TMI Tax Updates - e-Newsletter dated: March 12, 2024 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws

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TMI Tax Updates - e-Newsletter March 12, 2024 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Validity of provisional attachment order - benefit of Input Tax Credit availed from invoices issued from non-existing firms - It observes that the impugned order lacks proper grounds and reasons for the provisional attachment, violating the principles outlined in Section 83 and Rule 159(5) of the CGST Rules. - Citing precedents from the Gujarat High Court and the Andhra Pradesh High Court, the court emphasizes the necessity for the attachment order to disclose reasons and grounds. - Consequently, the court sets aside the impugned order of provisional attachment, affirming the petitioner's contention regarding the lack of proper reasoning. Visit to Get Source Income Tax: Exemption u/s 10 (23C) (vi) - generation of surplus from year to year - the court referred to precedents and a clarificatory circular issued by the Ministry of Finance. It highlighted that the mere generation of surplus income did not necessarily disqualify an educational institution from exemption under Section 10 (23C) (vi), as long as the surplus was used for educational purposes. Visit to Get Source Income Tax: Reopening of assessment u/s 147 - validity of order passed u/s 148A(d) - With Regard to the approval under Section 151 of the Income Tax Act, the High Court questions the decision-making process of the Principal Commissioner of Income Tax (PCIT). Despite the petitioner's objections to the accuracy of the information, the PCIT granted approval, indicating a potential lapse in due diligence or application of mind. - The court suggests that the CIT should have either declined approval or directed the Assessing Officer to address the petitioner's concerns adequately. - The court quashes and sets aside the impugned order and notice. Visit to Get Source Income Tax: Method of communication of notice - The High Court examined the provisions of Section 282(1) of the Income Tax Act, 1961 and Rule 127(1) of the Income Tax Rules, 1962 regarding the method and manner of service of notice. - The Court concluded that communication of notice electronically should adhere strictly to the prescribed methods and does not include presumptive notification by placing it on the e-portal. - The Court ruled in favor of the petitioner, stating that they were not given a fair opportunity to respond to the proceedings under Section 12A(1)(ac)(iii) of the Act of 1961. Visit to Get Source Income Tax: Proceedings u/s.144 - NFAC has noted the assessee’s continuous non-appearance in the lower appellate proceedings before rejecting his contentions vide ex-parte order under challenge - The ITAT observed that the NFAC's order did not address the substantive grounds raised by the assessee on merits, as mandated by section 250(6) of the Act. Consequently, the court deemed it appropriate to restore the appeal back to the NFAC for fresh adjudication, with a directive for a detailed discussion on the merits of the assessee's contentions. Visit to Get Source Income Tax: Unexplained expenditure - certain entries were found unmatched / not accounted for in the books of accounts in the expense ledger of the assessee - The assessee contended that the expenses were accounted for but not individually, and were incurred by employees at respective sites, later reimbursed by the assessee. However, the Tribunal (ITAT) found the explanation insufficient, emphasizing the need for proper documentation and evidence. While partially allowing the appeal, the tribunal imposed a restricted disallowance of 25% of the amount determined by the AO. Visit to Get Source Income Tax: Addition as suppressed income on cash sales - unexplained cash deposit which is brought into the assessee’s books in guise of sales before demonetization period u/s. 68 r.w.s. 115BBE - The Tribunal upheld the appellant's stance, justifying acceptance of cash sales based on detailed submissions and evidence provided. Visit to Get Source Income Tax: Condonation of delay - delay of 17 days filling appeal before ITAT - The Tribunal observed that the delay in filing the appeal was 17 days beyond the prescribed period. The reasons provided for the delay, including the ill health of the Karta, were considered insufficient as the medical reports submitted were not indicative of any serious ailment. - Tribunal deemed the explanations insufficient and dismissed the appeal on grounds of limitation. Visit to Get Source Income Tax: Addition of income u/s 56(2)(x)(b)(B) - under valuation of stamp duty value on purchase consideration of the property u/s 50C - The assessee asserts that only a partial amount of the purchase consideration was paid, and the transaction is embroiled in a legal dispute, hence section 50C should not be applicable. - The ITAT noted that despite the assessee's claim of only a partial payment, the sale deed indicated otherwise. As a result, the tribunal upholds the addition to the assessee's income under section 56(2)(x)(b)(B) for the differential amount between the stamp value and the purchase consideration. Visit to Get Source Income Tax: Reopening of assessment u/s 147 - reasons to believe - The Tribunal held that the reasons for reopening the assessment were vague and non-specific, and there was no failure on the part of the Assessee to fully disclose all material facts during the original assessment proceedings. Therefore, the initiation of reassessment proceedings was struck down. Visit to Get Source Income Tax: Capital gain - STCG - compensation on the compulsory acquisition of capital assets - The ITAT noted a defect in the order of the CIT(A) as it did not provide the benefit of deduction for the written down value of Rs. 7,67,802/- and also did not give the benefit of acquisition of land with indexation cost. Upon recalculating the capital gain, the Court found that the tax liability of the assessee would reduce significantly. - Assessing Officer directed to delete the addition made. Visit to Get Source Income Tax: Disallowance of export commission paid by the assessee - allowable business expenses or not? - Despite the substantial increase in commission compared to the preceding year, there was no allegation of the commission being paid to a related party or being bogus. The ITAT recognized the challenging market situation in the export industry, which warranted higher commission payments due to extra efforts by commission agents. The Tribunal found that the expenditure was incurred wholly and exclusively for business purposes, with no contradictory evidence on record. - As a result, the ITAT allowed the appeal by the assessee Visit to Get Source Income Tax: Exemption under Section 10(23C)(iiiad) - Determination of threshold of turnover - ‘annual receipts’ versus ‘gross receipt’ - The Assessing Officer (AO) disallowed the claim, stating that the gross receipt of the college exceeded the threshold limit, thereby making it ineligible for exemption under this provision. - However, the Tribunal's decision highlighted that the provision refers to "annual receipts" and not "gross receipts." It argued that voluntary contributions towards corpus, which are uncertain as to time and volume, should not be considered part of the regular, annual receipt of an educational institution. - The Tribunal allowed the college's appeal, directing the deletion of the disallowance of exemption under Section 10(23C)(iiiad). Visit to Get Source Income Tax: Claim of Loss - Deduction u/s. 57 - Taxability of real income / net interest income - The Tribunal observed that the investment in perpetual debt instruments (PDIs) was financed by secured debentures. It was established that the funds raised through debentures were not meant for investment in PDIs but for the objectives of the company. The Tribunal allowed the deduction of interest expenditure against interest income, considering only the net income liable for taxation. - ITAT emphasized that only real income, subject to the provisions of the Act, is taxable. Visit to Get Source Income Tax: Denial of Foreign Tax Credit (FTC) claimed u/s. 90 - there was delay in furnishing Form 67 - The Tribunal referred to a similar case where Form 67 was not filed before the processing of the return under section 143(1) of the Act but was filed subsequently. In that case, the Tribunal directed the Assessing Officer (AO) to give credit for FTC after due verification of Form 67. - The Tribunal concluded that the denial of FTC for the delay in filing Form 67 was not justified. Therefore, it directed the AO to give credit for FTC after due verification of Form 67. Visit to Get Source Income Tax: Benefit of the option of lower rate of tax exercised by the assessee u/s 115BA - claim was denied by the CPC/CIT(A) for the simple reason that the assessee has not filed form 10IB for the assessment year under consideration - The ITAT found that the instructions clarify that Form 10IB is required to be filed only in the first year when opting for the concessional tax rate for the first time. - The ITAT concluded that since the assessee had complied with the requirements and filed Form 10IB in the first year, there was no requirement to file the same for subsequent years. Therefore, the ITAT directed the Assessing Officer to levy tax at the rate of 25% as applicable to the assessee. Visit to Get Source Customs: Customs airports — Appointment for specified purposes - The amendment adds an additional entry for the airport in Bhopal, Madhya Pradesh, specifying its purpose as "Unloading of baggage and loading of baggage." Visit to Get Source Customs: The Circular No. 03/2024-Customs issued with the aim to promote gender inclusivity and ensure a safe working environment for women in the customs sector. It emphasizes the need for custodians of customs facilities to provide gender-specific infrastructure including special Exim counters for the female customs brokers/traders, separate workplace, customer care cells, essential utilities, restrooms etc. and comply with relevant laws to support the participation and well-being of women in trade-related roles. Visit to Get Source Customs: Circular No. 2/2024-Customs issued by the Government of India's Ministry of Finance aims to promote gender equality in international trade. It emphasizes the need for women's representation across all levels and roles in the trade sector be it as traders, customs house agents, freight forwarders, or customs brokers and outlines specific measures for achieving this goal. Key points include encouraging women's participation in trade committees, incorporating women's perspectives into agenda items, establishing dedicated support mechanisms, and providing training opportunities for women in logistics and customs. Visit to Get Source Customs: Confiscation of goods and levy of penalty - Import of Pair of Shoes - mis-declaration/suppression in the import documents - Non-compliance of the provisions of the IPR Rules, 2007 - The CESTAT found the goods to be counterfeit, bearing the logo "UCB" without the right holder's consent, categorizing them as "prohibited goods" under the Customs Act. The appellant's challenge based on the procedure under Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, was dismissed, upholding the confiscation under Section 111(d) and the penalty under Section 112(a)(i). Visit to Get Source Customs: Impleading of the Jurisdictional Commissioner as another respondent alongwith Commissioner (Adjudication) - The Tribunal examined Rule 12 of the CESTAT Procedure Rules, 1982, which states who may be joined as respondents. It was clarified that the Principal Commissioner or Commissioner concerned should be impleaded as the respondent. The Tribunal interpreted the term "concerned" to mean the Commissionerate issuing the show cause notice, making the Principal Commissioner or Commissioner of that Commissionerate the relevant party to the case. - The Tribunal found that there was no restriction on impleading more than one respondent in appeals filed, especially in cases involving multiple jurisdictions. Visit to Get Source Customs: Waiver of pre-deposit - requirement u/s 129E - The case revolved around the appellant's failure to fulfill the mandatory pre-deposit requirement under section 129E of the Customs Act, despite seeking relief from the same. The Tribunal referred various decisions, which upheld the necessity of pre-deposit as per the statutory provisions. Consequently, the CESTAT dismissed the appeal due to non-compliance with the mandatory pre-deposit requirement. Visit to Get Source Customs: Levy of Penalty on Customs Broker - pre-condition to restore the license - The case revolves around a Customs Broker who handled the clearance of household goods without obtaining proper authorization from the importer/exporter. The appellant claimed to have undertaken the formalities in good faith at the behest of the importer, while the department alleged violations of Customs Brokers Licensing Regulations. The CESTAT, after considering the submissions and evidence, found the department's case hyper-technical and set aside the penalty imposed on the appellant. Visit to Get Source Customs: Seeking amendment in the bills of entry - Refund of customs duty wrongly paid - The appellant imported Fitbit Wearable Devices and sought a refund after realizing incorrect classification. The Commissioner (Appeals) allowed the refund for three entries but rejected it for eight, citing non-reassessment and pending amendment applications. The Tribunal directed the Deputy Commissioner to expedite the decision on the pending amendment application. Visit to Get Source Indian Laws: The notification outlines specific exemptions from certain provisions of the Competition Act, 2002 for a period of two years. These exemptions apply to enterprises involved in acquisitions, control acquisitions, and mergers or amalgamations meeting certain criteria related to asset value and turnover. - The notification provides guidance on how to calculate the relevant thresholds under section 5 of the Act. It specifies that when a portion of an enterprise or division or business is involved in the transaction, the value of assets and turnover attributable to that portion or division or business shall be considered. Visit to Get Source Indian Laws: The notification is issued u/s 20(3) of the Competition Act, 2002 relating to Inquiry into combination by Commission. It aims to adjust the thresholds for assets and turnover for the purposes of Section 5 of the Act. - The Central Government, in consultation with the Competition Commission of India, has decided to enhance the thresholds by 150%. This means that the value of assets and turnover used to determine the applicability of Section 5 of the Act will be increased by 150%. Visit to Get Source Indian Laws: The Competition Commission of India (Commitment) Regulations, 2024 - It lays out the requirements for a Commitment Application, including necessary details, fees, timelines, and submission procedures. This section also addresses scenarios where the application is incomplete or defective and the consequences thereof. - Parties are provided with an opportunity to submit objections and suggestions regarding the proposed commitments, ensuring transparency and participation in the process. Visit to Get Source Indian Laws: Competition Commission of India (Determination of Turnover or Income) Regulations, 2024 - (1) Turnover or income for enterprises includes the value of sales, revenue, or receipts, excluding certain items like other income, indirect taxes, trade discounts, and intragroup sales. Guidelines are provided for cases where audited financial statements are not available, requiring certification by a Chartered Accountant and supporting affidavit. - (2) Income for individuals is defined as gross total income as per Income Tax Returns, excluding income from house property and capital gains. Procedures are outlined for cases where Income Tax Returns are not available or not filed, requiring certification by a Chartered Accountant and supporting affidavit. - (3) Guidelines are provided for converting turnover or income not maintained in Indian Rupees into Indian Rupees based on the average of foreign currency reference rates published by the Reserve Bank of India. Visit to Get Source Indian Laws: Competition Commission of India (Determination of Monetary Penalty) Guidelines, 2024 - The guidelines outline the methodology for determining penalties for enterprises under Section 27(b) of the Act, penalties under the proviso to Section 27(b), penalties for persons liable under Section 48 of the Act, penalties under Section 43A, and penalties under Sections 42, 43, 44, and 45 of the Act. Visit to Get Source Indian Laws: Criminal breach of trust - loan and its repayment - dishonest intention or not - proceeding under Section 138 of the N.I. Act is pending for dishonor of cheque - Parallel proceedings or not - This case involved a dispute over the repayment of a loan, where the petitioners (a company and its directors) were accused of failing to fulfill their financial obligations, leading to charges under the IPC. The court's analysis revealed that the dispute was of a civil nature and that there was insufficient evidence of any criminal wrongdoing by the petitioners. Consequently, the court quashed the legal proceedings against them, highlighting the absence of dishonesty or misappropriation and emphasizing the importance of distinguishing between civil disputes and criminal offences. Visit to Get Source Indian Laws: Dishonour of Cheque - The petitioner challenged the dismissal of his application for summoning records/documents for cross-examination purposes. - The High Court reiterated the conditions under which documents could be summoned – when they are deemed "necessary or desirable" for the case's adjudication. The Court found that the documents the petitioner sought were neither relevant nor necessary for a fair trial of the complaint filed under Section 138 of the NI Act. The Court emphasized that the documents' summoning at this stage appeared to be a tactic for a roving inquiry and to unduly delay the trial. Consequently, the petition was dismissed. Visit to Get Source Indian Laws: Market fee/mandi shulk - Whether ghee is a product of livestock - The majority opinion of the Full Bench of the Andhra Pradesh High Court upheld the validity of the 1994 notification, stating that "ghee" is indeed a "product of livestock." The High Court concluded that the notification under challenge was issued under Section 4 of the Act and not under Section 3, hence the procedural requirements of Section 3 were not applicable. - Now the Supreme Court agreed with the High Court's decision, emphasizing that "ghee" is derived from milk, which is a product of livestock, and therefore falls under the definition of "products of livestock" as per the Act. Visit to Get Source IBC: CIRP - Unsecured Financial Creditor or not - Non-registration of charge before the Registrar of Companies - the mortgaged property, will form part of the Liquidation Estate or not - The tribunal recognized the appellant's mortgage rights, stating that non-registration of the mortgage under Section 77 of the Companies Act, 2013, does not invalidate the appellant's status as a secured creditor. It emphasized the rights of a mortgagee under the Transfer of Property Act, 1882, and the SARFAESI Act, 2002, should not be diluted by regulatory provisions introduced later. - The tribunal set aside the adjudicating authority's order, which had classified the appellant as an unsecured creditor, and recognized the appellant's status as a secured creditor. Visit to Get Source SEBI: Securities and Exchange Board of India (Index Providers) Regulations, 2024. - As per the proposed new regulations, the Index Providers must establish complaint redressal policies, provide for dispute resolution mechanisms, and ensure assessments of their adherence to benchmark principles are conducted by independent auditors. They are also required to maintain accurate records and submit reports to SEBI. - SEBI reserves the right to conduct special audits of Index Providers and take appropriate actions in case of non-compliance with the regulations. - These regulations are set to come into force 180 days from their publication in the Official Gazette. Visit to Get Source SEBI: Securities and Exchange Board of India (Index Providers) Regulations, 2024. - The new regulations mandate the registration of entities acting as Index Providers with SEBI, outlining the application process, eligibility criteria, and conditions for maintaining the registration. This includes the requirement for a minimum net worth of twenty-five crore rupees and adherence to the International Organization of Securities Commissions Principles for Financial Benchmarks. - The regulations detail the expectations regarding the quality of Indices and the methodologies used for their calculation and maintenance. It emphasizes the importance of transparency, representativeness, and appropriateness of the Indices as references for financial instruments. Visit to Get Source SEBI: The Securities and Exchange Board of India (SEBI) has introduced new regulations titled "Securities and Exchange Board of India (Index Providers) Regulations, 2024," aiming to establish a regulatory framework for Index Providers in the securities market. The objective is to enhance transparency and accountability in the governance and administration of Indices, fostering a more robust and reliable market infrastructure. Visit to Get Source SEBI: Securities and Exchange Board of India (Real Estate Investment Trusts) (Amendment) Regulations, 2024 - Certain chapters and regulations of the original REIT regulations are not applicable to SM REITs, with specific provisions adjusted for these smaller entities. This includes adaptations in the roles of managers and sponsors towards an "investment manager" model for SM REITs. - The amendment outlines detailed eligibility criteria, registration processes, and operational frameworks for SM REITs, including requirements for the investment manager's net worth, experience, and the structural setup of SM REITs. - It sets out specific conditions for investments and fundraising activities of SM REITs, including limitations on borrowing and requirements for leveraging. Visit to Get Source SEBI: Securities and Exchange Board of India (Real Estate Investment Trusts) (Amendment) Regulations, 2024 - The amendment revises the definition of REITs, highlighting that a REIT pools funds of fifty crores or more from at least two hundred investors for the purpose of managing real estate assets, without giving investors day-to-day control. It explicitly differentiates REITs from companies that offer securities based on real estate assets. Additionally, it introduces SM REITs, designed to pool money under one or more schemes, specifically applying relaxed regulations compared to traditional REITs. Visit to Get Source Service Tax: Classification of service - providing chartered flights to various organization - to be classified under Transport of Passenger by Air Service or supply of tangible goods services? - reverse charge mechanism - The tribunal meticulously dissected the legal provisions, prior judgments, and definitions within the Finance Act and Civil Aviation Requirements to conclude that the services offered by the appellants fall under 'Air Transport of Passengers Services'. It rejected the classification under 'Supply of Tangible Goods Services' for several reasons, including the nature of charter operations and the regulatory framework governing non-scheduled air transport services. Visit to Get Source Central Excise: Demand of interest under Section 11AB of the Central Excise Act, 1944 by invoking extended period of limitation - Interest on duty paid on supplementary invoices - The Tribunal held that since the duty on the supplementary invoices was paid during the period 2008-09 and audit was conducted within a reasonable time thereafter, the demand of interest on supplementary invoices is barred by limitation. The Tribunal set aside the impugned order, concluding that the appellant is not liable to pay interest on the duty paid through supplementary invoices. Visit to Get Source VAT: Validity of assessment orders - Allegation that freight not reported and goods sold with under value - The court finds that the assessing officer's determination of suppressed freight charges lacks a rational basis. The freight charges attributed by the assessing officer are significantly higher than the actual consignment values, indicating flawed reasoning. Additionally, the court notes that the reliance on information gathered from the Internet without specifying its nature raises doubts about the credibility of the assessment orders. - Matter restored back for fresh consideration. Visit to Get Source TMI Short Notes GST: Ensuring Justice in GST Registration Cancellations: A Landmark High Court Ruling Insolvency & Bankruptcy: Limitation Period in Insolvency Appeals: A Step Towards Legal Clarity for determination of relevant date and Condonation of delay in filing an appeal. Articles Apex Court cannot order automatic vacation of the interim orders of the High Courts of staying without passing a speaking order Myths about Trademark Registration Circulars / Instructions / Orders SEBI - SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/14 - dated 11-3-2024 Measures to instill trust in securities market – Expanding the framework of Qualified Stock Brokers (QSBs) to more stock brokers Income Tax - F. No. 225/132/2023/ITA-41 - dated 1-3-2024 Processing of returns of income validly filed electronically with refund claims under section 143(1) of the Income-tax Act, 1961 beyond the prescribed time limits in non-scrutiny cases Customs - PUBLIC NOTICE No. 04/2024 - dated 5-3-2024 Amnesty Scheme for one time settlement of default in export obligation byAdvance License and EPCG authorization holders as per Public Notice 2/2023-DGFT dated 01.04.2023, as amended, from time to time-Reg. News Advisory: Integration of E-Waybill system with New IRP Portals India-EFTA Trade and Economic Partnership Agreement Income Tax Department to mount e-campaign for Advance Tax e-campaign for F.Y. 2023-24 Case Laws: GST 2024 (3) TMI 483 Issuance of provisional attachment order - benefit of Input Tax Credit availed from invoices issued from non-existing firms - no further proceedings drawn by the respondents either by issuance of show cause notice or by any proceedings drawn under Section 73 or for that matter under Section 74 of the CGST Act - HELD THAT:- Except for the words in order to protect the interest of revenue there does not appear to be any reflection of the grounds/reasons/circumstances that compelled the Principal Commissioner to pass the order of provisional attachment. On looking at section 83, what is envisaged is upon initiation of any proceedings under Chapter XII, Chapter XIV or Chapter XV, the Commissioner has to make up an opinion that opinion is to be formed on the basis of the reasons which formed in the course of proceedings from the circumstances that prevailed in between etc., etc. If the opinions were not to be revealed and reflected in the order, the framers of law would have simply held that the Principal Commissioner had the power to issue orders of provisional attachment, protecting the interest of the government revenue. It has been emphatically held by Gujarat High Court in the case of M/S ANJANI IMPEX VERSUS STATE OF GUJARAT [ 2020 (10) TMI 760 - GUJARAT HIGH COURT] and Andhra Pradesh High Court also in the case of M/S ARHAAN FERROUS AND NON FERROUS SOLUTIONS PVT LTD VERSUS THE SENIOR INTELLIGENCE OFFICER [ 2022 (5) TMI 560 - ANDHRA PRADESH HIGH COURT] that once when Rule 159(5) provides for filing an objection, the person who intends to file an objection must know the reasons and grounds under which the order was passed, so that he can effectively file his objection and made the objections and grounds on the basis of which, the order of provisional attachment was passed. There are no doubt for the aforesaid reasons that the impugned order is un-sustainable and the same deserves to be and is accordingly set aside. Nonetheless, the right of the respondents stands reserved if they so want to pass a fresh order under Section 83 after framing of an opinion which may not be spell out in the order enabling the petitioner to avail the remedy available to him under Rule 159(5) of the CGST Rules. Petition allowed. Income Tax 2024 (3) TMI 484 Disallowance u/s 14A - mandation of recording satisfaction to be recorded by the AO - Assessee suo-moto disallowed an expenditure incurred for earning the aforesaid exempt income - HELD THAT:- Satisfaction as required to be recorded under the provisions of section 14A of the Act is not limited to merely disagreeing with the submission of the assessee and requires that the AO should also provide the basis for reaching such a conclusion, after having regard to the accounts of the assessee. However, as noted above, in the present case the AO merely proceeded to compute the disallowance u/s 14A read with Rule 8D without examining the correctness of the claim of the assessee regarding expenditure incurred for earning the exempt income. It is evident from the record that the assessee's own funds, i.e. share capital and reserves surplus, are Rs.2487.78 crore, while investment in tax-free securities is only limited to Rs.165.07 crore and therefore it can be presumed that the assessee had sufficient own funds for making the aforesaid investment in tax-free securities. It is also evident from the record that the assessee has computed the suo-moto disallowance on the basis of the salary cost of the designated employees, however, there is no material available on record to show that the AO has recorded the requisite satisfaction to the effect that the computation made by the assessee is incorrect having regard to the accounts of the assessee. Since, in the present case, no proper satisfaction has been recorded by the AO in terms of the provisions of section 14A(2) of the Act, having regard to the accounts of the assessee, about the correctness of the claim of the assessee in respect of expenditure incurred in relation to exempt income, no reason for upholding the disallowance made by the AO u/s 14A read with Rule 8D of the Rules. Accordingly, the same is directed to be deleted. As a result, ground no.1 raised in assessee s appeal is allowed. Disallowance of expenditure incurred on the feasibility study report - HELD THAT:- From the perusal of the documents available on record, it is sufficiently evident that the assessee ventured into altogether a new line of business, which is different from the existing business of manufacturing paints and enamels. We agree with the conclusion of the learned CIT(A) that the new line of business operates completely on different domains, as the infrastructure, expertise, workforce and all other connected things engaged and involved are completely different. We find that the entire expenditure of Rs.1,74,40,000 was not incurred on obtaining a feasibility report in respect of home improvement and decor business, therefore we direct the AO to restrict the disallowance only to the extent of expenditure pertaining to home improvement and decor business. As a result, ground no.2 raised in assessee s appeal is partly allowed. TP adjustment - non-recovery of charges for providing the letter of comfort/support - international transaction or not? - TPO noted that the assessee has issued non-contractual letters of comfort/support to banks on behalf of some of its subsidiaries from time to time and has not charged any thing from its associated enterprises - whether the aforesaid letters of comfort issued by the assessee to the banks on behalf of some of its associated enterprises constitute an international transaction within the meaning of the Act? - HELD THAT:- From a plain reading of the aforesaid provision, it is evident that for a transaction to be an international transaction it has to be between two or more associated enterprises, either or both of whom are non-residents. Undoubtedly, in the present case, the assessee issued letters of comfort on behalf of its associated enterprises outside India. Thus, in our considered view, the first condition for being an international transaction is satisfied in the present case. It is pertinent to note that the corporate guarantees issued by the assessee have already been accepted to be an international transaction by the assessee in the present case. Such being the facts of the present case, we are of the considered view that the letters of comfort issued by the assessee in respect of the credit facility extended to its subsidiaries by the banks outside India, which has been admitted to be a liability by the assessee and thus have a bearing on the assets, constitutes an international transaction within the meaning of section 92B of the Act. Thus we find no merits in the submission of the assessee that it is not financially obligated to bear the cost of repayment of loans to the banks in case subsidiaries default in repayment, as the assessee itself has treated the credit facility extended to its subsidiaries pursuant to the letters of comfort as its contingent liability. During the hearing, no material was brought on record to controvert the disclosure made by the assessee in its financial statement. Further, from the document of the credit facility extended to Berger International Ltd, Singapore, we find that the credit facility was extended on the security/support of the letter of comfort issued by the assessee. As regards the ALP of the letters of comfort, the TPO considered 0.50% as the arm s length rate (being 50% of 1% fee for guarantee commission). While the learned CIT(A) reduced the arm s length corporate guarantee commission to 0.20%, and the arm s length rate for letters of comfort was also reduced to 0.04% (being 20% of 0.20%). During the hearing, the learned AR without prejudice to the main submission that the letters of comfort issued by the assessee are not an international transaction submitted that the corporate guarantee issued by the assessee cannot be compared with the letters of comfort and therefore agreed with the computation of arm s length rate of 0.04%. Agreeing with the submissions of the assessee, we upheld the findings of the learned CIT(A) in computing the arm s length rate of the letter of comfort to be @0.04%, finding the same to be reasonable in the peculiar facts and circumstances of the present case. Accordingly, ground no.3 raised in assessee s appeal is dismissed. Allowability of expenditure u/s 35(2AB) - on receipt of the certificate in Form No.3CL, the AO granted partial relief to the assessee and restricted the disallowance - HELD THAT:- We find that while deciding a similar issue the coordinate bench of the Tribunal in assessee s own case in Asian Paints Ltd [ 2014 (1) TMI 16 - ITAT MUMBAI] as held relevant provisions of the Act did not contain any specific condition that the deduction u/s 35(2AB) and accordingly the claim of the assessee for deduction u/s 35(2AB) will be restricted to the amount of R D expenditure as contained in the certificate. The Tribunal found on verification of the relevant details that even the expenditure is not included in the said certificate was eligible for deduction u/s 35(2AB) in respect of the said expenditure was allowed by the Tribunal. In our opinion, the issue involved in the case of Torrent Pharmaceuticals [ 2009 (11) TMI 819 - ITAT AHMEDABAD] thus is similar to the one involved in the present case and this position is not disputed even by the Id. DR at the time of the hearing before us - Decided against revenue. Restricting the disallowance of damaged stock in the valuation of the closing stock - HELD THAT:- We find that while deciding a similar issue in assessee s own case the coordinate bench of the Tribunal in Addl. CIT v/s Asian Paints Ltd [ 2022 (7) TMI 1508 - ITAT MUMBAI] as respectfully following the earlier decision of the ITAT, Ld.CIT(A) in the present appeal also allowed the same. Considering the fact on record and also this method is consistently followed by the assessee over the years there is no loss to the revenue. Accordingly, we do not find any reason to interfere with the findings of the Ld.CIT(A). Accordingly, ground raised by the revenue is dismissed. Allowance of balance additional depreciation - asset put to use less than 180 days - as submitted that as per the provision to section 32(ii)(b), if the assets are put to use for less than 180 days in the previous year, then the deduction in respect of depreciation shall be restricted to 50%. Accordingly, the assessee could claim only 10% of the additional depreciation for additions made in the second half of the financial year 2010-11 and the balance 10% additional depreciation was claimed in the year under consideration - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case cited supra, for the assessment year 2011-12 [ 2022 (7) TMI 1508 - ITAT MUMBAI] decided the similar issue in favour of the assessee by following the earlier decisions rendered in assessee s own case it is well settled by a number of judicial precedents that if for use of new plant and machinery for a period of less than 180 days the entire amount of additional depreciation cannot be claimed in the subject assessment year, the balance unclaimed amount can be claimed in the subsequent assessment year. It is also a fact on record, against similar claim allowed by learned Commissioner Appeals) in assessee's own case in Assessment Year 2008- 29, the revenue has not preferred any appeal before the Tribunal. In view of the above, we uphold the decision of Jeaned Commissioner (Appeals) on the issue. Ground raised is dismissed. TDS u/s 194H - Allowance of expenditure incurred on the Trip Scheme - disallowance u/s 40(a)(ia) - assessee is having huge chain of dealers across India and it is incurring expenses under various heads of the consolidated head advertisement promotion expenses - HELD THAT:- As decided in [ 2022 (2) TMI 1428 - ITAT MUMBAI] for the assessment year 2010-11, the scheme is closely linked to assessee's business activity. It is also a fact that the assessee has not paid any amount to the dealers and distributors, but amount spent has been paid to SOTC for organizing the trip. It is also a fact on record that the amounts paid to SOTC has been subjected to TDS as per the relevant provision. Therefore, the allegation of the Assessing Officer that the amount has not been subjected to deduction of tax is without any basis. As regards the applicability of section 194H of the Act, by no means, the Assessing Officer has established on record that dealers/distributors are agents of the assessee. Further, as we find, the trip scheme has been introduced by the assessee from past 20 years and the deduction claimed by the assessee on account of such trip scheme has never been disallowed by the Assessing Officer except for the impugned assessment year. Therefore, even applying the rule of consistency, the expenditure claimed by the assessee has to be allowed. Addition on account of waiver of royalty received from two subsidiaries - Royalty is calculated @3% of associated enterprises sales as per the agreement duly signed and executed - HELD THAT:- As per section 5(1) of the Act in the case of a resident, the total income, inter-alia, includes all income from whatever sources derived which accrues or arises to him outside India during the year. As per the assessee, it is entitled to receive the Royalty from its overseas subsidiaries @3% on the net sales price of products sold by the overseas subsidiaries. Thus, the net sale price of the products sold can only be determined at the end of the financial year and accordingly, the amount of Royalty payable to the assessee can only be computed thereafter. Therefore, prior to the end of the financial year, no amount accrues or arises to the assessee outside India. In the present case, prior to the determination of the net sale price of the products sold, the assessee had decided to waive Royalty by 2%. No material has been brought on record to show that there is no understanding between the assessee and its overseas subsidiaries to waive the Royalty. Such being the facts, we are of the considered view when only 1% Royalty is payable by the overseas subsidiaries, therefore the AO has no authority to make an addition of the balance 2% Royalty waived by the parties, which is nothing but a notional income considered taxable by the AO in assessee s hands. Before concluding, it is pertinent to note that in the assessment year 2011-12, the coordinate bench of the Tribunal decided a similar issue in favour of the assessee. Accordingly, in view of the aforementioned findings, we find no basis in the impugned addition made by the AO. As a result, ground raised by the Revenue is dismissed. Allowance of Corporate Social Responsibility ( CSR ) expenses - HELD THAT:- Explanation-2 to section 37(1) of the Act was introduced from 01/04/2015 and is prospective in nature, therefore CSR expenditures incurred prior thereto are allowable expenditures. We find that the in Pr.CIT v/s PEC Ltd [ 2022 (12) TMI 759 - DELHI HIGH COURT] held that amendment brought by way of Explanation 2 to section 37(1) by Finance Act, 2014, with effect from 1-4-2015 is prospective in nature and thus, CSR expenditure incurred prior to 1-4-2015 was to be allowed. Since, in the present case, it is undisputed that the aforesaid expenditure incurred by the assessee is towards its Corporate Social Responsibility, therefore we find no infirmity in the findings of the learned CIT(A) in allowing the expenditure in the year under consideration. As a result, ground no.8 raised in Revenue s appeal is dismissed. Sundry balances written off - HELD THAT:- As per the assessee, it has changed its practice from the assessment year 2012-13, where sundry balances written off is claimed as deduction, and sundry balances written back is offered for tax in its return of income. The assessee submitted that the expenditure is normal business expenditure and allowable as deductible expenditure. However, from the perusal of the record, we find that neither there is an examination of the aforesaid claim of the assessee nor any details were furnished. Accordingly, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication. The assessee is directed to file necessary details/documents in support of its claim of deduction of sundry balances written off. As a result ground raised in Revenue s appeal is allowed for statistical purposes 2024 (3) TMI 482 Exemption u/s 10 (23C) (vi) - generation of surplus from year to year - exemption denied as surplus being generated is not incidental to educational purposes - HELD THAT:- This Court observes that the Ministry of Finance, Department of Revenue, Central Board of Direct Tax issued a Circular bearing No. 14/2015 (F.No.197/38/2015-ITA-I) dated 17.08.2015, stating therein that representations have been received seeking clarification on certain issues relating to grant of approval and claim of exemption u/s 10 (23C) (vi) and vide the said circular, it was clarified that the mere generation of surplus from year to year cannot be a basis for rejection of application under Section 10(23C) (vi) of the Act of 1961. The petitioner is claiming that it is being run as a Trust solely for educational purposes, and thus, seeking the exemption under Section 10 (23C) (vi) of the Act of 1961, and the generation of surplus from year to year cannot be bar in seeking such exemption under the said provision of law. This Court further observes that after the judgment rendered by the Hon ble Apex Court in case of Queen s Educational Society [ 2015 (3) TMI 619 - SUPREME COURT] and issuance of the aforementioned clarificatory Circular, the case of the present petitioner needs to be duly considered by the respondents. Thus, in light of the aforesaid observations and looking into the factual matrix of the present case, particularly, the precedent of Queen s Educational Society (supra) and the aforementioned clarificatory circular, the present petition is partly allowed; accordingly, while quashing and setting aside the impugned order matter is remanded back to the respondents with a direction to re-consider and decide the application in question preferred by the petitioner under Section 10 (23C) (vi). 2024 (3) TMI 481 Reopening of assessment u/s 147 - validity of order passed u/s 148A(d) - According to the AO, the information is enough to suggest that the income has escaped assessment - eligible sanction accorded u/s 151 or not ? - information suggested that Petitioner had booked a fictitious loss - HELD THAT:- According to us, this order passed under Section 148A(d) of the Act defies sense because the entire basis on which the notice under Section 148A(b) of the Act was issued, is because the information suggested that Petitioner had booked a loss and fictitious loss and when Petitioner has given evidence that the entire information is incorrect and infact Petitioner has made a profit AO should have reflected on the information submitted by Petitioner and passed orders suitably. In the order passed u/s 148A(d) AO has reproduced the entire reply given by Petitioner to the notice issued u/s 148A(b) of the Act and therefore, even Petitioner s case was before the PCIT who accorded sanction u/s 151 - The fact that PCIT has granted sanction when Petitioner has highlighted that the entire information, based on which the notice u/s 148A(b) issued was incorrect, the PCIT should have either refused to grant sanction or directed the AO to deal with the stand taken by Petitioner appropriately. Not having done that, reflects non-application of mind even by the PCIT. In our view, the impugned order and the impugned notice u/s 148A(d) and 148, respectively, are required to be quashed and set aside, which we hereby do. 2024 (3) TMI 480 Seeking order or direction to release the outstanding payment along with interest on delayed payment at the rate of 15% per annum for the outstanding dues - dues in lieu of the work carried out by the petitioner company since 20.03.2011 for setting up, management and operating of 1542 Common Service Centres (CSC) in central and southern Assam - petitioner contended that the respondent No.3 under the garb of notices u/s 226(3) of the Income Tax Act, 1961 are not making payment of the outstanding dues. HELD THAT:- From perusal of the Apex Court order [ 2017 (3) TMI 1945 - SC ORDER] it is clear that the petitioner withdrew the petition with liberty to avail the remedy under the Income Tax Act. As the respondent submits that in view of the aforesaid development, the petitioners are trying to re-agitate the issue before the High Court of MP, Indore Bench by filing a petition when the issue with regard to recovery has been put to rest in earlier two rounds of litigation, therefore, this petition is not maintainable before the Indore Bench of High Court of MP, and hence deserves to be dismissed. Heard learned counsel for the parties. This Court finds force in the submissions made by the learned counsel for the respondent No.2. Accordingly, this petition being not maintainable and also on the ground of jurisdiction is hereby dismissed at the admission stage itself. 2024 (3) TMI 479 Method of communication of notice - Service of notice generally u/s 282(1) - as per assessee SCN was not sent on the petitioner s email or otherwise and was only reflected on the e-portal of the Department - Notice initiating proceedings under Section 12A(1)(ac)(iii) - HELD THAT:- It is essential that before any action is taken, a communication of the notice must be in terms of the provisions as enumerated hereinabove.The provisions do not mention of communication to be presumed by placing notice on the e-portal. A pragmatic view has to be adopted always in these circumstances. An individual or a Company is not expected to keep the e-portal of the Department open all the time so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms etc..The principles of natural justice are inherent in the income tax provisions and the same are required to be necessarily followed. This Court is of the firm view that the petitioner has not been given sufficient opportunity to put up his pleas with regard to the proceedings under Section 12A(1)(ac)(iii) of the Act of 1961 and as he was not served with any notice. Therefore, he would be entitled to file his reply and the Department would of course be entitled to examine the same and pass a fresh order thereafter. Writ Petition is allowed and the order is quashed and set aside. 2024 (3) TMI 478 Disallowance of deduction u/s 80P by way of processing under sub-sec.(a)(v) thereof - HELD THAT:- Revenue could hardly dispute that such a deduction under Chapter-VIA have been made disallowable in sec. 143(1)(a)(v) processing vide Finance Act 2021 w.e.f. 01.04.2021 without having any retrospective effect. We are in assessment year 2018- 2019 only. This being the clinching factual and legal position, it is held that the impugned processing dated 03.09.2019 as upheld in the CIT(A)'s order, disallowing sec. 80P claim is not sustainable in law going by stricter interpretation as per Commissioner of Customs (Imports), Mumbai vs. M/s. Dilip Kumar And Co. Ors.[ 2018 (7) TMI 1826 - SUPREME COURT ] . Ordered accordingly. 2024 (3) TMI 477 Proceedings u/s.144 - NFAC has noted the assessee s continuous non-appearance in the lower appellate proceedings before rejecting his contentions vide ex-parte order under challenge - HELD THAT:- Revenue could hardly dispute the clinching fact that the NFAC s order has nowhere decided the assessee s substantive grounds on merits as contemplated u/sec.250(6) of the Act requiring it to give points for determination followed by a detailed discussion thereof. Faced with the situation, we deem it appropriate in the larger interest of justice to restore the assessee s instant appeal back to the NFAC for it s afresh adjudication, preferably within three effective opportunities of hearing, subject to the rider that it shall be the taxpayer s onus and responsibility only to file and prove all the relevant facts in consequential proceedings. The impugned delay of 4 days herein is condoned as per assessee s solemn averments in light of Collector, Land Acquisition vs., MST Katiji [ 1987 (2) TMI 61 - SUPREME COURT] having settled the law long back that all such technical aspects must make a way for the cause of substantial justice.This assessee s appeal is allowed for statistical purposes in above terms. 2024 (3) TMI 476 Unexplained expenditure - certain entries were found unmatched / not accounted for in the books of accounts in the expense ledger of the assessee - As per AO assessee has not been able to match the expenses on one to one basis and in absence of a clear and satisfactory explanation, the expenses remained unexplained - CIT(Appeals) dismissed the appeal of the assessee by observing that it is an uncontroverted fact that the impugned expenses have not been accounted for in the books of accounts and explanation of the assessee that these expenses were first incurred by the employees at respective sites, which were subsequently reimbursed by the assessee to employees is also not acceptable HELD THAT:- Section 69C came into force with effect from 01.04.1976, the provision is merely clarificatory and embodies a rule of evidence which is even otherwise quite clear. When there is direct and clear evidence of expenditure not recorded in the books, the ITO would be entitled to treat the amount of expenditure or unexplained part of it as income from undisclosed sources, as the case of proven expenditure is in principle no different from that of a cash credit. See YADU HARI DALMIA [ 1980 (5) TMI 22 - DELHI HIGH COURT] . In the instant facts, we observe that the assessee has not been able to give any plausible explanation for the aforesaid expenses i.e. why they were not accounted for in the books of accounts, the assessee has not been able to file any confirmation of employee s to whom such expenses were reimbursed, and the assessee has also failed to show entries of reimbursement in his cashbook as well. The assessee has only relied on the fact that books of accounts were audited and turnover of the assessee has increased during the year. However, looking into the instant facts and the plea of the Ld. Counsel for the assessee that a reasonable disallowance may be made, in the interests of justice, the disallowance of restricted to 25% of disallowance made by the AO. Appeal of the assessee is partly allowed. 2024 (3) TMI 475 Addition as suppressed income on cash sales - unexplained cash deposit which is brought into the assessee s books in guise of sales before demonetization period u/s. 68 r.w.s. 115BBE - AO made addition on protective basis in respect of the cash given to cash handlers during demonetization period which was deposited in the bank account - A.R. submitted that the cash deposits in respect of sale of bullions were accepted in the preceding years by the Revenue, in fact, during demonetization period, the assessee has not sold gold but it was buyer to the demonetization period specially in the period of festivities that of Dussehra and Diwali has sold the bullions. HELD THAT:- As the assessee has given required PAN details of the customers from the stock register entry, these details were as per the guideless of the Revenue in cases of the transactions related to the bullion where the mandatory form has been filed stating therein that the assessee is not required to prove the identity and creditworthiness of purchasers who have purchased the goods below 2 lakhs. Thus, the ground of the Revenue is dismissed but through this observation the ground contested by the assessee in assessee s appeal that of ground nos. 1 to 5 is allowed. As regards assessee s ground related to confirmation of addition on protective basis from the perusal of the records, it appears that the Assessing Officer has taken cognizance of the submission recorded by Tejus Desai is not co-related the same with the assessee s transaction as from the records it can be seen that the assessee has not dealt with these parties i.e. M/s. Tejus Enterprises and that of M/s. Shy Bullion. Thus, the addition does not sustain. Assessee appeal allowed. 2024 (3) TMI 474 Addition of income u/s 56(2)(x)(b)(B) - under valuation of stamp duty value on purchase consideration of the property u/s 50C - difference between the stamp value and the purchase value - HELD THAT:- Today is the 11th time of hearing of the above appeal. None appeared on behalf of the assessee and no authorization given to appear on behalf of the assessee. Even in the previous hearings, adjournment requests were sent from the email id of the Chartered Accountant in the name of the assessee, stating his chartered accountant is hospitalized but without enclosing any medical records. Even in the last two hearings before this Tribunal, None appeared on behalf of the assessee. This clearly shows that the assessee is not interested in pursuing the above appeal. Therefore, with the assistant of Ld. Sr. D.R., we are inclined to dispose of this appeal. There is no material on record in support of the Grounds raised by the assessee, namely copy of the Sale Deed and Civil Notice on the dispute pending before High Court of Gujarat, Bank Statements, etc. In the absence of the same and the assessee being habitual non-appearance before the First Appellate Authority as well as before this Tribunal, we have no other option than to confirm the addition made by the Lower Authorities. Appeal filed by the Assessee is dismissed for non-prosecution. 2024 (3) TMI 473 Reopening of assessment u/s 147 - reasons to believe - As argued Reasons for Reopening do not specify either the Specific issues for which case is sought to be reopened and nor the amount of alleged escapement of income chargeable to tax - HELD THAT:- We observe that there is no specific allegation that there is any non-disclosure on part of the assessee during the course of assessment proceedings. In the recent case of PCIT v. DSC Ltd.; 2023 (7) TMI 865 - DELHI HIGH COURT] the High Court held that where assessment was ought to be reopened in case of assessee on ground that a search conducted at DSC Group of Companies revealed bogus purchases made by assessee through unexplained sources, since reasons recorded by AO did not make specific allegations of failure to disclose all material facts by assessee, jurisdictional ingredients for reopening assessment provided in first proviso to Section 147 were absent, both in form and substance and, thus, proceedings were bad in law. In the case of Dhirendra Hansraj Singh [ 2018 (5) TMI 1386 - GUJARAT HIGH COURT] High Court held that where after expiry of four years from end of relevant year, Assessing Officer sought to reopen assessment on ground that deduction u/s 80-IB(11A) was wrongly claimed as assessee was engaged in manufacturing and processing of fruit juices and did not derive profits from processing, preservation and packaging of fruits, since there was no failure on part of assessee to disclose fully and truly any material facts which were necessary for assessment, in view of proviso to Section 147, impugned reassessment proceedings deserved to be set aside. We also agree with the contention of assessee that the reasons for reopening also do not specify the amount of income having escaped assessment, so as to extend the period of limitation beyond four years from the end of the relevant assessment year. Where nothing has been brought on record to show that there was failure on part of the assessee to fully and truly disclose all material facts during the course of original assessment proceedings, we are of the considered view that initiation of reassessment proceedings are liable to be stuck down. Appeal of the assessee is allowed. 2024 (3) TMI 472 Capital gain - STCG - compensation on the compulsory acquisition of capital assets - deduction the cost of acquisition of the land in dispute along with indexation - CIT(A) contended that it has shown the impugned assets being land and building as part of the block of asset and claimed the depreciation thereon, therefore, the written down value should be allowed as a deduction against the compensation received - AR contended that even the compensation received by the assessee towards the land is excluded from the income shown by the assessee under the head short term capital gain, then also the assessee is entitled for the deduction the cost of acquisition of the land in dispute along with indexation HELD THAT:- From the preceding discussion, we note a defect in the order of ld. CIT(A) in so far as the benefit of cost of acquisition with respect to the land has not been provided as mandated under the provisions of law. As such, we note that the ld. CIT(A) on the one hand is denying the benefit of a deduction representing the written down value and on the other hand, the ld. CIT(A) has not given the benefit of acquisition of land along with the indexation cost. Thus, we are of the view that such an order passed by the CIT(A) is not based on the provisions of law. Thus we hold that the order passed by ld. CIT(A) is not sustainable and accordingly, we direct the Assessing Officer to delete the addition made by him. Hence, the grounds of appeal of the assessee are hereby allowed. 2024 (3) TMI 471 Condonation of delay - delay of 17 days filling appeal before ITAT - contentions of the assessee that the Karta of the assessee HUF was not well at the time of filing of the appeal for which copies of certain medical prescriptions and medical lab reports have been submitted before us along with the application for condonation of delay. It is further argued that due to old age of Karta and unwellness, he could not sign the documents of appeal in time. HELD THAT:- As prescriptions submitted before us are not indicating any serious ailments they are for general tests to be undergone by the Karta of the assessee HUF. Ld. AR squarely failed to brought to our attention to any such illness to substantiate the reasonableness in submission of the appeal before the tribunal. The prescription and lab reports submitted before us are dated in November 2022 i.e., 7 months prior to the date of filing of appeal on 06.06.2023 and the other prescription dated 05.07.2023 a/w lab reports dated 21.07.2023 i.e., after one month from the filing of appeal, are regarding general checkup and tests thus, are not substantiating the aspect that the Karta of the assessee HUF was under serious illness thereby helpless in signing and filing the appeal from 21.03.2023 (date of communication of the order) and 60 days thereafter which is prescribed under the statute to file an appeal, this only indicates towards the callous approach of the assessee which is apparently evident from the orders of the Ld. AO and Ld. CIT(A) also. Moreover, when the challan for filing of appeal was already paid before the due date of filing of appeal, non-submission of appeal in time before the tribunal shows careless approach of the assessee. Under such facts and circumstances, we can only infer that the delay was occurred on account of callous and lackadaisical approach on the part of the assessee HUF in not preferring the appeal within the stipulated time period. As observed by the Hon ble Supreme Court in the case of Ramlal, Motilal and Chotelal Vs. Rewa Coalfields Ltd. AIR ( [ 1961 (5) TMI 54 - SUPREME COURT] that seeker of justice must come with clean hands, therefore, now when in the present appeal the assessee appellant had failed to come forth with any substantial clarification to support the application for condonation elaborating in the backdrop of sufficient reason that would justify condonation of the delay involved in preferring of the captioned appeal, therefore, we decline to condone the same and, thus, without adverting to the merits of the case dismiss appeal of the assessee as barred by limitation. 2024 (3) TMI 470 Rectification u/s 154 - adjustment/s made by the AO in disallowing the claim u/s. 11 - assessee being not registered u/s. 12AA, it s claim for exemption u/s. 11 rejected - Alternative claim of exemption u/s. 10(23C)(iiiad) - Determination of threshold of turnover - annual receipts versus gross receipt - voluntary contribution received - as there was no claim u/s. 10 for the AO to have disallowed the claim u/s. 10(23C)(iiiad) per the rectification application, which is in any case not maintainable in view of the assessee s receipt being in excess of the threshold limit of Rs. 100 lakhs HELD THAT:- Elemental to a rectification u/s. 154 are the attributes of mistake and apparent from record , excluding debatable issues, i.e., which do not admit of conceivably two views, and limiting the said view as on the basis of the record and the clear law in the matter. Section 2(24)(iia) of the Act, defining income, makes no exception for a voluntary contribution received toward corpus, so that it is income by definition, though exempt u/s. 11(1)(d)). It is for this reason that capital expenditure is equally an application of income, entitling exemption u/s. 11(1) on income derived from property held under trust (Tiruppani Trust v. CIT [ 1998 (2) TMI 3 - SUPREME COURT] ) The assessee being not registered u/s. 12AA, it s claim for exemption u/s. 11, or for it being a capital receipt, not in the nature of income, is misplaced and, accordingly, stands rightly disallowed on processing the return u/s. 143(1)(a). It s plea for extension of subsequent registration, on the ground that rectification proceedings are a continuation of the assessment proceedings, is misconceived. When processing u/s. 143(1) is itself not an assessment, how could rectification thereof possibly be? That apart, rectification u/s. 154 would necessarily restrict the record to that which can be referred to u/s. 143(1)(a). It s final accounts, however, reflect a loss on operations, which stands mistakenly returned as income. The financial statements form part of the return of income (s. 139(9)) and, therefore, could validly be taken into account for processing it. The matter would accordingly have to travel to the AO for taking the audited final accounts, on the basis of which the assessee has returned income, on record and passing an order u/s. 154 of the Act. Alternate claim for exemption u/s. 10(23C) - As regards the assessee s, an accredited institution supported by Government, alternate claim for exemption u/s. 10(23C)(iiiad), the same stands rightly considered by the AO in the rectification proceedings. The same, it may be appreciated, is not a new claim, but incidental to it s activity of running an educational institution, and on which basis it had been claiming exemption in the past. It is true that equitable considerations are out of place in interpreting tax laws. However, as explained in R. B. Jodha Mal Kuthiala vs. CIT [ 1971 (9) TMI 2 - SUPREME COURT] those laws, like all other laws, are to be interpreted reasonably and in consonance with justice. As it famously remarked in CIT vs. J. H. Gotla [ 1985 (8) TMI 5 - SUPREME COURT] that though equity and taxation are often strangers, attempts should be made that these do not remain always so, and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction. How does an assessee, one may ask, make an alternate claim? And for which, it therefore employs s. 154, subjecting itself thus to the limitations of the said provision. The premise of the Board Instructions as well as the decisions by the higher courts in this regard is that the assessee should get a fair deal. It is, further, irrelevant for the purpose of rectification whether the genesis or the cause of the mistake (in the order/intimation sought to be rectified) is at the end of the Revenue or the assessee, with, as aforenoted, both making the same mistake in the instant case. True, exemption provisions are to be strictly construed. There are however no procedural requirements in respect of a claim u/s. 10(23C)(iiiad), as was the case for s. 10B, as explained in Pr. CIT v. Wipro Ltd. [ 2022 (7) TMI 560 - SUPREME COURT] ousting a later claim thereunder by the assessee. The assessee s Balance Sheet and Income Expenditure A/c clearly reflect it to be qua an educational institution, an aspect on which there is even otherwise no doubt, being the premise for a claim u/s. 10(23C)(iiiab/iiiad/vi). Non-allowance thereof by the Revenue is, thus, a mistake and, rather, as striking as by assessee in claiming exemption u/s. 11 and, further, not on income but on it s receipt. This is as the provision, in relation to the qualifying quantum of receipt, refers to annual receipts and not gross receipt . Corpus donation, being uncertain as to time and volume, is surely not a part of the regular, annual receipt of an educational institution. There is also no scope, while entertaining the said claim, for extending the purview of processing , or indeed of rectification proceedings in its respect, and probe further in the matter, examining, for instance, it s income profile; charter, etc. That is, the very same reason for which the assessee s claim under proviso to s. 12A(2) did not find favour with either the Revenue or with us. The assessee s alternate claim for exemption of it s income, including capital receipt, u/s. 10(23C)(iiiad), which extends to the entire income received by such person, and not it s annual receipt, is not exigible to being disallowed u/s. 143(1)(a). Its disallowance is, accordingly, directed for deletion. We decide accordingly. 2024 (3) TMI 469 Claim of Loss - Deduction u/s. 57 - Taxability of real income / net interest income - Capitalization of the impugned interest income, or of setting it off against preoperative expenditure - claim was for being allowed proportionate interest expenditure against interest income inasmuch as the entire investment in PDI is sourced from secured debt - HELD THAT:- The assessee, a company setting-up business during the relevant year, though claiming loss (qua preoperative expenditure, on setting it off interest income), rightly disallowed, restricts it s claim before us to expenditure incurred by way of interest on secured debt deployed in debt instrument earning interest income, assessed u/s. 56 and, again, rightly so, i.e., in computing the said income. The facts are admitted. It is only real income, unless constrained by law, that is liable to tax. Though the nomenclature perpetual debt is inconsistent with the stated position of parking of business funds, surplus for the time being, the same shall have no immediate bearing in the instant case, limited to deductibility of interest on borrowed capital placed in a debt security for interest. Revenue s insistence on taxing the gross receipt, de hors expenditure there-against, is without any factual or legal basis. In the facts of Tuticorin Alkali Chemicals [ 1997 (7) TMI 4 - SUPREME COURT] there was no claim of expenditure u/s. 57. It is a clear case of misapplication of a decision, applicable in principle, though distinguishable on facts. The disallowance of the balance expenditure, not agitated before us, gets confirmed by default. Assessee s appeal is allowed. 2024 (3) TMI 468 Denial of Foreign Tax Credit (FTC) claimed u/s. 90 - there was delay in furnishing Form 67 - HELD THAT:- The requirement of filing Form 67 within the due date prescribed u/s. 139(1) of the Act cannot be treated as mandatory. Further, it was held that it is to be treated as directory in nature. This is because Rule 128(9) of the Income-tax Rules, 1962 does not provide for disallowance of FTC in case of delay in filing Form 67. On identical facts, the Ahmedabad Bench of the Tribunal in the case of Keval Niraj Hutheesing [ 2023 (3) TMI 1467 - ITAT AHMEDABAD] after considering the judicial pronouncements, had directed the AO to give credit for FTC after due verification of Form 67 filed. In the afore-mentioned case also, Form 67 was not filed before the processing the return u/s. 143(1) of the Act, but was filed subsequently. Thus we direct the A.O. to give credit for FTC after due verification of Form 67. Appeal filed by the assessee is allowed for statistical purposes. 2024 (3) TMI 467 Disallowance of export commission paid by the assessee - allowable business expenses or not? - assessee is a merchant exporter having the business of exporting textiles and other goods - AO found the export commission paid by the assessee, in the year under consideration, to be excessive as compared to the preceding year, thus has computed the disallowance of excess commission - HELD THAT:- Admittedly, in the present case, all the commission has been paid by the assessee to only one party, i.e. AL Saqi Trading LLC, of UAE. It is pertinent to note that there is no allegation that the aforesaid entity is a related party of the assessee or that the commission paid by the assessee is bogus. Therefore, the payment of the export commission by the assessee, in the year under consideration, has not been doubted by the Revenue. As find that in the preceding year commission @ 5.75% of sales was paid by the assessee, while in the year under consideration, the same has increased to 9.79%. As per the assessee, the increased commission was paid due to the difficult market situation in the export industry because of which extra efforts were put in by the commission agents, for which a higher commission was charged. Therefore, when the facts clearly show that the expenditure was incurred wholly and exclusively for the purpose of business and there is no contrary material available on the record, we are of the considered view that merely because a higher commission was paid as compared to the preceding year cannot justify the impugned disallowance by the lower authorities. Accordingly, the part disallowance of the export commission made by the AO and upheld by the learned CIT(A) is directed to be deleted. Decided in favour of assessee. 2024 (3) TMI 466 Benefit of the option of lower rate of tax exercised by the assessee u/s 115BA - claim was denied by the CPC/CIT(A) for the simple reason that the assessee has not filed form 10IB for the assessment year under consideration - HELD THAT:- As per the instructions issued by the CBDT it was clarified that Form 10IB is required to be filed only in the first year when opting for the concessional tax rate for the first time. - In the light of the instructions for filing out form ITR-6 is explained by the CBDT, we do not find any merit in the orders of the authorities below. We according direct the AO to levy tax rate @ 25% as applicable in the case of the assessee. The appeal is accordingly allowed. Customs 2024 (3) TMI 465 Seizure of goods - Show Cause Notice issued - beyond the maximum extended period of limitation of 12 months - No Opportunity for hearing - Violation of natural justice - HELD THAT:- We find that there is no finding on record in terms of reply by the Appellant to the show cause notice served or that personal hearing was rescheduled taking into consideration reasons stated by the Appellant for not being able to attend the same in the first place. We find that the impugned order has been passed by the Learned Commissioner of Customs drawing inference from only the issuance of show cause notice and letters of personal hearing to the Appellant whereas in the light of natural justice the requests made by the Appellant towards rescheduling of personal hearing should be considered. We are of the considered view that the Appellant shall be provided with an opportunity to be heard and present their submissions - We set aside the impugned Order and allow the appeals by way of remand to the Adjudicating Authority to consider the issue afresh. 2024 (3) TMI 464 Confiscation of goods and levy of penalty - Import of Pair of Shoes - mis-declaration/suppression in the import documents - Non-compliance of the provisions of the IPR Rules, 2007 - absolute confiscation of the goods bearing the logo UCB - Notification No.51/2010-Cus (NT) - counterfeit goods - Applicability of the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 - ownership of the logo of UCB and title ROCK (i) Whether jurisdictional Assistant Commissioner of Customs has immediately informed the importer and the right holder or their respective authorized representative through a letter issued by speed post or through electronic mode of suspension of clearance of goods and had stated reasons for suspension as per Rule 7(2) of the Intellectual Property Right (Imported Goods) Enforcement Rules, 2007, (Rules, 2007)? (ii) Whether time limit in sub-rule (3), (4) and (6) of the Rules, 2007 was followed by the jurisdictional Assistant Commissioner? Ownership of the logo of UCB and title ROCK - HELD THAT:- We find that M/s Benetton India Pvt. Ltd is the right holder (Licensee) of the said logo w.e.f. 12.09.2014 to 31.01.2022 as the original agreement dated 26.12.2010 has to be read with the amended agreement dated 12.09.2014 which incorporates the right to use the logo UCB having been registered on a later date. The right holder has also claimed their right on the said logo w.e.f. 25.07.2017. They produced the photograph of the genuine shoe of Benetton having the UCB logo. The contention raised by the appellant that BIL is not the right holder for the logo mentioned on the shoes and they are not licensed for the said logo needs to be rejected. We are, therefore, of the view that the logo UCB belongs to BIL for footwear also and they are the right holder of the logo. Consequently, the use of the said logo by anybody else (the appellant) who is not authorized by BIL would amount to infringement of the trademark of BIL. Counterfeit goods - The goods in question bearing the logo of UCB are counterfeit goods as the appellant has failed to substantiate that they are the rightful owners of the logo and on the other hand BIL has proved that the logo UCB belongs to them and they are the rightful owners of the logo and the appellant by using the said logo on the shoes under import has infringed the trademark rights of BIL. The appellant deliberately suppressed that the goods are marked with the brand/logo as no such declaration was made on the Bill of Entry, Invoice or the Packing List and the goods are therefore liable for confiscation u/s 111(d). Absolute confiscation of the goods bearing the logo UCB - Since the goods fall in the category of prohibited goods , the appellant by his act or omission of not furnishing the correct description of the goods in the import documents has rendered such goods liable for absolute confiscation as per Section 111 and consequently, the import thereof amounts to smuggling . We therefore do not find any error in the impugned order ordering for absolute confiscation of the prohibited goods. The shoes bearing the brand ROCK not being prohibited goods can be released as per the provisions of Section 125 of the Act which provides that the officer adjudging in case of other goods which are not prohibited goods shall give an option to the owner or the person from whose possession or custody the goods have been seized to pay fine in lieu of confiscation. The impugned order holding that such goods not being prohibited goods could not be confiscated absolutely was justified in granting an option to redeem the same on payment of redemption fine u/s 125(1) of the Act. There is no infirmity in the impugned order and hence the same is hereby affirmed. Imposition of penalty u/s 112(a)(i) and Section 114AA - We are of the opinion that the Commissioner has dealt with the issue very reasonably and fairly which do not require any interference and the penalty imposed u/s 112 (a)(i) and (ii) of the Act is justified. Applicability of the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 - The adjudicating authority correctly observed that as the importer was aware of the discrepancy in the declaration of the goods and the fact that he never lodged a protest for 100% examination shows that he accepted the same. Also the gap of 11 days between 10% examination and 100% examination of the goods was also on account of the conduct of the importer who could not arrange for immediate 100% examination due to shortage of labour though permission for conducting 100% examination was granted on the same day, i.e. on 29.07.2017. In any event, the importer was informed vide letter dated 31.07.2017 (dispatched on 01.08.2017) issued by the Assistant Commissioner that the authorized representative from the right holder had visited their office and examined the consignment on 25.07.2017 which was informed to the customs broker of the importer on the same day. Further, under Rule 3 the right holder had sent a notice requesting to suspend the clearance of the goods as they believed that the questioned goods are counterfeit of UCB and the goods are infringed with the correct logo and trademark of UCB. Thus, we do not find any substance in holding against the department, more so when Rule 7(2) does not prescribe any consequences that may accrue in favour of the importer in absence of immediate information to him. We agree with the adjudicating authority that the instant rules, 2007 being creation of the Customs Act, therefore, any conflict on any issue between the two, the provisions of the Act shall prevail and have precedence. It is settled principle of law that Rules framed under a statute cannot go against the provisions of the statute. As noticed, the IPR Rules have been framed under the provisions of the Customs Act to carry out the purposes of the Act i.e. to restrain the import of prohibited goods which infringe the intellectual property rights. The Rules in so far as they fix the time limit can only be construed as directory as the Rules itself provide that what is mandatory is the compliance of the provisions of the Act. The provisions of the Rules cannot be construed as mandatory for the simple reason as noted above, any action for release of the goods is with a rider, subject to the compliance of other provisions of the import under the Customs Act. CONCLUSION : i). Admittedly, the goods were bearing the logo of UCB and the brand name ROCK which was not declared in the import documents. ii). Undisputed fact is that the importer/appellant was neither the owner of the logo or the brand nor was authorized to use the same. iii). The logo of UCB was registered in the name of Benetton India Ltd and they were authorised to use the same for the footwear also. iv). The imported goods were counterfeit goods and infringed the trademark rights of the rightful holder, the import of which is banned. v). Consequently, the shoes under logo of UCB are categorized as prohibited goods under the Customs Act. vi). The absolute confiscation u/s 111(d) of the Act is upheld. vii). The confiscation of goods bearing the brand name ROCK u/s 111(m) of the Act is upheld. viii). The penalty u/s 112(a)(i) as imposed under the impugned order is upheld. ix). The provisions of the IPR Rules in so far as they prescribe the time schedule are directory as the consequences of not adhering to the same are subject to the compliance of the provisions of the Act which is specifically provided to be mandatory. We do not find any merits in the submissions made on behalf of the appellant and hence no interference is called for in the impugned order which stands upheld. The appeal is , accordingly dismissed. 2024 (3) TMI 463 Newly impleaded respondent - Impleading of the Jurisdictional Commissioner as another respondent alongwith Commissioner (Adjudication) - However, it was mentioned that the CESTAT Procedure Rules do not permit such impleadment. - HELD THAT:- Bare perusal of the aforesaid Rule 3 reveals that there is no curtailment as far as number of defendants/respondents to a particular lis are concerned. No doubt in Rule 12 of CESTAT Procedure Rules, 1982, Principal Commissioner or the Commissioner is mentioned in singular but the Principal Commissioner or the Commissioner concerned is also mentioned. Principal Commissioner of Commissionerate issuing show cause notice and Commissioner (adjudication) since are dealing with matter arising out of same transactions/series of act i.e. the same SCN, both are the concerned Principal Commissioner or Commissioner. Hence, we do not find any reason to deny impleadment of Principal Commissioner or the Commissioner of jurisdictional Commissionerate (which issued show cause notice) as another respondent alongwith Principal Commissioner or the Commissioner (Adjudication). The notification dated 31st March, 2022, as relied upon by respondent-assessee, it is observed that to have been for the purpose of adjudication, in case of multiple jurisdictions. We don t find any restriction for impleading more than one respondent in the appeals filed. As a result, the request of the Department is hereby allowed. Learned DR is required to file amended cause title and also to get the notice of hearing served on the newly impleaded respondent. 2024 (3) TMI 462 Waiver of pre-deposit - requirement u/s 129E - HELD THAT:- It would be seen from a bare perusal of section 129E of the Customs Act that after 6.8.2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 129E on 06.08.2014 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue. The appellant has not made the pre-deposit. As the law, the appeal would have to be dismissed for non-compliance of the statutory mandatory requirement. Thus, appeal, therefore, is dismissed. 2024 (3) TMI 461 Levy of Penalty on Customs Broker - pre-condition to restore the license - No authorization from the importer/exporter for clearance of goods nor was the verification of the credentials of the client undertaken - violation of Regulation 11(a) - HELD THAT:- The fact remains that a copy of the passport has been duly supplied at the time of clearance of the household goods. The fact that the passport of the individual was supplied by the Customs Broker for purpose of clearance of the household good is substantive acknowledgement of obtaining the purported authorization as prescribed. Since this was not a case of regular import by an IEC holder but supply of domestic household goods, we do not find any merit in the department s plea in subjecting the appellant to severe penal action. The penalty imposed is certainly excessive and not proportionate to the nature of the said offence, if any. We do not find it a fit case for imposition of such harsh penal consequences and at best, if any violation- being hyper-technical, it ought to have been let off on a mere caution to the appellant. We therefore set aside the impugned order and allow the appeal filed by the party with consequential relief if any as per law. 2024 (3) TMI 460 Seeking amendment in the bills of entry - Goods imported Fitbit Wearable Devices - Whether a direction should be issued to the Deputy Commissioner to decide pending application filed u/s 149? - Refund of customs duty wrongly paid - HELD THAT:- Once an application for amendment has been filed, it is the duty of the Adjudicating Authority to decide it in view of the specific provisions contained u/s 149 of the Customs Act and the said application cannot be kept pending indefinitely. It is not open to the department to raise a plea in this appeal that a direction should not be issued by the Tribunal for deciding the appellant as it may ultimately lead to a situation that the application filed by the appellant u/s 149 of the Customs Act would remain undecided as the Deputy Commissioner will not decide and the Tribunal cannot issue a direction. A statutory duty is cast upon the Deputy Commissioner to decide the application at the earliest and the said application cannot be kept pending indefinitely. It is the contention of the appellant that the application for amendment of the Bills of Entry u/s 149 of the Customs Act was filed on 11.07.2019, but it has not been decided as yet and in fact the Commissioner (Appeals) before whom a direction was sought also refused to grant such a relief holding that such a power is not vested in him under the provisions of the Customs Act. It would, therefore, be appropriate that in case the application has already not been decided, it should be decided expeditiously and preferably within a period of three months from the date of filing of this order before the Deputy Commissioner. Such a direction is necessary as the application was filed in the year 2019 and almost more than three years have lapsed. The appeal is, accordingly, disposed of with the aforesaid direction. Insolvency & Bankruptcy 2024 (3) TMI 459 CIRP - Unsecured Financial Creditor or not - Non-registration of charge before the Registrar of Companies - the mortgaged property, will form part of the Liquidation Estate or not - mortgage rights over secured assets - failure to fulfil the requirements as per Section 52 of the Code r/w Regulation 21 of the Liquidation Process Regulations - HELD THAT:- This Tribunal keeping in mind of the prime fact that Right to recover the money, lent by enforcing a mortgage is a Right to enforce, an interest in the property and that the claim of the First Charge Holder, shall prevail over the claim of the Second Charge Holder, and the Appellant / Petitioner, can very well enforce the Security Interest, resting on Section 58(f) of the Transfer of Property Act, 1882 and Rule 8 of the Security Interest (Enforcement) Rules, 2002, comes to a resultant conclusion that mortgage, is the result of the Act of Parties, where the Transfer of Ownership Interest, in a particular Immoveable Asset is created, and that the conclusion arrived at by the Adjudicating Authority / Tribunal, in upholding the decision of the Liquidator, in classifying the Appellant / Petitioner / Bank, as an Unsecured Financial Creditor, is an illegal and an invalid one, in the eye of Law and in the Liquidation Proceedings, the Appellant /Bank, is to be treated as Secured Creditor, as held by this Tribunal. In addition, the non-registration of the Mortgage, as per Section 77 of the Companies Act, 2013, is not a sufficient / enough ground, to come to an opinion, that the Appellant, is not a Secured Creditor. In reality, the rights of a Mortgagee, under the Transfer of Property Act, 1882 and the SARFAESI Act, are not to be diluted, in terms of Regulation 21 of IBBI (Liquidation process) Regulations, 2016. It cannot be lost sight of the fact that CERSAI Registration, became mandatory, only in February, 2020, much after the Mortgage, was created in the instant case. Further, the fact remains that the Mortgage, was registered in the Office of S.R.O., Thovalai, Kanyakumari District, Tamil Nadu, which is again a Public Office, providing information, on the Mortgages, registered in it. Suffice it for this Tribunal, to unhesitatingly, to hold, that the Appellant s rights, in holding a Valid Mortgage Right, over the Secured Assets, is to be protected, by any means whatsoever The impugned order upholding the decision of the Liquidator, in classifying the Appellant/Petitioner, as an Unsecured Financial Creditor, is an invalid and illegal one and the same is set aside, by this Tribunal, to secure the ends of Justice - appeal allowed. Service Tax 2024 (3) TMI 458 Classification of service - providing chartered flights to various organization - to be classified under Transport of Passenger by Air Service or supply of tangible goods services? - reverse charge mechanism - levy of service tax on Banking and Financial Services and Management, Maintenance and Repairs services, received from the parties located aboard - Tax paid before issuance of SCN - Extended period of limitation. Transport of Passenger by Air Service or supply of tangible goods services? - HELD THAT:- For the service to be taxable under the category of transport of passengers by air service , such service should be provided by an aircraft operator, i.e., any person who provides the service of transport of goods or passenger by aircraft and the service should be in relation to scheduled or non-scheduled air transport service provided to any passenger embarking in India for domestic journey or international journey. The appellants are registered with the Director General of Civil Aviation (DGCA) as an aircraft operator for providing the service of transport of passengers by aircraft. Further, Air transport service is defined in Rule 3(9) of the Aircraft Rules, 1937 as a service for the transport by air of persons, mails or any other thing, animate or inanimate, for any kind of remuneration whatsoever, whether such service consists of a single flight or series of flights - The Civil Aviation Requirements ( CAR ) dated 1-6-2010 also provides a similar definition of Air transport service both for Scheduled and Non-Scheduled services. The charter operation is a sub-category of non-scheduled aircraft operations. The definition of charter operations is contained in that part of the CAR which pertains to Minimum Requirement for grant of permit to operate non-scheduled Air Transport Services. Hence, charter operations do not cease to be aircraft operations by reason of the fact that the entire aircraft is chartered by the client from the aircraft operator - it is seen that the services rendered by the appellants fall within the category of non-scheduled air transport services. Further, the appellant is in the business of providing service to its customers embarking in India for domestic journey. Hence, the conditions for coverage under the transport of passengers by air service are satisfied. Therefore, in our view the service provided by the appellant is covered under the taxable service category of transport of passengers by air service defined under clause (zzzo) of sub-section 65(105) of the Finance Act, 1994. It is well settled law when an activity becomes taxable from a particular date, it is to be treated as non-taxable for the previous period, therefore, for the period prior to 1-7-2010, the appellant s activity can not be treated as supply of tangible goods service covered by Section 65(105)(zzzzj), that since the cost of operation of the Aircrafts such as maintenance, cost of the crew, fuel expenses, parking fee etc. are borne by the appellants, and since the main remuneration received by the appellant is on the basis of flying hours, trips, per seats the appellant s activity can not be treated as supply of tangible goods, but has to be treated service of transportation of passengers in India by air. When there is an entry specifically for taxing transport of passenger by aircraft , the activity cannot be brought under a more general entry like supply of tangible goods . Levy of service tax on Banking and Financial Services and Management, Maintenance and Repairs services, received from the parties located aboard - Tax paid before issuance of SCN - HELD THAT:- In this regard appellant has accepted their liability and paid the entire service tax alongwith interest before the issuance of show cause notice and appellant only argued that since the service tax amount in dispute was paid along with interest before issuance of showcausenotice, benefit of sub-section (3) of Section 73 of Finance Act, 1994 should be available to the appellant. Accordingly, the issuance of show cause notice and imposition of penalty in respect of the said demand is unsustainable in law. The Division Bench of the Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS M/S ADECCO FLEXIONE WORKFORCE SOLUTIONS LTD [ 2011 (9) TMI 114 - KARNATAKA HIGH COURT] had held that assessee is not liable to pay any penalty under such circumstances. Whether the hiring of charter aircrafts by M/s KAPL from Kellet and Singleton Aviation is liable to service tax under the category of Supply of Tangible Goods Service and appellant being recipient of these service is liable pay service tax under reverse charge mechanism as per Rule 2(1)(d)(iv) of Service tax Rules, 1994 read with Section 66A of the Finance Act, 1994? - HELD THAT:- The said hiring of charter aircrafts was of air transport services from Ahmedabad to Moscow and Back. As already discussed, the said service is appropriately classifiable under the category of Transportation of Passengers embarks in India for International Journey by Air Services defined under Section 65(105)(zzzo) and not under the category of Supply of Tangible Goods Services Even if it is assumed that the appellant provided supply of tangiblegoods for use, liability to Service Tax is not attracted since as per the principles set out in, as the goods are not in India during the entire period of use. Reliance is placed on the above decision of this Tribunal in the case of PETRONET LNG LTD VERSUS COMMISSIONER OF SERVICE TAX [ 2013 (11) TMI 1011 - CESTAT NEW DELHI] wherein the phrase during the period of use was interpreted and it was held that to come within the scope of SOTG, the tangible goods must be located in India during the entire period of use - In the present case since the Aircrafts was used for transport to Moscow and back, it was not within India during the entire course of its use. The appellant cannot be held liable for payment of service tax under the reverse charge mechanism in respect of Aircrafts not located in India during the entire period of their use. The impugned orders are set aside - Appeals are allowed. 2024 (3) TMI 457 Classification of service - activity such as raising/ sizing/ breaking/ loading/ transportation of manually sized limestone for service recipient M/s. GHCL - classifiable as Mining Service or otherwise? - Time limitation - suppression of facts or not - HELD THAT:- From the work order it is clear that the order given to the appellant is for supply of chemical grade manually sized lime stone from mining site to the service recipient plant site. Therefore, there is no activity of mining given to the appellant. From this work order, it is also clear that mining was carried out by someone else in the service recipient s mine and the appellant was awarded the job of only sizing of lime stones manually and supply thereof to their site therefore sizing of already mined lime stones does not fall under the activity of Mining Service and the major part is of transportation of the goods. Therefore, the entire activity does not qualify to categorize the same as mining service. Moreover, on the transportation, undisputedly the service recipient discharges the service tax under reverse charge mechanism. Time Limitation - suppression of facts or not - HELD THAT:- The appellant have made out a strong case on limitation inasmuch as on the same activity, the service tax was being discharged by M/s. GHCL and they were subject to audit from time to time therefore, the activity of the appellant for supply of manually sized lime stones to M/s. GHCL was not beyond the knowledge of the department. Therefore, suppression of fact cannot be alleged against the appellant. Hence, the demand is also liable to be set-aside on the ground of limitation. The demand is not sustainable either on merit or on limitation - appeal allowed. 2024 (3) TMI 456 Invocation of extended period of limitation - shortage in payment of service tax - appellants did not pay service tax properly and further, not made proper disclosures to the department - construction of Subansiri Dam/Tunnel for the period 2012-13 - HELD THAT:- The appellant was under the impression that they had already suffered the service tax by way of deduction at source, by the main contractor on the said activity. Thus, there does not appear to be any deliberate attempt or intention on the part of the appellant to evade service tax in the facts of the case. Demand with respect to construction of elevated structure for BMRCL - HELD THAT:- Admittedly, when the project was awarded to the appellant, the same was exempt from service tax under Notification No. 25/2012-ST. During execution of project, the said exemption was withdrawn w.e.f. 01.03.2016. Thereafter, admittedly, this appellant was pursuing with the Principal BMRCL for release of funds towards payment of service tax, which took some time and upon release of such funds, admittedly, appellant had deposited such tax with interest. Hence, SCN is bad and is hit by the provisions of Sec 73(3) of the Finance Act, which provides that in such cases where tax and interest are paid without dispute, no SCN needs to be issued. Payment of service tax under RCM on Royalty paid to State Government - HELD THAT:- Evidently, the matter is sub-judice before the Apex Court (9 Judges Bench). Whereas, earlier the 7 Judges Bench of the Apex Court in the case of India Cements Ltd Others vs State of Tamil Nadu Others [ 1989 (10) TMI 53 - SUPREME COURT] have held that Royalty is Tax and set aside the cess imposed on such Royalty. Admittedly, no service tax is leviable on the amount of tax. In this view of the matter, the demand is only by change of opinion or interpretation of Statute. There is no case of fraud or mis-statement, etc., on the part of the appellant. The issue involved is wholly interpretational in nature. In this view of the matter, we hold that the SCN issued invoking extended period of limitation is bad - impugned order set aside - appeal allowed. 2024 (3) TMI 455 Nature of transaction - service or deemed sale - supplying tankers to OIL - supply of tangible goods service or not - whether effective control and possession of the tankers/bowsers have been transferred to OIL or lies with the Appellant? - Extended period of limitation - interest and penalty - HELD THAT:- In this case, the Agreement signed by the Appellant with OIL, is perused, to ascertain whether possession and control have been transferred not. From some of the clauses in the Agreement, it is found that the Appellant carries out the repair and maintenance of tankers; incurred expenditure for fuel and consumable; provides crew, and is responsible to comply with the statutory acts. These clauses of the Agreement indicate that the title or ownership vests with the Appellant only and not transferred to OIL. Accordingly, the Appellant is liable to pay service tax under the category of 'supply of tangible goods service'. The Appellant submits that for the period from July 2012 to March 2014, the impugned Order has confirmed the demand of Service Tax amounting to Rs. 33,41,267/- on the ground that the same falls within the ambit of supply of tangible goods service under Section 65 (105)(zzzzj) of the Finance Act 1994. In this regard, it is observed that post 01.07.2012, the provisions of Section 65 (105)(zzzzj) cannot be invoked to demand service tax on supply of tangible goods service - the demand confirmed by citing the non-existent legal provisions cannot be sustained CESTAT, New Delhi in the case of COMMISSIONER OF CENTRAL TAX GOODS AND SERVICE TAX, DELHI EAST VERSUS M/S SANJAY ELECTRICALS (VICE-VERSA) [ 2024 (1) TMI 891 - CESTAT NEW DELHI] held that demand confirmed by citing the non-existent legal provisions cannot be sustained. Thus, the demand for the period 01.07.2012 to March 2014 is liable to be set aside. Extended period of limitation - HELD THAT:- The Appellant was under the bona fide belief that no service tax is payable since the instant transaction in dispute constitutes a 'deemed sales' for which VAT was already paid. In the case of M/S. CARZONRENT (INDIA) PVT. LTD. VERSUS CST, DELHI [ 2017 (1) TMI 98 - CESTAT NEW DELHI] has held that when there is an element of dispute and ambiguity whether a transaction is covered by VAT law or Service Tax, and the same needs to be decided based on the facts and applicable law, then extended period of limitation cannot be invoked. In the impugned order demand has been confirmed for the period April 2009 to March 2014, by invoking extended period of limitation. The Show Cause Notice in this case was issued vide C. No. V(15)100/ADJ/ST/COMMR/DIB/ 2014/ 11154 on 16.09.2014. Under the normal period of limitation, demand can be issued only for a period of 18 months. Thus, the demand for the period prior to 2013 demanded in the Notice dated 16.09.2014, is time barred. Interest and penalty - HELD THAT:- The entire demand confirmed in the impugned order is not sustainable and accordingly, the same is set aside. Since the demand itself is not sustainable, the question of demanding interest and imposing penalty does not arise. Appeal allowed. 2024 (3) TMI 454 Works Contract Scheme - Appellant has failed to file any letter indicating their option to opt for Composition Scheme - time limitation - HELD THAT:- This Bench in the case of M/S HEAVY ENGINEERING CORPORATION LIMITED VERSUS COMMISSIONER OF CGST EXCISE, RANCHI [ 2023 (3) TMI 1393 - CESTAT KOLKATA] has held Admittedly, no demand has been made for the period prior to 01.06.2007 under the Works Contract Service . Therefore, the demand of service tax from the appellants does not survive prior to 01.06.2007 - Therefore, the demand for the period October 2005 to 31/5/2007 is set aside. The Appellant would be eligible for consequential relief, if any, as per law. Demand for the period 01/06/2007 to March 2010 - Time limitation - HELD THAT:- The Appellant has been paying the Service Tax under the category of Works Contract under Composition Scheme and reflecting the same in the ST-3 Returns. The Department did not raise any query about the same till the present Show Cause Notice was issued on 08/2/2010 - Admittedly, the Appellant s main business is to supply the Fire Equipment and erect and Commissioning the same in the premises. Therefore factually it gets proved that they were providing Works Contract Service only. If the Appellant is not paying VAT on the same, it is for the VAT Authority to take proper action against them. This cannot be the basis for confirmation of the demand by the Service Tax Authorities. Therefore, the confirmed demand on account of Works Contract , wherein the benefit of composition was not given, is also required to be set aside on account of limitation. No penalties are to be imposed. In case, any excess Service Tax has been paid by the Appellant, the same is required to be refunded as per statutory provisions. Appeal disposed off. Central Excise 2024 (3) TMI 453 CENVAT Credit - reversal of 6% of the value of the goods - adoption of hybrid option of post clearance availment of Ineligible CENVAT credit on inputs and payment of amount equal to 6% of the value of such exempted goods under rule 6(3) of the Credit Rules - benefit of the exemption Notification No. 30/2004-CE - HELD THAT:- Once the assessee has reversed the 6% of the value of the goods treating such goods as exempted as per the sub-rule (3D) of the rule 6 of the Rules, the condition of the Notification No. 30 of 2004 can be said to have been met and in such circumstances, the Tribunal has rightly allowed the appeal of the respondent-Assessee by quashing and setting aside the demand raised by the appellant. Thus, no question of law, much less any substantial questions of law, arises from the impugned order passed by the Tribunal - appeal dismissed. 2024 (3) TMI 452 Order for provisional assessment on quarterly basis and on the basis of CAS-4 certificate for a particular quarter - presumptive order - HELD THAT:- There is a loss to understand how learned Commissioner (Appeals) has come to a conclusion that the said observations were on the basis of fact because there is no supporting data available either in the orders ordering provisional assessment nor is it available anywhere in the order passed by Commissioner (Appeals). The impugned order is a presumptive order - impugned order is set aside - appeal allowed. 2024 (3) TMI 451 Levy of penalty under Rule 26 of Central Excise Rules, 2002 - failure to register with Central Excise - failure to maintain any record - failure to file returns - failure to make payment of central excise duty on inlay cards - HELD THAT:- The explanation in N/N. 83/94-CE dated 11.04.1994 states that for the purpose of the said notification, the expression job work means processing of or working upon raw materials or semi-finished goods supplied to the job worker so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or for operation which is essential for the aforesaid process. M/s. Leo Pack was a job worker to whom raw materials were supplied by M/s. MEC Engineers for cutting the PVC rigid roll into smaller pieces and piercing the same to make it ready for display of jewellery and, therefore, we are satisfied that the activities carried out by M/s. Leo Pack was job work. The said Notification No. 83/94-CE which exempts the goods manufactured in a factory at job work from the whole of the duty of excise leviable thereon provided that the procedures set out in the said notification and in Notification No.84/94-CE are complied with. M/s. Leo Pack was job worker for M/s. MEC Engineers and M/s. Leo Pack was not required to pay central excise duty on the job work - the impugned order is not sustainable insofar as the same relates to confirmation of demand and imposition of penalty on M/s. Leo Pack. Appeal allowed. 2024 (3) TMI 450 Reversal of CENVAT Credit - commission amount paid to commission agent - Business Auxiliary Service or not - Extended period of limitation - HELD THAT:- The issue is no more res integra. This Bench in PRINCIPAL COMMISSIONER OF CENTRAL EXCISE, KOLKATA IV VERSUS M/S. HIMADRI SPECIALITY CHEMICAL LIMITED [ 2022 (9) TMI 1213 - CALCUTTA HIGH COURT] has held the issue relating to eligibility of credit on commission agent services is no longer res-integra inasmuch as this Tribunal in M/S ESSAR STEEL INDIA LTD. VERSUS COMMISSIONER OF C. EX. SERVICE TAX, SURAT-I [ 2016 (4) TMI 232 - CESTAT AHMEDABAD] , as also relied by the appellant, has held that the above amendment would be applicable retrospectively and would cover cases for the past period also. Extended period of limitation - HELD THAT:- The Department was in full knowledge of the transactions made by the Appellant by May 2014 itself. Therefore, the Department had no reason to delay the issue of Show Cause Notice by another two and half year. The Department has not made out any case of suppression on the part of the Appellant except for relying on the COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD II VERSUS M/S CADILA HEALTH CARE LTD. [ 2013 (1) TMI 304 - GUJARAT HIGH COURT] relied by the Hon ble Gujarat High Court. Therefore, the confirmed demand is not sustainable even on account of limitation. Appeal allowed. 2024 (3) TMI 449 Levy of interest under Section 11AB of the Central Excise Act, 1944 on supplementary invoices by invoking extended period of limitation - appellant has availed irregular cenvat credit as well as failed to pay the duty on certain goods on certain instances - HELD THAT:- The said issue has been dealt by this Tribunal in the case of CCE VERSUS TVS WHIRLPOOL LTD. [ 1999 (10) TMI 701 - SC ORDER] wherein it has been held that it is only a reasonable time that the period of limitation that applies to a claim for the principal amount should also apply to the claim for interest thereon and further in the case of HINDUSTAN INSECTICIEDES LTD. VERSUS COMMISSIONER CENTRAL EXCISE, LTU [ 2013 (8) TMI 225 - DELHI HIGH COURT] , again the said issue was examined by the Hon ble Delhi High Court wherein the Hon ble High Court has held A reading of the aforesaid paragraph would show that in the said case notice of payment for interest was issued after four years and it was held that it was beyond a reasonable period and the department could recover the amount from the Assessing Officer, who had not taken steps for four years and not from the respondent-assessee therein. The finding of the Supreme Court on interpreting the applicable Act was that no limitation period was prescribed, therefore, proceedings for recovery could be initiated within a reasonable time. The extended period of limitation is not invokable for the facts and circumstances of the case as the appellant has paid the duty on the supplementary invoices during the period 2008-09 and the same shown in their records and audit was also conducted during the period from 15.11.2009 to 03.12.2009. The extended period of limitation is not invokable. Consequently , the demand of interest on supplementary invoices is barred by limitation. The impugned order quo demanding interest on the duty paid on supplementary invoices set aside - appeal allowed. 2024 (3) TMI 448 Recovery of CENVAT Credit alongwith interest and penalty - Process amounting to manufacture or not - Appellants are importing copper coated wires and they were carrying out processes like cutting, rewinding, branding, testing and repacking on the same - HELD THAT:- The issue is no more res integra. The Mumbai Tribunal in M/S. GEE LTD. AND S.M. AGARWAL VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE-I [ 2022 (10) TMI 957 - CESTAT MUMBAI] in the appellant s own case has followed the judgement of Hon ble Bombay High Court in the case of Commissioner of Central Excise, Pune-III vs. Ajinkya Enterprises and has held the demand made seeking to recover the Cenvat credit from the appellants which is in respect of the processed goods actually cleared by them on payment of central excise duty has to be set aside. The demand set aside - appeal allowed. 2024 (3) TMI 447 Clandestine removal - failure to declare the manufactured quantity - reliance placed on consumption norms worked out by Dr. Batra of IIT, Kanpur - main ground taken by the Revenue was that the electricity consumption as worked out by Dr.Batra, of IIT, Kanpur does not match with the output shown by the Appellant - Extended period of limitation - HELD THAT:- From the Order-in-Original para 9.2 it is seen that the Adjudicating authority has relied on the report of Dr.Batra of IIT, Kanpur to come to a conclusion that excess quantity has been manufactured and cleared without payment of excise duty. There is nothing to indicate in the Show Cause Notice and the Order-in-Original that the Department has brought in any corollary evidence to the effect that the Appellants have procured raw materials on cash basis or cleared the goods on cash basis and no private records have been seized nor any investigation has been taken up on this ground. In the case of COMMISSIONER OF C. EX., MEERUT-I VERSUS RA CASTINGS PVT. LTD. [ 2010 (9) TMI 669 - ALLAHABAD HIGH COURT] , the Hon ble Allahabad High Court has held we are of the view that the findings of the Tribunal are based on the material on record and they cannot be said to be without any material and perverse. We find that the Revenue has invoked the proviso to Section 11A(1) of the Act but no case has been made out in the show cause notices or in the adjudication order that there were any mis-statement, suppression of fact or fraud on the part of the respondents. No substantial question of law arises from the order of the Tribunal. The facts in the present case are similar and hence, the ratio of the decision is squarely applicable. Therefore, following these decisions, the confirmed demand is not sustainable on merits. Accordingly, the Appeal allowed on merits. Extended period of limitation - HELD THAT:- There are force in the Appellant s argument that the Department has not come out with any evidence towards suppression so as to invoke the extended period provisions. Therefore, the confirmed demand for the extended period is liable to be set aside on account of limitation. Accordingly, the confirmed demand for the extended period is set aside on account of limitation also. The Appeal is allowed both on merits as well as on limitation. 2024 (3) TMI 446 CENVAT Credit - inputs used in such Railway tracks - nexus with manufacturing and clearing activities or not - HELD THAT:- Hon ble Chhattisgarh High Court in the case of PR. COMMR. OF CUS. C. EX., RAIPUR VERSUS STEEL AUTHORITY OF INDIA LTD [ 2018 (2) TMI 2007 - CHHATTISGARH HIGH COURT] , has held After hearing Learned Counsel for the parties, we are not able to persuade ourselves to take any different view of the matter than the one which has been taken by this Court in the matter of AMBUJA CEMENTS EASTERN LTD. VERSUS COMMISSIONER OF C. EX., RAIPUR [ 2010 (4) TMI 429 - CHHAITISGARH HIGH COURT] where Welding Electrode has already been considered to be input for allowing CENVAT Credit. Appeal filed by Revenue dismissed. CST, VAT & Sales Tax 2024 (3) TMI 445 Exemption granted on turnovers relating to Bottle breakage charges and Levy of Rental Charges at 5% on bottles and craters - HELD THAT:- When the bottles travels from the manufacturer to wholesaler and the retailer, the active possession of bottles and crates are in the hands of sellers. The Tribunal found fault with the revisional authority analysis that generally all lease transactions will be for a specified period. However, Section 5-E of the Act provides for unspecified period and the appeal was allowed to that extent. There is no question of law framed by the petitioner for entertaining the Tax Revision Case. An order of remand for re-assessing the factual possession cannot be considered as an erroneous decision on the question of law. As seen from the order of the Tribunal, the Tribunal has not decided on any issue on the question of law. It has fairly considered the issues before it and passed the orders partly allowing the appeal and remanding back to the Revisional Authority. There is no question of law framed by the petitioner for entertaining the Tax Revision Case. An order of remand for re-assessing the factual possession cannot be considered as an erroneous decision on the question of law. As seen from the order of the Tribunal, the Tribunal has not decided on any issue on the question of law. It has fairly considered the issues before it and passed the orders partly allowing the appeal and remanding back to the Revisional Authority. The Tax Revision Cases are dismissed. 2024 (3) TMI 444 Validity of assessment orders in respect of assessment years 2007-08 to 2014-15 - freight not reported and goods sold with under value - petitioner contended that the computation in respect of freight charges in the notice under reply is not based on any material evidence, but entirely based on assumptions and presumptions - Whether proceedings relating to assessment years 2007-08 to 2010-11 are barred by limitation? - HELD THAT:- Under Section 27(1) of the TNVAT Act, the limitation period in respect of escaped assessment is six years from the date of assessment. Section 22(2) deals with deemed assessment. The principal clause prescribes that there will be deemed assessment on the 31st October of the succeeding year to the relevant assessment year - Admittedly, assessment orders were not issued in these cases pursuant to returns being filed. Since the proviso applies to these cases, as regards assessment years 2007-08 to 2010-11, limitation should be computed from 01.07.2012. If so computed, the assessments relating to the above mentioned orders are within the six year period of limitation because re-assessment proceedings were initiated pursuant to notice dated 12.08.2016. In the impugned assessment orders, the assessing officer has applied a flat rate per consignment based on the State from which the consignments were delivered to the petitioner. For instance, as regards the State of Gujarat, the freight charges per consignment was fixed at Rs. 1,00,000/-. As regards the State of Rajasthan, it was fixed at Rs. 80,000/-. The assessment orders also record the petitioner's contention that about 13 consignments from Gujarat were of the value below Rs. 50,000/- per consignment. Effectively, the freight charges determined by the assessing officer were twice the value of the consignment as regards those 13 consignments. Similarly, the petitioner has pointed out that six consignments were below the value of Rs. 1,00,000/-. Once again, the freight charges determined by the assessing officer is slightly more than the value of consignment as regards these six consignments. These illustrations demonstrate that the assessing officer did not determine the alleged suppressed freight charges on a rational basis. Hence, the assessment orders as regards assessment years 2007-08 to 2013-14 warrant interference. With regard to this assessment year, the petitioner had filed a rectification petition which was disposed of by order dated 05.06.2020. In the notice dated 12.08.2016, the suppressed turnover with regard to freight was specified as Rs. 89,31,520/-. As against this, in the rectification order, the assessing officer has determined the suppressed freight charges as Rs. 13,17,651/- and computed tax on that basis. It also appears that some additional factors were taken into consideration in the rectification order. The impugned assessment orders are quashed and these matters are remanded for re-consideration - petition disposed of by way of remand. Indian Laws 2024 (3) TMI 443 Market fee/mandi shulk - Whether ghee is a product of livestock under the provisions of The Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966? - whether the Government notification (G.O. Ms. No.286 dated 05.07.1994), which inter alia notifies ghee as one of the products of livestock for the purpose of regulation of purchase and sale of ghee in all notified market areas was published after due compliance of the procedure contemplated under the provisions of the Act? HELD THAT:- The argument that ghee is not a product of livestock is baseless, and bereft of any logic. The contrary argument that ghee is indeed a product of livestock is logically sound. Livestock has been defined under Section 2(v) of the Act, where Cows and buffalos are the livestock. Undisputedly, ghee is a product of milk which is a product of the livestock. The majority opinion of the Full Bench decision in Kommisetty Nammalwar [ 2009 (5) TMI 1021 - ANDHRA PRADESH HIGH COURT] while referring to the judgments of this Court in Park Leather Industry (P) Ltd. v. State of U.P. [ 2001 (2) TMI 893 - SUPREME COURT] ]; Kishan Lal v. State of Rajasthan [ 1990 (3) TMI 323 - SUPREME COURT ]; Ram Chandra Kailash Kumar v. State of U.P. [ 1980 (3) TMI 262 - SUPREME COURT ] and Smt. Sita Devi (Dead) by LRs. v. State of Bihar Ors. [ 1994 (11) TMI 439 - SUPREME COURT ] held that all animal husbandry products would fall within the meaning of products of livestock as defined under Section 2 (xv) of the Act. Further, the majority decision has also held that the inclusion of ghee as a livestock product cannot be faulted merely because it is derived from another dairy product. It was observed by the High Court that even though ghee is not directly obtained from milk, which is a product of livestock, it would still be a product of a product of livestock . The second argument of the appellant that the procedure given under Section 3 of the Act has not been followed, is also not correct. There is a basic difference between the notification which has to be made under Section 3 of the Act and the notification which has to be made subsequently under Section 4 of the Act. What has to be done under Section 3 is a onetime measure where the Government notifies an area where purchase and sale of agricultural produce, livestock and products of livestock can be made. This is a one-time exercise - A perusal of Sections 3 and 4 of the Act clearly shows that whereas a draft notification is mandatory under Section 3 and so is the hearing of objections to the draft notification, there is no similar provision under Section 4 of the Act. Market fee - HELD THAT:- Since the 1994 notification had an effect which made Ghee a product that could be regulated under provisions of the Act, Market Committees were empowered to levy fee on the sale and purchase of ghee as per section 12 of the Act. During the pendency of the matter before the High Court, the appellants were not required to pay market fee as they were granted interim protection by the High Court. After the majority decision of the High Court in Kommissetty Nammalwar [ 2009 (5) TMI 1021 - ANDHRA PRADESH HIGH COURT] , market committees started issuing demand notices to the producers of Ghee asking them to pay fees from the date of the notification in the year 1994 to the date of the High Court judgment i.e. 01.05.2009. As per section 4(2) of the Act, the Market Committee has the duty to enforce the provisions of the Act within a notified area. Section 4(3), which empowers Market Committees to establish markets within the notified area, also directs that these Market Committees have to provide facilities in the markets for the purchase and sale of notified products. Appellants argument that these Market Committees did not provide any facilities has already been dealt with and rejected by the High Court and we are also of the same view as that taken by the High Court. The appellants have availed the facility given by the Market Committee and hence they are liable to pay the fee. Appeal dismissed. 2024 (3) TMI 442 Criminal breach of trust - loan and its repayment - dishonest intention or not - proceeding under Section 138 of the N.I. Act is pending - Parallel proceedings or not - HELD THAT:- In the present case, the dispute relates to a loan and its repayment. There is absolutely no material on record to prima facie show that the accused has dishonestly mis-appropriated or converted the property for his own use. There is a strong case of repayment in this case. In respect of the present dispute even though a proceeding under Section 138 of the N.I. Act is pending, the present case under Sections 406/409/420/120B of IPC on the same dispute is maintainable as, though the facts may overlap but the ingredients of offences in the two proceedings are entirely different. In the present case, admittedly there was a business transaction between the parties but there is no case against the petitioners that he dishonestly induced the complainant. There was neither any deceit nor any inducement to deceive the complainant. The transaction was admittedly for the benefit of both the parties. The fact of wrongful loss of one resulting in wrongful gain of another is not present in this case as loan has been admitted and the dispute relates to its repayment. Thus the ingredients required to constitute the offence under Section 420 IPC are clearly absent in the present case. In the present case there is no materials to show that there was any existence of dishonest/fraudulent intention while making any initial promise that is from the beginning of formation of contract - The petitioners were repaying the loan as agreed, when they decided to the clear the dues prematurely. In the Present case, there is no substance in the allegations and no material exists to prima facie make out the complicity of the petitioner in a cognizable offence as alleged. As such the proceedings in this case should be quashed by exercising this courts inherent powers for ends of justice and to prevent the abuse of process of the court. Revision application allowed. 2024 (3) TMI 441 Dishonour of Cheque - application seeking summoning of the records/documents/books of accounts mentioned in the said application for purposes of cross-examination of the Authorised Representative of the respondent/complainant company dismissed - HELD THAT:- The present petition was first listed before this Court on 26.04.2022. This Court directed the petitioner to file a three page summary clearly identifying the documents of which the petitioner seeks summoning before the learned Trial Court, and referring to the relevance of the said documents within the context of the proceedings under Section 138 of the NI Act instituted by the respondent against the petitioner. The petitioner is seeking the production of documents only with the intent of conducting a fishing and roving inquiry and to, in fact, embarrass the trial. Such attempt of the petitioner cannot be allowed to succeed. In any case, if the learned Trial Court is later of the opinion that these documents were relevant to be produced by the respondent for proving the case against the petitioner, the Court will draw an adverse inference of their non-production against the respondent. However, at this stage, this Court is of the opinion that the documents, production of which are sought for by the petitioner, are neither relevant nor necessary for a proper and fair adjudication of the Complaint filed by the respondent. In KAILASH VERMA VERSUS PUNJAB STATE CIVIL SUPPLIES CORPN. [ 2005 (1) TMI 406 - SUPREME COURT] , the Supreme Court has held the power under Section 482 of the Criminal Procedure Code has to be exercised sparingly and such power shall not be utilised as a substitute for second revision. Ordinarily, when a revision has been barred under Section 397(3) of the Code, the complainant or the accused cannot be allowed to take recourse to revision before the High Court under Section 397(1) of the Criminal Procedure Code as it is prohibited under Section 397(3) thereof. However, the High Court can entertain a petition under Section 482 of the Criminal Procedure Code when there is serious miscarriage of justice and abuse of the process of the court or when mandatory provisions of law are not complied with and when the High Court feels that the inherent jurisdiction is to be exercised to correct the mistake committed by the revisional court. There are no merit in the present petition. The same is, accordingly, dismissed.
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