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TMI Tax Updates - e-Newsletter April 29, 2023 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy FEMA Service Tax Central Excise CST, VAT & Sales Tax Highlights / Catch Notes GST: Seeking refund of tax deposit during search proceedings - The very fact that in two years’ time, no notice has been issued, the deposit of tax during search cannot be retained by the department till the adjudication of notice, which can take more time in future - A direction is being given to the respondents to return the amount of Rs.2.54 crores to the petitioner(s) along with simple interest at the rate of 6% per annum from the date of deposit till the payment is made. - HC Visit to Get Source GST: Interest on delayed refund - Relevant Date - the reasons based on which a part of the refund was sought to be denied, was that the value of exports for the given month was less than the purchases made in that month - The petitioner is right in its contention that interest should trigger in accordance with the main part of Section 56 of the CGST Act, i.e., from 18.04.2018, and that interest should run, both on CGST and DGST, up until the date when the amount was remitted to the petitioner. The dates when the remittance was made have been captured. - HC Visit to Get Source Income Tax: Settlement of case - full and true disclosure - failure to disclose certain income - taking into consideration the spirit and mandate of the provisions contained in Chapter XIX and merely for the reason that further amounts had to be offered by the assessee, the Settlement Commission cannot reject the application for settlement. This is not to say that the assessee is not required to make full and true disclosure. - HC Visit to Get Source Income Tax: Penalty u/s 271(1)(c) - depreciation on account of the increase in the cost of machinery due to foreign currency fluctuation losses - At worst, in the instant case, the petitioner’s action could be construed as one where it sought to make a claim which was unsustainable in law. That by itself, in the given circumstance, would not call for imposition of penalty, as once the error was pointed out by the AO, the respondent/assessee made a course correction before the assessment order was passed. - No penalty - HC Visit to Get Source Income Tax: Rectification of mistake u/s 154 - amount relating to contingent liability - there is a figure of “0” in the “Amount in the Income Tax Returns” instead of the actual figure. In our view, this is an exfacie error which deserves to be rectified - CPC directed to consider the application of the petitioner for rectification - HC Visit to Get Source Income Tax: Rectification of mistake - On the face of inaccuracy in adopting the correct figure of remuneration from audited financial statement, an apparent mistake has been committed. In the absence of opportunity to the assessee contemplated in proviso to Section 143(1)(a) the difficulty has been compounded. The mistake could have been avoided while processing the return itself. - Matter restored back - AT Visit to Get Source Income Tax: TDS u/s 194H - incentive paid to various parties - Non deduction of tds - the retailers held the goods on their own behalf and not on behalf of the assessee and therefore they did not act as an agents of the assessee as such no TDS is deductible u/s 194H as it is not applicable in the case of assessee. - AT Visit to Get Source Income Tax: Correct head of income - Cash received as rental income - assessee could not prove the existence of the persons against whom he has shown the cash receipt as rental income as those persons were not in existence and were not traceable - the learned CIT (A) while upholding the addition has also given a finding that since the assessee has already offered the rental income under the head income from house property as per remand report, the addition should be limited to the disallowance u/s 24(b) - Order of CIT(A) sustained - AT Visit to Get Source Income Tax: Income deemed to accrue or arise in India - receipts from services relating to Progressive Cavity Pump system (PCP) and rental of tools/equipments to Cairn India’ and ONGC - the scope and ambit of section 44BB of the Act is wide enough to include the receipts of the assessee from Cairn India and ONGC - AT Visit to Get Source Income Tax: Conversion of limited scrutiny into complete scrutiny - As per the CBDT instructions, only upon conversion of such case to complete scrutiny after following the procedure laid down as stated , the AO may examine the issues other than the issues involved in the limited scrutiny but in the present case the procedures were not followed and assessment was conducted in violation of this Instruction. - AT Visit to Get Source Income Tax: Disallowance of expenses on ad-hoc basis - vehicle running maintenance expenses - when the assessee has successfully demonstrated that the expense has been incurred wholly and exclusively for the purpose of business of assessee and the AO has not point out any specific defect or deficiency therein then the disallowance cannot be made on ad-hoc basis without any specific allegation merely on the basis of general remarks and observations - AT Visit to Get Source Income Tax: Validity of TP order - Period of limitation - Computation period of 60 days given by the taxpayer cannot be faulted with on any ground because from 26.02.2022, the date of passing order of the AO, 60 days was to be computed by excluding the date of order i.e. 31.01.2021. So while excluding the date of passing assessment order i.e. 26.02.2022, the order was required to be passed by the Ld. TPO by 29.01.2021 whereas the impugned order has been passed on 31.01.2021 which is barred by limitation. - AT Visit to Get Source Customs: Withdrawal of benefit of exemption granted to the petitioners/hospitals from payment of customs duty for the imported medical equipments, apparatus etc. - the writ petitioners hospitals have not treated 40% of the outdoor patients and its indoor patients free of cost - The respondents have rightly and legitimately cancelled the Customs Duty Exemption Certificate (CDEC) granted in favour of the petitioners - HC Visit to Get Source Customs: Bar on application before the settlement commission - scope of the term 'any other matter' u/s 127L - The phrase 'any other matter', in my considered view, would bar an assessee from approaching the Settlement Commission ever, in the three situations set out under clauses (i) (ii) & (iii) in Section 127L(1). This is by way of a caution/deterent, to ensure that an assessee who approaches the Settlement Commission comes with a full and true disclosure placing all cards on the table in the spirit in which that Chapter must be seen to apply. - HC Visit to Get Source Customs: Levy of penalty u/s 41 - Delay in filing of export manifest (EGM) - The Contention of the Revenue is that the date of filing of EGM is not initial filing of EGM but the filing of Supplementary EGM hence, there is delay is in clear contradiction of the statutory provision of Section 41 (1) read with sub section 3 of customs act, 1962. This view taken by the lower authority is absolutely illegal, hence not acceptable - AT Visit to Get Source Customs: Grant of interest on the amount of bank guarantee, which was wrongly encashed by the Customs Department - the amount encashed by way of bank guarantee remained with the Revenue as deposit and accordingly with the meaning of Section 129 EE, the appellant is entitled to interest on refund from the date of deposit till the date of refund @6% p.a. - AT Visit to Get Source FEMA: Proceedings initiated u/s 6(3) of the FEMA - The provision has been omitted - saving clause - When the proceedings were initiated against the Petitioners, Section 6(3) of the Act, 1999 was still in force. Therefore, by virtue of Section 6 of the Act, 1897 the proceedings against the Petitioners are saved and cannot be disturbed merely because Section 6(3) of the Act, 1999 was subsequently omitted. - HC Visit to Get Source Corporate Law: Seeking modification in the scheme of Amalgamation - this application came to be filed only to cheat debenture holders by gaining more time. Therefore, for wasting the Court time and making an attempt to defraud the creditors and the debenture holders, this Court is inclined to dismiss this application with the cost of a sum of Rs.2,00,000/- to the Official Liquidator for meeting the expenses - HC Visit to Get Source Corporate Law: Validity of allotment of shares of R-1 Company in favor of R-3 and R-4 - The Articles of Association are binding on the company and its members and also on Board of Directors and if laid down procedure and principles have not been followed in allotment of shares to R-3 and R-4, the allotment cannot be held as valid. - AT Visit to Get Source Corporate Law: Oppression and Mismanagement - Order for the Exercise of Valuation - the Order, assailed by the Appellant, does not in any manner affect his Rights and Liabilities, and in any event, no prejudice is caused to him, by the issuance of direction, by the Tribunal, to the Valuer, to submit a Valuation Report, to be considered after submission of a Report, by the Valuer, of course by the NCLT, Hyderabad, Bench - I. - AT Visit to Get Source IBC: Overriding effect of forest law over IBC - Jurisdiction of NCLT over state government - They are in the realm of public law. The Tribunal had no jurisdiction to direct functioning/continuing of the windmill without the forest clearances, merely because the State had granted such permission at an earlier point in time. - HC Visit to Get Source IBC: Action against Resolution Professional - Section 233 gives protection to a resolution professional from criminal prosecution for acts in good faith, and not where he has been apprehended red-handed with the bribe amount. Insolvency and bankruptcy code is self-contained code but only with respect to the matter provided therein. It does not cover the matters like the present, where a Resolution Professional takes bribes in order to favour a party for which P.C. Act is squarely applicable. - HC Visit to Get Source IBC: Initiation of CIRP - date of default - period of limitation - the Bank could not produce any evidence to prove that there has been acknowledgment in writing and signed by the Appellant for the purpose of extension of period of limitation except for the reply to the notice issued under Section 13(2) of the SARFAESI Act, 2002 in which the Appellant did not make any unambiguous and unequivocal acknowledgement which could extend the period of limitation. - AT Visit to Get Source IBC: Preferential Transactions - The expression “financial affairs of the Corporate Debtor” cannot be given an extended meaning as contended by Learned Counsel for the Appellants that all financial transactions done by the Corporate Debtor is covered within expression “financial affairs’ hence the loan taken by the corporate debtor from different related and non-related parties is part of the financial affairs cannot be accepted - AT Visit to Get Source Service Tax: Valuation of service - Air Travel Agent Service - when the basic fare is so specifically indicated, the authorities cannot add or delete anything to the same to say that the basic fare should also include those other things- AT Visit to Get Source Central Excise: CENVAT Credit - inputs or capital goods - Electrode Carbon Paste(ECS) - electrode carbon paste used and consumed in the process of manufacture of ferro alloys is an input eligible for cenvat credit under Rule 2 (k) of the Cenvat Credit Rules, 2004 - AT Visit to Get Source Central Excise: Reversal of CENVAT Credit on damaged Capital Goods - As much as the appellant have cleared the capital goods as waste and scrap coupled with the fact of insurance claim it is absolutely beyond doubt that the capital goods became waste and scrap as the same is not usable for the intended purposes - the appellant have rightly paid the amount equal to the duty leviable on transaction value of the capital goods. - AT Visit to Get Source Central Excise: Benefit of Exemption - Manufacture of Tubular Plate Lead Acid Batteries for use in solar photovoltaic modules/ system - The Experts Opinions submitted by the Appellant clearly indicate that they are specially made Batteries to store electricity generated by solar cells and an integral part of the solar Photovoltaic Module. They have an independent function on its own and hence can be called as a ‘Device’ on its own for the purpose of the Notification 6/2006 dated 01/03/2006 and hence as per the Larger Bench decision cited the exemption can be made available to the Batteries. - AT Visit to Get Source VAT: Levy of penalty - Detention of goods - Merely non-reporting about the consignment at the concerned ICC and not making declaration in the prescribed form did not lead to the conclusion that there was violation of Section 51 (4) of PVAT Act with a view to make an attempt to avoid the tax. It is not the case of the respondent that the invoice or GR were not genuine - No penalty - HC Visit to Get Source Articles Apex Court set principle to establish the burden of proof to avail Credit under Pre GST regime. Will that apply to GST regime? 3 Benefits of Foreign Company Registration in India SUO MOTU ISSUE FRAMED BY THE APPELLATE AUTHORITY Circulars adverse to The IT Dept. are also binding on officers Notifications Central Excise 20/2023 - dated 26-4-2023 - CE Exemption from duty of excise - EOUs/EHTP/STP Units - EOUs/EHTP/STP Units and Goods Cleared to DTA - Amendment in Notification Nos. 22/2003-Central Excise and 23/2003-Central Excise dated 31/03/2003 Customs 33/2023 - dated 27-4-2023 - Cus Exemption from Customs Duty - Graded BCD structure for hearable / wearable devices and its parts, sub-parts and subassembly - Amendment in Notification Nos. 11/2022-Custom and 12/2022-Custom dated 01-02-2022 GST - States S. O. 126 - dated 21-4-2023 - Bihar SGST Amendment in Notification S.O. No. 157, dated the 18th October, 2021 ERTS (T) 18/2018/112 - dated 31-3-2023 - Meghalaya SGST Government of Meghalaya Re-Constitute the Authority for Advance Ruling ERTS (T) 65/2017/Pt. III/396 - dated 28-2-2023 - Meghalaya SGST Amendment in Notification No. ERTS (T) 65/2017/2, dated the 29th June, 2017 ERTS (T) 65/2017/Pt. III/395 - dated 28-2-2023 - Meghalaya SGST Amendment in Notification No. ERTS (T) 65/2017/1, dated the 29th June, 2017 ERTS (T) 65/2017/Pt. III/394 - dated 28-2-2023 - Meghalaya SGST Amendment in Notification No. 65/2017/13, dated the 29th June, 2017 ERTS (T) 65/2017/Pt. III/393 - dated 28-2-2023 - Meghalaya SGST Amendment in Notification No. ERTS (T) 65/2017/12, dated the 29th June, 2017 Indian Laws CORRIGENDUM - dated 26-4-2023 - Indian Law Competition (Amendment) Act, 2023 - Corrigendum issued Circulars / Instructions / Orders Central Excise - Order No. 03/2023 - dated 27-4-2023 Appointment of Common Adjudicating Authority in respect of SCNs issued to M/s Global Infrastructure -reg. Central Excise - Order No. 04/2023 - dated 27-4-2023 Appointment of Common Adjudicating Authority in respect of SCNs issued to M/s Alpesh Kumar Gokulbhai Patel -reg. News New facility to verify document Reference Number (RFN) mentioned on offline communications issued by State GST authorities Tariff Notification No. 32/2023 - Customs (N.T.) in respect of Fixation of Tariff Value for Edible Oils, Brass Scrap, Areca Nut, Gold and Silver Repayment of ‘7.16% GS 2023’ Future-Proofing the Indian Financial System (Inaugural Address by Shri Shaktikanta Das, Governor Reserve Bank of India - April 27, 2023 - Delivered at the Global Conference on Financial Resilience organised by the College of Supervisors in Mumbai) Case Laws: GST 2023 (4) TMI 1184 Seeking refund of tax deposit during search proceedings - whether the amount paid by the petitioner on 16.01.2021, could be retained by the department without issuing the show cause notice under Section 74 (1) of the CGST Act that too after expiry of two years? HELD THAT:- Though the respondents can initiate proceedings under Section 74 (1) of the Act by issuing notice within the period of limitation, they cannot retain the amount of Rs.1.54 crore deposited by the petitioner, which as per respondent-department was voluntary. The amount was deposited during search and as as per judgment passed in Vallabh Textiles case [ 2022 (12) TMI 1038 - DELHI HIGH COURT ], this deposit cannot be taken to be voluntary. Since no proceedings under Section 74 (1) of the CGST Act have been initiated till date, as per Rule 142 (1A) of CGST Rules, 2017, the department cannot even issue Form GST DRC-01A to ask the petitioner to make payment of tax, interest and penalty due. The very fact that in two years time, no notice has been issued, the deposit of tax during search cannot be retained by the department till the adjudication of notice, which can take more time in future. A direction is being given to the respondents to return the amount of Rs.2.54 crores to the petitioner(s) along with simple interest at the rate of 6% per annum from the date of deposit till the payment is made. This amount will be refunded to the petitioner within a period of 10 days from the date of receipt of certified copy of this judgment. Petition allowed. 2023 (4) TMI 1183 Maintainability of appeal - barred by time limitation - challenge to orders of assessment - opportunity of hearing not provided (in passing order of assessment) - Violation of principles of natural justice (audi alterem partem) - HELD THAT:- The appeals were filed on 20.02.2020. Inter alia, the appeal memorandum contained an error, in that, the date of receipt of the order was stated as '21.10.2019'. In fact, the orders of assessment had only been received on 29.09.2019 as confirmed by a certificate issued by the State Tax Officer, Group - VI, Intelligent - II dated 26.05.2020 placed on file before this Court - With the aforesaid confirmation, to the effect that the date of service of the orders was 29.10.2019, the appeals have been filed within time and the rejection of appeals as nonmaintainable is erroneous. However, no fault can be attributed to the second respondent in this regard as the officer has merely proceeded on the facts as contained in the appeal memorandum filed by the petitioner. In any event, there is no necessity to advert to the aspect of maintainability any further, seeing as the orders of assessment suffer from violation of principles of natural justice. The exchange of correspondence between the parties establishes that the petitioner was cooperating with the proceedings for assessment. This, and the request contained in letter dated 10.09.2019, lead me to the conclusion that the petitioner should be afforded an effective opportunity of hearing and has been denied the same prior to passing of the orders impugned. The assessments remanded to the file of the Assessing Authority to be re-done, de novo - Petition allowed by way of remand. 2023 (4) TMI 1182 Interest on delayed refund - Relevant Date - Refund of ITC - Purchases made during the earlier month - export made during the subsequent months - Date from which statutory interest under Section 56 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- A careful perusal of the main part of Section 56 would show that if any tax is ordered to be refunded under Section 54(5) of the CGST Act visa-vis an applicant, and if the same is not refunded within sixty days from the date of receipt of an application under Section 54(1), interest at such rate not exceeding 6%, as has been specified in the notification issued by the Government on the recommendation of the Council, is payable immediately after the expiry of sixty (60) days from the date of the receipt of the said application, which runs, as per the said provision, till the date of refund of such tax - the reasons based on which a part of the refund was sought to be denied, was that the value of exports for the given month was less than the purchases made in that month. Accordingly, for the month of August 2017, the inadmissible amount was pegged at Rs. 59,67,280/-; likewise for the month of September 2017, the inadmissible amount was quantified at Rs. 1,70,20,253/-. The petitioner is right in its contention that interest should trigger in accordance with the main part of Section 56 of the CGST Act, i.e., from 18.04.2018, and that interest should run, both on CGST and DGST, up until the date when the amount was remitted to the petitioner. The dates when the remittance was made have been captured. The respondents/revenue will remit the interest to the petitioner in accordance with what is stated hereinabove, within two weeks from receipt of a copy of the judgment - Petition disposed off. Income Tax 2023 (4) TMI 1181 Centralization of the cases - Transfer of case from one tribunal to another i.e from ITAT Bangalore to ITAT Mumbai - Transfer of cases u/s 127 - High Court has allowed the said writ petition preferred by the Assessee and has quashed and set aside the order passed by the President of the ITAT transferring four appeals from Bangalore Bench to Mumbai Bench, which was passed in exercise of powers under Rule 4 of the Income Tax Appellate Rules - HELD THAT:- As it cannot be said that the High Court has committed any error in setting aside the order passed by the President of the ITAT transferring the appeals from the Bangalore Bench to the Mumbai Bench. We are in complete agreement with the view taken by the High court. Therefore, now the appeals will be heard by the ITAT, Bangalore Bench. The present Special Leave Petition deserves to be dismissed and is accordingly dismissed. As observed that the other issues including the powers of the President under Section 255 read with Income Tax Appellate Rules are kept open to be considered in an appropriate proceedings. 2023 (4) TMI 1180 Order of Acquittal - offence u/s 276(C)/277 of the IT Act - complaint was made against the assessee/accused for filing false return to defraud the Income Tax Department - defence plea of the assessee accused was that he did not tendered any false statement to the Income Tax Department and he filed the IT return by getting the contents verified by the Office of the Branch Manager, LIC, but the ITO hurriedly passed the assessment order without appreciating the material furnished by him HELD THAT:- Admittedly, this is an appeal against acquittal, which was recorded by the learned trial Court way back in the year 1994 and law is well settled that in case of acquittal, the presumption of innocence of accused as provided under law, is reinforced and unless there appears miscarriage of justice and compelling reasons, no judgment of acquittal can be interfered with after near about 29 years more particularly in a case of this nature, where the offences with which the respondent-accused stood charged. In this case, the appellant was charged for offence u/s 276(C)/277 of the IT Act, but offence u/s 276(C) of IT Act can be established by way of evidence that such persons willfully attempted in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act. Similarly, offence u/s. 277 of IT Act can be established by way of evidence that such persons made a statement in any verification under this Act or under any rule made there under or delivered an account of statement, which is false, and which he either knows or believes it to be false or does not believe it to be true. While scrutinizing the impugned judgment, it appears that the learned trial Court has rightly framed the points of determination and proceeded to appreciate the evidence on record. Respondent-accused had not been noticed to have his say in the matter and the BM, LIC did not proved by showing any document of his Office that the respondent-accused had received Rs. 1,00,000/- (Rupees One Lakh) towards his additional conveyance allowance at the time of his assessment and in the course of hearing of appeal, the appellate authority was pleased to deduct Rs. 30,000/- (Rupees Thirty Thousand) from the additional conveyance allowance of the respondent-accused. It is also a fact that the respondent-accused was never given an opportunity to explain as to why complaint should not be filed against him and there appears from the record that a penalty proceeding was also pending at the time of institution of the complaint, which is contrary to law inasmuch as unless there is any finding in the penalty proceeding, the department should be slow to file complaint against the respondent-accused for the self same cause of action. In the course of trial, the respondent-accused had stoutly taken two pleas. One is that even for a moment, the evidence of prosecution is taken into consideration, yet he cannot be convicted for the offences with which he stood charged for want of sanction, which is defective and illegal. Second is the pendency of penalty proceeding U/S.271(1) against him is a bar for institution of the complaint. The learned trial Court after due analysis of provision and evidence, had concurred with the above pleas of the respondent-accused, but in the course of hearing of this appeal, the appellant could not validly dispute the said findings of the learned trial Court and, it therefore, appears to this Court that the appellant has failed to satisfy this Court either on merit or on the ground of technicalities. In view of the aforesaid discussion, this Court has no other option left, but to concur with the findings of the learned trial Court acquitting the respondent-accused. 2023 (4) TMI 1179 Reopening of assessment u/s 147 - Validity of second notice of reopening - whether it was permissible in law for the assessing officer to issue the second notice u/s 148 of the Act when once there was already a notice issued in exercise of the same powers under the very provision in respect of the same assessment year 2012-13? - HELD THAT:- Supplying the reasons as to why the second notice under section 148 for reopening of the assessment would be impermissible, the Division Bench observed that as long as the assessment was at large by virtue of the first notice of reopening, the question of issuing second notice for the same purpose would not arise. The observations in the decision in Aditya Medisales Ltd. [ 2016 (8) TMI 1235 - GUJARAT HIGH COURT] reflect that the Court was not oblivious of the aspect that in a given case where second notice for reopening was set aside, a piquant situation for the revenue may arise. Position of law enunciating from the decision in Aditya Medisales Ltd. (supra), the petitioner is entitled to succeed. The impugned notice dated 30.03.2019 under Section 148 of the Act, which is a notice for reopening the assessment for the same year under consideration cannot sustain. The same is liable to be set aside. 2023 (4) TMI 1178 Settlement of case - full and true disclosure - Application rejected by the Income Tax Settlement Commission - objection of the revenue was that the petitioner had not provided for interest on non-performing assets, purity of gold which had been sold in various auctions, was estimated at 80% for working out the income of the petitioner under this head - HELD THAT:- Writ petition is liable to be allowed. The procedure for settlement, as contemplated by Chapter XIX-A of the Income Tax Act, 1961 as it then stood, was a procedure enabling assessees to declare their previously undisclosed income and arrive at a settlement of their case. After considering the reports of the Department, the Settlement Commission would proceed to adjudication to arrive at a conclusion as to whether any further tax is to be paid by the assessee under any head. While the assessee is required to make a full and true disclosure, the Settlement Commission is also authorised to render findings on any additional income that must be brought to tax and, consequently, the amount of tax, penalty or interest payable by the assessee that should be paid in addition to the tax, penalty or interest already paid on the income offered in the application for settlement. This is clear from a reading of Sub-Sections (4) and (6) of Section 245-D of the Act. It is clear that the Settlement Commission does not proceed merely on the basis of the statements contained in the application for settlement or any further pleadings before it and can, for reasons to be recorded, come to a conclusion that some higher income had to be offered by the assessee for arriving at a settlement. Therefore, taking into consideration the spirit and mandate of the provisions contained in Chapter XIX and merely for the reason that further amounts had to be offered by the assessee, the Settlement Commission cannot reject the application for settlement. This is not to say that the assessee is not required to make full and true disclosure. One of the main reasons which weighed with the Settlement Commission is the alleged non-disclosure owing to the fact that the purity of gold which was sold in the auction was determined at 80% (on average) to arrive at the previously undisclosed income under this head. There appears to be some material on record to suggest that the yardstick adopted by the assessee was correct. Similarly, the documents produced by the Department could also be scrutinised by the Commission to determine whether the purity of gold sold in auction should be taken at some higher value than 80% for the purpose of determining whether the assessee is required to disclose further income and to pay tax, interest and penalty on the same. However, it was wrong on the part of the Settlement Commission to come to the conclusion that merely because the purity of gold recorded at the time of issuing the loan in favour of one P.M. Reji was higher than the average recorded or disclosed in the settlement application, there was failure to make a full and true disclosure. Failure to offer the interest accruing on Non-Performing Assets as part of the income - The decision of the Supreme Court in Vasisth Chay Vyapar Ltd [ 2018 (3) TMI 56 - SUPREME COURT] is the authority for the proposition that the instructions issued by the Reserve Bank of India on income recognition will take precedence over any contrary provision in the Income Tax Act, 1961. Therefore finding of the Settlement Commission that the failure to offer interest income on non-performing assets constitutes a failure to make a full and true disclosure for the purpose of Section 245-C of the Act, is unsustainable. Settlement Commission has ceased to exist - whether, in a case like this (where the order of the Settlement Commission is required to be quashed), the matter can be reconsidered by the Interim Board ? - As relying on K.S. Thirumalaivasan v. The Chairman, Income Tax Settlement Commission and others case [ 2022 (7) TMI 438 - MADRAS HIGH COURT] the application filed by the Appellant would have to be treated as a pending application and appropriate orders are to be passed after giving the appellant sufficient opportunity and by considering all the materials placed by him. The effect of an order quashing the order passed by the Settlement Commission would result in the application for settlement filed by the petitioner being treated as a pending application which has to be disposed of by the interim board. Order of the Settlement Commission has been quashed, will be considered afresh by the Interim Board after affording an opportunity to the petitioner and to the respondent Department. 2023 (4) TMI 1177 Validity of reopening of assessment u/s 147 - assessee was subjected to scrutiny and accordingly, an order u/s 143(3) of the Act was framed - whether the AO could have commenced the reassessment proceedings based on the information already available on record? - HELD THAT:- On a careful perusal of the reasons, it appears that there is no reference to an audit objection, or to any other objection for that matter. Therefore, insofar as the AO is concerned, the trigger was the information which was already available on record. The respondent/assessee had debited, as it appears, the loss on sale of fixed assets in its Profit and Loss account, and this was an aspect which the AO seems to have noticed after the scrutiny assessment was framed. It is well-established that reassessment proceedings can be based on new material, and not material information which is already on record. The respondent/assessee in this case had disclosed primary facts. AO, decidedly, committed an error in appreciating the information that was already available on record. To our minds, the power available to the AO under Section 147 of the Act does not go so far as to correct errors in appreciating the primary facts, which are disclosed by the respondent/assessee. Insofar as Appellant submission is concerned, that the respondent/assessee had agreed to the addition with regard to the deduction qua loss on sale of fixed of assets wrongly claimed by it, we can only say that once we hold that the error was impregnated with jurisdictional flaw, no amount of concession can help the cause of the appellant/revenue. Decided in favour of assessee. 2023 (4) TMI 1176 Penalty u/s 271(1)(c) - depreciation on account of the increase in the cost of machinery due to foreign currency fluctuation losses - assessee accepted the position that the foreign currency fluctuation losses had to be capitalized, and therefore, logically, depreciation qua the same had to be allowed - Tribunal sustained the view of CIT(A) as deleted the penalty - HELD THAT:- The record shows that the respondent/assessee could not have claimed the loss on account of foreign currency as deductable expenditure, in view of the provisions of Section 43A of the Act. This provision, broadly, mandates adjustment in the cost of an asset, depending on whether there was an increase or a reduction in the liability of the assessee at the time of making payment, on account of changes in the rate of exchange.It appears that this aspect emerged during scrutiny. Assessee, as rightly pointed out accepted this position, without demur, even before the assessment order was passed, and accordingly, claimed depreciation on the increased cost of plant and machinery ,qua which foreign currency fluctuation loss had been incurred. The record shows that the respondent/assessee had preferred the appeal with CIT(A) only vis-a-vis that aspect of the assessment order whereby depreciation had not been granted by the AO. As noted by the CIT(A) while dealing with the penalty order passed by the DCIT there was in fact no advantage accruing to the respondent/assessee in claiming foreign currency fluctuation loss as deductable expenditure, given the fact that it had unobserved losses. Clearly, assessee, as noted even by the CIT(A), could not have gained anything by claiming foreign currency fluctuation loss as deductable expenditure, as it would have only added to the existing burgeoning losses. At worst, in the instant case, the petitioner s action could be construed as one where it sought to make a claim which was unsustainable in law. That by itself, in the given circumstance, would not call for imposition of penalty, as once the error was pointed out by the AO, the respondent/assessee made a course correction before the assessment order was passed. The law on the issue of penalty is a well traversed course, both by this court as well as by the Supreme Court. (See Commissioner of Income Tax, Ahmedabad v. Reliance Petroproducts Pvt. Ltd. [ 2010 (3) TMI 19 - SUPREME COURT] and Taneja Developers and Infrastructure Ltd. [ 2021 (4) TMI 275 - DELHI HIGH COURT] . It is only the application of law which has occurred in the facts and circumstances of the case. No substantial question of law 2023 (4) TMI 1175 Reopening of assessment u/s 147 - Validity of order u/s 148A - scope of new enactment of Section 148A - Period of limitation to issue notice issued u/s 148A(b) - notices issued u/s 148 referable to the old regime - HELD THAT:- As already noted, the department took shelter of the time limit extended by Notifications of the Central Board of Direct Taxes to treat the above class of notices to be within time. In Keenara Industries Pvt. Ltd. [ 2023 (3) TMI 104 - GUJARAT HIGH COURT] this Court proceeded to hold that enacting the provisions in Taxation and Other Laws (Relaxation Amendment of Certain Provisions) Act, 2020, was not the permissible device whereby the time limit could be legitimately extended for the purpose of issuing Notices under Section 148, which were otherwise barred in terms of Section 149, as it exists in the old regime. The Taxation and Other Laws Act, 2020 was rightly viewed to be a secondary legislation. It was therefore held that secondary legislation would not override the principal legislation-the Finance Act, 2021. Also negatived by the Division Bench in Keenara Industries Pvt. Ltd. (supra) as per observations in paragraph 36 of the judgment, the concept of freezing the time limit. It was held that it was not permissible in law for the Revenue to travel back in time. Nor does the Taxation and Other Laws Act endorse to such concept. It was held as per paragraphs 38 and 39 of the Keenara Industries Pvt. Ltd. (supra) that Notifications extending the due dates under the old provisions could not breath any more after the repeal of the old provisions. This Court is in agreement with the decision in Keenara Industries Pvt. Ltd. (supra), of this Court as well with Allahabad High Court decision in Rajeev Bansal (supra). Therefore, the point is no more res integra that all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act. Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above. All the impugned notices in the respective petitions under section 148 of the Act relatable to Assessment year 2013-14 or the assessment year 2014-15, as the case may be, are beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction. 2023 (4) TMI 1174 Rectification of mistake u/s 154 - amount relating to contingent liability amount been admittedly mentioned in Form 3CD but under the head Amount in Income Tax Returns , the figure of 0 is shown, instead of actual figure. - HELD THAT:- We observe from petition which contains an electronic dialogue on the Income Tax Portal between the Income Tax department and Petitioner with respect to the purported inconsistency with respect to the sum of Rs.42,94,12,920/- which the petitioner has disagreed with the following remarks : The proposed adjustment is incorrect. The proposed amount of Rs.42,94,12,920/- is already disclosed in Form 3CD clause 21(g) and also disallowed in the ITR computation refer Schedule BP Sr no 23. As observed from the rectification order dated 22nd November 2022 under Section 154 of the I.T.Act that is submitted on behalf of the petitioner, there is a figure of 0 in the Amount in the Income Tax Returns instead of the said figure of Rs.42,94,12,920/-. In our view, this is an exfacie error which deserves to be rectified. We direct the respondent no.1 Centralized Processing Centre to consider the application of the petitioner for rectification in the light of the above discussion, within a period of three months. 2023 (4) TMI 1173 Validity of reassessment proceedings u/s 147 - notice after the expiry of 4 years from the end of the relevant assessment year - business loss claimed by the assessee, which is chargeable to tax has escaped assessment and the assessee has failed to disclose true and full particulars of income for the year under consideration - HELD THAT:- All the details sought by the AO were provided by the assessee during the course of scrutiny assessment proceedings, and the said details were accepted by the AO under section 143(3) of the Act. Further, from the perusal of reasons recorded for reopening the assessment, it is evident that the only basis available with the AO for initiating the impugned reassessment proceedings was the perusal of the profit and loss account and balance sheet i.e. the information which was already considered and examined during the course of original scrutiny assessment proceedings. Reassessment proceedings u/s 147 of the Act, in the present case, are set aside being bad in law. Decided in favour of assessee. 2023 (4) TMI 1172 Exemption u/s 10(1) - Whether research and development activities of the assessee forms integral part of the agricultural activities for the purpose of section 10(1)? - HELD THAT:- There is no dispute about the activities conducted by the assessee or the assessee conducting such activities year after the year. It is also not in dispute that for the earlier assessment year, 2012-13, initially, no such disallowance of claim under section 10(1) of the Act was made, but was made consequent to the order under section 263 of the Act. It is also not in dispute that the order under section 263 as well as the order under section 143(3) read with section 263 of the Act were quashed. It is also not in dispute that the activities conducted by the assessee in this case are similar to the activities of M/s. Nuziveedu Seeds Ltd. [ 2015 (3) TMI 938 - ITAT HYDERABAD] It does not deny the fact that the activities of the assessee include such operations as are defined as the agricultural operations under section 2(1A) of the Act. Complaint of the learned Assessing Officer is that merely because the assessee is conducting the activities like sowing, weeding, irrigation, inter-cultivation etc., the same cannot be considered as agricultural operations u/s 2(1A) of the Act, because assessee conducts such activities as incidental to the main activity of producing foundation seeds which is a commercial activity in nature. We are unable to agree with this argument advanced on behalf of the Revenue. Hon ble High Court succinctly said that seed is a product of agricultural activity. When such agricultural activity is conducted and seeds are produced, merely because such seeds were sold commercially, the basic agricultural operations also cannot be dubbed as commercial activities , and not agricultural activities . Also see M/S PRABHAT AGRI BIOTECH LIMITED., HYDERABAD [ 2014 (2) TMI 1197 - ANDHRA PRADESH HIGH COURT] - Decided against revenue. 2023 (4) TMI 1171 Rectification of mistake - assessee e-filed application u/s 154 seeking rectification of mistake while processing intimation u/s 143(1) and reversal of the disallowance u/s 40(b) - inaccuracy in adopting the correct figure of remuneration from audited financial statement - HELD THAT:- Admittedly, the figures entered towards partner remuneration in the P L account are inconsistent with the tax audit report due to human error while making report under Section 44AB - The certificate of the tax auditor presenting correct position was also made available to the lower authorities. On the face of inaccuracy in adopting the correct figure of remuneration from audited financial statement, an apparent mistake has been committed. In the absence of opportunity to the assessee contemplated in proviso to Section 143(1)(a) the difficulty has been compounded. The mistake could have been avoided while processing the return itself. The mistake in adopting incorrect figure without opportunity mandated in law despite availability of correct position is a mistake of apparent nature and espouses the purpose rectification proceedings under Section 154 of the Act. The pedantic approach adopted by the CIT(A) does not take into account the denial of opportunity to assessee in this regard and thus cannot be countenanced. We thus set aside the impugned order passed by the CIT(A) in question and restore the matter back to the file of the Assessing Officer for redetermination of the issue after taking note of correct facts. This will advance the principles of natural justice explicit in Section 143(1) - Opportunity shall be given to the assessee to present correct factual position on the admissible partner remuneration eligible for deduction under Section 40(b) of the Act. Appeal of the assessee is allowed for statistical purposes. 2023 (4) TMI 1170 Deduction u/s 10AA - claim denied as assessee did not file return within time specified u/s 139(1) - HELD THAT:- On reading of the provisions of section 10AA of the Act we observe that no such proviso was introduced making mandatory filing of return within the due date specified under sub section (1) of section 139 of the Act for availing deduction under section 10AA of the Act. An identical issue raised in the case of M/s. Opto Circuits (India) Limited [ 2022 (10) TMI 117 - ITAT BANGALORE] and M/S. OPTO CIRCUITS (INDIA) LIMITED [ 2022 (10) TMI 117 - ITAT BANGALORE] held that the denial of exemption claimed under section 10AA of the Act on the ground of not filing return of income within the due date specified under section 139(1) of the Act is not legally correct. For the year under consideration i.e. assessment year 2018-19 there is no mandatory requirement of filing the return of income within the due date specified under section 139(1)of the Act for availing exemption under section 10AA of the Act. Assessee appeal allowed. 2023 (4) TMI 1169 Disallowance of bad debts written off u/s 36(1)(vii) - HELD THAT:- After going through entire material placed before us, we notice that similar issue has been decided by the coordinate bench of the Tribunal in assessee s own case for AY 2014-15 [ 2022 (3) TMI 669 - ITAT BANGALORE] as held that assessee bank is eligible to claim and be allowed write off of the bad debts u/s.36(1)(vii) of the Act and we therefore reverse and delete the disallowance made by the Assessing Officer in this regard. Decided in favour of assessee. Deduction u/s. 36(1)(viii) for reserve credit - AO observed that the assessee has not transferred any amount to the special reserve as mentioned in section 36(1)(viii) - HELD THAT:- As decided in assessee own case [ 2022 (3) TMI 669 - ITAT BANGALORE] reserve created even in subsequent / succeeding years; however before the finalization of grant of deduction under Section 36(1)(viii) of the Act i.e. as per date of order of assessment is required to be considered while allowing the assessees claim for deduction under Section 36(1)(viii) of the Act. As in the case of Vijaya Bank [ 2022 (3) TMI 669 - ITAT BANGALORE] and hold that reserve credit in the subsequent or succeeding years before the initiation of grant of deduction u/s 36(1)(viii) of the Act is required to be considered while allowing the assessee s claim for the deduction under the said section. We, therefore direct the AO to examine and allow the assessee s claim accordingly. TDS u/s 194J - Disallowance of expenditure u/s 40(a)(ia) - expenditure for ATM switch charges to National Payment Corporation of India (NPCI) and debited under the head other expenses - assessee stated that no TDS was made on the NFS ATM charges and that ATM Switching facility provided by NPCI does not involve any human intervention and is a seamless transaction as the same is based on settlement reports - HELD THAT:- As decided in assessee own case [ 2022 (3) TMI 669 - ITAT BANGALORE] following the said decision of Canara Bank [ 2018 (9) TMI 2109 - ITAT BANGALORE] payments made to NPCI towards NFS ATM charges cannot be considered as technical services within the meaning of sec.194J of the Act. Hence there is no liability to deduct tax at source from those payments. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the disallowance. Decided in favour of assessee. Penalty for violation of any direction of RBI - allowable deduction u/s. 37 or not? - HELD THAT:- We note that assessee has paid Rs.5.16 lakhs as penalty for deficiencies in exchange of notes and coins/ remittances sent to RBI/operations of currency chest etc. AR could not controvert the case law relied by the ld. CIT(A). However, the violations of Banking Regulation Act and RBI directions is not clear from the order of authorities below as well as from the submissions made by the ld. AR of the assessee - we think it fit to remit the issue to the AO for determination of the nature of violation of Banking Regulation Act / RBI directions and decide the issue as per law. The assessee is directed to provide necessary details. Accordingly this issue is allowed for statistical purposes. MAT applicability u/s 115JB - assessee submitted that it was a public sector bank and not a company under proviso to section 211(2) of the Companies Act, thus not covered under section 115JB(2)(b) and hence book profit was not computed - HELD THAT:- As decided in assessee s own case for AY 2014-15 [ 2022 (3) TMI 669 - ITAT BANGALORE] CIT(A) should considered the effect of provisions of sec. 51 of BR Act and accordingly he should have appreciated the contentions of the assessee on the definition of banking company , provisions of sec.211(2) of the Companies Act etc. Since these aspects go to the root of the issue, in our view, this issue needs to be examined at the end of Ld CIT(A) afresh. Considering the submission of the ld. DR that SLP has been accepted by the Supreme Court on this issue, but the status of the same could not be furnished by the ld. DR. In view of this, respectfully following the decision rendered by the coordinate bench in assessee s own case, we restore this issue of applicability of the provisions of section 115JB to the CIT(A) with similar direction. Computation of the deduction u/s. 36(1)(viia) - HELD THAT:- As decided by the co-ordinate bench of this Tribunal in the case of VIJAYA BANK [ 2018 (1) TMI 1575 - ITAT BANGALORE] assessee is not disputing the classification of rural branches made by the Assessing Officer and accepts the AAA [Aggregate Rural Advances] as arrived at by the Assessing Officer of the order of assessment and in this context pleaded that the matter need not be remanded back to the Assessing Officer. In view of the aforesaid submissions of the learned Authorised Representative of the assessee, we hold that the assessee is entitled to deduction by considering the AAA as worked out by Assessing Officer and direct the Assessing Officer to rework the deduction under Section 36(1)(viia) - Decided against revenue. Depreciation on various categories of securities as per classification of the RBI in its computation of income - HELD THAT:- Similar issue has been decided by the coordinate Bench in [ 2022 (3) TMI 669 - ITAT BANGALORE] wherein decision of CIT(A) with respect to depreciation on HTM securities is upheld and the appeal of the revenue on this issue is dismissed. Disallowance under Section 14A - assessee made suo-moto addition - HELD THAT:- As decided by the coordinate Bench of the Tribunal in assessee s own case for the AY 2014-15 [ 2022 (3) TMI 669 - ITAT BANGALORE] A.R relied upon certain other decisions in order to contend that no disallowance u/s 14A is called for. In view of the subsequent development of law on this issue, in our considered view, this issue requires fresh examination at the end of AO by duly considering the various decisions on the subject - we set aside the order of the CIT(A) and restore the issue to the AO for examining it afresh in the light of above cited details. Accordingly the grounds raised by the revenue is allowed for statistical purposes. 2023 (4) TMI 1168 Nature of expenditure - Addition of licence fee as capital expenditure - as per AO Act provides for such capital expenditure to be amortised as per provision of section 35ABB over unexpired portion of the licence. The unexpired portion of the licence from assessee s document is 8.5 years - assessee has contended that in three preceding AY(s) and in succeeding AY 2011-12 the said payment of licence fee has been allowed as revenue expenditure - HELD THAT:- A different view has been taken by the Ld. AO in AY 2010-11 presently under consideration. The contention of the assessee could not be controverted by the Ld. DR. In our view, a different approach without there being variation in facts or in law is not justified. CIT(A) has placed reliance on the decision of Bharti Hexacom Limited [ 2013 (12) TMI 1115 - DELHI HIGH COURT] as also on the decision of Delhi Tribunal in the case of M/s. MTNL [ 2006 (2) TMI 224 - ITAT DELHI-G] for recording his findings in favour of the assessee with which we concur. Accordingly ground No. 1 of the Revenue is rejected. Addition u/s 41(1) - unexplained creditors - entire amount standing in the name of sundry creditors as reflected in the Balance Sheet as on 31.03.2010 for want of submission by the assessee of details as per the format devised by him under section 41(1) - addition deleted by the Ld. CIT(A) - HELD THAT:- As per CIT-A addition under section 41(1) can be made only if a genuine trade liability has ceased to exist for the reasons enumerated in section 41(1) of the Act. We agree. CIT(A) has recorded the finding that the Ld. AO has not made the impugned addition by holding that these liabilities ceased to exist during the year. None of the conditions precedent for applicability of the provisions of section 41(1) is fulfilled in the case of the assessee. The Ld. AO was thereof not justified at all to invoke the provisions of section 41(1) to make the impugned addition and the Ld. CIT(A) has rightly observed that the impugned addition can be deleted on this ground alone.O was not justified in treating the entire trade creditors as bogus when majority of them were well-established public sector undertakings or limited companies e.g. BSNL, MTNL, Bharti Airtel Ltd., HCT Info-systems Ltd. and Tata Tele Services Ltd. etc. as observed by the Ld. CIT(A) whose identity cannot be questioned. Decided in favour of assessee. 2023 (4) TMI 1167 Maintainability of the appeal against company as dissolved - assessee company does not exist anymore in the eye of law and the Official Liquidator has discharged his duties and relieved as OL - Revenue relied on case of CIT vs. M/s. Gopal Shri Scrips Pvt. Ltd. [ 2019 (3) TMI 743 - SC ORDER] wherein it was held that proceedings can be initiated and continued even after strike off of names of companies remain - also in Dwearka Portfolio Pvt. Ltd. [ 2022 (5) TMI 1385 - ITAT DELHI] ruled that even if the company has been struck off from the register of Companies, an appeal filed by it against the revenue does not become ineffective or infructous and is maintainable HELD THAT:- The revenue in the present Misc. Application quoting the cases above which are in the nature of cases the company name has been struck off from the register of Companies under section 560(5) of the Companies Act, 1956. But in the present case of the assessee here in, the Hon ble High Court of Gujarat dissolved assessee company under section 481 of the Companies Act. Therefore in the present Misc. Application, citing new of the Judgments on the ground of striking off the name of the company and consequence thereon will not be applicable to the facts of the present case. Thus the Revenue is re-arguing the appeal with new grounds and case laws, which is not permitted, since the Appellate Tribunal u/s. 254 of the Act, do not have the power to review his own order. Therefore the Present Misc. Application filed by the Revenue is hereby dismissed. 2023 (4) TMI 1166 Addition u/s 69A - cash deposit in the bank account by the assessee as unexplained money - HELD THAT:- Assessee has earned tuition fees by providing tuition to various students and received cash in consideration of the same - supporting, account books, relevant vouchers and the documentary evidences were not considered during the course of assessment proceedings by the A.O. CIT(A) ought to have consider the material on record for adjudicating the issue contested in the appeal on merit. Section 250(6) contemplates that the first appellate authority would determine point in dispute and therefore, record reason on such point in support of his conclusion. Therefore, restore this case to the file of the ld. CIT(A) for adjudicating on merit after affording opportunity to the assessee. Appeal of the assessee is allowed for statistical purposes. 2023 (4) TMI 1165 TDS u/s 194H - incentive paid to various parties - Non deduction of tds - addition u/s 40(a)(ia) - CIT(A) has viewed that the discount given to the various parties by the assessee in the nature of turnover discount did not attract TDS u/s 194H and assessee in the instant case did not have any right or control over the goods sold to the retailers and the goods hold by the retailers on their own behalf and not on behalf of the appellant - HELD THAT:- CIT(A) rightly observed that the payment of incentive are made to the various parties by the assessee leading to transfer of ownership in the goods (with complete risk and rewards) the assessee in such a situation did not have any right or control over the goods sold to the retailers, as the retailers held the goods on their own behalf and not on behalf of the assessee and therefore they did not act as an agents of the assessee as such no TDS is deductible u/s 194H as it is not applicable in the case of assessee. Thus we confirmed the order passed by the ld. CIT(A) - Decided against revenue. 2023 (4) TMI 1164 Revision u/s 263 by CIT - Allowability of deduction u/s.57 - nexus between interest received from the firm and the interest paid to the bank on the term loan not developed - assessee claimed net interest income after claiming interest expenses u/s.57, i.e., interest paid on SBI term loan was claimed as expenditure allowable u/s.57 - assessee has taken term loan from SBI which was given to the partnership firm - HELD THAT:- Assessee has received interest on capital contribution which has been shown separately. Apart from that, it has paid interest on loan taken from the assessee - The loan taken by the firm from the assessee, in turn was taken by the assessee from the SBI. Thus, the assessee received interest on loan given to the firm and on the same loan taken from the bank, the assessee has paid interest. Thus, there was direct nexus between earning of the interest income and interest paid. Accordingly, the netting of the net interest income after deducting the interest paid to the bank had direct nexus which is allowable under Section 57. This aspect of the matter was also examined by the AO and assessee has filed all the replies which were called upon by the AO. No infirmity in allowing the interest paid by the AO and therefore, order of ld. PCIT cannot be sustained, because on merits the assessment order is neither erroneous nor prejudicial to the interest of the Revenue and therefore, on merits, the appeal of the assessee is allowed. 2023 (4) TMI 1163 Income deemed to accrue or arise in India - Royalty or Fees for Technical Services - assessee received consideration for project support services such as Midrange support services, Database support services, Service delivery management, and support services in relation to the Standard Chartered Bank Project from Atos India - AO held the consideration received by the assessee from the Indian entity is nothing but Royalty within the definition as per Article 12(3) of the India Singapore DTAA - HELD THAT:- We find the coordinate bench of the Tribunal in assessee s own case [ 2021 (4) TMI 446 - ITAT MUMBAI] held that payment received by the assessee from various projects related services, including Standard Chartered Bank Project, would not qualify as Royalty/Fees for Technical Services. The issue arising in the present appeal is recurring in nature and has been decided by the coordinate bench of the Tribunal in the preceding assessment years. Thus we uphold the plea of the assessee and direct the AO to delete the impugned addition on account of receipts from Atos India towards project-related services pertaining to Standard Chartered Bank Project. Taxability of receipts from Atos India for the support services pursuant to the Regional Service Agreement - AO only referred to the Regional Support Agreement entered by the assessee with Atos India, but neither analysed the various services rendered by the assessee under the aforesaid agreement nor analysed the terms of the agreement to come to the conclusion that the receipts are in the nature of Royalty and/or Fees for Technical Services under the Act and the DTAA. DRP also did not analyse any of the above aspects and rejected the objections filed by the assessee by merely placing reliance upon its directions rendered in assessee s own case for the assessment year 2014-15, wherein this issue was not involved. Since the factual aspect pertaining to the taxability of receipt under the Regional Service Agreement has not been properly examined by any of the lower authorities vis- -vis the terms of the agreement and services rendered therein, we deem it appropriate to remand this issue to the file of AO for de novo adjudication - Assessee ground allowed for statistical purposes. Short grant of credit of TDS - This issue is restored to the file of the AO with the direction to grant TDS credit, in accordance with the law, after conducting the necessary verification. 2023 (4) TMI 1162 Revision u/s 263 - Assessee Declared Income in Survey u/s 133A - As per CIT provisions of section 115BBE were applicable to the case of the assessee and the AO should have assessed the Undisclosed Income declared during the survey u/s.69, 69A and 69C - Assessee Declared Income in Survey u/s 133A - HELD THAT:- Pr.CIT has himself observed that the Undisclosed Income have been rightly credited to P L A/C. Once, the ld.Pr.CIT has observed that the undisclosed income declared during survey of has been Correctly credited to P L A/c, he cannot advocate that the declaration should have been assessed u/s.69, 69A and 69C. The amounts assessed under Section 69, 69A and 69C are never part of P L A/c. Whereas in the case under consideration, the assessee has included survey declaration in P L A/c and the ld.Pr.CIT has observed it to be correct entry. In these facts and circumstances of the case, the Assessment Order cannot be said to be erroneous and prejudicial to the interest of the Revenue. Therefore, we hold the order u/s.263 as not sustainable in law. Thus, the ground of appeal number 1 5 of the assessee are allowed. CIT s observation that AO has not verified the survey disclosure - AO had verified during the scrutiny proceedings that assessee has offered the amount disclosed during the survey for taxation. The AO based on the submission has satisfied himself that the amount disclosed during the survey has been properly reflected by the assessee in the return of income. After satisfying himself, the AO passed the order under section 143(3) of the AcT Pr.CIT s observation that AO has not verified the survey disclosure is not based on facts. Therefore, the order passed by the AO is not erroneous. Once the AO takes a view on a particular issue after considering all facts, the ld.Pr.CIT may or may not agree with the view taken by the AO, but that does not mean that the assessment order is erroneous. When two views are legally possible and AO adopts one view the Assessment Order cannot be said to be erroneous for the ld.Pr.CIT to invoke jurisdiction u/s.263. Decided in favour of assessee. 2023 (4) TMI 1161 Characterization of income - addition made towards agricultural income treating the same as income from other sources - HELD THAT:- Respectfully following the order of the Tribunal in assessee s own case for the preceding 3 A.Ys,[ 2022 (7) TMI 493 - ITAT HYDERABAD] we are of the considered opinion that an amount of Rs.40,000/- may reasonably be estimated as agricultural income for the impugned A.Y. We accordingly modify the order of the CIT (A) and direct the Assessing Officer to give benefit as agricultural income and the balance amount is to be treated as income from other sources . Ground of appeal No.2 by the assessee is accordingly partly allowed. Correct head of income - Cash received as rental income - Income from house property or house property - addition by treating the same as income from other sources as against rental income shown by the assessee on the ground that the assessee could not prove the existence of the persons against whom he has shown the cash receipt as rental income as those persons were not in existence and were not traceable - HELD THAT:- We do not find any force in the above argument of the learned Counsel for the assessee. It is an admitted fact that the assessee was giving loan against mortgage of the property and such interest income received towards loan extended against mortgage of properties cannot partake the character of rental income. We find the learned CIT (A) while upholding the addition has also given a finding that since the assessee has already offered the rental income under the head income from house property as per remand report, the addition should be limited to the disallowance u/s 24(b) of the Act only which in our opinion is just and proper and needs no interference. Accordingly, ground of appeal No.3 by the assessee is dismissed. 2023 (4) TMI 1160 Income deemed to accrue or arise in India - receipts from services relating to Progressive Cavity Pump system (PCP) and rental of tools/equipments to Cairn India and ONGC - nature of business profits to be taxed under section 44BB or Fee for Technical Services (FTS) - assessee is a non-resident corporate entity incorporated under the laws of Singapore and a tax resident of Singapore - HELD THAT:- Once the services related to prospecting, exploration, extraction or production of mineral oils is treated as in the nature of mining or like projects, automatically it will fall out of the ambit of FTS as defined in Explanation 2 to section 9(1)(vii) of the Act, hence, cannot be treated as FTS - Language used in section 44BB makes its scope very wide and encompasses not only the services or facilities in connection with prospecting for, or extraction, or production of mineral oils but also supply of plant and machinery on hire to use or ought to be used for the said purpose. In the facts of the present case, undisputedly, the service provided by the assessee to Cairn India is in connection with activity of prospecting for, or extraction, or production of mineral oils. Even, the hiring/leasing of tools/equipments to both Cairn India and ONGC is in connection with the same activity. Merely because the services provided are of technical nature, that by itself, would not make the receipts FTS when there is special provision in the shape of section 44BB engrafted in the Statute to bring such kind of receipts for the purpose of taxation in India under the head profits and gains from business or profession . AO, while concluding that the receipts are in the nature of FTS, has heavily relied upon a decision of the Uttarakhand High Court in case of CIT Vs. ONGC [ 2005 (12) TMI 46 - UTTARANCHAL HIGH COURT] However, we are surprised to note that, while doing so, he has completely ignored the decision of the Hon ble Supreme Court in case of ONGC Vs. CIT [ 2015 (7) TMI 91 - SUPREME COURT] wherein the very same decision of the Hon ble Uttarakhand High Court was reversed. As per SC in above case if the work/services in terms of a particular agreement is directly associated or inextricably linked with prospecting, extraction or production of mineral oil, then the receipts have to be taxed as business profits under section 44BB of the Act. Thus, in our view, the scope and ambit of section 44BB of the Act is wide enough to include the receipts of the assessee from Cairn India and ONGC. At this stage, it is relevant to observe, in assessee s own case for assessment year 2019-20, the Assessing Officer, while considering similar nature of receipts from ONGC, has accepted assessee s claim under section 44BB of the Act. We cannot sustain the decision of the Assessing Officer to treat the receipt as FTS. Accordingly, we direct the Assessing Officer to compute assessee s income under section 44BB of the Act. This ground is allowed. Taxability of the receipts from repair services stated to have been rendered directly from head office to Cairn India and ONGC - HELD THAT:- As observed that the receipts in dispute are from repair of tools and equipments used by Cairn India and ONGC for extraction or exploration of mineral oil. In case of ONGC Vs. CIT [ 2015 (7) TMI 91 - SUPREME COURT] while interpreting the provisions contained under section 44BB of the Act in the context of scope of work covered under the contract, has considered the entire gamut of work executed under the contract, including repair, training of personnel etc. and held that the pith and substance of each of the contracts is inextricably connected with prospecting, extraction or production of mineral oil - we hold that the receipts from repair work is inextricably connected with prospecting, extraction or production of mineral oil, hence, such receipt has to be taxed under section 44BB of the Act. We order accordingly. This ground is partly allowed. Treating the receipts from Cameron India towards business support services as FTS - HELD THAT:- The expression make available if read in conjunction with, which enables the person acquiring the services to apply the technology contained therein , would mean that the recipient of service will be in a position to acquire the technical knowledge, experience, skill etc so that it equips the recipient to apply such technical knowledge, experience, skill etc. by himself independently without the aid and assistance of the service provider. In the facts of the present appeal, the departmental authorities have failed to prove this fact through any cogent material brought on record. The nature of services enumerated earlier would make it clear that these are routine managerial and partly consultancy services to provide business support to the subsidiary. There is nothing on record to suggest that while rendering services, the assessee has made available any technical knowledge, know-how, skill etc. enabling the recipient of service to apply them independently. That being the case, in our considered opinion, the conditions of section 12(4)(b) are not satisfied. Therefore, we hold that the receipts are not in the nature of FTS. This ground is allowed. Addition treating the reimbursement of expenses as FTS - HELD THAT:- An amount on which, the assessee has paid service tax on reverse charge mechanism is actually expenditure incurred by the assessee itself on its own behalf and not in the nature of reimbursement. As it appears, the Assessing Officer has treated this amount as income under factual misconception. Therefore, we are inclined to delete the addition made as FTS. For the balance amount it is the claim of the assessee that these are reimbursements from Cameron Indian on cost to cost basis without any markup. The assessee has explained before the Assessing Office that the assessee was expecting to enter into new contracts with Cairn India but Cairn India awarded the contract to Cameron India. The assessee submitted that since the assessee had incurred certain expenses in relation to ongoing work, they were cross charged to Cameron India without any markup on pure cost to cost basis. In principle, we accept assessee s contention that reimbursement of expenses on cost to cost basis without any markup does not have any profit element - as observed, before the Assessing Officer and learned DRP, the assessee did make submission to the effect that given sufficient time, he will be in a position to submit the agreement between Cairn India and Cameron India - we restore this issue to the Assessing Officer with a direction to examine assessee s claim afresh with reference to evidences already available on record or which the assessee may file in course of proceeding. 2023 (4) TMI 1159 Penalty u/s 271(1)(c) - additions made on estimation basis - HELD THAT:- It is seen from the records that the additions were made on the basis of estimation and part relief was granted by the Appellate Authority. AO ought not to have imposed penalty. We therefore, considering the binding precedent as relied by the Ld. Counsel for the assessee, direct the AO to delete the penalty imposed u/s 271(1)(c) of the Act to the assessee. Grounds raised by the assessee are hence, allowed. 2023 (4) TMI 1158 Condoning the delay in filing of Form 10B - assessee has not filed the audit report electronically - HELD THAT:- As non-compliance of filing Form 10B along with return of income electronically, the assessee failed to show reasonable cause which prevented to file the same along with the return of income. Therefore, we find no infirmity in the order of CIT(A) and it is justified. Thus, ground No. 1 raised by the assessee is dismissed. Exemption u/s 11(1B) - We note that there is no dispute with regard to showing the said amount as chargeable to tax by the assessee in the return of income and also for non-filing of Form 10B electronically along with return of income. The said amount was treated as income by the CPC as well as by CIT(A). Having no submissions rebutting the findings of CIT(A) in this regard, we deem it proper to uphold the order of CIT(A) in holding an amount as income chargeable to tax u/s. 11(1B) of the Act. Therefore, we agree with the reasons recorded by the CIT(A). Application of money consequential, to filing of Form 10B electronically along with the return of income - As we upheld the order of CIT(A) in dismissing ground No. 1 that no Form 10B was filed by the assessee. In the view of the same, the assessee is not entitled to claim amount in this regard as application of money. Appeal of assessee is dismissed. 2023 (4) TMI 1157 Conversion of limited scrutiny into complete scrutiny - whether AO has exceeded the jurisdiction in enquiring into the issues relating to unsecured loans even before prior to 14.12.2017 when the case was converted into complete scrutiny which is against the provisions of Act? - HELD THAT:- CBDT Instruction No. 5/2016, we are of the considered view that the AO has exceeded his jurisdiction in enquiring into those issues beyond the scope of limited scrutiny even prior to the date of conversion which is in clear violation of mandate given by CBDT in the said Circular and has been held by the Co-ordinate Bench of Delhi in the case of Dev Milk Foods Pvt. Ltd. [ 2020 (6) TMI 317 - ITAT DELHI] to be bad in law. CBDT has clarified that in a limited scrutiny, the scrutiny assessment proceedings would initially be confined only to issues and questionnaire, enquiry, investigation etc. would be restricted to such issues in the limited scrutiny. Only upon conversion of such case to complete scrutiny after following the procedure laid down as stated , the AO may examine the issues other than the issues involved in the limited scrutiny but in the present case the procedures were not followed and assessment was conducted in violation of this Instruction. In our opinion, the order passed by the AO is bad in law and cannot be sustained - Decided in favour of assessee. 2023 (4) TMI 1156 Disallowance of expenses on ad-hoc basis - HELD THAT:- Neither the lower tax authorities pointing out any such vouchers, the genuineness of expenditure therein claim to have been incurred by the wholly and exclusively for the purpose of its business did not provide any sustainability to the orders of the authorities below. It was not the case of revenue that any part of expenditure in question was not either found to be bogus or fictitious nor was found to have not been incurred by the assessee wholly and exclusively for the purpose of his business. In the present case the assessee has successfully demonstrated that his turnover during relevant financial period was more and the quantum of disallowance is very small in comparison to the turnover. Therefore when the assessee has successfully demonstrated that the expense has been incurred wholly and exclusively for the purpose of business of assessee and the AO has not point out any specific defect or deficiency therein then the disallowance cannot be made on ad-hoc basis without any specific allegation merely on the basis of general remarks and observations - See SHRI KAILAS CHAND AGRAWAL case [ 2022 (4) TMI 671 - ITAT RAIPUR] as followed - Decided in favour of assessee. 2023 (4) TMI 1155 Disallowance of depreciation - adopting wrong actual cost of the assets vested in pursuance of Scheme of Arrangement by relying on his predecessor's assessment order - HELD THAT:- As identical issue arose in the case of A.Y. 1999-2000 to A.Y. 2013-14 [ 2013 (2) TMI 927 - ITAT MUMBAI] , 1829989 , [ 2020 (7) TMI 155 - ITAT MUMBAI] , [ 2017 (4) TMI 862 - ITAT MUMBAI] , [ 2019 (6) TMI 542 - ITAT MUMBAI] , [ 2019 (5) TMI 411 - ITAT MUMBAI] respectively where the co-ordinate Bench restored issue back to the file of the learned Assessing Officer for the computation. Therefore, this matter as per this ground should also be restored to the file of the learned Assessing Officer. CENVAT credit addition - assessee company has followed the inclusive method for valuation of inventory - HELD THAT:- As in the opening and closing stock, both, the assessee has included the amount of excise duty. Therefore, the effects of excise duty in the closing stock in pursuance of provisions of Section 145A of the Act were already included in the profit offered by the assessee. There was no adjustment / addition was required to be made. AO made the adjustment. This issue is already decided by the co-ordinate Bench and therefore, respectfully following the decision of the co-ordinate Bench in assessee s own case for A.Y. 2005-06 and 2007-08 to 2009-10, the addition deserves to be deleted. Disallowance of claim of writing off non-moving and obsolete finished goods - AO held that there is no concrete evidence of any write off or co-relation of sale out of such alleged written off material, made the addition - HELD THAT:- As the provision is made by the assessee in the earlier year which was not claimed as deduction in that year but would actually provisions are reversed and actual write off of the inventory is made in this year and assessee has claimed it as deduction. We find that the above sum disallowed amounts to double disallowance. Accordingly, we direct the learned Assessing Officer to delete the disallowance. TP Adjustment - addition on account of the Arm's Length Price of interest on interest free loan given by the assessee to Piramal Glass, UK Limited - HELD THAT:- As respectfully following the decision of the coordinate bench in assessee's own case in many assessment years, we do not find any infirmity in the order of the learned assessing officer/transfer pricing officer in adopting interest on interest for loan to the UK subsidiary company at arm's length at LIBOR +200 points. Accordingly, the adjustment made by the learned AO/TPO on this count is confirmed. Argument that LIBOR rate without any markup should have been used based on certain decisions is devoid of any merit because the London interbank offered rate (LIBOR) is benchmarking interest rate at which major global banks lend to one another in the international interbank market for short-term loans. Before us, it is not established that the lender as well as the borrower is a bank - it is not a short-term loan. Therefore, we need not refer to the several judicial precedents cited before us. Hence, this argument is rejected. Commercial expediency can also not be tested in transfer pricing because the assessee has given loan to an independent entity, may be subsidiary of the assessee, however in normal course the assessee would not have given any sum to an independent party without charging interest. Further, the reliance placed by the learned and authorized representative on the decision of coordinate bench [ 2013 (10) TMI 1569 - ITAT MUMBAI] is also not correct because the fact in that case shows that the advances were given only for the period of six months - it has been categorically held that the coordinate bench agreed with the submission of the revenue that commercial expediency is not relevant in making transfer-pricing adjustments. As it was an initial year of the subsidiary company and assessee has advanced interest-free funds to its subsidiary as a matter of commercial production by fulfilling the shareholder obligation - Any financial incapacitation of the subsidiary would joke arise the appellant's investment. Accordingly, the appellant's expectation from granting of loan is not on interest but to protect its investment interest and help the subsidiary company achieve its business objectives thus the said loan was granted in the nature of shareholder activity. It was further stated that though the said interest free loan is a loan in a legal firm but in substance is in the nature of quasi equity. The assessee has merely made the submission however has not substantiated it by putting any financial data to justify the above claim. In the transfer pricing study report also assessee has not given any justification on these grounds. Assessee submitted that it had sufficient own funds available at its disposal out of which the loan was given to the subsidiary company to meet its working capital requirements and therefore knowing charging of interest is justified - AR failed to show us any provision of the income tax act in chapter X to show that payment of interest by the lender is a necessary condition to determine the arm's-length price of an international transaction of loan by assessee to its subsidiary company. Therefore, this argument also deserves to be rejected. Addition on account of compensation for providing corporate guarantee to Piramal glass USA and Grammar Glass Europe - TPO adopted compensation at the rate of 3% per annum and computed the arm's-length price of the guarantee commission. When the matter was set aside by the coordinate bench back to the file of the learned dispute resolution panel, found that in the assessee's own case for assessment year 2007 08, 2009 10 and 2011 12 to 2012 13 the arm's-length rate of 0.5% was considered at arm's length. DRP also followed the decision of the honourable Bombay High Court in adopting such rate. No infirmity in such direction. Based on the same the guarantee commission was considered at arm's length. We do not find any infirmity in the direction of the learned dispute resolution panel and consequent adjustment made by the learned TPO/AO. Appeal of the assessee is partly allowed. 2023 (4) TMI 1154 Validity of TP order - Period of limitation - Validity of Assessment order - draft assessment order passed by the ld. AO is without jurisdiction having been passed beyond the prescribed time limit and as such, consequent assessment order is liable to be annulled - HELD THAT:- Undisputedly, sub-section (3A) to section 92CA has been inserted w.e.f. 01.06.2007 providing time limit for the TPO to pass the order i.e. within a period of 60 days prior to the date of completion of assessment as per section 153. So, u/s 92CA (3A) read with section 153, TPO was required to pass the order within the period of 60 days prior to the date on which the period of limitation referred to in section 153 expires i.e. 21 months. In the instant case undisputedly assessment order in this case was passed on 26.02.2022 and the Ld. TPO was required to pass the order within 60 days prior to the date on which period of limitation as prescribed under section 153 of the Act expires. How the period of 60 days prior to the date of TP order i.e. 31.03.2013 is to be computed? - Hon ble Madras High Court in case of M/s. Pfizer Healthcare India Pvt. Ltd. [ 2021 (2) TMI 1152 - MADRAS HIGH COURT ] while dealing with the issue held that for computing the period of 60 days, the last date as per section 153 should be excluded. Also see Honda Trading Corporation [ 2015 (9) TMI 846 - ITAT DELHI ] Computation period of 60 days given by the taxpayer cannot be faulted with on any ground because from 26.02.2022, the date of passing order of the AO, 60 days was to be computed by excluding the date of order i.e. 31.01.2021. So while excluding the date of passing assessment order i.e. 26.02.2022, the order was required to be passed by the Ld. TPO by 29.01.2021 whereas the impugned order has been passed on 31.01.2021 which is barred by limitation. Thus as per mandate of section 92CA (3) read with section 153 of the Act, impugned order passed by the ld. TPO is barred by limitation which was required to be passed by 29.01.2021 and as such is hereby quashed. Decided in favour of assessee. 2023 (4) TMI 1153 TP adjustment - arm s length price determination of outstanding receivables - TPO characterized overdue receivables from the AEs as a deemed loan stating that it constitutes a separate international transaction - HELD THAT:- We are under the jurisdiction of Hon ble Delhi High Court. The ITAT in several recent decisions has found that the decision of Hon ble Delhi High Court in the case of Pr. CIT vs Kusum Health Care (P.) Ltd. [ 2017 (4) TMI 1254 - DELHI HIGH COURT ] continuous to be a binding precedent. Thus we set-aside the orders of the authorities below and delete the transfer pricing adjustment in respect of arm s length price determination of outstanding receivables. 2023 (4) TMI 1152 Treatment of interest and other expenses - Disallowance of expenses added to the total work-in- progress of the project - assessee failed to establish the nexus between revenue offered and the expenses claimed and closing work- in- progress - only contention of the assessee in support of claiming the interest and other expenses as revenue expenses is that project was on the verge of completion and, therefore, this amount of interest / finance and other cost is not justified for adding into WIP - CIT-A deleted the addition - HELD THAT:- We find that the project of the assessee was completed on 08/05/2012 as per paper book page 31, which falls in subsequent assessment year i.e. A.Y. 2013-14. In such circumstances, if the expenses related to project are not included in the project cost, then profit from the project will be distorted which will be against the principle of percentage completion method. The section 4 of the Act prescribes for income which has accrued to the assessee, during the year for the purpose of taxation since in long term projects, when substantial part of the project is completed, the risk and rewards shift from the assessee and corresponding income accrue to the assessee, which is offered computed following the percentage completion method, however, the expenses which pertain to project cost cannot be allowed to be debited to P L Account. In the case, the assessee did not provide details of the borrowings and purpose for which those borrowings were utilized and corresponding interest expenditure. Similarly regarding other expenses also, particularly advertisement publicity and commission brokerage, no details have been provided for determination whether those expenses pertain directly to the undergoing project. The interest and other expenses, which are directly related to the project should not be included in project cost and balance should be debited to P L Account. The gross profit from project is then credited to P L Account and the expenses in the nature of Administration and General, which are not specific to project like directors remuneration, office expenses are debited in P L Account and then net profit / loss is computed as per accounting principles. But in the case, assessee is seeking to debit whole of interest and other expenses to profit loss account. The interest and other expenses, which are directly related to the project should not be included in Project cost and balance should be debited to P L account. Thus we restore this issue back to the file of the Ld. CIT(A) for determining the quantum of interest and other expenses related directly to the project.Ground No.1 of the Revenue is allowed for statistical purpose. Customs 2023 (4) TMI 1151 Withdrawal of benefit of exemption granted to the petitioners/hospitals from payment of customs duty for the imported medical equipments, apparatus etc. - HELD THAT:- Exemption Notification No.64/88 Customs dated 01.03.1988 was issued in exercise of powers conferred by Sub-Section (1) of Section 25 of the Customs Act, 1962 (52 of 1962). The Central Government in the Public Interest exempted all equipments, apparatus and appliances, including spare parts and accessories thereof, by excluding consumable items, the import of which is approved either generally or in each case by the Government of India in the Ministry of Health and Family Welfare, or by the Directorate General of Health Services to the Government of India, as essential for use in any Hospital specified. The issue of importance rest on the factual matrix, which is to be determined by the competent authority for granting exemption from payment of customs duty. The conditions stipulated in the notification No.64/88 is unambiguous that to provide free treatment on an average to at least 40% of their outdoor patients and free treatment to all indoor patients belonging to families with an income of less than rupees five hundred per month and keeping for this purpose at least 10% of all the hospital beds reserved for such patients - the interpretation of these two conditions must be read in consonance with the purpose and object of granting exemption from payment of customs duty. On considering elaborately the Constitutional perspectives, role of the Courts and the liability of the State, the exemption was granted in public interest, in order to achieve the Constitutional goal and the perspectives of the Constitution. Right to Life being a Fundamental Right and medical facilities to be provided is an integral part of Article 21. The Government while expanding the scope of medical facilities to the poor and the poorest of poor, imposed conditions for exemption of customs duty and it is needless to state that the exemption is granted at the cost of public funds. Therefore, the nexus between the exemption from payment of customs duty and the conditions imposed to provide free treatment by the hospitals on availing the benefit of exemption is to be understood holistically in order to ensure that the Constitutional mandates are honoured for the welfare of the people. In the perspective of the Constitution, one should understand that the medical facilities being the basic right to the citizen of our great Nation and the poorest of poor will not be in a position to get specialised treatment, the Government thought fit and granted exemption from public funds and imposed conditions to provide free treatment for at least 40% of their outdoor patients. The writ petitioners have given undertaking that they will abide by the conditions on availing the exemption from payment of customs duty. With reference to the issue regarding the compliance of the clause in notification No.64/88, the Director General of Health Services categorically found that the petitioners hospital are the beneficiaries under the Notification dated 01.03.1988. The compliance of conditions are continuing onus. The hospitals were given ample opportunities to substantiate their claim that they have fullfilled the conditions stipulated in the notification. The hospitals have furnished informations regarding the free treatment provided based on the conditions. The Director General of Health Services formed an opinion that the medical services provided by the hospitals through the outdoor camps in another place, which is away from the location of the imported equipments installed cannot be considered. Accordingly, the claims of the petitioners hospital were not accepted as they conducted free medical camps outside the places and away from the place, where the imported medical equipments are installed. The free medical treatment contemplated under the said notification should be with a reference to outpatients treated at the hospitals, which includes all the equipments imported availing of the duty exemption benefits. The Director of Health Services, New Delhi found that the writ petitioners hospitals have not treated 40% of the outdoor patients and its indoor patients free of cost. Hence, they have not fulfilled the post import conditions as undertaken at the time of importation of goods. Thus, the writ petitioners are found to be not eligible to avail / retain the CDECs issued to them under notification No.64/88 Cus dated 01.03.1988. The petitioners could not establish that they have treated 40% of their outdoor patients in the hospital, where the imported medical equipments are installed and further they have failed to establish that 10% of all the hospital beds are reserved for such patients, who have taken free treatment in the hospital, where the imported medical equipments are installed. These facts are not seriously disputed by the writ petitioners. Contrarily, the writ petitioners have consistently contended that they are not obligated to provide the treatment in the place, where the imported medical equipments are installed - When the petitioners themselves have not established that they have reserved 10% beds in the hospital, where the imported equipments are installed and further, they have not proved that 40% of outdoor patients are treated free of cost in their hospitals, where the imported medical equipments are installed, this Court is of the considered opinion that the petitioners are not entitled for the relief as such sought for in the present writ petitions. The respondents have rightly and legitimately cancelled the Customs Duty Exemption Certificate (CDEC) granted in favour of the petitioners, which is in consonance with the Constitutional principles and the purpose and object of the conditions imposed in the Notification No.64/88 in public interest from public funds, more so, the petitioners have given an undertaking to comply with the conditions. Petition dismissed. 2023 (4) TMI 1150 Bar on application before the settlement commission - scope of the term 'any other matter' u/s 127L - whether the bar under Section 127L would be, at all, applicable in the present case? - Misclassification of the imported goods by the petitioner - application dismissed without hearing the petitioner - whether the procedure adopted by the Bench in dismissing the application without hearing the petitioner is appropriate? HELD THAT:- The present case is no exception. It is for this reason and bearing in mind the spirit and objective of Chapter XIV-A, that Legislature imposes a bar upon parties to approach the Settlement Commission in any other matter in three specified situations:- (i) Where a penalty is imposed on the assessee on the ground of concealment of particulars of duty liability. (ii) Conviction of an offence and (iii) Remand of the case to the proper officer under Section 127I. The phrase ' any other matter ' is relevant here. While the petitioner emphasises upon the word ' other ' to state that the bar applies only to a cause of action different from that in regard to which the first application was filed, is disagreed. The phrase ' any other matter ', in my considered view, would bar an assessee from approaching the Settlement Commission ever, in the three situations set out under clauses (i) (ii) (iii) in Section 127L(1). This is by way of a caution/deterent, to ensure that an assessee who approaches the Settlement Commission comes with a full and true disclosure placing all cards on the table in the spirit in which that Chapter must be seen to apply - In the present case, the case of the petitioner has been found to attract penalty and a sum of Rs.4,50,000/- imposed. In such an event, the bar under Section 127L would apply on all fours. Thus, merely because the petitioner has chosen to style the application culminating in the impugned order as a fresh application does not mean that the Settlement Commission has to close its eyes to the relief sought and the lineage of the matter, particularly the bar under Section 127 L that must be strictly enforced. In the present case, the petitioner is well aware of the duty that has been imposed in respect of 17 addtional transactions as amended by the subsequent corrigendum. The petitioner has also settled the duty demand acquiescing to the fact of wrongful classification by it at the original instance - In such circumstances, the petitioner ought to have, even at the original instance, included those transactions in the ambit of settlement application and hence having failed to do so cannot be granted a second innings merely to obtain the benefit of waiver. Petition dismissed. 2023 (4) TMI 1149 Maintainability of appeal - appeal dismissed on the ground of time limitation - appeal filed well within 60 days of the said first receipt of the order in original or not - HELD THAT:- The Revenue is not in a position to either confirm or deny the receipt of the Order-in-Original by the Appellant. Other than pointing out the despatch number and date of despatch as indicated in xerox copy of the Order-in-Original on record. Obviously in taxing statutes, in particular, no presumption can be rested upon the delivery and service of an order and the fact need to be expressly established. In view of the Revenue, not being able to demonstrate anything, to the submissions made by the Learned Advocate and the Learned Advocate amply demonstrating their bonafides in promptly writing to the concerned agencies, and also enclosing details of speed post transmission. The dismissal of the appeal by Commissioner (Appeals) on limitation is not sustainable. In his order, the Commissioner (Appeal) has mentioned that the appeal was filed on 24th July 2013, in respect of the adjudication order dated 27.02.2010 said to be received on 9th July 2013 - it cannot be imputed that the aforesaid appeal filed before the Commissioner (Appeals) was barred by limitation. As the appeal has been filed well within 60 days of the said first receipt of the order in original by the appellants, the same is not hit by the timelines contained in Section 128 of Customs Act - appeal remitted for appropriate decision to the Commissioner (Appeals) with a direction to the Jurisdictional Commissioner to ensure that a copy of the Show Cause Notice is supplied to the noticee/appellants within a month hereof. Appeal allowed by way of remand. 2023 (4) TMI 1146 Grant of interest on the amount of bank guarantee, which was wrongly encashed by the Customs Department - HELD THAT:- The Revenue have encashed the bank guarantee for Rs.9,78,291/- on 17.05.2012, which matter already stands adjudicated vide order-in-original dated 18.06.2014, wherein it has been held that the appellant have completed the re-export obligations on 31.03.2012 and no amount was required to be recovered from them, upon issue of the show cause notice in May, 2012. Further, the said order-in-original dated 18.06.2014 has attained finality. Under the aforementioned facts and circumstances, it is held that the amount encashed by way of bank guarantee remained with the Revenue as deposit and accordingly with the meaning of Section 129 EE, the appellant is entitled to interest on refund from the date of deposit till the date of refund @6% p.a. Appeal allowed. 2023 (4) TMI 1145 Levy of penalty u/s 41 of the customs Act, 1962 - levy on the allegation that the appellants have not filed the EGM within a stipulated period of 7 days in terms of section 41 of the Customs Act, 1962 - HELD THAT:- As per the Sub Section (1) of Section 41, the person shall be liable to pay penalty not exceeding Rs. 50,000/-, if he fails to deliver the departure manifest or export manifest or the export report or any part thereof within stipulated time period as prescribed under regulation 3(3) of Export Manifest (Vessel) Regulations, 1976. With this provision there is rider that the said provision shall apply in case when the proper officer is satisfied that there is no sufficient cause for such delay - In the present case there is no dispute that the appellant had filed EGM within the stipulated time period. Subsequently, the Supplementary EGM was filed. Such Supplementary EGM was accepted by the proper officer. Therefore, it is clear that the proper officer has found sufficient cause for delay by accepting the supplementary EGM. Moreover, Sub Section 3 clearly provides that in case of incorrect or incomplete EGM and that there was no fraudulent intention, the proper officer on his satisfaction may permit such manifest or report to be amended or supplemented - In the present case firstly, the appellants have filed EGM within stipulated time period and subsequently supplemented by filing correct Supplementary EGM which has been accepted. This shows that the appellants have complied with the provision of Section 41 in its entirety. The Contention of the Revenue is that the date of filing of EGM is not initial filing of EGM but the filing of Supplementary EGM hence, there is delay is in clear contradiction of the statutory provision of Section 41 (1) read with sub section 3 of customs act, 1962. This view taken by the lower authority is absolutely illegal, hence not acceptable - Appeal allowed. Corporate Laws 2023 (4) TMI 1148 Seeking modification in the scheme of Amalgamation - attempt for creation of trust for benefits of debenture holders (mere an attempt to cheat debenture holders by gaining more time) - HELD THAT:- There are assets about Rs.171.64 crores and after the liabilities, about a sum of Rs.157 crores are available. If they had realized those advances and loan, easily the company would have paid the amount to the debenture holders but it appears that no steps have been taken on their part and no report was filed with regard to the collection of those advances and loans - Further, the total amount outstanding to the debenture holders is about Rs.125 crores along with interest. If really the VIL and its sponsors had any intention to implement the scheme, they could have very well implemented the same with the realization of the current assets alone. When the scheme was approved, they have highlighted the above financial position and obtain the approval of this Court as well as the approval of the debenture holders. However, when the present modification has been filed, nothing has been mentioned about the recoveries made by VIL against the advances and loans mentioned in financial position as on 30.09.2013. This Court is of the view that allowing the modification only affect the interest of the debenture holders and further it would be more beneficial for the promoters to safeguard them from all the criminal proceedings and other liabilities and thereby, they will absolve from all the responsibilities. Therefore, this Court cannot be wittingly or unwittingly be a party for all those misdeeds of the applicant as well as Mr.R.Subramanian, party-in-person and other Directors of VIL - this Court is not inclined to entertain this application and the same is liable to be dismissed. While dismissing the application, this Court is of the considered view that this application came to be filed only to cheat debenture holders by gaining more time. Therefore, for wasting the Court time and making an attempt to defraud the creditors and the debenture holders, this Court is inclined to dismiss this application with the cost of a sum of Rs.2,00,000/- to the Official Liquidator and the said amount shall be utilised by the learned Official Liquidator to defray his expenses with regard to the taking over of assets and realization of assets of VIL. Application dismissed. 2023 (4) TMI 1144 Oppression and mismanagement - setting aside of the allotment of shares and removal of the applicant/Respondent No.1 herein from the Board of Directors - HELD THAT:- It is true that in the present proceeding after reply filed by the Respondent the appellant have also filed rejoinder but facts remains that in compliance with the impugned order subsequent development had already been taken place which has been elaborated in the reply filed by Respondent No.1. It is further evident that in the present case impugned order which was passed by the Learned NCLT exercising jurisdiction under Section 424(3) of the Act was exercised only with a view to implement the order passed in CP No.30/2014. Moreover, repeatedly it has been asserted in the Memo of Appeal as well as during argument also that the impugned order was passed ex-parte but facts remains that after filing of the Misc A. No.1065/KB/2018 the appellants participated in the proceeding. They filed reply and thereafter abstained in participation on the date of final arguments. It is also not in dispute that the order dated 3rd August, 2017 had attained its finality since it is admitted fact that against the said order no appeal was filed which is reflected from the record itself. Once in a proceeding initiated on an allegation of oppression and mismanagement of a company a final order is passed, it is the duty on the part of the NCLT/Appellate Authority to see implementation of the said order if request is made by the judgement holder. The Respondent No.1 being judgement holder and noticing the fact that even after expiry of the period of limitation the order was not being implemented, he was constrained to file an application under Section 424(3) of the Companies Act which was numbered as Misc A. No.1065/KB/2018. Appeal dismissed. 2023 (4) TMI 1143 Oppression and Mismanagement - seeking declaration of Board meetings dated 6.9.2014 and 20.9.2014 to be invalid in law and all resolutions passed therein to be null and void - seeking direction for investigation to be carried out in the affairs of the Company including misconduct by Shri Venkata Rami Reddy - seeking declaration of appointment of R-5 as Additional Director to be made null and void - HELD THAT:- The order for appointment of Independent Auditor to look into the accounts of R-1 Company and furnish draft audit report to the petitioners and Respondents was given with consent of the rival parties and it was also directed that the Final Audit Report, after taking into account the comments of both the parties, shall be submitted to the Bench within a period of thirty days, and furthermore, there was direction to the Company to pay the remuneration and other incidental expenses to the Independent Auditor as claimed by him. In the instant case allegations had been made about wrongdoings and mismanagement in the affairs of the Company and the CLB directed for preparation of the Independent Auditor s Report which was to be submitted to it by the Independent Auditor. The NCLT (as the successor tribunal of CLB) ought to have taken note of, and examined and considered the contents of the report and provided adjudication. To have kept the Auditor s Report in sealed cover on the ground that Auditor s fees was not paid does not appear to be the correct course of action, as there was no necessity to link the two issues, moreso when the CLB had itself ordered for conduct of independent audit and submission of the final report to the CLB. As is noted in the pleadings in the original company petition and also in this appeal, the reason for undertaking investigation in the company was spelt out and a prayer was made for such investigation. Once the prayer was accepted by the CLB, and an investigation was carried out by the Independent Auditor, and the CLB had fixed the case for further consideration, the NCLT (to whom the Audit Report had been submitted) ought to have looked at the report and passed necessary and appropriate orders. Since the NCLT did not do so, the prayer on the appeal for quashing of the Impugned Order implies that the Appellants are aggrieved by the Impugned Order and remand of the case remains an option that is available to this tribunal - the plea for remand in the arguments before us is sufficient in the facts of this case. The NCLT did not carry the judicial process to its logical conclusion when it continued to keep the Final Audit Report submitted by M/s. Brahmayya and Company on 13.11.2017 in a sealed cover and did not open it for due consideration, but the matter was in a confusing manner entangled with the issue of payment of the Independent Auditor s fees. The issue of payment of Auditor s fees was also finally set to rest by the order dated 29.10.2018 of NCLAT in CA No. 77 of 2018 which settled to the amount of the fees to be paid to the Independent Auditor by holding that since fees is on the basis of ICAI norms, it is not proper to interfere in the quantum of fees. Once the Final Audit Report was submitted to NCLT by the Independent Auditor and the quantum of their fees was not interfered by NCLT, it was incumbent on NCLT to open the Final Audit Report from the sealed cover and consider its findings, as the consideration of the investigation into the affairs of the Company would have given justice to the parties in a fair manner - the interest of the parties and requirement of justice would be met, if the matter is remanded to NCLT with the direction that the Final Audit Report submitted by M/s. Brahmayya and Company, Chartered Accountant be made available to the parties by NCLT and after due consideration of the Final Audit Report, which should include opportunity to the parties to be heard, necessary appropriate orders should be passed. NCLT should ensure that the requisite payments by the parties as has been decided earlier, be made to the Independent Auditor. Appeal disposed off. 2023 (4) TMI 1142 Declaration of the allotment of shares of R-1 Company in favor of R-3 and R-4 and their continued holding them as illegal - Seeking declaration that resolutions of the board of directors dated 2.12.2011 and 1.2.2012 by which the allotment of shares took place as invalid and illegal - restraining R-3 and R-4 from misusing any right or privilege as shareholders of R-1 Company - time limitation - principles of res-judicata and estoppel. Whether the Appellant s knowledge of the allotment of shares having been made to R-3 and R-4 in the year 2011 and her maintaining silence from 2011 to 2016 regarding the allotment, and also that she, inter alia, acknowledged the fact of the shares allotment to R-3 and R-4 provide res judicata and estoppel to her raising this issue later in CP No.09/2016? - HELD THAT:- The Appellant, even though she was a co-petitioner in CP No. 59/2014, was not a director of R-1 Company nor involved into day-to-day management and affairs of the Company, and therefore, even if she participated in the AGM, wherein the new shareholding of R-3 and R-4 were presented in the Annual Report of the company and Profit and Loss Account for the year 2012-13, she did not have any specific knowledge of the change in her own proportionate shareholding as a result of fresh allotment of shares to R-3 and R-4. The Appellant s petition CP 09/2016 is not affected by res judicata and estoppel in that the Appellant did not lose the entitlement to file the company petition. Whether the petition CP No. 09/2016 is beset with delay and laches and is hit by the issue of limitation? - HELD THAT:- When there exists a continuum in the act of oppression and mismanagement which continues up to the date of filing of the petition, any delay and laches cannot take away the right of the petitioner even if the origin of such acts occurred much prior to the institution of the company petition - In the matter of Praveen Shankaralayam v Elan Professional appliances Pvt. Ltd. [ 2017 (1) TMI 61 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI ], which has been cited by the Learned Senior Counsel for R-3 and R-4, the NCLT, New Delhi has held that the instant petition is hopelessly barred by limitation as per the provisions of Limitation Act. It has already been pointed out that for action like the one complained of by the petitioner, the period of limitation provided by the Limitation Act is three years. The petitioner as has acquired knowledge of all the facts as per his own showing by his reply sent to the Assistant Registrar of Companies on 23.2.2011. Thus, answer to the second question is that the company petition CP No. 09/2016 does not suffer from delay and laches. Whether the allotment of shares to R-3 and R-4 violates the provisions of the Articles of Association of R-1 Company and if so, whether the allotment of shares is null and void on account of contravention of Articles of Association and non-payment of premium? - HELD THAT:- The Memorandum and Articles of Association of a Company are sacrosanct and they represent a binding contract between the members and the company also the members inter se and further, the directors in a company are in a fiduciary position and they must exercise their powers with utmost care and faith for the benefit as well as in the interest of the company and the shareholders are entitled to know the details when new shares are being issued. When we examine the allotment of shares to R-3 and R-4 by the R-1 Company, it is clear that the then directors of R-1 Company, who were father and brothers of the Appellant, did not exercise necessary care and caution in the allotment of the fresh shares, which quite clearly should have been done in accordance with the Articles of Association of the Company. Our answer to the question of violation of Articles of Association in the allotment of shares to R-3 and R-4 is in the positive. Payment of premium - HELD THAT:- It is noted that 1,77,800 equity shares were allotted to Jansi Reddy and R. Yathin Reddy, by a resolution of the Board of Directors dated 2.12.2011 and the approval was given for allotment of these shares @ Rs. 10 per share and therefore, there is no document or record to show that any premium was required to be paid by the allottees for allotment of shares but since the allotment of shares to R-3 and R-4 has been found to be null and void, hence the question of payment of premium pales into insignificance. Thus, even if the Appellant had knowledge of the allotment of shares to R-3 and R-4 which was clearly in contravention of the Articles of Association, she was eligible and entitled to raise the issue of contravention of Articles of Association in allotment of these shares as she was not a person directly responsible for making such an allotment - The Articles of Association are binding on the company and its members and also on Board of Directors and if laid down procedure and principles have not been followed in allotment of shares to R-3 and R-4, the allotment cannot be held as valid. The NCLT committed an error in approving the share transfer to R-3 and R-4 as being in accordance with law and thereafter dismissed CP No. 09/2016. Since it is concluded that the allotment of a total of 1,88,800 shares to R-3 and R-4 is bad in law, the Impugned Order is set aside and the Appeal, is allowed and further it is held that allotment of these shares to R-3 and R-4 by virtue of the Resolution dated 2.12.2011 of the Board of Directors as null and void. Appeal disposed off. 2023 (4) TMI 1141 Oppression and Mismanagement - Order for the Exercise of Valuation - infringement of Rights and Liabilities of the Appellant or not - relevance on the Issue of Valuation, between the Parties - It is the version of the Appellant, that the 1st Respondent, had entered into unilateral discussions, with the Valuer, without the Appellant s knowledge. HELD THAT:- It transpires that the Appellant/Petitioner Company/2nd Respondent company, had preferred an IA No. 1169 of 2020 in CP No.285/241/HDB/2020 (under Rule 11 of NCLT Rules, 2016) against the 1st Respondent / Petitioner (in CP No.285/241/HDB/2020), mentioning that the 1st Respondent / Petitioner, had filed main Company Petition and that he has 10% of Shareholding, in the 2nd Respondent/Company (M/s Hyde Engineering and Consulting India Pvt Limited, Telangana and one of the reliefs, is for Valuation of Shares, of the 2nd Respondent company / 1st Respondent company - In fact, being a Majority Shareholder, the Applicant company/2nd Respondent company, intends to buy the Shares of the 1st Respondent / Petitioner (in Main Petition), who is having 10% of the total Shareholding in the 2nd Respondent company / 1st Respondent company. The 1st Respondent, had in para 6 of the counter to IA No.1169 of 2020 in CP No.285/241/HDB/2020, had proceeded to significantly point out that, he would be glad to settle the matter amicably if he is paid his rightful valuation for his 10% Shareholding in the Respondent No.2 / Respondent No.1 Company, along with accrued interest and legal costs incurred by him. - The First Respondent / Petitioner, had pointed out that the Application under Rule 11 of NCLT Rules, 2016, may be admitted by the Tribunal, and appoint a Registered Valuer, to fix a Fair Value, for the Equity Shares of the 1st Respondent / Petitioner, based on the audited financial 1st Respondent / Company for the fiscal year financial year 2017-18. Besides the above, the 1st Respondent / Petitioner, had stated in its Reply, that the Tribunal, may grant the prayer of Applicant Company / 2nd Respondent, to buy out the Equity Shareholding of the 1st Respondent / Petitioner at a fair and proper value of the company, in respect of the Financial year 2017-18, along with the accrued interest and legal costs, incurred by the 1st Respondent / Petitioner and on payment of the same, within a time bound manner - In the instant case, this Tribunal, pertinently points out in the Counter Affidavit filed by the 1st Respondent / Petitioner (vide page 65 in Diary No.791 dt. 23.8.2022 in CA (AT) CH No.76 of 2022) to IA No.1169 of 2020 in main CP No.285/241/HDB/2020, wherein at paragraph 6, the 1 st Respondent / Petitioner, had stated that, he would be glad to settle the matter amicably, if he is paid his rightful valuation for his 10% Shareholding in the Respondent No.2 / Respondent No.1 Company along with the accrued interest and legal costs, incurred by him. It is an axiomatic Principle in Law that, an Admission is the best piece of evidence, against the Maker and it conclusively binds the Party. Looking at from that perspective, the averments of the 1st Respondent / Petitioner at paragraph 6 and 8 of the Counter to the IA No. 1169 of 2020 in main CP No.285/241/HDB/2020, are tacit Admissions and that the 1st Respondent/Petitioner, is bound by the same in true Letter and Spirit, without any deviation, whatsoever, as opined by this Tribunal. Coming to the plea taken on behalf of the Appellant in the Memorandum of the instant Appeal, to the effect, that there was No such Consent, between the Parties, regarding the Appointment of the Valuer, and further, there was no occasion or basis or material to allow, the prayer for Appointment of an Valuer, and the same was done only in the garb of allowing the Appellant s IA 1169 of 2020 in main CP No.285/241/HDB/2020, this Tribunal, keeping in mind of the Hon ble Supreme Court decision in Central Bank of India v. Vrajlal Kapurchand Gandhi and Anr. [ 2003 (7) TMI 708 - SUPREME COURT ], is of the earnest opinion that, it is for the Appellant, to take necessary steps, in contradicting the Statements of Fact, during the hearing recorded in the impugned order of the Tribunal, (which are conclusive of facts so mentioned / recorded, as a matter of judicial record), stating that the order was not correctly reflecting the happenings, before the Tribunal. On a careful consideration of divergent contentions advanced on either side, on going through the Impugned Order, dt.29.7.2022 in IA 1169 of 2020 in main CP. No.285/241/HDB/2020, on the file of NCLT, Hyderabad, Bench - I, and also taking into account the surrounding facts and circumstances of the present case in a holistic manner, without any simmering doubt, comes to a resultant conclusion that the Order, assailed by the Appellant, does not in any manner affect his Rights and Liabilities, and in any event, no prejudice is caused to him, by the issuance of direction, by the Tribunal, to the Valuer, to submit a Valuation Report, to be considered after submission of a Report, by the Valuer, of course by the NCLT, Hyderabad, Bench - I. This Tribunal , pertinently points out, that the Impugned Order of the NCLT, Hyderabad, Bench I, dt. 29.07.2022 in IA 1169 of 2020 in main CP. No.285/241/HDB/2020, does not in any way infringe the Rights and Liabilities of the Appellant and hence, the instant Company Appeal is not per se maintainable. Viewed, in that perspective, the instant Appeal, sans merits and it fails. Appeal dismissed. Insolvency & Bankruptcy 2023 (4) TMI 1140 Overriding effect of forest law over IBC - Jurisdiction of NCLT over state government - Order passed by the National Company Law Tribunal, Ahmedabad on an application filed under Section 60 of the Insolvency and Bankruptcy Code, 2016 - Tribunal by the impugned order dated 06-07-2022 directs the State Government to permit functioning of the windmill by holding that it was essential to resolve insolvency of the corporate debtor i.e., the Company - Whether the Tribunal has exceeded its jurisdiction by passing the impugned order? HELD THAT:- The Company could not have knocked at the doors of the Tribunal as it completely falls beyond the purview of the Code, being in the realm of public law, since the State has exercised its jurisdiction in drawing up the proceedings and directing forest clearances to be submitted by the corporate debtor, the petitioner, in exercise of powers conferred under the statute. Therefore, they are in the realm of public law. The Tribunal had no jurisdiction to direct functioning/continuing of the windmill without the forest clearances, merely because the State had granted such permission at an earlier point in time. The submission of the learned senior counsel for the Company is that if the State had passed an order, then the Tribunal would have no jurisdiction. According to him, the one that is passed is not an order. The said submission is noted only to be rejected, as it is a communication from the hands of the State and it is understood by the Company also to be an order only, as the averments in the application filed before the Tribunal demolishes the contention of the learned senior counsel for the Company. Therefore, none of the contentions of the learned senior counsel for the Company would merit acceptance. It is open to the Company to produce all the necessary clearances as is sought by the State if the Company wants to continue with the operations. In the event, the Company would furnish its documents for forest clearances, it is open for the State to consider the same and pass appropriate orders in accordance with law. Impugned order dated 06.07.2022 passed by the National company Law Tribunal, Ahmedabad Division stands quashed - Petition allowed. 2023 (4) TMI 1139 Action against Resolution Professional - Demand of Bribe for showing leniency in the insolvency resolution process for extending CIRP process from 09 months to 02 years - demand of bribe for obtaining favourable forensic audit/valuation report from his chosen Forensic Auditor/Valuer and for helping in re-possession of plant/company - applicability Section 7 of PC Act to this petitioner (as a Resolution Professional is not a public servant within the meaning of Section 2(C) of the Prevention of Corruption Act or under Section 21of the IPC). Whether Resolution Professional as defined under Section 22 of the I B Code will come within the meaning of Public Servant under Section 2 (c) of the PC Act? HELD THAT:- This court is of the view that resolution professional will come within the meaning of a public servant under Section 2(c) the PC Act for the reason that definition of public servant as given under the PC Act is very wide and expansive. It is not limited to those serving under the Government or its instrumentalities and drawing salary from the public exchequer. Apart from the list of the functionaries given in Section 2 (c), the definition also lays down the functional criteria to include within its fold those discharging public duty or any duty authorized by a court of justice, in connection with administration of justice. Under Section 16 (1) an interim resolution professional is appointed by the adjudicating authority on the insolvency commencement date. Under section 22 (3)(a), the committee of creditors after taking a decision to continue the interim resolution professional as the resolution professional, is required to communicate its decision to Adjudicating Authority and others - Against this scheme of the I B Code the plea advanced on behalf of the petitioner that Adjudicating Authority had no role in the appointment of Resolution Professional is not sustainable. Thus, the appointment of Resolution Professional is made during the resolution process before the Company Law Tribunal with its approval, he will be a public servant under Section 2(c)(v) of the P.C. Act. Whether the functions of a Resolution Professional partake the character of a public duty ? - HELD THAT:- The appointment of resolution professional is made by the National Company Law Tribunal, which is the Adjudicating Authority for the insolvency resolution process of the companies under the I B Code, 2016. Resolution Professional has a key role to play in the insolvency resolution process and to protect the assets of the corporate debtors. From his nature of assignment and duty to be performed his office entails performance of functions which are in the nature of public duty and therefore will come within the meaning of public servant both under sections 2 (c) (v) (viii) of the PC Act - the plea that the Petitioner was not a Public Servant within the meaning of the PC Act is rejected. Petition dismissed. 2023 (4) TMI 1138 Initiation of CIRP - date of default - period of limitation - Corporate Debtor contested the application filed under Section 7 of the Code on the ground that it has been filed beyond the period of limitation and is not maintainable - whether the petition filed under Section 7 of the Code is barred by limitation or not? - HELD THAT:- It has now been repeatedly held by the Hon ble Supreme Court and followed by this Tribunal that Article 137 of the Act would apply for counting the period of limitation in respect of an application filed under Section 7 of the Code. Article 137 of the Act provides three years from the date when the right to apply accrues. Right to apply accrues from the date of default as has been provided in Section 7 of the Code itself. Admittedly, the Bank did not mention the date of default in Part IV of Form 1 of the application filed under Section 7 of the Code and disclosed the date of default as 30.06.2011 only in the supplementary affidavit. The trigger date is thus 30.06.2011 for the purpose of counting the period of three years which is up to 30.06.2014. Meaning thereby, w.e.f 01.07.2014 the limitation to apply under Section 7 of the Code had expired. However, Section 18 of the Act deals with acknowledgement of the debt for the purpose of extension of limitation but it categorically provides that the acknowledgement has to be made during the period of three years and not beyond that. In the present case, the Bank could not produce any evidence to prove that there has been acknowledgment in writing and signed by the Appellant for the purpose of extension of period of limitation except for the reply to the notice issued under Section 13(2) of the SARFAESI Act, 2002 in which the Appellant did not make any unambiguous and unequivocal acknowledgement which could extend the period of limitation. The limitation counted from the date of default i.e. 30.06.2011 had expired on 30.06.2014 and there is no acknowledgement of debt during this period in terms of Section 18 of the Act. The Bank did not place on record the balance sheet prior to 2014 and the only balance sheets placed on record are from 31.03.2015 to 31.03.2018 and the OTS also took place on 21st January, 2019 much beyond the period of three years. There are no substance in the argument of Counsel for Respondent for the purpose of maintaining the impugned order which is patently erroneous and based upon mis-reading of evidence. Hence, the appeal is hereby allowed and the impugned order is set aside. Appeal allowed. 2023 (4) TMI 1137 Preferential Transactions - appellant are related party to the Corporate Debtor or not - repayment to related parties and repayment to the non-related parties - HELD THAT:- There is no dispute between the parties that repayment to related parties and repayment to the non-related parties were within the lookout period. The avoidance transaction in Insolvency Proceedings has been dealt with in the legislative schemes under several enactments relating to subject. We may have a look over the legislative scheme with regard to avoidance transaction prior to enforcement of IBC to appreciate the changes in the legislative scheme which has been brought by the IBC - Anuj Jain [ 2020 (2) TMI 1259 - SUPREME COURT ] was a case where the Hon ble Supreme Court was considering a case where IRP filed an Application for avoidance of certain transactions as preferential transactions where the Corporate Debtor had created security interest by way of mortgage in favour of lenders of third party that is JAL on the unencumbered land of the Corporate Debtor which transaction were sought to be avoided by RP by filing an application. The Adjudicating Authority has declared the said transaction as preferential transaction. Taking financial assistance from related and non-related parties which transactions are subject of enquiry in the present Appeal can not be held to be ordinary course of business of the Corporate Debtor. The expression ordinary course of business or financial affairs of the Corporate Debtor has to be read ejusdem generis . The expression financial affairs of the Corporate Debtor cannot be given an extended meaning as contended by Learned Counsel for the Appellants that all financial transactions done by the Corporate Debtor is covered within expression financial affairs hence the loan taken by the corporate debtor from different related and non-related parties is part of the financial affairs cannot be accepted - Undistinguished common flow of the business of the Corporate Debtor does not contemplate any such or particular situation where the Corporate Debtor s claim that its financial position became unstable due to market condition and had started arranging money from their relatives and other parties. Money arranged from relative and other parties by the Corporate Debtor thus cannot be held to be part of ordinary course of business or part of financial affairs. When the law mandates that any transfer made in pursuance of order of Court can not preclude such transfer to be deemed to be giving a preference there is no occasion for not accepting any transaction made in pursuance to a notice or demand issued by the Lender or by threat extended by lender for initiating any legal proceeding as preferential transaction. The legislative scheme which is clarified by the above proviso clearly leads to the conclusion that any transaction under any notice, demand or threat shall not lose its character of preferential transaction merely on the above reason. The submissions of the Appellant on the ground that the transaction was entered into by the Corporate Debtor due to pressure put on it has no relevance and shall not change the nature of transaction from preferential transaction. Whether the composite application under Section 43, 44, 45, 46, 66, 67 and 60(5) of the Code could not have been filed by the RP? - HELD THAT:- The ingredients of Section 43, 45 and 66 are different and Resolution Professional is expected to keep such requirement in view while making motion to the Adjudicating Authority - When we look into the Application which has been filed in the present case the Resolution Professional has in the avoidance application in his application has dealt with preferential transaction undertaken by the Corporate Debtor and undervalued transaction undertaken by the Corporate Debtor as well as fraudulent transaction in different heads - thus allegations and averments were separately made and filing of composite application does not lead to any infirmity in the Application. We are not persuaded to accept the submission of the Appellant that since the composite Application was filed it ought to have been rejected. The Adjudicating Authority has rightly allowed the Application filed by the Resolution Professional and declared the preferential transactions undertaken in favour of the Appellants and directed the Appellants to refund the amount within three months - Appeal dismissed. FEMA 2023 (4) TMI 1136 Maintainability of WP against Violation of the Foreign Exchange Management Act, 1999 - proceedings initiated u/s 6(3) of the Act, 1999 - The provision has been omitted - saving clause - Scope of alternative remedy - Petitioners challenge the impugned order, inter alia, on the ground that they were charged under Section 6(3)(b) of the Act, 1999 which was subsequently omitted from the Act, 1999, w.e.f. 15.10.2019 - whether present writ petition is not maintainable as the Petitioners have an efficacious and alternative remedy under Section 19 of the Act, 1999? - HELD THAT:- Section 6 of the Act, 1897 is applicable to omission of a provision by the legislature. Section 6 of the Act, 1897 saves all the pending proceedings under a provision that was subsequently omitted. Now coming to the facts of the case, it is not in dispute that the proceedings for violations of Section 6(3)(b) of the Act, 1999 were initiated in the year 2017. When the proceedings were initiated against the Petitioners, Section 6(3) of the Act, 1999 was still in force. Therefore, by virtue of Section 6 of the Act, 1897 the proceedings against the Petitioners are saved and cannot be disturbed merely because Section 6(3) of the Act, 1999 was subsequently omitted. According to this Court, Respondent No. 1 was well within his jurisdiction to pass the impugned order dated 04.01.2023. As the Petitioner, has an effective alternative remedy in the form of an appeal under Section 19 of the Act, 1999, this Court, in light of the decision in Assistant Commissioner of State Tax (supra) holds that the present writ petition is not maintainable. Therefore, the present writ petition is liable to be dismissed. Writ petition is dismissed. However, the Petitioners are at liberty to raise all the contentions before the Appellate Tribunal. Service Tax 2023 (4) TMI 1135 Levy of Service Tax - Classification of service - Construction of Complex Service - Works Contract Service - construction of flats was for the service recipients per se - period from 01.02.2007 to 30.06.2010 - HELD THAT:- It is a matter of record, as observed from the Show Cause Notice, that the appellant, who is a developer, was rendering typical works contract service, for which reason they had started paying Service Tax with effect from December 2007, thereby availing the benefit under the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007. The fact however remains, by virtue of the construction agreements entered into with their prospective buyers, that, in essence, they were rendering works contract service in the construction of flats and this aspect has not been denied by the Revenue either in the Show Cause Notices or in the impugned order. The CESTAT, Chennai Bench in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] has, following the dictum of the Hon ble Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] , held that in respect of projects executed prior to 01.06.2007, being in the nature of composite works contract, could not be brought within the fold of commercial or industrial construction service or construction of complex service and for the period post 01.06.2007, the liability to Service Tax could be fastened only if the activities were in the nature of services simpliciter - The period of dispute is from February 2007 to June 2010 and from July 2010 to March 2011, and there is no dispute that from December 2007, the appellant is remitting the Service Tax under works contract service. Thus, the position of law is that there is no Service Tax liability as and when the construction of flat is for the personal use of the service recipient. Admittedly, in the case on hand, by virtue of agreements entered into by the appellant with the prospective buyers, which is reflected in the Show Cause Notice, it appears that there is no dispute that the construction of flats was for the service recipients per se. Demand do not sustain - appeal allowed. 2023 (4) TMI 1134 Valuation of service - Air Travel Agent Service - inclusion of commission received by the appellant on the fuel surcharge in the basic fare - Rule 6 (7) of the Service Tax Rules, 1994 - period from December 2008 to February 2009 - HELD THAT:- In the case of M/S AKBAR TRAVELS OF INDIA PVT. LTD. VERSUS THE PRINCIPAL COMMISSIONER OF SERVICE TAX, NEW DELHI [ 2020 (3) TMI 376 - CESTAT NEW DELHI] , the Principal Bench has, after following the order in M/S. KAFILA HOSPITALITY TRAVELS LTD. VERSUS CST, DELHI [ 2015 (1) TMI 387 - CESTAT NEW DELHI] , chosen to remit the matter back to the file of the Principal Commissioner for passing a fresh order since the Bench was satisfied that the Principal Commissioner had not considered the contentions of the appellant therein that that the commission on fuel surcharge was not paid normally to the Air Travel Agents by the Airlines. Rule 6 (7) ibid. clearly gives an option to the taxpayer, specifically an Air Travel Agent, to pay an amount calculated at the rate of 0.6% of the basic fare in the case of domestic bookings and at the rate of 1.2% of the basic fare in the case of international bookings instead of paying Service Tax at the rate specified in Section 66 of the Finance Act, 1994, and as per Section 66, the rate of Service Tax was a flat 12% of the value of taxable services. Section 67 ibid. provides for the assessable value to be the gross amount charged by the service provider for such service - What is relevant from the above is that the option is given to the taxpayer to remit the Service Tax either in terms of Rule 6 (7) ibid. or Section 67 ibid., and once an option is exercised by the taxpayer, the Revenue cannot find fault with the option so exercised. In the case of JAPAN AIRLINES INTERNATIONAL CO. LTD. VERSUS C.S.T. NEW DELHI [ 2016 (7) TMI 1077 - CESTAT NEW DELHI] , the co-ordinate Delhi Bench has, however, held that fuel surcharge was includible in the assessable value, but it is clear from a reading of the said order that the Bench did not consider the order of the very same Bench in the case of M/s. Kafila Hospitality and Travels Ltd. and has chosen to hold so on the basis of the provisions of Section 67 of the Finance Act, 1994 - Admittedly, the appellant has chosen to pay Service Tax in terms of Rule 6 (7) ibid. and therefore, tax cannot be demanded by applying the provisions of Section 67 ibid. Hence, the ratio in M/s. Japan Airlines International Company Ltd. is not applicable. An airline may pay commission inter alia on various items, apart from the basic fare, which are indicated clearly in the ticket issued to a traveller. The basic fare is clearly indicated, followed by various other charges in such ticket. Hence, when the basic fare is so specifically indicated, the authorities cannot add or delete anything to the same to say that the basic fare should also include those other things - Rule 6 (7) has to be read, therefore, in the context of the break-ups given in the ticket wherein the basic fare stands clearly indicated and viewed thus, the interpretation drawn by the lower authorities to include the commission on fuel surcharge in the basic fare cannot hold any water, for which reason the impugned order cannot sustain. Appeal allowed. 2023 (4) TMI 1133 Classification of services - Manpower Recruitment and Supply Service or not - contract for job work on per piece basis - HELD THAT:- The agreement between the appellant and the service recipient in Gujarati language has been produced by the appellant as Exhibit F - A perusal of the bills shows that the amount collected is calculated on the basis of some quantity however, the rate column has been left blank. The contract submitted by the appellant in the appeal memorandum also does not contain any rate list attached with the said contract. In this background it is not possible to verify if the bills raised by the appellant are on per piece basis. Unless the contract is for supply of manpower, the charge of provision of service under manpower recruitment and supply service cannot be made. A perusal of the bills and the contract submitted by the appellant does not make it clear how the bills have been raised. The bills as well as contract are in Gujarati language. The contract does not contain any per piece rate chart. Matter remanded back to the original adjudicating authority. The adjudicating authority can examine how the bills have been raised - appeals are allowed by way of remand to the original adjudicating authority. 2023 (4) TMI 1132 Levy of service tax - Works Contract Service - Construction of canals, water pipeline works etc., under EPC mode for state governments - Road works, earthwork and works to NTPC - Goods Transport Agency (GTA) service - Interest on short paid GTA - Renting of Immovable Property (RIPS). Construction of canals and water pipelines works etc. - HELD THAT:- From the Table given in the Show Cause Notice and Order-in-Original, it is seen that in respect of the 12 projects, the works undertaken by the Appellant are on account of various canal and other pipeline projects undertaken by them by way of Tender and Contract awarded by the Government of Andhra Pradesh. There is no dispute that the works have been rendered only to the Government of Andhra Pradesh. The Larger Bench in the case of M/S. LANCO INFRATECH LTD. AND OTHERS VERSUS VERSUS CC, CE ST, HYDERABAD [ 2015 (5) TMI 37 - CESTAT BANGALORE (LB)] held that Construction of canals for irrigation or water supply; construction or laying of pipelines/ conduits for lift irrigation conceived and integrated into a dam project, must be classified as works contract in respect of dam and is thus excluded from the scope of Works Contract Service defined in Section 65(105)(zzzza) of the Act, in view of the exclusionary clause in the provision - thus, the demand, interest and penalty in respect of Service Tax demand on construction of canals and water pipelines works etc., carried out for the State Government along with interest and penalty. Works undertaken for NTPC - HELD THAT:- The Appellant should work out the value of services rendered along with the Service Tax demand thereon, based on all the documents available with them. After this, if they take the stand that Service Tax is not payable on any activity undertaken for NTPC, the same should be brought out along with documentary evidence supported by statutory provisions before the Adjudicating Authority - The confirmed demand in respect of NTPC transaction alone is remanded to the Adjudicating Authority to verify all the documentary evidence to be produced by the Appellant on the above counts. The final amount of demand on account of NTPC transaction will be arrived at by the Adjudicating Authority, which is required to be paid by the Appellant along with interest and penalty @ of 25% of the confirmed amount - matter on remand. Demand on account of GTA services - HELD THAT:- It is seen that when the opportunity was given to the Appellant at the Adjudication stage to come up with all their submissions along with documentary evidence, the Appellant has not done so. They should have produced the documentary evidence to the effect that some of the freight charges were incurred on account of GTO and as to how the same was exempted from Service Tax, if any. Instead of making such detailed submission along with documentary evidence, the Appellant was simply questioning the quantification which has been correctly done by the Department based on the Profit Loss Account figures of the Appellant. The Appellant does not dispute the figures taken from the Profit Loss Account. Therefore, there are no merits in the present Appeal with regard to the confirmed demand of Rs. 11,23,161/- on GTA Services - demand set aside. Renting of Immovable Property - HELD THAT:- In the absence of any evidence forthcoming that the property has been leased out for residential purpose, the Appellant is required to pay the Service Tax. The amendment carried out with retrospective effect from 01.06.2007 has no impact in the present case - The Appeal in respect of confirmed demand of Rs. 2,19,513/- towards Renting of Immovable Property is dismissed. Appeal allowed in part. Central Excise 2023 (4) TMI 1131 Levy of Excise Duty - process amounting to manufacture or not - conversion of SO dyes from unformulated/ unstandarised - process of mixing/diluting SO dyes with dry salt, globular salt (sodium sulfide), dextrose etc. to match the strength with the help of ball mill - Section 2(f) of Central Excise Act, 1944 read with Note-8 to Chapter 32 of Central Excise Tariff Act, 1985 - HELD THAT:- The Adjudicating Authority has considered the entire investigation, statements of the persons, chemical examiner test report while dropping the proceedings of the show cause notice. The claim of the respondent was that except dilution of the readily manufactured SO Dyes, no process is carried out and the property in the product remained same except reduction of strength or percentage of the active dye content. On going through the test results, it is found that before and after the process of dilution, there is only change of percentage of the active dye content. This is only because of the contents of various items as mentioned above in the prepared dyes. Even though the percentage of the dye content reduced but otherwise there is no change in the chemical character of the product therefore, it is clear that SO dyes purchased by the respondent is already as formulated/ standardized/prepared form of dyes. Chapter Note 8 applies only in a case where the dyes are not formulated/ standardized or prepared. If the dyes are not in the said form or semi-finished form and only after the process it gets converted into formulated/standardized/ prepared then only as per Chapter Note 8 of Chapter 32 the process shall become a manufacture process. The Adjudicating Authority has also considered various certificates produced by manufacturer of SO dyes from whom the respondent had purchased the goods. The said certificate suggests that manufacturer of dyes had supplied prepared/ formulated/ standardized SO dyes in powder form to the respondent which was ready to use. Note-8 to Chapter 32 prescribes conversion from unformulated/ unstandardised or unprepared dyes into formulated/ standardized or prepared form shall amount to manufacture. Since the respondent have provided documentary evidence suggesting the purchase of ready to use SO dyes in powder form and sold the same by reducing its strength (dye content) and keeping in view the opinion of Chemical Examiner and the certificates of ATIRA and CRDC to the effect that dye content of the purchased SO dyes was reduced, the process adopted by the assessee of diluting the SO dyes by mixing with dry salt/starch etc. did not amount to manufacture within the meaning of Note-8 to Chapter 32. In the case of COMMISSIONER OF C. EX., AHMEDABAD VERSUS FRESH LABORATORIES [ 2008 (3) TMI 274 - CESTAT AHMEDABAD ] a similar issue was considered by this Tribunal wherein it was held that It has been held that physical mixture of already standardised, formulated and prepared ingredients by dissolving the same in boiling water does not result in emergence of new product, inasmuch as no manufacturing activity is involved. There are no infirmity in the impugned order passed by learned Commissioner while dropping the proceedings of the show cause notice - appeal filed by assessee allowed. 2023 (4) TMI 1130 CENVAT Credit - inputs or capital goods - Electrode Carbon Paste(ECS) - HELD THAT:- The issue is no more res integra and has been long settled by slew of decisions passed by various authorities. The fact of use of the said goods and its ultimate consumption in the manufacture of finished goods is not disputed. The electrode carbon paste (ECP) owing to its capability to conduct electricity is essential for the manufacture of the ferro alloys and in the process gets consumed, even being a part of the finished goods. Therefore, it is certainly in the nature of a consumable. The Tribunal in the case of COMMISSIONER OF C. EX., BHAVNAGAR VERSUS UNIFRAX INDIA LTD. [ 2009 (1) TMI 694 - CESTAT, AHMEDABAD] taking note of its earlier decision and thereby allowed CENVAT Credit on electrode assembly and needles. The Hon ble Calcutta High Court in the case of SINGH ALLOYS STEEL LTD. VERSUS ASSISTANT COLLECTOR OF CENTRAL EXCISE [ 1993 (1) TMI 97 - CALCUTTA HIGH COURT] had held that the definition of input was not dependent upon what ought to be used but what is in fact used. Relying on this decision the Tribunal in the case of INDUSTRIAL CHEMICALS MONOMERS LTD. VERSUS COLLR. OF C. EX., MADURAI [ 1995 (6) TMI 184 - CEGAT, NEW DELHI] had held that carbon paste used in the manufacture of calcium carbide either as a technical necessity or otherwise was entitled to benefit of notification 201/79-CE dated 4.6.79, thereby rejecting the plea of mere incidental consumption of carbon paste in the course of manufacture. Applying the ratio of the aforesaid judicial pronouncement to the facts herein, there is no question of denying that electrode carbon paste is in the nature of a consumable as it gets consumed during the process of manufacture of ferro alloys. The electrode carbon paste, therefore, cannot be held to be capital goods in terms of Rule 2 (a) of the Cenvat Credit Rules, 2004. Thus, electrode carbon paste used and consumed in the process of manufacture of ferro alloys is an input eligible for cenvat credit under Rule 2 (k) of the Cenvat Credit Rules, 2004 - there are no infirmity in the appellant having availed credit on the said product as input. Accordingly, the demand of interest cannot be sustained. Appeal allowed. 2023 (4) TMI 1129 Reversal of CENVAT Credit on damaged Capital Goods - damaged goods are usable or not - Department is of the opinion that the machines so damaged on which insurance claim has been received by the appellant is to be treated as cleared after being put to use and the appellant is required to reverse the cenvat credit in terms of sub rule 5 (A) of Rule 3 of Cenvat Credit Rules, 2004 - HELD THAT:- The fact of the case is not under dispute that the machine was used for almost 4 years thereafter it got damaged, the appellant also filed the insurance claim and after survey when the surveyor was satisfied the machines are not usable, the insurance company sanctioned the insurance claim. It is also fact in record that the appellant have cleared such damaged capital goods as waste and scrap. Whether the capital goods on which the CENVAT credit was availed has been cleared as usable capital goods or waste and scrap? - HELD THAT:- As much as the appellant have cleared the capital goods as waste and scrap coupled with the fact of insurance claim it is absolutely beyond doubt that the capital goods became waste and scrap as the same is not usable for the intended purposes. In such case clearance of capital goods clearly falls under Rule 3 (5A)(b) therefore, the appellant have rightly paid the amount equal to the duty leviable on transaction value of the capital goods. Appeal allowed. 2023 (4) TMI 1128 Benefit of Exemption - Manufacture of Tubular Plate Lead Acid Batteries for use in solar photovoltaic modules/ system - under N/N. Entry 10 of List 9 of the Notification 6/2002 dated 01/03/2002 and Entry 10 0f List 5 of Notification 6/2006 dated 01/03/2006 - levy of penalty - time limitation - cum-duty benefit - HELD THAT:- It is observed that Entry 10 of List 9 of the Notification 6/2002 dated 01/03/2002 and Entry 10 0f List 5 of Notification 6/2006 dated 01/03/2006, exempts Solar Power Generating Systems. Entry 21 in the above said Lists exempts Parts of all the preceding Entries in the said Lists. Thus, from the above Notifications, it is clear that the intention of the Government is to promote non conventional Energy systems and for that both the Systems/Devices as well as its parts were exempted. However, as per Entry 21, the Parts are exempted only if they are used within the factory of production. In this case the Batteries manufactured by the Appellant is a special type of battery used in solar PV systems. This has been confirmed by the Certificates and Expert Opinions submitted by them. However, there is no specific Exemption available to Batteries as such in the said Notifications. The Ld. Advocate for the Appellant stated that as there were contrary decisions on the subject matter, the issue was referred to the Larger Bench, in the case of M/S. REED MEDWAY PACKAGING CO. OF INDIA PVT. LTD. VERSUS CCE, DELHI-IV [ 2017 (5) TMI 93 - CESTAT NEW DELHI] . In that case, the Larger Bench held that there was no conflict in the said two decisions referred to Larger Bench. Both deals with different issues while considering the Exemption under the same Notification - From the decision of the Larger Bench, it is observed that if the part/device manufactured by the Appellant can be considered as an integral part of the non-conventional Energy systems, then the exemption under Notification 6/2002, dated 01/03/2002 as amended, is available. On the other hand, if it is only a part of the system which has no independent function on its own which cannot be called a device with independent function and cannot be called an integral part of the System, then the exemption would available only if the part is manufactured and consumed within the factory. In the present case, Exemption is provided to Solar Power Generating Systems. The Appellant manufactured Batteries and supplied the same to the two manufacturers of Solar Power Generating Systems. The Experts Opinions submitted by the Appellant clearly indicate that they are specially made Batteries to store electricity generated by solar cells and an integral part of the solar Photovoltaic Module. They have an independent function on its own and hence can be called as a Device on its own for the purpose of the Notification 6/2006 dated 01/03/2006 and hence as per the Larger Bench decision cited the exemption can be made available to the Batteries. From the decision of the Hon ble Supreme Court in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. [ 2018 (7) TMI 1826 - SUPREME COURT] , it is observed that a statute must be construed according to the intention of the Legislature. In the present case, there is no doubt that the Legislature wants to extend the benefit of Exemption to Non-Conventional Power Generating Systems. It is a policy decision of the Government to promote Renewable sources of energy - It is practically impossible to bring into existence a fully finished system within the factory. Just because the fully finished system comes into existence only at the site, the benefit of exemption available to the System cannot be denied to the parts , which are an integral part of the system. Thus, the Batteries manufactured by the Appellant, which are an integral part of the Solar Power Generating System, are eligible for the benefit of exemption Notification 6/2002 dated 01/03/2002 as amended. Hence, the demand confirmed in the OIO is not sustainable - Since the demand itself is not sustainable, penalty imposed on Sh Kalyan Das is also not sustainable - Since the Appellant is eligible for the benefit of the above said exemption Notifications, and the demand is not sustainable, other aspects of Limitation and availability of Cum Duty benefit raised by the Appellant not examined. Appeal allowed. CST, VAT & Sales Tax 2023 (4) TMI 1147 Clandestine business - Ex-parte orders of assessment - suppression of sales - Business was carried on or not - presumption drawn on the basis of weighing machine - findings of the taxing authorities are based on no evidences - Whether on the facts and in the circumstances of the case, report of a particular year can be relied and made basis for assessing for previous years? HELD THAT:- As a matter of fact, the Assessing Officer in support of start of business has relied upon the evidence of the inspecting officials who found that the Weights and Measures License with effect from 10.07.2000 being renewed every year and an electronic weighing machine was installed at the shop since 27.03.2000 and basing upon the confession of the dealer his daily sales was accepted by the Inspector of Sales Tax (Vigilance) at Rs. 2,000/- and estimated the total sale transaction at Rs. 6,20,000/- for 2001-02. Apart from the same, at the time of inspection, the dealer could not produce any purchase bill, purchase register confessing his unaccounted for purchase since 2000-01 and also at the time of inspection the dealer could not produce any sale bill or sale invoice before the officials. If it is the case of the petitioner that after cancellation of registration certificate he had stopped the business and could not revive the same, the Assessing Officer should not have drawn a presumption, on the basis of weighing machine said to have been purchased and obtained Weights and Measures License on 10.07.2000 and available in the premises, and the electronic machine said to have been installed at the shop since 27.03.2000, and come to a conclusion on the basis of best judgment assessment that the petitioner was engaged in clandestine nature of business during 2001-02 and accepted the Gross Turnover estimated by the Inspector of Sales Tax (Vigilance) at Rs. 6,20,000/-. On perusal of the orders passed by the assessing officer, first appellate authority and also the second appellate authority, namely, the Tribunal, it appears that no material relevance was indicated to justify the assessment of daily sales for the assessment years 2001-02, 2002-03 and 2003-04. Thereby, fixing of liability by the Assessing Officer on surmises and conjectures cannot be sustained in the eye of law. More so, if the Vigilance Officials conducted inspection in April, 2004, that material can be utilized for the assessment made in same year, i.e., 2004-05 but the same cannot be used for the assessment years 2001-02, 2002-03 and 2003-04, particularly when the petitioner had not carried out any business due to reason beyond its control. It may be pertinent to make observation that the inspection of the business premises was made on 11.08.2004 by the Vigilance personnel. On the material found available on the said date there was suggestion for determination of liability for the periods from 2000-01 to 2004-05 vide Vigilance New Case Report bearing No. 8, dated 29.11.2004. No material is placed on record by the Revenue to the effect that any of the documents suggested sale of goods during the period from 2000-01 to 2003-04 - Mere presence of weighing machine and obtaining Weights and Measures License ipso facto would not lead to construe that there was sale and the turnover exceeded the threshold limit as contained in Section 4(7) of the OST Act at any point of time during 2001-02 to 2003-04 particularly when the continuing liability fixed for the period 2000-01 was set aside by the Appellate Authority which attained finality as no second appeal was preferred thereagainst. Non-maintenance of books of account by the present petitioner-dealer, whose registration has been cancelled under Section 9(3-f) of the OST Act with effect from 01.04.1997, cannot be taken as pointer for suppression of sales so as to saddle on him the burden of tax on the specious plea that the assessee failed to discharge liability, more so when the liability fixed for the year 2000-01 was set aside by the Appellate Authority which attained finality being not questioned by the Revenue in the further proceeding. Whether there can be backward and forward projection of materials detected which are relevant to a particular assessment for the purpose of making assessment for some other year? - HELD THAT:- If the assessing officer wants to do so, some material has to be brought on record to justify just projection, which is absent in the present case. Thereby, the orders so passed by the authorities cannot be sustained in the eye of law - the date when the material was discovered is not relevant. What is relevant is the nature of evidence or material discovered during inspection is the most important thing. In absence of the same, the same cannot be utilized for making assessment for other years unless their relevance to any other period is established by the Assessing Officer. The matter is remitted back to the assessing officer to make fresh assessment in adherence to the principles of natural justice and in conformity with the provisions of law - Revision allowed. 2023 (4) TMI 1127 Levy of penalty - Detention of goods - failure on the part of transporter to produce documents - non-reporting about the consignment at the concerned ICC - machinery so transported was not for sale or trade as the same was plant and machinery parts to be installed at the Indian Railway Workshop at Patiala - capital goods or not - non-reporting of goods can be a ground for imposition of penalty though the goods were covered by proper invoice, Goods Receipt and Insurance and no other discrepancy had been pointed out at the time of detention? HELD THAT:- Undoubtedly, it is mandatory under the provisions of the PVAT Act that the carrier of the goods while entering or leaving the limits of a Punjab State will generate information about the goods at the nearest ICC which was not proved to be shown by the driver in the instant case. However, in our opinion, from this act of driver only, no interference can be drawn that the declaration was not obtained with a view to avoid payment of tax. Reliance in this regard can be placed upon GANPATI FOODS VERSUS STATE OF PUNJAB AND ANOTHER [ 2013 (9) TMI 986 - PUNJAB AND HARYANA HIGH COURT] wherein non-generation of declaration at ICC was considered to be not sufficient enough to arrive at a conclusion that an attempt to evade tax was made. Further, merely on the basis of statement alleged to have been made by the driver that he had been told by the appellant to not to generate bills, no penalty could be imposed upon the appellant - Merely non-reporting about the consignment at the concerned ICC and not making declaration in the prescribed form did not lead to the conclusion that there was violation of Section 51 (4) of PVAT Act with a view to make an attempt to avoid the tax. It is not the case of the respondent that the invoice or GR were not genuine. The authorities below and the Tribunal did not examine the genuineness or otherwise of these invoices and goods receipt etc. and the Tribunal had merely gone by the alleged admission of the driver. The impugned orders are not sustainable as the Tribunal was required to examine the entire material on record before concluding that there was any attempt to evade tax on the part of the dealer - impugned orders passed by the Tribunal are set aside and it is held that no case for imposition of penalty has been made out against the appellant - Appeal allowed.
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