TMI Tax Updates - e-Newsletter
April 5, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Revocation of cancellation of petitioner's registration - failure to file returns continuously for a period of six months - By not bringing them back to the Goods and Services Tax fold/regime, would not further the interest of the revenue. - Relief is granted subject to certain safeguards - HC
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GST:
Principles of Natural Justice - The petitioner instead of appearing through a legal representative before the adjudicating authority was kept on corresponding for supply for entire data collected by the respondents during the search. No such demand was made by the person from whose possession the data was seized - Even otherwise appellate authority is competent to examine the effect non-supply of non relied upon documents/ data while deciding the appeal. Even otherwise there are details of the data demanded by the writ petitioner only for the sake of delaying the proceedings simply letters were sent. - Petition dismissed - HC
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GST:
Classification of services - project management consultancy services - the service code 998341 is restricted to Geological and geophysical consulting Services and the service code 998343 is restricted to Mineral exploration and evaluation Services and the impugned services being provided by the Applicant cannot be considered as being connected to either Geological and geophysical consulting services or Mineral exploration and evaluation services. - AAR
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Income Tax:
Reopening of assessment u/s 147 - Shorter time to reply to notice - As an order passed under Section 147 of the Income Tax Act, 1961 is an appealable order, in terms of Section 246 (i)(b) of the Income Tax Act, 1961, it is the opinion of the Court that the petitioner can avail the alternative remedy available by approaching the appellate authority. However, keeping in view the fact that the petitioner has been given only 2 (two) days time to file a reply to the show cause notice dated 25.03.2022, this Court is of the view that the respondents should give the petitioner a further 10 (ten) days time from today, for filing his reply to the show cause notice dated 25.03.2022 - HC
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Income Tax:
Order of transfer u/s 127 - transferring the case of the petitioner from Raipur to Delhi - Even if financial nexus is not palpable between the petitioner and the searched party, that by itself cannot take away the right of the Revenue to exercise its wide and sweeping powers u/s 127 of transferring a case in public interest i.e. for effective and expeditious completion of search, seizure and other operations. of premises. - HC
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Income Tax:
Revision u/s 263 by CIT - entitlement u/s 10(23C)(iiiab) - the appellant neither during the assessment proceeding nor during revisionary proceeding submitted any details in relation to the donations showcasing its genuineness and further no evidential material found placed in substantiating the genuineness of cash expenditure incurred - Revision order and additions confirmed - AT
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Income Tax:
Addition u/s 2(22)(e) - deemed dividend - transfer of funds was between the companies on the direction of the Director - Substantial Share Holding - Before the Ld. CIT(A) it was inter alia submitted that the assessee had not paid but on the contrary it had received the sum from shareholder/director during the relevant year and, therefore, the provisions of section 2(22)(e) were not triggered. - CIT(A) rightly deleted the additions - AT
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Income Tax:
Unexplained cash credits in the bank account of the assessee - except stating that the Assessing Officer has already made additions towards investments made in property, the assessee could not file any documentary evidence to explain cash deposits found in bank account. - since the assessee could not file any satisfactory explanation, additions confirmed - AT
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Income Tax:
Scope of “limited scrutiny”? - The purpose of selection of a case for scrutiny be it complete scrutiny or limited scrutiny, is only determination of total income of the assessee. In our considered opinion, this would certainly include determination of total income both under normal provisions of the Act as well as in the computation of book profits u/s.115JB of the Act. The ld. AO is bound to compute the total income under both the mechanisms provided under the Act and ultimately determine the higher of the two tax liabilities in the manner provided therein and raise a demand on the assessee. - AO had not travelled beyond the jurisdiction provided under the limited scrutiny by disturbing the computation of book profit u/s.115JB of the Act - AT
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Income Tax:
Exemption u/s 11 & 12 - Application for registration was made way back in the year 1989 and after ten years the Competent Authority sought explanation regarding the application. Thereafter, claim of exemption was allowed for many years. All of sudden, the Officer wakes up out of slumber, issues notices for reopening of assessment purely on the ground that the assessee could not furnish the requisite certificate of registration u/s 12AA of the Act and proceeded to make assessment. - Benefit of exemption allowed - AT
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Income Tax:
Revision u/s 263 - The fact remains that the specific issue raised, in the revision order was specifically looked into, detailed submissions were made and these submissions were duly accepted by the AO. Merely because the Assessing Officer did not write specific reasons for accepting the explanation of the assessee cannot be reason enough to invoke powers under section 263, and non-mentioning of these reasons do not render the assessment order “erroneous and prejudicial to the interest of the revenue. - AT
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Income Tax:
Addition u/s. 69A - cash deposit during the year - there were big lines and the banks were over crowded. Therefore, it was open to the assessee for the safety of the money to deposit in piece meals till the period as allowed by the Competent Authority - Additions deleted - AT
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Income Tax:
Unexplained cash payments - There is also no evidence to suggest that cash withdrawn from ETLL was unused and kept with the assessee idle though repeatedly withdrawals were made one after the other. As per the provisions of section 292C, presumption is that cash found during the course of search belongs to assessee and burden is on the assessee to prove otherwise. Being so, we do not find any infirmity in the lower authorities bringing the cash found during the search to tax in the hands of assessee as unexplained cash. - AT
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Income Tax:
Difference between income shown in 26AS and as shown in profit & loss account - Income recognition - If the assessee has offered the income pertaining to the month of March 2009, in the subsequent month i.e. April 2009, thus if any addition is made in the current year, the same would lead to double addition which is unwanted. Thus, we are of the view that the justice would be served to the Revenue as well as assessee if the assessee is able to prove that the difference of income pointed out by the AO has been offered to tax in the subsequent year. If that be so, no addition is warranted. - AT
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Customs:
Principles of natural justice - request for cross examination of panch-witnesses and of departmental officers has been rejected - the allegations of Show Cause Notice are based upon the physical examination of the goods that too in the presence of the appellant and the appellant’s proprietor - Nothing cogent has been brought in reply to the Show Cause Notice to prima facie falsify the allegation of show cause notice or even to make the case of any prejudice or to establish that some prejudice has been caused to the appellant by procedure followed. - The Adjudicating Authority has committed no error while denying the opportunity of cross examination of investigating officers and the panch witnesses - AT
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Corporate Law:
Contribution for allotment of equity shares - This Bench is of the view that whether a company is in genuine need of more capital or not, and the route to be adopted for meeting the financial requirements of the company, will be decided by the Board of Directors and it is incumbent on them to exercise their powers for the benefit of the company. It is noted that the Board of Directors has inherent powers, unless otherwise provided in the Articles, to increase the prescribed share capital as per the provisions of the Companies Act 2013 - Tri
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Service Tax:
Refund of service tax - export of service or not - Applying Rule 6A of Service Tax Rules, in the fact of the present case, the provider of service i.e. the appellant is located in India which is the taxable territory, recipient of service i.e. client of the appellant is located outside India. The service is not specified in Section 66 of the Finance Act. As per the discussion made hereinabove, the place of provision of service is clearly outside India. There is no dispute that the payment of such services has been received by the appellant as a service provider in convertible foreign exchange - the appellant have clearly satisfied the conditions required for treating the service as export of service. - AT
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Service Tax:
Extended period of limitation - The appellants have registered themselves and they have not paid any service tax and moreover have been showing nil returns. Therefore, the Department had no occasion to consider the taxability of the service rendered by the appellants. Having suppressed / not disclosed material facts to the Department the appellants cannot take a plea that extended period cannot be invoked - extended period has been rightly invoked - AT
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Central Excise:
Maintainability of appeal - seeking waiver from making mandatory pre-deposit of 7.5% required to institute an appeal before the CESTAT - When the Statute does not provide for waiver of a pre-deposit, it is impermissible for this Court to act contrary to the legislative intention merely on the plea of financial hardships. If such pleas are entertained, and directions are issued for waiving the pre-deposit, there will be no end to such demands. Further if orders are issued, contrary to the Statute the same will destroy the very scheme of the Statute including the consequent amendment. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (4) TMI 193
Provisional attachment of Bank Accounts - ex-parte order - opportunity of personal hearing not provided - HELD THAT:- It appears from the materials on record that a show-cause notice came to be issued to the writ applicant in Form GST DRC-01 dated 24th August, 2020 calling upon the writ applicant to show-cause as to why an amount of ₹ 16,21,853/- shall not be levied with interest and penalty for the alleged contraventions as mentioned in the show-cause notice - Upon receipt of such show-cause notice, a formal reply was filed wherein the writ applicant requested the authority concerned to furnish him few documents which were referred to and relied upon in the show-cause notice. It is not in dispute that such documents as demanded by the writ applicant never came to be issued at any point of time. It appears that, thereafter, the authority concerned proceeded to pass the final order in MOV-07. In the facts and circumstances of the case, the impugned order passed by the authority concerned in MOV-07 is hereby quashed and set aside. The matter is remitted to the concerned authority. The concerned authority shall furnish all the documents as demanded by the writ applicant at the earliest - Application allowed.
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2022 (4) TMI 192
Seeking to allow amendment in GSTR-1 return - deemed export - seeking permission to amend those five bills which the writ applicant No.1 could have amended at the relevant point of time - HELD THAT:- Section 37 of the GST Act is with respect to the furnishing of details of the outward supplies. In accordance with Section 37 of the Act every registered person other than an input service distributor, a non resident taxable person and a person paying tax under the provisions of Section 10, Section 51 or Section 52 respectively, is obliged to furnish electronically in such form and manner the details of the outward supplies of goods or services or both effected during a tax period on or before the tenth day of the month succeeding the said tax period. Such details are to be communicated to the recipient of the said supplies within such time and in such manner that may be prescribed. We are not getting into the controversy whether there was any mistake on the part of the writ applicant No.1 so far as the GSTR-1 is concerned. The department permitted the writ applicant No.1 to amend the GSTR-1 with respect to all the nine invoices however, for some reason or the other, the writ applicant No.1 was in a position to amend only four such invoices. He is here before this Court as he is not able to amend the remaining five. There is a controversy whether those five invoices could have also been amended in the first instance or not - One last opportunity is granted to the writ applicant to get his GSTR-1 with respect to all the five invoices amended for one last time. The Respondents are directed to process the request of the writ applicant No. 1 for carrying out amendment in its GSTR -1 returns pertaining to the respective months in 2019 in all the aforesaid writ petitions with respect to ticking of the Deemed Export column in regard to the balance 5 invoices, which the writ applicant did not amend in the first request, however, the respondents are granted liberty to undertake necessary exercise to verify the same with the recipient as well - Application disposed off.
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2022 (4) TMI 191
Maintainability of petition - availability of alternative remedy of appeal - non-constitution of appellate authority - mandatory deposit for maintaining an appeal before Tribunal - case of petitioner is that petitioner is having good case on merits but appeal has been decided without hearing petitioner - HELD THAT:- Considering the fact that the petitioner is having remedy of filing statutory appeal before Appellate Tribunal under CGST/SGST Act, which is presently not functioning in State of Chhattisgarh, and further considering that if petitioner deposits 20% of disputed tax component alongwith memo of appeal before Appellate Tribunal, then there shall be deemed stay of recovery of balance amount under sub-section 9 of Section 112 of the CGST/SGST Act, it is directed that effect and operation of notice under Section 79 in the Form DRC-13, issued by respondent-department shall remain stayed till the next date of hearing. List this case in week commencing 25.04.2022.
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2022 (4) TMI 190
Levy of interest u/s 50 (1) of the CGST Act - no notice for the demand of interest served - violation of principles of natural justice - HELD THAT:- It is directed that respondents shall not take any coercive steps against petitioner pursuant to the impugned letter dated 25.03.2022 (Annexure P-7) till the next date of hearing. List the matter immediately after three weeks.
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2022 (4) TMI 189
Seeking either to re-open the online portal so as to enable the Petitioners to file TRAN-I form electronically for claiming tax credit or to accept the same manually on or before 30.06.2021 - HELD THAT:- Learned counsel for the Petitioner seeks permission to file amended Memo of Parties by giving the name of the Officer who, according to the Petitioner, has violated the order of this Court. Let the amended Memo of Parties be filed before the next date of hearing - List on 22.07.2022.
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2022 (4) TMI 188
Revocation of cancellation of petitioner's registration - failure to file returns continuously for a period of six months - application for revocation of the cancellation of a registration rejected as time barred - HELD THAT:- The case of the petitioner is quite similar to the cases of the petitioners in TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT] . There some of the petitioner had filed an appeal beyond the period of limitation either for filing application for revocation of cancellation, while some of them had directly filed a writ petition against the order cancelling the registration. While some of them filed appeal beyond the statutory period of limitation, there was further delay in filing the writ petition. However, considering the over all facts and circumstances of the case, it was held that no useful purpose will be served by keeping those petitioners out of the Goods and Services Tax regime, as such assessee would still continue to do business and supply goods/services. By not bringing them back to the Goods and Services Tax fold/regime, would not further the interest of the revenue. This writ petition is allowed.
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2022 (4) TMI 187
Seeking release of block on electronic credit ledger imposed under Rule 86A of the GST Rules - HELD THAT:- This writ application directing the respondent No.3 to remove the negative balance of ₹ 25,58,831/- in the electronic credit ledger so as to enable the writ applicant to file his returns. The negative balance shall be removed within a period of one week from the date of receipt of the writ of this order. It is not in dispute that till this date, no reasons have been assigned by the respondent No.3 for blocking the electronic credit ledger. As noted above, the balance available in the electronic credit ledger is of ₹ 10,68,613/- - The respondent No.3 shall furnish reasons for invoking Rule 86A of the Rules, 2017 for the purpose of blocking of the electronic credit ledger so that the writ applicant can meet with the same. This writ application stands disposed of.
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2022 (4) TMI 186
Principles of Natural Justice - whether the petitioner has been given an effective opportunity of hearing by non supplying the documents, data, demanded by the petitioner during the hearing before the adjudicating authority? - HELD THAT:- The petitioner is having the fundamental right of having the effective opportunity of hearing before imposing tax liability with interest and penalty. Although the relied documents were supplied with the show cause notice but the documents on which the petitioner wanted to rely in order to submit an effective reply to the show cause notice and strong defense in the pending proceedings was not been provided. Since there is a violation of principles of natural justice, therefore, the petitioner cannot be relegated to the appellant authority by way of appeal in light of the law laid down by the Apex Court in the case of M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH ORS. [ 2021 (4) TMI 837 - SUPREME COURT ] - the apex court has held that there are certain exceptions in the rule of alternate remedy including where the statutory authority has not acted in accordance with the provisions of law or acted in defiance of fundamental principles of judicial procedure or violation of principles of natural justice. The only ground on which the petitioner has filed this writ petition is that despite repeated demands the data collected from the laptop of Manish Verma were provided to him. However, it is not in dispute that the data and documents relied on in the show cause notice were provided to the petitioner. When any the noticee prays for fair trial then there should be effective participation in the entire trial by him also. The petitioner instead of appearing through a legal representative before the adjudicating authority was kept on corresponding for supply for entire data collected by the respondents during the search. No such demand was made by the person from whose possession the data was seized - Even otherwise appellate authority is competent to examine the effect non-supply of non relied upon documents/ data while deciding the appeal. Even otherwise there are details of the data demanded by the writ petitioner only for the sake of delaying the proceedings simply letters were sent. The grounds raised in this petition are available before the appellate authority to be raised in the appeal especially when other notice might have preferred an appeal against the impugned order. Petition dismissed.
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2022 (4) TMI 185
Classification of services - rate of GST - provision of project management consultancy (PMC) services - PMC services are provided to various natural oil and gas companies as well as oil and gas mining and exploration companies - to be classified under SI No. 24 (ii) of heading 9986 of the Rate Notification as 'Support services to exploration, mining or drilling of petroleum crude or natural gas or both' under SAC 998621 or under SI No. 21 (ia) of heading 9983 of the Rate Notification as 'Other professional, technical and business services relating to exploration, mining or drilling of petroleum crude or natural gas or both'? Whether the services provided by the Applicant are classified under SI No. 24 (ii) of heading 9986 of the Rate Notification as 'Support services to exploration, mining or drilling of petroleum crude or natural gas or both' under SAC 998621 and attracts GST @ 12% in terms of SI. No. 24(11) of Rate Notification? - HELD THAT:- The work of exploration, mining or drilling of petroleum crude or natural gas or both Vedanta Limited and support services in such respect are performed by the EPC contract or who have been contracted to and are responsible for all the engineering, procurement, and construction activities to deliver the subject Projects. It is seen that the service code 998621 includes services provided to the oil and gas mining sector by way of actual participation in the mining activity, and in the subject case, it would appear that it is actually the EPC contractor who is giving support services to VL by being responsible for all the engineering, procurement, and construction activities to deliver the completed Projects - the impugned activity is not covered under Heading 998621. Whether the services provided by the Applicant are classified under SI No. 21(ia) of heading 9983 of the Rate Notification as 'Other professional, technical and business services relating to exploration, mining or drilling of petroleum crude or natural gas or both' and attracts GST @ 12% in terms of SI. No. 21(ia) of Rate Notification? - HELD THAT:- Circular No. 114/33/2019-GST states that the scope of the entry at Sr. No. 21 (ia) under heading 9983 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 inserted with effect from 1st October 2019 vide Notification No. 20/2019- CT(R) dated 30.09.2019 shall be governed by the explanatory notes to service codes 998341 and 998343 of the Scheme of Classification of Services. The relevant Explanatory Notes are already mentioned in the Circular above and are not reproduced for the sake of brevity - From a reading of the Circular and the relevant Explanatory Notes to service codes 998341 and 998343 of the Scheme of Classification of Services, it is clear that the impugned services are not covered by the said Explanatory Notes since, the Notes to service code 998341 is restricted to Geological and geophysical consulting services and the Notes to service code 998343 is restricted to Mineral exploration and evaluation and the impugned services cannot be considered as being connected to either Geological and geophysical consulting services or Mineral exploration and evaluation services - thus, the impugned services are not covered under Sr. No. 21 (ia) also of Notification 11/2017-CTR dated 28.06.2017 as amended by Notification No. 20/2019-CTR dated 30.09.2019 (SAC 9983). In the subject case, even though the impugned services consist of professional, technical and business services, the same are not covered under Sr. No. 21 (ia) (SAC 9983) and Sr. No. 24 (SAC 9986) of Notification 11/2017-CT(R ) dated 28.06.2017 as amended. Therefore, the said professional, technical and business services supplied by the applicant to VL are clearly covered under the residual Entry No. 21 (ii) of Notification 11/2017-CT(R) dated 28.06.2017 as amended, attracting tax rate of 18%.
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2022 (4) TMI 184
Classification of services - project management consultancy services - taxable under Service Accounting Code 9983 stating Other professional, technical and business services or otherwise - insertion vide N/N. 20/2019-C.T.(Rate), dated 30.09.2019 since the said amendment is clarification to the amendment made vide Notification No. 1/2018-CT.(Rate) dated 25 January 2018 reducing G5T rate for service of exploration, mining or drilling of petroleum crude or natural gas or both to 12% - HELD THAT:- As a part of such project management consultancy services, the Applicant is required to manage the Projects right from the detail design to commissioning and is also required to review, monitor, manage and control all aspects of the execution of the Projects. Applicant will perform its activity using its independent and self-sufficient team, on behalf of VL, to complete the projects with quality, on time and within the approved cost. Thus, applicant has been appointed as a Project Management Consultant to manage and control all aspects of the execution of the Project by the Execution Partners. The applicant has been contracted to supply PMC services to suit the requirements of VL and from the oral and written submissions made by the applicant, it is found that there is no supply of goods involved in the subject case and therefore the impugned supply is a supply of services under the GST Laws. From a reading of the Circular No. 114/33/2019-GST and the relevant Explanatory Notes to service codes 998341 and 998343 of the Scheme of Classification of Services, it is clear that the impugned services are not covered by the said Explanatory Notes since the service code 998341 is restricted to Geological and geophysical consulting Services and the service code 998343 is restricted to Mineral exploration and evaluation Services and the impugned services being provided by the Applicant cannot be considered as being connected to either Geological and geophysical consulting services or Mineral exploration and evaluation services. In the subject case even though the impugned services consist of professional, technical and business services, the same are not covered under SAC 9983 (Sr. No. 21 (ia)). Therefore, the said professional, technical and business services supplied by the applicant are clearly covered under the residual Entry No. 21 (ii) of Notification 11/2017 - CTR dated 28.06.2017 as amended, attracting tax rate of 18% - the impugned services supplied by the applicant to VL are covered under Sr. No 21 (ii) of Notification No. 11/2017-CT(R) dated 28.06.2017 as amended and would be liable to tax at 18% GST.
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2022 (4) TMI 124
Seeking grant of Bail - evasion of GST around of ₹ 21 crores - incriminating evidence against the petitioner is present or not - retraction of statements - HELD THAT:- Taking into account the facts and circumstances of the case and without expressing any opinion on the merits of the case, this court deems it just and proper to enlarge the petitioner on bail. The bail application under Section 439 Cr.P.C. is allowed, subject to conditions imposed.
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2022 (4) TMI 123
Validity of subsequent complaint - legal fetter to submit a supplementary report after filing of the first report or not - HELD THAT:- During existence of the first complaint, filing the second complaint under the nomenclature of supplementary report is not permissible under law. The apprehension of the accused-petitioner that in the garb of the subsequent complaint, again efforts would be made to make search, seizure and to affect the arrest of the accused; is appears to be well founded in view of filing the complaint by declaring the accused as an absconder. When the facts manifestly reflecting that the petitioners have not made abscondance, they challenged the proceedings by way of filing the writ petition before the Division Bench and thereafter appeared before the agency, thoroughly interrogated and their statements have been recorded, still thereafter, filing the complaint by taking resort of Section 299 of Cr.P.C. prima facie appears to be perfunctory. The matter requires serious consideration - Put up on 28.03.2022.
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Income Tax
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2022 (4) TMI 183
Reopening of assessment u/s 147 - Shorter time to reply to notice - HELD THAT:- As show cause notice dated 25.03.2022, the petitioner was to submit his response by 23:59 hours of 27.03.2022. However, the petitioner has apparently not filed his reply to the show cause notice and has instead filed the present writ petition on 28.03.2022, which can be said to partake the character of an appeal, as the assessment is to be finalized as per the draft assessment order. As an order passed under Section 147 of the Income Tax Act, 1961 is an appealable order, in terms of Section 246 (i)(b) of the Income Tax Act, 1961, it is the opinion of the Court that the petitioner can avail the alternative remedy available by approaching the appellate authority. However, keeping in view the fact that the petitioner has been given only 2 (two) days time to file a reply to the show cause notice dated 25.03.2022, this Court is of the view that the respondents should give the petitioner a further 10 (ten) days time from today, for filing his reply to the show cause notice dated 25.03.2022
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2022 (4) TMI 182
Order of transfer u/s 127 - transferring the case of the petitioner from Raipur to Delhi - HELD THAT:- The decisions pertaining to existence of financial nexus between the assessee-petitioner and the search party as a pre-requisite for exercise of power u/s 127 do not assist the petitioner as the impugned order herein clearly reveals that incriminating documents were found in the search and seizure of the premises of Bhatia Group, Tuteja Group and Dhand Group suggesting that the petitioner-company was involved in payment of unexplained money running into multiple crores to certain persons in the State of Chhattisgarh. Even if financial nexus is not palpable between the petitioner and the searched party, that by itself cannot take away the right of the Revenue to exercise its wide and sweeping powers u/s 127 of transferring a case in public interest i.e. for effective and expeditious completion of search, seizure and other operations. of premises. The citations relied upon by the petitioner relating to reasons not being cogent also are not relevant as they turn on their own facts. The impugned order herein clearly elicits cogent reasons which no man of ordinary prudence can categorize as irrelevant or extraneous. Moreso, the sufficiency and adequacy of the reasons assigned for transferring a case, cannot be gone into provided such reasons are cogent, based on relevant consideration and not motivated by malice. A bare perusal of reasons assigned in impugned order indicates that they are based on reasonable consideration which has nexus with the ultimate object of public interest sought to be achieved. This Court has no manner of doubt that the order impugned herein of transferring the case of the petitioner from Raipur to Delhi cannot be found fault with in limited writ jurisdiction.
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2022 (4) TMI 181
Validity of search u/s 132 - Complete absence of any reason to believe for the respondents to conduct any search on the petitioner(s) under Section 132 - HELD THAT:- While exercising jurisdiction under Article 226 of the Constitution, the High Court does not act as an Appellate Authority nor can mere suspicion be the basis conferring jurisdiction to interfere in judicial proceedings. Care and caution needs to be taken while addressing the possibility and potential of conferring an undue advantage to the assessee which may have the effect of frustrating the endeavour of the revenue depending upon the stage the Court is approached with the challenge. It would, therefore, in itself, be not sufficient to vitiate the action taken with a rider that the officer exercising the authorization had acted bona fide. With these parameters in mind, we had gone through the records and the satisfaction notes of the revenue authorities and are of the view that the mandate of the statute stands fulfilled. The competent authority while taking the decision has taken into consideration the relevant facts and the other material based upon the information in its possession on the basis of which reasonable belief has been reached fulfilling the requirement of the mandate of Section 132 of the 1961 Act. In view of the above referred to legal position, we refrain from stating any further keeping in view the stage of the proceedings.
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2022 (4) TMI 180
Accrual of income - TDS on Advance received for contract work - whether or not an amount of TDS on advance revenue receipts exigible to tax as Income , of the year of deduction, where the assessee follows mercantile system of accounting? - HELD THAT:- Section 198 r.w.s. 190, is an anti-tax evasion mechanism provided by the legislature to safeguard against the probable claim of non-receipt or non-materialisation of income when accounted in accordance with the method of accounting regularly employed as per section 145(1) of the Act and by no means the provisions of chapter XVII were intend to create any deeming fiction for the chargeability of income overriding the provisions of section 4 r.w.s. 28 of the Act. We do not hesitate to hold that, by no stretch of imagination, an amount of TDS as appearing in the Form No 26AS shall be brought to tax as Income under the head Profits and Gains of business or profession applying the provisions of section 198, without reference to the method of accounting regularly employed by the assessee in relation to such business in question. As decided in Lloyd Insulation (India) Ltd [ 2013 (1) TMI 35 - ITAT NEW DELHI ] action of taxing the amount of TDS as income without reference to the method of accounting regularly employed by the assessee were held as contra legem. We do not subscribe the views of lower tax authorities in holding that, the amount of TDS credit as appearing in Form No 26AS can be brought to tax on the sole basis of its utilization against the present tax liability, without first disputing the method of accounting regularly employed by the assessee firm or correctness completeness of accounts in terms of section 145 of the Act. Since the income u/s 28 is to be computed with reference to section 145 of the Act, we find no merits in the impugned assessment order, ergo we set aside the orders of the authorities below and decide the issue in favour of the assessee.
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2022 (4) TMI 179
Revision u/s 263 by CIT - entitlement u/s 10(23C)(iiiab) - assessment were culminated without inquiry and verification of donation, building fund and expenditure incurred by the appellant trust and set aside for framing fresh assessment de-nova after conducting necessary inquiries and providing due opportunity of being hard to the appellant trust - HELD THAT:- Where an order passed under the provision of the Act, is unsustainable in the eyes of law, then the said invalid or illegal order cannot be subject matter of revision u/s 263 of the Act in terms of ration laid down in CIT Vs Jet Airways India Ltd [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] - Thus the contention of the Ld AR that, since the assessee trust is enjoying blanket exemption u/s 10(23C)(iiiab) whereby all income received are exempt and hence cannot be subjected to revision u/s 263, is blatantly perverse under the settled law. Per se, the nature, amount and type of claim in the return vis- -vis order passed does not decide the revisionary jurisdiction, but the validity of order does, consequently in the present case, the orders of assessment were passed u/s 143(3) irrespective of claims allowed thereby are undisputedly valid and legal orders and thus are subject matter of revision u/s 263. PCIT vouching the assessment records observed that, post culmination of assessments, a survey action u/s 133A was carried out on the assessee establishing on records that, the appellant trust for the assessment years under consideration was in receipt of voluntary donations and donation towards building funds etc., however no proper records were found maintained in showcasing the genuineness thereof, further the survey team also observed that, there were cash expenditure incurred without due supporting in the form of tax invoices / bills etc., substantiating the correctness and genuineness thereof and in the opinion of PCIT these were neither inquired into nor verified by the Ld AO during the course of regular assessment proceedings, which eventually triggered the invocation of revisionary jurisdiction On our careful perusal of paper books it revealed that, the paper book submitted by the appellant during the course of this hearing is not in consonance with rule 18 of the Income Tax Appellate Tribunal Rules. On a perusal of the written submission made in response to SCN issued u/s 263, from point number 7 titled Factual matrix it transpired that, the appellant claimed to have submitted the details of donation and building funds received by it along-with full list of doners with their full address and PAN before the AO during the course of assessment proceedings, per contra the appellant in its submission before the regular assessment proceedings We see that, the appellant neither during the assessment proceeding nor during revisionary proceeding submitted any details in relation to the donations showcasing its genuineness and further no evidential material found placed in substantiating the genuineness of cash expenditure incurred, for the reason we hold the conclusion drawn by the Ld PCIT is irresistible and find force in the action of PCIT within the ration laid by the Hon ble lordship in a celebrated case of Malabar Industrial Co Ltd [ 2000 (2) TMI 10 - SUPREME COURT] Thus the action of Ld PCIT is perfectly sustainable in law, to the effect holding the order of assessment as erroneous prejudicial to the interest of revenue, ergo we find no infirmity with the direction of 263 revisionary order, thus the legal grounds of the appellant are dismissed.
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2022 (4) TMI 178
Penalty u/s 271(1)(c) - Non specification of clear charge - defective notice u/s 274 - HELD THAT:- Hon'ble Karnataka High Court in the case of S Chandrashekar Vs ACIT , [ 2017 (2) TMI 1127 - KARNATAKA HIGH COURT] wherein a notice u/s 274 r.w.s. 271(1)(c) of the Act was issued in printed form without specifying the grounds of initiation of penalty proceedings, was held to be invalid and untenable in law. In omnibus, as noted by the Hon'ble Supreme Court in the case of Dilip N. Shroff [ 2007 (5) TMI 198 - SUPREME COURT] the quasi-criminal proceedings u/s 271(1)(c) of the Act ought to comply with the principles of natural justice, and in the present case, considering the observations of the Assessing Officer in the assessment order alongside his action of issuing the notice without any limb or charge being made against the assessee qua section 271(1)(c) of the Act establishes uniform stance and therefore the proceedings suffered from non- compliance with principles of audi alteram partem . Therefore, in view of the aforesaid discussion, the issue herein stands concluded in favour of the assessee and nothing contrary has been shown to us in the present facts which would warrant our taking a view different from Hon'ble Karnataka High Court in the case of S Chandrashekar Vs ACIT [ 2017 (2) TMI 1127 - KARNATAKA HIGH COURT] Since the provision of section 271(1)(c) is calamitous, albeit commercial, consequences, the provision is mandatory and brooks no trifling or dilution therewith, as a result we are of the considered view that, having regard to the fact that in the instant case the SCN dt 14/01/2015 issued u/s 274 r.w.s. 271(1)(c) of the Act without specifying any limb or charge, is invalid and untenable in the eyes of law, consequently the penalty imposed u/s 271(1)(c) of the Act is bad in law and hence quashed accordingly. - Decided in favour of assessee.
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2022 (4) TMI 177
Revision u/s 263 by CIT - Unexplained cash advance payment to tax as unexplained expenditure u/s 69C - whether the order passed by the assessing officer u/s 153A r.w.s. 143(3) can be said to be erroneous and prejudicial to the interest of the revenue? - HELD THAT:- We find that, pursuant to incriminating material, certain specific queries were raised by the Ld AO with respect to cash payment to Mr Subbha Rao which were claimed to have been made as advance against labour wages and claimed to have appropriated as expenditure in the immediately succeeding year, however no tangible deprecative evidential material were placed in dislodging the findings of the Ld AO. In-spite of conclusive findings emanated from the incriminating material placed on records, Ld AO merely left the elephant in the room unattended and framed the assessment losing the sight to bring such cash advance payment to tax as an unexplained expenditure u/s 69C of the Act, this is nothing but a clear, apparent grievous error vis- -vis incorrect computation on the part of Ld AO, which undoubtedly falls within the sweep of section 263(1) of the Act, and such a case does finds a place within the ration laid by the Hon ble lordship in a celebrated case of Malabar Industrial Co Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] PCIT during the revisionary proceedings made a categorical findings that, the Ld AO after conducting the necessary inquiry in the light of evidential material constituting incriminating seized material, reached the conclusion however has lost the sight while passing the impugned order of assessment without figuring the impugned advance cash payment as unexplained expenditure u/s 69C hence in our considered opinion the conclusion drawn by the Ld PCIT is irresistible. The action of Ld PCIT is perfectly sustainable in law, to the effect holding the order of assessment as erroneous prejudicial to the interest of revenue - Assessee appeal dismissed.
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2022 (4) TMI 176
Addition u/s 2(22)(e) - deemed dividend - transfer of funds was between the companies on the direction of the Director - Substantial Share Holding - Before the Ld. CIT(A) it was inter alia submitted that the assessee had not paid but on the contrary it had received the sum from shareholder/director during the relevant year and, therefore, the provisions of section 2(22)(e) were not triggered. - HELD THAT:- CIT(A) after considering the submissions of the assessee, the bank account, the ledger account of the loan balances in the books of the assessee as well as the related company, has given a finding that the transaction involved was not in the nature of loan from M/s. Samara India Private Limited to assessee, but, rather it was a loan transaction between Shri Rajnish Wadhwan and the assessee wherein the funds were transferred on his direction from his loan account with M/s. Samara India Private Limited to the assessee company and, therefore, the provisions of section 2(22)(e) of the Income Tax Act, 1961 are not applicable. Before us no fallacy in the findings of the Ld. CIT(A) has been pointed out by the Revenue. In such circumstances, we find no reason to interfere with the order of the Ld. CIT(A) and thus, Ground No.1 of Revenue is dismissed. Disallowances u/s 40A(2) - assessee had availed loans from Punjab and Sind Bank at an interest rate of 9.56%, whereas it was paying interest at the rate of 16.34% on the loans availed from M/s. Samara Automax Private Limited, a related party - HELD THAT:- It is a well-known fact that the interest charged on unsecured loans are higher than the interest charged on secured loans in view of the fact that secured loans as the name suggests, are secured and are generally secured either by a mortgage or hypothecation of certain properties, whereas on the other hand, unsecured loans are not secured and therefore the lender carries much more risk and therefore the rates at which the amount lent on secured loans are lower than the rates at which the unsecured loans are lent. Before us, the Learned AR has pointed to the State Bank of India Benchmark Prime lending rate to be in the range of 14.5% to 15% for secured loans. We further find that before CIT(A), assessee with the support of data available on SBI website and stated that the benchmarking rate for secured loans was in the range of 14.45% to 14.75%. The aforesaid fact has not been converted by the Revenue. Revenue has not placed any material on record to demonstrate that the benchmarking rate of unsecured loan by the bank was lower than the rate at which the assessee has been lent money. In view of the totality of the aforesaid facts, we are the view that the interest rate which has been charged to assessee by M/s. Samara Automax Private Limited at 16.34% cannot be considered to be excessive. Further Revenue has not placed any material on record to demonstrate the comparative rate charged in the open market on similar unsecured loans. We are thus of the view that no addition under section 40A(2) is called for in the present case. We thus direct the A.O. to delete the addition. Ground No.2 of the appeal of the Revenue is dismissed. Addition u/s 68 - unexplained cash credit - creditworthiness of the parties by explaining their source for giving the loans proved or not? - CIT-A deleted the addition - HELD THAT:- Assessee has discharged his onus of proving the identity, creditworthiness and the genuineness of the transaction and thus, no addition could be made under section 68 of the Income Tax Act 1961. Before us no fallacy in the findings of the Ld. CIT(A) is pointed-out by the Revenue. In such circumstances, we find no reason to interfere with the order of the Ld. CIT(A) on this issue and thus, Grounds No.3 of the Revenue is dismissed. Addition being interest expenses holding it to be capital in nature - since assessee was in the business of renting out of property and no rent has been generated out of these properties for which capital advance has been given, therefore, the interest payment as revenue expenditure cannot be allowed as it was capital in nature - CIT-A deleted the addition - HELD THAT:- CIT(A) while deleting the addition has given a finding that the business of the assessee is in trading in real estate and renting the properties since 1996 and the funds obtained through overdraft as working capital or through unsecured loan was deployed for the purpose of business and extending the advances for booking of property's was in the line of its business activity and that mere non-recognition of rental income cannot be the basis for allowing expenditure when the utilisation of fund is established for business purposes. He further noted that on identical facts in assessee s own case for the A.Y. 2012-13, the Ld. CIT(A) had deleted the addition. He noted that since there are no change no change in the facts and circumstances of the case as compared to A.Y. 2012-13, he, following the order of his predecessor for the A.Y. 2012-13 deleted the addition made by the A.O. Before us no fallacy in the findings of CIT(A) has been pointed out by the Revenue.
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2022 (4) TMI 175
TDS u/s 195 - non-deduction of TPS on payments to non-residents to different service providers - payments were in the case of Apple iOS, Google and LinkedIn.com - HELD THAT:- Contention of the assessee is that it was not liable to deduct tax as the payments were in the case of Apple iOS, the App was used by customers through Apple iOS interface and the fee was first collected by Apple Ireland Ltd. and paid to the appellant after deduction of commission/fee by Apple Ireland ltd. Similarly, in the case of Google also, the mobile app of the appellant was also available to Android users through Google. In this case also Google collected the payments from the Android users. It also charged collection charges/ fee for collection of payment and remitting the same to the appellant - in the case of LinkedIn, the payment was made to LinkedIn for job posting only, which is in the nature of advertisement. It is further contended that there was no technical consultancy or managerial service being provided by Google or Apple to the appellant, and such payments were not chargeable to tax in India under any provision of the Act. And in the case of LinkedIn the payment was purely advertisement income in the hands of non-resident. The issue whether any tax would be deductible u/s 195 of the Act, depends upon the nature of payment a person makes. In the case in hand it is the case of the assessee that in respect of the transactions in question, provisions of Section 195 of the Act do not apply. Authorities below have not adverted to this core objection of the assessee. Therefore, the impugned order is set aside on the issue of deductibility of tax qua the payments made to non-residents in relation to the aforementioned transactions in question. Ground allowed for statistical purposes. Disallowance of PF ESI contribution, deposited by the assessee late as stipulated under the respective Acts - HELD THAT:- This issue is covered in favour of the assessee by the judgment CIT Vs. AIMIL Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT] as also the judgment in the case M/s Pro Interactive Services (India) Pvt. Ltd. [ 2018 (9) TMI 2009 - DELHI HIGH COURT] wherei held hat the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of employee's provident fund (EPD) and employee s State Insurance Scheme (ESI) as deemed income of employer under section 2(24)(x) - Decided in favour of assessee.
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2022 (4) TMI 174
Deduction u/s 80P - as per AO interest from Co-op bank is taxable u/s.56 - assessee was in the business of providing credit facilities to its member and earned entitled to deduction u/s.80P(2)(a)(i) itself of the Act - said interest was attributable to business carried on by the assessee and there was no investment out of surplus funds generated - HELD THAT:- Interest income received by the assessee society from its short term deposits with cooperative banks is not to be construed as income from its investments with any other co-operative society, conclude, that the interest income received by the assessee society on its investments/deposits with the Co-operative Banks would be eligible for deduction u/s 80P(2)(d) - Grounds of appeal No.(s) 1 and 2 are allowed in terms of our aforesaid observations. Interest income earned by the assessee society on its deposits with the banks is eligible for deduction u/s 80P(2)(a)(i) - Whether or not the interest income earned by the assessee society on its surplus funds, which, in the normal course of its business of providing credit facilities to its members was parked as short term deposits with the banks, i.e, at a point of time when there were no takers for the said funds, would be eligible for deduction u/s. 80P(2)(a)(i) of the Act? - We are of the considered view that as the amount deposited by the assessee society for a short term with the banks, i.e, Co-operative banks or nationalized banks in the course of its business of providing credit facilities to its members, was in the nature of a simplicitor parking of its surplus/excess idle funds for which there were no takers at the relevant point of time, therefore, the same, as stated by the ld. A.R, and rightly so, was inextricably inter-linked, or, in fact interwoven with its aforesaid primary activity, i.e, of providing credit facilities to its members. We are of the considered view, that as held in the case of Guttigedarara Credit Co-operative Society Ltd. [ 2015 (7) TMI 874 - KARNATAKA HIGH COURT] and Tumkur Merchants Souharda Cooperative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] the interest income earned by the assessee society on the surplus amount that was parked by it as short term deposits with the banks, i.e, Co-operative banks and nationalized banks would duly be eligible for deduction u/s.80P(2)(a)(i) - We, thus, in terms of our aforesaid observations set-aside the order of the CIT(Appeals), and direct the AO to allow the assessee s claim for deduction u/s 80P(2(a)(i) qua the interest income received by it on deposits with the banks. Grounds of appeal No.(s) 3 and 4 are allowed in terms of our aforesaid observations.
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2022 (4) TMI 173
Disallowance u/s 14A r.w.s. Rule 8D - HELD THAT:- CIT(A) has rightly restricted the disallowance to the extent of exempt income earned by the assessee in view of the decision of Joint Investments P. Ltd.[ 2015 (3) TMI 155 - DELHI HIGH COURT] . We find no infirmity in the order of the ld. CIT(A) and accordingly, the ground raised by the Revenue is dismissed for both the assessment years. Disallowance made under section 57(iii) - HELD THAT:- Assessee is engaged in the business of investment and finance and has obtained loan from Industrial Finance Corporation of India (IFCI) and was utilized fully to fund M/s. Aban Offshore Ltd. by way of loan and the interest income earned was fully offered to tax. Moreover, the AO has not disputed the total interest expenditure incurred by the assessee. However, the Assessing Officer has no justification by reducing the same from earning of except income by reckoning the direct interest expenditure for the purposes of section 14A - CIT(A) has held that the disallowance does not have any merit and accordingly directed the Assessing Officer to delete the addition. Under the above facts and circumstances, we find no reason to interfere with the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed for all the assessment year under appeal. Disallowance of deemed dividend income - HELD THAT:- A similar view by relying on the ratio in the case of ACIT vs. Bhaumik Color P. Ltd [ 2008 (11) TMI 273 - ITAT BOMBAY-E] in which, it was held that the expression 'shareholder' referred to in section 2(22)(e) of the Act refers to both a registered shareholder and the beneficial shareholder. And further that if a person is a registered shareholder but not a beneficial shareholder, then the provisions of section 2(22)(e) of the Act would not apply and likewise if a person is a beneficial shareholder but a registered shareholder then also the provisions of section 2(22)(e) of the Act would not apply. While in the case at hand the ITAT noted that the assessee was not a shareholder at all and hence the provisions of section 2(22)(e) of the Act would not apply. DR could not controvert the above decisions of the Tribunal, which were relied upon by the ld. CIT(A) - we are of the considered opinion that the ld. CIT(A) has rightly rejected the view taken by the AO in bringing the loans and advances received by the assessee as deemed dividend within the meaning of section 2(22)(e) of the Act. Thus, the ground raised by the Revenue is dismissed for the assessment year 2012-13.
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2022 (4) TMI 172
Penalty u/s 271(1)(c) - Non specification of clear charge - as argued assessee is not conveyed in clear terms the specific default for which penalty under the said statutory provision was sought to be imposed - HELD THAT:- Failure on the part of the A.O to clearly put the assessee to notice as regards the default for which penalty under Sec. 271(1)(c) was sought to be imposed on her, i.e, by failing to strike-off the irrelevant default in the SCN , dated 10.07.2014, had left her guessing of the default for which she was being proceeded against for. We, thus held A.O had clearly failed to discharge his statutory obligation of fairly putting the assessee to notice as regards the default for which she was being proceeded against, therefore, the penalty under Sec. 271(1)(c).- Decided in favour of assessee.
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2022 (4) TMI 171
Addition towards amount paid for purchase of property - unexplained money u/s.69A - addition on the basis of loose sheets find in search - basis for additions is search conducted in the case of Shri E.Anandan, husband of the assessee - HELD THAT:- We reject reasons given by the CIT(A) to enhance the assessment on the basis of incriminating materials found during the course of search - explanation of the assessee that advance mentioned in sale agreement between the assessee and Mr. K.Thangavelu was paid by Mr.Ashok Kumar and make over to the assessee is proved beyond doubt with necessary evidences, including confirmation letter from the party - assessee had also proved fact that she had repaid a sum of ₹ 1 crore to Shri Ashok Kumar, out of sale proceeds of property at Chennai by her husband Mr. E.Anandan is also proved beyond doubt which is evidenced from fact that although, the purchaser had paid sale consideration of ₹ 90 lakhs by demand draft / RTGS, but Mr. E.Anandan has withdrawn amount from his bank account which clearly proves that money has been used to make payment to Shri Ashok Kumar. Therefore, we are of the considered view that additions made by the Assessing Officer towards advance payment made to Mr. K.Thangavelu on the basis of sale agreement dated 07.02.2014 is not correct. Addition of ₹ 10 lakhs cash advance claims to have been paid by M/s.Green Home Landscape Pvt Ltd. to Shri Thangavelu on the ground that this amount has gone from undisclosed source of Mrs.Latha. We find that when the agreement clearly shows that payment has been made by M/s.Green Home Landscape Pvt. Ltd., same cannot be attributed to the assessee and thus, we are of the considered view that the learned CIT(A) has erred in making addition in the hands of the assessee. Similarly, CIT(A) has made additions towards entries recorded in some loose sheets on the ground that the assessee has paid cash to Mr. K.Thangavelu for purchase of property. As no additions can be made only on the basis of loose sheets, when the assessee demonstrated with evidence that the property has been purchased for the stated consideration in the agreement of sale and further registered deed executed for transferring title also confirms consideration paid for purchase of property. Therefore, we are of the considered view that enhancement made by the learned CIT(A) on the basis of entries in loose papers cannot be sustained. Hence, we reverse findings of the learned CIT(A) and delete enhancement made by the learned CIT(A). Unexplained cash credits in the bank account of the assessee - explanation of the assessee that these cash deposits were payment made for purchase of property at Vadavalli and thus, when the AO has made addition towards investments in purchase of property, once again addition towards cash deposits found in bank account amounts to double addition - HELD THAT:- We find that except stating that the Assessing Officer has already made additions towards investments made in property, the assessee could not file any documentary evidence to explain cash deposits found in bank account. Further, additions made by the Assessing Officer towards unexplained investments in purchase of property has been deleted by holding that the assessee has explained source for investments out of borrowings from banks, loan from friends and relatives and various other loans from banks. However, with regard to cash deposits found in bank account on various dates, the assessee could not file any satisfactory explanation. Therefore, we are of the considered view that there is no error in the reasons given by the Assessing Officer to make additions towards cash deposits found in the bank account u/s.69A of the Income Tax Act, 1961. Hence, we are inclined to uphold findings of learned CIT(A) and reject ground taken by the assessee.
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2022 (4) TMI 170
Enhancement of income made by the CIT(A) - addition of loan and advances - unsecured loan received - HELD THAT:- CIT(A) enhanced income on the ground that the assessee failed to discharge its onus for proving identity and creditworthiness of this party as well as the genuineness of the transaction. The assessee has filed certain documents that goes to demonstrate that there were ongoing litigation between the parties. Therefore, looking to the facts and circumstances of the present case, we are of the considered view that this transaction needs further verification at the end of the AO. We therefore, set aside the order of Ld.CIT(A) and restore this issue to the assessing authority for decision afresh. The AO is hereby directed to carry out requisite inquiry to ascertain the true facts about the transaction and decide the issue afresh giving adequate opportunity to the assessee of representing case effectively. Thus, ground related to this transaction is allowed for statistical purposes.
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2022 (4) TMI 169
Addition made on account of club membership fees - Allowable deduction u/s 37(1) - HELD THAT:- Hon ble Supreme Court in the case of United Glass Manufacturing Company Ltd. [ 2012 (9) TMI 914 - SUPREME COURT ] as held that the club membership paid in the normal course of business is purely business expenditure allowable as deduction u/s.37(1) We find that the ld. CIT(A) had granted relief by placing reliance on case of CIT vs. Sundaram Industries Ltd. [ 1999 (4) TMI 50 - MADRAS HIGH COURT ] Since, the issue is covered in favour of the assessee by various High Courts including the Hon ble Jurisdictional High Court and the decision of the Hon ble Supreme Court referred to supra, the reliance placed by the ld. AO on various Tribunal decisions would be of no relevance and accordingly, we hold that the order of the ld. CIT(A) granting relief in this regard does not warrant any interference. Accordingly, the ground No.1 raised by the Revenue is dismissed. Disallowance made u/s.14A r.w.r. 8D - HELD THAT:- AO directly applied the computation mechanism provided in second and third limb of Rule 8D(2) of the Income Tax Rules and made disallowance - CIT(A) placed reliance on the decisions of various High Courts including decision of Oil Industry Development Board [ 2019 (3) TMI 1571 - SC ORDER ] wherein it was held that the disallowance u/s.14A of the Act could not be made in the absence of exempt income. The law is very much settled in view of the decision of the Hon ble Supreme Court in the case of Maxopp Investments [ 2018 (3) TMI 805 - SUPREME COURT ] wherein it had been held that disallowance u/s 14A of he Act cannot be invoked in the absence of exempt income and there cannot be any quarrel on this issue. Hence, we do not find any infirmity in the order of the ld. CIT(A). Accordingly, the ground Nos.2 3 raised by the Revenue are dismissed. MAT computation u/s 115JB - Disallowance of loan processing fees debited in the profit and loss account as an exceptional item while computing the book profit u/s.115JB - whether the action of the ld. CIT(A) in confirming the action of the ld. AO for disallowing the loan processing fees while computing book profits u/s.115JB of the Act would result in travelling beyond the scope of limited scrutiny ? - HELD THAT:- We find that the case of the assessee is selected for limited scrutiny under CASS wherein one of the items that required to be verified is verification of large other expenses debited in the profit and loss account . Admittedly, the fees paid to IFC for a capital project was indeed an exceptional item debited by the assessee in accordance with Accounting Standard-5(AS-5) issued by the Institute of Chartered Accountants of India (ICAI) as a separate line item. The purpose of selection of a case for scrutiny be it complete scrutiny or limited scrutiny, is only determination of total income of the assessee. In our considered opinion, this would certainly include determination of total income both under normal provisions of the Act as well as in the computation of book profits u/s.115JB of the Act. The ld. AO is bound to compute the total income under both the mechanisms provided under the Act and ultimately determine the higher of the two tax liabilities in the manner provided therein and raise a demand on the assessee. Hence, we are in complete concurrence with the view taken by the ld. CIT(A) in this regard. Hence, we hold that the ld. AO had not travelled beyond the jurisdiction provided under the limited scrutiny by disturbing the computation of book profit u/s.115JB of the Act and which is also relevant for the purpose of determination of total income. Accordingly, the ground Nos.1.1 to 1.2 raised by the assessee are dismissed. Admittedly, fee paid to IFC was for the purpose of expansion of business of the assessee. Hence, there is no doubt that such expenditure is clearly a capital expenditure. When this capital expenditure is debited in the profit and loss account as an exceptional item, then the ld. AO would be entitled to tinker with the audited financial statements, in view of the fact that Part-II and Part-III of Schedule-6 of the Companies Act, 1956 does not permit any capital expenditure to get debited in the profit and loss account. So, once it is undisputedly proved that a capital expenditure is debited to profit and loss account and claimed as deduction while computing book profits u/s.115JB of the Act, the ld. AO would be entitled to tinker with the said approved audited accounts even though it does not fall within the item of adjustments provided in Explanation-1 to Section 115JB(2). Thus wherein a particular expenditure which is not allowable as deduction from its inception, will not be allowed as deduction while computing book profits u/s.115JB of the Act and the same would have to be added back while computing book profits u/s.115JB of the Act. Hence, we confirm the action of the ld. CIT(A) in this regard. Accordingly, the ground Nos. 2.1 and 2.2 raised by the assessee are dismissed.
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2022 (4) TMI 168
Disallowance of employees contribution to ESI and EPF - deposit before the due date of filing of return of income - HELD THAT:- As in Insta Exhibitions Pvt. Ltd. [ 2021 (8) TMI 1235 - ITAT DELHI] held that the employees contribution to EPF and ESI deposited before the due date of filing of return of income, but beyond the due date prescribed under the respective EPF and ESI laws is allowable as deduction. The decision relied on by the ld. CIT (Appeals) as has been considered by the Tribunal in this case and following the decision of the jurisdictional High Court in the case of CIT Vs. AIMIL Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT] and the decision of case of Pr. CIT Vs. Pro Interactive Service (India) Pvt. Ltd. [ 2018 (9) TMI 2009 - DELHI HIGH COURT] and also ratio of the decision of the Hon ble Supreme Court in the case of Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] the Tribunal decided the issue in favour of the assessee. Further find that identical issue came up before this bench in the case of Flying Fabrication Vs. DCIT [ 2021 (11) TMI 1041 - ITAT DELHI] wherein similar view has been taken. As direct the Assessing Officer to delete the disallowance made to contribution to EPF and ESI as the same were remitted before the due date of filing of return of income. Grounds raised by the assessee are allowed.
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2022 (4) TMI 167
Deduction u/s. 80IC - claim for the fifth year - AMC and Repair Charges and Job Work Income - HELD THAT:- Respectfully following the order of the Tribunal in assesee s own case for A.Y.2011-12 and 2012-13 we hold that the assessee is entitled to deduction u/s. 80IC in respect of AMC charges. Duty draw back, interest on FDR and other interest , these incomes are not derived from business of the assessee as held by the Tribunal. Therefore, we hold that these incomes are not eligible for deduction u/s. 80 IC of the Act. Income from job work - It is a fact that the assessee has not given the details before the AO, despite being asked to do so. Since this issue is coming up for the first time before the Tribunal and the assessee has not given full details before the lower authorities, therefore, we deem it proper to restore the issue to the file of the AO with a direction to grant one more opportunity to the assessee to furnish full details regarding the nature of Job Work and explain as to how the assessee is entitled to deduction u/s. 80IC on such Job Work. Needles to say that AO shall decide the issue as per fact and law after giving the opportunity of being heard to the assessee. The issue regarding deduction u/s. 80IC on Job work is accordingly allowed for statistical purpose.
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2022 (4) TMI 166
Royalty receipts - use of copyright in the computer software - consideration received by the Assessee from various entities on account of sale/ supply of software - scope of Article 12(3) of the India-Singapore- DTA - as per AO transaction of sale of computer software to its customers implicit involved making of multiple copies of the software clearly indicates transfer of copyright and therefore the consideration received qua said transactions amounts to royalty - HELD THAT:- Recently the Hon ble Apex Court in Engineering Analysis Centre of Excellence Pvt. Ltd [ 2021 (3) TMI 138 - SUPREME COURT] clearly held that the amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software. Recently in the case of CIT (International Taxation) Vs. GRACEMAC CORPORATION [ 2022 (3) TMI 482 - DELHI HIGH COURT] wherein, the Assessee was also holding the licensing of software products of Microsoft company in the Territory of India and selling to its customers in India,dealt with the identical issue as involved in the instant cases and while relying upon dictum laid down in Engineering Analysis Centre of Excellence Pvt. Ltd. case, accepted the proposition that licensing of software products of Microsoft in the territory of India by the Respondent (Assessee) is not taxable in India as Royalty under Section 9(1)(vi) of the Act read with Article 12 of the Indo US DTAA - Decided in favour of assessee.
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2022 (4) TMI 165
Capital loss - Expenditure claimed on abandoned project - DR argued that there is no capital asset on which capital loss can be allowed u/s.45 of the Act, thereby the provisions of section 70 of the Act, cannot be brought into operation - HELD THAT:- We noted from the decision of R. Chidambaranatha Mudaliar, [ 1998 (4) TMI 77 - MADRAS HIGH COURT] was concerned with the allowances of capital loss against the set off of subsequent year income i.e., capital gains and held that any loss arising on account of transfer of own capital asst, which is a pre-condition of loss to be treated as capital loss, such loss cannot be carried forward and set off against capital gains of subsequent year. In the present case before us, the facts are very clear that the assessee is claiming loss of current year against the incomes of current year and particularly capital gains. The issue before the Hon ble Bombay High Court in Sterling Investment Corporation Ltd.[ 1979 (2) TMI 19 - BOMBAY HIGH COURT] is as regards to loss occurred due to forfeiture and not by relinquishment of assessee by its capital asset. In the present case, the issue is abandon of the project due to certain reasons. We have gone through the decision of Mascon Technical Services Ltd. [ 2013 (10) TMI 112 - MADRAS HIGH COURT] and noted that the issue before Hon ble Madras High Court is as regards to share issue expenses whether is to be allowed as revenue expenditure even when shares could not be issue due to non-approval of SEBI. But the facts before us in present case are altogether distinguishable and different. As before us, the issue is capital loss can be allowed arising out of abandoned project against the capital gains earned during the year or not. This has been answered by Hon ble Madras High Court in the case of Kwality Fun Foods and Restaurants (P) Ltd. [ 2013 (10) TMI 1029 - MADRAS HIGH COURT] , and EID Parry India Ltd., [ 2001 (11) TMI 25 - MADRAS HIGH COURT] , holding the assets as capital asset and loss arising out of the same as capital loss. Also in the case of Tamilnadu Magnesite Ltd.,[ 2018 (6) TMI 1236 - MADRAS HIGH COURT] , has considered the issue and found that the expenditure claimed on abandoned project is of capital in nature Undisputed fact is that the letter for termination of contract and forfeiture of advance paid received from M/s. Thales UK Ltd. Based on the terms of joint business arrangement executed with M/s. Raghav Tech Park Ltd., the assessee eventually recognized that the investment made in its own project as terminal loss and loss incurred on forfeiture of advance i.e., payment to suppliers. But, now assessee just supported alternative claim that even it is considered as capital loss as supported by various High Court s decisions, the same will meet the ends of justice. We are of the view that the alternative claim decided by the CIT(A) regarding allowability of capital loss and this being a short term capital loss as per section 70 of the Act, this loss can be set off against income from other sources under the same head in the current year and even there was long term capital gain from sale of land this should be set off accordingly. We find no infirmity in the findings of CIT(A) and hence, the same is affirmed. The appeal of Revenue is dismissed.
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2022 (4) TMI 164
Penalty u/s 271(1)(c) - unexplained cash credits u/s.68 - HELD THAT:- We are of the considered view, that though the failure of the assessee to substantiate the authenticity of the loan transactions justified the dubbing of the same as unexplained cash credits u/s.68 of the Act, but the same on such standalone basis and nothing else would not suffice for saddling the assessee with penalty u/s 271(1)(c) of the Act. We may herein observe, that the Assessing Officer had neither in the course of assessment proceedings specified the default for which the impugned penalty proceedings had been initiated in the hands of the assessee nor had clearly pointed out the same while imposing the penalty vide his order passed u/s 271(1)(c) - In so far the assessment order passed u/s.143(3) is concerned, we find that the A.O had merely stated that penalty proceedings u/s.271(1)(c) of the Act are separately initiated. Coming to the order passed by the AO u/s 271(1)(c) of the Act, we find that while imposing the impugned penalty he had stated that the assessee had concealed his income and furnished inaccurate particulars of income. In our considered view, there is a clear absence of mentioning of the specific default for which impugned penalty proceedings was initiated and also, the basis for imposition of the same. We not being able to persuade ourselves to subscribe to the imposition of penalty u/s 271(1)(c) by the A.O, therefore, set-aside the order of the CIT(A) who had upheld the same - Decided in favour of assessee.
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2022 (4) TMI 163
Penalty u/s 271(1)(b) - default of non-appearance - assessee failed to comply with subsequent notices issued by Ld. AO u/s 142(1) - HELD THAT:- In the written submission filed before us as submitted that Ld. CIT(A) has erred in law and in fact in confirming penalty u/s 271(1)(b) of the Act even for the first default since in the assessment order no specific date of service on the assessee has been mentioned in respect of the first notice dated 05/06/2015 issued u/s 142(1) of the Act. Also, there was a very short time gap between issuance of first notice dated 05/06/2015 and the second notice which was issued on 10/06/2015. CIT(A) has erred in confirming penalty in respect of even the first notice as well. We note that the written submissions are absolutely silent on why the assessee failed to comply with subsequent notices issued by Ld. AO u/s 142(1) of the Act dated 10/06/2015, 15/07/2015 and 18/01/2016. The assessee has repeatedly defaulted in responding to various notices issued by the Ld. AO u/s 142(1) of the Act and the assessment order had to be passed ex-parte in absence of any response/ co-operation by the assessee. The assessee has given no plausible explanation for his recurring non-compliance to various notices issued. Therefore, we are of the view that the Ld. CIT(A) has taken a well-reasoned view and has not erred in restricting addition to one default based on various judicial precedents cited in the appeal order. We are therefore view that CIT(A) has taken a very reasonable view in the matter by restricting the penalty to only one default of non- compliance, though the Ld. AO has issued four notices u/s 142(1) of the Act, all of which remained un-compiled with. Appeal of assessee dismissed.
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2022 (4) TMI 162
Exemption u/s 11 12 - as per AO assessee society was not registered u/s 12AA of the Act and, therefore, he was of the view that the assessee was not entitled for exemption u/s 11 12 - HELD THAT:- Application for registration was made way back in the year 1989 and after ten years the Competent Authority sought explanation regarding the application. Thereafter, claim of exemption was allowed for many years. All of sudden, the Officer wakes up out of slumber, issues notices for reopening of assessment purely on the ground that the assessee could not furnish the requisite certificate of registration u/s 12AA of the Act and proceeded to make assessment. There are divergent views on the issue of deemed registration amongst the Hon ble High Courts of Allahabad, Madras, Karnataka, Rajasthan and Kerala. The Hon ble High Court of Karnataka, Rajasthan and Kerala have ruled in favour of the assessee on the other hand Hon ble High Courts of Gujrat, Madras and Full Bench of Hon ble Allahabad High Court have ruled against the assessee. Hence, the issue in hand is debatable and two views are possible. The Hon ble Apex court [ 2016 (2) TMI 672 - SC ORDER] however affirmed the decision of the Hon ble Division Bench of Allahabad High Court in the case of Society for Promotion of Education Adventure Sports and Conservation of Environment [ 2008 (4) TMI 700 - ALLAHABAD HIGH COURT] by declaring that the registration of the application under section 12AA of the Act shall be with effect from 24.08.2003. Case of the assessee stands at better footing as in the present case the Revenue itself has been treating the income of the assessee as exempt treating the assessee as a charitable society. Under these peculiarity of facts and circumstances hereby hold that action of the Assessing Officer for not treating the assessee society eligible for exemption is not justified under the facts and circumstances of the present case. Therefore, direct the Assessing Officer to give benefit available u/s 11 and 12 - Decided in favour of assessee.
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2022 (4) TMI 161
Late fees u/s. 234E - Scope of enabling clause (c) was inserted in the section 200A w.e.f. 01.06.2015 - whether late filing fee u/s. 234E of the Act has rightly been charged in the intimation issued u/s. 200A/206CB of the Act while processing the TDS returns/statements as the enabling clause (c) having been inserted in the section w.e.f. 01.06.2015 - HELD THAT:- We understand that earlier, there was no enabling provision in the Act u/s. 200A for raising demand in respect of levy of fee u/s. 234E. As such, as per the assessee, in respect of TDS statement filed for a period up to 31.03.2015, no late fee could be levied in the intimation issued u/s. 200A of the Act. On similar facts, the same issue has been adjudicated in the case of 'Sudershan Goyal [ 2018 (5) TMI 1626 - ITAT AGRA] respectfully following 'Shri Fatehraj Singhvi and Ors' [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] accept the grievance of the assessees as genuine. Accordingly, the orders of the CIT(A) are reversed and the fee so levied under section 234E of the Act is cancelled. Appeal of assessee allowed.
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2022 (4) TMI 160
Revision u/s 263 - whether assessee s submission being accepted can be faulted with, whether the assessee ought to have produced the appropriate evidence and whether non-recording of the reasons for accepting explanation will render the order erroneous and prejudicial to the interest of the revenue? - HELD THAT:- As long as the action of the Assessing Officer cannot be said to be lacking bonafides, his action in accepting an explanation of the assessee cannot be faulted merely because it could have been lawful to make mere detailed inquiries or because he did not write specific reasons of accepting the explanation. As for learned PCIT s observations regarding accepting the explanation without appropriate evidence , there is nothing to question the bonfides of the Assessing Officer or to elaborate as to what should have been appropriate evidence. The fact remains that the specific issue raised, in the revision order was specifically looked into, detailed submissions were made and these submissions were duly accepted by the AO. Merely because the Assessing Officer did not write specific reasons for accepting the explanation of the assessee cannot be reason enough to invoke powers under section 263, and non-mentioning of these reasons do not render the assessment order erroneous and prejudicial to the interest of the revenue. - Appeal of assessee allowed.
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2022 (4) TMI 159
Disallowance of the claim of depreciation on Speed Boat - Purchases for purpose of the business - Assessee was selected only for limited scrutiny purposes - HELD THAT:- Reasons for selecting the case of the assessee for scrutiny mentioned and we do not find that there is any mention of claim of the assessee with respect to the depreciation on speedboat - It cannot be said that the assessee has been allowed depreciation for that year by the learned assessing officer. Even otherwise, each assessment year is separate and distinct assessment unit and therefore generally, unless glaring irregularity or inconsistency is noticed, allowability of allowance can be presumed. Even otherwise, in the present case it cannot be said that the depreciation on speedboat has been allowed to the assessee consistently. We find that speed boards are specially covered Under IV of appendix - 1 of the table of depreciation rates provided as per rule [5] of The Income Tax Rules 1962. It is the only asset in the block of the asset on which depreciation is claimed by the assessee. For the allowability of depreciation on any asset, it should be owned by the assessee as well as it should be used for the purposes of the business. The learned lower authorities have categorically held that the assessee has failed to show any evidence that speed boat has been used by the assessee for the purposes of the business of the assessee. Therefore, user test for claim of the depreciation on speedboat fails. The other financial parameters such as turnover et cetera or the number of dealership and agents are of no relevance, thus, do not support the case of the assessee in absence of any evidence that the speedboat is used for the purpose of the business of the assessee. The argument of the learned authorised representative that in case of a company assessment, the depreciation could not have been disallowed for the reason that assets have been used for personal purposes. We fully agree with that but in the present case there is no evidence that the speedboat is used for the purpose of the business and therefore this argument does not apply on the facts of the case. We upheld action of ld. Assessing Officer of disallowance of depreciation on the speed boat. - Decided against assessee.
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2022 (4) TMI 158
Addition u/s. 69A - case of the assessee was selected for limited scrutiny under CASS to examine the issue of cash deposit during the year - whether the assessee was having the explained cash which was deposited in his bank account? - HELD THAT:- Authorities below have not commented anything adverse on the evidences filed by the assessee regarding availability of cash and correctness of the cash flow statement. No material is brought on record rebutting the contention of the assessee. Therefore, the finding of the authorities below is purely based upon surmises, which is not permissible under law. AO ought to have given a clear finding regarding availability of cash in the specified bank notes, which were banned by the order of the Government. It was stated before the authorities below that the demonetization of currency was declared by the Reserve Bank of India on 8.11.2016. After demonetization there was huge crowed to deposit old currency and withdrew new currency by public. As per the assessee it was not safe in view of the banks being over crowded during that period. This plea of the assessee was rejected stating that on earlier occasion the assessee had withdrawn bigger amount of money from the bank account. We find merit into the contention of the assessee that there were big lines and the banks were over crowded. Therefore, it was open to the assessee for the safety of the money to deposit in piece meals till the period as allowed by the Competent Authority. Therefore, the basis of making addition, in my view, is unjustified and deserves to be deleted. Assessing Officer is hereby directed to delete the addition. Grounds of appeal taken by the assessee are allowed.
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2022 (4) TMI 157
Addition u/s. 14A r.w. Rule 8D(2)(iii) - Mandation of recording satisfaction - HELD THAT:- There was no occasion to AO to record satisfaction for not accepting the accounts before invocation of Rule 8D of the Rules. In our opinion, when the assessee itself submitted its working before the AO accepting in principle that the disallowance is required to be made under Rule 8D and accordingly the AO made disallowance under Rule 8D(2)(iii). We note that a contention was raised before the CIT(A) regarding having surplus fund making investments from its own funds and it was accepted by the CIT(A) resulted into deletion of disallowance under Rule 8D(2)(ii) - CIT(A) also held that the assessee failed to point out any error in respect of disallowance under Rule 8D(2)(iii) of the Rules, if that is so, a ground raising challenging the action of AO for non-recording of satisfaction concerning the accounts before us, is untenable. Therefore, we reject the arguments of ld. AR in respect of contentions raised in ground Nos. 1 to 4. Thus, ground Nos. 1 to 4 raised by the assessee are dismissed. Disallowance in respect of those investments which yielded exempt income - HELD THAT:- It is a settled principle to restrict the disallowance to the investment earned dividend income and this Tribunal has been following in directing the AO to compute the expenditure for the purpose of section 14A in respect of those investments yielded exempt income. Following the same we direct the AO to compute the disallowance taking into consideration those investments which yielded exempt income. The assessee is liberty to file evidences, if any, in this regard. Thus, the ground No. 5 raised by the assessee is allowed.
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2022 (4) TMI 156
Revision u/s 263 - submission of the assessee that the Ld. Pr. CIT has not given any opportunity to the assessee to substantiate his claim - HELD THAT:- Assessee did not appear before the Ld. Pr. CIT to substantiate his case. The main contention of the assessee is that due to COVID pandemic, the assessee or his counsel could not appear before the Ld. Pr. CIT and the non appearance was neither willful negligence nor lapse on the part of the assessee. The assessee pleaded for one more opportunity of being heard before the Ld. Pr. CIT. After considering the COVID pandemic situation, we find force in the argument of the assessee and we are of the view that it is a fit case to grant one more opportunity of being heard to the assessee to substantiate his case before the Ld. Pr. CIT - Appeal filed by the assessee is allowed for statistical purpose.
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2022 (4) TMI 155
Disallowance of expenditure incurred towards payment made for employees' contribution to PF ESI - amount remitted in the Government Treasury within the due date of filing the income tax return - HELD THAT:- In the case of the assessee it is not disputed that the amount of employee's contribution was deducted by the assessee and remitted in the Government Treasury within the due date of filing their returns of income under the Income Tax Act, 1961. Since the cases of the assessee relate to assessment years 2018-19 2019-20 and the amendment though clarificatory in nature has come into effect from 1/4/2021, for the relevant year under consideration it would suffice that the employee's contribution deducted by the assessee is remitted in the Government Treasury within the due date of filing of the return of income as prescribed under the Act. Therefore, the disallowance made by the Ld. Revenue Authorities is deserved to be deleted. Hence, we hereby direct the AO to delete the addition made in the hands of the assessee under appeal towards disallowance of payment made in regard to the employee's contribution to PF ESI fund. Appeal of assessee allowed.
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2022 (4) TMI 154
Exemption u/s 11 - Whether depreciation to be excluded from the gross receipts for computing accumulation of 15%? - HELD THAT:- Considering the facts on record and the decision in the case of Rajasthan Gujarati Charitable Foundation Poona [ 2017 (12) TMI 1067 - SUPREME COURT] , we do not find any justification in the suo motto direction given by the Ld. CIT(A) to the Ld. AO to exclude the amount of depreciation from the gross receipts for computing accumulation of 15%, when the claim of depreciation has already been held to be allowed by him. Accordingly, appeal of the assessee is allowed.
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2022 (4) TMI 153
Estimation of income - Bogus purchases - HELD THAT:- We are of the considered view that keeping in view the gross profit earned by the assessee in preceding as well as succeeding years as discussed in the preceding paras addition in this case @ 12.5% of the gross bogus purchases would meet the ends of justice. Since no independent enquiry has been carried out by the AO rather relied upon the information supplied by the Sales Tax Department as to the alleged bogus purchases and at the same time AO has not disputed the sales recorded by the assessee the gross profit rate on the normally accepted purchases can be fixed to deal with such bogus purchases. So the total addition on the basis of 12.5% minus already declared by the assessee in the year under assessment shall meet the ends of the justice. The contentions raised by the Ld. D.R. for the Revenue that 100% bogus purchases made by the assessee be added to his total income is not sustainable in the eyes of law. So appeal filed by the assessee is partly allowed and appeal filed by the Revenue is dismissed. Penalty levied u/s 271(1)(c) - When entire addition in this case is on estimation basis and at no point of time Revenue Authorities have reached the specific conclusion that the assessee has concealed the particulars of income or has furnished inaccurate particulars of income rather made the addition on the basis of information received from Sales Tax Department without conducting any independent enquiry as to the alleged bogus purchases, the penalty levied by the AO and confirmed by the Ld. CIT(A) is not sustainable in the eyes of law.
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2022 (4) TMI 152
Levy of penalty under section 271(1)(c) - assessee's inadvertent claim of expenditure under 'Corporate Social Responsibility' - HELD THAT:- Undisputedly, the assessee had claimed expenditure on CSR under section 37(1) of the Act in the original computation of total income. During assessment proceedings, the assessee voluntarily filed revised computation disallowing the said expenditure. The contention of the assessee is that the expenditure was claimed inadvertently. Explanation 2 to section 37 was introduced by the Finance (No. 2) Act, 2014 with effect from 01/04/2015. The newly inserted Explanation disallows the expenditure incurred on the activities relating to CSR referred to in section 135 of the Companies Act, 2013. The assessment year under appeal being the first year wherein this amendment had taken effect, the assessee ostensibly made a claim of CSR expenditure due to oversight. After having examined the facts and chronology of events, prima facie it appears to be a bonafide mistake. It is relevant to mention here that the assessee had made disclosure about the claim made in the computation of income including the expenditure claimed on CSR. Thus, the assessee has not suppressed the facts. The assessee in computation of income made a claim which was inadmissible and during assessment proceedings the assessee rectified the mistake by filing revised computation. Hon'ble Supreme Court in the case of CIT vs Reliance Petroproducts Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] has held that merely because the assessee had claimed expenditure which was not accepted or was not acceptable to revenue, that by itself, would not attract penalty under section 271(1)(c) Hon'ble Apex Court in the case of Price Waterhouse Coopers Pvt. Ltd. [ 2012 (9) TMI 775 - SUPREME COURT] has held that no penalty under section 271(1)(c) of the Act could be imposed where there was bona fide and inadvertent error. Thus this is not a fit case for levy of penalty under section 271(1) - Appeal of assessee allowed.
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2022 (4) TMI 151
Penalty u/s. 271(1)(c) - Non specification of charge - defective notice u/s 274 - HELD THAT:- Since the AO has not been specified u/s. 274 as to whether penalty is proposed for alleged 'concealment of income' OR 'furnishing of inaccurate particulars of such income', the penalty levied is hereby obliterated - Appeal of assessee allowed.
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2022 (4) TMI 150
Best judgment assessment u/s 144 - Unexplained expenditure u/s. 69-C and on account of unexplained investment u/s. 69 - Additional evidences produced by the assessee during the course of appellate proceedings - HELD THAT:- As per the mandate of Rule 46A(3), learned Commissioner (Appeals) is duty-bound to give an opportunity to the Assessing Officer to examine the fresh evidences filed by the assessee and have his say on the authenticity of such evidences, however, prima face, it appears that no such opportunity was extended to the Assessing Officer. Purely based on the submissions made and the evidences furnished at the appellate stage, learned Commissioner (Appeals) has deleted the additions. Thus, in our view, not only there is gross violation of Rules of Natural Justice but the mandate of Rule 46A(3) has been bypassed. In view of the aforesaid, we are inclined to set aside the impugned order of learned Commissioner (Appeals) and restore the issues to the file of learned Commissioner (Appeals) for de novo adjudication. It is made clear, in case learned Commissioner (Appeals) intends to rely upon any fresh evidence filed by the assessee in course of appellate proceeding, he must provide opportunity to the Assessing Officer to examine them and submit a report on the acceptability or otherwise of assessee's claim based on such evidence. Needless to mention, the assessee must also be given a fair opportunity of being heard before deciding the issues. Grounds are allowed for statistical purposes.
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2022 (4) TMI 149
Validity of search by issue of notice u/s. 153A - HELD THAT:- This issue has been settled by the decision of the Special Bench in the case of Proman Ltd. v. DCIT, [ 2005 (6) TMI 224 - ITAT DELHI] wherein it was held that Tribunal cannot adjudicate upon issue relating to validity of search conducted under section 132 while disposing of appeal against block assessment. The Hon'ble Supreme Court in the case of N.K. Jewellers [ 2017 (9) TMI 1299 - SUPREME COURT] held that in view of the amendment made in section 132A by Finance Act, 2017, the reason to believe or reason to suspect as the case may be, shall not be disclosed to any person or any Authority or Appellate Tribunal as recorded by income Tax Authority u/s. 132 or section 132A. We, therefore, cannot go into that question at all. In the case of Prathibha Jewellery House [ 2017 (11) TMI 1744 - KARNATAKA HIGH COURT] dismissed the writ petitions and held that even the law has been amended by insertion of the aforesaid Explanation by Parliament in Section 132 of the Act by the Finance Act, 2017 with retrospective effect from 1.4.1962. The Court held that the Explanation also prohibits the Appellate Authorities to go into the reasons recorded by the concerned Income Tax Authority for directing Search against the assessee or tax payer - Being so, the assessee cannot question the validity of search before this Tribunal. Accordingly these grounds are dismissed. Unexplained cash payments - HELD THAT:- In the present case, there is a valid MoU wherein payment of 5 crores are shown; 4 crores was in cash and 1 crore by way of cheque. The amount of payment of 1 crore by cheque was recorded in books of account and the other part of payment of 4 crores by cash was not recorded in the books of account. When 1 crore cheque payment has been accepted by assessee, why not the other 4 crores of cash payment is not true. The inference by the lower authorities was that both cash and cheque payments were true and on that basis the source of 4 crores has not been explained by assessee and it is unrecorded payment in the books of account and payment of cheque of 1 crore has been paid by assessee and fully recorded, but payment of another 4 crores has not been denied by assessee and also not shown to be source of payment of 4 crores. As such, it is justified to draw inference that assessee made payment of 4 crores to the concerned parties as mentioned in the MoU. The inference drawn by the lower authorities to this extent is justified. Section 292C grants permission to lower authorities to draw such inference. We do not find any infirmity in that inference drawn by the lower authorities. MoU was formed with the assessee and burden is cast upon assessee to show that amount of 4 crores has been paid by AOP who joined together vide MoU to make payment of 4 crores. But there is no iota of evidence brought on record by assessee to show that AOP existed by producing relevant records, PAN, bank account or any other material to suggest that there is existence of AOP. In such circumstances, the lower authorities are justified to infer that payment was made exclusively by the assessee itself. The addition was solely based on MoU found during the course of search action and it is not based on statement from various persons. Being so, there is no question of providing any cross-examination to the assessee in this case - we are of the opinion that lower authorities are justified in bringing to tax an amount of 4 crores paid by assessee to Kiran Kumar Jain and Mahendra Kumar Jain. This ground of the assessee is dismissed. Unexplained cash credit - contention of the ld. AR is that the alleged cash deposits were not made in the account assessee, as such it cannot be taxed in the hands of assessee - HELD THAT:- AO in his remand report stated that assessee has not furnished all his bank accounts tallying with closing balance as on 31.3.2010 at ₹ 11,44,112. However, the details of various bank accounts were not furnished to AO, as such it is not possible to verify the balance account wise. It is also true that copy of the remand report is not furnished to the assessee. In view of this, we are of the opinion that it is appropriate to remit the entire issue in dispute to the file of AO with a direction to AO to furnish copy of remand report to the assessee and direct the assessee to reconcile the closing balance and furnish details of various accounts with bank. Physical cash found during the course of search action - HELD THAT:- The statement recorded u/s. 132(4) has great evidentiary value and cannot be disregarded in a summary manner by simply observing that assessee has retracted the same. Retraction is to be made within reasonable time and immediately after such statement has been recorded either by filing a complaint to superior authority or otherwise brought to the notice of higher officials by duly sworn affidavit or statement supporting it. Nothing has been done by before the lower authorities. AR relied on various judgments to say that statement u/s. 132(4) has no evidentiary value. All the judgments relied by the assessee were delivered under different set of facts which cannot be applied to the present case. In the present case, the assessee other than taking a different plea at different stage, he has not brought any material on record to suggest otherwise that physical cash found during the course of search was not belonging to the assessee. There is also no evidence to suggest that cash withdrawn from ETLL was unused and kept with the assessee idle though repeatedly withdrawals were made one after the other. As per the provisions of section 292C, presumption is that cash found during the course of search belongs to assessee and burden is on the assessee to prove otherwise. Being so, we do not find any infirmity in the lower authorities bringing the cash found during the search to tax in the hands of assessee as unexplained cash. Therefore this ground of the assessee is rejected. Unexplained jewellery - HELD THAT:- Lower authorities considering the jewellery found during the course of search action at 1296.560 gms. Valued at ₹ 36,03,398 as on the date of search and the difference in value is only on account of inflation in the cost of jewellery and if the historical cost is applied, there is no undisclosed jewellery in the hands of assessee and there cannot be any addition. We find force in the argument of the assessee. The assessee has already disclosed 1441 gms. in its balance sheet as on 31.3.2010 valuing at ₹ 16,79,475, being so, jewellery cannot be treated as unexplained in the hands of assessee. Accordingly, the addition on this count is deleted.
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2022 (4) TMI 148
Reopening of assessment u/s 147 - reason to believe OR reason to suspect - HELD THAT:- The powers of AO to reopen an assessment, though wide, are not plenary. The words of the statute are reason to believe and not reason to suspect . There can be no manner of doubt that the words reason to believe suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income-tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income-tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. As relying on ParamjitKaur [ 2007 (8) TMI 323 - PUNJAB AND HARYANA HIGH COURT ] wherein, making identical observations, the Hon'ble High Court held that the in the absence of sufficient material to form satisfaction of the Assessing Officer that income of the assessee had escaped assessment, the issuance of notices u/s 148 of the Act was not valid. In view of the above discussion, in our view, the Assessing Officer has wrongly and illegally assumed jurisdiction in this case to reopen the assessment. The reasons pointed out by the Assessing Officer cannot be said to be the reasons to form the belief that income of the assessee had escaped assessment. Therefore, the assessment framed by the Assessing Officer was bad in law and the same is accordingly quashed.
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2022 (4) TMI 147
Disallowance u/s 14A applying Rule 8D(2)(iii) - HELD THAT:- The assessee is a Nationalized Bank and the issue is squarely covered in its favour by the order of the Co-ordinate Bench [ 2018 (12) TMI 50 - ITAT DELHI] where shares were held as stock-in-trade and therefore it becomes business activity of assessee - We allow this ground raised by assessee and hold that these were not investments made by assessee in order to fall within the ambit of Rule 8D (iii) - Decided against revenue. Addition being software expenses alleging it to be capital in nature as against the claim of the assessee that the same should be allowed as revenue expenditure - HELD THAT:- As decided in own case [ 2018 (4) TMI 1534 - DELHI HIGH COURT] mere circumstance that the depreciation rate is spelt out in the Schedule to the Income-tax Act, is not conclusive as to the nature of the expenditure and whether it resulted an enduring advantage to a particular assessee - Taking these into account and that the software itself would have run its course or life span as it were, given that the earlier assessment year in question is 2008-09, the question of law framed is to be answered in favour of the assessee. Disallowance u/s 36(1)(viia) on provision for bad and doubtful debts - HELD THAT:- As decided in own case [ 2017 (11) TMI 1589 - ITAT DELHI] as section 36(1)(viia) grants deduction in respect of total provision for bad and doubtful debts and the same is not confined to provision for rural branches only, we hold that the quantum of deduction has to be seen in the light of the total amount of provision consisting of both rural and nonrural branches.action taken by the Id. CIT(A) in reducing the amount of deduction to the extent of provision for bad and doubtful debts in respect of rural branches alone, becomes unsustainable. We, therefore, direct that deduction be allowed u/s 36(1)(viia) - Appeal of assessee allowed. Allowability of deduction being amortization of premium on HTM securities - HELD THAT:- Issue decided in favour of assessee in own case [ 2017 (11) TMI 1589 - ITAT DELHI] - The Hon ble Bombay High Court in the case of CIT vs. HDFC Bank Limited [ 2014 (7) TMI 997 - BOMBAY HIGH COURT] confirmed the ITAT Order wherein the claim of bank as deduction of amortized premium and HTM securities was allowed. Allowance of depreciation on temporary wooden structure at 100% - HELD THAT:- The above ground of the department has to be dismissed as it is a covered matter in favour of the assessee by the order of the Co-ordinate Bench of ITAT in [ 2015 (11) TMI 861 - ITAT DELHI] Deduction u/s 36(1)(vii) - HELD THAT:- Deduction u/s 36(1)(vii) will be limited only in those cases where such bad debt exceeds provision u/s 36(1)(viia). That means there should be a debt against which a provision u/s 36(1)(viia) should exist and such debt is a subject matter of write off u/s 36(1)(vii). Under such circumstance only the excess will be allowed. Whereas as per the facts accepted by the AO in his order and also by the ld. CIT(A), a separate debit in the profit loss account of ₹ 315.00 crores in respect of debts which are listed by the ld. CIT(A) at page no.64 has been claimed as written off u/s 36(1)(vii) against which there has been no claim u/s 36(1)(viia). There is no double claim made by the assessee nor there are any such findings by the AO or by the ld. CIT(A). The assessee submitted that all these bad debts are relating to advances which are reduced from the loans advances and no deduction against such provisions has been claimed by the assessee in any of the assessment year u/s 36(1)(viia) of the Income Tax Act. CIT(A) for the A.Y. 2015-16 accepted factual position that the sum of ₹ 315.00 crores reduced from the loans advances and thus the principle of the Hon ble Supreme Court in the case of Vijaya Bank [ 2010 (4) TMI 46 - SUPREME COURT] for write off u/s 36(1)(vii) duly satisfied. Therefore, in assessee s case also, it is an actual write off in view of the decision of the Hon ble Supreme Court, this issue is fully covered in favor of assessee. The appeal of the assessee is hereby allowed on this ground. Tax liability as per MAT provisions - Non-applicability of section 115JB to the Banking Companies - HELD THAT:- The plea of the assessee with respect to non-applicability of section 115JB to the Banking Companies was rejected in the case of Bank of India vs. ACIT Mumbai [ 2020 (12) TMI 862 - ITAT MUMBAI] There is no jurisdictional High Court decision or for that matter any other High Court decision against the assessee. In view of the fact that two use are possible, the view that favour the assessee may kindly be considered, more so in the case of a Nationalized Bank as held by the Hon ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] - Even if it is considered that book profit provisions would apply to the assessee bank, the adjustments carried out by the AO is not possible under the book profit computation as provided under Explanation to section 115JB of the Act. Tax liability as per MAT provisions will be on the book profits, as increased by the amounts, if any, from items (a) to (j) and reduced by the items from (i) to (viii). Therefore there are specified adjustments which can only be made to the net profits as per profit loss account. Since this is a section wherein the assessee is taxed by a deeming fiction, it has to be strictly construed and no adjustments are possible other than what is mentioned in the Explanation. Owing to the provisions of the Act that amended, we hereby allow the appeal on this ground. Bad and Doubtful Debts reduced from the loans and advances or the debtors from the assets side of the balance sheet the Explanation to section 115JA or 115JB - HELD THAT:- The assessee being a banking company; even there are specific provisions in the Income Tax Act, 1961 u/s 36(1)(viia) which allows deduction to the banks in respect of provisions made for bad and doubtful debts. The Income Tax Act has considered this peculiarity in the case of banking industry and has allowed deduction on the basis of provision whereas under normal circumstances, any provision made in the books is not allowed as deduction. The fact that the provisions of Section 115JB are now allowing the profit loss account to be prepared in accordance with the regulatory act under which the bank operates, all provisions as mandated by RBI and duly recorded in the books should be allowed. Also when in the Income Tax Act itself the deduction is allowed to the assessee, it cannot be held that the computation under book profit provisions contemplated addition of such claim under the garb of provision for diminution in the value of assets. Therefore also the addition made by the AO on this ground is directed to be deleted as it is not an adjustment contemplated u/s 115JB of the Act. Loss on amortization of investment - HELD THAT:- The loss on amortization is neither a provision nor a reserve and does not fall under any of the items from (a) to (j) of the above explanation to section 115JB. The AO has wrongly considered the same as falling within the preview of Clause (i) to the Explanation 1 to Sec. 115JB(2) whereas the same is not a provision for diminution in the value of assets. It is the actual loss on amortization of investments and the same is allowed under the Income Tax Act, 1961 under normal provisions also as held by Hon ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] elaboratly explained while dealing with the grounds on allowing the amortization of HTM investment as allowable business deduction u/s, 37(1) of the Income Tax Act. Hence, the same cannot be considered for the MAT computation. Provision for Bonus - Assessee submitted that the liability of bonus arises every year and based on the same, provision is made in the books of accounts to meet the bonus liability, therefore the same is an ascertained liability - HELD THAT:- The liability is in present case though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain. Therefore provision for bonus made is an ascertained liability and cannot be added in the net profit for arriving book profits. Leave Encashment, LTC Gratuity - HELD THAT:- The above provisions are made on actuarial valuation basis therefore the same are in the nature of ascertained liability and does not fall under any of the items from (a) to (j) of the above explanation to section 115JB. Therefore there is no question of making any addition to the book profits. Hence, the addition made on account to be deleted - Incurring of liability is the ground for allowability of deduction quantification may not be possible. In such cases the liability is present liability to be discharged in future and cannot be considered as contingent or unascertained liability. See BHARAT EARTH MOVERS VERSUS COMMISSIONER OF INCOME-TAX [ 2000 (8) TMI 4 - SUPREME COURT] - thus there is no addition can be made to the book profits. Provision for Wealth Tax - HELD THAT:- As while arriving at the book profit for MAT computation u/s 115JB, inadvertently, the assessee bank has added an amount in respect of provision for Wealth Tax. The same is not covered by any of the items from (a) to (j) of the above explanation to section 115JB. Therefore the same cannot form part of book profits. Expenditure of Capital Nature and Prior Period Expenditure - HELD THAT:- The Hon ble Supreme Court in the case of Apollo Tyres Ltd. vs. CIT [ 2002 (5) TMI 5 - SUPREME COURT] has held that the AO is bound to accept the profit loss account prepared in terms of the provisions of the Companies Act and can make adjustment which are mentioned in the section 115JB and not beyond. Prior period expenses do not fall under any of the category for making adjustment by way of addition to the net profit. In assessee s case the amount is debited in the Profit Loss account and the same is not covered by any clause of addition of the Explanation to section 115JB Expenditure incurred to earn exempt income computed u/s 14A could not be added while computing book profit u/s 115JB - See VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI] Interest on Overdue Deposits - HELD THAT:- This is the ascertained liability of the bank and has been duly accounted. Therefore the interest on overdue deposit, being an ascertained liability does not fall under any of the items from (a) to (j) of the above explanation to section 115JB. Hence, it cannot be considered for the MAT computation.
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2022 (4) TMI 146
Difference between income shown in 26AS and as shown in profit loss account - Income recognition - Method of accounting - recording the income after rendering the services - HELD THAT:- Admittedly, the assessee is following mercantile system of accounting which requires to recognize and record the transactions as and when they take place. Under the Mercantile system of accounting method, the Revenue is recorded when it is actually earned, and the expenses are reported when they are actually incurred. In the present case, the services have been rendered by the assessee then the same should be accounted for in the books of accounts. Assessee has contended before the authorities below that he has been recording the income after rendering the services in the subsequent month - This contention of the assessee has nowhere been challenged by the authorities below. Accordingly, we assume that contention of the assessee is correct. Thus, it is implied that the income which has been accounted by the assessee in the month of April 2008 i.e. the year under consideration actually pertains to the month of March 2008. But no benefit has been extended by the authorities below. If the assessee has offered the income pertaining to the month of March 2009, in the subsequent month i.e. April 2009, thus if any addition is made in the current year, the same would lead to double addition which is unwanted. Thus, we are of the view that the justice would be served to the Revenue as well as assessee if the assessee is able to prove that the difference of income pointed out by the AO has been offered to tax in the subsequent year. If that be so, no addition is warranted. Assessee has not challenged the addition made by the authorities below with respect to the interest from bank Accordingly we confirm the same. Hence the ground of appeal of the assessee is partly allowed for the statistical purposes. Addition of interest on the loan bearing funds diverted for non-commercial purposes - assessee on one hand is incurring interest expenses on the borrowed fund and on the other hand the assessee has advanced money without charging any interest thus the AO worked out the proportionate amount of interest on such interest free loans and advances and added to the total income of the assessee - HELD THAT:- Admittedly, the majority of the amount was advanced as loans to the parties in the earlier years except a sum of ₹ 6.25 lakhs. Undeniably, there was no disallowance was made by the revenue in the earlier year for the amount of interest attributable with respect to such loans and advances extended by the assessee. Accordingly we are of the view that, there cannot be any disallowance on account of interest expenses on the amount of loans advances which were extended in the earlier years. There was sufficient amount of fund available with the assessee to justify the interest-free loans and advances - As such we assume that, impugned amount of loans and advances ₹ 6.25 lakhs has been extended by the assessee out of interest free loans and advances. Therefore, no disallowance of interest qua to such loan advances is warranted. See TORRENT POWER LTD [ 2014 (6) TMI 185 - GUJARAT HIGH COURT] - we hold that there cannot be any disallowance of interest expenses as alleged by the authorities below. Accordingly we set aside the finding of the learned CIT(A) and direct to the AO to delete the addition made by him - Decided in favour of assessee.
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2022 (4) TMI 145
Addition of jewellery found in search - HELD THAT:- AO failed to appreciate the status of the assessee family and unjustifiably made an addition of entire Jewellery seized by the department during course of the search. Thus assessee had substantially explained the entire quantity/weight of gold, diamonds, silver and other valuable stones found during the course of search and therefore, the ld. Assessing Officer/learned CIT(A) was not justified in making/confirming the ad hoc addition in respect the jewellery seized by the department. Hence, we set aside the orders of the Revenue Authorities on this issue and delete the addition on this issue - Appeal of assessee allowed.
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Customs
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2022 (4) TMI 144
Levy of penalty u/s 112(a) of Customs Act - deliberate mis-declaration on the part of the Appellant or not - Appellant have abandoned the goods in view of the mistaken packing committed by the Shipper - HELD THAT:- There is no case of deliberate mis-declaration made out on the part of the Appellant importer. The Bill of Entry had been filed as per the packing list and Bill of Lading. Further, the Shipper/Exporter have accepted their mistake, there being error at the time of packing the goods at their end. This cogent explanation has not been found to be untrue. It is further noted that the Appellant had already been suffered financial loss at the end paid for the consignment to the Shipper. The penalty imposed under Section 112a of the Act is set aside - appeal allowed - decided in favor of appellant.
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2022 (4) TMI 143
Principles of natural justice - request for cross examination of panch-witnesses and of departmental officers has been rejected - evasion of Customs Duty - mis-declaration of brand of goods/ description of the goods - HELD THAT:- The right to cross examination is considered as a principle of natural justice as it corresponds to foremost principle of natural justice what is commonly known as audi alteram partem and the absence thereof may adversely affect the party. As it was held by Hon ble Apex Court in the case of CANARA BANK AND ORS. VERSUS SHRI DEBASIS DAS AND ORS. [ 2003 (3) TMI 664 - SUPREME COURT] and was reiterated in the case titled as NAGARJUNA CONSTRUCTION CO. LTD VERSUS GOVT. OF ANDHRA PRADESH AND ORS [ 2008 (10) TMI 686 - SUPREME COURT] . The Constitution Bench of Hon ble Apex Court earlier in the case of Sate of STATE OF M.P. VERSUS CHINTAMAN SADASHIV WAISHAMPAYAN [ 1960 (11) TMI 130 - SUPREME COURT] has held that rules of natural justice requires that party must be given the opportunity to adduce all relevant evidence upon which he relies and further that the evidence of positive commencement should be taken in his presence was that he be given an opportunity to cross examination, the witnesses examination of the other party charges the non providing of the said opportunity was held to be violation of principles of natural justice. Coming to the facts of the present case, the allegations of Show Cause Notice are based upon the physical examination of the goods that too in the presence of the appellant and the appellant s proprietor. He had declared the said goods in the Bill of Entry as unbranded TV panels. There is no denial of the appellant that said physical examination revealed that the goods instead of being TV parts were LED TVs of Samsung brand though in SKD form. There is no denial that the parts were imported in different consignments. In his statement dated 15.01.2018 the appellants proprietor himself has admitted that there was no written agreement or contract existed for the export nor any written purchase order placed nor even any written quotation /proforma invoice was supplied to him with respect to the goods in question - the definite match was observed by the investigating team in the documents submitted by the importer / appellant at the time of importing goods and the invoices recovered during investigation. These documents were recovered from the appellant s own mail which was got opened by him in the presence of investigating officer but on the computer installed in the SIIB brand. He also put his signatures on the print outs of various emails retrieved from his emails. These documents have been made the basis for allegations in the impugned Show cause notice. Nothing cogent has been brought in reply to the Show Cause Notice to prima facie falsify the allegation of show cause notice or even to make the case of any prejudice or to establish that some prejudice has been caused to the appellant by procedure followed. There is no case of the appellant that his statement dated 15.01.2018 was his involuntary statement given in coercion. No retraction is at all apparent on record - The Hon ble Apex Court in the case of SURJEET SINGH CHHABRA VERSUS UNION OF INDIA [ 1996 (10) TMI 106 - SUPREME COURT] has held that confession though retracted is an admission and binds the petitioner. The Customs Officer is not a police officer. Hence the confession made to them is an admissible evidence, hence there will be no need to permit the cross examination of the panch witnesses. The Adjudicating Authority has committed no error while denying the opportunity of cross examination of investigating officers and the panch witnesses - Appeal dismissed.
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2022 (4) TMI 142
Principles of natural justice - change in classification - appellant submitted that requirement of Section 17(5) of the Customs Act, 1962 has not been duly complied with by the original authority inasmuch as no speaking order was passed within the stipulated time frame, on changing the classification of disputed goods from CTH 8421 to CTH 3921 - HELD THAT:- The appellant has specifically stated that no show-cause notice was issued and no personal hearing was granted by the original authority in support of change in the classification of the goods. Since the requirement of sub-section (5) of Section 17 ibid has not been strictly complied with inasmuch as no opportunity of personal hearing was granted by the original authority in support of change of classification of the goods, we are of the considered view that the principles of natural justice have not been followed. Thus, the matter is required to be adjudicated afresh by the proper officer. The impugned order passed by the learned Commissioner (Appeals) is set aside and the matter is remanded to the original authority for passing of a fresh adjudication order by complying with the principles of natural justice. Needless to say that opportunity of hearing should granted to the appellant before deciding the matter afresh - Appeal allowed by way of remand.
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Corporate Laws
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2022 (4) TMI 141
Contribution for allotment of equity shares - whether there is a justification to allow the applicant to make further borrowings? - whether to allow the applicants to raise further share capital of the company by issuing shares to meet its immediate requirement of working capital? - HELD THAT:- The issues involved in the main petition relate to the lack of proper representation in the Board meetings by one group of shareholders, who are respondents in the present application and the alleged illegality in passing important resolutions involving the directorship of the same group of shareholders and in issuance of Rights Issue. In related CAs, apart from the aforementioned issues, the prayers include stalling the appointment of additional Director, the appointment of Administrators to manage the company in the short-run and to maintain the status quo with respect to the shareholding. In short, the governance process of the corporate itself has been challenged by one major group of equal shareholding, who are respondents in the present application. It is clear that the issues are closely related and If the interim reliefs are granted then it would have direct bearing on the outcome of the Main Petition. As held in Union of India Ors. v. Modiluft Ltd., [ 2003 (5) TMI 530 - SUPREME COURT ] Raja Khan v. Uttar Pradesh Sunni Central Waqf Board Anr., [ 2010 (11) TMI 201 - SUPREME COURT ], if interim relief is same as that of permanent relief, then it is not permissible because no case would be left for adjudication at the time of the final hearing. Unfortunately, there are unresolved issues between the two groups running the company mainly relating to the appointment of Directors and effective control over the management of the company. The prime objectives of this Bench are to ensure the smooth running of the company so that its existing assets are utlised to the fullest, to protect the legitimate interests of both the groups of shareholders and those of the current employees - The raising of finance to meet the EMI requirements is only a short-term measure. While the applicants, who are effectively in control of the company, have made efforts to arrange the short-term finance required to manage the short term requirements, the issues of Directorship and effective management by two groups, each holding 50% of shares, is still under the active consideration of this Bench. This Bench is of the view that whether a company is in genuine need of more capital or not, and the route to be adopted for meeting the financial requirements of the company, will be decided by the Board of Directors and it is incumbent on them to exercise their powers for the benefit of the company. It is noted that the Board of Directors has inherent powers, unless otherwise provided in the Articles, to increase the prescribed share capital as per the provisions of the Companies Act 2013 - Application dismissed.
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2022 (4) TMI 140
Sanction of the Scheme of Amalgamation - Section 230-232 read with Section 66 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- Upon perusing the records and documents in the instant proceedings and considering the submissions, it is concluded that requirements have been duly complied with. The scheme is sanctioned - application allowed.
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Insolvency & Bankruptcy
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2022 (4) TMI 139
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Service of notice - time limitation - HELD THAT:- The Notice in this case was ordered by this Tribunal on 03.04.2019, despite various dates of hearing, there is no response given by the Corporate Debtor - In this case the debt has been intimated in terms of Section 8 of the Code r/w Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 issued on dated 04.12.2018 annexed as P-7 at pg 71-136 and has duly been served. However, Respondent/Corporate Debtor is not disputing the same. The debt is due on 31.10.2017 and this application is well within time. The debt and default has been established by the Operational Creditor against the Corporate Debtor in re-payment of the Operational Debt. The Petition filed under section 9 of the Code fulfils all the requirements of Section 9(5) of IBC, 2016. Therefore, the Petition deserves to be admitted. Hence, this authority is inclined to initiate the CIR Process of Corporate Debtor. Accordingly, the captioned petition is admitted. Petition admitted - moratorium declared.
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PMLA
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2022 (4) TMI 138
Provisional attachment order - Smuggling - proceeds of crime - failure to discharge the burden as required under Section 24 of the PML Act - HELD THAT:- The PML Act, 2002 gives wide powers to the authorities to attach properties suspected to be involved in money laundering. Section 5 of the PML Act authorizes to attach property and the same is to be exercised if the authority has reason to believe, on the basis of material in their possession that, any person is in possession of any proceeds of crime and such proceed of crime are likely to be concealed, transferred, or dealt with in any manner, which may result in frustrating any proceedings relating to confiscation of such proceeds of crime - It is statutory duty on the part of the authority to file a complaint, stating the facts of attachment before the adjudicating authority after provisional attachment. Section 24 of the PML Act, 2002, casts the burden of proving that, the alleged proceeds of crime are not involved in money laundering on the accused. This Court is of considered view that, the attached properties purchased or acquired before the commission of the offence as well as the Act came into force. It is not in dispute that, the authority was not able to trace the tainted property . The issue to be examined is whether the necessary condition for passing the impugned order under Section 5(1) of the Act is satisfied or not. In the case on hand, the respondent authorities have passed order in mechanical manner, without assigning proper reasons thereof, as order itself reveals that, there is non-application of mind while come to a conclusion that, the properties were derived or obtained from proceeds of crime. At the relevant point of time, the sufficient material was with the authorities to arrive at a conclusion that, the properties were acquired before commission of offence. Even the very facts having been admitted by the authorities that, they could not find tainted properties. Therefore, there is no material that could suggest that the properties sought to be attached derived or acquired from criminal activity. The present writ petition in the present form has been rightly registered as Special Criminal Application and therefore, the contention raised by the respondents that, the present writ petition in present form invoking the criminal jurisdiction, is devoid of any merits and not acceptable - Petition allowed.
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Service Tax
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2022 (4) TMI 137
Refund of service tax - export of service or not - place of provision of services (POPOS Rules) - contention of the Department is that the services provided by the assessee-appellant in the form of supplying testing data in the electronic form does not amount to export of service in terms of Rule 3 of Place of Provision of Service, 2012 - suppression of facts or not - extended period of limitation - HELD THAT:- The appellant-assessee M/s. MedGenome Labs Limited is a service provider and the MedGenome Inc., USA is the service recipient. The foreign client approaches the appellant for analysis and for identification of genetic patterns and linkages of the specific diseases or ailments based on scientific data, report generated in respect of such diseases/ailments. Report is delivered to foreign client in electronic or web delivery. The report is used by the clients for publishing research articles or manufacture of drugs or formulation after conducting further research and development. As per this fact, the service which is provided by the appellant to their foreign client is analysis report of the samples and not any goods. The collection of samples, analysis thereon is conducted by the appellant in India. It is undisputed fact that the appellant are not receiving any goods from their foreign client but conducting the tests. As per Rule 3 of POPS Rules, the place of provision of service shall be the location of the recipient of service. In the present case, the location of the recipient of service is in abroad. Therefore, the service deemed to have been provided in abroad at the place of service recipient - In the present case, it is beyond any doubt that the service recipient has not physically made available any goods to the appellant being a service provider. The service recipient has no connection in any manner with regard to the collection of samples. It is the appellant who on their own procured the samples from the hospitals and conduct the analytical tests. The appellant have only providing the test reports in electronic or web form to the recipient of service i.e. their foreign client. Therefore, the specific condition under Rule 4 that the service should be provided in respect of goods which must be physically provided by the recipient of service to the provider is not satisfied. The place of provision of service is clearly the location of the recipient of service, which in the present case is country of appellant s clients. Applying Rule 6A of Service Tax Rules, in the fact of the present case, the provider of service i.e. the appellant is located in India which is the taxable territory, recipient of service i.e. client of the appellant is located outside India. The service is not specified in Section 66 of the Finance Act. As per the discussion made hereinabove, the place of provision of service is clearly outside India. There is no dispute that the payment of such services has been received by the appellant as a service provider in convertible foreign exchange - the appellant have clearly satisfied the conditions required for treating the service as export of service. Therefore, the appellant s service, being export of service, cannot be chargeable to service tax. Appeal allowed - decided in favor of assessee.
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2022 (4) TMI 136
Waiver of penalties under Sections 76, 77 and 78 of Finance Act, 1994, which are relating to the period 2005 - Refund of the tax wrongly paid - period of dispute is 01-01-2006 to 28-02-2007 - HELD THAT:- Admittedly, the assessee appellant has only engaged the services of individual truck owners for transporting the iron ore and ore burden from its mine head up to the port and hence he would become the recipient of GTA service. A perusal of paragraph 13 of the Order-in-Original referred to by the learned AR when read conjointly with Rule 4B ibid, it is found that the explanation given to consignment note matches with the contents extracted at paragraph 13 of the Order-in-Original. Definition under Section 65(50b) would also refer to issuing of consignment note, by whatever name called and hence if for convenience, the assessee has termed as pay slips , that by itself would not result in any other thing other than a consignment note. Secondly, even the definition of GTA as per Section 65(50b) would mean any person, including individuals and hence we are not in agreement with the contentions of the learned advocate in this regard. Insofar as the other contentions of the learned advocate that the work order was in a nature of composite contract for both removal and transportation of iron ore and ore burden at specified rates and hence the same would qualify, as understood by the assessee, as cargo handling service. This contention cannot also be accepted. It is found from the decisions relied upon by the learned advocate that penalties under Sections 76, 77 and 78 are not automatic and are governed by Section 80 ibid. The adjudicating authority has elaborately discussed and appreciated the bona fide belief entertained by the assessee that they were not liable to pay service tax since the trucks used for transportation were owned by the transporter himself. In any case, the adjudicating authority has exercised his discretion by dropping penalties being satisfied that the assessee had made sufficient case for invoking Section 80 ibid. Revenue has not found any mala fide insofar as the plea which provided the assessee in not paying service tax in time and hence we have to conclude that the assessee has proved reasonable cause for its failure which has been duly accepted by the adjudicating authority. Both the appeals are dismissed.
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2022 (4) TMI 135
Works contract services - distribution or transmission of electricity - time limitation covering period 01.07.2012 to 31.03.2014 - main argument of the appellant appeared to be that the services undertaken by them are covered by the Serial No. 29 (h) of Exemption Notification 24/2012-ST dated 20.06.2012 and M/s APDCL and CAEDCL are covered under the definition of electricity transmission or distribution utility in terms of Clause 48 of Section 65 B (23) of Finance Act, 1994 and also that the services covered under the negative list of Clause 66B of the Finance Act, 1994 - extended period of limitation - penalty - HELD THAT:- There is force in the contention of the appellants that the Transmission and Distribution of Electricity in the hands of APDCL/CAEDCL vis-a vis such specific customers is covered under negative list u/s 66D (k) being naturally bundled as per provisions of section 66F (3) of the Finance Act 1994.; all these impugned works contract activities of appellant are essential activities having direct and close nexus with transmission and distribution of electricity would be covered by the exemption and distribution of electricity extended under various notifications; therefore, the taxability of the related/ ancillary services are required to be given same treatment as is given to the single service, which gives such bundle its essential character, namely, transmission and distribution of electricity; moreover, one cannot think of transmission and distribution of electricity without impugned work contract services by the appellant. The learned commissioner has correctly evaluated the status of the appellants and the activities undertaken by them and concluded correctly that the exemption under Entry No 12 of Mega Exemption Notification 25/2012-ST dated 20.06.12 and Entry No 12A substituted by NN.09/2016-ST dated 01.03.2016 is not available to the appellants. However, as we find that the appellants are eligible for exemption under Serial No. 29 (h) of Notification 25/2012-ST dated 20.06.2012, the acceptability or otherwise of other claims becomes superfluous. Time Limitation - HELD THAT:- The appellants have registered themselves and they have not paid any service tax and moreover have been showing nil returns. Therefore, the Department had no occasion to consider the taxability of the service rendered by the appellants. Having suppressed / not disclosed material facts to the Department the appellants cannot take a plea that extended period cannot be invoked - extended period has been rightly invoked - However, as it is found that on merits, the appellants are eligible for exemption under Serial No. 29 (h) of Notification 25/2012-ST dated 20.06.2012, the issue of limitation does not affect the outcome of the case. Penalties - HELD THAT:- The penalty has been imposed correctly for the commission and omission on the part of the appellants. The appeal is partly allowed by way of remand.
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Central Excise
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2022 (4) TMI 134
Maintainability of appeal - seeking waiver from making mandatory pre-deposit of 7.5% required to institute an appeal before the CESTAT - Section 86 of the Finance Act, 1994 - It is contended that the huge quantum of pre-deposit due from the petitioner is too onerous and makes it practically impossible for the petitioner to pursue its statutory remedy - HELD THAT:- When the pre-deposit required for preferring the appeal in the instant case was ₹ 18,06,057/-, petitioner has already deposited ₹ 12,15,000/- and the balance is only ₹ 5,56,057/- which has not been deposited, since the petitioner claims to be in penury. A perusal of the statutory provisions will reveal that the amendment to section 35F of the Central Excise Act r/w Section 86 of the Finance Act, 1994, clearly manifest the intention of the legislature that the waiver of pre-deposit, which was being resorted to, quite often by the courts of law, needed to be amended to make the pre-deposit mandatory. Thus, after the Amendment Act came into force, no discretion is available with the courts of law to waive the mandatory requirement of pre-deposit of 7.5% even if it is assumbed to be onerous in the circumstances of the case - When the Statute does not provide for waiver of a pre-deposit, it is impermissible for this Court to act contrary to the legislative intention merely on the plea of financial hardships. If such pleas are entertained, and directions are issued for waiving the pre-deposit, there will be no end to such demands. Further if orders are issued, contrary to the Statute the same will destroy the very scheme of the Statute including the consequent amendment. It is appropriate to refer to the decision of the Supreme Court in OIL NATURAL GAS CORP. LTD. VERSUS GUJARAT ENERGY TRANSMISSION CORPORATION. LTD. AND ORS. [ 2017 (3) TMI 1628 - SUPREME COURT] , wherein it was observed that the High courts cannot disregard the statutory mandates. The writ petition is dismissed.
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2022 (4) TMI 133
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - failure to comply with the scheme - because of the countrywide lockdown, petitioner could not deposit the amount (as prescribed in the scheme) within 30 days - HELD THAT:- In the present case, the petitioner neither deposited the amount within 30 days from the date of issuance of Form no.3 on 21.01.2020 nor make any efforts to make payment upto 30.06.2020. The 30 days expired on 21.02.2020 and at that time there was no Covid-19 pandemic as well as no lockdown. Even during the extended period also the petitioner did not make any effort to make the payment. The petitioner deposited the amount on 16.11.2021 which is after almost one year. There are no ground to interfere - petition dismissed.
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2022 (4) TMI 132
Rejection of Petitioner s Declaration in Form SVLDRS - manufacture of partially oriented polyester yarn/POY, texturized yarn, grey fabrics and knitted fabrics from the POY, falling under the Chapters 54 and 60 respectively of the Central Excise Tariff Act - HELD THAT:- The picture that emerges as on date is that on one hand, the writ applicants want to question the legality and validity of the decision taken by the Designated Committee to reject the declaration under the scheme and on the other hand, there is an appeal filed by the writ applicants against the order in original passed by the Commissioner, Surat. The Tribunal should be allowed to proceed with the hearing of the appeal and decide the same on its own merits - Rule returnable on 22nd June, 2022.
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2022 (4) TMI 131
Recovery of CENVAT Credit - demand was made on the ground that the appellants are supplying excisable goods to SEZ developer, which is exempted under the Notification No.4/2004-ST and the appellant is required to reverse 10% of the value of the exempted excisable goods, in terms of Rule 6 of CENVAT Credit Rules, 2004 - HELD THAT:- From the amendment by Section 144 of the Finance Act, 2012, it is settled that the appellants are not required to pay any amount under Rule 6 in respect of supplies made to SEZ Developers, the appellant is not required to pay any amount in terms of Rule 6 of CENVAT Credit Rules, 2004. Also, reliance can be placed in the case of SAINT-GOBAIN GYPROC INDIA LTD VERSUS COMMISSIONER OF CENTRAL EXCISE THANE I [ 2019 (2) TMI 1557 - CESTAT MUMBAI] where it was held that notwithstanding a subsequent amendment in rule 6(6) to the CENVAT Credit Rules, 2004, to include developer of special economic zones within the escapement covered of rule 6 of the said Rules, the categorization as exports would itself suffice to exclude the applicability of the liability prescribed therein. Accordingly, demand of ₹ 1,97,01,669/- and corresponding interest and penalty are not sustainable - appeal allowed - decided in favor of appellant.
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2022 (4) TMI 130
CENVAT Credit - maintenance and repair services provided during the warranty period for periods both prior to 01.04.2011 and after 01.04.2011 - HELD THAT:- The issue regarding admissibility of cenvat credit on warranty service has been examined in detail by the Tribunal in the order in the case of M/S CASE NEW HOLLAND CONSTRUCTION EQUIPMENT (I) PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, UJJAIN [ 2021 (8) TMI 963 - CESTAT NEW DELHI] . It is seen that the said order examines the admissibility of credit for periods both pre and post 01.04.2011, where it was held that The appellant correctly availed CENVAT credit on the amount of service tax paid for the services provided by the dealers to the customers on behalf of the appellant for fulfilling the warranty obligations of the appellant. The ratio of aforesaid decision is squarely applicable to instant case - the credit on warranty service provided free of cost during the warranty period through third parties cannot be denied - appeal allowed - decided in favor of appellant.
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2022 (4) TMI 129
CENVAT Credit - input services - outward transportation service (GTA) used for removal of goods - demand barred by time limitation or not - HELD THAT:- The appellant have maintained proper records of the transactions and the fact of taking credit. Further, the appellant has also filed periodical returns regularly. Admittedly, show cause notice has been issued in September, 2019 disputing taking of cenvat credit on outward GTA for the period April, 2016 to March, 2017. During the course of argument, learned Counsel have also filed copy of the excise return in Form ER-1, wherein they have reflected the cenvat credit taken in the relevant columns alongwith other details as required. Thus, no case of suppression, mis-representation or fraud is made out against the appellant. The Tribunals, High Courts and even the Supreme Court have taken divergent views on the subject of allowability of credit on outward GTA. Finally, the CBIC has issued a circular in the year, 2018 mentioning four rulings of Hon ble Supreme Court in Roofit [ 2015 (4) TMI 857 - SUPREME COURT ], Ultratech [ 2018 (2) TMI 117 - SUPREME COURT ], Ispat Industries, [ 2015 (10) TMI 613 - SUPREME COURT ] etc. wherein divergent views have been taken and thereafter have given instruction to the Field Officer to take a pragmatic view in the matter of allowability of outward GTA. Thus, evidently the issue was open to more than one interpretation and thus the dispute raised by the Department is debatable and subject to different interpretation. The extended period of limitation is not available to Revenue. Accordingly, I hold the show cause notice is hit by limitation - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (4) TMI 128
Interstate purchases - issuance of C Form pertaining to interstate purchase transactions within three months - Financial Year 2016-2017 - HELD THAT:- It is evident from the Assessment Order dated 10th October, 2018 in respect of Financial Year 2016-17 that it was a case where no Form C were found missing. The only error that occurred was in mentioning the purchase of ₹2,24,14,584 in third quarter and ₹1,87,17,945 in fourth quarter as High Seas Purchases when in fact they were the sales made against Form C purchases. No Form C was found missing and the assessment was made on NIL demand. It is quite evident from the Assessment Order dated 10th October, 2018 that it was only an inadvertent misdescription of the purchasers for two quarter even though all the documents had been duly furnished. It is not a case where there is a default or concealment or adverse material is found by the Commissioner suggesting inaccurate particulars in the returns. It is the case where all the documents and particulars were furnished correctly except that the purchases were inadvertently misdescribed as High Seas instead of Form C purchases. The sole reason for declining the Form C is not that the petitioner is not entitled but merely that the system does not permit the downloading of C Form - Rule 5(4) (i) of the CST Delhi Rules is not attracted in the facts of this case. There was no failure on the part of the Petitioner to furnish a return, including reconciliation return or return in accordance with the provisions of law or in payment of tax due according to such return. In fact, the tax demand was Nil and there was no loss on account of Tax revenue to the Department. While in present day and age, technology has immensely facilitated the business transactions but it cannot be permitted to take over completely and prevent the genuine entitlements of the petitioner to be denied merely on the technical ground that the system does not so permit. The systems have been created purely for facilitating and simplifying the business transactions and cannot be self defeating. The respondent cannot plead its helplessness on the ground of the system not enabling it to do so. Once the petitioner is held to be entitled to C Form, the same cannot be denied for technical or administrative reasons. The Writ petition is accordingly allowed.
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2022 (4) TMI 127
Classification of goods - marble articles - falls under Entry 13 of Part E of the First Schedule to the TNGST Act or not - marble stone articles, can be treated as handicrafts or not - HELD THAT:- It is pertinent to refer to the decision of the Hon'ble Supreme Court in COLLECTOR OF CENTRAL EXCISE, NEW DELHI VERSUS LOUIS SHOPPE [ 1995 (3) TMI 108 - SC ORDER] , wherein, it was held that the authorities shall examine the matter, as to whether wooden furniture by itself can be treated as handicrafts, which may be characterised as handicrafts, if the following tests are satisfied and thereafter, pass orders accordingly:- (1)It must be predominantly made by hand. It does not matter if some machinery is also used in the process; and (2) It must be graced with visual appeal in the nature of ornamentation or inlay work or some similar work lending it an element of artistic improvement. Such ornamentation must be of a substantial nature and not a mere pretence . In the present case, the first respondent / Tribunal without examining the characteristic of the articles made by the petitioner, has formed an opinion that the marble stone items would not fall under the category of handicrafts, but come under Entry 13 of Part E of the First Schedule, treating the same as stone articles. Such course adopted by the Tribunal, in the opinion of this court, cannot be countenanced, in the light of the aforesaid legal proposition of the Hon'ble Supreme Court - thus, it is clear from the proceedings that the handmade stone works, sculptures and stone reliefs, stone inlay work, can be treated as 'Handicrafts'. It is not in dispute that the petitioner is handling stone articles and therefore, marble stone items made by them, fall within the category of 'Handicrafts'. The writ petition stands allowed.
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2022 (4) TMI 126
Process amounting to manufacture or not - interpretation of expression does not sell the goods so manufactured occurring in sub Section (4) of Section 3 of the Tamil Nadu General Sales Tax Act, 1959 - inclusion of intra state or export sale or both - export sale of the manufactured goods as being a direct levy on the export sale itself and thus contravening Article 286 of the Constitution - HELD THAT:- The issues involved in the present case are squarely covered in favour of the assessee, as per the earlier decision of this Court rendered in TC No.59 of 2019 dated 06.12.2019 in the case of The State of Tamil Nadu Rep., by the Joint Commissioner (CT), Chennai (South) Division, Chennai v. Tvl.Blue Diamond Leders [ 2019 (12) TMI 886 - MADRAS HIGH COURT ], wherein it was held that the process of conversion of wet blue leather into finished leather amounts to 'manufacture' within the meaning of Section 3 and therefore, there was no misuse of declaration in Form 17 by the assessee, while purchasing chemicals for processing the leather and the assessee was not liable to pay higher rate of tax on such purchase of materials . The substantial questions of law are answered in favour of the respondent / assessee and against the Revenue - Application dismissed.
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Indian Laws
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2022 (4) TMI 125
Dishonor of Cheque - breach of trust - cheating the complainant by manipulating the complainant s cheque by way of inserting huge amount in the blank cheque - HELD THAT:- This court is of the opinion that the further continuance of the proceedings, as such, would be an abuse of the process of the court thereby calling for interference. Revision application allowed.
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