TMI Tax Updates - e-Newsletter
February 7, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Levy of penalty at the rate of 200% of the tax (GST) payable - Detention of escalator machine (JCB) - JCB machine was returning from work - The High Court observed that, there was a valid e-way bill in support of the transportation. It is only because of non-production of the delivery challan that the penalty has been assessed and imposed. Though possession of all document in support of transportation is the fundamental requirement of law, but as it appears that, the petitioner did not have the intention to evade tax , accordingly, imposition of penalty at the rate of 200% of the tax payable appears to be highly disproportionate and not in accordance with the provisions of law. - HC directed the adjudicating authority to re-adjudicate the issue.
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GST:
Cancellation of registration of petitioner - The High Court observed that, the registration was obtained by fraud, wilful misstatement - The petitioner was given an opportunity by issuing show cause notice but he opted not to file any reply to the said notice. The petitioner has failed to file any document even alongwith the present petition to show that the unit is functional on the same place. - The High Court ultimately dismissed the petition, upholding the cancellation of registration.
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GST:
Rejection of the refund application - rejection on the ground of time limitation - Defective refund application - The High Court held that, even assuming that the petitioner subsequently submitted the relevant documents, it could not have been held that the petitioner’s application was barred by limitation, as filing of the application was not in dispute and any deficiency noted thereafter was a curable defect which could not have affected the date on which such application was filed and which was within its prescribed limitation. - HC directed the GST authorities to consider the refund application on merit.
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GST:
Grant of bail - passing on fake ITC through paper invoices without actual supply of any goods - It is argued that the applicant/accused had purposely taken Aadhaar Cards, PAN cards and other identity documents from individuals by promising them jobs or monthly payments and then using these documents to open fake firms on paper and to register the same under GST and to open bank accounts; managed and controlled all the GST returns of such fake firms created by him. - The High Court dismissed the application by holding that this is not a fit case, in which bail may be granted to the present applicant.
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GST:
Validity of GST assessment order raising demand of tax with interest - Procedure for scrutiny of GST returns u/s 61 read with rule 99 not followed - The High Court observed that, it is evident that principles of natural justice were followed before issuing the impugned order. In the impugned order, eight alleged defects in the return filed by the petitioner were examined. In respect of each alleged effect, the reply of the assessee was considered and findings were recorded. - The court, while acknowledging the availability of an appellate remedy, dismisses the writ petition.
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GST:
Grant of bail - creation of a bogus company and issuing forged bills to other businessmen for getting false benefit of input tax credit - The High Court observed that, Applicant is a businessman and he has earned wrongful gain of input tax credit. Offence under section 132 of GST Act is punishable upto 3 years of imprisonment. Applicant is made accused on basis of memorandum given by main accused in the case. HC granted bail to the petitioner subject to conditions.
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Income Tax:
Deduction u/s 43B - Payment of Excise duty - double deduction or not - The High Court held that, Section 43B of the Act, which came to be introduced from Assessment Year 1984- 1985 onwards, provides that the excise duty would be deductible only on the payment basis in the year in which it is actually paid. Therefore, the Tribunal was not correct in coming to a conclusion that this amount would amount to double deduction.
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Income Tax:
Reopening of assessment u/s 147 - The High Court observed that, the expression “accommodation entry” and “bogus financial transaction” in the recorded reasons are not reason for formation of reasonable belief but are conclusions. - The HC further observed that it is also not clear whether the statement of “accommodation entry provider” is recorded U/s 132(4) or Section 133A, inasmuch as, a statement recorded U/s 133A has no evidentiary value. - The High Court quashed the proceedings / notice since the Assessment Order is passed on pure guess work without any relevant material which is contrary to mandates of Section 144 dealing with Best Judgment Assessment.
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Income Tax:
Allowable expenditure versus Application of Income (Repayment of loan) - Payment made to the Marketing Board - progressive payments given to the Haryana State Agricultural Marketing Board from the year 2006 onwards till the year 2009 - payment of liability of old loan - The High court found that the payment made was for the achievement of the objectives prescribed under the Punjab Agricultural Produce Markets Act, 1961. Therefore, it should not be considered as a repayment of a loan, and the disallowance made was based on incorrect reasoning.
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Income Tax:
Validity of Penalty u/s 271D and u/s 271E - Penalty proceeding as independent of the assessment proceeding - absence of satisfaction recorded in the reassessment u/s 147 r.w.s 144 r.w.s. 144B - The tribunal, following the Judgement of Supreme Court, confirmed the order of CIT(A) for deleting the penalty on account of no satisfaction recorded by the Ld. AO in the reassessment order u/s 147 r.w.s. 144 r.w.s. 144B.
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Income Tax:
Validity of Reopening of assessment - disallowance of expenditure being the inflated cost of fuels - information from the Directorate of Revenue Intelligence (DRI) relied upon - The Tribunal noted that, the basis for the reopening, a DRI show cause notice, was quashed by the competent authority/ CESTAT, making the reassessment unsustainable. The ITAT upheld the order of CIT(A) deleting the additions as the determination made by the AO in any case is un-sustainable being sans foundation/substantive material.
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Income Tax:
Revision u/s 263 - Difference of opinion - Tribunal held that an assessment cannot be revised if there is no jurisdictional error in the order or if it has been passed after due application of mind or in case where PCIT has a view different from that taken by A.O. - Tribunal further observed that, both the ingredients i.e order must be erroneous in nature; and the error must be such that it is prejudicial to the interest of Revenue are present in a given case, it is not legally permissible for a Commissioner to initiate suo motu proceeding u/s 263
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Income Tax:
TP Adjustment - comparable selection - upper turnover filter - The assessee submits that the turnover of the assessee is only Rs. 124 Crores during the relevant previous year, hence, companies having turnover of more than Rs. 200 Crores needs to be excluded from the comparable list while calculating the ALP of the said international transaction. Following the earlier decision in assessee’s own case the Tribunal restored the matter before the AO with a direction to adopt upper turnover filter of Rs. 200 Crores.
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Income Tax:
Taxability of capital gain arising on sale of shares under the treaty provisions - AO and DRP have rejected assessee’s claim by holding that assessee being a mere paper company is not entitled to treaty benefits - vague allegations - The tribunal found that the denial of treaty benefits to the assessee was based on vague allegations without substantial evidence and allowed the exemption under Article 13(4) of the tax treaty. - The tribunal allowed the exemption under Article 13(4) of the tax treaty qua the capital gain arising on sale of shares.
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Income Tax:
Weighted deduction u/s 35(2AB) - Tribunal has noted that, Revenue expenditure which was not approved for weighted deduction by DSIR was directed to be allowable as Revenue expenditure under section 37 of the Act while computing the income of the assessee by the ld. CIT (Appeals) - AO has not questioned the genuineness and allowability of these expenses - Consequently, the tribunal sustained the order of CIT(A)
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Income Tax:
Non acceptance of fresh evidence submitted u/r 46A of the I. T. Rules by CIT(A) - Tribunal noted that, it is possible that in the transition, the ld.CIT(A)[NFAC] had not received copies of the additional evidence filed by assessee. - Consequently, the Tribunal held that, as the Faceless Appeal was a new concept to CIT(A) as well as Assessee, the error which has crept is a possible human error and restored the matter to ld.CIT(A) for denovo adjudication.
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Income Tax:
Rate of tax on assessed income of Non-Resident assessee - Partner in Joint Venture - Claim of Benefit of DTAA - to settle the matter at rest, the assessee is willing to offer the income subject to settlement of tax liability at the rate at which TDS has been deducted - The tribunal sustained the order of CIT(A) to tax the assessee's income at the rates provided under the India-Canada DTAA.
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Income Tax:
Disallowance of deduction u/s 80P - Addition in respect of rental income earned and Income from sale of crackers - The Tribunal held that the deduction u/s 80P is available activity-wise and the rental income is not defined as per the section 80P, however assessee has shown such income separately and paid the taxes thereon. Hence, the question of disallowance u/s 80P does not arise, specifically when the assessee has never claimed deduction under section 80P of the Act in respect of the rental income and income sale of crackers.
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Income Tax:
Unaccounted interest payment on cash loan - search and seizure action u/s 132 - loose paper seized from the premises of an employee - Tally printouts - 'dump document' - The tribunal found that the documents in question were insufficiently linked to the assessee, lacked corroborative evidence, and were not conclusively indicative of unaccounted transactions. Additionally, the failure to allow cross-examination further weakened the AO's case. - Consequently, the tribunal confirmed the order of CIT(A) for deletion of the additions.
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Customs:
Confiscation of the imported goods - used hand tools - "Capital Goods" or not as per para-9.12 of Foreign Trade Policy - appellant did not have licence to import such goods - The Tribunal referred to the earlier decision in the Asia Power Projects Ltd. case and concluded that the definition of "capital goods" in para 9.12 of FTP did not specifically mention "hand tools," but it encompassed a wide range of equipment, including instruments - Consequently, the Tribunal held that the imported hand tools fell within the definition of "capital goods".
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Customs:
Quantum of redemption fine and penalty - import of used digital multifunction machines - mis-declaration of value of goods - Considering the fact that the Department has also accepted the same in the case of M/s. Accord Digitech v. C.C., Bangalore, the tribunal held that in the interest of justice since 6 years have already been lapsed, the present appeal is partially allowed by reducing the redemption fine and penalty by 10% and 5% respectively of the enhanced value.
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Indian Laws:
Seeking direction for an in-depth, thorough and time bound investigation by a SIT into various serious illegalities, violations and siphoning of funds committed by the promoters of Indiabulls Housing Finance Limited (IBHFL), its subsidiaries and their promoters - siphoning of funds by the IBHFL and other Indiabull group of companies - High court dismissed the petition filed by the Citizens Whistle Blower Forum. - HC noted the importance of not interfering with the investigative process without evidence of grave injustice or misuse of legal procedures, emphasizing that the transfer of an investigation to a different agency is an exceptional measure, not a routine one.
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Indian Laws:
Inquiry before issuance of process - whether the amendment in Section 202, sub-clause (1) of the Code of Criminal Procedure, contemplating an inquiry before issuance of process by the Magistrate, where the accused is residing outside the jurisdiction of the Court, is discretionary or mandatory? - High Codurt has held that it is nonetheless the duty of the Magistrate to prima facie find out, if the case is made out by the complainant against the accused before the process is issued, so as to avoid any frivolous or vexatious claims being taken forward by the Magistrate.
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IBC:
Approval of Resolution Plan - Fresh claim based on Foreign Judgement - The Tribunal (NCLAT) in a crystalline manner pointed out that all such ‘claims’ which were not a part of the ‘Resolution Plan’ stood extinguished, on the date of ‘Approval of Resolution Plan’ and further no individual, is permitted to initiate or continue any ‘proceedings’, in regard to a ‘claim’, which was not part of the ‘Resolution Plan’.
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Service Tax:
Classification of services - sponsorship service or not - sponsorship fee paid by the appellant to M/s. JIPL towards grant of associate sponsorship rights of IPL team Rajasthan Royals for the IPL Season 3 (2010) - Following the precedence, wherein it was held that the expression in relation to sports event has an extensive connotation and the sponsorship of a team of IPL has to be considered as sponsorship of sports event itself, the tribunal set aside the demand.
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Central Excise:
Demand of duty raised on clearance / sale of scrap generated out of Capital Goods - The Tribunal held that the Appellant have cleared the scrap which is neither generated from cenvatable capital goods or cenvatable input nor from manufacturing. Therefore, the same is clearly not liable for any duty.
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Central Excise:
100% EOU - refund of unutilized cenvat credit - the invoices do not tally as to the address so as to show that the goods have originated from Hosur unit itself - The Tribunal held that, the policy is that duty / tax are not to be exported. These notifications are to facilitate hassle free exports so as to earn foreign exchange for the country. If the compliances can be verified by checking the invoice number in the documents the department ought not to resort to reject refund claims on flimsy and minor procedural aspects.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (2) TMI 289
Revocation of Attachment of bank accounts of the petitioner - jurisdiction to extend time for making payment - HELD THAT:- On examining Section 79(1)(c)(iv) of the TNGST Act, it appears that the proper officer has the discretion to extend time for making payment if he has issued a notice for recovery of amounts in terms of clause (c)(i) of Section 79(1) of the TNGST Act. This writ petition is disposed of by directing the third respondent to consider and dispose of the petitioner's representation dated 28.11.2023 by taking into account the applicable provisions of the TNGST Act.
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2024 (2) TMI 288
Levy of penalty at the rate of 200% of the tax (GST) payable - Detention of escalator machine (JCB) - JCB machine was returning from work - violation of provision of Section 68 (1) of CGST Act - failure to produce any document in support of movement of the goods, i.e, the JCB machine - demand of penalty - HELD THAT:- After physical verification of the goods it was detected that the document relied upon by the driver was not signed. The details mentioned in the e-way bill did not match the delivery challan. The name and address of the person who released the goods did not match with the details of the person whose name is mentioned in the e-way bill. Because of the discrepancy in the documents, the respondent authorities concluded that the petitioner transported the goods, i.e., the machine in contravention of the provisions of law. In Bharti Airtel [ 2022 (10) TMI 998 - ALLAHABAD HIGH COURT ] the Court opined that there is no provision under Section 129 for determination of tax due, which can be done only by taking recourse to provision of Section 73 and 74 of the Act, as the case may be. In Vardan Associates [ 2024 (2) TMI 189 - SUPREME COURT ], decision relied upon by the respondent authorities, penalty was imposed as the assessee failed to comply with the requirement to generate fresh e-way bill while transporting the goods as the e-way bill in question expired in the midst of transportation. In such a situation the Court was of the opinion that a fresh e-way bill ought to have been generated so that the transportation of the consignment could be concluded. In the present case there was a valid e-way bill in support of the transportation. It is only because of non-production of the delivery challan that the penalty has been assessed and imposed. Though possession of all document in support of transportation is the fundamental requirement of law, but as it appears that, the petitioner did not have the intention to evade tax, accordingly, imposition of penalty at the rate of 200% of the tax payable appears to be highly disproportionate and not in accordance with the provisions of law. The impugned order passed by the adjudicating authority affirmed by the appellate authority is liable to be set aside and is accordingly set aside. The adjudicating authority is directed to revisit the issue in line with the discussions made herein above and pass a reasoned order - Petition allowed.
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2024 (2) TMI 287
Cancellation of registration of petitioner - facts regarding fraud, wilful misstatement or suppression of facts have not been mentioned in SCN - Violation of principles of natural justice - HELD THAT:- The authorities have recorded finding that in physical verification, no such unit was found to be functional at the place which was mentioned in the application for registration and therefore, registration has been cancelled as per the provision of section 29(2) of the CGST Act. Thus, the registration was obtained by fraud, wilful misstatement - The petitioner was given an opportunity by issuing show cause notice but he opted not to file any reply to the said notice. There are no case for interference under Article 227 of the Constitution of India especially when both the authorities have recorded concurrent findings that no such unit exists at the place of business. The petitioner has failed to file any document even alongwith the present petition to show that the unit is functional on the same place. Thus, there is no perversity in the findings recorded by the authorities. Hence, no interference is called for. Petition dismissed.
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2024 (2) TMI 286
Rejection of the refund application - rejection on the ground of time limitation - effect of bar of limitation on deficiency in the application, when once the same was filed within the limitation - HELD THAT:- Neither the Original Authority nor the Appellate Authority has taken into consideration the fact that the filing of the petitioner s application by the online method was permissible under the circular of the revenue. Hence, once same was appropriately filed, on such count the application could not have been rejected on the ground of limitation. This apart, even assuming that the petitioner subsequently submitted the relevant documents, it could not have been held that the petitioner s application was barred by limitation, as filing of the application was not in dispute and any deficiency noted thereafter was a curable defect which could not have affected the date on which such application was filed and which was within its prescribed limitation. Even the extension of the period of limitation as permitted under the orders of the Supreme Court in Suo-Moto proceedings [ 2020 (5) TMI 418 - SC ORDER ] would come to the aid of the petitioner, in not only filing of such documents, but also even in filing of its refund application. All these issues have been overlooked by the authorities below, in rejecting the petitioner s application on the ground of limitation. The refund application dated 13 September, 2019 as filed by the petitioner is restored to the file of the Deputy Commissioner who shall adjudicate such application on its merits and in accordance with law, including on the petitioner s claim to the interest, within a period of eight weeks from the date copy of this order is produced before the authorities - application allowed.
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2024 (2) TMI 285
Seeking grant of bail - passing on fake ITC through paper invoices without actual supply of any goods during the period Feb-2018 to March-2020 - HELD THAT:- Looking to the facts and circumstances of the case particularly the nature of allegation as well as gravity of offence and the role played by the applicant, it is opined that this is not a fit case, in which bail may be granted to the present applicant Saurabh Kumar. Accordingly, this application of the present applicant under Section 439 Cr.P.C. is hereby dismissed.
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2024 (2) TMI 284
Validity of GST assessment order raising demand of tax with interest - Procedure for scrutiny of GST returns u/s 61 read with rule 99 not followed - Maintainability of petition - availability of alternative remedy - HELD THAT:- The impugned order reflects that the said order was issued after considering the assessee's replies dated 08.08.2023, 16.08.2023 and 31.08.2023. It also reflects that a personal hearing was granted to the petitioner. Therefore, it is evident that principles of natural justice were followed before issuing the impugned order. In the impugned order, eight alleged defects in the return filed by the petitioner were examined. In respect of each alleged effect, the reply of the assessee was considered and findings were recorded. Eventually, the proposal was dropped in respect of three defects and it was held that the petitioner is liable with regard to the five defects specified in the revenue abstract at the foot of the order. It is not required to exercise discretionary jurisdiction in view of the statutory appeal being available - petition dismissed.
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2024 (2) TMI 283
Seeking grant of bail - creation of a bogus company and issuing forged bills to other businessmen for getting false benefit of input tax credit - HELD THAT:- Applicant is a businessman and he has earned wrongful gain of input tax credit. Offence under section 132 of GST Act is punishable upto 3 years of imprisonment. Applicant is made accused on basis of memorandum given by main accused in the case namely, Ajay Parmar. Applicant is also ready to deposit 5% input tax credit of aforesaid amount. The bail application filed by the applicant is allowed subject to conditions imposed.
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Income Tax
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2024 (2) TMI 282
Deduction u/s 43B - Payment of Excise duty - double deduction - excise duty in case of unsold stocks at the end of previous year is not treated as expenses - HELD THAT:- Assessee was correct in submitting that the excise duty in case of unsold stocks held by them at the end of previous year is not treated as expenses in the accounts, but has been separately claimed and allowed in the income tax assessments. While computing the total income for Assessment Year 1986- 1987, appellant had claimed the deduction in respect of excise duty being the differential excise duty attributable to opening and closing stock of the finished goods held by them during the previous year ended 29th December 1985. Excise duty paid and included in the closing stock has to be claimed separately as a deduction otherwise appellant would not be claiming the entire excise duty paid in the year of its payment. Section 43B of the Act, which came to be introduced from Assessment Year 1984- 1985 onwards, provides that the excise duty would be deductible only on the payment basis in the year in which it is actually paid. Therefore, while computing the total income for Assessment Year 1986-1987, assessee had claimed a deduction of excise duty actually paid in the year 1985 and included in closing stock less excise duty paid and included in closing stock of 1984 already claimed. Therefore, in our view, the Tribunal was not correct in coming to a conclusion that this amount would amount to double deduction.
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2024 (2) TMI 281
Validity of Re-assessment order - additions to the income disclosed in the return of income - Addition of difference between the purchase value and guideline value of the immovable property - amounts received as rent and contractual receipt - HELD THAT:- As it is evident that the AO was fully conscious and aware of the fact that the report of the valuation officer was awaited. In spite of being aware of this fact, he proceeded to add the difference between the consideration specified in the sale deed and the guideline value as additional income and also initiated proceedings in respect of penalty. This approach is clearly unsustainable. Addition on account of rent receipts, the petitioner provided an explanation that rent was received towards a residential house property and that the income was duly disclosed. The petitioner further explained that tax had been wrongly deducted under Section 194IB instead of Section 194C of the Income-tax Act and that the petitioner should not be put to prejudice on that account. Contractual receipt which had been shown as business income. These explanations have been brushed aside as not satisfactory without providing any reasons for such conclusion. For reasons set out above, the impugned order is liable to be and is hereby quashed. As a corollary, the matter is remanded for re-consideration by the AO. AO is directed to await the valuation report before undertaking such reconsideration.
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2024 (2) TMI 280
Reopening of assessment u/s 147 - allegation of accommodation entries receipts and Bogus Financial Transactions - reliance on the statement recorded U/s 133A of a person who is claimed to be accommodation entry provider - What is tangible or cogent material on record leading to formation of belief? - HELD THAT:- From the record of reasons communicated to the Petitioner it appears that there is no nexus between the material before the assessing authority and the formation of belief by him. There is no direct nexus or live link between the material on record and formation of belief and no tangible or cogent material on record leading to formation of such belief. As per the recorded reasons, Sri Sharma has stated that he provided accommodation entries to certain persons ; however, the name of the Petitioner has never been taken by him. The date on which statement of Sri Sharma is recorded is not known to Assessing Officer and also whether it relates to the assessment year in question is also not known. Date of statement of Sri Sharma is neither mentioned in the recorded reasons nor in the show cause notice nor in the Assessment Order. The Counter Affidavit is also silent, hence, on its basis no reasonable belief could be formed that the said statement relates to the assessment year in question in which the income has escaped the assessment. In the absence of date of statement, it is far-fetched to assume that it relates to the assessment year in question as held in ITO Vs. Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] It further transpires from records that the proceedings in the instant case is initiated for verifications and roving enquiry which is clearly impermissible under section 147/148 as held by this Court in the case of PCIT Vs. Maheswari Devi [ 2022 (11) TMI 1117 - JHARKHAND HIGH COURT] It is also not clear whether the statement of Sri Ajay Kumar Sharma is recorded U/s 132(4) or Section 133A, inasmuch as, a statement recorded U/s 133A has no evidentiary value. The recorded reasons have been supplemented by using the word for bill purchase which means amount has flown-out of books, not a case receipt of accommodation entry. Further, the said finding says that the Petitioner is provider of accommodation entry, which is opposite of the recorded reasons. Further the recorded reasons reveals that the proceeding is initiated on the basis of information gathered from Insight Module while in the Order dated 16-03- 2022 disposing objection it is held that the assessment is reopened on the basis of information received from Director of Income Tax (I CI), Ahmedabad. As further transpires that from the recorded reasons and the impugned assessment Order, it is not clear whether the Petitioner is recipient of any accommodation entry/bogus financial transaction. The recorded reasons and findings in the impugned Order are also silent about the provisions under which addition are sought to be made as the assessing officer himself is not sure whether financial transactions sought to be added are debit entries or credit entries in the books of the Petitioner. In the instant case there is no material on the basis of which a reasonable belief could be formed that the cash has been deposited by the Assessee into the bank of the accommodation entry provider. Hence, it cannot be presumed to be an accommodation entry. - The expression accommodation entry and bogus financial transaction in the recorded reasons are not reason for formation of reasonable belief but are conclusions. Assessment Order is passed on pure guess work without any relevant material which is contrary to mandates of Section 144 dealing with Best Judgment Assessment. From a perusal of the findings recorded in the impugned Order it is clear that there is not even a scrap of material to hold that any accommodation entry have been provided to the Petitioner by Sri Ajay Kumar Sharma. We are having no hesitation in holding that in the instant case the belief formed by the Assessing Officer suffers from lack of bona fides, is vague, far-fetched, irrelevant, based on conjecture and surmises and also arbitrary and irrational. - Decided in favour of assessee.
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2024 (2) TMI 279
Allowable expenditure versus Application of Income (Repayment of loan) - Payment made to the Marketing Board - statutory functions of application of money for the objects provided in the Statute OR repayment of any loan - progressive payments given to the Haryana State Agricultural Marketing Board from the year 2006 onwards till the year 2009 - payment of liability of old loan - Purpose for which the market development fund may be expended - Tribunal was of the opinion that making repayment of such borrowed funds and claiming deduction as application of income was claiming double deduction for the same expenditure and, therefore, the appellant (Committee herein) was not eligible for double deduction on account of the same expenditure incurred based on the construction of rural roads and development of Mandis - penalty proceedings un/s 271(1)(c) Whether Tribunal erred in law in maintaining the disallowance on the ground that it is a repayment of loan to Haryana Mandi Board whereas from the record it is lucid that the payment was made for achievement of objects prescribed under the Act? HELD THAT:- It is the case of the assessee that it had a opening balance of Rs. 5,78,74,454/- which had been carried forward and a payment of Rs. 4,50,00,000/- had been made to the Apex Body on account of development works. The necessary receipts showing the payments wherein, the sum of the above said amount was disbursed in four installments on account of development works and the receipts have been issued by the Haryana State Agricultural Marketing Board. The said receipts would go on to show that the said amounts were deposited for development works. It was accordingly pointed out that as per the table, the Board had incurred expenditure on development works on account of the assessee. For the assessment year in question, an excess payment had been made and, thus, it was the case of the assessee that the excess payment had been made of the said amount leaving a balance towards development works which was carried forward to the next financial year 2008-09. The balance sheet was also appended in support of the said case which had been appended with the return of income duly attested by the Chartered Accountant wherein, the sum of Rs. 8,60,08,154/- was shown as capital works. Thus, it is apparent that the findings recorded by the Commissioner of Income Tax (Appeals) were correct to the extent that the payment was made by the assessee to the Marketing Board towards the statutory functions of application of money for the objects provided in the Statute and it was not for repayment of any loan and, therefore, both the Assessing Authority and the Tribunal wrongly came to the said conclusion regarding this aspect. Tribunal has wrongly reversed the well reasoned order passed by the Commissioner of Income Tax and the record as such would go on to show that the payment which was made was for the achievement of the objects prescribed under the Act and, therefore, the disallowance could not have been done on the ground that it was a loan to the Marketing Board. Rather, it was the expense as such for the purpose given in the objects of the Act as such and, therefore, the Assessing Officer was wrong in holding that it was a payment of liability of old loan. Resultantly, disallowance made was on a wrong reasoning. Penalty proceedings were initiated is liable to be dismissed - Decided against revenue.
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2024 (2) TMI 278
Disallowance made u/s 14A r.w.Rule-8D - HELD THAT:- As disallowance under Rule-8D(2)(ii) of the IT Rules should not have made by the AO, thus, the disallowance made by the AO is hereby deleted. Further, we direct the AO to compute the disallowance u/s 14A r.w.Rule-8D(2)(iii) of the Rules by considering only investment from each exempt income is earned. Accordingly, ground No.1 of the Revenue and the assessee are disposed off. Unexplained investment - Additions on the basis of said loose paper - credibility of dumb documents - search was conducted on the assessee wherein an estimated working was seized from the Laptop of the employee of the assessee containing details of certain land which was registered in the name of the assessee - assessee submitted that, the assessee has not been provided with opportunity to cross examine the person from whose laptop the document has been seized - HELD THAT:- It is well settled law that the dumb documents having no evidentiary value cannot be taken as sole basis for determination of undisclosed income of the assessee. If the Department of Revenue wants to make use of dumb documents, then the onus on the Revenue Department to collect cogent corroborative evidences. The Hon ble High Court of Allahabad in the case of Kumar Trading Co. [ 2007 (9) TMI 284 - HIGH COURT OF JUDICATURE AT ALLAHABAD] held that, it is settled principle of law that if the Revenue wants to rely upon the entries of the document, seized from the premises of third party, the burden lies upon the Revenue Authorities to prove the genuineness and authenticity of the said entries to connect the said entry with the dealer. Further, it is found that the person from who s possession the seized document is recovered, was not subject to the cross examination of the assessee and no opportunity of cross examination has been given to the assessee. Therefore, for the detailed discussion made above, in our considered opinion, the Ld. AO as well as the Ld. CIT(A) have committed error in making the addition u/s 69 of the Act which deserves to be deleted. Accordingly, the ground No.2 of the assessee is allowed and the subject addition sustained by the Ld. CIT(A) is deleted. Allowability of claim of education Cess - assessee raised claim the education Cess as eligible business expenditure u/s 40(a)(ii) and contention of the assessee that prohibition contained in section 40(a)(ii) of the Act is only with reference to payment of Income Tax and same does not apply to claim of education Cess paid along with Income Tax - HELD THAT:- The issue regarding allowability of education Cess has been considered in the case of Kanoria Chemicals and Industries Ltd.[ 2021 (10) TMI 1153 - ITAT KOLKATA] wherein it is held that the Cess is not allowable deduction - thus we hold that the education Cess can t be allowed as an allowable expense, accordingly, we find no merit in Ground No. 3 of the assessee and the Ground No. 3 of the assessee is dismissed. Nature of receipt - claim of FPS/FMS received as per foreign trade policy in computing the total income of the assessee - revenue or capital receipt - HELD THAT:- This issue of claim of FPS/FMS as capital receipt received as per foreign trade policy in computing total income has been dealt and decided by the Co-ordinate Bench of the Tribunal in Assessee s own case for Assessment Year 2013-14 [ 2023 (7) TMI 1357 - ITAT DELHI] in favour of the assessee. Apart from the same, in the case of Nitin Spinners Ltd. vide [ 2019 (9) TMI 1154 - RAJASTHAN HIGH COURT] as affirmed by SC [ 2021 (9) TMI 430 - SC ORDER] as held that apparently the Central Government gave the subsidy to enhance Indian export potential in the international market. It was not granted to meet the cost of expenditure to meet the competition of the Indian textile market. The ITAT took note of judgment in Ponni Sugars Chemicals Ltd. ( 2008 (9) TMI 14 - SUPREME COURT ) and held that the amount was not an export incentive, but rather capital receipt and therefore, not taxable. Characterization of receipt - revenue or capital receipt - interest subsidy under TUFFS - HELD THAT:- The allow-ability of claim of interest subsidy under TUFFS and RIPS have been decided by the Hon'ble High Court of Rajasthan in the case of PCIT vs. Nitin Spinners Ltd.[ 2019 (9) TMI 1154 - RAJASTHAN HIGH COURT] concluding the amount was received as capital stream and therefore, not taxable.
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2024 (2) TMI 277
Validity of Penalty u/s 271D and u/s 271E - Penalty proceeding as independent of the assessment proceeding - absence of satisfaction recorded in the reassessment u/s 147 r.w.s 144 r.w.s. 144B - allegation of acceptance of loans through journal entries as violative of section 269SS - HELD THAT:- Issue before us is no more res-integra in light of the judgment in the case of CIT vs. Jai Laxmi Rice Mills, Ambala City ( 2015 (11) TMI 1453 - SUPREME COURT] therefore, the penalty imposed by Ld. JCIT u/s 271D of the Act, dehors any satisfaction recorded in the reassessment u/s 147 r.w.s 144 r.w.s. 144B by the concerned AO, is not sustainable, thus, we concur with the findings of Ld. CIT(A) which is on the same line as discussed hereinabove, therefore, we do not find any infirmity in the order of Ld. CIT(A) to be interfered with. In the result, appeal of the revenue stands dismissed.
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2024 (2) TMI 276
Validity of Reopening of assessment - disallowance of expenditure being the inflated cost of fuels - information from the Directorate of Revenue Intelligence (DRI) relied upon - Assessee has purchased coal from Indonesia originally, which was purchased by intermediary at an inflated rate than the actual value of coal rate - AO considering enquiry report conducted by the DRI, observed that from report it appears that the intermediaries‟ firms were merely invoicing agents for facilitating invoice inflation. - CIT(A) deleted the additions relying upon the decision of CESTAT in customs valuation case. HELD THAT:- The show cause notice of DRI based on the investigation carried out by it, which is the foundation for reopening of the case u/s 147 of the Act and making the addition by the AO, has already been set aside by the Principal Commissioner of Customs (Adjudication) vide his order by holding that the show cause has not come out with any separate reasons and evidences that the extent of over-valuation alleged in the show cause notice in respect of RNRL other intermediaries are more or less same, suggestive of the fact that the relationship per se has not affected the transaction value . Hence considering the peculiar facts and circumstances in totality, in our considered view, the determination made by the AO in any case is un- sustainable being sans foundation/substantive material and thus the impugned order is affirmed and the appeal filed by the Revenue Department is dismissed.
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2024 (2) TMI 275
Revision u/s 263 - Discrepancies regarding the claim of deduction on account of bad debts and provision of bad and doubtful debts and the claim of deduction u/s. 80JJAA - as per CIT AO failed to verify the above claims and passed the assessment order which is erroneous and prejudicial to the interest of Revenue - HELD THAT:- In the case of the assessee company, the claim was taken while filing Revised Return of Income and further such claim was fully examined by Ld. AO during the course of assessment proceedings after verifying all evidences and explanation produced by the assessee. No defects have been pointed out either by the AO or the PCIT in the Revised Return of Income filed by the assessee. Assessee had merely exercised its right in claiming rightful deduction while revising its Return of Income. Therefore, the direction given to the assessing officer in connection with the claim of assessee company u/s 80JJAA to verify the belated return filed by the assessee is whether valid return of income u/s 139(9) or not is totally against the law laid down by Hon ble Jurisdictional High Court. Accordingly there is no justification in invoking Revision power u/s 263 of the Act. We also find merits in the arguments of once the AO has made inquires and accepted genuineness of the same after detailed verification submitted by the assessee, such view of A.O. being a plausible view, could not be considered erroneous or prejudicial to interest of Revenue as held in case of PCIT V. Shreeji Prints (P.) Ltd. [ 2021 (9) TMI 108 - SUPREME COURT] Respectfully following the above judicial principle, it is clear that the Ld. AO had made adequate inquiries in respect of the claim of deduction u/s. 80JJAA of the Act, while passing assessment order u/s 143(3) of the Act. The Revision of assessment proceedings on this ground is not permissible and accordingly the findings of the Ld. PCIT is hereby set aside. Provision for bad debt u/s. 36(1)(viia) - We observe that the assessees company reverses the provision created u/s 36(1)(viia) in the immediately next year and claims actual bad debt incurred for the year under consideration only. Further, details of bad debt written off for the year under consideration which shows list of customer name, amount written off, PAN, Address and subsequently recovered was also given before the PCIT. It was also explained that Net off bad debt written off, which means Bad debt incurred for the AY 2017-18, less the amount recovered from the customer has been written off by the assessee. Though, all such details were produced before the PCIT, he has without giving any finding on how the assessment order passed by AO is erroneous or pointing out any defect in the claim made by assessee u/s 36(1)(vii) and 36(1)(viia), directly set aside the assessment order passed by the Ld. AO, which is beyond the scope of powers conferred u/s 263 of the Act. Thus the very same issue what was considered by the Ld. A.O. in the assessment proceedings is revised by the Ld. PCIT on the ground that the Ld. A.O. has verified the claim properly. PCIT partially looking into the assessment record initiated the Revision proceedings which is factually not correct. PCIT failed to consider the reply to the notice issued u/s. 143(2) dated 21.11.2019 filed by the assessee already this order. Thus both the ingredients i.e order must be erroneous in nature; and the error must be such that it is prejudicial to the interest of Revenue are present in a given case, it is not legally permissible for a Commissioner to initiate suo motu proceeding u/s 263 the same has been upheld by Hon'ble Supreme Court in case of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] An assessment cannot be revised if there is no jurisdictional error in the order or if it has been passed after due application of mind or in case where PCIT has a view different from that taken by A.O. Therefore we have no hesitation in quashing the Revision order passed by the Ld. PCIT. It transpires that the Ld. PCIT ought to have proved that the order of the AO is both erroneous as well as prejudicial to the interests of the revenue. Even lack of adequate inquiries by the AO should result fulfilment of these critical twin conditions. Since the assessee has been following a consistent method and claim of deduction as and when it is actually written off in the annual accounts and the Ld. PCIT did not rebut the submissions made by the assessee. The claim of the assessee is also valid in light of the Judgment of T.R.F. Ltd., [ 2010 (2) TMI 211 - SUPREME COURT] we find merit in the submissions made of the assessee and set aside the order passed by the PCIT and restore the order passed by the AO. Appeal filed by the Assessee is hereby allowed.
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2024 (2) TMI 274
Addition of unsecured loan taken from shell/paper companies - assessee company during the year has accepted unsecured loans from certain parties - material collected during the search at third party premises - as alleged by the AO that the parties from whom unsecured loans were accepted by the assessee are paper/shell companies and managed by the entry provider - as argued search materials and statement relied upon by the AO for making addition against the assessee were neither supplied to the assessee - CIT(A) deleted the additions. HELD THAT:- The entire thrust of the AO for treating the unsecured loan as unexplained cash credit was materials collected during the search proceeding from the premises of entry provider and his statement recorded during the search. However, we note that the learned CIT(A) has given categorical finding that the search materials and statement relied upon by the AO for making addition against the assessee were neither supplied to the assessee for rebuttal nor the opportunity of cross examination of Shri Mukesh Banka has been provided. It is settled position of law that not providing the material used against the assessee for rebuttable and opportunity of cross examination of the statement relied upon by the AO will vitiate the validity of the assessment. See Andaman Timber Industries vs. CCE [ 2015 (10) TMI 442 - SUPREME COURT] Onus to prove - Assessee in support of genuineness of loan have furnished all the necessary documents such as ledger of parties, contra ledger from the parties and confirmation, ITRs, bank statements and annual reports. However, the AO without pointing out any infirmity and application of mind on those documentary evidence, treated the loan amount as unexplained cash credit by relying upon the statement recorded and material collected during the search at third party premises and that too without providing the opportunity of rebuttal and cross examination. Hon ble Supreme Court in the case of CIT vs. Odeon Builders Pvt Ltd [ 2019 (8) TMI 1072 - SUPREME COURT] has confirmed the concurrent finding of learned CIT(A), the ITAT and the High court in favour of the assessee. Once the assessee submits primary evidence with regard to identity and credit worthiness of creditor and the genuineness of the transaction the onus shifts on the AO to consider the material provided and make independent inquiry in order to find out genuineness of the evidence or bring material contrary to fact explained by the assessee. The AO cannot reject the primary evidence furnished by the assessee without appreciating the facts available on record or without bringing contrary material to form the belief that primary document or explanation furnished by the assessee is not satisfactory. Undeniably, the assessee during the assessment proceeding in support of genuineness of credit of unsecured loans has furnished ledger of parties, contra ledger from the parties and confirmation, ITRs, bank statements and annual report of parties along with their affidavit. The AO in assessment order has nowhere referred to any independent inquiry of whatsoever made to disprove the primary evidence provided by the assessee and not pointed out any infirmity in those evidence. As such, the AO merely on the basis statement of entry provider which has been retracted subsequently held the unsecured loans as unexplained cash credit. Thus approach taken by the AO is not justified. As such the AO failed to appreciate the facts, evidence provided, and case laws relied upon by the assessee company. Assessee company has taken loan through banking channel and repaid the same in the next year along with interest through banking channel and deducted TDS on the interest. It is also important to note that the interest has been allowed by the AO during the assessment which has direct nexus on the loan in dispute. As such the AO has taken a contrary stand. Thus, the loan amount of cannot be made subject to addition under the provisions of section 68 - Appeal of the Revenue is hereby dismissed.
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2024 (2) TMI 273
TP Adjustment - comparable selection - upper turnover filter - assessee submits that the turnover of the assessee is only Rs. 124 Crores during the relevant previous year, hence, companies having turnover of more than Rs. 200 Crores needs to be excluded from the comparable list while calculating the ALP of the said international transaction - HELD THAT:- In view of the above order of the Tribunal in assessee s own case for Assessment Year 2015- 16 [ 2022 (10) TMI 1225 - ITAT BANGALORE] , we restore the matter to the TPO and direct him to adopt upper turnover filter of Rs. 200 Crores. The TPO is directed to exclude from the comparable list companies whose turnover is exceeding 200 Crores and accordingly recalculate the ALP of the international transaction in the software development segment. It is ordered accordingly.
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2024 (2) TMI 272
Estimation of income - Bogus purchases - disallowance to 12.5% restricted by CIT - HELD THAT:- We are of the considered view that entire bogus purchases cannot be added in such a case. We are of the considered view that a reasonable disallowance of the purchases would meet the possibility of revenue leakage. Therefore, in view of the above findings, we find no infirmity in the findings of the learned CIT(A) in restricting the disallowance to 12.5% of the amount of bogus purchases. We find that the same is also in line with the judgment of the Hon ble jurisdictional High Court in PCIT v/s Paramshakti Distributors Ltd [ 2019 (7) TMI 838 - BOMBAY HIGH COURT] . Disallowance of sundry creditors - Addition u/s 68 - CIT(A) dismissed the appeal filed by the assessee on this issue and held that the assessee has provided the ledger extracts and payment through the bank account along with sample bills of such parties evidencing purchases, however, the assessee has neither furnished confirmation from these creditors nor produce such parties even during the remand proceedings - HELD THAT:- From the perusal of the ledger account of these parties in the books of the assessee, we find that the assessee made the purchases during the year and also made the payment. Accordingly, the balance outstanding was shown as sundry creditors in its balance sheet, which was added by the AO. Therefore, it cannot be disputed that the addition of outstanding trade creditors has been made under section 68 of the Act, as these parties did not respond to notices issued under section 133(6) of the Act and the assessee also could not furnish the confirmation from these parties. We find that the issue of whether unpaid trade creditors could be added under section 68 of the Act came up for consideration before a five-member Special Bench of the Tribunal in Manoj Agarwal [ 2008 (7) TMI 446 - ITAT DELHI-A] wherein held there is marked difference between a credit representing a liability payable by the assessee and a credit representing monies received from another person. It is because of this distinction, a liability for purchase which has been credited in the account of the supplier cannot be added under section 68 of the Act, more so when the purchase has been accepted as genuine and a deduction therefor has been allowed. In all other cases including the case of a credit representing the sale proceeds of an asset, the provisions of section 68 are applicable and it is for the assessee to prove satisfactorily the nature and source of the monies. We find that in Smt. Madhu Solanki v/s ITO, [ 2021 (8) TMI 373 - ITAT BANGALORE] the coordinate bench of the Tribunal after considering the aforesaid decision held that the AO cannot make an addition of trade creditors under section 68 of the Act when the purchases made during the year and payments made during the year have been accepted. Thus since in the present case the purchases made by the assessee and the payment made during the year have not been disputed by the AO in respect of the parties shown as sundry creditors, we are of the view that the addition in respect of the balance sundry creditors is not sustainable. Accordingly, the AO is directed to delete the same. As a result, ground raised in assessee s appeal is allowed. Ad hoc addition on account of lower household withdrawal and addition on account of various expenses - HELD THAT:- Having considered the submissions of both sides and perused the material available on record, we find that the AO has made the addition on an ad hoc basis without any relevant supporting documentation. Accordingly, we find no merits in these additions made by the AO and upheld by the learned CIT(A). Accordingly, we direct the AO to delete the addition on account of low household withdrawal, and various expenses incurred in cash. As a result, grounds raised in assessee s appeal are allowed.
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2024 (2) TMI 271
Reopening of assessment u/s 147 - gain on sale of property - LTCG or STCG - AIR information indicating that the assessee has sold immovable property during the year under consideration - though the property sold was a long term capital asset, however, AO has taxed the profit derived from sale of the property as short term capital gain since, assessee could not produce the purchase deed in course of assessment proceedings - subject addition on account of short term capital gain is only for the reason that the purchase deed was not available before the Departmental Authorities - HELD THAT:- It is the specific case of the assessee that the property was purchased on 30/05/2006 and sold on 16/03/2011, therefore, it is a long term capital asset. It is further case of the assessee that the assessee is one of the co-owners of the said property. If the assessee wants to prove the nature of the asset, whether long term of short term by leading some evidence, in our view, such opportunity should be granted to the assessee. Since, FAA has refused to take cognizance of the evidences furnished by the assessee, in our view, the assessee deserves an opportunity to prove his case through proper evidence not only with regard to nature of asset, whether long term and short term, but also the extent of his ownership over all the asset. Accordingly, we set aside the impugned order of the First Appellate Authority and restore the issue to the file of the AO for fresh adjudication after providing due and reasonable opportunity of being heard to the assessee.
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2024 (2) TMI 270
Penalty u/s 271(1)(c) - addition sustained purely on an adhoc estimate basis - allegation of defective notice u/s 274 - non specification of clear charge/ non striking off inapplicable part - HELD THAT:- The full Bench in the case Mohd. Farhan A Shaikh Vs. DCIT 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB) has held that a mere defect in the notice - not striking off the irrelevant matter, would vitiate the penalty proceedings. A perusal of the penalty notice issued u/s 274 read with 271 of the Act would show that the notices are in the nature of an omnibus show cause notice issued without deleting or striking off the inapplicable part. Same is the case with the penalty order passed under Section 271(1)(c) of the Act, as it also does not state under which limb of Section 271(1)(c) of the Act penalty has been levied. Thus penalty deleted - Decided in favour of assessee.
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2024 (2) TMI 269
Unexplained investment, unexplained purchases, unexplained investment in excess stock and undisclosed income - additions made by the AOat the hands of the assessee have actually been owned up by one of the directors of the company - assessee made application before the Settlement Commission for settling the dispute regarding those additions FAA did not accept the aforesaid contention of the assessee since the proceedings before the Settlement Commission were not finalized- HELD THAT:- As assessee has furnished a copy of the order passed by Interim Board for Settlement, wherein the application filed one of the directors of the assessee company, has been accepted. It is further observed, in the said order the Settlement Commission has observed that since Shri Rajiv Garg is the key person of the group and manages all financial affairs and further that he is responsible for earning undisclosed income emerging from the seized materials, all the transactions, which do not belong to any particular group, should be considered in his hands. Therefore, in view of the aforesaid observations of the Settlement Commission, all the issues relating to the additions made at the hands of the assessee and disputed before us need a fresh look at the end of the AO. Accordingly, we set aside the impugned order of Commissioner (Appeals) and restore the issues back to the AO for fresh adjudication after providing due and reasonable opportunity of being heard to the assessee. Appeal of assessee allowed for statistical purposes.
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2024 (2) TMI 268
Taxability of capital gain arising on sale of shares under the treaty provisions - taxability of income in India - assessee is a tax resident of Mauritius holding a valid TRC and is engaged in the business as an investment holding company having a Category 1 global business licence issued by the competent authority in Mauritius - AO and DRP have rejected assessee s claim by holding that assessee being a mere paper company is not entitled to treaty benefits - HELD THAT:- Reasoning, on which, the departmental authorities have denied assessee s claim of benefit under Article 13(4) of the tax treaty are unacceptable. It is evident, in course of proceedings before the departmental authorities, the assessee has furnished all materials and evidences to establish its residential status, bank statements reflecting details of investments made in foreign currency, Foreign Inward Remittance Certificate (FIRC) and various other documents have been submitted by the assessee before the departmental authorities. Whereas, neither the AO, nor DRP, except making vague allegations regarding the status of the directors and the structure of the company have held that since, the assessee is a mere paper company, it is not entitle to treaty benefits. This, in our view, is against the spirit of CBDT Circular no. 789, dated April 13, 2000 and the ratio laid down by the Hon ble Supreme Court in case Union of India Vs. Azadi Bachao Andolan ( 2003 (10) TMI 5 - SUPREME COURT ). In a recent decision of Blackstone Capital Partners (Singapore) VI FDI Three PTE. Ltd. ( 2023 (2) TMI 35 - DELHI HIGH COURT] it has been held that once the assessee holds a valid TRC, the Departmental Authorities cannot go behind it to question residential status. In the facts of the present appeal, except making vague allegations, the departmental authorities have failed to bring on record any cogent material to substantiate their allegations that the assessee is merely a paper company, hence, cannot be treated as a genuine tax resident of Mauritius. Interestingly, though, the AO has made various allegations regarding the status and genuineness of the assessee while denying benefit under Article 13(4) of the tax treaty, however, while computing the capital gain he has allowed set off of long-term capital loss relating to the assessment year 2012-13. This fact shows that the Assessing Officer to certain extent has accepted the genuineness of the activities carried on by the assessee, i.e., investment in shares of Indian companies. Thus, we hold that the assessee is entitled to claim exemption under Article 13(4) of the tax treaty qua the capital gain arising on sale of shares. Therefore, the amount in dispute is not taxable in India. Decided in favour of assessee.
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2024 (2) TMI 267
Weighted deduction u/s 35(2AB) - claim for deduction denied on the ground that Form No. 3CL was not furnished by the assessee before completion of assessment approving the R D expenditure by DSIR - CIT(A) decided in favor of assessee - Allowability of Revenue expenditure partly as not approved for weighted deduction by DSIR as Revenue expenditure u/s 37 - HELD THAT:- We observe that in the appellate proceedings the assessee furnished Form No. 3CL issued by DSIR quantifying the expenditure allowable for weighted deduction u/s 35(2AB) based on which the ld. CIT (Appeals) allowed the claim for weighted deduction. We further observe that the Revenue expenditure which was not approved for weighted deduction by DSIR was directed to be allowable as Revenue expenditure under section 37 of the Act while computing the income of the assessee by the ld. CIT (Appeals) - AO has not questioned the genuineness and allowability of these expenses. Moreover, during the course of appellate proceedings, on being asked, the AR has furnished these details and it is observed that these expenses have been incurred for the purposes of the business and therefore the same are allowable as revenue expenditure. In view of this, the balance expenses are allowable as revenue expenses and the AO is directed accordingly. Thus we sustain the order of the ld. CIT (Appeals) and reject this ground of appeal of the Revenue. Addition made u/s 68 - assessee company received un-secured loan - report sent by DDIT (Investigation Wing) Kolkata proves that the loan creditor though submitted some of the documents the principal officer of the said company was not present for deposition - AO disbelieved the documents furnished by the assessee and added the loan as unexplained credit - CIT(A) deleted addition - HELD THAT:- As loan creditor has filed its return of income for the year under consideration declaring net income of Rs. 29,63,710/- and has paid taxes on the same. On perusal of the balance sheet of the loan creditor it is clear that the capital account and reserves of the company stood at Rs. 15,65,58,169/- as on 31st March, 2014. The loans and advances of the creditor company stood at Rs. 10,62,64,984/-. On the date of loan i.e. 3.10.2013, before disbursement of loan to the assessee company the balance of bank account of creditor company stood at Rs. 8,83,089/- (credit and the bank statement reveals that an amount of Rs. 2.20 crores was advanced as loan to the assessee company through RTGS making its balance at Rs. 2,11,16,910/- (debit). It is clear from the bank statement that the balance remained at over draft. This fact was also confirmed by the Karnataka Bank Ltd. in its certificate dated 22.05.2017 wherein it has been clearly stated that the creditor company was enjoying over-draft limit of Rs. 7 crores and an amount of Rs. 2.20 crores has been remitted on 3.10.2013 in favour of the assessee by debiting the over-draft account of the creditor company. We further observe that the evidences furnished by the loan creditor before the DDIT, Investigation Wing, Kolkata, clearly proves that the identity, creditworthiness and genuineness of the transaction. We further observe that all these evidences and submissions of the assessee were considered by the ld. CIT (Appeals) and deleted the addition correctly. Appeal of revenue dismissed.
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2024 (2) TMI 266
Non acceptance of fresh evidence submitted u/r 46A of the I. T. Rules by CIT(A) - HELD THAT:- Once, the CIT(A), Bikaner had forwarded copies of additional evidence to the ACIT -Sriganganagar, it means, that CIT(A) has admitted the additional evidence. Once ld.CIT(A) admits the additional evidence, he is duty bound to discuss the additional evidence, remand report in the order under section 250 of the Act. However, in this case, it seems that the case was transferred from CIT(A), Bikaner to CIT(A)[NFAC]. Since for the first time CBDT had introduced the Faceless Appeal Scheme for adjudication by CIT(A), it is possible that in the transition, the ld.CIT(A)[NFAC] had not received copies of the additional evidence filed by assessee. As a result CIT(A)[NFAC] failed to discuss the additional evidence and remand report. In these facts and circumstances of the case, as the Faceless Appeal was a new concept to CIT(A) as well as Assessee, the error which has crept is a possible human error. In these facts and circumstances of the case, we deem it appropriate to set-aside the order of ld.CIT(A)[NFAC] to ld.CIT(A) for denovo adjudication. CIT(A) shall consider the additional evidence filed by the assessee, consider remand report. The ld.CIT(A) shall also provide opportunity to the assessee. Assessee shall also be at liberty to file necessary documents before the ld.CIT(A). Accordingly, the Ground No.4 is allowed for statistical purpose.
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2024 (2) TMI 265
Rate of tax on assessed income of Non-Resident assessee - Partner in Joint Venture - Claim of Benefit of DTAA - to settle the matter at rest, the assessee is willing to offer the income subject to settlement of tax liability at the rate at which TDS has been deducted - Withheld tax on the payments made towards technical know-how fee and financial commitment fee at the rate of 10% and 15% respectively - HELD THAT:- JV had approached the TDS Officer u/s 195 of the Act seeking a direction regarding the rate of TDS on the aforesaid payments. In response to the application filed by the JV, TDS officer has issued an order under section 195 of the Act, wherein he has directed the JV to deduct tax at the rate of 10% on technical know-how fee and at the rate of 15% on financial commitment fee. The aforesaid rates were applied by the TDS Officer treating the technical know-how fee as FTS and the financial commitment fee as interest income. The rate of TDS was determined in terms with the rate of tax for FTS and interest income as per the treaty provisions. Whereas, the Assessing Officer has taxed the entire receipts by applying the normal rate of tax as per the provisions of domestic law. There is no dispute that the assessee has willingly offered the entire receipts to tax in India. The dispute is only with regard to applicable rate of tax on such receipts. Since, the assessee is resident of Canada and is entitled to get benefit under India Canada DTAA, in our view, the assessee must get benefit of the tax rate provided under the DTAA. In fact, being conscious of this factual position, the TDS Officer has issued an order u/s 195 of the Act directing the payer to deduct tax at 10% and 15% respectively. Thus, on overall consideration of facts and circumstances of the case, we do not find any infirmity in the decision of learned first appellate authority on the issue. Accordingly, we dismiss the grounds.
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2024 (2) TMI 243
Deduction u/s 80P(2)(d) - interest income on fixed deposit made with the Cooperative Bank - assessee is a Cooperative Society claimed deduction u/s 80P(2)(d) inter-alia on the interest received from Bhopal Cooperative Central Bank as well as from Malwa Narmada Gramin Bank(MNGB) - CIT(A) allowed the claim of the assesse u/s 80P(2)(d) in respect of the interest received from Bhopal Co-operative Central Bank but confirmed the disallowance in respect of interest received from Malwa Narmada Gramin Bank for want of any information/details to show that the said bank is a Co-operative Society - HELD THAT:- As relying on Indore Pragatishil Sahakari Sakh Sanstha Maryadit [ 2024 (2) TMI 190 - ITAT INDORE] no error or illegality in the impugned order of the CIT(A) in allowing deduction u/s 80P(2)(d) of the Act on the interest received by the assessee from the deposit made in Bhopal Co-operative Central Bank. The revenue is devoid of any merits. Interest income received from MNGB - claim of the assesse was not allowed by CIT(A) for want of necessary details - assessee has stated that the assesse shall produce the necessary details before the AO to show that the said Co-operative Bank is a Co-operative Society and therefore, the interest received from the said bank is eligible for deduction u/s 80P(2)(d) - HELD THAT:- We are of the considered view that this issue required a proper verification and examination at the level of the AO. Accordingly the issue of deduction u/s 80P(2)(d) of the Act in respect of the interest received from MNGB is remanded to the record of the AO for fresh adjudication after verification and examination of the necessary record on the point whether the said Bank is Co-operative Society or not. In case the said bank is found to be a Co-operative Society registered under Co-operative Societies Act then the claim of the assesse u/s 80P(2)(d) of the Act is directed to be allowed. Appeal of the revenue is dismissed and CO of the assesse is allowed for statistical purposes.
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2024 (2) TMI 242
Disallowance of deduction u/s 80P(2)(d) - gross interest receipt/dividend from Co-operative Bank - HELD THAT:- We see no reason to take any other view of the matter then the view so taken in the case of Surat Vankar Sahakari Sangh Ltd. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT ] as held Section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society. This provision does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the cooperative society from any investment with a co-operative society. It is immaterial whether any interest paid to the co- operative society exceeds the interest received from the bank on investments. The Revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. The Act does not speak of any adjustment as sought to be made out by learned counsel for the Revenue. The provision does not indicate any such adjustment in regard to interest derived from the co-operative society from its investment in any other co-operative society. Therefore, we do not agree with the argument advanced by learned counsel for the Revenue. Decided in favour of assessee. Addition in respect of rental income earned - We note that assessee has not claimed deduction u/s 80P(2)(d) of rental income - The rental income has been shown by the assessee in the computation of total income separately and paid the taxes thereon as per the income tax rate applicable, therefore the question of disallowance does not arise. We note that deduction under section 80P is available activity-wise and the rental income is not defined as per the section 80P, however assessee has shown the rental income separately and paid the taxes thereon. Hence, the question of disallowance under section 80P of the Act does not arise, specifically when the assessee has never claimed deduction under section 80P of the Act in respect of the rental income. Therefore, we delete the addition.Decided in favour of assessee. Income from sale of crackers - We note that assessee has never claimed the deduction under section 80P of the Act on account of sale of crackers, hence the question of disallowance does not arise -The Ld. Counsel also took us through paper book page no.31 and stated that assessee has shown the crackers sale separately and the sale of crackers has not included in computing deduction under section 80P of the Act. The assessee has never claimed deduction under section 80P in respect of sale of crackers, therefore disallowance under section 80P of the Act does not arise.Decided in favour of assessee.
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2024 (2) TMI 241
Unaccounted interest payment on cash loan - search and seizure action u/s 132 - loose paper seized from the premises of an employee of the assessee as well as the tally account in the name of XYZ 0809-2 taken from laptop - scope of 'dump document' - no opportunity to assessee to cross examine - denial of natural justice - CIT(A) has considered the tally account as dummy one created for training purpose incorporating the data from different sources including that of assessee and therefore, the Tally account found in the laptop as well as loose paper were held to be having no evidentiary value being dump documents, thus deleted addition - HELD THAT:- Statement and witness cannot be used against the assessee without affording reasonable an opportunity of being heard as well as giving the assessee an opportunity for cross examination of the witnesses It is settled preposition of law that if any evidence or statement is made the basis of the assessment order without allowing the assessee to cross examine the witness or to rebut the evidence then it would amount to violation of principle of natural justice as held by the Hon ble Supreme Court in case of Andaman Timber Industries vs. Commissioner of Central Excise 2015 (10) TMI 442 - SUPREME COURT] It is also settled proposition of law that the presumption u/s 132(4A) of the Act is subject to rebut and therefore, the assessee has right to be confronted with the information being used against the assessee. AO has used the loose paper seized from the premises of employee as well as his statement without giving an opportunity to assessee to cross examine or to substantiate its claim based on the affidavit filed. Accordingly, we are of the considered view that there is a violation of principle of natural justice, so far as the addition is made by the AO on account of alleged unaccounted payment of interest on the basis of the statement of employee of assessee and consequently, it renders the assessment order nullity as much as the additions are made by the AO. Further when the assessee has denied the alleged transactions of taking any loan or payment of any interest on the same then it was incumbent on the AO to conduct a further inquiry by examining the person concerns from who alleged loans are stated to be taken. The AO has not even verified stands of those parties about confirming the transactions of the alleged loans and receipt of the interest. In case the assessee has taken this cash loans from these parties then a necessary consequence would be the said transactions to be taken for assessment in the hands of those persons as out of book transactions. AO has relied upon the statement of Shri G.C. Patidar to consider the contents and transactions in the seized documents as cash loan taken by the assessee therefore, except the statement of employee these documents do not speak themselves about the nature of the transactions. Hence, the non-affording opportunity of cross examination of employee is a gross violation of principle of natural justice rendering the assessment order as nullity. No error or illegality in the impugned order of the CIT(A) qua this issue of addition made on account of unaccounted/unexplained payment of interest on the alleged cash loans. Decided against revenue.
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Customs
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2024 (2) TMI 264
Confiscation of the imported goods - used hand tools - Capital Goods or not as per para-9.12 of Foreign Trade Policy - appellant did not have licence to import such goods - HELD THAT:- The issue has been considered by the Tribunal in the case of Asia Power Projects Ltd. [ 2019 (1) TMI 333 - CESTAT CHENNAI] wherein on identical set of facts the Tribunal observed that as per para 9.12 of FTP, any goods which fall under the category of equipments, apparatus etc. are freely importable irrespective of their size and nature. So also, as per the EPCG scheme, there is no difference as to whether tools are machine tools or hand tools. The order directing for confiscation of the goods and imposition of redemption fine and penalties cannot sustain. In the result, the impugned order is set aside - Appeal allowed.
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2024 (2) TMI 263
Quantum of redemption fine and penalty - import of used digital multifunction machines - mis-declaration of value of goods - HELD THAT:- It is seen from the records that there have been number of orders issued by this Tribunal and various High Courts accepting the fact that the impugned MFDs are not liable for absolute confiscation. Hence have taken a lenient view and released these goods on payment of redemption fine of 10% penalty of 5%. From the Final Order in the case of M/s. Accord Digitech v. C.C., Bangalore [ 2020 (12) TMI 647 - CESTAT BANGALORE] passed by this Tribunal, it is clearly evident that the used Digital Multifunction Printing and Copying Machine were released on payment of redemption fine of 10% and penalty of 5% of the enhanced value of the imported goods. This was also followed by this Bench in the case of M/S. S.R. ENTERPRISES VERSUS THE COMMISSIONER OF CUSTOMS BANGALORE-CUS. [ 2020 (4) TMI 421 - CESTAT BANGALORE] wherein the redemption fine and penalty was 10% and 5% respectively. Considering the fact that the Department has also accepted the same in the case of M/s. Accord Digitech v. C.C., Bangalore, it is opined that in the interest of justice since 6 years have already been lapsed, the present appeal is partially allowed by reducing the redemption fine and penalty by 10% and 5% respectively of the enhanced value. The present appeal is partially allowed by reducing the redemption fine to 10% of the enhanced value and penalty to 5% of the enhanced value. Appellant is allowed to redeem the goods for home consumption in above terms.
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Corporate Laws
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2024 (2) TMI 262
Seeking permission for withdrawal of appeal - HELD THAT:- In the instant TA (AT) No.113/2021 (Comp App (AT) No.200/2019), on the file of this Tribunal , the Appellant , is so far as the relief sought for `Set aside Order, dated 16.05.2019, passed by the National Company Law Tribunal , Hyderabad Bench in IA No.365/2018 in IA No.52/2018 in CA No.73/97/HYD/2016 and to punish the Contemnor / Respondent No.2 , in accordance with `Law . The Appellant , comes out with a crystalline stand that she is not pressing the said relief. Not resting to the above, in the said Memo , dated 30.10.2023, the Appellant , had also while seeking relief in the instant Appeal , for issuance of directions to the Contemnor / 2nd Respondent , to forthwith comply with the `Order , dated 08.03.2018, passed by the National Company Law Tribunal , Hyderabad Bench in CA No.73/97/HYD/2016 and once again the Appellant , seeking to agitate the relief in CP No.385/2019, pending before the Tribunal , this Tribunal , is of the earnest view that according to the 2nd Respondent , the instant Appeal , has become an Infructuous one and furthermore, the Appellant is not pressing for the relief sought for, in the instant Appeal , hence the Appellant , is not pressing the relief in the instant Appeal , seeking permission from this Tribunal to withdraw the same. This Tribunal , taking into account of the Appellant s contents of the Memo , dated 30.10.2023, filed before this Tribunal , in the instant Appeal , at this juncture, simpliciter, is of the considered view that the Appeal , has become an Infructuous one , especially the Appellant , is not pressing for the relief in the instant TA (AT) No.113/2021 (Comp App (AT) No.200/2019), and accordingly, the said `Appeal , is Dismissed , as an Infructuous one . Appeal dismissed.
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Insolvency & Bankruptcy
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2024 (2) TMI 261
Approval of Resolution Plan - Fresh claim based on Foreign Judgement - Allegation that the order is a non-speaking one - Section 44A of Civil Procedure Code, 1908 - It is represented on behalf of the Appellant that the I B Code, 2016 does not impose any bar upon this Tribunal , to take cognizance of a Foreign Judgement . HELD THAT:- In so far as the instant Appeal is concerned, this Tribunal pertinently points out that Section 60(5) of the I B Code, 2016 concerns with the Applications against a Corporate Debtor undergoing CIRP or claims against such Corporate Debtor , undergoing CIRP . Also that the Adjudicating Authority/Tribunal is enjoined with the power to determine any question of Law or Fact arising out of in, or in relation to the Insolvency Resolution or Liquidation Proceedings of the Corporate Debtor, or Corporate Person under this Code - It cannot be disputed that the Company was long out of the Insolvency and CIRP of the Company stood completed upon passing of the Plan Approval Order. Suffice it for this Tribunal to point out that the Approved Resolution Plan stood implemented as on date. This Tribunal in a crystalline manner points out that all such claims which were not a part of the Resolution Plan stood extinguished, on the date of Approval of Resolution Plan and further no individual, is permitted to initiate or continue any proceedings , in regard to a claim , which was not part of the Resolution Plan . Appeal dismissed.
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PMLA
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2024 (2) TMI 260
Seeking grant of bail - Money Laundering - huge quantity of gold has been recovered from the petitioner - Section 45 of the PMLA - HELD THAT:- In an appeal arising out of predicate offences the petitioner was granted bail by the High Court on 20.07.2022. Indisputably, the said order has not been challenged. In the present offence also, the accused Sukhpal Singh Khaira has already been granted bail. It is also considered Section 45 of the PMLA and find that in the facts and circumstances of the present case the rigor of the said section are duly satisfied more particularly looking to the custody period and parity of the petitioner s case with that of Sukhpal Singh Khaira. The petitioner is directed to be released on bail to the satisfaction of the Trial Court. The conditions of granting bail would be same as imposed by the High Court in the order dated 27.01.2022 passed in CRM-M No.51885/2021 in the case of Sukhpal Singh Khaira - SLP disposed off.
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2024 (2) TMI 259
Maintainability of SLP - money laundering - predicate offence - The High Court has allowed the petition of the respondent and quashed the ground that, If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him. HELD THAT:- The Special Leave Petition filed by the ED is dismissed as not pressed.
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Service Tax
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2024 (2) TMI 258
Condonation of delay in filing appeal before the Commissioner (Appeals) - appeal was filed on 02.07.2015 i.e. after the expiry of the limitation period prescribed under Section 85(3A) of the Finance Act, 1994 - sufficient reasons for delay present or not - HELD THAT:- The decision of the Supreme Court in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] in unambiguous terms, has laid down that there was no power to condone the delay after the expiry of the extended period of 30 days. The Tribunal in the case of M/S DIAMOND CONSTRUCTION, M/S SAI SHREE CONSTRUCTION VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX [ 2019 (2) TMI 1822 - CESTAT NEW DELHI] also observed that the provisions of Section 35 of the Central Excise Act relating to filing of an appeal before the Commissioner (Appeals) are in pari materia to Section 85(3A) of the Finance Act and hence, the decision of the Apex Court in Singh Enterprises will squarely apply and as a result, the delay cannot be condoned by the Commissioner (Appeals) and there is no illegality in the impugned order. The impugned order deserves to be upheld. The contention raised by the appellant that they are not the proper authority for levying the service tax and to file the appeal challenging the impugned order needs to be rejected for the simple reason that in response to the show cause notice, the appellant had submitted the reply and in adjudication proceedings, it is the appellant, who had contested. Thereafter, an appeal was also filed by the appellant only, may be after some delay. Similarly, the appeal has been filed before this Tribunal but after delay of more than 4 years and 9 months though the limitation prescribed for filing an appeal before this Tribunal as per Section 86 is three months from the date of receipt of the order. Therefore, the ground taken by the appellant in approaching this Tribunal after such a long delay is not justified. It is also found that at the time when the impugned order was passed on 21.06.2018, the appellant was pursuing the appeal before this Tribunal against the order-in-appeal dated 09.04.2018 and also against order-in-appeal dated 12.12.2014 which resulted in the Final Order dated 30.09.2019 and Final Order dated 17.06.2021 respectively (as referred above). The appellant could have similarly approached this Tribunal within the prescribed period. Therefore, the plea taken by the learned Counsel for the appellant in the application for condonation of delay deserves to be rejected. The application for Condonation of Delay in filing the present appeal is dismissed for want of any sufficient cause - appeal dismissed.
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2024 (2) TMI 257
Condonation of delay of 29 days in filing appeal before the Commissioner (Appeals) - sufficient reasons not there to condone the delay - HELD THAT:- The Order-in-Original in the present case was passed on 31st March, 2022 and the same is mentioned to have been received by the appellant on 15.04.2022. There is no dispute about the said date of receipt of order by the appellant. The appeal before Commissioner (Appeals) was admittedly filed on 15.07.2022. No doubt, in terms of section 85 of the Finance Act, the appeal was not filed within 60 days of the receipt of order. However, it has apparently been filed before expiry of 90 days from the said date. As per said section 85 itself, the Commissioner (Appeals) is competent to condone the delay within 30 days provided the delay has been sufficiently explained. It is observed that the application as has been considered by Commissioner (Appeals) apparently has no sufficient explanation for the impugned delay. However, it is also clear that the application does not pertain to the impugned issue/case. The reason given in the said application is about the order of cancellation of registration of the appellant. Whereas the Order-in-Original in the present case, which was appealed before Commissioner (Appeals) is about confirmation of demand of service tax alongwith the interest and the imposition of penalty of equal amount. This particular perusal is sufficient to hold that the question of insufficiency of explanation is absolutely irrelevant when it does not pertain to the issue involved. Hon ble Apex Court in the case of COLLECTOR, LAND ACQUISITION VERSUS MST. KATIJI AND OTHERS [ 1987 (2) TMI 61 - SUPREME COURT] that ordinarily a litigant does not stand to benefit by lodging an appeal late, it is held that appellant herein, at-least be given an opportunity to put-forth the appropriate application. This is a fit case to be remanded back to Commissioner (Appeals) to look into the proper application of the appellant while exercising its power/discretion under section 85 of the Finance Act - appeal allowed by way of remand.
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2024 (2) TMI 256
Levy of service tax - Man Power Recruitment or Supply Agency service (MRSA) - Transportation of goods by road - It is alleged by department that labour (services) was provided by appellant to farmers - HELD THAT:- On perusal of records it is seen that the appellant is a Co-operative society formed by farmers. It is alleged by department that labour (services) was provided by appellant to farmers. The appellant has made payment to the farmers on the basis of quantity of sugarcane cut and transported. It is not on the basis of man hours of work. Thus, the payment was made to farmer for harvesting, cutting and transportation of sugarcane. The very same issue was considered in the appellant's own case TALALA TALUKA SAHAKARI KHAND UDYOG MANDALI LIMITED, BILESHWAR KHAND UDHYOG, RANVIRBHAI B MORI, HARIBHAI OGHADBHAI BARAD AND ARJANBHAI KANABHAI DAHIMA VERSUS COMMISSIONER OF CENTRAL EXCISE ST, BHAVNAGAR [ 2022 (12) TMI 468 - CESTAT AHMEDABAD ] for different period, and the Tribunal after elaborate discussion has set aside the demand holding that the activity does not fall under MRSA service. The Tribunal in the case of SAMARTH SEVABHAVI TRUST VERSUS COMMISSIONER OF CENTRAL EXCISE, AURANGABAD [ 2013 (8) TMI 218 - CESTAT MUMBAI] and in the case of M/S. ARIGNAR ANNA SUGAR MILLS VERSUS THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, TIRUCHIRAPPALLI [ 2023 (10) TMI 1047 - CESTAT CHENNAI ] has taken similar views. The demand of Service Tax under 'Man Power Recruitment and Supply Agency' services cannot be sustained - the impugned order is set aside - appeal allowed.
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2024 (2) TMI 255
Interest on refund - refund claim has been filed on 02.07.2021 consequent to the Order-in-Appeal dated 2.12.2020, passed by the Commissioner (Appeals) - HELD THAT:- Admittedly, there is no dispute that the appellant has filed refund claim initially on 17.07.2018 for Rs. 10,90,40,506/-. The refund claim was rejected by the Adjudicating authority. On appeal the Commissioner (Appeals) set aside the OIO. Treating the appellant s reminder letter date 02.07.2021 as a fresh Refund claim, Show Cause Notice was issued, and after due process the Adjudicating authority has sanctioned refund of Rs. 10,26,92,605/, wherein the request of interest was denied. There are no further appeal was filed against OIA dated 02.12.2020 by the Revenue. Therefore, it is not coming out anywhere that the Revenue was aggrieved by the OIA dated 02.12.2020. This being so, the Adjudicating authority was precluded from initiating any further proceedings so as to re-quantify the initial refund claim of Rs. 10,90,40,506/- whereas he has done so, solely on the basis that a fresh refund claim has been filed subsequent to the OIA dated 02.12.2020, which is factually incorrect. There are no legal sanctity in issuing the SCN on this ground. Their subsequent letter dated 02.07.2021 cannot be viewed as a fresh refund claim filed by them, rather it should be taken as a reminder letter for the refund claim which was filed on 17.07.2018 itself - the interest is required to be paid to the appellant by treating the date of filing of the Refund Claim as 17.07.2018 for calculation of the interest payable to the appellant. Appeal allowed.
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2024 (2) TMI 254
Levy of service tax - Commissioning or Installation service - whether the activity of the appellant is covered under Section 65(39a) prior to 16.06.2005? - HELD THAT:- From the amended definition of Erection, Commissioning or Installation w.e.f. 16.06.2015, the concept has been expanded as prior to the said date the definition did not cover any activity relating to Electrical and Electronic Devices. Installation of Electrical and Electronic Devices including wirings or fittings has been specifically added by virtue of the enactment of the Finance Act, 2005 and since then appellant has been paying the service tax under this category. Reliance has been placed on the decisions of the Tribunal in POWER BEST ELECTRICALS LTD. VERSUS COMMISSIONER OF C. EX, [ 2007 (10) TMI 138 - CESTAT, BANGALORE] , RAJEEV ELECTRICAL WORKS VERSUS COMMISSIONER OF C. EX., CHANDIGARH [ 2007 (12) TMI 135 - CESTAT, NEW DELHI] . These decisions in clear words observed that Erection services were made taxable from 10.09.2004 and Electrical wiring or Installation of electrical fittings or devices was made taxable only pursuant to the enactment of Finance Act, 2005 on 14.05.2005. In the present case it is found from the records that the appellant undertakes Erection work for Vidhyut Vitran Nigam i.e., Erection of Transmission Line/Tower and the nature of activity involved therein includes conducting route survey, erection of PCC Poles in alignment, including excavation of pit, including back filing and Consolidation, fixation of Arms, MS Angle, MS Channel, Double Pole Line Structure Guard Packet and Porcelain Insulator, Erection of Lattice Tower, and Drawing of Wire etc. In terms of the enlarged definition of Erection, Commissioning or Installation as provided in Finance Act, 2005, the activity undertaken by the appellant becomes taxable w.e.f. 16.06.2005 and for the said period the appellant has already paid the service tax of Rs.1,37,515/-. Thus, the liability to tax arises only from 16.06.2005 consequent to the amendment enlarging the scope of the services relating to electrical fittings, wiring and other components and devices. Therefore, the demand on account of service tax, interest and penalty is unsustainable. Appeal allowed.
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2024 (2) TMI 253
Classification of services - sponsorship service or not - sponsorship fee paid by the appellant to M/s. JIPL towards grant of associate sponsorship rights of IPL team Rajasthan Royals for the IPL Season 3 (2010) - allegation in the Show Cause Notice is that the exclusion provided in Section 65 (105)(zzzn) is not available to the appellant as the sponsorship is for a sports team and not a sports event. HELD THAT:- The very same issue was considered by the Tribunal in the case of M/S HERO MOTOCORP LTD VERSUS COMMISSIONER OF SERVICE TAX, DELHI [ 2013 (6) TMI 447 - CESTAT NEW DELHI] wherein it was held that the expression in relation to sports event has an extensive connotation and the sponsorship of a team of IPL has to be considered as sponsorship of sports event itself. The said decision has been upheld by the Hon ble Supreme Court in COMMISSIONER VERSUS HERO MOTOCORP LIMITED [ 2015 (7) TMI 1163 - SC ORDER ] wherein the appeal filed by department was dismissed both on the ground of delay as well as being devoid of any merit. The impugned order is set aside - The appeal is allowed.
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Central Excise
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2024 (2) TMI 252
CENVAT Credit - common input service used for dutiable and exempted goods - liability to pay 5%/6% on the value of exempted goods (i.e. Sodium Chloride salt) in terms Rule 6(3) of the Cenvat Credit Rules, 2004 - HELD THAT:- This issue has been considered time and again and in various decision, it has been held that even if the appellant undertakes to reverse the proportionate credit attributed to the exempted goods along with interest even at the stage of CESTAT appeal, the demand of 5%/6% under Rule 6(3) of the Cenvat Credit Rules, 2004 shall not sustain. Since the appellant has undertaken to reverse the proportionate credit of common input service attributed to the exempted goods i.e. Sodium Chloride, the demand of 5%/6% under Rule 6(3) of Cenvat credit Rules, 2004 shall not sustain subject to complying their said undertaking. The appellant also made out a strong prima facie case on the ground of time bar as there appears to be no suppression of facts on the part of the appellant. However, if the appellant reverse the proportionate credit along with the payment of interest, the demand of 5%/6% shall not be sustainable. The appeals are allowed by way of remand to the Adjudicating Authority, to decide a fresh.
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2024 (2) TMI 251
Valuation - Corrugated Boxes received free of cost by Appellant from buyers for packaging glassware will be included in the calculation of Assessable Value under Section 4 of the Central Excise Act, 1944 or not - CENVAT Credit on scrap of capital goods - rule 3(5A) of Cenvat Credit Rules 2004 - HELD THAT:- In the present case, the cost of corrugated boxes supplied by the buyers to the appellant is includible in the transaction value of the glassware manufactured and supplied by the appellant as per the provision of Section 4 of the Central Excise Act 1944 and the rules made thereunder. Reliance placed on this tribunal s order in M/S. KAIRA CAN COMPANY LTD VERSUS C.C.E S. T- AHMEDABAD-III [ 2019 (12) TMI 114 - CESTAT AHMEDABAD] where it was held that in the present case apart from the transaction value the packing material supplied Free of Cost by the customer was also used by the appellant. The value of such packing material was not included. When any Excisable product is manufactured and cleared the value of such goods shall be the total value of goods in the form it is cleared from the factory of the Assessee. It is immaterial that whether a part of the material contained in the final product to borne the cost. Demand raised on the Appellant for the scrap of Capital Goods - HELD THAT:- As the show cause notice was badly issued by the Department without proper investigation into whether the Appellant has availed Cenvat Credit in respect to the scrap which was apparently cleared without payment of duty on such capital goods scrap. In the absence of any such investigation and the Department unable to adduce any evidence the allegation made in the Show cause notice is bad. In this position the submission of the appellant must be taken correct as there is no material produced by the revenue that states otherwise. Therefore, it is clear that the Appellant have cleared the scrap which is neither generated from cenvatable capital goods or cenvatable input nor from manufacturing. Therefore, the same is clearly not liable for any duty - The identical issue was raised in the appellant s own case only for a different period wherein this tribunal has taken a consistent view that such scrap other than manufacturing and non-cenvatable is not liable to duty. Appeal allowed in part.
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2024 (2) TMI 250
CENVAT Credit - Input service or not - availing outward transportation service from GTA to transport the goods from the factory to customer s premises - reverse charge mechanism - inclusion of the cost of transportation in the assessable value of the goods cleared by the Appellant - time limitation. CENVAT Credit - Input service or not - availing outward transportation service from GTA to transport the goods from the factory to customer s premises - reverse charge mechanism - HELD THAT:- From the definition of input service it can be seen that prior to 1.4.2008, in sub-clause (ii) any service used by the manufacturer whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, is covered under the definition of input service. However, post 01.04.2008, only those services which are used upto the place of removal were covered within ambit of input services. The period involved in the present appeal is prior to 01.04.2008. The issue is considered by various judgements, which are discussed hereunder, which clearly hold that, prior to 01.04.2008, the outward transportation services were specifically covered by main body of the definition of input service, which provides for means part of the definition and it is not necessary to examine the inclusive part of the definition of input services. The Hon ble Apex Court in COMMISSIONER OF CUSTOMS CENTRAL EXCISE AND SERVICE TAX, GUNTUR VERSUS M/S. THE ANDHRA SUGARS LTD. [ 2018 (2) TMI 285 - SUPREME COURT] , in paragraph 8 clearly holds that once it is accepted that the place of removal is the factory premises of the assesee, the outward transportation from the said place would clearly amount to input services. That place can be warehouse of the manufacturer or it can be customer s place if from the place of removal the goods are directly dispatched to the place of the customer. One such outbound transportation from the place of removal gets covered by the definition of input service. - the Appellant is entitled to CENVAT credit of service tax paid under RCM for transportation of goods from its factory to customer s premises. No case is made out by the revenue for denial of the CENVAT Credit on the ground that goods were not sold on FOR basis. Inclusion of the cost of transportation in the assessable value of the goods cleared by the Appellant - HELD THAT:- This very issue was considered by the Larger Bench s in the case of ABB LTD. VERSUS COMMISSIONER OF C. EX. ST., BANGALORE [ 2009 (5) TMI 48 - CESTAT, BANGALORE-LB ], which was ultimately upheld by the Hon ble Supreme Court in case of COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. [ 2018 (3) TMI 993 - SUPREME COURT] , and in which it is held that cenvat credit on outward transportation allowable - Following the decision of the larger bench in ABB Limited, it is held that non-inclusion of the costs of the transportation in assessable value is no ground to deny the CENVAT credit. Time Limitation - HELD THAT:- The demand in the present case relates to the period January, 2005 to June, 2007 and the show cause notice was issued on 02.12.2009. The entire demand is beyond normal period of one year. The issue involved is of interpretation of Cenvat Credit Rules and on this issue there are number of judgements. In these circumstances it cannot be said that the Appellant had a mala fide intention to evade the excise duty by taking the wrong credit - there are no suppression of fact or misstatement on the part of the Appellant. Thus, the extended period cannot apply in the facts of the present case. The impugned order set aside both on merits and on limitation - appeal allowed.
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2024 (2) TMI 249
100% EOU - refund of unutilized cenvat credit - appellant was neither issued a SCN nor given a personal hearing - ex-parte order - violation of principles of natural justice - Rule 5 of Cenvat Credit Rules, 2004 read with Notification No.27/2012-CE (NT) dated 18.06.2012 - opportunity of hearing not provided - violation of principles of natural justice - HELD THAT:- Apart from issuing a letter dt. 27.11.2015 informing the appellant to furnish the relevant A.R.E-1 documents duly certified by Customs authorities, there is no show cause notice issued to the appellant proposing to reject the refund claim. So also, the appellant was not granted a personal hearing by the adjudicating authority. It is indeed very much clear that the order has been passed by the adjudicating authority in violation of principles of natural justice. Even though the appellant had put forward this plea of violation of natural justice before the Commissioner (Appeals) the same was not considered and he has upheld the rejection of refund claim. Rejection of refund on the ground that the appellant has not furnished A.R.E-1 documents to establish that the goods have been exported - HELD THAT:- The appellant has produced the shipping bill, packing list, invoices as well as bank realization certificates. All these documents would show that the goods have been exported. Notification No.42/2001 provides for conditions in para-1 and procedures in para-2. The conditions in para-1 does not stipulate for submitting A.R.E-1 document at the time of export. However, in para-2 which lays down the procedure for export without payment of duty, it is stated that the exporter shall present the goods along with four copies of application in the Form A.R.E-1. Thus it can be inferred that the requirements to submit ARE-1 is not a condition but only a procedure - It is not the case of department that the goods have been exported without their approval or without issuing Let Export Order. In fact, the allegation that there is no proof for export itself is purely procedural. The department is well aware that goods have been exported. On the allegation of non-production of documents it is alleged that there is no evidence of export goods. When the exporter is following the self-certification procedure, he is not required to submit the A.R.E-1 document - It is found that the rejection of refund claim holding that the appellant has not produced A.R.E-! document to evidence the export of the goods is wholly unjustified. Rejection on the ground that the invoices do not tally as to the address so as to show that the goods have originated from Hosur unit itself - HELD THAT:- In the invoice though address is that of Bangalore, after the description of goods it is stated that the goods are manufactured by Hosur unit. The corresponding packing list shows appellant s Bangalore address. But the invoice number is same. Again the EDI Shipping Bill shows Factory sealed . The policy is that duty / tax are not to be exported. These notifications are to facilitate hassle free exports so as to earn foreign exchange for the country. If the compliances can be verified by checking the invoice number in the documents the department ought not to resort to reject refund claims on flimsy and minor procedural aspects - Further, the said ground has not been informed to the appellant by issuing a show cause notice. The appellant has not been given an opportunity for personal hearing also. The refund has been rejected without following the principles of natural justice. The rejection of refund claim is not justified - Appeal allowed.
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2024 (2) TMI 248
Abatement of duty - Compounded levy scheme - Cold Rolling Machine was dismantled and not in use for manufacture during the disputed period - N/N. 17/2007-CE - HELD THAT:- It is an option given to an assessee engaged in manufacture of stainless steel pattas/pattis to pay duty of excise on the basis of number of Cold Rolling Machines installed for cold rolling of such goods. The appellant had initially requested for permission for use of 3(Nos.) of Cold Rolling machines under the notification. Later, on 22.08.2012 they have issued letter informing the department that one machine is not working and that they are dismantling the same. The department has chosen not to respond to this letter. On 07.08.2013, the present show cause notice has been issued alleging that the notification does not provide for abatement. In fact, the appellant has not requested for any abatement. They have informed the department that they have dismantled one Cold Rolling machine and are using only two Cold Rolling machines for which they discharged the duty. The department has no case that the appellant had not dismantled the Cold Rolling machine or that during the disputed period the appellant was using all three Cold Rolling machines. The duty of excise cannot be demanded on goods which are not manufactured. The notification provides for special procedure to pay/ collect duty in respect of goods manufactured using Cold Rolling machines. The demand of duty during the period when the machine was not used for manufacture of goods is not justified - the demand cannot sustain. For the same reasons, the interest and penalties also require to be set-aside. The impugned order is set aside - The appeal is allowed.
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2024 (2) TMI 247
Valuation of the goods - clearance of kraft paper to their sister concern, and also to independent buyer - period April 2006 to September 2012 - HELD THAT:- The issue is wholly covered by ruling of the Larger Bench decision of this Tribunal in the case of ISPAT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD [ 2007 (2) TMI 5 - CESTAT, MUMBAI-LB] - The issue before the Larger Bench was whether the assessable value in respect of goods which are transferred to any plant/unit of the same assessee, is required to be determined as per Rule 4 or Rule 8 of Central Excise Valuation Rules 2000, in case where some goods were also sold to independent buyers. The Larger Bench have held in the circumstances and facts as follows:- In view of what we have observed above, we answer the reference in the following terms:- (a) the provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to independent buyers; (b) the provisions of Rule 4 are in any case to be preferred over the provisions of Rule 8 not only for the reason that they occur first in the sequential order of the Valuation Rules but also for the reason that in a case where both the rules are applicable, the application of Rule 4 will lead to a determination of a value which will be more consistent and in accordance with the parent statutory provisions of Section 4 of the Central Excise Act, 1944. The impugned order set aside - All penalties also stands set aside - appeal allowed.
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Indian Laws
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2024 (2) TMI 246
Seeking direction for an in-depth, thorough and time bound investigation by a SIT into various serious illegalities, violations and siphoning of funds committed by the promoters of Indiabulls Housing Finance Limited (IBHFL), its subsidiaries and their promoters - siphoning of funds by the IBHFL and other Indiabull group of companies - HELD THAT:- Applying the dictum of the Hon ble Supreme Court in Vishal Tiwari Vs. Union of India [ 2024 (1) TMI 188 - SUPREME COURT] to the case in hand, this Court is of the opinion that the allegations levelled by the petitioner are not substantiated as these are not supported by any evidence. The balance sheets or other material placed on record is already available on the website of these companies and is thus already in public domain. Not only a large portion of alleged loans were repaid by the respondent- companies but also the loans were advanced against mortgages and securities furnished by the borrowers. Moreover, due to alleged complaints, the Government functionaries have already set in motion and necessary inspections have been carried out by NHB. The Ministry of Corporate Affairs is also in the process of further investigation. In the considered opinion of this Court, due to articles published in magazine and newspaper, the tweets made by member of the petitioner-firm or a Member of Parliament, the share holders of accused-companies were jolted and they were made to suffer huge losses. It is settled position of law that the jurisdiction of investigation lies within the realm of investigating agency and a Court has no authority to interfere in the investigation until and unless there is grave miscarriage of justice or misuse of process of law. The investigation has to be transferred to CBI or SIT or any other agency only in exceptional cases and not as a matter of routine. There is no dispute to the position that necessary investigation in the present case has already been carried out by NHB and also the Ministry of Corporate Affairs is in the process of further investigation. Finding no merit in the present petition, it is accordingly dismissed.
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2024 (2) TMI 245
Change in the interest rate during the period of loan against guidelines of the Reserve Bank of India - illegally charging thousands of rupees as yearly charges - no opportunity of submitting objection was granted to the petitioner - violation of principles of natural justice - HELD THAT:- It was incumbent on the bank not to charge usurious interest, including processing and other charges. An appropriate ceiling should also be fixed on interest including processing and other charges that are levied on such loans and the same should be suitably publicized. In this case, though it is clear that variable rate of interest has been charged by the bank, but the same has not been accepted by the petitioner/customer. Further, the bank on its own had charged annual maintenance charges which was not even agreed upon by the petitioner - The respondent no.5-bank failed to provide and adopt a transparent method of charging of the interest. It has been pointed out that the respondent-bank did resort to an arbitrary methodology. As per the guidelines given by the RBI, any change in that rate cannot be applied to the customers without notice to him and without his consent. Surprisingly, RBI had been issuing guidelines but has done nothing for the implementation of the same. They have just been a mute spectator allowing the banks to charge arbitrarily a very high rate of interest - Even if the benefit of doubt is given to the bank that they are free to charge the interest rate but it is duty of the RBI to see that the customers are not inconvenienced by huge rate of interest charged by the banks. The order dated 17.6.2020 clearly mentioned that no objection by the complainant was received by the Banking Ombudsman but later, under the RTI sought by the petitioner, the Banking Ombudsman admitted that no opportunity for submitting the objection was granted to the petitioner. Even the impugned order of closure of petitioner s complaint by the Banking Ombudsman is a non speaking order and only a formatted order, which has been passed mechanically, without application of mind. The impugned order dated 17.6.2020 passed by the Banking Ombudsman (respondent no.4) is set aside and the matter is relegated back to the Banking Ombudsman to decide the same, after giving due opportunity of hearing to the parties by passing a speaking order - petition allowed by way of remand.
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2024 (2) TMI 244
Inquiry before issuance of process - whether the amendment in Section 202, sub-clause (1) of the Code of Criminal Procedure, contemplating an inquiry before issuance of process by the Magistrate, where the accused is residing outside the jurisdiction of the Court, is discretionary or mandatory? - HELD THAT:- Summoning of an accused in a criminal case, is a serious matter and it certainly cannot be a perfunctory exercise. The amendment introduced in the Code therefore, contemplates that a Magistrate shall examine the nature of allegations in the complaint and take into account the evidence, both oral and documentary, to find out if it is sufficient for the complainant to succeed in establishing the charge against the accused, and justify the issuance of process against him. It is nonetheless the duty of the Magistrate to prima facie find out, if the case is made out by the complainant against the accused before the process is issued, so as to avoid any frivolous or vexatious claims being taken forward by the Magistrate. Vindication of majesty of justice and maintenance of law and order in the Society, being the primary object of criminal justice, would not bring within its sweep, a personal vengeance. The reference is answered accordingly.
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