TMI Tax Updates - e-Newsletter
March 10, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
FEMA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Cancellation of GST registration of petitioner - The fact that the respondents have not found that any amount is due from the petitioner, is evident from the cancellation order dated 18.01.2021, which reflects that the amount recoverable from the petitioner is nil - the petitioner had shown sufficient grounds for revocation of his cancellation - HC
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Income Tax:
Penalty imposed u/s 271C - Bar of limitation for imposing penalties - Period for commencement of limitation prescribed in terms of the second limb of clause (c) of sub-section (1) of Section 275 of the Act would commence either from 2013 or 2014, there is a period of unexplained substantial delay, as the SCN, concededly, was issued only on 09.11.2017. - HC
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Income Tax:
Faceless inquiry or Valuation - having replied with necessary documents has participated in the enquiry under the faceless interface and hence, it cannot now turn back and say that it is prejudiced by such a procedure. The term technically not feasible in Section 142B(1)(a) of the Act would only mean that when it is not technologically feasible to invoke such provisions between the Department and the assessee. The technical advancement had reached new heights. Hence, the contentions petitioner that it is not having the technological feasibility, deserves no consideration. - HC
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Income Tax:
Addition on account of provision for Solid Waste Dispsal Expenses - contingent liability or accrued liability - The accounting method followed by the assessee was in consonance with the prescribed Accounting Standard and policy in accordance with the Prudence norms. That it complied accordingly with section 145 of the Act requiring income to be computed in accordance with notified accounting standards. DR was unable to controvert the same. - AT
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Income Tax:
Applicability of provision u/s 172 for shipping business of non-resident - benefit as per DTAA between India & UAE - Merely Partner’s/Director’s nationality will not suffice the company’s residency when the company is registered and operational in a particular country in the present case is in UAE Dubai and has obtained the business licence from the said resident company is the resident of UAE. - AT
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Income Tax:
Revision u/s 263 by CIT - remuneration to the partners - limit prescribed as per the Partnership Deed - Limit prescribed u/s 40(b) - in view of the supplementary partnership deed, partners shall be entitled to draw salary or remuneration as per the limit laid down u/s 40(b) of the Act and the ld. PCIT failed to advert the facts placed before him by the assessee. - AT
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Income Tax:
Revision u/s 263 by CIT - It is thus clear that the claim of the assessee for rental income from commercial complex and tower shown as business income instead of house property was allowed by AO without making necessary enquiry which was called for in the facts and circumstances of the case and there was an error in the order passed by the assessing officer u/s 143(3) - AT
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Income Tax:
Addition u/s 68 - Loans unexplained - the tax authorities are not justified in placing reliance on the statement given by the director in a third party proceeding without confronting the same with the assessee. On the contrary, the fact remains that both the above said companies have duly responded to the AO during the course of current assessment proceedings by furnishing replies to the notices issued u/s 133(6) of the Act and the summons issued u/s 131 - Additions deleted - AT
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Income Tax:
Income taxable in India - taxability of testing services as FTS - India-Finland DTAA - the payment in question is not for the process but was for the results of testing which is used in India. The argument of the Ld. D/R that these services were availed in India and hence are taxable in India has to be upheld. - AT
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Income Tax:
Revision u/s 263 by CIT - PCIT has not applied his mind to arrive at a consideration which is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s. 263 - AT
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Income Tax:
Cash deposited by the assessee jointly with his father - So far as regards the AO's observation that NRIs cannot purchase agricultural land in India without RBI permission and as per FEMA, whereas no RBI permission was taken for purchase of land in the present case, it has been stated that since no land was purchased and only agreement to sell was entered into, which agreement was cancelled later on, no RBI or FEMA permission was applicable or required and, therefore, permission was not applied for. - AT
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Income Tax:
Assessment u/s 144C - Non passing of draft assessment order - a final assessment order without passing of the draft assessment order, being not in accordance with law, is liable to be quashed and further that the subsequent proceedings after passing of the final assessment order would also be vitiated and would not have any sanctity of the law. - AT
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Income Tax:
Penalty u/s 271AAB(1) - disallowance u/s 14A - search and seizure - the disallowance of expenditure u/s 14A doesn’t represent any income of the specified previous year by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false - there is no legal basis for sustaining the charge of undisclosed income found during the course of search and accordingly, there is no justifiable and legal basis for levy of penalty u/s 271AAB - AT
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Customs:
Levy of penalty u/s 114 - attempt to export of red sanders whose export is prohibited unless one has a licence - There was a gross negligence on the part of the appellant and appellant’s act of filing the benami shipping bill and processing it and consequently bringing the consignment into the customs area had resulted in rendering the goods liable for confiscation u/s 113 - penalty imposed u/s 114 is justified and calls for no interference - AT
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Service Tax:
Framing of an assessment during pendency of CIRP - Pendency of CIRP confers no impediment in framing the assessment. But no recovery proceedings can be initiated for recovery of the liability assessed. - The petitioner is, essentially handicapped on account of requirement of making a pre-deposit for availing the statutory remedy of an appeal - Waiver from pre-deposit granted - HC
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Service Tax:
Classification of services - Leased Circuit Service - it is not enough that the service provider provides lease services but it should also be a ‘Telegraph Authority’ as defined in the Act. Unless both the conditions are cumulative satisfied, service tax levy is not attracted. - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (3) TMI 375
Seizure of goods alongwith vehicle - HELD THAT:- The matter requires consideration and the proposition of law has been laid down in decision rendered by the High Court of Kerala at Ernakulam in Hindustan Steel and Cement and Ors. v. Assistant State Tax Officer, 24X7 Mobile Squad @ Vatakara, State Goods and Services Tax Department and Ors. [ 2022 (8) TMI 393 - KERALA HIGH COURT ]. Issue notice.
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2023 (3) TMI 374
Violation of principles of natural justice (audi alterem partem) - petitioner submits that the order was passed without giving any reasonable opportunity of hearing to the petitioner - HELD THAT:- It does not appear that there was any bona fide intention on the part of the petitioner to produce the documents as sought for. The petitioner went on buying time by submitting repeated requests for adjournment. The Order-in-Original was passed on September 14, 2021. Even thereafter the petitioner chose not to file the appeal within the prescribed period. The Corona Pandemic substantially ebbed in the year 2021 and as opportunity was given for virtual hearing, the petitioner ought to have availed the same. The conduct of the petitioner does not appear to be a bona fide one. At such a belated point of time, the Court is of the opinion that, the matter is not required to be remanded back to the authority for reconsideration. The writ petition fails and is hereby dismissed.
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2023 (3) TMI 373
Cancellation of GST registration of petitioner - failure to file returns for a continuous period of six months - HELD THAT:- A plain reading of the impugned order indicates that the petitioner s appeal was dismissed as the Appellate Authority found that the petitioner had not shown sufficient cause for allowing revocation of cancellation of his registration. The Appellate Authority also observed that the petitioner had not filed an affidavit as required by the e-mail dated 06.05.2022 - There is no dispute that the petitioner is the sole proprietor of the concern, T S Events and Management. There is also no reason to doubt the petitioner s claim that he was suffering from ill-health during the period of pandemic and, therefore, was unable to respond to the Show Cause Notice or appear personally before the concerned Officer. In so far as the non-filing of the affidavit is concerned, the petitioner states that he has fully discharged its tax liability and no amount is outstanding. In fact, it is his claim that his business had come to a standstill - The fact that the respondents have also not found that any amount is due from the petitioner, is evident from the cancellation order dated 18.01.2021, which reflects that the amount recoverable from the petitioner is nil. This Court is of the view that the petitioner had shown sufficient grounds for revocation of his cancellation - The impugned order dated 18.01.2021, cancelling the petitioner s registration and the order dated 31.10.2022, rejecting his appeal, are set aside - Petition allowed.
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2023 (3) TMI 372
Attachment of Bank Account of petitioner - petitioner has challenged the impugned attachment notice on the ground that the petitioner was not informed in the show cause notice dated 20.01.2022 for levying GST - alleged output tax mismatch between GSTR-3B and GSTR-1 and tax mismatch between GSTR-7 and GSTR-1 - HELD THAT:- As seen from the written instructions, it is clear that only the summary of the impugned order was sent to the petitioner and no speaking order has been passed by the respondent. Since a speaking order has not been passed by the respondent with regard to the petitioner's contentions, necessarily the impugned order has to be quashed and the matter has to be remanded back to the respondent for fresh consideration on merits and in accordance with law after affording a fair hearing to the petitioner including granting them the right of personal hearing. The impugned assessment order dated 31.03.2022 and the consequential recovery notice dated 19.10.2022 are hereby quashed and the matters are remanded back to the respondent for fresh consideration on merits and in accordance with law.
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2023 (3) TMI 371
Profiteering - petitioner owns / runs multiplexes in various locations in India and the GST rates applicable to movie tickets had been reduced with effect from 01st January, 2019 - allegation is that benefit of input tax credit not passed on by way of commensurate reduction in the price - violation of principles of natural justice - HELD THAT:- Keeping in view the orders passed by this Court in PHILLIPS INDIA LIMITED VERSUS UNION OF INDIA ORS. [ 2020 (6) TMI 626 - DELHI HIGH COURT ] as well as M/S. SAMSONITE SOUTH ASIA PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2020 (10) TMI 1031 - DELHI HIGH COURT ] and M/S. PATANJALI AYURVED LTD. VERSUS UNION OF INDIA ORS. [ 2020 (7) TMI 614 - DELHI HIGH COURT ], this Court directs the petitioner to deposit the principal profiteered amount i.e. Rs.2,66,99,340/- in six equated instalments commencing 1st December, 2022. The interest amount directed to be paid by the respondents as well as the penalty proceedings and further investigation by NAA in respect of cinema halls of petitioner for extended period of time as provided for in the impugned order are stayed till further orders.
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Income Tax
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2023 (3) TMI 370
Misalignment between the show cause notice and the assessment order - assessable value of imports is recorded in assessment order almost ten (10) times the figure which was recorded in the show cause notice - HELD THAT:- According to us, the following aspects come to the fore. (i) First, as to the amount which remains unexplained according to the respondents/revenue; is it the amount which was mentioned in the show cause notice dated 14.03.2022 or the amount which is now part of the impugned assessment order. (ii) Second, as to whether or not the correct amount has been offered for tax, as contended by the petitioner. (iii) Third, as to whether the partnership firm, which runs under the name and style as the proprietorship concern, in fact, stood dissolved on 31.07.1999, as claimed by the petitioner. Given this position, we dispose of the writ petition giving leave to the petitioner to approach the AO for correction/rectification of the impugned assessment order. For this purpose, three (3) weeks are granted to the petitioner.AO, if approached, will pass a suitable order. Once the AO receives the representation/application in that behalf, he will pass a speaking order within the next eight (8) weeks. AO will also accord personal hearing to the petitioner and/or his authorized representative. For this purpose, the AO will ensure that a notice is issued to the petitioner which would indicate the date and time of the hearing.
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2023 (3) TMI 369
Penalty imposed u/s 271C - Bar of limitation for imposing penalties - Delay in issuing the impugned SCN - fixation of period of limitation when penalty is sought to be imposed as fallout of action taken in another proceeding - HELD THAT:- We are inclined to agree with the submission made on behalf of the petitioner i.e., the assessee, and the reason for that is quite simple. If we were to accept the respondent/revenue s stand, then it could end up [as it has in this case] in a situation, where the revenue could decide the date when it could trigger a SCN to fulfil, as a mere formality, the principles of natural justice, which are engrafted under Section 274 of the Act. Section 274 of the Act, inter alia, mandates that no order imposing a penalty under the Chapter i.e., Chapter XXI shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. In this case,the initial return qua the AY in issue i.e., AY 2007-08 was filed on 31.03.2007, and the revised return was filed on 31.03.2009. The scrutiny assessment under Section 143(3), concerning AY 2007-08, was framed on 28.10.2011. Despite the fact that the issue concerning limitation got flagged as far back as on 09.09.2013, and then again in an internal communication dated 11.07.2014, no steps were taken for the issuance of a SCN. The SCN was issued only on 09.11.2017. Delay in issuing the impugned SCN dated 09.11.2017 was inexcusable. There is no explanation, whatsoever, available on the record, as to why the SCN under Section 274 of the Act was not issued in 2013-14, if not earlier. As a matter of fact, there is no explanation, even with regard to the period falling between the time when the scrutiny assessment was framed [i.e., on 28.10.2011] and the communication dated 09.09.2013. Period for commencement of limitation prescribed in terms of the second limb of clause (c) of sub-section (1) of Section 275 of the Act would commence either from 2013 or 2014, there is a period of unexplained substantial delay, as the SCN, concededly, was issued only on 09.11.2017. We are inclined to agree with the petitioner i.e., the assessee, that the SCN dated 09.11.2017 is woefully delayed, and hence deserves to be quashed. Consequentially, the impugned order dated 14.06.2018 would collapse, which would also be the fate of the second SCN dated 27.06.2018.
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2023 (3) TMI 368
Faceless inquiry or Valuation - scope of the term technically not feasible - Deduction u/s 80P - Co-operative society claiming an exemption of interest - HELD THAT:- The claim of the petitioner is that the Virudhunagar District Central Cooperative Bank is a Cooperative society and not a scheduled bank and therefore, the judgment of the Hon'ble Apex Court in Totgars, Co-operative Sale Society Limited [ 2010 (2) TMI 3 - SUPREME COURT] will not be applicable to the facts of the case. The issue therein was that the Co-operative society claiming an exemption of interest that it had received from the scheduled bank would be exempted under Section 80P(2)(a)(i) of the Act. The judgment of the Hon'ble Apex Court could not be applied to this case, as the exemption now claimed by the petitioner is under Section 80P(2)(d) - Hence, the reliance placed upon by the Department on the said judgment to the facts of the case, in our view, is not correct. With regard to the claim of the petitioner that the Virudhunagar District Central Cooperative Bank is a cooperative society and not a scheduled bank are all factual disputes that will have to be raised before the appellate authority. The respondents herein have given a specific finding that the said Virudhunagar District Central Cooperative Bank is not a Co-operative society. Petitioner that Section 142B of the Act does not provide the petitioner with an opportunity of hearing cannot be made by the petitioner, as it had not challenged the statutory provisions of Section 142B of the Act, which provides for a faceless interface. The petitioner in this case pursuant to the notice issued under Section 142 of the Act invoking the scheme u/s 142B of the Act and having replied with necessary documents has participated in the enquiry under the faceless interface and hence, it cannot now turn back and say that it is prejudiced by such a procedure. The term technically not feasible in Section 142B(1)(a) of the Act would only mean that when it is not technologically feasible to invoke such provisions between the Department and the assessee. The technical advancement had reached new heights. Hence, the contentions petitioner that it is not having the technological feasibility, deserves no consideration. In this case, Standing Counsel for the respondents had invited my attention to the order of assessment, wherein in paragraph No.2, the details of opportunities given have been tabulated. From it, it could be seen that the petitioner had been given sufficient opportunity to explain its case. Further reliance placed upon by the learned counsel for the petitioner to the judgment of this Court in a batch of writ petitions also, in my view, would not be applicable and would not be any assistance to him. The reason we arrive at is that there again the Court had given a finding that the authority has simply relied upon the Totgars s case [ 2010 (2) TMI 3 - SUPREME COURT] and has not dealt with the merits of the case, namely whether the bank in which the society had invested was a Co-operative society or not. In the present case, there is a specific finding by the Department that the investments made by the petitioner in Virudhunagar District Central Cooperative Bank is not a Cooperative society and it is a banking institution. Hence, in my view the writ petitioner has got an alternative remedy of filing an appeal and the petitioner is directed to file an appeal before the appellate authority against the order impugned in this writ petition. Writ Petition is dismissed with liberty to the petitioner to file an appeal before the appropriate authority. From the order impugned, the limitation for filing an appeal is 30 days. The order impugned had been passed on 20.12.2022 and the petitioner had approached this Court on 12.01.2023.
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2023 (3) TMI 367
Reopening of assessment - validity of order u/s 148A(d) passed without taking into consideration any of the contentions raised by the Petitioner - bogus accommodation entries from entities controlled by Mr. Himanshu Verma - Revenues states that there is information available on the insight portal from a credible source which discloses modus operandi of tax evasion - HELD THAT:- As this Court finds that the information furnished to the Petitioner and the impugned order do not specify in which bank account or account number, the alleged amount have been received by the Petitioner. Though the impugned order states that the asset is represented by bogus accommodation entries in the form of bank deposits, yet no details of any such deposit have been mentioned in the impugned order. Consequently, the impugned order passed under Section 148A(d) of the Act as well as the notice issued under Section 148 of the Act both dated 22nd July, 2022, for AY 2017-18 are set aside and the matter is remanded back to the Assessing Officer for a fresh determination. This Court permits the Assessing Officer to supply additional information, if any, in his possession to the Petitioner-Assessee within four weeks.
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2023 (3) TMI 366
Reopening of assessment u/s 147 - condition specified u/s 149(1)(b) - income alleged to have escaped assessment should be Rs.50,00,000/- or more - HELD THAT:- This Court is of the view that the reopening in the present case is in violation of CBDT Instruction No.01/2022 dated 11th May, 2022, wherein it has been clearly stated that notices in the cases pertaining to assessment years 2013-14, 2014-15 and 2015-16 cannot be issued, if the condition specified u/s 149(1)(b) is not fulfilled namely that income alleged to have escaped assessment should be Rs.50,00,000/- or more. Consequently, as the impugned order under Section 148A(d) of the Act has been passed contrary to the CBDT Instruction No.1/2022, the same is quashed. (See Simplex Castings Ltd. v. Commissioner of Customs [Vishakapatnam], [ 2003 (4) TMI 107 - SUPREME COURT] : Commissioner of Customs v. Indian Oil Corporation Ltd[ 2004 (2) TMI 66 - SUPREME COURT] : Collector of Central Excise, Vadodara vs. Dhiren Chemical Industries [ 2002 (2) TMI 115 - SC ORDER] AND Catholic Syrian Bank Ltd. vs. [ 2012 (2) TMI 262 - SUPREME COURT] - WP allowed.
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2023 (3) TMI 365
Addition on account of provision for Solid Waste Dispsal Expenses - contingent liability or accrued liability - As per the AO, the assessee did not submit any documentary evidence clarifying whether the amount for which provision was made was based on actual incurrence of expenses and inquiry revealed that expenses actually incurred in subsequent years i.e. financial years 2015-16, 2016-17 2017-18 fell short of the amount provided for,the AO held that the provision related only to a contingent liability and disallowed the same - CIT-A deleted the addition - HELD THAT:- We find that the ld.CIT(A) has held the provision created by the assessee to be allowable as an accrued liability taking note of the fact that income in relation to the solid waste disposal under taken by the assessee was already accounted for in the impugned year, and since the assessee could not carry out the disposal of solid waste on account of non-availability of proper site and had kept the waste at temporary site, it had booked the expenses for the disposal of the waste at the permanent site,commensurate to income accounted for by it ,on the basis of the actual estimation of expenditure which were required to be incurred. DR was unable to controvert these factual findings of the ld.CIT(A). CIT(A) has further noted that this accounting method followed by the assessee was in consonance with the prescribed Accounting Standard and policy in accordance with the Prudence norms. That it complied accordingly with section 145 of the Act requiring income to be computed in accordance with notified accounting standards. DR was unable to controvert the same. In view of the above, we find no infirmity in the findings of the Ld.CIT(A) that the provision made by the assessee was not a contingent liability but an accrued liability, and therefore was allowable claim of the assessee. The order of the ld.CIT(A) is accordingly upheld, and the appeal of the Revenue is dismissed.
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2023 (3) TMI 364
Reopening of assessment u/s 147 - approval order u/s. 151 - HELD THAT:- Requirement of approval u/s. 151 of the Act is not a formal ritual but it is mandatory legislative requirement which has to be done after due application of mind to the material gathered by the AO and reasons recorded by him. The approving authority has to consider entire material before granting approval for initiation reassessment proceedings u/s. 147 and issuance of notice u/s. 148 of the Act. We unable to agree with the contention of the learned Senior DR that the putting seal as statement of approval is sufficient as the any exercise in the part of the Ld. PCIT for application of mind towards the said material which was gathered by the AO and the reasons recorded by him for the purpose of initiation of reassessment proceedings and issuance of notice u/s. 148 of the Act. Merely putting a seal as approving statement is not sufficient and make it clear that the approving authority has granted approval in a mechanical manner without application of mind to the relevant material and reasons recorded by the AO. Therefore the initiation of reassessment proceedings also fails on this count. Therefore additional grounds of assessee are allowed and initiation of reassessment proceedings, issuance of notice u/s. 148 of the Act and all consequent proceedings and orders are hereby quashed. Decided in favour of assessee.
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2023 (3) TMI 363
Applicability of provision u/s 172 for shipping business of non-resident - benefit as per DTAA between India UAE category of shipping business of non- resident - Applicability of Section 144C of the Act as related to overriding effect to any other Act/provisions related to Income Tax Act - HELD THAT:- Section 144C of the Act is related to reference to Dispute Resolution Panel and for this particular case there was no reference to Dispute Resolution Panel. When there is specific Statute/Section given under any Act for a particular classified category then that Section will be applicable to that particular category only. AR never contended that the assessee does not fall in that category of shipping business of non- resident. Thus, the additional ground taken by the assessee is dismissed. Benefit as per DTAA between India UAE as claimed by the appellant in return of income filed u/s.172(3) - It is undisputed fact that the assessee is a limited liability company which is non-resident. As relates to commercial licence of the company, the same is issued by Dubai Maritime City which is UAE country. Besides this, the assessee has also submitted the Bank details of Standard Chartered Bank related to outward payment customer advise that of UAE only. Though the partners/Directors are Yemenis national except one of the partner, the address of that partner/director of the resident is Dubai, United Arab Emirates (UAE) only. The UAE court (Ministry of Finance) has issued Tax Residency Certificate to the assessee company on 19.06.2008 which set out that licence No.234584 has been given to the assessee company which is domiciled in UAE. From the perusal of the additional evidence, the assessee company has given business licence details once again which clearly set out that the assessee company is a resident of UAE. Assessing Officer as well as the CIT(A) has totally ignored these facts. Merely Partner s/Director s nationality will not suffice the company s residency when the company is registered and operational in a particular country in the present case is in UAE Dubai and has obtained the business licence from the said resident company is the resident of UAE. Whether the exemption claimed by the assessee is applicable to assessee company or not? - It is the question for which Article 4(1) defines the residents and it clearly set out that the individual who is present in the UAE for period or periods totalling in the aggregate at least 183 days in the calendar year concerned, and a company which is incorporated in the UAE and which is managed and controlled wholly in UAE. In the present case, the company is incorporated in UAE and is managed and controlled only in UAE. In fact, the company and its business is operational from UAE only. Thus, it is a tax resident of UAE and, therefore, treaty between India and UAE (DTAA) is applicable in the present case. Thus, Article 8 where Shipping Business and its profit has been determined in respect of taxability the same is applicable in the present case and thus the assessee is entitled for the treaty benefit. The Assessing Officer was not right in denying the exemption and hence the addition does not sustain. Therefore appeal allowed.
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2023 (3) TMI 362
Addition u/s 56(2)(vii) - Jantri value of property was more as against the valuation shown in the documents - HELD THAT:- The document was registered by showing consideration at Rs. 3.05 crores. Certified copy of valuation sheet was also furnished. We find that the assessee specifically submitted that rate of Jantri value is available on the State Government e-portal for general public information and the jantri value of property is Rs. 4200/- per square meter. The total area of transaction for the impugned land in R.S. No. 47, Block No. 86 purchased by assessee and his co-owners is 7102 per square meter, so Jantri value is Rs. 2,98,24,800/-. we find that no investigation of such fact was carried out by ld CIT(A) of his own. Rather, such submissions were remanded to the assessing officer, the assessing officer objected for considering such submissions. On merit of the additions, the assessing officer again retreated the similar contention as recorded in the assessment order. Total area purchased by the assessee and his co-owners of 7102 Square meter, which is not in dispute. As per Jantri rate of the Revenue Survey No. 47, Block No. 87, final plot No. 82 B Bamroli is Rs. 4200/- per square meter so total value of land as per Jantri Value is Rs. 2,98,24,800/-. The assessee has shown consideration of such transaction at Rs. 3.05 Crore, which is much more than the value of Stamp Valuation authority. Thus, the assessing officer made addition of difference of Rs. 3,38,486/- without verifying the factual position. Thus, direct the assessing officer to delete such addition made under section 56(2)(vii). In the result, ground No. 3 of the appeal is allowed. Unexplained investment - assessee made investment for purchasing of property which is not declared in the return of income nor offered for taxation - assessee submits that the investment made in the land is duly reflected in the balance sheet and payment was made from ICICI bank account which was duly shown in the return of income - HELD THAT:- CIT(A) confirmed the addition without verifying the facts. Before me, the assessee made similar submissions as raised before ld CIT(A). On perusal of verification balance sheet of the assessee I find that land is reflected in his balance sheet and the payments were made from bank account which is duly shown in the return of income, copy of Profit and Loss account, balance sheet, capital account, copy of land purchase account and bank statement is already filed on record. Thus, no justification in confirming the addition by ld CIT(A). thus assessing officer is directed to delete the addition of unexplained investment of Rs. 12,33,150/-. We also find merit in the other submissions of the ld AR for the assessee that the case of his co-owners were also reopened under section 147 by recording similar reasons about the investment and difference in consideration shown of the registered sale deed and the value allegedly determined by the stamp valuation authority. However, in cases of two of his co-owners, the charges were dropped and no addition either under section 56(2)(vii) or unexplained investment was made. Thus, the assessee also succeeded on this submission that he cannot be treated differently by revenue authority on similar set of facts. Assessee appeal allowed.
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2023 (3) TMI 361
Revision u/s 263 by CIT - remuneration to the partners - limit prescribed as per the Partnership Deed - Limit prescribed u/s 40(b) - HELD THAT:- As per the findings of the ld. PCIT, we noticed that no explanation was found in the assessment record as claimed by the assessee to the fact that such supplementary deed was furnished by the assessee, in fact in the assessment record only partnership deed dated 01.04.2007 (notarized on 24.03.2008) was filed. As noticed from the index of papers placed before us by the ld. AR which contains the original partnership deed dated 01.04.2007 notarized on 24.03.2008 and supplementary deed dated 04.01.2008 respectively and in supplementary deed it has discussed the matter relating to clause 13 clause 11 of deed of partnership dated 01.04.2007 (notarized on 24.03.2008). Therefore, it is clearly indicate that the supplementary deed talks only about clauses of original partnership deed dated 01.04.2007 and in view of the supplementary partnership deed, partners shall be entitled to draw salary or remuneration as per the limit laid down u/s 40(b) of the Act and the ld. PCIT failed to advert the facts placed before him by the assessee. Therefore, we are not agree with the findings of the ld. PCIT and the revisionary action taken by the ld. PCIT cannot be sustained and we set aside the order passed by the PCIT hence grounds taken by the assessee are allowed.
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2023 (3) TMI 360
Unexplained credit - Penny stock purchases - report of Dy. Director (Inv.), Kolkata, observed that M/s. S.S. Securities is carrying out huge bank transactions vide RTGS and high value cheques and based on the pattern of the transactions, location of business, source of funds and further utilization of funds by these group of entities including M/s. S.S. Securities - HELD THAT:- When the enquiry was conducted by ld. AO during FY 2017-18, M/s. S.S. Securities had already surrendered the registration and not carrying out business activity. It is also not the case of the Revenue that the purchases of the assessee are bogus or non-genuine. Assessee made legitimate purchases in the preceding year and the said purchases were held as investments and their genuineness is not doubted by the Revenue authorities and during the year under consideration some of the investments have been sold through a broker registered with the Guwahati Stock Exchange Ltd. and the said transaction has been carried out through stock exchange and sale consideration has been received through banking channel via registered broker and, therefore, we do not find any reason to dispute the genuineness, identity and creditworthiness of the share broker at the point of time when transaction was carried out. Thus, no infirmity is called for in the finding of ld. CIT(A) deleting the alleged addition made u/s 68 of the Act. Therefore, all the grounds raised by the Revenue are dismissed.
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2023 (3) TMI 359
Addition u/s 68 - unexplained cash credit in the form of share capital and share premium - HELD THAT:- As decided in the recent decision in the case of ITO vs. Mainak Suppliers Pvt. Ltd. [ 2023 (2) TMI 506 - ITAT KOLKATA] we find that assessee has discharged its onus to prove the identity and creditworthiness of the share subscribing companies and the genuineness of the transactions. Accordingly, considering these facts and in the light of the judicial precedents referred above, we find no reason to interfere with the fact-based findings given by the Ld. CIT(A) and uphold his decision to delete the addition made by the Ld. AO towards share capital and share premium u/s. 68 of the Act. Accordingly, grounds taken by the revenue in this respect are dismissed. Addition for unexplained cash seized during the course of search - CIT- A deleted the addition - HELD THAT:- As examined the audited balance sheet and find that the alleged cash seized by the Revenue authorities is duly recorded in the financial statement and is part of the cash in hand available with the assessee in the due course of business. Thus, we fail to find any infirmity in the finding of ld. CIT(A). Appeal of revenue dismissed.
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2023 (3) TMI 358
TDS u/s 195 - Royalty payment - applicability of DTAA between India and Netherland defining term royalty as per Article 12 of such DTAA - HELD THAT:- CIT(A) simply upheld the findings of the ld. A.O on the basis of the provisions of the Act but whether the assessee s transaction is covered under the definition of royalty or fees for technical services as per Article 12 of the relevant DTAA, CIT(A) has not given any finding in this regard. The order of ld. CIT(A) suffers from lack of verification of facts and applicability of legal provisions in the subject matter of the case. Neither the ld. A.O nor the ld. CIT(A) has given a categorical finding regarding the nature of business of the assessee and what facts, verification are conducted in determining the transaction of the assessee, nothing has been brought on record. A.O has stated in his order that there is inherent use of the server and therefore, the service charge paid will amount to royalty but what is this inherent use and how the business of the assessee is working so far as the use of server is concerned. these detailed examination and results has not been brought out in the order. Most important whether the provision of the relevant DTAA regarding royalty and fees for technical services are applicable in the case of the assessee or not has to be re-examined. Even the ld. .D.R has submitted specifying the agreement of Softlayer Technologies Inc. and therein it has been clearly spelt out regarding use of trademark that such trademark ownership is exclusively with Softlayer Technologies Inc. and that the assessee has right only to use such trademark. If it is the right to use trademark, then that is covered within the definition of royalty as per Article 12 of the relevant DTAA. Therefore, this agreement (supra) also has to be looked into along with the provisions of DTAA. A.O shall come out with a speaking order on all these aspects after due verification. In view thereof, we set aside the order of the ld. CIT(A) and remand the matter to the file of the ld. A.O for re-adjudication as per law after complying with principles of natural justice. The grounds are allowed for statistical purposes.
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2023 (3) TMI 357
Revision u/s 263 by CIT - setting aside the regular assessment made u/s 143(3) - HELD THAT:- There is nothing on record to show that any enquiry whatsoever was made by the assessing officer so as to ascertained whether rental income from commercial complex and tower amounting as business income or house property income as found by the PCIT on examination of the relevant assessment records. The relevant details to ascertain the exact nature of transaction effected by the assessee in rental income from commercial complex and tower shown as business income instead of house property income. There is nothing brought on record on behalf of the assessee to rebut or controvert this finding especially recorded by the ld. PCIT during the course of proceeding u/s 263 - In reference to above, the assessee had replied that the rental income offered by the assessee as business income was absolutely right and it should not be treated under the head of house property and in this context assessee did not even furnish any written submission in support of his contention before the ld. PCIT. It is thus clear that the claim of the assessee for rental income from commercial complex and tower shown as business income instead of house property was allowed by AO without making necessary enquiry which was called for in the facts and circumstances of the case and there was an error in the order passed by the assessing officer u/s 143(3) - Therefore, the view taken by the PCIT on this aspect has rightly pointed out by which he set aside the order passed by the AO stating that it was prejudicial to the interest of revenue. Appeal of assessee dismissed.
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2023 (3) TMI 356
Unexplained cash deposits - Addition u/s 68 - HELD THAT:- The asseessee is an agriculturist. The assessee owns more than 20 acres of land individually and jointly with his family at village Bhangala. The copy of Jamabandi mentioning the khasara number and shareholding details. The summary of Landholding details is enclosed separately - That the appellant has filed the returns for subsequent years in which agriculture income has been declared and accepted by the department. The copy of return for A.Y. 2012-13 - The nature of income of the assessee is properly depicted which is from agriculture. The evidence was submitted before the ld. CIT(A) by the assessee by a letter dated 13/02/2021. Jamabandi/Girdawari represents the nature of income of assessee as agriculturist. Assessee properly raised the ground related addition U/s 68 of the Act without maintaining the books of accounts. The assessee confirmed that as an agriculturist is not maintain books of accounts for the impugned year. We fully relied on the order of Smt. Ramilaben B. Patel [ 2018 (12) TMI 1064 - ITAT AHMEDABAD] Mere possession of pass book cannot be treated as books of accounts. We respectfully relied on the order of CIT vs Bhaichand H. Gandhi,[ 1982 (2) TMI 28 - BOMBAY HIGH COURT] - The application of Section 68 is uncalled for the assessee. In our considered view the cash deposited by assessee is income from agriculture which is not come under purview of the taxable income. The opening balance of cash was also not considered during determination of peak by the ld. AO. We set aside the order of revenue authorities. So, the entire addition is quashed.
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2023 (3) TMI 355
Validity of assessment u/s 153A - necessity of documents as seized which relates to and the information contained therein pertains to the assessee - HELD THAT:- The provisions of law, as existing on the date of search namely 04.12.2014 in this case is to be followed. Therefore the satisfaction note recorded by the Assessing Officer on 14.10.2016 (which is extracted in Para 3.2 of this order), invoking the amended provisions of section 153C namely various documents were seized which relates to and the information contained therein pertains to the assessee is not correct in law. Even as per the pre-amended provisions of Section 153C, AO has to record satisfaction to the effect that seized material belongs or belongs to other person. In this case, the A.O. has not put on record that any material seized during the course of search does belong to the assessee. However seized materials related to other third party. Therefore in our considered view, the invocation of proceedings u/s. 153C is against the provisions of law. As prior to the amendment the material found from the premises of the searched person, should be belonging to the person in whose case the material is to be used by drawing satisfaction and for issuance of notice u/s. 153C. Decided against revenue.
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2023 (3) TMI 354
Addition u/s 68 - Loans unexplained - HELD THAT:- With regard to the statements of certain persons relied upon by the AO, the CIT(A) has noticed that those statements do not turn against the assessee at all. We do not find any reason to interfere with his decision in holding that there is no ground to make addition u/s 68 in respect of the loans. We uphold the order passed by him on this issue. Consequently, the relief granted in respect of interest disallowance relatable to the above said amount of Rs.5.05 crores is also upheld. Addition confirmed by Ld CIT(A), we notice that the Ld CIT(A) as well as AO has placed reliance on a statement given by the director of two companies, viz., M/s Lity Star Constructions Ltd and M/s Pushpanjali Commo Trade P Ltd in some other proceeding before the investigation wing. Thus, the fact remains that the above said statements have not been taken during the course of present assessment proceedings of the assessee. We are of the view that the tax authorities are not justified in placing reliance on the statement given by the director in a third party proceeding without confronting the same with the assessee. On the contrary, the fact remains that both the above said companies have duly responded to the AO during the course of current assessment proceedings by furnishing replies to the notices issued u/s 133(6) of the Act and the summons issued u/s 131 of the Act. All the relevant financial statements have been filed before the AO in respect of above said two companies in order to prove the three main ingredients, viz., identity of the creditor, credit worthiness of the creditor and the genuineness of transactions. Accordingly, we are of the view that the CIT(A) was not justified in sustaining addition relating to the above said two companies. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition relating to the above said two companies. Consequently, the interest disallowance made in AY 2013-14 and 2014-15 are directed to be deleted. Assessee appeal allowed.
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2023 (3) TMI 353
Income taxable in India - taxability of testing services as FTS - India-Finland DTAA - HELD THAT:- As decided in own case [ 2019 (6) TMI 777 - ITAT KOLKATA] income in question becomes taxable as royalty or fees for technical services, is deemed to arise in the contracting state where the payer is a resident of that contracting state, which is in India, in our case. The income is also taxable in India as the right or property for which the royalty was paid, is used within India and hence, it is deemed to arise in India, i.e. the state in which the right or property is used. The assessee argues that the technical services of testing is performed outside the country, i.e. in Finland and hence cannot be taxed in India in view of the exception curved out to Article 12(5) of the India-Finland DTAA. The exception in question is, when the fees is paid for technical services which are performed within a contracting state, then the income therefrom is deemed to accrue or arise within the state in which the services were performed. In our view, this Clause does not apply as the payment in question was made for the test results which were used within the contracting state, India. It may be true that the process of testing may have been conducted outside India. But the payment in question is not for the process but was for the results of testing which is used in India. The argument of the Ld. D/R that these services were availed in India and hence are taxable in India has to be upheld. In the result, this ground of the assessee is dismissed. Taxability of income earned from sale of designs and drawings - as contended by the assessee that these receipts are not taxable under the provisions of the Act and the India-Finland DTAA - HELD THAT:- As decided in own case [ 2019 (6) TMI 777 - ITAT KOLKATA] findings of the Hon'ble DRP was that the transactions is in the nature of FTS that (i)the assessee had access to a wide range of technologies for the purpose of setting up/construction of the plants, (ii) it was developed after research and after necessary modification and thereafter (iii) these designs and drawings were sold to Indian customers who used the same for internal business purpose of setting up of their plants. These findings were reversed and the ground of appeal of the assessee was allowed. Computation of tax liability - AO computing the tax liability at the rate of 40% plus surcharge and cess instead of 10% as per the tax rate available under India-Finland DTAA in the tax computation sheet annexed to the final assessment order - HELD THAT:- We hold that surcharge and education cess cannot be levied in respect of tax liability of the assessee computed under DTAA. Accordingly, ground taken in this respect is allowed. Short credit of TDS - HELD THAT:- As we find it proper to remit this matter to the file of the Ld. AO to allow the credit as claimed after due verification of documents relating to TDS claimed by the assessee. Due credit of TDS may be allowed by the Ld. AO based on the verification of documents and records. Accordingly, this ground of appeal is allowed for statistical purposes.
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2023 (3) TMI 352
TP Adjustment - TPO adopted the interest @ 12.25% as ALP on the interest free loan and proposed upward adjustment - HELD THAT:- We find before the TPO, the assessee vide its reply dated 26.12.2013 had categorically stated that during the financial year 2009-10, they made equity investment in their wholly owned subsidiary M/s Global Inc, USA and the investment in equity was made for the purpose of development of software products and new technology products. It was categorically stated that against this investment the company M/s. Global I.T. Inc, US has allotted the shares copy of which is placed at page 161 of the Paper Book. Under these circumstances, the allegation of the TPO that the taxpayer did not submit the details of the investment in the AE claimed as equity investment despite numerous opportunities given by the TPO is incorrect. DRP in assessee s own case for the A.Y 2008-09 has deleted the addition being the ALP of the international transaction pertaining to the Arm s Length interest on the investment. We find the Hon'ble Bombay High Court in the case of Vodafone India Services (P) Ltd vs. Union of India [ 2014 (10) TMI 278 - BOMBAY HIGH COURT] has held that the issue of shares at a premium by the assessee to its nonresident holding company does not give right to any income from an admitted international transaction and therefore, there is no occasion to apply Chapter X in such cases. Since admittedly the assessee has furnished the relevant details before the TPO as well as the DRP by submitting that the investment was made towards equity investment for the purpose of business expansion of the assessee company and its subsidiary company and the investments were made out of the internal funds raised by the assessee and since the DRP in the assessee s own case in the immediately preceding A.Y has deleted such addition made by way of adjustment on ALP being investment in equity and the Revenue has accepted the same by not filing any appeal before the Tribunal, therefore, we are of the considered opinion that the DRP was not justified in directing the TPO to adopt LIBOR+2% as interest receivable by the assessee on loan to its AE especially when the assessee has not given any loan but the same is towards equity, the share certificate of which was already filed before the lower authorities. The grounds raised by the assessee on this issue are accordingly allowed. Computing the eligible deduction u/s 10A - HELD THAT:- In view of the submissions of the assessee and in view of the conditions laid down in section 10A, we direct the A0 to verify export bill invoice wise export realised as claimed by the assessee with reference to the FIRCs and consider the export turnover to the extent the proceeds are released in convertible foreign exchange within the stipulated time limit or within the extended time if any given supported by relevant certificates and accordingly recompute the deduction allowable u/s.10A. Treatment of gain on Foreign Exchange fluctuation as other income - HELD THAT:- Assessee submitted that the assessee has already offered such foreign exchange fluctuation as other income and addition of the same will amount to double taxation and therefore, he has no objection if the same is restored to the file of the Assessing Officer with a direction to verify the same and if it amounts to double addition, then the same has to be deleted. The learned DR has no objection for the above proposition. Therefore, the issue of foreign exchange fluctuation gain is restored to the file of the Assessing Officer with a direction to verify that the assessee has already offered the same to taxation and addition of the same will amount to double addition. AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee on this issue are accordingly allowed for statistical purposes. Exclusion of telecommunication charges from the total turnover for the purpose of computing deduction u/s 10B - HELD THAT:- As relying on cases M/S TESCO HINDUSTHAN SERVICE CENTRE PVT LTD [ 2018 (7) TMI 1234 - SC ORDER] ,HCL TECHNOLOGIES LTD. [ 2018 (5) TMI 357 - SUPREME COURT] DRP is fully justified in holding that the communication expenses to be deducted from both total turnover and export turnover. Accordingly, the ground raised by the Revenue on this issue is dismissed.
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2023 (3) TMI 351
Reopening of assessment u/s 147 - Unexplained cash deposits in his bank account - reliance on AIR information - As per assessee it is advance received against sale of another piece of agriculture land - HELD THAT:- We find that there was deposit of cash of Rs. 79,00,000/- on 07/07/2009 the very same day on which the sale deed was executed and Rs. 2,00,000/- was deposited on the next day, therefore a clear nexus has been established between source of such cash deposit and sale transaction so executed by the assessee. In absence of any contrary evidence brought on record in terms of statement of witnesses and comparative sale data of similar transaction undertaken at same/nearby location at a value different from what has been claimed by the assessee, the explanation so furnished by the assessee cannot be disputed. We are conscious of the fact that though the sale deed shows lower sale consideration which is also the Stamp Duty Valuation however, once the assessee has brought on record the relevant facts and documentation as well as nexus between transaction of sale and deposit in bank account has been established then in absence of any contrary evidence brought on record, only inference which can be drawn from these facts and circumstances of the case is that the source of deposit is the sale consideration of the agriculture land. No finding has been recorded by the AO as to why the explanation of the assessee regarding other sources of deposits being the advance received against sale of another piece of agriculture land was not found acceptable - In absence of any contrary evidence brought on record by the Revenue, the explanation of the assessee duly corroborated by the affidavit from the buyer and the bank statements reflecting the receipts and refund of Rs. 7,00,000/- is found acceptable and the source of such deposits thus stand explained and no adverse view is warranted in this regard. Regarding explanation of the assessee that there were cash withdrawals earlier made from the bank accounts and which were re-deposited during the year, we have gone through the assessee's bank statements and the cash flow statement and find that there were withdrawals and deposits during the year in the two bank accounts maintained by the assessee and the deposits so made duly stand explained by the earlier withdrawals during the year and no adverse view is warranted in this regard. We find that the assessee has duly explained the nature and source of cash deposits during the year and the initial onus on the assessee duly stand discharged. - Decided in favour of assessee.
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2023 (3) TMI 350
Revision u/s 263 by CIT - reporting of correct income of interest received from bank vis-a-vis. as appearing in Form 26AS - Finance cost paid by the assessee to bank on various credit facilities vis-a-vis. the quantum of borrowings - HELD THAT:- On the first issue relating to high borrowing cost vis-a-vis. the amount of borrowed money, admittedly, it is a fact on record that assessee has made detailed disclosure of its finance cost during the year under consideration by way of Note No. 24 forming part of the financial statement for the year. We note that this finance cost of Rs. 3.92 Cr. has two components, (a) interest expenses of Rs. 98.94 Cr. (b) bank charges and commission for Rs. 2.94 Cr. The component of bank charges and commission are all in respect of buyers' credit, availed by the assessee against the issue of LCs for its import purchase. The import purchase outstanding as on 31.03.2017 are reported as sundry creditors/trade payables which forms part of current liabilities and not the borrowed money. We also take note of the fact that assessee has furnished all the details in respect of expenses incurred by it on letter of credits against its import purchase, which the Ld. Pr. CIT has failed to consider and examine or caused to have examined them before arriving at the conclusion to pass the impugned revisionary order. The long term and short term borrowings outstanding at the end of the year as reported in the audited financial statements at Rs. 2.90 Cr. and the trade payables are at Rs. 40.45 Cr. Against these two components, the total finance cost claimed by the assessee is of Rs. 3.92 Cr. All these facts are verifiable from the material placed on record. In respect of second issue relating to reporting of interest income by the assessee wherein the bank itself has done the netting of interest income against the interest expenses though the assessee has reported the interest income of Rs. 1,12,15,593/-. There is no under assessment of the interest income as observed by the assessee since interest income earned has been reconciled with Form 26AS. Thus we find that PCIT has not applied his mind to arrive at a consideration which is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s. 263 - in the course of proceedings u/s. 263 of the Act before the Ld. PCIT, assessee had furnished the relevant details and explained the issues raised through the show cause notice issued by the Ld. PCIT, supporting its contentions by corroborative documentary evidences. It is well settled law that for invoking the provisions of section 263 of the Act, both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon'ble Courts. We find that the issue in the present case is purely on facts which are verifiable from the records of the assessee placed on record. Examination and verification of the audited financial statement i.e. Balance sheet and P L Account of the assessee. Perusal of the ledger account and the details of imports made by the assessee tabulated in the paper book, reveals the correct state of affairs in respect of the two issues raised in the impugned revisionary proceeding for which, both the Ld. Pr. CIT and the Ld. CIT, DR could not bring any material to controvert the said verifiable factual position. Accordingly, on the two issues raised by the Ld. Pr. CIT in the revisionary proceeding, no action u/s. 263 of the Act is justifiable - Decided in favour of assessee.
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2023 (3) TMI 349
Exemption u/s 11 - deduction claimed towards application and accumulation of funds denied - delay in filing Form 10B - HELD THAT:- For AY 2016-17 AY 2017-18, the delay in filing Form 10B is condoned where the audit report is obtained before filing the return of income and filed before the date specified u/s 139 of the Act. The circular also states that in all other cases i.e. for AYs other than AY 2016-17 2017-18 prior to AY 2018- 19, if there is a delay, then an application for condonation to be made and the CIT is authorized to admit the application and condone if satisfied that there was a reasonable cause for the delay. In assessee s case the year under consideration is AY 2017-18 and therefore, we see merit in the argument of the ld. A.R. that the delay is condoned by the circular and that there is no requirement to file condonation application. Accordingly, we hold that the ld. CIT(A) denying the deduction claimed on this ground is not correct. Assessee has obtained the audit report dated 1.6.2017 and has filed the same, though not along with the return of income, on 28.8.2017 which date is well before the due date u/s 139(1) i.e. 31.10.2017. Therefore, in our view, assessee s case is covered under para 4(i) of the CBDT Circular (supra) where by the delay in filing Form 10B is condoned. We therefore, of the opinion that assessee cannot be denied the deduction claimed towards application and accumulation of funds. The addition made in this regard is deleted. Appeal is allowed in favour of the assessee.
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2023 (3) TMI 348
Disallowance u/s 14A r.w.r. 8D - computation of amount of disallowance under Rule 8D(2)(iii) - HELD THAT:- We find merit in the contention the appellant that for the purpose of computation of amount of disallowance under Rule 8D(2)(iii), the value of such investments which yielded exempt income alone has to be considered in the light of the decision of Joint Investments Pvt. Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] , the decisions of ACB India Ltd. [ 2015 (4) TMI 224 - DELHI HIGH COURT] , Marg Ltd. Vs. CIT [ 2020 (10) TMI 102 - MADRAS HIGH COURT] and CIT Vs. Shriram Ownership Trust 318 CTR (Mad.) 233 and also by the Hon ble Karnataka High Court in the case of Pragathi Krishna Gramin Bank [ 2020 (12) TMI 736 - MADRAS HIGH COURT] . Therefore, we remand the issue of computation of disallowance under Rule 8D(2)(iii) to the file of the Assessing Officer with the direction to compute the value of those investments which yielded the exempt income alone for the purpose of computing the average value of investments. Thus, this ground of appeal no.2 raised by the assessee stands partly allowed for statistical purposes. Allowance of balance of additional depreciation - asset was not put to use for less than 180 days - HELD THAT:- This issue is no longer res integra as it was decided by the Hon ble Jurisdictional High Court in the case of PCIT vs. M/s. Godrej Industries Ltd. [ 2018 (12) TMI 64 - BOMBAY HIGH COURT] following the decision CIT vs. Rittal India Pvt. Ltd. [ 2016 (1) TMI 81 - KARNATAKA HIGH COURT] and case of CIT vs. Shri T. P. Textiles Pvt. Ltd. [ 2017 (3) TMI 739 - MADRAS HIGH COURT] and also the legislative amendment has been brought by inserting third proviso to clause (ii) of sub-section (1) of section 32 of the Act allowing the benefit of balance of 50% of depreciation in the subsequent year in such situation. Respectfully, following the above legal positions, this ground of appeal no.3 stands allowed in favour of the assessee company. Subsidy received from Government of Maharashtra under Package Scheme of Incentive, 2007 to be reduced from the actual cost of asset in terms of Explanation 10 to section 43(1) - HELD THAT:- This issue stands covered in favour of the assessee company by the decision of the Co-ordinate Bench of this Tribunal in the case of ITO vs. Shriniwas Engineering Auto Components Pvt. Ltd. [ 2022 (4) TMI 1486 - ITAT PUNE] as held now subsidy given by the Central Government or a State Government or any authority etc. for any purpose, except where it is taken into account for determination of the actual cost of the asset under Explanation 10 section 43(1), has become chargeable to tax. Even if a subsidy is given to attract industrial investment or expansion, which is a otherwise a capital receipt under the pre-amendment era, shall be treated as income chargeable to tax, except where it has been taken into account for determining the actual cost of assets in terms of Explanation 10 to section 43(1). This amendment is patently prospective. As the assessment year under consideration is 2011-12 and the amendment is effective from assessment year 2016-17, new hold that section 2(24) (xviii) will have no application - Decided in favour of assessee. Nature of expenses - Disallowance towards amortization of leasehold premium paid in respect of land acquired from Gujarat Power Corporation Limited, Gujarat for Solar Project on leasehold basis - HELD THAT:- This issue is no longer res integra as it is settled by the decision of the Hon ble Supreme court in the case of Aditya Minerals Pvt. Ltd. [ 1998 (2) TMI 8 - SUPREME COURT] wherein, the Hon ble Apex Court held that lease rent paid for acquiring mining rights is capital in nature and cannot be allowed as a deduction. Thus the impugned amortization of lease premium cannot be allowed as revenue expenditure . Thus, the ground of appeal filed by the assessee stands dismissed.
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2023 (3) TMI 347
Unexplained Cash deposited by the assessee jointly with his father - whether CIT(A) is correct in holding that the AO erred in observing that there was no reference of the cash deposits issue in the assessment order passed for A.Y. 2011-12, in the case of the Assessee's father? - HELD THAT:- CIT(A) has taken due cognizance of this Office Note while deleting the addition made by the Assessing Officer. CIT(A) has, observed that the principal deposit has already been examined (by the AO) in the case of Shri Gurdev Singh, father of the assessee, for A.Y. 2011-12; that the Office Note concerning that Assessment clearly refers to the same amount of Rs. 1.95 cores, which was the basis of reopening of the assessment; and that in those assessment proceedings, the proposed buyer of the land, the agreement relating to which land was cancelled (i.e., Shri Inderjit Singh) himself certified the source of the said cash. DR has not been able to successfully challenge the aforesaid well versed findings of the Ld. CIT(A). Accordingly, these findings are hereby confirmed. CIT(A) is also correct in observing that the other issues raised by the AO in the assessment order, i.e., the issue pertaining to the recipient having been alone at the time of the receipt of the amount, or the amount having been received on behalf of Shri Gurdev Singh, father of the assessee, and the issue of Circle rate of the property, are, at best, marginal issues, having no bearing on the decision of the issues at hand, i.e., the deposit of cash. Otherwise too, the response of the assessee with regard to these issues has not been at all rebutted before us, much less, successfully. The plausibility of the assessee's stand has been examined by us and it has been found to be in order, being self-evident there from. The assessee had explained the source of the cash deposited, to be refund of advance given for purchase of property in the earlier years. This source of cash could have been examined by the AO, in case of any doubt, by reopening the earlier year assessment. This was not done. Moreover, Sh. Inderjit Singh, the intending seller of the agricultural land, in his statement before the AO, confirmed the return of the advance amount. Shri Inderjit Singh had stated that when the payment was received by him, he received it alone and from his side, there was nobody present. The paper of the assessee would show his presence and the presence of his father and witnesses - The name of the purchaser of the stamp papers is immaterial in the case of Real Estate, such stamp papers being normally purchased in the name of the seller. So far as regards the AO's observation that NRIs cannot purchase agricultural land in India without RBI permission and as per FEMA, whereas no RBI permission was taken for purchase of land in the present case, it has been stated that since no land was purchased and only agreement to sell was entered into, which agreement was cancelled later on, no RBI or FEMA permission was applicable or required and, therefore, permission was not applied for. Concerning the AO's doubt that Shri Inderjit Singh stated that no Member of any Panchayat intervened in the cancellation agreement, once again, it has been stated that when the parties to the agreement to sell agree to the cancellation of the agreement, no intervention of Panchayat is required, there being no dispute between the parties. None of the above elaborate categoric point-wise rebuttals of the assessee, as made before and considered by the Ld. CIT(A), has, to reiterate, even been challenged before us, much less successfully, on behalf of the Department. It has not been established as to how the doubts raised by the AO (termed as evidence brought on record by the AO) go to prove that the explanation and evidence given by the Assessee was created evidence, produced as an afterthought, not representing reality. Further, the Department has also failed to show as to how the Ld. CIT(A) erred in relying on the Assessee's explanation, particularly when the contents of the documents were not proved to be in-genuine or false. - Decided in favour of assessee.
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2023 (3) TMI 346
Addition u/s 68 - creditworthiness of the nine share subscribing companies proved or not? - directors of the share subscribing companies failed to appear to the notices issued u/s. 133(6) - HELD THAT:- Since the assessee has sufficiently explained the identity and creditworthiness of the share subscriber companies and the genuineness of the transaction of applying for the equity shares of the assessee company and since nothing contrary to the evidence filed by the assessee has been placed on record by the Revenue, except the reason that the directors of the share subscribing companies failed to appear to the notices issued u/s. 133(6) we find no reason to interfere with the meritorious finding of the CIT(A). We accordingly, dismiss the grounds raised by the revenue in this respect. Appeal of the revenue is dismissed.
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2023 (3) TMI 345
Assessment u/s 144C - Non passing of draft assessment order - assessment after reference to the TPO on the transfer pricing issue - DRP jurisdiction over a draft assessment order passed subsequent to withdrawal of the final assessment order - HELD THAT:- AO before passing of the final assessment order is mandatorily required to forward a draft of the proposed order of assessment (draft order) to the eligible assessee if he proposes to make any adjustment, and to give opportunity to the assessee to file objections against such draft order either to the Assessing Officer himself or to the DRP. In this case, AO straightway passed the final assessment order, without passing any draft assessment order. As held by the various Benches of the Tribunal a final assessment order without passing of the draft assessment order, being not in accordance with law, is liable to be quashed and further that the subsequent proceedings after passing of the final assessment order would also be vitiated and would not have any sanctity of the law. Coordinate Bench of the Tribunal in the case of Jazzy Creations Pvt. Ltd. [ 2016 (1) TMI 1453 - ITAT MUMBAI] , wherein, the Tribunal while relying upon the decision of the Hon'ble Madras High Court, in the case of Vijay Television Pvt. Ltd. Vs DRP [ 2014 (6) TMI 540 - MADRAS HIGH COURT] has quashed such an invalid assessment order which was framed without passing of draft assessment order and held that the subsequent corrigendum issued by the AO did not have any legal sanctity. Appeal of the assessee stands allowed.
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2023 (3) TMI 344
Ex-parte order passed by CIT-A - Exemption u/s 11 - applicability of proviso to section 2(15) - CIT(A) decided to proceed the appeal ex-parte observing that the assessee failed to explain as to how the activity undertaken by the assessee is not commercial or charitable - HELD THAT:- It is no doubt true that notices were issued to the assessee on several occasions. The assessee had requested for adjournment in the hearing fixed on 25.05.2022 and the case was adjourned to 10.08.2022. On that date also, the assessee did not appear before CIT(A) and the case was adjourned to 16.10.2022 on which date also neither the assessee nor his Authorized Representative appeared before CIT(A). The order of the CIT(A) has to be set aside and the issue remanded to CIT(A) for a decision on merits. The applicability of the proviso to 2(15) of the Act cannot be on the basis of the default of the parties but should be on the basis of facts and circumstances of each case. In the present case, the donations received by the assessee which was taken as receipts were prima facie donations and there is no material to show that the donations were not voluntary. Both the AO and the CIT(A) have called upon the assessee to demonstrate as to how the donations were voluntary and thereby the assessee was called upon to prove a negative fact. The assessee should have an opportunity of hearing before the CIT(A) who can appreciate as to how the proviso to section 2(15) of the Act will operate on the facts and circumstances of the given case. In this regard, the contentions that the assessee may put forth should also be considered by the CIT(A) rather than deciding the appeal on the basis of default of parties. We set aside the order of the CIT(A) and remand the issue of applicability of proviso to section 2(15) of the Act to the CIT(A) for fresh consideration, after affording the assessee opportunity of being heard. Appeal of the assessee is treated as allowed for statistical purposes.
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2023 (3) TMI 343
Revision u/s 263 - claim of interest expense - HELD THAT:- There is no enquiry or verification initiated and undertaken by the AO during the course of entire assessment proceedings regarding the claim of interest expense and therefore, we agree with the findings of the ld. PCIT that it is a case where the AO has failed to conduct any enquiry and verification. In light of the same, we are unable to accept the ld. AR's contention that there was no requirement in law to raise queries even on the issues on which the AO after examining the record feels satisfied as it is case where there is a failure on the part of the AO to examine the profit/loss and balance sheet where there is substantial movement in loan transactions both on the liability and asset side of the balance sheet besides claim of interest expense in the profit/loss account and the question of satisfaction will arise where the matter has been examined at first place and which is completely absent in the instant case. Bank charges and interest on car loan cannot be subject matter of disallowance u/s. 36(1)(iii) of the Act and to this extent, we agree with the ld. AR and the order passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue and the findings of the ld. PCIT are set-aside to this extent. Interest expense for availing cash credit limits from Punjab National Bank - The credits and withdrawals in such cash credit account need to be examined and a clear nexus is required to be established between the borrowed funds and making of loans/advances to Sister concerns. On the same footing, the argument of the assessee regarding availability of its own funds need to be tested and examined after analyzing the nature and position of funds at the relevant point of time of making such advances. In light of aforesaid discussions, we uphold the order of the ld. PCIT to this extent and the assessment order is set-aside to this limited extent to examine the matter afresh in light of above discussions and as per law. Needless to say, the Assessing officer shall provide reasonable opportunity to the assessee and the latter shall submit the desired information/documentation as so desired by the Assessing officer. Appeal of the assessee is partly allowed.
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2023 (3) TMI 342
Levy of penalty u/s 271F - not filing return of income within time limit specified in the notice issued u/s 153A - reasonable cause for the delay in filing the Returns of income in response to the 153A - HELD THAT:- We address this issue first namely the assessee s explanation pursuant to the search action u/s. 132 of the Act, various books of accounts, diaries, papers were seized by the Department which were voluminous and pertaining to different group concerns. Checking, cross checking and reconciliation of datas was a very lengthy process. There was considerable delay in furnishing seized documents was also a reasonable cause in filing the Returns of Income. Without the above information, the assessee was not able to file the Returns of income within the stipulated time limit of 30 days of the receipt of the notice. Further the assessee also gone to the Settlement Commission, where his application for settlement of the case was admitted on 14.08.2014 is also a valid reasonable cause , which prevented the assessee from filing the Returns of income, in response to the 153A notices. On this count, the penalty levied u/s. 271F r.w.s. 273B is legally not valid. Therefore we hereby delete the penalties levied u/s. 271F of the Act. Assessee appeal allowed.
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2023 (3) TMI 341
Reopening of assessment u/s 147 - Addition stating bogus LTCG claimed u/s 10(38) in the ROI held to be income from undisclosed sources - HELD THAT:- During the course of assessment proceedings, AO noted that the assessee had purchased 50 shares of unlisted company M/s. Ranisati Commotrrade Pvt. Ltd. for a very meager amount of Rs.500/- in cash from M/s. Pushpanjali Commotrade Pvt. Ltd., Kolkata and then got converted these shares through amalgamation into shares of M/s Blueprint Securities Limited and received as humongous long term capital gain. AO observed that the assesee has not dealt in any other trading activities in shares or made investment on other shares during the year under consideration and thus claimed capital gain as exempted u/s 10(38) which has been treated by the AO as undisclosed income of the assessee. Conclusively the AO held that the amount introduced/credited by the assessee out of these purported share sales receipts during the year under consideration as her income from undisclosed sources and thus computed the bogus LTCG claimed u/s 10(38). Since the issue raised by the assessee is covered to the case of Nilesh Agarwal, HUF, vs ITO [ 2021 (2) TMI 540 - ITAT JAIPUR] therefore, we do not concur with the findings of the CIT(A) and thus the appeal of the assessee is allowed.
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2023 (3) TMI 340
Penalty u/s 271AAB(1) - disallowance u/s 14A - Scope of definition of undisclosed income as per section 271AAB(3)(c)(ii) - Whether the disallowance of expenditure under Section 14A is covered within the definition of undisclosed income for the purpose of levy of penalty under section 271AAB ? - HELD THAT:- Disallowance u/s 14A is not made on account of any additional income found either in cash or in kind or otherwise in respect of any documents or entries in the account book. It has been held that it was a notional disallowance made by the assessee on the footing that out of the total expenditure, some of the expenditure might have been attributable to the activity of making investment from which the assessee has earned tax exempt income. It has been held that it is not the case of the AO that the aforesaid disallowance made by the AO u/s 14A is attributable/relating to the incriminating documents found during the search action or that the aforesaid surrender can be related to part of any other income of the assessee. It has been held that the AO has not recorded any satisfaction from the accounts of the assessee that the contention of the assessee that it has not incurred any expenditure for making investment is not correct. We find that the disallowance of expenditure u/s 14A doesn t represent any income of the specified previous year by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and which would not have been found to be so had the search not been conducted - there is no legal basis for sustaining the charge of undisclosed income found during the course of search and accordingly, there is no justifiable and legal basis for levy of penalty u/s 271AAB - Decided against revenue.
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2023 (3) TMI 339
Addition u/s 14A read with Rule 8D - investments were made out of own interest free funds - HELD THAT:- Coordinate bench of Kolkatta tribunal in Babul fiscal Services Pvt Ltd. [ 2022 (9) TMI 98 - ITAT KOLKATA] has followed the decision in the case of Era Infrastructure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] and held that explanation to section 14 A of the Act is prospective. Therefore we find merit in the submission of decision holding the amendment to be retrospective in nature is wrong and cannot be applied. On this score alone, the order of Ld. CIT(A) cannot be sustained. We note that the assessee s own funds were far more than investment made in shares and securities in the preceding financial years and presumption has been drawn that the investments were made out of own interest free funds. The case of assessee finds support from the decision of case of Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] where the ratio has been laid that no disallowance can be made u/s 14A read with Rule 8D(2)(ii) of the Act where the assessee s own funds were far more than the value of investments which yielded the exempt income. In the present case, we note that the assessee has invested in equity shares - Therefore on this count, we find merit in the contentions of the A.R that no disallowance can be made under Rule 8D(2)(ii). In view of the above facts and circumstances, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the disallowance. Club expenses confirmed as incurred for business purposes - HELD THAT:- We observe that the assessee reported revenue from operations of Rs. 28,751 Lacs whereas the expenses were only Rs. 1,58,263/-. We find merit in the contentions of assessee that these expenses were incurred primarily for the business purpose and for promoting the interest of the company and therefore allowable u/s 37 - The case of assessee finds support from the decision of in the case of CIT vs. United Glass Mfg. Co. Ltd. [ 2012 (9) TMI 914 - SUPREME COURT] wherein it was held that such expenses are purely business expenses. Club membership fee incurred by the assessee is business expense u/s 37 of the Act and none of the decisions have been challenged in this Court. Similarly in the case of OTIS Elevator Co. (India) Ltd. [ 1991 (4) TMI 53 - BOMBAY HIGH COURT] and CIT vs. Samtel Color Ltd. [ 2009 (1) TMI 26 - DELHI HIGH COURT] similar issue has been decided in favour of the assessee by holding that the club expenses/admission fee paid towards business expense is wholly and exclusively incurred for the purpose of business. Considering this fact and ratio laid down in above decisions we are inclined to set aside the order of Ld. CIT(A) by directing the AO to delete the addition. Non-granting TDS/TCS credit - HELD THAT:- We find that the issue is required to be examined at the level of AO. Accordingly we direct the AO to examine this issue and allow the same after such examination. Assessee is also directed to produce the necessary evidences in this regard before the AO. Accordingly ground no. 7 is allowed for statistical purposes.
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2023 (3) TMI 338
Revision u/s 263 - claim of deduction u/s.35(2AB) - whether once the assessee is covered under approval granted by DSIR, does the Assessing Officer has any power to question the same as approval granted by DSIR under power vested under the provisions of section 35(2AB)? - HELD THAT:- In our view, the Assessing Officer has rightly allowed claim of deduction u/s.35(2AB) of the Act based on Form No.3CM Form No.3CL issued by DSIR, as per provisions of section 35(2AB) of the Act, which does not give power to the Assessing Officer jurisdiction to question approval granted by the DSIR. As regards argument of the Revenue that the assessee is engaged in manufacturing of cosmetics and toilet preparations, in our view, observations of the Revenue is not based on facts. We noted the arguments of the Revenue, wherein many products cited by the Department are such as Bikers, Bacto-V, Germ Flush, Electric, Saafoo, Paaga Professional and Lava Berry are products which have been taken from current website of the assessee. We noted that as contended by assessee, these products were launched in recent years i.e. for and from the year 2019 and 2020 and hence, these are not relevant for consideration for assessment year 2011-12. Certificate as approved by DSIR in Form No.3CM 3CL, which categorically mentions nature of business activity of the assessee as manufacture and marketing of personal care products , which clearly proves that the assessee company is engaged in manufacture or production of articles or things, which is eligible for claim of deduction u/s.35(2AB) - Further, sub-section(3) of section 35 clearly provides that if any question arises under this section as to whether, and if so, to what extent, any activity constitutes or constituted, or any asset is or was being used for scientific research, the Board should refer question to the prescribed authority and whose decision shall become final and binding. Neither the Assessing Officer nor the PCIT can sit on judgement on the approval granted by the prescribed authority i.e., DSIR, as in the present case. In the present case before us, even on assumption of jurisdiction, apart from merits as discussed above, the Assessing Officer has allowed deduction while framing assessment u/s.143(3) and u/s.35(2AB) of the Act only after verifying all necessary documents and certificates and hence, we find that assessment order framed is neither erroneous nor prejudicial to the interests of revenue and assumption of jurisdiction by the PCIT is bad in law in the given facts and circumstances of the case. Hence, we set aside the revision order and allow appeal filed by the assessee on merits as well as on assumption of jurisdiction. Appeal of the assessee is allowed.
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2023 (3) TMI 330
Delayed employee s contribution of Provident Fund and Employee State Insurance - HELD THAT:- Since the issue is already covered in favour of the Revenue by the recent decision of the Hon ble Supreme court in the case of Checkmate Services Pvt. Ltd vs CIT [ 2022 (10) TMI 617 - SUPREME COURT ] we proceed to dispose of this appeal by hearing the ld. DR and perusing the materials available on record. It is not in dispute that the employees contribution to PF and ESI were deposited by the assessee to the Government account beyond the due dates prescribed under the respective acts but well before the due date of filing of return of income u/s. 139(1) - Decided against assessee.
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2023 (3) TMI 329
Revision u/s 263 - Unexplained investment - revisionary jurisdiction exercised for the second time - order u/s. 263 passed by the Ld. Pr. CIT second time by upholding the order passed in the first round by the AO in terms of the direction of the Ld. Pr. CIT - HELD THAT:- CIT has revised the assessment on the ground lack of enquiry on the part of the AO into the issue of investment of share capital and share premium. However, we note that in the set aside assessment proceeding in the first inning the AO examined the issue in detail after calling information from the assessee as well as investors u/s 133(6) of the Act and based on that detailed enquiry on the issue accepted the investments made in the assessee company. Findings of the AO that while giving effect to the directions of the Ld. Pr. CIT, AO issued notice u/s. 142(1) of the Act to the assessee which was duly complied with by filing necessary documents and informations. We note that the AO also issued notices u/s. 133(6) on 12.07.2016 to the parties from whom the funds were raised by the assessee and verified the source of investments, identity and genuineness. The said investor companies duly responded to the said notice and thereafter the AO recorded his satisfaction accepting the said investments in the hands of the assessee. Considering the above facts, we are of the view that the jurisdiction u/s. 263 of the Act by Ld. Pr. CIT has not been validly exercised. The case of the assessee finds support from the decision of the coordinate bench in Omkar Infracon (P) Ltd. [ 2020 (5) TMI 209 - ITAT KOLKATA] wherein under similar facts, wherein the show cause notice is verbatim same, the coordinate bench has held the second revision as invalid by upholding the assessment order passed in the first inning. Thus we are therefore, inclined to quash the order u/s. 263 of the Act passed by the Ld. Pr. CIT second time by upholding the order passed in the first round by the AO in terms of the direction of the Ld. Pr. CIT. Accordingly, the appeal of the assessee is allowed.
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Customs
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2023 (3) TMI 382
Refund of SAD - rejection of refund claims on the ground of limitation, following the ruling of Bombay High Court in the case of M/S. CMS INFO SYSTEMS LIMITED VERSUS THE UNION OF INDIA OTHERS [ 2017 (1) TMI 786 - BOMBAY HIGH COURT] holding that the refund claim had to be filed within a period of one year from the date of payment of SAD. HELD THAT:- The issue herein is squarely covered by the rulings of the Hon ble Delhi High Courts cited above, in favour of appellant. Further, the ruling of the Hon ble Bombay High Court in M/s. CMS Info Systems Ltd. has been distinguished by this Tribunal in COMMISSIONER OF CUSTOMS, NEW DELHI VERSUS S.R. TRADERS [ 2020 (12) TMI 503 - CESTAT NEW DELHI] , which judgement has been upheld by the Hon ble Delhi High Court in COMMISSIONER OF CUSTOMS VERSUS S.R. TRADERS [ 2022 (4) TMI 1167 - DELHI HIGH COURT] . The Adjudicating Authority is directed to grant refund along with interest @ 12% p.a., starting from the end of 3 months from the date of filing of refund application - appeal allowed.
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2023 (3) TMI 381
Levy of Custom Duty - import of Flexi containers - durable container or not - denial of benefit of N/N. 141/94- Cus dated 16.03.1994 - responsibility of the importer themselves to export the goods in terms of the notification - imposition of penalty under Section 112 of the Customs Act, 1962 - Whether the fact that the exporter of goods has claimed drawback or otherwise has any impact of the applicability of Notification No. 141/94- Cus.? HELD THAT:- The issues are answered by Tribunal in the case of C.C. -JAMNAGAR (PREV) VERSUS JR ROADLINES PVT LTD WITH JR ROADLINES PVT LTD AND DHIREN RAJDE VERSUS C.C. -AHMEDABAD [ 2020 (9) TMI 856 - CESTAT AHMEDABAD] where it was held that Tribunal in various cases has categorically held that merely because the container does not have repeated use, the nature of durability cannot be rejected. The only criterion to be seen is that whether the container in itself is durable in nature. As per the nature of container and use thereof, it is clear that the container imported by the assessee is durable. It was further held that it is clear that the Flexi Tank Containers imported by the assessee is durable container. Consequently notification no. 104/94-Cus is available to such containers. Appeal allowed - decided in favor of appellant.
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2023 (3) TMI 380
Levy of penalty u/s 114 of Customs Act - attempt to export of red sanders whose export is prohibited unless one has a licence - case of appellant is that appellant was not at fault for filing the shipping bill as per the documents as received by it and it was not aware about the true contents of the consignment. Whether any act or omission of the appellant had rendered the goods liable for confiscation, and if so, the appellant is liable for penalty? HELD THAT:- It is found that a benami shipping bill was filed by the appellant. It would have been a different case if the appellant had filed the shipping bill at the behest of the IEC holder and thereafter it was found that consignment had some prohibited goods. However, in this case the appellant had not obtained any authorisation from IEC holder. It is also on record that IEC holder had no business dealings with appellant so there is no possibility on the appellant innocuously filing a shipping bill in the normal course of the business. The papers were all provided by one Shri Vir Bahadur who was a clearing agent at the ICD and was neither an employee nor an agent of the IEC holder. The appellant had not obtained any authorisation from the IEC holder and Shri Vir Bahadur also did not project himself to be the employee of the IEC holder. There was a gross negligence on the part of the appellant and appellant s act of filing the benami shipping bill and processing it and consequently bringing the consignment into the customs area had resulted in rendering the goods liable for confiscation under section 113 of the Customs Act - penalty imposed under section 114 of the act is justified and calls for no interference - Appeal dismissed.
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2023 (3) TMI 337
Seeking grant of bail - Smuggling - Gold - petitioners admitted their guilt - documents not genuine - HELD THAT:- The statements of the apprehended persons were recorded under Section 108 of the Customs Act, 1962 wherein they admitted their guilt and stated that they are engaged in smuggling of gold. After investigation, show-cause notices were issued against the petitioners and others and based on the grounds, the A.D.G, D.R.I, Luckhnow Zonal Unit sanctioned the prosecution against the accused persons including the petitioners. During investigation, the documents produced by the petitioners in favour of the alleged seized gold Biscuits/Bullions were not found genuine. Considering the fact that recovery of gold Biscuits/Bullions from the individual possession of the petitioners are less than Rs. One Crore and the period under custody, let the petitioners, above named, be released on bail on furnishing bail bonds of Rs. 10,000/- each with two sureties of the like amount each to the satisfaction of learned Special Judge, Economic Offences, Patna - Petition disposed off.
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2023 (3) TMI 336
Refund of Special Additional Duty (SAD) - rejection on the ground of limitation, following the ruling of Hon ble Bombay High Court in the case of M/S. CMS INFO SYSTEMS LIMITED VERSUS THE UNION OF INDIA OTHERS [ 2017 (1) TMI 786 - BOMBAY HIGH COURT] holding that the refund claim had to be filed within a period of one year from the date of payment of SAD, in view of the amendment vide Notification no.93/2008- Customs. HELD THAT:- The issue herein is squarely covered by the rulings of the Hon ble Delhi High Courts in COMMISSIONER OF CUSTOMS (IMPORT) VERSUS GULATI SALES CORPORATION [ 2017 (11) TMI 1300 - DELHI HIGH COURT] , in favour of appellant. Further, the ruling of the Hon ble Bombay High Court in M/s. CMS Info Systems Ltd. has been distinguished by this Tribunal in COMMISSIONER OF CUSTOMS, NEW DELHI VERSUS S.R. TRADERS [ 2020 (12) TMI 503 - CESTAT NEW DELHI] , which judgement has been upheld by the Hon ble Delhi High Court in COMMISSIONER OF CUSTOMS VERSUS S.R. TRADERS [ 2022 (4) TMI 1167 - DELHI HIGH COURT] . The Adjudicating Authority is directed to grant refund along with interest @ 12% p.a., starting from the end of 3 months from the date of filing of refund application. The appeal is allowed.
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FEMA
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2023 (3) TMI 335
Penalty u/s FERA Act - Demand fastened upon the petitioner in terms of Sections 70(1)(i) 70(1)(ii) of the Foreign Exchange and Regulation Act, 1973 - HELD THAT:- A compilation has been filed by R1 R2 containing four documents. That apart, the complaint copy itself refers to order of adjudication having been passed, though perhaps not served. Thereafter, an opportunity notice has been issued which has been duly served upon the petitioner. The diary of proceedings before the Criminal Court have also been produced to show that the petitioner has been present from 10.06.2008 onwards, on various dates till 29.01.2018. In the meantime, steps were initiated by the respondent for splitting of the complaint qua the company and the Directors. As a result was continued in the name of the company and one Director and as against the petitioner and another Director. Thus, through all this, the petitioner has certainly been aware of the factum of order having been passed and this is the question that this Court has to contend with, as to whether such prolonged inaction on the part of the petitioner to even seek a copy of the order and then initiate appropriate steps, may be condoned. The response, in my considered view, must be in the negative, for the reason that there is no justification whatsoever, let alone justifiable explanation, that has been set out to consider condonation of such intervening inaction. In fact, and as been noted in the preceding paragraphs, the case of the petitioner has bordered on stating that he was not even aware of the order which position is clearly contrary to the facts.
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2023 (3) TMI 334
Violation of the provisions of the Foreign Exchange Management Act - lookout circular against the petitioner - petitioner vehemently contend that the petitioner is not an accused in any crime under the IPC or under any other law - HELD THAT:- A lookout circular cannot be issued against any subject in thin air. There has to be reason for issuance of such lookout circular. The categories on which the lookout circulars can be issued are borne out from several official memoranda issued by Union of India from time to time and right to travel can be curtailed only in terms of those ingredients found in the official memoranda. The case at hand does not have a single ingredient as found in those official memoranda for issuance of a lookout circular. The petitioner is not an accused in any case under any penal law. Therefore, the very act of issuance of lookout circular against the petitioner runs counter to law or counter to the guidelines issued by the Union of India from time to time. The Apex Court holds that right to travel abroad is an important basic human right of great significance. Referring to the judgment of the Apex Court in the case of MRS.MANEKA GANDHI V. UNION OF INDIA [ 1978 (1) TMI 161 - SUPREME COURT] the Apex Court holds that refusal of such freedom to go abroad would contravene that genuine human right. Therefore the said right cannot be curtailed except in accordance with law. Communication between the 1st and 2nd respondents, the petitioner cannot be prevented or detained for the purpose of questioning or even questioned at any airport or anywhere else on the pretext of exchange of information between the respondents, the Originating Agency and the Bureau of Immigration. Originating Agency and the Bureau of Immigration shall update on their database with regard to non-questioning of the petitioner, as is observed in the course of the order in compliance of the order. The writ petition is disposed of with the above observations reserving liberty in the petitioner to knock at the doors of this Court in the event of any violation of this order. The writ petition is disposed of with the above observations reserving liberty in the petitioner to knock at the doors of this Court in the event of any violation of this order.
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Service Tax
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2023 (3) TMI 379
Levy of Service Tax - Technical Testing and Analysis (TTA) services or mining services - service tax for the period 10.9.2004 to 31.3.2008 demanded under TTA services but assessee paid tax under mining services - it is the submission of the learned counsel that once it is undisputed that from 1.6.2007, the services rendered by the appellant fall under mining services , they cannot be classified under any other category prior to that date - time limitation - suppression of facts or not - HELD THAT:- It is undisputed that the appellant provides wireline logging, perforation and data processing services to ONGC and OIL. The appellant has been paying service tax on these three services from 1.6.2007 under the head mining services and the department has not disputed this classification of the service. Once the department accepted that these are mining services , it cannot, simultaneously, classify them under TTA services. Unless the department can establish that the appellant was wrong in classifying these services under mining services and the department itself was equally wrong in accepting their classification under mining services , the department cannot classify the services under any other head, including TTA - it is not found in the impugned order explaining why the department and the appellant were both wrong in classifying them as mining services . Therefore, the demand cannot be sustained on merits. Time Limitation - HELD THAT:- The scheme in Finance Act, 1994 is that if the assessee does not self-assess tax correctly, the remedy against it is the Best Judgment Assessment under section 72. This provision is similar to the provision for re-assessment under Section 17 (4) of the Customs Act, 1962. The Commissioner imagined that wrong self-assessment by an assessee would amount to deliberate mis-declaration and suppression of facts with intent to evade. As per the Finance Act, 1994, if the assessee wrongly self-assesses tax in its returns and none of the five elements required to invoke extended period of limitation is present and if the demand gets time-barred, the responsibility for it rest squarely on the officer who had the jurisdiction and the mandate to the Best Judgment assessment under section 72 but has not done so and NOT on the assessee. Therefore, the invocation of the extended period of limitation cannot be sustained. Demand of interest and penalties - HELD THAT:- The demand of interest and penalties also deserve to be set aside as it is held in favour of the appellant both on merits and on limitation. Appeal allowed.
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2023 (3) TMI 333
Framing of an assessment during pendency of CIRP - Moratorium period or not - proceedings for assessment had commenced after the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted by the National Company Law Tribunal (NCLT) and a Corporate Insolvency Resolution Process (CIRP) had commenced - petitioner claims that in terms of Section 14 of the IBC, no such proceedings could be commenced against the petitioner - demand of service tax - CENVAT Credit. HELD THAT:- Pendency of CIRP confers no impediment in framing the assessment. But no recovery proceedings can be initiated for recovery of the liability assessed. This is clear from the following extract from the decision in SUNDARESH BHATT, LIQUIDATOR OF ABG SHIPYARD VERSUS CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS [ 2022 (8) TMI 1161 - SUPREME COURT] where it was held that the respondent could only initiate assessment or reassessment of the duties and other levies. They cannot transgress such boundary and proceed to initiate recovery in violation of Sections 14 or 33(5) of the IBC. The interim resolution professional, resolution professional or the liquidator, as the case may be, has an obligation to ensure that assessment is legal and he has been provided with sufficient power to question any assessment, if he finds the same to be excessive. Merits of the case - HELD THAT:- This Court does not consider it apposite to entertain this challenge as the petitioner has an equally efficacious remedy of filing an appeal. The petitioner is, essentially handicapped on account of requirement of making a pre-deposit for availing the statutory remedy of an appeal. Given the nature of challenge and also the fact that the petitioner s company is undergoing CIRP, it is considered apposite to direct that in the event, the petitioner prefers appeal(s) within a period of two weeks from today, the same would be entertained uninfluenced by any question of delay or insistence of any pre-deposit. Petition disposed off.
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2023 (3) TMI 332
Classification of services - services availed by the Appellant from Verizon Inc (located outside India) - classifiable as Internet Telecommunication Service or are classifiable as Leased Circuit Service (upto 31 May 2007) and there after Telecommunication Service , having been provided by an entity not qualifying to be a Telegraph Authority - Cenvat credit of alleged service tax liability - extended period of limitation - penalty - revenue neutrality - HELD THAT:- The issue herein is squarely covered by the precedent ruling of this Tribunal, co-ordinate bench in TCS E-SERVE LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [ 2014 (6) TMI 655 - CESTAT MUMBAI] . In the facts of the said case TCS E-Serve was engaged in providing call centre services, collection and sales services and computerised data processing services to various customers in India and abroad, were registered with the department of service tax under the category of BAS BSS - This Tribunal held that service tax liability does not arise under Section 66A of the Finance Act, if service is not specified under Section 65(105) of the Finance Act. Applying the ratio, the Tribunal held that it is not enough that the service provider provides lease services but it should also be a Telegraph Authority as defined in the Act. Unless both the conditions are cumulative satisfied, service tax levy is not attracted. Appeal allowed - the question of limitation left open.
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Central Excise
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2023 (3) TMI 331
Seeking waiver of pre-deposit of 7.5% of duty for maintaining an appeal - petitioner claims that the interest of the revenue is fully protected as the petitioner is entitled to the refund of CENVAT credit which has not been processed yet - HELD THAT:- This Court is unable to accept that the petitioner can set off its obligation to make a pre-deposit against its claim for the refund of CENVAT credit. However, we find merit in the contention that the petitioner s remedy of an appeal would be rendered illusory in the given circumstances where the petitioner does not have the liquid funds to make the said deposit. After some arguments, learned Counsel appearing for the petitioner states that the petitioner would make a deposit equal 2.5% of the liability instead of 7.5% to maintain the appeal against the order-in-original dated 26.11.2021 - thus, it is considered apposite to direct that if the petitioner deposits an amount equivalent to 2.5% of its liability, the petitioner s appeal against the order in original would not be rejected solely for want of the requisite pre-deposit. Petition disposed off.
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Indian Laws
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2023 (3) TMI 378
Dishonour of Cheque - Rejection of claim against the Opposite Party Nos.2 and 3/Bank who failed to discharge their duty and service to him as per the RBI guidelines - illegality in not intimating regarding the status of the cheque deposited by him in the said bank in spite of several approach made by him. HELD THAT:- From the materials on record, it is clear that the Petitioner has presented a counter-foil dated 12.06.2017 with bank seal as proof that his deposit was duly acknowledged by the bank. However, generally in banks, the cheques are dropped in a Drop in Box and no receipt is issued. If the depositor insists for the receipt, the counterfoil of the pay-in-slip is stamped and is returned to the depositor. But, this does not signify that the deposit via cheque is successful from the Bank s end. The depositor is usually notified via his registered phone number with the Bank if his deposit has been successfully processed. In the instant case, the Petitioner has contended that after deposit of the cheque no intimation was received by him from the Opp. Party No.2/ Bank and due to his arrest after 7-8 days of the deposit of the said cheque, he could not contact the Opp. Party No.2/ Bank to know about the status of the aforesaid cheque. The fact that the Petitioner or any of his acquaintances did not inquire about the status of the cheque for approximately 2 years (5years in total) from the date of deposit itself casts a doubt on the genuineness of the Petitioner s claim - the Petitioner in the instant case did not inquire about the status of deposit even after a week and thereafter, he was arrested. Moreover, a case for obtaining money through fraud has been registered against the Petitioner vide Badambadi P.S Case No.136/2017 under Sections 420, 467, 471 and 406 of IPC. The cheque in question in the present Writ Petition is also the subject matter of the said criminal case and the same is pending for trial. Since, a criminal case is pending against the Petitioner where he has been accused of receiving huge sums of money amounting to Rs.1,44,77,000/- for committing fraud, it is imperative that the case be investigated in proper prospective so as to unearth the true dimensions of the crime. Under these circumstances, this Court is not expected to marshal the records with a view to decide admissibility and reliability of the documents or records. Petition dismissed.
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2023 (3) TMI 377
Refusal to issue a No Objection Certificate (NOC) in favour of the petitioner so as to enable him to get his full pension after his superannuation on 31.10.2017 - refusal to release the leave encashment and gratuity payable - the only reason on which the petitioner has been denied his terminal benefits and full pension, is that, in a Special Audit conducted for the Punjab Bhawan, for the period between 2002-2003 and 2003-2004, some irregularities were pointed out - HELD THAT:- Once it is an admitted position that, even after five years since the petitioner s superannuation neither any criminal proceedings, nor any departmental proceedings, have been initiated against him, there is absolutely no justification on the part of the respondents in withholding the petitioner s terminal dues. An employee after rendering long years of service, especially like the petitioner, who was even granted extension after he reached the prescribed age of superannuation and worked at the respondent organisation for 33 years, looks forward to receiving his terminal benefits and pension which would give him some succour in his old age. In the present case, however, it is the respondent s own case that some objections were raised in the report pertaining to the Special Audit conducted in 2006, and the relevant file which formed the basis for raising allegations on the petitioner s conduct, was, according to the respondents, misplaced and resurfaced again in May 2017. There is no explanation by the respondents as to why, once the file, even as per the respondents, resurfaced in May, 2017, no finality has been given to the Special Audit Report.There is absolutely no justification on the part of the respondents in not completing the exercise regarding the Special Audit to arrive at a final decision in respect of the petitioner, even after a period of five years since his superannuation. The petitioner, who is already in the evening of his life, cannot be left to wait endlessly for the respondents to complete their purported Special Audit exercise, and that too when even as per the own stand of the respondents, the audit report was furnished in 2006 itself. The writ petition, therefore, deserves to be allowed. Petition allowed.
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2023 (3) TMI 376
Suit for recovery of money - Loan or gift. Whether the plaintiff had given a loan to the defendant in each of the suits and if so, on what terms, if any, as to repayment and interest? - HELD THAT:- The defendant had set up a sole defence that the amounts were being remitted by the plaintiff regularly to the accounts of various family members as gift, but the entire amount was being credited back to the Chirag International Pvt. Ltd., a Company held by the plaintiff in Sri Lanka. It was his defence that the money, though being shown as a gift to defendant and other family members, was being remitted back immediately to the plaintiff in a circuitous manner. It was first transferred to Vipin Enterprises and the Dinesh International Pvt. Ltd. which were the family Companies/Partnership Firms and thereafter, transferred to Chirag Pvt. Ltd. located in Sri Lanka and owned by the plaintiff - While this defence has been taken and the affidavit of evidence was tendered by the defendant, but he failed to step into the witness box for cross-examination and, therefore, failed to tender any evidence in proof of his defence. No admissible evidence has been led by the defendant to prove that the money received from the plaintiff was returned. It is thus held that it is proved by the evidence on record that the plaintiff had admittedly remitted a sum of USD $ 4,70,000/- (in CS(OS) 1240/2008) to the defendant Mr. Daya Kishan Goel and a sum of 2,30,000 $ to the defendant (in CS(OS) 1239/2008) through his father which the defendants have failed to return. Whether the defendant in each of the suit had received the monies as gift? - HELD THAT:- The defendant himself has failed i.e., admissible evidence to substantiate his defence that the amount had been received as a gift. However, as already discussed above, he himself has admitted that the amount received by him was intended to be returned to the plaintiff in a circuitous manner through the partnership firms/Companies of the family members and the plaintiff and the defendant in India, to Chirag Pvt. Ltd. - defendant has failed to prove his defence of the money having been received as gift which was not intended to be returned. The issue is decided against the defendant. Whether the defendant in each suit is not liable for refund of the monies, also for the reason of transfer of monies at the instance of the plaintiff, as averred in the written statement? - HELD THAT:- The defendant was liable to refund the monies to the plaintiff which he failed to do. If the plaintiff is found entitled to recovery of money but no agreed term of rate of interest is proved, whether the plaintiff is entitled to any interest, and if so, at what rate and for what period? - HELD THAT:- The plaintiff has further asserted that the defendant had agreed to pay an interest @18 per annum from the date of transmitting the loan amount to his account, but there is no cogent evidence produced in this regard. The Legal Notice Ex.PW1/5 demanding the money and the interest was served upon the defendant Daya Kishan Goel only on 27th March, 2008. The plaintiff has not been able to prove that there was any agreement to pay interest @18 per annum - the plaintiff is entitled to interest @ 6% from the date of institution of the Suits till the realization of the amount. The two Suit of the plaintiff are accordingly decreed.
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