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TMI Tax Updates - e-Newsletter April 18, 2022 Case Laws in this Newsletter: GST Income Tax Securities / SEBI Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Highlights / Catch Notes GST: Refund of IGST - Restoration / Re-credit to the ITC ledger - payment of IGST on exports, and thereafter claimed refund of such IGST on exports - It cannot be that for the purpose of repayment, there was an error, and for the purpose of restoration of the ITC, there was no error. There is no question of any refund of the ITC at all. The question is one of restoration of the ITC in the electronic credit ledger and not a refund thereof. Hence, any reference to sub-rule (10) of rule 96 of the CGST Rules is completely misconceived and not tenable - the respondent authorities are directed to re-credit/restore the ITC in the electronic tax ledger of the writ- applicant. - HC Visit to Get Source GST: Revocation of cancellation of registration of applicant - non-filing of returns - Since the registration of certificate of the writ-applicants came to be cancelled solely on the ground of non-filing of the returns, which was on account of non-payment of tax and the writ-applicants now having paid such outstanding tax, the registration certificate of the writ-applicants should be ordered to be restored so that they are able to continue with their business. - HC Visit to Get Source GST: Seeking condonation of delay of 1310 days in filing the accompanying appeal - it is common knowledge, of which we take judicial notice, that since January 2017, the orders of the Tribunal are uploaded, and, hence, available on its website. The appellant, thus, cannot take refuge of lack of knowledge or, at least, means to acquire knowledge, concerning the impugned order passed by the Tribunal. - HC Visit to Get Source GST: Validity of Show cause notice issued u/s 74 - Erroneous Refund - Section 74(1) of the OGST Act does not appear to make any distinction between those refund orders that have been passed without an adjudication and those have been passed after an adjudication. Also, there is nothing in Section 74 (1) of the OGST act to indicate that an order of refund granted after an adjudication cannot be sought to be reopened thereunder. - It would be open to the Petitioner to raise all such other contentions in its reply to the SCN which will then be examined and disposed of in accordance with law by the Department. - HC Visit to Get Source GST: Refund alongwith the interest - generation of e-way bill in the name of petitioner was a bona fide mistake or not - Apparently, courier receipt/invoice and eway bill, pertains to same transaction but the generation of e-way bill is in incorrect name. The mistake appears to be bona fide inasmuch as the detail of vehicle, dispatch date is same. The case in hand appears to be a case where e-way bill was generated wrongly in the name of petitioner on account of some clerical or typographical error, therefore, the impugned orders are quashed. - HC Visit to Get Source Income Tax: Revision u/s 264 - Refund of excess tax paid - Admittedly, petitioner has paid more capital gains than what should have been paid. Capital gains has to be calculated on the basis of what actual consideration has been received. Certainly, petitioner has not received his proportionate share to the extent from ₹ 9,17,04,240/- that was reduced from the escrow account.In the circumstances we hold that petitioner be entitled to refund of excess tax paid on the excess capital gains shown earlier. - HC Visit to Get Source Income Tax: Dis-allowance u/s.80IB(10) - assessee had failed to file his return of income within the stipulated time u/s 139(1) - the finding recorded by the tribunal as above is that in view of the provisions of Section-92E, the assessee was required to get the transfer pricing report in the Form 3CEB. In such circumstances, the assessee had the benefit of the extended period of the due date for filing of the return. - HC Visit to Get Source Income Tax: Revision u/s 263 - Reopening of assessment initiated against assessee - Since in the instant case the AO has conducted due enquiry and after being satisfied, accepted the returned income and passed the order under section 143(3)/147 therefore, the order cannot be called as an erroneous order. Therefore, even if the order is prejudicial to the interests of Revenue, but, the same not being erroneous, the twin conditions are not satisfied - AT Visit to Get Source Income Tax: Reopening of assessment u/s 147 - It is well established that the reasons recorded by the AO cannot be further be substituted or added or deleted - We are of the view that the reference to market value of the flat as determined by stamp duty valuation authority also cannot justify initiation of reassessment proceedings under section 147 of the Act, as the validity of reassessment has to be tested only on the basis of reasons recorded by the Assessing Officer before issuing notice under section 148 of the Act and those reasons cannot be further improved. - AT Visit to Get Source Income Tax: Validity of Reopening of assessment u/s 147 - eligibility of reasons to believe - initiation of reassessment proceedings u/s.147 of the Act, issuance of notice u/s.147 of the Act, impugned reassessment order as well as first appellate order are hit by second limb of first proviso to section 147 of the Act, therefore, on this count entire action of the AO including impugned reassessment order and first appellate order deserves to be quashed. - AT Visit to Get Source Income Tax: Revision u/s 263 by CIT - set off of the brought forward "non-speculative business loss" against the "profit of speculative business" - provisions of section 72 and 73, which fall under the Chapter VI - assessee was justified in claiming set off of the brought forward "non-speculative business loss" against the "profit of speculative business" and the Ld. AO has allowed the same, which is very much in accordance with the provisions of the Act. - AT Visit to Get Source Service Tax: Seeking condonation of delay of 1310 days in filing the accompanying appeal - it is common knowledge, of which we take judicial notice, that since January 2017, the orders of the Tribunal are uploaded, and, hence, available on its website. The appellant, thus, cannot take refuge of lack of knowledge or, at least, means to acquire knowledge, concerning the impugned order passed by the Tribunal. - HC Visit to Get Source Service Tax: Levy of Service Tax - income disclosed under Income Disclosure Scheme (IDS), 2016 - In the present matter Appellant also produced the details of payment received after obtaining Business use (BU) i.e. sales of flats, shop etc. after receipt of the completion certificate. Therefore it cannot be said that the income declared by the Appellant under IDS Scheme is attributable to the taxable service provided by them to their clients. In this case, evidence gathered by the Department is not sufficient to establish even the preponderance of probability. Therefore, the demand on the ground that the income declared under IDS scheme is earned from the taxable service is not sustainable. - AT Visit to Get Source Service Tax: Levy of service tax - interest free deposit amount collected by the Appellant from the demat account holders under the Scheme - appellant has not collected AMC charges - department could not bring on record any clinching evidence that the deposit has influenced the service charges, the demand is not sustainable. - AT Visit to Get Source Central Excise: Valuation - intent to evade payment of duty - The Tribunal has furnished adequate reasons to justify the perception that the appellant herein had intended to evade payment of duty. The initial order had merely waived the penalty without indicating any reason. Since appropriate reasons relevant to the issue have been indicated in the order impugned upon due considerations being taken into account, the order in appeal does not call for any interference. - HC Visit to Get Source Central Excise: Violation of the principles of natural justice - Validity of SCN - this Court is of the considered view that, the case projected by the petitioner as if that the documents mainly relied upon by the Revenue, though had been sought for, have not been supplied to the petitioner is not factually correct and it is the case where most of the documents have been supplied to the petitioner and even with regard to the invoices sought for by the petitioner for which the Revenue has given a reply that the numbers of the invoices has been given in the annexure and the same can very well be verified by the petitioner with their suppliers. - Petition dismissed. - HC Visit to Get Source Central Excise: CENVAT Credit - input services - Erection Commissioning and Installation Services - Works Contract Services - The service provider has classified the services under ECIS and not under Construction Service and paid service tax under the head of ECIS. The ECIS Service independently not covered under the exclusion clause therefore, for this reason also credit cannot be denied. There is a catena of case laws wherein, it was held that the classification of service cannot be disturbed or challenged at the end of service recipient particularly for denial of cenvat credit. - AT Visit to Get Source Central Excise: Denial of interest on the refund claim sanctioned to the appellant - it is seen that in ordinary course of refund arising out of finalization of provisional assessment would be decided in terms of Rule 9B however if any refund arises on account of challenge to an order passed under Sub Rule (5 )of Rule 9 B then such demand or refund would be governed by section 11 A or Section 11 B as the case may be. - In the instant case there is no finalization of Provisional assessment and there is no challenge to any such assessment, in these circumstances the refund would not be governed by provisions of Rule 9 B. - AT Visit to Get Source Articles Understanding extended limitations for instituting proceedings under any law, before any Courts, Tribunals including Supreme Court, as per orders of the Supreme Court of India dated 10.01.2022 and earlier orders in view of COVID related problems. News IBBI to launch 3rd National Online Quiz on Insolvency and Bankruptcy Code, 2016 Case Laws: GST 2022 (4) TMI 755 Scope of SCN - Section 74 of the Odisha Goods and Services Tax Act, 2017 - HELD THAT:- It is open to the petitioner to urge before the concerned authority that the show cause notice travels beyond the reasons delineated in Section 74 of the Odisha Goods and Services Tax Act, 2017. Application disposed off. 2022 (4) TMI 754 Refund of unutilized input tax credit - zero-rated supplies - exports without payment of tax - absence of entry in Annexure B stated as the sole reason for partial rejection of the refund in the impugned order - HELD THAT:- It appears that even though it was mentioned in the application for refund that it was an application pertaining to exports on payment of tax, the adjudicating authority appears to have adjudicated the application as if it was for refund of unutilized input tax credit pertaining to exports without payment of tax. This has created a situation whereby on one hand the refund has been partially rejected and on the other hand such partially rejected amount is not even being re-credited into the electronic credit ledger of the writ-applicant even though there is an order passed by the authority for re-credit of the rejected amount. It also appears from the documents on record that the order partially rejecting the refund was passed without issuing any show cause notice to the writ-applicant and is also a nonspeaking and cryptic order. The matter is remanded to the adjudicating authority for deciding afresh the refund application of the writ-applicant to the extent the refund has been rejected. The refund which has already been granted to the writ-applicant may not be disturbed - Application allowed by way of remand. 2022 (4) TMI 753 Refund of IGST - Restoration / Re-credit to the ITC ledger - payment of IGST on exports, and thereafter claimed refund of such IGST on exports - advance license for duty free importation of raw material and export goods - benefit of the Notification No.79/2017-Customs dated 13.10.17 - HELD THAT:- Under the scheme of the IGST Act, 2017, a registered person having an advance license shall be eligible for importing raw material without payment of import duty. As per Section 16(1)(a) of the IGST Act, export of goods or services or both falls within the ambit of 'zero rated supply', i.e. no IGST is applicable on exports of goods. As per Section 16(3) of the IGST Act, a registered person making 'zero rated supply' shall be eligible to claim refund - As per Rule 96(10) of the CGST Rules, a registered person importing raw-material without payment of import duty under the advance license shall not be eligible for utilizing accumulated ITC for payment of IGST on exports of goods or services. The writ-applicant is importing raw- material under the advance license without payment of the import duty. The finished goods produced using the raw-material so imported have been exported by the writ-applicant. The writ- applicant opted for the second route, i.e. payment of IGST on exports, and thereafter claimed refund of such IGST on exports instead of opting for the first route, i.e. exports under the Letter of Undertaking. However, inadvertently, the writ-applicant utilized the ITC for payment of the IGST on exports (instead of paying the IGST separately) which, in turn, was automatically refunded. In view of rule 96(10), the writ-applicant could not have utilized the ITC for payment of the IGST on exports. Upon realizing the aforesaid mistake, the writ-applicant separately paid the requisite IGST (which was refunded in past) along with the interest thereon. In so far as the erroneous grant of refund and return of such refund amount together with interest by the writ-applicant is concerned, the same is undisputed. That being the case, the first part of the transaction is nullified inasmuch as the amount erroneously refunded has already been repaid by the writ- applicant along with interest. However, once both these transactions are taken out from the equation, what survives is the reduction of the ITC originally effected from the electronic credit ledger of the writ-applicant. The respondent authorities are of the view that the writ-applicant is not entitled to such a refund of the ITC at all. According to Mr.Sharma, the learned AGP, such a refund is not permissible under sub-rule (10) of rule 96 of the CGST Rules. However, in the present case, refund as contemplated under sub-rule (10) of rule 96 of the CGST Rules is not at all an issue. It cannot be that for the purpose of repayment, there was an error, and for the purpose of restoration of the ITC, there was no error. There is no question of any refund of the ITC at all. The question is one of restoration of the ITC in the electronic credit ledger and not a refund thereof. Hence, any reference to sub-rule (10) of rule 96 of the CGST Rules is completely misconceived and not tenable - the respondent authorities are directed to re-credit/restore the ITC to the tune of ₹ 1,39,49,810/- in the electronic tax ledger of the writ- applicant. The respondent authorities are directed to restore/ re-credit the Input Tax Credit of ₹ 1,39,49,810/- in the electronic credit ledger of the writ-applicant within a period of two weeks from the date of receipt of this order - application disposed off. 2022 (4) TMI 752 Detention of goods - seeking release of Bank Guarantee - minor discrepancies in the invoice/e-way bill etc. - section 129(3) of CGST Act - Circular No.64/38/2018 dated 14- 09-2018 - HELD THAT:- A reading of the statutory Circular reveals that the purpose of issuing such a Circular was to mitigate the hardships being caused to taxpayers for minor discrepancies, which had no bearing on the liability to tax or on the nature of goods being transported. The circular is statutory in nature and is binding on the Tax Officers. Thus minor discrepancies cannot be penalized contrary to the mode and procedure contemplated under the Circular - the Circular refers to only six instances of minor discrepancies. Strictly speaking, the present situation is not covered by the six instances mentioned in the Circular. However, the analysis of the six instances reveals those discrepancies which have no bearing on tax liability and are caused on account of bonafide mistakes like typographical errors, or otherwise are regarded as minor discrepancies. In the instant case, the discrepancy pointed out is only on the date of invoice which is shown as 03.02.2021 while that shown in the e-way bill was 02.03.2021. All other details in the invoice and the e-way bill including the nature of goods transported, the details of consignor and consignee, the GSTIN of supplier and recipient, place of delivery, invoice number, value of goods, HSN code, vehicle number etc. tallied and had no discrepancy. Thus the error noticed is insignificant and not of any consequence for invoking the power conferred under section 129 of the Act to impose tax and penalty. The situation arising in the instant case, warranted imposition of only a minor penalty as contemplated under the Circular. In view of the above, the imposition of tax and penalty upon the petitioner to the extent imposed in Ext.P6 is perverse and illegal, warranting interference under Article 226 of the Constitution of India. Petition allowed. 2022 (4) TMI 751 Revocation of cancellation of registration of applicant - non-filing of returns by the writ-applicants - extension of time limitation or not - HELD THAT:- The Central Board of Indirect Taxes and Customs extended the time limit for filing application for revocation of cancellation of registration and the limitation for all the orders passed on or before 12.06.2020 was to effectively commence from 31.08.2020. As the application filed by the writ-applicants for revocation of cancellation of registration was looked into by a quasi-judicial authority, the order of the Supreme Court extending the period of limitation in view of the Covid-19 Pandemic would apply and in such circumstances, the limitation in accordance with the order passed by the Central Board of Indirect Taxes and Customs could be said to have been extended. Indisputably, the application requesting for restoration of registration was filed in July 2021 i.e. during the period when the order of the Supreme Court extending the limitation was in operation. More importantly, the writ-applicants have paid the requisite amount towards tax on the basis of self assessed liability on 06.09.2021. Since the registration of certificate of the writ-applicants came to be cancelled solely on the ground of non-filing of the returns, which was on account of non-payment of tax and the writ-applicants now having paid such outstanding tax, the registration certificate of the writ-applicants should be ordered to be restored so that they are able to continue with their business. The impugned order dated 10.07.2019 cancelling the registration certificate is hereby quashed and set aside. The respondents are directed to forthwith restore the registration certificate of the writ-applicants under the provisions of the G.S.T. Act - Application disposed off. 2022 (4) TMI 749 Detention of goods alongwith vehicle - inter-state transaction - mismatch in the place of delivery in the E-Way bill - HELD THAT:- Ms. Vaibhavi Parikh has a serious grievance to redress. She submitted that for no good reason, the goods and the conveyance were kept under detention for almost a period of 12 days and her client had to pay an amount of ₹ 65,000/- towards the demurrage charges to the transporter. The grievance of Ms. Parikh is well founded and is a matter of concern. Since the goods and the conveyance have already been released, no further adjudication of the present writ-application is required. This writ-application is accordingly disposed of. 2022 (4) TMI 748 Liability of interest based on the amount available / credited in the Electronic Cash Ledger (in excess of the previous month liabilities) as date of payment of tax instead of date of filing of the GSTR-3B returns - statutory due by way of interest can be recovered from the petitioner, or not - HELD THAT:- In the impugned demand itself what is the due date payable for the tax has been provided, i.e., 20th of next month and when actually the amount has been paid also stated. For instance, petition which relates to the Assessment Year 2020-21, for the month of July, August, September and October, the petitioner paid the tax in time, i.e., on 20th day of the next month, therefore, no interest was calculated and demanded. For the rest of the period, since there was a delay ranging from 7 days to 196 days, depending upon the delayed payment, the interest was calculated and demanded. It becomes a mandatory one that for the belated payment of the tax, the taxpayer is liable to pay the interest, the maximum percentage of the interest shall be 18% - assuming that the petitioner has made e-payment through Bank of the petitioner in the credit of the Government Account, when actually that credit has been made in respect of each of the month was the question asked, for which the learned counsel appearing for the petitioner has relied upon calculation sheet. In this regard, for instance, the Assessment Year 2020-21 is concerned, for the month of April 2020, they say that, they deposited on 27.06.2020, correspondingly in every month, there might be some delay except one or two month, even according to the calculation memo given by the petitioner side. In Section 107 of the Act, it is made clear that, any person aggrieved by any decision or order passed under this Act by an Adjudicating Authority may appeal to such Appellate Authority within three months from the date on which, the said decision or order is communicated to such person - even though the impugned demands are claimed as notice for belated payment of tax, in all practical purposes, it is only a decision since the impugned communication has made it clear that, the registered person is requested to pay the amount immediately, therefore, it is a final decision which is reflected in the demand which is impugned herein. Hence, against such decision, the petitioner can very well file an Appeal under Section 107 of the Act, within a period of three months. Since these orders impugned was passed only on 05.01.2022, the petitioner is having limitation to file an Appeal and therefore, this Court feel that, these writ petitions can be rejected with a liberty to the petitioner to file Appeal against the impugned orders within the limitation period - petition dismissed. 2022 (4) TMI 747 Validity of Show cause notice issued u/s 74 - Erroneous Refund - limitation placed by the Legislature on the powers exercisable under Section 74(1) of the OGST Act, or not - HELD THAT:- The Court notices that there is no limitation placed by the Legislature on the powers exercisable under Section 74(1) of the OGST Act. In particular there is no indication that an order that is otherwise appealable under Section 107 of the OGST Act cannot be sought to be revisited under Section 74(1) of the OGST Act - Section 74(1) of the OGST Act does not appear to make any distinction between those refund orders that have been passed without an adjudication and those have been passed after an adjudication. Also, there is nothing in Section 74 (1) of the OGST act to indicate that an order of refund granted after an adjudication cannot be sought to be reopened thereunder. The Court is not prepared to accept the plea of the Petitioner that the impugned notice dated 1st October, 2021 is without jurisdiction. However, the Court clarifies that it has expressed no opinion on the other contentions of the Petitioner on merits which it may advance in response to the impugned SCN. The writ petition is disposed of. 2022 (4) TMI 704 Refund alongwith the interest - generation of e-way bill in the name of petitioner was a bona fide mistake or not - Section 129 of Central Goods and Service Tax Act, 2017 - HELD THAT:- Perusal of courier receipt/invoice which has been produced on record at page 19 shows that the consignor name was AVGOL India Pvt. Ltd. and the consignee details were mentioned as SIDWIN FABRIC PVT. LTD. It is also important to note that in the same invoice, registration of truck number by which the consignment was to be transported was also mentioned as GJ-01-FT-7770. It is also relevant to note that the shipping date was mentioned as 20/06/2019. Now if this courier receipt is placed at juxtaposition with e-way bill which finds mention at page no. 20, the same would reveal that the transportation was to be carried out through vehicle bearing registration no. GJ-01-FT-7770 and the date was also mentioned as 20/06/2019. The same is evident from perusal of Part B of e-way bill system which finds mention at page no. 20. The entire details of the courier receipt were rightly mentioned in the e-way bill system however, the description of generator of e-way bill was wrongly mentioned and it was generated in the name of petitioner and, resultantly, all the orders impugned were passed while treating the present petitioner to be dispatcher of the goods and the statutory liability was fastened upon the petitioner by way of the order of imposition of tax as well as penalty. Apparently, courier receipt/invoice and eway bill, pertains to same transaction but the generation of e-way bill is in incorrect name. The mistake appears to be bona fide inasmuch as the detail of vehicle, dispatch date is same. The case in hand appears to be a case where e-way bill was generated wrongly in the name of petitioner on account of some clerical or typographical error, therefore, the impugned orders are quashed. Petition allowed. 2022 (4) TMI 703 Detention of goods alongwith the vehicle - inter-State transaction - mismatch of place of delivery in the E-way bill - HELD THAT:- It appears that the writ applicant has also filed a representation dated 9th March 2022 which has been annexed at page : 36 as Annexure : F pointing out that there is a clerical error in the invoice and as regards the discrepancy in the place of delivery, it has been pointed out that the writ applicant has two registered place in the GST. One is the principal place and the other one is additional place. It appears that although the representation is of 9th March 2022, the State Tax Officer has not yet looked into it and has not taken an appropriate decision. Let Notice be issued to the respondents, returnable on 17th March 2022. No Notice now be issued by the Registry to the respondents Nos.2 and 3 as Mr. Utkarsh Sharma, the learned A.G.P. has already entered his appearance on behalf of the respondents. Mr. Sharma is requested to take instructions in the matter and revert to us on 17th March 2022 - On the next date of hearing, notify this matter on top of the Board. Income Tax 2022 (4) TMI 746 Revision u/s 264 - Refund of excess tax paid - computation of capital gain - Assessment completed taxing the capital gains at higher amount on the basis of sale consideration and without reducing the consideration - HELD THAT:- In the present case, the real income (capital gain) can be computed only by taking into account the real sale consideration, i.e., sale consideration after reducing the amount withdrawn from the escrow account. Respondent no.1 has proceeded on an erroneous understanding that the arrangement between the seller and buyer which results in some contingent liability that arises subsequently to the transfer, cannot be reduced from the sale consideration as per Section 48 - We say this because the liability is contemplated in SPA itself and certainly the same should be taken into account to determine the full value of consideration. Therefore, if sale consideration specified in the agreement is along with certain liability, then the full value of consideration for the purpose of computing capital gains under Section 48 of the Act is the consideration specified in the agreement as reduced by the liability. For respondent no.1 to say that from the sale consideration only cost of acquisition, cost of improvement and cost of transfer can be reduced and the subsequent contingent liability does not come within any of the items of the reduction and the same cannot be reduced, is erroneous because full value of consideration under Section 48 would be the amount arrived at after reducing the liabilities from the purchase price mentioned in the agreement. Even if the contingent liability is to be regarded as subsequent event, then also the same ought to be taken into consideration in determining capital gain chargeable under Section 45 of the Act. We do not agree with respondent no.1 that the contingent liability paid out of escrow account does not affect the amount receivable as per the agreement for the purpose of computation of capital gains under Section 48 of the Act. Respondent no.1 has failed to understand or appreciate that the promoters have received only net amount of ₹ 125,00,00,000/- plus ₹ 20,82,95,760/- (₹ 30,00,00,000/- - ₹ 9,17,04,240/-). Such reduced amount should be taken as full value of consideration for computing capital gains under Section 48 of the Act. For respondent no.1 to hold that in the absence of specific provisions by which an assessee can reduce returned income filed by it voluntarily, the same cannot be permitted indirectly by resorting to provisions under Section 264 of the Act, is also erroneous. Certainly, assessee could file revised returned of income within the prescribed period, to reduce the returned income or increase the returned income. Petitioner filed an application under Section 264 because the assessment under Section 143 had been completed by the time the amount of ₹ 9,17,04,240/- was deducted from the escrow account. Section 264 of the Act in our view, has been introduced to factor in such situation because if income does not result at all, there cannot be a tax, even though in book keeping, an entry is made about hypothetical income which does not materialize. Section 264 of the Act does not restrict the scope of power of respondent no.1 to restrict a relief to an assessee only upto the returned income. Where the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income even though an entry that might, in certain circumstances, have been made in the books of account. Therefore, respondent no.1 ought to have directed the Assessing Officer to recompute income as per the provisions of the Act, irrespective of whether the computation results in income being less than returned income. It is the obligation of the revenue to tax an assessee on the income chargeable to tax under the Act and if higher income is offered to tax, then it is the duty of the revenue to compute the correct income and grant the refund of taxes erroneously paid by an assessee. As regards the stand of respondent no.1 that the income returned by petitioner is sacrosanct and cannot be disturbed, the only thing that is sacrosanct is that an assessee can be asked to pay only such amount of tax which is legally due under the Act and nothing more. If returned income shows a higher tax liability than what is actually chargeable under the Act, then the assessee is entitled to refund of excess tax paid by it.We, therefore, quash and set aside the order dated 13th February 2015 passed by respondent no.1. Admittedly, petitioner has paid more capital gains than what should have been paid. Capital gains has to be calculated on the basis of what actual consideration has been received. Certainly, petitioner has not received his proportionate share to the extent from ₹ 9,17,04,240/- that was reduced from the escrow account.In the circumstances we hold that petitioner be entitled to refund of excess tax paid on the excess capital gains shown earlier. Assessing Officer is directed to pass fresh assessment order within 6 weeks from the date this order is uploaded on the basis that the capital gains on the transfer of the shares of the company should be computed after reducing proportionate amount withdrawn from the escrow account from the full value of the consideration and allow the refund of additional tax paid with interest. 2022 (4) TMI 745 Dis-allowance u/s.80IB(10) - assessee had failed to file his return of income within the stipulated time under Section-139(1) and the project namely The Venus Parkland Project was not completed within the period of 05 years from the end of the year in which the approval was granted by the local authority u/s 80IB(10) - HELD THAT:- The ratio in the case of Saket Corporation [ 2015 (6) TMI 460 - GUJARAT HIGH COURT] appears to be that in a case where the assessee completes the construction of its entire housing project and thereafter applied for the BU Permission within the prescribed time-limit, then irrespective of the fact whether such BU permission has been granted or not before the prescribed date, the assessee would be entitled to deduct under Section-80IB(10) As regards the delay in filing the returns under Section- 139 of the Act is concerned, the finding recorded by the tribunal as above is that in view of the provisions of Section-92E, the assessee was required to get the transfer pricing report in the Form 3CEB. In such circumstances, the assessee had the benefit of the extended period of the due date for filing of the return. Thus, in our opinion, no error not to speak of any error of law could be said to have been committed by the tribunal in affirming the order passed by the CIT(A) and thereby dismissing the appeal filed by the revenue. 2022 (4) TMI 744 Non disposing of the rectification applications filed by the Petitioner and consequentially grant refund arising there from along with applicable interest under Section 244A - petitioner states respondents have failed to process rectification applications filed by the petitioner without any reason or cause - HELD THAT:- Issue notice. Keeping in view the limited prayer sought in the present writ petition, respondent No.1 is directed to decide the rectification applications for Assessment Years 2005-06, 2006-07, 2008-09, 2009-10, 2012-13, 2014-15, 2017-18, 2006-07 (FBT) and 2007-08 (FBT) in accordance with law within twelve weeks. Refund, if any, along with applicable interest under Section 244A of the Act shall be issued within the said period. 2022 (4) TMI 743 Revision u/s 263 by CIT - wrongful Capital gain computation - non-consideration of difference in sale value shown in registered document, when compared to guideline value fixed by the authorities for stamp duty purpose in computing long term capital gain - case of the assessee was selected for scrutiny under CASS for verification of deduction claimed under capital gains - HELD THAT:- Principal CIT erred in invoking jurisdiction u/s.263 of the Act, to revise assessment order passed by the Assessing Officer u/s.143(3) of the Act dated 27.09.2017, because very purpose of scrutiny assessment in the present case was to examine long term capital gain computed by the assessee and exemption claimed thereon. In the assessment proceedings, the Assessing Officer had called upon various details, including statement of long term capital gain computed by the assessee along with relevant evidences and after considering various evidences filed by the assessee has accepted long term capital gain computed by the assessee. From the above, it is very clear that the issue considered by the Principal CIT for revision of assessment order has been already examined by the Assessing Officer and has taken a view and thus, we are of the considered view that the Principal CIT cannot substitute his view and held that assessment order passed by the Assessing Officer is erroneous and insofar as it is prejudicial to the interests of revenue. According to the Principal CIT, there is difference between sale value shown in registered document, when compared to guideline value of property. If you compare difference arrived at by the Principal CIT, it is less than specified percentage allowed under the Act, in terms of provisions of section 50C(3) and 55A(b)(i) of the Act. Even assuming for a moment, the Assessing Officer has not considered the above issue, but definitely it cannot be said that said issue is prejudicial to the interests of the revenue, because even if, the Assessing Officer has considered the issue the A.O. cannot make any addition, because difference in value shown in sale deed, when compared to guideline value is less than specified percent. Therefore, in our considered view on this issue, the Principal CIT cannot revise the assessment order. As regards, cost of improvement claimed by the assessee, including expenses incurred on fencing, bore well, leveling of plot and building, it was the case of the PCIT that although, the assessee claimed various expenditure, but the Assessing Officer had not examined the claim. We do not find any merit in findings of the Principal CIT for simple reason that very purpose of limited scrutiny assessment was to examine long term capital gain computed by the assessee. From the assessment order, it is very clear that the Assessing Officer has called for various details and accepted long term capital gain computed by the assessee. Therefore, we are of the considered view that the Principal CIT has erred in coming to the conclusion that the Assessing Officer has not examined cost of improvement claimed by the assessee. Cost of acquisition considered by the assessee by adopting fair market value of the property as on 01.04.1981 - We find that the assessee has considered certain value of the property as on 01.4.1981, whereas the Principal CIT has considered value as on 01.04.2003. There may be various reasons for difference in value of property. We find that unless the Principal CIT brings on record any conclusive evidence to prove that value adopted by the assessee is incorrect, the Principal CIT cannot presume that value adopted by the assessee is incorrect by considering value on different rate. Further, the very purpose of scrutiny assessment in the present case was to examine computation of long term capital gain. The Assessing Officer had considered the issue and called for various details and accepted claim of the assessee . Therefore, we are of the considered view that the Principal CIT has erred in revising the assessment order on this issue also - Decided in favour of assessee. 2022 (4) TMI 742 Disallowance towards commission expenses - assessee failed to furnish the details of the services rendered by the commission agent - HELD THAT:- As far as the genuineness of the payment of the commission expenses is concerned, there is no iota of doubt that the commission was paid through banking channel and after deducting the TDS. What has been doubted by the authorities below is that the assessee failed to provide details of the nature of services rendered by the commission agent. The onus lies upon the assessee to justify based on the documentary evidence that the expenses have been incurred wholly and inclusively for the purpose of the business. To our understanding the assessee has not justified the services rendered by the commission agent, therefore, we do not find any merit in the argument of the Ld. Counsel for the assessee. Accordingly, we uphold the findings of the authorities below. Hence the ground of appeal of the assessee is dismissed. Disallowance on account of consultancy expenses - Onus to prove - HELD THAT:- No ambiguity to the fact that the AO is not expected to interfere in the decision making process of the assessee. In the business environment, there are certain decision which are taken by the assessee depending upon the market forces. However, the primary onus lies upon the assessee at least to justify based on the documentary evidence that the business decision were taken in the course of the business as mandated under the provision of section 37 of the Act. But in the given case we note that the Ld. AR has just tried to justify the genuineness of the expenses which has been not doubted by the authorities below. What has been doubted, were the services which were rendered by the consultants as discussed above. To this effect no satisfactory explanation was furnished by the Ld. AR for the assessee before us. Therefore, we do not find any ambiguity in the order of the authorities below. Hence, the ground of appeal of the assessee is dismissed. 2022 (4) TMI 741 Disallowance u/s. 40A(3) - cash expenses in excess of limit specified under the Act - AO rejected the assessee s plea by holding that assessee has not been able to substantiate why payments could not be made by account payee cheque - assessee submitted that the payments in cash were made since firstly, payments were made to newspapers for political advertisements and secondly, payments were made after banking hours at 7.00 P.M. At the relevant time, elections were going in the state of Gujarat and for this purpose, payments were made to newspaper companies for political advertisements and they refused to accept payment through any other mode than by way of cash payment - HELD THAT:- We are of the considered view that in the facts of the instant case, no disallowance u/s 40A(3) is called for. The assessee has identified the parties to whom payments were made. The parties have confirmed receipt of payment in cash. The assessee has laid down the circumstances which necessitated payments in cash, being payment for advertisement for political parties on account of State elections, outside of banking hours. In a few instances, the assessee has obtained letter from the parties to the effect that it was at their insistence that cash payment was made. Exceptions contained in Rule 6DD are not exhaustive and that the said rule must be interpreted liberally, depending upon business necessities and facts and circumstances of the case. In the result, we are of the view that the Ld. CIT(A) erred in law and in facts in disallowing the sum u/s 40A(3) - Appeal of assessee allowed. 2022 (4) TMI 740 Revision u/s 263 - Allowability of exemption u/s 54B - Reassessment proceedings initiated against assessee - HELD THAT:- Under Section 54B of the Act the amount was firstly required to be deposited in the capital gain account and thereafter payment was to be made from such capital gain account for availing the exemption. No detail of deposit in the capital gain account was made available either before the Revenue or before us by the appellant. Whereas the assessee was required to deposit the unutilized capital gain in capital gain account scheme within the due date of filing of the return of income u/s 139(1) - Whereas the record reveals that the assessee had paid cash on purchase of land after 31.07.2010 and further availed exemption u/s 54B - These two are contradictory with each other since the amount of cash was not out of the capital gain account. We do not find any iota of evidence submitted by the assessee before the Revenue during the reopening proceeding under Section 147 of the Act in regard to the capital gain account scheme in respect of the several transactions entered into by the assessee both for sale and purchase. Thus, we do not find any enquiry conducted by the concerned ITO in this regard which could be a solid foundation of the opinion made by the PCIT against the order passed by the ITO as erroneous and prejudicial to the interest of the Revenue. It is expected that the ITO would make an enquiry of a particular item of income in the absence of which in the facts and circumstances of the case in our considered opinion the Senior Revenue Officer as the PCIT has the jurisdiction to interfere with the matter under Section 263 of the Act on a prima facie finding of the order as passed by the ITO is erroneous and prejudicial to the interest of Revenue. We, therefore, do not find any reason to interfere in the order passed by the Ld. CIT(A) in exercising the powers conferred by Section 263 of the Act in setting aside the issue with the direction upon the AO to frame an assessment afresh upon conducting as proper enquiries / verification of the above referred issues and to pass orders which in our considered opinion is just and proper so as to warrant interference. Hence, we confirm the impugned order passed by the Ld. PCIT. - Decided against assessee. 2022 (4) TMI 739 Validity of Revision u/s 263 - period of limitation or time barred order - Re-assessment was completed by making addition on account of prior period expense - book profit under section 115JB towards grants, subsidies and consumer contributions were not being properly calculated by the AO in the original assessment proceedings - CIT set aside the reassessment order, and directed the AO to frame assessment afresh after proper enquiries/ verification - HELD THAT:- No doubt the excess claim of depreciation on grants, subsidies and consumer contributions were subject matter of proceedings only in the original assessment passed under section 143(3) which is dated 30.12.2010. In the reassessment proceedings the issue is related to prior period expenses claimed by the assessee which was in the re-assessment order dated 30.12.2015. Therefore the present impugned order dated 22.03.2018 passed under section 263 is clearly time barred as per section 263(2). Further, jurisdictional High Court in the case of CIT Vs. Gujarat Forging P.Ltd [ 2008 (7) TMI 1029 - GUJARAT HIGH COURT] following Supreme Court judgment in the case of Alagendran Finance Ltd. [ 2007 (7) TMI 304 - SUPREME COURT] held that revision proceedings initiated under section 263 is beyond period of limitation and quashed the same. In view of the above binding judgment, we have no hesitation in holding that Revision proceedings initiated under section 263 by the Pr.CIT is beyond period of limitation, since the issue of computation of book profit under section 115JB towards grants, subsidies, consumer contributions are not subject matter of re-assessment proceedings and but arising from original assessment proceedings vide order dated 3.12.2010 which is clearly is time barred. Thus, the additional ground raised by the assessee are allowed. Thus order passed by the AO neither an erroneous nor prejudicial to the interest of Revenue and therefore the initiation of 263-proceeings itself is unwarranted - Decided in favour of assessee. 2022 (4) TMI 738 Delayed payment of employee contribution of PF and ESI - Deposits before due date of filing of the return of income u/s 139(1) - HELD THAT:- As in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down in the case of Essae Teraoka Pvt. Ltd[ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] had held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) of the I.T.Act. It was further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. The amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration. - Decided in favour of assessee. 2022 (4) TMI 737 Deduction u/s 80IA - initial/first year - interpreting 'initial assessment year' as mentioned in subsection (5) of section 80IA - HELD THAT:- Circular No.1/2016 issued by the CBDT that an assessee who is eligible to claim deduction u/s 80IA has the option to choose the initial/first year from which it may desire the claim of deduction for ten consecutive years, out of a slab of fifteen (or twenty) years, as prescribed under that sub-section.the term 'initial assessment year' would mean the first year opted for by the assessee for claiming deduction u/s 80IA. However, the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years, as the case may be and the period of claim should be availed in continuity. Thus the Assessing Officers are directed to allow deduction u/s 80IA in accordance with this clarification and Standing Counsels/D.R.s are suitably instructed pending litigation on allowability of deduction u/s 80 IA shall also not be pursued to the extent it relates to interpreting 'initial assessment year' as mentioned in subsection (5) of section 80IA of the Act. Set off of losses as per section 80IA(5) for computation of income of eligible unit - Following this Circular the SLP filed by the department was also dismissed against High Court's ruling that loss in year earlier to initial assessment year already absorbed against profit of other business cannot be notionally brought forward and set off against profits of eligible business as no such mandate is provided in section 80-IA(5) of the IT Act reported in Assistant Commissioner of Income-tax, Tirupur-Vs-Velayudhaswamy Spinning Mills (P.) Ltd.[ 2016 (11) TMI 373 - SC ORDER] - Following the same we hereby reject the Grounds of appeal filed by the Revenue and allow the claim of deduction u/s.80IA in favour of the assessee. Disallowance of deduction of amount from the book profits under s.115JB - Tribunal in [ 2022 (4) TMI 642 - ITAT AHMEDABAD] allowed the claim of deduction u/s 80IA of the Act in favour of the assessee for earlier assessment years. Considering above, this issue is also remitting back to the AO for verification and allowed the necessary deductions in accordance with the provisions of law. 2022 (4) TMI 736 Unexplained cash credit under section 68 - As per AO mere transactions carried out through the banking channel does not imply ipso facto as genuine transaction - HELD THAT:- With respect to the identity of the party, we find that the assessee has furnished the details such as copy of ledger account, bank statements, PAN. From the above, there remains no doubt that the identity of the investor parties is not in disputed, as it has been proved beyond doubt. With respect to the genuineness of transaction undisputed fact that the amount of share application money received by the assessee was refunded to the parties. It implies that the assessee was not the beneficiary of the amount received by it as alleged by the AO. Though the share application money has been repaid by the assessee in the subsequent year, but it is difficult to hold that the assessee was the ultimate beneficiary of the impugned amount. Thus, we can assume that the impugned transaction was the genuine transactions between the assessee and the parties. CIT (A) has given categorical finding that there was assessment framed in case of all three parties for the year under consideration where additions were made. This fact cannot be brushed aside merely on the ground that the investor were not produced by the assessee during the assessment proceedings. It was the revenue which wanted to verify the investors. For this purpose, lot of powers were available with the revenue such as issuing notice under Section 131 of the Act for inviting the personal attendance of the parties. But the AO has not exercised such power in the given facts and circumstances. Thus we are of the opinion that, though the transactions of the share application money received by the assessee received without proper share application form or written correspondence may raise doubt but in either of the case, once application money is returned back, which has been established based on the documentary evidence, the credit entries cannot be looked into in isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, we hold that there is no infirmity in the order of the Ld. CIT-A. Hence, the ground of appeal of the revenue is hereby dismissed. Addition u/s 68 - loans and advances - HELD THAT:- There remains no ambiguity that amount of ₹ 5 crore each received from Shri Ramesh Thakor and Shri Vinod Sharma represent repayment of advances given by the assessee in the month of February 2009. Therefore the provision of section 68 will not be applicable on this transaction. Hence the ground of appeal of the Revenue is hereby dismissed. 2022 (4) TMI 724 Revision u/s 263 - Reopening of assessment initiated against assessee - AO during the course of assessment proceedings has not properly examined the difference in the closing balance AND gift received by the assessee from his wife was not supported with proper documentary evidences - HELD THAT:- Admittedly, the AO during the course of assessment proceedings after making all possible enquiries had completed the assessment under section 147/143(3) - During the course of such assessment, the A.O. had asked the assessee to furnish details of all gifts, loans and advances taken and given during the year or within three years. The amount was nothing, but, repayment of loan taken by the assessee in the past and, therefore, repayment of the loan by the assessee cannot be considered as income of the assessee. Similarly, assessee had filed the details such as copy of Gift Deed, copy of bank statement, copy of acknowledgment of return of income for the A.Ys. 2008-09 to 2011-12, copy of ledger account of Sh. Punit Gupta in the books of the assessee for the period from 01.04.2010 to 31.03.2011. We find an amount of ₹ 2 lakhs was withdrawn by Smt. Pooja Gupta from her bank account on 22.11.2020 and the cash gift was made on 23.11.2010. Under these circumstances, when the A.O. had made full enquiry, in our opinion, the same cannot be considered as lack of enquiry or lack of investigation. Further the view taken by the A.O. after considering various details furnished by the assessee during the course of assessment proceedings cannot be termed as unsustainable in law. The A.O. in the instant case has taken a plausible view. Since in the instant case the AO has conducted due enquiry and after being satisfied, accepted the returned income and passed the order under section 143(3)/147 therefore, the order cannot be called as an erroneous order. Therefore, even if the order is prejudicial to the interests of Revenue, but, the same not being erroneous, the twin conditions are not satisfied and, therefore, the Ld. PCIT is not justified in invoking the provisions of Section 263 - Decided in favour of assessee. 2022 (4) TMI 723 Reopening of assessment u/s 147 - Addition under section 69 of the Act as unexplained investment - market value of the flat as determined by a stamp duty valuation authority is much more than the documented payment and thus the same circumstantially corroborate that extra consideration over and above the agreement value would have been paid by the assessee - HELD THAT:- It is evident that the statement recorded under section 131 of the Act is relied upon by the Revenue only partially, to suit its convenience. The Revenue has neither provided to the assessee nor brought on record agreement alleged to have value of ₹ 22,75,500. On the contrary, from the copy of agreement dated 25 October 2008 forming part of the paperbook, it is clear beyond doubt that agreement value was ₹ 41,00,000 instead of ₹ 22,75,500 as alleged by the AO. From the above, it is thus evident that there was no independent application of mind by the AO on the information received. Accordingly, we are of the view that the basis for initiating reassessment proceedings i.e. statement recorded under section 131 of the Act, is contrary to the facts on record and such a statement cannot be relied upon to initiate the reassessment proceedings. Therefore, in the present case, reassessment on the basis of wrong facts cannot be upheld. It is well established that the reasons recorded by the AO cannot be further be substituted or added or deleted - We are of the view that the reference to market value of the flat as determined by stamp duty valuation authority also cannot justify initiation of reassessment proceedings under section 147 of the Act, as the validity of reassessment has to be tested only on the basis of reasons recorded by the Assessing Officer before issuing notice under section 148 of the Act and those reasons cannot be further improved. As the AO, in the present case, has failed to provide opportunity of cross examination to the assessee, which is contrary to the principle of natural justice, on this basis also assessment framed under section 143(3) r/w 147 is liable to be set-aside.Order passed by the CIT(A) is set aside and AO is directed to delete the addition made under section 69 - Decided in favour of assessee. 2022 (4) TMI 722 Penalty u/s 271B - not getting the books of accounts audited as required u/s 44AB - HELD THAT:- We find that the assessee has not disputed the fact of the turnover of the assessee of ₹ 27,69,32,010/-. The assessee has also not disputed the requirement of books of account be audited as per the provisions of section 44AB of the Act. Despite the fact that the books of account of the assessee were required to be added under section 44AB of the Act, the assessee has not explained the reasons for not getting the books of account audited. Thus when the assessee has not explained the reasons for not getting his books of account audited, we do not find any reason to interfere with the orders of the authorities below levying the penalty under section 271B - Decided against assessee. 2022 (4) TMI 721 Delayed deposit of employee shares of ESI/PF - assessee is not entitled to claim deduction u/s. 36(1)(va) - HELD THAT:- It is an undisputed fact that the assessee in the instant cases has deposited the employee s contribution to PF ESI before the due date of filing of return, although the same has been paid after the dates specified in the relevant Act. If the assessee has deposited the employees share of contribution to PF ESI before the due date of filing of return u/s.139(1) then no disallowance u/s. 36(1)(va) can be made. It has further been held that the amendment to the provisions of section 43B and 36(1)(va) of the Act by the Finance Act, 2021 has to be construed as prospective and applicable for the period after 01.04.2021. It is held that this provision imposes a liability on the assessee and therefore, cannot be construed as applicable with retrospective effect since the legislature has not specifically said so. Since the assessee in the instant case has admittedly deposited the employee s contribution to PF ESI before the due date of filing of return of income, therefore, we are of the considered opinion that the ld. CIT(A) is not justified in sustaining the disallowance made by the CPC. We, therefore, direct the Assessing Officer to delete the disallowances in the hands of the assessee. - Decided in favour of assessee. 2022 (4) TMI 720 Addition in respect of employees contribution towards EPF - Deposits before due date of filing of return of income u/s 139(1) - HELD THAT:- As decided in MOHANGARH ENGINEERS AND CONSTRUCTION COMPANY [ 2021 (8) TMI 563 - ITAT JODHPUR] where the PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income u/s 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act. In the instant case, admittedly and undisputedly, the employees contribution to EPF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) of the Act. Further, the ld D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we find that there are express wordings in the said memorandum which says these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years . In the instant case, the impugned assessment year is assessment year 2019-20 and therefore, the said amended provisions cannot be applied in the instant case. Thus addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the delayed deposit of the employees s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) - Decided in favour of assessee. 2022 (4) TMI 719 Addition made towards sundry payments - document showing the sundry payment and expenditure retrieved from the computer system bear the system generated, time stamp of date of creation or modification or deletion of the document and these reveal that these documents have been created and accessed on different dates spread over several months and years - HELD THAT:- Incriminating material seized showing various sundry payments made out of cash which are not allowable as business expenditure. Being so the lower authorities disallowed the same. Before us the AR is unable to show how these payments are related to the business of the assessee. In our opinion unless these expenditure is wholly and exclusively incurred for the purpose of carrying on the business of the assessee, the expenditure cannot be allowed. Being so the lower authorities are justified in disallowing the expenditure. These grounds of appeal of the assessee is dismissed. With regard to the other arguments of the assessee that there no material to substantiate the claim of the assessee s alleged sundry payments, the Managing Director of the assessee company Shri Naveen Shetty and also Shri Narayan Shetty confirmed the usage of BTW application by RSINL and its sister concern since 10 years. Regarding the books of accounts maintained and source of transactions pertaining to the company as per the BTW application files, Shri Naveen Shetty has stated in the statement that he did not remember and his replies remained evasive and non-committal. The digital evidences gathered through the search are systematic and comprehensive and the total record of actual transactions and the evidences retrieved from the server system were also supported by the hard copies of various documents and soft copies and computers seized from multiple locations. Further a perusal of the books of accounts contained in the BTW files reveal that the BTW files contain cash book and all ledgers including ledge under the head Sundry and it is complete with voucher number, date narration, amount and transaction type. The payments were reflected in cash book and the voucher number assigned to each sundry expense item suggest both chronological sequences and consistency of records relating to sundry payments and reflected in the books of account. Majority of such folders were also found to have been deleted from the hard disk. The sundry payments were forming part of books of accounts maintained in the names of RNS, NHL, MPC, NMCC or other entries in the cash book and in ledgers except those relating to sundry payments have been found to be reflected in the regular books of accounts prepared by assessee for statutory purposes. The digital evidences discussed above, has also been found from systems in Hubli office of RNSI as well as from systems in the site office of RNSI at Tarikere. There is also letter issued to RNSI vide circular dated 21.02.2012 directing the employees for prompt accounting of the sundry payments to various department on daily basis. Further the Vice President of RNSI, Shri Sunil Sahasrabudhey, also admitted these payments, though he retracted later- we are of the opinion that there is no error in the order of the lower authorities in disallowing the payment - Decided against assessee. 2022 (4) TMI 718 Addition based on the cash found in excess of the cash book balance and based on the sworn statement of Shri Rajeev N. Narayan under the head income from other sources in the computation of taxable total income - HELD THAT:- We are inclined to hold that despite a specific request by the assessee to allow cross examination, ld. CIT(A) denied the same without any cogent justification and valid reason which is a clear violation of proposition rendered by the Hon ble Supreme Court in the case of Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] - Therefore, we hold that the ld. CIT(A) was not correct in confirming the addition made by the AO keeping aside the evidence submitted by the assessee in the form of sales vouchers, VAT payment evidence, ledger entries, etc. only on the strength of reply letter received by him on 26.05.2019 from M/s National Pharma, Delhi without allowing cross examination to the assessee on the said letter/reply of M/s National Pharma. Therefore, respectfully following the proposition laid down by the Hon ble Supreme Court, we are compelled to hold that the addition confirmed by the ld. CIT(A) is not sustainable and the observations and findings recorded by the CIT(A) are hit by the proposition rendered by the Hon ble Supreme Court in the case of Andaman Timber Industries (supra). Accordingly, we allow the appeal of the assessee and direct the AO to delete the addition. 2022 (4) TMI 717 Validity of Reopening of assessment u/s 147 - eligibility of reasons to believe - tangible material in the hands of the AO to initiate reopening - HELD THAT:- For invoking second limb of first proviso to section 147(1) of the Act, the AO is duty bound to record an allegation against the assessee in the reasons recorded for initiation of reassessment proceedings that any income chargeable to tax has escaped assessment for such assessment years by the reasons of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. From the reasons recorded by the AO it is very much clear that no such allegation has been noted by the AO against the assessee in the reasons recorded and we are unable to see any indication of the AO to invoke second limb of first proviso of section 147 of the Act to initiate action against the assessee for reassessment for A.Y.2007-2008 beyond the period of four years, therefore, we are compelled to hold that the initiation of reassessment proceedings u/s.147 of the Act, issuance of notice u/s.147 of the Act, impugned reassessment order as well as first appellate order are hit by second limb of first proviso to section 147 of the Act, therefore, on this count entire action of the AO including impugned reassessment order and first appellate order deserves to be quashed. So far as second part of the arguments of the assessee, we are of the considered view that from the reasons recorded by the AO we clearly note that the AO has only perused the relevant records as well as Notes forming part of Accounts by initiating action against the assessee for reassessment proceedings for A.Y.2007-2008 and there was no new tangible material in the hands of the AO, which was not before him during original scrutiny assessment proceedings, therefore, it is a clear case of change of opinion, which is again hit by the recent decision in the case of Marico Ltd. [ 2020 (6) TMI 436 - SC ORDER] . The initiation of reassessment proceedings u/s.147 of the Act, notice u/s.148 of the Act, impugned reassessment and first appellate order also deserves to be quashed on this count and we hold so. - Decided in favour of assessee. 2022 (4) TMI 716 TP adjustment - MAM selection - addition made towards overdue receivables from Associated Enterprises - HELD THAT:- When TNMM method has been applied as most appropriate method it could take care of all notional interest costs wherever it could be applied and there could be no separate upward adjustments on export receivables for belated realization of export bills. Hence, we direct the Assessing Officer to delete upward adjustment made towards overdue receivables from Associated Enterpriseswe direct the Assessing Officer to delete upward adjustment made towards overdue receivables from Associated Enterprises. 2022 (4) TMI 715 Belated remittance of employee s contribution to PF ESI - HELD THAT:- In this case, the assessee claims that it has remitted employees contribution to PF ESI on or before due date specified u/s.139(1) of the Act, for filing return of income. CIT(A), after considering relevant facts and following clarificatory amendments made by Finance Act, 2021 to section 36(1)(va) and section 43B rejected the arguments advanced by the assessee and confirmed disallowance made by the AO as said late payments are not covered under section 43B of the Act. We find that amendment brought to the statute by insertion of Explanation 1 to section 36(1(va) by the Finance Act, 2021 w.e.f. 01.04.2021 is considered to be prospective in nature as per the decision of the co-ordinate Bench of ITAT., Chennai in [ 2021 (12) TMI 558 - ITAT CHENNAI] where it was held that insertion of Explanation 1 to said section cannot be considered as retrospective in nature and thus, belated payment of employees contribution to PF ESI after due date specified under respective Act, but before due date for filing of return of income u/s.139(1) of the Act is allowable deduction - we direct the Assessing Officer to delete additions made towards disallowance of employees contribution to PF ESI u/s.36(1(va) r.w.s. 2(24)(x) - Decided in favour of assessee. 2022 (4) TMI 714 Correct head of income - treating the rental income as business income - only source of income is letting out the property - HELD THAT:- AO and the CIT appeal have rightly held that the appellant has treated the office complex as business asset as the assessee extended various services to the tenants, the rental income derived there from is to be assessed under the head business income. We are inclined to concur with the finding of the learned CIT appeal in treating the assessee s rental income business income and denying the applicant assessee claim of standard deduction. Accordingly, the impugned order of the learned CIT appeal is sustained. - Decided against assessee. 2022 (4) TMI 713 Disallowing maintenance charges (including non occupancy charges) claimed as deduction while computing income from house property - AO held that neither Sec. 23 nor Sec. 24 provides for the deduction of expenses incurred towards Society Maintenance Charges - claim of maintenance charges against the rental income of the assessee has been disallowed on the ground that it had already claimed 30% deduction u/s. 24(a) - HELD THAT:- As decided in own case [ 2022 (4) TMI 641 - ITAT MUMBAI] assessee is entitled for deduction u/s. 23 of the Act apart from the standard deduction u/s. 24(a) of the Act. We direct the AO to verify the claim of deduction of the assessee of the said society maintenance charges paid by the assessee but stated to be obligation of the lessee and stated to be duly included in the gross rent received by the assessee before allowing the claim of the assessee. - Decided in favour of assessee. 2022 (4) TMI 712 Revision u/s 263 by CIT - set off of the brought forward non-speculative business loss against the profit of speculative business - HELD THAT:- This simply means the computation of taxable income of 'speculative business and non-speculative business cannot be combined together, the figures have to be separately arrived at for each segment. Having arrived at such separate figures of two segments, if there arises necessity of set off in case of negative figure (i.e. loss) from either segment, we have to look upon the provisions of section 72 and 73. We believe that it may not be correct to say that by segregating two segments as per mandate of section 28, there is an automatic consequence that loss of one segment cannot be set off against profit of another segment. If that be so, what would be the necessity of section 72 and 73? Therefore, we have to look upon the provisions of section 72 and 73, which fall under the Chapter VI, to understand what is allowed and what is prohibited in the matter of set off. AR has already put forward the analysis of section 72 and 73 supported by the legal precedents. We do not want to reproduce the same for the sake of brevity but the Ld. AR is right in submitting the interpretation that the loss of speculative business cannot be set off against the profit of non-speculative business but the loss of non-speculative business is allowed to be set off against profit of speculative business . We observe that the assessee was justified in claiming set off of the brought forward non-speculative business loss against the profit of speculative business and the Ld. AO has allowed the same, which is very much in accordance with the provisions of the Act. Therefore the order passed by the Ld. AO is neither suffering from any error nor prejudicial to the interest of revenue. Being so the Ld. PCIT has wrongly invoked the provisions of section 263 which are not applicable to the present case. Therefore we are persuaded to quash the revision-order passed by the Ld. PCIT u/s. 263 - Decided in favour of assessee. 2022 (4) TMI 711 Issuance of a valid 143(2) a condition precedent for framing Section 143(3) assessment in the year of search - DR vehemently reiterated the Revenue's foregoing pleadings that the issuance of Section 143(2) notice is nowhere mandatory in Section 153A proceedings initiated in furtherance to a search in light of the various case law cited therein - HELD THAT:- We find no merit in the Revenue's instant grievance since it has come on record that this is AY. 2010-11 before us where the search itself was conducted on 11-03-2010. This is the year of search in other words not covered under the specified period of six assessment years u/s. 153(1)(a) of the Act. Coupled with this, the hon'ble apex court's decision in CIT Vs. Laxman Das Khandelwal [ 2019 (8) TMI 660 - SUPREME COURT] holds that issuance of a valid 143(2) notice is very much a condition precedent for framing Section 143(3) assessment in the year of search. We thus find no infirmity in the Ld. CIT(A)'s order under challenge quashing the impugned assessment. 2022 (4) TMI 710 Disallowance of Employees' Contribution to EPF/ESI deposited belatedly - Amount claimed to have been paid before the due date of return of income under section 139(1) - Scope of amended provisions of section 36(1) (va) as well as section 43B vide Finance Bill, 2021 - HELD THAT:- As after the amendment in the provisions of section 36(1) (va) read with section 43B vide Finance Bill, 2021, it is clear that the said amendment as per the memorandum of the Finance Bill is applicable only from the assessment year 2021-22. So far as the allowability of the deduction in respect of employees' contribution to EPF/ESI deposited before the due date of filing of return of income under section 139(1), the same is allowable for the year under consideration as amended provisions of section 36(1) (va) as well as 43B are applicable only from the assessment year 2021-22. Hence, this issue on principle is decided in favour of the assessee and against the Revenue. However, the Assessing Officer is directed to verify the actual date of payment of the Employees' Contribution towards EPF ESI and if the same is found deposited before the due date of filing of return under section 139(1) of the Income Tax Act, the same be allowed. 2022 (4) TMI 709 Revision u/s 263 - Allowability of foreign exchange fluctuation loss - HELD THAT:- There is no dispute that in the assessment order there is no reference about the examination of foreign exchange fluctuation loss. However, we find that during the assessment proceeding the AO issued notice first notice dated 26.08.2015 and sought various information therein. In para 2(x) of the said notice, the AO sought complete details of expenses including loss of foreign exchange loss on foreign currency. We find that the assessee vide its reply furnished the details of expenses including loss of foreign currency. The assessee further in response to order sheet entry furnished the fluctuation account /export. Thus, the issue was examined and verified by the AO. As recorded there is no reference in the assessment order about the verification of the issue. However, it is clearly discernible from the copy of show cause notice and the reply thereto and the relevant evidence in support of such claim that issue was examined by the AO. The Hon ble Supreme Court in CIT Vs Woodward Governor India (P) ltd. [ 2009 (4) TMI 4 - SUPREME COURT] held that the loss suffered by the assessee on account of foreign exchange fluctuation difference as on the date of balance sheet is an item of expenditure allowable under section 37. Therefore, the order of AO in allowing the foreign exchange loss in assessment order will not render his action as erroneous. Pr. CIT while issuing show cause notice on his observation as recorded in para 2(i)(ii) that the statutory auditor has qualified foreign exchange loss in absence of details. We find that the assessee filed detailed reply to the said show cause notice under section 263. The ld. Pr.CIT instead of giving any independent finding on the reply so furnished by the assessee repeated his observation that assessment order was passed without making enquiries or verification. The Hon'ble Jurisdictional High Court in Aryan Arcade Ltd., [ 2017 (8) TMI 535 - GUJARAT HIGH COURT] held that merely because Commissioner held a different belief that would not permit him to take the order in revision, it if further held that when Assessing Officer made full enquiry, he made up his mind, the notice of revision is not valid - Decided in favour of assessee. 2022 (4) TMI 702 Belated remittance of employees' contribution on ESI PF - Deposits after due date as prescribed under the relevant act but before the due date of filing of return of income - HELD THAT:- We find that this issue stand covered in assessee s favor by the decision of Hon ble High Court of Madras in the case of CIT V/s M/s Industrial security and intelligence India Private Limited [ 2015 (7) TMI 1063 - MADRAS HIGH COURT] wherein it was held that if the assessee had deposited employees contribution towards PF and ESI after due date as prescribed under the relevant act but before the due date of filing of return of income then no disallowance could be made u/s 43B. Also in Adyar Anand Bhawan Sweets India Pvt. Ltd. [ 2021 (12) TMI 558 - ITAT CHENNAI] has held that the amendment to Sec.36(1)(va) by way of insertion of explanation-2 would operate prospectively only. Therefore, respectfully following the same, we confirm this issue in assessee s favor. The ground thus raised stand dismissed. Nature of Royalty payments/Management Service Charges - revenue or capital expenditure - royalty was to be paid for use of ISS Brand - AO held that the expenditure was held to be capital in nature - HELD THAT:- The undisputed position that emerges is that the assessee is using the trade name as well as management services under contractual terms. The payment was to be made on annual basis and the same was based on fixed percentage of net sales turnover. Upon termination of the agreement, the benefits/licenses/services were to lapse and the assessee was to return the manuals, reports etc. No new asset was acquired by the assessee. The assessee merely acted as user. Therefore, it could not be said that the rights acquired by the assessee were enduring in nature. The Ld. CIT(A), in our considered opinion, has clinched the issue in the correct perspective and therefore, the same would not require any interference on our part. The grounds raised by the revenue, in this regard, stand dismissed. Disallowance u/s 14A - assessee earned exempt dividend income - assessee submitted that investments were out of internal accruals - AO computed aggregate disallowance u/r 8D(2) which comprised-off of interest disallowance u/r 8D(2)(ii) and indirect expense disallowance u/r 8D(2)(iii) - CIT(A) directed Ld. AO to exclude strategic investments to compute the disallowance and also to verify if the own funds were more than the investment - HELD THAT:- So far as the exclusion of strategic investment is concerned, the directions of Ld. CIT(A) stand reversed in the light of the decision of Hon ble Supreme Court in the case of Maxopp Investment Limited [ 2018 (3) TMI 805 - SUPREME COURT] - At the same time, no infirmity could be found in the direction of Ld. CIT(A) for verification of plea of own funds since a presumption would run in assessee s favor that the investments were out of own funds in case own funds exceed the investments made by the assessee. Additionally, Ld. AR has pleaded that there is no opening and closing investments and therefore, no disallowance could be computed u/r 8D(2). However, this plea could not be accepted in revenue s appeal. Finally, finding no infirmity in the order of Ld. CIT(A), we dismiss the ground raised by the revenue. The appeal stands partly allowed in terms of our above order. Computation of books profit u/s 115JB for disallowance u/s 14A - HELD THAT:- We concur with the adjudication of Ld. CIT(A) since no disallowance could be computed in the absence of exempt income. Further, the disallowance could not be added back to Book Profits u/s 115JB as per the decision of Special Bench of Delhi Tribunal in ACIT V/s Vireet Investment (P) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] . Finding no infirmity in the impugned order, we dismiss the grounds urged by the revenue. The appeal stands dismissed. Securities / SEBI 2022 (4) TMI 708 Release of the mutual funds in favour of the applicant/Respondent No.5, which are of the value of about 350 crores - Earlier, by order this Court had given the option to applicant/Respondent No.5 to get mutual funds converted/encashed and the amount was to be deposited in a fixed deposit account of a nationalized bank - HELD THAT:- The subsequent supplementary chargesheet submitted by the EOW, and relied upon by the learned counsel for the petitioner, ought not to be ignored while considering this matter. In its earlier orders, this Court has clearly found that the securities need to be released in favour of the applicant/Respondent No.5. The only question is with regard to the mode and manner of the securities to be furnished by the applicant/Respondent No.5. It is not disputed that the petitioner has, in terms of the order dated 16.03.2021, complied with the condition of furnishing bank guarantee of ₹ 344.07 Crores. In paragraph 20 of this application filed by the applicant/Respondent No.5, it is stated that the applicant is a public limited company, having sound financials with a strong balancesheet and other financial statements (assets of INR 18,556 Crores and turnover of INR 8,779 Crores during financial year 202021). The same is not denied by the other parties who have filed their respective replies to this application. We are of the opinion that the operative part of the order dated 21.09.2021 deserves to be modified and, accordingly, the same is modified to the extent that instead of bank guarantee for a sum of ₹ 344.07 Crores, which has been furnished by applicant/Respondent No.5, in terms of order dated 16.03.2021, the applicant/Respondent No.5 shall now furnish bank guarantee for a sum of ₹ 100 Crores and it shall further furnish a corporate guarantee to the extent of ₹ 300 Crores. The bank guarantee earlier furnished by the applicant/Respondent No.5 to the extent of ₹ 344.07 Crores shall stand discharged on the applicant/Respondent No.5 fulfilling the above condition to the satisfaction of the Trial Court concerned. Insolvency & Bankruptcy 2022 (4) TMI 707 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Principles of natural justice - one more opportunity to the appellant in this case to amend its pleading on payment of costs, are given or not - time limitation - HELD THAT:- As far as issue of MPID Act is concerned, it looks that there is no prohibition under the MPID Act for initiating CIRP process. As and when CIRP is initiated, the Resolution Professional is duty bound to approach the designated court for taking back control and custody of the said property over which the Corporate Debtor has ownership right derived from the legal documents. Hence the attachment of property does not prohibit initiation of CIRP. As far as issue of Balance Sheet is concerned, whether the Balance Sheet acknowledgment will give life to the due debt otherwise payable in law has also been amply clear in Hon ble Apex Judgment in Asset Reconstruction Company (India) Ltd. Vs. Bishal Jaiswal Anr. [ 2021 (4) TMI 753 - SUPREME COURT] , where it was held that the NCLT held that the Section 7 application was not barred by limitation, and therefore, admitted the same. It is very much clear that the debt is due and payable in law - Petition dismissed. Service Tax 2022 (4) TMI 750 Seeking condonation of delay of 1310 days in filing the accompanying appeal - interpretation of the provisions of Rule 6(3) of the CENVAT Credit Rules, 2004 - HELD THAT:- It was incumbent upon the appellant to furnish the details with regard to the address at which the impugned order had to be served. The conduct of the appellant, who sits quietly for more than three and a half years and not seek information as to the status of its appeal, is unacceptable. In any event, it is common knowledge, of which we take judicial notice, that since January 2017, the orders of the Tribunal are uploaded, and, hence, available on its website. The appellant, thus, cannot take refuge of lack of knowledge or, at least, means to acquire knowledge, concerning the impugned order passed by the Tribunal. The reasons given are not tenable in law insofar as explanation of more than three and a half years delay in approaching the Court is concerned. The delay of 1310 days is not condoned - application dismissed. 2022 (4) TMI 735 Levy of Service Tax - Construction service - cash amount deposited in Bank and income disclosed under Income Disclosure Scheme (IDS), 2016 - Circular No. 1053/02/2017-CX dated 10.03.2017 - HELD THAT:- The revenue has not come forward with the evidence that the Appellant have generated the disputed income on account of providing taxable service. Therefore in absence of concrete evidence on record, the service tax cannot be demanded on the basis of assumption and presumption.The department has not been able to support their allegation with evidence that the said disclosed income under IDS scheme were collected for providing services of construction Service. There is merit in the contention of the appellant that it is settled principal of law that the burden of proving a fact is on the person who alleges the same but the department did not produce any evidence on record to prove that the disclosed Income under Income Tax Disclosure Scheme, 2016 pertained to construction activity and that the charges of income was generated out of taxable activity without any evidence was not sustainable in the absence of cogent, convincing and tangible evidences. Income tax and service tax are two different/ separate and independent special Act and their provisions operating in two different fields. Therefore by relying the income disclosed in income tax provision, without undertaking any independent investigation under the Service Tax Act, demand of service tax cannot be made. In the case of M/S. RAVI FOODS PVT. LTD. OTHERS VERSUS CCE, HYDERABAD [ 2010 (12) TMI 290 - CESTAT, BANGALORE] , it was held that admission by assessee to Income Tax department as regards undisclosed/suppressed sales turnover cannot be held to be on account of clandestine removal of their final products, in the absence of any other corroborative evidence. The meaning of income has been defined under Section 2(24) of the Income tax Act, 1961 is very wide and it cover all types of Income. Income can also be earned from taxable, non-taxable, exempted activity. The provisions of Income-tax Act and IDS scheme are having specific scope, purpose and intent, as decided by the legislature. Further, under the Income tax, income declared by the assessee cannot be assumed that the said income earned from taxable service only, whereas under the income tax income have wide meaning. In the present matter department‟s allegation that the income disclosed under the IDS scheme is attributable to construction services provided to their clients/ customers is based on the assumption that Appellant have no other activity except construction service. In the present matter Appellant also produced the details of payment received after obtaining Business use (BU) i.e. sales of flats, shop etc. after receipt of the completion certificate. Therefore it cannot be said that the income declared by the Appellant under IDS Scheme is attributable to the taxable service provided by them to their clients. In this case, evidence gathered by the Department is not sufficient to establish even the preponderance of probability. Therefore, the demand on the ground that the income declared under IDS scheme is earned from the taxable service is not sustainable. Appeal allowed - decided in favor of appellant. 2022 (4) TMI 734 Refund claim - the two numbers of export invoices against single shipping bill has been submitted by the claimant, but the invoice details as given in the shipping bill do not match - violation of provision of Para (1) of the said Notification No.41/2012-ST dated 29.06.2012 - HELD THAT:- The export was made through M/s MMTC Ltd. which was the statutory provision in the Trade Policy, Schedule-II SL. 80 and the money be realized after the export of the goods. The service tax paid in terms of the services utilized in the export of goods to be claimed as Refund. It is also found that the Role of M/s MMTC Ltd. as intermediary is only because of the restriction imposed in the Foreign Trade Policy schedule-II, SL. 80 which states that the Manganese Ore to be exported through MMTC Ltd. The restriction imposed in respect of Manganese ore is governed by the Section 3 of the Import and Export (Control) Act, 1947. It is apparent that the Appellant submitted invoices on which certification has been done in terms of para 3(k) of the said notification regarding co-relation and nexus between input services and exports made for the said period of claim for refund as well as payment of Service Tax made by them - all the exports as mentioned above are Third party Exports have been made through Visakhapatnam Port through MMTC Limited as per the export policy of canalized items. It is apparent that M/s MMTC Ltd. stands indemnified that export to be made through them and M/s S. K. Sarawagi Co. Pvt. Ltd. (the Appellant herein), is the owner of the goods, is not allowed to export directly under Section 2 (20) of the Customs Act, 1962 as well as under the definition of exporter in the Foreign Trade Policy, 2009-14 under Chapter 9.26 - the role of M/s MMTC Ltd. in the export of Manganese Ore, is a compulsion to be observed by the Appellant and it is not by choice which has led to the present dispute - the Appellant declared that no CENVAT Credit of service tax paid on the specified service used for export of said goods has been taken under CENVAT Credit Rules, 2004. That the appellant have submitted the invoices issued in the name of the exporter duly certified as prescribed in the said notification in terms of Para 3 (j) (k) of the said Notification. The impugned order is set aside - Appeal allowed - decided in favor of appellant. 2022 (4) TMI 706 Construction of residential and commercial complexes - service tax registration not obtained - non-payment of service tax - period in dispute is 2004-2005 to 2008-09 - explanation added by the Finance Act, 2010 in Section 65(105)(zzzh) of the Finance Act, 1994 - HELD THAT:- Prior to 1-7-2010 builders/developers are not liable to pay service tax for the Construction Service and in the present case, the period involved is from 2004-2005 to 2008-09. Consequently, it is held that the impugned order is not sustainable in law. In the case of COLLECTOR OF C. EX., VADODARA VERSUS DHIREN CHEMICAL INDUSTRIES [ 2001 (12) TMI 3 - SUPREME COURT ], the Apex Court held that We need to make it clear that regardless of the interpretation that we have placed on the said phrase, if there are circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase, that interpretation will be binding upon the Revenue. In COLLECTOR OF CENTRAL EXCISE, MEERUT VERSUS MARUTI FOAM (P) LTD. [ 2004 (1) TMI 328 - SUPREME COURT ], the Apex Court held that the construction of statutory phrase, placed by a circular issued by the Central Board of Excise and Customs, although different from the one placed by the Supreme Court, was binding on the Revenue till the same was withdrawn. It becomes clear that the circular, is binding on the department and this circular makes it more than abundantly clear that construction service provided by the builder/developer will not be taxable for the period prior to 01.07.2010 - Appeal allowed - decided in favor of appellant. 2022 (4) TMI 705 Levy of service tax - interest free deposit amount collected by the Appellant from the demat account holders under the Scheme - appellant has not collected AMC charges - HELD THAT:- Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] , while deciding the appeal filed by the Department against the decision of the Tribunal, also explained the scope of Section 67 of the Act. The Supreme Court observed that any amount charged which has no nexus with the taxable service and is not a consideration for the service provided does not become part of the value which is taxable under Section 67 - Supreme Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] and it was observed that since service tax is with reference to the value of service, as a necessary corollary, it is the value of the services which are actually rendered, the value whereof is to be ascertained for the purpose of calculating the service tax payable thereupon. In the case of MURLI REALTORS PVT. LTD., MAGRPATTA TOWNSHIP DEVELOPERS CONSTRUCTION CO. LTD., JAIN CONSTRUCTION, SAI CONSTRUCTION PVT. LTD., INDIA LAND INFRASTRUCTURE DEVELOPMENT PVT. LTD., RVS HOSPITALITY DEVELOPMENT PVT. LTD., VANSUM INDUSTRIES AND THE MANJRI STUD FARM PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE PUNE-II [ 2014 (9) TMI 461 - CESTAT MUMBAI] , a Division Bench of the Mumbai Tribunal made the observations with regard to the security deposit towards the renting of immovable property, holding that In the absence of a provision in law providing for a notional addition to the value/price charged, the question of adding notional interest on the security deposit as a consideration received for the services rendered cannot be sustained. In view of the facts that department could not bring on record any clinching evidence that the deposit has influenced the service charges, the demand is not sustainable. The impugned orders are set aside - appeal allowed - decided in favor of appellant. Central Excise 2022 (4) TMI 733 Valuation of Central Excise Duty - argument of the appellant is that the mandate of Section 4A(2) obligates the taxing authority to assess the excise duty only in reference to the market selling price printed on the packing of the product - HELD THAT:- The submission of argument clearly overlooks the purport of expression retail sale price occurring in Section 4A. The non-obstante clause in Section 4A(2) will have to be construed in the context of the meaning of the expression retail sale price as elaborated in explanation (1). Taking that into account, the conclusion reached by the Tribunal needs no interference. Hence, the civil appeals are dismissed. Application disposed off. 2022 (4) TMI 732 Classification of goods - Light Oils and Preparations - HELD THAT:- In the present case, even as per the Chemical Examiner s Report, the range of distillation of the product in question was between 35 degree to 58 degree Celsius which is much below 210 degree Celsius and the word used in sub-heading notes referred to herein above is at and not up to - there are no reason to interfere with the impugned order(s) passed by the Tribunal. Appeal dismissed. 2022 (4) TMI 731 Valuation - intent to evade payment of duty - whether the goods sold to a related party or a sister concern should have been computed on cost of production basis which was not undertaken by the appellant herein? - Central Excise Valuation Rules, 2000 - HELD THAT:- In discussing the aspect of intent to evade , as used in Section 11AC(1)(a) of the Act of 1944, the Tribunal found that once it was established that the assessee had not valued the goods in accordance with the said Rules of 2000 and when the assessee produced no evidence to substantiate its claim of having cleared the goods to the related parties at the prevailing market prices, the intention to evade duty payable would arise and an adverse inference could be drawn against the assessee. The Tribunal also noticed that no effort was made by the assessee to show the prices charged to the related party or compare such prices to those charged to independent parties. The Tribunal noticed that there was a charge against the assessee that it had deliberately over-valued the goods cleared to related parties in an attempt to obtain a higher refund. The Tribunal found that the assessee had indulged in under-valuation as per its convenience, to short pay the duty amount which has not been rebutted by submitting the prices charged to independent parties. The Tribunal has furnished adequate reasons to justify the perception that the appellant herein had intended to evade payment of duty. The initial order had merely waived the penalty without indicating any reason. Since appropriate reasons relevant to the issue have been indicated in the order impugned upon due considerations being taken into account, the order in appeal does not call for any interference. Appeal dismissed. 2022 (4) TMI 730 Violation of the principles of natural justice - Validity of Show Cause notice - only ground raised by the petitioner for invoking Article 226 of the Constitution of India by filing the present writ petition before this Court is that, the documents sought for by the petitioner have not been supplied - HELD THAT:- Since the invoice numbers have been given with the suppliers name since those suppliers have claimed to have supplied the input ie., the CRCA Scrap to the petitioner, from them those transactions could very well be verified by the petitioner. Therefore, in this case it cannot be treated that the documents sought for by the petitioner have not been furnished. Moreover, it has been made clear after investigation by the Revenue that, what is the exact raw material which they use and based on which their finished product requires such a raw material as an input claimed to have been purchased from the suppliers were required for manufacturing process itself was unearthed by the Revenue - this Court is of the considered view that, the case projected by the petitioner as if that the documents mainly relied upon by the Revenue, though had been sought for, have not been supplied to the petitioner is not factually correct and it is the case where most of the documents have been supplied to the petitioner and even with regard to the invoices sought for by the petitioner for which the Revenue has given a reply that the numbers of the invoices has been given in the annexure and the same can very well be verified by the petitioner with their suppliers. This kind of gesture shown by the respondent, in the considered view of the matter, cannot be treated as non-supply of documents and therefore, for that reason, it cannot be considered in this case that there has been a violation of principles of natural justice. Therefore, on that ground, the petitioner is not entitled to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. Petition dismissed. 2022 (4) TMI 729 CENVAT Credit - input services - Erection Commissioning and Installation Services - Works Contract Services - credit on ECIS was denied on the ground that this service is falling under the exclusion clause in the definition of input service under Rule 2 (l) of Cenvat credit rules, 2004 - extended period of limitation - HELD THAT:- The capital goods/ structure for which ECIS service was received is clearly in respect of the plant and machinery which are itself capital goods. Therefore, it is not coming out from the fact as reproduced above that the ECIS services were received for execution of Works contract and/or construction of building or civil structure. The Adjudicating Authority in his finding has contended that the works contract and /or construction of building does not mean only a building which is made of cement, steel etc but building of any nature falls under the category of construction in general - In the present case ECIS is in respect of plant and machinery which does not amount to construction of building and which by any stretch of imagination cannot be amount to construction of a building or a civil structure. Therefore, the ECIS in the facts of the present case do not fall under exclusion category. We agree with the submission of the appellant in as much as the construction of the building or civil structure which is in the nature of building. However, in the present case ECIS was used not for constructing any building or civil structure whereas the ECIS /WCS was used only for plant and machinery which are the capital goods. It is clear that the construction means commercial or industrial construction of a building or a civil structure or a part there of. However, the exclusion provided in the definition in respect of roads, airports, railway, transport terminal, bridge, tunnel, and dam etc further reinforce the contention of the appellant that only those constructions which is in respect of building and civil structure will fall under construction. However, in the present case the ECIS services were not used for construction of building or a civil structure, it is admittedly used for erection installation of plant and machinery therefore the ECIS were not used for construction of building or civil structure. The revenue relied upon the Board Circular No. 80/10/2004-ST dated 17.09.2004 which clarified that erection involves civil structure which otherwise fall under the category of construction service - in a composite work if along with ECIS the service of civil structure is involved only those can be categorized under construction service. This rather helps the case of the appellant in as much as the ECIS service is independent without involving any work contract. Therefore, the ECIS alone will not fall in the construction service. There is no dispute that the ECIS service is in respect of technological, mechanical or industrial structure, the fabrication of such structure by any stretch of imagination cannot be construed as construction of civil structure. As per the Finance Act, 1994 reference to civil structure is construction using steel, cement, sand etc and to a similar building, road, dam, airport etc. therefore there is a vast difference between the civil structure, building, etc. and technological structure which in the present case, the appellant have erected and installed by using ECIS - The appellant have availed credit with respect of fabrication in respect of pipe supports which are nothing but pipe fittings and are covered under the definition of capital goods under Rule 2(a) of Cenvat Credit Rules, 2004 admittedly the appellant availed the Cenvat Credit only for installing and commissioning of the technological structure which cannot be said to be activity of making structure for support of capital goods. The service provider has classified the services under ECIS and not under Construction Service and paid service tax under the head of ECIS. The ECIS Service independently not covered under the exclusion clause therefore, for this reason also credit cannot be denied. There is a catena of case laws wherein, it was held that the classification of service cannot be disturbed or challenged at the end of service recipient particularly for denial of cenvat credit. Once the classification is finalized at the service provider end, the same cannot be altered at the service recipient end. Any service of any nature if it is used for modernization and renovation or repair of the existing factory are indeed input services in terms of Rule 2(l) of Cenvat Credit Rules, 2004. On this ground also the appellant are entitled for Cenvat Credit in respect of ECIS which were used in relation to modernization and renovation of the existing factory - In the facts of the present case the appellant being the manufacturer of excisable goods availed the credit on ECIS. In these circumstances the exclusion clause is not applicable to the appellant. For this reason also the denial of credit on ECIS is not sustainable. Extended period of Limitation - HELD THAT:- The information sought for during the audit was details of Cenvat credit on the service availed in relation to construction of civil structure and for support of capital goods. As per the submission of the appellant, it is their bona fide belief that no credit whatsoever has been availed by it on any construction services let alone the service which has been used for construction of civil structures or for making the structure for support of capital goods would not have furnished the information called for. Therefore, it cannot be said that the appellant have suppressed the fact wilfully with intent to take wrong cenvat credit - it cannot be said that the appellant have wilfully suppressed the facts with intent to avail wrong credit - the demand for the extended period is not sustainable on the ground of limitation also. The appellant have correctly availed the cenvat credit in respect of ECIS therefore, the demand of cenvat credit on ECIS service is not sustainable - appeal allowed - decided in favor of appellant. 2022 (4) TMI 728 Denial of interest on the refund claim sanctioned to the appellant - finalization of provisional assessment or not - rejection on the ground that the refund claim was allowed under Rule 9B of the erstwhile rule and not under section 11 B of the act and therefore there was no case for interest on the delayed refund since Rule 9 B of the erstwhile rule contained no such provisions for interest - HELD THAT:- The refund has been sanctioned on finalization of provisional assessment. The order granting refund sanctions refund under section 11B of the Central Excise Act, 1944 read with Rule 9B of Central Excise Rules, 1944. The appellant claims that since while sanctioning the refund Section 11B has been invoked, therefore in terms of Section 11 BB the appellant is entitled to interest for the delay in sanction of refund claim from the date of filing of refund claim. The facts of instant case are that while assessment was done provisionally on the direction of Hon ble High Court, no order finalizing the provisional assessment has been passed. The appellant had filed the refund claim on 29.07.1998 after the Commissioner (Appeals) decided their appeal on 06.01.1998 and held that the goods are rightly classifiable under heading No. 2302 and charge to nil rate of duty - it is seen that in ordinary course of refund arising out of finalization of provisional assessment would be decided in terms of Rule 9B however if any refund arises on account of challenge to an order passed under Sub Rule (5 )of Rule 9 B then such demand or refund would be governed by section 11 A or Section 11 B as the case may be. In the instant case there is no finalization of Provisional assessment and there is no challenge to any such assessment, in these circumstances the refund would not be governed by provisions of Rule 9 B. Relying on the CBEC Circular No 670/61/2002-CX/1 dated 01.10.2002. Another SCN was issued wherein it was held that the refund arising on account of finalization of provisional assessment under Rule 9 B are not governed by the provisions of section 11B. It is seen that this view is in harmony with the observation of Hon ble Apex Court in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] .In this regard the observation of the jurisdictional High Court in the case of CONTEMPORARY PACKAGING TECHNOLOGIES PVT. LTD. VERSUS UNION OF INDIA 2 [ 2013 (8) TMI 577 - GUJARAT HIGH COURT] also becomes relevant wherein it is categorically observed that the provisions of Section 11B of the Central Excise Act would not govern the grant of refund claims arising on account of finalization of provisional assessment under rule 9B of Central Excise, 1944. The appeal is dismissed. 2022 (4) TMI 727 Clandestine Removal - Re-rolled products - cross-examination sought by the manufacturer not granted - third party evidences - penalty under Rule 25 of the CER, 2002 - HELD THAT:- Both the adjudicating authority has considered the entire records and evidences as is against the appellant and imposed the penalty. It is found that there is confessional statement of Appellant, the entire clandestine activity was also supported by the transactions recorded in records which were recovered from appellant. Further the Manufacturer, M/s Chamunda Rolling Mills Pvt. Ltd. also not disputed the demand of central excise duty involving the role of appellant in this matter. Penalty - HELD THAT:- The penalty provisions were correctly invoked to impose penalty on him. There are no reason to set aside such a reasoned orders for the imposition of penalty. However, the appellant being an individual and considering overall facts of this case, the penalty imposed on the appellant reduced to ₹ 50,000/-. Appeal allowed in part. 2022 (4) TMI 726 CENVAT Credit - import of capital goods - project import regulation - period February, 2006 to April, 2007 - HELD THAT:- It is not in dispute that the appellant has imported the machinery vide seven bills of entry and the same was initially cleared provisional, on payment of the applicable duties and thereafter it is further evident from the record that the machinery/ parts have been installed in the factory of production, as verified by the certificate issued by the Range Superintendent on 26.06.2009. It is further found that as the appellant has filed the original bills of entry with the Customs Department and they were not in a position to again produce the same before the Excise Department - the refusal to allow cenvat credit by the Court below is bad. The appellant is entitled to cenvat credit under dispute - appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2022 (4) TMI 725 Validity of assessment order - sales of paper to manufacturing registered dealers against declarations in Form IA out of the paper purchased by furnishing declaration in Form 34 inside the State of Odisha - contravention of the 2nd proviso to Section 5A(a)(ii) of the Orissa Sales Tax Act, 1947 (OST Act) - non-consideration of Sections 6 and 7 read with Sections 4(1) of the OST Act - validity of orders of assessment passed under the Odisha Additional Sales Tax Act (OAST) for which no separate notice under Section 12(8) of the OST Act read with the OAST Act had been issued - validity of orders of assessment passed under the OAST Act leaving additional sales tax under Section 5(2)(A)(a)(ii) of the OST Act which did not form part of the gross turnover under the OST Act. HELD THAT:- In Lloyd Electric and Engineering Ltd. [ 2015 (9) TMI 370 - SUPREME COURT] , the question was whether the Appellant Assessee is liable to pay central sales tax @ 2% on the inter-State sales for the period 1st April, 2009 to 17th June, 2009 or @ 1 % in view of the Industrial Policy of the State? The question was answered in favour of the Assessee and it was held that the Assessee would be entitled to concessional rate of CST @ 1%. In coming to that conclusion, it was held that the State Government was bound by the policy decision taken by the Council of Ministers and duly notified by the Department concerned, namely, the Department of Industries. It was held that the State Government cannot speak into two voices . The impugned orders of the Tribunal for both years are accordingly set aside and the corresponding orders of the ACST are restored to file - Revision petition disposed off.
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