TMI Tax Updates - e-Newsletter
February 22, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Rejection of refund claim - refund claim application was not filed electronically - This Court rejected the similar stand taken by the learned counsel for Revenue and held that Rule 97A can not be construed in a manner as sought to be canvassed by the learned counsel for Revenue so as to defeat the purpose of Legislation. This Court accordingly held that the impugned Circular would certainly be applicable to all application filed electronically on the common portal but the impugned Circular cannot affect or control the statutory rule i.e. Rule 97A of the C.G.S.T. Rules or derogate from it. - HC
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GST:
Transitional Credit - Input service distribution - The respondents cannot raise their hands in despair saying that it is not possible to correct or take care of the technical glitches. The writ applicant herein has been running from pillar to post requesting the respondents to provide a solution and take care of the technical error and glitch that occurred as regards furnishing the GSTR – 6 return for recording and distributing the ISD credit of ₹ 20,52,989/-. - Directions issued - HC
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GST:
Confiscation of goods - This matter would require a detailed consideration. At the same time, no useful purpose will be served by detaining the goods other than the inflict of financial loss on the petitioner. Even if the petitioner is eventually found guilty of the violation of the provisions of the Act and the Rules made thereunder, Penalty and Fine are only to be imposed - Goods directed to be released on payment of disputed GST and 25% of tax as bank guarantee - HC
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GST:
Input tax credit - Seeking withdrawal of negative block of the electronic credit ledger of the Petitioners as visible from the extract of credit ledger - scope and applicability of Rule 86A - If credit balance is available, then the authority may, for reasons to be recorded in writing, not allow the debit of amount equivalent to such credit - there is no power of negative block for credit to be availed in future. The writ applicants are also entitled to the refund of ₹ 20 Lakh deposited by them to enable them to file their return. - HC
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GST:
Levy of GST - Valuation - GST at 18% on reimbursement of expenses i.e., Basic Salary, ESIC, EPF, Bonus with service charge or only on service charge for providing pure service by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution? - taking into the view the definition of 'consideration' and the aspect of 'valuation of supply' as discussed above, it is apparent that the GST is chargeable on the entire amount received by the applicant against supply of manpower. - AAR
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Income Tax:
Exemption u/s 11 - cancellation of registration granted u/s 12A - As documents which were the basis for concluding that the registration granted in favour of the assessee should be cancelled were not furnished to the assessee. Therefore, the CIT(E) having committed a fundamental error cannot be granted for one more opportunity. Therefore, the tribunal was right in rejecting the prayer for remanding the proceedings and we are also of the view that the question of granting a further opportunity to the CIT(E) on the facts of the case on hand does not arise. - HC
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Income Tax:
Revision u/s 263 to impose a penalty u/s 271(1)(c) - CIT merely set aside the assessment order in its entirety and remanded the case for a fresh consideration by the assessing officer - Thus, while issuing the order of assessment the assessing officer was bestowed with all powers as in an original assessment, including the power to express his satisfaction for initiating penalty proceedings. - Writ petition dismissed - HC
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Income Tax:
Nature of receipt - amount received under the Deed for restrictive covenant - revenue or capital receipt - ITAT, CIT and the AO have proceeded on an erroneous footing that the company came into existence only on 22nd June, 2000 and the assessee was inducted into its employment on 30th June, 2000 and therefore it was not feasible and it is inconceivable that appellant can be a privy to the business secrets of the company within a period of eight days of his employment. The deed of negative covenant does not provide or even indicate that appellant was privy to the business secrets of the company within a period of eight days - No material has been brought on record to show that the negative covenant agreement is a sham agreement. - HC
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Income Tax:
Revision u/s 263 by CIT - direction to the AO to compute income of the appellant Trust without allowing exemption u/s. 10(23C)(iiiae) - All the conditions as prescribed u/s.10(23C)(iiiae) of the Act, have been fulfilled by the appellant Trust and there is no allegation that the appellant Trust is involved in any other activity for profit or does not exist for philanthropic purposes. Even in this case, all the facts are on the file, therefore there was no need for any further investigation by the A.O. as alleged by the Ld. CIT(E). - AT
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Income Tax:
Addition u/s 68 - unsecured loans treated as unexplained credits - Revenue has also failed to conduct complete enquiries to bring much needed evidences on record. Hence, in the interest of justice to both the parties, we deem it proper to remand the matter to the file of the Assessing Officer - AT
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Income Tax:
Disallowing interest payment on loan - Even, before us, no evidences have been provided to prove that the loan received earlier was utilized for the business purpose which makes the interest paid or payable allowable under the provisions of Section 36(1)(vii). The arguments that there was no outgoing fund on the contrary, the assessee was a net gainer in form of waiver cannot be considered as a tenable claim. - AT
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Income Tax:
Revision u/s 263 by CIT - Wrong Capital gain computation as AO not examined the transaction by the angle of section 50C - in our considered view the view taken by the AO in accepting the capital gain/loss on capital contribution of (03)three pieces of land is not erroneous. Therefore, the twin condition as enunciated under section 263 of the Act is not made out in the present case, thus, the order passed by the ld. PCIT is set-aside - AT
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Customs:
Seeking release from preventive detention - COFEPOSA - Smuggling - Baggage Rules - Merely because a detenu is able to sign or write a few words in English or any other language, does not mean that the detenu is ‘conversant with the language’, since the detenu may yet not be able to effectively understand the contents of the grounds of detention and the relied-upon documents, to be able to make an effective representation against the detention order. - HC
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Customs:
Principle of natural justice - provisional release of goods - reexport of subject goods - It is clarified that if the DRI has any further doubts in the matter, it is always open for the DRI to proceed further with its inquiry in accordance with law. For the present, we are only concerned with the goods. Let the goods be released upon the writ applicant furnishing a bond of the amount equivalent to the value of the goods at the earliest - HC
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Customs:
Smuggling - foreign origin black pepper - jurisdictional infirmity - whether the learned Magistrate have correctly assumed proper jurisdiction while passing the original impugned order under Section 451/457 Cr.P.C. or the same have been passed without jurisdiction? - It is also well settled that the provisions of the Special Act will override the provisions of the general law as in the case in hand. The principles of the latin maxim of “generalia specialibus non derogant”, i.e., general law yields to special law should they operate in the same field on same subject will be applicable here. - HC
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Indian Laws:
Dishonor of Cheque - Funds Insufficient - acquittal of the accused - if in course of proceedings the petitioner is able to rebut the presumptions so far as the proviso clause of Sub-section 1 is concerned i.e. “if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence” he would be entitled to an order of acquittal. The stage at which petitioner has approached this Court is premature and as such this Court finds no reason to interfere with the proceedings. - HC
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Indian Laws:
Dishonor of Cheque - existence of enforceable debt or not - evidently, the cheque in question was given as ‘security’ and not in respect of any ‘enforceable debt’, which the applicant No.1-Company was required to pay to the respondent-complainant. In paragraph-1 of the complaint filed under Section 138 of the NI Act, the respondent-complainant itself has stated that the cheque in question has been given in view of the compromise arrived at between the parties. Thus, as per the admission of the complainant also, the cheque in question was not issued in respect of any ‘enforceable debt’, which the applicant No.1 Company was required to pay to the respondent-complainant - Complaint and proceedings quashed and set aside - HC
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Service Tax:
Liability of service tax - RCM - The contract envisages services required to be provided to RIL, both at the project stage at which stage a support base was required to be set up as well as an ongoing basis when the oil and gas production was to commence. The reference to ‘support base‘ is to a repair yard where tools, spares, parts and testing equipments have to be kept and maintained. It is not in reference to a ‘project office‘ or any ‘fixed establishment‘. It would not be appropriate to read the word ‘established‘ as ‘establishment‘ - the inevitable conclusion that emerges from the above discussion is that RIL, as the service recipient, was required to discharge service tax liability on a reverse charge mechanism on the services provided by Aker Malaysia to RIL - AT
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Service Tax:
Non-payment of service tax - Business Auxiliary Services - reimbursable expenses - The demand is raised on reimbursable expenses and that these cannot be included in the taxable value for the disputed period. The decision of the Hon’ble Apex Court in Intercontinental Consultants and Technocrats Ltd. has been consistently followed by the Tribunal. Applying the decision of the Apex Court in the above case, it is held that the demand cannot sustain. The issue on merits is answered in favor of appellant and against the Revenue. - AT
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Service Tax:
Supply of manpower services or job work contract - suppression of facts or not - On reading the agreement as a whole, it is apparent that the contract is pure and simple a contract for the provision of contract labour. An attempt has been made to camouflage the contract as a contract for job work to avail of the exemption from the payment of service tax. The judgment of the Tribunal does not, in the circumstances, suffer from any error of reasoning. - SC
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Central Excise:
Classification of intermediate goods - Nylon/Polyester Filament Yarn, partially oriented yarn (POY) - as per test report with regard to the samples of classification list no.Yarn/37/83-84, it has been reported that the samples are not fully drawn and can be further drawn or stretched. Thus, such yarn has characteristics of POY and accordingly, we find that the findings of the court below is vitiated as they have ignored the test report and have used their personal knowledge, without any cogent materials on record. - AT
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VAT:
Condonation of delay of 2 years and 300 days in filing a Tax Revision Application - After several adjournments, the applicant has stated that they are not in a position even to secure the tax or part. Though this is not a consideration for either condoning or not condoning the delay, we think that the entire conduct of the applicant does suggest that the applicant was far from diligent and the proceedings were taken up only to delay or avoid the payment of the tax as determined. The Applicant perhaps carried the impression that the mere pendency of proceedings might delay the action from the tax authorities and took full advantage of this impression to delay the proceedings. - Application dismissed - HC
Articles
Notifications
News
Case Laws:
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GST
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2022 (2) TMI 847
Rejection of refund claim - application filed by the Petitioner rejected on the ground that the refund claim application was not filed electronically, which was mandatory with effect from 26th September 2019 - HELD THAT:- A perusal of the Order passed by the Respondent No.3 indicates that the Respondent No.3 has not rejected the said application for refund filed by the Petitioner under Section 54 of the said C.G.S.T. Act on the ground that the Petitioner is not entitled to apply for refund under any of the provisions of the said C.G.S.T. Act or the applicable Rules. The said Order dated 18th February 2021 indicates that the application for refund is rejected only on the ground that the said refund claim application is not filed electronically and in accordance with Circular dated 18th November 2019 issued by the Government of India. A Division Bench of this Court in the case of LAXMI ORGANIC INDUSTRIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2021 (12) TMI 63 - BOMBAY HIGH COURT] has dealt with identical facts and after construing Section 168 of the C.G.S.T. Act, Rule 89 and Rule 97A of the C.G.S.T. Rules has held that the plain and simple construction of Rule 97A is that despite Rule 89 providing for electronic filing of applications for refund on the common portal, in respect of any process or procedure prescribed in Chapter X, any reference to electronic filing of application on the common portal shall, in respect of that process or procedure, include manual filing of the said application - This Court rejected the similar stand taken by the learned counsel for Revenue and held that Rule 97A can not be construed in a manner as sought to be canvassed by the learned counsel for Revenue so as to defeat the purpose of Legislation. This Court accordingly held that the impugned Circular would certainly be applicable to all application filed electronically on the common portal but the impugned Circular cannot affect or control the statutory rule i.e. Rule 97A of the C.G.S.T. Rules or derogate from it. This Court accordingly quashed and the impugned Order therein is set aside and it is clarified that the said Circular shall be applicable only to applications filed electronically on the common portal but would have no applicability to an application for refund which is filed manually - petition allowed.
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2022 (2) TMI 846
Transitional Credit - Input service distribution - availment of credit of various input transactions as the ISD for distributing proportionate credit to each of the business premises in accordance with Rule 7 of the Cenvat Credit Rules - HELD THAT:- The respondents cannot raise their hands in despair saying that it is not possible to correct or take care of the technical glitches. The writ applicant herein has been running from pillar to post requesting the respondents to provide a solution and take care of the technical error and glitch that occurred as regards furnishing the GSTR 6 return for recording and distributing the ISD credit of ₹ 20,52,989/-. As usual, there is no response at the end of the GSTN. The writ applicant is not allowed to distribute the ISD credit of ₹ 20,52,989/- as the same has not been recorded, reported and declared in the GSTR 6 return. Mr. Tripathi is right in his submission that the credit is a tax paid by the registered person on input transactions and therefore, the credit of such tax already paid to the credit of the Central Government is a vested right of the person. Such vested right cannot be defeated on account of any irregularity in the system evolved by the Government. The respondents are directed to allow the writ applicant to furnish manually the GSTR 6 return with details of the ISD credit of ₹ 20,52,989/- and also permit distribution of such credit to the constituents of the writ applicant. Let this entire exercise be undertaken within a period of six weeks from the date of the receipt of writ of this order - Petition allowed.
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2022 (2) TMI 845
Seizure and detention of goods - goods detained on the ground that the E-Way Bill had expired, and that the vehicle was moving goods without a valid E-Way bill - HELD THAT:- The facts on record indicates that the value of the consignments including tax partially exceeds a sum of ₹ 1,00,000/-. The issue as to whether the value would include tax and whether there was a violation has to be determined in the manner known to law by the authority under the Acts. At the same time, no useful purpose will be served by detaining the vehicle or the consignment of goods (cement) as it will only result in the cement getting spoilt. The respondents are directed to release the vehicle and the goods if the consigner namely M/s.Chettinad Cement Corporation Private Limited or the consignee namely M/s.Murugavel Traders or the petitioner as the owner of the vehicle furnishes a Bank Guarantee for the tax and proposed penalty for a specified period subject to the satisfaction of the respondents, within a period of fifteen (15) days from the date of receipt of a copy of this order - If such Bank Guarantee is furnished by the consigner namely M/s.Chettinad Cement Corporation Private Limited or the consignee namely M/s.Murugavel Traders or the petitioner as the owner of the vehicle, the vehicle and the goods shall be released by the respondents forthwith. This Writ Petition stands disposed of.
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2022 (2) TMI 844
Confiscation of goods - reasons for issuing Form GST MOV-2 is in Sl.No.5 of the impugned communication is that the previous movement of goods was not covered an E-Way bill - HELD THAT:- It is noticed that at the time of seizure, the goods accompanied E-Way bill. However, the allegation that no E-Way bill was generated for the previous transport from the port of import to the CFS. It is not clear as to whether for movement of goods from CFS to the petitioner's premises accompanied an E-Way bill and whether it was generated or not. This matter would require a detailed consideration. At the same time, no useful purpose will be served by detaining the goods other than the inflict of financial loss on the petitioner. Even if the petitioner is eventually found guilty of the violation of the provisions of the Act and the Rules made thereunder, Penalty and Fine are only to be imposed - the petitioner is directed to pay the disputed tax and furnish a bank guarantee for the tax and 25% of the tax amount towards penalty within a period of seven days from the date of receipt of a copy of this order to the satisfaction of the respondent. Goods directed to be released on payment of disputed GST and 25% of tax as bank guarantee. The writ petitions stand disposed of
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2022 (2) TMI 843
Input tax credit - Seeking withdrawal of negative block of the electronic credit ledger of the Petitioners as visible from the extract of credit ledger - scope and applicability of Rule 86A - HELD THAT:- One of the primary conditions in order to invoke Rule 86A is that the Credit of input tax should be available in the electronic credit ledger. Further, such credit should be claimed to have been (supported by reason to believe recorded in writing) fraudulently availed - Rule 86A is not the rule which entitled the proper officer to make debit entries in the electronic credit ledger of the registered person. The rule merely allows the proper officer to disallow the registered person debit from the electronic credit ledger for the limited period of time and on a provisional basis. In case debit entries are made by the proper officer, the same will tantamount to permanent recovery of the input tax credit and certainly permanent recovery is governed by the statutory provisions (Section 73 of 74 of CGST Act) and it certainly travels beyond the plain language and underlined intent Rule 86A. The fact or possibility of registered person availing and utilising the fraudulent credit persistently and continuously cannot be the basis to invoke Rule 86A - the power to restrict debit from the electronic credit ledger is extremely harsh in nature. The rule outreaches the detailed procedure provided in the legislature for determination of input tax credit wrongly availed or utilised provided in Section 73 and 74 of CGST Act and empowers the officer to unilaterally impose certain restrictions in compelling circumstances. In other words, Rule 86A is invoked at a stage which is anterior to the finalization of an assessment or the raising of a demand. Accordingly, it should be governed strictly by specific statutory language which conditions the exercise of the power. The respondents are directed to withdraw negative block of the electronic credit ledger at the earliest. The condition precedent for exercise of power under Rule 86A of the GST Rules is the availability of credit in the electronic credit ledger which is alleged to be ineligible. If credit balance is available, then the authority may, for reasons to be recorded in writing, not allow the debit of amount equivalent to such credit - there is no power of negative block for credit to be availed in future. The writ applicants are also entitled to the refund of ₹ 20 Lakh deposited by them to enable them to file their return. The respondents shall refund this amount of ₹ 20 Lakh to the writ applicants within a period of two weeks from the date of the receipt of the writ of this order. Application disposed off.
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2022 (2) TMI 842
Levy of GST - Valuation - GST at 18% on reimbursement of expenses i.e., Basic Salary, ESIC, EPF, Bonus with service charge or only on service charge for providing pure service by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution? - applicability of exemption contained in sl. No. 3 of the Notification No. 12/2017-CT (Rate) dated 28.06.2017 - HELD THAT:- There is mention of only rate per manpower per month in the Work orders and total amount of work order is excluding EPF/ESIC/WC contribution/commission charges taxes. Further, in the tax invoice raised by the applicant, there is mention of cost of employees and the commission and there is no mention of EPF/ESIC/WC contribution on the invoice. MPMKVVCL is presently not an establishment with 90 per cent or more participation by way of equity or control, to carry out a function entrusted by the State Government. There is also nothing on record that MPMKVVCL is set up by an Act of Parliament or State Legislature. As such, we hold that MPMKVVCL is not a Govt. entity - although there is no such mention on the website of MPPKVVCL it is all likelihood that the same is also presently not an establishment with 90 per cent or more participation by way of equity or control, to carry out a function entrusted by the State Government like MPMKVVCL. There is also nothing on record that MPPKVVCL is set up by an Act of Parliament or State Legislature. Further, the Chief Financial Officer, MPPKVVCL, Indore in his GST Circular-11 issued under F.No. MD/WZ/02/Tax/259/9425 dated 10.05.2018 has only given the definition of 'Government Entity' and declared the Company as Government Entity without giving any criterion of the applicability of the said definition on the Company. As such, we hold that MPPKVVCL also is not a Govt. entity. Although it is accepted that rural electrification including distribution of electricity is covered in function entrusted to a Panchayat but we are of the view that the invoices issued to the Executive Engineer, MPPKVVCL or GM, MPMKVVCL by the applicant with description of supply of manpower (Rural) is not a sufficient document to conclude that the manpower will be actually used for distribution of electricity in rural area as a sub-station supplying electricity covers large area which include rural as well as urban area - the applicant is not entitled for exemption contained in Sl.No. 3 of the Notification No. 12/2017-CT (Rate) dated 28.06.2017. Section 15(1) clearly stipulates that the value of supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. Further, sub-section (2) of Section 15 elaborates in detail, the items that are required to be included in the value of supply, whereas sub-section (3) of Section 15 specifically elaborates the items that are not to be included in the value of supply - As per Section 15 of the CGST Act, 2017, there is intent to include even all taxes, duties, cesses, fees and all charges in the value of supply and there can be no exception for ESI and EPF amount. Therefore, taking into the view the definition of 'consideration' and the aspect of 'valuation of supply' as discussed above, it is apparent that the GST is chargeable on the entire amount received by the applicant against supply of manpower.
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Income Tax
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2022 (2) TMI 883
Exemption u/s 11 - cancellation of registration granted u/s 12A - money laundering activities conducted by the assessee trust with school of Human Genetics and Population Health and such activities has been established in other instances - Tribunal quashing the order of cancellation of registration - HELD THAT:- The initial allegation in the show cause notice is that donation was received by the assessee and the same was returned in cash to the organisation - in the order of adjudication passed by the CIT(E) the allegation was totally different in the sense that the assessee paid cash to receive donation from the organisation. Even assuming that the name of the assessee trust figures in the list of donations given by the organisation, that by itself would not establish the allegation that the assessee was engaged in money laundering activities - CIT(E) has used the expression money laundering without noting the serious implications which flow from use of such expression. On a perusal of Section 3 of the Prevention of Money Laundering Act, 2002 assuming that such activity was being done by a person, it is rather doubtful to bring it under the definition of money laundering . Apart from that, the CIT(E) in paragraph 6.1 of the order dated 17th March, 2016 mentioned that the Treasurer and Secretary of the organisation were permitted to be cross-examined but the assessee trust did not avail the opportunity but merely filed their declaration on 13th January, 2016. The correctness of this finding was considered by the Tribunal and on going through the order-sheet maintained by the CIT(E) it was found that such finding was factually incorrect. As documents which were the basis for concluding that the registration granted in favour of the assessee should be cancelled were not furnished to the assessee. Therefore, the CIT(E) having committed a fundamental error cannot be granted for one more opportunity. Therefore, the tribunal was right in rejecting the prayer for remanding the proceedings and we are also of the view that the question of granting a further opportunity to the CIT(E) on the facts of the case on hand does not arise. Thus, for all the above reasons, we find no grounds to interfere with the order passed by the tribunal. - Decided against revenue.
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2022 (2) TMI 882
Validity of reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT:- One thing is very clear from the reasons recorded that there is nothing to indicate that there was non disclosure by the assessee of any material facts. Since the reasons do not indicate the failure on the part of assessee to disclose fully and truly all material facts, on this ground alone, the impugned notice dated 23rd March, 2021 has to be quashed and set aside. Assessing Officer has issued notice before passing assessment order to which Petitioner has responded providing all documents including the share purchase agreement and the Assessing Officer has passed the assessment order accepting the returned income. Therefore, this issue has also been discussed and considered by the Assessing Officer before passing assessment order. To reopen an assessment based on the same material to take a different view, is not permissible as held time and again by various Courts. In the circumstances, we have no hesitation in holding that the impugned notice dated 23rd March, 2021 requires to be quashed and set aside. - Decided in favour of assessee.
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2022 (2) TMI 881
Validity of intimation u/s 245 - adjustment of demand of assessment year 2015-16 in excess of 20 % from the refund of assessment year 2008-09 - HELD THAT:- The impugned action of the assessing officer under Section 245 of the Income Tax Act, 1961 making adjustment of demand of assessment year 2015-16 in excess of 20 % from the refund of assessment year 2008-09 without disposing of the objection of the petitioner against the intimation under Section 245 of the Act and taking any formal decision on the said objection is bad and not sustainable in law and the impugned action under Section 245 of the Act without disposing of and taking any decision on application of the petitioner under Section 220 (6) of the Act and acting contrary to the aforesaid office memorandum of CBDT dated 29th February, 2016 and 31st July, 2017 is bad in law. Accordingly the Assessing officer concerned is directed to refund the amount adjusted in excess of 20% of the demand arising out of the assessment order relating to assessment year 2015-16 from the refundable amount from the assessment relating to assessment year 2008-09 within four weeks from the date of communication of this order.
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2022 (2) TMI 880
Revision u/s 263 to impose a penalty u/s 271(1)(c) - whether assessment order had not recorded the satisfaction for initiating penalty proceedings? - HELD THAT:- Distinction between the proceedings under section 263 and the initiation of penalty un/s 271(1)(c). There is no quarrel that while issuing orders under section 263 of the Act, the Principal Commissioner of Income Tax cannot direct penalty to be imposed. However, when in the exercise of powers under section 263 of the Act, an assessment order was set aside and remanded back to the assessing officer, all the powers of an original assessing officer gets vested by operation of law. In such proceedings, if the assessing officer expresses his satisfaction that penalty proceedings can be initiated, then, that satisfaction is certainly expressed before conclusion of proceedings under the Act and is within his authority. The satisfaction recorded by the assessing officer in Ext.P3 that proceedings for penalty must be initiated under section 271(1)(c) is clearly within his jurisdiction, despite the fact that the original assessment order did not mention anything about initiating penalty proceedings. Ext.P3 assessment order issued after remand, is a proceeding under this Act and satisfies the ingredients of section 271(1)(c) and hence, the assessing officer was vested with the jurisdiction to record his satisfaction and thereafter initiate penalty proceedings. Coming to the instant case, nowhere in Ext.P2 order has the Principal Commissioner of Income Tax expressed his satisfaction for initiating penalty proceedings. On the contrary, he merely set aside the assessment order in its entirety and remanded the case for a fresh consideration by the assessing officer. Thus, while issuing the order of assessment, as per Ext.P3, the assessing officer was bestowed with all powers as in an original assessment, including the power to express his satisfaction for initiating penalty proceedings. In such a view of the matter, I find that the initiation of proceedings for imposing penalty and the consequent imposition was within the jurisdiction and authority of the assessing officer. Hence there is no merit in the challenge raised. WP dismissed.
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2022 (2) TMI 879
Validity of Reopening of assessment u/s 147 - certain income, which are liable for payment of tax, has escaped the assessment and it warrants re-assessment - assessee had not disclosed fully and truly the material facts necessary for the completion of the assessment - whether there was no fresh material that came to the notice of the Assessing Officer? - HELD THAT:- In the re-assessment order, it was merely stated that it was noticed that the assessee was allowed a deduction of ₹ 94,86,333/- as bad debts, wrongly. The assessment was therefore re-opened under Section 147 . This would stand testimony to the fact that the Assessing Officer has no tangible material evidence to initiate the re-assessment proceedings. Had there been any material evidence, which prompted the assessing officer to initiate re-assessment proceedings, he ought to have atleast indicated it in the order of reassessment proceedings. But the re-assessment proceedings was concluded only on the basis of the explanation offered by the assessee with respect to the suit filed against them before this Court and the Memorandum of Understanding entered into with M/s. Shree Aravindh Steel Private Limited. Therefore, it is evident that the re-assessment proceedings have been initiated without any tangible material evidence, unearthed subsequently, which the assessee did not produce at the time of original assessment u/s 143 (3) . Thus based on a change of opinion on the part of the Assessing Officer, the re-assessment proceedings were initiated. The Tribunal also held that there was no fresh material in the possession of the Assessing Officer warranting initiation of re-assessment proceedings under Section 147 - Tribunal is right in allowing the appeal filed by the assessee - Decided in favour of assessee.
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2022 (2) TMI 878
Nature of receipt - termination of employment - non-compete agreement - amount received under the Deed for restrictive covenant - revenue or capital receipt - appellant agreeing not to compete with the company for a period of 10 years after termination, under Article 2 of the agreement the company agreed to pay compensation amount by allotting 20,00,000 Equity Shares of the nominal face value of ₹ 10 each to appellant - HELD THAT:- The agreement expressly provides that appellant shall not directly or indirectly engage in or be concerned or connected with any business which is similar to and/or in competition with the business of the company in the metro cities of Bombay, Delhi, Ahmedabad and Bangalore and appellant shall not directly or indirectly control or operate or cause to control or operate or participate in any similar business in the metro cities. In fact, the agreement goes to the extent of even stating that appellant shall not associate himself or be an advisor, employee or be a partner in any similar business as that of the company and he shall cease and desist from participating in similar business activities as that of the company and not to use his goodwill or expertise in respect of similar business as that of the company. To that extent, in our view it was loss of source of income for him in the future. The agreement, i.e., the deed for negative covenants was an independent obligation undertaken by appellant with the company in same field for a period of ten years.The compensation attributable to restrictive covenant, i.e., 20,00,000 Equity Shares of ₹ 10/- each in the hands of appellant was a capital receipt in as much as it was appellants profit making capabilities for a period of ten years from the date of appellant leaving the employment of the company either on his own or in association with professional competitors. ITAT, CIT and the AO have proceeded on an erroneous footing that the company came into existence only on 22nd June, 2000 and the assessee was inducted into its employment on 30th June, 2000 and therefore it was not feasible and it is inconceivable that appellant can be a privy to the business secrets of the company within a period of eight days of his employment. The deed of negative covenant does not provide or even indicate that appellant was privy to the business secrets of the company within a period of eight days. The objective for entering into agreement was because the company was engaged in the business of maintenance and collection of art and sale of art by conducting auctions, exhibitions etc., and appellant has been actively and closely associated with the Indian Art Industry for over seven years and was a pioneer in his field with extensive knowledge of the history and aesthetics of Indian Classical Modern Contemporary Art and has considerable skills, expertise, goodwill and experience in the aforesaid business. Respondents have also proceeded on an erroneous basis that statement of income filed by appellant for A.Y. 2000-01 does not show that appellant had income from business of maintenance and collection of art and sale of art and the assessee was showing only interest income and therefore he cannot be stated to be in a position to compete in any manner with the employer company because he did not have any existing business running. According to respondent for any sum stated to be non-compete fess, the same should be paid to any person from whom the real threat of competition exists and because his return of income for A.Y. 2000-01 does not show any income or business of maintenance and business of collection of art and sale of art, the value of shares received by appellant should be treated as revenue receipt and not capital receipt. In our view, these things really does not matter. No material has been brought on record to show that the negative covenant agreement is a sham agreement. All judgments/orders relied upon by Mr. Kaka certainly hold that whether compensation is received for negative restrictive covenant or non-compete with business of the company, compensation relatable to such activity would be a capital receipt. See GUFFIC CHEM (P) LTD. MANDALAY INVESTMENT P. LTD VERSUS COMMISSIONER OF INCOME-TAX [ 2011 (3) TMI 6 - SUPREME COURT] Thus Tribunal erred not treating that the amount received under the Deed for restrictive covenant as a Capital Receipt not liable to tax - Decided in favour of assessee.
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2022 (2) TMI 877
Addition u/s.80IB(10) - proportionate deduction - assessment was completed by the AO on the ground that one of the unit sold by the assessee is above 1500 square feet and therefore the entire claim of deduction under section 80IB was rejected by the AO - HELD THAT:- As rightly pointed out by the ld.DR only one unit in the project i.e. A/57-58 which is admeasuring 1508.41 square feet. This fact has also been confirmed by the Department Valuation Officer. The assessee cannot be denied of entire remaining housing projects under this provision just because one unit is in excess of 1500 square feet. Judgment in the case of Viswas Promoters P.Ltd [ 2012 (11) TMI 1117 - MADRAS HIGH COURT] Ltd (supra) supports the case of the assessee. Also see M/S SHREENATH BUILDCON [ 2018 (12) TMI 1723 - SC ORDER] er allowing assessee's claim for deduction under section 80-IB by taking a view that simply because out of several units included in housing project, only in one of them, constructed area exceeded upper limit; that too, by a small margin, deduction claimed could not be denied in respect of entire housing project. - Decided in favour of assessee.
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2022 (2) TMI 876
Capital gain computation - transfer of asset u/s 2(47) - year of assessment - whether the transfer, to attract capital gains tax liability, took place on the date of execution of sale deed on 15.12.2007 or on the registration of sale deed on 17.4.2008? - HELD THAT:- As per section 45 of the Act, which is a charging section for capital gains, provides that any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54 etc., be chargeable to income-tax under the head Capital gains , and shall be deemed to be the income of the previous year in which the transfer took place. Manifestly, income under this head becomes chargeable to tax in the year in which the transfer takes place. Transfer takes place only when it becomes operational, that is, on executing the sale deed - neither before it, that is, when the parties are in the process of negotiations, nor after it, that is, when the registration of the deed actually takes place. Sale deed, even though registered on 17.04.2008, was admittedly executed on 15.12.2007, which date falls in the previous year relevant to the A.Y. 2008-09 and, as such, the amount of capital gain becomes chargeable to tax in such preceding assessment year. Since the transfer of the property took place on execution of sale deed in the preceding year, we hold that the amount of capital gain cannot be charged to tax for the A.Y. 2009-10 under consideration. On a specific query, the ld. AR candidly admitted that no capital gain was offered for taxation by the assessee in her return for the A.Y. 2008-09 or any other year. AO is at liberty to take necessary action for taxing the amount in the correct assessment year as per law. Assessee appeal is allowed.
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2022 (2) TMI 875
Penalty u/s 271(1)(c) - LTCG computation - delay in filing of appeal before CIT-A - adopting the Stamp Duty Valuation as sale consideration by invoking the provisions of Section 50C and recomputed the Long Term Capital Gain - HELD THAT:- As from the copy of Form No.35 filed by the assessee before the learned CIT(A) that the relevant notice of demand for penalty imposed under Section 271(1)(c) of the Act was served on the assessee on 21.03.2016. As per the specific provision contained in sub-section (2)(b) of Section 249 of the Act, the assessee was required to file the appeal before the learned CIT(A) against the order of penalty under Section 271(1)(c) of the Act within 30 days from the date of service of the notice of demand relating to the penalty. The impugned order of the learned CIT(A) that the appeal was filed by the assessee only on 20.06.2016, i.e. beyond the period prescribed in sub-section 2 of Section 249 - As rightly contended by the learned Departmental Representative, the learned CIT(A), however, failed to take note of this delay and proceeded to dispose of the appeal of the assessee vide his impugned order on merit without passing any order on the issue of condonation of delay. We, therefore, find merit in Ground No.1 of the Revenue s appeal and remit the matter back to the learned CIT(A) for considering the issue of delay on the part of the assessee in filing the appeal and passing the order on this preliminary issue, in accordance with law, after giving the assessee an opportunity of being heard.
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2022 (2) TMI 874
Assessment u/s 153A - proof of incriminating material found in search - HELD THAT:- Once the requisite time limit for issuance of scrutiny notice u/s.143(2) of the Act had expired, the assessee would be justified in entertaining a honest belief that assessment for the concerned assessment year had been completed by the Assessing Officer. Infact in the case of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT had elaborately dealt this aspect of assessment getting completed u/s.143(1) of the Act and concluded that even for such assessment, no addition could be framed in 153A proceedings unless there is incriminating material found during the course of search relatable to such assessment year. The said decision also covers all the decisions relied upon by the ld. DR before us. Special Leave Petition (SLP) preferred by the Revenue before the Hon ble Supreme Court against the decision of the Hon ble Delhi High Court in the case of Kabul Chawlahad been dismissed by the Hon ble Apex Court - Though SLP has been granted by the Hon ble Apex Court in some of the cases referred to supra on the impugned issue of existence of incriminating material found during search for framing addition in respect of unabated assessment we find that as on date, the issue is squarely covered in favour of the assessee in Continental warehousing corporation. - Decided in favour of assessee.
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2022 (2) TMI 873
Validity of Reopening of assessment u/s 147 - Unexplained cash credit u/s.68 - share application money received in cash - HELD THAT:- As per section 147, the AO has reasons to believe that any income liable to tax has escaped assessment for any assessment year, then he can issue notice under section 148 after satisfying section 149 which prescribed time limit for issuance of notice and quantum of escaped income. But in the present case, the AO has made an observation that no accrued income is offered to tax against bank deposits by the assessee. Further, the AO has not quantified what extent of income has escaped from taxation relevant to the assessment year 2008-09, whereas addition made by the AO are on account of share application money received and unsecured loan availed by the assessee, which are not formed in the reasons recorded by the AO. Hence, the reasons recorded does not satisfy provisions of section 148 which says AO has reasons to believe that there is escapement of income. Thus reopening of assessment is bad in law and therefore we quash reassessment order made by the AO. Consequently, grounds of appeal of the assessee are allowed on the preliminary issue.
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2022 (2) TMI 872
Late payment of employees contribution to PF and ESI - Payment after the due date prescribed but, paid on or before the due date of filing of the income-tax return/s 139(1) - HELD THAT:- Identical issue had come up before the Tribunal in the case of M/s Adama Solution P. Ltd[ 2021 (10) TMI 621 - ITAT DELHI] assessee admittedly has deposited the employees' contribution to PF ESI before the due date of filing of the income tax return, therefore, CIT(A) is not justified in sustaining the adjustment made by the A.O-CPC on account of belated payment of employees' contribution to PF and ESI. Since the assessee, in the instant case, has, admittedly, deposited the employees contribution to PF and ESI before the due date of filing of the return, therefore, we hold that the CIT(A) is not justified in sustaining the addition made by the AO on account of late payment of employees contribution to PF and ESI under section 36(1)(va) - Accordingly, the order of the CIT(A) is set aside and the grounds raised by the assessee are allowed.
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2022 (2) TMI 871
Cumulative figures of provisions for various liability of earlier years - CIT(A) allowed the assessee's appeal by directing the Ld. A.O. to delete the addition on the ground that this amount was not charged to the P L account and in fact represented cumulative figure of provisions for various liability of earlier years - HELD THAT:- CIT(A) has correctly allowed the appeal by directing the Ld. A.O. to reduce a sum of ₹ 34,07,60,000/-, as the Ld. A.O. has wrongly taken the figure of ₹ 1303,77,23,000/- instead of ₹ 1337,84,83,000/-. In view of above facts, we do not find any infirmity in the order of the Ld. CIT(A) and therefore the same is upheld by dismissing the appeal of the revenue.
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2022 (2) TMI 870
Failure to pay the employees' contribution of ESI PF within the prescribed due date under the relevant Statute as per section 36(1)(va) - scope of amendment - assessee has deposited employees' contribution towards ESI and PF though with the delay of few days from the due date mentioned in the respective Statutes, however, the same was deposited well before the due date of filing of return of income u/s. 139(1) - HELD THAT:- It is a consistent position across various Benches of the Tribunal including Chandigarh Benches that the amendment which has been brought in by the Finance Act, 2021 shall apply w.e.f. assessment year 2021-22 and subsequent assessment years and the impugned assessment year being assessment year 2017-18, the said amendment cannot be applied in the instant case. Therefore, considering the entirety of facts and circumstances of the case and following the decisions of various High Courts as well as Coordinate Benches of the Tribunal the addition made by way of adjustment while processing the return of income u/s. 143(1) so made by the CPC towards the deposit of employees' contribution towards ESI and PF paid before the due date of filing of the return of income u/s. 139(1) of the Act, is hereby directed to be deleted. - Decided in favour of assessee.
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2022 (2) TMI 869
Disallowance of interest income earned by staff advance claimed to be eligible for deduction u/s 80P - HELD THAT:- As decided in own case [ 2020 (12) TMI 1313 - ITAT CHENNAI] Assessee s Society has existed only for the members of the Telecom Employees Co-operative Society and not for the benefit of the staff of the Telecom Employees Co-operative Society. The Telecom Employees Cooperative Society is an altogether different from the staff of the Assessee. Therefore, the claim made by the Assessee u/s.80P of the Income Tax Act, 1961 is not an eligible claim and therefore the Assessing Officer as well as the learned Commissioner of Income Tax (Appeals) rightly denied the claim of the Assessee u/s.80P. Disallowance of interest income earned from FDs and Trusts, which was treated as income from other sources - HELD THAT:- As decided in own case[ 2020 (12) TMI 1313 - ITAT CHENNAI] case of the Assessee is that the Assessing Officer has treated the interest income earned by the Assessee has income from other sources and estimated the expenditure only. In the Assessment Order, the Assessing Officer has not properly considered the expenditure incurred by the Assessee to earn the interest income and simply estimated the interest expenditure. In our view, it is not correct. Thus we set aside the order passed by the learned Commissioner of Income Tax (Appeals) on this count and remit back the matter back to the Assessing Officer to adjudicate the issue afresh in accordance with law de novo. Disallowance of depreciation - AO has noted that the assessee has claimed depreciation on certain items of additions made to the fixed assets like furniture and fittings and computers - since the assessee was not able to produce any evidence in respect of additions to the fixed assets, the Assessing Officer disallowed the claim of depreciation - CIT(A) confirmed the disallowance on the ground that the assessee has not furnished any evidence even during the course of appellate proceedings - HELD THAT:- Before us also, the assessee has not produced any evidence in respect of the items of additions made to the fixed assets like furniture and fittings and computers. In view of the above, the disallowance of depreciation confirmed by the ld. CIT(A) stands sustained. Thus, the ground raised by the assessee is dismissed. Disallowance of repair and maintenance - Assessee was not able to produce any proof in respect of repair and maintenance expenses - HELD THAT:- Before us also, the assessee has not produced any evidence in respect of the expenses towards repair and maintenance claimed to have incurred. In view of the above, the disallowance of repair and maintenance charges confirmed by the ld. CIT(A) stands sustained. Thus, the ground raised by the assessee is dismissed. Disallowance u/s 40a(ia) - TDS on professional and technical services - HELD THAT:- As assessee has not produced any documentary evidence in respect of the TDS deduction made towards payment of professional and technical services as well as payment to contractors. In view of the above, the disallowance made under section 40a(ia) of the Act and confirmed by the ld. CIT(A) stands sustained. Thus, the ground raised by the assessee is dismissed. Disallowance of land tax as business expenditure - HELD THAT:- Before us, the ld. Counsel for the assessee was unable to establish that the expenses was incurred wholly and exclusively for the purpose of business of the assessee. In view of the above, we find no infirmity in the order passed by the ld. CIT(A). Assessee appeal partly allowed,
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2022 (2) TMI 868
Revision u/s 263 by CIT - direction to the AO to compute income of the appellant Trust without allowing exemption u/s. 10(23C)(iiiae) - Whether in the absence of any receipt from any hospital or other institution for the reception and treatment of persons suffering from illness, the allowability of exemption u/s. 10(23C)(iiiae) of the Act is prima facie, erroneous and prejudicial to the interest of the Revenue ? - Whether 'other income' of a philanthropic entity is eligible for deduction u/s. 10(23C)(iiia e) ? - HELD THAT:- There is no requirement of provision Section 10(23C)(iiiae) of the Act that the income should be earned from such philanthropic activity, rather it is otherwise that the institution/Trust has done such an activity purely for charitable/philanthropic purposes and under such circumstances expectation of income from such activity will be against the spirit of the aforesaid statutory provision. There is no allegation that the institution is doing any activity other than the aforesaid medical dispensary. The annual income of the appellant Trust is out of the interest income from the investment has been made of surplus lying with it. However, there is no allegation that such surplus is applied for any purpose other than the charitable activity. Now, the only allegation is that the appellant Trust has applied only 12% of its receipts and accumulated 88%. We find that under the provision of Section 10(23C)(iiiae) of the Act, there is no limit prescribed for application of receipts and accumulation of receipts. Appellant Trust is within its rights to accumulate the receipts as per its requirement. It had been explained by the assessee Trust to the Ld. CIT(E) that the surplus of investment was being accumulated for spending in future years for the objects and purposes of the Trust like building of hospital, nursing home or any other similar medical institution. All the conditions as prescribed u/s.10(23C)(iiiae) of the Act, have been fulfilled by the appellant Trust and there is no allegation that the appellant Trust is involved in any other activity for profit or does not exist for philanthropic purposes. Even in this case, all the facts are on the file, therefore there was no need for any further investigation by the A.O. as alleged by the Ld. CIT(E). The action of the Ld. CIT(E) in directing the A.O. to disallow the exemption granted u/s. 10(23C)(iiiae) of the Act was not justified - Appeal of the appellant Trust stands allowed.
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2022 (2) TMI 867
Addition on accounts of transfer of land - whether Section 50C is applicable or not in the case of compulsory acquisition? - Land of the assessee was acquired by the NHAI and the transfer is by compulsory acquisition - HELD THAT:- As decided in SRI JUSTICE B. SUBHASHAN REDDY (HUF) HYDERABAD [ 2020 (7) TMI 623 - ITAT HYDERABAD] set aside the order of the Ld. CIT(A) and direct the Ld. A.O. to delete the addition made invoking the provisions of section 50C of the Act in the case of both the assessee. Shortage of coal and shortage of imported coal - HELD THAT:- In the case of imported coal, the A.O. could have, similarly examined the import bills, dates of payments, dates of shipment to find out the exact quantity of coal imported by the applicant along with the opening stock, etc. These and similar facts could have led to a correct fact finding related to the purchase, consumption and stock of coal. Deprived of any fact, it is difficult to accept the AO's action which appear to be based on his own whims. Whims cannot be a ground for making addition to the income of the appellant. The additions made by the A.O. to the tune of ₹ 7.41 crores and ₹ 16.36 lakh on account of disallowance of shortage of coal at 27,426.39 MT of coal and 170.91 MT of imported coal is directed to be deleted. Appeal filed by the Revenue is dismissed.
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2022 (2) TMI 866
Validity of Assessment u/s 153C - Whether incriminating material found during the search? - HELD THAT:- The original assessment u/s.143(3) of the Act was completed on 09.03.2017 and the assessment was framed and business loss was determined subsequent to search notice u/s.153C was issued and served on the assessee. We observed from the notice u/s.153C of the Act that the issues raised in the notice and the additions made by the AO in assessment order are not the same, in the Assessment Order AO analysed the financial statements and disallowed certain expenditures which according to the AO should have been charged to work-in-progress accordingly, he made addition. After careful consideration of the order passed by the Ld.CIT(A) and Ld.CIT(A) gave a finding that the addition made by the Assessing Officer in the Assessment Order are not based on any incriminating material found during the search it is in line with the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Continental Warehousing All Cargo Global logistics [ 2015 (5) TMI 656 - BOMBAY HIGH We do not find any reason to interfere with the finding of the Ld.CIT(A) as per which Assessing Officer has not made the addition based on any incriminating material found during search. Therefore, ground raised by the revenue is dismissed.
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2022 (2) TMI 865
Rectification of mistake - Mistake apparent in exercise jurisdiction u/s. 254(2) - Tribunal overlooked the judgment of the jurisdictional High Court in the case of Deepak Extrusions (P.) Ltd. 2017 (3) TMI 1257 - KARNATAKA HIGH COURT] - HELD THAT:- The judgment is of no assistance to the assessee. Failure to consider a decision or fact relied upon by a party to the appeal may not amount to a mistake apparent from the record so as to attract the provisions of section 254(2) of the Act. Considering and discussing such decision or fact by the Tribunal in its order and arriving at a conclusion based on the same cannot be said to be a mistake apparent on the record warranting any rectification by the Tribunal in exercise of its powers u/s. 254(2) - See MC DOWELL AND COMPANY LTD. [ 2008 (3) TMI 301 - KARNATAKA HIGH COURT] Since we have observed that the judgment relied on by the ld. counsel for the assessee in the case of Deepak Extrusions (P.) Ltd. (supra) is not applicable to the facts of the assessee s case, the Supreme Court judgment in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd., [ 2008 (9) TMI 11 - SUPREME COURT] is of no assistance to the assessee. The scope of rectification is confined to mistake apparent on the face of the record and not a mistake with regard to debatable questions, where a conscious decision has been taken. Reference may be made to the judgment of Hon ble Supreme Court in the case of Deva Metal Powders (P.) Ltd. v. Commissioner, Trade of Tax, U.P., [ 2007 (12) TMI 221 - SUPREME COURT] In the present case, a reading of the application itself shows that instead of pointing out a mistake apparent on record, the ld. AR attempts to argue out a case for review or re-writing of the order of the Tribunal. The entire arguments of the ld. AR was not to point out any obvious or patent mistake to be rectified, but to make out a case for re-argument, which cannot be permitted u/s. 254(2) - Decided against assessee.
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2022 (2) TMI 864
Estimation of profit on the bogus purchases - CIT(A) restricted the addition to the extent of 25% of purchase - HELD THAT:- We find that neither the Assessing Officer nor the CIT(A) tried to find out the profit element embedded in such transactions. Therefore, in absence of any material the conclusion to arrive that profit margin in the impugned transaction is 25%, the addition of 25% is not justified. The assessee has shown its profit @ 6.67%. It is settled law that even if the transaction of disputed purchases is not fully verified, the revenue authority are not entitled to tax the entire transaction, rather the profit element embedded in such transaction is to be tax. In our view, when the assessee himself has shown profit at 6.67%, the disallowance @ 8% of such disputed purchases would meet the possibility of revenue leakage. Therefore, we direct the Assessing Officer to restrict the purchase @ 8% on both the disallowances - Appeal of the assessee is partly allowed.
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2022 (2) TMI 863
Addition u/s 68 - unsecured loans treated as unexplained credits - as per AO sole objective of providing accommodation entries and the creditworthiness of these parties along with the genuineness of the transactions have not been proved - directors of these companies were neither produced by the assessee before the AO nor did they present themselves for personal deposition in response to the summons issued u/s. 131 - HELD THAT:- As gone through the details of all the 14 companies which have lent the amounts to the assessee. We have also gone through the details filed by various loan parties before the revenue authorities. After going through the entire details, we hold that the assessee has failed to undisputedly prove the genuineness of the loans or the creditworthiness of the parties. Revenue has also failed to conduct complete enquiries to bring much needed evidences on record. Hence, in the interest of justice to both the parties, we deem it proper to remand the matter to the file of the Assessing Officer with instructions to the Supervisory Officers to act in accordance with the provisions of the Income Tax Act in conducting the enquiries. Needless to say, the revenue shall follow principles of natural justice while concluding the proceedings. Appeal of the assessee is allowed for statistical purposes.
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2022 (2) TMI 862
Disallowing interest payment on loan - Assessee failed to provide proofs and evidences thereof to support the utilization of such loan so that the interest paid can be treated as an eligible deduction - Assessee had failed to furnish justification as to on which account the interest was actually incurred in the year and also failed to submit the utilization of loan and why such interest was not paid or credited to the account of Matrix Cellular Services International in earlier years - HELD THAT:- As was the case during assessment proceedings, even during the appellate proceedings the assessee has failed to establish the nexus of the loan taken with the business - As submitted that the assessee company has earned interest income on loan and advances - interest on such loans and advances is less than 5%, whereas interest has been paid almost @10% on the loan taken - assessee has also failed to demonstrate the fund flow for paying of the loan on taking the loan from director. No cogent evidence has been submitted as to how the loan taken as well as the loan given was for business purposes. Payment of interest on the loans which have not been proved to be for business purpose and the waiver of the loan are not interrelated but are mutually exclusive In the instant case, the expenditure of interest for which the loan has been received has not been shown to be for the purpose of the business. We are not swayed by the observation of the Assessing Officer that earlier year, no interest has been paid but interest has been paid in the current year only. Even, before us, no evidences have been provided to prove that the loan received earlier was utilized for the business purpose which makes the interest paid or payable allowable under the provisions of Section 36(1)(vii). The arguments that there was no outgoing fund on the contrary, the assessee was a net gainer in form of waiver cannot be considered as a tenable claim.- Decided against assessee.
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2022 (2) TMI 861
Revision u/s 263 by CIT - Wrong Capital gain computation as AO not examined the transaction by the angle of section 50C - asset which was contributed as a capital contribution by a partners to a firm where he is a partner - scope of provision of section 45(3) and 50C of the Act are separate and independent and capital gain is to be determined in accordance with the provision of section 50C of the Act as has been clearly held by ld. PCIT while exercising his power under section 263 of the Act issued show cause notice to the assessee - HELD THAT:- No doubt that the transaction of capital contribution was examined by the AO. However, it is a matter of fact that there is no reference in the assessment order about the examination of issue. As recorded above that Hon ble Jurisdictional High Court in case of Nirma Chemical works [ 2008 (2) TMI 373 - GUJARAT HIGH COURT] held that when assessing officer after making due inquiries had adopted one of the view and granted partial relief, merely because Commissioner took a different view of the matter, it would not be sufficient to permit Commissioner to exercise his powers under section 263. The stand of the assessee before the AO as well as before the ld. PCIT is that the assessee has contributed three pieces of land as his contribution in the partnership firm, thus, keeping in view, the decision of Co-ordinate Bench in Sarrangan Ashok vs. ITO [ 2019 (8) TMI 1527 - ITAT CHENNAI] and Mumbai Bench in ACIT vs. Amartara (P) Ltd. [ 2020 (4) TMI 222 - ITAT MUMBAI] wherein it was held that where the partner transferred land as a capital contribution to its partnership firm and the transaction falls under the scope of section 45(3) of the Act, which itself is a deeming section, another deeming section prescribed in section 50C of the Act could not be extended to determine the value of consideration. Thus, in view of the aforesaid legal decisions, in our considered view the view taken by the AO in accepting the capital gain/loss on capital contribution of (03)three pieces of land is not erroneous. Therefore, the twin condition as enunciated under section 263 of the Act is not made out in the present case, thus, the order passed by the ld. PCIT is set-aside, accordingly, grounds of appeal raised by the assessee are allowed.
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2022 (2) TMI 860
Claim of deduction u/s 54/54F - AO denied the claim of the assessee on the ground that the said property was not completed even as on 04.03.2016 - HELD THAT:- We find that the ld. CIT(A) has rightly followed the decision of the Hon ble Jurisdictional High Court in the case of CIT v. V.R. Karpagam [ 2014 (8) TMI 899 - MADRAS HIGH COURT] wherein as referred to the decision taken by case of CIT v. Smt. K.G. Rukminiamma [ 2010 (8) TMI 482 - KARNATAKA HIGH COURT] to hold that the assessee is eligible for the deduction claimed under section 54F of the Act. The ld. DR could not controvert the above decisions of various High Courts - Decided against revenue.
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2022 (2) TMI 859
Deduction u/s 80IB(10) - pro-rata deduction - few of units satisfying the conditions - HELD THAT:- Respectfully following the decisions of CIT v. Arun Excello Foundations (P.) Ltd. 2012 (10) TMI 1216 - MADRAS HIGH COURT] as well as decision of the Coordinate Benches of the Tribunal in the case of Elegant Estates [ 2016 (1) TMI 502 - MADRAS HIGH COURT] the ld. CIT(A) has rightly directed the Assessing Officer to work out the pro-rata deduction in respect of units satisfying the conditions under section 80IB(10) of the Act and allow the claim of deduction. Thus, we find no infirmity in the order passed by the ld. CIT(A).
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Customs
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2022 (2) TMI 841
Seeking release from preventive detention - COFEPOSA - Smuggling - Baggage Rules - drones, goods, cigarettes and certain other items in commercial quantity by six passengers on different flights - Illegal detention of respondents - seeking a direction in the nature of habeas corpus for the production of her son - detention order was not served upon the petitioner s son in a language that he understands - HELD THAT:- The petitioner as well as the respondents have premised their contentions essentially on Article 22(5), namely the constitutional mandate for communicating the grounds of detention to a detenu and affording him the opportunity of making a representation against a preventive detention order. While several judicial precedents have been cited by the petitioner on the law on communicating the grounds of detention, the legal position is best crystalized in various decisions. Reliance placed in the case of HARIKISAN VERSUS STATE OF MAHARASHTRA [ 1962 (1) TMI 58 - SUPREME COURT] , the Hon ble Supreme Court took the view that since the High Court had not returned a finding that the detenu knew enough English, the High Court had committed an error in holding that only because English was the official language of the State of Maharashtra, supplying the grounds of detention in English language was sufficient compliance of the mandate of Article 22(5). A detenu has a fundamental right under Article 22(5) that the grounds on which a detention order has been made against him, be communicated to him as soon as may be; and that he be afforded an opportunity of making a representation against the detention order at the earliest - Interpreting the scope and operation of this fundamental right, the Hon ble Supreme Court has laid down that communication , within the meaning of Article 22(5), means imparting to the detenu sufficient knowledge of the grounds on which a detention order has been made; so that the detenu is in a position to effectively make a representation against the order. More specifically, the Hon'ble Supreme Court has said that oral explanation or oral translation of the grounds of detention would not amount to communicating the grounds to a detenu - Merely because a detenu is able to sign or write a few words in English or any other language, does not mean that the detenu is conversant with the language , since the detenu may yet not be able to effectively understand the contents of the grounds of detention and the relied-upon documents, to be able to make an effective representation against the detention order. Merely because Harmeet Singh signed several documents in English and was able to string a few words into sentences, evidently on the urging of the concerned officers, is no basis to impute to him sufficient working knowledge of the English language - to also best serve the legal interests of the detaining authority, it should be the preferred course of action in all cases, that on the mere asking of a detenu, a complete set of detention order along with the grounds of detention as also all relied-upon documents, should be furnished to a detenu in the language in which the detenu requests. It would be preferable that the detaining authority should take such request in writing from a detenu and must formally serve upon the detenu the translated papers as requested expeditiously, against acknowledgement, to obviate challenges such as the present one, which we find are frequently made. In the present case, detention order was not served upon the petitioner s son, detenu Harmeet Singh, in a language that he understands. Accordingly, the impugned detention order falls foul of the constitutional mandate contained in Article 22(5) of the Constitution as interpreted by the Hon ble Supreme Court - As a sequitur, detenu Harmeet Singh, son of the petitioner Ms. Jasvinder Kaur, is directed to be released from preventive detention forthwith, unless required in any other case. The present habeas corpus petition is allowed and disposed of.
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2022 (2) TMI 840
Principle of natural justice - provisional release of goods - reexport of subject goods - direction to pay the demurrage, detention, storage charges in respect of the subject goods - Section 110(A) of the Customs Act, 1962 - HELD THAT:- It appears from the materials on record that the writ applicant imported a consignment claiming that to be one of Naphtha. It is the case of the writ applicant that the port of loading was at Oman and the port of discharge was to be at any Indian port - The consignment reached the port at Kandla. The DRI expressed some doubt as regards the declaration made by the writ applicant that the goods imported is Naphtha. The DRI did not permit the writ applicant to clear the goods. The DRI thought fit to draw the samples of the goods for the purpose of getting them tested at the Laboratory. It is the case of the DRI that if the goods imported is not Naphtha then the same may be liable to be confiscated. It also appears from the materials on record that at one point of time the goods were cleared and ordered to be released by the respondent No.1 upon the writ applicant furnishing a bond of the amount equivalent to the value of the goods. The bond was also furnished, however, the DRI asked the Commissioner not to give effect to his order of release as the DRI wanted the samples to be further tested - the picture that emerges as on date is and more particularly, considering the test reports that prima facie, the goods is Naphtha. At this stage, the writ applicant is only concerned with getting his goods released. Since there are test reports indicating the goods to be Naphtha, let the goods be released at the earliest on the condition that the writ applicant shall furnish a fresh bond of the amount equivalent to the value of the goods. The bond shall be furnished to the respondent No.1 and upon furnishing such bond, the respondent No.1 shall permit the writ applicant to take delivery of the goods. It is clarified that if the DRI has any further doubts in the matter, it is always open for the DRI to proceed further with its inquiry in accordance with law. For the present, we are only concerned with the goods. Let the goods be released upon the writ applicant furnishing a bond of the amount equivalent to the value of the goods at the earliest - this writ application stands disposed of.
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2022 (2) TMI 839
Smuggling - foreign origin black pepper - jurisdictional infirmity - whether the learned Magistrate have correctly assumed proper jurisdiction while passing the original impugned order under Section 451/457 Cr.P.C. or the same have been passed without jurisdiction? - HELD THAT:- The provision of Section 451 Cr.P.C. empowers a Criminal Court to order for custody and disposal of property pending trial in certain cases and when such property was produced before the said Court, an appropriate order may be passed for the custody of such property. Coming to the Customs Act, 1962 what is seen is that there are specific provisions for searches, seizure and arrest under chapter XIII of the Act which empowers the proper officer to resort to the provisions of Sections 100 through Section 110-A for the same. However, for the limited purpose of this matter, the relevant provision would be Section 110 which speaks of seizure of goods, documents and things and Section 110-A which provides for release of goods, documents and things seized pending adjudication - In a proceeding under the Customs Act, it is but natural to expect that the provisions of the said Act would be applicable to enable the concerned party to resort to for specific directions or relief as the case may be. When in Section 110-A it has been specifically laid down that the proper officer is empowered to release the seized goods to the owner on taking a bond from him, then there is no necessity to approach the Magistrate to employ Section 451 of the Cr.P.C. for the purpose of release of such goods. It may be mentioned that the Customs Act, 1962 is a special Act while the Code of Criminal Procedure deals with the general law. It is also well settled that the provisions of the Special Act will override the provisions of the general law as in the case in hand. The principles of the latin maxim of generalia specialibus non derogant , i.e., general law yields to special law should they operate in the same field on same subject will be applicable here. This Court finds that the learned Magistrate has acted without jurisdiction while passing the impugned order dated 20.07.2021 and thus, an abuse of the process of the court has been occasioned. The same is hereby set aside and quashed - Petition disposed off.
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Corporate Laws
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2022 (2) TMI 835
Seeking restoration of the name of the company in the Register of Companies - Section 252(3) of the Companies Act 2013 - HELD THAT:- It is seen from the documents available on record that the company was carrying on its business and was operative at the time of its name struck off from the register. The assumption of Registrar of Companies that the company was not in operation was erroneous. Besides that it is seen that the appeal has been filed within the stipulated period prescribed under Section 252 of the Act. Needless to say, that Income Tax Department and ROC have raised no specific objection against the restoration of the Company subject to filing of statutory returns with fees as prescribed. Moreover, nobody would be prejudiced by the restoration of the name of the Company. The restoration of the running company despite its default is clearly in the interest of the company, although, there is a delay in filing the annual returns as well as financial statement before the RoC, however, the same can be compensated by way of requisite late filing fees - non- filings of the annual return as well as balance sheet before the RoC were only inadvertent in nature and not willful - the impugned order passed by the RoC, whereby the name of the present appellant was struck-off from the Registrar of the Companies is hereby set aside - appeal allowed.
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Insolvency & Bankruptcy
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2022 (2) TMI 838
Claim of refund for the assessment year 2019-2020 from Income Tax Department - rejection of refund holding that it is not within the jurisdiction to direct Income Tax Department to give refund - waterfall mechanism as per Section 53 of the IBC - HELD THAT:- There is no illegality committed by the Ld. Adjudicating Authority while passing the impugned order, in view of provisions of Section 245 of the Income Tax Act, 1961. Therefore, we do not need to interfere in the impugned order. The impugned order passed by the Ld. Adjudicating Authority (National Company Law Tribunal), Indore Bench at Ahmedabad Court 1 is hereby affirmed. There is no merit in the Appeal. The Appeal is hereby dismissed and the Appellant is further directed to move before the Income Tax Department who are competent to adjudicate the matter.
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2022 (2) TMI 837
Seeking necessary declaration that the registered trademark RATHI is not an asset of the Corporate Debtor - declaration also sought to the corporate debtor, through resolution professional that usage of the registered trademark RATHI in any manner is illegal and beyond his authority under the provisions of the Insolvency Bankruptcy Code - HELD THAT:- It is clear from the pleadings that the Respondent has never claimed that the corporate debtor is the owner of the trademark RATHI and same was never made the part of the asset of corporate debtor, hence, we believe that there is no need to pass any direction with respect to registered trademark RATHI is not an asset of the Corporate Debtor. The applicant further sought the direction that usage of the registered trademark RATHI by the corporate debtor through resolution professional in any manner is illegal and beyond his authority under the provisions of the Insolvency Bankruptcy Code, to which it is submitted by the respondent that usage of the trademark cannot be restricted by the applicant as the license was granted to the corporate debtor without any condition for usage and furthermore, similar relief is sought by the applicant in civil suit (Comm) No. 151 of 2020 and same is pending for adjudication before Hon'ble Delhi High Court. It is pertinent to mention that Hon'ble Delhi High Court only gave suggestion that while dealing with the matter concerning corporate debtor, the NCLT should take into account the submissions of the parties given before Hon'ble Delhi High Court. In fact, there is no direction/order of the Hon'ble Delhi High Court to this Tribunal to decide the ownership issue of the trademark RATHI in its order dated 16.10.2020 passed in Civil Suit (Comm) 151 of 2020. There are no merits in the present application - application dismissed.
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2022 (2) TMI 836
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- Mere plain reading of the provision under section 7 of IBC shows that in order to initiate CIRP under Section 7 the applicant is required to establish that there is a financial debt and that a default has been committed in respect of that financial debt. That while dealing with an application under section 7 the Adjudicating Authority is not required to consider the question of dispute between the parties as long as the 'debt' and 'default' is established. Corporate Debtor contention of making T-Series a party has failed as no settlement agreement has been placed on record and even if for the sake of argument, if it is considered, still the same is not binding upon the Financial Creditor - the documents submitted by the Financial Creditor and the Corporate Debtor clearly substantiate the Financial Creditor's claim that the Corporate Debtor has defaulted on repayment of loan amount. After giving careful consideration to the entire matter, hearing the arguments of the parties and upon appreciation of the documents placed on record to substantiate the claim, this Tribunal admits this petition and initiates CIRP on the Corporate Debtor with immediate effect - the present application is complete in all respect and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been default in payment of the financial debt. Application admitted - moratorium declared.
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2022 (2) TMI 834
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- An application under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence or existence of default. What is material is that the default is for at least ₹ 1 Lakh. In view of Section 4 of the Code, the moment default is of Rupees one lakh or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. The corporate debtor has failed to show that there is no debt or default in existence so as to avoid the provisions of the Code. In the facts it is seen that the applicant clearly comes within the definition of Financial Creditor. The material placed on record further confirms that respondent has committed default in repayment of the outstanding financial debt. On a bare perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same, he evidence produced by the applicant company remained un-rebutted - the present application is complete in all respect and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been default in payment of the financial debt. In terms of Section 7(5)(a) of the Code, the present application is admitted - Moratorium declared.
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2022 (2) TMI 833
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditors - existence of debt and dispute or not - HELD THAT:- It is clear from the Affidavit and NEFT Advices submitted that the CD has paid ₹ 5,48,977.00 including the last payment of ₹ 3.00 lacs made on 08/07/2021. The leftover claimed amount of invoice of ₹ 33,282.00, not related to them, is also less than ₹ 1.00 lac. The OC has not objected to the above submission of the CD - It is also observed that the OC has made all attempts to continue the cases despite the receipt of the claimed amount. The action of the OC is not appreciated. Application dismissed.
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Service Tax
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2022 (2) TMI 858
Supply of manpower services or job work contract - suppression of facts or not - filing of incorrect ST-3 returns - filing of ST-3 returns for the period between April 2013 to September 2013 after the due date - Section 70(1) of the Finance Act 1994 and Rule 7 of the Service Tax Rules 1994 - benefit of N/N. 25/2012-Service Tax dated 20 June 2012. Whether the appellant is a job worker within the meaning of the exemption notification dated 20 June 2012 or is merely a supplier of contract labour for the work of the establishment? - HELD THAT:- The substratum of the agreement between the appellant and Sigma deals with the regulation of the manpower which is supplied by the appellant in his capacity as a contractor. The fact that the appellant is not a job worker is evident from a conspicuous absence in the agreement of crucial contractual terms which would have been found had it been a true contract for the provision of job work in terms of Para 30(c) of the exemption notification. The decisions of CESTAT relied upon by the appellant in OM ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2016 (10) TMI 1234 - CESTAT MUMBAI ] and BHAGYASHREE ENTERPRISES, SONAWANE INDUSTRIAL VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2017 (3) TMI 786 - CESTAT MUMBAI ] also do not help their submissions as they are fact-specific and based on a reading of the contracts in those cases. In this case, though ostensibly, the agreement contains a provision for payment on the basis of the rates mentioned in Schedule II, the agreement has to be read as a composite whole. On reading the agreement as a whole, it is apparent that the contract is pure and simple a contract for the provision of contract labour. An attempt has been made to camouflage the contract as a contract for job work to avail of the exemption from the payment of service tax. The judgment of the Tribunal does not, in the circumstances, suffer from any error of reasoning. There is no merit in the appeal - Appeal is dismissed.
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2022 (2) TMI 857
Non-payment of service tax - Business Auxiliary Services - reimbursable expenses - non-discharge of service tax liability on the gross amount received from their clients - financial years 2006-2007 to 2010- 2011 - time limitation - HELD THAT:- The appellant has discharged service tax on the amounts received by them as management fee. The demand raised in SCN are only reimbursements and amounts received under the head sale of goods There is no doubt that the amount received under the head sale of goods cannot be subjected to levy of service tax. In para 22.8 of the impugned order, the adjudicating authority also has taken this view wherein he has stated that sale of goods is not covered under service in terms of the Finance Act, 1994 and hence not liable to levy of service tax. The demands confirmed by the adjudicating authority as seen from the show cause notice is on redemption receipts and reimbursement receipts. In para 13 of the impugned order it is observed by the adjudicating authority that the terms redemption receipts and reimbursable expenses are interchangeably used by the appellant in their accounts representing the charges received in the form of cash rebate, gift items and other expenses on behalf of their clients. It is thus clear that these are receipts reimbursed for the expenses incurred for providing the services - the finding by the adjudicating authority is confined to the alleged mark up on the expenses incurred being 15% of the cost and shown as management fee in the table of the agreement. The appellant has collected and accounted the service tax on variable management fee also. Department who has conducted extensive scrutiny of the accounts do not have a case that the service tax collected under these invoices are not deposited to the Government. There is no such allegation in the show cause notice. The Department has accepted and admitted in the show cause notice as well as impugned order that appellant has discharged service tax on management fee. Further, the table of show cause notice itself describes the amounts on which tax is demanded as reimbursements and not as management fee - the entire demand is raised on costs/expenses incurred by the appellants for providing the Business Auxiliary Service which was reimbursed by the clients. The Hon ble Apex Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] has categorically held that prior to 14.05.2015 reimbursable expenses for providing taxable service are not includable in the assessable value. The demand is raised on reimbursable expenses and that these cannot be included in the taxable value for the disputed period. The decision of the Hon ble Apex Court in Intercontinental Consultants and Technocrats Ltd. has been consistently followed by the Tribunal. Applying the decision of the Apex Court in the above case, it is held that the demand cannot sustain. The issue on merits is answered in favor of appellant and against the Revenue. Time Limitation - HELD THAT:- The Revenue has not been able to establish any evidence of positive act on the part of the appellants for willful suppression or misstatement of facts. The demands in the show cause notice are prepared after scrutiny of the accounts, balance sheet, service tax returns of the appellant. There is no evidence to show that the appellant had suppressed receipts in their accounts. Moreover, the issue as to whether reimbursable expenses are includable in the taxable value is an interpretational in nature and has travelled upto the Apex Court. For these reasons, the demand raised for the extended period cannot sustain. The appellant succeeds on the ground of limitation also. The demand of service tax cannot sustain - Appeal allowed - decided in favor of appellant.
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2022 (2) TMI 832
Liability of service tax - RCM - contention of the appellant that service tax was payable in the present case by RIL as the service recipient of the services provided by Aker Malaysia under the reverse charge mechanism and not by treating the appellant as a service provider was rejected - applicability of reverse charge mechanism for the period prior to 01.07.2012, if the foreign service provider had established a fixed establishment in India from which the service was provided - location of the service provider - Place of Provision of Service Rules was India, since the Project Office in India was the establishment most directly concerned with the provision of service - period from February 2010 to April 2014. HELD THAT:- The Principal Commissioner has held that the location of the service provider would be India in view of clause (iii) of rule 2(h)(b). According to the Principal Commissioner India was the establishment most directly concerned with the provision of the service . This conclusion is factually not correct. The contract would show that Aker Malaysia was the only establishment concerned with the provision of service and Aker India had no connection with the provision of services. The true test for determining this issue would be who, amongst the various establishments involved in the execution of a service contract, would be liable to be sued for any breach of the contract. Aker India did not even exist when the contract dated 15.09.2009 was executed between Aker Malaysia and RIL and Aker India was not even a party to the said contract. Service provider is one who is contractually obliged to render services - it may be useful to refer to the decision of the Delhi High Court in VERIZON COMMUNICATION INDIA PVT. LTD. VERSUS ASSISTANT COMMISSIONER, SERVICE TAX, DELHI III, DIVISION-XIV ANR. [ 2017 (9) TMI 632 - DELHI HIGH COURT] , wherein it was held that the identity of the service recipient has to be decided with reference to the contract concerned. Learned counsel for the appellant has submitted that Explanation 4 to section 65B (44) of the Finance Act has to be read together with Explanation 3(b) and if so read, the conclusion would be that though a representational office in any other country is an establishment of the person whom the said office represents (by virtue of Explanation 4), such a representational office is considered as a person distinct and separate from the other establishments of the same person located elsewhere [(by virtue of Explanation 3(b)] - the submission deserves to be accepted as the position that would emerge would be the same as that from the erstwhile section 66A (2), which dealt with different establishments located in different countries as separate persons for the purpose of reverse charge mechanism. A complete perusal of the terms of the contract would show that setting up a support base at Kakinada was not the only or the main element of service that was required to be provided to RIL. Infact Exhibit A talks of 19 deliverables. The contract envisages services required to be provided to RIL, both at the project stage at which stage a support base was required to be set up as well as an ongoing basis when the oil and gas production was to commence. The reference to support base is to a repair yard where tools, spares, parts and testing equipments have to be kept and maintained. It is not in reference to a project office or any fixed establishment . It would not be appropriate to read the word established as establishment - the inevitable conclusion that emerges from the above discussion is that RIL, as the service recipient, was required to discharge service tax liability on a reverse charge mechanism on the services provided by Aker Malaysia to RIL. The order passed by the Principal Commissioner is, accordingly, set aside - appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (2) TMI 856
Violation of principles of natural justice - grant of personal hearing to the Petitioner or not - ex parte Order finalizing the assessment or not - period from 01.04.2011 to 31.03.2012 - HELD THAT:- The notice of hearing was issued on 28 May 2021 calling upon the Petitioner to remain present on 31 May 2021 at 11.00 a.m. The Petitioner requested for time. On 7 June 2021, the Respondents issued another notice and intimated the Petitioner to remain present on 8 June 2021 and 10 June 2021 at 12.00 noon (wrongly mentioned as 12.00 a.m.). The Petitioner applied for adjournment again on the ground that the notice was short notice). The Respondents ought to have given reasonable time to the Petitioner to remain present at the time of assessment. The notices issued by the Respondents further indicate that the first notice was issued after a long gap but a short notice, whereas the second notice was issued to remain present within 48 hours or less - action on the part of the Respondents in not issuing notice granting reasonable time to the Petitioner to remain present and passing ex parte Order is passed in gross violation of principle of natural justice. The proceedings are restored to file before the Respondent No.2 - The Writ Petition is allowed.
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2022 (2) TMI 855
Refund of unutilized CENVAT credit of service tax - input service claimed to have been used by them during the period in question viz., August 2008 to September 2008, October 2008 to December 2008 and January 2009 to march 2009 - claim rejected on the ground that respondent was not registered - HELD THAT:- Admittedly, in the instant case there is no dispute that the respondent fulfilled the condition as set out in Rule 5 of CENVAT Credit Rules, 2004. However, the benefit of refund has been denied to the respondent on the ground that its not registered. Para 3 of the Notification No.5/06 dated 14.03.2006 does not contain any requirement with regard to registration with the department as a condition precedent for claiming CENVAT Credit Rules, 2004. Even assuming that it is so, such an eligibility condition in the absence of any sanction by the Rules cannot be prescribed by way of notification. The question of law involved in this appeal is squarely covered in MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT ] where it was held that Registration not compulsory for refund - Export of software not a taxable service still refund cannot be denied. N o substantial questions of law arise for our consideration in this appeal - Appeal dismissed - decided against Revenue.
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2022 (2) TMI 854
Classification of intermediate goods - Nylon/Polyester Filament Yarn, partially oriented yarn (POY)) and the final goods manufactured by the appellants - N/N. 178/83-CE dated 01.07.1983 - HELD THAT:- The findings in the impugned order, which are apparently based with reference to the earlier Circular No.YRN/2/80 dated 24.09.1980, which has been subsequently clarified by the aforementioned Circular dated 20.02.1990, clarifying that the partially POY/polyester yarn/nylon filament yarn, are dutiable at the appropriate rate of duty as per Notification No.49/83-CE dated 1.3.83 read with amending notification no.181/83-CE and 261/83-CE. Once the duty is held to be chargeable on the yarn as per classification list no.Yarn(intermediate product)/37/83-84, the duty on the final product viz. Polyester/Nylon textured yarn is nil as provided in notification no.178/83-CE dated 1.7.1983. Further, as per test report with regard to the samples of classification list no.Yarn/37/83-84, it has been reported that the samples are not fully drawn and can be further drawn or stretched. Thus, such yarn has characteristics of POY and accordingly, we find that the findings of the court below is vitiated as they have ignored the test report and have used their personal knowledge, without any cogent materials on record. The amount of ₹ 1.25 Crores, deposited vide challan No.148/1 dated 6.10.1986, pending finalisation of the classification list, shall be treated as duty paid and the appellant shall be entitled to Refund or Credit of the same, as per law - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (2) TMI 853
Condonation of delay of 2 years and 300 days in filing a Tax Revision Application - time limitation - Goa Value Added Tax Act, 2005 - HELD THAT:- The provisions of Section 39 of the Act are quite clear in that they provide for a limitation of only 60 days against the order of the Administrative Tribunal. Instead, the applicant instituted this revision application after the delay of 2 years and 300 days. The contention about alleged bonafide belief on the part of the applicant cannot be accepted in the aforesaid facts and circumstances. Rather, it is clear that this revision was filed only after the applicant received the notice for provisional freezing of his account on 05/01/2021. Accordingly, we are satisfied that no sufficient cause has been shown condoning the delay of 2 years and 300 days in this case. From time to time, this matter is adjourned to enable the learned Advocate for the applicant to obtain instructions as to whether the applicants are willing to secure the tax amount or some part. This was to test the bonafide of the Applicant. After several adjournments, the applicant has stated that they are not in a position even to secure the tax or part. Though this is not a consideration for either condoning or not condoning the delay, we think that the entire conduct of the applicant does suggest that the applicant was far from diligent and the proceedings were taken up only to delay or avoid the payment of the tax as determined. The Applicant perhaps carried the impression that the mere pendency of proceedings might delay the action from the tax authorities and took full advantage of this impression to delay the proceedings. Application dismissed.
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2022 (2) TMI 852
Levy of purchase tax at 2% on the value of gold jewellery - it was the case of the petitioner that they had received the goods from three persons for safe custody and displaying in its business premises and there was no purchase attracting liability under section 7A of the TNGST Act - HELD THAT:- In the present case, after verification of the accounts for the years 1996-97 and 1997-98 and memorandum of declaration of deposit and refund of gold ornaments produced by the petitioner, it was found by the assessing officer that the dealer had received gold ornaments to the weight of 1900 grams from 3 persons on 28.11.1996; the receipt of such gold ornaments was entered in the regular stock book at page 47 / Vol.II on 28.11.1996; and the goods so received were sent for conversion and manufacture of new jewels along with the dealer's other purchases of old gold jewels. Further, the contention of the petitioner that the ornaments were received as deposit for show purpose, was not accepted by the assessing officer, taking note of the liberty granted to convert the gold ornaments into new one by melting process. Having regard to the admitted fact that though the petitioner said to have received 1900 grams of gold ornaments from 3 persons for deposit purpose on 28.11.1996, they had not declared the said fact of deposit before the Enforcement wing officials on 07.01.1997 and that, they admitted the entire stock of gold ornaments to be its own stock only at the time of inspection; and no separate stock book was maintained by the petitioner for such deposit, this court finds no reason to differ with the view so taken by the Tribunal - the contention raised on the side of the petitioner that there was no purchase of gold jewellery by the assessee, but only a deposit or loan of such jewellery from the relatives and the same does not attract the levy of purchase tax under section 7A of the Act, cannot be accepted. This court holds that the Tribunal has rightly restored the order of the assessing officer and set aside the order of the appellate authority and hence, the order of the Tribunal does not require any interference - Petition dismissed.
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Indian Laws
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2022 (2) TMI 851
Dishonor of Cheque - Funds Insufficient - acquittal of the accused - main thrust of contention of the present petitioner is that since he has resigned from the company he cannot be made liable for the dishonoured cheque - HELD THAT:- In view of the law laid down in the case of Lalit Kumar Sharma [ 2008 (5) TMI 429 - SUPREME COURT ] that the second complaint do not create any new debt or liability the provisions of Section 141 of the Negotiable Instruments Act which refers every person and consent and connivance attributable on the part of any director should be extended to the present petitioner as liability depends on the role played by a person and not on his designation - the case is at the initial stage any further interpretation regarding the conduct of the present petitioner as also the manner of application of precedents would encourage defaulters to enter into compromise and thereafter resign from the Company. On an appreciation of the factual aspect it is reiterated that this opinion is expressed by this Court as the petitioner has challenged the proceedings at the very inception regarding the maintainability of the proceedings against him - However, if in course of proceedings the petitioner is able to rebut the presumptions so far as the proviso clause of Sub-section 1 is concerned i.e. if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence he would be entitled to an order of acquittal. The stage at which petitioner has approached this Court is premature and as such this Court finds no reason to interfere with the proceedings. Revision application dismissed.
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2022 (2) TMI 850
Dishonor of Cheque - insufficient funds - acquittal of accused - failure to appreciate the evidence in its proper perspective - burden to proof - Section 138/141 of the Negotiable Instruments Act - HELD THAT:- It appears that the learned Magistrate had failed to appreciate the evidence and the presumption under Section 139 of the Negotiable Instruments Act, that the onus lies upon the accused person, who issued the cheques. Therefore, a person who has undisputedly issued the cheques cannot shirk the responsibility when they are dishonoured unless he proves that such cheques were not for discharge of debt or other liability in whole or in part in favour of the payee. The Ld. Magistrate has misplaced the burden of proof. The complaint case has been lodged within the statutory period laid down in Section 142(b) of the Negotiable Instruments Act. As such, the decision arrived at, acquitting the appellant is not legally tenable. The impugned judgment and order is therefore, set aside. The case is remitted to the 8th Court of Metropolitan Magistrate, Calcutta for summoning the complainant and the accused respondent and after giving them an opportunity of hearing pass a fresh judgment in accordance with law on the evidence already on record, preferably within three months from receipt of this order. Appeal allowed.
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2022 (2) TMI 849
Dishonor of Cheque - existence of enforceable debt or not - Issuance of warrant of attachment - HELD THAT:- he earlier order dated 22.03.2016 passed by the executing Court at Rajkot below application Exhibit-15 was quashed and set aside by the coordinate Bench of this Court vide order passed in Special Civil Application No.7417 of 2016 dated 18.11.2016 and the matter was remanded to the executing Court at Rajkot for consideration afresh. The executing Court at Rajkot considered the matter afresh; however, it stood by the conclusion arrived at in its earlier order dated 22.03.2016 by passing the order dated 20.08.2019 below applications Exhibits 11 and 15. The said order dated 20.08.2019 was assailed before this Court in Special Civil Application No.15137 of 2019 and by judgment and order dated 16.10.2019, the subsequent order dated 20.08.2019 passed by the executing Court at Rajkot was quashed and set aside by the Division Bench of this Court. Thus, both the orders dated 22.03.2016 and 20.08.2019 passed by the executing Court at Rajkot below Exhibits 11 15 were quashed and set aside by this Court after recording elaborate reasons. Coming to the proceedings initiated under the NI Act, itis not in dispute that the cheque in question was given as security . The Deed of Undertaking dated 07.04.2016 executed by and between the parties in the presence of the Court Bailiff lays down the terms and conditions of payment. It specifically mentions that the cheque in question has been been given as security and also lays down the conditions as to when the said cheque shall be deposited. It is a settled proposition of law that proceedings under Section 138 of the NI Act would lie only in respect of any enforceable debt . In the case of LALIT KUMAR SHARMA VERSUS STATE OF UP. [ 2008 (5) TMI 429 - SUPREME COURT] the Apex Court held that the second cheque dated 29.07.2000 was issued in terms of the compromise and it did not create a new liability and therefore, the same cannot be said to have been issued towards payment of debt, even if the compromise had not fructified. In the present case also, evidently, the cheque in question was given as security and not in respect of any enforceable debt , which the applicant No.1-Company was required to pay to the respondent-complainant. In paragraph-1 of the complaint filed under Section 138 of the NI Act, the respondent-complainant itself has stated that the cheque in question has been given in view of the compromise arrived at between the parties. Thus, as per the admission of the complainant also, the cheque in question was not issued in respect of any enforceable debt , which the applicant No.1 Company was required to pay to the respondent-complainant. Considering the aforesaid factual aspects and in view of the principle laid down in Lalit Kumar Sharma s case, the impugned proceedings initiated under the provisions of the NI Act deserves to be quashed and set aside. The impugned order dated 18.11.2019 passed by the Court of learned 13th Additional Chief Judicial Magistrate, Rajkot below Exhibit-1 as also the complaint filed by respondent No.2 under section 138 of the NI Act are quashed and set aside - application allowed.
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