TMI Tax Updates - e-Newsletter
April 20, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Refund of accumulated Input Tax Credit (ITC) on account of the export of services, rejected - Since it is an admitted position that no hearing was given to the Petitioner before the rejection of the refund application contrary to the proviso to Rule 92(3) of the Rules, the impugned order needs to be set aside on this ground as well. - Matter restored back - HC
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GST:
Rejection of refund claim - refund claim on the basis of e- BRCs/FIRCs furnished by the claimant, addressed to their corporate office in Kolkata, whereas exports done from Bangalore unit - The second respondent must not only be directed to consider continuation of the proceedings in the light of these submissions but also to decide within a certain time frame lest the petitioner is forced into a loop of litigation. - HC
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Income Tax:
Claim of expenses from rental income - correct head of income - the business centre was being exploited by the respondent/assessee as a commercial asset. Therefore, the income from the same, as rightly concluded by the Tribunal, should have been treated by the AO/CIT(A) as business income. Consequently, the deduction of expenses as well as interest on borrowed capital would have to be allowed, in terms of Section 36(1)(iii) of the Act. - HC
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Income Tax:
Stay of demand - Scope of the CBDT instructions - As there is no disputation or disagreement that the writ petitioner's case i.e., writ petitioner's plea that interim order is covered by said instruction read with Section 220(6) of IT Act and as the only ground on which the prayer has been negatived is that the writ petitioner is not covered by said instruction, this Court deems it appropriate to interfere qua the impugned order. - Matter restored back - HC
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Income Tax:
Penalty u/s 271(1)(c) - when we examine penalty levied on account of salary disallowance AO has merely made adhoc addition by way of guess work and the AO has not arrived at a definite decision that the assessee has made wrong claim qua the expenditure on account of salary and wages. It is also settled principle of law that on the basis of any adhoc addition penalty proceedings under section 271(1)(c) of the Act cannot be levied. - AT
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Income Tax:
Depreciation on goodwill u/s 32(1) - post demerger - once the assessee proves that goodwill accounted in the books of accounts in a scheme of demerger is only of purchased goodwill by paying consideration then the same fall within the ambit of purchased goodwill and entitled for depreciation under section 32(1) of the Act. - AT
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Income Tax:
Addition u/s 69A - cash deposit in the bank account - entire amount of withdrawal was re-deposited - This conduct is a normal conduct of a man ordinary prudent which cannot be doubted unless revenue authorities bring on record positive or adverse material to establish that the amount withdrawn by the assessee from his bank account was utilised or deposited somewhere else - AT
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Income Tax:
Revision u/s 263 by CIT - Underreporting of income - Lesser amount of revenue shown in income tax return vis-ŕ-vis the service tax return, if not successfully proved, would have gone to swell income for the year under consideration - Revision order sustained - AT
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Income Tax:
Denial of foreign tax credit u/s 90/90A due to delay in filing Form no.67 - Mere delay in filing Form No. 67 as per the provisions of Rule 128(9), as they stood during the year under consideration, will not preclude the assessee from claiming the benefit of foreign tax credit in respect of tax paid outside India. - AT
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Customs:
Delay of 14 years in concluding the proceedings - The learned Tribunal was fully justified in coming to the conclusion that in the absence of any explanation for the inordinate delay of 14 years, the rights of the respondent have been affected and it would be in violation of the principles of natural justice. - HC
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Customs:
Review application - Maintainability of application before Supreme Court or High Court - Classification of goods - Admittedly, in the instant case, the stand of the department is that the goods dealt with by the respondent/assessee are not covered by the exemption notification. If that be so, the appeal is maintainable before the Hon’ble Supreme Court. - HC
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Customs:
Benefit of CVD @ 8% - denial of benefit on the ground that imported goods has not suffered duty of excise and credit has not been availed - The Hon’ble Apex Court opined that the benefit of notification cannot be denied if the condition is such that it is practically impossible to satisfy the condition - The decision of the Apex Court in the case of SRF Ltd. would be applicable. - AT
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FEMA:
Adjudication proceedings as contemplated u/s 13(1) of the FEMA - whether the supply of relied upon documents - if the respondents are insisted upon to provide legible copies of those documents which are not even in their possession, it will amount to stretching the principles of natural justice too far, particularly at a stage when only the adjudication proceedings have been initiated and the parties are yet to produce their respective evidences/material before the Adjudicating Authority, whereafter the matter is required to be considered finally by the said Authority. - HC
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Indian Laws:
Dishonour of Cheque - vicarious liability of director - Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by the company along with averments in the petition containing that the accused were in charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. - HC
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Service Tax:
Levy of service tax - Job Work - Manpower Supply Agency Service or not - the Circular clarifies that mere payment of wages by the manpower recruitment or supply agency does not take away their status. However, as far as the facts of the present case are concerned, there are no reasons for applying the said circular; the terms of the contract are very clear and the appellants have rendered the job assigned by Punjab Tractors Ltd and did not at all supply any manpower. - AT
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Service Tax:
CENVAT Credit - transportation charges paid to GSPL - trading activity(output service) - the service of transportation of gas from the supplier of gas namely GSPC to the respondent premises is used to the fullest extent in the trading of gas. The trading of gas is not an activity leviable to service tax and therefore even in terms of Rule 6(1) of the CCR, 2004 no credit of the same would be admissible. - AT
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Central Excise:
Classification of goods - Plant Growth Regulator or not - the product ‘MIRACULAN’ which primarily contains Traicontanol 0.05% by weight is a product under the category of Insecticides and cannot be considered as the plant growth regulator. - AT
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Central Excise:
CENVAT Credit in respect of goods procured from 100% EOU - A perusal of invoices produced by the appellant clearly shows that the duty has not been discharged in the prescribed manner - The matter needs to be reconsidered by the original adjudicating authority by examining all invoices individually. The provisions of Rule 3(7)(a) of Cenvat Credit Rules would be applicable only in cases where the duty has been paid taking benefit of Serial No. 2 Notification No. 23/2003-CE dated 31/03/2003. - AT
Articles
Notifications
Case Laws:
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GST
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2023 (4) TMI 754
Validity of SCN/assessment orders issued by the respondent - GST Department raising demand of GST on royalty paid to the respondent - Mining Department towards mining lease - HELD THAT:- Learned counsel for the petitioner is not in a position to dispute the fact that the issue regarding demand of GST on royalty paid to the respondent - Mining Department towards mining lease has already been decided by this Court in SUDERSHAN LAL GUPTA CONTRACTOR VERSUS UNION OF INDIA, STATE OF RAJASTHAN, CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, DEPUTY COMMISSIONER OF STATE TAX, CIRCLE KARAULI, RAJASTHAN [ 2022 (10) TMI 43 - RAJASTHAN HIGH COURT] and SHREE BASANT BHANDAR INT UDYOG VERSUS UNION OF INDIA [ 2022 (7) TMI 565 - RAJASTHAN HIGH COURT] , where it was held that demand is upheld. This writ petition is dismissed in terms of the orders passed by this Court in Sudershan Lal Gupta s case and Shree Basant Bhandar Int Udyog s case.
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2023 (4) TMI 753
Rejection of refund claim - Period of limitation - filing of application online and manually - Petitioner provided various back-office support services without payment of integrated tax under Letter of Undertaking as per Section 16 of the Integrated Goods and Service Tax Act, 2017 - Circular No. 17/17/2017 dated 15 November 2017 - HELD THAT:- The learned Counsel for the Petitioner has relied upon decision of the Division Bench of Gujarat High Court in the case of M/S. CHROMOTOLAB AND BIOTECH SOLUTIONS VERSUS UNION OF INDIA [ 2022 (10) TMI 1000 - GUJARAT HIGH COURT] to contend that the Division Bench has taken a view that the date on which the online application is filed should be taken into consideration and not the date of physical application. No contrary decision is shown here. However, even proceeding on the basis that the decision of the Division Bench of Gujarat High Court is applicable, still the facts in the Petitioner s case would have to be examined as to whether the Petitioner is entitled to the law laid down and this enquiry will have to be conducted by the Deputy Commissioner. It is opined that the impugned order needs to be quashed and set aside and the Refund Application of the Petitioner be restored to file to be proceeded from the stage of issuance of Form GST-RFD-08. Order accordingly - petition disposed off.
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2023 (4) TMI 752
Refund of accumulated Input Tax Credit (ITC) on account of the export of services, rejected - export of services under a Letter of Undertaking without payment of integrated tax in terms of section 16 (3) of the Integrated Goods and Services Tax (IGST) Act, 2017 - rejection of refund claim for the reason alleged in the defect sheet - defect sheet was received by the Petitioner or not - main contention of the Petitioner is that the procedure adopted by the Respondents to reject the refund claim is contrary to law and in breach of principles of natural justice. HELD THAT:- The statutory procedure u/s 54 prescribed for dealing with the application of the refund arising under the provisions of the IGST Act of 2017 and CGST Act of 2017 in the context of the facts of this case. The gist of the procedure enumerated above is that once an application for a refund is made, it has to be processed. If there are lacunae, the Applicant is to be informed to remove the lacunae and to submit the claim after removing the said lacunae; the application is to be considered for either grant or rejection of the refund. Also, no application for a refund should be rejected without giving an opportunity to the applicant of being heard. The procedure is a selfcontained and provides for various stages which mandates steps to be taken by the applicant and the officer. The Petitioner had applied for a refund. The Petitioner received an acknowledgment under Form GST RFD-02 with a Nil remark, meaning, thereby, the application for refund was acknowledged. There were no lacunae pointed out under the said acknowledgment. No deficiency was pointed out; neither deficiency memo, as contemplated under Rule 90 (3) of the CGST Rules of 2017 in Form GST RFD-03, was issued to the Petitioner. The Petitioner directly received Form GST RFD-08 under Rule 92 (3) of the CGST Rules of 2017 for rejection of the application for refund. There were no reasons given in the said Form GST RFD-08, and it was stated that the Exports Defects Memo Knowledge Capital-pdf.pdf is a file that is attached - There was no opportunity given to the Petitioner to rectify lacunae, and the deficiencies which are to be informed through Form GST RFD-03 were sent in a file attached in Form GST RFD-08. This deprived the Petitioner of submitting a fresh refund application as contemplated under Rule 90 (3) of the CGST Rules of 2017. Since it is an admitted position that no hearing was given to the Petitioner before the rejection of the refund application contrary to the proviso to Rule 92(3) of the Rules, the impugned order needs to be set aside on this ground as well. The impugned order dated 25 July 2022, passed by Respondent No. 3- Assistant Commissioner of State Tax, is quashed and set aside - application of the Petitioner made under Form-GST RFD-01 is restored to file.
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2023 (4) TMI 751
Rejection of refund claim - refund claim on the basis of e- BRCs/FIRCs furnished by the claimant, addressed to their corporate office in Kolkata, whereas exports done from Bangalore unit - HELD THAT:- This Court must observe that the order rejecting refund [Annexure-G] cannot be sustained as it is premised only on the ground that show cause notice is issued for the earlier two periods, and the petitioner cannot be relegated to avail statutory remedy when it is undisputed that on examination of the critical issue viz., whether the e- BRCs relied upon by the petitioner relates to the Bengaluru unit, the petitioner is permitted refund. The impugned order dated 15.11.2022 rejecting refund must yield, and the proceedings restored to the second respondent to consider the same subject to the outcome of the proceedings that are commenced with issuance of the impugned Show Cause Notice dated 14.09.2022. The second respondent, in the peculiarities of this case, and the grounds urged, must be called upon to decide on the continuation of the proceedings in the light of the petitioner s specific defense that the assumption that these e-BRCs could be used for refund across the other ports in the country would be incongruous as the petitioner exports software and e-BRCs are issued under the aforesaid regulations specific to invoices based on declaration and with necessary uploading with the Joint Director of Foreign Trade. The second respondent must not only be directed to consider continuation of the proceedings in the light of these submissions but also to decide within a certain time frame lest the petitioner is forced into a loop of litigation. The third respondent s Order [Refusal order] is quashed restoring the same for reconsideration subject to the outcome of the proceedings commenced with the Show Cause Notice dated 14.09.2022, but within four weeks therefrom - petition is allowed in part.
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Income Tax
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2023 (4) TMI 750
Levying penalty u/s 273(2)(aa) or u/s 273(2)(a) - Section mentioned in the assessment order of the first notice issued under Section 273(2)(a) while actual charge by subsequent notice issued under Section 273(2)(aa) - HELD THAT:- Tribunal observed that the penalty was imposed after allowing proper opportunity to the assessee with respect to specific default under Section 273(2)(aa). Tribunal held that the mistake in mentioning wrong section in the assessment order and the first notice was only of a clerical nature which was subsequently rectified. Senior Manager, Taxation had given an affidavit and tendered unconditional apology before the Court and his apology was accepted. Tribunal held that the penalty had been imposed by the Assessing Officer after due application of mind and on the technical ground and that the initial notice given under Section 273(2)(a) cannot be made a ground for quashing the penalty levied under Section 273(2)(aa). CIT(A) had rightly set aside the order and directed the Assessing Officer to recompute the penalty @ 10% of the difference in tax by taking the assessed income. No substantial question of law arises for consideration in the present appeal and the same is dismissed.
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2023 (4) TMI 749
Transfer order u/s 127 - denial of natural justice - Not providing any material to the petitioner on the basis of which such decision of transferring the file of the petitioner has been taken and without giving any opportunity of personal hearing - HELD THAT:- Considering the facts and circumstances of the case and the decision of Nouvelle Advisory Services Private Limited [ 2023 (2) TMI 866 - CALCUTTA HIGH COURT ] this writ petition is disposed of by directing the respondent authority concerned to provide relevant documents to the petitioner indicating the basis for taking such order of transfer of the petitioner s file and to provide opportunity to file further objection, if such material is supplied and also to give opportunity of personal hearing to the petitioner, within eight weeks from the date of communication of this order. In case the petitioner is able to satisfy the respondent authority concerned, in course of personal hearing, in that event the respondent authority concerned shall revoke its order of transfer u/s 127 of the Income Tax Act, 1961. Till any fresh decision is taken after the personal hearing provided to the petitioner, the respondent authority concerned shall maintain status quo with the regard to any further proceedings.
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2023 (4) TMI 748
Addition u/s 68 - entity which had granted the loan, had not responded to the summons - HELD THAT:- Tribunal adopted the correct approach. Merely because the respondent/assessee had not repaid the balance amount and the creditor had not responded to the notice issued under Section 133(6) of the Act could not have been used as a reason by the AO to make an addition. Addition of amount written off by assessee - ITAT deleted the addition - HELD THAT:- Tribunal has returned a finding of fact, that the amount reflected the interest accrued which had been offered for tax in the preceding year. In the AY in issue, since the amount could not be recovered from the debtor i.e., Bell Ceramics Ltd., the respondent/assessee had written off the same. Tribunal came to the correct conclusion, based on the appreciation of the material placed before it. Inter alia, the respondent/assessee not only submitted to the AO/CIT(A), the details of the amount given on loan to Bell Ceramics Ltd., as also the interest accrued from year to year, but also the TDS certificate and interest received on the amount of loan extended to the said entity. The addition, as noted above, was rightly deleted by the Tribunal. Correct head of income - whether the income earned from business centre, run and managed by the respondent/assessee should have been treated as income under the head income from Business and Profession or, as held by the AO/CIT(A), as income from House Property ? - HELD THAT:- Tribunal, in our view, has correctly ruled that the business centre was being exploited by the respondent/assessee as a commercial asset. Therefore, the income from the same, as rightly concluded by the Tribunal, should have been treated by the AO/CIT(A) as business income. Consequently, the deduction of expenses as well as interest on borrowed capital would have to be allowed, in terms of Section 36(1)(iii) of the Act.
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2023 (4) TMI 747
Stay of demand - request for stay was rejected on the lone basis that Instruction No.1914 dated 02.12.1993 as modified by two office memoranda dated 29.02.2016 and 31.07.2017 does not apply to the writ petitione r - AO had come to the conclusion that there is unaccounted capital drawings and unexplained interest credit both under Section 56 - this Court is informed that the appeal is under Section 246A of IT Act; that pending appeal, writ petitioner moved the first respondent (Assessing Officer) under Section 220(6) of IT Act with an interim prayer - HELD THAT:- There is no disputation or disagreement as between the petitioner's counsel and the learned Revenue counsel that this is incorrect. This is evident and obvious from the first and second sentences in the first paragraph of impugned order. The first sentence says that stay of demand is governed by said instruction and second sentence says that writ petitioner is not covered by said instruction. As there is no disputation or disagreement that the writ petitioner's case i.e., writ petitioner's plea that interim order is covered by said instruction read with Section 220(6) of IT Act and as the only ground on which the prayer has been negatived is that the writ petitioner is not covered by said instruction, this Court deems it appropriate to interfere qua the impugned order. Order As passed: a) the impugned order i.e., order dated 12.12.2022 bearing reference ITBA/COM/F/17/2022-23/1047945987(1) made by the first respondent is set aside. The impugned order is set aside on the sole ground that it has proceeded on the lone erroneous basis that said instruction (Instruction No.1914 dated 02.12.1993 as modified by two office memoranda dated 29.02.2016 and 31.07.2017) does not apply to the writ petitioner; b) The petition of the writ petitioner seeking interim order is remitted back to the first respondent for consideration on its own merits and in accordance with law inter alia by applying said instruction; c) The above exercise shall be completed by the first respondent as expeditiously as his business would permit and in any event, within three weeks from today i.e., on or before 12.01.2023; d) Though obvious it is made clear that the writ petitioner's petition styled 'petition to keep the demand of tax in abeyance' before the first respondent now gets revived and the same will stand over for consideration by the first respondent as per the aforementioned directive within aforementioned time line.
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2023 (4) TMI 746
Stay of demand - order made on the lone basis that Instruction No.1914 dated 02.12.1993 as modified by two office memoranda dated 29.02.2016 and 31.07.2017 does not apply to the writ petitione r - AO had come to the conclusion that there is unaccounted capital drawings and unexplained interest credit both under Section 56 - this Court is informed that the appeal is under Section 246A of IT Act; that pending appeal, writ petitioner moved the first respondent (Assessing Officer) under Section 220(6) of IT Act with an interim prayer - HELD THAT:- There is no disputation or disagreement as between the petitioner's counsel and the learned Revenue counsel that this is incorrect. This is evident and obvious from the first and second sentences in the first paragraph of impugned order. The first sentence says that stay of demand is governed by said instruction and second sentence says that writ petitioner is not covered by said instruction. As there is no disputation or disagreement that the writ petitioner's case i.e., writ petitioner's plea that interim order is covered by said instruction read with Section 220(6) of IT Act and as the only ground on which the prayer has been negatived is that the writ petitioner is not covered by said instruction, this Court deems it appropriate to interfere qua the impugned order. Order As passed: a) the impugned order i.e., order dated 12.12.2022 bearing reference ITBA/COM/F/17/2022-23/1047945987(1) made by the first respondent is set aside. The impugned order is set aside on the sole ground that it has proceeded on the lone erroneous basis that said instruction (Instruction No.1914 dated 02.12.1993 as modified by two office memoranda dated 29.02.2016 and 31.07.2017) does not apply to the writ petitioner; b) The petition of the writ petitioner seeking interim order is remitted back to the first respondent for consideration on its own merits and in accordance with law inter alia by applying said instruction; c) The above exercise shall be completed by the first respondent as expeditiously as his business would permit and in any event, within three weeks from today i.e., on or before 12.01.2023; d) Though obvious it is made clear that the writ petitioner's petition styled 'petition to keep the demand of tax in abeyance' before the first respondent now gets revived and the same will stand over for consideration by the first respondent as per the aforementioned directive within aforementioned time line.
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2023 (4) TMI 745
Penalty u/s 271(1)(c) - whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during the assessment proceedings? - as contended that at the time of framing assessment the AO has failed to apply his mind by recording valid satisfaction as to which of the limb of section 271(1)(c) i.e. for concealing particulars of income or furnishing inaccurate particulars of such income penalty proceedings are being initiated rather vague and ambiguous satisfaction - HELD THAT:- When we examine the satisfaction recorded by the AO to initiated the penalty proceedings u/s 271(1)(c) of the Act in the light of the settled principle of law that in order to invoke the provisions contained u/s 271(1)(c) of the Act i.e. as to whether the assessee has furnished inaccurate particulars of income or concealed particulars of income need to be invoked specifically but in the instant case the AO has failed to apply his mind at the time of recording his satisfaction at the time of framing assessment to initiate the penalty proceedings under section 271(1)(c) of the Act as to under which limb of section 271(1)(c) penalty proceedings are being initiated, rather vague and ambiguous satisfaction has been recorded as discussed in the preceding paras. This is a mechanical satisfaction recorded by the AO which shows that the AO was himself not aware as to whether the assessee has concealed the particulars of income or furnished inaccurate particulars of such income. Not only this, when we examine penalty levied on account of salary disallowance AO has merely made adhoc addition by way of guess work and the AO has not arrived at a definite decision that the assessee has made wrong claim qua the expenditure on account of salary and wages. It is also settled principle of law that on the basis of any adhoc addition penalty proceedings under section 271(1)(c) of the Act cannot be levied. Disallowance of excess salary this addition has been deleted by the Ld. CIT(A) subject to the verification of the figures by the AO but the AO proceeded to levy the penalty on this amount also which shows that the entire process of initiating penalty proceedings were mechanical, without any application of mind. Appeal of assessee allowed.
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2023 (4) TMI 744
Maintainability of Rectification application u/s 154 - Period of limitation - application for requesting allowances of depreciation which has been disallowed by CPC 5 - HELD THAT:- As is discernible from the orders of the lower authorities the assessee had filed a rectification application u/s.154 on 31.01.2018 i.e. much after lapse of four years from the end of the financial year in which intimation u/s.143(1) of the Act dated 13.12.2010 was issued by the A.O. As the aforesaid application was filed by the assessee u/s.154 beyond the stipulated time period as provided in sub-section (7) of Section 154 of the Act, therefore, the same was rightly held by the A.O as not maintainable. No infirmity in the orders of the lower authorities who had rightly dismissed/sustained the dismissal of the application filed by the assessee u/s.154 of the Act uphold the same.
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2023 (4) TMI 743
Deduction u/s 80P - true interpretation of sec 80-P in the context of cooperative societies engaged in the business of banking or provision of credit facilities to their Members - As per revenue the assessee, though registered under the Kerala Act as PACS has lost all characteristics thereof 93-99% of its lending is for non-agricultural purposes, it is engaged in accepting the deposits as well as providing all types of loans, to members of the public, by being compulsorily required to become nominal members either under category C or D and invests in shares of District Co-operative Bank and also different co-op. societies, i.e., with a view to earn profit, diluting mutuality. HELD THAT:- Cooperative societies engaged in lending to their members, or predominantly so, for whatever purpose, could stand to be excluded on the principle of mutuality. Income by way of interest or dividend on investment in another cooperative society stands exempted u/s. 80P(2)(d), being only an extension of the principle of mutuality. It is this, we would like to think, that p rompted the Apex Court in Citizen CS Ltd. [ 2017 (8) TMI 536 - SUPREME COURT ] to state the assessee-appellant as being not a cooperative society meant for its members and providing credit facilities thereto. Even as we consider it proper to bring on record our understanding of the decision in The Citizen CS Ltd. (supra), i.e. , qua both the aspects of the Revenue s case, the same having been explained in Mavilayi Service Co-op. Bank Ltd [ 2019 (3) TMI 1580 - KERALA HIGH COURT ] have no hesitation in, respectfully following the same, holding that the appellant-societies in the instant case/sas eligible for deduction u/s. 80P as claimed. In this, we also take into account the absence of any finding of the lending being in violation of s. 59 of the Kerala Act, as well as the decision in CIT v. Peroorkada Service Co-op. Bank Ltd. [ 2021 (12) TMI 1084 - KERALA HIGH COURT ] holding investment in cooperative banks as not impeding the deduction on interest thereon. Decided in favour of assessee.
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2023 (4) TMI 742
Assessment u/s 153A - assessee has found to have not disclosed HSBC Bank account at Dubai - admissibility of information received from the French authorities - HELD THAT:- The onus was on Ld. AO to establish that the material retrieved or printed from the Pen Drive, has contents of the Bank Account as exists with the said Bank. Then only it could be said to be carrying any evidentiary significance with categorical value. There is nothing on record to show that any communication was made with the concerned Bank to verify the details made available in the information or as to what was the nature of account, who was its operator, how it was operated. It appears that Ld. CIT(A) has done this all exercise on the basis of his own interpretation and inferences from the information available in the paper, by refereeing it to a Bank Account Statement . The Bench is of considered view that when any quasi judicial authority is referring to a document of the nature like Bank Account Statement, then mere inferences from the contents of a documents it cannot be assumed that same is extract of a Bank Account statement kept in regular course of Banking Business. Even in case of a Banks incorporated in India it is only by virtue of the Bankers Books Evidence Act, 1891, the Bankers books have been made admissible. When the information about an account in foreign bank was not coming from the Bank itself but some other source, there had to be some foundation to rely the same and reach a conclusion. However, that seems to be not the case here. Whether apart from the aforesaid information in the hands of Revenue there was any other material of inculpatory nature found during search itself on the basis of which assessment under Section 153A of the Act can be done? - No doubt the admission is best piece of evidence and any retracted admission continues to be relevant and admissible for drawing inferences. However, the same need corroboration in material particulars. Which is completely absent in the present case. Any search material of inculpatory nature found in search can be corroborated by a retracted statement by way of establishing material facts arising from the search material matching with the retracted oral statements but where the retracted statement is the solitary evidence to be relied, the Revenue cannot consider same to be a 'incriminating material to make addition under Section 153A of the Act. As decided in Parminder Singh Kalra [ 2021 (6) TMI 542 - ITAT DELHI ] statement recorded u/s 132(4) does not constitute incriminating material and no addition can be made on the basis of statement alone without any reference to material gathered during the course of search operations, we hold that no addition can be made in the instant years. Present is case of a Completed assessment - We hold that the additions as finally made to the total income of the assessee on account of transactions reflected in the alleged Bank account of the assessee with HSBC Bank account at Dubai and income relating thereto for relevant AY under consideration are beyond the scope of section 153A as the assessments for the said years had become final prior to the date of search and there was no incriminating material found during the course of search to support and substantiate the said addition. The disputed addition therefore, deserves to be deleted allowing the relevant grounds of the assessee's appeals. Addition made on account of deposits found in the Bank accounts of the children - The matter of fact is that no incriminating material was found during the course of search so as to suggest that any part of undisclosed money or investment in Banks were transferred to the accounts of children. More so once the explanation of source of such money was explained by the children in their assessment and same was accepted, then Ld. AO had no reason to make additions in the hands of assessee and Ld. CIT(A) has rightly deleted the same. Payment made by Sh. Rajkapur to the Children of assessee - AO has erred in making additions based on conclusion that money was not transferred by legitimate manner while Ld. CIT(A) has examined the evidence which establish that it was a loan arrangement from Sh. Raj Kapur at the instance of Sh. Behl who is related to the wife of assessee. CIT(A) is also justified to observe that as the two children are non-resident Indians so without there being any connection of this disputed loan amount with any income earned by them in India, the same cannot not be added in the hands of Assessee. Addition on account of air conditioner allegedly purchased by the assessee - CIT(A) has taken in due consideration the fact that the name of the assessee no where figures in the retail cash invoices and the evidence that during the relevant period of time, the premises was in occupation of a tenant who was leased out the said premises vide lease deed and tenant may have installed these air conditioners for his own use, as such the expenses have not been incurred by the assessee. Addition on account of payment made to Sh. Jindal towards excess money received on account of JMD flats sold during the year - From the notices u/s 142(1) of the Act it is observed that except for calling for details related to foreign bank account and other routine issues no question was ever raised by the AO during the assessment proceedings and addition has been made without giving the assessee any opportunity to clarify or rebut the allegation. On consideration of the facts it is apparent that all the transactions are through banking channels and there is no case for unaccounted payment. The addition is therefore deleted. Undisclosed interest income on deposit made in foreign bank account - Revenue cannot dispute the fact that so called bank statement of foreign bank account does not show any interest has been credited in the said. There is no evidence brought on record by the Ld. AO that interest was also paid on the deposits/balance in the account peak balance of which has already been added in AYs 2007-08 and 2008-09. Particularly in the subsequent years after the years relevant to AYs 2007-08 and 2008-09 for which there is no statement of the said bank account or any information, as part of the information received under exchange of information or otherwise, in respect of these subsequent years. There is also no error in Ld. CIT(A) holding that it is settled law that notional interest cannot be taxed as income. Decided against revenue.
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2023 (4) TMI 741
Penalty u/s 271(l)(c) - AO completed the assessment u/s 143(3) r.w.s. 153A accepting the income declared by the assessee - CIT-A deleted the penalty - HELD THAT:- Additional income offered by the assessee in the return filed in compliance to the notice u/s 153A of the Act which partakes the character of regular income filed u/s 139 of the Act and the said additional income being not offered on the basis of any incriminating material but is the voluntary disclosure made by the assessee and there being no other legal binding precedence referred to by ld. D/R, we fail to find any infirmity in the finding of ld. CIT(A) deleting the penalty levied u/s 271(1)(c) Penalty levied u/s 271AAB(1)(a) - CIT(A) deleted the impugned penalty adopting the same analogy that no incriminating material was found during the course of search - HELD THAT:- We are inclined to hold that in the absence of incriminating material found during the course of search and the income surrendered by the assessee is voluntary in nature not having any nexus to any incriminating material found during the course of search and ld. AO has accepted the returned income filed by the assessee, therefore as relying on case Marvel Associates [ 2018 (3) TMI 946 - ITAT VISAKHAPATNAM] and Mothukuri Somabrahmam [ 2018 (3) TMI 947 - ITAT VISAKHAPATNAM] we fail to find any infirmity in the finding of ld. CIT(A) deleting the penalty levied u/s 271AAB(1)(a). Revenue appeal dismissed.
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2023 (4) TMI 740
Disallowance of non compete fee - assessee had acquired running businesses of various bottlers companies - HELD THAT:- CIT(A) had upheld the order of Ld. AO and the issue was carried forward in the assessment year 2002-03 where Tribunal had upheld the view of ld. Tax Authorities below. Assessee s appeal in this regard stands admitted before Hon ble Delhi High Court [ 2015 (9) TMI 1712 - DELHI HIGH COURT] - Subsequently, the appeals for 2001- 02 and 2003-04 have been admitted on the same substantial question of law by Hon ble Delhi High Court. That being the states of facts of the legacy issue, the propriety requires to follow the rules of consistency as there is nothing to differ. Thus, the issue is decided against the assessee. Consequently, the grounds in that regard raised in the respective A.Y. stand dismissed. Disallowance of depreciation claimed on acquisition of distributors list - assessee had appointed as its distributor in Chennai which was earlier distributor of competing product from which it had built a large customer base in Chennai - HELD THAT:- As relying judgment of Hon ble Supreme Court in CIT vs. Rajasthan Breweries Ltd. [ 2011 (11) TMI 727 - SC ORDER] of Hon ble Delhi High Court in CIT vs. Oswal Agro Mills [ 2010 (12) TMI 947 - DELHI HIGH COURT] , DCIT vs. Gujarat Narmada Valley Fertilizers Co. Ltd [ 2013 (8) TMI 300 - GUJARAT HIGH COURT] Bombay High Court judgment in DIT vs. HSBC Asset Management (I) (P) Ltd. [ 2014 (10) TMI 103 - HIGH COURT OF BOMBAY] and certain judgments of the Tribunal, it was submitted that once an asset enters into block of asset and depreciation benefit has been given in the initial year of claim the same cannot be disturbed in the subsequent years. It can be observed that the Ld. tax authorities below have disallowed the expenditure on the basis of non-production of relevant evidence with regard to nature of agreement of assessee with M/s. S.R. Minerals Water. However, the fact of allowance of the expenditure in 2003-04 is not disputed by the Revenue. Thus, the settled proposition of law that if in the initial year of claim the depreciation, is allowed, the claim cannot be disturbed in the subsequent years, has not been followed by the Ld. Tax Authorities below on the basis of lack of agreement between the assessee and M/s. S.R. Minerals Water,to examine the nature of receipt, cannot be sustained and the grounds arising out of this issue in the respective assessment years are allowed in favour of the assessee. Disallowance to the extent of 10% of the processing charges - processing charges were claimed during the relevant previous years and the same have been disallowed on adhoc basis on the basis of non-sustenance of same on the basis of notices issued to the concerned parties - HELD THAT:- The bench accordingly is inclined to restore the issue to the files of Ld. AO with direction to examine the issue of processing charges on the basis of evidence made available by the assessee showing genuineness of the payments made to the suppliers. The non-availability of the suppliers or their failure to appear on the behest of assessee is not required to be considered to discredit the expenditure otherwise established from books and mode of payment. Accordingly, the ground arising out of this issue in appeal of assessee for the assessment year 2004-05 and 2005-06 are allowed for statistical purposes. Disallowance of CSR expenses - HELD THAT:- Expenditure was incurred on activities like installation of handpumps, distribution of shoes, uniform etc. to school students, drought relief measures etc. Ld. AO however, considered that these expenses were not substantiated and that the same were ineligible for deduction u/s 37(1) of the Act. Ld. CIT(A) applying Explanation 2 to Section 37(1) of the Act inserted by the Finance Act, 2014, with effect from 01.04.2015 observed the same to be clarificatory in nature and made applicable to A.Y. 2004-05. In this context, it can be observed that the Raipur Tribunal Bench in the case of Jindal Power Limited [ 2016 (7) TMI 203 - ITAT RAIPUR] and Co-ordinate Delhi Tribunal in The National Small Industries Corp. Ltd. [ 2019 (2) TMI 1538 - ITAT DELHI] while relying CIT vs. Vatika Townships Pvt. Ltd. [ 2014 (9) TMI 576 - SUPREME COURT ] have held that the explanation is not retrospective. These decisions of the Tribunal have been followed by Co-ordinate Bench, in case of Honda Motorcycle and Scooter India Pvt. Ltd. [ 2020 (9) TMI 62 - ITAT DELHI] . This bench is of considered opinion that there is nothing substantiates to hold a different opinion and accordingly, the ground is decided in favour of the assessee. Disallowance expenses incurred on Ice- Boxes - HELD THAT:- This bench is of considered opinion that the nature of expenditure on the articles once examined by Co-ordinate Bench, cannot be interfered without there being substantial basis to disagree, that not being there accordingly following the Co-ordinate Bench decision in assessee s own case for A.Y. 2002-03, the ground is decided against the assessee.
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2023 (4) TMI 739
Depreciation on goodwill u/s 32(1) - goodwill recorded in books of accounts of resulting post demerger - company addition on the ground that goodwill accounted in the books of assessee company is a self-generated which is not qualified for depreciation as an intangible - HELD THAT:- Neither the AO nor the ld. CIT(A) had any dispute regarding manner in which quantum of goodwill was arrived at. In fact, both the authorities have accepted the valuation of net asset acquired by the assessee company and the valuation for arriving at the consideration to be paid to the shareholders of the demerged company. It is also a fact that no goodwill was appeared in the books of Demerged company before appointing date. The fact that the depreciation on goodwill was specifically omitted by amending section 32 by the Finance Act, 2021 w.e.f. 01.04.2021 also demonstrate that depreciation on goodwill was allowable before the amendment. AO and the ld. CIT(A) have stated that goodwill recorded by the assessee company is self-generated, but, fact remains that goodwill recorded in the books of accounts in resulting company is not self-generated goodwill but falls into the category of purchased goodwill. From the above facts, it is clear that goodwill recorded in the books of assessee company is purchased goodwill and cost of the same has been rightly arrived at. Pursuance to the scheme of demerger, goodwill recorded in books of accounts of resulting company was acquired, but not self-generated as per the order of the Hon ble High Court of Madras in a scheme document. Therefore, we are of the considered opinion that once the assessee proves that goodwill accounted in the books of accounts in a scheme of demerger is only of purchased goodwill by paying consideration then the same fall within the ambit of purchased goodwill and entitled for depreciation under section 32(1) of the Act. Assessee has rightly claimed depreciation on goodwill accounted in the scheme of demerger approved by the Hon ble High Court of Madras and thus, we direct the Assessing Officer to allow depreciation on goodwill as claimed by the assessee for all the three assessment years. Decided in favour of assessee. Disallowance made under section 14A r.w. Rule 8D - argument of the assessee that the assessee has not earned any exempt income for the assessment year in question - HELD THAT:- It is an admitted fact that the assessee had not earned any dividend income, which was claimed as exempt under section 10(34) of the Act. It is well settled principle of law by the decision of Hon ble Supreme Court in the case of Chettinad Logistics [ 2018 (7) TMI 567 - SC ORDER] wherein, it was held that section 14A of the Act can be triggered if the assessee seeks to square off expenditure against income which does not form part of total income. Thus where no exempt income is earned, section 14A could not be invoked. Hon ble Delhi High Court in the case of Cheminvestments Ltd. v. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] had considered identical issue and held that no disallowance can be made where no dividend income has been received. In this case, there is no dispute with regard to the fact that the assessee has not earned any dividend income. Thus in the absence of exempt income, no disallowance under section 14A r.w. Rule 8D could be made. Decided in favour of assessee.
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2023 (4) TMI 738
Addition of bad debts / debts written off u/s 37 - pre-condition to claim any amount of bad debts on revenue account - As per the AO, the amount has never been taken into account in computing the income of previous year in which such debt or part has become irrecoverable, so he disallowed the same - HELD THAT:- We note that assessee has credited brokerage into income and the total bad debt in this year includes brokerage and part of the amount of transaction owe to the assessee. We note that Hon ble Delhi High Court in the case of CIT vs. Bonanza Portfolio Ltd. [ 2009 (8) TMI 636 - DELHI HIGH COURT] hold that the money receivable from the client has to be treated as debt and since it became bad, it was rightly considered as bad debt and claimed as such by the assessee in the books of account. Since this bad debt occurred in the year in question, it was shown by the assessee in that manner. Since the brokerage payable by the client is a part of the debt and that debt had been taken into account in the computation of the income, the conditions stipulated in sub-section (2) of section 36 read with section 36(1 )(vii) stand satisfied in this case. Thus when the debt included brokerage and amount receivable otherwise, Hon ble High Court has expounded if the entire debt becomes bad the same is allowable as bad debt. Decide the issue in favour of the assessee.
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2023 (4) TMI 737
Addition u/s 69A - cash deposit in the bank account of assessee unexplained - Assessee deposited amount in cash in his bank account during demonetization period - HELD THAT:- Assessee is a senior citizen having family including Shri Amit Bhardwaj as a son born on 26.01.1988 and his marriage was solemnized on 25.04.2017 with Smt Riddhi Bhardwaj. On the occasion of wedding of son it is obvious that renovation of house and other expenses are incurred by the parents and in such a situation withdrawal of cash is a normal action of a father. We are not in agreement of allegation of Ld. CIT(A) that entire amount of withdrawal was re-deposited is a fact of beyond probability as when the purpose of renovation of house and marriage of son is deferred and the assessee was having cash amount withdrawn from his bank then after declaration of demonetization he had no option but to re-deposit the same to his bank account. This conduct is a normal conduct of a man ordinary prudent which cannot be doubted unless revenue authorities bring on record positive or adverse material to establish that the amount withdrawn by the assessee from his bank account was utilised or deposited somewhere else and the impugned amount of cash deposited by the assessee during demonetization was not the same which was withdrawn by the assessee from his bank account during pre-demonetization period. No such findings have been recorded by the authorities below in this case. Therefore the explanation offered by the assessee explaining the source of cash deposit to his bank account his properly explained and no addition u/s. 69A or any other provision of the Act is required to be made in the hands of assessee on this count. Accordingly grounds of assessee are allowed and AO is directed to delete the addition. Appeal of the assessee is allowed.
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2023 (4) TMI 736
Late filing fees u/s 234E and interest u/s 220(2) - HELD THAT:- AO imposed late fees u/s 234E of the Act., where the enabling clause (c) was inserted in the section 200A w.e.f. 01.06.2015 and the same has been confirmed by the Ld. CIT(A) relying on the decision in the case of Rajesh Kaurani vs. Union of India [ 2017 (7) TMI 458 - GUJARAT HIGH COURT ] We find that late filing fee u/s 234E of the Act has not rightly been charged in the intimation issued u/s 200A/206CB of the Act while processing the TDS returns/statements as the enabling clause (c) having been inserted in the section w.e.f. 01.06.2015. No enabling provision in the Act u/s 200A for raising demand in respect of levy of fee u/s 234E. As such, as per the assessee, in respect of TDS statement filed for a period up to 29.06.2014, no late fee could be levied in the intimation issued u/s 200A - The details of the TDS deduction and statement filed by the assessee are available on record which were not disputed by the Revenue. As per Shri Fatehraj Singhvi and Ors [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT ] and our own finding in the case of Sudershan Goyal [ 2018 (5) TMI 1626 - ITAT AGRA ], we accept the grievance of the assessees as genuine. Accordingly, the orders of the CIT(A) are reversed, and the fee so levied u/s 234E of the Act is cancelled. Appeals of assessee are allowed.
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2023 (4) TMI 735
Addition towards the cash deposited during demonetization period - HELD THAT:- Detailed copies of partner s current and fixed capital accounts have been annexed to the balance sheet which shows that the partners had made substantial capital contributions to the firm. Closing cash in hand also shown. The above narration of the factual panorama reveals that the assessee was having sufficient capital balance of partners and opening cash in hand. After meeting certain expenses incurred in cash, the assessee deposited Rs.16.81 lakh in its bank account, still leaving balance of cash in hand on 30-12-2016, being, the last day of demonetization scheme at Rs.3,86,991/- and such balance at the end of the year came to Rs.3.74 lakh. This depicts the amount of cash deposited in the bank account during demonetization period was from the assessee s business operations only, which was properly accounted for in the books of account.Therefore, order to delete the addition sustained in the first appeal. Appeal is allowed.
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2023 (4) TMI 734
Disallowance u/s 14A r.w.r. 8D(iii) - As submitted that assessee had not earned any income which is exempt and not includible in the total income of the assessee for the year - HELD THAT:- Admittedly, it is a fact on record that assessee had reported long-term capital gains as taxable income in the return form, taxable at the rate of 20% which was set off against the business loss of the current year. It is also a fact as noted from the return form, that assessee had not earned any income, exempt from tax and not includible in the total income for the year. AO has computed the disallowance under section 14A of the Act read with rule 8D(iii) on a misconceived fact that assessee has earned long-term capital gains which is exempt under the Act. We find that on this misconceived fact of assessee having earned exempt income, disallowance made by the Ld. AO under section 14A read with rule 8D(iii) is not warranted since the correct fact in the matter is that assessee has not earned any exempt income during the year. Decided in favour of assessee.
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2023 (4) TMI 733
Revision u/s 263 by CIT - Underreporting of income - criterion for selection of case for limited scrutiny was `Contract receipts/fees mismatch' - there was a mismatch between the amount of revenue as per service tax return and the amount offered as per income-tax return inasmuch as less revenue was shown in income tax return - HELD THAT:- Under the column B1.2 Amount received in advance for services for which bills/invoices/challans or any other documents have not been issued , the amount has been shown as Nil in the service tax return for the last quarter, i.e. Jan to March, 2015. This obviously contravenes what the assessee made out a case and what is the position as per the service tax return. AR contended that a sum was the amount received as advance from its customer for rendering the services, the assessee itself mentioned Nil as the amount received in advance, in its service tax return. This apparent contradiction ought to have been examined by the AO who, after seeing reconciliation filed by the assessee showing some amount as advance, did not go further to ascertain as to why the assessee had declared Nil figure of advance in its service tax return. Lesser amount of revenue shown in income tax return vis- -vis the service tax return, if not successfully proved, would have gone to swell income for the year under consideration. We are satisfied that the assessment order passed by the AO on this score was erroneous and prejudicial to the interest of the Revenue which was rightly taken cognizance of by the ld. Pr.CIT u/s.263 - Decided against assessee.
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2023 (4) TMI 732
Entitled for deduction u/s 54B - Correct head of income - consideration received on account of sale of property - business income or capital gains income - CIT(A) allowed the claim of the assessee and held that the income from the sale of the property is to be treated as long-term capital gains and further allowed the cost of improvement, indexation and also allowed the deduction u/s 54B - HELD THAT:- The case of the assessee was selected for limited scrutiny to examine the claim of deduction/exemption out of capital gains earned by the assessee. There was not any mandate to the AO to examine the issue relating to the nature of the income earned by the assessee as to whether the same was treated as business income or capital gains and there is no allegation of the AO that the assessee is otherwise not entitled for deduction u/s 54B - No merit in the appeal of the Revenue.
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2023 (4) TMI 731
Addition of peak credit - As per assessee s submissions, the money deposited in NRE account was withdrawn by assessee s parents in India and same has been sourced to deposit the same in another NRO account from time to time - AO held that the cash was not re-deposited within a reasonable time frame - HELD THAT:- Assessee is a NRI and living in USA for past more than 20 years. The income of the assessee is not subjected to tax in India and accordingly, he has not filed any return of income. This fact has not been appreciated by Ld. AO since Ld. AO has treated the assessee as resident only. Assessee is maintaining NRE account as well as NRO account at Erode to remit foreign savings. The assessee, apparently, has no source of income in India. Therefore, the reasoning of Ld. AO that the deposits are not within reasonable time frame could not be accepted. In fact, Ld. AO has admitted correlation between these two accounts and added only peak credit to assessee s income. On this fact alone, the impugned addition is not sustainable and presumption would arise in assessee s favor that the only source which could be used to make deposits would be assessee s NRE account only and nothing else. Therefore, delete the impugned addition. Assessee appeal allowed.
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2023 (4) TMI 730
TDS u/s 194J - Addition u/s 40(a)(ia) - assessee uses the transmission line of Orissa Power Transmission Corporation Limited (OPTCL) and Power Grid Corporation of India Limited (PGCIL) - HELD THAT:- The claim of the assessee that it is not liable for TDS insofar as it is not a payment by the assessee to OPTCL but it is the assessee only acting as a banker and deposited in ESCROW arrangements and subsequently payments were made to OPTCL. In any case, the decision in the assessee s own case shows that in the immediately preceding the issue has been held in favour of the assessee and the revenue has not been able to show that any appeal has been filed against the said decision. This being so, respectfully following the decision of the Co-ordinate Bench in assessee s own case [ 2011 (11) TMI 77 - ITAT, CUTTACK] we have no reason to interfere with the order of the ld CIT(A) as the ld CIT(A) has judiciously decided the issue following the decision of the Co-ordinate Bench of this Tribunal for the earlier assessment years. Consequently, we uphold the same. Appeal of the revenue stands dismissed.
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2023 (4) TMI 729
Denial of foreign tax credit u/s 90/90A due to delay in filing Form no.67 - taxpayer filed Form No.67, after the due date for filing the return of income u/s 139(1) - rectification application u/s 154 for claiming the foreign tax credit was disposed off without granting any relief to the assessee - HELD THAT:- As decided in SONAKSHI SINHA case [ 2022 (10) TMI 107 - ITAT MUMBAI] assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income Tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income Mere delay in filing Form No. 67 as per the provisions of Rule 128(9), as they stood during the year under consideration, will not preclude the assessee from claiming the benefit of foreign tax credit in respect of tax paid outside India. Since in the present case, the claim of the assessee was denied on this technical aspect without going into the merits, therefore, we deem it appropriate to direct the jurisdictional AO to decide the claim of the foreign tax credit on merits, after accepting the Form No.67 and other related documents filed by the assessee. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
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2023 (4) TMI 727
TP Adjustment - addition of AMP Expenses applying Bright line test - HELD THAT:- There is no substantial difference between the agreement came into effect from 01/07/2005 and that of Agreement came into effect from 01/04/2010. TPO/A.O have already considered the agreement dated 01/07/2005 in earlier round of litigation and only after the remand by the Tribunal for the second time, wrongly considered the agreement which was came into effect from 01/04/2010. It is not the case of the revenue that the assessee has misled the TPO by providing the wrong agreement which ultimately resulted in considering the wrong agreement. Also observed that the relevant agreement which is applicable for the year under consideration was already on record of the TPO, but the Ld. TPO has reproduced the agreement which is not applicable for the year under consideration for which the assessee cannot be penalized. Remitting the issue to the file of Lower Authorities once again for the third time will not serve any purpose which would only result in dragging the proceedings for no fault of the assessee, therefore, in our opinion, the same shall be avoided in the interest of justice. Thus by following the order of the Tribunal in Assessee s own case for the Assessment Year 2016-17 [ 2021 (11) TMI 647 - ITAT DELHI ], we are of the opinion that it cannot be held that there was any kind of understanding or arrangement with the A.E. which can be lead to interference that AMP expenditure incurred by the assessee is an intentional transaction nor there is any iota of material that there was any action in concert. Accordingly, we hold that there is no international transaction of incurring any AMP expenditure and direct the A.O/TPO to allow the claim of the assessee.
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2023 (4) TMI 726
Interest u/s 234A - what is the period upto which interest u/s 234A can be levied? - HELD THAT:- As the interest u/s 234A is a monetary compensation against the legitimate taxes due to the Government of India, we in the light of CIT Vs Prannoy Roy [ 2008 (9) TMI 150 - SUPREME COURT] are of the considered view that, irrespective of date of filing of ITR, interest u/s 234A of the Act, shall on the balance of taxes outstanding accrue commencing from the first date immediately following the due date and shall cease to accrue on the date of payment by instalment (when paid in parts) or on the date of full discharge of entire tax liability computed on the total income. It shall be needless to mentioned that, by virtue of provisions of sub-section (2) to section 243A, the interest payable under sub-section (1) shall be reduced by the interest, if any, paid u/s 140A towards the interest chargeable thereunder. In the extant appeal, since the appellant in terms of section 234A(1) computed the interest accrued on each occasion of payment by instalment on the outstanding balance of taxes due to ex-chequer and discharged the entire tax liability alongwith interest accrued thereon before filing of his return, we finding no fault with the computation of interest liable u/s 234A, hold the orders of both the Ld. TAB as erroneous, consequently we set-aside the order of Ld. NFAC and direct the Ld. CPC to compute interest in aforestated terms - Assessee appeal allowed.
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2023 (4) TMI 725
TP Adjustment - In second round, the assessee sought various economic adjustments while computing its margins - AR submitted that TP adjustment could not exceed global profit of the group as a whole and therefore, TP adjustments may be restricted by considering 94% or in worst scenario @100% of sales consideration received from ultimate customer i.e., Nike - HELD THAT:- TPO has proposed overall adjustment of Rs.60.50 Crores for all the three years which far exceeds the 100% of revenue ultimately realized by the assessee group from Nike. The same could not be held to be justified from any angle particularly considering the fact that in APA for subsequent years, it has been agreed that ALP, in no case, would exceed 100% of sale consideration receivable from ultimate customer. Therefore, accepting the plea of Ld. AR, we direct Ld. TPO to restrict the TP adjustment, for all the three years, by considering 100% of sale consideration receivable from ultimate customer i.e., Nike. The same has been tabulated by Ld. AR in the above table and works out to be Rs.31.49 Crores for all the three years. TPO is directed to verify the figures and restrict the adjustment to that extent.
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Customs
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2023 (4) TMI 724
Interest on delayed refund of drawback - denied on the ground that the drawback was pending for verification of information/ reply of queries in respect of two shipping bills and there was no delay - no discussion whatsoever regarding delayed payment in respect of other 15 shipping bills and the impugned communication is silent regarding same - section 75A of the Act of 1962 - HELD THAT:- When a drawback payable to the claimant under section 75A of the Act of 1962 is not paid within the stipulated period therein, then interest at the rate fixed under section 27A from the date after the expiry of the said period till the date of payment of such drawback is applicable. Therefore, an enquiry is needed into each of the shipping bill as to when the drawback became due, when it was paid and then accordingly calculate the interest thereafter. This entire enquiry is clearly missing in the impugned order. Therefore, the impugned communications will have to be set aside and the application of the Petitioner for interest needs to be restored to the file. Application of the Petitioner made for interest under section 75A of the Act of 1962 is restored to the file of the Deputy Commissioner of Customs, NS-II, Drawback Section - The Deputy Commissioner of Customs will carry out exercise in light of section 75A of the Act of 1962 and take necessary steps in that regard within a period of twelve weeks from today - Petition disposed off by way of remand.
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2023 (4) TMI 723
Delay of 14 years in concluding the proceedings - failure to fulfill the condition of N/N. 21/2002- Cus dated 01.03.2002 - goods imported by the respondent has not at all been received in their declared factory premises and diverted to local market in Delhi - HELD THAT:- It is seen that there was a delay of 14 years in concluding the proceedings. Though the show cause notice was issued on 9th November, 2004 and reply was submitted by the respondent on 21st March, 2005 and the respondent was heard in person, the final order of adjudication was passed on 29th June, 2018. The learned Tribunal noted that there is nothing on record to indicate that the respondent attributed to the delay in completion of the proceedings whereas in the order of adjudication it has been noted that there were multiple personal hearings conducted in the matter but there was no explanation for the delay of 14 years. In any event, a matter cannot be kept indefinitely pending as it will virtually be a Damocles sword hanging on the head of the assessee. The learned Tribunal was fully justified in coming to the conclusion that in the absence of any explanation for the inordinate delay of 14 years, the rights of the respondent have been affected and it would be in violation of the principles of natural justice. This is sufficient to uphold the order passed by the learned Tribunal. Consequently, the other issues which have been raised by the revenue and suggested as substantial questions of law need not be gone into. Appeal dismissed on the ground that there is no substantial question of law arises for consideration.
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2023 (4) TMI 722
Review application - Maintainability of application before Supreme Court - Classification of goods - decision of the Hon ble Supreme Court in COMMISSIONER OF CUSTOMS, BANGALORE-1 VERSUS M/S MOTOROLA INDIA LTD. [ 2019 (9) TMI 229 - SUPREME COURT] where the Hon ble Supreme Court held that the case would not fall within the categories of cases which are to be dealt with by the Hon ble Supreme Court. HELD THAT:- In terms of the above decision, if the case relates to determination of a question relating to classification of goods under the Tariff and whether or not they are covered by an exemption notification, it would fall within one of the categories of cases which have been entitled to give a special treatment of providing an appeal directly to the Hon ble Supreme Court. Admittedly, in the instant case, the stand of the department is that the goods dealt with by the respondent/assessee are not covered by the exemption notification. If that be so, the appeal is maintainable before the Hon ble Supreme Court. Furthermore, the facts in M/s. Motorola India Limited are slightly different from the facts of the case on hand. In the said decision the only question that was involved was whether the said assessee had violated the conditions of the exemption notification by not utilizing the imported material for manufacturing of the declared final product and, therefore, liable for payment of duty, interest and penalty. However, the distinguishing feature in the case on hand is that the department takes a stand that the goods dealt with by the respondent are not covered by exemption notification which was not the facts in the case of M/s. Motorola India Limited. Thus, we find that no grounds have been made to review the judgment and order of this court dated 7.3.2022. The review application stands dismissed.
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2023 (4) TMI 721
Benefit of CVD @ 8% under Notification No.30/2004-CE dated 09.07.2004 denied - denial of benefit on the ground that imported goods has not suffered duty of excise and credit has not been availed (notification says that benefit of notification will be available only if the goods that are used as inputs in the products manufactured by him, have already suffered duty of excise and the assessee has not availed credit of such duty on the inputs under the provisions of Cenvat Credit Rules, 2004). HELD THAT:- The very same issue came up for consideration before the Hon ble Apex Court in the case of M/S SRF LTD., M/S ITC LTD VERSUS COMMISSIONER OF CUSTOMS, CHENNAI, COMMISSIONER OF CUSTOMS (IMPORT AND GENERAL) , NEW DELHI [ 2015 (4) TMI 561 - SUPREME COURT] and it was held that the assessee would be eligible for the benefit of notification. The Hon ble Apex Court opined that the benefit of notification cannot be denied if the condition is such that it is practically impossible to satisfy the condition - The decision of the Apex Court in the case of SRF Ltd. would be applicable. The jurisdictional High Court in the case of THE COMMISSIONER OF CUSTOMS (EXPORTS) VERSUS M/S. PRASHRAY OVERSEAS PRIVATE LIMITED, CUSTOMS EXCISE SERVICE TAX APPELLATE TRIBUNAL [ 2016 (5) TMI 1106 - MADRAS HIGH COURT] had analysed the issue after the date of amendment. In para-15, the Hon ble High Court also took notice of the fact that the review petition filed by department against the decision of the Supreme Court in SRF Ltd. is pending. The decision of the Hon ble jurisdictional High Court in the case of Prashray Overseas Pvt. Ltd. came to be passed on 28.03.2016 - the decision in the case of Prashray Overseas Pvt. Ltd. is not applicable to the facts and material placed. There are no grounds to interfere with the order passed by the Commissioner (Appeals) - Appeal of Revenue dismissed.
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Securities / SEBI
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2023 (4) TMI 720
Petition to remove the name of the petitioners from the Promoter Group of Lumax Automotive Systems Limited and reclassify the petitioners as public group category - Regulation 24 of Delisting Regulations, 2009 Application - According to respondent No.3-Bombay Stock Exchange (BSE), the Fair Value along with the names of the promoters, as available on the BSE s records, was included in the Final Public Notice issued by the BSE - respondent No.3 that subsequently, the office of the Official Liquidator, New Delhi in terms of communication dated 24.01.2019, informed respondent No.3 that the petitioner-company was already wound up - HELD THAT:- As seen that the main reason for issuance of the impugned notices is the application of Regulation 24 of Delisting Regulations, 2009 which admittedly did not have any application, therefore, this court finds it appropriate to set aside the impugned notices, as the same are based on wrong presumptions. Accordingly, the impugned notices qua the petitioners are set aside.The parties are at liberty to take appropriate recourse in accordance with the law, if so advised. If the respondent feels that notwithstanding the non-applicability of Regulation 24 of Delisting Regulations, 2009, they are still empowered to take any further action, the same can be done as per law.
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Insolvency & Bankruptcy
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2023 (4) TMI 719
Violation of principles of natural justice (audi alterem partem) - 2nd Respondent / Resolution Professional is a party to the proceeding or not - non-providing an opportunity to explain the facts as to why the 2nd Respondent / Resolution Professional, was a necessary Party - seeking summon to Resolution Professional, for not paying the Corporate Insolvency Resolution Process costs, for a period of nearly six months to the Appellant - HELD THAT:- On a careful perusal of the Impugned Order dated 25.08.2022 in IA/596(CHE)/2022 in CP/1264/IB/2018, on the file of the Adjudicating Authority, National Company Law Tribunal, Special Bench, Court I, Chennai, this Tribunal, is of the considered view that, though the Learned Counsels appearing for the Parties, were present, nothing is made mention of or recorded in the Impugned Order, as to whether the Learned Counsels, had prayed for an opportunity, to explain the necessary facts having provided to them - Suffice it, for this Tribunal, to make a pertinent mention that the Impugned Order, is conspicuously silent, on this aspect. This Tribunal, to aptly points out the Judgment of the Hon ble Supreme Court of India in Central Bank of India v. Vrajlal Kapurchand Gandhi Anr. [ 2003 (7) TMI 708 - SUPREME COURT ], wherein, it is observed that Statements of fact as to what transpired at the hearing recorded in the judgment of the court, are conclusive of the facts so stated and no one can contradict such statements by affidavit or other evidence. If a party thinks that the happenings in Court have been wrongly recorded in a judgment, it is incumbent upon the party, while the matter is still fresh in the minds of the Judges, to cull the attention of the very Judges who have made the record. That is the only way to have the record corrected. It is an axiomatic principle in Law, that the Tribunal / an Appellate Tribunal, are guided by the Principles of Nature Justice, notwithstanding the fact that it can regulate its own procedure, as it deems fit and proper. However, the Tribunal (Adjudicating Authority), under Section 5 (1) (a) of the I B Code, 2016 - 408 of the Companies Act, 2013 and an Appellate Tribunal (NCLAT), as per Section 410 of the Companies Act, 2013, are very much required and guided to adhere to the Principles of Natural Justice, in terms of ingredients of Section 421 (4) of the Companies Act, 2013, and as per Rule 34 of the NCLT Rules, 2016 - the Principle of Audi Alteram Partem, has been negated, as seen from the Impugned Order. On this simple ground alone, this Tribunal, without delving deep into the merits of the matter nor expressing any opinion, one way or the other simpliciter, at this juncture, is inclined to set aside, the Impugned Order, and allows, the Comp. App (AT) (CH) (INS.) No. 53 / 2023, in furtherance of Substantial Cause of Justice. The matter is remitted back to the Adjudicating Authority, who shall restore the IA/596(CHE)/2022 in CP/1264/IB/2018 to its file and after restoration of the said Application, and taking it on file, is to pass an reasoned / speaking order, De novo, both on, qualitative and quantitative term(s), by adverting to the Arguments / Factual and Legal pleas, raised on behalf of the Parties - appeal disposed off.
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FEMA
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2023 (4) TMI 718
Adjudication proceedings as contemplated u/s 13(1) of the FEMA - whether the supply of documents relied upon by an Adjudicating Authority in framing an opinion to proceed against the notice is a mandatory requirement? - whether a person has contravened any provision of FEMA, the Adjudicating Authority has to adjudge the matter? - HELD THAT:- It is clear that for the purpose of adjudication under Section 13 of FEMA, the Adjudicating Authority has to hold an enquiry after giving the person alleged to have committed contravention under Section 13 a reasonable opportunity of being heard. The Adjudicating Authority has to hold an enquiry upon a complaint in writing made by any the authorized officer and the person, against whom allegations of contravention are made, has a right to appear in person or to have legal assistance before the Adjudicating Authority. As per the said provision, the powers of civil court have been vested to an Adjudicating Authority. The record, which contains these documents, goes on to confirm this fact. Therefore, even the respondents are not in possession of legible copies of the aforesaid documents, as such, there was no occasion or possibility for the respondents to provide legible copies of these documents to the petitioners when they were not themselves in possession of the legible record. Though the respondents were obliged to provide legible copies of the documents relied upon by them but when they themselves were not in possession of the legible copies of the documents mentioned above, it was impossible for them to provide the same to the petitioners. The rules of natural justice do not operate in vacuum. Therefore, when the respondents themselves incapable of furnishing legible copies of certain documents, it cannot be stated that by non-furnishing of these documents to the petitioners, the principles of natural stand violated. A perusal of the reply to the show cause notice filed by the petitioners clearly indicates that they have effectively replied each and every allegation made in the show cause notice and they have also responded to the allegations relating to confessional statements of petitioners No.1 and 2 and their statements recorded before the Chief Judicial Magistrate, Srinagar, which are stated to be not legible. Therefore, no prejudice has been caused to the petitioners by non-supply of legible copies of these two documents which, in any case, are not available with the respondents themselves. In the present case, if the respondents are insisted upon to provide legible copies of those documents which are not even in their possession, it will amount to stretching the principles of natural justice too far, particularly at a stage when only the adjudication proceedings have been initiated and the parties are yet to produce their respective evidences/material before the Adjudicating Authority, whereafter the matter is required to be considered finally by the said Authority. We do not find that non-furnishing of legible copies of the documents by the respondents to the petitioner has infringed the principles of fairness. Thus, the impugned communication issued by the Adjudicating Authority does not call for any interference from this Court. For what has been discussed hereinbefore, the petition is dismissed.
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PMLA
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2023 (4) TMI 717
Money Laundering - provisional attachment of property - despite the provisional attachment order having been passed, the Resolution Plan was approved by NCLT - allegation of the Petitioners is that Respondent No.3- State Bank of India (SBI) was fully aware of the provisional attachment order but still did not inform the Petitioner or other bidders - HELD THAT:- The Court is informed that no appeals have been filed challenging the final approval of the resolution plan dated 29th September, 2021. In effect, the Petitioner No. 2 has stepped into the management of the Petitioner No. 1 company. The Petitioners had deposited a sum of Rs.28 crores, which was kept at the disposal of the Committee of Creditors and has also been distributed amongst the various creditors and lenders - The issue, that has obviously arisen today, is that despite the payment of Rs. 28 crores, the title deeds of the land continued to remain with the Bank in view of the fact that the attachment by the ED took place subsequent to the commencement of CIRP. Ideally, the Bank ought to have informed the Petitioner no.2 of the PAO, when it acquired knowledge in October 2021, as the amounts were deposited by the Petitioner no.2 only in March 2022, which for inexplicable reasons, it did not. Considering the ED s instructions that have been communicated to the Court, and the Petitioners willingness to deposit a sum of Rs. 3.01 crores, in the peculiar facts and circumstances of the present case, the petitioners shall be permitted to challenge the PAO order dated 25th August 2021 and the confirmation order dated 26th May 2022 before the PMLA Appellate Tribunal, within four weeks. The legal issues raised in this petition have not been adjudicated upon by this Court. Mr. Zoheb Hossain, ld. Counsel shall inform the Petitioners of the name of the official with whom the Petitioners shall coordinate for the submission of the FDR of Rs.3.01 crores. Petition disposed off.
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Service Tax
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2023 (4) TMI 716
Levy of Service Tax - activities performed by the sovereign/public authorities under the provisions of law being mandatory and statutory functions - fee collected for performing such activities is in the nature of compulsory levy as per the provisions of the relevant statute or not - said amount deposited into the Government treasury - HELD THAT:- The effect of the decision of this Court in the case of KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ALWAR [ 2022 (2) TMI 1113 - SUPREME COURT] vis-avis the functioning of the Gujarat Industrial Development Corporation under the Gujarat Industrial Development Act, 1962 (GID Act) are required to be considered by the Tribunal in light of the law laid down by this Court in the case of Krishi Upaj Mandi Samiti, where it was held that As per the exemption circular only such activities performed by the sovereign/public authorities under the provisions of law being mandatory and statutory functions and the fee collected for performing such activities is in the nature of compulsory levy as per the provisions of the relevant statute and it is deposited into the Government treasury, no service tax is leviable on such activities. The impugned judgment and order passed by the Tribunal in appeal as well as the review application(s) are hereby quashed and set aside. The appeal is ordered to be remitted back to the Tribunal - Appeal allowed by way of remand.
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2023 (4) TMI 715
Levy of service tax - Job work - Manpower Supply Agency Service or not - business of transportation of tractors by driving the tractors from the factory of M/s Punjab Tractors Ltd to the premises of dealers - interest - penalty - HELD THAT:- Consideration for the job undertaken by the appellants is on the basis of per kilometer. Letter dated 02.01.2004 written by Punjab Tractors Ltd to the appellants indicates the same. The said letter inter alia requests the appellants to organize drivers as required. It appears that the department has understood the same to be request for supply of the drivers and apparently the department did not consider the other terms of the contract. The terms of the contract were not for supply of the drivers. The appellants had to undertake the transportation of tractors from premises of Punjab Tractors Ltd to their dealers and in the bargain they may appoint drivers for the work. Appellants were required to take all responsibilities on the way - even where the wages of the workers or the employees supplied by the agency are paid by the agency, the liability to pay the service tax would be under said agency and not on the clients. In other words, the Circular clarifies that mere payment of wages by the manpower recruitment or supply agency does not take away their status. However, as far as the facts of the present case are concerned, there are no reasons for applying the said circular; the terms of the contract are very clear and the appellants have rendered the job assigned by Punjab Tractors Ltd and did not at all supply any manpower. There are no hesitation whatsoever in concluding that the job work undertaken by the appellants does not fall under the category of Manpower recruitment or supply agency service , therefore, the demand confirmed therein are liable to be set aside - Once demand itself is set aside, the penalty and the interest do not survive - appeal allowed.
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2023 (4) TMI 714
Levy of Service Tax - clearing and forwarding services for the goods manufactured and exported - service tax paid for the period up to June 2008 - non-payment of service tax from July 2008, for the reason of exclusion in terms of Rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - HELD THAT:- The services have been wholly performed outside India, which the Revenue wants to tax since the sale proceeds were being collected in India. It is in this context that Rule 3(ii) of the Rules ibid which is framed, comes to the rescue of an exporter who would earn in foreign exchange. The very same issue has been decided by this very Bench in the appellant s own case M/S. SUNDARAM INDUSTRIES LTD. VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, MADURAI COMMISSIONERATE [ 2018 (12) TMI 947 - CESTAT CHENNAI] that There is no dispute that the service is provided outside the territory of India, but the Revenue wants to tax the assessee since it collects sale proceeds in India. But the legislature in its wisdom, has framed Rule 3(ii) to encourage exports and in turn foreign exchange remittances. We find force in the contention of the Ld. Advocate that the activity of the appellant being wholly performed outside India, is excluded from service tax liability as per Rule 3(ii) of the Taxation of Services (provided from outside India and received in India) Rules, 2006. The demand, as confirmed in the impugned Order-in-Appeal, cannot sustain, for which reason the same is set aside - Appeal allowed.
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2023 (4) TMI 713
CENVAT Credit - transportation charges paid to GSPL - trading activity(output service) - service of gas through pipeline used for trading activity (input service or not) - demand relating to utilization of said credit for payment of service tax - extended period of limitation - HELD THAT:- It is seen that the respondents are purchasing gas from GSPC and receiving the same through the network of pipeline of GSPL. The respondents are paying service tax on the services of transportation of gas from GSPC to the respondent s premises. The said gas is sold by the respondent to various customers and supplied through the network of pipelines. It is quite clear that the respondents are engaged in the trading activity i.e. buying and selling of gas. The respondents are also involved in a. Installation and administration charges of gas pipe lines up to the end of customers. b. Annual Maintenance Charges of gas pipelines. c. Service charges received for sales promotion for sale of gas at CNG pumps tax. The term business would apply only to the business activities which are of the nature which become liable to excise duty or service tax. The term activity related to business has to be read in relation to the activities which are related to the business which is of the nature which is taxable either under excise or under service tax. Moreover, the service of transportation of gas from the supplier of gas namely GSPC to the respondent premises is used to the fullest extent in the trading of gas. The trading of gas is not an activity leviable to service tax and therefore even in terms of Rule 6(1) of the CCR, 2004 no credit of the same would be admissible. The Commissioner has relied on the decision of the Tribunal in the case of CST, DELHI VERSUS CONVERGYS INDIA PVT. LTD. [ 2009 (5) TMI 50 - CESTAT, NEW DELHI] the commissioner has observed that the value of transportation is recovered from the customers. It is apparent that the value of transportation is recovered from the customers who buy the gas from the respondent. The value of transportation of gas is included in the cost of the gas sold by the respondent - In the instant case the facts are different and therefore the decision of Convergys India Pvt. Ltd has no application. It is seen that the impugned order has not examined the issue of limitation and second demand relating to utilization of said credit for payment of service tax. The matter is remanded to the Commissioner for fresh adjudication.
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2023 (4) TMI 712
Refund of accumulated CENVAT Credit - out of pocket expenses incurred by Chartered Accountant which were included in the charges charged by the Chartered Accountant (C. A.) on which Service Tax was paid - cleaning activity services of the office premises - works contract services - telecommunication services - packing activity services - denied on the ground like invoice address not matching with the registered premises etc. - real estate agencies services - consultancy engineering services - short term accommodation services availed by the officials for providing output services - club and association services - IT services - denial on the ground of having no nexus with the output services. Objections raised where the invoice address does not match with the registered premises - HELD THAT:- There are large number of decision of this Tribunal where it has been held that so long as it is not established that services are not utilized, CENVAT Credit cannot be denied. Real estate agencies services - consultancy engineering services - short term accommodation services availed by the officials for providing output services - club and association services - IT services - HELD THAT:- The finding of the appellate authority that there is no nexus with output services is not sustainable. Double credit of Rs. 1,353/- - HELD THAT:- The contentions of Revenue that there has been a double credit of Rs. 1,353/- is accepted, the refund of Rs. 1,353/- is disallowed and it is ordered for refund of unutilized CENVAT Credit of the balance amount involved in this appeal, except for Rs. 1,353/-. Appeal disposed off.
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Central Excise
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2023 (4) TMI 728
Classification of goods - MIRACULAN (which primarily contains Traicontanol equivalent to 0.05% of weight) - be classified under Chapter Sub-heading no. 3808 3040 as Plant Growth Regulator or under Chapter Sub-heading no. 3808 93 40 as plant growth promoter? - rejection of refund claims under the provisions of Section 11B of Central Excise Act, 1944 - HELD THAT:- The primary basis of the department to hold that subject product MIRACULAN is a plant growth regulator is on the basis of the chemical test report given by departmental chemical examiner which says that the product contains Traicontanol equivalent to 0.05% by weight and may be considered as a plant growth regulator. As per the certificate of registration obtained by the appellant from the Directorate of the Plant Protection, Quarantine and Storage, Faridabad which works under the Ministry of Agriculture, Government of India as per requirement of Section 9(3) of the Insecticides Act, 1968. The registration which have been obtained by the appellant is for the Traicontanol 0.05% wherein, this product namely Traicontanol has been considered as insecticide. Also, on considering the literature which have been pointed out by the learned advocate for the appellant wherein, the Traicontanol 0.05% EC has been considered as the plant growth promoter. Since product MIRACULAN is based on Traicontanol 0.05% EC which is nothing but an insecticide as it requires a registration under Section 9(3) of the Insecticides Act, 1968 with the Directorate of the Plant Protection, Quarantine and Storage, Faridabad. From the literature as well as from the registration obtained by the appellant, it is found that the product MIRACULAN which is nothing but Traicontanol equivalent to 0.05% EC is a product of the insecticides. Whether the MIRACULAN can be considered as a plant growth regulator? - HELD THAT:- On going through the relevant entries of the Central Excise Tariff i.e. 380810 and 380830, it becomes clear that plant growth regulators are the products which fall under the category of Herbicides, anti sprouting products and plant growth regulators classifiable under sub heading 380830 while the product which is under consideration is nothing but a Traicontanol which is an insecticide and thus, we are of the view that the product insecticide will clearly fall under the sub heading 380810. The products which are of nature of Herbicides, anti sprouting products and plant growth regulators fall under chapter heading no. 380830. In view of the above, the product MIRACULAN which primarily contents of Traicontanol which is an insecticide will certainly cannot be considered as a plant growth regulator. Reliance placed in the case of BAHAR AGROCHEM FEEDS PVT LTD., VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2011 (2) TMI 600 - CESTAT, MUMBAI] - It can be seen from the above decision of the tribunal that the similar product which contains Traicontanol has been classified as insecticide and not a plant growth regulator and since the issue at hand is similar to the one decided by the above decision, the product MIRACULAN which primarily contains Traicontanol 0.05% by weight is a product under the category of Insecticides and cannot be considered as the plant growth regulator. Appeal allowed.
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2023 (4) TMI 711
Benefit of SSI exemption denied - repeated/Duplicate bills wrongly considered twice - value of Non-Manufactured goods wrongly considered as dutiable or not - demand of Energy cess - penalty under section 11AC of CEA, 1944 - interest under section 11AA of CEA, 1944 - HELD THAT:- The submission of the appellant that non-manufactured goods were wrongly considered as dutiable goods and duty was confirmed thereon has been examined. During the entire period the value of the goods which were traded and the value of goods, which were manufactured were taken separately and were indicated in the Annexure to the SCN and duty was demanded only on the value of the manufactured goods - no central excise duty was payable at all. It is a well settled principle that manufacture involves change, but every change is not manufacture. Manufacture requires that a new distinct marketable goods should be produced. In this case, the raw material which the appellant was using was steel sheets, as known in the market. What the appellant was producing were MS Shuttering Plates, MS Round Shuttering Plates, MS Crash Bar Plates, MS Hunch Plates, MS Trusses, MS Jali, MS Bar, MS Pier Cap Set, MS Concrete Bucket etc. which are different products known to the market. The appellant is not selling its final products as steel sheets but as these products. There is no mechanism prescribed under the Act for any process to amount to manufacture. So long as a new and distinct commodity known to the market is produced, the process amounts to manufacture and not otherwise - the appellant was manufacturing goods using steel sheets and, therefore, there is no infirmity in the appellant being charged to central excise duty. Demand of energy cess - HELD THAT:- The clean energy cess was chargeable along with the education cess and higher education cess along with the excise duty. The appellant has not produced any law under which it was exempted from payment of clean energy cess. Therefore, this ground cannot be accepted. The appellant contested the demand of interest. Payment of interest is mandatory under section 11AA and, therefore, the same cannot be set aside. Penalty imposed under section 11AC - HELD THAT:- The appellant had not taken registration and had not paid central excise duty nor had disclosed its activities to the department. Its only the investigation which revealed the activities of th appellant. In view of this, the appellant had evaded central excise duty while suppressing facts. Accordingly, the mandatory penalty under section 11AC needs to be upheld. The appeal is partly allowed to the extent of deduction of excise duty on the two sets of duplicate invoices.
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2023 (4) TMI 710
CENVAT Credit in respect of goods procured from 100% EOU - Applicability of formulae prescribed under Rule 3(7)(a) of Cenvat Credit Rules, 2004 - benefit of Serial No. 2 Notification No. 23/2003-CE dated 31/03/2003 has not been availed by appellant - demand of interest and penalty - invocation of extended period of limitation - HELD THAT:- It is seen that Rule 3(7)(a) of Cenvat Credit Rules applies only the duty has been paid at the concessional rate prescribed in Serial No. 2 of Notification No. 23/2003-CE dated 31/03/2003. The appellant has submitted a significant number invoices during hearing. A perusal of these invoices shows that benefit of Serial No. 2 Notification No. 23/2003-CE dated 31/03/2003 has not been availed while payment of duty. Serial No. 2 Notification No. 23/2003-CE dated 31/03/2003 prescribes that the duty shall be calculated at the normal rate for BCD/CVD and thereafter the total duty is reduced by 50%. A perusal of invoices produced by the appellant clearly shows that the duty has not been discharged in this manner. In the appeal memorandum also, the appellant has given a chart on page 90 and 91 as Exhibit 'G'. It has been specifically claimed in respect ofmany entries that benefit of Serial No. 2 Notification No. 23/2003-CE dated 31/03/2003 has not been availed. From the above it is apparent that the observation of Commissioner in the impugned order that duty has invariably been paid under Serial No. 2 Notification No. 23/2003-CE dated 31/03/2003 is prima facie incorrect. The matter needs to be reconsidered by the original adjudicating authority by examining all invoices individually. The provisions of Rule 3(7)(a) of Cenvat Credit Rules would be applicable only in cases where the duty has been paid taking benefit of Serial No. 2 Notification No. 23/2003-CE dated 31/03/2003. Further it is noticed that Tribunal vide order No. 88018 of 2016-SMB dated 22.02.2010 in the appellant's own case has held that the BCD mentioned in the said formula refers to the BCD leviable on the like goods if imported into India. The ratio of the said decision needs to be applied for deciding the cases where the invoices clearly indicate that duty has been paid availing benefit of Serial No. 2 Notification No. 23/2003-CE dated 31/03/2003. In all other cases where duty has not been paid availing benefit of Serial No. 2 Notification No. 23/2003-CE dated 31/03/2003, the registration prescribed under Rule 3(7)(a) cannot be applied. The matter is remanded to the original adjudicating authority for fresh decision - Appeal allowed by way of remand.
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2023 (4) TMI 709
Valuation - Erection Commissioning services - inclusion of value of bought out items supplied as such along with manufactured goods, in the assessable value or not - HELD THAT:- There is no dispute on the fact that appellant are manufacturing lattice mast and during the course of manufacture no bought out items are used in the manufacture. The bought out items which is subject matter of the present dispute are purchased and thereafter sold as trading activity by the appellant. Even though the bought out items are supplied by the appellant as trading activity but the same is not part and parcel of the manufacture of lattice mast. At the most, this bought out items are used for completing and erection and installation of High Mast Tower. There is clear distinction between lattice mast manufactured by the appellant and High Mast Tower erected and installed at the site of the customers - it is clear that bought out items are neither used as parts nor accessories of the lattice mast as they are not required for manufacture of lattice mast. Therefore, trading activity of above items is separate activity which is independent from the manufacturing activity of the appellant. The manufacturing of lattice mast is an independent manufacturing activity for which except the material used in making lattice mast no further bought out items are required. Therefore, the bought out items in any way not taking part in the manufacture of lattice mast. This issue has been considered in various judgments that if any bought out items are supplied along with manufactured items, the value of the same cannot be included in the value of manufactured goods and this issue has been considered in KERALA STATE ELECTRONIC DEV. CORPN. VERSUS COMMR. OF C. EX., TRIVANDRUM [ 2007 (10) TMI 198 - CESTAT, BANGALORE] where it was held that Bought out items such as cable, cards, etc., used for installation of machinery and its functioning, fact that they are bought out items on which excise duty has already been paid is not disputed - Hence value of such bought out items cannot be included in assessable value of machinery. There are many judgments cited by the learned Counsel wherein it was consistently held that value of bought out items supplied along with manufactured goods cannot be included in the assessable value of the manufactured goods. Therefore, the issue is no longer res-integra. Appeal allowed.
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2023 (4) TMI 708
Excess utilization of the MODVAT Credit in respect of bars and rods manufactured by the Appellant which are used for construction purposes - Section 3 or Section 3A of the Central Excise Act, 1944 - HELD THAT:- The Ld. Commissioner in the de novo order has given detailed findings - It was held by the Ld Commissioner that the assessee complied with the order of the Commissioner of Central excise, Kolkata-II Commissionerate and acted on that basis and no duty was intentionally paid excess and passed on to the buyers by the assessee in as much as the modvat credit was available to the buyers when duty was paid by the assessee correctly under the provisions of Section 3 of Central excise Act, 1944 and hence I hold the charges framed against the assessee not sustainable. The Commissioner s permission dated 23.09.1997 and 20.04.1998 was neither withdrawn nor challenged before the higher appellate forum. Inasmuch as the Commissioner vide his order dated 23.09.1997 and 20.04.1998 allowed the Respondents to work under the provisions of Section 3 w.e.f. Financial Year 1997-98 and the Respondent had discharged the duty burden under the said provisions availing MODVAT Credit. There are no infirmity in the order passed by the Ld. Commissioner - appeal of Revenue dismissed.
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CST, VAT & Sales Tax
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2023 (4) TMI 707
Levy of penalty u/s 51(7)(b) of the Punjab VAT Act - goods imported in Punjab on the basis of RC number of other dealers - documents were not genuine - attempt to evade tax - HELD THAT:- The facts in the present case which cannot be disputed are that on the GRs and invoices M/s. Arihant Industrial Equipment, Amritsar was the consignee of the goods and had made sale in transit to M/s. Bhushan Thukral. The GRs were self in account of Crompton Greaves Ltd. and in the GRs there was mentioning of M/s. Arihant Industrial Equipment, Amritsar. The Tribunal held that if the sale made by M/s. Arihant Industrial Equipment to M/s. Bhushan Thukral was to be treated as transit sale, then first these facts would be endorsed in favour of M/s. Arihant Industrial Equipment and then by M/s. Arihant Industrial Equipment to M/s. Bhushan Thukral with proper endorsement - Both the above said dealers were based in Punjab. There were no documents to show that it was a transit sale by M/s. Arihant Industrial Equipment to M/s. Bhushan Thukral during the course of inter-State trade. Even if the sale is taken as transit sale by M/s. Arihant Industrial Equipment to Bhushan Thukral, Govt. contractor, can it be taken as inter-State sale for the purpose of tax? - HELD THAT:- The goods were purchased from M/s. Crompton Greaves Ltd. and it was M/s. Arihant Industrial Equipment, Amritsar who had purchased the goods from M/s. Crompton Greaves Ltd. and during the course of transit of goods, the goods were delivered to M/s. Bhushan Thukral, Govt. contractor at Ludhiana. The detaining officer need not to go in the issues of absence of documents, whether the sale was in transit or whether M/s. Arihant Industrial Equipment had accepted any price of sale from M/s. Bhushan Thukral. He was only required to see the documents that it was a case of inter-State sale which in the present case is not in dispute as the goods were travelled from Nasik to Amritsar. In M/S THYSSEN KRUPP ELEVATOR (INDIA) PVT. LTD. VERSUS STATE OF PUNJAB AND ANOTHER [ 2010 (9) TMI 873 - PUNJAB AND HARYANA HIGH COURT] , the goods were being transported from Maharashtra to State of Punjab. The goods were detained on the ground that the transaction in question was clearly of intra-State sale in the State of Punjab as the goods were to be used in the works to be executed in the State of Punjab. The writ petition was allowed by not giving plea of alternative remedy to the respondents on the ground that once the petitioner had furnished all the information and there was a dispute of taxability, there could not be any attempt of tax evasions. Appeal allowed.
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Indian Laws
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2023 (4) TMI 706
Dishonour of Cheque - discharge of legally enforceable debt or not - vicarious liability of director - HELD THAT:- Receiving an ICD of Rs.5 crores was evidently not done under the signatures of the petitioner, nor was the petitioner a signatory to the said cheque which was furnished as part of the promissory guarantee of repayment. There is nothing on the records of the proceedings that there was any communication with the complainant which would have noted an active role of the petitioner in the specific transition that had taken place or the cheque which had been issued in lieu thereof - The dictum of the Hon ble Supreme Court in Sunita Palita [[ 2022 (8) TMI 55 - SUPREME COURT] ] is, therefore, apposite and applicable in these circumstances. Mere designation as a director cannot import vicarious liability for a dishonoured cheque. Vicarious liability is a specific species and assumes critical importance, particularly when there is criminal liability involved and therefore, cannot be taken lightly. If such an extension of principle of vicarious liability were to remain, it would go against the very grain and texture of what the Hon ble Supreme Court has held in a catena of decisions. Thus, the following principles emerge: (i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction. (ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company. (iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by the company along with averments in the petition containing that the accused were in charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. (v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with. (vi) If the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint. (vii) The person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases. otherwise. Creeping up an escalating liability to Chairpersons of large conglomerates/companies for cheques issued in day-to-day affairs of the business of a company would unfairly and unnecessarily expand the provisions of vicarious liability under the provisions of the Negotiable Instruments Act. Particularly, since no prejudice is caused to the complainant in this case as the signatory of the cheque and admittedly the Managing Director of the accused company is already arrayed as A-2 and is continued to be part of proceedings. It does not need to be reiterated, as has been held by various decisions, including the ones noted above, that the High Courts have the power to quash proceedings under section 138 NI Act qua those accused who do not fall within the rubric of vicarious liability as now defined and refined by various decisions of the Hon ble Supreme Court. In the considered opinion of this Court, the said complaint and its proceedings would be quashed qua the petitioner herein (arrayed as A-3 in the said complaint). Accordingly, the impugned order dismissing the revision by the petitioner is also set aside - petition disposed off.
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