be resorted to. For examination whether the assessee has earned any exempt income during the relevant assessment year, the matter is restored to the files of the A.O. Appeal filed by the assessee is partly allowed.

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• 2023 (2) TMI 497
  Addition u/s 68 - bogus LTCG - Unexplained cash credit - HELD THAT:- There are large number of assessees, who have transacted with equity shares of M/s. Cressanda Solutions Limited and claimed exemption u/s 10(38) of the Act. Apart from this scrip, there are other scrips also in Kolkata, who were found to be penny stock and transactions on papers only. The Hon ble Calcutta High Court has recently considered this aspect in its judgment in the case of Swati Bajaj Others [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT ] In a number of appeals, we have also rejected the claim of the assessees, where the assessee transacted in the shares of M/s. Cressanda Solutions Limited. All these transactions have been held as bogus by the Hon ble Jurisdictional High Court. Therefore, we affirm the view taken by the Revenue Authorities who have rejected the claim of the assessee and made the additions. We do not find any merit in this appeal. Decided against assessee.

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• 2023 (2) TMI 496
  Income deemed to accrue or arise in India - Chargeability of receipt from domain name registration as royalty under the domestic law as well as India-USA Double Tax Avoidance Agreement (DTAA) - HELD THAT:- We are of the humble opinion that the ratio laid down in the aforesaid decision cannot be made applicable to the facts of assessee s case as the inter-se dispute between the parties is with regard to registration of certain domain names. While deciding the dispute between the parties the Hon ble Court has observed that the domain names are typically never owned. However, we are confronted with a situation of chargeability of consideration received as royalty in terms of Section 9(1)(vi) of the Act. Section 9(1)(vi) defines royalty and as per the said definition, right to use of trade mark also qualifies as royalty. In the case of Hindustan Unilever Ltd. v. Endurance Domains Technology LLP Ors. [ 2020 (6) TMI 818 - BOMBAY HIGH COURT] the Hon ble Court never had an occasion to examine the issue qua the definition of royalty as per Section 9(1)(vi) of the Act. On a query from the Bench in course of hearing, learned counsel appearing for the assessee fairly submitted that domain name is in the nature of a trade mark under the Trade Mark Act, 1999. Therefore, based on the decision in the case of Hindustan Unilever Ltd. v. Endurance Domains Technology LLP Ors. [ 2020 (6) TMI 818 - BOMBAY HIGH COURT] the decisions of the Coordinate Benches in assessee s own case for assessment years 2013-14 and 2014-15 cannot be declared as per incuriam, more so, when the Hon ble Jurisdictional High Court is seized of the matter by admitting the substantial question of law on the issue in these assessment years. Thus, the issue in dispute as off now, stands concluded against the assessee by virtue of the decisions of the Tribunal in its own case in assessment years 2013-14 and 2014-15 as discussed earlier. Therefore, in absence of any material difference in factual position in the impugned assessment year and having regard to judicial discipline and propriety, we do not find any valid reason not to follow the earlier decisions of the Tribunal in assessment years 2013-14 and 2014-15. Thus, in assessee s own case [ 2018 (4) TMI 390 - ITAT DELHI] And [ 2018 (7) TMI 1809 - ITAT DELHI] we hold that the consideration received by the assessee from registration of domain names is in the nature of royalty under section 9(1)(vi) of the Act and is taxable as such. Ground is dismissed. Treating the income from web hosting services as FTS under section 9(1)(vii) of the Act as well as Article 12(4)(a) of the India-USA Tax Treaty - HELD THAT:- AO has treated it as FTS/FIS under section 9(1)(vii) read with Article 12(4)(a) of the Tax Treaty, on the reasoning that such services are ancillary and incidental to the domain name registration services rendered by the assessee, the consideration received from which is in the nature of royalty. It is observed, identical issue came up for consideration before the Coordinate Bench in assessee s own case in assessment year 2013-14. Since the issue did not have any tax implication, the ground was not pressed. Similar decision was taken in assessment year 2014-15 as well. We have held that the consideration received by the assessee from domain name registration services is in the nature of royalty. In our view, the amount received by the assessee from web hosting services is ancillary to domain name registration services. That being the position emerging on record, the amount received has to be treated as FTS. In any case, the assessee has not contested the issue in assessment year 2013-14 and 2014-15 as the issue is of mere academic interest considering that the tax rate of royalty and FTS under the Act is similar. The situation is no different in the impugned assessment year. Thus, we do not find any reason to interfere with the decision of the departmental authorities. The grounds are dismissed.

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• 2023 (2) TMI 471
  Rectification u/s 154 - validity of levy of late filing fee u/s 234E along with interest u/s 220 - order passed u/s 200A - HELD THAT:- Out of that 176 appeals were listed before the Coordinate Bench, who has commenced the hearing on 16th January, 2023 and ultimately concluded it on 19th January, 2023 [ 2023 (2) TMI 433 - ITAT PATNA] held merely, giving the statement of the exact amount due to the assessee, that too, at the request of the assessee, is just the calculation provided by the Assessing Officer and the assessee, in this respect, can agitate only if the assessee is aggrieved by the aforesaid calculation given by the Assessing Officer. The assessee in the process of requesting and taking calculation of interest due cannot be said to have acquired any cause of action or right to challenge the original order passed u/s 200A of the Act. The assessee has not pointed out as to what mistake has occurred in the order passed u/s 154 of the Act as compared to the original order dated 27.04.2015 passed u/s 200A of the Act. In fact, no mistake apparent on record, has been alleged in the said order by the assessee itself in its correction statement/request. If the assessee is aggrieved by an order passed u/s 154 of the Act he will be entitled to file appeal against the said order. However, the assessee must bring out from the record as to what prejudice has been caused to the assessee in the order passed u/s 154 of the Act when compared with the original order which has been amended or rectified. Neither any rectification has been done by the Assessing Officer to the original order nor any cause of action has accrued to the assessee by getting up-to-date calculation of the demand. In view of this, there is no merit in the appeal of the assessee.

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• Customs

• 2023 (2) TMI 495
  Duplication of orders - EPCG Scheme - export obligations not satisfied within the time stipulated under the Scheme - petitioner was directed to regularize the export obligation by payment of customs duty with penal interest - Petitioner sought the exact quantum of amount to be paid, to ensure compliance with the appellate order - HELD THAT:- Instead of simply informing the petitioner as to the quantum of outstanding demand, the officer has passed a second order in original on 06.02.2013. There was absolutely no necessity for the aforesaid order to have been passed as the same cause of action had been addressed vide orders dated 30.03.2005 and 11.09.2007. Be that as it may, the petitioner challenged the order in first appeal leading to the passing of the impugned order dated 31.03.2015 by the first appellate authority. Quite apart from being an aberration in procedure, all that the respondents needed to have done was to convey the quantification of duty and penalty to the petitioner and ensure its compliance. In fact the petitioner has on all occasions expressed its readiness to pay the amount on being informed of the amount to be paid - On 12.08.2015 when this matter had come up for admission, there was an order of interim stay upon condition that the petitioners remit 50% of the penalty within a period of four weeks from the date of receipt of copy of that order. The petitioner has admittedly complied with this order. Thus, let a demand be raised for the balance, which the petitioner, in light of its acquiescence as noted in the preceding paragraphs, will settle expeditiously. The impugned orders are clearly in violation of procedure apart from being duplication of the orders already passed, and are hence set aside - Petition disposed off.

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• 2023 (2) TMI 494
  Violation of principles of natural justice - SCN not issued - sufficient opportunity of hearing to contest the allegations, not provided (audi alterem partem) - communications sent by speed post without acknowledgement due, would also fall within the deeming provision of Section 153(3) of the Customs Act or not - mode of communication of SCN - Levy of penalty on the petitioner under Section 114AA of the Customs Act, 1962 - non-existent exporters - exports under the Shipping Bills, were to fraudulently avail export benefits - HELD THAT:- It is important to note that Section 153(3) of the Customs Act does not provide for any mode of service; it merely stipulates the date on which an order, decision, summon, notice or any communication is deemed to have been served when it is dispatch through registered post or speed post. Thus, it is erroneous to contend that Section 153(3) of the Customs Act, provides for a mode of service other than as stipulated under 153(1)(b) of the Customs Act. As is apparent from the plain language of Section 153(3) of the Customs Act, it is open for any party to establish that the notices were not received on expiry of the normal time taken in transit for any article sent through speed post or registered post, as the case may be. In the present case, the petitioner has affirmed on affidavit that it did not receive the Show Cause Notice. The petitioner had informed the respondent prior to the date of personal hearing regarding non-receipt of the Show Cause Notice and had repeatedly requested for a copy of the same. No response was given by the Respondent to the said notices/request. In the given facts, it is difficult to accept that the petitioner has not discharged its burden to establish that it had not received the Show Cause Notice - Since there is no material to indicate that the Show Cause Notice was sent by speed post with acknowledgement due or had been served by any of the modes as specified under Section 153(1) of the Customs Act, there are no hesitation in accepting the petitioner s contention that it was not served with the Show Cause Notice in question. There are merit in the contention that the impugned order has been passed in violation of principles of natural justice and the petitioner was not afforded full opportunity to contest the allegations against it. Consequently, the impugned order, to the limited extent that it imposes penalty on the petitioner, is set aside - petition allowed.

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• 2023 (2) TMI 493
  Duty drawback - Re-fixation of brand rates by Respondent No.4 - Petitioner challenged the order refixing the brand rates on the ground of lack of jurisdiction in Respondent No.4 to re-fix/ revise the brand rates and without prejudice on the merits of the re-fixation/ revision - power of Respondent No.4 to re-fix or revise the brand rates fixed under Rule 7 of the Rules of 1995 - if the power exists and is properly utilized, then whether on merits, such re-fixation of brand rates was necessary? HELD THAT:- The Revisional Authority has referred to Circular No.83/2003, dated 18 September 2003, on the aspect of jurisdiction and observed that the clarification given in para (c) of the impugned Circular undoubtedly states that the Commissioner of Central Excise and the officers under his control have been invested with powers to rectify such mistakes through issuance of any amendment, addendum or corrigendum to the brand rate letters issued. As such, the interpretation of the relevant portion of the above Circular spelt out in the impugned order in the appeal is flawed and improper. The Revisional Authority, therefore, held that the re-fixation of the brand rates was just and proper and that the orders of the Commissioner were within the jurisdiction. In the present case, the re-fixation of brand rates has not been carried out by the Ministry upon complaint or on the investigation; therefore, clause 3(d) does not arise in the present case, nor is stated so by the Revisional Authority. It is found that the reasoning of the Revisional Authority on the aspect of jurisdiction is entirely unsatisfactory. Apart from the facts of the individual case, when the question of the power of authority comes up for consideration, it has to be dealt with carefully as it sets a precedent to the authorities below and, therefore, the Revisional Authority was under a duty to scrutinize this aspect carefully. Except referring to the language of the Circular dated 18 September 2003, the Revisional Authority has not examined whether any amendment, addendum or corrigendum was carried out or that order existed even what is stated in clause 3(c) of the Circular dated 18 September 2003. The impugned order dated 15 September 2020 passed by Respondent No.2- Revisional Authority is quashed and set aside - Matter restored back.

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• 2023 (2) TMI 492
  Seeking provisional release of seized goods - allegation of evasion of Anti-dumping duty - Imposition of anti-dumping duty equal to the lesser of the margin of dumping and the margin of injury - adjudicating authority has merely communicated the conditions for the provisional release without considering any features of quasi-judicial order - Power of Commissioner of Customs to make an extension of period under Section 110A of the Customs Act - Non-speaking orders without any reasons for extension of time - HELD THAT:- The Court has perused, in detail, the material which has been produced as also the notification issued by the Government of India, Ministry of Commerce and Industry, Department of Commerce, Directorate of General of Trade Remedies of 28.09.2021 with the subject of anti-dumping investigation concerning imports of Decor Paper originating in or exported from China PR - It appears that it speaks of the Kingdecor being a limited liability company. It also says that the legal statute of the Kingdecor has not changed in the last three years. It has directly exported MT of Product Under Consideration (PUC) to India and MT through two different related traders namely Xianhe Company Limited and Zhejiang Xianhe New Material Sales Company Limited, China PR. The Kingdecor company has claimed the adjustments on account of the ocean freight, insurance, inland transportation, port and other related expenses, credit cost and bank charges. The net export price at ex-factory level for Kingdecor (Zhejiang) Co. Ltd. has been determined and is shown in the dumping margin table. It is quite clear that the anti-dumping duty recommended by the authority is 116 USD per MT so far as the producer Kingdecor (Zhejiang) Co. Ltd. from China in relation to the decor paper. This comes under the heading 48059100 and 48022090 - it has made quite clear that XH and KD series of paper type for different markets and different customers have been made by them. It is not being questioned that in notification dated 28.09.2021, there is a specific reference of Xianhe as a producer of decorative base paper, however, it had not been provided the information as a producer but, only as an exporter. Xianhe has stated that it produces the Speciality Paper. The product under consideration is only a Speciality Paper and clarification is required on how the product produces by the company is different from the subject goods. Xianhe stated that it does not have any joint venture, however Kingdecor is a joint venture of Xianhe and Schattdecor AG. The entire emphasis is on that the item code of the paper manufactured by the Kingdecor (Zhejiang) Co. Limited is with alphabet KD , the item code of the paper manufactured by the Xianhe Co. Ltd. is starting with XH and the item manufactured by M/s. Zhejiang Xianhe New Materials Sales Co. Ltd. China also stats with XH . It is M/s. Saraf Sales Corporation which has acted as an agent. It is the note itself which is showing that the goods were traded and supplied by M/s. Kingdecor. It is the producer which is important to known and there has been a specific declaration given based on the Kingdecor s own letter - This being the case with the petitioner having already paid the anti-dumping duty at the rate of 116 USD per metric ton, with a further amount of Rs. 88,22,040/- where the differential duty amount has been paid. The petitioner is hereby directed to furnish the bond of entire amount of goods of Rs. 25,00,00,000/- before the authority and shall also disclose properties of company and its directors before this Court on oath and also give an undertaking of not to part with the same till this inquiry is completed in above mentioned four weeks period - respondent no.4 is directed to release the goods and the operation of seizure order passed by the respondent no.3 under Section 110 of Customs Act is hereby quashed and set aside. Respondent authority shall release the goods as soon as the petitioner furnish bond of Rs. 25,00,00,000/-. Petition disposed off.

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• 2023 (2) TMI 491
  Absolute Confiscation - redemption of goods denied on the ground of it being prohibited goods - Mosquito swatter/bat - imported goods are prohibited in nature since the DGFT notification (effect of the notification was, mosquito killer racket under HS code 85167920 and 85167990 in theimport policy was revised from free to prohibited) was issued on 26.04.2021 and the Bill of Lading date was also 26.04.2021 - HELD THAT:- Both the Adjudicating authority and Ld. Commissioner (Appeals) are of the opinion that, prohibited goods cannot be redeemed which is contrary to the decision of the Hon ble Supreme Court relied upon by the consultant in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT ], wherein it was held that Absolute confiscation should be an exception rather than a Rule. Without exploring any other alternative it has been held that goods are liable for confiscation. The case law relied upon by the Ld. Commissioner (Appeals) M/S. Pam Agro Industries [ 2021 (3) TMI 910 - GUJARAT HIGH COURT ], has got no application in the present case. In that case ultra vires of the DGFT Notification restricting and amending the policy was under challenge. Besides the amount of MIP fixed for cashew nuts was in dispute which is not the case here. Hence the case law relied upon by the Ld.Commissioner (Appeals) is completely distinguishable from the present case. In the present case, the goods were ordered for shipment in 19.04.2021 and goods were shipped on 26.04.2021. So it is admitted that the items become prohibited since the declared value was much lower than Rs. 121/- per piece as per the DGFT notification dated: 26.04.2021. In terms of the policy para- 1.05, as transitional arrangement in case of export and import that is permitted freely under FTP is subsequently subjected to any restriction or regulations, such export or import ordinarily be permitted, notwithstanding such restrictions or regulations, unless otherwise stipulated. This is subject to the condition that the shipment of export or import is made within the original validity period of an irrevocable commercial letter of credit, established before the date of imposition of such restrictions - Since the order for supply of the goods was not backed by any LC, no benefit of transitional arrangement can be extended. There are force in the submission of the Ld.Consultant that in the case of Har Govind Das K. Joshi Vs. Collector [ 1987 (1) TMI 107 - SUPREME COURT ] the Hon ble Supreme Court held that absolute confiscation of goods by Collector without question of redemption on payment of fine although having discretion but omitted to consider such a discretion available with him and remanded the matter to Collector for consideration of an exercise of discretion for imposition of Redemption fine. Besides, since the policy was amended when the shipment was in process their mala fide intention cannot be proved without any additional evidence to invoke penal clause under section 112 of the Customs Act 1962. In the meantime the consultant produced documents and photographs stating that, the goods are suffering huge demurrage and partly some imported items stuffed in the container are damaged which were required to be verified maintaining the principles of natural justice. The Appeals filed by the Appellants are allowed by way of remand to the Adjudicating authority for denovo consideration and to decide the case using the discretion in a prospective manner.

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• 2023 (2) TMI 490
  Levy of penalty on CHA under Section 114 of the Customs Act, 1962 - CHA, abetting in the attempt to export the restricted goods by misclassifying the goods - HELD THAT:- The appellant as a CHA cannot be expected to examine and ensure the nature of the goods in the consignment. In para-65 of the impugned order, the adjudicating authority has observed that when the test report mentioned that the samples are naturally occurring Potassium Chloride, the CHA ought to have classified the goods under ITC HS 31042000; and they ought to have not assisted the exporter in misdeclaring the goods as ITC HS as 28273990. The classification is not mentioned in the test reports. The main reason for imposing penalty on the appellants is that they did not ensure correct classification of the goods so as to see whether the goods are restricted items. The original authority has held that the appellant has abetted in the attempt to export restricted goods as they did not exercise due diligence to ascertain the correctness of the information imparted by their client. There is no allegation or evidence to establish that the appellant had indulged in any overt act or played any role in any manner so to assist the exporter in his attempt to export the goods. The issue of classification is of complex nature. The Tribunal in the case of HIM Logistics Pvt. Ltd. [[ 2016 (8) TMI 925 - CESTAT NEW DELHI] ] has held that The appellant is mainly a CHA and the issue of classification is of complex nature. It cannot be said that the CHA should have information that the goods were Food Supplements and not Medicaments . It is for the Customs Department to classify the goods. Under these circumstances, the levy of the penalty is not justified. Thus the penalty imposed on the appellants under Section 114 of the Customs Act is not warranted and are therefore required to be set aside - appeal allowed.

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• Corporate Laws

• 2023 (2) TMI 489
  Public Interest Litigation - imposition of dress code for advocates for appearance before the Tribunal - public servants within the meaning of Section 21 of the Indian Penal Code - HELD THAT:- The impugned order is without jurisdiction and authority, and has no basis in law. It is trite legal position that the orders of the Tribunals, either judicial or administrative, are subject to judicial review of the High Courts, as they are subordinate to it. From the conjoint reading of Section 34 of the Advocates Act and the Bar Council of India Rules, it is clear that only the High Courts can frame rules for dress code for the appearance of the Advocates before it, the courts and Tribunals, subordinate to it. In absentia, the rules in chapter IV of the Bar Council of India Rules shall prevail and the Tribunals have no authority to issue any instructions determining the dress code for the appearance of the advocates before it. When there are statutory rules framed by the competent authority and when the statute has conferred the powers on the High Court with reference to prescription of the dress code, any instruction, direction, advisory by the Tribunal, especially when it runs contrary to the statutory rules, is ultravires the Act, and without there being any source of power for issuance of such directions. Thus, wearing of gown is only optional and not mandatory before any courts other than the Supreme Court or the High Court - Further, the power conferred under Rule 51 of the NCLT Rules, is for the purpose of discharging its functions under the Act in accordance with the principles of natural justice and equity and is not an enabling provision to be read along with Section 432 of the Companies Act, 2013, which deals only with right to legal representation, and cannot be meant to confer upon it the power to prescribe the dress code, more so when it is contrary to the Bar Council of India rules. Similarly, the words such other powers used in Rule 16 (f) of the NCLT Rules, 2016 has to be read keeping in mind the later part of the rule dealing with the administrative power of the President as head of the Tribunal, while dealing with the staff, and cannot be stretched to mean to include the power to frame any rule or issue any instruction, in the nature of the one impugned, to prescribe the dress code for the advocates. Petition allowed.

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• 2023 (2) TMI 488
  Enforcement and execution of the final Award passed by Foreign Arbitral Tribunal - genesis of the entire dispute between the parties originates from the dealings of two groups, one being Sakthi Group and the other being Aapico Group - Alleging defaults in the loan agreements - non-compliance of terms and conditions of Kotak Mahindra Bank s (KMB) loan sanction letter - HELD THAT:- The Arbitral Tribunal has not passed any order with regard to the prior approval of KMB. In the present case, the claim was filed for the change of management, shareholdings, Directorship, ownership, etc. The main prayer in the claim statement was with regard to the change of management, directorship, shareholdings, etc. When such being the case, merely withdrawing the prayer in the counter claim by the respondent would not deny the right to make objections to the main prayer in the claim statement. Since the petitioners have agreed for the terms and conditions of the loan sanction letter of KMB, the said loan sanction letter has to be read with the SHA. Conjoint reading of the SHA and the loan sanction letter makes it clear that the petitioners, who are the parties to the SHA have agreed for the loan sanction letter. Therefore, when the petitioners intend to change the shareholding pattern, directorship, ownership, etc., it is their bounded duty to get prior approval from KMB as per the terms and conditions of the said loan sanction letter. This vital fact was not at all considered by the Tribunal - it is clear that the rendering of Award is conflict with the most basic notion of the justice and also against the public policy of India. Therefore, this Arbitration award is liable to be rejected on this ground and for this reason, this Court is not inclined to grant any approval for enforcement of the subject foreign Award. Respondent unable to present its case before SIAC - HELD THAT:- In the present case, the petitioner failed to comply with the second procedural order, by not producing the documents as if the petitioners did not have the documents. However, the petitioners had the relevant documents and the same were traced out in the discovery proceedings before the UK Court, subsequent to the pronouncement of the award. The acts of the petitioners, ultimately proved the various fraud played in the course of the transfer of shares in SGAH, managing the company and valuing the shares, which are all well within the scope of agreement as the same would reflect in the step down subsidiaries of SGAH. Due to the non-availability of these documents, the respondent was not in a position to present his case before the tribunal. Therefore, the present award is liable to be suffered on the ground mentioned in Section 48(1)(b) of the Act. Hence the enforcement of the award is liable to be rejected on this ground also. Fraud - whether the present Award is suffered by fraud? - HELD THAT:- Aapico deliberately withheld and concealed the documents and it amounts to fraud within the meaning of Explanation at 1(i) to Section 48(2)(b) of the Act. Therefore, this Court is of the view that the enforcement of the present award is also liable to be rejected on this ground as well. Violation of RBI regulations and commission of fraud in the valuation of shares of SGAH (respondent holding company) - HELD THAT:- In the present case, the petitioners enforced its rights of transfer of shares by virtue of invocation of pledge, in the respondent holding company namely Sakthi Global Auto Holdings Limited (SGAH). In the said company originally, ABT Auto holds 50.01% shares and 80% of the share of the said ABT Auto held by the ABT investment (India) Private Limited, which means SGAH is a step down subsidiary of Indian company - merely for the procedural violation, which are all curable in nature without affecting the parties interest, the Foreign Awards cannot be refused to be enforced. In the present case, whether loss of the foreign exchange occurred to the exchequer due to the play of fraud, violation of FEMA and contravention of the under valuation of the shares by the Aapico at the time of execution and enforcement of the pledge of shares in SGAH, are not curable? - HELD THAT:- As per the FEMA Regulations, in the event of any transaction of securities, it should be at the fair market price or value. In the present case, the petitioners valued on its own through the FTI Consulting. It has valued the shares of SGAH for its holding company, who holds 50.01% as 27 Million USD. The total valuation of SGAH by the FTI was 55 Million USD - as per the Regulations of FEMA, in the event of transfer of shares in foreign entities, the shares have to be valued and transferred based on the Fair Value Method. Fair Value means that it should be valued based on the market value, that means by following the DCF method. At any cost, whatever the method adopted by the parties ultimately it should not affect the interest of the country and also it should be in accordance with the RBI Regulations without affecting the parties interest also. Since the basic information, which are required for arriving at the valuation in the Market Multiple Method were not available, the Think Capital adopted DCF method and valued SGAH as on May 2019 at 274.42 Million USD, whereas the total value arrived at by the FTI based on the multiple method is about 55 Million USD. The total difference between the DCF and multiple method is 219.42 Million USD - If the dollar rate in the year 2019 is considered as 75 Rupees, the loss of foreign exchange through the step down subsidiary for India is a sum of Rs.822.98 crores INR. The petitioners have concealed various documents and failed to produce the same, subsequent to the second procedural order passed by the Tribunal and by concealing all these documents the award was obtained and the present award came to be passed under the above circumstances. Thus, this Court is of the view that the foreign award is suffered with the infirmities, as narrated. Therefore, the enforcement of the award is liable to be rejected for the reason that violation of the FEMA Regulations coupled with commissions of fraud on part of the petitioner in valuing the SGAH shares, which are not curable in nature, apart from the other instances that are narrated. The prayer sought for enforcement of the foreign Award dated 06.10.2021 passed by the Tribunal SIAC, is liable to be rejected - Petition dismissed.

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• Insolvency & Bankruptcy

• 2023 (2) TMI 487
  Termination of lease agreement under Section 5(1) of the Gujarat Public Premises (Eviction of Unauthorized Occupants) Act, 1972 - non-compliance of the conditions of allotment letter - violation of principles of natural justice - whether the issues raised in this petition can be considered by the NCLT in the application filed by the GIDC with a prayer that no option be undertaken of the property in question and leave be granted of the Tribunal for taking action consequent to the termination of the agreement dated 20.01.2007? HELD THAT:- What is evident from the facts is that the petitioner was allotted the subject land vide allotment letter dated 09.01.2007. The letter of allotment indicates that the plot was allotted for the purpose of development of a product specific SEZ where the petitioner was an anchor tenant . It was incumbent upon the petitioner to submit a time bound program / development schedule for utilization of the land within three years from the date of allotment. In light of this allotment letter, a license agreement was entered into on 20.01.2007. This license agreement under the relevant clauses also indicated a time bound schedule. The lease deed accordingly was executed on 12.11.2008. It was for a period of 99 years with a relevant date as per the letter of allotment dated 09.01.2007. Clauses 15, 17 and 18 of the lease deed indicate that in the event of non-payment of rent, action will be taken under the GPP Act - the allotment letter, the license agreement and the lease agreement are contracts which have to be read coterminous with each other, in continuation and conjunction. Since the lease agreement is not executed after a certificate of completion of the conditions as stipulated in the license agreement, the contention of learned Senior Advocate Mr.Thakore that the conditions of the lease deed will supersede the license agreement and once the lease agreement is executed, the license agreement stood extinguished is misconceived. Reading the relevant paragraphs in Tata Consultancy Services Limited [ 2021 (11) TMI 798 - SUPREME COURT ] as cited by the respondent, the NCLT can intervene when, it is even the case of the petitioner that there is an embargo under the IBC. In the application filed by the respondent which is pending before the NCLT, it is open for the petitioner to take all the contentions raised in this petition. The residuary jurisdiction of the Tribunal therefore to decide this issue had already been invoked by the respondent and the petition therefore, at the hands of the petitioner company which seeks the protective umbrella under the IBC itself can oppose the prayers made in that application. Petition dismissed.

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• 2023 (2) TMI 486
  Liquidation of the Corporate Debtor namely Ajanta Offset packaging Limited - approval plan quashed - Adjudicating Authority in the impugned order has held that Appellants were not eligible to submit the Resolution Plan under Section 29A read with Section 240A since the date when application for submitting EOI was issued, the Appellants were not eligible - HELD THAT:- From the facts specified, it is clear that Form G was issued by the Resolution Professional on 19.08.2020 in pursuance of which two Resolution Applicants filed the Resolution Plan which were considered but were not approved by the CoC and Resolution was also passed by the CoC on 05.06.2021 for liquidation and an application was filed for liquidation by the Resolution Professional on 02.07.2021, on which application notices were issued and it was only at that stage when Appellants have filed I.A. No. 4388/2021 seeking direction to permit the Appellants Suspended Directors to submit Resolution Plan for revival of the Corporate Debtor. From the order passed by the Adjudicating Authority, it is clear that the Adjudicating Authority also extended the CIRP period and directed the Resolution Professional to call a lenders meeting for taking appropriate decision and deliberate on whether more Resolution Applicants can be invited. After the order of the Adjudicating Authority dated 28.09.2021, meeting of CoC took place on 20.10.2021, where it was decided to consider the Resolution Plan submitted by the Appellants. However, CoC did not decide to issue any fresh Form G and invite any other Resolution Applicants, which act of the CoC has been adversely commented by the Adjudicating Authority - the Adjudicating Authority vide order dated 28.09.2021 gave opportunity to the Resolution Professional and the CoC to take steps to revive the Corporate Debtor. The Adjudicating Authority is right in its observation that the CoC ought to have taken steps in accordance with provisions of CIRP Regulations. The decision of the Adjudicating Authority not approving the resolution of the CoC dated 30.12.2021 approving the Resolution Plan cannot be faulted. The order of the Adjudicating Authority insofar as it disapproves the CoC decision dated 30.12.2021 is affirmed and application seeking approval of the Resolution Plan rejected. Appeal disposed off.

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• Service Tax

• 2023 (2) TMI 485
  Seeking refund the service tax deposited by the petitioner under SVLDRS-2019 - dispute inter se between the petitioner and her husband as to the real ownership of M/s. Creative Media and the liability of payment of service tax - HELD THAT:- SVLDRS-2019 Scheme was voluntarily scheme introduced by Government of India and there was no compulsion of any person or party to opt for Scheme. Section 129 and 130 of the SVLDRS-2019 enacted in Parliament vide Chapter V of Finance Act (No. II) Act, 2019 clearly provides that Scheme shall be conclusive as to the matter and time period stated therein. From reading of Section 130, it is clear that any amount paid under the Scheme shall not be refunded under any circumstances. Once, the petitioner had opted for the Scheme and paid the amount with full eyes open she cannot after a lapse of three years come up and claim for refund of the amount paid by her. From reading of the material on record as well as from her argument, it appears that there is some matrimonial dispute going on between the petitioner and her husband, Ashok Jha - The plea taken by petitioner, Pratibha Jha cannot be accepted by this Court at this stage seeking refund of the service tax amount deposited by her under the Scheme, due to the fact that the documents which have been brought on record such as registration before the Service Tax Department of the year 2013, her statement before the adjudicating authorities as well as the orders passed on her application under the Scheme of 2019 clearly demonstrates that she is the proprietor of M/s. Creative Media. The entire emphasis on part of petitioner is on the fact that her husband played mischief by portraying her as the proprietor of M/s. Creative Media not only before the taxing authorities but also before the Bank, and thus, any recovery to be made by the Department should be made from Ashok Jha, her husband. This Court finds that it is a dispute inter se between the petitioner and her husband as to the real ownership of M/s. Creative Media and the liability of payment of service tax. From the documents which have been placed before the Court, it is clear that petitioner herself had got registered with the Tax Department in the year 2013 as the proprietor of M/s. Creative Media. In her tax return for the Assessment Year 2014-15, the business income has been shown from Creative Media. Moreover, she has opted for SVLDRS-2019 Scheme and had deposited the concessional tax amount getting a huge relief for the balance amount - In case, petitioner wants refund of the amount deposited by her as service tax, she can initiate appropriate legal proceedings against her husband, Ashok Jha for the recovery of the amount deposited by her during the compounding scheme. The Service Tax Department is only concerned with service tax which is due to be paid by the firm, Creative Media for the business done during the relevant period. In case of any dispute as to the proprietorship of the firm, it is the person who claims the dispute should approach the appropriate legal forum for redressal of her grievance against the person whom she claims to be the real person behind the agency. There are no case for interference is made out exercising extraordinary jurisdiction under Article 226 of Constitution - petition dismissed.

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• 2023 (2) TMI 484
  Validity of action of the respondent No.1 who did not issue discharge certificate in Form SVLDRS-4 under Section 127(8) of the scheme of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and under Rule 9 of Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 within 30 days of the date of payment - recovery of penalty - HELD THAT:- It is directed in Rule 7 that the amount of tax is required to be deposited electronically. Electronic transfer means transfer by NEFT or RTGS so that the amount is immediately credited to the respondent authority. In the instant case, the amount was deposited on 30th June, 2020 by RTGS through cheque after obtaining E-Mandate Form. E-Mandate Form is electronically generated. When a cheque is deposited for transmission through NEFT or RTGS, it is the duty of the bank to immediately credit the money to the account of the RBI on verification of the account of the petitioners to ascertain as to whether the petitioners have requisite amount to honour the cheque. For the failure of the bank in sending the money by electronic by RTGS on 30th June, 2020, the petitioners cannot be held liable. The respondents are directed to accept payment of tax of Rs.16,951/- dated 30th June, 2020 as per statement in SVLDRS-3 and issue discharge certificate in favour of the petitioners in Form SVLDRS-4 settling all dues relating to payment of tax and granting consequential relief for the financial year 2011- 2012 to 2014-2015 under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Imposition and recovery of penalty of Rs.12,15,185/- by the respondents from the bank account of the petitioners is accordingly quashed and the respondents are directed to repay the said amount within four weeks from the date of communication of this order - Petition allowed.

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• 2023 (2) TMI 483
  Entitlement to interest - Jurisdiction of Commissioner (Appeals) - absense of protective show cause notice for recovery of interest - deposit made by the appellant during investigation for the refund of the same - whether the appellant is entitled for the interest on such deposit or otherwise? - HELD THAT:- As per the facts of the present case , the appellant have paid Rs. 25 Lacs Suo moto during the investigation of the case way back in January and February, 2007. Therefore, the amended provision of 35F /35FF prevailing in 2014 is not applicable in the case of any deposit made prior to enactment of Finance Act, 2014. The CBEC Circular No. 984/8/2014- CX dated 16.09.2014 was also issued with reference to the new provision of 35F/35FF therefore the Adjudicating Authority has gravely erred on applying said Circular. In the present case as regard submission of Learned Counsel that order of Commissioner (Appeals) is not correct and legal on the ground that the department has not issued protective show cause notice for recovery of interest amount which was already sanctioned and paid to the appellant, therefore the order is not sustainable - the Commissioner (Appeals) has decided the appeal against an appealable order passed by the Adjudicating Authority, the non issuance of protective show cause notice does not create any estoppels to the Learned Commissioner (Appeals) for passing the Order in Appeal. Therefore the contention the appellant is not acceptable. The recovery of the erroneous refund is the separate proceeding which is not the subject matter in the present appeal. Therefore the same cannot be dealt with in this case - this is not the case of recovery of erroneous refund whereas the Revenue before the Commissioner (Appeals) had challenged the sanction of interest of Rs. 5,55,093/-. Therefore, the judgment which is on recovery of erroneous refund are not relevant in the present case. The Learned Commissioner has correctly held that the appellant is not liable for interest of Rs. 5,55,093/- in terms of Section 35F - Appeal dismissed.

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• 2023 (2) TMI 482
  Rejection of refund of unutilised credit - Export - Place of Provision of services - Notification No. 27/2012-CE(NT) dated 18.06.2012 issued under Rule 5 of Cenvat Credit Rules, 2004 - Place of Provision of Service herein is to be decided under Rule 3 or Rule 4(a) of Place of Provision of Service Rules, 2012? - HELD THAT:- Admittedly the refund claims have been filed by the appellants under Rule 5 ibid read with Notification No. 27/2012 dated 18/06/2012. The said rule provides for refund of accumulated Cenvat Credit in respect of goods and services exported under bond or undertaking. This rule is very specific and lays down how to determine the quantum of admissible refund from the accumulated Cenvat Credit. It cannot be considered to be a proceeding for denial of Cenvat Credit available in the account of the claimant and therefore even if the refund is denied, then also the amount continues to remain in the Cenvat account of the claimant. If the Revenue is not in agreement with the claims of the appellants and if, according to Revenue, the services in issue do not fall within the ambit of export of service then the Revenue ought to have initiated the proceedings against the appellants for demanding the Service Tax in respect of taxable service provided by the appellants. Admittedly no such proceedings have been initiated by the Revenue as borne out from the records of the case and therefore in a way Revenue itself has allowed this taxable service provided by appellants as export of service. If that is so then in the proceeding under Rule 5 ibid Revenue cannot deny refund by treating the service provided not to be export of service. There is no iota of doubt that the Appellant is an independent contractor and not an agent or representative or to be more precise an intermediary. They are providing the service of marketing and market research to the overseas recipient of service. The services are provided on principal to principal basis and consideration is also decided, the cost plus mark up - Undoubtedly there is no tripartite agreement at any given point of time. Rule 4 of POPS Rules, 2012 deals with the Place of Provisions in case of performance-based services and the services provided in relation to the goods required to be made physically available are only covered under the ambit of this Rule. Whereas undertaking the activities in relation to the accounting and management reporting services, the data in the incorporeal form is provided, which do not have any physical presence and hence not covered under Rule 4 ibid and the same is covered under Rule 3 ibid i.e. location of recipient of services which is overseas. The after sales support service or Engineering Support service are services which the appellant is doing in respect of providing technical parameters of the products, design and it in no way require the goods to be made physically available to the appellant i.e. service provider, therefore, for these services also place of provision has to be determined in terms of Rule 3 ibid and not under Rule 4 - As a result in the facts of the present case, the Place of Provision has to be determined in terms of Rule 3 of POPS Rules, 2012 and are not covered under Rule 4(a) ibid, therefore the services provided by the appellant to its overseas entities clearly qualify to be export and they are eligible for refund. Appeal allowed.

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• 2023 (2) TMI 481
  Rejection of refund claim - services availed in relation to export of goods - GTA Service - Port Service - Technical Testing and Analysis Service - applicability of N/N. 41/2007-S.T., dated 6-10-2007 - It is the observation of the Ld.Commissioner(Appeals) that one to one co-relation of the services i.e. datewise accumulation of the materials within the port as per LR, loading of the same in the ship etc. has not been done and in absence of one to one co-relation the refund is inadmissible and cannot be allowed. HELD THAT:- As per Notification No. 41/2007-S.T. certain co-relations are required to be made before sanctioning the refund claims. It is observed from C.B.E. C. Circular No. 120/01/2010-S.T., dated 19-1-2010 that exporters were facing certain difficulties in relation to one to one co-relation between input services and the exports made. So far as admissibility of Service tax paid on GTA Services is concerned, it is observed that similar refunds were allowed by CESTAT in the case of Jumbo Mining Ltd. v. CCE Hyderabad [ 2012 (7) TMI 739 - CESTAT, BANGALORE ] by holding that It cannot be the case that the goods are exported from Kakkinada Port without being transported from the factory of the appellants as claimed by them. Therefore, in the peculiar facts and circumstances of the case, the compliance of condition No. (iii) should be ascertained by broadly correlating the evidence relating to transport and service tax paid on such transport charges and the quantity exported. C.B.E. C. in Para 3.2.1 of Circular No. 120/01/2010-S.T., dated 19-1-2010 also clarified that The departmental officers are only required to make a basic scrutiny of the documents and, if found in order, sanction the refund within one month. The reports from the field show that this has improved the process of grant of refund considerably. It has, therefore, been decided that similar scheme should be followed for refund of CENVAT credit under Notification No. 5/2006-C.E. (N.T.). The procedure prescribed herein should be followed in all cases including the pending claims with immediate effect. Though the above clarification was with respect to Notification No. 5/2006-C.E. (N.T.) but it clearly conveys that in budget 2009 the scheme under Notification No. 41/2007-S.T. was simplified in Notification No. 17/2009-S.T. by providing self certification or Chartered Accountant s certification about co-relation and nexus between input Services the exports. That above logic can be followed for Notification No. 5/2006-C.E. (N.T.) where such simplification of Notification No. 17/2009-S.T. may not be available. Appeal allowed.

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• 2023 (2) TMI 480
  Levy of penalty under Section 76,77 78 of FA - demand of service tax was confirmed under Section 73(A) of the Finance Act, 1994 where the respondent has collected service tax from their customer and not deposited to the government - HELD THAT:- From the reading of sections 76 78, it is clear that penalty under such sections can be imposed only when demand of service tax is confirmed under Section 73(1) of the Finance Act, 1994 - In the present case, the service tax demand was confirmed under Section 73(A) therefore, in case of confirmation of demand under Section 73(A) there is no application of Section 76 and 78 for imposition of penalty. Therefore, the adjudicating authority has rightly not imposed the penalty under Section 76 78. However, the respondent has not followed the provision such as non-obtaining the service tax registration nor deposited the service tax collected from their customer on their own therefore, in terms of Section 77 they are liable to pay penalty of Rs.10,000/-. Thus, penalty of Rs.10,000/- is imposed on the respondent - appeal of Revenue allowed partly.

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• 2023 (2) TMI 479
  Rejection of Refund claim of service tax - service tax filed by the appellant, developer of residential flats, on cancellation of booking - transitional provisions under Section 142 of their CGST Act - rejection of refund claim on the ground of limitation as well as unjust enrichment - HELD THAT:- There is no dispute on facts with regard to booking and cancellation and the refund made by the appellant to the buyer including the amount of service tax. Further, the appellant is entitled to refund, in view of the Cenvat credit no longer available, in spite of being entitled to the same under Rule (6)(3) of Service Tax Rules, the appellant is entitled to refund of such amount u/s 142(3) of CGST Act. Further, as admittedly the appellant have refunded the booking amount including service tax, the appellant have satisfied the bar of unjust enrichment. The appellant is entitled to refund of the amount of Rs. 12,74,883/- - Appeal allowed - decided in favor of appellant.

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• 2023 (2) TMI 478
  Liability of service tax - services provided by the assessee as a main consultant as also to the services provided by the assessee as a sub-consultant of the main consultant - invocation of extended period of limitation - HELD THAT:- So far as the confirmation of demand for the services provided by the assessee as a sub-consultant to the main consultant is concerned, the issue has been decided by a Larger Bench of the Tribunal in COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI] . The Larger Bench answered the reference holding that a sub-contractor would be liable to pay service tax even if the main contractor discharged service tax liability on the activity undertaken by the sub-contractor in pursuance of the contract. In coming to the aforesaid conclusion, the Larger Bench placed reliance on the provisions of sections 66, 68 and 94 of the Finance Act. The Larger Bench also noted that the matter had been referred because of conflicting decisions of the Tribunal on the issue as to whether a sub-contractor was required to pay service tax even if the main contractor had discharged the service tax liability - the reasons given by the Larger Bench to hold that a sub-contractor would be liable to pay service tax even if the main contractor has discharged service tax liability would also be applicable in the case of a sub-consultant. Thus, in view of decision of the Larger Bench of the Tribunal, it has to be held that a sub-consultant would have to discharge service tax liability even if the main consultant has discharged the service tax liability - demand for normal period stands confirmed. Whether the Principal Commissioner was justified in holding that the extended period of limitation contemplated under the first proviso to section 73(1) of the Finance Act could not have been invoked in the facts and circumstances of the case? - Benefit of doubt - HELD THAT:- It is seen that the Principal Commissioner noted that the assessee in the ST-3 Returns had disclosed the taxable income and also disclosed the exempted services for the relevant period and therefore, the Department could not urge that there was suppression of facts by the assessee with an intent to evade payment of service tax - It also needs to be noted that at the relevant time there were conflicting decisions of the Tribunal regarding payment of service tax by a sub-contractor or a sub-consultant and it is only when the Larger Bench decided the issue on May 23, 2019 that it was settled that a sub-contractor would have to discharge the service tax liability even if the main contractor had discharged the service tax liability. The issue as to whether the extended period of limitation could be invoked in such a situation when there are conflicting views of the Tribunal on a particular issue has been considered by the Supreme Court in various decisions - In JAIPRAKASH INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., CHANDIGARH [ 2002 (11) TMI 92 - SUPREME COURT] , the Supreme Court held that when there are divergent views of High Courts, there can be a bona fide doubt as to whether the activity would amount to manufacture and in such circumstances it cannot be urged that there was mis-statement or suppression of facts with intent to evade payment of duty - In M/S CONTINENTAL FOUNDATION JOINT VENTURE SHOLDING, NATHPA HP VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I [ 2007 (8) TMI 11 - SUPREME COURT] , the Supreme Court held that when there is a scope for entertaining a doubt about the view to be taken, the extended period of limitation cannot be invoked. The finding, therefore, that has been recorded by the Principal Commissioner for denying the invocation of the extended period of limitation does not suffer from any illegality. The appeals filed by the assessee and the Department deserve to be dismissed and are dismissed.

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• 2023 (2) TMI 476
  CENVAT Credit - trading/exempt service - input services used in the manufacturing of dutiable goods as well as trading activity - demand of 6% / 7% in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004 - HELD THAT:- On the clearance value on which the demand was raised, the appellant have admittedly paid the duty except for the period 19.04.2016 to 23.01.2017 wherein the appellant have not availed Cenvat credit. Thus, the appellant have paid the excise duty/ Cenvat on the clearances on which the demand was raised in the present case. With these details, there was no difficulty to the Adjudicating Authority as well as the appellate authority to arrive at the conclusion that there is no case of demand under Rule 6(3)(i) of Cenvat Credit Rules, 2004. However, both the lower authorities on flimsy ground that details were not given by the appellant, confirmed the demand, which cannot be agreed upon. The Revenue is at liberty to verify calculation of payment and or reversal of Cenvat in respect of inputs cleared as such and clearances on which no Cenvat credit was availed - appeal allowed.

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• Central Excise

• 2023 (2) TMI 477
  CENVAT Credit - appellant carrying out part of process in Unit-2 on the machinery installed therein and after the entire process is done, Unit-1 is clearing the final products on payment of duty - Cenvat credit availed in respect of some spares and accessories of laser cutting machines which were used in Unit-2 - objection of the department is that since spares and accessories procured by Unit-1 is used in Unit-2 where the Laser Cutting machines was installed, the credit for the same is in dispute. HELD THAT:- The excisable goods manufactured and cleared from the appellant s Unit-1, therefore, it is undisputed that the spares and accessories were used in or in relation to the manufacture of excisable goods of the appellant - Secondly, the similar issue has been decided in the appellant s own case in respect of capital goods i.e. machineries installed in the Appellant s Unit-2 in M/S EIMCO ELECON INDIA LTD. VERSUS C.C.E. S.T. -VADODARA-I [ 2019 (1) TMI 173 - CESTAT AHMEDABAD ] and Tribunal held that the essential condition for availment of credit as interpreted by various courts is that the capital goods should be used in or in relation to manufacture of the final product and even if the same are used outside the factory for the said purpose the credit cannot be denied so long as the said capital goods are not alienated by the appellant. Thus, demand do not sustain - the impugned order is set-aside and the appeal is allowed.

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• CST, VAT & Sales Tax

• 2023 (2) TMI 475
  Invocation of penal proceedings under Section 67(1) of the KVAT Act - goods in transit - goods transported with a view to evade tax? - Whether the Tribunal erred in directing the assessing authority to invoke the penal provisions under Section 67(1) of the KVAT Act when there is specific provision governing the matter of goods in transit under Section 47(6)? HELD THAT:- Section 46(3)(e) mandates that when goods are imported to the State the transporter shall keep a copy of the declaration bill duly acknowledged by concerned authority and shall be produced on verification by any authority and the declaration should be in Form 8FA. The case of Joy Alukkas [ 2022 (11) TMI 92 - KERALA HIGH COURT ] is a case in which gold ornaments were transported from Haryana and from New Delhi through Air. When the goods were intercepted, it was found that there were defects in the delivery note and in respect of the full name and address of the consignee the invoice did not contain the full address of the consignee. The delivery notes tampered with over writings and thus the Assessing Officer had reason to believe that there was an attempt to evade tax and therefore, section 47(6) of the KVAT Act was invoked - Going through the facts of the case it can be seen that only defect is that declaration in form 8FA was not accompanied with the goods. All other documents including invoices, bill of entry and delivery note were in order and there were no defects. Hence, the decision has no application to the facts of this case. The Tribunal has found in its order that there is clear violation of the provisions on the part of the appellant/respondents which warrants imposition of penalty. But held that penalty under Section 47(6) of the KVAT Act is not warranted and liberty was given to invoke the penal provision under Section 67(1) of the KVAT Act for the offences proved against the assessee - On going through the order of the Tribunal in detail, it is opined that the Tribunal was justified in allowing the appeal and setting aside the penalty under Section 47(6) KVAT act and giving liberty to invoke Section 67(1) KVAT finding that the appellant had clearly violated the provisions of section 46(3)(e) of the KVAT. Therefore the question of law raised in this revision is answered against the petitioner and in favour of the assessee. Revision dismissed.

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• Indian Laws

• 2023 (2) TMI 474
  Professional and other Misconduct by Chartered Accountant - Soliciting their clientele in the guise of canvassing for votes during the club s Executive Committee elections - It was the complainant s allegation that the respondent, under the guise of soliciting votes for his candidature to the post of Officer Bearer of the Executive Committee of the said club, had represented to members of that club that he was a proprietor of M/s. D.S. Desai and Company Limited, claiming that his firm has rendered dedicated services to several corporate clients whose names were stated in the said letter. HELD THAT:- The respondent and the complainant in the matter, though served on two occasions, have not put in appearance. Shri Saxena, appearing for the petitioner has taken us through the record of the disciplinary proceedings and the complaint, the written statement of the respondent and the letter written by the respondent to members of the Poona Club Limited, through which the Respondent claims he solicited votes while standing for election. The Disciplinary Committee has followed the procedure laid down under the Act and the Regulations framed thereunder. It has adhered to the principles of natural justice while conducting the inquiry; the complainant and the respondent were both afforded an opportunity of given their statements and cross-examined each other. The Disciplinary Committee had thereafter considered the evidence of the parties and after deliberating over the contents of the letter written by the respondent soliciting votes of members of the club, has arrived at findings of guilt which are entirely based upon the evidence before it - The findings do not suffered from any perversity or non consideration of the record before the Disciplinary Committee. On going through the minutes of the meeting of the Council wherein it considered the record of the Disciplinary proceedings and the findings arrived at by the Disciplinary Committee in its Report, it is opined that the Council has afforded both parties an opportunity of being heard and presenting their version before the Council in its meeting held on 19.02.2007 - further, the Council has accepted the findings of the Disciplinary Committee and there is no error in the procedure followed by the Council. The order of the reprimand (to tell somebody officially that he/she has done something wrong) of the respondent will serve the ends of justice and will be proportionate to the acts of misconduct of which the respondent has been held guilty - application referred under Sub-Section (6) of Section 21 of the said Act is disposed of.

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• 2023 (2) TMI 473
  Right to information - CIC did not issue notice to the Shri Ram Janmabhoomi Teerth Kshetra Trust whose information was sought, which is mandated under Section 19(4) of the RTI Act - seeking exemption / deduction u/s 80G(2)(b) for donations - HELD THAT:- The Petitioner i.e. CPIO, CBDT has made out a prima facie case for grant of interim relief, the balance of convenience lies in its favour and irreparable injury would be caused to it if the interim relief is not granted. Accordingly, impugned order dated 30th November, 2022 which is stated to be received by the CPIO, CBDT on 3rd January, 2023 shall remain stayed till the next date of hearing. No coercive steps shall be taken against the CPIO, CBDT pursuant to the same. Ld. counsel for the CPIO, CBDT shall consider whether the Shri Ram Janmabhoomi Teerth Kshetra Trust, whose information is being sought in the RTI application ought to be impleaded as a Respondent in this matter. If so, he shall take appropriate steps in accordance with law - The Registry shall serve the Respondent on the Email ID given in the memo of parties.

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• 2023 (2) TMI 472
  Disruption in the easement right of way to his (complainant) home - laying down of wi-fi transmission cable lines by the Jio Fibrenet Ltd. passing through the house of compainant - complainant is aggrieved by the fact that the CPIO did not facilitate him complete desired information after liasioning with the private entity i.e. Jio Fibrenet Pvt. Ltd. as per Section 2(f) read with Section 2(j) of RTI Act - HELD THAT:- The Commission upon a perusal of records and after hearing submissions of the parties finds no infirmity in the reply and as a sequel to it further clarifications tendered by the Respondent no. 1 during hearing as it adequately suffices the information sought by the Complainant in terms of RTI Act. Moreover, the Commission is not inclined to accept the contention of the Complainant for initiating penal action against the CPIO in the absence of any malafide ascribed on their part. In this regard, the attention of the Complainant is drawn towards a judgment of the Hon ble Delhi High Court in the matter of Registrar of Companies Ors. v. Dharmendra Kumar Garg Anr. [ 2012 (6) TMI 176 - DELHI HIGH COURT] wherein it was held that Merely because the CIC eventually finds that the view taken by the PIO was not correct, it cannot automatically lead to issuance of a show cause notice under Section 20 of the RTI Act and the imposition of penalty. The legislature has cautiously provided that only in cases of malafides or unreasonable conduct, i.e., where the PIO, without reasonable cause refuses to receive the application, or provide the information, or knowingly gives incorrect, incomplete or misleading information or destroys the information, that the personal penalty on the PIO can be imposed. Considering the inability of the Complainant in substantiating his level of dissatisfaction with the CPIO s reply in the instant Complaints, no further action is warranted in the instant matters - Complaint disposed off.

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