TMI Tax Updates - e-Newsletter
March 6, 2023

Case Laws in this Newsletter:

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

Articles

1. Suo Moto cancellation of GST Registration

   By: Rajeev Jain

2. While proper E-Mail Ids should be used by AO to serve notice, assesses should not try to evade the notices too.

   By: Vivek Jalan

3. CREDITORS MUST PLAY CATALYTIC ROLE IN CIRP

   By: DR.MARIAPPAN GOVINDARAJAN

4. Procedural lapses cannot be ground for denying substantive benefits

   By: Bimal jain

News

1. SWAMIH Fund completes 20,557 homes since inception in 2019

2. Sovereign Gold Bond Scheme 2022-23 (Series IV) – Issue Price

Notifications

Central Excise

1. 12/2023 - dated 3-3-2023 - CE

Exemption from Excise - Additional duty of excise leviable - Seeks to further amend No. 10/2022-Central Excise, dated the 30th June, 2022 , to reduce rate specified for High speed diesel oil

2. 11/2023 - dated 3-3-2023 - CE

Prescribe rates of Special Additional Excise Duty for exports of petrol and diesel - Seeks to Reduce the Special Additional Excise Duty on Diesel - Further amend Notification No. 04/2022-Central Excise, dated the 30th June, 2022.

3. 10/2023 - dated 3-3-2023 - CE

Special Additional Excise Duty on production of Petroleum Crude and export of Aviation Turbine Fuel - increase the Special Additional Excise Duty on production of Petroleum Crude and reduce on export of Aviation turbine Fuel - Seeks to amend No. 18/2022-Central Excise, dated the 19th July, 2022.

Customs

4. 16/2023 - dated 3-3-2023 - Cus

Effective rates of Customs duty and IGST for goods imported into India - Seeks to amend notification No. 50/2017- Customs, dated 30.06.2017, in order to reduce the BCD on Tur Whole to Nil.

5. 15/2023 - dated 3-3-2023 - Cus

Global Tariff Rate Quota (TRQ) to Crude Sunflower Oil and Crude Soyabean Oil -Seeks to amend notification No. 30/2022- Customs, dated 24.05.2022, in order to discontinue the specified TRQ rate after the 31st March 2023.

GST - States

6. S.R.O. No. 279/2023 - dated 1-3-2023 - Kerala SGST

Amendment in Notification G.O.(P) No.63/2017/TAXES dated 30th June, 2017

7. S.R.O. No. 278/2023 - dated 1-3-2023 - Kerala SGST

Amendment in Notification G.O. (P) No.62/2017/TAXES dated 30th June, 2017

Income Tax

8. 12/2023 - dated 3-3-2023 - IT

Karnataka State Building and Other Construction Workers Welfare Board notified a Board constituted by the State Government of Karnataka U/s 10(46) of IT Act 1961.

9. 11/2023 - dated 3-3-2023 - IT

Income-tax (Second Amendment) Rules, 2023 - Corrigendum - Notification No. 05/2023 dated 14-02-2023

Money Laundering

10. S.O. 1036 (E) - dated 3-3-2023 - PMLA

Court of Session designated as Special Court under the Prevention of Money laundering Act, 2002 - Amendment in Notification No. S.O. 372(E), dated the 5th February, 2016

Highlights / Catch Notes

Income Tax

• Court Rules Fresh Assessment Order u/s 153A Barred by Sections 153(3) and 153(4) of Income Tax Act.

  Case-Laws - HC : Assessment u/s 153A - Time limit for completion of assessments and reassessments - The contention that passing fresh assessment order pursuant to the Tribunal’s order dated 07.01.2016, is barred under the provisions to Section 153(3) and 153(4) of the Act, is merited. - We also express our displeasure in the manner the present matter has been dealt with by the concerned officer. - HC
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• Court Clarifies Tax Exemption for Scheduled Tribe Members u/s 10(26) of Income Tax Act, 1961.

  Case-Laws - HC : Exemption of payment of Income Tax u/s 10(26) - right of member of a Scheduled Tribe - scope of expression “residing in any area specified” - The petitioner is indeed entitled to the benefits accrued under Section 10(26) of the Income Tax Act, 1961. - HC
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• ITAT Confirms No TDS Deduction Needed for Freight to Non-Resident Ship Owners u/s 40(a)(ia.

  Case-Laws - HC : Addition u/s 40(a)(ia) - Non deduction of TDS on freight expense - non-residents ship owners/charters - the relation between the assessee and the agent was that of a principal and agent. The ITAT in that matter had held that there was an obligation to deduct the tax at source from the payment of transfer charges and other charges were concerned, which had been complied with by the agent. - Order of CIT(A) and ITAT deleting the additions sustained - HC
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• Revenue Must Verify Form 26AS Transaction Claims Before Assuming Unreported Income, Especially for Expense Reimbursements.

  Case-Laws - AT : Addition on account of mismatch in the interest amount with form 26AS - The transaction shown in form 26AS cannot be taken as the gospel truth that it represents the income in the hands of the assessee especially in a situation where the assessee has contended that the above amount representing was reimbursement of the expenses. In such a situation, the Revenue is expected to be more vigilant before reaching to the conclusion that the assessee has not shown certain income. - AT
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• Section 44BBB: Lower Profit Claims Allowed with Proper Books and Audits per Sections 44AA and 44AB.

  Case-Laws - AT : Contract receipts from HPCL - applicability of section 44BBB and Rule 10(i) - Even, assuming that section 44BBB applies, sub-section (2) of section 44BBB carves out an exception by providing that the assessee may claim lower profit, if he keeps and maintains the books of account and documents prescribed under section 44AA and his accounts are audited in terms of section 44AB. - AT
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• Assessing Officer Denies Bad Debt Claim on Unwritten-Off Term Loan Interest; Loan Still Listed as "Unsecured Considered Good.

  Case-Laws - AT : Interest on term loan due from Joint Venture Companies - assessee claimed that the debt is already bad - the AO has noted that the assessee has not written off the loans in its books of account and the same figure is continuing even in subsequent assessment years. Moreover, the assessee itself treated the loan amount as “unsecured considered good” and interest due on the same - Additions confirmed - AT
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• Incriminating Info from Searches Can't Trigger Section 148 Assessments; Only Section 153C Valid Until March 2021.

  Case-Laws - AT : Assessment u/s 153A or u/s 147/148 - any incriminating information of any undisclosed income of the person not searched which was found during the course of a search having taken place up to 31/03/2021 on some other assessee, can only be taken into consideration for an assessment / reassessment in the hands of the said person not searched through the domain of the section 153C of the Act. Thus, any assessment / reassessment proceedings-initiated u/s 148 of the Act in respect of the said incriminating information found during the course of a search up to 31/03/2021 on some other assessee is illegal and is ab initio - AT
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• Expense Reimbursement Not Classified as Fees for Technical Services Under Article 12(4) of India-Singapore DTAA.

  Case-Laws - AT : Taxability of reimbursement of expenses as FTS - the recipients are receiving such services on a continuous basis from year to year, which shows that the recipients are not capable of independently performing such services without the aid and assistance of the assessee. - the reimbursement of cost received by the assessee, cannot be treated as FTS under Article 12(4) of the India-Singapore DTAA, at least, based on the facts involved in the impugned assessment years. - AT
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• Lower Authority Incorrectly Reclassifies Partnership Firm as "Association of Persons" Without Proper Justification.

  Case-Laws - AT : Status of assessee as "AOP" instead of "partnership firm" - The assessee firm was comprised of four individual partners who were representing their respective firms - There was no justification on the part of the lower authorities to have recharacterized the assessee firm i.e. a firm comprising of individual partners (representing their respective firms) as an "AOP". - AT
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• Interest Payments by Indian Branches to Overseas Head Offices Non-Taxable Under DTAA, Despite Finance Act 2015 Amendment.

  Case-Laws - AT : Taxability of interest payable/paid by the Indian branch office to the head office and its other overseas branches - even though the submission of the Revenue that the amendment by Finance Act 2015, whereby Explanation to section 9(1)(v) of the Act was inserted specifically to overcome the decision in Sumitomo Mitsui Banking Corporation (supra), is accepted, the same would still not lead to taxation of the interest paid to the head office/overseas branches under the provisions of the DTAA. - AT
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• Income Tax Act Sec 41(1): No Addition for Unexplained Creditors Without Proving Cessation of Liability.

  Case-Laws - AT : Addition u/s 41(1) - Unexplained sundry creditors and advance from customers - No addition can be made under section 41(1) of the Act merely on the basis of doubting the genuineness of the creditor without establishing the actual cessation of liability. - AT
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• Court Rejects DCF Method in Favor of Net Asset Value Approach for ECL Shares u/r 11UA Valuation.

  Case-Laws - AT : TP Adjustment - Fair market value of share of ECL representing the ALP - the DCF Method could not be adopted in the facts and circumstances of the present case as the Appellant is an investment company incorporated on 30.01.2007 with unpredictable income/cash flows. This takes us to the method adopted by the Appellant for determining the value of shares of ECL - Rule 11UA is also based on Net Asset Value Approach adopted in the valuation report relied upon by the Appellant to support the valuation of shares of ECL - Valuation done by the assessee adopted - AT
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• Assessee Must Pay 20% of Disputed Demands and Provide Security of Rs. 35 Crores Within Two Weeks.

  Case-Laws - AT : Stay of demand - payment of 20% of the disputed demands - furnishes security of equal amount in respect thereof - The assessee shall provide a reasonable security for an amount of Rs. 35 crores or more, within two weeks from the date of receipt of this order; Provided, however, in case the Assessing Officer is, for any reasons whatsoever, not satisfied with the security offered by the assessee, the Assessing Officer shall pass a detailed speaking order in respect of the same - AT
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Customs

• Import License Delays Resolved: Submit Form X u/r 88 to DGFT for Quick Processing Within Three Weeks.

  Case-Laws - HC : Seeking issuance of import licences in ‘Form X’ format as per Rule 88 of the Arms Rules, 2016 - The holding-up of these consignments on procedural grounds, especially owing to confusion between two authorities would be contrary to the object behind issuance of the licences itself by the DDP. Insofar as the defence requirements are concerned, the DDP is well conversant of the same and has duly licensed the imports. - The application shall be made within a period of one week from now to the DGFT along with the requisite fee and the permission under ‘Form X’ shall be issued within a period of two weeks thereafter. - HC
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• High Court Rules DGFT Cannot Impose Conditions Contradicting Foreign Trade Policy or FTDR Act in License Issuance.

  Case-Laws - HC : Exemption from levy of whole of Basic Customs Duty and Agriculture Infrastructure and Development Cess - Issuance of license is only procedural aspect and in any case, the DGFT cannot impose conditions and restrictions in license which are contrary to FTP and FTDR Act and any such condition cannot be sustained in law. On this score also, the impugned ‘condition x’ is not sustainable in law. - HC
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• Customs Authority waives demurrage charges; shipping line holds lien on goods pending CESTAT decision. Bank guarantee required.

  Case-Laws - HC : Seeking waiver of the demurrage and detention charges - release the consignment - The respondent – Customs Authority has acted fairly by expressing that it is not going to charge the demurrage charges, however, the shipping line would have a right and lien over the goods until the matter is decided by the CESTAT. There shall a need to direct furnishing of some security which should be in the form of the bank guarantee, in the given circumstances. - HC
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• Court Rules Finished Leather Status Despite Minor Processing Deficiency; Buyer Accepted and Paid for Goods.

  Case-Laws - AT : Export of Finished Leather or Unfinished Leather - The fact of buyer accepting the goods and making payment, ordering further quantities and terming only 13 cartons of suede leather of grey colour as unfinished leather when 24 cartons of other colours of the same consignment as finished leather have weighed in our mind. - minor deficiency in the processing may not ipso facto make the leather as not fully finished as the appellant’s have carried out all the major operations. - AT
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• Exemption Dispute: Are GoPro Cameras "Digital Still Image Video Cameras" Under Notification No. 50/2017-Cus?

  Case-Laws - AT : Exemption from customs duty - import of GoPro Digital cameras and their accessories - There are two notifications one of which impose a restriction in terms of capacity and time limitation of the recording, whereas the other do not impose and such restriction, once it is found that the imported action camera qualifies as “Digital Still Image Video Camera”, benefit of exemption under the notification no 50/2017-Cus cannot be denied. - AT
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Corporate Law

• Tribunal Declares Circular Resolutions No. 1-6 Void for Not Being Properly Circulated to All Directors.

  Case-Laws - AT : Circular Resolutions - not duly circulated to all the Directors - This Tribunal, keeping in mind of the divergent contentions, raised on either side and taking note of the facts and circumstances of the case, in a conspectus fashion, without any haziness, holds that the Circular Resolutions No. 1 to 6 dated 03.11.2020, are Void in Law. - AT
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IBC

• Homebuyer Status Confirmed: Appellant Not Recognized as Financial Creditor u/s 7 of Insolvency Code 2016.

  Case-Laws - AT : Initiation of CIRP u/s 7 - money lent to Corporate Debtor or not - Homebuyer or Lender? - it is unequivocal that the Appellant is a homebuyer and there is no such documentary evidence to establish that the Appellant is a Financial Creditor, who lent the money to the Corporate Debtor within the meaning of Section 5(7) of the I&B Code, 2016. - AT
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Central Excise

• Court Dismisses Central Excise Duty Demand Due to Lack of Evidence on Goods Marketability in Works Contract Case.

  Case-Laws - AT : Taxability - liable to central excise duty or taxable under the provisions of the service tax for providing works contract service - Revenue failed to establish that the partially fabricated goods removed from the factory were in marketable state. The whole case is made out on the basis of assumptions and presumptions. No inspection has been made by the Revenue at the factory premises of the appellant/assessee - Appellant had taken registration under the Service Tax Provisions for discharge of their tax liability - Demand under central excise set aside - AT
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Case Laws:

• Income Tax

• 2023 (3) TMI 1554
  Revision u/s 263 - development fees from its students had been directly carried to the balance sheet under the nomenclature Development Fund instead of being routed through the income and expenditure account and this was then treated as part of the Revenue and therefore the taxable income u/s 11 (1) - HELD THAT:- CIT (E) simply stated that the impugned assessment order was erroneous and prejudicial in the interest of Revenue. ITAT has in the impugned order discussed in detail the explanation offered by the Assessee regarding application of funds. Inter alia, it was noticed that CIT (E) had taken the total revenue earned, granted 15% accumulation, without considering the capital expenditure to the tune of Rs.258 crores. As noted by the ITAT, if the said bill taken into account the taxable income would be a loss. It would have been observed the 15% accumulation granted to the Assessee. Further, even after treating the development fees of Rs.111 crores as revenue income, the net figure would still be a loss. As noted by the ITAT, if only the CIT (E) had undertaken an inquiry, he would have come to the above conclusion and there would have been no need to act to the taxable income of the Assessee. The Court is satisfied that no error has been committed by the ITAT in concluding that the order of the CIT (E) is unsustainable in law. No substantial question of law arises.

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• 2023 (3) TMI 220
  Assessment u/s 153A - Time limit for completion of assessments and reassessments - Refund due to FSSL (which is now amalgamated with the petitioner company) claim to be refunded to the petitioner along with applicable interest - HELD THAT:- Section 153 of the Act was amended by the Finance Act, 2017 with retrospective effect from 01.06.2016 and the provision regarding limitation for framing an assessment pursuant to any order passed inter alia under Section 254 of the Act was included under sub-section (3) of Section 153 of the Act. Pursuant to the order dated 07.01.2016 passed by the Tribunal, the Transfer Pricing Officer passed an order dated 24.01.2017. However, concededly, the Assessing Officer has not passed any final order. It is material to note that despite sufficient opportunities, the respondents have not filed the counter affidavit. Mr. Sanjay Kumar states that in view of his instructions that the assessment order has not been passed, there is no requirement to file any counter affidavit. The contention that passing fresh assessment order pursuant to the Tribunal s order dated 07.01.2016, is barred under the provisions to Section 153(3) and 153(4) of the Act, is merited. We also find merit in the contention that the income as returned by FSSL for the Assessment Year 2007-08 would stand accepted. Consequently, any adjustment made for the refund due to FSSL for the assessment year 2006-07 is not sustainable. It is, accordingly, directed that the said amount, which was due as a refund for the assessment year 2006-07 be refunded to the petitioner along with interest as applicable within a period of eight weeks from today. We also express our displeasure in the manner the present matter has been dealt with by the concerned officer.

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• 2023 (3) TMI 219
  Early disposal of its statutory Appeal which is pending on the file of the 1st respondent - The said statutory appeal was filed u/s 246-A of the Income Tax Act by the petitioner on 23.03.2021 - petitioner has been receiving hearing notices from the respondents u/s 250 of the Income Tax Act - HELD THAT:- This Court is of the considered view that six months time would suffice for the 1st respondent to pass final orders on the petitioner s statutory appeal dated 23.03.2021. However, it is made clear that the petitioner will have to co-operate with the respondents for disposal of the statutory appeal by the 1st respondent, within a period of six months from the date of receipt of a copy of this order. No prejudice would be caused to the respondents, if a direction is issued to the 1st respondent to pass final orders on merits and in accordance with law on the petitioner s statutory appeal dated 23.03.2021, within a time frame to be fixed by this Court. This Court directs the 1st respondent to pass final orders on merits and in accordance with law on the petitioner s statutory appeal, dated 23.03.2021, within a period of six months from the date of receipt.

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• 2023 (3) TMI 218
  Addition u/s 68 - unexplained loans taken by the partners - cash credits pertaining to the two partners of the appellant firm - HELD THAT:- We are of the view that issue raised in this appeal is squarely covered by the decision of this Court in M.Venkateswara Rao [ 2015 (3) TMI 153 - ANDHRA PRADESH HIGH COURT] which is binding on us. That was also a case where certain cash credits were advanced by the partners, which according to the revenue authorities remained unexplained and accordingly were added to the income of the firm. Unexplained cash credits would have to be assessed at the hands of the partners of the firm and not the firm itself. Such amounts could not have been treated as income of the firm by relying upon Section 68. We answer the substantial questions of law in favour of the appellant-assessee and against the respondent-revenue insofar the cash credits pertaining to the two partners of the appellant firm i.e., Smt. K.Sujatha and Sri K. Prabhakar Reddy only are concerned.

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• 2023 (3) TMI 217
  Exemption of payment of Income Tax u/s 10(26) - right of member of a Scheduled Tribe - scope of expression residing in any area specified - grievance of the writ petitioner is that although he is certified to be a member of the Schedule Tribe Meena in the State of Rajasthan and by virtue of which he is exempted from payment of Income Tax under the provisions of Section 10(26) of the Income Tax Act, 1961, Income Tax has been deducted from his salary in the form of Taxes Deducted from Source (TDS) - petitioner is serving as a DIG (Ops) of Border Security Force and is posted in Masimpur, Silchar, Assam - HELD THAT:- As per Section 10(26) of the Income Tax Act, 1961 any member of a Scheduled Tribe as defined in Clause (25) of Article 366 of the Constitution, residing in any of the areas prescribed under Section 10(26), is exempted from payment of income tax. Having perused the Judgment of this Court rendered by a full Bench in Pradip Kr. Taye ( 2009 (12) TMI 285 - GAUHATI HIGH COURT ) as well as in view of the Tax Exemption Certificates dated 10.12.2020 and 21.04.2021 issued by the respondent department; this Court is of the view that the prayers made by the petitioner will have to be allowed. The petitioner is indeed entitled to the benefits accrued under Section 10(26) of the Income Tax Act, 1961. Accordingly, Mandamus is hereby issued to the respondent, more particularly, the Commissioner of Income Tax (TDS) as well as the concerned Income Tax Officer of the ward to expeditiously process the request for refund of income tax deducted from the salary of the petitioner and remit to the petitioner forthwith. Respondent department is directed to carry out this order within a period of three (3) weeks from the date of receipt of a certified copy of this order.

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• 2023 (3) TMI 216
  Release the seized gold ornaments u/s 132B - unresponsiveness of the respondent Nos. 1 and 2 to the application of the petitioner made u/s 132B to release the seized gold ornaments on the ground that this is illegal action on the part of the respondent - HELD THAT:- Following the very decisions in case of Ashish Jayantilal Sanghavi Vs. Income Tax Officer [ 2022 (4) TMI 1285 - GUJARAT HIGH COURT] this court decided the very issue where, the Assessee -Company had filed various applications for release of diamonds seized during the search conducted upon the company under Section 132B of the I.T. Act. However, the revenue retained the assets even after the expiry of 120 days from date of last authorization for search, such seized diamonds were released to the assessee, according to the Court in view of provision of Section 132B. This writ application succeeds and is hereby allowed. The respondents are directed to hand over the seized asset (gold ornaments) to the writ applicant within a period of four weeks from the date of receipt of the writ of this order.

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• 2023 (3) TMI 215
  Addition u/s 40(a)(ia) - Non deduction of TDS on freight expense - assessee failed to bring any evidence on record to the effect that the payments made are covered under circular No.723 of 1995 and that the non-residents ship owners/charters had filed returns u/s 172 - HELD THAT:- Shoes of the principal and hence, the provision of Section 172 would apply and not the provision of Sections 194C and 195 - Therefore, the action on the part of the CIT (Appeals) which had been confirmed by the ITAT of not having endorsed to the views of AO of adding the dis-allowance claimed under Section 41(a) would not deserve any interference as is quite clear the authority concerned has already taken the note of the fact that the assessee had deducted the tax at source on terminal handling charges, documentation charges, etc. however, when they acted as the principal for and on behalf of the assessee and paid the amount, it was essentially the reimbursement for which there cannot be any TDS required to be deducted. No reason as to why we should also not be followed the ratio laid down by this Court in [ 2014 (4) TMI 235 - GUJARAT HIGH COURT ] where the assessee had claimed the deduction u/s 40(a)(ia) towards the reimbursement of charges paid to C F agent and also the reimbursement of the expenses towards consignment agents, which were disallowed by the Assessing Officer solely on the ground that the assessee had not deducted TDS on the said amount. We found that the relation between the assessee and the agent was that of a principal and agent. The ITAT in that matter had held that there was an obligation to deduct the tax at source from the payment of transfer charges and other charges were concerned, which had been complied with by the agent. This Court had not interefered with when the CIT (Appeals) had quashed and set aside the order passed by the AO of deleting the dis-allowance claimed by the assessee under Section 40(a)(ia) and confirmed by the ITAT. Applying the same to the instant case also, it does not arise any substantial question of law and hence, question (A) is not entertained. Addition on account of the interest and of insurance expenses so also the depreciation, petrol and repair expenses - HELD THAT:- This relates to the deletion of the disallowance made in respect of the interest and insurance expenses claimed on vehicle and part dis-allowance in respect of depreciation and incidental expenses claimed on vehicle. The car since has been reflected as an asset in the balance sheet of the company and the car loan also appeared as a liability in the company s balance sheet, which would have its dominion over the car although the resolution for registration of the said car was in the name of the director and the same was used wholly and exclusively for the business of the company, on the ground that the company was eligible for claiming the depreciation, the additions were made in respect of insurance interest, insurance, have been held to be rightly deleted by the ITAT. In respect of depreciation of Rs.1,36,000/- and the car expenses of Rs.28,995/- have been partly deleted to the extent of 75% and 25% had been continued being unambiguous taking into consideration the assesses books of accounts maintained in regard to the asset. It has also struck a good balance after looking at the entire set of facts and even otherwise the tax effect if is looked at then also, this does not require any interference nor any admission as the substantial question of law. Dis-allowance of expense of the web designing and development for the market survey and production of commercial films for broadcasting on T.V. channel and for the advertisement of the film - HELD THAT:- This issue is also covered by the decision of this Court in case of Zydus Wellness Ltd [ 2017 (4) TMI 920 - GUJARAT HIGH COURT] - We are in complete agreement with the findings of both the CIT(Appeals) and the ITAT that all these expenditures will not have any enduring benefits to the assessee to be termed as Capital Expenses as they are being used in connection with the running of business of the assessee and they will need to be essentially held to be revenue in nature. Under invoicing of the sales made to the sister concern - HELD THAT:- AO failed to appreciate that difference in sales price could be on account of various factors such as strength of the product, terms of payment, the concerned country being the final destination, stability of political conditions in those countries, quantity supplied, quality supplied, creditworthiness of parties, market conditions, risk factor, etc. Under invoicing of the export since was by a huge sum almost 5.54 times of exports to the sister concern, it was held that the same is not possible as the under invoicing the Gross Profit rate and Net Profit rate by this method would work out to be 64.79% and 46.38%. Considering strongly acceptable reasonings of both the CIT(A) and the ITAT, it could be noticed that when the assessee s books of account had been duly audited and at no stage, the Tax Auditor had questioned its books of accounts or the method used by the assessee with the AO having not referred this to the Transfer Pricing Officer and instead having adopted a method which is alien to the statute, both authorities have rightly held this to be the method and act non-acceptable.

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• 2023 (3) TMI 214
  Unexplained cash deposit to the bank account - identity of creditor/donor, the capacity of the creditor/donor only to advanced money and genuiness of the transaction, which not at all proved - HELD THAT:- We agree with the contention of the AR that the amount of Rs. 9 lakh depotised by the assessee to his bank account was from the amount withdrawn by the sister of assessee from her bank account on the very same date i.e. 17.02.2011, therefore the source of first deposit is properly explained and copy of PAN and affidavit along with confirmation given by sister of assessee Smt. Jyoti Rathi again confirm the fact that she has having PAN number and bank account which shows her identity, capacity and creditworthiness and genuineness of transaction of gift to his brother that is assessee. Regarding second deposit from the copy of passbook of father of assessee Shri Ganshyam Dass Rathi reveals that the father of assessee has withdrawn Rs. 5 lakh on 01.03.2011 from his bank account maintained with Corporation Bank and on the very same date the same amount was deposited by the assessee to his bank account. The copy of bank passbook, Aadhar Card, affidavit and confirmations of gift given by the father of assessee Shri Ganshyam Dass Rathi clearly reveals the identity capacity and creditworthiness and genuineness of transaction of gift from the father to son therefore no addition is called for in the hands of assessee on this account. The copy of ITR acknowledgment of Smt. Jyoti Rathi and copy of ITR acknowledgment of Shri Ganshyam Dass Rathi clearly reveals that these persons filing Income Tax Return with the Department therefore their identity cannot be doubted. We are inclined to hold that the assessee has successfully demonstrated and substantiated the source of cash deposit to his bank account therefore no addition is called for in this regard therefore grounds of assessee on merits are allowed and the AO is directed to delete the addition. Appeal of the assessee allowed.

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• 2023 (3) TMI 213
  Addition u/s 115BBE - cash has been deposited out of unexplained sources - AR submitted that the section 115BBE is not a charging section but this section simply provides mechanism for levying of tax in a case there is addition made u/s. 68, 69, 69A, 69B, 69C and 69D - HELD THAT:- AO has not mention any section under which additions have been in the hands of assessee and he merely mentioned that the cash has been deposited out of unexplained sources and same is added to the return income of assessee in terms of section 115BBE of the Act. Further from the careful reading of findings recorded by the Ld. CIT(A) in para 5 it is also clear that the Ld. CIT(A) has not mentioned any section under which the addition has been confirmed - As decided in SMT. SUDHA LOYALKA, C/O M/S RRA TAXINDIA [ 2018 (7) TMI 1892 - ITAT DELHI] non-mentioning the precise provision of law makes the impugned addition bad in law. Cash deposit during demonetization - HELD THAT:- Undisputedly there was a opening cash of Rs. 2,74,580/- as on 01.04.2016, the assessee received rent of Rs. 3,20,000/-, tuition fee of Rs. 1,20,100/- and there were bank withdrawals of Rs. 5,54,000/- up to demonetization i.e. 25.11.2016. The said amounts comes to Rs. 12,68,680/- and the amount deposited by the assessee during pre-demonetization and during demonetization period was Rs. 12,10,000/- leaving the cash balance of Rs. 58,680/- as on 25.11.2016. These facts have not been controverted by the Ld. Senior Departmental Representative in any manner. Therefore in my consider opinion the addition of Rs. 7 lakh confirm by the CIT(A) is not sustainable under the said facts and circumstances as the assessee has successfully demonstrated the source of cash deposited by her to her bank account. Therefore the grounds of assessee on merits are allowed and AO is directed to delete the addition.

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• 2023 (3) TMI 212
  Deduction of tax deducted at source in the computation of income exempt u/s 11 - authorities below have held that TDS cannot be treated as application of income so as to qualify for deduction in computing the total income exempt under the Act - interpretation of sections 11(1)(a)/11(2) qua the amount of tax deducted at source claimed as application against the interest income, which was accounted for on gross basis in the Income and expenditure account - HELD THAT:- As it only the net amount of Rs.90/- which can be said to be available with the assessee for application or accumulation, the deduction on account of tax deducted at source has to be allowed in computing the amount of income available after entering such income at gross level. If suppose, in a later year, the amount of tax deducted at source in this year is refunded fully or partly, the amount of such refund shall fall for consideration on the income side of the Income and expenditure account. On a specific query, the ld. AR pointed out that income-tax refund was granted to the assessee in the succeeding year for a sum of Rs.1,55,39,950/-, which was duly included on the income side of the Income and expenditure account. As gone through the Income and expenditure account for the succeeding year ending 31-03-2017, in which the last item on the Income side is Income-tax refund amounting to Rs.1,55,39,950/-. Computation of income for such later year has been done by including the amount of income-tax refund in the gross income available for application or accumulation - the authorities below were not justified in jettisoning the claim of allowing deduction of TDS in the computation of income available for application or accumulation. The impugned order is overturned pro tanto . Appeal is allowed.

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• 2023 (3) TMI 211
  Validity of the order passed u/s 143(3) r.w.s 144C (3) - period of limitation - HELD THAT:- As for AYs before the amendment, which has come into effect from 01.04.2020 in Section 144C of the Act, the cases in which no variation in the return income or loss were proposed, the draft assessment orders were not required to be issued. Accordingly, no extended period for concluding assessment. In the case in hand admittedly there was no proposal for variation in the return income. The assessment order should have been passed by 31st December, 2018 while the impugned assessment order has been passed on 21.02.2019. Thus, impugned assessment order is beyond statutory time lines provided u/s 153(1) of the Act. Ld. CIT(A) has taken into account judgment of Hon ble Madras High Court in World Part Ltd [ 2019 (9) TMI 390 - MADRAS HIGH COURT] however , in that case since the assessee had the alternate remedy available by way of appeal before Ld. CIT ( A ) the writ petition before High Court was disposed, without no findings on merits. Thus, the Bench is of considered opinion that the ground no. 1 goes to the root exercise of jurisdiction of passing assessment order barred by limitations , therefore, the same along with sub grounds stands allowed.

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• 2023 (3) TMI 210
  Addition on account of cash deposits - HELD THAT:- We had carefully gone through the explanation tendered by the appellant during the course of proceedings before the CIT(A), which is extracted by the CIT(A). We also find that the ld. CIT(A) also extracted the entries in the bank statement of father of the appellant, wherein, cash withdrawals of Rs.18,00,000/- were shown. The appellant also filed the confirmation letter from his father stating that he had given cash of Rs.15,00,000/- out of withdrawals made by him. It is evident there is no material to disbelieve the explanation given by the assessee and, therefore, the explanation tendered by the assessee cannot be said to be unreasonable and is a plausible explanation. We do not see any reason to reject the explanation of the assessee. In the circumstances, we are of the considered opinion that the CIT(A) ought not to have rejected the explanation of the assessee. We direct the AO to delete the addition made on account of cash deposits. Thus, the ground of appeal no.1 stands allowed. Addition on account of cost of improvement - HELD THAT:- We find that the appellant had failed to produce any evidence in support of the cost of improvement. Accordingly, we confirmed the addition. Thus, the ground of appeal no.2 stands dismissed.

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• 2023 (3) TMI 209
  Disallowance of interest expenditure - allowable u/s 24(a) or u/s 36(1)(iii) - Whether entire expense is duly allowable? -whether the property in dispute was acquired by the assessee out of the loan taken from the Bajaj Auto Finance Ltd.? - HELD THAT:- The onus lies upon the assessee but he did not furnish any detail to this effect as far as the quantification of the amount of loan adjusted against Bajaj Finance and other utilization. In the absence of sufficient documentary evidence, we hold that the amount borrowed by the assessee from the company namely Capital First Ltd over and above the amount of loan settled against such borrowing was not utilized for the purpose of acquiring the assets. Thus, we hold that the assessee is eligible for the deduction against the rental income on account of the interest cost incurred by it in proportion to the borrowing from Capital First Ltd utilized for repayment to the Bajaj Auto Finance Ltd loan. Whether such extra amount of interest can be allowed as deduction u/s 36(1)(iii) which provides that the amount of interest paid on capital borrowed for the purpose of business should be allowed as deduction while computing business income ? - It is the settled position of law that any expense incurred by the assessee for the purpose of the business the same can be allowed as deduction provided it is not capital or personal in nature. It is the onus upon the assessee to justify based on the documentary evidence the utilization of the loan borrowed by the assessee from Capital First Ltd over and above the amount used for the settlement of outstanding loan from Bajaj Auto Finance Ltd. On perusal of the financial statements of the assessee pertaining to the different years, we note that the assessee is not carrying out any business activity. Admittedly, the assessee is a corporate and legal entity. Indeed, the assessee to maintain legal entity has to incur certain expenses such as audit expenses, ROC filing charges etc. To maintain the legal status of the assessee, it is not required to incur the expenses beyond the certain points until and unless some cogent material is brought on record by the assessee. Considering the fact that there was no business carried on by the assessee during the year under consideration and in immediate previous year, we therefore hold that the amount of loan borrowed by the assessee from the Capital First Ltd over and above the amount utilized for settlement of outstanding loan of Bajaj Auto Finance Ltd was not for the purpose of business. Hence the interest cost incurred thereon cannot be considered for the purpose of the business. Hence, the ground of appeal of the assessee is partly allowed. Addition on account of mismatch in the interest amount with form 26AS - whether the amount received by the assessee from the HDFC Bank represents the income in the hands of the assessee as the bank has made the payment to the assessee after deducting the TDS u/s 194C of the Act which is reflecting in the Form-26AS generated by the Department? - HELD THAT:- We note that the assessee before the authorities below has filed the copy of the ledger and receipt issued by Indian Electric Corporation, payments received from the bank, invoice issued by Indian Electric Corporation in the name of the bank and the latter issued by the assessee to the bank for the reimbursement of the expenses which are placed - None of the document placed in the paper book has been doubted by the authorities below. Likewise, the authorities below have not taken any confirmation from the bank or the company namely Indian Electric Corporation so as to verify the genuineness of the claim of the assessee. But the revenue has disbelieved the version of the assessee despite having many information in respect of which no doubt was raised. Undeniably, there was no direct evidence available on record from the bank stating that the payment made to the assessee was representing the reimbursement of the expenses incurred by the assessee on behalf of the bank. But in the absence of such evidence, the revenue is not expected to ignore the other information submitted by the assessee which have been elaborated in the preceding paragraph. The transaction shown in form 26AS cannot be taken as the gospel truth that it represents the income in the hands of the assessee especially in a situation where the assessee has contended that the above amount representing was reimbursement of the expenses. In such a situation, the Revenue is expected to be more vigilant before reaching to the conclusion that the assessee has not shown certain income. The scope of necessary verification in such facts and circumstances is widened in order to disprove the contention raised by the assessee during the assessment proceedings. But we find that no such exercise has been done by the authorities below. Accordingly, in the absence of necessary verification and having any doubt on the details filed by the assessee, we do not find any reason to uphold the finding of the learned CIT(A). Hence, we direct the AO to delete the addition made by him. Thus, the ground of appeal of the assessee is hereby allowed. Disallowance of insurance premium - assessee has not furnished the documentary evidence for payment of such insurance premium - HELD THAT:- In the present case, the assessee has claimed insurance expense as claimed as prepaid expenses incurred in the earlier year. For this purpose, we have referred the balance sheet of the last year ending as on 31st March 2013 and find that the assessee in the immediate preceding year has shown prepaid expenses under the head short-term loans and advances amounting to Rs.68,425/- only which was written off in the year under consideration. Thus, to this extent it cannot be said that the assessee has claimed any expense which is bogus in nature. The books of accounts of the assessee were audited and no defect of whatsoever was pointed out by the AO during the assessment proceedings. Thus, we hold that the assessee has incurred the expenses. Undeniably, the assessee has not been carrying out any business activity but the assessee being our body corporate has to carry out necessary compliance to maintain its status. For this purpose, the assessee may require to employ some staff, incur certain administrative expenses. Thus it cannot be said that the expenses claimed by the assessee will be ineligible for deduction in the absence of any business activity. The genuineness of the expenses cannot be doubted in the year under consideration as the same is arising from the earlier year. Accordingly, we are not convinced with the finding of the authorities below. Hence, the ground of appeal of the assessee is hereby allowed.

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• 2023 (3) TMI 208
  Validity of reopening of assessment - Issue of notice where income has escaped assessment - Necessity to issue notice u/s 143(2) - Whether the issue of notice under section 143(2) of Act was mandatory to frame assessment under section 143(3) r.w.s. 147 - HELD THAT:- AO was under the obligation to issue a notice under section 143(2) of the Act for making the assessment or reassessment as the case may be. In case AO has not done so, the order framed under section 143(3) read with section 147 of the Act becomes invalid. Whether the notice under section 143(2) issued beyond the statutory time limit provided under the Act can be held invalid or the provisions of section 292BB of the Act come to rescue the revenue? - Assessee had filed return of income dated 24th October 2015. To carry out the assessment of such return, the AO was required to issue notice under section 143(2) of the Act on or before 30th September 2016 i.e. 6 months from 31st March 2016. However, the notice was issued dated 07th December 2016. Thus, in our considered opinion, the notice issued after the prescribed time limit is not valid for the reason that the AO has no power to issue such notice after expiry of 6 months from the end of financial year in which return has been field. Therefore, any assessment made based on notice which itself is not valid will also become void ab initio. In holding so we also draw support and guidance from the judgment of Hon ble Gujarat High Court in case of DCIT vs. Mahi Valley Hotels Resorts [ 2005 (8) TMI 84 - GUJARAT HIGH COURT] . The provision of section 292BB of the Act does not deal about the issuance of notice. In the present case, the issue is whether the assessment framed under section 147/143(3) of the Act is valid in a situation where the mandatory notice under section 143(2) of the Act was issued beyond statutory time limit prescribed. Accordingly, we hold that, the provision of section 292BB of the Act does not extend any benefit to the Revenue. We conclude that there was not issued the valid statutory notice under section 143(2) of the Act within the prescribed time. The Ld. DR has also not brought anything on record contrary to the arguments advanced by the Ld. AR for the assessee. Thus in the absence of the valid statutory notice, the assessment framed under section 143(3)/147 of the Act is not sustainable. Hence, the ground raised by the assessee is allowed.

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• 2023 (3) TMI 207
  Determination of income - Addition u/s 68 - cash deposits in bank unexplained - assessee submitted that the entire amount of cash deposit cannot be assumed as income of the assessee and as there were various withdrawals from the bank by the assessee which were available with the assessee for re-deposit - whether the amount of cash deposit represents the income of the assessee in its entirety? - HELD THAT:- If the cash deposit is treated as income then on the same logic the withdrawal from the bank in cash should be treated as an expense until and unless some contrary information is available on record. These contrary informations may include the expenses incurred by the assessee for his personal purposes such as foreign travelling, household expenses, marriages, education or any other expense of personal nature. Likewise, there is also a possibility of having withdrawn the money by the assessee from the bank for the purpose of making some investment which is of capital nature. However, the authorities below have not gone/ considered all the factual aspects but reached to the conclusion that the cash deposits represent the income of the assessee. As relying on MAHESH K. BHUTIYA PARTH VERSUS THE INCOME TAX OFFICER WARD-2 (3) , PORBANDAR [ 2022 (8) TMI 80 - ITAT RAJKOT] we are inclined to adopt the same basis to determine the income of the assessee. Thus, we work out the income of the assessee at 8% of total cash deposit. Hence, the ground of appeal of the assessee is partly allowed.

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• 2023 (3) TMI 206
  Penalty Levied u/s 234E - belated submission of tax deducted at source statement - Scope of retrospective operation of provisions of section 234E - HELD THAT:- It is only w.e.f. 01.06.2015 an amendment was made u/s 200A of the Act providing that fee u/s 234E could be computed at the time of processing of the return of income and intimation could be issued specifying the same payable by the dedutor as fee u/s 234E of the Act. In the case of Fatheraj Singhvi vs. Union of India [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] held that the provisions of section 234E of the Act are substantive in nature and the mechanism for computing the late fee was provided by the Parliament only w.e.f. 01.06.2015. Therefore, late fees u/s 234E of the Act can be levied only prospectively w.e.f. 01.06.2015. In the circumstances, we direct the ACIT, CPC- TDS, Ghaziabad to delete the late fee being levied u/s 234E of the Act. - Decided in favour of assessee.

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• 2023 (3) TMI 205
  Existence of fixed place Permanent Establishment (PE), installation PE, service PE, dependent agent PE and attribution of profit to the PE - assessee is a non-resident corporate entity incorporated in Peoples Republic of China and tax resident of that country - HELD THAT:- From the materials available on record, it is observed that while deciding the issue for the first time in assessment years 2005-06 to 2008-09, the Tribunal has considered all aspects relating to existence of PE as well as attribution of profit and upheld the decision of the departmental authorities. In subsequent assessment years, viz., assessment years 2009-10 to 2016-17, the assessee had advanced identical arguments as has been advanced in the present appeal. Though, the Tribunal took note of various submissions made by the assessee, however, adhering to the norms of judicial discipline the Tribunal had followed its earlier decision in assessee s own case and decided the issues against the assessee. Before us, though, learned counsel appearing for the assessee has contended that various arguments advanced before the Tribunal in assessment years 2009-10 to 2016-17 were not considered, however, we are not convinced. A careful perusal of the observations of the Tribunal reproduced above would make it clear that the Tribunal after taking note of various submissions of the assessee took a conscious decision to follow its earlier decision. Therefore, the allegation of learned Senior Counsel that various submissions made by the assessee were not considered in assessment years 2009-10 to 2016-17 is without any substance. The issues have been consistently decided against the assessee by the Tribunal beginning from assessment year 2005-06 to 2016-17. There is no difference in the factual position permeating through different assessment years, including, the impugned assessment year. It is relevant to observe, before us, learned counsel appearing for the assessee has submitted that against the decision of the Tribunal for assessment years 2005-06 to 2008-09, the assessee has preferred appeals before the Hon ble High Court and the appeals have been admitted. Thus, when there are decisions of the Coordinate Bench in assessee s own case on identical set of facts and circumstances upholding the decision of the Revenue Authorities with regard to existence of PE and attribution of profit, as a Bench of equal strength, we are bound by such decisions. Therefore, norms of judicial discipline, decorum and propriety demand that we have to follow the earlier decisions of the Tribunal. In fact, for this very reason, while deciding the appeals for assessment years 2009-10 to 2016-17, the Tribunal had followed its earlier decision. In view of the aforesaid, following the consistent view of the Tribunal in assessee s own case in past assessment years, we uphold the decision of the Departmental authorities on these issues. Accordingly, these grounds are dismissed. Addition towards royalty on sale of software - software component was treated as royalty and brought to tax on gross basis by applying the rate of 10% as per the treaty provisions - HELD THAT:- Having considered rival submissions, we find, the Tribunal while deciding the issue in assessment years 2005-06 to 2008-09 [ 2014 (4) TMI 770 - ITAT DELHI] has deleted the addition by holding that the receipts are not in the nature of royalty. Thus respectfully following the decision of in assessee s won case, we delete the addition. Ground no. 7 is allowed.

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• 2023 (3) TMI 204
  Assessment u/s 144C - contract receipts from HPCL - applicability of section 44BBB and Rule 10(i) - determination of profits attributable to the Permanent Establishment ( PE ) of the Appellant - applicability of transfer pricing provision to expenditures/payments covered under section 40A(2)(b) - HELD THAT:- As will reveal that he has not pointed out any deficiency or anomaly in the documents furnished by the assessee. The only adverse observation made by him is to the effect that as per Note no. 15 to financial statements, the assessee has significant transaction with its related parties. Whereas, the assessee has not submitted any benchmarking analysis in order to justify that expenses in relation to the related parties are not unreasonable as per section 40A(2)(b) of the Act. Thus, in our view, AO has not implemented the directions of learned DRP in letter and spirit, in terms with section 144C(10) read with section 144C(13) of the Act. As could be seen from the facts on record, the financial statements disclosing related party transaction where available with the Assessing Officer at draft assessment stage. AO has not made any reference to the TPO to undertake an analysis to find out whether transaction with related parties are at arm s length or not. Therefore, it has to be assumed that the Assessing Officer accepted the arm s length nature of the transaction. Be that as it may, a reading of section 92BA, which defines specified domestic transaction, it is observed, the provision would not be applicable to assessee s transaction with related parties as sub-clause (1) of section 92BA, which provided for applicability of transfer pricing provision to expenditures/payments covered under section 40A(2)(b), has been omitted from the statute by Finance Act, 2017 w.e.f. 01.04.2017. Therefore, there was no obligation on the part of the assessee to furnish any benchmarking analysis in relation to such transaction. Having said that, it is necessary to examine the provisions of section 40A(2)(a) - Reading of the said provision would make it clear that where the AO is of the opinion that some expenditure incurred by the assessee is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so much of the expenditure which according to the AO is excessive or unreasonable has to be disallowed. Admittedly, the assessee has furnished all necessary and relevant documents, including audited financial statements, Audit Reports/invoices etc. to justify its claim. Even, the assessee has furnished detailed replies to various queries made by the AO. Thus, the assessee has discharged its onus with reference to the expenses. As per the provisions of section 40A(2)(a), AO has to form an opinion not in vacuum but based on cogent material that the expenses/payments made by the assessee to the related parties are excessive and unreasonable having regard to fair market value of goods or services. In the facts of the present appeal, AO has not demonstrated in what manner he has formed the opinion that the expenses with reference to related parties are excessive and unreasonable having regarding to the fair market value. AO has not referred to even a single comparable case of similar nature of expenses to demonstrate that the payments/expenses made by the assessee are excessive and unreasonable and more than fair market value. Thus, in our view, the Assessing Officer has failed to discharge the burden cast upon him u/s 40A(2)(a) - Hence, the conditions remained unfulfilled. In any case of the matter, for the first time, at the final assessment stage, the AO has invoked the provisions of section 40A(2)(b) without providing any opportunity to the assessee. In fact, neither at the draft assessment stage, nor before the DRP, applicability of section 40A(2)(b) was ever an issue. At the final assessment stage, the Assessing Officer having not found any anomalies in the documents furnished by the assessee, only for the purpose of circumventing the directions of learned DRP and to somehow repeat the addition, has gone in a different tangent by invoking section 40A(2)(b) of the Act. This, in our view, is wholly unjustified and is in complete violation of Rules of Natural Justice. It also militates against the directions of learned DRP. In any case of the matter, we have already held that the Assessing Officer has failed to fulfill the conditions of section 40A(2)(b) of the Act. Therefore, the addition made is unsustainable. We may also address the issue regarding applicability of section 44BBB(1) of the Act. On a careful reading of the said provision, we are of the view that it is not applicable to the assessee as the assessee is neither executing any turkey power project, nor the project is approved by the Central Government or a competent authority in terms of section 44BBB(1) of the Act. Even, assuming that section 44BBB applies, sub-section (2) of section 44BBB carves out an exception by providing that the assessee may claim lower profit, if he keeps and maintains the books of account and documents prescribed under section 44AA and his accounts are audited in terms of section 44AB. In the facts of the present case, undoubtedly, the assessee has fulfilled the conditions mentioned in sub-section (2) of section 44BBB. Therefore, ignoring the provisions of sub-section (2) of section 44BBB, which overrides sub-section (1) of the said provision, the Assessing Officer could not have proceeded to estimate profit at 10% of the gross receipts. Thus, on overall analysis of facts and circumstances of the case and the ratio laid down in the decisions cited before us, we have no hesitation in holding that the disputed addition is unsustainable. Accordingly, we direct the Assessing Officer to delete the addition. Grounds are allowed.

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• 2023 (3) TMI 203
  Reopening of assessment u/s 147 - reason to believe - fresh or intangible material - addition on account of amount paid by the assessee towards release of lease tenancy - HELD THAT:- From the very reasons recorded, it is clear that the Assessing Officer has simplicitor gone into assessment records and whatever information filed during assessment proceedings, the Assessing Officer has made basis for reopening of assessment. Admittedly original assessment was completed u/s.143(3) of the Act and the Assessing Officer has examined issue of lease rights release of Rs.18.00 lakhs. I find that this issue has been considered by the Assessing Officer in the original assessment and relevant para 6 of assessment order is already re-produced above in para 8 of this order. Hon ble Madras High Court in the case of TANMAC India Vs. DCIT ( 2017 (1) TMI 122 - MADRAS HIGH COURT] has considered this issue in detail and noted that reassessment can be done only on the fresh and tangible material. The Hon ble Supreme Court in the case of CIT Vs. Kelvinator of India (supra) has also considered an identical issue and held that Department cannot be permitted to avail of extended time limit, in absence of any new or tangible material. No counter judgement was cited by the Department except case law of the Hon ble Supreme Court in the case of CIT Vs. P.V.S.Beedies Pvt.Ltd. [ 1997 (10) TMI 5 - SUPREME COURT] wherein the issue of audit objection how to be dealt with and whether that forms opinion or not is to be considered. Since, the Hon ble Supreme Court in the case of CIT vs. Kelvinator of India [ 2010 (1) TMI 11 - SUPREME COURT] has considered this issue, reopening on the same set of facts, which were available in the original assessment proceedings which were examined by the Assessing Officer, is bad in law and hence, quashed - Appeal of the assessee is allowed.

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• 2023 (3) TMI 202
  Reopening of assessment u/s 147 - Notice beyond period of four years - HELD THAT:- As gone through the orders of authorities below including notes of arguments and case law relied upon. In the return of income, the assessee had shown the receipt of interest income from M/s. Elnet Technologies Ltd. and M/s. Elnet Technologies Ltd. deducted TDS in the interest component and the entire amount was shown under other liabilities in the return. The assessee has not explained what other liabilities is by showing it under Notes of accounts. Therefore, it cannot be said that the assessee has disclosed fully and truly all the details before the Assessing Officer. Thus, in our opinion the Assessing Officer rightly reopened the assessment under section 147 of the Act. We are of the opinion that it is a clear case of escapement of interest income from taxation and therefore, the Assessing Officer by issuing notice under section 148 of the Act reopened the assessment under section 147 of the Act on the ground that there is an escapement of income from taxation which is in accordance with law. Whether there is no failure on the part of the assessee to disclose the entire income? - As we find that in the return of income, the assessee has not made full and true disclosure. It was only shown as under other liabilities and he has not filed Notes on account before the Assessing Officer. Therefore, AO was not able to assess correct income of the assessee while concluding the assessment under section 143(3) of the Act. Further, we find that the case law relied on by the assessee has no application to the facts of the present case as the facts are entirely different. In view of the above, the issue raised by the assessee in ground Nos. 2 3 are dismissed. Assessee has received the interest amount from M/s. Elnet Technologies Ltd. - The assessee has submitted that it is not income of the assessee and it is income of Government of Tamil Nadu. We find that if the amount received by the assessee from M/s. Elnet Technologies Ltd. is not income of the assessee and if at all it had paid to the Government of Tamil Nadu, the assessee should been remitted through banking channels only. If at all the assessee paid this amount, it can show its bank account before the Assessing Officer or before the ld. CIT(A) or even before the ITAT. Admittedly, the assessee was not able to file any proof for the payment made to the Government of Tamil Nadu. Under these facts and circumstances of the case, we are of the opinion that the amount received from M/s. Elnet Technologies Ltd. by the assessee is income of the assessee and the Assessing Officer has correctly taxed. We also find that the ld. CIT(A) has rightly decided the issue and no interference is warranted. Accordingly, the issue raised by the assessee in ground Nos. 4 5 are dismissed. Reopening of assessment u/s 147 - Depreciation claim - assessee has claimed depreciation on a property wrongly and the same was withdrawn and therefore, similar depreciation was claimed by the assessee in the assessment year 2003- 04 for which the assessee is not entitled to - HELD THAT:- We find that it is a clear case of escapement of assessment for taxation and the Assessing Officer by considering the entire facts, issued the notice under section 148 of the Act on the ground that there is an escapement of income as per section 147 of the Act, which was confirmed by the ld. CIT(A). Thus, we also find that the reopening of assessment under section 147 of the Act is valid and accordingly, ground Nos. 2 3 raised by the assessee are dismissed. Depreciation on the property at Nandanam in the computation of taxable total income - AO has ascertained that the property at MHU Complex was allotted to the assessee by Tamil Nadu Housing Board during September, 1994 for a consideration of Rs..1,67 crores. The sale consideration was @ Rs..1,300/- per sq. ft. The property allotted consisted of 12,802 sq. ft. of built up area and 3,463 sq. ft. of undivided portion of land. The assessee incurred substantial expenditure towards construction of interiors and partitions. The assessee also paid subsequently towards garage and car parking area. From the details filed, it is noted that the total purchase consideration paid to TNHB for purchase of the property was Rs..1,81,18,712/-. Out of this figure, the land value of Rs..28,08,493/- adopted in the assessment order for the assessment year 2006-07 was found to be quite reasonable and no further modification was required. Accordingly, depreciation claimed on this land value @ 10% was disallowed and added to the total income of the assessee. On appeal, the ld. CIT(A) confirmed the order of the Assessing Officer. We have gone through the assessment order and also appellate order and find that the Assessing Officer has perfectly decided the issue and the ld. CIT(A) has confirmed the same. We find no infirmity in the order passed by the ld. CIT(A). Accordingly, ground Nos. 4 5 raised by the assessee are dismissed. Interest on term loan due from Joint Venture Companies - HELD THAT:- The arguments of assessee is that the interest income is not recoverable from the joint venture companies on the ground that the debt is already bad. In the assessment order, the Assessing Officer has noted that the assessee has not written off the loans in its books of account and the same figure is continuing even in subsequent assessment years. Moreover, the assessee itself treated the loan amount as unsecured considered good and interest due on the same. In view of the above, it cannot be said that the unsecured loan became bad debt and even the assessee company has not written off in the books of account and therefore, it cannot be allowed as bad debt. Thus, the ground raised by the assessee is dismissed.

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• 2023 (3) TMI 201
  Revision u/s 263 - As per CIT assessment order passed by AO is erroneous and prejudicial to the interest of Revenue in allowing the claim of deduction u/s 80IA - HELD THAT:- In this case, in the assessment order, the Assessing Officer has specifically noted the issue, wherein at para 1 Sl.No. (iii) deduction claimed for industrial undertaking u/s 80IA/ 80IAB/80IAC/IB/IC/IBA/80ID/80IE/10A/10AA. AO has issued notice under section 142(1) in respect of deduction claimed under section 80IA of the Act and also computation in respect of 80IA - Again, AO has issued notice u/s 142(1) of the Act and specifically asked about the claim of the assessee in respect of HTSC No. 1313 for which the assessee claimed deduction under section 80IA of the Act and he also asked that why there is a mismatch in name of the undertaking i.e., M/s. Graha Inds. Pvt. Ltd. In response to that the assessee filed a reply wherein, it has specifically explained that M/s. Graha Industries got merged with the assessee company and the Hon ble Madras High Court has approved the amalgamation and filed copy of the judgement before the AO. Thereafter, after examining the details produced by the assessee, AO has completed the assessment under section 143(3) of the Act dated 09.03.2021. Under these facts and circumstances of the case, we are of the opinion that it cannot be said that the Assessing officer has not examined the issue AO, after making enquiry about allowability of deduction claimed by the assessee and after receiving the information relating to that, the Assessing Officer has completed the assessment order. PCIT was of the opinion that the Assessing officer has not discussed anything in respect of the issue in the assessment order and therefore, the assessment order is erroneous. In our opinion, the Assessing Officer, examining all the details, came to a conclusion that the assessee is eligible for claiming deduction and no discussion is required. Therefore, the order passed by the Assessing Officer cannot be said that it is an erroneous order. So far as merits of the case is concerned, the Mumbai Benches of the Tribunal in the case of UltraTech Cement Ltd [ 2022 (1) TMI 923 - ITAT MUMBAI] has considered similar issue and also considered the Circular No. 3 of 2008 dated 12.03.2008 issued by the CBDT, thus the order passed by the Assessing Officer cannot be said that it is erroneous and prejudicial to the interest of Revenue. PCIT was not able to establish that the assessment order passed under section 143(3)by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, the revision order passed by the ld. PCIT is quashed. Decided in favour of assessee.

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• 2023 (3) TMI 200
  Assessment u/s 153A or u/s 147/148 - reasons recorded by the AO wherein he has referred to various information during the course of search and seizure carried out in the case of M/s Evergreen Enterprises, wherein assessee is one of the partner and it was found that assessee has taken some accommodation entry of bogus /long term capital gains on sale shares of M/s DB International and various persons have taken loan from the assessee and M/s Evergreen Enterprises - whether there was any escapement or whether any income representing in the form of asset which has escaped assessment amounts to Rs. 50 lakhs or more? - HELD THAT:- The legislature has specifically carved out scope of assessment / reassessment of income of a person not searched of such alleged escaped income based on some incriminating information found during a search on some other person searched by taking recourse to the section 153C of the Act. AO has not been empowered to extend the scope of an assessment/ reassessment u/s 153A read with the section 153C of the Act beyond the alleged incriminating material found during the course of search in the case of some other person, because assessment / reassessment in such case is specifically restricted to the income based on the said incriminating information only. Whereas, in the proceedings initiated u/s 148 of the Act, the AO may extend the scope of the assessment / reassessment on other amounts also if any information about those is on his record over and above the alleged escaped income as per the reasons recorded. The purpose of restriction of assessment for amount of income by taking recourse to the provisions u/s 153C of the Act to alleged incriminating material and not on suspicion has been upheld by the Hon ble Supreme Court in the case of Sinhgad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT] Accordingly, we hold that any incriminating information of any undisclosed income of the person not searched which was found during the course of a search having taken place up to 31/03/2021 on some other assessee, can only be taken into consideration for an assessment / reassessment in the hands of the said person not searched through the domain of the section 153C of the Act. Thus, any assessment / reassessment proceedings-initiated u/s 148 of the Act in respect of the said incriminating information found during the course of a search up to 31/03/2021 on some other assessee is illegal and is ab initio as the same can be considered only by taking recourse to the provisions of the section 153C r.w.s. 153A of the Act. Thus, the assessment of the said amount of LTCG, which was claimed to be exempt u/s 10(38) of the Act by the assessee, made u/s 147 of the Act is beyond the scope of section 147, albeit it can be roped in only u/s 153C. If on overall appreciation of the scheme of assessment / reassessment of income after the income-tax searches on the assessee searched and also for the persons not searched based on detection of some incriminating information during the said searches conducted upto 31/03/2021. Here in this case as held above, the assessment order passed u/s 147 is beyond the jurisdiction as correct course for framing reassessment as per statute was u/s 153A and u/s 153C only. Ergo, on all the above legal grounds and issues raised by the assessee here are the jurisdictional issue and goes to the threshold of the validity of the assessment proceedings, which in our opinion has not been validly assumed. If the jurisdiction has not been correctly assumed, then the entire consequent assessment proceedings also become illegal. Accordingly, the assessee succeeds here on the above two legal issues / pleas raised by him resulting into cancellation of the assessment order in this appeal. We hold that the assessment order passed u/s 147 is illegal and void ab initio and same is hereby quashed, having been passed on incorrect provision, ignoring the mandatory non-obstante sections 153A / 153C of the Act, as here in this case, jurisdiction to assess and pass the assessment order was under sections 153A / 153C.

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• 2023 (3) TMI 199
  Legal validity of the notice issued u/s. 153A/153C - Treating the amount of loan as unexplained amount by the Ld. Revenue Authorities - HELD THAT:- We find merit in the argument of the Ld. AR that in the absence of any incriminating material found in the premises of the assessee, notice U/s. 153A of the Act cannot be issued. In the instant case, the affidavit was found in the premises of Nexus Group but any corresponding corroborative evidence was not found in the premises of the assessee. In the absence of any evidence or incriminating material found in the premises of the assessee, issuance of notice U/s. 153A could not be made and the assessment could not be framed U/s. 153A. The case law relied on by the Ld. AR in Mr. Trilok Chand Chaudhary [ 2019 (9) TMI 95 - ITAT DELHI] by the Coordinate Bench of the Delhi, wherein it was held that separate search warrant has been issued in the case of the assessee as well as in the case of other party and where the Assessing Officer has used the material found in the case of the other party in the assessment made U/s. 153A of the Act is not permitted in view of the express provision of the law. We are of the considered view that the assessment made by the Ld. Revenue Authorities U/s. 153A of the Act is not valid in law and therefore considered as void-ab-initio. Therefore, we are inclined to quash the assessment order passed by the Ld. AO. Decided in favour of assessee. Unexplained Gold Jewellery - treatment of 222.21 gms of Gold Jewellery as unexplained in the hands of the assessee - R argued that 222.21 gms of Gold Jewellery belong to the granddaughter of the assessee who is not staying with the assessee but has kept in the premises of the assessee - HELD THAT:- CIT(A) has rightly followed the Board s Instruction No. 1916, dated 11/5/1994 and has allowed the Gold in the possession of the assessee to an extent of 1600 gms in accordance with the family members in the premises of the assessee. Assessee s Representative could not substantiate with evidence that the balance of 222.21 Gms of Gold Jewellery belongs to the granddaughter of the assessee who had kept their jewellery in the assessee s premises. Neither the Ld. AR produced any copies of bills for claiming the jewellery being purchased by the assessee. In the absence of any material evidence to substantiate the holding of addition gold in the premises of the assessee we find that the Ld. CIT(A) has rightly given the benefit of Board s Instruction (supra) and accordingly treated the balance gold of 222.21 gms as unexplained. We are therefore inclined not to interfere in the decision of the Ld. CIT(A) on this issue. Accordingly, these grounds raised by the assessee are dismissed. Gain on sale of land - cost of acquisition of the land - Sale consideration of plots considered as income of the assessee - AR submitted that the agricultural land converted into plots and sold by the assessee and should be considered as capital gains - DR submitted that the cost of acquisition of the land the cost of development of the land into plot was not produced before the Ld. Revenue Authorities and hence it cannot be considered - HELD THAT:- Admittedly the assessee has sold three plots in the current year by converting the agricultural land into non-agricultural land which is considered as business income by the Ld. AO. It was also observed by the Ld. CIT(A) that the assessee has not submitted the Fair Market Value (FMV) on the date of conversion of the land for the purpose of considering it as capital gains and subsequently, the FMV of the land on the date of conversion was also not submitted before the Ld. Revenue Authorities for considering the same as expenses / cost of acquisition by the assessee for the sale of plots. Assessee has not submitted the details of land development charges and has not produced copies of any bills either before the Ld. Revenue Authorities or before us. In the absence of any cogent evidence regarding the cost of acquisition of the agricultural land / conversion into plots, obviously certain expenses would have been incurred by the assessee in acquiring the agricultural lands and cost towards conversion of the agricultural land in to plots. Considering the peculiar circumstances of the case it would be reasonable to estimate the business income at 20% on the sale value of Rs 23,71,000/-. We therefore, direct the Ld AO to compute the business income as decided above and thus, this ground raised by the assessee is partly allowed. Addition of interest - AR argued that the loan amount belongs to the wife of the assessee wherein the wife of the assessee has taken a loan on OD facility from Punjab National Bank, Bhimavaram for Rs. 4 Crs which was the source for the loans given by the assessee for interest - HELD THAT:- As admitted by Ld AR we find that the interest was not disclosed in the hands of the wife of the assessee. However incriminating evidences was seized with respect of interest by the assessee in the impugned AY. In view of this the Ld. Revenue Authorities have rightly considered it as income of the assessee during the impugned assessment year and hence we are inclined not to interfere with the decision of the Ld. CIT(A) on this issue. Thus, this ground raised by the assessee is dismissed.

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• 2023 (3) TMI 198
  Income deemed to accrue or arise in India - Fee For Technical Services (FTS) under Article 12 of the India-Singapore Double Taxation Avoidance Agreement (DTAA) and section 9(1)(vii) of the Act - addition of marketing receipts, frequent guest program receipts, general advertising, coordination fund contribution and reservation fees etc. - assessee is a non-resident corporate entity incorporated under the Laws of Singapore and a tax resident of Singapore - HELD THAT:- From the nature of activities carried on by the assessee, it is found to be in the nature of centralized marketing and reservation related activities to have a wide geographical coverage and to improve the visibility amongst prospective customers. The centralized reservation allows a customer or a third party travel intermediary anywhere in the world to access the availability status, the room rates to make booking easily. Thus, as could be seen, the marketing and reservation activities performed by the assessee are not only distinct and different from the license fee but they are done under two distinct and separate agreements. Therefore, in our view, the marketing and reservation receipts cannot be treated to be ancillary and subsidiary to the license fee. Hence, such fee will not fall under Article 12(4)(a) of the treaty. Similarly, the nature of services rendered does not demonstrate that they are in the nature of managerial, technical or consultancy services. Even if, to some extent they may involve consultancy services, however, there is nothing on record to demonstrate that while rendering the services, the assessee had made available technical knowledge, experience, skill, know-how or processing etc. to bring it within the ambit of FTS under Article 12(4)(b) of the treaty. See Starwood Hotels and Resorts case [ 2022 (7) TMI 781 - ITAT DELHI] , thus we direct the Assessing Officer to delete the additions in both the assessment years. Taxability of reimbursement of expenses as FTS both under the provisions of the Act as well as India-Singapore DTAA - As alleging that the assessee did not provide the break up of reimbursement and copy of bank statement the Assessing Officer treated the reimbursement of expenses as FTS - HELD THAT:- As could be seen from the nature of services, these are routine services without involving any technical or strategic expertise or involvement of any advisory services. Further, these services are neither ancillary and subsidiary to royalty nor there is anything on record to demonstrate that while rendering such services, the assessee had made available any technical knowledge, know-how, skill etc. to the third party Indian hotels. It is further observed that the recipients are receiving such services on a continuous basis from year to year, which shows that the recipients are not capable of independently performing such services without the aid and assistance of the assessee. Thus, in our considered opinion, the reimbursement of cost received by the assessee, cannot be treated as FTS under Article 12(4) of the India-Singapore DTAA, at least, based on the facts involved in the impugned assessment years. Therefore, we direct the Assessing Officer to delete the additions. Short grant of TDS - HELD THAT:- Having considered the submissions of the parties, we direct the Assessing Officer to factually verify assessee s claim and allow credit of TDS in accordance with law.

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• 2023 (3) TMI 197
  Commision in respect of hawala entries - Estimation of income - accommodation entries - commission income to be computed at 2% of the total receipt - HELD THAT:- CIT(A) after considering the submissions of the assessee has given a finding that the main activity of the assessee was providing accommodation entries and assessee has failed to justify the rate of commission shown by him. He has further noted that in the case of Pratibha Finvest Pvt. Ltd. [ 2012 (12) TMI 575 - DELHI HIGH COURT ] has upheld the commission rate @ 2% in respect of hawala entries. Before us, no material has been placed by assessee to point out any fallacy in the findings of CIT(A). We therefore, find no reason to interfere with the order of CIT(A) and thus the grounds of assessee are dismissed.

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• 2023 (3) TMI 196
  Interest expenses capitalised to WIP - Reducing the work in progress (WIP) on account of proportionate disallowance of interest expenses capitalised to WIP mainly incurred on account of secured loans - HELD THAT:- Undisputedly assessee has taken loan of Rs.411.9 crore against which claimed interest expenses of Rs.59.91 crore but at the same time the assessee has also given loans and advances amounting to Rs.208.52 crores to various parties. AO allowed the interest at the rate of 14.5% on the basis of ledger of the assessee. When the assessee has failed to prove the nexus of interest free funds with advances made rather advanced the loan out of common pool and no other facts have been brought on record before the Tribunal we do not find any illegality or perversity in the impugned findings given by the CIT(A). The assessee despite availing numerous opportunities has failed to appear before the Tribunal to assist the Bench to unsettle the findings returned by the CIT(A). Income from house property - Treating the business centre income generated from providing business facilities as income taxable under the head income from house property - HELD THAT:- There is nothing on record if the findings returned in the earlier years have been disturbed. The assessee has not come up before the Tribunal to explain as to how the said income is to be treated as business income. So we find no illegality or perversity in the impugned addition confirmed by the CIT(A). In view of what has been discussed above present appeal filed by the assessee is hereby dismissed.

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• 2023 (3) TMI 195
  Status of assessee as AOP instead of partnership firm - Another partnership firm as Partner in the present Firm through its Partner respectively - Restriction as per the Indian Partnership Act, 1932 - HELD THAT:- The assessee firm was comprised of four individual partners who were representing their respective firms. It is, thus, in the backdrop of the aforesaid factual matrix that I shall herein deal with the proposition that as to whether or not such an arrangement is as per the mandate of law. It would be apposite to refer to the judgment of Ram Laxman Sugar Mills [ 1967 (3) TMI 17 - SUPREME COURT] as observed, that the mere fact that the manager of a HUF describing himself as a representative of the family had entered into an agreement of partnership with other persons could not form a basis to infer that an agreement of partnership was intended contrary to law between the HUF and other partners. There was no justification on the part of the lower authorities to have recharacterized the assessee firm i.e. a firm comprising of individual partners (representing their respective firms) as an AOP . Thus, in terms of aforesaid observations set-aside the order of the CIT(Appeals) and direct the A.O. to assess the assessee firm in the status as that of a firm as therein claimed. Thus, the Ground of appeal No. 1 raised by the assessee is allowed in terms of my aforesaid observations. Disallowance u/s 14A - HELD THAT:- When both interest free funds and interest-bearing funds are available, then, it can safely be presumed that the interest free advances or investments in exempt income yielding assets were made out of the interest free funds is supported by the judgment of Pr. CIT Vs. Sintex Industries Ltd [ 2017 (6) TMI 601 - GUJARAT HIGH COURT] - Also, a similar view had been taken in the case of HDFC Bank Ltd.[ 2016 (3) TMI 755 - BOMBAY HIGH COURT] Thus, in terms of my aforesaid observation that the assessee had sufficient interest free funds available with it to source the investments in exempt income yielding mutual funds, thus, vacate the disallowance made/sustained by the lower authorities u/s. 14A of the Act. Thus, the Ground of appeal No. 2 raised by the assessee is allowed in terms of my aforesaid observation. Disallowance of claim for deduction of donation - claim for deduction of expense incurred was related to its business, therefore, the same was disallowed by the A.O. in view of provisions of Section 37 - HELD THAT:- Although the assessee specifically assailed the aforesaid disallowance before the CIT(Appeals), however, I find that the same had not been addressed by the said appellate authority while disposing off the appeal. Considering the fact that the CIT(Appeals) had failed to adjudicate the Ground of appeal No. 4, wherein the assessee had assailed the disallowance of its claim for deduction of donation restore the said issue to his file for adjudicating the same. Needless to say, the CIT(Appeals) shall grant a reasonable opportunity of being heard to the assessee while adjudicating the aforesaid issue. Thus, the Ground of appeal No. 3 raised by the assessee is allowed for statistical purposes.

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• 2023 (3) TMI 194
  Revision u/s 263 by CIT - As per CIT AO has not verified the cash deposit during the demonetization period nor sought any explanation while finalising the assessment u/s 143(3) - HELD THAT:- We are of the considered view that the AO had made enquiries into the aspect of cash deposit in the bank accounts of the assessee during demonetization period, and after due consideration of the response filed by the assessee, accepted the contention of the assessee and did not make any addition to the returned income. Accordingly, in our view, this is not a case where no enquiry has been made by the assessee officer during the course of assessment proceedings. In our view, Pr. CIT has incorrectly observed in the instant facts that the Ld. AO failed to apply his mind to the issues on hand or he had omitted to make enquiries altogether or had taken a view which was not legally plausible in the instant facts. As held by various Courts, Principal CIT cannot in 263 proceedings set aside an assessment order merely because he has different opinion in the matter. In our view, s 263 of the Act does not visualise a case of substitution of the judgment of the Principal CIT for that of the Assessing Officer who passed the order unless the decision is held to be wholly erroneous. As noted in various judicial precedents highlighted above, the Principal CIT, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-visit the entire assessment and determine the income himself at a higher figure. Now on the issue that the Ld. AO passed a cryptic order and did not discuss in detail regarding assessee s submissions on various queries raised vide the various notices, in our view it is a well settled position of law that if from the assessment records, it is evident that the Ld. AO has made due enquiries in response to which assessee has filed its submissions, then even if the assessment order does not discuss all aspects in detail with regards to claim of the assessee, it cannot be held that the order is erroneous and prejudicial to the interests of the Revenue. The above proposition has been upheld in the case of CIT v. Reliance Communication [ 2016 (4) TMI 173 - BOMBAY HIGH COURT] , Smt. Anupama Bharat Gupta [ 2021 (4) TMI 1000 - ITAT AHMEDABAD] , Goyal Private Family Specific Trust [ 1987 (10) TMI 43 - ALLAHABAD HIGH COURT] , CIT v. Mahendra Kumar Bansal [ 2007 (7) TMI 149 - HIGH COURT, ALLAHABAD] - We thus find no error in the order of Ld. AO so as to justify initiation of 263 proceedings by the Ld. Pr. CIT. The Grounds of appeal raised by the assessee are thus allowed.

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• 2023 (3) TMI 193
  Rate of tax applicable to domestic companies and/ or co-operative banks - Scope of provisions of Article 26 (Non-discrimination) of the India France tax treaty - assessee is a commercial bank having its head office in France having 8 branches in India - assessee is involved in normal banking activities including financing of foreign trade and foreign exchange transactions - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case in BNP Paribas vs DCIT, [ 2021 (1) TMI 1296 - ITAT MUMBAI] decided a similar issue against the assessee by following the judicial precedents in assessee s own case wherein referred to the Explanation in the Section 90, inserted in the IT Act with retrospective effect from 01-04- 1962 as per which the higher tax rate in case of foreign company, should not be regarded as violation of non-discrimination clause. The Tribunal also referred to the judgment of the Hon ble Supreme Court in the case of ACIT Vs. J.K. Synthetics [ 2001 (2) TMI 17 - SUPREME COURT] . The Tribunal accordingly, rejected the ground raised by the assessee. Ground no.1 raised in assessee s appeal is dismissed. Taxability of data processing fees paid by the Indian branch offices of the assessee to its Singapore branch - HELD THAT:- As decided in own case [ 2019 (8) TMI 1856 - BOMBAY HIGH COURT] what was being paid by the Indian entity to its Singapore branch was only in the nature of reimbursement of expenses. This finding of fact was not challenged in the Revenue s appeal for Assessment Year 2006-07 or in these appeals for Assessment Year 2008-09 and 2009-10. The Revenue has not been able to show any difference in facts and/or in law in the subject Assessment Years to that in Assessment Year 2006- 07. Therefore, the above decision of this Court for Assessment Year 2006-07 will apply in these two Appeals. Ground no.2 raised in assessee s appeal is allowed. Taxability of interest payable/paid by the Indian branch office to the head office and its other overseas branches - AO held that the interest income of the head office/overseas branches would be taxable under Article 12 of the India-France DTAA at the rate of 10% - HELD THAT:- In view of Article 7 of the India-France DTAA, the Revenue though has rightly accepted that the fiction of hypothetical independence or a separate entity approach, as stated in this Article, comes into play for the limited purpose of computing the profit attributable to the PE. However, extended this fiction of hypothetical independence also for the computation of profit of the head office, for bringing to tax the interest received from the Indian branch office under the provisions of the Act. We are of the considered opinion that the latter approach is flawed. This aspect was extensively dealt with by the coordinate bench of the Tribunal in assessee s own case in BNP Paribas SA[ 2016 (5) TMI 428 - ITAT MUMBAI] , for the assessment year 2004-05. In the aforesaid decision, the coordinate bench held that the principles for determining the profits of the PE and GE/head office are not the same, and the fiction of hypothetical independence does not extend to the computation of the profit of the GE/head office. Interest paid by the Indian branch/PE to the head office/GE is not taxable in India independent of the decision of the Special Bench of the Tribunal in Sumitomo Mitsui Banking Corporation [ 2012 (4) TMI 80 - ITAT MUMBAI] . Thus, in view of the above, even though the submission of the Revenue that the amendment by Finance Act 2015, whereby Explanation to section 9(1)(v) of the Act was inserted specifically to overcome the decision in Sumitomo Mitsui Banking Corporation (supra), is accepted, the same would still not lead to taxation of the interest paid to the head office/overseas branches under the provisions of the DTAA. Accordingly, in view of aforesaid findings and respectfully following the judicial precedent in assessee s own case cite supra, we direct the AO to delete the addition on account of interest income received by the head office/overseas branches. As a result, ground no.4 raised in assessee s appeal is allowed.

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• 2023 (3) TMI 192
  Unexplained sundry creditors and advance from customers - condition for treating the same as income of the assessee u/s 41(1) is that the liability ceased to exist as at the end of the financial year relevant to the year under consideration - HELD THAT:- Hon ble High Court in MATRUPRASAD C PANDEY [ 2015 (4) TMI 830 - GUJARAT HIGH COURT] has held that addition under section 41(1) cannot be made simply by doubting the creditor or his creditworthiness or his identity. Further, no addition can be made simply because the creditors are old. No addition can be made under section 41(1) of the Act merely on the basis of doubting the genuineness of the creditor without establishing the actual cessation of liability. Hence when the assessee is showing the liability in the books of account and has repaid in the subsequent years then the addition under section 41(1) of the Act is not sustainable. Accordingly we upheld the order of ld. CIT (A) and dismiss the appeal of the revenue. Addition on account of difference in contract receipt shown in Form 26AS vis- -vis receipts accounted by the assessee - CIT-A deleted addition - HELD THAT:- The submission of the assessee was that the book entries and ledger account of parties are sufficient evidence to explain the difference. CIT (Appeals) has reproduced the party-wise reconciliation and explained the difference - We find that the ld. CIT (A) has given specific and categorical finding and reasons for deleting each addition regarding RMC sales, Hire Charges where the parties has deducted TDS on RMC sales and higher charges which are not part of contract receipts - the finding regarding difference in 26AS and contract receipts are mentioned party-wise in detail. Considering the detailed submissions and explanations made by the assessee at the appellate proceedings, we find no infirmity in the order of the ld. CIT (A) and the same is upheld. The ground of the revenue is dismissed. Disallowance of various expenses made by the AO in absence of verification - CIT (A) has considered the detailed submissions comprising of ledger accounts and other evidences furnished by the assessee in tabular chart and deleted the addition - HELD THAT:- Looking to the facts and circumstances of the case, we are of the considered view that the findings given by the ld. CIT (A) are in accordance with law and accordingly deleted the disallowance. We find no infirmity in the order of ld. CIT (A), which is hereby upheld. The ground of the revenue is dismissed. Additional depreciation claimed on new plant machineries relating to manufacture of Ready Mix Concrete (RMC) - CIT (A) has considered the detailed submissions comprising of relevant bills on which additional depreciation were claimed along with evidences and deleted the disallowance - HELD THAT:- As decided by CIT-A correctly there is no dispute that the appellant company is engaged in manufacture of ready mixed concrete which involved mixture of three ingredients, namely, cement, sand and aggregate and the product manufactured is mixed with other chemicals, thereafter the final product after mixing and processing has to be used within four hours of its mixing and as a result, the product manufactured by the assessee is altogether a different product from the material out of which it was produced. Further from the evidence produced by the appellant company it is also evident that the appellant has purchased this new machinery during the year under consideration and used it in its manufacturing process as discussed above as increase in sale is indication of this fact. Therefore, considering the overall facts and circumstances and evidences brought on record, it is held that the AO is not justified in disallowing the assessee s claim of additional depreciation. Appeals of the Revenue are dismissed.

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• 2023 (3) TMI 191
  TP Adjustment - TPO/DRP has adopted DCF Method for determining the ALP of the transaction of sale of shares of ECL to ECHL, Mauritius - HELD THAT:- TPO/DRP has adopted the actual published results of the Appellant instead of projected future cash flows as on the date of the transactions. Reliance on behalf of the Appellant was placed on the decision of the Hyderabad Bench of the Tribunal in the case of DQ (International) Ltd. [ 2022 (12) TMI 379 - ITAT HYDERABAD] wherein it was held by the Tribunal that while computing value of intangible asset by using DCF Method the future projections cannot be substituted with the actual figures. We accept the contention of the Appellant that for the purpose of arriving at the valuation using DCF method actual figures cannot be substituted for future projections. Fair market value of share of ECL representing the ALP - HELD THAT:- We concluded that the DCF Method could not be adopted in the facts and circumstances of the present case as the Appellant is an investment company incorporated on 30.01.2007 with unpredictable income/cash flows. This takes us to the method adopted by the Appellant for determining the value of shares of ECL. We note that the shares of ECL were sold by the Appellant on 23.06.2008. However, the valuation report is based upon the audited financial statements of ECL as on 31.03.2008. In the synopsis of arguments filed before the Tribunal, the Appellant had, without prejudice basis, stated that the value of shares determined on 23.06.2008 by following the method prescribed in Rule 11UA of the Income Tax Rules, 1962 was INR 112/- this was accompanied by unaudited financial statements as on 23.06.2008. Rule 11UA is also based on Net Asset Value Approach adopted in the valuation report relied upon by the Appellant to support the valuation of shares of ECL. Therefore, accepting the without prejudice submission of the Appellant, we adopt the value of INR 112/- as the fair market value of share of ECL representing the ALP. TP Adjustment - debt as equity (such as general/specific anti-avoidance rules) - HELD THAT:- In the case of Besix Kier Dabhol SA [ 2012 (10) TMI 817 - BOMBAY HIGH COURT] it was held in absence of specific provision in the Act incorporating thin capitalization rules, the TPO was not permitted to re-characterize debt as equity for making transfer pricing adjustments. It is admitted position that for the relevant assessment year there were no provisions in the Act providing for secondary transfer pricing adjustment and/or for making transfer pricing adjustment by treating debt as equity (such as general/specific anti-avoidance rules). The amount of receivable outstanding has arisen on account of transfer pricing adjustment made by the TPO/AO. In our view, the transfer pricing adjustment made by the TPO/AO (by treating the aforesaid amount as interest on outstanding receivables) is clearly in the nature of secondary adjustment and cannot be sustained in the absence of specific provision in the Act providing for the same. Disallowance u/s 14A r.w.r.8D - HELD THAT:- We note that in the case of Pr.CIT, Patiala Vs State Bank of Patiala [ 2018 (11) TMI 1565 - SC ORDER] had held that that amount of disallowance under Section 14A of the Act cannot exceed the amount of exempt income. It is admitted position that the Appellant had earned exempt income of INR 9,136/- only. Accordingly, following the aforesaid judgment of the Hon ble Supreme Court, we restrict the addition under Section 14A of the Act to INR 9,136/-. Accordingly, Additional Ground No. 1 to 3 raised by the Appellant are partly allowed.

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• 2023 (3) TMI 190
  Validity of order passed u/s 92CA(3) as barred by limitation - Computation of period of 60 days - whether time limit of 60 days mandatory? - may in contrast to shall as used in Sec. 92CA(4) - order has to be passed by TPO before 60 days prior to the last day on which the period of limitation referred to in Sec.153 for making assessment expires - HELD THAT:- As considering the statutory time limit, the order passed by Ld. TPO u/s 92CA(3) on 01.11.2019 would be barred by limitation and consequence as mentioned in para- 4 would follow. This order would be time barred as a result of which the assessee would cease to be an eligible assessee and therefore, the machinery of Sec.144C would not be triggered. The Ld. AO is not required to pass the draft assessment order; DRP would not have any jurisdiction to adjudicate the matter. Consequently, the final assessment order passed on 30.04.2021 would be barred by limitation since in terms of Sec. 153(1) r.w.s. 153(4), the same should have been passed on or before 31.12.2019. The same is accordingly, liable to be quashed. Accepting first two legal propositions of Ld. Sr. Counsel, we would hold that the assessment would be nullity since it is barred by limitation. Decided in favour of assessee.

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• 2023 (3) TMI 189
  TP Adjustment - Adjustment done to manufacturing segment - Non-consideration of Internal TNMM Analysis undertaken by the appellant - HELD THAT:- As decided in assessee s own case [ 2022 (2) TMI 1351 - ITAT BANGALORE] direct the Ld.TPO to carry out detailed analysis of the international transactions using TNMM as MAM, based on the materials filed by assessee related to internal comparables. In the event the details filed are satisfactory, the determination must be confined to the internal comparables so filed by assessee. In the event, the details filed by assessee is not verifiable or not in accordance with law, the Ld.AO/TPO is open to carry out analysis in accordance with law. Thus we send back this issue to the file of AO/TPO for de-novo consideration in the above terms and decide the issue as per law. Needless to say reasonable opportunity of hearing to be given to the assessee and the assessee is directed not to seek unnecessary adjournments for early disposal of the case. Delayed trade receivables from AEs - Assessee contested interest on delayed receivables should not be considered as international transactions and notional interest computed by the AO/TPO/DDRP which is libor +450 basis points, therefore the adjustment should not be made for the interest on delayed receivables - HELD THAT:- We reject the plea of the assessee that the interest on receivable is not an international transactions after relying on the judgments as cited by the DRP in his order and the order of the coordinate bench in the case of Outsource partners International (P.) Ltd.. [ 2022 (6) TMI 1361 - ITAT BANGALORE] We also uphold that the interest on delayed receivables is an international transactions, accordingly the adjustment should be made on those receivables which were not realized within the agreements period.. During the course of hearing, it was brought into the notice of both the parties that in respect of rate for calculation of interest is to be considered by the AO/TPO/DRP at libor + 350 basis points considering the nature of business and location of the receivables with the consent of AR. Accordingly this issue is also remitted back to the file of the AO. Deduction u/s 35(2AB) - weighted average deduction - HELD THAT:- ITR was filed on the basis of certificate issued by the auditors. The form No.3CL was issued in the month of December 2019 and the DSIR certified sum of Rs.1104.60 lakhs was admissible for deduction. Accordingly the difference was not approved by the DSIR which relates to certain miscellaneous revenue expenditure incurred in connection with research and development work, therefore, the AO disallowed the weighted average deduction and added into the total income of the assessee - we are remitting this issue back to the file of the AO for verification of the nature of expenditure incurred by the assessee in terms of sec.37(1) of the Act, if the AO finds that these expenditures are covered u/s 37(1), he may allow the actual expenditure incurred by the assessee which is not part of the weighted average deduction allowed as per sec.35(2AB) of the Act. The assessee had undertaken during the course of hearing that assessee will be able to prove with the necessary documents for substantiating his case. Accordingly, the assessee is directed to produce necessary documents. This issue is allowed for statistical purposes.

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• 2023 (3) TMI 188
  Stay of demand - Tribunal s powers of granting the stay - payment of 20% of the disputed demands - HELD THAT:- An institution like this Tribunal, which is itself a creature of the Income Tax Act, 1961, has to perform its functions within the limitations that the Income Tax Act, 1961, has imposed on its functioning. As we say so, we make it clear that the law itself visualises that the payment of 20% of the disputed demands, impugned in the appeal before the Tribunal, cannot be viewed as a condition precedent for the grant of stay by the Tribunal, inasmuch as when the applicant furnishes security of equal amount in respect thereof , the Tribunal can exercise its powers of granting a stay. While the issue of the reasonableness of the nature of security cannot be at the unfettered discretion of the Assessing Officer, and it must meet the judicial scrutiny as and when so required. It has to be ensured that the limitations placed upon the powers of the Tribunal are respected, in letter and in spirit, and, on the other hand, it has to be equally ensured that, within this framework, substantial justice is to be rendered to the assessee and the rights of the assessee even to seek the legal remedies against any inappropriate use of power by the field authorities are zealously guarded. What constitutes reasonable security may vary from case to case. That is where a judicious and pragmatic approach by the field authorities is of utmost importance. Still, where their decisions, on this aspect, are less than appropriate, the Tribunal can surely judicially examine the same, or even decide, on its own, as to what is the nature of security to be offered by the assessee. In the present case, for the reasons we will set out in a short while, there is no need for us, as of now, to take a call on the nature of security to be offered by the assessee, even as the ususal precautions to safeguard legitimate rights of the assessee are being taken anyway. Learned counsel hastens to add, at the fag end of the proceedings, that since almost all the issues are covered by the binding judicial precedents in favour of the assessee, a conditional stay may be granted by directing the Assessing Officer to grant a stay on collection/recovery of the demands impugned in appeal before us, after accepting security equivalent to 20% of the disputed demands and to his satisfaction, on the same lines as was ordered by a coordinate bench in the case of Grasim India Ltd [ 2021 (4) TMI 495 - ITAT MUMBAI] That is a case in which the stay was granted on the condition that the assessee was to provide, to the satisfaction of the Assessing Officer, security for the amount of 20% of the disputed demands impugned in the appeal. Having heard the learned Departmental Representative on this plea and having satisfied ourselves that the issues in appeal are by and large covered by the judicial precedents- including in the assessee s own case, we are inclined to accord the same treatment, and, consequently, grant a stay on collection/recovery of the disputed impugned demands, and interest thereon. The assessee shall provide a reasonable security for an amount of Rs. 35 crores or more, within two weeks from the date of receipt of this order; Provided, however, in case the Assessing Officer is, for any reasons whatsoever, not satisfied with the security offered by the assessee, the Assessing Officer shall pass a detailed speaking order in respect of the same and setting out his position on the issue, and will give a two week notice to the assessee, before initiating any coercive recovery proceedings, so that the assessee can pursue appropriate legal remedies, if so advised, against the stand of the Assessing Officer. The assessee will fully cooperate in expeditious disposal of appeal before this Tribunal and will not seek any unnecessary adjournment.

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• 2023 (3) TMI 165
  Income deemed to accrue or arise in India - treating the receipt of fees for business support services as Fees for technical services ( FTS ) as per Article 12 of the tax treaty between India and Netherlands - Whether services are managerial in nature and hence do not fall within the definition of FTS? - HELD THAT:- From the nature of services rendered, it is very much evident that they are mostly in the nature of managerial services. Reading of Article-12 (5) of India-Netherlands DTAA reveals that it does not include managerial services within FTS. Therefore, the payment received by the assessee cannot be treated as FTS under India-Netherlands DTAA. Even, assuming for the sake of argument that payment received for certain kind of services is in the nature of FTS, however, the make available condition needs to be satisfied. Neither the Assessing Officer nor learned DRP have established on record that by rendering the services, the assessee has made available technical knowledge, know-how, skill etc. to the recipient of services, which would have enabled the recipient of such services to utilize it independently without the aid and assistance of the assessee. Thus, in our view, the make available condition is not satisfied. Therefore, the payment received cannot be treated as FTS under Article-12(5) of India Netherlands DTAA. Hence, we are inclined to delete the addition made by the Assessing Officer. Decided in favour of assessee.

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• Customs

• 2023 (3) TMI 187
  Seeking issuance of import licences in Form X format as per Rule 88 of the Arms Rules, 2016 in respect of the licences that it has already procured from the Department of Defence Production (DDP), Ministry of Defence - import of restricted item - It is the case of the Petitioner that it obtained seven licences from the DDP for import of restricted items from the U.S. and various other countries - HELD THAT:- The factual situation reveals that in view of the applicability of the FTDR Act and the Arms Act, there has been some confusion between the authorities as to the manner in which licenses are to be granted for import of arms and parts thereof. The stand of the DGFT is that Form X license would be required for import of fire arms in India. However, on a specific query as to whether there was any methodology prescribed for filing an application under Form X on the DGFT portal, the Court has been informed that there is no procedure for online application under Form X and a physical copy would have to be filed by the importer. Insofar as the DDP is concerned, though, it is the delegatee of the DGFT under the FTDR Act, insofar as the Arms Act is concerned, the power of granting import licence under the said Act has not been delegated. Even during the submissions before this Court when officials from both the authorities have appeared, it is clear that there was a lack of clarity on this matter which led to the issuance of the circular dated 8thFebruary, 2023 by the DDP, which now seeks to clarify all the required forms to be filled, the authorities to deal with the same and the permissions thereof to be granted. The clear position that therefore emerges is that the Petitioner has been issued licences for imports by the DDP. Two consignments have already arrived in India. These two consignments are in respect of licences which are at pages 61 and 64 of the writ petition. Both these consignments are meant for indigenisation of rifle production in India under Technology Transfer Collaboration with LMT Defence, USA, and for indigenisation of shotgun production in India under Technology Transfer Collaboration with Hugul Firearms Cooperative, Turkey. Such imports are crucial and clearly are meant to expedite indigenisation which is an important aspect of achieving self-sufficiency for defence purposes. The holding-up of these consignments on procedural grounds, especially owing to confusion between two authorities would be contrary to the object behind issuance of the licences itself by the DDP. Insofar as the defence requirements are concerned, the DDP is well conversant of the same and has duly licensed the imports. The application shall be made within a period of one week from now to the DGFT along with the requisite fee and the permission under Form X shall be issued within a period of two weeks thereafter. It is made clear by the Petitioner that none of the products are meant for commercial sale and the same shall not be sold without obtaining requisite licenses and permissions. An undertaking to this effect shall be recorded by the DGFT at the time of processing the permission. The Petitioner is permitted to approach this Court by way of an application if there is any delay in processing of licence in Form X or if any other objections are raised by the concerned department - Petition disposed off.

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• 2023 (3) TMI 186
  Exemption from levy of whole of Basic Customs Duty and from whole of Agriculture Infrastructure and Development Cess as per Notification No. 30/2022-Cus dated 24.05.2022 - degummed and Crude Sunflower seed oil - freely importable goods, as per the ITC (HS) Schedule 1 - Import Policy, 2022, or not - legality and validity of condition x mentioned in para-2 of the Public Notice at Annexure-J dated 14.06.2022 and consequential condition No.3 in the Condition sheet of the TRQ dated 05.07.2022 (Annexure-M) issued / allotted to the petitioner - subject goods of the petitioner lying at Indian Ports (under warehousing etc.,) before the date of issuance of TRQ licence. HELD THAT:- The power and jurisdiction to issue Public Notice stipulating the procedure and amending the same by the DGFT is circumscribed and traceable only to the FTP and consequently, the DGFT does not have jurisdiction or authority of law to stipulate any condition contrary to the FTP and which has the effect of amending, modifying or altering the FTP, thereby establishing that condition x in the Public Notice dated 14.06.22 being contrary to Para 2.13 of FTP, the same clearly tantamounts to amending the provisions of the FTP, which power cannot be exercised by the DGFT, especially when the power to amend the FTP is within the sole domain of the Central Government and not by the DGFT and on this ground also, the impugned condition x and consequential condition in the TRQ issued in favour of the petitioner deserve to be quashed. Issuance of license is only procedural aspect and in any case, the DGFT cannot impose conditions and restrictions in license which are contrary to FTP and FTDR Act and any such condition cannot be sustained in law. On this score also, the impugned condition x is not sustainable in law. Under similar circumstances in Kanak Export s case supra, the Apex Court held that exports and imports shall be free, except in cases where they are regulated by the provisions of the said Policy or any other law for the time being in force. As per Para 2.4, DGFT was authorised to specify the procedure which needs to be followed by an exporter or importer or by any licensee or other competent authority for the purposes of implementing the provisions of the Act, the Rules and the Orders made therein and this Policy. Such a procedure was to be stipulated and included in the Handbook (Vols. I II), Schedule of DEPB and in ITC (HS) and published by means of a public notice. It was permissible to amend this procedure from time to time. The impugned condition x mentioned in Para 2 of the Public Notice at Annexure-J dated 14.06.2022 and the consequential Condition No.3 in the Condition sheet of the TRQ dated 05.07.2022 vide Annexure-M issued / allotted to the petitioner deserve to be quashed and necessary directions are to be issued to the respondents to refund the excess duty paid by the petitioner back to him, in addition to returning the Bank Guarantee dated 05.08.2022 furnished by the petitioner pursuant to the orders of this Court. Petition allowed.

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• 2023 (3) TMI 185
  Demand of Differential Duty - portable emergency lamp, Model PRL 786, imported by the petitioner in the year 2002 - recovery notice and the attachment letter were issued by the second respondent only on 14.02.2020 and immediately after coming to know the same, the petitioner has approached this Court and therefore, there is no delay on his part - HELD THAT:- Admittedly, the impugned Order in Original is dated 11.05.2004. The petitioner has filed this writ petition only in the year 2020. Under the impugned Order in Original, the petitioner has been directed to pay the differential duty of Rs.2,22,427/-. Since the petitioner has approached this Court belatedly, this Court is of the considered view that after a lapse of almost sixteen years from the date of the impugned Order in Original, he must be put on terms for quashing the impugned Order in Original dated 11.05.2004 and for reconsideration of the same, on merits and in accordance with law, based on the decisions relied upon by the learned counsel for the petitioner as well as the order dated 30.07.2004 passed by the Commissioner of Customs (Appeals), involving a batch of identical cases. No prejudice would be caused to the respondents if such a direction is issued as the respondents will be getting revenue in view of the deposit made by the petitioner pursuant to the directions given by this Court today. This writ petition stands allowed by directing the petitioner to deposit with the first respondent a sum of Rs.2,22,427/- within a period of four weeks from the date of receipt of a copy of this order.

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• 2023 (3) TMI 184
  Non-compliance of the directions of this Court - Seeking waiver of the demurrage and detention charges - seeking release the consignment comprising Chinese Knotted Woollen Carpets which were detained by the respondent no.2 - HELD THAT:- In absence of any notice of seizure of goods, on provisional basis, the goods were not released which otherwise is permissible taking the bond from the owner in proper form and with certain security conditions. There were certain inquiries pending, for which, the petitioner was being called and he could not attend to the summons because of the reason of his health as put forward by him and he approached this Court by invoking the writ jurisdiction. He, however, had ensured to cooperate with the inquiry after furnishing the bond before this Court. This Court had specifically held that there was sufficient independent device and mechanism under the law for him to be asked to appear and assist the inquiry/investigation and non-appearance cannot be a valid ground for the authority to hold back the goods without following the legal procedure as contemplated under the law of seizure. Therefore, release was directed within one week from the date of receipt of copy of the order. As held by the Apex Court in case of Mumbai Port Trust vs. M/s. Shri Lakshmi Steels and Ors. [ 2017 (7) TMI 977 - SUPREME COURT ], this Court had already permitted the petitioner to approach the respondent authority for exemption and remission of demurrage for the authority concerned to take a sympathetic view while considering the case of the petitioner. At the same time, the detention charges of the shipping lines are to be paid on the basis of the contract between the petitioner and the shipping line. The Apex Court had been quite clear that the High Court cannot in writ proceedings direct the DRI/Customs to pay the detention charges to the shipping line, firstly because there was a contract between the importer and the shipping line and moreover, under the writ jurisdiction, these aspects are not to be adjudicated as there are many aspects on facts which would need the proper adjudication. The petitioner had 14 days of free period to clear the consignment by making payment of all the due charges and releasing the empty container to the present respondent no.5. In default of such clearance and non-return of the empty container to the respondent no.5 within the scheduled time frame, the detention as well as the demurrage charges would start applying to the consignment. The charges are due and payable by the petitioner as a pre-condition to get the delivery order of the subject consignment. The detention of the cargo by the customs as well as the DRI was held to be legal and therefore, the release was directed by an order and judgment of this Court. It appears that without passing any order of seizure under Section 110 of the Customs Act, when there was a detention and there was a specific denial for shifting the goods to the public warehouse under Section 49 in order to save the demurrage and detention charges, the respondent authority cannot insist on the demurrage which is in its hand. So far as the detention charges are concerned, the contract of the parties would govern the detention charges if eventually it is found that it was without any valid and justifiable reasons, the other respondents, other than respondent no.5, are the reasons for this detention charges, the Court concerned can definitely decide. It was the action of the other respondents which was under challenge by the petitioner in earlier litigation The only aspect that needs to be determined by this Court is as to whether the same can be directed against the authorities which also has its defence of the petitioner not responding to its summons officially issued. The detention of the goods without the seizure under Section 110 of the Act was not found sustainable under the law and the respondent had acted as if it was powerless and it needed to continue to use this tactic of detaining the goods till the petitioner actually attends to the proceedings of inquiry/investigation. It is worth noting that now that inquiry is completed and there has been a cooperation of the petitioner as well. The respondent Customs Authority has acted fairly by expressing that it is not going to charge the demurrage charges, however, the shipping line would have a right and lien over the goods until the matter is decided by the CESTAT. There shall a need to direct furnishing of some security which should be in the form of the bank guarantee, in the given circumstances. The petition is partly allowed - The respondents shall release the consignment imported under B/E No. 4956991 dated 06.08.2021 on the petitioner furnishing the bank guarantee to the tune of Rs. 16,00,000/- for a period of six (06) months.

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• 2023 (3) TMI 183
  Export of Finished Leather or Unfinished Leather - whether CLRI s interpretation of the conditions/norms prescribed in DGFT s Public Notice No. 21/2009-2014 dated 01.12.2009 is correct or not for Export of Finished Leather? - HELD THAT:- We have been persuaded to come to the conclusion that shaving/snuffing as used in the DGFT s Public Notice dated 01.12.2009 to mean shaving or snuffing. As all the major manufacturing operations are carried out on the impugned goods, the same could not be termed as unfinished goods. The fact of buyer accepting the goods and making payment, ordering further quantities and terming only 13 cartons of suede leather of grey colour as unfinished leather when 24 cartons of other colours of the same consignment as finished leather have weighed in our mind. On consideration of the decision rendered in the case of COLLECTOR OF CUSTOMS, MADRAS VERSUS M. ASLAM AEJAZ CO. [ 1995 (5) TMI 130 - CEGAT, MADRAS] , to the effect that minor deficiency in the processing may not ipso facto make the leather as not fully finished as the appellant s have carried out all the major operations. Appeal allowed.

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• 2023 (3) TMI 182
  Levy of penalty u/s 114 of CA - contravention of provisions of Section 113 of the Customs Act, 1962 - appellant could not produce any authority letter received from the exporter and, therefore, it cannot be held that appellant was reasonable for confiscation of goods - HELD THAT:- The original authority has held that the appellant were liable for penalty under Section 117 of the Customs Act, 1962 and subsequently ordered imposition of penalty of Rs.2.0 lakhs under Section 114(i) of the Customs Act, 1962 and penalty of Rs. 1.0 lakh under Section 117 of the Customs Act, 1962 and the said penalties sustained through Order-in-Appeal. There is no finding recorded by the original authority as to why the original authority had imposed penalty under Section 114(i) of the Customs Act, 1962 in the original order. The original authority without giving any reason why penalty under Section 114(i) of the Customs Act, 1962 is liable to be imposed on the appellant, has imposed the said penalty. The penalty of Rs. 2.0 lakhs imposed on appellant under Section 114(i) of the Customs Act, 1962 is set aside - other part of demand upheld - appeal allowed in part.

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• 2023 (3) TMI 181
  Maintainability of appeal - rejection on the ground of time limitation - recovery of drawback for failure to produce evidence of receipt of export proceeds in foreign exchange - HELD THAT:- The learned Commissioner (Appeals) has reproduced Section 153 of the Customs Act, 1962, which provides for services of order or decision. It is provided that the order etc. should be served by sending it by registered post or by such courier as may be approved by the Commissioner and if it is not possible to serve the order etc. in the said manner, then by affixing it on notice board of the Custom House. The learned Commissioner (Appeals) has held that the filing of appeal was time barred. However, on which date the concerned Order-in-Original was sent by registered post to the appellant or on which date the said Order-in-Original was affixed on the notice board of the Custom House, has not been stated in the impugned order. The impugned order not found to be reasonable because the date from which period of 90 days is reckoned with is missing. Matter remanded to the appellate authority to decide the issue on merit - appeal allowed by way of remand.

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• 2023 (3) TMI 180
  Non-speaking order - Modification of self assessment made by the appellant claiming the benefit of exemption under Notification No 50/2017- Cus (S No 502) without issuance of any speaking order as per Section 17 (5) of the Customs Act, 1962 - classification of GoPro Digital cameras and their accessories - to be classified under tariff heading 85258020, availing exemption under Notification No 50/2017-Cus (Sl No 502) or under heading 85258090 (without exemption benefit)? HELD THAT:- Classification is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. From the plain reading of the heading 85258020, it is quite evident that for classification under this heading the goods under question should be a Digital Camera and the terms of the heading are not restricted to Digital Still Image Video Camera . All the cameras which are digital cameras get classified under this heading. Further revenue do not dispute that the goods covered by the referred bill of entries are action cameras . In para 7 of the impugned order specific finding has been recorded to this effect. In case of Panam Corporation [ 2020 (2) TMI 1434 - CESTAT MUMBAI ] for the period prior to insertion of the Explanation in 2012, tribunal refused to restrict the meaning given to the phrase Digital Still Image Video Cameras and allowed the benefit of exemption at Sl No 13 of 2005 notification. The findings recorded in the impugned order not agreed upon, to the effect that the phrases used in the Notification No 50/2017-Cus at Sl No 502 has to be interpreted in light of the Explanation which was there in some other Notification at any point of time, the interpretation of the Notification wherein explanation was given defining the phrase Digital Still Image Video Cameras need not be examined. The said explanation cannot be used to restrict the phrase used in the notification under consideration. If government intended that the said phrase should have been interpreted according to the explanation contained in the earlier notification then same explanation could have been inserted in the present notification. There are no merits in the said argument of the revenue because it is settled law that if two notifications are available to the importer at the same time in respect of the imported goods, then it is for importer to choose the exemption which is beneficial to him, revenue cannot force him to chose a particular exemption notification. The argument made by the revenue by the revenue that the exemption notification No 50/2017_Cus was General exemption Notification and Notification No 25/2005-Cus as amended by the Notification No 15/2012 dated 17.03.2012, is more specific for the goods under question, is still in existence and should have been applied, was rejected by the Hon ble Supreme Court in case of HCL. LIMITED VERSUS COLLECTOR OF CUSTOMS, NEW DELHI [ 2001 (3) TMI 971 - SC ORDER ]. There are two notifications one of which impose a restriction in terms of capacity and time limitation of the recording, whereas the other do not impose and such restriction, once it is found that the imported action camera qualifies as Digital Still Image Video Camera , benefit of exemption under the notification no 50/2017-Cus cannot be denied. Since no speaking order has been made either by the assessing officer Commissioner (Appeal) and matter remanded to the assessing officer to pass an speaking order, there are no any infirmity in the order of the Commissioner (Appeals). All the appeals are allowed in the cases where the bill of entries pertain to importation of the Digital Cameras by the appellant, holding that the benefit of exemption under Notification No 50/2017-Cus as claimed by them will be admissible to the appellant - Matter is referred back to the original assessing officer to assess the Bill of Entries as per directions contained in this order.

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• Corporate Laws

• 2023 (3) TMI 179
  Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies (RoC), NCT of Delhi and Haryana - HELD THAT:- In view of the fact that the Company is having a large plot of land approximate area of 27,822 square yards, from the U.P.S.I.D.C., being Plot No. 2/l, in Sahibabad Industrial Area, Sahibabad, Ghaziabad, U.P. vide lease deed dated 15th July, 1972 shows that the Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Company is not carrying on any business or operations. The order passed by the National Company Law Tribunal (Court-V, New Delhi) as well as Registrar of Companies, NCT of Delhi Haryana is not sustainable in law - The name of the Company be restored to the Register of Companies subject to the compliances imposed - application allowed.

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• 2023 (3) TMI 178
  Circular Resolutions - the main grievance of the Appellants / Petitioners is that the Circular Resolutions, are not duly circulated to all the Directors, as per Section 175 of the Companies Act, 2013, these Resolutions, were contrary to the clause 6.2 of the Secretarial Standard 1, on the Meetings of the Board of Directors, and in Violation of the Articles of Association of the Company. HELD THAT:- In reality, Section 175 of the Companies Act, 2013, provides that no Resolution, shall be deemed to have been duly passed by the Board, or by a Committee, by circulation, was circulated in Draft, all the Directors or Members of the Committee, at their addresses, registered with the Company in India, and was approved by a Majority. This Tribunal, points out Clause 22.4 of the Articles of Association of the Company, clearly mentions that A Circular Resolution, shall be deemed to have been duly passed by the Board, if it has been approved in writing (which would include confirmation via electronic or other means) by a majority of directors constituting the Board for the time being - Also that, Section 118 (10) of the Companies Act, 2013, enjoins that Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under Section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government. Furthermore, it is latently and patently quite clear that, as per Article 21.3 of the Articles of Association, the Majority, includes the consent of the 1st Appellant. That apart, as per Secretarial Standards-1 clause 6, the Circular Resolutions, have the same effect, as that of passed in the Board Meeting and hence, the Majority Vote, as applicable, for the Board Meeting, equally applies, to the Resolutions, passed by the Circulation, as well - the Circular Resolutions, cannot be said to have been duly approved, by the Majority Directors, and hence, this Tribunal, holds that the said Resolutions, are Void in Law. This Tribunal, keeping in mind of the divergent contentions, raised on either side and taking note of the facts and circumstances of the case, in a conspectus fashion, without any haziness, holds that the Circular Resolutions No. 1 to 6 dated 03.11.2020, are Void in Law. Appeal disposed off.

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• Insolvency & Bankruptcy

• 2023 (3) TMI 177
  Maintainability of application - initiation of CIRP u/s 7 - money lent to Corporate Debtor or not - Homebuyer or Lender? - It is submitted that the Learned Adjudicating Authority rejected the application by holding that the Appellant is a homebuyer and do not fall under the category of lender, who lent the money to the Corporate Debtor on the understanding that the amount which was paid to be treated as loan amount and not as homebuyer. HELD THAT:- It is clear that the Corporate Debtor in the capacity as seller and developer and the Appellant being the purchaser entered the said agreement. The covenant of the agreement emphasises that the project / cottages will take approximately 30 months to complete and the same will be delivered after completion of construction. The total consideration of each cottage mentioned as Rs. 76,33,000. /-. In Clause 14 of the Agreement to Sell, the Corporate Debtor / Seller has given a buy back option to the Appellant/ Buyer for the said property as per the terms mentioned there at. The Appellant and the Corporate Debtor also entered Assured Return Agreement dated 22.07.2016, whereby it is stated that the Corporate Debtor will pay @ 16% per annum of BSP received or Rs. 28,949/- as Assured Return rate for a total period of 30 months or till possession whichever is later. There is no doubt that the Appellant had purchased two cottages and to that effect entered Agreement to Sell and also entered an agreement for Assured Return dated 22.07.2016. From the perusal of the said document, it is crystal clear that the Appellant is a homebuyer and paid an amount of Rs.45,00,000/- pursuant to the agreement and terms conditions as mentioned there at. The bone of contention of the Appellant is that the Appellant cancelled the Agreement to Sell by a Cancellation Agreement dated 20.11.2018 - From the perusal of the said Cancellation Agreement dated 20.11.2018 annexed as Annexure A-11 at pages 152 to 155, we find that the only signature of the buyer affixed on each page of the said document, however, there is no signature affixed by the Corporate Debtor and there are no signatures of the witnesses. Therefore, this Tribunal reluctant to decide its authenticity and validity. The Hon ble Supreme Court in the matter of MANISH KUMAR VERSUS UNION OF INDIA AND ANOTHER [ 2021 (1) TMI 802 - SUPREME COURT] , whereby the Hon ble Supreme Court upheld the above amendment and therefore, the Adjudicating Authority need to follow the provision of law scrupulously while entertaining the petitions of this nature. Thus, it is unequivocal that the Appellant is a homebuyer and there is no such documentary evidence to establish that the Appellant is a Financial Creditor, who lent the money to the Corporate Debtor within the meaning of Section 5(7) of the I B Code, 2016. Appeal dismissed.

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• 2023 (3) TMI 176
  Competency of appeal - Appellant Vistra ITCL (India) Ltd. has appropriate authority to pursue the present Appeal - after completion of Challenge Mechanism on 21.12.2022, the Committee of Creditors was obliged to put the draft plans submitted by the Resolution Applicants on 22.12.2022 to vote without it having any other option, or not - value maximization was achieved and Committee of Creditors was prohibited to take any further steps towards value maximization or not. Whether the Appellant Vistra ITCL (India) Ltd. has no appropriate authority to pursue the present Appeal and the Appeal is not competent at its instance? - HELD THAT:- When Board of Directors of the Appellant has authorised filing of the appeal by authorized person, we fail to see how the appeal filed by Vistra ITCL (India) Ltd. is incompetent. The submission of learned counsel for Respondent No.1 that Bondholders has not authorized filing of the Appeal does not commend us. The Board of Directors is fully competent to take all steps on behalf of Vistra ITCL (India) Ltd. including initiation of legal proceedings. When the Board has authorised filing of the appeal through authorised representative, the submission cannot be accepted that Appellant is not authorised by the shareholders. Interests of the shareholders are looked by the Board of Directors of the Vistra and Board having been authorized, the preliminary objection raised by Respondent No.1 cannot be accepted. The Appeal by financial creditor who is member of the Coc and as per learned senior counsel for the Appellant, holds 90% vote share in the CoC, there is sufficient locus with the Appellant to challenge the impugned order dated 02.02.2023. Appellant being Financial Creditor in the CoC which is admitted fact, there is no lack of jurisdiction in the Appellant to file this appeal. Whether Regulation 39(1A) contains an implied prohibition on the jurisdiction of the CoC to enter into any further negotiations with Resolution Applicant or to further ask a Resolution Applicant to increase its Resolution Plan value? - HELD THAT:- Regulation 39(1A) was inserted empowering Resolution Professional to allow modification of the Resolution Plan, but not more than once or use a Challenge Mechanism to enable Resolution Applicants to improve their Plans. The Regulation 39(1A) cannot be read containing any fetter on the right of the CoC to take further action as per RFRP after receipt of the Resolution Plan consequent to Challenge Mechanism - there is no consideration of the relevant Clauses of RFRP and without adverting to relevant Clauses of RFRP, the Adjudicating Authority opined that the same run foul to Regulation 39(1A). The Adjudicating Authority further fell into error in coming to a conclusion that there is no power with the CoC to enter into negotiations with the Resolution Applicant, after the Challenge Mechanism and the exercise of the commercial wisdom is circumscribed by the framework for value maximization provided under the Code read with the Regulations. Whether the Regulation 39(1A) has taken place of the negotiation process and it forecloses any negotiation by CoC with Resolution Applicant? - HELD THAT:- The consideration by the CoC comes after the Plan is examined by Resolution Professional and presented before the CoC and thereafter, the deliberation by CoC begins in the presence of Resolution Applicants. The process of negotiations, thus, can commence only after Plan comes for consideration, when the Resolution Applicants are also present. The modification of Plan not more than once and improvement of Plan under Regulation 39(1A) completes before deliberation on the Plan. Thus, it can neither foreclose, nor prohibit negotiations. The Clauses in RFRP as noticed above reserve right to the CoC to negotiate and interact with one or all Resolution Applicants, which obviously is subsequent act, after Plan is received under Regulation 39(1A). Hence, Regulation 39(1A) cannot prohibit any negotiation or any further steps of the CoC. The view of the Adjudicating Authority that no negotiation or value maximizatioin exercise can be individually undertaken by the CoC dehors the mandate of Regulation 39(1A) is contrary to the Scheme delineated by the Code and CIRP Regulations. The very concept of negotiation envisages dialogue between two parties. The Adjudicating Authority has again concluded that no negotiation or value maximization exercise can be individually undertaken by the CoC in view of the provisions of Regulation 39(1A) - It is opined that Adjudicating Authority committed error in allowing IA No.1/MB/C-I/2023 and IA No.99/MB/C-1/2023. 60. Thus, even after completion of Challenge Mechanism under Regulation 39(1A)(b), the CoC retain its jurisdiction to negotiate with one or other Resolution Applicants, or to annul the Resolution Process and embark on to re-issue RFRP - appeal allowed.

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• 2023 (3) TMI 175
  Rejection of claims by Resolution Professional - privity of contract between the Appellant and the Corporate Debtor or not - business loan for expansion of their business - Financial Debt or not - HELD THAT:- It is seen from the record that the erstwhile Promoter has brought in funds in his personal capacity which were permitted as Director loans and the same was already informed to the Appellant that they were treated accordingly in the Books of Accounts of the Corporate Debtor. There is no rebuttal by the Appellant to the submissions made by the Respondent that loans from Directors are allowed as per the provisions of the Companies Act, 1956 2013, subject to certain conditions and that in the instant case, the amount that was brought in by the Promoter into the Corporate Debtor, was deemed as Directors loans and treated accordingly in the Books of Accounts. From the Resolutions relied upon by the Counsel for the Appellant, it is clear that Dr. AM Arun in his capacity as Managing Director was authorized to sign the documents and to conclude the money in his personal name and deposit the same into Company s Account and the Board approved that the repayment is to be made by Company only. There are no substantial reasons given as to why the amounts, if meant for the purpose of rendering the operations of the Company, and the Company has a distinct Bank Account, the amount was disbursed to the Personal Account of the Managing Director. The Adjudicating Authority has given a finding that there was no copy of any Notice convening the Board Meeting or the relevant extract of the attendance of the other Directors on the Board, having been produced before the Adjudicating Authority. The documents relied upon by the Appellant with respect to the Promissory Note, the Confirmation Letter dated 31.03.2019, the Statement of the Account (Annexure-5) do not establish that the amounts were lent directly to the Corporate Debtor, though the amounts have been linked to the Promoter of the Corporate Debtor, in his personal capacity, the same cannot be treated as Financial Debt, as defined under Section 5(8) of the Code, specifically in the absence of any documents, supporting the transactions, namely, the Bank Accounts of the Corporate Debtor to substantiate that the amounts were directly lent by the Appellant into the coffers of the Corporate Debtor meant for the business purposes of the Corporate Debtor - merely because the Promoter had acknowledged the debt does not tantamount to the same being classified as a Financial Debt under the IBC, specially, in the absence of Loan Agreements, terms of repayment, payment of interest, tenure of loan, etc., more so keeping in view the Independent Auditor s Report for three consecutive Financial Years. This Tribunal does not find any illegality or infirmity in the well-reasoned Order of the Adjudicating Authority, National Company Law Tribunal, Division Bench I, Chennai) in observing that the Applicant/Appellant herein is to seek his/its remedy against the said Promoter and not against the Corporate Debtor - Appeal dismissed.

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• 2023 (3) TMI 174
  CIRP - Ex-Parte Order - appeal barred by time limitation or not - NCLT admitted the application - Pre-Existing Dispute or not - HELD THAT:- It is seen from the record that though the Impugned Order of Admission is passed on 21.03.2022, the Operation of the Order was stayed vide Order dated 25.03.2022 till 05.05.2022, that is the date on which the Order in I.A.33/2022 was passed. It is apparent from the record that the Appellant has diligently pursued their remedy of seeking recall of the Ex-Parte Order, passed against the Corporate Debtor, and therefore the period spent before the Adjudicating Authority, pending adjudication, would not be included in computing the Limitation. This Tribunal is of the considered view that when the Operation of the Impugned Order dated 21.03.2022 was suspended till 05.05.2022, no Appeal could have been preferred by the Appellant herein, pending the adjudication before the Adjudicating Authority. The Appellant had challenged both Orders dated 21.03.2022 and 05.05.2022 by filing both these Appeals before this Tribunal on 09.05.2022 which is well within the period of Limitation and thereforethe Company Appeal (AT) (CH) (Ins.) No.158/2022 is not barred by Limitation. This Tribunal is conscious of the fact that any Admission under Section 9 of the Code, it is also mandated that the existence of a Pre-Existing Dispute is to be ascertained by the Adjudicating Authority. Keeping in view the peculiar facts of the attendant case that the Corporate Debtor had replied on 06.01.2022 to the Section 8 Demand Notice dated 21.12.2021, highlighting the Pre-Existing Dispute; the Section 9 Application was filed on 07.01.2022 and the copy of the Reply Notice was delivered to the first Respondent on 08.01.2022; that the matter was listed before the Adjudicating Authority on 10.02.2022 and on 17.03.2022, but the Respondent had failed to place this Reply before the Adjudicating Authority either on 10.02.2022 or on 17.03.2022; this Tribunal is of the earnest view that in the interest of justice, an opportunity be given to the Appellant herein to be heard on merits. This Tribunal finds it a fit case to remand to the Adjudicating Authority to decide the matter on merits, specifically keeping in view that in paras 13 20 of the Impugned Order, the Adjudicating Authority has observed that even if the Reply Notice dated 06.01.2022, was placed on record, the same conclusion, as was drawn in respect of the Reply Notice dated 04.10.2021, could have been drawn in respect of the said Notice, since, no document in support of the proof of the contention of the said Notice dated 06.01.2022 also came forth. Having regard to the fact that the Adjudicating Authority has touched upon the merits of the case by adverting to the submissions made in the Reply Notice, this Tribunal, is of the earnest view that an opportunity be given to the Appellants to raise all contentions and put forth the communication between the parties and argue their case on merits. The Impugned Orders are set aside and the Adjudicating Authority (Tribunal), shall hear both parties on merits and decide the matter afresh, uninfluenced by any of the observations made by this Tribunal in this Order - Appeal allowed.

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• 2023 (3) TMI 164
  Unable to give a date or proof, on which the reply was filed to the section 7 petition - HELD THAT:- It is found from the DMS that it is still continues under scrutiny and the respondent has not chosen to rectify the defects so as to bring it on record. This shows the callous attitude on the part of the CD, as he in not defending the case hence we have no other option except to close the right of filing reply.

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• Service Tax

• 2023 (3) TMI 173
  Levy of Service Tax - expenses incurred in foreign currency on business promotion and other activities - reverse charge mechanism - obsolete provisions - Business Promotion Expenses - Advertisement services. The first submission advanced by the learned counsel for the appellant that the impugned order has been passed on obsolete provisions of law which are not applicable for the relevant period deserves to be accepted - HELD THAT:- Though the show cause notice dated 18.4.2016 invoked provisions of law which were applicable during the relevant period, but the impugned order held that Business Auxiliary/Business Support/Advertisement Agency/Business Consultant services received by the appellant were liable to service tax as per the provisions of the erstwhile section 66A of the Finance Act, read with rule 3 of the 2006 Rules - This apart, the issue involved in this appeal has also been decided in favour of the appellant in the appellant s own case. On an identical issue, for period 2006-07 to June 2012, the Tribunal decided the issue in favour of the appellant in M/S. KUSUM HEALTHCARE PVT. LTD. VERSUS C.C.E., JAIPUR-I [ 2018 (2) TMI 1408 - CESTAT NEW DELHI] . For the period July 2012 to November 2013 also, the Tribunal decided the issue in favour of the appellant in M/S. KUSUM HEALTHCARE PVT. LTD. VERSUS C.C.E., ALWAR [ 2018 (7) TMI 919 - CESTAT NEW DELHI] . For the period December 2013 to August 2014, the Tribunal decided the issue in favour of the appellant in KUSUM HEALTHCARE PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, ALWAR [ 2021 (10) TMI 229 - CESTAT NEW DELHI] . Thus, as the issue involved has been decided in favour of the appellant in the own case of the appellant for pre-negative list and post-negative list, the demand deserves to be set aside. Business Promotion Expenses - HELD THAT:- The said amount was directly paid by the appellant and even the invoices were raised upon the appellant and not the representative offices - amount not taxable. Advertisement services - HELD THAT:- According to the appellant, both prior and post the amendment of clause (g) of section 66D of the Finance Act, sale of slots in advertisement in print media did not attract service tax liability. The appellant had discharged service tax liability on expenses for non-print media advertisements. The services of advertisement in respect of print-media is exempted in terms of the negative list of services under section 66D(g) of the Finance Act. Thus, the appellant is not liable to pay service tax on the service of advertisement in print- media. It is not possible to sustain the order dated December 01, 2016 passed by the Commissioner - Appeal allowed.

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• Central Excise

• 2023 (3) TMI 172
  Refund of central excise duty - Service Air Trolley (SAT 300) supplied to Indian Air Force - It is the case of the appellant that though the invoices mentioned central excise duty on the goods supplied, they have not collected the duty from the buyer as the goods are exempted from central excise duty - Refund rejected on the ground of unjust enrichment. HELD THAT:- Undisputedly, the appellants have mentioned the excise duty in the invoices. Then presumption envisaged in Section 12 B of the Central Excise Act, 1944 is attracted. However, this presumption is a rebuttable one. It is for the appellant to establish that they have not collected the duty from the buyer. Appellant has furnished a certificate from the buyer to show that price in the supply order is without including the excise duty. The appellant has now produced Certificate issued by the Chartered Accountant along with relevant Financial Statement, to establish that the incidence of duty has not been passed on to the buyer. However, these documents require verification as these were not presented before the authorities below. The matter requires to be remanded to the original authority, who shall consider the issue of refund afresh on the basis of the documents including the CA certificate and the audited financial statement produced by the appellant. The appellant shall be given an opportunity of personal hearing. Appeal allowed by way of remand.

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• 2023 (3) TMI 171
  Taxability - liable to central excise duty or taxable under the provisions of the service tax for providing works contract service - activities of the fabrication/manufacture including installation (at premises of customer) of Retail Visual Identity (RVI) under contract by the appellant - Suppression of facts or not - extended period of limitation - HELD THAT:- After the goods are inspected by the Oil Companies or its nominated agencies, the appellant undertakes fabrication, wherein they do cutting, sizing, etc., as per measurements taken at the retail outlets. Partially fabricated frames in un-finished condition and other cut materials etc. are then transported to the site, where final adjustments are made at site by cutting, re-working, etc. Frames are finally fabricated and fixed (piece by piece) with the help of the angles and brackets fixed to the building facia, column, etc. Barring a few small signages, various elements of RVI upon final fabrication/erection at site like Canopy facia, building facia, monolith, etc are practically immovable. These cannot be removed without cannibalizing, only few smaller signages including Arches and spreaders (direction signs) are made in the factory. Revenue have failed to identify the state or form in which the goods are removed from the factory and whether these are in marketable stage. We further find that the statement of the officers of the Oil Companies is not reliable, as the same is contrary to the documentary evidence being work order, inspection reports, etc. on record, forming part of the relied upon documents. The schedule of rates forming part of the work order mentions fabrication with prescribed materials as per drawings and specifications, fixed securely to existing canopycolumns by welding, etc. at site. ACM panel fixing - to ensure the joint gaps are uniform. Thus, from the work order, partial fabrication at site including welding etc. is evident - Revenue failed to establish that the partially fabricated goods removed from the factory were in marketable state. The whole case is made out on the basis of assumptions and presumptions. No inspection has been made by the Revenue at the factory premises of the appellant/assessee. Admittedly the appellant have maintained proper books of accounts and had taken registration under the Service Tax Provisions for discharge of their tax liability and have accordingly discharged the service tax payable under the head Works Contract Service on the gross value under Compounding Scheme. Thus, Revenue had full knowledge of the activities of the appellant. Extended period of limitation - HELD THAT:- On the activity of the appellant, central excise duty is not attracted, as the partially fabricated frames etc. removed from the works of the appellant are not in a marketable stage. It is also found that Revenue have failed to value the various elements of RVI or goods in the state, they are cleared from the factory and have grossly erred in charging the duty on the gross value of the work contract. It is also found that it has been clarified by the Oil Companies subsequently (after remand) that RVI elements are fabricated at site as per specific measurements and requirements. After installation, the RVI elements cannot be dismantled without cannibalizing and they become as integral part of the building facia, etc. The impugned order is also bad as it was not proposed in the show cause notice to classify under CTH 8310 of CETA. Under the facts and circumstances, the extended period of limitation is also not applicable - Appeal allowed.

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• 2023 (3) TMI 170
  Grant of proper interest on the amount refunded, which was deposited during investigation - HELD THAT:- The issue herein is squarely covered on all four by the precedent ruling of Division Bench of this Tribunal in M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) [ 2021 (5) TMI 870 - CESTAT ALLAHABAD] which has also been confirmed by Punjab Haryana High Court in COMMISSIONER OF CENTRAL EXCISE, PANCHKULA VERSUS M/S RIBA TEXTILES LIMITED [ 2022 (3) TMI 693 - PUNJAB HARYANA HIGH COURT ]. It was held in the above-stated cases that interest on refund of amount deposited during investigation or deposited during pendency of appeal is allowable under Section 35EE of the Act and has to be paid from the date of deposit till the date of refund. The appellant is entitled to interest on the refundable amount of Rs. 22,84,270/- from the date of deposit (27.10.2010) till the date of refund being 05.02.2021, @ 12% per annum - Appeal allowed.

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• 2023 (3) TMI 169
  CENVAT Credit - capital goods - MS Angles, Beams, Plates, channels etc. - HELD THAT:- It is found from the show-cause notice dated 21.04.2014 that the wordings M/s CEAT Ltd. are using such capital goods i.e. MS Angles, Beams, Plates, Channels indicates that the said goods were treated as capital goods by Revenue while issuing show-cause notice. Hon ble High Court of Gujarat in the case of MUNDRA PORTS AND SPECIAL ECONOMIC ZONE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS [ 2015 (5) TMI 663 - GUJARAT HIGH COURT] has held that judgment of Larger Bench of the Tribunal in the case of VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] was not a good law. By following the observation of Hon ble High Court of Gujarat in the case of Mundra Port, the appellant are allowed to avail CENVAT Credit in respect of the goods in the present proceedings - appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (3) TMI 168
  Application for rectification of the assessment orders rejected - challenged to impugned orders on the ground of violation of principles of natural justice as the reply sent, has not been considered by the respondent in the impugned orders - seeking grant of opportunity of being heard (audi alterem partem) - HELD THAT:- While dealing with a similar issue, this Court in the case of TVL SRI RAGAVA MEDICAL AND GENERAL STORES, REP. BY ITS PROPRIETOR MR. ARIVAZHAGAN VERSUS THE DEPUTY SALES TAX OFFICER, THIRUKOILUR ASSESSMENT CIRCLE, THIRUKOILUR., THE COMMISSIONER OF COMMERCIAL TAXES EZHILAGHAM, CHEPAUK, CHENNAI [ 2023 (1) TMI 1102 - MADRAS HIGH COURT] , after extracting section 84 of the Act, 2006 which deals with the rectification application held that as per the provisions of Section 84 of the Act, only in cases of enhancement of Assessment or Penalty, the respondents will have to afford an opportunity of hearing to the petitioner. Since the respondents have confirmed the Assessment made in the year 2016 for the Assessment Year 2013-14 in the impugned order, the question of granting an opportunity of hearing to the petitioner will not arise. In the case on hand in the impugned orders passed under section 84 of the Tamil Nadu Value Added Tax Act, 2006, there is no enhancement of assessment or penalty and therefore, there is no necessity for the respondent to adhere to the principles of natural justice as claimed by the petitioner in these writ petitions. Petition dismissed.

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• 2023 (3) TMI 167
  Club or Association Service - Principles of mutuality - sale taking place between the member and the club or not - HELD THAT:- Since the issue raised in the present Revision Cases is squarely covered by the law laid down by the Hon ble Supreme Court in Calcutta Club Limited [[ 2019 (10) TMI 160 - SUPREME COURT] ], wherein it was held that the doctrine of Mutuality continues to be applicable to incorporated and unincorporated member s clubs even after the 46th Constitutional Amendment and sub-clause (f) of Article 366(29-A) to the Constitution of India has no application to member s clubs , which binds this Court under Article 141 of the Constitution of India and also since it is not shown any subsequent deviation from the above position, the question of law raised in the present Revision Cases in favour of the petitioners-assessee. Tax Revision Cases are allowed.

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• Indian Laws

• 2023 (3) TMI 166
  Seeking the return of the plaint for presentation to the proper court - suit schedule properties are situated within the jurisdiction of the appropriate courts in Bengaluru or not - suit schedule properties are situate within the jurisdiction of the appropriate courts in Bengaluru - HELD THAT:- It is clear, (i) that suit concerns immovable properties which are not just described in the plaint schedule by way of empty formality but are clearly stated to be the subject-matter of the suit; and (ii) that the plaintiffs are actually questioning the right, title and interest of the contesting defendants to the suit schedule properties. The High Court was right in holding that the suit falls under the category of one, for the determination of any right to or interest in immovable property covered by Section 16(d). The contention that even if Section 16 applies, the suit would be saved by the proviso to Section 16, is completely misplaced. At least one of the reliefs which relates to possession, may not fall under the proviso to Section 16. The present suit filed by the appellants-plaintiffs is for preserving the subject-matter of the property through interim reliefs sought in the form of permanent injunction. The partition suit itself is of the year 2007 and we cannot lose sight of the ground reality that in most of the civil disputes, half the battle is won through interim orders. We do not think that the court should be a party to the practice of allowing a litigant to use one court for the purpose of temporary reliefs and another court for permanent reliefs - The plaint does not even show the particulars of the Office of the Registrar where the deeds of confirmation were registered and the deeds of power of attorney were registered and subsequently cancelled. Though a relief is sought to direct the Registrar to cancel the deeds of revocation of power of attorney, the details of the Office of the Registrar are not provided and he is also not made a party. The order passed by the High Court in the civil revision application arising out of the applications under Order VII Rule 10 CPC does not call for any interference. However, as one portion of the impugned order by which the other application under Order VII Rule 11 CPC stands allowed, perhaps by way of inadvertence, is liable to be set aside. Appeal allowed in part.

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