TMI Tax Updates - e-Newsletter
March 3, 2023

Case Laws in this Newsletter:

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

Articles

1. Any ad-hoc determination of ALP by TPO de-hors Section 92C(1) of the Act cannot be sustained

   By: Vivek Jalan

2. Assessments under GST

   By: Rajeev Jain

3. Department cannot raise demand without examining the reversal of Cenvat credit and calculating proportional credit

   By: Bimal jain

4. HARD ALLOWANCE - CAPITAL RECEIPT

   By: DR.MARIAPPAN GOVINDARAJAN

5. Credit of unadjusted TDS under VAT can be transitioned into GST regime

   By: Bimal jain

News

1. PM GatiShakti National Master Plan and National Logistics Policy (NLP) together will greatly help both businesses and people: Shri Piyush Goyal

2. 8th National Conference on Economics of Competition Law tomorrow in National Capital

3. Several steps taken to boost the Indian tea industry, to address emerging challenges and to create a global brand

4. Developed and developing countries must have different goals and timelines while being sensitive to each other's needs, potential goals and roadmap towards sustainability: Shri Piyush Goyal

5. Controller General of Accounts celebrate 47th Civil Accounts Day

Notifications

GST - States

1. 09/GST-2 - dated 1-3-2023 - Haryana SGST

Amendment of Notification No. 36/GST-2, dated 30.06.2017 under the HGST Act, 2017

2. 08/GST-2 - dated 1-3-2023 - Haryana SGST

Amendment of Notification No. 35/GST-2, dated 30.06.2017 under the HGST Act, 2017

3. 07/GST-2 - dated 1-3-2023 - Haryana SGST

Amendment of Notification No. 48/GST-2, dated 30.06.2017 under the HGST Act, 2017

4. 06/GST-2 - dated 1-3-2023 - Haryana SGST

Amendment of Notification No. 47/GST-2, dated 30.06.2017 under the HGST Act, 2017

Income Tax

5. 10/2023 - dated 1-3-2023 - IT

Faceless Assessment proceedings - Income-tax Authorities of Units specified shall exercise the powers and functions of AO concurrently, to facilitate the conduct of Faceless Assessment proceedings - Amendment in Notification No. 61/2022 dated the 10th June, 2022

6. 09/2023 - dated 1-3-2023 - IT

Insolvency and Bankruptcy Board of India’, New Delhi, notified as a Board established by the Central Government u/s 10(46) of IT Act 1961.

SEBI

7. SEBI/LAD-NRO/GN/2023/126 - dated 28-2-2023 - SEBI

Securities and Exchange Board of India (Investor Protection and Education Fund) (Amendment) Regulations, 2023

SEZ

8. S.O. 949 (E) - dated 28-2-2023 - SEZ

Special Economic Zone for Footwear sector at SIPCOT Industrial Growth Centre, Bargur, Uthangarai and Pochampalli Taluk, Krishnagiri District, in the State of Tamil Nadu

Highlights / Catch Notes

GST

• High Court Orders Reconsideration of GST Refund Claim on Terminated Lease Transaction by Appellate Authority.

  Case-Laws - HC : Refund of GST paid - The entire transaction of lease was brought into question and was terminated under the resolution plan. Thus, according to the petitioner, there was no supply of services. This contention has not been considered by the Appellate Authority. - Matter restored back for reconsideration - HC
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• Input Tax Credit Unavailable for Vouchers Exchanged via Loyalty Points, Rules AAAR u/s 16 of CGST Act 2017.

  Case-Laws - AAAR : Input tax credit - vouchers and subscription packages procured by the Applicant from third party vendors that are made available to the eligible customers participating in the loyalty program against the loyalty points earned/ accumulated by the said customers - Section 16 of the CGST Act, 2017 - ITC not available - AAAR
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Income Tax

• Assessment Reopening u/s 147 Barred by Limitation; CBDT Notifications Cannot Extend Time Limit Per Section 149(1) Proviso.

  Case-Laws - HC : Reopening of assessment u/s 147 - barred by limitation - in view of express language of 1st proviso to Section 149(1), legislative mandate required that no notice could be issued under the new provision, if such notice could not be issued at that time on account of being beyond the time specified under the said section as it stood before the commencement of the Finance Act 2021, i.e a period of six year - even though CBDT issued both the notifications of 31.03.2021 and 27.04.2021, they could have no power to extend the time period under the first proviso to section 149(1) of the Act - HC
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• Rental Income from Subletting Classified as "Income from Other Sources" Since Assessee Isn't Property Owner.

  Case-Laws - AT : Correct head of income - taxability of rental income - the assessee is owner and thereby receives any income from house property, it should be taxed under the head “income from house property”. But in the case on hand, the assessee received rent only by sub letting the property, therefore, we are of the view that the assessee has rightly shown the rental income under the head “income from other sources”. - AT
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• Section 10(23C)(vi) Exemption Upheld: Loose Papers Insufficient to Prove Assessee Society's Activities Were Not Genuine.

  Case-Laws - AT : Withdrawal approval granted u/s 10(23C)(vi) - Loose papers don’t establish that the activities of assessee society are not genuine and are not carried out in accordance with the objects and thus the same cannot form the basis for withdrawal of exemption. - AT
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• Payments to Third Party by Company Not Deemed Dividends; No Outstanding Balance u/s 2(22)(e) of Income Tax Act.

  Case-Laws - AT : Deemed dividend u/s.2(22)(e) - the company has given some payments to the third party on behalf of the assessee, but said payments have been subsequently re-paid by the assessee or his family members either on the same day or within a short period i.e. less than one month without there being any outstanding balance in the books of accounts of the company. Therefore, transactions between the assessee and company cannot be treated as loan or advance within the meaning of provisions of Sec.2(22)(e) - AT
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• Assessee Can Claim TDS Credit Deducted in Deceased Mother's Name; AO to Verify Form 26AS for Allowance.

  Case-Laws - AT : Credit of TDS deducted in the name of deceased mother of the assessee - the assessee would not be made to suffer because of delay on the part of the deductor in updating PAN of the legal heir. Accordingly, the AO is directed to allow credit of the TDS claimed by the appellant on verification of form 26AS - AT
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• Commissioner (Appeals) decision on reducing contract value and goodwill reversed; 25% depreciation by Assessing Officer upheld.

  Case-Laws - AT : Deprecation - value of customer related contracts and goodwill - The action of Commissioner (Appeals) in reducing the value of customer contract and goodwill, as determined by the independent Valuer is wholly inappropriate, hence, unsustainable. Accordingly, we reverse the decision of Commissioner (Appeals) on the issue of valuation. Consequently, the computation of the Assessing Officer in allowing depreciation at 25% is upheld. - AT
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Customs

• Boiled Supari Classification: Not Under Chapter 21 of Customs Tariff, Analyzed Under Sub-heading 0802 for Edible Nuts.

  Case-Laws - HC : Classification of the goods - preparation of Betel Nuts known as ‘Boiled Supari’ - Given the definition of the sub-heading “Betel nut product known as ‘Supari’”, read in the context of the main title of Chapter 21 and sub-heading 0802 read in the context with the title of Chapter 8 of the Customs Tariff (“Edible fruits and nuts; peel of citrus fruit or melons”); it would not be apposite to classify the products in question as those covered under Chapter 21 of the Customs Tariff. - HC
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• Customs Authorities Liable for Demurrage Charges Due to Illegal Detention of Goods Without Exemption Provisions.

  Case-Laws - HC : Levy of demurrage charges - the detention of the goods by the Customs Authorities was illegal and such illegal detention prevented the importer from releasing the goods. Therefore, the Customs Authorities would be bound to bear the demurrage charges in absence of any provision absolving the Customs Authority from that liability. - HC
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• Shipping Bill Conversion Allowed Without Time Limit u/s 149 of Customs Act; Time Limits Deemed Ultra Vires.

  Case-Laws - HC : Conversion of shipping bills from Duty Drawback Scheme to DFIA Scheme - Period of limitation - they were held to be eligible to claim the benefit of DFIA. Section 149 of the Customs Act, 1962 lays down that any import/export document may be considered for conversion subject to satisfaction of the proper officer without having any limitation. - No time period is prescribed in Section 149 for conversion of bills and any policy providing for time period is ultra vires - HC
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• Customs broker cleared of penalty; verified documents from exporters were authentic, making Customs Brokers Licensing Regulations penalty unsustainable.

  Case-Laws - AT : Levy of penalty on Customs broker - overvaluation of goods by exporter in order to claim excess export benefits - since SVARAD had verified the relevant documents possessed by the exporters and issued by government departments, the authenticity of which is not under challenge, there is no failure in this regard on their part and the penalty imposed on them under the CBLR and is not sustainable. - AT
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IBC

• Resolution Professional's Fees Deemed Excessive Post-Liquidation Order; Evidence Supports Disproportionate Claims.

  Case-Laws - AT : Quantum of fees and other expenses payable to the Resolution Professional - The fees/expenses claimed by the Resolution Professional for the period following the passing of the liquidation order is exorbitant and not commensurate with the work performed by him as is clearly borne out from material on record. - AT
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• Resolution Plan Approved in CIRP; Contingent Provision for Appellant Questioned Due to Ongoing Arbitration Proceedings.

  Case-Laws - AT : CIRP - Approval of the Resolution Plan - Contingent Liability - there are no reason to set aside the Resolution Plan per se except for observing that the RP ought not to have made a ‘Contingent Provision’ with respect to the Appellant herein having regard to the specific facts of this case, which would be subject to the result of the Arbitration Proceedings. - AT
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Service Tax

• Service Tax on Foreign Bank LC Charges Under Reverse Charge Mechanism Dismissed Due to CENVAT Credit Eligibility.

  Case-Laws - AT : Service tax levy on the LC charges paid by the appellant to foreign bank - LC charges/fee paid to the bank are taxable, under Reverse Charge. However, as the appellant is entitled to cenvat credit, the demand for extended period is set aside - AT
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• Interest Demand Under Finance Act Section 75 Ruled Unjustified Due to Questionable Liability.

  Case-Laws - AT : Demand of interest u/s 75 of the Finance Act, 1994 - when the orders of the CESTAT Benches are considered, it is found that since the liability itself was questionable, the Revenue is not justified in demanding the interest also. - AT
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Central Excise

• Assessee Can Choose When to Reverse Cenvat Credit u/r 6(3); Revenue Cannot Enforce Specific Option.

  Case-Laws - AT : Reversal of Cenvat Credit - applicability of Rule 6(3) of CCR - This tribunal time and again taken a view that whether option is availed in advance or later stage it is prerogative to the assesse to choose any one of the option - Therefore, merely because the appellant at the relevant time did not opt for any of the option, revenue cannot impose upon the appellant a particular option i.e. payment of 6/7% of the value of the goods/service. - AT
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VAT

• Court Highlights Need for Concrete Proof in VAT Evasion Claims; ITC Under JVAT Act 2005 Considered Key Factor.

  Case-Laws - HC : Under-pricing of goods/colourful transactions - In the absence of tangible materials to support such a finding, it is difficult to assume that a purchaser of petitioner would purchase minerals at a lesser price under an invoice in order to evade payment of tax especially when the said purchaser is entitled to avail ITC under the JVAT Act, 2005. - HC
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• Petitioner Not a Casual Trader Under Andhra Pradesh VAT Act Section 2(7) Due to Single Out-of-State Purchase.

  Case-Laws - HC : Casual Dealer - turnover tax (TOT) dealer - The petitioner cannot be treated as casual trader also for the reason that U/s 2(7) of AP VAT Act a casual trader is a person who carries on occasional transactions of a business nature involving buying, selling or distribution of goods in the State, whether as petitioner made a single purchase from outside the State. - HC
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Case Laws:

• GST

• 2023 (3) TMI 113
  Suspension/cancellation of registration under the Central Goods and Services Tax Act, 2017 - HELD THAT:- The petitioner s grievance insofar as suspension / cancellation of its registration is concerned, stands addressed. It is also noted that the question whether the petitioner is liable to pay the amount as demanded appears to be a contentious one. However, we do not consider it apposite to examine that issue in this petition. Needless to state that the petitioner is at liberty to avail of such remedies in respect to the said demand notice as available in accordance with law. Petition disposed off.

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• 2023 (3) TMI 112
  Rejection of Petitioner s appeal as not maintainable - cancellation of GST registration under section 107 of the GST Act - HELD THAT:- A perusal of the impugned order clearly indicates that although the Commissioner (Appeals) has relied upon the suo-moto orders of the Supreme Court in respect of the limitation period considered the same and held the same to be within limitation, however, it has held that the appeal to be not maintainable as the course of action under section 30 was not adopted. This court in BALAJI ENGINEERING WORKS VERSUS UNION OF INDIA ORS. [ 2022 (5) TMI 637 - BOMBAY HIGH COURT ] n similar circumstances this court has granted an opportunity to the Petitioner to file an application before the authority under section 30 of the CGST Act - We therefore do not propose to take any different course of action in the matter. We are inclined to afford an opportunity to the Petitioner to file an application to the authority under section 30 of the CGST Act. It is made clear that if an application is made by Petitioner within 15 days from today before the authority under section 30 of the CGST Act, the authority to consider the same and take a decision on merits as expeditiously as possible within a period of three months from today. Petition disposed off.

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• 2023 (3) TMI 111
  Seeking permission to Petitioner to rectify the GST Return filed in Form- B2B instead of B2C as was wrongly filed under GSTR-1 in order to get the Input Tax Credit (ITC) benefit by the principal contractor - evasion of tax or not - HELD THAT:- The fact remains that by permitting the Petitioner to rectify the above error, there will be no loss whatsoever caused to the Opposite Parties. It is not as if that there will be any escapement of tax. This is only about the ITC benefit which in any event has to be given to the Petitioner. On the contrary, if it is not permitted, then the Petitioner will unnecessarily be prejudiced. In similar circumstances, the Madras High Court in M/S. SUN DYE CHEM VERSUS THE ASSISTANT COMMISSIONER (ST), THE COMMISSIONER OF STATE TAX [ 2020 (11) TMI 108 - MADRAS HIGH COURT] accepted the plea of the Petitioner and directed that the Petitioner in that case should be permitted to file the corrected form. This Court permits the Petitioner to resubmit the corrected GSTR-1 for the aforementioned periods and to enable the Petitioner to do so, a direction is issued to the Opposite Parties to receive it manually. Once the corrected Forms are received manually, the Department will facilitate the uploading of those details in the web portal - Petition disposed off.

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• 2023 (3) TMI 110
  Refund of GST paid - Non-supply of service - lease rentals on account of assessment/provisional assessment/appeal/any other order for the period of 01.07.2017 to 30.07.2018 - impugned order was passed in violation of principles of natural justice or not - failure on the part of Appellate Authority to appreciate that the lease was nullified in terms of the resolution plan. HELD THAT:- It is important to note that the SCN dated 11.01.2021 had proposed rejection of the petitioner s application on the premise that the lease of the property was required to be considered as supply of the services and the same were required to be valued in terms of Section 15 of the CGST Act. The Adjudicating Authority had reasoned that there was no specific exclusion under Section 15 of the CGST Act from the value of the supply in respect of non-recovery of payments of bad debts . Thus, according to the Adjudicating Authority, the fact that the petitioner had not recovered the lease rentals on which GST had been paid, it did not entitle it to any refund because a liability to pay GST would not stand extinguished on that ground. It is clear that the Appellate Authority had granted sufficient opportunity of personal hearing to the petitioner but the petitioner had failed to avail the same. The assumption that the Appellate Authority was bound to accede to repeated request for adjournment is erroneous. The contention that the impugned order has been passed in violation of principles of natural justice is bereft of any merit. Whether the petitioner was liable to pay GST in respect of the lease of the property in view of the resolution plan terminating all agreements/arrangements between BSL and other related parties? - HELD THAT:- There is no dispute that the resolution plan was sanctioned by the National Company Law Tribunal and is binding. It is the petitioner s contention that, in terms of the sanctioned plan, the Memorandum of Agreement for Lease dated 01.04.2015 was terminated without any liability on the part of BSL to pay or make any payment - The entire transaction of lease was brought into question and was terminated under the resolution plan. Thus, according to the petitioner, there was no supply of services. This contention has not been considered by the Appellate Authority. The impugned order largely proceeds on the basis that the supply of services was admitted and the refund of GST was sought on account of non-recovery of the lease rentals. The impugned order is set aside and matter remanded to the Appellate Authority to consider the aforesaid contention and pass a speaking order after affording the petitioner a reasonable opportunity to be heard - petition disposed off.

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• 2023 (3) TMI 109
  Seeking release of confiscated goods and vehicle - interaction, interplay and inter se application of Section 129 and Section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- As far as prayer for interim relief is concerned regarding release of the goods and vehicle of the petitioner, the same deserves to be considered on the same line and upon imposition of the similar conditions as done in the aforesaid order dated 01.07.2022 in Special Civil Application No. 8353 of 2012 [ 2022 (7) TMI 1364 - GUJARAT HIGH COURT ]. As could be seen from the impugned order, the penalty amount is Rs. 13,27,052/-. The fine and other charges are demanded to the extent of Rs.73,72,512/- and the tax is demanded of Rs.13,27,052/-. It is directed that the respondents shall release the goods and conveyance of the petitioner, confiscated and detained subject to the conditions imposed - application allowed.

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• 2023 (3) TMI 108
  Seeking release of confiscated goods and vehicle - interaction, interplay and inter se application of Section 129 and Section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- As far as prayer for interim relief is concerned regarding release of the goods and vehicle of the petitioner, the same deserves to be considered on the same line and upon imposition of the similar conditions as done in SMIT DIPEN SHAH, M/S LIBERTY PRODUCTS VERSUS STATE OF GUJARAT [ 2022 (7) TMI 1364 - GUJARAT HIGH COURT] , where it was held that A prima facie case is made out for grant of interim relief. As could be seen from the impugned order, the penalty amount is Rs. 2,85,120/-. The fine and other charges are demanded to the extent of Rs.15,84,000/- and the tax is demanded of Rs.2,85,120/- and fine in lieu of confiscation of conveyance of Rs. 2,85,120/-. It is directed that the respondents shall release the goods and conveyance of the petitioner, confiscated and detained subject to the conditions imposed - application allowed.

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• 2023 (3) TMI 107
  Input tax credit - vouchers and subscription packages procured by the Applicant from third party vendors that are made available to the eligible customers participating in the loyalty program against the loyalty points earned/ accumulated by the said customers - Section 16 of the CGST Act, 2017 - HELD THAT:- The eligibility to input tax credit is governed by the provisions of Chapter V (Sections 16 to 19) of the CGST Act. Section 16 states that a registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both which are used or intended to be used in the course or furtherance of business. Thus, the primary conditions for eligibility of ITC is that there should be an inward supply of either goods or services or both; such inward supply should be charged to tax by the supplier and such inward supply should necessarily be used or intended to be used in the furtherance of business - Input tax credit is restricted when the goods and services or both are used for non-business purposes or exempt/non-taxable supplies. Further, notwithstanding the entitlement conferred by Section 16(1), certain goods and services and certain forms of supply, as mentioned in Section 17(5) of the CGST Act, are expressly denied input tax credit. The Bombay High Court in SW ENERGY LIMITED VERSUS UNION OF INDIA AND ORS.[ 2019 (6) TMI 717 - BOMBAY HIGH COURT ] has held that the scrutiny in writ jurisdiction of the orders passed by the lower Authority and the Appellate Authority of Advance Ruling is minimal. Under the writ proceedings, the Court can examine the order of the Appellate Authority by applying the principles of judicial review and not the principles which apply in case of an appeal. Any attempt by the Court to examine the orders of the Appellate Authority for Advance Ruling on their substantive merits or demerits will amount to enlarging the supervisory power of the High Court under Article 226/227 of the Constitution into an appellate power. Any challenge to the order passed by the Appellate Authority for Advance Ruling before the High Court in writ proceedings will have to be confined to a judicial review which will inter alia include the issue as to whether there has been a failure of natural justice at the appeal stage thereby vitiating the decision-making process leading to the making of the order by the Appellate Authority for Advance Ruling. The Appellant has also made detailed submissions on why the vouchers cannot be termed as gifts given to the customers. Again, we find that examining this aspect is of no relevance since it is already held that input tax credit is not eligible on an inward supply which is held by the High Court as being neither a supply of goods or service. Therefore, it is agreed with the ultimate ruling given by the lower Authority that input tax credit is not available on the vouchers received by the Appellant. Appeal dismissed.

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• Income Tax

• 2023 (3) TMI 106
  Settlement of disputes under the Direct Tax, Vivad Se Vishwas Act - Respondent No. 1 issued Form - 3 reflecting therein an amount as the balance amount payable after taking into account and adjusting the amounts of refund etc. for the relevant assessment year 2013-14 - HELD THAT:- It is clear that the spirit of the enactment was to unlock the amounts held up in disputes on account of pendency of various appeals filed by not only the tax payers but also the Government. The amount of disputed tax arrears as reflected in the Bill was an enormous amount of Rs.9.32 lakh crores, which reflected approximately one year s direct tax collection. In the present case it can be seen that the Petitioner being eligible did apply for settlement of these disputes in terms of the Act. The Petitioner s eligibility therefore is not in dispute. It is true that the Petitioner did not deposit the entire amount which was determined as payable by Respondent No. 1 and which ought to have been paid before the specified date. The specified date earlier fixed as per the Act was 31st March, 2020. The Petitioner was required to pay an amount of Rs.8,39,676/- before the said date, however in case the payment was made after 01st April, 2020, the amount payable was Rs.967194/- Petitioner had therefore admittedly not approached the authorities for depositing the balance amount within even the extended period up to 01st October, 2021. Petitioner never intended that its dispute with the department be not settled, nor would the Petitioner gain any unfair advantage by not paying the balance amount which was insignificant and small. In fact on the face of it it is clear that the payment which was required to be paid in terms of Form - 3 was short only by Rs.300/-. This clearly appears to us to be an inadvertent error on the part of the Petitioner, which is neither deliberate nor intentional. Considering the purpose and spirit of the act, which was noting but to unlock the amount of disputed tax before various appellate fora as also put an end to litigation, we feel that issuing a writ of mandamus in the present case, directing the Respondents to accept the balance payment would be nothing but in furtherance of the object for which the Direct Tax, Vivad Se Vishwas Act was enacted. We accordingly allow the present petition. The Respondent No. 1 is directed to accept the balance payment which remained to be paid in terms of Form - 3 alongwith interest at the rate of 10% per annum calculated on the said unpaid amount from the date of issuance of Form - 3. A Form - 5 be issued thereafter in terms of the scheme.

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• 2023 (3) TMI 105
  Stay of demand - petitioner had asked for stay of demand and waiver of 20% of the demand - addition of bogus purchases - HELD THAT:- Even if the additions made by the AO on account of purchases are accepted, then surely, there is a case for examining, as to what is the gross profit rate to be attributed to the petitioner, based on the past record. If the said gross profit rate is accepted, then, the amount that may have to be deposited by the petitioner, pending the disposal of his appeal, could be adjusted. However, for the moment, we are not expressing any firm views in the matter. CIT will consider these aspects of the matter, without being burdened by the observations made hereinabove. We make it clear, that till such time the application is disposed of by the CIT, no coercive measures will be taken against the petitioner. CIT will dispose of the application within two weeks of receipt of a copy of the judgement. In the event that the order passed by the CIT is adverse to the interests of the petitioner, the petitioner will have liberty to take recourse to an appropriate remedy, albeit, as per law. The order, if any, passed adverse to the interests of the petitioner will not be given effect to for a further period of two weeks, to enable the petitioner to take recourse to an appropriate remedy.

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• 2023 (3) TMI 104
  Reopening of assessment u/s 147 - barred by limitation - Period of limitation to issue notice issued under Section 148A(b) - power to extend the time period under the first proviso to section 149(1) - scope of Taxation and Other Laws (Relaxation and Amendment of Certain Provision) Act, 2022 [TLA Act ] - effect of substituted provisions of sections 147 to 151 - HELD THAT:- A conjoint reading of section 149(1) proviso w.e.f. 01.04.2021 along with section 149(1)(b) prior to 01.04.2021. The case of the petitioner for assessment years 2013-14 and 2014-15 cannot be reopened. The assessment year is 2013-14 (01.04.2012 to 31.03.2013) and assessment year 2014-15 (01.04.2013 to 31.03.2014). The end of assessment year is 31.03.2014 and 31.03.2015 respectively. Therefore, the last date for issuance of notice under section 148 of the Act would be 31.03.2020 or 31.03.2021 (being six years from the end of relevant assessment year) whereas the impugned notices under section 148 is issued beyond that period and hence, the same are clearly time barred. There is an erroneous interpretation of the Apex Court s decision which did not say that the extension provided by TLA Act would get extended for issuance of reassessment notices to travel back in time to the original date when such notices were to be issued. While so interpreting, the CBDT overlooked the fact that in para 10(iv) in case of Union of India vs. Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] the Apex Court kept all the defences available to the petitioner including those available under section 149 of the Act open. Accordingly, the petitioner has raised the defence under the first proviso to section 149 of the Act before issuance of notice under section 148 of the Act. The legal effect of enactment of Finance Act, 2021 and substitution of provisions contained in sections 147 to 151 of Finance Act, 2021 when regarded, it is to be appreciated that the TLA Act has extended the last date under unamended section for initiating the actions under sections 147/148 of the Act which is prescribed under unamended section 149. TLA Act is a subsidiary legislation, whereas the unamended sections 147 to 151 being the principal legislation, substitution of sections 147 to 151 by Finance Act with the entire new set of provision having different conditions and procedures on which the existence of subsidiary legislation TLA Act depends itself and ceased to excess, the provision contained in TLA can not have any effect after the enactment of Finance Act, 2021. The CBDT failed to appreciate such legal effect of enactment of Finance Act, 2021 before relying on provisions contained in TLA Act. Again, as mentioned hereinabove the extension under the TLA Act would not mean that it can extend the time limit provided under section 149(1)(b) of the Act as it stood immediately before the commencement of Finance Act, 2021, which remained six years from the end of assessment year. It is apposite to take notice of the language used by the legislature while drafting first proviso to section 149 which contains reference to the time limit specified under clause (b) of the unamended section 149 of the Act being six years from the end of relevant assessment years. This time limit is since not being altered by TLA therefore, extension of time limit for taking the action cannot be said to have been altered. Extension of Limitation from time to time in relation to all the proceedings by the Apex Court led to the enactment of TOLA Act, 2020, which extends time period for various enactments. Circular of CBDT extending time limit for the issuance of notice under section 148 of the IT Act upto 30.06.2021 met with a serious challenge. In wake of coming into effect the new Act of 2021 w.e.f. 01.04.2021 to give an overriding effect over legislation by issuance of notification for issuance of notice under the old provisions was not sustained by various High Courts and eventually the Apex Court intervened to give a balanced solution. It permitted the procedure under the new Act for those proceedings initiated before 01.04.2021 to 30.06.2021 and at the same time all contentions were kept open for the litigating parties to raise. Again, it is an unquestionable proposition that notifications which are the creation of the executives, issued under section 3 of TOLA Act, 2020 cannot override the legislation no matter how grave the situation may be and pandemic due to COVID-19 virus would also not be potent enough to dilute this principle. Resultantly, even though CBDT issued both the notifications of 31.03.2021 and 27.04.2021, they could have no power to extend the time period under the first proviso to section 149(1) of the Act. Resultant outcome would be to negate the submissions of Revenue that these two notifications would extend time period provided under the proviso to section 149(1) of the IT Act. The time limit as per unamended section 149(1)(b) rendered six years from the end of assessment year. TOLA has not altered time limit provided in clause (b) of unamended section 149 of the IT Act. As needed to be clarified that we have since held the notices to be barred by the ground of limitation, other legal and factual aspects are not deal with in any of the petitions and all these petitions are allowed on the issue of limitation. Resultantly, these petitions are allowed. Notices under section 148 of the IT Act and impugned orders under section 148A(d) of the IT Act are quashed and set aside on the ground of limitation. MAUNA M. BHATT,J - Supplementing View - As substituted provisions of sections 147 to 151 shall be applicable w.e.f. 01.04.2021, and as per First Proviso to Section 149, limitation as specified under unamended provision as it stood prior to 01.04.2021, shall be applicable. As per unamended provision prescribing limitation, no notice can be issued under section 148, if six years have elapsed from the end of the relevant assessment year. For assessment year 2013-14, six years had ended on 31.03.2020 and for assessment year 2014-15, six years had ended on 31.03.2021. Had there been no amendment in Section 149, TOLA and through its delegated legislation by way of Notifications could have extended the time for issuance of notice . However in view of express language of 1st proviso to Section 149(1), legislative mandate required that no notice could be issued under the new provision, if such notice could not be issued at that time on account of being beyond the time specified under the said section as it stood before the commencement of the Finance Act 2021, i.e a period of six years. Moreover, in view of decision of Hon ble Supreme Court in case of Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] the notices issued to the respective assessees under section 148 shall be deemed to be notices under section 148A(b) of the Act as substituted by Finance Act 2021. In all the petitions of batch I and batch II, the notices under Section 148A (by deeming fiction) was issued, between the period 01.04.2021 to 30.06.2021 (i.e after 31.03.2021), wherein six years had elapsed from end of the relevant assessment year and therefore they are time barred and the petitions of Batch I- for A.Y. 2013-2014 and Batch-II for A.Y.2014-2015 deserves to be allowed.

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• 2023 (3) TMI 103
  Reopening of assessment u/s 147 - order of the selfsame u/s 148 A(d) - investigation wing had carried out a search action u/s 132 - HELD THAT:- There is no link of the assessee with the entire material, which had been found out during the search action. According to him, the booking had been done for the assessment year 2014-15 and on the strength of the rate card those rates cannot be thrust upon the petitioner when the entire transaction was through the Banking channel. Issue Notice, returnable on 17.01.2023. The assessment process can continue, however, no final assessment order shall be passed. We are expecting the respondent authority to file affidavit-in-reply and also point out a link in this case.

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• 2023 (3) TMI 102
  Rectification petition u/s 154 seeking that the MAT credit was allowed after levying of surcharge and education cess - amount of MAT credits including surcharge and education cess were rejected by the ld. CIT(A) on the ground that while processing the return of income u/s 143(1) only those claims can be allowed, which are within the scope of section 143(1), the claim not made in the return of income, cannot be allowed - HELD THAT:- When the matter was called on, none appeared on behalf of the appellant-assessee despite due service of notice of hearing. However, there was a petition seeking adjournment of hearing on the ground that the Counsel was busy. The assessee also filed a written submission. We had carefully gone through the order passed by the ld. CIT(A), which is a well speaking and reasoned order, we find that the order of the ld. CIT(A) is in consonance with the settled position of law and does not require any interference. Accordingly, the grounds of appeal filed by the assessee stand dismissed.

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• 2023 (3) TMI 101
  TDS u/s 194C OR 194I - deductibility of TDS on rent and CAM - AR has submitted that payment of CAM charges is nothing but reimbursement of common area maintenance expenses incurred by the lessor on general maintenance, electric, water and security services etc. - HELD THAT:- We find that the issue of deductibility of tax on rent and CAM was examined by the Tribunal in the case of Connaught Plaza Restaurants P. Ltd. [ 2022 (1) TMI 409 - ITAT DELHI] , Lifestyle International Pvt. Ltd. [ 2022 (5) TMI 1335 - ITAT BANGALORE] and [ 2022 (4) TMI 1278 - ITAT BANGALORE] and also by the order of this bench in the case of Yum Restaurants India (P) Ltd. [ 2022 (10) TMI 256 - ITAT DELHI] Thus we hold that rent is subjected to TDS @ 10% u/s 194-I and CAM charges u/s 194-C @ 2%. Hence, the appeal of the assessee is hereby allowed.

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• 2023 (3) TMI 100
  Correct head of income - taxability of rental income - income from house property or income from other sources - addition made under 143(1) intimation - AR contended that rental income of a person other than the owner cannot be charged to tax under the head income from house property - HELD THAT:- There is no dispute that the assessee took the property for lease and sublet the property, thereby, received rental income and offered the same as income from other sources. The contention of the revenue is that the assessee failed to show the rental income under the head income from house property based on entries in 26AS. We have gone through the section 22 of the Act, which deals with the rental income chargeable to tax under the head income from house property . This provision clearly establishes that if the assessee is owner and thereby receives any income from house property, it should be taxed under the head income from house property . But in the case on hand, the assessee received rent only by sub letting the property, therefore, we are of the view that the assessee has rightly shown the rental income under the head income from other sources . We, therefore, direct the AO to delete the addition made under 143(1) intimation. Hence, the grounds raised by the assessee are allowed.

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• 2023 (3) TMI 99
  Rectification of mistake u/s 154 - relief claimed under section 89(1) - inclusion of tax exempt income in the total income returned to tax by the assessee could be said to be any error apparent from record for allowing its rectification or not? - HELD THAT:- Clearly while on the one hand the income from salary reflected in the return of income far exceeded that reflected in the TDS certificate at the same time there was no basis for claiming relief u/s 89(1) - On records itself the information pertaining to income of the assessee was incorrectly returned. Therefore when the assessee explained that incomes which were actually exempt from tax had been included in the income returned and the relief claimed u/s 89(1) of the Act had been inadvertently so claimed, it tantamounted to nothing but seeking rectification of mistakes apparent from record. Having found, there were apparent and obvious mistakes in the return filed by the assessee, from the record itself, which was brought to the notice of the AO immediately on receiving intimation, and which mistake on merits the AO admitted to also, we find no reason for rejecting the assessee s claim of rectification under section 154 of the Act. Even otherwise, CBDT vide its Circular No.014(XL-35)/1955 dated 11.4.1955 has long back laid down the duty of its officer to compute correct income in law and even advise the assessee as to its benefit. In the present case, it appears that the Revenue officers have not acted in accordance with their duty so laid down by the CBDT. We direct that rectification sought by the assessee of excluding the exempt income from its computation of income be done by the AO and necessary relief to that extent be granted to the assessee. Appeal of assessee allowed.

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• 2023 (3) TMI 98
  Reopening of assessment u/s 147 - Addition u/s 68 - HELD THAT:- The authorities below failed to give set off of such withdrawals. Considering the fact that there was cash withdrawals during the year under consideration, the addition is restricted to a sum of Rs. 2,50,000/-, as the probability of utilization of withdrawals cannot be ruled out The grounds raised against legality of reopening on the basis that there was no failure on the part of assessee, it is recorded by the AO that no return was filed by the assessee and there was huge transaction in shares. The grounds raised by the assessee are dismissed. Thus, addition made in respect of cash deposits is sustained to the extent of Rs. 2,50,000/- and in respect of share transactions, the addition made by the Revenue is hereby confirmed. The grounds of appeal are partly allowed.

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• 2023 (3) TMI 97
  Reopening of assessment u/s 147 - admissibility of deduction u/s 54B and in respect of valuation of the property - HELD THAT:- Facts of the present case are identical to the facts as were in [ 2016 (3) TMI 1061 - ITAT DELHI] in the case of one of the co-owner and brother of the assessee. Therefore, respectfully following the decision of the Division Bench we hereby set aside the assessment order and direct the AO to make assessment afresh in the light of binding precedent after affording adequate opportunity to the assessee. The grounds raised in this appeal are allowed for statistical purpose only.

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• 2023 (3) TMI 96
  Assessment u/s 153A - Addition u/s 68 - Assessee company is a non-banking Finance Company and engaged in the business of investment and received accommodation entries - HELD THAT:- AO though examined the reply of the Assessee and claim to the effect that the Assessee has not received any accommodation entry, however, came to the conclusion that from the information gathered by the department that the Assessee company is engaged in providing accommodation entries in lieu of cash to various entities including Sajan Kumar Jain group of companies and family members of Shri Sajan Kumar. Moreover, the same has been admitted by Shri Pradeep Kumar Jindal in his statement recorded u/s. 132(4) of the Act. It is also pertinent to mention here that the Assessee company is controlled, managed and run by Shri Pradeep Kumar Jindal. In view of this, it is established that these are accommodation entries and have been routed through the front company, i.e., the Assessee company. It is pertinent to mention that this share capital investment has been made in the hands of the Assessee company which is a front company as explained above, therefore, the entire amount in the form of share premium and share capital is added in the hands of the Assessee company. Entries on the basis of which addition have been made, already subjected to tax in the case of Shri Pradeep Kumar Jindal, who by letter dated 18.01.2023 accepted the fact that he has already accepted the commission income on the accommodation entries given by M/s. Pawansut Holdings Ltd. as part of his taxable income in respect of assessment years 2010-11 and 2015-16 and his personal appeals for the said assessment years for A.Y. 2010-11 and for A.Y. 2015-16 are pending in ITAT for its direction on multiple additions, rate and calculation of commission and its taxability as per law. By considering the order passed by the Hon ble Coordinate bench and the confirmatory letters issued by Shri Pradeep Kumar Jindal, we are inclined to dismiss the appeals of the Revenue department.

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• 2023 (3) TMI 95
  Withdrawal approval granted u/s 10(23C)(vi) - Retrospective withdrawal of the exemption approval - Whether the perquisite towards residential accommodation has been rightly determined by the assessee society in the hands of the Chairperson or not? - HELD THAT:- Hon ble Rajasthan High Court in case of Indian Medical Trust [ 2019 (6) TMI 996 - RAJASTHAN HIGH COURT ] has taken a similar view and held that the provisions of section 12AA (3) empowers the Commissioner to initiate steps for cancellation of the registration of a Trust, but the legislation had no intention of giving the said provision a retrospective effect and for in such a situation, the same would have been clearly specified in the said provision. It was held by the Hon ble Rajasthan High Court that the interpretation of the said provision has to be harmonious rather than being prejudicial to the institutions as it would instigate and create a fear of the Income Tax Department and has referred to earlier decisions of the Hon ble Allahabad High Court in case of Oxford Academy for Career Development and Agra Development Authority [ 2008 (12) TMI 192 - ALLAHABAD HIGH COURT ] In the instant case, we, therefore, find that as far as assumption of jurisdiction by the ld PCIT(Central) is concerned, the same is clearly in the capacity of prescribed authority as per amended Rule 2C vide CBDT Notification dated 05/11/2019 and pursuant to transfer of jurisdiction and order passed u/s 127 dated 15/12/2020 and there is no dispute in this regard. At the same time, it is noted that on assumption of jurisdiction, the show-cause notice has been issued by the ld PCIT(Central) on 15/06/21 and thereafter, he has passed the impugned order dated 21/10/21 withdrawing the approval retrospectively that too with effect from A.Y 2003-04. In light of aforesaid rulings as discussed supra where the Courts and various Benches of the Tribunal have consistently held that the exercise of power of withdrawal cannot be done retrospectively and in absence of any contrary authority brought to our notice, we are of the considered view that the PCIT(Central) was not legally correct in withdrawing the approval u/s 10(23C)(vi) retrospectively and such approval can only be withdrawn from the date of issuance of the show cause notice dated 15/06/21 that is, with effect from A.Y 2022-23 and subsequent years. Conditions so specified for withdrawal of approval u/s 10(23C)(vi) - utilization of the two immovable property of the assessee society - whether the usage of the assessee s society property by the Chairperson is in violation of objectives or not? - Approval u/s 10(23C)(vi) was granted by the ld CCIT on 14/02/2007. We therefore find that the matter relating to residential accommodation provided by the assessee society to its then chairman Mr S.S Khanna and Mrs Patricia Khanna, Principal was duly examined while grant of initial approval and the same was clearly as per the objects of the assessee society and it is also manifest from the records that rent was recovered from them. It is also a matter of record that Mrs Patricia Khanna has since taken over from Mr S.S Khanna and is rendering services as the chairperson of the assessee society and as part of her services, she has been allowed by the assessee society to retain and occupy the said residential accommodation and there is thus no dispute in this regard that a facility by way of residential accommodation has been provided by the assessee society to the Chairperson in lieu of her services. Whether the same has been considered as perquisite in her hands by the assessee society for tax purposes and/or any rent has been recovered from her? - Form 16s and personal tax returns were available but for some reasons, the same couldn t be brought on record resulting in aforesaid findings of the PCIT(Central). The same can be verified and examined by the Assessing officer during the course of assessment proceedings to determine whether the perquisite towards residential accommodation has been rightly determined by the assessee society in the hands of the Chairperson or not and take appropriate steps and decide as per law while framing the assessment. In light of aforesaid discussions, we are of the considered view that the same cannot be a reason for withdrawal of exemption u/s 10(23C)(vi) as the residential accommodation has been provided to the Chairperson in furtherance of the society s educational objectives and in pursuance of her services to the assessee s society. Fleet of luxury cars which were owned by the assessee society and used by the Chairperson and other members of the society for personal purposes - Whether these vehicles have been provided by the assessee society to the chairperson and other members of the society for the purposes of rendering services to the assessee society or exclusively for their personal use? - In our understanding, these vehicles have been provided to the respective members of the assessee society for discharge of their services to the assessee society as it evident from the record when the matter was initially enquired by the ld CCIT(Chandigarh) and at the same time, given that these vehicles are at the exclusive disposal of the individual members, possibly, some personal usage cannot be ruled out and it thus gives an impression that these vehicles have been provided to them exclusively for personal usage. The exclusive disposal of vehicle vis- -vis exclusive personal usage thus seems to be have created the present situation which has led to the impugned findings of the ld PCIT(Central). Basis the material available on record, we believe that not enough evidence has been brought on record by the Revenue to hold that these vehicles have been provided exclusively for personal purposes of members of the assessee society and funds to that extent have been diverted for personal benefit - we believe that the AO is not precluded from examining the said matter during the course of regular assessment proceedings as to whether the vehicles have been used for official purposes alone or besides the official purposes, whether there is any personal usage as well and take appropriate action as per law. At the same time, in light of aforesaid discussions and in the entirety of facts and circumstances of the case and taking into consideration the decision of the Coordinate Mumbai Benches referred supra which support the case of the assessee, we are of the considered view that the provision of vehicles per se to the members of the assessee society cannot be a reason for withdrawal of exemption u/s 10(23C)(vi). Payment of lower salary to the employees and misappropriating the excess amount for use of the members of the assessee society - We are of the considered view that basis material available on record and carefully analysis thereof, it cannot be held that there is misappropriation of society s funds all these years by way of inflating salary expenditure and withdrawing money from the respective teachers bank accounts and that too, for benefit of Chairperson and members of the assessee s society. This is however subject to part of salary withdrawn in respect of aforesaid two teachers and who have confirmed that they have parted with their salary. In respect of part of salary so withdrawn in respect of these two teachers, the Assessing officer is directed to verify the same and take appropriate action as per law in regular assessment proceedings in the hands of the assessee society for the years involved. Loose papers don t establish that the activities of assessee society are not genuine and are not carried out in accordance with the objects and thus the same cannot form the basis for withdrawal of exemption. At the same time, it was further held by the Coordinate Bench that where there are allegations that funds of the assessee society have been misappropriated or there is any ambiguity in the claim of expenses, the same can be taken up during the assessment proceedings. We find that the facts in the instant case are similar where there are allegation of misappropriation of assessee society s fund by inflating the salary expenditure and withdrawal from teachers s bank account and the registration has been cancelled with retrospective effect though there is nothing on record wherein the genuineness of the activities of the assessee society has been challenged in terms of imparting education to school children. In light of aforesaid discussions and in the entirety of facts and circumstances of the case, we are of the considered view that the same cannot form the basis for withdrawal of exemption u/s 10(23C)(vi). Funds diverted for benefit of Chairperson - PCIT has held that the value of the property at Sector 18 has been artificially enhanced without any basis over and above the collector rate and the differential consideration received in cash was misappropriated and not accounted for in the books of account of the assessee society and the funds so received were diverted for the benefit of the Chairperson and members of the assessee society - HELD THAT:- We are of the considered view that basis aforesaid discussion, the same cannot lead to a situation where the approval granted u/s 10(23C)(vi) can be withdrawn and that too, from a retrospective effect. We find that similar view has been taken in case of Shri Jairam Education Society vs PCIT (Central) [ 2021 (10) TMI 911 - ITAT INDORE ] Further, we draw support from the decisions of Hon ble Rajasthan High Court in case of DCIT vs. Cosmopolitan education Society [ 1999 (8) TMI 13 - RAJASTHAN HIGH COURT ] wherein the Hon ble High Court affirming the finding of the Tribunal held that where there is allegation of misutilisation of the funds of the Society or mismanagement of the activities of the Society, the action could be taken against the members of the society as per the provision of governing the Society. However, even such misutilisation and mismanagement by the members could not be the basis of rejection of the claim of exemption to the assessee education Society and the SLP against the judgement stood dismissed by Hon ble Supreme Court. The order passed by the ld PCIT(Central) withdrawing the approval u/s 10(23C)(vi) is set-aside and the original approval is revived from the date of withdrawal of such approval. Appeal of the assessee society is allowed.

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• 2023 (3) TMI 94
  Reopening of assessment u/s 147 - invocation of reassessment proceedings based on non-existing provisions of the law, i.e., 147(C) - notice issued u/s 148 is time barred as issued after 4 years from the end of the relevant assessment year where the case has already been assessed u/s 143(3) - DR submitted that the mention of non-existent provision of section 147(C) of the Act is a clerical mistake which is curable u/s 292B - HELD THAT:- AO, in the first page of reasons mentioned in column 7 that provisions of section 147(C) is applicable which is non-existent in the statute book for AY 2010-11. This apparently shows non-application of mind by the AO while filling proforma in a mechanical manner and the ld. ACIT and Ld. PCIT also approved the same in a mechanical manner. So far as the contention of the ld. Sr. DR that this defect is curable u/s 292B of the Act is concerned, this contention was decided in the case of Madhu Apartments India Pvt. Ltd., [ 2021 (2) TMI 709 - ITAT DELHI] the relevant part of which has already been reproduced in the earlier part of this order since the same was referred to and included in the relevant part of the order of the ITAT in the case of Omkam Developers Ltd. ( 2021 (5) TMI 414 - ITAT DELHI] . Therefore, we hold that the impugned reassessment proceedings and the impugned reassessment order deserves to be quashed and we hold so. Validity of initiation of reassessment proceedings u/s 147 - HELD THAT:- As per requirement of mandatory provisions i.e., proviso to section 147, the AO is required to make specific allegation to identify the particular facts not fully and truly disclosed by the assessee and compliance of the said mandatory provision solely depends on verification of facts/material disclosed by the assessee in the course of assessment proceedings and from perusal of the reasons recorded. In a case the AO did not disclose anything on the evidences furnished during the original assessment proceedings and failed to identify the particular facts or material which were not fully and truly disclosed by the assessee, then, the initiation of reassessment proceedings beyond the period of four years from end of relevant assessment year has to be held as void ab initio and bad in law as per various judgements including the judgement of the Hon ble jurisdictional High Court of Delhi in the case off Dushyant Kumar Jain ( 2016 (5) TMI 113 - DELHI HIGH COURT ) and Usha International Ltd. ( 2012 (9) TMI 767 - DELHI HIGH COURT ). The initiation of reassessment proceedings u/s 147 of the Act and issuance of notice u/s 148 of the Act is void ab initio and bad in law being initiated without complying with the mandatory provisions of first proviso to section 147. Thus we have quashed the reassessment proceedings and reassessment order while adjudicating the legal ground No.3 of the assessee, no additions made by the AO could be held as sustainable.

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• 2023 (3) TMI 93
  Levy of penalty u/s 271(1)(c) - furnishing inaccurate particulars of income - Non disclosure of professional receipt - HELD THAT:- It is undisputed fact that assessee deposited tax on impugned professional receipt of Rs. 5 Lakh i.e. after issuance of notice under section 142(1) where explanation with regard to difference in the amount of professional income declared viz-a-viz income reported in Form-26AS was sought. The assessee in reply explained that the amount was omitted to be included in the computation of income by the accountant due to oversight. However, such human error was rectified on realization of mistake by depositing due taxes. As during the year the assessee has offered taxable income of Rs. 4,03,78,080/- on account of professional receipt, STCG and other receipts. Thus, considering the same, we find force in the contention of the assessee that impugned receipt of Rs 5 lakh was omitted due to oversight without being any mala fide intention. AO only on the basis of presumption and surmises held that the assessee offered income only after same has been identified by the department. Such presumption of the AO is not based on any material. Therefore, in this fact and circumstances it cannot be held that the assessee has concealed or furnished inaccurate particulars of his income and liable to penalty under section 271(1)(c) of the Act. As decided in PCIT vs. Gujarat State Electricity Corporation Ltd. [ 2022 (10) TMI 1052 - GUJARAT HIGH COURT] reported where held that in no penalty can be imposed where the assessee made bona fide mistake and corrected the same on realization of mistake. There was human error committed by the accountant of the assessee due to which impugned professional receipt of Rs. 5 lakh omitted to be included in the total income. Thus, there was no willful attempt from the assessee to conceal his income. - Decided in favour of assessee.

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• 2023 (3) TMI 92
  Allowable expenses u/s 37/28 - Compensation for cancellation of booking of residential complex - Disallowance of expense incurred towards compensation u/s 37/28 - HELD THAT:- Customers approached the assessee for cancellation of booking and from Annexure-A, B C it can be seen that the assessee by paying the limited compensation has made profit after entering into new transactions. Thus, the assessee made profit after paying minimum compensation to these three parties. The assessee has already given all the documentary evidences with respect to original buyers in respect of bank statement, Aadhar Card, PAN and confirmation from these buyers. The assessee has also given details of the new buyers of the said flat, bank statement, Sale Deed as well as the amount upon which the new transaction has taken into consideration. In fact, the flat was booked for Rs.35,50,000/- and the new transaction shows that the flat was sold for Rs.37,50,000/- by paying only Rs.18,00,000/- to the original buyer as the booking amount paid by the original buyer was Rs.16,00,000/- only. Thus, the assessee has made profit and it was business strategy for earning the profit. Assessing Officer as well as the CIT(A) never disputed the new transactions which has earned profit to the assessee. Therefore, the Assessing Officer as well as the CIT(A) was not justified in making the addition. Disallowing employee s contribution towards PF u/s.36(1)(va) r.w.s. 2(24)(x) - HELD THAT:- AR submitted that the same is covered against the assessee vide decision of Hon ble Apex Court in the case of CHECKMATE Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] Hence, ground no.2 is dismissed.

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• 2023 (3) TMI 91
  Deemed dividend u/s.2(22)(e) - payments made by M/s.IEIL is nothing but loans advances taken by shareholders having more than specified percentage of share capital, which attracts provisions of Sec.2(22)(e) - as submitted whatever amount paid by M/s.IEIL, has been subsequently re-paid by the assessee through his mother Smt.V.Padma account on very same day or within a short period i.e. less than one month without there being any outstanding balance in the name of the assessee in the books of M/s.IEIL - HELD THAT:- It is very clear that company has paid to M/s.Chaitanya Builders on behalf of the assessee for purchase of property as a stop gap arrangement and the same has been subsequently re-paid by the assessee and his mother out of their source of income. The amount paid by M/s.IEIL to M/s.Chaitanya Builders on behalf of the assessee, cannot be considered as loan or advance which can be treated as deemed dividend u/s.2(22)(e) because, at no point of time, there is no outstanding loan or advance in the name of the assessee in the books of accounts of M/s.IEIL. At best transactions between the assessee and M/s.IEIL can be treated as a running current account between the shareholder and company, but said transaction cannot be considered as loan or advance within the meaning of provisions of Sec.2(22)(e) of the Act. In this case, facts are entirely different, because, at no point of time, M/s.IEIL has given any loan or advance to the assessee either by way of cash payment or through account transfer - the company has given some payments to the third party on behalf of the assessee, but said payments have been subsequently re-paid by the assessee or his family members either on the same day or within a short period i.e. less than one month without there being any outstanding balance in the books of accounts of the company. Therefore, transactions between the assessee and company cannot be treated as loan or advance within the meaning of provisions of Sec.2(22)(e) - AO as well as the Ld.CIT(A) are completely erred in invoking provisions of Sec.2(22)(e) of the Act, and making additions u/s.2(22)(e) of the Act. Hence, we direct the AO to delete the additions made towards deemed dividend u/s.2(22)(e) of the Act, in the hands of the assessee. Appeal filed by the assessee is allowed.

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• 2023 (3) TMI 90
  Validity of CIT(A) order u/s 250 as ex-party - Non compliance of mandatory provision of section 249(4) - AR relied on the provisions of section 207 and submitted that as the there was no liability for payment of advance tax the Assessee was not required to file the return of income, therefore, provision of section 249(4) of the Act were not applicable - HELD THAT:- When read in context of section 249(4)(b) it has to be observed that where no return has been filed by the assessee, then in that case at time of appeal before the CIT(A), the assessee has to pay an amount equal to the amount of advance tax which was payable by him . Here no advance tax was payable as the assessee was over 60 years of age and not having any income from P G. Further, the proviso to the Section 249(4) of the Act provides that if sufficient reason are brought on record in writing the CIT(A) may exempt the Assessee from the operation of provision of clause 249(4)(b) of the Act. The record does not show if the Assessee has claimed before CIT(A) that it was entitled to any exemption by virtue of section 207. The impugned order was passed in the absence of Assessee and the impugned order dated 31.12.2018 in paragraph Nos. 2 to 12 mention that inspite of notice being issued the same could not be served on the Assessee and therefore, there was no representation of the Assessee before the ld CIT(A) and who proceeded to dismiss the appeal by invoking provision of section 249(4)(b) of the Act without giving taking into consideration the facts which assessee claims made him not liable to pay the advance tax. The Bench is of considered opinion that the Assessee should be given an opportunity to put across its claim of exemption from the application of section 249(4) of the Act before the ld CIT(A). The bench can rely on the Hyderabad bench s order in case of Late Smt Raful Ghani Vs. Asstt. CIT [ 2021 (6) TMI 1135 - ITAT HYDERABAD] wherein, the Bench was confronted with similar situation. The impugned order is set aside and the issue is restored to the file of the ld CIT(A) to decide the question of applicability of section 249(4) of the Act on merits of claim of the assessee, after giving an opportunity of hearing to the Assessee. The appeal is allowed for statistical purposes.

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• 2023 (3) TMI 89
  Income deemed to accrue or arise in India - FTS or FIS - taxing the reimbursements of salaries of expat employees made by Google India Pvt. Ltd. (GPIL) to the assessee - characterising such reimbursements as fees for technical services (FTS) as per Explanation 2 to Section 9(1)(vii) of the Act as well as Fees for Included services (FIS) as per Article 12(4) of the DTAA between India and USA (India-US Tax Treaty) - HELD THAT:- In light of the judgement of Hon ble Jurisdictional High Court in the case Flipkart Internet (P.) Ltd. [ 2022 (6) TMI 1251 - KARNATAKA HIGH COURT ] which was followed by Bangalore Tribunal in the case Biesse Manufacturing Company (P.) Ltd. [ 2022 (11) TMI 186 - ITAT BANGALORE ] we hold that the amounts paid by GIPL to the assessee with reference to seconded employees does not come within the FTS or FIS under the Act or under DTAA.

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• 2023 (3) TMI 88
  TP adjustment - fee for advisory and other services involving its overseas associated enterprises AE s whose price has been taken by the TPO at NIL as affirmed in the DRP s directions - HELD THAT:- As decided in assessee own case [ 2021 (7) TMI 892 - ITAT PUNE] Tribunal has passed orders starting from assessment year 2009-10 to 2015-16, whose copies have been placed on record. In the lead order, which has been followed in later years, the application of the TNMM as the most appropriate method has been accepted in preference to the CUP method as applied by the TPO. After giving certain directions, matter has been sent back to the AO/TPO for deciding the issue accordingly. The ld. DR fairly conceded that the facts and circumstances of the instant appeal are mutatis mutandis similar to those of earlier years. Respectfully following the precedent, we set-aside the impugned order and remit the matter to the file of AO/TPO for deciding this issue afresh in accordance with the directions given by the Tribunal in assessee s own case for the earlier assessment years. Thus we direct the learned TPO to decide the instant first and foremost ground afresh as per law after taking into consideration all the said preceding assessment years developments on the very issue. ALP adjustment - international transactions with overseas associated enterprises involving the provision of oracle support services in the relevant previous year - Comparable selection - HELD THAT:- We make it clear that neither of the learned lower authorities holds the entity M/s. Crystal Vox Ltd. as not a functionally comparable entity. This is indeed coupled with the assessee s pleadings on merits that both the learned lower authorities had not made available the corresponding financial statements. Mr. Bafna further highlighted the fact that the receivables in the said company of merely Rs.97,391/- out of Rs.2,21,26,002/- exceed 06 months time period as per the corresponding financial statements. Be that as it may, the Revenue could hardly dispute that even if the said outstanding receivables are accepted as having more than four months, the same would hardly effect the relevant profit margin in the very segment. Sec.92B Explanation-(c) also treats such receivables as an international transaction itself. We further observe at the cost of repetition that we are yet to see even a single observation from the learned lower authorities rejecting M/s. Crystal Vox Ltd. as not satisfying FAR analysis. Faced with the situation, we accept the assessee s corresponding substantive ground no.6(i) herein to this effect and direct the TPO to frame his afresh computation in very terms. Weighted deduction u/s 35(2)(AB) - Disallowance on the ground prescribed authority i.e., Department of Science and Industrial Research [ DSIR ] has not issued Form 3CL qua the same - HELD THAT:- It emerges during the course of hearing that the said prescribed authority has now issued Form 3CL to the assessee on 25.04.2022 before us. Faced with the situation, we restore the assessee s instant ground to the Assessing Officer for his afresh factual verification as per law preferably within three effective opportunities of hearing. Disallowance to employees contribution as deposited beyond the due date - HELD THAT:- Hon ble apex court s recent landmark decision in Checkmate Services P. Ltd. Ors. vs. CIT Ors. [ 2022 (10) TMI 617 - SUPREME COURT] has already decided the instant issue against the assessee and in department s favour that such a contribution ought to be deposited before the due date under the corresponding statute than that of filing sec.139(1) return. We accordingly uphold the impugned disallowance. Mismatch of TDS credit as against correct sum is restored back to the file of Assessing Officer for his afresh factual verification as per law since not requiring any substantive adjudication at our level.

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• 2023 (3) TMI 87
  Nature of expenses - advertising expenses - Revenue or capital expenditure - whether the above expenses were revenue in nature in view of the fact that these expenses would essentially lead to establishment and promotion of Livpure brand in India? - HELD THAT:- There is no denial to the fact that these expenses have been incurred to increase the awareness and popularity of the Livpure brand and to enhance the profit and revenue for the Assessee in long run. Thus these expenses have given enduring benefit to the Assessee and cannot be said to have incurred on revenue account wholly and exclusively for the purposes of Assessee s business. We observe that there are so many heads of expenses which the Assessee has claimed to have been incurred. AO though gone into the legality/status of the expenditures but without bifurcating different heads of the expenditures treated all the expenditures as capital in nature and therefore in our view determination qua nature of different head of expenditures has not been done properly and in real sense. Assessee also did not file proper details/heads of the expenditures incurred and in lump sum claimed the said expenditure as revenue in nature . Hence, we are inclined to remand the instant case to the file of the Assessing Officer for decision afresh, suffice to say, by affording reasonable opportunity of being heard to the Assessee. Assessee is also directed to produce the bifurcated details and documents in relation to the expenses incurred on account of advertising and publicity expenses as claimed. Further, the primary onus would be upon the Assessee to establish the nature of the expenses before the Assessing Officer. Appeal filed by the Assessee stands allowed for statistical purposes.

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• 2023 (3) TMI 86
  Assessment u/s 153A - unexplained cash deposits u/s 68 - AO s observation that some of the CD-Drives containing KYC documents were not working - second search action conducted u/s 132 - whether the unabated assessment could have been disturbed by the AO in absence of incriminating material seized in the course of search so as to make additions u/s 68? - HELD THAT:- We find merit in the submissions of assessee that these twelve (12) statements of the account-holders did not contain anything which incriminated the assessee society or which would suggest that the cash deposited with the assessee society by these account holders represented its own unaccounted monies. Even if these statements are considered at their face value, it is noted that some individuals were taking advantage of the absence of reporting compliances on the assessee society to route their own unaccounted monies and even the ultimate beneficiaries had been named by these account-holders and identified by the authorities as well. On these facts, we find merit in the assessee society s contention that these twelve (12) statements did not contain any incriminating material which could be used to disturb the finality of these unabated AYs and justify the additions made by the AO u/s 68 Improper KYC documentation - AO had prima facie stated that KYC compliance was done by the assessee at the time of opening the accounts in these two AYs. In our considered view therefore, in the facts and circumstances discussed instances of improper KYC documentation if any noted in second search cannot constitute incriminating material found in the course of first search so as to make additions in the impugned unabated AYs. Report of Ld. DDIT(I CI) - Only if the Revenue demonstrates that some material or document or evidence was unearthed in the course of search or that some incriminating statement was obtained in the course of search, which supported the findings of this verification report, only then such verification report could have been used to disturb the finality of the unabated assessments. The Revenue, however, has been unable to do so in the present case. In our considered view therefore, this verification report on its own cannot be said to be incriminating material unearthed in the course of search. As showed during the relevant FY 2009-10 there were no RTGS made by any of the members of the assessee society and therefore this report was of no relevance in the relevant AY. Hence, we find merit in the Ld. AR s contention that the Ld. CIT(A) s reliance on this report to justify the impugned additions in the unabated AYs 2010-11 2011-12 was factually misplaced. The contents of the report shows that the Ld. DDIT(I CI) had observed that these account holders were depositing large sums of cash on different dates in the accounts held by them with the assessee society, which was in turn being routed to different firms by way of RTGS who were the ultimate beneficiaries of these deposits and had failed to disclose the same in their respective tax returns. DDIT(I CI) observed that by taking advantage of the absence of reporting liabilities, these societies were being used as a conduit for money laundering. One of the ten persons viz., Mr. R.A. Shah from whom enquiries were made had admitted that he had not disclosed his account in his tax return and accordingly revised his return of income and paid taxes thereon. On these facts, we are unable to countenance the action of Ld. CIT(A) seeking to justify the additions by way of unexplained monies being made u/s 68 of the Act in the hands of the assessee society, based on this spot verification report which does not incriminate the assessee qua the cash deposits made by these depositors qua these relevant AYs in these appeals. To substantiate the bonafides of the assessee society, the Ld. AR showed that the assessee had suo moto written several petitions to the Financial Intelligence Unit (FIU-IND) much prior to the date of search on 09.02.2016 viz., between July 2014 to June 2016 wherein they had time and again requested them to register them with FIU-IND so that they could share the details information of their members with the concerned Department. He showed us that, it was only vide Circular dated 08-01-2018 that the multi-state cooperative societies were brought within the purview of PMLA Act, 2002 and all multi-state cooperative societies were required to register themselves with the Department. Before us, the Revenue was unable to bring any material on record to controvert the aforesaid submissions of the assessee society. On the overall conspectus of the facts, we thus hold that the reasoning given by the Ld. CIT(A) viz., existence of incriminating material statements against the assessee society, to justify the validity of the additions made in the unabated assessments framed u/s 153A/143(3) of the Act for AY 2010-11 was untenable both on facts and in law. Disallowance of interest administrative expenses u/s 69C - As per CIT-A there was no incriminating material found in the course of search which suggested that these expenses were unaccounted for - HELD THAT:- CIT(A) has rightly observed that these expenses were recorded in the regular books of the assessee and therefore invocation of Section 69C - there was no incriminating material qua the assessee which would justify the additions made by the AO in the unabated AY 2010-11. AO is accordingly directed to delete the same. Therefore, the ground of appeal of the assessee stands allowed.

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• 2023 (3) TMI 85
  Bogus LTCG - exemption u/s.10(38) denied - unexplained cash credit - HELD THAT:- We find that the assessee had duly proved the nature and source of credit representing sale proceeds of shares of Radford Global Ltd and Blazon Marbles Ltd within the meaning of section 68 of the Act. The sale proceeds have been received by the assessee from the stock exchange through the SEBI registered share broker by account payee cheques through regular banking channels. Hence the three ingredients of section 68 of the Act are duly fulfilled by the assessee in the instant case. Hence there is no question of making any addition as unexplained cash credit u/s 68 of the Act in the instant case. Considering we are not inclined to accept to the stand of the ld. CIT(A) in sustaining the impugned additions on account of denial of exemption for long term capital gains u/s 10(38) of the Act and estimated commission @ 6% against the same. Accordingly, the ground nos. 1 2 raised by the assessee are allowed.

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• 2023 (3) TMI 84
  Credit of TDS deducted in the name of deceased mother of the assessee - As contended that where the income of the deceased mother is offered for taxation, then the appellant is entitlement of credit of such TDS - claim of TDS under Rule 34BA of Income Tax Rules - HELD THAT:- It is admitted facts on record that the appellant s deceased mother s income on which TDS was deducted had been offered for tax in its return of income and assessed u/s 143(1) and thus, the credit of TDS cannot be denied merely because it appears in the name of deceased mother. As per law and in principle the tax on particular income can be charged once only. In the instant case, the tax has already been deducted by way of TDS by the revenue and thus, the confirmation of the order of the lower authorities would be denial of TDS claim to the appellant would result into double taxation of the same income. In our view, a particular income cannot be taxed twice under the law and therefore, as in the present case, the appellant is entitlement for the credit of TDS deducted on the disputed income. Assessee shall be eligible to seek permissible from the CCIT to file belated return in the name of disease person (Appellants mother) for the claim of TDS under Rule 34BA of Income Tax Rules and thereby withdrawing the diseased mother income shown in its return. In the case of Smt. Vijay Luxmi Gupta (Through legal heir Shri Mukesh Gupta) Vs. Income Tax Officer, Ward- 1(4), [ 2021 (3) TMI 1105 - ITAT ALLAHABAD] it was held that credit of TDS cannot be denied merely because the TDS amount was wrongly deposited by the deductor in PAN of the deceased husband and in refusing to follow Rule 37 BA of Income Tax Rules. We accept the grievance of the assesse as genuine. As such, we conclude that the assessee would not be made to suffer because of delay on the part of the deductor in updating PAN of the legal heir. Accordingly, the AO is directed to allow credit of the TDS claimed by the appellant on verification of form 26-AS issued for the relevant quarters of the financial year in the name of diseased person as per Rule 37 BA of Income Tax Rules. Appeal filed by the assessee is allowed.

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• 2023 (3) TMI 83
  Nature of expenditure - acquiring customer contracts and assembled workforce - Revenue or capital expenditure - HELD THAT:- On perusal of materials placed before us, we are convinced that there is nothing therein which could even remotely suggest that the assessee, at any point of time, before acquiring the debt collection services business, was in the same line of business. It is a fact on record that the assessee has made payment for acquiring the customer contracts and assembled workforce, which are nothing but capital assets and would give enduring benefits to the assessee. In sum and substance, by incurring the expenditure, the assessee has acquired a completely new business set up, which is nothing but an income generation tool. Therefore, in our view, the expenditure incurred is in the nature of capital expenditure. To that extent, we agree with the view expressed by the departmental authorities. Enhancement of income by FAA - whether FAA was justified in reducing the value of customer related contracts and goodwill by tinkering with the value determined by registered valuer? - As observed assessee has paid the consideration for acquiring the business on the basis of value determined by an independent valuer. It is a fact that the assessee has paid the consideration as determined by the Valuer for acquiring the business. There is nothing on record to suggest that the payment claimed to have been made for acquiring the business is either non-genuine or doubtful. At least, no such view, either express or implied, can be found either in the observations of the Assessing or learned first appellate authority. Thus, when the payment made by the assessee is not disputed and is in terms of an agreement between two parties, learned Commissioner (Appeals) cannot arbitrarily and unitarily reduce a part of the payment made for computing depreciation. In any case of the matter, the consideration paid by the assessee is supported by valuation report of an independent Valuer, who is an expert in the field. In case, learned first appellate authority had any doubt regarding valuation report, he should have referred the valuation to an expert, instead assuming the role of Valuer himself and tinkering with valuation of certain assets made in the valuation report, viz., customer and contract goodwill. Thus, action of Commissioner (Appeals) in reducing the value of customer contract and goodwill, as determined by the independent Valuer is wholly inappropriate, hence, unsustainable. Accordingly, we reverse the decision of Commissioner (Appeals) on the issue of valuation. Consequently, the computation of the Assessing Officer in allowing depreciation at 25% is upheld. Grounds are partly allowed.

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• 2023 (3) TMI 82
  TP Adjustment - Comparable selection - exclude the foregoing comparable companies in its ITES segment - HELD THAT:- Entities included by the learned lower authorities i.e., Vitae International Accounting Services Private Limited, Access Healthcare Services Private Limited and Integra Software Services Private Limited are also found to be not engaged in the assessee s segment since they have been carrying-out their business activities and deriving revenues from accounting, healthcare services and e-publishing services, respectively and, therefore, do not have even broader comparability in the segment in issue before us. This is indeed coupled with the fact that M/s. Integra Software Services Private Limited had undergone a merger scheme with M/s. Integra Infotech Private Limited as per the NCLT order to this effect in the relevant previous year. Faced with the situation, we direct the TPO to exclude all the instant six comparables and compute the assessee s arm s length price [ALP] adjustment accordingly. Include M/s. Cheers Interactive (India) Private Limited, I Services Private Limited and Sundaram Business Services Limited which stand excluded in the learned lower authorities respective orders. The first and foremost comparable herein M/s. Cheers Interactive (India) Private Limited had not derived any revenue in ITES segment. We thus reject the assessee s arguments seeking its inclusion in the array of comparables. M/s. I Services Private Limited it prima facie emerges in the assessee s paper book that this entity carried out its business activities in BPO sector. The assessee s case before us is that the said segment is very much identical to its ITES segment. Faced with the situation, we remit the instant issue back to the learned TPO for his fresh adjudication on merits without commenting anything further at this stage. Third comparable Sundaram Business Services Limited could hardly dispute that it s revenue from operation nowhere specified any ITES activity. We thus decline the assessee s arguments seeking to include this comparable in ALP computation. Ordered accordingly. Negative working capital adjustment when it had not carried any such working capital risk. Learned counsel quotes Inductis India (P.) Ltd. [ 2018 (8) TMI 1205 - ITAT DELHI] reiterating the very proposition. Revenue s case on the other hand is that the instant issue indeed requires the TPO s afresh factual verification. Faced with the situation, we restore the assessee s instant additional ground back to TPO in very terms.

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• 2023 (3) TMI 81
  Penalty levied u/s 271B - Turnover of the assessee was beyond the limit prescribed u/s 44AB of the Act and that the assessee has failed to submit the report of the auditors and audited statement of accounts and that the same leads to contravention of provision of section 44AB - Assessee argued CIT(A) has erred in confirming the penalty without considering the guidelines of ICAI in the working of turnover in future and option - HELD THAT:- The most commonly prevalent derivative transaction is future and options commonly known as F O and in case of calculation of tax for such transaction, the total turnover or gross receipts in the previous year are to be taken into consideration. Section 44AD of the Act prescribes a percentage of such total turnover as gross receipts to be calculated for levying tax. In the common parlance turnover as per Companies Act, 2013 means that aggregate value of the realization amount made from sale, supply or distribution of goods or on account of services rendered or both, by a company during the financial year. This interpretation does not hold good in case of F O transactions where there are neither physical goods involved nor any delivery of shares or securities involved in the said transaction. The entries in the books of accounts of such transactions are not made on the contracted notes issued, but are made only of the differences. For the said purpose, the Institute of Chartered Accountant of India has prescribed the method of computing the turnover in such cases through Guidance Note on Tax Audit . The issue involved in the present scenario is the legal sanctity of guidance note issued by ICAI, for which we would like to place our reliance on the decision cited by the assessee in the case of Punjab Stainless Industries [ 2014 (5) TMI 238 - SUPREME COURT] and Pact Securities and Financials Ltd [ 2002 (3) TMI 221 - ITAT HYDERABAD-A] wherein it was held that the Hon ble Apex Court has recognized ICAI as an expert body of accountants and the guidance note on tax audit issued by them can be relied upon in the absence of any statutory provision for computation of turnover in such cases. Validity of the ICAI guidance for calculating the turnover in case of derivatives has been reiterated by various judicial precedence. Upon consideration of the said method of calculating the turnover in transactions related to future and options, the assessee s case does not fall under the provisions of section 44AB which mandates auditing of books of accounts and furnishing audited statement of accounts. Appeal filed by the assessee is allowed.

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• Customs

• 2023 (3) TMI 80
  Classification of the goods proposed to be imported - preparation of Betel Nuts known as Boiled Supari packed in consumer packing and bulk packing - to be classified under sub-heading 2106 90 30 in Chapter 21 of the First Schedule to the Customs Tariff Act or not - HELD THAT:- The question of classification of the products in question is squarely covered by the decision of the Supreme Court in CRANE BETEL NUT POWDER WORKS VERSUS COMMR. OF CUS. C. EX., TIRUPATHI [ 2007 (3) TMI 6 - SUPREME COURT ] . Although the said decision was rendered in the context of the question whether the goods in question could be cleared under the Tariff heading in the entry 21 07 of the Central Excise Act, 1944, which read as Betel nut powder known as Supari ; the said decision continues to be applicable because, by virtue of the Supplementary Note 2 to Chapter 21 of the Customs Tariff, the definition of the goods, Betel nut product known as Supari is identical to the definition of Betel nut powder known as Supari . It is clear from a plain reading of the judgment in Crane Betel Nut Powder Works v. Commissioner of Customs and Excise, Tirupathi Anr., that the Supreme Court was of the view that the product in question, sweetened betel nut powder, did not fall within the definition of Betel nut powder known as Supari - Accordingly, the Supreme Court held that the product in question is covered by sub-heading 0801 00 under Chapter 8 of the First Schedule of the Central Excise Tariff Act, 1985. The Supreme Court s view that the products in question did not fall within the classification under Chapter 21 but under Chapter 8 of the First Schedule to the Central Excise Tariff Act, 1985 would squarely cover the controversy in this case as well. Given the definition of the sub-heading Betel nut product known as Supari , read in the context of the main title of Chapter 21 and sub-heading 0802 read in the context with the title of Chapter 8 of the Customs Tariff ( Edible fruits and nuts; peel of citrus fruit or melons ); it would not be apposite to classify the products in question as those covered under Chapter 21 of the Customs Tariff. Appeal dismissed.

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• 2023 (3) TMI 79
  Levy of demurrage charges - issuance of notification No. 15 (Re-2006) 2204-09 dated 27.06.2006 whereby amendment had been made in the Import Export Policy, prohibiting the export of tuvar dal, whole gram choli by inserting the entry at sr. no. 44 in Chapter-7 of the Table-B under Schedule-2 of the Indian Trade Classification (ITC) - prohibition of export of certain items for a period of six months from the date of issuance of notification dated 27.06.2006 was made with retrospective effect by subsequent notification bearing no. 19(RE-2006)2004-09 dated 04.07.2006. The respondent no.1 made several representations to various authorities and contended that the goods which are lying at Kandla Port does not cover the said notification issued by the DGFT because before issuance of the said notification, the goods were passed out of charge by the Customs Authority under Sections 50 and 51 of the Customs Act and the said notification cannot be made applicable in the case of the petitioner especially in view of para-9.12 of the Import Export Policy. Whether the policy decision which otherwise the authority is entitled to, would save it from payment of the demurrage charges? HELD THAT:- In case of INTERNATIONAL AIRPORTS AUTHORITY VERSUS GRAND SLAM INTERNATIONAL OF INDIA [ 1995 (2) TMI 70 - SUPREME COURT ], the question was about the demurrage for the period for which the detention certificate issued for wrongful detention of the imported goods by Customs Authorities. There was a public notice issued in 1986 by the Collector of Customs in purported exercise of power under Sections 8, 33, 34 and 45 of the Customs Act read with Rules 56, 57, 58 and 59 of the Aircraft Rule, 1920 directing the approved custodian of imported goods in Kandla Customs area i.e. International Airport Authority of India/ Central Warehousing Corporation to calculate the warehousing/storage charges by excluding the charge for the period of detention of the goods at the instance of the customs as certified by the Assistant Collector of Customs. Per majority, the notice had been held ultra vires Section 45 of the Customs Act - The Court held that custodian does not entitled the Customs Authority to debar IAAI/CWC from charging demurrage even for period covered by the detention certificate. IAAI and CWC being proprietor of the storage space at the Airport, Custom Public Notice would be effective only if IAAI or CWC accept the same. Concurring with this decision, it was held that Custom Authority by issuing such direction in the public notice did not act within the powers conferred under the Customs Act, its rules and regulations. In yet another decision of UNION OF INDIA VERSUS RC. FABRICS (P) LTD. [ 2001 (11) TMI 82 - SUPREME COURT ], the Customs Authorities on examining the goods belonging to the respondent-importer found the fabric to be excess in length. On request of the importer for waiver of show-cause notice, the Assistant Collector passed an order whereby the importer was allowed the release of the excess goods after payment of fine as well as personal penalty. The amount was deposited along with the customs duty on the excess goods. The DRI officers detained the consignment on the basis of information available with them and seized the detained goods - The High Court had set aside the order as the Department violated the principles of natural justice in not waiting for the reply of the importer. On remand, the Collector discharged the show-cause notice and dropped the proceedings by holding that in view of the order of adjudication, there could not be another adjudication order in respect of the same consignment. Whether is this a case where the DRI Custom Authorities can be directed to pay the demurrage/ detention charges. Can it be said to be an Act which is malafide or of a gross abusive powers that the officials of the customs or the DRI could be asked to compensate the importer for the extra burden which he had to bear? - HELD THAT:- Here is a case where the importer is of the strong feeling that it had been unjustly dealt with and the goods ought to have been cleared by the Customs Authorities. Many of its requests have been not paid any heed to. It had already paid the charges due and now have claimed the reimbursement - the submissions made by the appellant that the respondent no.1 ought to have a taken a recourse of the civil law by preferring the suit and this could not have been decided without adducement of evidence and also following the procedure of cross examining the person, cannot be agreed upon. The learned Single Judge has committed no error in directing the respondent authority to pay the demurrage. We must not be oblivious of the fact that the Apex Court in case of Shipping Corporation of India [ 2001 (4) TMI 83 - SUPREME COURT ] had been quite clear that the goods in question had already been directed to be released without payment of demurrage charges. It was also the case where the Court found that High Court had already concluded to the effect that the detention of the goods by the Customs Authorities was illegal and such illegal detention prevented the importer from releasing the goods. Therefore, the Customs Authorities would be bound to bear the demurrage charges in absence of any provision absolving the Customs Authority from that liability. Here the facts have grossed out. Appeal disposed off.

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• 2023 (3) TMI 78
  Conversion of shipping bills from Duty Drawback Scheme to DFIA Scheme - Export of goods under DIA Scheme as well as Duty Drawback scheme - whether the conversion of Drawback shipping bills can be allowed to DFIA Scheme or not? - HELD THAT:- No error, not to speak of any error of law could be said to have been committed by the tribunal in passing the impugned order. Section 149 is applicable at the relevant point of time. In fact, the questions as proposed by the revenue cannot be termed as substantial questions of law as the issue is squarely covered by a decision of this Court in the case of INTER CONTINENTAL (INDIA) VERSUS UNION OF INDIA [ 2002 (2) TMI 129 - HIGH COURT OF GUJARAT AT AHMEDABAD] and the same is also upheld by the Supreme Court in UNION OF INDIA OTHERS VERSUS INTER CONTINENTAL (INDIA) [ 2008 (4) TMI 23 - SUPREME COURT] . The above mentioned judgment of Gujarat has attained finality as in the proposal for fling SLP before Hon ble the Supreme Court of India against order of High Court, it has been decided not to file SLP in this case (A-2). It has been observed in the letter that the products are covered under the above mentioned 126 shipping bills i.e Biscuits and Confectioneries, were notified under the SION norms. Thus, they were held to be eligible to claim the benefit of DFIA. Section 149 of the Customs Act, 1962 lays down that any import/export document may be considered for conversion subject to satisfaction of the proper officer without having any limitation. No time period is prescribed in Section 149 for conversion of bills and any policy providing for time period is ultra vires - appeal dismissed.

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• 2023 (3) TMI 77
  Levy of penalty on Customs broker under Regulation 17(7) of the Customs Broker Licensing Regulations, 2018 (CBLR) - overvaluation of goods by exporter in order to claim excess export benefits - adjudicating authority was of the view that the KYC verification was not done in a proper manner and hence they had erred in their duty as a Customs Broker. HELD THAT:- A penalty has been imposed on the appellant, for their alleged failure to do a proper KYC verification, arising from a lack of physical check of premises of the exporters as found required under Regulation (10)(n). it is seen from a plain reading of the said provision that the CB is required to verify correctness of Importer Exporter Code (IEC) number, Goods and Service Tax Identification Number (GSTIN), identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. There is no reference to a physical verification of premises. CB these days service clients from all over the country and expecting them to verify individual premises located anywhere in the country for its functioning, would be very difficult for the CB. It is for this reason that the Regulation 10(n), states by using reliable, independent, authentic documents, data or information. i.e. The verification would be satisfied if done using authentic documents, data or information. No physical verification was called for. Hence since SVARAD had verified the relevant documents possessed by the exporters and issued by government departments, the authenticity of which is not under challenge, there is no failure in this regard on their part and the penalty imposed on them under the CBLR and is not sustainable. Thus, SVARAD cannot be said to have violated the provisions of Regulation 11(n) of CBLR, 2018 and there was no justifiable reason to impose a penalty on them - appeal allowed.

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• Corporate Laws

• 2023 (3) TMI 76
  Seeking permission to operate the bank account without any further fetters from the respondent Bank - HELD THAT:- The Learned Single Judge was mindful of the fact that an interim application is pending before NCLT, Kolkata for joint operation of bank accounts. Therefore, the order to make bank transactions by the parties with the concurrence of the other was passed to protect the interest of the parties pending final adjudication of the company petition and to prevent hampering of the pending application before the NCLT. The matter pending before the NCLT relates to affairs of a private company; its business efficacy, financial transactions, management and disputes between the shareholders of the company and thus the need for judicial intervention and interference into orders and proceedings of the NCLT must be kept to bare minimum. Thus, no case is made out to interfere in the order of the Learned Single Judge and therefore, the appeal is devoid of any merits - application disposed off.

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• 2023 (3) TMI 75
  Scheme of amalgamation - suit for specific performance - Direction to amend the schedule of property attached to the Approved scheme removing New Mill Factory Estate from property scheduled - HELD THAT:- From the facts it appears that the HMCL filed Civil Suit for Specific Performance of Contract on the basis of agreement against FGIL. The said suit being CS No. 168 of 2009 is still pending before the High Court of Calcutta wherein the Respondent was substituted as plaintiff on the basis of agreement dated 12.02.2009 (on record). The civil dispute with regard to North Mill Estate is pending for consideration before the Hon ble High Court of Calcutta. On the other hand, the FGIL has also filed title suit No. 987 of 2015 before the Learned Civil Judge (Junior Division, First Court, Uluberia) for possession of that property against the Respondent. From the record, it is evident that a Civil Suit No. 168/2009 is pending before the Hon ble High Court of Calcutta with regard to the dispute passing of title of the suit property i.e. North Mill estate. Further, it is also on record that prior to filing of reply affidavit by the Appellant, the Appellant on or about 16.08.2019 filed a Suit bearing No. 192/2019 in Uluberia Court for ejectment of the Respondent No.1 from the North Mill property. It reveals that certain proceedings / suits are pending with regard to claim of title to the North Mill Estate property. The contention of the Respondent that the Appellant did not disclose with regard to the pendency of civil disputes and it is mandatorily to make a disclosure under Section 230(2) of the Companies Act, 2013. Since the Appellant included the North Mill property as the property in the scheme of amalgamation, therefore, all the details with regard to the said property ought to have been disclosed in the scheme. However, the Appellant failed to do so. Appeal dismissed.

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• Insolvency & Bankruptcy

• 2023 (3) TMI 74
  Fraudulent transactions (entries of Rs. 21.37 crores shown in the Audited Financial Statement for the year 2018) - distribution under Section 53 of the Insolvency and Bankruptcy Code, 2016 (liability to pay to liquidator) - HELD THAT:- Section 66 of the I B Code, 2016, gives powers to the Adjudicating Authority to pass suitable orders, if it is found that any person has carried on the business of the Corporate Debtor with an intention to defraud its Creditors or other stakeholders. Section 66 also give powers to the Adjudicating Authority to give directions for making contribution to the assets of the Corporate Debtor. This also includes Directors of the Corporate Debtor, and their personal liability towards contribution, provided such Directors did not exercise due diligence or failed to take reasonable steps to minimize potential losses to the creditors when there was no possibility of avoiding the commencement of Corporate Insolvency Resolution Process. However, a director can be deemed to have exercised due diligence, if such diligence was exercised as expected reasonably of a director carrying out a business in ordinary course of business. Thus, for establishing the fraudulent purpose, it must be shown that the Ex-Directors of the Corporate Debtor knew that the Company was insolvent but continued to run business with dishonest intentions. On a broader sense, concealment of true financial position of the Corporate Debtor can also be covered under such provisions. This Appellate Tribunal after going through the averments of both the parties and the record made available, comes to the conclusion that onus was on the Appellants and difficult to accept that details of large number of 4,000 customers were not available. Similarly, it also not convincing that no payment has been received from any of such customers. On face of it, the finding of the Adjudicating Authority seems to be correct and no error is found in the impugned order on this account. This Appellate Tribunal, is of the considered opinion that the Appellants, have not turned out to be clean in their explanations and submissions, and therefore cannot avoid their responsibilities towards non-available / non-verifiable Assets of Rs. 21.37 crores, as shown in the Balance Sheet for the Financial Year 2018. These Assets, have proved to be Fictitious / Fraudulent, in nature and seems to have been created in the Books of Accounts, with an intent to Defraud the Creditors - Appeal dismissed.

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• 2023 (3) TMI 73
  Quantum of fees and other expenses payable to the Resolution Professional and in the course of determination of fees/expenses - conduct of the Resolution Professional in respect of insolvency proceedings of M/s Kushal International Limited which had entered into liquidation. Whether in light of the facts of the present case the Adjudicating Authority had erred in disallowing the fees/expenses claimed by the Appellant and in refixing the same and whether the negative remarks made on the conduct of the Appellant stands to reason? HELD THAT:- On the activities undertaken post passing of the liquidation order, we notice that the Adjudicating Authority has returned the findings that no progress report was filed by the Resolution Professional on the efforts made by him during the period when the liquidator remained to be appointed. While this is factually correct, it also cannot be discounted that he had undertaken several steps including appointment of security guards to protect the assets of the Corporate Debtor, prevented the suspended management from causing harm to the property of the Corporate Debtor by way of unauthorized leased deeds, undertook several visits to the factory site, made several appearances for hearings before the Adjudicating Authority etc. This finding of the Adjudicating Authority has also been challenged on the ground that in the absence of his regular appointment as liquidator, the liquidation process could not have moved forward and therefore there was no question of submitting progress report. The Adjudicating Authority in the impugned order has narrated the chronology of hearings and stated that though the matter was heard 22 times, in none of the hearings the expeditious appointment of liquidator without delay was emphasized. In fact there were numerous adjournments either on request of the parties or on grounds of settlement being under consideration between parties. The delays were compounded by the lockdown imposed on account of Covid pandemic during the intervening period - for the sluggishness in the appointment of the liquidator, it is not the Resolution Professional alone who can be held solely responsible but the responsibility equally devolves on the CoC and as much on the Adjudicating Authority which took an inordinately long time in making the appointment. The fees/expenses claimed by the Resolution Professional for the period following the passing of the liquidation order is exorbitant and not commensurate with the work performed by him as is clearly borne out from material on record. The directions of the Adjudicating Authority as contained in the impugned order are concurred with respect to the determination of the fees of the Resolution Professional; expenses incurred by him on site visits; fees of the legal advisor and salary of the security guards and direct that the same shall be paid by the CoC within ten days from the date of uploading of this order. Further all the adverse observations made on the conduct of Resolution Professional in the impugned order is expunged - appeal disposed off.

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• 2023 (3) TMI 72
  Violation of principles of natural justice - Impleading Financial Creditors as necessary party - Resolution plan already approved - whether for obtaining the approval of the Adjudicating Authority for sale of asset as per the Revised Resolution Framework, whether the Appellant ought to have been impleaded as necessary party to the application? - HELD THAT:- The Appellant being member of the Creditors Committee and having participated in the meeting held on 17.02.2021, it cannot be said that in passing resolution for approving the highest bid any principles of natural justice have been violated. The Appellant is a dissenting Financial Creditor who has only 1.89% vote share. When resolution is passed by the Creditors Committee and approval is sought from the Adjudicating Authority, as per the Revised Resolution Framework approved by this Tribunal on 12.03.2020, it is not necessary that all dissenting Financial Creditors should be impleaded to the application - Present is not a case where it can be said that any principles of natural justice have been violated since the Appellant has raised its objection in the meeting of the Creditors Committee and also voted against the resolution. The filing of the application for approval before the Adjudicating Authority was as per the steps provided in the Revised Resolution Framework - the order of the Adjudicating Authority dated 23.09.2022 cannot be set aside on the ground of violation of any principles of natural justice. The stay of an order means that the order which has been stayed would not be operative from the date of the passing of the stay order but it does not mean that the said order has been wiped out from existence. The distribution of the consideration received by the applicant (IL FS) from the transaction which have been proposed or withdrawal of any other amounts from the designated bank account shall be subject to further orders of the Adjudicating Authority. In event, order is passed by Hon ble Supreme Court in the pending Appeal, the same is also to be given effect in the proceedings before the Adjudicating Authority - Appeal dismissed.

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• 2023 (3) TMI 71
  Admitted application - existence of any stay order or not - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Non-performing Assets (NPA) - time limitation - order for liquidation of corporate Debtor - HELD THAT:- The NPA of the corporate debtor loan account was declared on 6.8.2012. Thereafter, while it is noted that the corporate debtor filed a civil suit before the Hon ble High Court of Calcutta that suit is yet to be decided and therefore in the present, no illegality attaches to the declaration of NPA, as the stay order granted by Hon ble High Court of Calcutta vide order dated 15.10.2020 [[ 2021 (3) TMI 126 - CALCUTTA HIGH COURT] ] was vacated by the Hon ble Supreme Court by its judgment in SLP Civil No. 1168/2021 [[ 2021 (4) TMI 753 - SUPREME COURT] ]. Thus, it is clear that there is no stay order operative on the order of NCLT dated 19.8.2019, whereby the application under section 7 was admitted. The State Bank of India declared the loan account of the corporate debtor as NPA on 6.8.2012 and quite clearly the declaration of NPA has not been declared as illegal or incorrect. Therefore, the limitation for section 7 application starts from 6.8.2012. As per Article 137 of the Limitation Act, 1963 the period of limitation prescribed for an application under section 7 of IBC is three years. Therefore, the limitation of section 7 application would be valid upto 5.8.2015. Before the expiry of the limitation period, the balance sheet for FY 2014-15 filed by the corporate debtor (attached at pp.86-100 of the appeal paperbook Vol.I) mentions the amount of long-term borrowings as Rs.33,49,92,064/- and the balance sheet very clearly mentions in Textual Information 23 that the company has defaulted in repayment of dues to the Bank - It is noted that while this limitation period was running, another acknowledgment was made by corporate debtor in its balance sheet for the FY 2015-16, wherein again the long-term borrowings for the year ended 31.3.2016 has been shown as Rs.33,49,92,064/-. Further, since no caveat by way of any textual information is shown by the corporate debtor in its appeal with the balance-sheet (attached at pp.101-114 of the appeal paperbook, vol.II) , the limitation would again get extended from the last date of the balance sheet i.e. 31.3.2016 for another three years, which would make it upto 31.3.2019. It is observed from the section 9 application that it was filed on 8.8.2018, which is within the limitation period, which extends upto 31.3.2019. It is clear that the application under section 7 is within the prescribed limitation period - The loan account of corporate debtor declared by State Bank of India as NPA on 6.8.2012 the date of default and the balance-sheets for the financial years 2014-15 and 2015-16 provide an unequivocal and clear extension of limitation of the debt by virtue of section 18 of the Limitation Act, 1963. Such a limitation is validly extended through acknowledgment of liability of the said debt upto 31.3.2019 and the section 7 application, which was filed on 8.8.2018, is clearly within limitation. The admission order passed by the Adjudicating Authority admitting the section 7 application is correct - the Impugned Order-I does not need to be interfered with. Further, in view the fact that the Impugned Order-I has been held to be correct, the order of liquidation i.e. Impugned order-II also is held to be correct and therefore, there are no reason to interfere with it. Appeal dismissed.

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• 2023 (3) TMI 70
  CIRP - Approval of the Resolution Plan - whether the Appellant/Operational Creditor can be allowed to pursue the Arbitration Proceedings in the light of the ratio laid down by the Hon ble Apex Court in FOURTH DIMENSION SOLUTIONS LTD. VERSUS RICOH INDIA LTD. ORS. [ 2022 (1) TMI 1352 - SUPREME COURT] ? - Contingent Liability HELD THAT:- any Claims which are not part of the Resolution Plan shall stand extinguished and no person would be entitled to continue any Proceedings in respect of a Claim , which is not part of Resolution Plan. The Hon ble Apex Court had disposed of the Appeal with a liberty to the parties to pursue all contentions available to them in the Proceedings at the relevant period of time. Contingent Liability - HELD THAT:- The ratio of this Judgement is applicable to the facts of this case, keeping in view that the CIRP Proceedings were invoked under Section 10 of the Code, that the name of the Appellant was mentioned in the list of Operational Creditors, that the RP had posted on the website that the Claims of the Operational Creditors are under verification, and that admittedly Pre-Arbitration Proceedings were pending prior to the invocation of the Section 10 Proceedings, and there was no Contingent Liability or any other provision made in the Resolution Plan, subject of course, to the result of the Arbitration Proceedings. There is no illegality in the Order of the Approval of the Resolution Plan by the Adjudicating Authority and there are no reason to set aside the Resolution Plan per se except for observing that the RP ought not to have made a Contingent Provision with respect to the Appellant herein having regard to the specific facts of this case, which would be subject to the result of the Arbitration Proceedings. Having observed so, liberty is being given to the Appellant herein to pursue all contentions available to them in the pending Arbitration Proceedings and the same be decided in the said proceedings on its own merits in accordance with law. Appeal disposed off.

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• PMLA

• 2023 (3) TMI 69
  Seeking a writ of Habeas Corpus (to present/produce the person before the court) to forthwith release the petitioner from illegal custody - only ground urged for seeking a writ of habeas corpus is that the learned Special Judge granted remand of more than 15 days in one go and not there was no valid remand order - HELD THAT:- The issue whether an order of remand is required to be passed under Section 167 CrPC even if the accused is not entitled to default bail, when no cognizance is taken despite filing of chargesheet has been considered in S SURESH KUMAR BHIKAMCHAND JAIN VERSUS STATE OF MAHARASHTRA ANR. [ 2013 (2) TMI 821 - SUPREME COURT ] . Hon ble Supreme Court noted that from the provisions of Section 167 CrPC, it would be amply clear that the Magistrate may authorize the detention of the accused person, otherwise than in the custody of the police, beyond the period of fifteen days, if he is satisfied that there are adequate grounds for doing so, but no Magistrate is authorized to detain the accused person in custody for a total period exceeding 90 days. The power of remand is vested in the Court at the very initial stage before taking cognizance under Section 167(2) Cr.P.C and once cognizance is taken, power to remand shifts to the provisions of Section 309 Cr.P.C. It was thus categorically held that in case, on the filing of the charge sheet, cognizance is not taken, the Magistrate may postpone the commencement of, or adjourn, any inquiry or trial, for reasons to be recorded and may by a warrant, remand the accused if in custody for a period of 15 days at a time. Thus, in cases, where though charge sheet is filed, however, sanction is not received, the accused will have no right to bail, however, his remand under Section 167 CrPC will be required to be continued if necessary. In the decisions reported as NATABAR PARIDA VERSUS STATE OF ORISSA [ 1975 (4) TMI 132 - SUPREME COURT ] , it was held that before the Court proceeds to the next stage of Section 309 CrPC, the accused has to be remanded in custody of some Court. The two stages i.e. one under Section 167 CrPC and the other under Section 309 CrPC though different but one follows the other so as to maintain a continuity of the custody of the accused with the Court. Thus, it is clear that on 13th January 2023 or even on the adjourned date i.e. 24th January 2023 after the complaint was filed on 13th January 2023, no order of judicial remand was passed against the petitioner. Though learned counsel for the petitioner has seriously challenged that the learned Special Judge could not have taken up the file suo-moto on the request of the Reader on 13th February 2023. Be that as it may, passing of a remand order is a judicial act and realizing the error committed, the learned Special Judge corrected the mistake and vide order dated 14th February 2023, directed the Rehnumai remand of the petitioner. Thus, even if on the date of filing of the petition, the custody of the petitioner was illegal in the absence of an order of remand, however, before the date of return which was 20th February 2023, when the matter was to be heard, the said defect had been rectified and the custody of the petitioner was no more illegal. There is no dispute to the proposition raised by the learned counsel for the petitioner that an order of remand is a judicial remand and the same cannot be passed on chits of paper. However, in the present case, the learned Special Judge took up the file, issued notice to the parties and thereafter, directed the Rehnumai remand. There are no ground to issue a writ of Habeas Corpus releasing the petitioner from the custody - petition dismissed.

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• 2023 (3) TMI 68
  Seeking grant of regular bail - Money Laundering - predicate/scheduled offence - smuggling of contraband (Heroin) from Pakistan - HELD THAT:- This Court is not in a position to record its prima facie satisfaction on the three ingredients in order to dilute the rigour of presumption arising out of Section 45 of the PMLA, 2002. In view of law laid down in VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. [ 2022 (7) TMI 1316 - SUPREME COURT ], all the three conditions under Section 45 of the PMLA, 2002 are to be satisfied. Thus, no ground is made out to grant indulgence in favour of the petitioner. The petition is dismissed.

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• Service Tax

• 2023 (3) TMI 67
  Refund of Service tax - export of output services - Constitutional Validity of first and second provisos to the Section 86 (1) of the Finance Act, 1994 - HELD THAT:- Considering the fact that the Petitioner s claim for refund had been made in July 2011 and that Petitioner had succeeded before the first appellate authority, the Tribunal will consider taking the decision on Petitioner s applications early. Petition disposed off.

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• 2023 (3) TMI 66
  Wrong utilisation of cenvat credit of service tax paid on consulting engineering service - short payment of service tax found on reconciliation of commercial accounts with service tax returns - non payment of service tax on amounts received from Delhi Airport Metro Express Private Limited, under the head-Renting of Immovable property service - Non-payment of service tax on L.C. charges paid to foreign banks under reverse charge mechanism - levy of penalty. Disallowance of cenvat credit of Rs.30,12,86,790/- alleging wrong utilization of cenvat credit on receipt of consultancy engineering service - HELD THAT:- The said issue already stands decided in favour of the appellant in appeal no.53176/2016 [[ 2023 (2) TMI 607 - CESTAT NEW DELHI] ]. Thus, this ground is allowed in favour of appellant assessee and the demand is set aside. Short payment of service tax of Rs.8,17,58,940/- - HELD THAT:- In reconciling the account of debtors with the amount offered for service tax in the ST-Returns, the same have been erroneously raised. As admittedly, the appellant maintained their accounts on accrual basis (Mercantile basis). Whereas service tax for the period was payable on cash basis or receipt basis in terms of Section 68 of the Finance Act read with Rule 6 of Service Tax Rules, 1944 upto 31.03.2011. With effect from 01.04.2011, there was change in the basis of charge of service tax, which became payable immediately following the calendar month, in which the service is deemed to be provided as per Rules framed (i.e. on Mercantile basis) or immediately on raising the invoice or providing of service, as amended vide Notification no. 3/2011-ST dated 01.03.2011 - this demand for alleged short payment of tax is erroneous and is set aside. Demand of service tax of Rs.5,93,02,321/- on account of amounts received from DAMEPL - HELD THAT:- From perusal of the Concession Agreement, it is found that the appellant was entitled to receive certain amounts as concession fee and share a small percentage (1 to 5%) of the fare collection from the passengers. The arrangement between the parties have all the features of Joint Ventures or partnership - Both the parties have jointly rendered services to the passengers or users of the Metro line under the Concession Agreement. Both parties have undertaken their assigned rights and have performed their specified tasks to run the Metro line service on the Airport Metro line. Further, such service could not be run without active involvement of the appellant as the service was aligned with the existing Metro network of the appellant - no service has been provided by DAMEPL to the appellant. Accordingly, this ground is allowed in favour of the appellant and the demand is set aside. Service tax levy on the LC charges paid by the appellant to foreign bank (Bank of India-Tokyo), where the service tax is demanded under RCM - HELD THAT:- Under the admitted facts, it is the Government of India, which have entered into loan agreement with Japan International Corporation Agencies (JICA) (formerly JAPAN Bank of International Corporation ) on 10.03.2008 to borrow money for establishment and implementation of Delhi Mass Rapid Transport System. The proceeds of loan has been used for purchase of eligible goods and service for implementation of the Metro Project. There is defacto privity of contract between the appellant and the Bank of India, Tokyo, accordingly, the LC charges are paid towards ensuring payment to suppliers from the loan amount sanctioned by JICA. Further, we find that loan agreement provides that in case of any dispute between the Government of India and Bank of India, relating to any provisions of the contract, the same shall be resolved by arbitration - the LC charges/fee paid to the bank are taxable, under Reverse Charge. However, as the appellant is entitled to cenvat credit, the demand for extended period is set aside. Eligibility of benefit of exemption Notification No. 25/2012-ST - HELD THAT:- The same is not available to the appellant as this notification is effective from 01.07.2012, whereas the period in dispute is prior to this date. Appeal allowed in part.

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• 2023 (3) TMI 65
  Demand of interest under Section 75 of the Finance Act, 1994 - Non-payment of service tax - Intellectual Property Rights - it is alleged that the appellant had not discharged Service Tax immediately after making the provision for payment of Royalty and Technical Knowhow fees to their associate companies abroad. HELD THAT:- In the orders of the CESTAT Benches in M/s. Tata Consultancy Services Ltd. v. Commissioner of S.T., Mumbai [ 2015 (11) TMI 236 - CESTAT MUMBAI ], M/s. Alstom T and D India Ltd. and Schneider Electric Infrastructure Ltd. v. Commissioner of Central Excise Service Tax, LTU, Chennai ors. [ 2018 (2) TMI 148 - CESTAT CHENNAI] and M/S. AREVA T D INDIA LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI. [ 2018 (4) TMI 1944 - CESTAT CHENNAI] relied upon by the Learned Advocate for the appellant, it has been held that in order to be categorized for the purpose of Service Tax under Intellectual Property Rights, such rights should have been registered with the Trademark / Patent authority in India as per the law for the time being in force. That is to say, as long as it is not legally recognized by the process under the Act, the same could not be considered as recognized by the law for the time being in force. In the case on hand, the appellant has categorically canvassed, which is also clear from the grounds-of-appeal urged, that wherever Royalty and Technical Knowhow fees were paid to the overseas entities, applicable Service Taxes have been discharged by the appellant and that it is only the interest which is the point of dispute and not the Service Tax. The scope of the appeals is limited, as contended by the appellant, to the demand of interest alone and when the orders of the CESTAT Benches are considered, it is found that since the liability itself was questionable, the Revenue is not justified in demanding the interest also. Appeal allowed.

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• 2023 (3) TMI 64
  Refund claims - Seeking modification in the refund claims filed by the appellant without initiating any proceedings by way of issuance of show cause notice under Rule 14 of Cenvat Credit Rules, 2004 - HELD THAT:- In the case of appellant itself, the issue has been settled by the orders reported at [ 2018 (8) TMI 19 - CESTAT MUMBAI ], where it was held that under the substituted Rule 5 of the rules, there is no requirement of showing the nexus between the input service and the output service provided by the assessee. Since the refund under the said amended rule is governed on the basis of receipt of export turnover to the total turnover, the establishing the nexus between the input and output service cannot be insisted upon for consideration of the refund application. Issue also stands decided in the case of PMI ORGANISATION CENTRE PVT. LTD. VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, MUMBAI EAST [ 2022 (3) TMI 192 - CESTAT MUMBAI ] where it was held that The reasons assigned by the authorities below in this case for denial of the refund benefit to the applicant shall not stand for judicial scrutiny inasmuch as other than the allegation of non-establishment of nexus, the department had never questioned nor pointed out any discrepancy, alleging that the ingredients mentioned in Rule 5 ibid have not been complied with by the appellant. Hence, refund benefit shall not be denied to the appellant. Appeal allowed.

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• Central Excise

• 2023 (3) TMI 63
  CENVAT Credit - traded goods - exempt goods or not - cenvat credit was availed on the common input service attributed to the dutiable goods as well as exempted service (trading activity) - appellant was admittedly reversing the proportionate credit attributed to the trading activity along with interest - applicability of Rule 6(3) of CCR - HELD THAT:- The facts of the present case is that though initially the appellant have taken the cenvat credit on the common input service which were used for manufacture of dutiable goods as well in relation to exempted service i.e. trading activity, however, on pointing out by the department, the appellant have calculated the proportionate credit in respect of common input service attributed to the trading activity and paid the same along with interest. After payment of such proportionate credit, the situation became as if no cenvat credit was taken in respect of common input service attributed to the trading activity as held by the Hon ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT ]. In Rule 6(3) from the different options provided to the assessee in addition to 6/7% payment an option for proportionate reversal of the credit is also provided. This tribunal time and again taken a view that whether option is availed in advance or later stage it is prerogative to the assesse to choose any one of the option - Therefore, merely because the appellant at the relevant time did not opt for any of the option, revenue cannot impose upon the appellant a particular option i.e. payment of 6/7% of the value of the goods/service. Therefore, once it is admitted fact that the appellant have reversed the cenvat credit in respect of common inpout service attributed to the trading activity and also paid the interest thereon at the relevant time, no demand of 6/7% of the value of the trading activity will sustain - Appeal allowed.

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• 2023 (3) TMI 62
  Seeking condonation of delay of 9 years and 11 days in filing the appeal - Area based exemption - effect of N/N. 17/2008-CE dated 27.03.2008 - HELD THAT:- In similar circumstances in the appellant s own case vide Interim Order No.71/2021 dated 23.08.2021, this Tribunal condoned the delay in filing the appeal before the Tribunal. Following the precedent decision in the appellant s own case, the delay of 9 years and 11 days in filing the appeal is condoned. Registry is directed to list appeal for final hearing in due course.

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• CST, VAT & Sales Tax

• 2023 (3) TMI 61
  Under-pricing of goods/colourful transactions - Determination of sale price of Iron Ore sold by the petitioner on the basis of average I.B.M. rate in exercise of the powers under Section 35 (7) read with Section 40 (1) of the JVAT Act - HELD THAT:- After going through the proviso to Section 35 (7) of the Act it appears that the statute specifically postulates that prescribed authority shall record his reason before initiating the proceedings and no order shall be passed under this sub section without giving the dealer an opportunity to be heard. Section 40(1) provides for Assessment in cases where turnover has escaped assessment on account of reasons indicated under Clause (a) to (e). In cases of concealment or failure to disclose willfully etc. the penal provisions under proviso to 40(1) provide imposition of three times the amount of additional tax assessed - the proviso to Section 35 (7) of the JVAT Act firstly stipulates that the reasons must be recorded by the prescribed authority for initiating the proceeding and secondly, the principles of natural justice should be followed. Though in the instant case the second ingredient of the proviso has been fulfilled; however, there is no document to suggest that the assessing officer has recorded his reason before initiating the proceeding - it is noteworthy that even after remand by the appellate authority in the revised assessment order the assessing officer has not correctly applied its mind to the requirement of law under Section 35(7) of the Act and rather observed that it is not a case where the assessee has sold the goods at a price higher than what is shown by him. In the case of GIRDHARI LAL NANNELAL VERSUS SALES TAX COMMISSIONER, MP [ 1976 (3) TMI 51 - SUPREME COURT] , the Apex Court, held that for the purpose of levy of Sales Tax it would be necessary not only to show that the source of money has not been explained but also to show existence of some material that such acquisition of money has resulted from transactions liable to Sales Tax and not from other sources. The Assessing Officer has come to the finding that it is a case of underpricing . The finding with respect to underpricing of the goods sold by the petitioner recorded by the assessing officer is not tenable in the eye of law. Further, assessing officer in its revised order has stated that underpricing of the petitioner has been occasioned due to connivance of the seller and the purchaser, but no details of such enquiry has been mentioned in the revised order. The lower court records do not show that any such enquiry was conducted by the learned assessing officer to conclude underpricing done by the petitioner before proceeding to impose tax and penalty under Section 40(1) based on the IBM rates - In the absence of tangible materials to support such a finding, it is difficult to assume that a purchaser of petitioner would purchase minerals at a lesser price under an invoice in order to evade payment of tax especially when the said purchaser is entitled to avail ITC under the JVAT Act, 2005. It is only after recording of reasons for initiation of proceedings under Section 35(7) the exercise for determination of value of goods at the time of sale and assessment of tax on such price is to be done by giving the dealer an opportunity of being heard. Though several contentions have been raised by the parties on the merits of the matter regarding the levy of tax and penalty but since the matter is being remanded for the assessing officer on the point of recording of satisfaction under Section 35 (7) of the JVAT Act before initiation of the proceedings, it is refrained from making any observation on the merits of the case regarding the levy of tax and penalty upon the petitioner under Section 35 (7) r/w Section 40 (1) of the JVAT Act. The judgment relied upon by the learned Advocate General i.e. VEENA THEATRE, PATNA VERSUS THE STATE OF BIHAR [ 1970 (4) TMI 169 - SUPREME COURT] relate to cases of best judgment assessment after the rejection of Books of Account of the Assessee - Since in the present case the requirement of law for initiation of the proceedings have not been fulfilled, these decisions are not of assistance to the present cases. Petition disposed off.

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• 2023 (3) TMI 60
  Entitlement to avail reduced CSA @ 2% on the interstate sales of yarn, against submission of D Forms to the Government Departments, by taking recourse of Notification dated 13.07.2001 - Declaration in Form C were submitted as specified in the Central Sales Tax) Registration Turn Over) Rules, 1957 at the time of assessment - HELD THAT:- A perusal of the notifications shows that intention of the Legislator was to provide benefit of 2% tax on the inter-state sales to all the dealers outside State of Punjab and this included the Government dealers as well. However, at the time of issuing final notification, words declaration in Form D could not be mentioned. This omission in itself cannot alter the meaning of the notification as a whole, whereby it is clearly mentioned that benefit of this notification is to be given to any dealer having his place of business outside the State of Punjab. Any dealer would include private as well as Government dealer. Only declarations in Form C and Form D were to be provided by the private and Government dealers respectively. Guidelines for presenting Form C and D by the private as well as Government dealers have also been laid down separately. This is only a procedural declaration and omission of mentioning the words Form D cannot be made a ground to deny the benefit of this notification to the Government dealers outside the State of Punjab. The present appeal was admitted way back in the year 2012. Learned counsel for the petitioner-State has not been able to cite any instance, where even after 2012, the State has not extended this benefit to any dealer outside State of Punjab being a Government department - Petition dismissed.

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• 2023 (3) TMI 59
  Constitutional Validity of Section 17(5)(b) of AP VAT Act and charging Section 4(2) of AP VAT Act - ultra vires to Section 17(2)(3)(4)(7) - petitioner is to be assessed as ToT dealer only for his single transaction of purchase of goods from outside the State and for that single transaction or not - time limitation under Section 21(4) of the AP VAT Act - penalty can be imposed at 25% only on the tax due as per Section 49 of AP VAT Act or not - maintainability of writ petition. Whether Section 17(5)(b) without reference to quantum of turnover is ultra vires to Section 17(2)(3)(4)(7) as well as charging Section 4(2) of AP VAT Act and liable to be struck down? - HELD THAT:- When Section 17 is comprehensively studied, it does not appear that 17(5)(b) has totally negated the operation of Sub Sections (2)(3)(4) and (7), rather it has limited their operation by carving out an exception. In other words, Sub Sections (2)(3)(4) and (7) are still operable so long as they do not fall within the groove of exception. Therefore, the petitioner cannot contend that Section 17(5)(b) has taken away the right conferred under Sub Sections (2)(3)(4) and (7). We find no conflict or inconsistency between sub-section (5) and other sub-sections and therefore, vires of Section 17(5) cannot be questioned. Whether the petitioner is to be assessed as ToT dealer only for his single transaction of purchase of goods from outside the State and for that single transaction the petitioner shall be assessed to tax as a casual trader under relevant provisions of the AP VAT Act? - HELD THAT:- A tax is imposed for public purpose for raising general revenue of the State. As per Article 366(28) of the Constitution of India, the term taxation includes the imposition of any tax or impost, whether general or local or special and the tax shall be construed accordingly. The term impost means a compulsory levy. Since imposition of tax involves a compulsory levy or exaction of money by Government, the same is not permissible except by or under the authority of a statutory provision. The petitioner shall be treated as a TOT dealer only irrespective of his involvement in a single transaction of purchase from outside the State. The said single transaction of purchase is concerned, the same is liable to be taxed under Section 6 of the CST Act, 1956 but not under the provisions of AP VAT Act, 2005 for the reason that as per Section 5 of AP VAT Act, the said Act has no application to impose tax on sale or purchase of any goods which took place outside the State. The petitioner cannot be treated as casual trader also for the reason that U/s 2(7) of AP VAT Act a casual trader is a person who carries on occasional transactions of a business nature involving buying, selling or distribution of goods in the State, whether as petitioner made a single purchase from outside the State. Whether the assessment for the period April, 2013 to July 2014 is barred by limitation under Section 21(4) of the AP VAT Act? - HELD THAT:- According to the petitioner the impugned Assessment for the period April, 2013 to July, 2014 is barred by limitation under Section 21(4) of AP VAT Act since the assessment for the aforesaid period exceeded four years. The plea cannot be accepted, for the reason that for the aforesaid period, the petitioner has wilfully underdeclared his sales turnover and evaded payment of the tax to a tune of Rs.3,030/-. Therefore, following Section 21(5) of the AP VAT Act the 3rd respondent has rightly levied the tax. It is relevant at this juncture to mention that for the subsequent period also, for any undervaluation of sales and consequent evasion of tax, the petitioner will be liable to pay tax at 1% as a TOT dealer but not 14.5% as a VAT dealer Whether penalty can be imposed at 25% only on the tax due as per Section 49 of AP VAT Act? - HELD THAT:- The petitioner shall be treated as TOT dealer only but not as VAT dealer. As such, he need not pay tax as a VAT dealer. Consequently, Section 49 of the Act which deals with penalty for failure to registration does not apply to the instant case. On the other hand, the petitioner for his act of undervaluing the tax as a TOT dealer, shall be liable to pay penalty as per Section 53 of AP VAT Act. Whether the writ petition is not maintainable due to availability of alternative, efficacious remedy of appeal? - HELD THAT:- In Whirlpool Corporation v. Registrar of Trade Marks, Mumbai [ 1998 (10) TMI 510 - SUPREME COURT] the Apex Court held that the alternative remedy will not operate as a bar in the contingencies namely where the writ petition has been filed for the enforcement of fundamental rights or where there has been a violation of principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In the instant case the petitioner challenged the validity of Section 17(5)(b) of AP VAT Act. As such the writ is maintainable. The impugned Assessment Order dated 04.08.2018 penalty proceedings dated 23.11.2018 and Appellate Order dated 22.10.2020 are hereby set aside - Petition allowed.

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