TMI Tax Updates - e-Newsletter
March 3, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Legality of search and seizure conducted in the office premises of the appellant - seeking to return the sum which, according to the appellant, was forcibly obtained - Admittedly, the payment has been made through banking channels in the statutory form presumably by way of e-payment. Therefore, the onus is on the appellant to establish that the payment was extracted by undue force and threat etc. - the concerned respondent shall expeditiously take steps in issuing show cause notice - HC
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GST:
Validity of assessment order - denial of input tax credit - petitioner did not file its return for the period due to ignorance of law within the time limit prescribed - Learned Appellate Authority has however failed to take note that the assessment order itself suffers from serious infirmities for non-compliance of principles of natural justice and procedural requirement prescribed under the Act in the absence of proper notice upon the petitioner. The impugned action has led to serious penal consequences which cannot be sustained in view of serious infirmities in the procedure adopted by the Assessing Officer. - HC
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GST:
Parallel enquiry in connection with a search and seizure - one by the DGGI in Siliguri and other by the DGGI, Eastern Zonal Unit, Kolkata - to ensure that the investigation is done in a proper manner and there is no inconsistency and at the same time, the writ petitioners/respondents also are not put to unnecessary hardship, in the fitness of things, all files of the Siliguri Unit of the DGGI have to be transferred to the Central unit, viz., DGGI (East), Kolkata. - HC
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GST:
Validity of assessment order - validity of recovery proceedings - without proper service of Show Cause Notices - Though Section 169 of the respective enactments allows the authorities to communicate any decision, order, summons, notice or other communication under this Act by any one of the methods specified, unless the proper conformation that notices and impugned orders which were uploaded in the web portal of the State Government in tngst.cid.tn.gov.in are auto populated, it cannot be said that there is a sufficient compliances of the aforesaid Section. - HC
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Income Tax:
Report of audit of accounts to be furnished under section 44AB - Rule 6G of the Income-tax Rules, 1962 as amended w.e.f. 1-4-2021 - Revision of Tax Audit Report in certain cases
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Income Tax:
Thresholds for the purposes of significant economic presence - Rule 11UD of the Income-tax Rules, 1962 w.e.f. 1.4.2022
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Income Tax:
Income assessable under Section 44BB or not? - authorities were not justified in arriving at the conclusion that the use of the tugs and barges was in the nature of a mere transportation facility. On facts, respondent no.1, in terms, recorded that tugs were hired by the petitioner to transport the Compressor module from the yard to the offshore platform. The said compressor module, as it emerges from the record, was an integral part of the execution of the contract by the petitioner. - The payments made by the petitioner to the non-resident assessess in the execution of the contract with ONGC is properly assessable under the provisions on Section 44BB of the Act, 1961. - HC
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Income Tax:
Offences u/s 276(B) and 278(B) - TDS has been deposited by the petitioners a bit late - There might be a case of slight harm in not crediting the TDS amount by 07.03.2013 and in fact considering that the interest has already been paid, it can be safely said that the harm has not taken place. - The entire criminal proceeding whereby cognizance has been taken against the petitioners for the offences u/s 276(B) and 278(B) quashed - HC
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Income Tax:
Validity of Reopening of assessment u/s 147 - borrowed satisfaction - non independent application of mind - non-recording of specific details lead us to belief that without proper application of mind, the Assessing Officer has solely and mechanically relying upon the information received from Investigation Wing, has issued impugned notice. - The impugned notices are hereby quashed and set aside. - HC
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Income Tax:
Penalty u/s 271C r.w.s 274(1) - assessee has not deducted TDS on certain expenses for which provision was created in its books of account - In the absence of invoices and consequential liability to make the payment, the assessee did not withhold taxes on the said year end provision for expenses u/s 40(a)(i)/40(a)(ia) - the Ld. CIT(A) while cancelling the penalty levied u/s 271C has given justifiable reasons - AT
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Income Tax:
Income accrued in India - subscription/distribution revenue derived by the assessee as assessable to tax as royalty - the amount received cannot be brought to tax in India as royalty and the same is in the nature of business income. - AT
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Income Tax:
Unexplained credit in the capital account - Impugned order shows that in spite of repeated notices issued, except seeking adjournment, the assessee did not cooperate with the first appellate authority nor any attempt was made to produce the information that was sought by the AO. Even before us also, the assessee is not diligent to prosecute this appeal. For want of evidence or material supporting the claims of the assessee, it is not possible for us to take a different view that was taken by the authorities. - AT
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Customs:
Rejection of Custom Broker application for renewal of license - if there are multiple instances of complaints of misconduct of a Custom House Broker, the renewal of license may be refused. However a mere isolated instance of irregularity which was found to be no more serious than to impose penalty of ₹ 25,000/-, cannot be the ground for refusal to grant renewal. - HC
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Customs:
Rejection of refund claim - CVD and SAD paid for regularisation of advance licence (import licence) - The payment of CVD and SAD subsequently during GST regime, for the imports made prior to 30.06.2017 - refund of CVD and SAD in question is allowable, as credit is no longer available under the GST regime, which was however available under the erstwhile regime of Central Excise prior to 30.06.2017. Accordingly, the appellant is entitled to refund under the provisions of Section 142(3) and (6) of the CGST Act. - AT
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IBC:
Maintainability of applications filed before the NCLT against the personal guarantor - The argument of the petitioners that the role of Adjudicating Authority is reduced to that of a rubber stamp under the context of Sections 95, 97, 99 and 100 of the IBC, is hence not factually correct. This Court finds no illegality or unconstitutionality in Sections 95, 97, 99 or 100 of the IBC. - HC
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Service Tax:
Levy of penalty - When the audit was conducted, the appellant had paid service tax on the rent received as on 24.01.2012 in respect of the shops in the mall. This amount has already been appropriated. Thus, section 73(3) applies to this case and no SCN should have been issued - no case has been made out by the Revenue to justify the imposition of penalty upon the appellant under section 78 insofar as this part of the demand is concerned. - AT
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Service Tax:
Demand of differential tax - There are force in the contention of the appellant that part of the service tax being demanded by the Department on RCM basis cannot be sustained since Service tax was already collected by Service Providers as seen from invoices and Reconciliation Certificate. - invoking extended period cannot be sustained for part of tax demand raised on RCM basis by virtue of it being a revenue neutral situation since the appellant is eligible for credit if it had done tax payment. - AT
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Service Tax:
Condonation of delay in filing appeal before the Commissioner (Appeals) - To say that he was not aware that there was a legal remedy against the order of the Assistant Commissioner is unbelievable. At any rate, neither Section 35 of the Central Excise Act nor Section 85 of the Finance Act, 1994 provide for condonation of delay in filing appeals before Commissioner (Appeals) beyond one month. - AT
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Service Tax:
Refund of CENVAT Credit - rejection on the ground of time limitation - Admittedly, in the facts of the present case, no limitation is applicable as provided under Section 11B (one year from the relevant date), due to overriding effect of CGST Act. Accordingly, the appellant is entitled to refund under the provisions of Section 142(3) r/w 142(8) (b) of the CGST Act r/w the erstwhile provisions of Central Excise Act and the Cenvat Credit Rules. - Refund allowed - AT
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VAT:
Input Tax Credit - petitioner has not fully complied with the requirements of Sub-Rule (1) and Sub-Rule (2) of Rule 38 of the Rules of 2006. - It is petitioner’s own admission and undisputed fact that various cash transactions were made and the authorities found that invoices in respect of various transactions were not issued - there are no ground to interfere with the impugned order in exercise of our revisional jurisdiction under Section 84 of the Act of 2003. - HC
Articles
News
Case Laws:
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GST
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2022 (3) TMI 92
Maintainability of writ application - application was declined to be entertained only on the ground that the impugned order passed by the authority concerned in Form GST MOV 11 is an appealable order - HELD THAT:- The writ applicant has a statutory remedy of filing an appeal under Section 107 of the GST Act. The liberty is reserved for the writ applicant to file an appropriate appeal against the impugned order passed in Form GST MOV 11. If the goods and conveyance are still under detention, then it shall be open for the writ applicant to file an application under Sub-section (6) of Section 67 of the Act before the appellate authority for the provisional release of the goods and conveyance. If any such application is filed, the appellate authority shall look into the same at the earliest and pass an appropriate order in accordance with law. This writ application stands disposed of.
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2022 (3) TMI 91
Transitional credit - seeking to allow filing of declaration in form GST TRAN-1, to enable it to take in his electronic credit ledger - petitioner submits that the Credit could not be availed as prescribed in law because of technical problem to upload such date on his GST portal - HELD THAT:- In view of Section 140 and relevant rules of the GST law and in view of the judgment passed in NODAL OFFICER, JT. COMMISSIONER, IT GRIEVANCE, GST BHAWAN VERSUS M/S. DAS AUTO CENTRE AND OTHERS [ 2021 (12) TMI 835 - CALCUTTA HIGH COURT ], wherein liberty was given to the writ petitioner/assessee to claim individual tax credit in GSTR-3B Forms for the month of January, 2022 to be filed in the month of February, 2022 and the concerned authority/ Assessing Officer would be at liberty to verify the genuineness of such claim. As return in GST 3B for the month of January 2022, to be filed in the month of 20th February has already been filed, liberty is granted to the petitioner/assessee to file individual transitional tax credit in GSTR-3B Forms for the month of February, 2022 which is to be filed in the month of March, 2022 and the conerned authority/Assessing Officer would be at liberty to verify the genuineness of such claim - petition disposed off.
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2022 (3) TMI 90
Exemption to inter-State supply of taxable goods - export as is in excess of the amount calculated at the rate of 0.1% subject to fulfilment of the laid down conditions - export to be made within the time limit of 90 days as required under sub clause (II) of the Exemption notification - HELD THAT:- Let notice be issued on respondent No.1 under registered cover with A/D and speed posts for which requisites etc. must be filed by Friday. Let notice be additionally effected by the petitioner upon the official email address of the respondent no.1 containing the attachment of the entire pleadings and its enclosures by Friday and a supplementary affidavit to that effect be filed in the next week. Let the matter appear on 31st March, 2022.
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2022 (3) TMI 89
Legality of search and seizure conducted in the office premises of the appellant - seeking to return the sum which, according to the appellant, was forcibly obtained from the appellant and to the same effect an interim order was also sought for - HELD THAT:- The appellant cannot question an order of seizure by way of a writ petition nor a summon could be challenged to the writ petition. Once we steer clear of the legal principle, we take note of the other submissions of the learned counsel for the appellant. It is submitted that when summons dated 14.11.2021 was signed, the appellant was to appear at the Office of the appellant itself on 01.11.2021. One fails to understand as to how the summon dated 14.11.2021 could have been issued and directed the appellant to appear on 01.11.2021. It is not clear whether there is a typographical error. Be that as it may, the appellant sent a representation seeking adjournment of the hearing on health grounds. After stating out certain other factual details, the appellant stated that he retracts statement recorded by the Officers as well as the payment of ₹ 47,99,184/- which was shown to be made voluntarily by the appellant in form DRC-03. The learned writ court had directed the respondent to consider the said representation wherein there was retraction regarding the money paid. No useful purpose would be served by directing the authority to consider the representation made on 30.12.2021 since the show cause notice is yet to be issued by the concerned respondent/authority. The question whether the payment of ₹ 47,99,184/- was voluntarily made or not also is a factual matter to be decided by the adjudicating authority and not in a writ petition. Admittedly, the payment has been made through banking channels in the statutory form presumably by way of e-payment. Therefore, the onus is on the appellant to establish that the payment was extracted by undue force and threat etc. - the concerned respondent shall expeditiously take steps in issuing show cause notice and giving reasonable time concerned to the appellant to reply the same and afford personal hearing to the appellant and thereafter adjudicate the case on merits in accordance with law and pass an order of adjudication. Application disposed off.
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2022 (3) TMI 88
Validity of assessment order - petitioner did not file its return for the period due to ignorance of law within the time limit prescribed under Section 39 of JGST Act, 2017 as no transaction or activity of manufacture took place - denial of input tax credit - period July 2017 to March 2018 - HELD THAT:- The impugned assessment order passed under section 62 of the Act by the Respondent No. 2 suffers from a serious lacuna due to non-issuance of notice under section 46 of the Act. The action of the Respondent had led to blocking of ITC to the tune of ₹ 2.88 crores which has been adjusted against the disputed tax liability of ₹ 3,30,76,800/- imposed under the impugned assessment order. From perusal of the appellate order at Annexure-9, it appears that the Appellate Authority has only taken into consideration that the petitioner had failed to file its return within thirty days of the assessment order in terms of section 62(2) of the Act and therefore, the assessment order passed by the proper officer to the best of his judgment did not require any interference. Learned Appellate Authority has however failed to take note that the assessment order itself suffers from serious infirmities for non-compliance of principles of natural justice and procedural requirement prescribed under the Act in the absence of proper notice upon the petitioner. The impugned action has led to serious penal consequences which cannot be sustained in view of serious infirmities in the procedure adopted by the Assessing Officer. This Court is, therefore, of the view that the impugned assessment order dated 02.08.2018 passed by the Respondent No. 2 (Annexure-6)as also the Summary of the Order contained in DRC-07 dated 01.10.2018 issued by the Respondent No. 3 deserves to be set aside - As also admitted by the Respondent, petitioner has filed its return for the period in question. It is open for the Respondent to accept the return or undertake proper scrutiny thereof as per law. Learned counsel for the petitioner submits that pre-deposit made before the Appellate Authority may be directed to be released. It is up to the petitioner to approach the Appellate Authority with proper request, which shall be considered in accordance with law. Petition allowed.
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2022 (3) TMI 87
Parallel enquiry in connection with a search and seizure - parallel enquiry, one by the DGGI in Siliguri and other by the DGGI, Eastern Zonal Unit, Kolkata - HELD THAT:- The first set of summons have been issued by the Senior Intelligence Officer, who is located at Siliguri. It appears that the assessee had cooperated in the enquiry before the officer at Siliguri. The summons, which is the subject matter of challenge in the writ petition is dated 5th December, 2021, and has been issued by the DGGI (East), Kolkata. The appellants would contend that the DGGI (East), Kolkata is the Zonal Unit for the entire Eastern India and their jurisdiction would extend up to State of Sikkim and considering the matter, which is involved, summons have been issued to the respondents / writ petitioners by the DGGI (East), Kolkata. The respondents / writ petitioners were not justified in challenging the summons as a writ petition against the summons is not maintainable. However, the ground on which the challenge has been thrown contending that the officer in Siliguri cannot parallelly proceed. Secondly, it is submitted that the shareholder of the assessee was affected by Covid and the adjournment was sought for by producing a doctor s certificate. The appellants are of the view that a Centralised Agency exercising jurisdiction over the entire Eastern region spreading even outside the State would be the appropriate authority to conduct the investigation in the matter. If that is so, to ensure that the investigation is done in a proper manner and there is no inconsistency and at the same time, the writ petitioners/respondents also are not put to unnecessary hardship, in the fitness of things, all files of the Siliguri Unit of the DGGI have to be transferred to the Central unit, viz., DGGI (East), Kolkata. Summons issued to the doctor - HELD THAT:- The doctor, who certified the health condition of the respondent no.2, has done so as a medical professional and in discharge of his duties as per the relevant statute. The medical certificate was produced to justify the request for adjournment. Therefore, it would have been well open to the authorities not to accede to their request or grant a short adjournment. We are informed by the learned counsel for the appellants that the matter stood deferred by a month - In any event, the appellant authorities are wholly unjustified in issuing summons to the doctor. Therefore, the summons issued to Dr. P. D. Bhutia dated 15th February, 2022 under Section 70 of the Central Goods and Services Tax Act, 2017 is quashed. The writ appeals are partly allowed.
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2022 (3) TMI 86
Validity of assessment order - validity of recovery proceedings - it is alleged that the impugned assessments orders have been passed either without proper service of Show Cause Notices or without giving adequate opportunity to reply to the Show Cause Notices - violation of principles of natural justice - HELD THAT:- Though Section 169 of the respective enactments allows the authorities to communicate any decision, order, summons, notice or other communication under this Act by any one of the methods specified, unless the proper conformation that notices and impugned orders which were uploaded in the web portal of the State Government in tngst.cid.tn.gov.in are auto populated, it cannot be said that there is a sufficient compliances of the aforesaid Section. GST Act was implemented in the year 2017 with effect from 01.07.2017. The web portal maintained by GST has faced problems on several occasions and steps were taken for correcting the technical glitches. Even as on date, there are problems arising out of intercommunication between the State GST and Central GST and the web portal which has to be resolved - respondents can therefore continue the service of notice through registered post or speed post or courier with acknowledgment to the petitioners at their last known place of business or residence and upload the same in the web portal. Till all problems are resolved on the technical side, the authority may simultaneously serve the notice of assessment and communications under the Act and Rules both through registered post or speed post or courier with acknowledgment as is contemplated Section 169(1)(b) of the Act and through web portal. The impugned assessment orders are set aside - cases remanded back to the respondents to pass speaking on merits and in accordance with law - petition allowed by way of remand.
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2022 (3) TMI 85
Cancellation of GST registration - Seeking extension of time for payment of their amounts due, which is pending consideration - non-filing of return for a continuous period of six months - HELD THAT:- A direction can be issued to the Commissioner to dispose of Exhibit P1 within a time frame until such time, Exhibit P8 proceedings can be directed to be kept in abeyance. The writ petition is disposed of directing the Commissioner of State Goods and Services Tax Department - 3rd respondent to finalise Exhibit P1 within three weeks from the date of receipt of a copy of this judgment. Petitioner is directed to appear before the 4th respondent on 24.01.2022 as directed therein and appraise the situation of pendency of the application before the Commissioner.
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Income Tax
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2022 (3) TMI 84
Income deemed to accrue or arise in India - payments made by the petitioner to the non-resident assessee as assessable under Section 44BB or not? - payment made by the petitioner towards charter hire of the tugs and barges for executing the contract entered into with ONGC - whether the hire of the tugs and barges by the petitioner had any connection with the exploration, extraction or production of mineral oils? - whether the payment of charter hire for the tugs and barges by the petitioner falls within the ambit of royalty under Section 9(1)(iv) or is covered by the special provision contained in Section 44BB ? - HELD THAT:- It is imperative to note that the service provider in this case being a non-resident assessee, under Section 195 of the Act, the petitioner assessee was enjoined to deduct income tax thereon at source at the applicable rates. Moreover, there is material to indicate that in the case at hand, the petitioner had grossed up the profits by 10% and thereafter paid the taxes. There does not appear much controversy as regards the nature of the contract between ONGC and the petitioner - the use of the expression in connection with in Section 44BB is of significance. The said expression, expands the horizon of the services or facilities, provided by a non-resident assessee, which fall within the ambit of the said provision, provided they have connection with the exploration, extraction or production of mineral oils. The emphasis is not as much on the service, facility as plant as on the purpose to which it is put to. It is the proximity or connection of the service, facility, plant or machinery with the process of exploration, extraction and production of mineral oils, that is of determinative significance. Supreme Court in the case of Oil and Natural Gas Corporation Limited [ 2015 (7) TMI 91 - SUPREME COURT] concluded that the pith and substance of each of the contract and agreement in the said case was inextricably connected with prospecting, extraction and production of mineral oil. The dominant purpose of each of such agreements was for prospecting, extraction or production of mineral oils though there might be certain ancillary works contemplated thereunder, and, therefore, the Supreme Court held that the payments made by the ONGC and received by the non-resident assessees or foreign companies under the said contracts were more properly assessable under the provisions of Section 44BB and not under Section 44D of the Act. Applying the aforesaid ratio to the facts of the case at hand, where there is no qualm over the fact that the petitioner had entered into a contract with ONGC on turn-key basis for enhancing the exploration/production capacity of the platform at Bassein field offshore site and, for the said purpose, the petitioner had hired the tugs and barges from non-resident assessees, we are of the view that the authorities were not justified in arriving at the conclusion that the use of the tugs and barges was in the nature of a mere transportation facility. On facts, respondent no.1, in terms, recorded that tugs were hired by the petitioner to transport the Compressor module from the yard to the offshore platform. The said compressor module, as it emerges from the record, was an integral part of the execution of the contract by the petitioner. If we consider the object of special dispensation and the proximate use, to which the facility / service or plant and machinery was put to, an inference becomes irresistible that the hire of the tugs and barges, to transport an integral part of the equipment to enhance the exploration / production capacity, was inextricably connected with the extraction and production of mineral oil. The payments made by the petitioner to the non-resident assessess in the execution of the contract with ONGC is properly assessable under the provisions on Section 44BB of the Act, 1961. Thus, the impugned order deserves to be quashed and set aside.
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2022 (3) TMI 83
Offences u/s 276(B) and 278(B) - TDS has been deposited by the petitioners a bit late - Person responsible for overall charge of the business - HELD THAT:- In the case in hand, it is an admitted fact that on the basis of the letter of the State Bank of India, the credit initiation was made well within time. It might have been reflected in the account of the Central Government on the next day, as the Bank hours at that time was over before 11.00 o clock, however, now this transaction in view of the Government of India guidelines are taking place now a days in 24 hours. Thus, this Court is placing reliance in the case of Rajiv Thapar Ors.[ 2013 (1) TMI 932 - SUPREME COURT] and comes to a conclusion that the documents of the State Bank of India can be looked into by this Court, sitting under Section 482 Cr.P.C. The court is not in agreement with the learned counsel appearing for the O.P. No. 2, who submits that Sections 200 and 202 of the Cr.P.C. are required to be read simultaneously. It is an admitted fact that the petitioner No. 2 was stationed at Mumbai and seeing this, the learned Magistrate was required to follow the mandatory provision of Section 202 Cr.P.C., which has been amended in the year 2005 making it mandatory to postpone the issue of process, where the accused is not residing within the territorial jurisdiction of the magistrate concerned. A person, who at the time of offence was committed, was in-charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. It has not been disclosed in the petition that as to how the petitioner no. 2 is overall in-charge of the business and the case of Girdhari Lal Gupta [ 1970 (8) TMI 83 - SUPREME COURT] and Dayle De souza [ 2021 (11) TMI 67 - SUPREME COURT] are helping the petitioners. There might be a case of slight harm in not crediting the TDS amount by 07.03.2013 and in fact considering that the interest has already been paid, it can be safely said that the harm has not taken place. The entire criminal proceeding whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, pending in the Court of learned Special Judge, Economic Offences, Dhanbad, are hereby, quashed.
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2022 (3) TMI 82
Addition u/s 68 - ITAT deleted the addition - HELD THAT:- AO on one hand stated that the share application cheques were actually encashed by the assessee for a subsequent financial year. The Tribunal found that there is nothing wrong about the same and merely because there was a time gap between the receipt of cheques and its encashment and in the interregnum there was change of financial year cannot make a transaction as a sham transaction - CIT(A) noted that the AO had admitted that the share application money was obtained, maintained or improved the applicant debt equity ratio so as to lower the interest burden - we find that the entire matter is factual and the facts having been analysed by the CIT(A), relief was granted to the assessee. When the revenue carried out the matter in appeal, a similar case was shown by the Tribunal to examine as to whether the finding of the CIT(A) on facts was justified. After satisfying itself about the same, the Tribunal dismissed the revenue's appeal. Thus, we find that there is no substantial question of law arising for consideration on the said issue. Disallowance under Section 14A - HELD THAT:- CIT(A) noted that for the investments made in the earlier year their department has accepted the assessee's explanation that the investments were made out of own funds and there is no question of taking a contrary stand for the year under consideration. This factual position was verified and affirmed by the Tribunal. Therefore, we do not find any substantial question of law arising for consideration on the said issue. Addition under Section 36(1)(iii) - HELD THAT:- After analysing the factual position, the CIT(A) held that the AO has not pointed out any inaccuracy or infirmity in the unit-wise accounts maintained by the assessee or the allocation of interest made by the assessee inter se among the units. Further, the assessee had identified the specific sources of funds used for meeting in the cost of capital. Furthermore, the CIT(A) held that in the absence of any material brought on record by the AO that borrowed funds have been additional investment to meet the capital, the AO was not justified in allocating interest costs. This finding of the CIT(A) was examined by the Tribunal and it concurred with the CIT(A) on facts. Therefore, we are convinced that there is no substantial question of law arising for consideration in this appeal on this issue.
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2022 (3) TMI 81
Validity of Reopening of assessment u/s 147 - borrowed satisfaction - non independent application of mind - A O disallowed the expenses claimed by the petitioner Company and at the same time, was added to be total income of the assessee treating the same has incurred for non business purpose - whether AO was justified in issuing the impugned notices dated 30.03.2021/31.03.201 in reopening the assessment in exercise of powers conferred u/s 147 merely on the basis of information required from Investigation Wing and that too, based on search and survey carried out at premises of 3rd party? - HELD THAT:- Reasons for reopening of the assessment in the case of petitioner Company for annual assessment year 2014-15/2015-16 by the Assessing Officer is based on the borrowed satisfaction and the Assessing Officer has not applied his independent mind to arrive at the conclusion that there was failure on the part of the assessee to disclose fully and truly all material facts. In fact, the Assessing Officer is under obligation to arrive at such conclusion that the assessee has failed to disclose all material facts and has to form independent opinion resulting into reason to believe with regard to escapement of income chargeable to tax in case of the petitioner. Department has tried to improvise by referring to the original file of the Department to emphasize that there is tangible material on record to show that the petitioner Company has made purchase transaction and has availed accommodation entry by way of bogus sales / purchases / fictitious loans etc. with Disman Group of Company. In our opinion, in absence of specific details as regards particulars of nature of transaction basic details of information, clarity with regard to name of person with whom such transaction has been entered into, goes to the very root of the matter. The sole object of providing reasons for reopening of the assessment is to prima facie supply the relevant material to the assessee to meet with his case and at the same time, it reflects the basic ingredients of reason to believe for Assessing Officer to assume the jurisdiction under Section 147 and 148 - such non-recording of specific details lead us to belief that without proper application of mind, the Assessing Officer has solely and mechanically relying upon the information received from Investigation Wing, has issued impugned notice. Thus we are not convinced with the manner in which satisfaction is arrived at by the respondent, as recorded in the reasons supplied to the petitioner Company, for assuming jurisdiction to reopen the assessment of relevant A.Y. 2014-15/2015-16. Thus condition precedent for resorting to the reopening of assessment under Section 147 of the Act are not satisfied in the present case. - Decided in favour of assessee.
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2022 (3) TMI 80
Exemption u/s 11 - carry forward of deficit, being excess of expenditure over receipts, to subsequent years - HELD THAT:- We find that on similar issue, the Hon'ble Supreme Court in Subros Educational Society [ 2022 (2) TMI 582 - SC ORDER] held that any excess expenditure incurred by the trust / charitable institution in earlier assessment year would be allowed to be set off against income of the subsequent years by invoking the provisions of section 11. We find no reason to interfere with the findings of the CIT(A) allowing carry forward of deficit, being excess of expenditure over receipts, to subsequent years. Accordingly, the sole ground raised by the Revenue is dismissed.
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2022 (3) TMI 79
Assessment u/s 153C - reasons for issuance of notice was that assessee had given unsecured loan to one party - mandation of recording satisfaction note - HELD THAT:- We find that CIT(A) after considering the submissions of the assessee, remand the report from the AO and assessee s reply to the remand report has given a finding that the satisfaction note, the basis on which the proceedings u/s 153C against the assessee were initiated, was on the basis of the investment made by assessee in M/s. Golf Link Hospitality Pvt. Ltd. He has given a finding that AO had noted in the satisfaction note that assessee had invested ₹ 45,00,000/- each in A.Y. 2011-12 2012-13 but the factual position was that investment exist only in A.Y. 2011-12 and thus there was no satisfaction of the AO for other year than 2012-13 u/s 153C . Even for A.Y. 2011-12, the satisfaction recorded were not based on incriminating document found as a result of search, all the additions made by the AO were either of the items reflected in the Balance Sheet or Profit and Loss account of the assessee. He has further noted that no addition was made by AO on the basis of any incriminating material found and the addition made by AO did not co-relate with satisfaction noted by him. He thereafter relying on the decision of Sinhgad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT] held the notice issued u/s 153C of the Act to be void ab initio invalid and legal not sustainable and therefore annulled the assessment order. Grounds of Revenue are dismissed.
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2022 (3) TMI 78
Penalty imposed u/s 271(1)(c) - Disallowance on account of travel expenses - Defective notice u/s 274 - arguments of non striking of irrelevant potion in notice - as submitted that AO has not stated as to whether on the addition of disallowance of travel expenses on which the penalty has been levied was a case of furnishing of inaccurate particulars of income or was a case of concealment of income - HELD THAT:- The first step is to record satisfaction and come to a finding while completing the assessment as to whether the assessee has concealed its income or furnished inaccurate particulars of income. AO thereafter has to levy penalty u/s 271(1)(c) of the Act for non-satisfaction of either of the limbs which gets attracted. Thereafter, notice u/s 274 r.w.s 271(1)(c) of the Act is to be issued to the assessee. The aforesaid notice should specifically indicate on what ground penalty is sought to be imposed, whether for concealment of income or for furnishing of inaccurate particulars of income. In the present case, the perusal of assessment order passed by the AO reveals that in the assessment order, no specific finding has been recorded by the AO as to whether it is a case of concealment of income or a case of furnishing of inaccurate particulars of income. Further in the notice dated 26.12.2008 issued u/s 274 r.w.s 271 of the Act, the inapplicable portion or limb of section 271(1)(c) of the Act has not been struck off. It is a settled law that the two limbs i.e. concealment of particulars of income and furnishing of inaccurate particulars of income carry different connotations. Various High Courts have held that AO must indicate in the notice for which of the two limbs he proposes to impose the penalty and for this the notice has to be appropriately marked. If in a printed format of the notice the inapplicable portion is not struck off thus not indicating for which limb the penalty is proposed to be imposed, it would lead to an inference as to non application of mind, thus vitiating imposition of penalty. Penalty u/s 271(1)(c) was not leviable when the notice issued by AO did not specify as to whether the proceedings were initiated for concealment of particulars of income or for furnishing of inaccurate particulars of income - See M/S. SAHARA INDIA LIFE INSURANCE COMPANY, LTD. [ 2019 (8) TMI 409 - DELHI HIGH COURT] - Decided in favour of assessee.
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2022 (3) TMI 77
Penalty u/s 271C r.w.s 274(1) - assessee has not deducted TDS on certain expenses for which provision was created in its books of account - CIT(A) deleted the penalty levied by the JCIT u/s 271C - HELD THAT:- We do not find any infirmity in the order of the Ld. CIT(A) on this issue. The assessee during the course of hearing of penalty proceedings before the JCIT had categorically mentioned that in absence of receipt of actual invoices as in the last day of respective financial years, the amount of provision for expenses were based on estimates. In the absence of invoices and consequential liability to make the payment, the assessee did not withhold taxes on the said year end provision for expenses u/s 40(a)(i)/40(a)(ia) We find identical issue had come up before the Coordinate Bench of the Tribunal in the case of ITO vs DLF Southern Homes Pvt. Ltd. [ 2017 (12) TMI 1118 - ITAT DELHI] wherein under somewhat identical circumstances dismissed the appeal filed by the Revenue against the order of the ld.CIT(A) deleting the penalty levied u/s 271C held the controverted facts establish that because of the peculiarity of the circumstances involved in this matter, namely, at the time of creation of the provision for brokerage expenses, neither the names of the brokers nor the amounts to be paid to them on account of brokerage was a determinable owing to the fluid situation, due to which TDS was not practically feasible to be deducted by the assessee, and more particularly in view of the fact that the assessee neither claimed nor availed any benefit of the provision made for expenses and paid due tax in full, we are of the considered opinion that the findings of the Ld. CIT(A) that there is neither any tax evasion nor loss of revenue to the Government do not suffer any illegality or irregularity, and that this tribunal cannot interfere with the same - Also see M/S. TELCO CONSTRUCTION EQUIPMENT CO. LTD., BANGALORE [ 2014 (3) TMI 1016 - ITAT BANGALORE] Since, the Ld. CIT(A) while cancelling the penalty levied u/s 271C has given justifiable reasons, therefore, in absence of any distinguishable features brought to our notice by the Ld. DR to take a contrary view than the view taken by the Ld. CIT(A) on this issue on the basis of facts available on record, we do not find any infirmity in the order of the Ld. CIT(A). - Decided against revenue.
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2022 (3) TMI 76
Capital gains derived from transfer of property - settlement of the Loans availed by the Companies from the Bank - As argued assessee did not receive a penny from the sale of assets, because the assets mortgaged to the bank, have been sold by the banks and the sale consideration has been appropriated towards loans payable by the borrowers - HELD THAT:- Facts are contradicting. In case the claim of the assessee is correct that the banks have sold the property mortgaged by the assessee and appropriated sale consideration against loan payable by the three companies, then the case of the assessee is squarely covered by the decision in the case of CIT v. Smt.Thressiamma Abraham [ 1996 (9) TMI 60 - KERALA HIGH COURT] wherein, it was clearly held that when the purchaser of the property paid entire sale consideration directly to the lender and it was only thereafter mortgaged property was released, then, it can be said that sale consideration was diverted to the lender by overriding title and in such circumstances, no capital gains accrued to the assessee. In case, the claim of the AO is correct that the assessee himself has sold the property and received sale consideration from the purchaser and thereafter discharged the debt payable by three companies to banks and get released the mortgaged property and thereafter executed the Sale Deed in favour of the purchaser, then the case of the assessee is not covered by the decision of the Hon ble Kerala High Court in the case of CIT v. Smt.Thressiamma Abraham (supra). Since, there are contradicting arguments from both the sides, we are of the considered view that the issue needs to be re-examined by the AO in light of the arguments of the assessee that the bank has took possession of the property under SARFAESI Act, 2002, sold the property directly to the buyers and buyers have directly paid the consideration to the banks against loans repayable by three companies in light of decision of the Hon ble Kerala High Court in the case of CIT v. Smt.Thressiamma Abraham (supra) to ascertain the correct facts to compute capital gains. As per the additional grounds filed by the assessee, Ld.CIT(A) having accepted the fact that once assessee become creditor in the books of accounts of three companies, and the assessee has written off loans and advances given to three companies in his books of accounts as irrecoverable bad debts, the Ld.CIT(A) ought to have examined the claim of the assessee in light of provisions of Sec.36(1)(vii) r.w.s.36(2) of the Act. Because, when the assessee had mortgaged his property in favour of the banks against loans availed by three companies, then loan repaid by the assessee to banks becomes loans and advances given to three companies in the books of accounts of the assessee. If assessee written off those loans and advances given to three companies as irrecoverable bad debts, then the assessee can claim the benefit of deduction towards bad debts, if conditions prescribed u/s.36(1)(vii) r.w.s.36(2) of the Act are satisfied. Since, the assessee has taken arguments for the first time before the Tribunal, we are of the considered view that the issue needs to go back to the file of the AO for verification of the facts on this count also.
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2022 (3) TMI 75
Disallowance of deduction of interest income u/s. 80P(2)(a)(i) - Interest income that was earned on the surplus funds which were deposited by it with Jila Sahakari Kendriya Bank, i.e, a co-operative bank - whether or not the interest income earned by it on its surplus funds which were parked as deposits in the normal course of its business of providing credit facilities to its members, i.e., at the point of time when there were no takers for the said funds, was eligible for deduction u/s. 80P(2)(a)(i)? - HELD THAT:- As in the case of the assessee before us the surplus funds parked by way of short-term deposit with the co-operative bank, viz. Jila Sahakari Kendriya Bank are inextricably interlinked, or in fact interwoven with its business of providing credit facilities to its members, therefore, the same as claimed by the Ld. AR, and rightly so, would duly be eligible for deduction u/s. 80P(2)(a)(i) - We, thus, in terms of our aforesaid observations, direct the AO to allow deduction u/s. 80P(2)(a)(i) of the Act on the interest income earned by the assessee society on its deposits with the co-operative bank. Deduction of the income earned from paddy procurement business u/s 80P(2)(a)(iii) - Scaling down 35% of its claim - HELD THAT:- We find substantial force in the claim of the Ld. AR that now when only a small fraction of the procurement of paddy was made by the assessee-society in the course of its paddy procurement business from non-members, therefore, restricting of its claim for deduction u/s. 80P(2)(a)(iii) of the Act to 35% of the profits earned from theee said business activity was not justified. Be that as it may, we are of the considered view that as the compilation of the paddy procurement by the assessee-society has been filed before us as additional documentary evidence, and the same was not there before the lower authorities, therefore, the matter in all fairness requires to be re-visited by the AO - In terms of the aforesaid observation set-aside the matter to the file of the AO, with a direction to re-adjudicate the same after considering the additional documentary evidence that had been filed by the assessee before us - AO shall after determining as to what extent the assessee society had facilitated the marketing of the agricultural produce grown by non-members, therein, restrict the assessee s claim for deduction u/s. 80P(2)(a)(iii) of the Act only to the extent of the profit relatable thereto. Addition of gross profit earned by the assessee-society from its public distribution activity during the year under consideration, viz. distributing essential commodities to the ration card holders through fair price shop - HELD THAT:- Before us, it is the claim of the assessee that as the profit from PDS activities after considering the proportionate expenses amounted therefore, its claim for deduction u/s.80P(2)(c)(i) of the Act was liable to be restricted only to the said extent. After having given a thoughtful consideration to the claim of the Ld. AR, we though principally concur with his aforesaid claim, but then, the same cannot be accepted on the very face of it and would require factual verification. Therefore, for the said limited purpose, we restore the matter to the file of the AO for doing the needful. Rejection of the assessee s claim for deduction u/s. 80P(2)(d) - deduction of the dividend income received on the shares of Jila Sahakari Kendriya Bank, Raipur, i.e a co-operative bank - HELD THAT:- In our considered view, as a Co-operative bank falls within the realm of the definition of Co-operative Society as contemplated in Section 2(19) of the Act, therefore, the view taken by the lower authorities that dividend income received by the assessee from Jila Sahakari Kendriya Bank, Raipur, i.e a Co-operative Bank, would not eligible for deduction u/s. 80P(2)(d) of the Act cannot be sustained. Our aforesaid view is fortified by the order of the ITAT, Mumbai in the case of M/s Solitaire CHS Ltd [ 2019 (12) TMI 80 - ITAT MUMBAI] - Decided in favour of assessee.
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2022 (3) TMI 74
Disallowance of the rent paid to the owners of the property till the date of actual realization of cheques - what is actual date of actual encashment of cheques of the earnest money? - HELD THAT:- As a part of Sale consideration, two cheques dated 13/5/2013 have been issued, total amounting to ₹ 5,00,00,000/- in favour of the owners. The said two cheques issued by the assessee have not been encashed within its validity. Further, on 13/09/2013 the assessee had made the actual payment of ₹ 5,00,00,000/- as part (90%) sale consideration by way of RTGS to both the vendors proportionately. The agreement to sell has been executed on 25.03.2013 but the consideration has not been passed as per the terms of the agreement by encashing the cheques mentioned thereon. The actual part sale consideration (90%) has been passed only on 13.09.2013 by way of RTGS. Thus, the finding of the CIT(A) that 'sale had occurred on 25.03.2013 and the assessee had become the owner of the property' is factually incorrect. Thus in the present case, the rent paid by the Assessee to the owners in respect of the subject property, prior to actual part payment of Sale consideration by way of RTGS is allowable. For above said reasons, we are of the opinion that both Ld. A.O and the CIT(A) have erred in disallowing said rent. - Decided in favour of assessee.
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2022 (3) TMI 73
Unexplained cash deposits u/s 68 - assessee deposited cash in his bank account on various dates - HELD THAT:- We find that the assessee deposited cash in his bank account on various dates. The assessee has placed on record 'Cash balance summary' alongwith cash book extract, average cash balance and bank statement. A perusal on these documents would adequately prove that the assessee is a man of means - AO found any deficiency in the cash book maintained and produced by the assessee. Merely on surmises and conjectures, assessing officer brushed aside the books of accounts produced by assessee. Therefore, in our opinion, the authorities below were not justified in making the addition. The documents on record that the assessee's late brother Shri Dilipkumar Amichand was a man of worth. Shri Dilipkumar Amichand redeemed his investment in Reliance Mutual Funds to the extent of ₹ 63,28,380/-. The assessee has, in the paper book produced copy of invoice issued in the name of M/s. Dilipkumar Amichand Kothari by Flax Investment Services Pvt. Ltd. for sale of gold bar (owned by Shri Dilipkumar Amichand). Further, from the order of Ld. CIT(A), it transpires that the Ld. CIT(A) had called for remand report from the assessing officer. But the assessing officer did not file any remand report. Therefore, it was not fair on the part of the Ld. CIT(A) to decide the issue against the assessee as all the material evidence that needed for his decision were filed before him and the assessing officer had an opportunity to put on his say on the matter. For these reasons, we do not see any merit in the findings recorded by the Ld. CIT(A). Therefore, we reverse the orders of authorities below on this issue and hereby delete the addition. Assessee appeal allowed.
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2022 (3) TMI 72
Disallowance u/s.40(a)(ia) in respect of freight charges paid - As per AO freight charges are paid by the supplier on behalf of the assessee and hence TDS would have been deducted therefrom - whether M/s. Rukmini Rama Steel Rollings Pvt. Ltd. engages the lorry on its own account or on behalf of the assessee? - HELD THAT:- A.O. has taken the view that the lorry freight is paid on behalf of the assessee. However, M/s. Rukmini Rama Steel Rollings Pvt. Ltd. have also confirmed the submission of the assessee that the sales price charged to the assessee includes cost, freight, taxes and other duties, meaning thereby, the lorry freight is paid by M/s. Rukmini Rama Steel Rollings Pvt. Ltd. on its own account and not on behalf of the assessee. We are of the view that it cannot be said that the liability to deduct tax at source would fall upon the assessee, merely for the reason that the assessee has disclosed freight charges separately. Accordingly, we are unable to agree with the view expressed by the Ld. CIT(A). Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to delete the disallowance made u/s. 40(a)(ia) of the Act during the year under consideration. - Appeal of assessee allowed.
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2022 (3) TMI 71
Revision u/s 263 by CIT - Deduction u/s 80P - HELD THAT:- The entire details called for during the assessment proceedings were submitted by the assessee at the time of assessment under Section 143(3) of the Act and the AO was very well aware that section 80P claim was reflected in the details of the assessee. The assessee vide letter dated 22.05.2017 submitted the details regarding deduction under Section 80P of the Act which was claimed in the return of income which included in the interest income from Mehsana Urban Co-operative Bank. PCIT has issued the show cause notice under Section 263 on 14.02.2020 on the very same issue which was verified by the Assessing Officer in Section 143(3) proceedings itself. Once the issue verified by the Assessing Officer and the jurisdictional Court has allowed the said claim related to interest income earned from Co-operative Bank, the PCIT cannot exercise Section 263 - A.R. aptly relied upon the decision of State Bank of India [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] - PCIT cannot invoke provisions of section 263 - Decided in favour of assessee.
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2022 (3) TMI 70
Condonation of delay - delay of 712 days in filing appeal before the Tribunal - as stated impugned appellate order dated 6.3.2014 was stated to have been received by the assessee-company by its the then Accounts Manager, Shri Prakash Mannari who was in-charge of the accounts and finance of the company. It is also stated that he left the assessee-company in the month of May, 2016 and left country for better job opportunity. The assessee came to know about the disposal of the appeal when it received recovery notices from the Department - HELD THAT:- The assessee is a private limited. No doubt it has its own Accounts Manager to look after accounts and financial management. Even before the Ld. CIT(A) they had engaged a Chartered Accountant to represent the case on their behalf. The reason stated in their affidavit are not convincing for the fact that the impugned order received by the then Accounts Manager in 2014 itself, but he was stated to have left company and the country in the month of May, 2016 i.e. almost about 25 months after passing of the impugned order. Further reason assigned by the assessee is that the assessee came to know disposal of the appeal by the CIT(A) only after the department initiated recovery proceedings against the assessee in March, 2016, which is also not convincing and not a reasonable cause, because the assessee being a private limited company, would have reasonable manpower back-up, and would not have left the income-tax matter unattended for such a long period. Further, it is also not explained, when the then Accounts Manager had received the impugned order. Reasonable diligence is expected, where time is essence in taxation matters. In the absence of the same, the reasons attributable by the assessee are not convincing wherein a substantial delay of 712 days in filing appeal before the Tribunal has occurred. Therefore, we cannot accept the proposition put forth by the assessee-company as good and sufficient reason to condone such delay. As enough opportunities were given to the assessee to prove its case both by the AO as well as by the Ld. Commissioner of Income-tax (Appeals). Further no new material or evidence is produced by the assessee before this Tribunal. The assessment year being 2010-11 no useful purpose will be served by entertaining this appeal at this point of time, wherein there is a delay of 712 days in filing of appeal. The reasons narrated by the assessee-company in its affidavit do not demonstrate sufficient cause or reasons so as to condone a huge delay of 712 days. - Decided against assessee.
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2022 (3) TMI 69
Revision u/s 263 - assessee has debited a sum in the profit loss account towards donation paid by it under the head other expenses' - HELD THAT:- Principal CIT should have given open hand to the A.O. to decide on the claim made by the assessee, instead of directing him to disallow the claim. Since the AO did not examine this issue during the course of assessment proceedings, in our view, the Ld. PCIT was justified in initiating revision proceedings and passing the impugned revision order - we are of the view that the final decision of Ld. PCIT requires modification. Accordingly, we modify the order passed by Ld. PCIT and direct the A.O. to examine the claim of donation made to FIMI in accordance with law after duly considering the explanation and information furnished by the assessee in support of the claim. We also make it clear that the A.O. should not be influenced by the observations made by the Principal CIT or direction given in the revision order.
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2022 (3) TMI 68
Income accrued in India - subscription/distribution revenue derived by the assessee as assessable to tax as royalty - as per AO assessee had granted various rights relating to its products including the right to sub-license. The Assessing Officer further observed that in allowing TIIPL to sub-distribute the encrypted television signals for commercial exploitation, the assessee has granted the right to communicate the work to public which is defined u/s. 2(ff) of the Copyright Act, 1957 - HELD THAT:- A careful perusal of the clause by clause comparison shows that the terms and clauses are pari materia same except the difference in channels that have been distributed. A similar comparison of the assessment order in the case of TBSAP [ 2020 (10) TMI 245 - ITAT DELHI] and the assessee has been furnished by the assessee. A perusal of the same shows that the wordings and findings are identical. Tribunal at Bombay in the case of MSM Satellite (Singapore) Pte Limited [ 2015 (9) TMI 793 - ITAT MUMBAI] had the occasion to consider a similar quarrel in respect of subscription charges collected by MSM which were taxed as royalty for use of copyright and the co-ordinate bench held that the amount received by the Singaporean company cannot be brought to tax in India as royalty and the same is in the nature of business income.This decision has been approved by the Hon'ble High Court of Bombay [ 2019 (4) TMI 1621 - BOMBAY HIGH COURT] as emphatically observed that there is difference in copyright and broadcast reproduction right As per Circular No. 6/2001, it has been clarified that subscription charges receivable for Foreign Telecasting Companies (FTCs) shall continue to be taxed in accordance with guidelines prescribed for advertisement revenue, i.e. as business income. - Decided in favour of assessee.
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2022 (3) TMI 67
Addition u/s 68 - Bogus loans - identity, genuineness and creditworthiness of the company which advanced unsecured loan to the assessee company, could not be confirmed - HELD THAT:- Shri Ram Yadav was not a director of M/s White Collar Management Services Pvt. Ltd. and therefore his statement, in our opinion, has no evidentiary value. The list of the companies named by Shri Ram Yadav, which has been reproduced by the Assessing Officer nowhere shows that he was a director of M/s White Collar Management Services Pvt. Ltd. We further find, the assessee during the course of assessment proceedings has filed confirmation from the said party, copy of which is placed at page 192 of the paper book. The assessee has filed copy of ITR, coy of bank statement of the said party reflecting the receipt and payment of loan and balance sheet as on 31.03.2011 and Form-16 for TDS deducted on interest. Not a single document furnished by the assessee has been proved to be false or untrue by the lower authorities. Under these circumstances and in view of the overwhelming evidences filed by the assessee during the course of assessment proceedings, which are not found to be false or untrue, we hold that the Ld. CIT(A) is not justified in sustaining the addition shown by the assessee as loan which has been repaid in the subsequent year and much before the date of search. Accordingly, the order of the Ld. CIT(A) is set-aside and ground of appeal 4, 5 and 6 are allowed. Disallowance of interest - HELD THAT:- AO in the instant case, disallowed the interest treating the loan as bogus. Since we have already held that the loan is not bogus and since we have allowed the grounds raised by the assessee on this issue, therefore, the disallowance of interest made by the Assessing Officer and sustained by the Ld. CIT(A) is directed to be deleted. The ground of appeal no.7 filed by the assessee is accordingly allowed. Addition u/s 69C - assessee company purchased gold coin and could not explain the source of such cash purchase - HELD THAT:- We do not find any infirmity in the order of the Ld. CIT(A) on this issue in sustaining the addition as unexplained expenditure u/s 69C of the Act. However, the request of the assessee for telescoping of above expenditure out of the income sustained out of bogus purchases finds merit. The Hon ble Delhi High Court in the case of CIT vs. Sonal Construction [ 2012 (11) TMI 11 - DELHI HIGH COURT] has accepted the theory of benefit of telescoping. We, therefore, held that the assessee is entitled to the benefit of telescoping of the addition of unexplained expenditure of ₹ 4,22,975/- out of the additions mere on account of bogus purchases, etc. The ground of appeal no.7 is accordingly partly allowed. Addition being 25% of the purchases - directing the Assessing Officer to restrict the same @ 20% in case of the parties which are found to be in existence by the Ward Inspector - HELD THAT:- It is an admitted fact that the sales declared by the assessee have not been disturbed. The assessment order indicates that letters were served upon certain parties which proves their existence. The books of account were also audited and auditors have not given any adverse remarks. All the payments have been made through banking channels. The assessee had produced the stock register showing relevant entries of the items purchased and issued for consumption in job work and the items were tallying and no discrepancy in the stock was found at the time of survey. Under these circumstances, we are of the considered opinion that disallowance of 20% of the purchases appears to be on the higher side especially when some of the parties to whom letters were issued were served and the payments have been made through banking channel. Considering the totality of the peculiar facts and circumstances of the instant case, the disallowance of 2% of the total purchases under the facts and circumstances of the case, in our opinion, will meet the ends of justice. Addition of commission expense u/s 69C - HELD THAT:- Since we have held that entire purchases cannot be considered as bogus since the sales have not been disturbed and some of the parties to whom letters were issued are existing in the given address and no discrepancy was found in the stock at the time of survey and the stock register was tallying with quantitative details, therefore, estimation of commission for the entire purchases, in our opinion, is not justified. At the same time, the conduct of the assessee is not above board. Considering the totality of the facts and circumstances of the case, we are of the considered opinion that lump sum addition of ₹ 50,000/- on estimate basis under the facts and circumstances of the instant case will meet the ends of justice. Telescoping of addition u/s 68, u/s 69C against additions on account out of bogus purchases - HELD THAT:- Referring to the decision of Hon ble Delhi High Court in the case of CIT vs.Sonal Construction r [ 2012 (11) TMI 11 - DELHI HIGH COURT] has accepted the theory of benefit of telescoping. We, therefore, hold that the assessee is entitled to the benefit of telescoping of the addition on account of unexplained expenditure of ₹ 4,25,975/- out of the additions made on account of bogus purchases, etc. The ground of appeal no.15 is accordingly allowed. Addition of unsecured loan - HELD THAT:- Since, the assessee has accepted and repaid the loan through banking channel, due taxes has been deducted on the interest so paid and the amount has been repaid prior to the date of search and the assessee has filed relevant documents before the AO evidencing the identity and creditworthiness of the loan creditor and genuineness of the transaction and since all the documents were filed before the AO and nothing has been proved to false or untrue, therefore, we are of the considered opinion that the ld. CIT(A) is not justified in sustaining the addition made by the AO. Accordingly, we set-aside the order of the Ld. CIT(A) and direct the AO to delete the addition.
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2022 (3) TMI 66
Addition u/s 40(a)(ia) - Non deduction of TDS - CIT(A) has held that though the assessee had claimed that the said payment was in fact reimbursement of expenditure to the concerned party, however no evidence was brought on record to prove that contention - HELD THAT:- There is nothing on record which suggested that the TDS was deducted by the associated company. This facts does not come out from the order of the AO. The A.R. of the appellate also did not field any submission and evidences during the appellate proceeding in the matter. The A.R. only stated that he rely on - CIT(A) has held that though the assessee had claimed that the said payment was in fact reimbursement of expenditure to the concerned party, however no evidence was brought on record to prove that contention - we do not find any reason to interfere with the above finding of the Ld. CIT(A). Hence, ground No. 1 of the appeal is dismissed. Disallowance of liquidated damages - As per CIT-A the said expenditure was not incurred by the assessee for the purpose of business of the assessee, rather the said damages were paid because of the violation of the terms of the contract - HELD THAT:- A.O. has pointed out that there is payment of damage and it is on violation of terms of the contract. When it is violation of contract terms and conditions than it is very much penal in nature and accordingly, the A.O. has taken correct view in the matter - We also agree with the view as taken by the A.O. in the matter. Keeping in view of above, in the absence of any cogent material evidence,no infirmity in the order of the assessing officer and the same is hereby upheld. In view of above, the appeal of the appellant is dismissed - we do not find any reason to interfere with the above finding of the Ld. CIT(A) and the same are upheld. Hence, ground No. 2 of the appeal is dismissed. Estimated disallowance being at the rate of 50% of the expenditure claimed under the head Indo Trailer Exp-Market Load - CIT(A) in the impugned order has observed that the assessee had claimed that the aforesaid expenditure was made in cash and that no bills, vouchers, evidences/confirmation etc. were furnished to prove that the said expenditure was actually incurred by the assessee - HELD THAT:- Since, neither anyone has appeared nor any document has been furnished to show the veracity of the aforesaid expenditure, we therefore are not inclined to interfere with the order of the Ld. CIT(A) on this issue also. In view of this, we do not find any merit in the appeal of the assessee and the same is accordingly dismissed. Assessee appeal dismissed.
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2022 (3) TMI 65
Reopening of assessment u/s 147 - Notice after expiry of four years from the end of the relevant assessment year - addition made u/s. 40(a)(ia) for non-deduction of tax - HELD THAT:- We find merit in the pleadings of the Ld. A.R. that reopening has to be made in terms of stipulation of 1st Proviso to section 147. We find that in the present case the Assessing Officer as well as CIT(A) failed to demonstrate any failure on the part of the assessee to fully and truly disclose the material facts for the income which is related in the assessment of income. After perusal of the records before us, we find that there was a mistake of mentioning the correct assessment year while deducting the TDS and therefore, the tax deducted at sources by the assessee did not get displayed on the TIN system which was got rectified later on and the TDS deducted appeared correctly in the TIN system of the assessee. Under the circumstances, we are of the considered view that reopening has been made without satisfying the conditions as envisaged in the 1st Proviso to section 147. Even on merits, the assessee has fool proof case. In our opinion that no meaningful purpose would be served except wastage of time and resources. Accordingly we set aside the order of the CIT(A) by holding that the reopening has not been validly made and the reassessment proceedings and consequent assessment framed is quashed. - Decided in favour of assessee.
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2022 (3) TMI 64
Addition u/s 69A - cash deposited into bank accounts - HELD THAT:- Assessee failed to explain source of the cash deposits. It was, however, stated that the aforesaid bank accounts were opened to provide accommodation entries. However, CIT(A) held that the assessee failed to substantiate the above contention with any evidence in this respect. So far as the contention of the assessee about the declaration of income of ₹ 84010/- made by the assessee u/s. 183 of the Finance Act, 2016 and accepted by the Principal Commissioner of Income Tax while deciding this issue, the Ld. CIT(A) in his order specifically stated that there was no established nexus between the aforesaid cash deposits and said declaration. Since neither anyone has appeared on behalf of the assessee, nor any evidence has been brought on record to substantiate the contention of the assessee, we therefore do not find any reason to interfere with the order of the CIT(A). - Decided against assessee.
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2022 (3) TMI 63
Validity of the reopening of the assessment u/s. 147 - HELD THAT:- Neither written submission nor any argument has been addressed on behalf of the assessee on this issue. Even a perusal of the impugned order of the Ld. CIT(A) reveals that this issue was taken by the assessee vide ground No. 1 in appeal before him and the Ld. CIT(A) has noted that the assessee has not brought on record any evidence to show that the Assessing Officer's action was not legally tenable. In view of this Ground No. 1 of the assessee is dismissed. Addition of deposits/estimation of sales figures - HELD THAT:- As per the information obtained by the Assessing Officer from commercial tax authorities, the Assessing Officer noted that the assessee had shown less sales as compared to the said information. Further, the Assessing Officer had added back certain deposits in the bank account of the assessee treating the same as undisclosed sales proceeds of the assessee. Assessing Officer applied GP rate on the said deposits. CIT(A) after considering the submissions of the assessee observed that there were issues which the AO had not dealt with in his order. He noted that the estimation of sales figures of the Assessing Officer was not correct. However, at the same time, the Ld. CIT(A) noted that the Assessing Officer's requisitions for information were not fully complied with by the assessee. Therefore, he directed the Assessing Officer to undertake the exercises again to arrive at correct sales figures and proceed to calculate the undisclosed business income, if any, accordingly. No reason to interfere in the impugned order of the Ld. CIT(A). Addition on account of the alleged gift received by the assessee from his mother - HELD THAT:- CIT(A) has given a categorical findings that the assessee had not submitted any documents to prove that ₹ 1,40,000/- has been given by his mother to him. Neither any documents nor any bank statements was furnished, therefore, the Ld. CIT(A) upheld the findings of the Assessing Officer in this respect.
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2022 (3) TMI 62
Addition u/s 68 - Addition made by AO and further confirmed by the CIT(A), only because of the non-appearance of the director of the assessee-company - HELD THAT:- There is no rebuttal by the Ld. DR regarding the submissions of the assessee that the required evidences and details furnished by the assessee have not been thoroughly examined by the Assessing Officer before arriving at a conclusion that the transactions were not genuine. Interest of justice will be well-served if the matter is restored to the file of Assessing Officer to examine the issue afresh and make proper enquiries and investigations duly considering the evidences and details furnished by the assessee. The director/directors of the assessee-company shall make themselves available before the Assessing Officer, if so required by the Assessing Officer, relating to any queries in relation to the aforesaid transactions. With the above directions, the matter is restored to the file of the Assessing Officer for de novo assessment. Appeal of the assessee is treated as allowed for statistical purposes.
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2022 (3) TMI 61
Unexplained credit in the capital account - Addition being 20% of the cost of construction - assessee failed to produce any details or documentary evidence in support - HELD THAT:- Though the assessee filed written submissions and certain copies of accounts, he failed to produce supporting evidence in support of the addition to the capital, or unsecured creditors etc. Because of non production all these documents, the AO held the issues against the assessee and made the additions. Impugned order shows that in spite of repeated notices issued, except seeking adjournment, the assessee did not cooperate with the first appellate authority nor any attempt was made to produce the information that was sought by the AO. Even before us also, the assessee is not diligent to prosecute this appeal. For want of evidence or material supporting the claims of the assessee, it is not possible for us to take a different view that was taken by the authorities. For these reasons, we do not find any reason to take a view contrary to the one taken by the authorities and we find no option but to confirm the additions. Appeal of the assessee is dismissed.
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Customs
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2022 (3) TMI 60
Applicability of N/N. 38 of 2002-Cus (N.T.) dated 13th June, 2002 - imported goods consisting of 1647.414 metric tonnes of crude palmolein - whether the claim of the present respondent which was admittedly not lodged before the Resolution Professional after public notices were issued under Sections 13 and 15 of the IBC could be considered at this stage? - HELD THAT:- Admittedly, the claim in respect of the demand which is the subject matter of the present proceedings was not lodged by the respondent no. 2 after public announcements were issued under Sections 13 and 15 of the IBC. As such, on the date on which the Resolution Plan was approved by the learned NCLT, all claims stood frozen, and no claim, which is not a part of the Resolution Plan, would survive. In that view of the matter, the appeals deserve to be allowed only on this ground. It is held that the claim of the respondent, which is not part of the Resolution Plan, does not survive. The amount deposited by the appellant at the time of admission of the appeals along with interest accrued thereon is directed to be refunded to the appellant. Appeal allowed.
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2022 (3) TMI 59
Rejection of Custom Broker application for renewal of license - It was alleged that in the process the appellant as CHA failed to advise his client to comply with the provisions of the Customs Act and failed to bring the matter to the notice of the Deputy Commissioner of Customs - Regulation 9(2) of the said Regulations of 2013 - HELD THAT:- Whatever be the irregularity at the end of the tribunal in first pronouncing the order dismissing the appeal and thereafter sending it for rehearing, surely the department cannot capitalize on the same. In substance in the first order which was pronounced but not signed and a subsequent order which confirmed the previous order the appeal of the appellant stood dismissed. We are therefore called upon to decide the correctness of the view of the Commissioner as confirmed by the tribunal. In this context it is found that the decision of the Commissioner to refuse renewal of the license of the appellant was wholly unjustified. Regulation 3 of the said Regulations of 2013 provides that no person shall carry on business as a Customs Broker unless he holds a license granted under the regulations. Application for license has to be made as provided in Regulation 4. Regulation 5 provides the conditions to be fulfilled for grant of license. Under Sub-regulation (2) of Regulations of 2013, renewal of license can be granted if the performance of the licensee is found to be satisfactory with respect inter-alia to obligations specified in the regulation including the absence of instances of any complaints of misconduct. The power for grant of renewal of extension is thus quite wide. The request for renewal would be considered on the parameter of the performance of the licensee if found satisfactory and there being absence of instance of any complaint of misconduct. However to refuse renewal of the license only on the ground of one isolated incident of irregularity for which the competent authority found that appropriate punishment was imposing penalty of ₹ 25,000/-, would be wholly unjustified and impermissible - if there are multiple instances of complaints of misconduct of a Custom House Broker, the renewal of license may be refused. However a mere isolated instance of irregularity which was found to be no more serious than to impose penalty of ₹ 25,000/-, cannot be the ground for refusal to grant renewal. Non-renewal of a license would prevent the appellant from carrying on the business permanently. In absence of allegations of any other complaint the isolated instance of the nature noted, cannot be the sole ground for refusal to grant renewal. The Commissioner of Customs as well as the Tribunal committed serious error - the question of law is answered in favour of the appellant and against the department - appeal allowed.
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2022 (3) TMI 58
Rejection of refund claim - CVD and SAD paid for regularisation of advance licence (import licence) - HELD THAT:- The payment of CVD and SAD subsequently during GST regime, for the imports made prior to 30.06.2017 is not disputed under the advance authorisation scheme. It is also not disputed that the appellant have paid the CVD and SAD in August, 2018 by way of regularisation on being so pointed out by the Revenue Authority. Further, it is found that the Court below have erred in observing in the impugned order, that without producing proper records of duty paid invoices etc. in manufacture of dutiable final product, refund cannot be given. It is also found that refund of CVD and SAD in question is allowable, as credit is no longer available under the GST regime, which was however available under the erstwhile regime of Central Excise prior to 30.06.2017. Accordingly, the appellant is entitled to refund under the provisions of Section 142(3) and (6) of the CGST Act. The jurisdictional Assistant Commissioner is directed to grant refunds to the appellant of the amount of SAD CVD as reflected in the show causes notices and also in the orders-in-appeal - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2022 (3) TMI 93
Liquidation Process - Validity of e-auction proceedings - Whether the sale of the Corporate Debtor as a going concern held on 11.02.2021, is contrary to 32A of IBBI (Liquidation Process) Regulations? If so, whether the impugned sale is liable to be set aside? - HELD THAT:- Admittedly, the order of liquidation of corporate debtor in this case has been passed on 04.02.2019. It is pertinent to note that by the date of commencement of liquidation in the case on hand, no time limit was set under IBBI Regulation No 32 for sale of the CD as going concern. The amended Regulation 32A, which has come in to force subsequent to passing of liquidation order in this case i.e., on 27/7/2019, states that, If the liquidator is unable to sell the corporate debtor or its business under clause (e) or (D of regulation 32 within ninety days from the liquidation commencement date, he shall proceed to sell the assets of the corporate debtor under clauses (a) to (d) of Regulation 32 . It is manifestly clear, that the Stakeholders Consultation Committee unanimously and consciously, decided to sell the corporate debtor company as a whole as a going concern, despite being sensitized of the 90 days' time line for sale of the corporate debtor or the business of the corporate debtor as going concern, set under sub clause 4 of IBBI Regulation 32A, by the Liquidator as the minutes of the above meeting clearly disclose that the Liquidator informed the stakeholders about the timeline of 90 days which commences the date of commencement of liquidation, to sell the Corporate Debtor as a going concern - In this undeniable factual backdrop, having carefully examined the contentions of the Petitioner, mostly based on the ruling in re, Sundaresh Bhat, [ 2021 (9) TMI 927 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI ], that, the IBBI Regulation 32A, since held to be an open ended provision relating to procedural besides that the Power of IBBI, under Section 196(1) (p) or (t) to issue guidelines cannot be expanded to interpret the provisions made, the circular dated 26th August, 2019, supra, issued by IBBI, is un sustainable under law consequently, the sale in the instant case since held beyond 90 days from the date of liquidation commencement date is violative of the newly inserted Regulation 32A, as such, on this score alone, the sale is liable to be set aside. Reserve price - HELD THAT:- The record placed before us viz. minutes of the Stakeholders Consultation Committee meetings clearly disclose that the Liquidator discussed fixation of reserve price in every meeting and the members of the committee, which admittedly includes the Petitioner herein, have unanimously agreed for the reduced reserve price proposed by the Liquidator. According to the Liquidator, despite the Regulation allowing 25% reduction, the average of the reduced reserve price from time to time was only 8% - in the case on hand, 15 times, the auction has failed and therefore, it became inevitable for the SCC to accept reduction in the reserve price, lest the sale can never happen and further delay result in deterioration of the asset value. On perusal of records it is found that the reduction was around 8%, though the Regulations provide for reduction up to 25%. That apart, the Applicant herein, is part of the committee that agreed unanimously for the reduction in the reserve price from time to time, and allowed the sale notices to be published. There are no reason at all in entertaining the plea of the Petitioner that too, when the sale ultimately fructified pursuant to the 16th sale notice, that the reserve price as fixed was low - also nowhere the petitioner has pleaded as to how cancellation of this sale and a going for a fresh sale of the corporate debtor other than as a going concern, will benefit the Petitioner or the corporate debtor, when the subject sale itself, did not even receive bids until the 16th sale notice. The pleas raised in the application are neither tenable nor substantiated and the same are devoid of any merit or substance. Hence, the application deserves to be dismissed.
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2022 (3) TMI 57
Maintainability of applications filed before the NCLT against the personal guarantor - non-application of mind by the National Company Law Tribunal - applicability of law of limitation - HELD THAT:- Section 61 of the Insolvency and Bankruptcy Code provides that notwithstanding anything to the contrary contained under the Companies Act 2013, any person aggrieved by the order of the Adjudicating Authority under this part may prefer an appeal to the National Company Law Appellate Tribunal. The petitioners, therefore, have an efficacious alternate remedy. The proceedings under challenge are under the Insolvency and Bankruptcy Code. When the Code itself provides for an appellate remedy, this Court would not be justified in adjudicating on the sustainability of the order passed by the NCLT in writ proceedings. The Adjudicating Authority, under Section 100, is to decide whether to admit or reject the application for IRP. From a reading of Chapter III, Part III of the IBC, it is obvious that in the matter of initiating an IRP, the role of the Resolution Professional is limited to making appropriate recommendations to the Adjudicating Authority - Resolution Professional is required to give reasons in support of his recommendations. The Adjudicating Authority is the body which takes final decision in the matter. The Adjudicating Authority is not bound by the recommendation made by the Resolution Professional. In fact, a reading of other provisions in the IBC would make it abundantly clear that in the matter of issuing public notices inviting claims from the creditors and approving or rejecting repayment plan as also in passing Discharge Order, it is the Adjudicating Authority, who is the decision making authority, even though the Adjudicating Authority may not be justified in interfering with commercial wisdom of the Committee of Creditors. The Hon ble Apex Court has held in Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta and others [ 2021 (3) TMI 340 - SUPREME COURT ] that merely because a duty has been imposed on Resolution Professional, it does not mean that the jurisdiction of NCLT is circumscribed. The argument of the petitioners that the role of Adjudicating Authority is reduced to that of a rubber stamp under the context of Sections 95, 97, 99 and 100 of the IBC, is hence not factually correct. This Court finds no illegality or unconstitutionality in Sections 95, 97, 99 or 100 of the IBC. Petition dismissed.
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2022 (3) TMI 56
Scope of 'Fraud' - Whether this Appellate Tribunal was misled and deceived by fraud practiced by Respondent No.1 which lead dismissal of the Company Appeal in MR. VINEET KHOSLA VERSUS M/S EDELWEISS ASSET RECONSTRUCTION COMPANY LTD., MARGRA INDUSTRIES LTD., MR. RAJENDER KUMAR GIRDHAR, MR. PARAMJEET SINGH BHATIA, ARCK RESOLUTION PROFESSIONALS LLP [ 2022 (1) TMI 321 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] ? HELD THAT:- The judgment of MR. VINEET KHOSLA is sought to be recalled on the ground of fraud claim to have been practiced by Respondent No.1. Insolvency and Bankruptcy Code, 2016 does not define fraud - the definition of fraud as contained in Section 17 of the Indian Contract Act, 1872 becomes relevant for determining a question of fraud claim to be practiced in proceedings under the IBC. Section 3(37) of the IBC expressly provided that words and expressions used but not defined in the Code but defined in the Indian Contract Act, 1872 and other Acts as referred therein, shall have the meanings respectively assigned to them in those Acts. The Hon ble Supreme Court A.V. PAPAYYA SASTRY ORS VERSUS GOVERNMENT OF A.P. ORS [ 2007 (3) TMI 735 - SUPREME COURT] has also defined the expression fraud . The Hon ble Supreme Court held that the fraud is an act of deliberate deception with the design of securing some unfair or undeserved benefit by taking undue advantage of another. In the resent case, there was neither any fraud practiced by Respondent No.1 nor any misrepresentations made by Respondent No.1 before this Tribunal and the judgment dated 07.01.2022 passed by this Tribunal cannot be held to be obtained by fraud. There are no substance in the submissions of counsel for the Applicant of allegation of fraud or misrepresentation Application disposed off.
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2022 (3) TMI 55
Entitlement of interest of 19.40% in terms of 2015 circular - maximum lending rate were defined as 19.75% p.a whereas it has been paid at the Cash Credit rate applicable to the utilization of the Cash Credit facilities - direction to admit the entire claim at higher rate of interest - HELD THAT:- Letter of Credit is a non-fund based facilities which is not to carry any rate of interest but bank charges of Letter of Credit for issuance commission. When Letter of Credit is debited by the bank and if the fund is not available in the current account of the customer, then in that case, a forced debit is made in the cash credit account / overdraft in the current account of the customer/CD and naturally the rate of interest applicable to the cash credit facilities are made applicable to the Letter of Credit overdue amounts. Accordingly, the Liquidator has allowed the rate of interest applicable to the Cash credit facilities to Letter of Credit facilities. It is not a case of providing term loan or other temporary non -fund based facilities to be guided by rates provided in the sanction letter and for Letter of Credit facilities no such rate of interest was provided specifically to be charged at a higher rate of interest of 20% p.a plus penal interest or so. The Appellant being an Assignor is only producing the Ledger Account of the Karur Vysya Bank who is the Assignor of the Agreement and the same is not supported by the requisite authority letters - as per details provided at page 230 of the Appeal paper book the base rate was 9% p.a and that over base rate a spread of 4% p.a. was provided with maximum lending rate of 20% p.a. The Appellant cannot be agreed upon ,that Liquidator has no power to reduce the claim of the Appellant and his duty is only to verify the claim. It is made clear vide Section 39 of the Code that the Liquidator is suppose to verify the claim and Section 35 of the Code empowers it to verify the claims. The available banking practices as also such exorbitant maximum high rate of interest alleged by the Appellant is not justifying the allowing of appeal. Hence, we uphold the order of the Adjudicating Authority dated 04.10.2021 as it does not require any review - Appeal dismissed.
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2022 (3) TMI 54
Seeking extension of time to the Applicant for completing the purchase under the LOI until such time the disputes in connection with the Disputed Extent are resolved and attained finality - waiver of interest purported to be imposed on the Applicant for any delay on payment of the balance consideration - whether the Liquidator was entitled to issue a letter of intent only for an extent of 45.21 Acres as against the total extent of 47.99 Acres as described in EOI process memorandum and all other subsequent correspondence? - HELD THAT:- On perusal of Various terms and clauses of the EOI process memorandum and other consequential documents and also the applicable provisions of the Code and Regulations made thereunder and accordingly there is no merit in both the Applications and that the Liquidator is fully empowered to issue the LOI to the part extent i.e., for 45.21 Acres forming part of the total extent of 47.99 Acres of the property. The Applicant failed to show any clause or term from any of the EOI Process memorandum or any provisions or Regulations of the IBC, which prohibits the Liquidator from issuing a LOI for an extent less than the extent shown in the EOI. Application dismissed.
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Service Tax
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2022 (3) TMI 53
Maintainability of petition - availability of alternative remedy of appeal - requirement of making pre-deposit - HELD THAT:- This writ petition is disposed off by giving liberty to the petitioner to file an appeal against the impugned Order-in-Original No.15/2021-ST dated 29/30.11.2021 within a period of fifteen days from the date of receipt of a copy of this order. In case such an appeal is filed before the Appellate Commissioner and mandatory pre-deposit is made by the petitioner, the Appellate Commissioner shall consider and dispose the same on merits and in accordance with law within a period of four weeks from the date of receipt of a copy of this order - petition disposed off.
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2022 (3) TMI 52
Non-payment of service tax - renting of immovable property service - Business Support Services - amount received as a share of the Net Box office collections from screening movies in the cinemas. Levy of penalty - renting of immovable property service - appellant already paid service tax and interest - applicability of section 73(3) in view of the exception provided in section 73(4) of Finance Act - HELD THAT:- The period involved in this case is 1.04.2010 to 31.12.2014 and the show cause notice was issued on 13.01.2015. When the audit was conducted, the appellant had paid service tax on the rent received as on 24.01.2012 in respect of the shops in the mall. This amount has already been appropriated. Thus, section 73(3) applies to this case and no SCN should have been issued - no case has been made out by the Revenue to justify the imposition of penalty upon the appellant under section 78 insofar as this part of the demand is concerned. The appellant has not contested and is still not contesting the demand of service tax. Business Support Services - whether service tax can be levied on the cinema owner s share of the Net Box office collections? - HELD THAT:- Movies are made by producers investing money and the producer acquires the copy right to the movies which, he then transfers to various distributors across the country for a consideration. The distributors, in turn, enter into agreements with various cinema/ theater owners and provide license/ right to screen the movie in their theaters. The Net Box Office collections, i.e, the proceeds of sales of tickets minus some expenses such as taxes are shared between the cinema owners and the distributors. The question as to whether the share of collections received by the cinema owners can be taxed has been decided in negative by this Tribunal in the case of M/S. MOTI TALKIES VERSUS COMMISSIONER OF SERVICE TAX, DELHI I [ 2020 (6) TMI 87 - CESTAT NEW DELHI] where it was held that Though, renting of immovable property is a declared service under section 66E of the Finance Act, then too under section 67(1) of the Finance Act, the value shall, in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him. The appellant is not receiving any payment to the distributor and, therefore, no service can be said to have been provided by the appellant. No case law has been brought before us where the share of the cinema owners in the Box Office collections is held to be exigible to service tax. Therefore, the issue stands decided that no service tax can be charged. Allegation that a joint venture has been created and that joint venture is an unincorporated business entity and the service has been rendered by the appellant to such a business entity and that business entity is paying the appellant for allowing the business entity to use the appellant s premises and other support - HELD THAT:- There are nothing in the records to indicate that there was an express or implied agreement to form a joint venture. There is no joint ownership or control of the property the appellant is the owner of the distributors. The distributors own the licensing rights to the movies. They lease the rights temporarily to the appellant. The distributor has no control over how the movies will be screened which is completely up to the appellant. Since the distributor is giving rights to screen the movies, as a consideration, it receives a share of the net box office collections. There is nothing on record to show that there is an agreement to share profits and losses. Only the collections are shared after some deductions. If, for instance, the total expenses incurred by the appellant in running the theatre is much more than its collections from the movie, it will incur losses - The quantum of consideration is not a fixed amount but a share of collections. The distributor does not assume any business risks in screening the movies. Therefore, we find no evidence whatsoever in this arrangement of forming an unincorporated joint venture. The impugned order is modified by setting aside the demand of service tax under the category of business support services along with interest. The demand of service tax on renting of immovable property service is upheld - Appeal allowed in part.
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2022 (3) TMI 51
Condonation of delay in filing appeal before the Commissioner (Appeals) - time limitation - appeal before the Commissioner (Appeals) was filed beyond the normal period of limitation of two months and also beyond the one month condonable delay provided in section 85 of the Finance Act, 1994 - the only plea in the appeal is that the appellant was in Meerut jail for 796 days from 23.5.2017 to 30.5.2019 - HELD THAT:- There is no reason why the appellant could not have filed an appeal before Commissioner (Appeals) while in prison. If one cannot seek any legal remedy because one is in jail, no bail application can ever be filed. In fact, the appellant himself had filed for and was granted bail by the High Court. The facts that the appellant was the only son and that he was afraid for safety of his parents also do not explain why an appeal was not filed within time. If the appellant was involved in a criminal case and had to spend time in jail, he would have had access to lawyers. To say that he was not aware that there was a legal remedy against the order of the Assistant Commissioner is unbelievable. At any rate, neither Section 35 of the Central Excise Act nor Section 85 of the Finance Act, 1994 provide for condonation of delay in filing appeals before Commissioner (Appeals) beyond one month. The impugned order is correct and proper in dismissing the appeal for delay and it calls for no interference - Appeal dismissed.
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2022 (3) TMI 50
Demand of differential tax - CA certified Reconciliation of Form 26AS and ST-3 Returns clearly shows that some service recipients deducted TDS on the entire rent/commission plus the Service Tax component causing inflation in Form 26AS as compared to ST3 Returns - extended period of limitation - revenue neutrality - HELD THAT:- There are force in the contention of the Ld Counsel of the appellant that CA Certified Reconciliation of ST-3 Returns and Form 26AS clearly shows that inflated figure in Form 26AS is because some Service Recipients deducted TDS not only on the rent/commission but also on the Service Tax component. The Service Recipients also confirmed the same. There are force in the contention of the appellant that part of the service tax being demanded by the Department on RCM basis cannot be sustained since Service tax was already collected by Service Providers as seen from invoices and Reconciliation Certificate. Extended period of limitation - Service tax demand for the period April 2014-September 2014 is beyond the extended period of 5 years - revenue neutrality - HELD THAT:- The Department has done audit of the appellant for February, 2014-15 as per Detailed Manual Scrutiny Report dated 15.12.2017, which includes checking of Form 26AS as clearly mentioned in Para 5.2 of CBEC Circular No 185/4/2015-ST dated 30.6.2015 vide F.No 137/314/2012 and therefore no suppression can be alleged for this period - proviso to Section 73(1) has not been invoked in the operative part of the SCN and therefore extended period cannot be invoked as held in M/S SATISH KUMAR CO. VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2018 (5) TMI 611 - CESTAT MUMBAI] - thus invoking extended period cannot be sustained for part of tax demand raised on RCM basis by virtue of it being a revenue neutral situation since the appellant is eligible for credit if it had done tax payment. The entire demand fails on merits as well as on limitation - there can be no imposition of Service tax, interest and penalty on the appellant - Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 49
Refund of CENVAT Credit - rejection on the ground of time limitation - whether refund arises by way of self assessment the same is not entertainable as Section 142(8) sub-Clause b provide for refund arising pursuing to assessment observing that assessment does not include self-assessment? - principles of unjust enrichment - HELD THAT:- On the issue whether assessment includes self-assessment, learned Counsel has drawn attention to Rule 2(b) of Central Excise Rules, 2002, wherein it have been specifically provided- assessment includes self-assessment of duty made by the assessee and provisional assessment under Rule 7. Thus, the first objection for refund is bad and against the provisions of law. Time Limitation - HELD THAT:- Section 142(3) of CGST Act, provides that after the appointed day (30 th June 2017) every claim for refund of any duty, tax, interest, etc., under the existing law shall be disposed of in accordance with the provisions of the existing law and any amount eventually accruing to him (assessee) shall be paid in cash, notwithstanding, anything to the contrary contained under the provisions of existing law other than the provisions of sub-section 2 of Section 11B (unjust enrichment) of Central Excise Act - Further, again 142(8)(b) also similarly provides for disbursement of any refund arising pursuant to assessment or adjudication proceedings, except for the provisions of Section 11B(2) of Central Excise Act, which deals with unjust enrichment. Admittedly, in the facts of the present case, no limitation is applicable as provided under Section 11B (one year from the relevant date), due to overriding effect of CGST Act. Accordingly, the appellant is entitled to refund under the provisions of Section 142(3) r/w 142(8) (b) of the CGST Act r/w the erstwhile provisions of Central Excise Act and the Cenvat Credit Rules. The adjudicating authority is directed to disburse the amount of refund alongwith interest under the provisions of Section 11BB of the Central Excise Act - Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 48
Levy of penalty under Rule 15(4) of Cenvat Credit Rules, 2004 or Rule 15(2) of CCR - suppression of fact or an apparent error - HELD THAT:- There is suppression of fact on the part of the assessee. Therefore, the correct rule for penalty to be invoked is Rule 15(4) of Cenvat Credit Rules, 2004 and not Rule 15(2). However, whether there is suppression of fact or otherwise the matter in the assessee s case M/S FASCEL LIMITED (PRESENTLY KNOWN AS VODAFONE ESSAR GUJARAT LIMITED) , BHARAT SANCHAR NIGAM LIMITED, VODAFONE ESSAR GUJARAT LIMITED, BHARAT SANCHAR NIGAM LIMITED CMTS AHMEDABAD VERSUS C.S.T., AHMEDABAD [ 2017 (1) TMI 1283 - CESTAT AHMEDABAD] has been remanded to the Adjudicating Authority. Therefore, this matter also needs to be remanded to the Adjudicating Authority. Appeal is disposed of by way of remand to the Adjudicating Authority.
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Central Excise
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2022 (3) TMI 47
CENVAT Credit - input services - repair and maintenance of wind mill which is located outside the factory premises - denial of credit on the ground that the wind mill is located outside the factory premises - HELD THAT:- An identical issue has been decided by this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD VERSUS ENDURANCE TECHNOLOGY PVT LTD [ 2015 (6) TMI 82 - BOMBAY HIGH COURT] wherein after considering various judgments, it was held that management, maintenance and repair of windmills installed by the respondents is input service as defined by clause l of Rule 2. Rule 3 and 4 provide that any input or capital goods received in the factory or any input service received by manufacture of final product would be susceptible to CENVAT credit. Rule does not say that input service received by a manufacturer must be received at the factory premises. The ratio of the above judgment is applicable in the present case. Accordingly, irrespective of the fact that windmill is located outside the factory premises, repair and maintenance service is admissible for Cenvat credit in terms of rule 2 (l) of Cenvat Credit Rules, 2004. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (3) TMI 46
Input Tax Credit - petitioner has not fully complied with the requirements of Sub-Rule (1) and Sub-Rule (2) of Rule 38 of the Rules of 2006. - HELD THAT:- The claim of input tax credit by a registered dealer is required to be examined taking into consideration not only Section 18 of the Act of 2003 providing for input tax credit, but also other provisions contained in the Act of 2003 as also the Rules framed under the Act of 2003. While Section 18 of the Act of 2003 provides for input tax credit, Section 72 of the Act of 2003 read with Rule 38 of the Rules of 2006 provides contingencies when input tax credit may not be allowed. On the face of clear provision contained in Rule 38, Sub-Rule (3) of the Rules of 2006, the claim of input tax credit, which is otherwise available under Section 18 of the Act of 2003, may be disallowed as the mandate of law is clear that unless the dealer makes full compliance of Sub-Rule (1) and Sub-Rule (2) of Rule 38 of the Rules of 2006, input tax credit shall not be allowed. The provisions contained in Section 18 of the Act of 2003, Rule 18 of the Rules of 2006 as also Section 72 of the Act of 2003 and Rule 38 of the Rules of 2006 had to be read conjointly and not in isolated manner. It is petitioner s own admission and undisputed fact that various cash transactions were made and the authorities found that invoices in respect of various transactions were not issued - there are no ground to interfere with the impugned order in exercise of our revisional jurisdiction under Section 84 of the Act of 2003. Revision petition dismissed.
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Indian Laws
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2022 (3) TMI 45
Dishonor of Cheque - complaint filed under Section 138 of the Act of 1881 has been withdrawn - continuation of the proceedings under Section 174-A of the IPC instituted in pursuance of the order declaring the present petitioner as proclaimed person are abuse of the process of the Court or not - HELD THAT:- Once the proceedings under Section 138 of the Act of 1881 have been withdrawn, then, keeping the present FIR registered under Section 174-A of the IPC alive would be an abuse of process of the Court. Even, order dated 04.07.2019 (Annexure P-2), vide which the petitioner has been declared as proclaimed person in the proceedings under Section 138 of the Act of 1881, deserves to be set aside. The present petition is allowed and FIR registered under Section 174-A of the IPC at Police Station Hisar City, District Hisar and all the subsequent proceedings arising therefrom are quashed and order dated passed by the Judicial Magistrate Ist Class, Hisar vide which the petitioner has been declared as proclaimed person, is set aside - Petition allowed.
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