TMI Tax Updates - e-Newsletter
March 27, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Rejection of refund for input tax credit (ITC) - export of services - There is no dispute that the recipient of Services – that is EY Entities – are located outside India. Thus, indisputably, the Services provided by the petitioner would fall within the scope of the definition of the term ‘export of service’ under Section 2(6) of the IGST Act. - HC
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GST:
Classification of supply - the goods are supplied from a location outside India to a location outside India, i.e., the supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India. - The supply of goods from the Applicant to the overseas customer is treated neither as supply of goods nor as supply of services. - AAR
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GST:
Exemption from GST - supply of the aircraft type rating training services to commercial pilots in accordance with the training curriculum - The fact that such a certificate may be taken into account by the DGCA approved examiner for the purpose of evaluating the experience and content of training will not make it statutory in character. - the said services are exigible to GST. - AAR
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GST:
Classification of supply - Supply or not - transaction of transfer/ sale of one of the independent running business divisions of the Applicant, as a whole - an independent part (staffing division business) of the applicant's business is being transferred / sold by the applicant - Benefit of exemption available - AAR
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Income Tax:
Reopening of assessment u/s 147 - extension of period of limitation u/s 147 - In this case, failure on the part of the assessee to fully and truly disclose all material particulars in our view would constitute the "jurisdictional fact" for invoking extended period of limitation and failure to record the existence of the above jurisditional fact while invoking the extended period under the proviso to Section 147 of the Act, would vitiate the entire proceedings. - HC
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Income Tax:
Revision u/s 263 by CIT - the AO despite having recorded that though the assessee trust’s activity fall under the ambit of “general public utility”, they are of commercial in nature and are covered by first and second proviso of section 2(15) - However, he erroneously assessed income of the assessee at Rs.NIL. - it is the clear case where the assessment order is erroneous and self-contradictory. - AT
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Income Tax:
TDS u/s 195 - the assessee had also furnished declaration regarding “No Permanent Establishment in India” of Oilstone UAE to the assessing Officer during the course of assessment hearing. Further copy of Tax Residency Certificate (TRC) to the effect that Oilstone UAE is a tax resident of UAE was also furnished before the AO - the assessee was not under an Obligation to withhold taxes on such payments - AT
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Income Tax:
Deduction u/s 80IB - Claim denied as assessee did not have 10 workers during the year - The attendance register of the appellant, that on that particular day the number of employees were less than ten, as some of them were absent on account of leave etc. These facts have not been appreciated by the AO while passing the assessment order - matter restored back to verify the facts - AT
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Income Tax:
Income deemed to accrue or arise in India - Liaison Office (LO) as a Service PE or Dependent Agency Permanent Establishment (DAPE) - LO did not carry any activity, beyond that permitted by the RBI. - The activities/operations of the assessee in connection with the contracts are carried from outside India. - LO of subsidiary of assessee does not constitute a PE in the case of assessee, hence, addition on this ground made by AO is directed to be deleted. - AT
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Income Tax:
Difference in gross receipts as per Form no. 26AS and books of accounts of the assessee - The assessee is following the method of accounting as per which it was accounting service charges received from the clients towards rendering various services as their income and reimbursement of expenses is squared off in the parties account. - Additions not permissible - AT
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Income Tax:
Setoff of unabsorbed depreciation and carry forward depreciation - Condition as prescribed u/s 72A(6) - Merger of partnership firm into Company - percentage of holding that the aggregate of the shareholding in the company of the partners of the firm is not less than 50% of the total voting power and their shareholding continues to be as such for a period of 5 years from the date of succession. - AT
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Customs:
Confiscation - Foreign marked gold bars - Unless this condition of the import (only by a notified agency) is fulfilled, gold is a prohibited good. The appellant also does not dispute that the gold can be imported only by the nominated agencies. If gold is imported by anyone else, it will be prohibited goods. - The gold bars and piece of gold were correctly held liable for confiscation under section 111(d) by the adjudicating authority - AT
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Customs:
Judicial discipline - We are surprised as to how the Committee of two Commissioners has not only concluded that the Commissioner (Appeals) does not have to follow judicial discipline but have gone further to say that the Commissioner (Appeals) has erred in following the binding precedent of the jurisdictional High Court. - AT
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Customs:
Valuation - barge - rejection of declared value - The adjudicating authority is also obliged to explain the different positions adopted for valuation of the same vessel which, but for a brief while, was within Indian territorial waters and, yet, was found to be valued with substantial difference on the two occasions; this could have a significant bearing on the manner in which the residual method is used for conformity with the scheme of valuation espoused in rule 3 - AT
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Customs:
Valuation of imported goods - the word “doubt” used in the rule has to be based on cogent reasons and evidences - Clearly, for rejection of the transaction value under Rule 12, there has to be a reasonable ground and it cannot be rejected merely on the ground that similar goods have been imported at higher value without examining the applicability of Rule 5 of Customs Valuation Rules, 2007. - AT
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SEBI:
Stock broker which requires multiple registrations to operate on more than one stock exchange(s) or a single registration will suffice for all the stock exchanges - stock broker not only has to obtain a certificate of registration from SEBI for each of the stock exchange where he operates, at the same time, has to pay ad valorem fee prescribed in terms of Part III annexed to Regulation 10 of the Regulations, 1992 in reference to each certificate of registration from SEBI - SC
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Central Excise:
SSI Exemption - clubbing of clearances - in the present case the clubbing is not on the basis of the common facility between both the units but because of the common ownership, being same partners in both the firm. Therefore, the adjudicating authority has rightly clubbed the value of clearance of both the units and demanded excise duty - AT
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Central Excise:
Levy of penalty u/r 26(1) for abatement - it is clear that all the appellants were indulged in abating the manufacturer for fraudulent availment of Cenvat credit therefore, they have made themselves liable for penalty under Rule 26(1) Cenvat credit rules 2002 - AT
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Central Excise:
Invocation of Extended Period of Limitation - In this case, not only one but several rounds of audit were conducted. Show Cause Notice was issued for the previous period on the same issue by the Revenue. Thus, the department was fully aware of the issue in question, the general marketing pattern of the appellant and it was for the officer scrutinising the returns to have checked the returns and issued SCN within time. - demand set aside as time barred - AT
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VAT:
Right of Auction Purchaser of property - Recovery of Outstanding dues of Bank and tax dues under the VAT / sales tax act - Priority of claims - Attachment order - The auction purchasers had never received any actual notice of the lien or constructive notice from the Respondent No.1 Authority in respect of the said writ property and thus is not liable to pay any tax separately towards the tax dues of the dealer of Respondent No.1 Authority. - Attachment order set aside - - HC
Articles
News
Case Laws:
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GST
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2023 (3) TMI 1117
Rejection of refund for input tax credit (ITC) in respect of export of services for the period from December 2017 to March 2020 - denial on the premise that the petitioner is an intermediary and thus, the place of services is located in India, where the petitioner s place of business is located and not where recipient of services is located. Whether the Service rendered by the petitioner to EY Entities in terms of the service agreement constitutes services as an intermediary ? - HELD THAT:- The services rendered by the petitioner to EY Entities, prior to roll out of the GST regime, was considered as export of services . The petitioner prevailed before the concerned service tax authorities in establishing that the professional services rendered by it cannot be considered as services as an intermediary . It is also material to note that the petitioner s application for refund of ITC for the period after March 2020 has also been accepted by the Adjudicating Authority. Thus, the petitioner has been denied ITC only for the period from December 2017 to March 2020; it has been allowed CENVAT credit for the period covered under the service tax regime as well as ITC for the period after March 2020. In terms of Sub-section (8) of Section 13 of the IGST Act, the place of supply of certain services would be the location of the supplier of the services. In terms of Clause (b) of Sub-section (8) of Section 13 of the IGST Act, the place of supply of intermediary services is the location of the supplier of services. In the present case, the place of supply of services has been held to be in India on the basis that the petitioner is providing intermediary services - the Services rendered by the petitioner are not as an intermediary and therefore, the place of supply of the Services rendered by the petitioner to overseas entities is required to be determined on basis of the location of the recipient of the Services. Since the recipient of the Services is outside India, the professional services rendered by the petitioner would fall within the scope of definition of export of services as defined under Section 2(6) of the IGST Act. There is no dispute that the recipient of Services that is EY Entities are located outside India. Thus, indisputably, the Services provided by the petitioner would fall within the scope of the definition of the term export of service under Section 2(6) of the IGST Act. The impugned order as well as the impugned orders-in-original are set aside - Petition allowed.
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2023 (3) TMI 1116
Classification of supply - Supply of goods or supply of services - zero rated supply or not - supply of goods from the Applicant to the overseas customer - HELD THAT:- There are two transactions involving the applicant. The first transaction is of supply of goods by the manufacturer to the applicant and the second transaction is of supply of the same goods by the applicant to an overseas customer - As per the agreement with the applicant, the Indian manufacturer undertakes to supply the goods and complete all the export compliances including filing of Shipping Bill as an exporter and also receives Bill of Lading from shipper. The person claiming 'exporter' is the owner of the goods, and also the bill of lading is proof of title of goods when the goods are handed over to the shipper. Since the manufacturer files the shipping bill as exporter and also gets the bill of lading issued to him, he is the owner of the goods and holds the title of goods till they cross the customs frontiers of India. In effect the manufacturer takes the goods out of India to a place outside India while he is holding ownership and title of the goods, i.e., he exports the goods in terms of Section 2(5) of the IGST Act, 2017. Thus the manufacturer is the exporter of goods. Therefore in the first transaction of supply of goods by the manufacturer to the applicant, the place of supply of goods shall be the location outside India in terms of Section 11(b) of the IGST Act, 2017. In respect of the second transaction involving the supply of the same goods by the applicant to overseas customer, it is observed that the goods are supplied from a location outside India to a location outside India, i.e., the supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India. The said transaction is covered under Entry 7 of Schedule III of CGST Act, 2017 as a transaction or supply which shall be treated neither as a supply of goods nor a supply of services. The supply of goods from the Applicant to the overseas customer is treated neither as supply of goods nor as supply of services.
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2023 (3) TMI 1115
Exemption from levy of Central Goods and Service Tax Karnataka Goods and Service Tax or not - supply of the aircraft type rating training services to commercial pilots in accordance with the training curriculum approved by the Directorate General of Civil Aviation for obtaining the extension of aircraft type ratings on their existing licenses - covered under SI. No. 66 (a) of the Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017 and SI. No. 66 (a) of the Notification No. A.NI.-2-843/Xl-9(47)/ 17- U.P. Act-1-2017-Order- (10) -2017 dated 30.6.2017 or not. Whether the Applicant qualifies to be an educational institution and if so whether they are entitled to the benefit of entry number 66(a) of Notification 12/2017 or not? - HELD THAT:- The services provided by an educational institution to its students, faculty and staff, covered under heading 9992 or 9963, are exempted unconditionally under entry number 66(a) of Notification 12/2017 supra. Educational institution , for the purpose of this notification means an institution providing services by way of education as a part of a curriculum for obtaining a qualification recognized by law for the time being in force. Therefore an institution becomes an Educational institution only when the services provided by them are (i) part of a curriculum, (ii) the services yield a qualification and (iii) the said qualification must be recognized by law for the time being in force. It is observed from the facts of the case that the applicant undertakes the supply of the ATR extension training services to their trainees as per the agreement. The pilots holding the CPL(A) have to undergo the ATR extension training for the specific type of aircraft(s) so as to fly the said aircraft with the commercial airlines. Thus they approach the applicant either directly on their own or through the airlines with whom they are employed (on stipend basis as trainee or otherwise). The applicant institute is approved by the DGCA to conduct aircraft specific type rating training courses, as per the curriculum approved by the DGCA. The applicant issues a course completion certificate once the type rating training is completed. The pilots have to file an application with the DGCA, for extension of ATR, along with the required documents amongst which the course completion certificate is the one which evidences that the said pilot has undergone the training. ? - Whether the training and course completion certificate issued thereafter amount to a qualification recognized by any law or not? - HELD THAT:- The candidates who receive training from the applicant would be subjected to examination / test by the DGCA approved examiner. It is based on the results of these examinations and fulfilment of other prescribed conditions that the DGCA would endorse the type rating of aircraft in the licence of the trainee pilots. Therefore, the course completion certificate issued by the applicant can t said to be a certificate which is recognized by law for the time being in force. The fact that such a certificate may be taken into account by the DGCA approved examiner for the purpose of evaluating the experience and content of training will not make it statutory in character. Whether the Type Rating Training by the applicant enables the trainee to seek employment or undertake self employment directly after such training or coaching? - HELD THAT:- The applicant imparts training to the trainees and thus provides ATR extension services. On completion of the said training the applicant issues course completion certificate, which is a pre-requisite document for preferring application before the DGCA, who conducts the examination through an approved examiner and on passing of the said exam the DGCA records the said ATR extension in the CPL of the pilots concerned. Thus the training of the applicant does not result into any qualification and also is not recognized by the law. The applicant also referred the Circular No. 117/36/2019-GST dated 11.10.2019 wherein a clarification on applicability of GST exemption to the DG Shipping approved maritime courses conducted by Maritime Training Institutes of India to the effect that the Maritime Training Institutes and their training courses are approved by the Director General of Shipping and are recognized under the provisions of the Merchant Shipping Act, 1958 read with the Merchant Shipping (standards of training, certification and watch-keeping for seafarers) Rules, 2014 and thus the said institutes are educational institutions. It is observed that the said institutes are empowered to impart training and certification of the said training in terms of Merchant Shipping Act, 1958 read with relevant rules, whereas in the instant case the Aircraft Act and the Aircraft rules did not approve the applicant institute for conduction of examination that yields to a qualification, but only to issue course completion certificate which is useful only as one of the enclosure to file the application for the Type Rating examination conducted by the DGCA. Further, there is no circular applicable to the said Type Rating training, being given by the applicant and thus the Circular dated 11.10.2019 relevant to Shipping courses is not applicant to the instant case. Therefore the impugned services of the applicant are not covered under entry number 66(a) of the Notification 12/2017-Central Tax (Rate) dated 28-06-2017, as amended and hence do not qualify for exemption. Thus the said services are exigible to GST.
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2023 (3) TMI 1114
Classification of supply - Supply or not - supply of goods or supply of services or both - transaction of transfer/ sale of one of the independent running business divisions of the Applicant, as a whole, along with all the assets and liabilities of the independent business division on a going concern basis (business of providing/supplying of engineering services primarily relating to semi-conductor services) - slump sale or not - input tax credit - applicability of GST rate mentioned in Sl. No. 2 of the notification No.12/2017-Central Tax (Rate), dated 28th June, 2017. HELD THAT:- The activity of the applicant in the instant case is transfer of staffing business, which is one of the form of supply of goods or services or both, agreed to be made by the applicant and thus the first limb is fulfilled. Further the impugned transaction (supply) is admittedly for a consideration, to be received in multiple stages with a performance guarantee and sharing of revenue and thus the second limb also is fulfilled. The applicant intend to sell the staffing business in the course of his business and thus the third limb also is fulfilled. In view of the foregoing the activity of the applicant amounts to or results in supply in terms of Section 7 of the CGST Act 2017. Whether the impugned supply is of goods or services or both? - HELD THAT:- Every kind of movable property other than money and securities are goods. In the instant case the staffing business of the applicant is being transferred, which is not a movable property and thus the said supply can't be a supply of goods. Further, anything other than goods, money and securities are services - In the instant case as the impugned supply is not of goods as decided above, it is the supply of service. Further in terms of entry at 4 (c)(i) of Schedule II [Activities or transactions to be treated as supply of goods or supply of services] of the CGST Act, 2017, transfer of business assets amount to supply of goods unless the business is transferred as a going concern to another person, in which case it amounts to supply of service. Thus the transfer/ sale of the independent running business division of the Applicant as a whole, along with all the assets and liabilities of the independent business division as a going concern basis, in terms of business transfer agreement, amounts to supply of service in terms of Section 7(1)(a). Time of supply of the impugned supply - Section 13 of the CGST Act 2017 - HELD THAT:- The time of supply of the impugned transaction has to be determined by the applicant in terms of Section 13 of the CGST Act 2017, as the details required to determine the time of supply are not forthcoming. Value of the impugned supply/transaction - Section 15 of the CGST Act 2017 - HELD THAT:- In the instant case, the supplier i.e., Applicant and the recipient of the supply are not related and the price is the sole consideration for the supply and thus the value of the impugned supply shall be the transaction value, which is the price actually paid or payable. The applicant, accordingly, has to arrive at the value of the said supply. Rate of tax applicable to the impugned supply - HELD THAT:- SAC 9971 covers Financial services and related services and SAC 99711 covers Financial services (except investment banking, insurance services and pension services) and SAC 997119 Other financial services (except investment banking, insurance services and pension services. Thus the impugned transaction being a financial service it gets covered under SAC 997119. The rate of GST applicable on the impugned transaction is 18%, in terms of Entry No.15(vii) of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended. Whether the recipient i.e., the purchaser/transferee of the business as a whole is entitled to claim the credit of the input tax paid on the said transaction? - HELD THAT:- Section 95(a) of the CGST Act 2017 stipulates that the questions, on which advance rulings can be sought by the applicant, have to be in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant - In the instant case the third question is not related to the supply of the applicant but about the entitlement of the input tax credit by the recipient. Thus the question is beyond the jurisdiction and can't be answered. Applicability of the benefit of SI. No. 2 of the notification No.12/2017-Central Tax (Rate), dated 28th June, 2017 to the transaction of the applicant - HELD THAT:- The said entry prescribes that the services by way of transfer of a going concern, as a whole or an independent part thereof attracts NIL rate of GST unconditionally - in the instant case an independent part (staffing division business) of the applicant's business is being transferred / sold by the applicant. Hence the benefit of Si. No. 2 of the notification No.12/2017-Central Tax (Rate), dated 28th June, 2017 is applicable to the applicant's transaction, subject to fulfilment of the condition's of a going concern.
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Income Tax
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2023 (3) TMI 1113
Provision for bad and doubtful debts - Interpreting section 36(1)(viia)(a) - NPA - scope of the expression at its option - Whether deduction under the first proviso to Section 36(1)(viia)(a) was alternative to that under sub-clause (a) and that no deduction under the first proviso was allowable if the deduction had been allowed under sub-clause (a)? - HELD THAT:- The proviso carves out an exception from the stipulation in sub-clause(c), otherwise the use of the expression at its option would lose its significance. The said decision would squarely apply to the case on hand and the only distinction being sub-clause(a) of Section 36(1)(viia)(a) would stand attracted in the case on hand and the said provision was given effect to from the assessment year 2000-01. The decision in the case of Tamilnadu Industrial Investment Corporation Limited was challenged by the revenue before the Hon ble Supreme Court and the Special Leave Petition was dismissed as reported [ 2019 (7) TMI 408 - SC ORDER ] Decided in favour of assessee. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As relying on Dhansar Engineering Co. (P) Ltd. case [ 2021 (12) TMI 824 - CALCUTTA HIGH COURT ] the procedure under Rule 8D of the Income Tax Rules, 1962 was held to be prospective in operation and not retrospective. Thus, the substantial questions of law nos.2 and 3 are answered in favour of the appellant/assessee and the AO is directed to do the recomputation bearing in mind the above legal principle.
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2023 (3) TMI 1112
Reopening of assessment u/s 147 - Reasons to believe - unexplained purchase of flat - HELD THAT:- AO has failed to take into account the material on record, i.e., the objections filed by the petitioner and the response given by him to the notice dated 24.09.2019 issued under Section 133(6) of the Act. The petitioner not only explained the source of his income but also adverted to the periodicity of the instalments remitted towards purchasing the Flat. AO, for some unknown reason, has dealt with these assertions, which were backed by facts and figures, cursorily, to say the least. The petitioner had claimed that he had consistently disclosed the Flat as an asset and, accordingly, claimed depreciation qua the same; an aspect for some inexplicable reasons, the AO failed to notice and deal with. The injury to the respondent is compounded by the fact that respondent no. 2 while sanctioning the commencement of reassessment proceedings, has simply rubber-stamped the proposal We are inclined to accept the submissions made by Mr Syali that this was not a fit case for triggering reassessment proceedings, contrary to what has been held by respondent no.2. More so, the material placed on record by the petitioner had, in our opinion, failed to establish a nexus with the belief formed by respondent no. 1, that the income chargeable to tax in the relevant AY, i.e., AY 2016-17, had escaped assessment. Decided in favour of assessee.
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2023 (3) TMI 1111
Reopening of assessment u/s 147 - extension of period of limitation u/s 147 - computing the income u/s 115JB excluded the provision created towards bad and doubtful debts from the purview of 'Book Profits' - HELD THAT:- It leaves no room for any doubt that to invoke the extended period, AO ought to show/ demonstrate the existence of any of the three circumstances set out in the proviso to Section 147 - In this case, failure on the part of the assessee to fully and truly disclose all material particulars in our view would constitute the jurisdictional fact for invoking extended period of limitation and failure to record the existence of the above jurisditional fact while invoking the extended period under the proviso to Section 147 of the Act, would vitiate the entire proceedings. When the view taken by the assessee is also the view taken by the Hon'ble Supreme Court [ 1972 (8) TMI 110 - SUPREME COURT] it would not be open to the Revenue to state that there is failure on the part of the assessee to fully and truly disclose all material particulars. Afortiori there is a legislative affirmation of the view taken by the assessee by way of an amendment introduced to Section 115 JB of the Act with regard to the treatment to bad and doubtful debts whereby the above position of law declared by the Hon'ble Supreme Court was neutralized with retrospective effect from 01.04.2010 We agree with the finding of the learned Single Judge that the condition precedent to invoke extended period of limitation under Section 147 of the Act viz., failure on the part of the respondent /assessee to disclose fully and truly all material particular is absent in the facts of the case.
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2023 (3) TMI 1110
Rectification of mistake u/s 154 - computation of disallowance u/s 14A r/w Rule 8D - HELD THAT:- We find that in CIT vs HDFC Bank Ltd., [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] held that where assessee s own funds and other non interest bearing funds were more than the investment in tax-free securities, no disallowance u/s 14A of the Act can be made. We further find that in South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT ] held that disallowance under section 14A of the Act would not be warranted where interest-free own funds exceed the investment in tax-free securities and in such a case the investment would be presumed to be made out of assessee s own funds. Therefore, AO is directed to delete the disallowance made under section 14A r/w Rule 8D(2)(ii). In the present case, it is undisputed that during the year, the assessee earned exempt income totaling Rs.11,20,109. We find that in Nirved Traders (P.) Ltd. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT ] has held that disallowance under section 14A of the Act cannot be more than exempt income. Therefore, AO is directed to restrict the disallowance made under section 14A r/w Rule 8(2)(iii) to the exempt income earned by the assessee. Grounds challenging the assumption of jurisdiction under section 154 of the Act are dismissed.
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2023 (3) TMI 1109
Disallowance u/s 2(22)(e) - Whether accumulated profits as per the Companies Act are not the correct accumulated profits to be considered for the purpose of Section 2(22)(e)? - A.R. submitted that the correct accumulated profits have to be ascertained after making necessary adjustments towards depreciation as per Income Tax Act - HELD THAT:- We observe that in case the depreciation as per Income Tax Act is taken into account then the accumulated profits of the assessee would be working out to be in negative meaning thereby that there are no accumulated profits for the purpose of Section 2(22)(e) - In the aforesaid decisions M/S. PUSHPARTHY PACKS PVT. LTD. [ 2013 (12) TMI 200 - BOMBAY HIGH COURT] and YASHIN HOTELS (P) LIMITED. [ 2008 (9) TMI 435 - ITAT MADRAS-B] it has been held that the accumulated profits have to be arrived at after allowing depreciation as per the Act and not as per Companies Act. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the addition of disallowance. Appeal of the assessee is allowed.
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2023 (3) TMI 1108
Revision u/s 263 - distinction between 'lack of inquiry' and 'inadequate inquiry' - revision initiated on the basis of audit objection and lack of enquiry on the part of the AO - HELD THAT:- We have to understand that lack of enquiry/no enquiry is different from inadequate enquiry and it is only in case of no enquiry by the AO, Pr. CIT/CIT can exercise jurisdiction u/s 263 of the Act and not in case where the AO has made enquiries as seems appropriate in the facts and circumstances of the case. In the instance case, inquiry on relevant issue has been made by AO, hence no action invited u/s 263. Our view gets support from the Judgement given by the Hon ble Delhi High Court in case of CIT vs. Sunbeam Auto Ltd [ 2009 (9) TMI 633 - DELHI HIGH COURT ] We hold that the impugned order passed on the issue of audit objection and on No/Lack of enquiry by the PCIT is perverse to facts on record in holding assessment order erroneous and prejudice to the interest of revenue. Appeal of assessee allowed.
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2023 (3) TMI 1107
Revision u/s 263 by CIT - application of section 2(15) - HELD THAT:- Any issue which was considered by the AO in the assessment order, such order would be open for revision u/s 263 of the Act, if such order is erroneous and prejudicial to the interest of justice. The controversy related to application of section 2(15) of the Act, has now been set at rest by the decision of ACIT(E) vs Ahmedabad Urban Development Authority ( 2022 (10) TMI 948 - SUPREME COURT] by holding that as per provision of section 2(15) of the Act, such advancement of the object would not be considered charitable if an institution is engaged in trade, commerce or business or provides any service relating to trade, commerce or business for which cess, fee or other consideration is received. In the case in hand, the AO despite having recorded that though the assessee trust s activity fall under the ambit of general public utility , they are of commercial in nature and are covered by first and second proviso of section 2(15) - However, he erroneously assessed income of the assessee at Rs.NIL. Thus, the case laws relied by the Ld. Counsel for the assessee would not help as it is the clear case where the assessment order is erroneous and self-contradictory. Under these undisputed facts, there is no infirmity in the order of Ld.CIT(E) in revising the assessment under section 263 of the Act. Thus, grounds raised by the assessee are devoid of merit hence, dismissed.
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2023 (3) TMI 1106
TDS u/s 195 - Default u/s 201(1) and 201(1A) - payment for designing of towers made to a foreign company in UAE - payment for designing of towers made to Oilstone UAE was in the nature of FTS OR royalty - HELD THAT:- There is no allegation that the service provider i.e. Oilstone UAE has Permanent Establishment (PE)/business connection in India so as to hold that the services may be taxable in India under Article 7 of the India UAE Tax Treaty. Since the payment do not qualify as FTS under the India UAE Tax Treaty in absence of FTS clause in the said treaty, we are of the considered view, that there was no requirement for the assessee to withhold taxes on such payments made to Oilstone UAE. In the instant case, the assessee had also furnished declaration regarding No Permanent Establishment in India of Oilstone UAE to the assessing Officer during the course of assessment hearing. Further copy of Tax Residency Certificate (TRC) to the effect that Oilstone UAE is a tax resident of UAE was also furnished before the assessing Officer during the course of proceedings under section 201 - we are of the considered view that the assessee was not under an Obligation to withhold taxes on such payments made to Oilstone UAE. Accordingly, we find no infirmity in the order of Ld. CIT(Appeals) so as to call for any interference. Appeal of the Department is dismissed.
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2023 (3) TMI 1105
Reopening of assessment u/s 147 - addition on all grounds or issues which may come to notice of AO subsequently during the course of proceedings u/s 147, even when the reason for the notice for such income which may have escaped assessment, may not survive - HELD THAT:- We are of the considered opinion that since the decision in Jet Airways India Ltd [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] has been rendered by the Hon'ble jurisdictional High Court, therefore, the same is binding on us. In view of our aforesaid findings and respectfully following the decisions of the Hon‟ble jurisdictional High Court cited supra, we are of the considered opinion that in the present case, the Assessing Officer had no jurisdiction to make the addition under section 147 of the Act. As a result, the petition filed by the assessee under Rule 27 of ITAT Rules is allowed. Reopening of assessment u/s 147 - undisclosed income in bank in bank account - information received under the DTAA from the French authorities regarding the foreign bank accounts under Article 28 of the Indo-French Fiscal Convention Treaty held with the HSBC Bank, Geneva, Switzerland - HELD THAT:- As reassessment proceeding under section 147 of the Act was initiated to bring to tax the funds lying in various bank accounts, however, while passing the assessment order the Assessing Officer made the addition of the minimum balance required to open an account in HSBC Bank, Geneva. Thus, our aforesaid findings rendered shall apply mutatis mutandis. As a result, the petition dated 17/01/2023 filed by the assessee under Rule 27 of ITAT Rules is allowed.
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2023 (3) TMI 1104
Rectification application u/s 154 for allowing the enhanced claim of depreciation - claim of depreciation which has been wrongly claimed as per the provisions of Companies Act whereas the same have to be claimed as per the provisions of the Income Tax Act - As submitted that during the course of assessment proceedings, the assessee brought to the notice of the AO that while filing its return of income it had inadvertently and wrongly taken opening balance of WDV of fixed assets as per the Companies Act instead of Income Tax Act and the AO has not given effect to its bonafide error - HELD THAT:- As per the depreciation chart for A.Y. 2015-16, the closing WDV as on 31/03/2015 has been shown at Rs. 2,70,39,004/- and as per the depreciation chart for A.Y 2016-17, WDV on fixed assets as on 01/04/2015 has been taken at Rs. 2,20,00,290/- which clearly shows that there is some error which has crept in while taking the opening balance of WDV as on 01/04/2015 instead of the closing WDV for the previous year which by default will become the opening WDV for the year under consideration. None of the lower authorities have disputed the said factual matrix of the case in terms of both the computation of depreciation as per Income Tax Act and relates rules, and the quantum thereof so reflected in the tax returns of both the years and same being clearly a mistake which is apparent from the record and in respect of which there could not be any two opinions, being purely a factual matter which is clearly emerging from the record, we hereby direct the AO to take into consideration the opening balance of WDV and work out the claim of the depreciation and determine taxable income accordingly. Appeal of the assessee is allowed.
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2023 (3) TMI 1103
Mode of filing the appeal - As disputed by the CIT(A) wherein the assessee has filed the appeal manually whereas the Rules required the appeal to be filed electronically - HELD THAT:- There is no other defect which has been pointed out by the CIT(A). No doubt the Rules have been amended to provide for electronically filing the appeal, however before dismissing the appeal of the assessee, CIT(A) should have atleast allowed an opportunity to the assessee to remove the defect on account of manual filing of the appeal and to allow the assessee to file the appeal electronically which has apparently not happened in the instant case as no such opportunity was provided by the assessee to remove the defect. We find that under similar circumstances, in case of Mr. Umesh A Mishra Vs. ITO [ 2019 (3) TMI 1113 - ITAT MUMBAI ] has granted liberty to the assessee to file its appeal electronically before the CIT(A) holding that the liberal approach is required to be taken to advance justice as the procedure are handmade to advance justice. The assessee is hereby allowed to file its appeal electronically before the ld CIT(A) within four weeks of this order and the ld. CIT(A) is hereby directed to admit the appeal so filed electronically by the assesseee and adjudicate the issue raised by the assessee in its appeal on merits in accordance with law after providing reasonable opportunity to the assessee.
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2023 (3) TMI 1102
Deemed dividend u/s 2(22)(e) - assessee is a common shareholder having share in nature at 12.3% in one company and 50% in other - contention of the assessee that the transfer of fund was from and to the sister concerns on need basis for a few days and therefore, receipt and payment of the amount is only for short while depending upon the exigency of the business. HELD THAT:- The transaction interest between the sister concerns and the assessee cannot partake of the nature of either deposit or loan though interest might have been paid on the same. It only represents giving funds from one concern to another depending upon the exigencies of the business. The decision of Ankitech [ 2011 (5) TMI 325 - DELHI HIGH COURT ] relied upon by the Revenue that the assessee entered into normal business transaction as a part of day to day business activity and is a loan / dividend income. The same will not be applicable in present assessee s case. Therefore, the addition made by the AO and the confirmation made by the CIT(A) u/s 2(22)(e) cannot be termed as deemed dividend income and hence is deleted. Appeal of the assessee is allowed.
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2023 (3) TMI 1101
Assessment u/s 147 - cash deposits unexplained - addition on account of undisclosed sources - HELD THAT:- If an opportunity is given to the assessee to substantiate the source of cash deposits and also to produce the copy of the agreement of sale relied by the assessee and if the CIT(A) considers the same and passes the order afresh, the substantial justice would be rendered. Irgo, we partly allow the grounds of appeal for statistical purpose by remanding the matter to the file of the CIT(A) with a direction to the assessee to substantiate the source of the cash deposits and also to prove the agreement to sale relied by the assessee and further we direct the CIT(A) to consider the same and pass appropriate order in accordance with law. Appeal filed by the assessee is partly allowed for statistical purpose.
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2023 (3) TMI 1100
Addition u/s 69 - unexplained Cash loans given to various persons interest earned thereon - CIT-A deleted the addition - HELD THAT:- Assessee had sufficient cash balance available with him for advancing temporary loans to various parties. Accordingly, we are of the considered opinion that there was no rationale for making addition to the total income of the assessee on account of alleged amount of cash loans advanced to various parties - amount of interest income earned by the assessee from such temporary loans was received during the F.Y. 2018-19 and was accordingly offered for tax in the income-tax return for the A.Y. 2019- 20. There was no justification for making addition to the total income of the assessee on account of alleged amount of cash loans given to various persons and interest calculated thereon by treating it as undisclosed income under section 69 of the Act, which has been rightly deleted by the Ld. CIT(A). - Decided in favour of assessee. Unaccounted/ undisclosed investment u/s 69B - Unaccounted cash investment made in the name of various parties and interest calculated thereon - HELD THAT:- All the transactions found noted in the registers, BS-01 and BS-02 actually pertained to the partnership firm, M/s Motilal Gopikishan and did not relate to the assessee in his individual capacity and accordingly, we find that there was no justification for making any addition to the total income of the assessee on account of amounts found noted in the registers, BS-01 and BS-02 against the names of various parties/ projects and notional interest computed thereon by treating it as unaccounted investment of the assessee. We also find force in the alternative contention of the Ld. Counsel that daily balance in the registers found during the course of search and inventorized as BS-01 and BS-02 was either Rs. 10,00,000/- or less on each of these days and therefore, the addition in dispute before us should have at most been Rs. 10,00,000/- and not Rs. 1,53,83,960/-. We are of the considered opinion that there was no justification for making addition to the total income of the assessee on account of alleged amount of unaccounted cash investment made in the name of various parties and interest calculated thereon by treating it as unaccounted/ undisclosed investment under section 69B of the Act, which has been rightly deleted by the Ld. CIT(A). - Decided in favour of assessee. Addition of investment made in cash in C K Greens, Burhanpur and profit calculated thereon on sale of such investment - HELD THAT:- We are in agreement with the contentions of assessee did not make any investment towards purchase of plot in C K Greens, Burhanpur and consequently, there arises no occasion for fallaciously presuming that the assessee might have sold the plot in C K Greens, Burhanpur and earned profit thereon. Thus, considering the entire aspect of the matter, we are of the considered opinion that there was no justification for making addition to the total income of the assessee on account of alleged investment made in cash.- Decided in favour of assessee. Unexplained cash receipt by treating it as unexplained/ undisclosed investment u/s 69A - HELD THAT:- Assessee received advance amount against sale of plot executed through him in Phase II of Pranam City and such amount was stated by the assessee to have been handed over to the owner of Pranam City. We further observe that even if the amount of advance received by the assessee ought to have been taxed in his hands, such amount of advance could have been taxed only in the year in which sale registry was executed. AO has failed to bring on record any material to show that actual sale of plot was made by the assessee and that too during the year under consideration. In absence of such findings, we are unable to the accept the contentions of the Ld. AO and accordingly, we are in agreement with the findings of the Ld. CIT(A) having no rationale for making addition - Decided in favour of assessee.
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2023 (3) TMI 1099
Deduction u/s 80IB - Claim denied as assessee did not have 10 workers during the year - employment of 10 workers was not verifiable before the AO who has examined the Manager and also obtained report of PF department - HELD THAT:- As seen that the statement of Sh. Rohit Sharma, Manager was taken in isolation and the assessee has not been granted an opportunity to cross examine in rebuttal and hence, the evidentiary value of such statement without cross examination is in nullity in the eyes of law. Report of PF department, did not make it clear that on which particular day there were 8 workers excluding watchman/ckaukidars for day and night and the frequently of such day on monthly basis, so as to understand the working strength/man power/workers employed in view of the requirement of the provisions of section 80IB(iv) - CIT(A) was justified in approving the claim of the appellant assessee that there were 10 and more workers were employed during the year under consideration. The attendance register of the appellant, that on that particular day the number of employees were less than ten, as some of them were absent on account of leave etc. These facts have not been appreciated by the AO while passing the assessment order as it was not the case of the AO that the Department has undertaken an independent enquiry to find out as to whether ten or more workers were working and have found that the actual numbers of workers were actually less than ten. The sole reliance on the report of PF department is not tenable. AO had not pointed out any specific defect in the salary register, wages register attendance register and payment of wages register produced before him during the assessment proceedings to rebut the claim of the appellant assessee that 10 or more workers were working in the factory unit of the assessee. Thus the matter is remanded to the AO on the limited issue whether, there were 10 or more workers employed in the factory unit of the assessee to qualify for claim of deduction u/s 80IB(iv) - Appeal of the assessee is allowed for statistical purposes.
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2023 (3) TMI 1098
Application for registration u/s 12A - grant registration u/s 12AA to the applicant Trust from the date of application - HELD THAT:- Assessee had applied for registration to the CIT(E) Chandigarh for A.Y.2017-18 as per Form- 10A but worthy CIT(Exemptions) had granted registration in respect of Assessment Year 2018-19 vide order dated 30.03.2022 in the 2nd round of adjudication in compliance to the Tribunal Order remanding back the matter for adjudication on facts and in law. Since, the appellant Trust has filed application dated 16.05.2016 in respect of the Assessment Year 2017-18, the registration is required to be granted with effect from the Assessment Year 2017-18. DR has no objection to the request of the appellant Trust in granting registration with effect from the date of application for registration in respect of the Assessment Year 2017-18 under consideration. Accordingly, the CIT(E) is directed to grant registration u/s 12AA of the Act, to the applicant Trust from the date of application i.e. dated 16.05.2016 in respect of the Assessment Year 2017-18.Appeal of the assessee is allowed.
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2023 (3) TMI 1097
Addition of amount in respect of credit entry received - CIT-A deleted the addition - HELD THAT:- No infirmity in such deletion of addition made by CIT(A), keeping in view of this particular fact that the three limbs of Section 68 of the Act has duly been discharged by the assessee. We, therefore, do not find any reason to interfere with the said order passed by the Learned CIT(A) - Decided against revenue. Addition u/s 68 - advance received - CIT-A deleted the addition - HELD THAT:- Copy of balance sheet of the assessee company for A.Ys. 2010-11 2011-12 alongwith confirmation were also verified which establishes the fact of advance given and received back from the above parties as also observed by the First Appellate Authority, upon verification of the above documents placed before him. It is relevant to mention that those documents have also been verified by us and the Ld. DR has not been able to controvert such facts borne out from the records placed before us. As it is a fact that the assessee had duly accounted for the said transaction in its books of accounts and when the said parties had confirmed the same, no addition can be said to be justifiable on account of receiving back the advances so given in earlier year in the present facts and circumstances of the case as observed by the Ld. CIT(A) is found to be proper, without any ambiguity so as to warrant interference. We confirm the same. The grounds of appeal preferred by Revenue, is therefore, found to be devoid of any merit and, thus, dismissed. Short term capital gain - same amount treated as income under business head - HELD THAT:- Shares as investment has also been shown in its balance sheet and the assessee has offered the same as short term capital gain under the head income from capital gain . The entire set of details have also been filed before us by the assessee. As the said income has been offered in its return by the assessee, the addition made by the Ld.AO on the same amount treating the same as income under business head tantamounts to double taxation. Since, the same has already been offered for taxation by the assessee company, the addition, in our considered opinion, has been rightly deleted by the Ld. CIT(A) for the reasons above. Revenue s appeal is dismissed.
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2023 (3) TMI 1096
Revision u/s 263 by CIT - unverified/ unexplained from undisclosed sources of income - HELD THAT:- We find that the matter has been thoroughly examined by the AO wherein specific queries have been raised regarding source of gold ornaments and source of other expenditure and after due examination of the submissions and documentation filed by the assessee, AO has partially accepted the assessee s explanation and has made the addition in the hands of the assessee and has passed a speaking order. The explanation has been called for and not accepted on face value shows due application of mind on part of the AO and the PCIT in his order has not brought out what further enquiries or verification which ought to be done and has not been done by the AO and how the order so passed by the AO can be held as erroneous and prejudicial to the interest of the Revenue. The order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of the Revenue and the impugned order passed u/s 263 by the ld PCIT is set-aside and that of the AO s assessment order passed u/s 147 r/w 143(3) is sustained.Appeal of the assessee is allowed.
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2023 (3) TMI 1095
Penalty levied u/s 271(1)(c) - assessee has made a surrender of income - As per AO assessee has failed to explain and substantiate the source of additional income which was offered only due to conduct of survey by the Income Tax Department which is covered by Explanation (1) to section 271(1) - HELD THAT:- In the present case, since the AO has not noticed any difference between in the return income and the assessed income, the citations relied upon by the department are not applicable to the facts of the instant case as income under consideration forming the foundation of the penalty has not the one which was added by the AO beyond the income returned. Assessee has voluntary declared the income in the survey, and the return of income was accepted in the assessment without making any addition on that score. We hold that such income cannot constitute the basis for the imposition of penalty u/s 271(1)(c) of the Act. We, therefore, held that the impugned order passed by the ld. CIT(A) is perverse to the facts on the record and bad in law. Decided in favour of assessee.
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2023 (3) TMI 1094
Validity of Transfer pricing order and final assessment order - period of limitation - As per Section 92CA(3A) r.w.s.153 of the Act the transfer pricing order has to be passed 60 days prior to due date of completion of assessment as per Section 153(1) of the Act - HELD THAT:- The time limit for passing of final assessment order should be 31 March 2014. However, the Ld. AO has passed the final assessment order on 2 April 2014 i.e., beyond the time limit of 31 March 2014. The order passed by the TPO is barred by the limitation is illegal and void ab-initio and is quashed. Consequently assessment order passed after transfer pricing adjustment is without jurisdiction. Since the additional grounds of appeal are allowed in favour of the assessee. Disallowance u/s 14A - sufficiency of own funds - As submitted assessee has substantial own funds in comparison to the investments and referred to the Audited financial statements and contended that the investments are made out of own funds which are more than the size of the investments, and hence no disallowance of interest is attributed under section 14A r.w.r 8D - HELD THAT:- AR has demonstrated the availability of substantial own funds in the financial statements for making the investments. But the A.O. has to verify and examine the evidences considering the judicial decisions and also the ratio of decision of Vireet Investment Pvt Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] where only those investments which yield exempted income are considered for computing the average value of investments in respect of computing the disallowance under rule 8D(2)(iii) of the IT Rules. Thus restore the disputed issue to the file of the AO to verify, examine and consider the judicial decisions and recompute the disallowance u/s 14A r.w.r 8D of the Income Tax Rules and the grounds of appeal are allowed in favour of the assessee for statistical purpose and finally the assessee appeal is partly allowed for statistical purposes.
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2023 (3) TMI 1093
TP Adjustment - comparable selection - modifying the turnover filter applied by the Assessee - AR submitted that comparables whose turnover is more than 200 crores have to be excluded since the TPO has not applied the upper turnover filter Rs.200 crores - HELD THAT:- The coordinate bench of the Tribunal in the case of Autodesk India Pvt.Ltd. [ 2018 (7) TMI 1862 - ITAT BANGALORE] took note of all the conflicting decision to held as that high turnover is a ground for excluding companies as not comparable with a company that has low turnover. Thus comparables whose turnover is more than 200 crores should be excluded from the list of comparables.
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2023 (3) TMI 1092
TP Adjustment - disallowance of depreciation on the alleged excess amount paid by the assessee to its associated enterprises towards the purchase of second-hand machinery - In order to justify the amount paid to the associated enterprises for the purchase of the second-hand machinery, the assessee in its transfer pricing report has placed reliance upon the valuation certificate obtained from Chartered Engineer in Italy - TPO rejected the benchmarking analysis conducted by the assessee on the basis that such a certificate was not furnished by the assessee and accordingly proceeded to adopt the WDV of the machinery in the books of the associated enterprise as the arm s length value. HELD THAT:- We find merit in the submission of the assessee that the AO/TPO/learned DRP always had the power to call for the valuation report to determine the arm s length price of the machinery purchased by the assessee from its associated enterprises - As find from the record that neither such exercise was carried out by the TPO nor by the learned DRP. Even in the remand proceedings, TPO apart from finding deficiencies in the valuation report submitted by the assessee made no efforts to seek any expert opinion on the valuation of machinery purchased by the assessee, and rather the TPO justified the adoption of WDV as the arm s length value of the machinery. When the DRP had agreed with the findings of the TPO in its remand report then the expert opinion on the valuation should have been sought - when the DRP chose not to call for such a report and even the TPO neither in the first round nor in the remand proceedings sought such a report, partial rejection of the second valuation report submitted by the assessee is not justified. We do not agree that the Revenue had no other option and therefore proceeded to accept the valuation report submitted by the assessee in cases where the WDV is Nil. We completely reject the cherry-picking basis of considering the valuation report adopted by the lower authorities while computing the arm s length price of the impugned international transaction. In such peculiar circumstances of the present facts, the second valuation report submitted by the assessee from the government-approved valuer merits acceptance. Benchmarking of the transaction on an aggregate basis - When each of the machinery purchased by the assessee from its associated enterprise is connected for the purpose of operation of the assessee, the same cannot be treated as the independent transaction requiring separate benchmarking merely because invoices have been raised separately, or valuation by the valuer has been done separately. We find that the coordinate bench of the Tribunal in Boskalis International Dredging International vs DDIT, [ 2014 (7) TMI 866 - ITAT MUMBAI ] held that when the transactions are influenced by each other and particularly in determining the price and profit involved in the transactions then those transactions can safely be regarded as closely linked transactions. It was further held that such aggregation can be vis- -vis each associated enterprise separately and not by clubbing the transactions with all the associated enterprises. We direct the TPO/AO to compute the arm s length price of the international transaction pertaining to the purchase of capital goods by considering the second valuation report submitted by the assessee - further directed that the transaction with each associated enterprise be benchmarked on an aggregate basis. Grounds raised in assessee s appeal are allowed for statistical purposes.
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2023 (3) TMI 1091
TP Adjustment - comparables selection - HELD THAT:- Accentia Technologies Ltd be rejected on the ground that it was functionally different since it was providing high-end software services which could not be compared to the functions of the assessee - this entity has been excluded by Tribunal in assessee s own case for AY 2009-10 [ 2014 (9) TMI 126 - ITAT HYDERABAD ] as well as in AY 2010-11 [ 2016 (9) TMI 1308 - ITAT HYDERABAD ] Eclerx Services Ltd. - As this entity was involved in diverse nature of services and no segmental data was not available. In AY 2010-11.[ 2016 (9) TMI 1308 - ITAT HYDERABAD ], Ld. DRP excluded this entity. The Tribunal dismissed the revenue s plea on the ground that there was no change in activities of this entity in comparison to AY 2009-10 [ 2014 (9) TMI 126 - ITAT HYDERABAD ] In AY 2011-12 [ 2018 (5) TMI 239 - ITAT HYDERABAD ], this entity was excluded by Ld. DRP on functional differences and extra ordinary events. The action of Ld. DRP was confirmed by Tribunal. Therefore,we direct Ld. AO / TPO to exclude this entity. Infosys BPO Ltd. - We find that this entity has been excluded by Tribunal in AY 2009- 10 for the reason that this entity had brand value, high turnover, huge asset base and accordingly, not comparable. In AY 2011-12, this entity has been excluded by Ld. DRP by relying upon the decision of Tribunal in AY 2009-10. The same was upheld by Tribunal. TCS eServe Ltd - This entity is functionally different. This entity has presence of brand, having huge turnover, extreme profit margins and huge employee base. We find that this entity has been excluded by Tribunal in AY 2010- 11. In AY 2011-12, this entity has been excluded by Ld. DRP which has been confirmed by Tribunal. Therefore, considering the same, we direct Ld. AO / TPO to exclude this entity. Crossdomain Solutions Pvt. Ltd. - Before us, the Ld. AR has submitted that this entity is functionally different and this entity does not appear in the search carried out by Ld. TPO. For the said reason as well as following consistent stand of Tribunal in AYs 2009-10 to 2011-12, we direct Ld. AO / TPO to exclude this entity. Crystal Voxx Limited - Since this entity has failed service income filter at entity level and it is a persistent loss-making company, the same has rightly been rejected. We direct Ld. TPO / AO to re-compute the transfer pricing adjustments after revising comparability matrix as above. In case the margins of the assessee vis- -vis the resultant comparable entities are more, the benefit of tolerance range of +5% as per proviso to Sec. 92C(2) would be considered. The corresponding grounds stands allowed. All the other connected grounds have been rendered infructuous. Interest on overdue receivables - HELD THAT:- We find that the transaction of overdue receivable would be covered under capital financing as per Explanation as inserted by Finance Act, 2012 to Sec.92B. The same has to be benchmarked separately irrespective of the fact whether any interest has been charged by the assessee from non-AEs or not. The Ld. DRP has already noted that substantial receivables have been outstanding during this year. Accordingly, we direct Ld. TPO to consider ALP rate of LIBOR+3% for delayed remittance beyond allowable credit period. The assessee is directed to provide the requisite information and computation. The ground stand partly allowed.
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2023 (3) TMI 1090
TP Adjustment - MAM selection - export of finished goods from Thane Plant by adopting internal TNMM - Contention of the Appellant before AO and DRP was that exports made to different geographical location to non-AEs could be considered to benchmark export sales to AEs by adopting internal TNMM method since the transactions undertaken with the AEs and Non-AEs were in the same industry, and had high level of similarity with respect to products, cost of goods sold, manufacturing processes, etcHELD THAT:- DRP erred in adopting the aforesaid reasoning given by the Appellant to include even the domestic sales made by the Appellant for benchmarking the export sales made to AEs from Thane Plant. Accordingly, we set aside the transfer pricing addition and direct the TPO/Assessing Officer to re-compute ALP of the international transaction of export of goods from Thane Plant by taking OP/OC of the export sales to non-AEs. In view of the aforesaid directions, Ground No. 1 raised by the Appellant allowed. TP addition - export of finished goods from Nagda Plant by adopting internal CUP method - HELD THAT:- We note that in identical facts and circumstances in the case of Firmenich Aromatics Production (India) Pvt. Ltd [ 2018 (11) TMI 862 - ITAT MUMBAI] held that CUP Method could not be adopted as most the appropriate method. In the present case the TPO has accepted application of Internal TNMM for transactions of 65% of exports from Nagda Plant. Therefore, we hold that internal TNMM should also be adopted for benchmarking the balance 35% of the export transactions pertaining goods from Nagda Plant. Accordingly, we set aside the transfer pricing adjustment and direct the TPO/Assessing Officer to re-compute ALP using internal TNMM. Unexplained expenditure and undisclosed income - Admission of additional evidence - HELD THAT:- The Appellant was not able to produce evidence before lower authorities due to paucity of time and partly for the reason that the information/evidence was also not in the knowledge/possession of the Appellant at the relevant time. Accepting the reasons failure to furnish this evidence before the Assessing Officer and DRP provided by the Appellant, we admit the additional evidence in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 and remand issue raised to the file of Assessing Officer for adjudication afresh.
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2023 (3) TMI 1089
Income from house property - deduction for interest u/s.24(b) - disallowance of deduction claimed u/s 24(b) in respect of interest paid on borrowed capital while computing income from house property - HELD THAT:- In this case, since the assessee has let out the building from January, 2007 onwards in the Financial Year relevant to the AY 2007-08, it has rightly claimed interest paid on borrowed capital u/s.24(b). CIT(A), although, accepted the fact that the assessee has borrowed loan from bank for the purpose of construction of building and also said building has been let out, erred in sustaining addition made towards disallowance of interest on flimsy grounds like probability or improbability of construction of building in a short period ignoring fact that what was constructed by the assessee is unfinished building. AO is erred in disallowing interest claimed towards borrowed capital u/s.24(b) - CIT(A) without appreciating the facts simply sustained additions made by the AO and thus, we direct the AO to delete additions made towards disallowance of deduction claimed towards interest paid on loan borrowed from SBI u/s.24(b) - Decided in favour of assessee.
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2023 (3) TMI 1088
Income deemed to accrue or arise in India - Liaison Office (LO) as a Service PE or Dependent Agency Permanent Establishment (DAPE) - Estimation of the taxable profits as per Rule 10 of the Income Tax Rules - Whether Liaison Office (LO) of the Appellant constitutes a business connection of Appellant in India as per provisions of Section 9(1)(1)? - HELD THAT:- LO in India does not constitute PE in India under Article 5 of India Switzerland DTAA because. LO does not constitute a fixed place through which business of assessee is carried out in India. Employees of the LO do not negotiate, finalise or discuss the mechanics of contracts including pricing with the assessee's customers. As such the employees of LO merely act as a communication link between the assessee and the airline companies. LO did not carry any activity, beyond that permitted by the RBI. The activities carried by the LO are thus, preparatory (auxiliary in nature). The activities/operations of the assessee in connection with the contracts are carried from outside India. Ground No.1 to 4 raised by assessee are allowed and held that LO of subsidiary of assessee does not constitute a PE in the case of assessee, hence, addition on this ground made by AO is directed to be deleted. Appeal filed by the assessee is allowed.
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2023 (3) TMI 1087
Difference in gross receipts as per Form no. 26AS and books of accounts of the assessee, on the basis of certain additional evidence - HELD THAT:- As reasons given by the AO to make additions towards difference in gross receipts appears to be baseless and incorrect, because the assessee can file whatever evidence the AO wants, to prove its financial transactions with their clients, but it is incorrect on the part of the AO to expect the assessee to produce books of accounts of their clients. The only reason for the AO to make additions towards difference in gross receipts is doubt and suspicion on expenses booked by the clients in their books of accounts. AO is miserably failed to understand the concept of accounting, because deduction of TDS on total payments including reimbursement of expenses itself is a sufficient proof that the client have accounted expenses incurred by the assessee on behalf of their clients. The assessee is following the method of accounting as per which it was accounting service charges received from the clients towards rendering various services as their income and reimbursement of expenses is squared off in the parties account. The assessee has filed a party wise reconciliation along with ledger account explaining the difference. As per chart filed by the assessee, the gross receipts towards C F service charges and other income, exactly matches with gross receipts booked by the assessee in their books of accounts. Assessee had also reconciled difference between reimbursement of expenses and as per bills filed by the assessee, amount received from clients towards reimbursement of expenses is more than the amount of difference noticed by the AO from the Form no. 26AS. AO has erred in making additions towards difference in gross receipts as per Form no. 26AS and as per books of accounts of the assessee. Appeal filed by the Revenue is dismissed.
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2023 (3) TMI 1086
TP Adjustment - Comparable selection - HELD THAT:- Assessee in engaged in the business of provision of Information Technology enabled Services (ITeS), to its wholly owned holding company, thus companies functionally dissimilar with that of assessee need to be deselected. Application of turnover filter - We hold that 7 companies whose turnover in the current year is more than Rs.200 Crores should be excluded from the list of comparable companies - We direct the TPO/AO to compute the ALP of international transaction in question as per the directions contained in this order, after affording Assessee opportunity of being heard.
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2023 (3) TMI 1085
Deduction in regard to unabsorbed depreciation and carry forward depreciation - Merger of partnership firm into Company - satisfaction of conditions mentioned in section 72A(6) - HELD THAT:- All the stipulated conditions u/s.47(iii) of the Act, that all the assets of the partnership firm became the assets of the assessee company from the date of merger. Even all the partners of the firm before the takeover have become shareholders of the assessee company in the same proportion and the partners have not got any additional benefit before the takeover other than the shares allotted in the company in the same proportion which has taken over the firm. We also noted from the chart filed before us i.e., percentage of holding that the aggregate of the shareholding in the company of the partners of the firm is not less than 50% of the total voting power and their shareholding continues to be as such for a period of 5 years from the date of succession. Another condition that the SEBI should approve the corporatization of the company is not applicable to the assessee company being a private limited company and that condition applies to the limited company. In view of the admitted factual aspects and as per provisions of law i.e., section 72A(6) of the Act and provisions of section 47(iii) of the Act or the proviso to clause xiv of section 47 of the Act, we are of the view that the assessee has complied with all the conditions and hence, entitled for claim of deduction in regard to unabsorbed depreciation and carry forward depreciation. Therefore, we confirm the order of CIT(A) and this issue of Revenue s appeal is dismissed.
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Customs
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2023 (3) TMI 1084
Confiscation - penalty - Smuggling - Foreign marked gold bars - gold ornaments - cash - burden to prove - retraction of statements - cross examination on whose statements the whole case is based, were not provided - HELD THAT:- It is inconceivable that the officer recording the statement had these details. It suggests that the statements were voluntary. These statements also indicate the appellant s relationship with Deepak Handa and that the appellant would sell gold to Deepak. The retraction does not indicate what part of the statement recorded by the officers was incorrect and what the truth is- his personal details, the fact that he would sell gold to Deepak or the nature of the seized gold. If officers had compelled him to write incorrect facts, the retraction should have brought out the correct facts - If one has legitimately bought foreign marked gold and is accused by DRI officers of possessing smuggled gold, it is inconceivable that when one is produced before the learned CMM that one would NOT say that he had actually bought duty paid gold and produce the documents. It needs to be reiterated that no duty paid documents have been produced till date even before us. Therefore, these submissions of the learned counsel will not carry the case of the appellant any further. Section 111(d) nowhere indicates whether it applies to town seizures or seizures at the ports and airports. All that it states is that any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force are liable for confiscation. Gold is not freely importable. Import of gold in any form, is prohibited except by nominated agencies as per the Foreign Trade Policy notification above issued under the Foreign Trade (Development and Regulation) Act, 1992. Unless this condition of the import (only by a notified agency) is fulfilled, gold is a prohibited good. The appellant also does not dispute that the gold can be imported only by the nominated agencies. If gold is imported by anyone else, it will be prohibited goods. The gold bars and piece of gold were correctly held liable for confiscation under section 111(d) by the adjudicating authority and such confiscation was correctly upheld in the impugned order. Confiscation under sections 111(i) and (p) need to be set aside. Gold jewellery weighing 581.71 grams seized from the appellant - HELD THAT:- It is not in dispute that the gold jewellery was not smuggled but is made in India. If it was established with some evidence that the jewellery was manufactured out of smuggled gold, then such smuggled gold would have been covered under Section 123 and by virtue of section 120, would have been liable for confiscation notwithstanding the change in its form into jewellery. However, there is no such evidence on record - therefore, the jewellery is not liable to confiscation in the absence of any evidence that it is smuggled or it has been made by converting smuggled gold. The mere fact that the jewellery was found along with the smuggled gold bars makes no difference. Confiscation of the gold jewellery cannot be sustained and needs to be set aside. Indian currency amounting to Rs. 8,86,500 seized from the appellant - HELD THAT:- It is for the Revenue to establish that the cash which has been seized are (a) the sale proceeds; (b) the goods that were sold were smuggled goods; and (c) the person who has so sold the goods had either the knowledge or had reason to believe that the goods were smuggled. Merely because some unaccounted cash is lying, it cannot be confiscated unless the three conditions in Section 121 are fulfilled - It is not found that the Revenue has established any of these factors or even identified which were the smuggled goods which were sold by the person from whom the cash is seized. Confiscation of this cash is therefore, liable to be set aside. Penalty of Rs. 25,00,000 imposed on the appellant under Section 112 - HELD THAT:- The penalties imposed on Shri Deepak Handa and Shri Ravi Handa reduced - confiscation of the cash and jewellery seized from the appellant set aside - it is deemed fit to reduce the penalty imposed on the appellant also to Rs. 5,00,000/-. Appeal allowed in part.
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2023 (3) TMI 1083
Refund of SAD - rejection of refund claim for the reason that the claims were filed beyond one year from the date of payment of duty and hence were time-barred as per condition 2 (c) of the notification - HELD THAT:- The Commissioner (Appeals), by the impugned orders, allowed appeals of the respondent relying on the judgment of the jurisdictional Delhi High Court in SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2014 (4) TMI 870 - DELHI HIGH COURT] in which the it was held that the notification must be read down insofar as it places the restriction of one year for filing the refund claim. Revenue filed these appeals on the ground that in another case of Wilhem Textiles India Pvt. Ltd. [ 2016 (9) TMI 1370 - DELHI HIGH COURT ], involving the same issue, Revenue s appeal to Delhi High Court on the same issue was dismissed and Revenue s SLP against the dismissal by the Delhi High Court has been admitted by the Supreme Court. Therefore, according the Revenue, Commissioner (Appeals) has erred in observing the judicial discipline and following the ratio of the judgment of the jurisdictional High Court and should have defied Delhi High Court while passing the impugned order. We are surprised as to how the Committee of two Commissioners has not only concluded that the Commissioner (Appeals) does not have to follow judicial discipline but have gone further to say that the Commissioner (Appeals) has erred in following the binding precedent of the jurisdictional High Court. The prayer before us is to hold that the Commissioner (Appeals) erred in following judicial discipline and that he should have not followed the binding precedent of the jurisdictional High Court because in some other case, on the same issue in which also the High Court dismissed the Revenue s appeal, an SLP has been admitted by the Supreme Court. The submissions of Revenue in this appeal that the Commissioner (Appeals) should have not followed the binding ruling of the jurisdictional High Court can only result in considerable harassment to the assessee-public through needless litigation without any benefit to the Revenue. Both these appeals filed by the Revenue are dismissed.
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2023 (3) TMI 1082
Refund of SAD - Time Limitation - rejection of refund claim on the ground that the review order as required under Sub Section (2) of Section 129 D of Customs Act, 1962 has been passed beyond the period of three months as envisaged in Sub Section (3) of Section 129 D of Customs Act, 1962 - HELD THAT:- As per Sub Section (2) of Section 129 D of Customs Act, 1962, the review authority has to examine the decision or order passed by adjudicating authority so as to satisfy the legality or propriety of such decision or order and has to pass a review order directing the department to prefer an appeal before the Commissioner (Appeals). Sub Section (3) of Section 129 D provides that every such order under Subsection (2) shall be made within a period of three months from the date of communication of the decision or order passed by the adjudicating authority. In both these appeals it is argued that when the period of three months is computed from the date of receiving the Order-in-Original by the reviewing authority, the review orders passed are well within time as prescribed under Sub Section (3) of 129 D of Customs Act, 1962. From the Section as noticed above it can be seen that the period of three months has to be computed from the date of communication of the decision or order passed by the adjudicating authority. In both review order, the date of receiving the Order-in-Original by the Reviewing Cell is not mentioned. When Sub Section (3) of Section 129 D prescribes a time frame of three months from the date of receiving the order passed by adjudicating authority, it is necessary and would be convenient to mention it in the review order - What prevented the department from producing it before the Commissioner (Appeals) even after repeated request. How did the seal appear for the purpose of filing an appeal before the Tribunal. The Bench raised these doubts to the learned AR as to what is the reason that the Commissioner (Appeals) was not able to take notice of such seal if it was present on the order while considering the appeal. The learned AR was not able to reply. It is opined that the seal seen affixed on the photo copy of the Orders-in-Original found in the annexure to the appeal filed by the department, purporting to show the date of receipt of the order in the review section, to be suspect - the strong inference that can be drawn is that there was no evidence available to establish as to the date on which the order-in-original was received by the Review Cell and apparently there was a delay in passing the review order. The Registry is directed to issue a copy of this order to the jurisdictional Principal Chief Commissioner who is directed to issue instructions to the Committee of Commissioners, so that appeals of this nature are filed with due seriousness and after satisfying themselves about the truth of the matter - the contention of the department that the orders were received by the reviewing authority only on 11.3.2010 / 16.3.2010 cannot be accepted - appeal dismissed.
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2023 (3) TMI 1081
Confiscation of imported goods - barge - rejection of declared value under rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - section 28 and section 114A of Customs Act, 1962 - HELD THAT:- It is found that the adjudicating authority has incorporated facts, not suitably tested by offering opportunity to challenge, which is anathema to just and fair adjudication. The deficiency in not placing the appellants on notice of these allegations would need to be remedied and it is only by a fresh adjudicating process that the factual position may be established. As pointed out by Learned Council, the restricted framework of section 28 and section 114A of Customs Act, 1962 would have to be adhered to in in the fresh proceedings. The adjudicating authority is also obliged to explain the different positions adopted for valuation of the same vessel which, but for a brief while, was within Indian territorial waters and, yet, was found to be valued with substantial difference on the two occasions; this could have a significant bearing on the manner in which the residual method is used for conformity with the scheme of valuation espoused in rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Matter remanded back to the adjudicating authority for fresh determination of all issues that the appellants have raised the proceedings - appeal allowed by way of remand.
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2023 (3) TMI 1080
Valuation of imported goods - 100% Non-Textured Polyester Lining Falling - Mix Lot of 100% Polyester Knitted Fabrics - to be classified under CTH 54076190 and CTH 60053200 of the Customs Tariff Act, 1975 or not - redetermination of value of goods as per NIDB data under Rules of Customs Valuation Rules, 2007 and assessed bills of entry - benefit of Notification No. 30/2004-CE dtd. 19.07.2014 as amended by Notification No. 34/2015-CE dtd. 17.07.2015 - HELD THAT:- Section 14 of the Customs Act, 1962 read with Customs Valuation Rules makes it abundantly clear that transaction value in the ordinary course of commerce is to be taken as the assessable value. The Customs Valuation Rules outlines the step-by-step methodology to be adopted for re-determination of the assessable value in certain cases. The primary requirement for re-determination of the value is that the transaction value should be rejected for cogent reasons prescribed in the Customs Valuation Rules. If the transaction value is rejected, then the Customs Valuation Rules prescribes the basis for arriving at the assessable value. However, the requirement of Section 14 and the Customs Valuation Rules need to be satisfied for enhancement of value. Nothing is forthcoming from the record of the case from which the basis for such re-assessment can be made out. Rejection of declared value on Bill of Entry is a serious affair and the same could have been rejected on the basis of cogent examination of evidences and justifiable reasons. From plain reading of the Rule 12 it is quite evident that the word doubt used in the rule has to be based on cogent reasons and evidences. No cogent evidence or reason has been put forth in the present case to justify the doubt of the assessing officer. Clearly, for rejection of the transaction value under Rule 12, there has to be a reasonable ground and it cannot be rejected merely on the ground that similar goods have been imported at higher value without examining the applicability of Rule 5 of Customs Valuation Rules, 2007. In the present case, the adjudicating authority enhanced the value as the declared value appears to be low compared to value available in NIDB data, otherwise, there is no material available. The Tribunal consistently observed that the declared value cannot be enhanced merely on the basis of NIDB data - Tribunal in the case of NEHA INTERCONTINENTAL (P) LTD. VERSUS COMMISSIONER OF CUSTOMS, GOA [ 2006 (5) TMI 279 - CESTAT, MUMBAI] has held in the absence of rejection of transaction value, invoice value requires acceptance and when the contemporaneous import of similar goods is not established, value cannot be enhanced. Whether appellant are eligible for exemption Notification under Notification No. 30/2004-CE dtd. 09.07.2004 which provide exemption form Countervailing Duty (CVD)? - HELD THAT:- An identical issue has been decided by this tribunal in the appellant s own matter of SEDNA IMPEX INDIA PVT LTD. VERSUS C.C. MUNDRA [ 2022 (2) TMI 1355 - CESTAT AHMEDABAD] where it has been held that the appellant are clearly entitled for the exemption Notification No. 30/2004-CE dated 09.07.2004 for exemption from CVD on the imported goods - it is settled that the appellants are entitled for the exemption from payment of CVD under notification No.30/2004-CE. Appeal allowed - decided in favour of appellant.
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Corporate Laws
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2023 (3) TMI 1079
Application seeking winding up proceedings relating to Shree Shyam Cotspin Ltd. (the company) be transferred to the National Company Law Tribunal for further proceedings under the Insolvency and Bankruptcy Code, 2016 - whether the learned Company Court had erred in proceeding on the basis that irreversible steps have been taken? - HELD THAT:- The said question is required to be answered in the negative. It is clear from the record that several steps have been taken for winding up of the company; assets claims have been invited from creditors; parts of the company s assets have been sold; all movable assets taken over by respondent no.4 SARFAESI Act have been sold; the immovable asset of the company is under acquisition; and the assets are insufficient to meet the company s liabilities. There are no error in the impugned order - appeal dismissed.
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Securities / SEBI
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2023 (3) TMI 1078
Exemption from payment of fees for the period for which the erstwhile individual Srikant Mantri has paid to the Board cannot be converted to the corporate entity MFL - Stock broker which requires multiple registrations to operate on more than one stock exchange(s) or a single registration will suffice for all the stock exchanges - HELD THAT:- As decided by this Court in Securities and Exchange Board of India Vs. National Stock Exchange Members Association and Another [ 2022 (10) TMI 526 - SUPREME COURT] and remains no more res integra in view of the judgment of this Court wherein it has been held that stock broker not only has to obtain a certificate of registration from SEBI for each of the stock exchange where he operates, at the same time, has to pay ad valorem fee prescribed in terms of Part III annexed to Regulation 10 of the Regulations, 1992 in reference to each certificate of registration from SEBI in terms of the computation prescribed under Circular dated 28th March, 2002 and fee is to be paid as a guiding principle by the stock broker which is in conformity with the scheme of Regulations 1992. Whether the appellant Company is entitled to fee continuity benefits under Para 4 of Schedule III of the Regulations 1992? - When Srikant Mantri transferred his membership card of CSE to the Company, he was not a whole time Director but was only a Director. Neither CSE nor its internal auditors, were clear of the exact date on which Srikant Mantri had acquired 40% shareholding in the appellant Company. As was informed by the Board to the CSE vide letter dated 18th March, 1998 that Srikant Mantri was holding less than 40% of the paidup capital of the corporate entity. It was also recorded by the Tribunal that from the true copies of annual returns provided by the appellant Company, it was revealed that the details of the Directors provided by them nowhere indicate Srikant Mantri as a whole time Director for any of the relevant years. The designation of Srikant Mantri has been indicated as Director in all the relevant years Annual Return. It was also established from the copy retrieved from ROC s office in respect of AGM dated 28th April, 1997 and 19th May, 1999. Appellant Company was granted registration after para 4 was put in place by notification dated 21st January, 1998 and the appellant Company failed to satisfy that it fulfilled the conditions of para 4 to Schedule III pursuant to which the appellant has claimed his entitlement of fee continuity benefits. We are satisfied that the appellant Company failed to fulfil the conditions as referred to under Para 4 of Schedule III appended to the Regulations of which a reference has been made.
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Insolvency & Bankruptcy
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2023 (3) TMI 1077
Review of Order - Upon filing of section 95 application, interim moratorium under section 96 of the IBC commenced and all legal action and proceeding against the judgment debtor no.2 are deemed to be stayed - HELD THAT:- The scope of review under order XLVII rule 1 read with section 114 of the Code of Civil Procedure is applicable where mistake or error is apparent on the face of the record and it is not synonymous with re-hearing of the matter, for detecting any error in earlier decision and to correct the same. Error which is not self evident and has to be detected by a process of reason, can hardly be said to be an error apparent of the face of the record, justifying court to exercise his power of review under order XLVII rule 1 CPC. It is also settled position of law that in case of review, it must be remembered that it can be used for limited purpose and it s not an appeal in disguise. There is a clear distinction between erroneous decision and error apparent on the face of the record. When the court has specifically directed the judgment debtor no. 2 to file affidavit of asset, long back on 2nd April 2019 and also by subsequent order and when judgment debtor in spite of appearance did not bother to comply the same on the plea that such affidavit is not required to be filed in the present context, there are no mistake or error which is apparent on the face of the record. Even when impugned order was passed, opportunity was given to judgment debtor to file affidavit of asset within four weeks and in case filing the same opportunity was given to them for mentioning to discharge the warrant of arrest. Till date, judgment debtor has not complied the same and as such there is no mistake or error apparent on the face of the record and as such the prayer for review is not sustainable. Application dismissed.
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2023 (3) TMI 1076
Winding up of company - Section 241 and 242 of the Companies Act, 2013 - HELD THAT:- Reliance has been placed by Ld. Counsel for the Respondent No. 2 in the case of MSDC RADHARAMANAN VERSUS M. SD CHANDRASEKARA RAJA [ 008 (3) TMI 471 - SUPREME COURT ], wherein the Hon ble Supreme Court has held in the context of the Companies Act, 1956 that the jurisdiction of the Company Law Board (now NCLT) must be considered having regard to the complex situation(s) which may arise in the cases before it. No hard and fast rule can be laid down. If an application is filed under Section 433 or Section 397/398 of the Companies Act, 1956, (now Section 241/242 of the Companies Act, 2013), an order of winding up may be passed but the Company Law Board in a winding up application may refuse to do so, if any other remedy is available. The Company Law Board may not shut its doors only on sheer technicality even if it is found that unless its jurisdiction is exercised, there will be complete mismanagement in regard to the affairs of the company. The ratio laid down in the aforesaid case is applicable in the facts of the instant case. The Consent Terms entered between the parties in the past, pursuant thereto, the Original Petition was disposed off, thereafter, violation of Consent Terms, applications were filed before the NCLT, therefore, the NCLT appointed Observer cum Facilitator to settle the disputes, to revive the company etc. however, the parties could not arrive at any amicable settlement despite several opportunities given by the NCLT - the order passed by the NCLT is correct in nature to meet ends of Justice and in the interest of the Company, winding up order was passed. Keeping in view of the aforenoted background, there are no merit in the instant appeal. The impugned order dated 08th June 2021 passed by the National Company Law Tribunal (Mumbai Bench, Court-II) is hereby affirmed. Appeal dismissed.
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2023 (3) TMI 1075
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of discernible pre-existing dispute surrounding the debt claimed to be due and payable by the Operational Creditor or not - HELD THAT:- The Corporate Debtor in its reply dated 08.08.2020 to the Section 8 demand notice had disputed both the quantum of operational debt and also deficiencies in respect of discharge of contractual obligations by the Operational Creditor. There are no material to have been placed on record by the Operational Creditor wherein the Corporate Debtor can be said to have unambiguously admitted the operational debt claimed by the Appellant - the Adjudicating Authority has rightly observed in the impugned order that the Corporate Debtor had raised an issue with regard to the existence of amount claimed by the Operational Creditor and asked for reconciliation of accounts. Deficiencies in respect of discharge of contractual obligations by the Operational Creditor as raised by the Corporate Debtor - whether there was a plausible dispute supported by the materials raised by the Corporate Debtor in Reply to Demand Notice? - HELD THAT:- On looking into the contents of allegations made in the Reply to the Demand Notice, it is clear that Reply notice raises substantial and genuine issues to oppose the claim of the Operational Creditor s amount due. The issue of deficiency in terms of defects and delays in respect of supplies received from the Operational Creditor was raised by the Corporate Debtor prior to issue of demand notice of 29.07.2020 as borne out from a series of emails placed at pages 432-437 of APB. Concisely put, the email dated 10.10.2017 from the Corporate Debtor raises issues about repair/replacement of supplies made; email dated 18.10.2017 relates to complaint about oil drums having been sent without sealing; email dated 18.05.2018 is about non-supply of oil; email dated 29.11.2018 is about oil drums sent without sealing; email dated 23.02.2019 is about repair of leaking power transformers; email dated 15.10.2019 and 26.11.2019 are about repair of power transformers. These emails which are on record clearly substantiate that the Operational Creditor was put to notice regarding non-supply of goods, delay in supplies, supply of defective goods which are clear signs of pre-existing disputes. The Adjudicating Authority having noted that the arbitration proceedings were kick-started by the Corporate Debtor starting September 2020, also observed that these arbitration proceedings were clearly initiated after the issuance of the demand notice in July 2020. Hence, it has been rightly held by the Adjudicating Authority that the invocation of the arbitration proceedings being subsequent to the issue of the demand notice cannot be treated as a pre-existing dispute. There exists a pre-existing dispute with respect to the existence of amount due and payable and quality of goods and services supplied by the Operational Creditor to the Corporate Debtor. Present is a case where it cannot be said that defence taken by the Corporate Debtor in Reply Notice is a moonshine defence unsupported by any evidence. The ratio of judgment by the Hon ble Supreme Court in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Private Limited [ 2017 (9) TMI 1270 - SUPREME COURT ] is indeed squarely applicable in the present case and has been correctly applied by the Adjudicating Authority. The Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Appellant on the ground of pre-existing dispute. There is no merit in the Appeal - Appeal dismissed.
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FEMA
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2023 (3) TMI 1074
Forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators - order passed by the competent authority under Section 7 read with 19(1) of the Smugglers and Foreign Exchange Manipulators(Forfeiture of Property) Act - partners of the first appellant, namely, N.A. Yusuf, was ordered to be detained by Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974(hereinafter being referred to as COFEPOSA ) - HELD THAT:- From the evidence which came on record, it could be gathered that out of the investment made by the partners(Appellant nos. 2 to 5) to the tune of Rs.10.20 lakhs, N.A. Yusuf contributed Rs.5 lakhs and Appellant no.2(P.M. Saheeda) and her children have contributed to the tune of Rs.5.2 lakhs each but neither N.A. Yusuf has justified any source from where his capital contribution was made nor the explanation was tendered by Appellant nos. 2 to 5 regarding their source of income and it was disbelieved at all stages and a finding was returned that major part of the investment has been treated as income from undisclosed sources. That apart, no evidence was placed by Appellant no. 2(P.M. Saheeda) on record to justify that the land in question was purchased from the resources available at her command in the year 1969, through the sale deed dated 16th April, 1969. In the given circumstances, the appellants are not entitled to seek protection of Section 9 of the Act 1976. That apart, as regards the submissions made by the counsel for the appellants to impose fine in lieu of forfeiture, as contemplated under Section 9 of the Act 1976, after noticing the argument advanced by the appellants before the High Court, a categorical finding has been recorded as to why the appellants are not entitled to seek protection of Section 9 of the Act 1976, as held that major investment remain unexplained and also disbelieved the version of the 2nd petitioner on the ground that the proof of gift from her marriage has not been produced. Thus, according to the Competent Authority as well as the Appellate Tribunal, even if the value of the land is taken only at Rs.33,000/, the total value of the land and building will work out at Rs.25,20,000/and as such, it was of the view that major part of the investment remained unexplained. No error being committed in the finding returned by the High Court which may call for our interference. Even before this Court, there is no material that has been placed by Appellant no.2 (P.M. Saheeda) in rebuttal which may even prima facie justify the sources of fund available at her command for acquisition of the land in question to the tune of Rs.33,000/in the year 1969. In the absence of proper explanation as to the source of acquisition and as majority of investment remains unexplained, the authority disbelieved the version of Appellant no. 2(P.M. Saheeda) as no proof was placed on record of gifts from her marriage. Even the accounts were not maintained in respect of the cost of construction of the building, in absence whereof, the authority has not committed any manifest error in forfeiting the property in exercise of power under Section 7 of Act 1976. Appeal is without substance and accordingly dismissed
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PMLA
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2023 (3) TMI 1073
Money laundering - case of the Petitioner is that it s case has not even been considered by the Adjudicating Authority (PMLA) despite filing a detailed reply and explaining its position along with its documents and decisions relied upon - Adjudicating Authority (PMLA) is passing template cut-paste orders and the same has been demonstrated to the Court by the ld. Counsel for the Petitioner through a compilation of similar orders passed by the Adjudicating Authority - violation of principles of natural justice. HELD THAT:- Use of identical templated paragraphs could reflect as non-application of mind by the Authority concerned and hence ought to be avoided. The Adjudicating Authority is cautioned about passing such templated orders. It is the admitted position that the Appellate Tribunal (PMLA) is now constituted under the PMLA, 2002. The order under challenge is an Attachment Order which is appealable to the Appellate Tribunal (PMLA). Accordingly, the Petitioner is relegated to the Appellate Tribunal (PMLA) to avail of its appellate remedies before the same. The appeal of the Petitioner shall now be listed and taken up by the Appellate Tribunal, for adjudication in accordance with law. Petition disposed off.
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Service Tax
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2023 (3) TMI 1072
Levy of service tax - activity undertaken by the assessee of hire purchase and financial lease agreement entered prior to 16.07.2001 and amount received thereafter - prior to 01.03.2006, when there was no mechanism for bifurcation of service, income as provided in Notification No.4/2006, demand of service tax, is sustainable or not? - levy of penalty on assessee. Whether for the activity undertaken by the assessee of hire purchase and financial lease agreement entered prior to 16.07.2001 and amount received thereafter, are liable to service tax or not? - HELD THAT:- The service tax has been levied on Banking and Other Financial Services with effect from 16.07.2001. Prior to that, there was no leviable on Banking and Financial Institution Services. Therefore, the agreement, which has been entered by the assessee, with their clients prior to 16.07.2001, when no service tax was leviable, the liability of service tax does not arise against the assessee. The agreement entered by the assesse prior to 16.07.2001, is not liable to be taxed although the assesse has received the payments later on. Therefore, the issue is answered in favour of the assessee. Whether prior to 01.03.2006, when there was no mechanism for bifurcation of service, income as provided in Notification No.4/2006, demand of service tax, is sustainable or not? - HELD THAT:- As there was no mechanism for bifurcation of taxable and non-taxable service rendered by the assessee, in that circumstances, reliance has been made in the case of COMMISSIONER OF CGST CENTRAL EXCISE VERSUS SHRIRAM TRANSPORT FINANCE COMPANY LTD. [ 2021 (2) TMI 836 - BOMBAY HIGH COURT] wherein the Hon ble High Court of Bombay has observed that Explanation 1 to section 67 of the Finance Act prior to 18.04.2006 contained a specific exclusion vide sub clause (viii) excluding interest on loans. Though section 67 was substituted by Finance Act 2006 w.e.f. 18.04.2006, the corresponding Service Tax Determination of Value Rules 2006 vide rule 6(2)(iv) again excluded interest on loan from the purview of valuation of taxable services. However, the Board vide circular No.80/10/2004-ST dated 17.09.2004 clarified that interest on loan would stand excluded. Respondent has been discharging service tax regularly on processing charges and also filing returns regularly. Respondent gives loan to its customers / borrowers for the purpose of hire purchase agreement for purchasing the vehicles and this lending is in the nature of a loan. Since it is in the nature of loan consequently interest on loans stands excluded from the value of taxable services. Board circular dated 09.07.2001 referred to by the appellant in fact supports the case of the respondent. Thus, for the period prior to 01.03.2006, no service tax is payable by the assessee, although the agreements may have been entered post 16.07.2001 - for the agreement entered after 16.07.2001, the assessee is liable to pay service tax w.e.f. 01.03.2006 in terms of Notification No.4/2006-ST dated 01.03.2006. Whether in the facts and circumstances of the case, penalty is imposable on the assessee or not? - HELD THAT:- Nno penalty is imposable on the assessee. Appeal disposed off.
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Central Excise
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2023 (3) TMI 1071
Maintainability of appeal - appeal dismissed on the ground of non-payment of pre-deposit being 7.5% of the disputed demand duty - HELD THAT:- The appeal is a creature of statute. In the present case, the legislature has chosen to grant conditional right of appeal to the assessee. Thus, the assessee could have maintained its appeal only against pre-deposit of 7.5% of disputed demand of duty. In absence of pre-deposit, the Tribunal has not erred in rejecting the appeal of the assessee. Again, these being statutory proceeding of further appeal, it is not open for this Court to exercise its inherent power that otherwise may arise under Article 226 of the Constitution of India to grant any relief contrary to the statutory law - Further, it may be noted, neither challenge to the validity of law may arise in these proceedings nor that challenge appears pending in any proceeding. In the interest of justice, to allow the assessee appellant one opportunity to appeal (on facts), indulgence is granted with consent of learned counsel for the revenue such that subject to the assessee making the pre-deposit (@ 7.5%) within a period of two weeks from today.
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2023 (3) TMI 1070
SSI Exemption - clubbing of clearances - in both the firms, the partners are same with the same sharing of 25% each - applicability of N/N. 8/2003-CE dated 01.03.2003 - whether the value of M/s. Himalaya Engineers and Manufacturers can be clubbed with the value of the present appellant? - HELD THAT:- Even though there is a different name of the firm but both the firms are owned by same partners therefore, there is a common ownership by same partners. From the para 2 of Notification, it is clear that for the purpose of aggregating value of clearance under notification no. 8/2003-CE, the value of clearance of manufacturer must be taken for the clearance of one or more factories and as per Para 7, the aggregate value of clearance of excisable goods for home consumption by manufacturer from one or more factories should not be exceeded Rs. 300 lakhs in the preceding financial year - In the present case, as it is observed that the ownership of both the units i.e. M/s. Himalaya Equipments and M/s. Himalaya Engineers and Manufactures is with the same partners which is to be considered that the one manufacturer has cleared the excisable goods from their both the factories therefore, for the purpose of exemption limit as well as for the purpose of eligibility limit of Rs.300 lakhs, the value of clearance of both the factories have to be taken together. In the present case, the appellant have heavily emphasized on the fact that both the factories have separate set up in respect of other aspects therefore, cannot be treated as one. As stated, the findings clearly provides that even two different factories of same manufacturer needs to be combined therefore, in the present case the clubbing is not on the basis of the common facility between both the units but because of the common ownership, being same partners in both the firm. Therefore, the adjudicating authority has rightly clubbed the value of clearance of both the units and demanded excise duty from M/s. Himalaya Equipments. Appeal dismissed.
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2023 (3) TMI 1069
Condonation of transit loss - shortage of quantity on account of transit/handling loss - Whether the condonation of loss of 1% on the basis of CBEC circular dated 12.02.1987 would cover the case of the petitioner and if that is not applied to the case of the petitioner whether the demand so raised can be sustained and, as such, the claim of the petitioner can be allowed? HELD THAT:- The CBEC in its circular dated 29.11.1979 on due consultation with the Ministry of Law on the question of condonation of loss occurring due to natural or human causes in terms of Rule- 13 of the Central Excise Rules instructed that such losses are to be permitted and in each case of loss the claim should be decided on merit allowing remission to the extent the adjudicating officer is satisfied about the genuineness of the losses. The said circular has also taken note of the expression otherwise accounted for to the satisfaction of the Collector occurring in Rule-13 and while referring to the said expression it is clarified that the language used is of wide amplitude so as to take in all losses occurring whether due to natural or human causes - In the present case there being factual adjudication of occurrence of transit/handling loss after clearance from the factory to the post of export, thereby the order passed by the revisional authority disallowing the transit loss cannot sustain in the eye of law. On perusal of the order impugned it is seen that though aforementioned judgments cited by the petitioner have been taken note of by the revisional authority in paragraph 3.11 thereof, but the said judgments have not been considered nor discussed in the judgment itself. Without taking into consideration of the same, the revisional authority has observed that no condonation of losses can be allowed - the Government notes that there is no case for imposition of penalty as adjudicating authority has not given any finding on the penal action and straightaway imposed penalty. In SN. GONDAKAR VERSUS COMMISSIONER OF COMMERCIAL TAXES IN KARNATAKA, BANGALORE AND ANOTHER [ 1983 (7) TMI 281 - KARNATAKA HIGH COURT ] it has been held that consistency in the judicial administration should not ordinarily be sacrificed unless there is compelling reason. The need for consistency in approach and uniformity in the exercise of judicial discretion in respect of similar cases require that all similar matters should receive similar treatment except where the factual difference require a different treatment. Merely stating that the circular of the Commissioner is not applicable to the case can hardly be said to be a reason to be given by a quasi judicial authority. This Court sets aside the order dated 26.04.2010 passed by the revisional authority under Annexure-10 and the matter remitted back to the very same revisional authority to reconsider the same afresh by taking into consideration all the judgments cited before him and by affording opportunity of hearing to the parties. The writ petition is allowed.
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2023 (3) TMI 1068
Levy of penalty u/r 26(1) of Central Excise Rules, 2002 - availment of CENVAT Credit fraudulently - receipt of bills without receipt of finished goods - HELD THAT:- here is no dispute about the fraudulent availment of Cenvat Credit by M/s. Tarun Polymers, Daman, who has wrongly availed the Cenvat Credit of huge amount of 29170642/-. In order to avail this fraudulent Cenvat credit by M/s. Tarun Polymers, Daman, all buyers of the goods purchasing the goods without cover of invoice have clearly facilitated M/s. Tarun Polymers, Daman for wrong availment of CENVAT Credit. In case of M/s. Rajguru Enterprises Pvt Ltd it is clear that though they have received the bills but not received the goods covered therein. Therefore, in the above facts it is a clear case of abatement in evasion of duty on the part of the appellants. Thus, it is clear that all the appellants were indulged in abating M/s. Tarun Polymers, Daman for fraudulent availment of Cenvat credit therefore, they have made themselves liable for penalty under Rule 26(1) Cenvat credit rules 2002 - there are no infirmity in the impugned order imposing penalty under Rule 26(1) of Central Excise Rules - the impugned order to the extent it imposes penalty on the present appellants is upheld - appeal dismissed.
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2023 (3) TMI 1067
Invocation of Extended Period of Limitation - case involving interpretation of law or not - department was well aware of the facts of the case since SCN was issued for the previous period on the same issue - Five audits were conducted at the factory every year since 1.1.2008 - no intent to evade - HELD THAT:- There is no dispute regarding the merits of the case and the calculation of duty. Therefore, insofar as the directions of this Tribunal in the Final Order dated 29.7.2019 [ 2019 (7) TMI 1791 - CESTAT NEW DELHI ] are concerned, they have been fully complied with. The only question which remains is the invocation of extended period of limitation which was also required to be examined by the Commissioner. The officer is mandated under the Rules to do what the audit may do much later. If the officer, who is an expert in taxation scrutinises the returns as he is mandated to do and calls for any records as he is authorised to call for, any mistakes which may be pointed out by the audit would come to light and an SCN could have been issued under section 11A within the normal period of limitation. Therefore, even if no audit is conducted during the relevant period and some duty escapes assessment, extended period of limitation cannot be invoked for that reason. The check against incorrect self assessment is the scrutiny of the return by the officer and audit is only the second check. Therefore, while the fact that audit checks only some selected documents and not every document as held in the impugned order is correct, this cannot be a ground to invoke extended period of limitation. Unlike audit, the officer receiving the ER-1 returns is required to scrutinise the returns and is empowered to call for any information. While the assessee was required to self assess duty and file ER-1 return, a check against such self- assessment was the scrutiny which the officers were mandated to do by Rules. Audit is the next level of check against the scrutiny. If the audit points out some wrong assessment which was not pointed out by the officer scrutinising the ER-1 return, the fault lies at the doorstep of the officer. It does not, by itself, establish that the assessee had suppressed any facts. In this case, not only one but several rounds of audit were conducted. Show Cause Notice was issued for the previous period on the same issue by the Revenue. Thus, the department was fully aware of the issue in question, the general marketing pattern of the appellant and it was for the officer scrutinising the returns to have checked the returns and issued SCN within time. The impugned order cannot be sustained as the entire demand is time barred - Appeal allowed.
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CST, VAT & Sales Tax
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2023 (3) TMI 1066
Recovery of Outstanding dues of Bank and tax dues under the VAT / sales tax act - Priority of claims - Attachment order - Right of Auction Purchaser of property - borrowers failed and neglected to clear the outstanding dues to the Petitioner Bank - Seeking directions to issue NOC to the Petitioners for effecting the transfer of the Secured Assets in its name, without any requirement of making payment of the dues of the Respondent No.3 and/or NOC of Respondent No.3. Whether the Petitioner Bank having registered mortgage of the secured asset with Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI) will have priority to make its claim over the claims/charge of the Sales Tax Department arising out of the dues under the Maharashtra Value Added Tax Act, 2002 (MVAT) against the borrower to enforce the mortgaged writ property in favour of the Petitioner and more particularly, when the Sales Tax Deparatment had not registered its claim with CERSAI? HELD THAT:- The issue as to who will have priorty in view of Section 26E of SARFAESI Act was referred to the Full Bench of this Court in case of Jalgaon Janta Sahakari Bank Ltd. Anr. [ 2022 (9) TMI 163 - BOMBAY HIGH COURT ] where Full Bench considered Section 26-C of the SARFAESI Act and held that the proviso to Section 26-C also declares that a secured creditor, who has registered the security interest or other creditor who has registered the attachment order in its favour, shall have priority of claims over subsequent security interest created over the property in question, any transfer by way of sale, lease, assignment or licence of such property or attachment order subsequent to such registration. This Court noted that since the equitable mortgage could be created without registration, the transaction between the lender and the borrower largely remained secret. There was no way anyone else could get an inkling thereof, until the provisions of CERSAI registration were enacted. This Court held that to curb such problems and other undesirable consequences, the Parliament designed Chapter IV-A in such a manner to include provisions which, on the one hand, would disable any secured creditor to exercise the right of enforcing security interest under Chapter III of the SARFAESI Act without the CERSAI registration (section 26D) and, on the other, enable the secured creditor, if it has the CERSAI registration, to claim priority over all other debts and all revenues, taxes, etc. It is held that Section 26E, also beginning with a non-obstante clause, is unambiguous in terms of language, effect, scope and import. A priority in payment over all other dues is accorded to a secured creditor in enforcement of the security interest, if it has a CERSAI registration, except in cases where proceedings are pending under the provisions of the Insolvency and Bankruptcy Code, 2016. This Court held that such registration would constitute public notice thereof. The Full Bench of this Court has held that the dues of the secured creditor shall have priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority in view of Section 26E of the SARFAESI Act. This Court held that Section 26E of the SARFAESI Act is a subsequent legislation, as it was notified on 24th January, 2020. Subject to compliance of the terms of Chapter IV-A, Section 26E of the SARFAESI Act would, thus, override any provision in the MGST Act and the BST Act in case of a conflict with the SARFAESI Act. This Court held that Section 26D which also refers with a non-obstante clause, prohibits a secured creditor from exercising the rights for enforcement of security interest conferred by Chapter III, unless the secured interest created in its favour by the borrower has been registered with the CERSAI. It has further held that not only therefore registration with the CERSAI has been made a mandatory pre-condition for invocation of the provisions contained in Chapter III of the SARFAESI Act, the provisions relating to debts that are due to any secured creditor being payable to such creditor in priority over all other debs and revenue, taxes etc. is available to be invoked only after the registration of security interest. It leads to the irresistable and inevitable conclusion that unless the security interest is registered, neither can the borrower seek enforcement invoking the provisions of Chapter III of the SARFAESI Act nor does the question of priority in payment would arise without such registration. The auction purchaser have participated in the e-auction conducted by the Petitioner Bank who had priority over the secured asset in view of registration of the equitable mortgage under Section 26E of the Securitization Act with CERSAI - the Petitioner Bank is not liable to take cognizance of the claim of Respondent No.1 over the secured asset in view of the Petitioner bank having priority over the secured asset and thus, is not liable to pay any taxes or other liabilities out of sale proceeds of the secured asset to the Respondent No.1. The Auction Purchasers claim their rights from the Bank having priority over the secured asset which was not liable to pay any taxes to the Respondent No.1 Authority. The principles laid down by the Full Bench on this aspect clearly applies to the facts of the present case. The submission of the learned special counsel for the Respondent No.1 Authority that the Petitioner cannot waive their right to forfeit the earnest money deposit and to accept the balance consideration amount subsequently, depending upon the outcome of this petition filed by the Petitioner Bank, cannot be agreed upon - there is no substance in the submission made by the learned Special Counsel for Respondent No.1. If the Petitioner Bank has waived its right to forfeit the Earnest Money Deposit which is permissible in law, Respondent No.1 Authority cannot object to right of Petitioner not to waive. The auction purchasers had never received any actual notice of the lien or constructive notice from the Respondent No.1 Authority in respect of the said writ property and thus is not liable to pay any tax separately towards the tax dues of the dealer of Respondent No.1 Authority. Attachment order set aside - Society to issue such NOC in favour of such auction purchasers for transfer of Secured Asset in their favour without insisting for payment of the Sales Tax dues payable by the dealer, if any, however, on compliance with all other formalities, expeditiously - petition disposed off.
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2023 (3) TMI 1065
Time Limitation - Levy of penalty - suo-moto revision initiated by the respondent no. 3 was much after expiry of the period of limitation as prescribed under Sections 33 and 74 of the TVAT Act, 2004 - HELD THAT:- The respondent no. 4 after verification of the relevant documents of the petitioner had completed the assessment by assessment order dated 24.03.2015. From the face of the record, it is apparent that the respondent no. 4 on 10.07.2020 i.e. after elapse of more than five years had issued a notice under Section 70(1) of the TVAT Act, upon the petitioner wherein the petitioner was asked to appear in person or by his authorized representative and to explain as to why the assessment shall not be cancelled or modified. As per sections 33 of 74 of the TVAT Act, 2004, the issuance of notice after elapse of five years is barred by limitation. This court prima facie on perusal of the proceeding dated 27.10.2020, order which is impugned herein, this court expresses its concern that the revisional authority has not passed any speaking order and has not dealt with the issues allowing the discounts and to say that the amounts discounted are fictitious. Without entering into the merit of the case, the case is remanded back to the revisional authority to decide the matter afresh by passing a speaking order. It is also open for the petitioner to raise all his objections including the issue of jurisdiction and also to place any judgment in support of his contentions before the revisional authority. Petition disposed off.
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Indian Laws
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2023 (3) TMI 1064
Dishonour of Cheque - legally enforceable debt - whether the judgment, dated 20.08.2007 in Criminal Appeal No. 66 of 2006, on the file of learned X Additional District Sessions Judge, Krishna at Machilipatnam, suffers with any illegality, irregularity and impropriety and whether there are any grounds to interfere with the said judgment of the learned Additional Sessions Judge? - Section 138 of N.I. Act - HELD THAT:- The complainant examined P.W.2, who was the attestor of Ex.P.7, promissory note and P.W.2 supported the case of the complainant. Ex.P.7 literally support the case of the complainant that P.W.2 acted as an attestor to Ex.P.7. D.W.1 in cross examination admitted that he had no disputes with the attestors or scribe mentioned in Ex.P.7. There is no dispute about the signature of the accused in Ex.P.7. Even there is no dispute that the cheque number as mentioned in Ex.P.1 was also written by the accused - As admitted by D.W.1, the accused, he did not intimate to the bank and even did not intimate to the police that Ex.P.1 cheque was lost from his custody. Therefore, it is very clear that though the account was closed in the year 2001 as per D.W.1 and D.W.2, but, it was within the exclusive knowledge of the accused as to why he issued Ex.P.1 in the year 2004 in favour of the complainant. The defence of the accused that he used to sign the cheques beforehand and he used to return unused leaves, etc., is not at all probabalized by virtue of the evidence of D.W.2 coupled with Ex.D.1 to Ex.D.4. No man of reasonable prudent would venture to sign beforehand especially when he was a habit of returning the unused cheques to the bank. The complainant was able to prove before the Court below that the accused issued Ex.P.1 cheque in favour of the complainant towards part discharge of legally enforceable debt. The date of return was on 28.10.2004. Ex.P.6 reveals that the complainant also sent a legal notice under certificate of posting. The complainant could not be found fault for the absence of the accused in the headquarters when the postal authorities tried to serve the notice. Therefore, if the registered notice was sent to the correct address of the accused with proper postage and when the accused was not available at his house without any instructions to the inmates, it can be taken as a proper service. Therefore, there is no dispute that after waiting for the statutory period only from the date of return, the complainant instituted the complaint before the Court below. Hence, the contention of the accused that there was no proper compliance of statutory notice under Section 138 of N.I. Act cannot stand to any reason - the contention of the accused that there was no proper compliance of statutory notice under Section 138 of N.I. Act cannot stand to any reason. There are no grounds to interfere with the judgment of the learned X Additional District and Sessions Judge, Krishna at Machilipatnam - the Criminal Revision Case is dismissed.
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