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TMI Tax Updates - e-Newsletter April 15, 2023 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Indian Laws Highlights / Catch Notes GST: Validity of assessment order - Demand of GST - To calculate and assess the non-payment of tax, it is essential that the relevant evidence is carried out by the department in respect of the taxable supplies made by the assessee and non-payment of tax which is required to be done at the time of supply as specified under section 13 of the Act. - Without any corroborative material, merely on the basis of discrepancies found in the scrutiny of returns or discrepancies found during the inspection is not enough to assess the tax. - HC Visit to Get Source GST: Classification of supply - rate of IGST - supply of Mattress to Hostel students of Government Schools, Educational Institutions of Government of Karnataka, Department of Social Welfare - supply of Mattress to any Hostel of Educational Institutions - There is no exemption or concessional rate of IGST based on end use of Mattresses. - liable to IGST / GST @ 18% - AAR Visit to Get Source Income Tax: Disallowance of Employee Stock Option Plan (ESOP) cost claimed as expenditure - No reasons are forthcoming for invoking the provisions under section 17(2)(vi)(c) of the Act against the repeated contentions of the assessee that for the reasons stated in their written submissions, such an expenditure has to be allowed in the hands of the employer. Reasons are the life blood for any judicial/quasi-judicial order without which it would be difficult for the appellate authority to sustain or overrule the findings reached by the authorities. - AT Visit to Get Source Income Tax: Income taxable in India - PE in India - Tax authorities below failed to appreciate the distinction between the existence of a business connection and the income accruing or arising out of such business connection, which is clear and explicit. It is established that assessee had no business connection or dependent agent PE or construction PE in India. The attribution of profit from off-shores supplies made to PGCIL to the alleged business connection or PE and application of Section 44BBB is not sustainable. - AT Visit to Get Source Income Tax: Unexplained deposits in bank account - Amount deposited in the bank account was out of sale of various items as held by the assessee as stock in trade and since the deposits in the bank account were out of sale of stock therefore the stock of the assessee has depleted and the cash has come in respect of stock, such sales had been disclosed in the trading account against the purchase which had not been doubted, neither the opening and closing stock had been doubted. - Additions deleted - AT Visit to Get Source Income Tax: Addition under the head of Vehicle Running Expenses and Repairs & Maintenance - "exaggerated expense' or "not reasonable expense". - The onus is on the Revenue to establish that the expenses claimed by the assessee has been booked twice in the books of accounts. However, the Revenue has not brought in any evidence - the claim of the assessee on account of vehicle running expenses on account of repairs & maintenance expense deserves to be allowed. - AT Visit to Get Source Income Tax: TDS u/s 194A - processing charges (upfront fee) paid for taking loan from bank - Since, the assessee could not justify the payments without deduction of tax with necessary evidence and also fails to obtain the certificate from the Auditor to the effect what was quantified under relevant Form No.3CD, includes processing fees paid to banks of which provisions of Section 194A has no application. - AT Visit to Get Source Income Tax: Rectification of mistake u/s 154 - the income tax proceeding are not adversarial it is not material as to who committed the mistake, the fact that a mistake has been committed and the same has to be rectified. - Thus as the interest awarded under Land Acquisition Act is not taxable as held by the Hon'ble Supreme Court, the department cannot demand to pay the tax on the same by way of invoking section 263 - AT Visit to Get Source Income Tax: TP Adjustment - intra/group services in the nature of management services - DRP ignored the evidences filed by the assessee demonstrating receipt of management services by merely stating that the assessee failed the benefit test. - Adjustment made by the TPO by determining the arm’s length price of the management services at nil is unsustainable. - AT Visit to Get Source Income Tax: TP Adjustment - Addition towards interest on receivables - though the assessee was required to maintain the T.P. Study and file the same before the TPO to show that the assessee’s transactions with it’s A.E. were at Arms Length however, nothing has been brought to our notice that the assessee has brought any comparable instance. - additions confirmed - AT Visit to Get Source Income Tax: Additions based on entries in the Diary - Presumption u/s 292C - without substantiating the content of the noting in the diary, the value adopted by way of decoding by the authorities below based on assumption, presumption and guess work is illegal and against the law. Since, the diary jottings have not been corroborated from any relevant material documentary evidence and hence, the jottings in the diary by no stretch of imagination can be accepted as an evidence or conclusive proof of ‘renovation expenditure in multiple of 00/100 by the assessee for the purpose of presumption u/s 292C of the Act against the assessee - AT Visit to Get Source Customs: Release of warehoused goods seized by the DRI - The appellant having accepted the order-in-original holding him guilty of violation of the terms and conditions of the advance license and the provisions of the Act and the goods having detained and kept in the custody of the warehouse from 2002, a vested right accrues in favour of CWC to recover the rent payable to them and therefore the demand made on the appellant by CWC, atleast up to the date when the provision was amended is valid and proper and the said amount already paid by the appellant need not be returned or refunded to the appellant. - HC Visit to Get Source Customs: Exemption from duty - import of helicopters - Actual user condition - Although, the requirements of Condition No.104 of the Exemption Notification are unambiguous but the explanation inserted by way of amendment of Condition No.104 of the Exemption Notification amply clarifies that the exemption condition would be satisfied if the aircraft imported is used for non-scheduled (passenger) services or non-scheduled (charter) services. - HC Visit to Get Source Customs: Revocation of the Customs Broker license - There is no evidence brought out that there is any overt involvement of the Customs Broker in the fraud committed by the exporter. There is no basis to allege that the appellant has violated the relevant Regulations of CBLR, 2018. - AT Visit to Get Source Customs: Rejection of value and its re-determination of the duty - retraction of statements - The only thing which goes in favour of Revenue is that the Managing Director of the appellant had given statements which, he retracted later. If the statements and the retraction are both considered, nothing survives in this demand. If neither is considered also, nothing survives. - AT Visit to Get Source Customs: Revocation of Customs Broker License - Since, the employee of Team Logistics is not an employee of the Customs Broker, the Appellant cannot be held responsible for the misdeclaration if any, on the part of employee of Team Logistics or the Importer. Thus, the allegation in the Notice that the Appellant failed to exercise proper control over his employees, is not proved and hence the allegation in the Notice about the contravention of Rule 13 ( 12) by the Customs Broker is not sustainable. - AT Visit to Get Source Customs: Prohibited goods - areca nuts - So far as the prohibition under the notification issued by the DGFT is concerned, it is based on the CIF value, i.e., the transaction value including the cost, freight and transit insurance. It is not based on the assessable value under the Customs Act. Therefore, so long as the CIF value is as per the DGFT Notification, import of the goods is not prohibited. Therefore, the areca nuts which were imported were not prohibited because the CIF value was not below the threshold. - AT Visit to Get Source Indian Laws: Dishonour of Cheque - validity of notice issued - as in the notice which was issued after the bouncing of the cheque, there was no demand of the amount of the bounced cheque, in this background, the findings returned by learned Trial Court that the notice was no notice in the eyes of law, as is envisaged under the provisions of the Negotiable Instruments Act, were also correct findings. - HC Visit to Get Source Articles No TDS on payments made to ‘advertising agencies’ for procuring and canvassing for advertisements Time limit for issuance of SCN for F.Y. 2017-18 is extended till June 30, 2023 Important Statutory Due dates for Company Annual Filing for FY 2022-23 REJECTION OF PLAINT IN A CIVIL SUIT Vouchers – Whether Goods or Services, leviable to GST and corresponding GST Credit on same Notifications Customs 28/2023 - dated 13-4-2023 - Cus (NT) Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver GST - States (06/2023) FD 20 CSL 2023 - dated 6-4-2023 - Karnataka SGST Extension of limitation under Section 168A of Karnataka Goods and Services Tax Act, 2017 (05/2023) FD 20 CSL 2023 - dated 6-4-2023 - Karnataka SGST Amnesty to GSTR-10 non-filers. Circulars / Instructions / Orders SEBI - SEBI/HO/DDHS/DDHS-RACPOD1/CIR/P/2023/56 - dated 13-4-2023 Contribution by eligible Issuers of debt securities to the Settlement Guarantee Fund of the Limited Purpose Clearing Corporation for repo transactions in debt securities GST - States - Order No. 01/2023/GST-II - dated 3-4-2023 Specification of Proper Officer for Rule 144A under the Haryana Goods and Services Tax Act, 2017 News Updated Advisory: Time limit for Reporting Invoices on the IRP Portal Advisory: Time limit for Reporting Invoices on the IRP Portal 12th Session of India-Spain Joint Commission for Economic Cooperation in New Delhi Shri Piyush Goyal meets Mr Adolfo Urso, Minister for Enterprises and Made in Italy and Mr. Matteo Salvini, Deputy Prime Minister & Minister for Infrastructure and Sustainable Mobility, holds extensive discussions on issues of mutual interest High-level Event on Sri Lankan debt issues on the sidelines of IMF/WB Spring meetings 2nd meeting of G20 Finance Ministers and Central Bank Governors (FMCBG) under the Indian G20 Presidency Case Laws: GST 2023 (4) TMI 545 Validity of assessment order - Demand of GST - Search and Seizure - Maintainability of appeal - appeal was dismissed as was beyond time limitation - Section 74 of the U.P. G.S.T. Act - wilful suppression of facts or not - Ex-parte order - no opportunity of hearing provided - principles of natural justice - HELD THAT:- In terms of the scheme of the Act, the power of search and seizure is conferred by virtue of Section 67 of the Act and the power of scrutiny of returns filed is conferred upon the proper officer in terms of Section 61 of the Act. Both the said sections 61 and 67, are step towards the initiation of the proceedings either under Section 73 or Section 74 of the Act, as the case may be. They in itself do not form any basis for concluding the evasion of tax, which has to be established by following the procedure as prescribed under section 73 and under section 74 of the Act as the case may be. Section 74 from its plain reading confers the power to assess the non-payment of tax on the supply or wrong availment of input tax credit by the reasons of fraud, wilful misstatement or suppression of facts coupled with an intent to evade tax. Irrespective of the outcome of the scrutiny of return under section 61 of the Act or the inspection carried out under section 67 of the Act, the burden of assessing the short payment of tax or wrong availment of input tax credit still lies on the department which is to be discharged by the department. To calculate and assess the non-payment of tax, it is essential that the relevant evidence is carried out by the department in respect of the taxable supplies made by the assessee and non-payment of tax which is required to be done at the time of supply as specified under section 13 of the Act. It is also incumbent on the department to compute the value of taxable supply on the goods on which it is alleged that the tax has either not been paid or short paid or short levied - Without any corroborative material, merely on the basis of discrepancies found in the scrutiny of returns or discrepancies found during the inspection is not enough to assess the tax. It is also incumbent upon the department to give the opportunity of hearing as per the Section 75(4) of the Act which is mandatory to be followed by the department. It is equally well settled that any document proposed to be relied upon should be provided to the assessee prior to conclusion of the proceedings - In the present case, the order dated 24.01.2022, clearly falls short of the principle of natural of justice as admittedly the SIB report, which is the foundation was never supplied to the petitioner, no hearing was granted to the petitioner under section 75(4) of the Act and there is prima facie no material other than the SIB report to corroborate the discrepancies as allegedly found by the SIB at the time of scrutiny of returns and inspection. The impugned order dated 24.01.2022 is unsustainable and is quashed - The matter is remanded to the adjudicating authority to pass a fresh order after supplying the copy of the SIB report and giving an opportunity of hearing to the petitioner and also an opportunity of filing a reply. Petition allowed by way of remand. 2023 (4) TMI 544 Doctrine of merger - Opportunity of hearing not provided - proceedings were initiated under Section 74 against the petitioner - applicability of Sub-Section (4) of Section 75 of the U.P. GST Act - violation of principles of natural justice (audi alterem partem) - HELD THAT:- The order dated 01.10.2020 also does not reveal that any personal hearing was accorded to the petitioner prior to passing of the order, as such, the inescapable conclusion from the material available on record is that petitioner was not granted personal hearing which is required and is mandatory under Section 75(4), as such, on that ground alone the order dated 01.10.2020 is quashed. The respondents shall be at liberty to conclude the proceedings in accordance with law afresh, if so advised. Petition allowed. 2023 (4) TMI 543 Cancellation of GST registration of petitioner - Lack of application of mind - petitioner s appeal dismissed on the ground of delay - HELD THAT:- This Court must opine that there is complete lack of application of mind in cancelling the petitioner s registration and the petitioner has made out grounds that would justify interference. Hence, the petition is allowed, and the order dated 20.04.2022 [Annexure-A] is quashed on the condition that the petitioner files returns within a period of four [4] weeks from the date of receipt of a certified copy of this order. Failing which, the cancellation order shall stand revived. Insofar as the petitioner s grievance as against the order dated 14.12.2022 [Annexure-F] in view this Court s finding as against Annexure-A, the same stands disposed of as not surviving for consideration. 2023 (4) TMI 542 Cancellation of GST registration of petitioner - lack of application of mind - petitioner's appeal rejected on the ground that it is filed beyond four months that is permissible under the provisions of Sections 107(1) and 107(4) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- What remains salient is the fact that the third respondent has proceeded to cancel the registration on the ground that he has perused the reasons offered in response to the Show Cause Notice and the submissions during the personal hearing notwithstanding the fact that the petitioner, who contends that it was not served with the notice dated 07.09.2021, admittedly has not filed any response or participated in any hearing. As rightly pointed out by Sri. Skanda Kumar, the learned counsel for the petitioner, non-application of mind stands out and therefore, this Court must interfere. The order dated 27.09.2021 [Annexure-A] is quashed subject to the condition that the petitioner files returns within a period of four [4] weeks from the date of receipt of a certified copy of this order. Failing which, the cancellation order shall stand revived - Petition allowed. 2023 (4) TMI 541 Supply of service or not - providing service by branch office in one State to head office in another State through employees who are common to the company - liability of GST - HELD THAT:- From comprehensive reading of the statutory provisions of relevant Acts, any supply of service between two registrations of the same person in the same State or in different States attract the provisions of Section 25 (4) and Section 7 read with Schedule I (2) and Section 15 - Even the services of employees deployed in a registered place of business to another registered premises of the same person will attract the provisions, as the employees are treated as related person in terms of explanation to Section 15 and treated as supply by virtue of Schedule I (2) to CGST Act, 2017. 2023 (4) TMI 540 Classification of supply - rate of IGST - supply of Mattress to Hostel students of Government Schools, Educational Institutions of Government of Karnataka, Department of Social Welfare - supply of Mattress to any Hostel of Educational Institutions - HELD THAT:- Perusal of Notification No.02/2017 IT (Rate) dated 28.06.2017 reveals no exemption available for HSN 9404, leave alone supplies to hostel students of Government educational institutions - The applicant has merely mentioned Schedule III as applicant's interpretation of law and/or facts. Schedule III of the Act provides various activities or transactions which shall be treated neither as a supply of goods nor a supply of services, wherein the goods supplied by applicant, on which clarification is sought by the applicant, is not found mentioned. It is pertinent to note that Notification No.02/2017 IT (Rate) dated 28.06.2017 providing exemption for inter-state supply of goods and Notification No. 1/2017 I.T (Rate) dated 28.06.2017 providing effective rate of tax for inter-state supply of goods, have not provided any exemption or concessional rate of IGST based on end use of Mattresses. Mattresses, classified by the applicant under HSN 940429, supplied by the applicant in the State of Tamil Nadu to hostel students of Government Schools, educational institutions of Government of Karnataka under Department of Social Welfare, through M/s Coir Industrial Co-operative Society Limited is liable to IGST @ 18% vide serial number 438 under Schedule III of Notification No.01/2017 I.T (Rate) dated 28.06.2017, as amended by Notification No.43/2017 I.T (Rate) dated 14.11.2017 - Mattresses, classified by the applicant under HSN 940429, supplied by the applicant in the State of Tamil Nadu to any hostel of educational institutions in other State is liable to IGST @ 18% vide serial number 438 under Schedule III of Notification No.01/2017 I.T (Rate) dated 28.06.2017, as amended by Notification No.43/2017 I.T (Rate) dated 14.11.2017. 2023 (4) TMI 539 Classification of services - Works Contract - rate of GST - 12% or 18%? - Civil Contract Services (SAC 995415) undertaken / to be undertaken to customer M/s IIT, Madras (GST NO.33AAAAI3615G1Z6) - Government Entity - amendment to Notification No. 11/2017 C.T. (Rate) vide Notification No.15/2021 C.T (Rate) dated 18.11.2021 - HELD THAT:- Description of service in Serial No. 3(vi) of Notification No. 11/2017 C.T (Rate) dated 28.06.2017 was amended by Notification No. 15/2021 C.T (Rate) dated 18.11.2021 and the same superseded by Notification No.22/2021 C.T (Rate) dated 31.12.2021. The said amendment substituted the words Union territory, a local authority, a Governmental Authority or a Government Entity with the words Union territory or a local authority with effect from 01.01.2022 and also the condition under column 5 has been omitted. In short the words 'a Governmental Authority or a Government Entity' have been deleted - Notification No.3/2022 C.T (Rate) dated 13.07.2022 omitted, inter alia, item (vi) and the corresponding entries in column 4 of serial number 3 of Notification No. 11/2017 C.T (Rate) dated 28.06.2017, as amended, with effect from 18.07.2022. It is evident from Section 3 (j) (iii) of The Institutes of Technology Act, 1961 that Indian Institute of Technology Madras is a 'Society' registered under the Societies Registration Act, 1860, conferred with the status of 'body corporate' by Section 4 (1) of the said Act for the promotion of science, education, diffusion of useful knowledge, etc. under the control of Central Government. Accordingly, Indian Institute of Technology Madras is a 'Government Entity' within the meaning of explanation 4(x) of Notification No. 11/2017 C.T (Rate) dated 28.06.2017, as amended, and the nature of service provided by the applicant narrated under para 7.1 is covered under entry in serial number 3(vi) of Notification No. 11/2017 C.T (Rate) dated 28.06.2017 till 31.12.2021. However, after omission of 'Government Entity' from the description of service under the said entry vide Notification No. 15/2021 C.T (Rate) dated 18.11.2021 read with Notification No.22/2021 C.T (Rate) dated 31.12.2021 with effect from 01.01.2022, the services of the applicant is covered under serial number 3 (xii) of Notification No. 11/2017 C.T (Rate) dated 28.06.2017 and attract CGST of 9%. Income Tax 2023 (4) TMI 538 Reopening of assessment u/s 147 - dissonance in the sales turnover, as indicated in the ITR and the Tax Audit Report [i.e., Form 3CD] - HELD THAT:- As would be evident, we had granted four weeks to respondent/revenue to file a counter-affidavit in the matter. On the next returnable date i.e., 07.09.2022, once again further four weeks were granted to respondent/revenue to file counter-affidavit. On that date, interim order dated 04.02.2022 was made absolute during the pendency of the writ petition and accordingly, interlocutory applications were disposed of. It is in this backdrop that the matter has been listed before the court today i.e., 27.03.2023. To be noted, there is a typographical error in the order dated 07.09.2022, as it indicates that the returnable date is 25.03.2022 instead of 27.03.2023. The record shows that the counter-affidavit despite opportunities being given in that behalf. According to us, this appears to be a case of change in opinion. 2023 (4) TMI 537 Application for settlement of cases - Validity of order passed by the Settlement Commission u/s 245D(4) - Jurisdictional powers of Settlement Commission as delineated in Section 245BA - HELD THAT:- Settlement Commission found that there was no basis for estimation and quantification of undisclosed income by the department. Settlement Commission found that a sum of Rs.2,00,00,000.00 comprising of Rs.50,00,000.00 offered in the return filed under Section 153A, Rs.1,13,70,000.00 in the settlement application as well as a further sum of Rs.36,30,000.00 offered in the course of hearing would meet the ends of justice. The same was accepted and the issue was settled. No procedural or substantive error or infirmity in the approach of the Settlement Commission. Settlement Commission had followed the laid down procedure contemplated under Chapter XIX-A of the Act as well as under the Rules. Principles of natural justice were duly complied with. There is no allegation of any fraud or misrepresentation. In the absence thereof, we are afraid we cannot reopen a concluded settlement in a proceeding under Article 226 of the Constitution of India like an appellate authority. No merit in the writ petition. 2023 (4) TMI 536 Addition u/s 68 - unexplained loan/advances - huge increase in loan/advances from related parties - AO concluded that assessee had introduced his unaccounted money in the garb of loan from share holders and relatives of share holders and from whom the assessee can get confirmation or any other documents as per his convenience - CIT-A deleted the addition - HELD THAT:- Apparently, during the assessment proceedings or during the remand proceedings the learned AO has not made any attempt to exercise his powers of inquiry from jeweler or from other available open sources to establish any suspicion. AO has stressed on his belief that the assessee was under an obligation to explain the source and occasion of jewellery purchased and received by these nine parties. Bench is of considered opinion that learned CIT(Appeals) has taken a more prudent approach by observing that AO has not questioned the sale transactions. As such he has merely added the LTCG amount earned by respective parties on the jewellery sold. It is also coming up that these parties in fact had transactions earlier and they were old depositors of the assessee who had received further deposits during the previous year. CIT(Appeals) has also made a valid observation that there was no legal mandate for them to furnish wealth-tax returns. For the purpose of Section 68 of the Act, the assessee had brought sufficient explanation of the source of deposits. Circumstances how so ever strong, the same can never take the place of proof, upon the discharge of the burden, with what so ever probabilities. The findings of CIT(Appeals) require no interference. - Decided against revenue. 2023 (4) TMI 535 Disallowance of Employee Stock Option Plan (ESOP) cost claimed as expenditure - TDS credit for a lesser amount than was available - CIT(A) in sustaining the disallowance to the tune of 30% of the ESOP cost and not allowing the full TDS credit - Main plank of the argument of the AR is that the order of the learned CIT(A) does not address any of the contentions raised by the assessee in their written submissions filed before AO and also the CIT(A) nor to the material submitted by the assessee - HELD THAT:- We are of the considered opinion that the exercise, if any, done by the learned CIT(A) in formulating the opinion that various contentions raised by the assessee to the effect that ESOP expenditure is a revenue expenditure allowable in the hands of the employer are not acceptable is not reflected on the face of the order. No reasons are forthcoming for invoking the provisions under section 17(2)(vi)(c) of the Act against the repeated contentions of the assessee that for the reasons stated in their written submissions, such an expenditure has to be allowed in the hands of the employer. Reasons are the life blood for any judicial/quasi-judicial order without which it would be difficult for the appellate authority to sustain or overrule the findings reached by the authorities. As rightly pointed out by the learned AR, the reasons are conspicuous by their absence and, therefore, we find it difficult to know the mind of the first appellate authority. We deem it just and proper to set aside the impugned order and restore the appeal to the file of the learned CIT(A) to dispose it of by way of speaking order, after affording an opportunity to both the parties - Appeals are treated as allowed for statistical purposes. 2023 (4) TMI 534 Addition u/s 68 read with Section 115BB - loan received unexplained - HELD THAT:- We find that the assessee has shown in its books that it had borrowed unsecured loan from Mr. Vijaya Kumar Gulati who had sourced the said loan out of borrowings from IIFL. There is no clear factual finding in this regard. It is a fact that loan sanction letter together with the repayment schedule from IIFL was placed on record before the Ld. AO. Due to continuous absence of the assessee before us, we are unable to get the suitable assistance in this regard to ascertain the factual situation. Fact of borrowings made from IIFL and the fact of loan sanction letter being placed on record before the Ld. AO is not disputed by the Revenue before us, considering all we deem it fit to appropriate to restore this issue to the file of the Ld. AO for denovo adjudication in accordance with law - Grounds raised by the assessee are allowed for statistical purposes. 2023 (4) TMI 533 TDS u/s 194H - disallowance of commission expenditure for non-deduction of TDS - As submitted by assessee there is neither credit to the parties account on account of commission expenditure nor actual payment by the appellant. Therefore, the question of deduction of TDS in terms of provisions of section 194H of the Act does not arise - HELD THAT:- The material facts to be noted is that the appellant had received sale proceeds net of the expenditure like transport, labour, adat, loading and unloading charges etc. The appellant neither paid nor credited such income to the account of the payee. In an identical facts in the case of Super Religare Laboratories Ltd [ 2021 (10) TMI 1114 - BOMBAY HIGH COURT] held that there is no obligation to deduct tax at source u/s 194H - Thus assessee is not under obligation to deduct TDS in such commission expenditure. Decided in favour of assessee. 2023 (4) TMI 532 Income taxable in India - PE in India - receipts on account of off-shore supplies - proceeded to attribute business income to PE in India - allegation of the Revenue about an artificial split of contract - HELD THAT:- The bench is of considered opinion that the Ld. Tax Authorities below have fallen in error in concluding that there was an artificial split of a contract and that there was one inseparable, indivisible and composite contract. AO has not given any substantial reason on the basis of evidence while what weighted heavily in the mind of Ld. DRP was that the supply of equipment on the basis of off-shore contract would have been rendered meaningless in the absence of services of supervision, erection commissioning etc. all of which was an indivisible part of the contract. The Bench is of considered opinion that when the allegation of the Revenue about an artificial split of contract is not sustained and it is established that the assessee has entered into the First Contract , in its independent capacity, there is no force in the finding of Ld. AO that GE India ( Alostom-I) was actively involved in soliciting business for the assessee. In fact, there is substance in the contention of Ld. Sr. Counsel that in the bidding structure of present nature there is no question of someone soliciting the business, as it was a case of open bid to which Indian and Foreign entities, both, were eligible to make the offer of bid. There is no question of any agent and principle relationship between the assessee and the Indian associate for a very substantial reason that PGCIL has treated in its contract documents, ALSTOM-I to be its Independent Contractor . There is substance in the argument of Ld. Sr. Counsel on the basis of judgment of E-funds IT solutions [ 2017 (10) TMI 1011 - SUPREME COURT ] that the onus was on the department to prove the existence of PE. The Bench is of considered opinion that such an onus can be considered discharged by specific reference to the evidence. No evidence is brought on record to show that the Indian Associate was employed by any act of the assessee to represent the assessee independently while dealing with PGCIL. On the contrary what is established is that it was the assessee at whose proposal, ALSTOM-I was accepted to be an Associate of the assessee and the employer PGCIL treated ALSTOM-I as its independent contractor on the terms and conditions, as laid down in the bidding document. If there was any involvement of the employees of Indian Associate, at any stage in the meetings between assessee and the PGCIL that was bound to be there and outcome of the fact that assessee and its Indian associate were required to work in tandem and that does not give rise to existence of a dependent agent P E of the assessee. Question of Indian Associate being a Construction PE - Again there is force the contention of Ld. Sr. Counsel that the findings of Ld. Tax Authorities below are not on the basis of any facts and evidence. The case of assessee as submitted and established is that under First contract it was merely liable to make offshore supplies. Thus, assessee was not engaged in any construction project in India. Its revenues were outcome of the offshores supplies and services rendered off shore. Thus, there was no question of constitution of the Construction PE as per Article 5(2) of the DTAA. Applicability of Section 44BBB - It can be observed that the foundation of it was existence of a PE. The assessee under the First contract was merely under obligation to make off shore supplies and wherein property in the goods transferred outside Indian, therefore as Section 44BBB does not speak of engagement of a foreign company for supply in connection with the turnkey Power Project, the provisions of Section 44BBB are not applicable. DRP has fallen in error in sustaining application of Section 44BBB of the Act, on premises that the assessee is involved in the end to end execution of the project in India. The revenue derived by the assessee were on the basis of offshore supplies and not out of any construction, erection, testing or commissioning activities of a turnkey power project in India. Thus, the application of section 44BBB to such revenue, which is not per se taxable India, is not sustainable. Tax authorities below failed to appreciate the distinction between the existence of a business connection and the income accruing or arising out of such business connection, which is clear and explicit. It is established that assessee had no business connection or dependent agent PE or construction PE in India. The attribution of profit from off-shores supplies made to PGCIL to the alleged business connection or PE and application of Section 44BBB is not sustainable. Tax Authorities below have fallen in error to hold that off-shores supplies to PGCIL are taxable in India. The assessee was merely under liability for making off-shores supplies to PGCIL under the First contract for which the revenue earned is not taxable in India. Consequently, ground no. 3 to 8 are decided in favour of the assessee. AO did not follow DRP directions - HELD THAT:- The Bench is of considered opinion that once the foundation of the findings of Ld. AO on the basis of dependent agent PE status of GE T D India and SFO technologies in not sustained by this Bench, the foundation of his reasoning in para no above stands washed away. At the same time what comes up is that assessee had claimed that there was no agreement with GE T D and SFO technologies and on the basis of orders and invoices generated, the supplies were made. On the basis of general terms and conditions, purchase orders were raised and on the basis of which the offshore supplies were made to these two Indian companies. Ld. AO was under obligation to give effect to the orders of DRP in a substantive manner but without there being anything on record to show on the part of the Ld. AO that the supplies were in regard to PGCIL contract with the assessee, the addition was made by ignoring invoices. Thus, these grounds are sustained and decided in favour of the assessee. Taxing global operation fee received from GETDIL as Fees from Technical Services ( FTS ) - HELD THAT:- The essence of make available clause is that the technical knowledge or skills of the provider should be imparted to be absorbed by the receiver so that the receiver can deploy similar technology or technique in the future without dependent upon the provider. However, in the case in hand for the services rendered, there is renewal of contract on annual basis and the nature of services are all prima facie managerial in nature. They have also passed the arm s length tests. Thus Ld. Tax authority below have fallen in error in taxing global operation fee received from GETDIL as Fees from Technical Services ( FTS ) under the provisions of the Act and the India-UK DTAA, without appreciating that provision of said services by the Appellant did not satisfy the make available clause contained in Article 13(4)(c) of the India-UK DTAA. Ground is adjudicated in favor of assessee. 2023 (4) TMI 531 Disallowance u/s 14A - objective satisfaction recorded by the Ld. AO having regard to the accounts of the assessee - HELD THAT:- The mandate of section 14A(2) and 14A(3) of the Act read with Rule 8D(1) of the Rules clearly stipulates that the AO is supposed to examine the financial statements of the assessee and from the said examination arrive at an objective satisfaction as to what expenses could be attributed towards the investment activity of the assessee. This exercise has not been apparently done by the AO in the instant case as is evident from the manner of recording satisfaction reproduced. We find that the Hon ble Supreme Court in the case of Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT ] had categorically held that the Ld. AO is bound to record objective satisfaction as to why the claim made by the assessee is incorrect. In the absence of mandatory objective satisfaction recorded by the Ld. AO in terms of section 14A(2)/14A(3) of the Act read with Rule 8D(1) of the IT Rules, we hold that the disallowance made u/s 14A of the Act would have no legs to stand in the eyes of law. Accordingly, we direct the AO to delete the disallowance of expenses u/s 14A - Grounds No.1, 2 and 3 raised by the assessee for AY 2010-11 are allowed. Chargeability to interest u/s 234C - The law is very well settled that interest u/s 234C of the Act could be done only on the returned income and not on the assessed income. AO is directed accordingly. Chargeability of interest u/s 220(2) - This would be consequential in nature and does not require any specific adjudication. However, AO is directed to charge interest u/s 220(2) of the Act in accordance with law. Incorrect grant of interest u/s 244A on refund - AO is directed to grant interest u/s 244A of the Act in accordance with law. 2023 (4) TMI 530 Reopening of assessment u/s 147 - Income escaped pertaining to the transaction of fictitious losses - HELD THAT:- As assessee had categorically stated that it had not incurred any loss in F O Segment either in the sum of Rs.10,09,250/- or 20,18,500/-. This is also evident from the ledger account of IMSPL maintained by the assessee which is placed on record before the Ld. AO. This fact is further evident from the ledger account of assessee as maintained in the books of account of IMSPL which was also placed on record before the Ld. AO. All these facts collectively go to prove that even on merits, there is no case made out by the Revenue that assessee had incurred fictitious losses on either Rs.10,09,250/- or Rs.20,18,500/-. On the contrary, the assessee had made actual profit on 73,40,121/- which was duly offered to tax from the F O Segment. Hence, we have no hesitation to hold that the reopening made suffers from various legal infirmities and deserves to be quashed. Even on merits, there is no case made out by the Revenue and hence, the addition made in the sum is hereby deleted. Accordingly, Grounds No.1, 3 and 4 raised by the assessee are allowed. 2023 (4) TMI 529 Unexplained deposits in bank account - appellant had inflated the sales to cover unaccounted money - AO has rejected the books of accounts u/s 145(3) on the ground that the assessee has not furnished the sales bills - addition made u/s 68 on account of unexplained cash deposit and the same is taxed u/s 115BBE at the rate of 60% - HELD THAT:- It is pertinent to mention here that the assessee has duly submitted books of accounts, sale purchase register, confirmations, bank statements, expenses, parties from whom the purchase and to whom sales were made. AO has computed the sales for the month of October November 2016 at Rs. 28,06,536/- and Rs. 9,63,687/- respectively. AO while doing such exercise has ignored the fact as to why a prudent businessman will make purchases to the tune of Rs. 3,09,69,406/- in the month of October, 2016 much before the date of demonetization in order to execute such meagre sale as computed by the AO. Assumption drawn by the AO in respect of estimating the sales is merely on assumption or presumption or surmises or conjectures . AO has made addition in the hands of the assessee by reducing the actual sales for the month of October, November 2016. The basis of rejection of books was not acceptable here. AO has made such addition without discharging the burden of prove the correctness of addition. It is a settled law that once the adequate evidence/material has been provided which prima facie discharge the burden of the assessee in that case, the burden shifts on the revenue and the revenue has not discharged its onus in these circumstances. Amount deposited in the bank account was out of sale of various items as held by the assessee as stock in trade and since the deposits in the bank account were out of sale of stock therefore the stock of the assessee has depleted and the cash has come in respect of stock, such sales had been disclosed in the trading account against the purchase which had not been doubted, neither the opening and closing stock had been doubted. Nothing could have been doubted when the source of cash was well explained and was shown in the bank account. Addition was made only on the basis of surmises without establishing any motive on the part of the assessee and without disturbing the closing stock as on 31/03/2017 which had been arrived at after reducing the sale in quantity of stock in trade. AO has no right to calculate sales on hypothetical basis ignoring the evidence submitted during the course of assessment proceedings in the form of VAT return, purchase bills and quantitative details. Once the amount is declared as turn over cannot be called concealed income and be taxed doubly on same amount. We further relied on order of Jet Freight Logistics Ltd. [ 2022 (9) TMI 1183 - ITAT MUMBAI] - addition U/s 68 is beyond jurisdiction of the ld. AO as the turnover is already reflected in the books of the assessee. Decided in favour of assessee. 2023 (4) TMI 528 Transaction by way of agreement to sell - Addition based on document seized during search - Addition based on unsigned draft agreement and the amounts were also cut and trimmed - HELD THAT:- The entire addition was based on the documents which has no evidential value. The assessee primarily decided to purchase the property but later on changed the decision and has taken the property on lease - The lease rent was paid and the TDS was deducted at source. Only 2 kanal property was purchased in later from the party by the assessee. The copy of the financial statement duly filed related to Baba Shrichand Educational Society which is depicted that the amount debited against lease from the M/s Amar Singh Educational Charitable Trust, represented by Mr Gurdeep Singh. Copy of the balance sheet of society, Baba Shrich and Educational Society is annexed - AO had not able to correlate any such payments which are mentioned in the assessment orders. The property is still in the possession of M/s Amar Singh Educational Charitable Trust. We find that there is no infirmity in the order of the ld. CIT(A), so, the ground of the revenue is dismissed. Assessment u/s 153A - Addition of stamp duty in cash - HELD THAT:- In factual matrix it is correct that the addition for payment of stamp duty is not part of the incriminating documents and will not be come under purview of section 153A of the Act. We relied on the order of ITAT-Amritsar Bench in the case of Gaurav Narula,[ 2022 (10) TMI 1162 - ITAT AMRITSAR] So, the addition amount is quashed. Addition u/s 69A related to loan with the party and related to investment in the property - HELD THAT:- Related to loan amount of Rs.40 lacs, the ld. counsel pointed out that the addition was made for unexplained investment u/s 69A. Whereas the ld. CIT(A) has directed for violation of section 269SS and 269T for accepting and repaying the loan in cash exceeding the prescribed limit against Mr Prem Pal Singh. Both the provisions cannot run together. We find that there is no merit in the order of the revenue. There, no statement was recorded from Sh. Prem Pal Singh in relation of the transaction of loan. The documents are already denied by the ld. Counsel on which thereliance was made for addition. We find no merit in addition Rs.40 lacs with the total income of the assessee. So, the addition is quashed. Investment in property - The addition can not be done on basis of any assumption or any guess work. The ld. CIT-Dr was not able to place any contrary judgment against the submission of assessee. We find that the addition is not proper against the assessee. So, the addition is liable to be quashed. Expenditure on construction of college building - Assessee had made surrender on account of construction of house which was clearly mentioned in the surrender letter and the seized documents clearly show that expenditure is incurred on civil work in the college - HELD THAT:- The assessee surrendered Rs.2.5 crore made out of which amount of Rs.1.75 crore relates to construction. Under these circumstances of the case Rs.38,07,065/- is related to out of the declared construction. CIT-DR has not brought any contrary fact against the submission of assessee. We find that there is no infirmity in the order ld. CIT(A), accordingly, the appeal of the revenue bearing ground no. 6 is dismissed. Ground no. 7 is general in nature. Accordingly, the appeal of the revenue is dismissed. Addition u/s 69 on account of unexplained cash deposits - CIT-A deleted addition as deposits are out of surrendered income - HELD THAT:- It is very clear from the order of the ld. CIT(A) that the assessee has deposited cash in the bank out of his surrendered income and the tax was paid accordingly. The copy of the ITR is duly annexed, copy of surrendered letter u/s 132(4) of the Act providing the fact that assessee surrendered Rs.7.5 crores as its income - We find no infirmity in the order of the ld. CIT(A), accordingly, the ground of the revenue is quashed 2023 (4) TMI 527 Disallowance of some portion of cost of material consumed - Non rejection of books of accounts - HELD THAT:- We find that neither ld. AO nor ld. CIT(A) had pointed out any specific discrepancy in the audited books of accounts of the assessee nor books of accounts are rejected and disallowance of some portion of cost of material consumed expenses is merely on the basis of conjectures and surmises which cannot be held justified and since ld. D/R has failed to place any contrary material to doubt the book results, therefore, the estimate disallowance made by ld. AO as well as ld. CIT(A) cannot be accepted. Hence, the impugned disallowance made by ld. AO @ 5% of material consumed is deleted. Accordingly, the ground no.1 raised by the assessee is allowed and that of the Revenue is dismissed. Addition under the head of Vehicle Running Expenses and Repairs Maintenance - CIT(A) allowed the claim of the assessee and deleted the addition made by ld. AO on this account with the finding that that ld. AO should have conducted relevant enquiries, made some comparisons with other assessees placed in same situations or other assessees working in similar locations and should have also pointed out specific expenses which, based on such relevant enquiries, were exaggerated but the same was not done by ld. AO - HELD THAT:- In order to disallow expenses, rather than making a bald assertion without any enquiry to assail the so called exaggerated expenses of the assessee, ld. AO should have conducted relevant enquiries, made some comparisons with other assessees placed in same situations or other assessees working in similar locations and should have also pointed out specific expenses which, based on such relevant enquiries, were exaggerated. However, no independent third-party enquiries were conducted by ld. AO and no comparisons were made by ld. AO. In the absence of relevant enquiries and relevant comparisons, no part of the expense claimed by the Appellant could have been treated as exaggerated expense' or not reasonable expense . The onus is on the Revenue to establish that the expenses claimed by the assessee has been booked twice in the books of accounts. However, the Revenue has not brought in any evidence before this Tribunal to show that the expenses has been booked twice. Before us, ld. D/R has not identified or pin pointed even a single transaction or a single instance in any of the corresponding ledger accounts (i.e. pertaining to the Vehicle Running Maintenance Expense and pertaining to the Machinery Repair Maintenance Expense) which would prove that the assessee had debited/claimed a particular expense item more than once as alleged. Therefore, we are inclined to hold that the claim of the assessee on account of vehicle running expenses on account of repairs maintenance expense deserves to be allowed. We, further hold that none of the expenses as alleged by ld. AO above have been claimed twice by the assessee. Therefore, no infirmity is called for in the finding of ld. CIT(A) and, thus, dismiss ground no. 2 raised by the Revenue. Addition under the head of excess depreciation applying 15% rate as against 30% claimed by the assessee - HELD THAT:- Since the issue of excess depreciation is squarely covered against the Revenue by the decision of Coordinate Kolkata Benchin [ 2019 (3) TMI 1702 - ITAT KOLKATA] and since ld. D/R failed to put forth any binding precedence in its favour, we fail to find any infirmity in the finding of ld. CIT(A) deleting the disallowance of excess depreciation of Rs. 3,23,72,494/-. Accordingly, Ground No. 3 raised by the Revenue is dismissed. Disallowance u/s 14A r.w.r 8D - Suo moto addition made by assessee - HELD THAT:- This issue is no more res-integra as held in the case of PCIT Vs. Era Infrastructure (India) Ltd [ 2022 (7) TMI 1093 - DELHI HIGH COURT] that the amendment made in Section 14A of the Act by Finance Act, 2022, will be applicable prospectively and also held that disallowance u/s 14A of the Act should not exceed the exempt income earned by the assessee during the year. Thus we hold that disallowance u/s 14A of the Act cannot exceed the exempt income earned by the assessee and the same holds good prior to amendment made in Section 14A of the Act by Finance Act 2022. Thus, no infirmity is called for in the finding of ld. CIT(A). Accordingly, Revenue s ground no.4 is dismissed. Assessment u/s 153A - Deduction claimed u/s.80IA - whether fresh claim of deduction u/s 80IA(4) of the Act can be made in returns filed pursuant to section 153A of the Act when the same has not been claimed in original returns u/s 139? - HELD THAT:- In the instant case, since the Returns of Income filed u/s 153A(1) of the Act for the impugned assessment years substituted the original Returns filed u/s 139(1) of the Act, the said Returns u/s 153A(1) of the Act would be construed as the one filed u/s 139(1) of the Act and as specifically laid down u/s 153A(1)(a) of the Act, all the provisions of the Act [including Chapter VI-A and the impugned deduction u/s 80IA(4) of the Act] would apply to such Returns u/s 153A of the Act and the assessments u/s 153A of the Act framed pursuant thereto. We are, thus, of the considered view that the assessee in the instant case was entitled to all legitimate claims of deduction, including its claim u/s 80IA(4) of the Act, in its Returns filed pursuant to Notices issued u/s 153A for the impugned A.Ys although the same were not claimed in its original Returns u/s 139 of the Act. Assessee in the instant case was very well within its rights to claim deductions u/s 80IA(4) of the Act in its Returns filed in compliance to Notices issued u/s 153A of the Act in respect of pending/abated assessment proceedings for the impugned AYs 2017-18, 2018-19 2019-20 although such deductions were not made in the original Returns filed u/s 139(1) of the Act (prior to search) and such claims were also not raised vide revised Returns of Income filed u/s 139(5) of the Act. Disallowance of deductions claimed by the assessee u/s 80IA in returns filed pursuant to notice issued u/s 153A of the Act on the ground that the assessee did not furnish audit report and particulars for claim of deduction u/s 80IA of the Act within the specified time - Where the Return u/s 153A of the Act is filed within the time permitted u/s 153A of the Act, the same is to be taken as filed within the time limit as per section 139(1) of the Act. Thus, where the Audit Report in Form 10CCB is furnished on or before the time allowed for filing Return of Income in the Notice issued u/s 153A of the Act, the said Form 10CCB is to be taken as filed on or before the time permitted u/s 139(1) of the Act and thus within the time allowed u/s 80IA(7) r.w.s 80AC. See Shrikant Mohta vs. CIT [ 2018 (8) TMI 200 - CALCUTTA HIGH COURT] Decided in favour of assessee. 2023 (4) TMI 526 Addition u/s. 56(2)(vii)(c) - difference between guideline value and consideration paid for purchase of property - HELD THAT:- As per the provisions of section 56(2)(vii)(c) of the Act, if difference between consideration paid for purchase of property and guideline value of said property, then said difference should be treated as income of the assessee for the relevant assessment year. In this case, there is no dispute with regard to the fact that there is a difference between guideline value of the property and consideration paid for purchase of said property, because the registration authority has levied an additional stamp duty while registering the property.AO has made addition being difference between guideline value and consideration paid for purchase of property. There is no error in the reasons given by the AO to make additions towards difference in value of property u/s. 56(2)(vii)(c) of the Act. Alternate plea of the assessee that, the difference between guideline value and consideration paid for property is less than the tolerance band fixed by virtue of amendment to Section 50C by the Finance Act, 2020 and thus, no addition can be made u/s. 56(2)(vii)(c) - We find that, the amendment brought to Section 50C by the Finance Act, 2018 and further amendment by Finance Act, 2020 is held to be retrospective in nature, as held in the case of Maria Fernades Cheryl [ 2021 (1) TMI 620 - ITAT MUMBAI] - Thus by virtue of said amendment to section 50C of the Act, if difference between guideline value and consideration paid for purchase of property is less than the tolerance band, then said difference cannot be considered as deemed consideration in the hands of the seller and consequently the provisions of section 56(2)(vii)(c) of the Act cannot be invoked in the hands of the buyer. Since, difference between guideline value and consideration paid for purchase of property in the present case is less than tolerance band, we are of the considered view that no addition can be made u/s. 56(2)(vii)(c) - Thus, we direct the AO to delete addition made towards difference in value of property u/s. 56(2)(vii)(c) TDS u/s 194A - processing charges (upfront fee) paid for taking loan from bank - disallowance of certain expenditure u/s. 40(a)(ia) for non deduction of TDS - AO was disallowed 30% of interest on other payment u/s. 40(a)(ia) - HELD THAT:- We find that the tax auditor has quantified interest on other payments which is subjected to TDS to the relevant facts in its tax auditor report issued in Form No.3CD for the impugned assessment year. Assessee could not file any correctable evidence to justify his arguments that impugned payment does not comes under the preview of provisions of Section 194 - Although, assessee, tried to make out the case that part of said amount is processing charges paid to bank for availing loans. Since, the assessee could not justify the payments without deduction of tax with necessary evidence and also fails to obtain the certificate from the Auditor to the effect what was quantified under relevant Form No.3CD, includes processing fees paid to banks of which provisions of Section 194A has no application. We are of the considered view that, there is no merit in the reasons given by the Ld. CIT(A) to sustain addition made towards disallowance of expenditure u/s. 40(a)(ia) of the Act. Thus , we are inclined to uphold the findings of the Ld. CIT(A) and reject ground taken by the assessee. 2023 (4) TMI 525 Revision u/s 263 - estimation of agricultural income derived by the assessee - i n respect of Tomato crop, the PCIT disputed estimation made by the AO only for the reason that the estimation made by the AO is higher than the estimation made by the assessee - HELD THAT:- PCIT has not brought on record any cognizant reason and also explained how the assessment order passed by the AO on the issue of estimation of income from Tomato crop, is incorrect. In our considered view, when the AO has completed best judgment assessment in terms of provisions of section 144 of the Act, it is as good as the AO has applied his mind to relevant facts in right perspective of law and has taken a plausible view. The view taken by the AO may not be acceptable to the PCIT - unless view taken by the AO is unsustainable in law, it cannot be open to the PCIT to assume his jurisdiction and revise the assessment order. It is not a case of PCIT that the AO has not carried out necessary enquiries in the given facts and circumstances of the case, because as per available records, the AO has discussed at length in assessment order and also obtained certain details from the public domain including from National Horticultural Board and arrived at a conclusion that the probable yield of a particular crop grown by the assessee is approximately at particular quantity. Estimation made by the AO may not be accurate, but if the AO has applied a scientific method for estimation of income in the given facts and circumstances of the case and said estimation is based on certain reliable information available as per public domain, in our considered view, the PCIT cannot exercise his power conferred u/s. 263 of the Act, and set aside assessment order only on the ground that the estimation made by the AO on a particular crop is higher than the estimation made by the assessee. PCIT, has conveniently ignored other two crops, where estimation made by the assessee is more than the estimation made by the AO, whereas, questioned one crop where the estimation made by the AO is higher than the estimation made by the assessee. Thus assumption of jurisdiction by the PCIT is incorrect - Decided in favour of assessee. 2023 (4) TMI 524 Revision u/s 263 - Taxability of interest awarded under Land Acquisition Act - AO allowed the application filed by the assessee u/s 154 by rectifying the mistake and held that the interest awarded is not taxable - HELD THAT:- The issue regarding whether interest awarded under the land Acquisition Act is taxable or not, has been settled in the case of Ghanshyam HUF [ 2009 (7) TMI 12 - SUPREME COURT] declaring that the interest awarded under the Land Acquisition Act is not taxable. Such being the case, the remedy available to the assessee is to bring to the notice of the AO regarding passing of the judgment in the case of Ghanshyam HUF (supra) and get the other rectified. The said method is also in-conformity with the Circular issued by CBDT No. 68 dated 17.11.1971 wherein, it is stated that the subsequent interpretation of law could constitute a mistake apparent from the record. As on the date of examination of the record of the assessment order it is not prejudicial to the interest of the revenue. The right tax had to be collected from the right person. The reason for exercising power conferred u/s 263 by the ld CIT is that the return of income had to be filed without any paper i.e. it was paperless filing of return of income, even if the assessee had attached the document along with return and same will be taken off the record. Therefore, held that the AO has committed an error in exercising power u/s 154 - In our opinion the income tax proceeding are not adversarial it is not material as to who committed the mistake, the fact that a mistake has been committed and the same has to be rectified. Thus as the interest awarded under Land Acquisition Act is not taxable as held by the Hon'ble Supreme Court, the department cannot demand to pay the tax on the same by way of invoking section 263 therefore, we hold that the order of the ld CIT is erroneous. We quash the impugned order passed by the CIT u/s 263 and uphold the order passed by the ld AO u/s 154 of the Act. Appeal of the assessee is allowed. 2023 (4) TMI 523 Levying penalty u/s 271B - not getting the books of accounts audited when no books of accounts have been maintained by the assessee - HELD THAT:- It is pertinent to note that when the assessee did not maintain the regular books of account then the question of getting the books of accounts audited does not arise. In this regard, I find that the Coordinate Bench of the Jaipur Tribunal has dealt with the similar issue in the in the case of Shahnaz Khanam vs. ITO [ 2018 (5) TMI 2141 - ITAT JAIPUR ] wherein as held once the assessee found to have not maintaining the regular books of account as contemplated by Section 44AA of the Act the default was completed and therefore, after the default of not maintaining the books of accounts there cannot be a further default for not getting the same audited as required U/s 44AB of the Act. Hence, the penalty of levy by the AO U/s 271B is not justified and the same is deleted. Thus the imposition of penalty under section 271B is not justified and bad in law. The penalty is deleted. Decided in favour of assessee. 2023 (4) TMI 522 TP Adjustment - intra/group services in the nature of management services - determining the value of the international transaction relating to management services availed from the associated enterprises at Nil - HELD THAT:- This is not the first year wherein the assessee received such services and made payment to the AE. The TPO himself has referred to similar nature of transaction made in assessment years 2012-13, 2013-14 and 2014-15. Thus, the assessee has made payment towards identical nature of transaction in various assessment years including assessment year 2011-12. In fact, DRP has referred to similar transaction in assessment year 2011-12. Notably, while deciding identical issue in assessee s case in assessment years 2007-08, 2009-10, 2010-11, 2011-12 and 2012-13 [ 2019 (2) TMI 796 - ITAT DELHI] the coordinate Bench, deleted identical additions stating TPO accepted that services were rendered and received by the assessee. Once the rendering and receiving of the services were not disputed which is supported by the evidences, the TPO is not correct in holding that arms length value of the management fee is Nil and accordingly making an upward adjustment. Therefore, the finding of the TPO is not correct and this addition does not sustain. DRP ignored the evidences filed by the assessee demonstrating receipt of management services by merely stating that the assessee failed the benefit test. As per settled judicial principles the departmental authorities are not competent to apply the benefit test to determine the value of a transaction entered with the AE at Nil. See Avery Dennison (India) Pvt. Ltd [ 2016 (9) TMI 244 - DELHI HIGH COURT] - Adjustment made by the TPO by determining the arm s length price of the management services at nil is unsustainable. Accordingly, we direct the Assessing Officer to delete the addition. Decided in favour of assessee. 2023 (4) TMI 521 TP Adjustment - Addition towards interest on receivables - argument of the assessee that the assessee is a debt free company and therefore, no borrowed fund was used for making supplies to it s A.E. and therefore, is not liable to be compensated for the delay in receiving the receivable is concerned - HELD THAT:- There is a delay in receiving the outstanding in respect of 519 invoices as mentioned hereinabove and there is no explanation given by the assessee for such a delay in receiving the amount. The very purpose of benchmarking the transaction is to ascertain whether assessee, who is similarly situated, would render the same kind of services at the same or similar price to a third party or not. If we examine the issue in the above-said context, it would be clear that the assessee would charge bank interest or any other interest with a view to compensate itself on account of delay in making the payment. Hence, we do not find any error in the same. In the present case, though the assessee was required to maintain the T.P. Study and file the same before the TPO to show that the assessee s transactions with it s A.E. were at Arms Length however, nothing has been brought to our notice that the assessee has brought any comparable instance. In these circumstances, the TPO had applied the banking rate as applicable to short term loans - the same is required to be corrected and instead thereof, ALP is to be computed by adding notional interest @ 6% on the receivable. Accordingly, the appeal of the assessee is dismissed. 2023 (4) TMI 520 TP Adjustment - adjustment of arm s length price on the service rendered - main grievance of the assessee is that the TPO considered the assessee as ITeS company whereas the assessee is only a human resource provider - HELD THAT:- The segment applicable to the assessee for TP benchmarking is Placement services , recruitment services etc as done by the assessee in the TP documentation. In fact, the assessee requested the TPO to do a search on Recruitment, Placement services segment which is the most appropriate in its case and accept its bench marking analysis. The assessee does not render any services in the nature considered by the TPO as key words. Also, the services rendered by the assessee do not fall under these categories of business as Placement and HR consultancy services is completely different from the business of ITES , BPOs, call centres etc considered by the TPO. The assessee does not provide any back-end support services to its AEs. The TPO has also stated that the assessee has rendered Placement services or recruitment services . Even the definition of ITES as per Rule 10A of the Income Tax Rules, 1962 does not include Placement and recruitments Services . We are therefore of the view that the addition made on account of transfer pricing should be set aside to the AO/TPO for a fresh analysis considering assessee as Placement and HR Consultancy Service provider. The AO/TPO will do a fresh analysis as stated above after due opportunity to the assessee of being heard. Whether TPO has grievously erred in ignoring the margin analysis prepared by the assessee for its AE exports business and non-AE domestic business to unrelated parties? - This is a fundamentally faulty way of assessing the Arms Length Price ( ALP ) of the international transactions undertaken by the assessee with AEs since the Revenue transactions with AE constitute only 0.75% of the total Revenue from Operations earned by the assessee and expenditure transactions with AE constitute only 0.62% of total expenses incurred. Hence, to apply TNMM on an overall basis at the entity level is against the basic canons of transfer pricing law. Assessee had already furnished to the TPO that the net operating margin analysis of the AE and non-AE segment in the TP documentation. As can be seen from therein, the net operating margins of the AE segment is 20.20%. The assessee requested the TPO to consider this instead of looking at the overall margins of the company which includes negligible transactions with AEs. The assessee had furnished the net operating margin analysis of the AE and non-AE segment of the TP documentation. As can be seen from therein, the net operating margins of the AE segment is 20.20%. There was no reason for the TPO to look at the overall margins of the company which includes substantial transactions with non-AEs and to make a transfer pricing adjustment with reference to the total costs incurred / revenue earned by the Company, which includes considerable expenses and sales with non-AEs. This is factually wrong. It may also be noted that the AO has not assigned any reasons for ignoring the margin analysis and allocation of expenses of AE and non-AE segment furnished by the appellant. AO has also not stated as to why he had redone the margin analysis by allocating all expenses on turnover basis rather than accept the basis of allocation followed by the assessee. We allow ground raised by the assessee and direct the AO/TPO to consider the margin analysis as provided by the assessee relating to AE segment alone. Interest on delayed receivables - TPO held that delay in realizing the receivables from the AE is one form of shifting profits from India and was an international transaction and ALP has to be computed for such delay in realization of receivables from the AO - HELD THAT:- The computation has to be made on the net amount i.e, excess of receivables over payables. We hold and direct accordingly. We are also of the view that the adoption of SBI short term deposit rates as done by the revenue has not been approved in several decisions of the ITAT and it is only the LIBOR rate that has to be applied. In addition to the LIBOR rate, based on the credit rating appropriate percentage points towards credit risk alone can be added. The TPO should re-compute interest on delayed receivables based on the correct parameters for average collection period and rate of interest as give above. The issue is accordingly set aside to TPO/AO. Disallowance of belated remittance of ESI / PF - AO following the total income computed by CPC determined the total income in the order passed u/s.143(3) of the Act - HELD THAT:- As it is not disputed that as per the decision rendered in the case of CHECKMATE SERVICES PVT LTD [ 2022 (10) TMI 617 - SUPREME COURT ] decided the issue on allowability/treatment of delayed Employee PF Contribution payment in hands of assessee under provisions of Income Tax Act and held that Section 36(1)(va) and Section 43B(b) operate on totally different equilibriums and have different parameters for due dates, i.e., employee's contribution is linked to payment before the due dates specified in the respective Acts and employer's contribution is linked to the payment before the prescribed due date for filing of return u/s. 139(1) of Income Tax Act, 1961.The result of any failure to pay within the prescribed dates also leads to different results. In the case of employee's contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer's claim for deduction permanently forever u/s.36(1)(va). On the other hand, delay in payment of employer's contribution is visited with deferment of deduction on payment basis u/s.43B and is therefore not lost totally. Therefore, as per the above decision, the disallowance made by the Revenue authorities, were fully justified - Decided against assessee. 2023 (4) TMI 519 Disallowance of Provision for foreseeable loss - Claim was made as per Accounting Standard 7 relating to Construction Contracts - AO held it to be a contingent liability and accordingly disallowed the claim - CIT(A) also confirmed the disallowance - HELD THAT:- When the onshore supply portion of the revenue in the contract was fixed at Rs.44.56 crores, the assessee would have estimated the cost lesser than the above said revenue. However, the cost has been claimed to have been escalated to Rs.110.39 crores within a period of 18 months, which is almost 300%. The claim that the cost has escalated by 300% within a period of eighteen months is unheard and accordingly, shall raise doubt in the minds of any prudent person, though it may be probable also. Accordingly, it is the obligation of the assessee to explain before the AO as to how the cost has escalated by 300% from the original estimate. The burden of the assessee is further increased on the reason that the contract has been obtained by the assessee from its promoter, a related concern. As noticed earlier, there was no occasion for the AO to examine these factual aspects, as he had disallowed the claim holding it as contingent liability. This issue needs to be restored to the file of AO for examining the computation of the loss claimed by the assessee. Accordingly, we restore this issue to the file of the AO with the direction to examine the claim of the assessee by calling for the relevant details. Appeal filed by the assessee is treated as allowed for statistical purposes. 2023 (4) TMI 518 Bogus subcontract expenses - assessee failed to prove the genuineness of the subcontract expenses with supporting material - HELD THAT:- Assessment order itself shows that the assessee furnished the Information called for. AO, however, recorded that there is a gap in the confirmations given by the sub-contractors. Grievance of the assessee is that the AO is influenced by the concession made by the learned AR in causing the verification of the material and calling for further information if any, required. Having regard to the totality of facts and circumstances of the case, we are of the considered opinion that it would be in the interest of justice, to direct the AO to consider the claim of the assessee with reference to the material on record and also the material if any, filed by the assessee. Writing off of the work in progress - Assessee is now claiming the written off expenses which were already debited to the work in progress account without first offering such amount as an income and without any proof of incurring the expenses that were debited to the work in progress account in the earlier assessment years and without any proof of claim of such RA bills and the reasons for their rejection by the client. It is therefore now relevant to consider whether the expenses that were debited to the work in progress account were for the business of the assessee in executing the contract, and that the same were not passed for the reasons other than being bogus expenses. We, therefore, direct AO to examine the contract document with reference to the work in respect of which the expenses debited to the work in progress in the earlier assessment years and to examine the reasons for the client not certifying the same. If the assessee incurred the expenses for the purpose of business in executing the relevant contract and those were not certified by the client giving rise to the assessee to write it off, then the learned AO may take a view according to law. Appeal of the assessee is treated as allowed for statistical purpose 2023 (4) TMI 517 TP Adjustment - financial adjustments undertaken to eliminate material differences in respect of capacity utilization adjustment and working capital adjustment - As contended that comparables were operating at a much higher capacity per year than what the assessee operated at, during its first year of operation - HELD THAT:- We agree with the contention of assessee to permit making adjustment in respect of capacity utilization and working capital levels vis- -vis the comparables based on the methodology adopted by it. Since the grounds taken by the assessee on the selection of comparables by the Ld. TPO is not pressed upon in the instant appeal and the categorical finding of the Ld. CIT(A) on the same holding the selection of comparables by TPO as undisturbed, we find it proper to direct the Ld. TPO/AO to consider the claim of adjustment in respect of capacity utilization and working capital levels so as to allow adjustment to the profit margin on comparables selected by him (TPO/AO), after affording the assessee reasonable opportunity of being heard. In a situation where the data about comparable companies is not available for the purpose of allowing adjustments towards capacity utilization and working capital levels, the only way to get the data in a current case would be by Ld. TPO collecting the same from the comparable companies so selected by him by exercising his powers u/s 133(6) of the Act. We direct the Ld. TPO to exercise powers u/s. 133(6) of the Act to call for information on capacity utilization and working capital levels of the selected comparable companies in those cases whose data is not available in public domain. After obtaining the information, the assessee be given an opportunity to put up its case by sharing details so obtained and accordingly grant the adjustment for capacity utilization and working capital levels. We thus, remit the matter back to the file of Ld. TPO/AO in terms of our above directions and thus the appeal of the assessee is partly allowed for statistical purposes. 2023 (4) TMI 498 Assessment u/s 153A - Search and seizure was conducted u/s 132 at the premises of the assessee - addition was being made on the basis of uncorroborated rough noting in a diary - presumption u/s 292C of the act for the purpose of assessing the undisclosed income - Credibility of rough blank figure/jotting in a diary - addition on account of unexplained expenditure on renovation of in cash u/s 69C on the renovation of her house - HELD THAT:- In the present case, the cheques amounts written in the alleged diary have been validated from the bank account statement and such Confirmation of cheque payments supports the fact that these relates to renovation/construction of the house. CIT(A) ought to have brought on record corroborative documentary evidence on record to interpret or decode the alleged notings/jotting as multiple of 100. Meaning thereby, the interpretation of the noting of entries/jotting in the diary by multiple of 100 has no basis therein and such an interpretation made on the basis of assumption, presumption and conjectures in absence of supporting corroborative evidence such application of money for alleged expenditure, renovation/construction material bills, payment of labor or even Department Valuation Officer report in order to estimate the expenditure is not tenable and cannot be approved. Addition was being made on the basis of uncorroborated rough noting in a diary. CIT(A) has deciphered the figures by decoding in the form of Indian style and international style at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for such assumption of the decoded figures to multiple of 00 (stands 100) is not justified. AO had made no enquiry regarding the alleged disputed expenditure based on rough blank figure/jotting in a diary that what are the renovation/construction material bills, payment of labor or even not referred Department Valuation Officer s report in order to estimate the expenditure on the said rough noting of the paper of diary which does not fall within the definition of books of account or document. If, a rough diary paper seized without being corroborated with relevant documentary evidence to the effect to understatement the alleged renovation expenditure on the house, then it had no evidentiary value and it would not disprove the claim of the appellant that the jottings in the diary were actual figure of renovation expenditure on her house, According, same cannot form the basis for presumption u/s 292C of the act for the purpose of assessing the undisclosed income of the appellant assessee. Thus, without substantiating the content of the noting in the diary, the value adopted by way of decoding by the authorities below based on assumption, presumption and guess work is illegal and against the law. Since, the diary jottings have not been corroborated from any relevant material documentary evidence and hence, the jottings in the diary by no stretch of imagination can be accepted as an evidence or conclusive proof of renovation expenditure in multiple of 00/100 by the assessee for the purpose of presumption u/s 292C of the Act against the assessee. Assessee appeal allowed. Customs 2023 (4) TMI 516 Release of warehoused goods seized by the DRI - Validity of amount collected in the name of rent, insurance and GST charges which are not payable by the appellant - whether this right of CWC to demand and collect rent from the date on which the goods were warehoused stands extinguished in its entirety after the amendment? - HELD THAT:- Statutorily CWC was entitled to demand and collect rent. Having steered clear of this aspect, we once again need to examine the facts of the appellant s case. The order of adjudication dated 05.01.2018 imposing fine, duty and penalty was unconditionally accepted by the appellant. The corollary being that the appellant is guilty of having illegally diverted the goods in the local market without utilizing the goods imported under advance license for manufacture of product for export. The question would be whether such a person who has been found guilty of violating the terms and conditions of the advance license can seek for waiver or complete waiver of the warehousing charges. The appellant having accepted the order-in-original holding him guilty of violation of the terms and conditions of the advance license and the provisions of the Act and the goods having detained and kept in the custody of the warehouse from 2002, a vested right accrues in favour of CWC to recover the rent payable to them and therefore the demand made on the appellant by CWC, atleast up to the date when the provision was amended is valid and proper and the said amount already paid by the appellant need not be returned or refunded to the appellant. Appeal dismissed. 2023 (4) TMI 515 Violation of principles of natural justice - cross-examination of petitioner was not allowed - attempts made by the respondents by sending notices through post - notice came back as unserved - HELD THAT:- Attempt made by the respondent is not very clear and is cloudy in the facts and circumstances of the case particularly in the case of Santanu Dutta as to how a postal endorsement on two earlier occasions when came as left and then in the third attempt it could come with postal endorsement refused . When on earlier two occasions the persons have left then who has refused the third attempt. So far as case of Ambarmoni Dutta is concerned, the department could not show any other document except the endorsement made by the Postal Department peon as deceased . To verify the actual truth about as to whether both witnesses namely, Ambarmoni Dutta and Santanu Dutta are at all existing at their registered place or left or whatever may be, can be confirmed by directing the respondent Customs Authority to send a copy of this order to both at their addresses with acknowledgement due, within a week from date and the officer concerned shall depute an inspector from the department at the addresses of those witnesses for physical verification. List this matter on 8th May, when the respondent Customs Authority shall file the document relating to postal services as well as physical verification before this Court. 2023 (4) TMI 514 Exemption from duty - import of helicopters - Actual user condition - To be used for non-scheduled air transport (passenger) service - Compliance of Condition No.104 of the Exemption Notification No.21/202-Cus dated 01.03.2002 as amended by Notification No.61/07-Cus dated 03.05.2007 - Confiscation alongwith interest and penalty - whether the respondent had violated the Condition No.104 of the Exemption Notification? - HELD THAT:- It is relevant to note that neither ground has been raised in the present appeal nor any specific question is projected regarding the Tribunal s finding that the Adjudicating Authority had travelled beyond the scope of the show cause notice. The demands raised in respect of helicopters having Registration Nos.VT-AZU and VT-AZV was on the basis that the respondent had transferred the NSOP to its group company. The Tribunal found that there was no such allegation in the show cause notice and the order passed by the Adjudicating Authority was liable to be set aside. There is no challenge to the said conclusion in this appeal. In the present case, there is no dispute that the respondent had used the helicopters for air transport services as defined in sub-rule (9) of Rule 3 of the Aircraft Rules, 1937 (Aircraft Rules). Thus, the condition that the helicopters were used for non-scheduled (passenger) services/ non-scheduled (charter) services was satisfied - It is clear from a plain reading of Condition No.104 of the Exemption Notification that the exemption from custom duties would be available in respect of an aircraft used for providing non-scheduled (passenger) services or non-scheduled (charter) services. Accordingly, if the aircraft is used for either of the aforesaid purposes, the Condition No.104 of the Exemption Notification would be satisfied. In East India Hotels Ltd. [ 2023 (2) TMI 47 - DELHI HIGH COURT ], this Court had noted that the term air transport service is defined in wide terms and would cover transport by air of humans, animals, mails or any other thing, animate or inanimate. However, for a service to fall within the meaning of air transport service as defined in Rule 3(9) of the Aircraft Rules, it is essential that the same is provided for some kind of remuneration. Although, the requirements of Condition No.104 of the Exemption Notification are unambiguous but the explanation inserted by way of amendment of Condition No.104 of the Exemption Notification amply clarifies that the exemption condition would be satisfied if the aircraft imported is used for non-scheduled (passenger) services or non-scheduled (charter) services. The impugned order, to the extent that it holds that Customs Authorities can take action on the basis of the undertaking submitted by the importer only when the DGCA holds that the conditions of the permit issued by them have been violated, is set aside - Appeal allowed in part. 2023 (4) TMI 513 Revocation of the Customs Broker license - forfeiture of the whole of the security deposit - levy of penalty - fraudulent of ineligible IGST refund - drawback and reward by using bogus GST registration issuing bogus GST invoices (where no GST duty has been paid to exchequer) - HELD THAT:- The relevant Regulation of CBLR 2018 has already been reproduced above. As per Regulation 10(d), the Customs Broker is required to advice the client to comply with the provisions of the Act and bring to the notice of the department in case of non-compliance. Regulation 10(e) requires that the Customs Broker has to exercise due diligence to ascertain the correctness of information provided by the client to him. Regulation 10(n) casts an obligation on the Customs Broker to verify the correctness of IE Code, GST Registration etc., identify of the client and functioning of client at the declared address by using reliable independent authentic document, data or information. In the present case, it is brought out from evidence that the exporter had a valid IE Code, GST registration, PAN card and bank details. It is submitted by learned counsel for appellant that the Customs Broker had done the KYC verification of the exporter namely J. Tex India by checking the details of GSTIN, IE Code. The department issues GSTIN number only after background checking of the exporter. The address and business details of the person who has applied for the GST registration is verified by the department. When the said registration is still operative as per the website, the Customs Broker cannot be found fault if he has relied upon such data available on the Government website. There is no evidence brought out that there is any overt involvement of the Customs Broker in the fraud committed by the exporter. There is no basis to allege that the appellant has violated the relevant Regulations of CBLR, 2018. The department has failed to establish with cogent evidence that there are grounds for revoking the license of the appellant. The impugned order is therefore set aside - Appeal allowed. 2023 (4) TMI 512 Classification of imported goods - modified Tapioca Starch, Industrial Grade - classificable under Chapter Heading 35051090 or under Tariff Heading 1108? - rejection of value and its re-determination of the duty - retraction of statements - willful mis-statement of facts or not - extended period of limitation - HELD THAT:- The differential duty worked out in this case has the effect of changing both the classification and the valuation. However, there is no proposal whatsoever in the SCN to change the classification and the impugned order and the order-in-original also do not indicate any proposak to change the classification of the goods. Therefore, the change of classification cannot be sustained. As far as the valuation is concerned, the entire proposal of the Revenue is on two legs. The first is the appellant admitted in his statement that there was a difference between modified Tapioca Starch and Tapioca Starch and that he had imported Tapioca Starch in the disputed consignments. The TTSA prices during the relevant period were much higher. Based on these two facts, the assumption of the Revenue is that the prices were mis-declared by the appellant with an intent to evade duty and, therefore, the declared prices can be rejected retrospectively and a demand under Section 28 (4) can be issued because there was a willful mis-statement by the appellant. After examining the statements and the evidence available on record, we do not find any substantial evidence to reject the declared value. The only thing which goes in favour of Revenue is that the Managing Director of the appellant had given statements which, he retracted later. If the statements and the retraction are both considered, nothing survives in this demand. If neither is considered also, nothing survives. Appeal allowed. 2023 (4) TMI 511 Refund of SAD - it is alleged that appellant have not passed of the burden of 4% SAD to their customers - fulfilment of all the conditions for grant of refund under Notification No. 102/2007-Cus or not - HELD THAT:- The part of the refund claim of Rs. 1,45,754.45 have been rejected on surmises relying on the communication dated 22.03.2016 of the DRI, Jaipur. This document is not made RUD in the show cause notice. Thus, the said communication has got no evidentiary value. Further the appellant have led sufficient evidence that they have sold the machines imported under the eight bills of entry, in respect of which, the present refund claim was filed, totalling Rs. 14,35,763.80 - further it is found that none of the evidence led by the appellant before the court below, have been found to be incorrect. The rejection of the part refund claim of Rs. 1,45,754.45 is set aside - the Adjudicating Authority are directed to grant the refund of this amount within a period of 45 days alongwith interest as per rules - appeal allowed. 2023 (4) TMI 510 Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - mis-declaration of the goods - statements made with corroborative evidences or not - violation of provisions of Rules 10(a), 10(d), 10(e), 10(f) and 13(12) of the CBLR, 2018 - HELD THAT:- The Bills of Entry were filed in the name of the Appellant with the digital signature of the Authorized Representative of the Appellant, who is a G card holder. The role of Shri Jyotirmoy Biswas in filing of the Bills of Entry is not supported by any documentary evidence except the statements. Mere statements without any corroborative evidence cannot be conclusive proof to establish the alleged role of Shri Jyotirmoy Biswas in the mis-declaration. The Appellant is responsible for the works done by his employee Sh Prabir Majhi in filing the Bills of Entry. As discussed earlier, the Bills of Entry were filed as per the description available in the documents given by the Importer. If there is any misdeclaration in the documents submitted by the Importer, then they are solely responsible for the misdeclaration. To establish the complacency of the Customs Broker, it must be proved that the Customs Broker had prior knowledge about the mis-declared description, before filing the Bills of entry. There is no evidence brought on record to show that the Customs Broker was aware of the misdeclaration. The misdeclaration came to light only after proper investigation by DRI. If there is a mischief done by Sh Jyitirmoy Biswas, he can be penalized for his mischief. Since, he is not an employee of the Customs Broker, the Appellant cannot be held responsible for the misdeclaration if any, on the part of Sh. Jyotirmoy Biswas or the Importer. Thus, the allegation in the Notice that the Appellant failed to exercise proper control over his employees, is not proved and hence the allegation in the Notice about the contravention of Rule 13 ( 12) by the Customs Broker is not sustainable. The revocation of license and forfeiture of Security Deposit, as per the Order dated 08.12.21 passed by the Ld. Principal Commissioner, as not sustainable - Appeal allowed. 2023 (4) TMI 509 Absolute Confiscation of prohibited goods - areca nuts - redemption for re-export on payment of redemption fine of Rs. 2.5 lakhs being beyond the jurisdiction - rejection of transaction value - restoration of penalty under section 112 of the Customs Act, 1962 and also penalty under section 114AA of the Customs Act, 1962 - HELD THAT:- If the declared transaction value is rejected, valuation of the imported goods, (i.e., determining the value to calculate the duty payable) is to be done as per Valuation Rules 4 to 9 based on value of identical goods or value of similar goods, etc. Thus, while the proper officer can reject the transaction value and assess duty based on some other value determined as per the Valuation Rules, the transaction value- be it CIF, C F, FOB- cannot be changed by him. It is the consideration to be paid by the buyer to the seller for the goods as per the contract (either explicit or implicit) between them. When goods are imported, the transaction value is the consideration paid or to be paid by the importer to the exporter for the goods supplied. Thus, the rights and liabilities of the two parties are decided by the transaction value. An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate - Rule 12 of the Valuation Rules gives the officer the power to reject the transaction value but not to change it. The officer can reject the transaction value and determine the assessable value of the goods under the Customs Act as per the Valuation Rules but he cannot change the transaction value. So far as the prohibition under the notification issued by the DGFT is concerned, it is based on the CIF value, i.e., the transaction value including the cost, freight and transit insurance. It is not based on the assessable value under the Customs Act. Therefore, so long as the CIF value is as per the DGFT Notification, import of the goods is not prohibited. Therefore, the areca nuts which were imported were not prohibited because the CIF value was not below the threshold. Confiscation of the LLDPE granules - HELD THAT:- The confiscation was correctly set aside by the Commissioner (Appeals). As far as the areca nuts are concerned, although their confiscation was not challenged, in view of the assertion of the Revenue that they were prohibited goods (and hence should not have been allowed to be redeemed on payment of fine), it is examined and held that they were not prohibited goods. Therefore, section 112(i) does not apply. There is nothing on record to show that any duty was sought to be evaded by the appellant on the areca nuts. Therefore, section 112(ii) also does not appear to apply. There are no reason to interfere with the impugned order of the Commissioner (Appeals) reducing the penalty under section 112 to Rs. 2.5 lakhs - appeal of Revenue rejected. Insolvency & Bankruptcy 2023 (4) TMI 508 Seeking to allow to add the escalation clause in the Resolution plan - seeking remittance of Resolution Plan of the Appellants to the CoC so that the escalation clause may also be added to the Resolution Plan - Approval of Resolution Plan pending - HELD THAT:- As per office report, notice has been delivered to Respondent No.2 and 3 but no one appears on behalf of R3. Shri Amar Vivek is appearing on behalf of the R2 and supported the proposal submitted by the Appellant. In view of the peculiar facts and circumstances of the present case, much less the fact that the escalation has been accepted by the homebuyers, the appeal is allowed and the matter is remanded back to the Adjudicating Authority to take a fresh decision as early as possible but not later than one month from the date of appearance of the parties before it - Appeal allowed by way of remand. 2023 (4) TMI 507 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - loan facility granted to one of subsidiary of ILFS Group - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Adjudicating Authority after noticing the submissions of the parties has also relied on letters issued by ITNL which has issued an awareness letter to loan given by MP Border i.e. subsidiary of the ILFS dated 29th March, 2018 and further has referred to another Letter dated 07th October, 2022 which was sent to the Corporate Debtor by IFLS Transportation Networks Limited. The Financial Facility extended by Corporate Debtor was to one of the subsidiary of the ILFS and it is not far to seek that since under RBI Directives ILFS could not directly lend the amount to its subsidiary the said mechanism was adopted which has been found so by the Adjudicating Authority. The Adjudicating Authority in the facts of the present case has rightly exercised its discretion in not admitting Section 7 Application. It is also to be noticed that under the order passed by this Tribunal in Order dated 15.10.2018, the actions against ILFS was prohibited - there are no error in the Order impugned - appeal dismissed. Service Tax 2023 (4) TMI 506 Valuation - considerations received were inclusive of service tax or not - Failure to produce any supportive evidence to the effect that the gross amounts received for its services were inclusive of service tax - HELD THAT:- Learned counsel for the appellant submits that sufficient documentary evidence fortifying its plea(s) was produced before the Commissioner (Appeals) as well as the Adjudicating authority and given an opportunity, the appellant is ready and willing to produce such evidence for Tribunal s consideration as well. Learned counsel for the respondent-revenue could not oppose this reasonable offer made on behalf of the appellant. The case is remitted to the Tribunal for fresh adjudication of the said question, after taking into consideration the relevant material/documents as may be produced by the parties - appeal allowed in part. 2023 (4) TMI 505 Levy of service tax - Business Auxiliary Service - appellant entered into an agreement with M/s Neelachal Ispat Nigam Limited (NINL) for marketing and sale of the products of NINL during the material period - HELD THAT:- It is the fact on record that the appellant is receiving commission agent at the rate of 3% of the sale value of goods sold by NINL and the Notification No.13/2003-ST dated 20.06.2003, clearly spelt that the commission agent means, a person who causes sale or purchase of goods, on behalf of another person for a consideration which is based on the quantum of such sale or purchase . As the appellant is getting his commission at the rate of 3% of the sale amount effected by that on behalf of NINL. In that circumstances, the appellant is entitled for benefit of Notification No.13/2003-ST dated 20.06.2003. The appellant is not liable to pay service tax during the period 01.07.2003 to 08.07.2004 - there are no merit in the impugned order demanding service tax amounting to Rs.62,11,908/- - no penalty is imposable on the appellant in the facts and circumstances of the case. Appeal allowed. 2023 (4) TMI 504 Non-sanction of interest on delayed refund - rate of interest - HELD THAT:- This issue has been considered by the Tribunal in various cases and it has been consistently held that the assessee is entitled to claim interest from the date of deposit till the date of payment at the rate of 12% - Further, this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, PANCHKULA VERSUS M/S RIBA TEXTILES LIMITED [ 2022 (3) TMI 693 - PUNJAB HARYANA HIGH COURT] after considering the various decisions held that the assessee is entitled to claim interest from the date of payment of initial amount till the date of its refund and granted the interest at the rate of 12% per annum. The arguments of the Revenue that M/S PARLE AGRO PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [ 2017 (2) TMI 984 - CESTAT ALLAHABAD] has been challenged before the Hon‟ble Allahabad High Court and the appeal has been admitted will not help the Revenue in any way as no stay has been granted against the said decision. Further, the main thrust of the argument of the Ld. DR that in the present case the duty has been deposited voluntarily and not under protest also does not have any force because consistently it has been held that any amount that is deposited during pendency of the adjudication proceedings or investigation is in the nature of deposit made under protest as held by the Madras High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE, COIMBATORE VERSUS M/S. PRICOL LTD., THE CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL [ 2015 (3) TMI 735 - MADRAS HIGH COURT] , COMMISSIONER, CENTRAL EXCISE 7-A, ASHOK MARG, LUCKNOW VERSUS M/S EVEREADY INDUSTRIES INDIA LTD. [ 2017 (2) TMI 197 - ALLAHABAD HIGH COURT] . Appeal allowed. Central Excise 2023 (4) TMI 503 Refund claim - tanker hire charges were classified as freight charges or not - Sabka Vishwas (Legacy Disputes Resolution) Scheme 2019 - HELD THAT:- Refund by the third respondent to the writ petitioner. Refund as regards the first writ petition is concerned, it will be subject to the conclusion the first respondent arrives at, on considering and processing the writ petitioner's application under said Scheme. Captioned four writ petitions are disposed of with a simple directive to the first respondent to consider, process and conclude the writ petitioners' applications under said Scheme as expeditiously as the business of the first respondent would permit and in any event, within four weeks from today i.e., by 19.01.2022. Conclusion shall be duly communicated to the writ petitioners under due acknowledgement within seven working days from the date of disposal of writ petitioners' applications under said Scheme. Consequently, captioned W.M.P.No.32692 of 2022 is disposed of as closed. 2023 (4) TMI 502 Valuation - inclusion of value of drawing/design provided to the appellant for fabrication of steel structure by their customers in the transaction value or not - Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000 - HELD THAT:- Firstly it is found that adoption of 10% towards value of design/drawing had already been rejected by the Tribunal in its earlier final order - Secondly, Revenue itself had accepted 0.025% towards value of drawings and designs, under same facts and circumstances, for the subsequent period vide the order-in-original dated 28th Feb., 2019, which has attained finality. Accordingly, this appeal is allowed and the impugned order is modified to the effect that 0.025% shall be considered on the value of the goods towards drawing and design charges for the purpose of valuation in terms of Rule 6 of the Valuation Rules. The appellant shall be liable to pay penalty under section 11 AC of the amount of additional duty calculated as per this order. The impugned order stands modified. Appeal allowed. Indian Laws 2023 (4) TMI 501 Re-auction proceedings initiated by the first respondent - initiation of independent proceedings before the competent forum for recovery of the amount which stood forfeited by the first respondent - HELD THAT:- The auction notice, in the first instance, was published on 18th June, 2013 with the reserve price of Rs.1.19 crores and the appellant s bid of Rs.2.01 crores was the highest. The earnest money of Rs.11.19 lakhs was deposited on 22nd July, 2013 and the bid was finalized on 26th July, 2013 and 25% of the bid in terms of the auction notice of Rs.38.35 lakhs was deposited by the appellant on 27th July, 2013. This fact has not been disputed that DRT passed an interim order on 26th July, 2013 and the fact that the proceedings had been initiated and pending on the date when the auction was held and the date on which 25% of the bid amount was deposited by the appellant, i.e., 27th July, 2013, was never brought to the notice of the appellant which would give him an option to revisit as to whether he may proceed with the auction or withdraw at that stage. This fact can be further corroborated which has come on record that even when the correspondence was made by the first respondent, the only request made by the appellant throughout was that he had no difficulty to pay the balance amount provided the matter is finally decided by DRT. Obviously, as a man of ordinary prudence, one is always supposed to assess the value of the property on which the auction was held by the secured creditor (first respondent) - once there is no dispute on the facts came on record, there appears no reason for the appellant to be relegated to avail other remedial mechanisms for recovery of the indisputed amount and the Division Bench has committed a manifest error in the facts and circumstances in not exercising its power under Article 226 of the Constitution and instead of resolving the dispute, the Division Bench under the impugned judgment has kept the issue alive, permitting the parties to have a second innings in reference to the dispute which stands crystalized/settled. The first respondent is directed to return the money of Rs.50.25 lakhs to the appellant deposited in reference to the auction notice dated 18th June, 2013 within a period of two months failing which it shall carry interest @ 12% per annum until the date it is made over to the appellant - Appeal allowed. 2023 (4) TMI 500 Dishonour of Cheque - funds insufficient - infusion of share capital for augmenting the working capital to sustain the operations - Invocation of inherent powers of this Court under Article 226 of the Constitution of India, read with Section 482 of the Code of Criminal Procedure - impleadment of Directors or persons of an accused Company, on the basis of the statement that, they are incharge of and responsible for the conduct of the business of the company, without anything more, does not fulfill the requirement of Section 141 of the N.I. Act - HELD THAT:- It is clear that, despite his resignation from the company, as a Director, the applicant herein came into contact with the complainant and others and being an authorized power of attorney holder of the promoters, entered into two agreements and accordingly, parties have acted upon as per the terms and conditions of the understanding. The accused no.2 to 6 belongs to business family and doing their business jointly. The applicant herein had signed the agreements in the capacity as POA of the promoters and authorized signatory. The copy of the income tax returns for the Assessment Year 2017-18 filed by the applicant Zafar Sareshwala would show that at the relevant time, he was serving with the accused no.1- company as a Chief Operating Officer (Sales Marketing). It is duty of the applicant to produce the copy of power of attorney, to substantiate the allegations leveled in the complaint. It is his duty to explain why he had signed two agreements as an authorized signatory. Considering his power to sign the agreement as authorized signatory and attorney of the promoters would rise reasonable inference that at the relevant time, he was representing the accused no.1 company and its promoters and was involved in day to day affairs of the company and having knowledge about the entire transaction including the return of cheque. Thus, this Court is of prima-facie opinion that, the averments in the complaint are sufficient for the purpose of summoning the applicant herein and the trial Court has rightly issued summons. The criminal complaint pending before the trial Court is at the stage of completion as the matter is at the stage of recording further statement of the accused-applicant. In light of the settled principle of law and applying it to the facts of the present case, this Court is of considered opinion that, the averments made in the complaint are sufficient to summon the applicant herein and at this stage, it cannot be said that, prima-facie, no offence is made out against the applicant. This Court, therefore, find no merits in the applications - Hence, all the applications stand dismissed. 2023 (4) TMI 499 Dishonour of Cheque - validity of notice issued - complaint has been rejected by the learned Trial Court is that the notice issued after the cheque was returned back as dishonoured, was no notice as contemplated under the provisions of Negotiable Instruments Act, as no demand of money was made therein - HELD THAT:- It is not in dispute that the cheque in issue is dated 14.09.2004. The same was drawn upon H.P. State Cooperative Bank, branch Beri, District Bilaspur, H.P. This cheque though was presented by the appellant with her bank on 07.03.2005, yet the same was received by the payee bank, i.e. H.P. State Cooperative Bank, branch Beri, District Bilaspur, H.P. on 15.03.2005, i.e. after six months from the date of issuance of the cheque which lapsed on 13.03.2004. Hon ble Supreme Court in SHRI ISHAR ALLOY STEELS LTD. VERSUS JAYASWALS NECO LIMITED [ 2001 (2) TMI 984 - SUPREME COURT] , has been pleased to hold that the law mandates a cheque to be presented at the bank on which it is drawn if the drawer is to be held criminally liable necessarily within six months as from the date of its issuance (this judgment relates to the period when the validity of cheque used to be for a period of six months) - in the said judgement, this Court observes that there is no infirmity in the findings returned by learned Trial Court that the cheque in issue in fact was presented before the payee bank after the cheque had expired as it is an admitted fact that the cheque was presented with the payee bank, may be by the bank of present appellant, after a period of six months as from the date of issuance of the cheque. Hon ble Supreme Court in KR. INDIRA VERSUS DR. G. ADINARAYANA [ 2003 (10) TMI 385 - SUPREME COURT] , has been pleased to hold that though no formal notice is prescribed in Section 138 of the Negotiable Instruments, the statutory provisions indicate in unmistakable terms as to what should be clearly indicated in the notice and what manner of demand it should make. Hon ble Supreme Court was further held that what is necessary is making of a demand for the amount covered by the bounced cheque. Coming back to the facts of the present case, as in the notice which was issued after the bouncing of the cheque, there was no demand of the amount of the bounced cheque, in this background, the findings returned by learned Trial Court that the notice was no notice in the eyes of law, as is envisaged under the provisions of the Negotiable Instruments Act, were also correct findings. This Court does not finds any merit in the present appeal, the same is dismissed.
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