TMI Tax Updates - e-Newsletter
April 20, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Seeking grant of Regular Bail - unauthorised and fraudulent claim of input tax credit - cheating and fraud - There is no suggestion in the Status Report that the applicant neither has prior criminal antecedents nor is there any material to suggest that he is a flight risk. The applicant has been in custody for a period of approximately nine months - The chances of the applicant tampering with the evidence is therefore unlikely. - Bail granted - HC
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GST:
Revocation of cancellation of the registration of petitioner - non-filing of returns for continuous period of six months - In the peculiar facts and circumstances, the authority ought to have condoned the delay which unfortunately was not done, despite the writ applicant having made a fervent request for condonation of delay in filing appeal seeking revocation of cancellation of registration. - On account of procedural lapses, the High Court should not be flooded with writ applications. The procedural aspects should be looked into by the authority concerned very scrupulously and deligently. Why unnecessarily give any dealer a chance to make a complaint before this Court when it could have been easily avoided by the department. - HC
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GST:
Classification of goods - rate of tax - The Composite supply of works contract is provided by the applicant sub-contractor to the main contractor who is further providing services specified in item (vii) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or Government Entity - the impugned supply of the applicant is covered under Sr.No. 3(x) f Notification No. 11/2017-CTR dated 20.06.2017 as amended from time to time. - with effect from 01.01.2022, the impugned services supplied by the applicant will not be covered under Sr. No. 3 (x) of Notification No. 11/2021-CTR dated 28.06.2017 as amended from time to time. - AAR
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Income Tax:
Disallowance of rates & taxes being reversal of CENVAT credit on scrap written off - In case, the assessee is able to explain CENVAT credit with necessary details, then the Assessing Officer is directed to delete additions made towards disallowance of reversal of CENVAT credit on scrap written off. - AT
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Income Tax:
Deduction claimed u/s. 54 - LTCG - In the present case, the assessee has purchased property in the name of married daughter, although she was divorced, but she is an independent for purpose of the Income Tax Act. Therefore, we are of the considered view that benefit of deduction u/s.54 of the Act cannot be allowed, when property has been purchased in the name of married daughter. - AT
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Income Tax:
Revision u/s 263 by CIT - buy back of shares from its own holding company - deemed dividend under section 2(22)(d) - dividend distribution tax u/s 115-O - CIT has flagged a pertinent issue and fully justified as to how the assessment order was erroneous as well as prejudicial to the interest of the revenue. Upon perusal of assessment orders, we find that this issue was never delved into by Ld. AO or Ld. TPO and there was complete non-application of mind on the sated issue. - AT
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Income Tax:
Revision u/s 263 - issue of bonus shares would amount to distribution of dividend or not - the assessee has issued only equity shares and there are no preference shares. The bonus has been issued to equity shareholders only. Thus, the assessee’s case do not fall either in Clause (a) or Clause (b) of Sec.2(22). This being so, the amount of bonus could not be held to be dividend and accordingly, Sec.115-O would have no application in such a case. - AT
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Income Tax:
Addition treating the cash deposit in bank account as Income other Source - the assessing officer has just brushed aside the evidences without even a word on why they are not acceptable and how these are fabricated documents. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. - Additions deleted - AT
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Income Tax:
Long term capital gains arising on sale of house property - cost of improvement - CIT(A) rightly observed that the air conditioners are at best categorized as furnishing in order to improve the living condition inside the building and it do not enhance the value of building or longevity of the building per se. - AT
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Income Tax:
Condonation of delay - delay of 41 months in filing appeal before the CIT(A) - according to the assessee, it could not realize the effect and consequence of the order passed under section 143(1) - this is a harsh decision as there is no supposition that everybody is the custodian of law, though ignorance of law is not an excuse for any wrong action. But in the instant case, according to the assessee, it could not realize the effect and consequence of the order passed under section 143(1). This, according to us, is a convincing reason. - Delay condoned - AT
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Income Tax:
Disallowance claim of deduction u/s.80- IA - the assessee is found to have executed works contract attracting the explanation to sub-section 13 of 80IA – A partnership firm is not a creation of statute but it is a body of individuals regulated by the statute namely Partnership Act - The assessee fails to satisfy the applicability clause of the provision as envisaged under section 80IA(4)(i) - AT
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Income Tax:
Additional Depreciation on Power Generation Unit - u/s 32(1)(iia) - The provisions do not state that setting up of a new machinery or plant, which was acquired and installed after 31-3-2002, should have any operational connectivity to article or thing that was already being manufactured by the assessee. - AT
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Income Tax:
Status of a private discretionary trust - AOP OR Individual - The Ld. CIT(A) has interpreted the meaning of AOP - the subsequent amendment by explanation to section 2(31) wherein the AOP can be formed without the common objective of deriving income, profits or gains, thus concluding that private discretionary trust will come under the purview of AOP. In addition to this, the proviso to section 164(1) also states that under the circumstance provided therein, the income of the discretionary trust shall be assessed to tax as AOP. - Order of CIT(A) sustained - AT
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Service Tax:
CENVAT Credit - input service - amount paid to the broker / property consultant for purchasing the immovable property to be used for providing output service of renting of immovable property - The amount in question is the amount given to the person who rendered the services of getting purchased the immovable property through which the output service of renting of immovable property could not have been provided. The brokerage/ consultancy services received for setting up of said immovable property is accordingly held to be an eligible inputs service.- AT
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Central Excise:
Maintainability of revenue appeal - Inappropriateness of the direction given in the circular issued by the Department to follow regime of call-book - threshold monetary limit - The assessee can raise grounds independent of that contention. But if the assessee chooses to raise ground regarding call-book regime, that contention must await the outcome of the proceedings pending before this Court in the connected cases listed today. - SC
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VAT:
Exemption from Entry tax - Iron & Steel (MS Angle, MS Channel, MS Plate, MS Beam, etc.) used in expansion of Cent Plan - capital goods or not - the certificate of Charted Accountant nowhere mentions as to how the consumption of iron & steel is directly connected with the plant & machinery or its accessories or its components - Only by referring or describing the user will not help the assessee for treating the iron & steel used for the constructions of buildings as “capital goods”, more precisely, as “plant & machinery”. - HC
Articles
Notifications
News
Case Laws:
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GST
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2022 (4) TMI 867
Maintainability of petition - remedy of filing of an appeal under Section 107 of the U.P. G.S.T. Act 2017 - lapse of statutory time limit - Cancellation of GST registration of the petitioner - HELD THAT:- Having perused the record what is apparent is that the petitioner has a remedy of filing an appeal against the impugned order dated 08.02.2021. Though the petitioner was desirous of filing of appeal yet he could not file the appeal within the statutory time period. The delay is sought to be explained on the ground of COVID 19 pandemic and reliance has also been placed on the judgement of Hon'ble the Apex Court in the case of IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (3) TMI 497 - SC ORDER ] to contend that the period of limitation is bound to be extended. The writ petition is disposed of leaving it open to the petitioner to file an appeal within a period of two weeks from today.
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2022 (4) TMI 866
Seeking grant of Regular Bail - unauthorised and fraudulent claim of input tax credit - cheating and fraud - offences under Sections 420, 468 and 471 of the IPC - HELD THAT:- The chargesheet and a supplementary chargesheet having been filed, the applicant is entitled to bail in the facts and circumstances of the case. From the Status Report quoted above, it appears that the main link of the present applicant with the transactions in question is on the basis of the use of the mobile No. 9015824684 and his email address. As far as the mobile number in question is concerned, the chargesheet and the Status Report reveal that it was transferred to the applicant only on 13.03.2018. The email addresses mentioned in paragraph 6 of the Status Report were also accessed not through the applicant but through another party. In the Status Report, the prosecution has made out a case that the applicant, in conspiracy with Shubham Khandelwal, had registered various bogus firms and opened fictitious bank accounts. There is no suggestion in the Status Report that the applicant neither has prior criminal antecedents nor is there any material to suggest that he is a flight risk. The applicant has been in custody for a period of approximately nine months since 14.07.2021. The evidence in the present case is largely documentary, and has already been placed before the Trial Court. The chances of the applicant tampering with the evidence is therefore unlikely. The applicant is admitted to bail, subject to the conditions imposed - application allowed.
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2022 (4) TMI 865
Initial and completion of final assessment proceedings within a reasonable time period - seeking release of Bank Guarantees - direction to respondent to return the amount deposited by the petitioner in favour of the petition - compensation to petitioner for monetary losses suffered by petitioner due to bank guarantee charges - permission to petitioner to sell their machines - grievance of the writ-applicant is that the final assessment proceedings are yet to be undertaken - HELD THAT:- The merits of this litigation, need not be entered, as the issue is still at large before the Assistant Commissioner, Vadodara. The only concern is the delay that has occurred in the present litigation in finalizing the assessment proceedings. The Assistant Commissioner of Central Excise, Vadodara is directed to immediately take up the matter and see to it that the assessment proceedings are concluded finally with an appropriate order of assessment in accordance with law within a period of two (02) months from the date of the receipt of the writ of this order. Application disposed off.
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2022 (4) TMI 864
Revocation of cancellation of the registration of petitioner - non-filing of returns for continuous period of six months - fraud - wilful suppression of facts or not - HELD THAT:- The assignment of reasons is imperative in nature and the speaking order doctrine mandates assigning the reason which is the heart and soul of the decision and said reasons must be the result of independent re-appreciation of evidence adduced and documents produced in the case. The respondent authority has failed to extend sufficient opportunity of hearing before passing impugned order, inspite of specific request for adjournment sought for. Even the impugned order is not only non speaking, but cryptic in nature and the reason of cancellation not decipherable therefrom. Thus, on all counts the respondent authority has failed to adhered to the aforesaid legal position - there are no hesitation in holding that the basic Principles of natural justice stand violated and the order needs to be quashed as it entails penal and pecuniary consequences. The Appellate authority ought to have appreciated that the writ applicants at relevant point of time i.e. in year 2017, applied for registration which request was favourably considered by the authorities under the Act with a specific registration number allotted to the writ applicant. It was a transitional phase, whereby the old CST Act was repealed and the new regime of CGST/ GGST has come into force - Unfortunately, information of the returns for certain period not being uploaded, surfaced in the year 2019 and the cause explained suggest that circumstances were beyond the writ applicant's reach. In such peculiar circumstances, it was least expected of the Appellate authority to condone the delay for filing appeal, more so, with the Onset of Pandemic Covid-19, preventing further follow up action. In the peculiar facts and circumstances, the authority ought to have condoned the delay which unfortunately was not done, despite the writ applicant having made a fervent request for condonation of delay in filing appeal seeking revocation of cancellation of registration. On account of procedural lapses, the High Court should not be flooded with writ applications. The procedural aspects should be looked into by the authority concerned very scrupulously and deligently. Why unnecessarily give any dealer a chance to make a complaint before this Court when it could have been easily avoided by the department. All the writ applications deserve to be allowed solely on the ground of violation of principles of natural justice and, accordingly, the writ applications are allowed.
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2022 (4) TMI 863
Classification of goods - rate of tax - applicability of SI No 3A- Chapter No. 9954 as per Notification No. 12/2017- C.T. (Rate) dated 28.06.2017, as amended by Notification No. 2/2018-Central Tax (Rate) dated 25th January 2018, w.e.f. 25th January 2018 or SI No 3 (x) - Chapter No. 9954 as per Notification No. 01/2018-C.T. (Rate) dated 25th January 2018 (amendment in the Notification No 11/2017- C.T. (Rate) dated 28th June 2017)? - HELD THAT:- The activity of the Principal Contractor is not covered under Sr. No 3A-Chapter No. 9954 as per Notification No. 12/2017- C.T. (Rate) dated 28.06.2017, as amended from time to time, in the subject case also, relying on the same ratio we are of the opinion that the applicant cannot avail the benefit of Sr. No 3A- Chapter No. 9954 as per Notification No. 12/2017- C.T. (Rate) dated 28.06.2017, as amended. Section 3 (x) of Notification No. 11/2017 CTR dated 20.06.2017 as amended, covers Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (vii) of Sr No 3 of Notification 11/2017-CTR to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity. The Particulars of various work items to be done by the applicant includes : Excavation for Tunnel work in all kind of soft-strata and rock including ventilation arrangement ; Providing and fabrication, transporting and erecting structural supports ; Providing and rock bolting in position (work order in running meter) ; Providing and fixing in position M.S. reinforcement; Providing and applying material component shot crating in two layers ; providing ad fixing chain link ; providing and laying in situ cement concrete in grade M-15 ; Providing and laying in situ cement concrete in grade M-20 ; removing excavated stuff from underground excavation ; providing drainage arrangement and bailing out water, etc. The Composite supply of works contract is provided by the applicant sub-contractor to the main contractor who is further providing services specified in item (vii) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or Government Entity - the impugned supply of the applicant is covered under Sr.No. 3(x) f Notification No. 11/2017-CTR dated 20.06.2017 as amended from time to time. Notification No.11/2017-CT (Rate) dated 28/6/2017 as amended, was amended vide Notification No. 15/2021-Central Tax (Rate) dated 18.11.2021 (with effect from 01.01.2022) and in Sr. No 3, in column (3), in the heading Description of Services , the words or a Governmental authority or a Government Entity are omitted. Therefore, with effect from 01.01.2022, the impugned services supplied by the applicant will not be covered under Sr. No. 3 (x) of Notification No. 11/2021-CTR dated 28.06.2017 as amended from time to time.
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Income Tax
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2022 (4) TMI 862
Commissioner of Income Tax jurisdiction under Expenditure Tax Act, 1987 - Revision of orders by the Commissioner - Assistant Commissioner empowered to act in place of the Commissioner under Section 21 of the ET Act - notice under Section 21 of the E.T. Act dated 01/10/2002 was issued and signed by the Assistant Commissioner of Income Tax - HELD THAT:- Record was examined by the Assistant Commissioner and not by the Commissioner of Income Tax. Section 21 of the E.T. Act mandates the examination of records by the Commissioner of Income Tax and for issuance of notice under Section 21 of the E.T. Act Commissioner of Income Tax himself is required to apply his mind. The Commissioner of Income Tax cannot pass an order in revision order on the basis of a notice issued by his subordinate officer. The Assistant Commissioner of Income Tax in his notice dated 01/10/2002 nowhere stated that the said notice was issued on the instructions or direction of the Commissioner of Income Tax. Insofar as principle of waiver is concerned, it is settled position of law that the same cannot be invoked so as to confer jurisdiction. In this case, the Assistant Commissioner Income Tax had issued notice under Section 21 of the E.T. Act who admittedly had no jurisdiction. In terms of Section 21 of the E.T. Act, the Commissioner of Income Tax is the competent authority vested with that power. Therefore, the notice under Section 21 of the E.T. Act has necessarily to be issued by the Commissioner of Income Tax and not by the Assistant Commissioner. As a consequence, the notice being without jurisdiction, all the proceedings subsequent thereto are without authority of law. In Sahni Silk Mills (P) Ltd.. [ 1994 (7) TMI 312 - SUPREME COURT] the Supreme Court was considering the legality of resolution empowering the Director General to authorize any other Officer to exercise his powers. The Court found that in the absence of enabling provision, such delegation would not be permissible and that the legislature can permit any statutory authority to delegate its power to any other authority after such a policy is indicated in the statute itself and when parliament has specifically appointed an authority to discharge a function, it cannot be readily presumed that it had intended that its delegate should be free to empower another person to act in his place. In the instant case, nothing has been shown to us whereby the Assistant Commissioner was empowered to act in place of the Commissioner under Section 21 of the ET Act.. As we can see from the aforesaid decisions, an Officer superior in rank to the Assessing Officer was found to have no jurisdiction to issue the notice in question. Applying these principles at the case at hand, we have no hesitation in concluding that the Assistant Commissioner could not have issued the notice in the instant case.
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2022 (4) TMI 861
Dismissal of appeal by CIT-A for non-persecution - CIT-A proceeded to hold that assessee has not made any submission in respect of the grounds of appeal till date HELD THAT:- We find that ld.CIT(A) has taken up the appeal after three years of filing of the appeal and within a very short span of time has dismissed the appeal for non-persecution. The only reason to uphold the order of AO mentioned by the ld.CIT(A) is that no submission was made before him by the assessee. We find that the above is a non speaking, non reasoned and cryptic order, not sustainable in law. As a matter of facts, the income tax Act in section 251 of the I.T.Act dealing with the power of ld.CIT(A) does not provide for any power to the ld.CIT(A) to dismiss the appeal for non-prosecution. In these facts, we are of the considered opinion that the matter needs to be remitted to the file of ld.CIT(A) to give the assessee, an opportunity of being heard and thereafter, decide the appeal as per law by a speaking order. Ld. Counsel of the assessee agreed with the above proposition and undertook to cooperate with ld. CIT(A) when the matter is remanded - Appeal by the assessee stands allowed for statistical purposes.
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2022 (4) TMI 860
Reopening of assessment u/s 147 - unexplained cash deposits made in the bank account - HELD THAT:- In this case, original assessment was completed under section 143(1) of the Act and therefore, there was no occasion for the Assessing Officer to examine all the relevant information to complete the assessment. Subsequently, the Assessing Officer has noted that there is a huge credits and debits on various dates and therefore, the Assessing Officer was of the opinion that there is an escapement of income chargeable to tax and reopened the assessment. In view of the above facts, we find that the Assessing Officer has validly reopened the assessment. We find no merits in the arguments of the ld. Counsel and accordingly, the ground of reopening of assessment raised by the assessee is dismissed. Unexplained cash deposits - As assessee has submitted with regard to the addition of ₹ 86,500/- that the assessee has received the said amount from Arihant Capital Markets Limited, share broker and member of NSE and is registered with SEBI. It was further submitted that the receipt of funds from Arihant Capital Markets Limited are from trading of securities only and that all the receipts and payments are being made through banking channel only. Once the receipts and payments are being made through banking channel and not disputed by the authorities below, we are of the opinion that the addition made by the Assessing Officer is liable to be deleted and accordingly, the addition is deleted. For amount shown as opening cash balance as on 01.04.2009 since no wealth tax return has been filed by the assessee - assessee has submitted that the net wealth of the assessee is far below the taxable limit and there is no need for the assessee to file her wealth tax return. In case, the AO is of the opinion that the net wealth of the assessee is more than the prescribed limit, the Assessing Officer can proceed for making wealth tax assessment than adding the sum under the income tax assessment. Accordingly, the addition made by the Assessing Officer is deleted. Thus, the grounds raised by the assessee on merits are allowed.
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2022 (4) TMI 859
Reopening of assessment u/s 147 - Proof of fresh tangible material - whether reopening of assessment is based on reasonable belief of escapement, which suggest escapement of income on the basis of fresh tangible material or mere change of opinion on the issue which has been deliberated upon by the AO during the scrutiny assessment proceedings? - HELD THAT:- The facts born out from records clearly indicate that the Assessing Officer has examined issue of compensation paid by the assessee for breach of contract with his employer company and has allowed claim which is evident from fact that the Assessing Officer has left a note not to the assessee in the assessment records as per which, it is clearly evident that the Assessing Officer has applied his mind before allowing claim of the assessee. Reasons recorded by the Assessing Officer to form reasonable belief of escapement is based on audit objection, as per which the audit party also noted that as per note not to the assessee from assessment records, the audit party has raised objection on the issue of deduction allowed towards expenses claimed by the assessee. Basis for reopening of assessment is audit objection and further, which is based on note not to the assessee given on assessment records. Except this, there is no fresh tangible material in the possession of the Assessing Officer to form reasonable basis of escapement of income - once it is noted that basis for reopening of assessment is note not to the assessee available on record, then it is implied that the Assessing Officer had very clearly and definitely formed opinion on the issue and thus, reopening of assessment on the very same issue amounts to change of opinion, which is not permissible under the law. Since, there is no fresh tangible material, except note not to the assessee , with the Assessing Officer to form reasonable belief of the escapement, we are of the considered view that the AO had applied his mind to the issue in the original assessment proceedings and has allowed deduction. Therefore, reopening of assessment on the very same issue in absence of any fresh tangible material amounts to clear case of change of opinion, which is not permissible under the law. CIT(A), after considering relevant facts has rightly quashed the assessment proceedings. Hence, we are inclined to uphold findings of the learned CIT(A) and reject grounds taken by the revenue.
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2022 (4) TMI 858
Disallowance of rates taxes being reversal of CENVAT credit on scrap written off - AO Disallowed reversal of CENVAT credit on scrap written off on the ground that the assessee could not file necessary evidences and also failed to explain how figure was arrived at - HELD THAT:- There is no dispute with regard to legal position that when unutilized CENVAT credit is available with the assessee for any reason, including restriction if any, imposed under CENVAT Credit Rules, same can be reversed and debited into profit loss account, because CENVAT credit availed by the assessee on purchase of raw materials partakes nature of cost of materials purchased/consumed. Therefore, when the assessee has reversed CENVAT credit as per CENVAT Credit Rules, then it needs to be debited into expenses account. However, the assessee has to file necessary evidences to prove reversal of CENVAT credit and also to explain how such figure has been arrived. In this case, the Assessing Officer claims that the assessee did not furnish necessary evidence, whereas, the assessee claims that it has filed reconciliation explaining reversal of CENVAT credit. The fact needs to be verified. Hence, we set aside this issue to the file of the Assessing Officer and direct the Assessing Officer to reexamine claim of the assessee in light of our findings given hereinabove. In case, the assessee is able to explain CENVAT credit with necessary details, then the Assessing Officer is directed to delete additions made towards disallowance of reversal of CENVAT credit on scrap written off. Disallowance of withholding tax debited into rates taxes account - AO has disallowed withholding tax included in rates taxes account on the ground that any tax, duty or cess is not allowable deduction u/s.40(a)(ii) - HELD THAT:- In this case, as per terms of agreement with lenders, the assessee should make interest payment net of all applicable taxes in India. In other words, as per terms of agreement between the parties, the assessee shall borne all applicable taxes on interest payment to the lenders. As per terms of agreement, the assessee has grossed up interest payment towards TDS paid on said interest and remitted into Govt. account and also debited withholding tax to the profit loss account. In our considered view, withholding tax paid by the assessee to the Govt. account on behalf of the lenders in terms of agreement between the assessee is nothing, but cost of borrowings (interest to the assessee) and thus, the assessee is entitled to claim deduction for said withholding tax u/s.37(1) - However, fact remains that although, the assessee claims to have filed all details, but the Assessing Officer observed that the assessee does not furnish any evidence to substantiate its claim. Hence, we set aside this issue also to the file of the Assessing Officer and direct the Assessing Officer to examine claim of the assessee in light of agreement between the parties. In case, claim of the assessee is correct, then the Assessing Officer is directed to delete addition made towards withholding tax u/s.40(a)(ii) of the Act. Appeal filed by the assessee is treated as allowed for statistical purposes.
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2022 (4) TMI 857
Unexplained cash deposits and undisclosed expenses - assessee has not provided any sufficient evidence to substantiate her claims - HELD THAT:- In case any piece of evidence is available with the assessee or any explanation for the source of cash deposits, the assessee would have submitted before the ld. CIT(A) and the ld. CIT(A) would have considered the same. When the assessee has not rebut the averments of the Assessing Officer before the ld. CIT(A), there is no question of remitting the matter back to the file of authorities below for affording one more opportunity of being heard since the assessee has not furnished any piece of evidence or any explanation for the source of cash deposit, we are unable to accept the plea raised by the ld. Counsel for the assessee and accordingly, the plea of the ld. Counsel is rejected.- Decided against assessee.
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2022 (4) TMI 856
Disallowance of loss on claim of Foreign Exchange loss - whether notional loss in Foreign Exchange rate claimed by the assessee in the instant case was not incurred in connection with loan for revenue purposes so as to allow the deduction as revenue expenditure - whether investment made in a foreign subsidiary company as advance is only capital in nature and hence loss due to fluctuation in Foreign Exchange rate is only a capital loss on investment? - CIT-A deleted the addition - HELD THAT:- High Court of Madras in the case of CIT Vs. Celebrity Fashion Ltd. [ 2020 (9) TMI 1022 - MADRAS HIGH COURT] had considered an identical issue and held that in case of the assessee, not being dealer in foreign exchange, but exporter of cotton, loss incurred on account of cancellation of forward contract would not be speculative losses falling within the provisions of section 43(5) of the Act and the assessee would be entitled to claim deduction in respect of loss suffered by it as business loss. The sum and substance of ratio laid down by various courts, including the Hon'ble Supreme Court is that if loss incurred on account of fluctuation of foreign currency, whether it is on account of revenue account or capital account, same needs to be allowed as deduction, unless loss comes under provisions of section 43(5) of the Act. In this case, the revenue fails to bring on record any evidence to prove that loss incurred by the assessee on account of restatement of loan liability is capital in nature and further, it comes under the provisions of section 43A - Therefore, we are of the considered view that there is no reason to interfere with the findings of the learned CIT(A) to delete additions made by the Assessing Officer towards disallowance of forex loss. Hence, we are inclined to uphold findings of the learned CIT(A) and reject grounds taken by the revenue.
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2022 (4) TMI 855
Validity of reassessment proceedings - addition on account of Long Term Capital Gain - HELD THAT:- AO in the instant case, on the basis of information obtained from CIB Wing of the Department that the assessee sold immovable property issued a verification letter u/s 133(6) of the Act to the assessee and in absence of any reply from the side of the assessee, reopened the case u/s 147 and issued notice u/s 148 of the Act. Since, the assessee neither filed any return in response to notice u/s 148 nor cooperated during the course of reassessment proceedings, the AO after deducting the indexed cost of acquisition from the sale consideration of ₹ 55 lakhs made addition to the returned income of the assessee - we find the ld. CIT(A) dismissed the appeal filed by the assessee on both the counts i.e. validity of reassessment proceedings and the addition on merit. While doing so, he has given justifiable reasons for the same and has passed a very details order considering each and every aspect of the issue, we do not find any infirmity in the detailed order passed by the ld. CIT(A) in upholding the validity of reassessment proceedings and the addition on merit in absence of any contrary material brought to my notice. Accordingly, the order of the ld. CIT(A) is upheld and the grounds raised by the assessee is dismissed.
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2022 (4) TMI 854
Deduction claimed u/s. 54 - LTCG - Disallowance of deduction as the New property was purchased in the name of Appellant s daughter - HELD THAT:- As per plain reading of section 54 of the Act, it is very clear that investment should be made in the name of the assessee to get benefit of deduction. However, various courts, including the case of CIT vs. V.Natarajan . [ 2006 (2) TMI 136 - MADRAS HIGH COURT] had taken a lenient view considering beneficial provisions of section 54 of the Act, and held that even if investments is made in the name of spouse or minor daughter, the deduction cannot be denied - we ourselves do not subscribe to the arguments advanced by the learned AR for the assessee to claim benefit of deduction u/s.54 of the Act, in respect of purchase of new property in the name of married daughter, because courts have considered the provisions and after considering fact that the assessee has purchased house property in the name of spouse has allowed benefit, because as per provisions of section 64 64(1A) of the Act, in case of purchase of property is in the name of spouse and minor children, income from such property is assessable in the hands of the assessee. Therefore, under those facts, the Courts have held that when property was purchased in the name of spouse, benefit of deduction cannot be denied. In the present case, the assessee has purchased property in the name of married daughter, although she was divorced, but she is an independent for purpose of the Income Tax Act. Therefore, we are of the considered view that benefit of deduction u/s.54 of the Act cannot be allowed, when property has been purchased in the name of married daughter. Assessing Officer as well as learned CIT(A), after considering relevant facts has rightly denied deduction claimed u/s.54 - Decided against assessee.
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2022 (4) TMI 853
Revision u/s 263 by CIT - buy back of shares from its own holding company - deemed dividend under section 2(22)(d) - dividend distribution tax u/s 115-O - HELD THAT:- Assessee bought back the shares from its holding company a Singapore incorporated entity. The consideration of buy-back was met out of general reserves and surplus. The payment so made was to be considered as distribution of accumulated profits to its holding company on the reduction of capital of the assessee company as envisaged in Sec. 2(22)(d). Accordingly, the assessee was liable to pay tax on distributed profits u/s 115-O besides payment of interest u/s 115P. Further, the excess consideration received by the holding company was to be treated as capital gains and the assessee was to be treated as representative assessee of its holding company in terms of Sec. 160 163 of the Act to pay the tax in respect of the above gains. Since, the assessment was completed without proper enquiry and non-application of mind, the order was erroneous and prejudicial to the interest of the revenue. Undisputed position that emerges is that the issue which has been racked up by Ld. Pr. CIT in the impugned order was never the subject matter of examination either by Ld. TPO or by Ld. AO during the course of regular assessment proceedings. The queries raised by lower authorities during the course of regular assessment proceedings and the assessee s replies thereto do not address the issue as highlighted by Ld. Pr. CIT in the impugned order. CIT has flagged a pertinent issue and fully justified as to how the assessment order was erroneous as well as prejudicial to the interest of the revenue. Upon perusal of assessment orders, we find that this issue was never delved into by Ld. AO or Ld. TPO and there was complete non-application of mind on the sated issue. This being so, the observation made by Ld. Pr. CIT in the impugned order could not be faulted with. The revision jurisdiction is perfectly valid and justified. The case laws as cited by Ld. Pr. CIT in the impugned order clearly support his view. However, our aforesaid view would not be construed as expression on the merits of the case, in any manner. - Decided against assessee.
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2022 (4) TMI 852
Addition u/s 68 - No explanation and evidences furnished in support of the credits in the Bank Accounts - HELD THAT:- Once, the authorities have accepted fact that the assessee is into business of purchase and sale of used cars, then they must have examined claim of the assessee that cash deposits found in bank account is out of advance received from customers for sale of used cars. No doubt, the assessee has taken a different stand at different levels, but learned A.R for the assessee has explained reasons for taking different stand as per which, the assessee s father was ill during the relevant time and the assessee could not explain his case before the Assessing Officer with necessary evidences. Therefore, the learned A.R for the assessee has requested to give one more opportunity of hearing to explain his case before the AO. We find that when the authorities below does not disbelieve claim of the assessee that he was into business of purchase sale of used cars, then they must have examined claim of the assessee that cash deposits found in bank accounts is out of advance received from customers. Since, both the authorities have failed to examine claim of the assessee, we are of the considered view that the issue needs to go back to the file of the Assessing Officer to give one more opportunity of hearing to the assessee to justify his case. Hence, we set aside order of the learned CIT(A) and restore the issue back to the file of the Assessing Officer and direct the Assessing Officer to re-examine claim of the assessee - Assessee appeal allowed for statistical purposes.
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2022 (4) TMI 851
Computation of income in a presumptive basis u/s.44AD - addition of trade creditors - Whether no addition u/s.28 to 43C can be made when the Assessee has filed return of income u/s.44AD? - HELD THAT:- Admittedly, the Assessee s trading turnover is to the extent of ₹ 60,87,980/-. Assessee has declared profit on the same at ₹ 4,98,560/-, i.e. net profit and had paid taxes on the same. Assessee has fulfilled all the conditions provided u/s.44AD as the Assessee has got his accounts audited and that the Assessee is in retail trade. Further, the Assessee has not claimed any deduction. Assessee, being an individual, is eligible for claim on presumptive taxation u/s.44AD of the Act. Assessing Officer has gone into the sundry creditors which are appearing in his accounts but there is no such condition provided in the provisions of Section 44AD of the Act and the CIT(A) has rightly held that, even the provisions of Section 41(1) of the Act does not apply, as there is no cessation of liability. In view of the above, we confirm the order of the CIT(A) on this issue. Assessee has also interest income received from fixed deposits made in the Bank for ₹ 2,09,084/- and this cannot be covered under presumptive taxation. Revenue has pointed out from the Assessee s accounts that it has made fixed deposits at Electricity Department, Bank of Baroda, Federal Bank, Syndicate Bank, Rent deposit and Sales Tax Deposits. According to the Revenue, this interest income is earned by the Assessee on fixed deposits made with the Banks. According to us, this is income from other sources and it has to be assessed separately. Hence, we direct the Assessing Officer to add this income apart from the income declared by the Assessee u/s.44AD of the Act and re-compute the income accordingly. This appeal of the Revenue is partly allowed
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2022 (4) TMI 850
Disallowance of SWAP contract loss - HELD THAT:- It is observed by the CIT(A) that the M2M loss on SWAP contract is allowable where loans were converted into foreign currency loan to take benefit of low interest rate and loss recognised on account of foreign exchange fluctuation as per notified Accounting Standard 11 is an accrued and subsisting liability and not merely a contingent or hypothetical liability. There is no need to interfere with the findings of the CIT(A). Therefore, appeal of the Revenue is dismissed.
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2022 (4) TMI 849
Revision u/s 263 - issue of bonus shares would amount to distribution of dividend or not - as per CIT assessee had accumulated profits and the assessee issued bonus shares during the year, therefore, the assessee was liable to pay dividend distribution tax (DDT) on such issuance u/s 115-O as profits were distributed indirectly by issue of bonus shares as covered by the provisions of Sec. 2(22)(b) - HELD THAT:- As per the provisions of Sec.2(22) dividend includes- (a)any distribution by a company of accumulated profits, whether capitalized or not, if such distribution entails the release of assets by the company to its shareholders of all or any part of the assets of the company, or (b) any distribution to its shareholders by a company of debentures, debenture-stock, or deposit certificates in any form, whether with or without interest, and any distribution to its preference shareholders of shares by way of bonus, to the extent to which the company possesses accumulated profits, whether capitalized or not. The remaining clauses (c) to (e) are not relevant in the present case. It could be gathered that the assessee s case do not fall u/s 2(22)(a) since the bonus shares are nothing but mere conversion of accumulated profits into equity share capital. There is no actual outflow or release of assets of the assessee. The clause (b) of Sec. 2(22) applies in two situation i.e., (i) any distribution to its shareholders by a company of debentures, debenture-stock, or deposit certificates in any form, whether with or without interest; (ii) any distribution to its preference shareholders of shares by way of bonus. The amounts paid under situation (i) and (ii) shall amount to dividend to the extent to which the company possesses accumulated profits, whether capitalized or not. In preceding para (5), we have already noted that the assessee has issued only equity shares and there are no preference shares. The bonus has been issued to equity shareholders only. Thus, the assessee s case do not fall either in Clause (a) or Clause (b) of Sec.2(22). This being so, the amount of bonus could not be held to be dividend and accordingly, Sec.115-O would have no application in such a case. Therefore, we direct Ld. AO to delete the impugned demand as raised against the assessee. The assessee succeeds on merits which render the issue of validity of revisional jurisdiction merely academic in nature. - Assessee appeal allowed.
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2022 (4) TMI 848
Addition treating the cash deposit in bank account as Income other Source - scope of provisions of section 44AD - Counsel pleads before us that while filing return of income, the assessee has selected wrong Income Tax Return form (ITR form), that does not mean that assessee is not covered by the provisions of section 44AD - assessee had disclosed the said bank account while filing the belated return of income for retail job-work and trading income on the basis of estimated profit on turnover - HELD THAT:- As Counsel submitted that assessee had shown Gross Profit of ₹ 2,56,230/- and net profit of ₹ 1,58,395/- on his turnover. The net profit ratio comes to 9.88% of the turnover, which is greater than the 8% of profit in cases of section 44AD of the Act. Therefore, we note that based on this factual position, the addition made by the assessing officer should be deleted. The assessee submitted memorandum Trading and Profit and Loss account and Balance Sheet. We note that assessing officer has not made any adverse finding in any of these documents even, though all the details were furnished by the assessee before him. The assessing officer ought to have examined all these details and refuted / rejected them, with a cogent adverse findings and discernable line of reasoning, in order to arrive at a conclusion and to make the addition. On the contrary, the assessing officer has just brushed aside these evidences without even a word on why they are not acceptable and how these are fabricated documents. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. Therefore, based on the facts and circumstances, as narrated above, we delete the addition. - Appeal of assessee allowed.
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2022 (4) TMI 847
Employees contribution towards ESI/PF - contribution with a delay of few days from the due dates mentioned in the respective Acts, however the same was deposited well before the due date of filing of return of income under section 139(1) - HELD THAT:- In the instant case, admittedly and undisputedly, the employees contribution to ESI and PF 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) - 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 towards the deposit of the employee s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. - Decided in favour of assessee.
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2022 (4) TMI 846
Long term capital gains arising on sale of house property - restriction of property sale expenses - HELD THAT:- It is a common practice to pay brokerage while purchase or selling the properties. Since the assessee is in USA, it is quite possible that he would have paid brokerage to the broker who introduced the buyer. Hence, the payment of brokerage by the assessee cannot be discounted altogether and in our view, in the facts of the present case, in the absence of concrete evidences, the genuineness of the payment may be determined on the basis of circumstantial evidences, which are acknowledgement given on the letter pad of the assessee and the bank entries. Since these are incomplete documents, it is not clear as to whether the entire amount represented only brokerage amount or not. Accordingly, in the absence of proper evidences, we are of the view that the entire claim of brokerage may not be allowed. Accordingly, we restrict the brokerage payment to the extent of 1% of the sale consideration may be allowed and direct the AO to allow brokerage expenses partly. Determination of fair market value as on 1.4.1981 - We notice that the assessee could not furnish any material to support the claim of FMV of ₹ 25,000/- per cent. Hence, the only other credible material available in this case is copy of certificate obtained in 1981 itself from Tahsildar of Thrissur taluk. We noticed that the Ld CIT(A) has computed the FMV land as on 1.4.1981 at ₹ 4,000/- per cent on the basis of this certificate. While making computation, we notice that the Ld CIT(A) has adopted the value of building at ₹ 2,00,000/- - we noticed earlier that the FMV of building was adopted at ₹ 1,00,000/- both by the assessee and AO. Accordingly, we are of the view that the FMV of building should have been taken at ₹ 1,00,000/- by Ld CIT(A) instead of ₹ 2,00,000/-. We noticed that the value of 62 cents and building was estimated by the Tahsildar at ₹ 4,52,000/-. By adopting the value of building at ₹ 1,00,000/-, the value of 62 cents of land would work out to ₹ 3,52,000/-, which results in FMV of land per cent at ₹ 5,677/-. Accordingly, we are of the view that the FMV of land as on 1.4.1981 may be adopted at ₹ 5,700/- per cent. Accordingly, we modify the order passed by Ld. CIT(A) and direct the A.O. to adopt fair market value of land at ₹ 5,700/- per cent. Rejection of claim of cost of improvement to ₹ 1 lakh as against the claim of ₹ 5 lakhs - CIT(A) has observed that the assessee has not been able to provide any banking transaction in support of purchase of air conditioners. Further, he has observed that the air conditioners are at best categorized as furnishing in order to improve the living condition inside the building and it do not enhance the value of building or longevity of the building per se. Accordingly, on cumulative reasons, he has rejected the claim of ₹ 4.00 lakhs. Before us, the Ld. A.R. could not counter the reasoning given by Ld. CIT(A) that the air conditioners, at best, can be categorized as furnishing for improving living conditions. We also agree with the said view expressed by Ld CIT(A). Accordingly, we are of the view that the tax authorities are justified in rejecting the claim of cost of improvement of ₹ 4 lakhs relating to purchase of air conditioners. Accordingly, we confirm the order passed by Ld. CIT(A) on this issue. Enhanced claim of deduction u/s 54 - In the instant case, we noticed that the assessee has made investment in acquiring new residential house property within the time given in sec.54 of the Act and also within the time limit prescribed u/s 139(4) for filing revised return of income. Accordingly, we direct the AO to allow the deduction u/s 54 to the extent of ₹ 1,48,26,257/-.
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2022 (4) TMI 845
Penalty u/s 271(1)(c) - Defective notice u/s 274 - assessee claim for deduction of expenses under Section 57 - HELD THAT:- The full Bench of the Hon ble Bombay High Court in the case Mohd. Farhan A Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] has held that a mere defect in the notice - not striking off the irrelevant matter, would vitiate the penalty proceedings. A perusal of the penalty notice, dated 26.12.2016, issued under Section 274 read with 271 of the Act would show that it in an omnibus show cause notice issued without deleting or striking off the inapplicable part. Similarly, the Assessment Order, dated 26.12.2016, is also vague as it states that Penalty proceedings u/s 271(1)(c) of the I.T. Act, 1961 are initiated separately for concealing and furnishing inaccurate particulars of income. Same is the case with the penalty order, dated 23.06.2017, passed under Section 271(1)(c) of the Act, as it also does not state under which limb of Section 271(1)(c) of the Act penalty has been levied. Thus the penalty proceedings stand vitiated on account of defect in the penalty notice - Decided in favour of assessee.
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2022 (4) TMI 844
Disallowance of weighted deduction on research development expenditure incurred (both capital and revenue expenditure) and claimed u/s. 35(2AB) - AO restricted claim as per Form 3CL certified issued by DSIR - HELD THAT:- As decided in own case [ 2020 (2) TMI 143 - ITAT CHENNAI] entire claim of weighted deduction claimed by the assessee cannot be acceded to over and above the restriction made by the DSIR. In view of the above facts and circumstances and case law relied on, we are of the considered opinion that the Ld. CIT(A) has rightly directed the Assessing Officer to allow the correct amount of deduction under section 35(2AB) of the Act after taking note of the DSIR certificate dated 16.03.2017. Thus, the ground raised by the assessee stands dismissed for assessment year 2012-13. For 2016-17, the Ld. AR for the assessee stated that the disallowance of weighted deduction on research development expenditure incurred, both capital and revenue expenditure, due to non-receipt of Form No. 3CL issued by DSIR - We remit this issue back to the file of the AO who will decide the issue as per the report received from DSIR, as per law. Needless to say, that the assessee is free to raise any issue before AO on this particular issue as per law. The AO will not object for non-consideration of issue. Accordingly, this issue of assessee's appeal for assessment year 2016-17 is remanded back to the file of the AO. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- This issue is squarely covered in favour of assessee by the decision of Hon'ble Supreme Court in the case of Chettinad Logistics (P.) Ltd. [ 2018 (7) TMI 567 - SC ORDER] wherein it was held that section 14A cannot be invoked where no exempt income was earned by assessee in relevant assessment year. As the issue is squarely covered in favour of assessee, we delete the disallowance and direct the AO to recompute the income. Accordingly, this issue of assessee's appeal is allowed. Addition made on account of non-reconciliation of income as per Form 26AS and income as offered by assessee - AR stated that the difference was mainly due to deduction of tax deducted at source by the deductor on the amount including service tax. Hence, according to him tax was deducted at source on the service tax portion also - HELD THAT:- AR before us filed a statement containing reconciliation for majority of difference and he pleaded that from the reconciliation statement, it is evidence that the tax was deducted at source on service tax - When these Form No. 26AS and reconciliation filed by assessee are confronted to ld. CIT-DR, he fairly conceded that this reconciliation should have been submitted before the AO but on principle, he agreed that in case the difference was mainly due to deduction of tax at source by the deductors on the amount of service tax, the same can be deleted by the AO. As both agreed that the issue is simply of reconciliation, we remit this issue back to the file of AO, who will verify the reconciliation statement viz-a-viz Form No. 26AS and after verification, he will decide the claim of assessee. Accordingly, this issue of assessee's appeal is allowed for statistical purpose and set aside to the file of AO.
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2022 (4) TMI 843
Condonation of delay - delay of 41 months in filing appeal before the CIT(A) - according to the assessee, it could not realize the effect and consequence of the order passed under section 143(1) - HELD THAT:- On a perusal of order of Ld.CIT (A) we find that the Ld.CIT (A) dismissed the appeal of the assessee, as un-admitted being not satisfied with the reasons adduced by the assessee for delay of 41 months in filing the appeal. The assessee explained that It is submitted that the delay occurred since the effect of consequence of the intimation under sub section 1 of section 143 was not realized immediately, that is to say that it was not clear to the assessee as to what was the nature of the disallowance resulting to a higher demand and the assessed income getting higher than the returned income. Upon hearing the parties, we find that this is a harsh decision as there is no supposition that everybody is the custodian of law, though ignorance of law is not an excuse for any wrong action. But in the instant case, according to the assessee, it could not realize the effect and consequence of the order passed under section 143(1). This, according to us, is a convincing reason. Therefore, without going into the merits of the case, we deem it fit to remit the matter to the file of the Ld.CIT (A) for a fresh consideration. The Ld.CIT (A) is directed to condone the delay of 41 months, admit the appeal and then, adjudicate the matter on merits after providing reasonable opportunity to the assessee. Appeal filed by the assessee is treated as allowed, for statistical purpose.
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2022 (4) TMI 842
TDS u/s 194C - Disallowance of job work charges paid without deduction of TDS by invoking provisions of Sec.40(a)(ia) - HELD THAT:- Since the amounts paid towards job work charges to master weavers comes within the preview of provisions of Sec.40(a)(ia) of the Act. The AO has rightly disallowed the same u/s.40(a)(ia) of the Act - As relying on CRESCENT EXPORT SYNDICATE PARK INTERNATIONAL [ 2013 (5) TMI 510 - CALCUTTA HIGH COURT] , TUBE INVESTMENTS OF INDIA LIMITED [ 2009 (9) TMI 37 - MADRAS HIGH COURT] and M/S. PALAM GAS SERVICE [ 2017 (5) TMI 242 - SUPREME COURT] we find that non-deduction of TDS will attract the provisions of Sec.40(a)(ia) of the Act. Therefore, we find no infirmity in the orders of the AO the Ld.CIT(A) and hence, the appeal filed by the assessee is dismissed.
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2022 (4) TMI 841
Disallowance claim of deduction u/s.80- IA - assessee is a partnership firm carrying on the business of civil constructions, contractors, engineers and builder - HELD THAT:- As relying on ESHWARNATH CONSTRUCTIONS [ 2013 (12) TMI 299 - ITAT CHENNAI] assessee being a partnership firm in the relevant assessment years is legally not eligible to claim deduction u/s.80IA(4)(i) and also, even on merit, the assessee is found to have executed works contract attracting the explanation to sub-section 13 of 80IA A partnership firm is not a creation of statute but it is a body of individuals regulated by the statute namely Partnership Act - The assessee fails to satisfy the applicability clause of the provision as envisaged under section 80IA(4)(i) - Decided against assessee.
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2022 (4) TMI 840
TP Adjustment - comparable selection - inclusion of M/s. Ashnoor Textiles Mills Ltd - HELD THAT:- DRP has held that the claim of the assessee is correct and there was no basis for the TPO to reject M/s. Ashnoor Textiles Mills Ltd. holding it as loss making. DRP has directed the TPO/AO to include M/s. Ashnoor Textiles Mills Ltd. as a comparable. We find no infirmity in the proceedings of the ld. DRP, which was rightly reflected in the final assessment order dated 28.12.2015 passed u/s 144C(13) r.w.s. 143(3) of the Act. Under the above facts and circumstances, we find no infirmity in the proceedings of the ld. DRP as well as assessment order on this issue. Directions of the ld. DRP to ascertain the percentage of risk adjustment - After considering the arguments of the assessee as regards operating in a challenging market, competitive price offer from foreign and Chinese manufacturers and the necessity of retaining skilled manpower irrespective of fluctuation in volume of productions as well as the details of break-up of the employee cost, the ld. DRP was of the opinion that appropriate adjustment should be allowed to the assessee and accordingly directed the TPO to decide the percentage of risk adjustment to be calculated in this issue after taking into account of all the relevant facts and details. After carrying out the directions contained in the proceedings of the ld. DRP, the AO has completed the final assessment order under section 144C(13) r.w.s. 143(3) of the Act by revising the upward adjustment to Nil. Thus, we find no infirmity in the order passed by the ld. DRP/AO. Appeal filed by the Revenue is dismissed.
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2022 (4) TMI 839
Additional Depreciation on Power Generation Unit - Depreciation at the rate of 80% on all the Plant Machinery used in the co-generation unit - Extending benefit of initial depreciation to the power sector - depreciation Claim of 80% OR 15% - AO disallowed the same on the ground that the words or in the business of generation and distribution of power were inserted by Finance Act 2012 w.e.f. 01.04.2013 and therefore, the additional depreciation would be allowable only from AY 2013-14. - HELD THAT:- We find that this issue is covered in assessee s favor by the decision of Vishakhapatnam Tribunal in Sri Sarvaraya Sugars Limited [ 2017 (12) TMI 1220 - ITAT VISAKHAPATNAM] wherein it was held that various components which form integral part of cogeneration plant are to be allowed higher rate of depreciation. We find that the facts are similar in the present case whereas the undisputed findings are that the various components form part of integral part of cogeneration plant. These components could not be used on standalone basis but part and parcel of power generation unit. Each item would not have any function by itself except when it forms part of the whole system. Therefore, no infirmity could be found in the impugned order, on this issue. The grounds thus raised stands dismissed. Eligibility to claim additional depreciation u/s 32(1)(iia) - HELD THAT:- We find that it is undisputed position that the assessee has fulfilled all the conditions laid down u/s 32(1)(iia) for claiming additional depreciation. In such a case, new plant machinery as installed by the assessee would be entitled for additional depreciation since the assessee was engaged in manufacturing and production of article or thing. In the case of CIT V/s VTM Ltd. [ 2009 (9) TMI 35 - MADRAS HIGH COURT] held that in order to claim additional depreciation u/s 32(1)(iia), what is required to be satisfied is only that a new machinery or plant has been acquired and installed after 31-3-2002 by an assessee, who was already engaged in business of manufacture or production of any article or thing. The provisions do not state that setting up of a new machinery or plant, which was acquired and installed after 31-3-2002, should have any operational connectivity to article or thing that was already being manufactured by the assessee. Respectfully following the same, we dismiss the grounds raised by the revenue.
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2022 (4) TMI 838
Validity of Reassessment proceedings - Status of a private discretionary trust - AOP OR Individual - AO levied FBT in respect of the fringe benefit provided by the assessee to its employees - HELD THAT:- CIT(A) has given a detail findings for each of the grounds of appeal raised by the assessee. The Ld. CIT(A) relied on the decision of Rajesh Jhaveri Stock Broker Pvt. Ltd.[ 2007 (5) TMI 197 - SUPREME COURT] wherein it was held that process u/s 115WE(1) of the Act will not amount to application of mind and the consequent reopening u/s 115WG cannot be said to be change of opinion. The Ld. CIT(A) also justified the AO s view that during earlier proceedings also the charging of FBT was raised by the erstwhile AO and was decided to consider this issue separately and the same was not concluded. Therefore, we are of the considered view that the justification of the Ld. CIT(A) in holding the re-assessment as valid is not disputed. Treating the assessee as AOP as against the status of a private discretionary trust as individual CIT(A) has rightly decided the issue in the light of various judicial decisions. The Ld. CIT(A) has interpreted the meaning of AOP on a comparison with the Hon ble Supreme Court decision in the case of CIT vs. Indira Balkrishna [ 1960 (4) TMI 7 - SUPREME COURT] with that of the subsequent amendment by explanation to section 2(31) wherein the AOP can be formed without the common objective of deriving income, profits or gains, thus concluding that private discretionary trust will come under the purview of AOP. In addition to this, the proviso to section 164(1) also states that under the circumstance provided therein, the income of the discretionary trust shall be assessed to tax as AOP. The Ld. CIT(A) has also rejected the submission of assessee that the departmental circular referring to the discretionary trust as individual is also not very relevant in view of the explanation provided to section 2(31) of the Act and the said circular merely refers to the difficulty in accepting the return by existing e-filing software if the status of private discretionary trust is shown as individual is also not disputed. AR has submitted a copy of the latest judgment of Madras High Court in CIT, Chennai vs. Shriram Ownership Trust, Chennai [ 2020 (12) TMI 736 - MADRAS HIGH COURT] where the facts of the case are not identical with the present appeal before us and the said decision does not hold good for this case. Apart from this, there is no other material on record to take any other view than that of Ld. CIT(A) s findings. - Decided against assessee.
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2022 (4) TMI 837
Exemption u/s 54F for investment made in only one residential house - Whether CIT(A) has erred in granting exemption u/sec 54F in respect of two residential flats irrespective of amendment which has come into effect from 01. 04. 2015 and is applicable to the assessee for investment in one residential house in India? - HELD THAT:- We find that the CIT(A) has considered the facts provisions of law, submissions, and judicial decisions and observed that the assessee has invested in one residential property. Further the Ld. AR has substantiated with the copy of structural plan and the society letter dated 8-04-2019 that it is only one residential unit. Whereas, the provisions of sec 54F of the Act are beneficial provisions and are to be construed liberally. DR could not controvert the finding of the CIT(A) with new cogent material information or evidence and the CIT(A) has passed a reasoned and logical order. Accordingly, we do not find any infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue.
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2022 (4) TMI 836
Computation of capital gains - application of Sec.50C - land was sold through power of attorney holder - land was sold through power of attorney holder - assessee submitted by the assessee that entire land to the extent of 1 Kani 70 Kuzhees was sold through power of attorney for sale consideration of ₹ 210 Lacs and no extra consideration flowed to the assessee - Claim of exemption u/s 54F - Deduction on two properties on the ground that the properties were within one boundary / compound - HELD THAT:- Assessee, along with another co-owner, has executed General Power of Attorney on 05.08.2010 in favor of Shri P.Vaidyanathan. As per the Schedule, POA encompasses a total extent of land of 1 Kani 70 Kuzhi which has been sub-divided into plots. It further states that total extent of 13747 square feet has been sold by the co-owners earlier and the balance 1 Kani 46 Kuzhi 2 -1/4Veesam is left. Thus, the POA has been executed to that extent. However, as per the receipt dated 22.12.2010, POA is stated to have paid a sum of ₹ 210 Lacs against land admeasuring 1 Kani 7 Kuzhi. Therefore, there is clear contradiction between these two documents and the correct factual matrix is required to be brought on record. To resolve the same, we remit the issue back to the file of Ld. AO to ascertain the correct factual matrix. It could be noted that the property under consideration is immoveable property and the sale value of the same could be ascertained on the basis of sale deeds. AO is directed to ascertain the aggregate sale consideration arising out of sale of pots of land sold by the assessee during the year. The assessee is directed to file the relevant details / explanation. Application of Sec.50C AO shall consider the submissions / objection of the assessee to the adoption of stamp duty value and readjudicate the same. The assessee s plea that Sec.50C would have no application in case of sale executed through POA would not hold much water since no such distinction has been created under the statute. Similarly, the cost of improvement could not be allowed in the absence of any documentary evidences forthcoming from the assessee. Deduction u/s 54F would also stand restored back to the file of Ld. AO in the light of inspector s report as placed by the revenue before us. The same would be confronted to the assessee and the issue may be re-adjudicated in the light of submissions made and findings arrived at thereafter. Appeal stands partly allowed for statistical purposes
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Customs
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2022 (4) TMI 835
Validity of assessment order - HELD THAT:- The present Special Leave Petition stands disposed of as withdrawn without further entering into the merits of the controversy and/or expressing anything on merits in favour of either of the parties. The Commissioner (Appeals) to decide and dispose of the appeal which has been filed against the final Assessment in accordance with law and on its own merits without in any way being influenced by any of the observations made by the High Court in the impugned judgment and order, if any.
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2022 (4) TMI 834
Seeking grant of default bail - Smuggling - Gold Cylinder - active involvement not only in the smuggling of gold but also in snatching away gold from the passengers who act as carriers on their arrival in various Airports - HELD THAT:- It appears that nothing has been seized from this petitioner though the allegation is that he is the kingpin who made arrangements for smuggling of gold from abroad. Since the investigating agency requires more time to unearth the details involved in this case, they could not submit the final report after completion of the investigation. Doubtless that the nature of the accusation levelled against this petitioner as well the other accused are very grave and serious. It is fact that so many persons are involved in the smuggling business which is a real threat as it creates instability and corrosive impact on the economy of our country. The illicit trade of gold is increasing day by day though the customs is vigilant and cases are being registered regularly; still the authorities could not curb the same totally due to various reasons. But it is a fact that the petitioner is in custody since 29-6-2021 and the investigating agency is still collecting materials to apprehend all the persons involved in this smuggling business - Though the complicity of this petitioner in the alleged crime is prima facie revealed from the materials so far collected by the investigating agency, considering the period of detention undergone by him in judicial custody as well the fact that the investigating agency could not complete the investigation of the case till date, he is entitled for default bail. The petitioner shall be released on bail on his executing bond for a sum of ₹ 5,00,000/- with two solvent sureties for the like sum each to the satisfaction of the Court having jurisdiction - Petition allowed.
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Insolvency & Bankruptcy
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2022 (4) TMI 833
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - Service of demand notice - HELD THAT:- The Minutes of the Meeting of the Board of Directors of Appellant Company dated 29.01.2019 specifies that all actions taken by Ms Meetu Bajaj by way of earlier Resolution dated 05.10.2017 were ratified and she was clearly authorised by the Board of Directors to initiate CIRP under the Code before the NCLT. Therefore, this Tribunal is of the earnest view that the Adjudicating Authority ought not to have dismissed the Application on such technical grounds. Having regard to the aforenoted Board Resolution dated 29.01.2019 and also the provisions of Section 9 sub-section (5) of the Code, the impugned order is set aside and this Appeal is allowed and the Adjudicating Authority shall decide the Admission/Rejection of the Application as expeditiously as applicable keeping in view that the Application is of the Year 2019. The Registry is directed to upload the Judgement on the website of this Tribunal and send a copy of this Judgement to the Learned Adjudicating Authority (National Company Law Tribunal, Mumbai) forthwith.
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2022 (4) TMI 832
Seeking to include claims in the settlement process by treating it as an extension of the Original claim - restoration of name of the Applicant in the list of creditors in the Information Memorandum accordance with Law - HELD THAT:- The Applicant had filed IA/506/CHE/2021 seeking direction against the liquidator to accept the claim filed in Form-C for a sum of ₹ 6,04,041 and another claim in Form-C for a sum of ₹ 2,06,64,147/-. It is seen from the claim forms that the details of the claim pertain to GST for the supply of Goods and Services and also the GST arrears for the period from February 2018 to December 2019. The Liquidation in respect of the Corporate Debtor was ordered by this Tribunal on 06.08.2018 and as per the Public Announcement made by the Liquidator in Form-B, the stakeholders are required to submit the proof of claim as calculated as on 06.08.2018. The Applicant are directed to submit their claim before the Liquidator as calculated as on 06.08.2018 within two weeks from the date of this order. The Liquidator is directed to examine the claim of the Applicant as per the provisions of IBC, 2016 read with attendant Regulations framed thereunder. Application disposed off.
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2022 (4) TMI 825
Seeking transfer of petition - Rule 16 (d) and 11 of NCLT Rules, 2016 r/w Section 60(5) of the IBC, 2016 - HELD THAT:- It is now stated that Bench No. 2 has already reserved Order in IB-415(ND)2017, therefore, it is prayed that the other two matters are also placed before the same Bench. Considering the reasons, in relation to the prayer, the application is allowed.
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Service Tax
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2022 (4) TMI 831
Levy of Service tax - GTA service - Manpower Supply Agency and Security Service - reverse charge mechanism - revenue neutrality - imposition of penalties - HELD THAT:- The appellant admittedly has paid the service tax chargeable from them under reverse charge mechanism, on 31.10.2015, which was reflected in the return filed for the period 2014-15, which was filed on 21.01.2016. Further, appellant has also informed this fact of tax having been deposited vide letter dated 21.03.2017 before the Adjudicating Authority. Further, it appeared that the Adjudicating Authority has failed to take notice of the same as such representation has not been considered in the adjudication order. The appellant is manufacturing and clearing dutiable goods and are entitled to take cenvat credit of service tax payable under reverse charge mechanism. Hence, the situation is revenue neutral. In this view of the matter, the demand of ₹ 1,97,054/- as well as the penalty imposed under Section 78 of equal amount. Levy of penalties - HELD THAT:- So far penalty under Section 70 read with Rule 7(C) is concerned, the same is excessive and is reduced to ₹ 5,000/- - So far penalty under Section 77 is concerned, the same is imposed for alleged violation of Rule 5(2) of Service Tax Rules, which provides that every assessee soon after filing of their ST-3 return for the first time shall provide a list to the Range Superintendent as regards the details of records, books of accounts maintained by them. Further, there is no alleged violation of the provisions of Section 66B and Section 68 read with Rule 5(2). Accordingly, penalty of ₹ 10,000/- under Section 77 is set aside. Appeal allowed.
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2022 (4) TMI 830
CENVAT Credit - input service - amount paid to the broker / property consultant for purchasing the immovable property to be used for providing output service of renting of immovable property - Extended period of limitation - HELD THAT:- From the definition of input service, it is clear that any service used by provider of taxable service for providing an output service is admissible input service. In addition, the input service specifically include among other services as are being utilised, the services used in relation to setting up of factory or premises of the provider of output services. Though vide an amendment in rule 2(l), the words setting up were omitted with effect from 1.4.2011 but the period here is 2009 to 2010 i.e. prior the said amendment. Thus the services used for setting up of premises from where the output service has to be provided are to be treated as input service and would be eligible for CENVAT credit. This Tribunal Mumbai Bench in the case of M/S VAMONA DEVELOPERS PVT LTD VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, PUNE-III [ 2015 (12) TMI 1111 - CESTAT MUMBAI] has held that when the output service was the service of renting of a mall any service for getting that mall constructed is an eligible input service. Tribunal in the case of M/S BELLSONICA AUTO COMPONENT INDIA PVT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III, GURGAON [ 2014 (3) TMI 876 - CESTAT NEW DELHI] held that the services of installation is the services clearly covered under the services of setting up of the premises. It was held that setting up of factory has a nexus with the manufacturer of final product and accordingly the services are eligible inputs service. Even service of pipeline laying is held to be eligible input service for providing output service of transportation of gas as it was held by this Tribunal in case of RELIANCE GAS TRANSPORTATION INFRASTRUCTURE LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI II [ 2016 (8) TMI 91 - CESTAT MUMBAI] . The amount in question is the amount given to the person who rendered the services of getting purchased the immovable property through which the output service of renting of immovable property could not have been provided. The brokerage/ consultancy services received for setting up of said immovable property is accordingly held to be an eligible inputs service. Extended period of limitation - HELD THAT:- Admittedly the demand has been raised for the period 2009 to 2010 but it has been raised vide Show Cause Notice in the year 2014. The demand is absolutely for a period more than one year/ 18 months. The Show Cause Notice has been issued invoking proviso to section 11B of Central Excise Act, 1944. But it is clear that the proviso can be invoked only in case where there is any allegations of fraud or suppression of facts that too with an intent to evade payment of duty is found against the appellant. In the present case as has already mentioned above, admittedly the appellant is regularly discharging the Service Tax liability ST 3 return are also being regularly filed, even the broker i.e. M/s Arora Associates was duly registered with the Service Tax department ( as already mentioned above) there remains no question of evasion of duty - the facts otherwise had come to the notice of the department at the time of audit of appellant s record in the year 2010. The show cause notice was still issued after four years later. The above said show cause notice proviso for invoking the extended period has wrongly been confirmed by the Adjudicating Authority. Hence it is clear that the Department has wrongly invoked the extended period. Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (4) TMI 829
Maintainability of revenue appeal - Inappropriateness of the direction given in the circular issued by the Department to follow regime of call-book - threshold monetary limit - Circular No. 17/2019 (F. No. 279/Misc.142/2007-ITJ(Pt.), dated 8th August, 2019 - HELD THAT:- The assessee can raise grounds independent of that contention. But if the assessee chooses to raise ground regarding call-book regime, that contention must await the outcome of the proceedings pending before this Court in the connected cases listed today. Accordingly, the Appellate Authority ought to proceed with the appeal keeping in mind the aforementioned observation and on its own merits in accordance with law. Further, the Appellate Authority shall decide the appeal uninfluenced by the finding or observation made by the High Court in the impugned judgment and order, including on the merits of the contention. Application disposed off.
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2022 (4) TMI 828
Extended period of limitation - appellant has submitted that one another issue with respect to extended period of limitation and the consequential penalty was raised before the Tribunal which has not been dealt with by the Tribunal - HELD THAT:- For the issue, namely, whether the extended period of limitation could have been invoked or not and the consequential penalty, in the peculiar facts and circumstances of the case, the appellant are relegated to file a review application before the Tribunal and if such a review application is filed within a period of four weeks from today, the same be entertained and the Learned Tribunal to take appropriate decision on the same in accordance with law and on its own merits. Appeal stands dismissed/disposed of.
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CST, VAT & Sales Tax
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2022 (4) TMI 827
Exemption from Entry tax - Iron Steel (MS Angle, MS Channel, MS Plate, MS Beam, etc.) used in expansion of Cent Plan - capital goods or not - MS Angle, MS Channel, MS Plate, MS Beam, etc. used by the applicant in expansion of Cement Plant - N/N. 927 dated 18.02.2003 - HELD THAT:- Admittedly, the revisionist is manufacturer of cement. For expansion of its unit/cement plant, the revisionist purchased iron steel and used the same for construction of various buildings, sheds, etc. The revisionist claimed the iron steel, purchased and used for construction of various buildings for expansion of its unit, as capital goods so that benefit of input tax credit can be granted to it - Bare perusal of section 2(f) of the VAT Act it has been clearly stated that capital goods means any plant, machine, machinery, equipment, apparatus, tool, appliance or electrical installation used for manufacture or processing of any goods for sale by the dealer. Further, perusal of section 13(1)(b) of the VAT Act would reveal that the dealer shall be entitled for claim of ITC only in respect of taxable goods purchased. On close scrutiny of the submissions of the learned counsel for the revisionist and the certificate brought on record to justify its claim, would clearly show that various buildings have been constructed for various other purposes, which have been tried to bring within the definition of capital goods . Further, the said certificate of Charted Accountant nowhere mentions as to how the consumption of iron steel is directly connected with the plant machinery or its accessories or its components - Only by referring or describing the user will not help the assessee for treating the iron steel used for the constructions of buildings as capital goods , more precisely, as plant machinery . In absence of any material having been brought on record, the claim capital goods by the revisionist has rightly been rejected by the authorities below. No case is made out for interference by this Court with the impugned order. Revision dismissed.
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2022 (4) TMI 826
Grant of leave to the revenue to file a CAN application challenging the orders of the Board - Section 8 of the West Bengal Taxation Tribunal Act, 1987 - HELD THAT:- Regulation 16(1) of the Regulations, provides that any person or authority, who is or has been a party to a proceeding may make an application for grant, extension, discharge, variation or setting aside or interim order pending disposal of the proceeding - Clause (a) of Regulations 16(1) provides the nature of relief which may be sought for by a party and may be passed by the Tribunal on a miscellaneous application being filed. The said Regulation contains an expression pending disposal of the proceeding which shall be the guiding factor for deciding the nature of the relief which may be passed by the tribunal on a Miscellaneous application. On a plain reading of the said Regulation it is evident that the nature of the relief contemplated under clause (a) of Regulation 16(1) is a relief which is other than a final relief as the various mode of the relief specifically described in the said Regulation is followed by the aforesaid expression. The State revenue authority sought to quash the order dated August 10, 2018 passed by the Board, which is an order amenable to challenge under Section 8 of the Act. The relief sought for in the said application is final in nature for which recourse to Regulation 16 is not permissible for the reasons as stated hereinbefore. Thus, this court is of the considered view that the miscellaneous application being CAN 28 of 2022 was not maintainable and the grant of leave by the tribunal to file a miscellaneous application without considering its maintainability was improper. This Court is of the considered view that a challenge against an order passed by the Revisional Board ought to have been made by filing an application under the relevant provisions of the West Bengal Taxation Tribunal Act and not by resorting to Regulation 16 of the said Regulations as contended by the learned Advocate for the State - this Court holds that the learned Tribunal erred in granting leave to the revenue to file the application being CAN 28 of 2022. The leave granted to the revenue vide order dated December 20, 2021 is set aside and quashed. The writ petition stands disposed of.
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