TMI Tax Updates - e-Newsletter
April 8, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Highlights / Catch Notes
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GST:
Release of seized cash - alleged evasion of tax due - The seizure of cash from the premises of the appellants was wholly uncalled for and unwarranted. Moreover, as the respondent has retained the seized cash for more than six months and is yet to issue a show cause notice to the appellants in connection with the investigation, there can be no justification for a continued retention of the said amount with the respondent. - HC
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GST:
Validity of demand of GST - Mismatch in total turnover as pf GST Return (tax invoice) with total of e-way bills - there is palpable error in the way bill, which may be construed to be an human error. If this fact will be brought to the notice of the assessing authority, the same can be considered in accordance with law and fresh assessment order can be passed. - HC
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Income Tax:
Reopening of assessment u/s 147 - notice in the name of a non-existing company - company as already been amalgamated - Thus impugned notice was issued in the name of non-existing company in spite of revenue having notice and knowledge of non-existence of such Company. - Notice is not tenable - HC
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Income Tax:
Condonation of delay in filing income tax return - delay on the part of Chartered Accountant - Considering the phrase “genuine hardship” used in Section 119(2)(b) of the Act, to be construed liberally, as held in various decisions of the Apex Court and various High Courts, we find that the case of the petitioner comes within the sweep of phrase ‘genuine hardship’, particularly, when there is no allegation of mala fide or deliberate delay on the part of the petitioner. - HC
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Income Tax:
Revision u/s 263 by CIT - selecting a return under CASS - expressions 'erroneous', 'erroneous assessment' and 'erroneous judgment' - Error', here, should be an error in approach, error in computation, error in applying the relevant law or facts, or error in selecting a principle which would not govern the fact situation; arbitrary exercise of quasi-judicial power certainly would fall within the scope of section 263. - HC
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Income Tax:
Deduction u/s 54B - LTCG - the claim made by the assessee that of deduction u/s 54B was justifiable as the purchase was made in the name of assessee’s wife for which the assessee has paid the entire - AT
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Income Tax:
Nature of gain on sale of property - LTCG or STCG - Receipt of propter through Gift or POA - Since the gift deed falls under the documents which registration is compulsory as per section 17 of the Registration Act, 1908 the unregistered instrument of gift of immovable property does not have any legal sanctity. Therefore, considering the fact that the above property has been assigned by way of POA in favour of the assessee vide Power of Attorney and the same was sold by the assessee on 18.06.2008, the holding period of the same was not more than 36 months in the hands of the assessee - Lower authorities have committed no error in treating the same as ‘short term capital gain’. - AT
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Income Tax:
Undisclosed income u/s 69 - additions based on messages found from the mobile phone - there was no justification for making addition to the total income of the assessee on account of amount worked out on the basis of alleged suspicious messages relating to hawala transactions found from the mobile phone of the assessee by treating it as undisclosed income u/s 69 - AT
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Income Tax:
Revision u/s 263 - Nature of capital gain - On going through the copy of the purchase deed of the said land, we find that direct possession of the land in question had been handed over/transferred to the appellant being one of the co-owners/ purchaser of the land on 17–04–2008 only and not on 17–05–2010 as presumed by PCIT. - order passed by the assessing officer is neither erroneous nor prejudicial to the interest of Revenue. - AT
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Income Tax:
Deduction u/s 80-IB(10) - manner of allocating the common expenses - the financial positions of the assessee will represent distorted position if the common expenses are allocated based on turnover. Thus, assessee has rightly adopted the basis of allocating the common expenses based on the area of construction of eligible and non-eligible projects - AT
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Income Tax:
Unexplained investment - the Ld. AO has himself mentioned in Para 12.1 “The excel sheet does not contain the year wise breakup. A reasonable estimate of these year wise is as under”. This categorical mention by Ld. AO clearly admits that there was no basis for attributing the transactions to AY 2009-10 under consideration. - No additions - AT
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Customs:
Levy of safeguard duty - Validity of show cause notice - bill of entry was finalized - department did not challenge the assessment by way of an appeal - Bill of Entry having been presented for clearance of goods though after the issuance of the Notification in question but before it was published so as to be effective and, therefore, the Notification imposing the safeguard duty shall not be applicable to the said Bill of Entry. - AT
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Customs:
Classification of imported goods - plastic trigger sprayer for plastic bottles lotion pump for plastic bottle and fine mist sprayer for plastic bottles - What were imported were mounts which could be fixed on any bottle. There is a very specific heading for such goods ‘9616 10 10 --- Scent sprays and similar toilet sprays - The fact that the mounts were used on bottles of toilet sprays in Reckitt and Coleman and in this case they are used for sanitizers makes no difference. - AT
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Service Tax:
Levy of serivce tax - right to use radio frequency - declared service or not - Undisputedly, the act of transferring radio frequencies now falls within ‘declared service’ by virtue of clause (j) of Section 66E of the Act. There would be no reason for the Parliament to amend Section 66E of the Act to specifically include the assignment of the right to use radio frequency spectrum or its transfer as a separate ‘declared service’ if the same was covered under Section 66E(e) of the Act - However, no service tax on such services prior to 14.05.2016 - HC
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Service Tax:
Refund of unutilized Cenvat Credit - Relevant Date - Period of limitation - export of services - In the present case, the exports were made and refund claims filed before the issuance of the above notification. The lower adjudicating authority reckoning the date of export invoice as the relevant date, rejected these refund claims as time barred - there is no ground that Section 11B mandates that the date of invoice must be considered as the relevant date. - AT
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Central Excise:
Recovery of irregular CENVAT Credit - The non-repudiation of the claims of the department doubting the authenticity and manipulation of the evidence tendered by the appellant as concocted, fabricated and after thought pointed out inter-alia by way of specific examples, the invocation of the willful misstatement/ suppression clause in the show cause notice in terms of the proviso to Section 11A is upheld. - AT
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Central Excise:
100% EOU - disallowance of concessional rate of duty in regard to tipping bodies - It can be seen that the open top containers exported by the appellant is similar to the tipper body used for transportation. It is not necessary that the goods cleared into DTA have to be identical to the goods exported by the EOU. Further, permission has been granted by the MEPZ to clear containers which are similar - the denial of the benefit of the notification is not justified. - AT
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Central Excise:
Extended period of limitation - the appellant had been filing their refund claim regularly in respect of all the clearances made from their factory. It is very obvious that the department before sanctioning the refund claim was under taking scrutiny of all the records such as duty paying invoice, payment through CENVAT, Payment through PLA, etc., Therefore, it can be conveniently construed that there was no suppression of fact on the part of the appellant. - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (4) TMI 254
Service of SCN u/s 74(1) of the U.P. State Goods and Service Act, 2017 - intimation in terms of Section 74(5) was issued to the petitioner, to which a reply has been given under DRC 01-A, Part-B - It is contended that show cause notice has been issued on the previous terms without adjudicating the petitioner's reply. HELD THAT:- Admittedly, a show cause notice has been issued to the petitioner, allowing him to submit a reply in the matter. It is only on the failure to submit a reply that the proceedings can be initiated further. In such circumstances, the remedy of the petitioner would be to submit a reply to the notice and various submissions raised on the merits of the matter are not required to be commented upon by this court, at this stage. The writ petition stands dismissed.
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2023 (4) TMI 253
Maintainability of petition - existence of second appellate forum, or not - It is contended that the petitioner has already deposited 10% of the demanded tax amount before the first appellate authority and as there is no second appellate forum, this Court should entertain this writ petition - HELD THAT:- Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd appellate tribunal, which has not yet been constituted, as an interim measure subject to the Petitioner depositing entire tax demand within a period of four weeks from today, the rest of the demand shall remain stayed during the pendency of the writ petition. Issue notice to the opposite parties.
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2023 (4) TMI 252
Release of seized cash - alleged evasion of tax due - HELD THAT:- The power of any authority to seize any 'thing' while functioning under the provisions of a taxing statute must be guided and informed in its exercise by the object of the statute concerned. In an investigation aimed at detecting tax evasion under the GST Act, we fail to see how cash can be seized especially when it is the admitted case that the cash did not form part of the stock in trade of the appellant's business. It is evident from the order of the Intelligence Officer that the cash that was seized from the premises of the appellants was not the stock in trade of the quarry business that was conducted by the appellant. The seizure of cash from the premises of the appellants was wholly uncalled for and unwarranted. Moreover, as the respondent has retained the seized cash for more than six months and is yet to issue a show cause notice to the appellants in connection with the investigation, there can be no justification for a continued retention of the said amount with the respondent. This appeal is allowed by directing the first respondent to forthwith release to the appellant the cash seized from the premises, against a receipt to be obtained from him.
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2023 (4) TMI 251
Validity of demand of GST - Mismatch in total turnover as pf GST Return (tax invoice) with total of e-way bills - assessment order has been passed by the assessing authority u/s 74 of the OGST Act with intimation through DRC-01A for the cause of less filing of return for the period of 2019-20 - Attachment of Bank Account - HELD THAT:- This Court finds that in the tax invoice the amount has been mentioned as Rs.1,97,047.86 whereas in the e-Way Bill it has been mentioned as Rs.197047086.00. Thereby, there is palpable error in the way bill, which may be construed to be an human error. If this fact will be brought to the notice of the assessing authority, the same can be considered in accordance with law and fresh assessment order can be passed. The matter is remitted back to the assessing authority for reconsideration in accordance with law - Petition allowed by way of remand.
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2023 (4) TMI 250
Service of SCN - Cancellation of GST registration of petitioner - HELD THAT:- Subsequent to filling of the petition, there is no gainsaying that the detailed show cause notice was delivered to the petitioner. Therefore, the ground raised in the petition that notice was not sent with detailed reasons to the petitioner nor was uploaded on the portal, no longer remained available to be advanced. In view of the aforesaid developments and the situation emerging, this petition is disposed of by passing the following directions, (i) The petitioner shall be given time till 15th April, 2023 to submit its reply. (ii) The date of personal hearing within this period may also be fixed to provide the reasonable opportunity of being heard to the petitioner. (iii) The decision shall be rendered by the competent authority within three weeks from the date when the aforesaid exercise of hearing is completed. Petition allowed.
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2023 (4) TMI 249
Cancellation of GST registration of petitioner - denial of Input Tax Credit - HELD THAT:- Considering the fact that the input tax credit has been denied to the appellant on the ground that the registration of the other end dealer was cancelled and according to the appellant, there were sufficient documents to show that the transactions done by them are genuine, one more opportunity should be granted by the adjudicating authority and decision should be taken on merits after considering the documents that may be placed by the appellant before the authority. Matter remanded back to the authority for fresh consideration.
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Income Tax
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2023 (4) TMI 248
Reopening of assessment u/s 147 - notice in the name of a non-existing company - notice issued in the name of the company as already been amalgamated - HELD THAT:- As relying on TAKSHASHILA REALTIES PVT LTD VERSUS DY COMMISSIONER OF INCOME TAX CIRCLE 4 (1) (2) [ 2016 (12) TMI 872 - GUJARAT HIGH COURT] assessment can always be made and is supposed to be made on the transferee Company taking into account the income of both the transferor and transferee Company and also the more advisable course from the point of view of the revenue would be to make one assessment on the transferee Company and to make separate protective assessments on both the transferor and transferee Companies separately ultimately, the Division Bench has held that the transferor Company would no longer be amenable to the assessment proceedings for the Assessment Year 2010-11, and therefore, notice for producing documents for such assessment would therefore be invalid. Thus impugned notice was issued in the name of non-existing company in spite of revenue having notice and knowledge of non-existence of such Company. Decided in favour of assessee.
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2023 (4) TMI 247
Revision u/s 263 by CIT - As per CIT assessment was erroneous in so far as it was prejudicial to the interest of revenue - whether the assumption of jurisdiction by the PCIT u/s 263 was just and proper? - provisions for doubtful debts was not disallowed, PF contribution received from the employees was not deposited to concerned account in due date AND amount was debited to the profit and loss account under the head Air Conditioner Expenses which being capital in nature is not allowable expenses - THAT:- AO had issued notice u/s 142(1) and issued a questionnaire form and the assessee had submitted all the relevant details which have been noted by the Tribunal - there is another question with regard to the details of expenses head-wise, where assessee had deducted tax at source. Tribunal on going through the assessment records found that the questionnaire on the issues raised by the assessing officer called for the details of expenses appearing in the audited P L Account and various replies filed by the assessee and the Tribunal found that the assessing officer has specifically carried out an enquiry regarding provisions for doubtful debts and air-conditioner expenses and the specific reply given by the assessee was also taken note of. Provisions for doubtful debts - Tribunal noted that the assessee during the regular course of business as claimed to have been shown sales, in the preceding years of which, some sales turned bad and the same has been written off in the books of accounts as bad debts which the assessee is entitled for and, therefore, found the claim to be admissible. Similarly, for air-conditioner charges the assessee had filed complete details along with tax deducted on the charges paid and the bills were also placed in the form of a paper book which the Tribunal perused and found the same to be acceptable. Thus, the Tribunal concluded that on both these issues, namely with regard to the provisions for doubtful debts and air-conditioner expenses, the assessing officer had conducted a detailed enquiry and thereafter completed the assessment. Secondly, it was held that the PCIT had erred in invoking the revisional jurisdiction under Section 263 of the Act. The law on the subject is well settled, that if it is found, that the assessing officer has in fact conducted an enquiry, merely because the PCIT is of a different opinion, it would not justify action under Section 263. Provident fund contribution - As mentioned, the assessment order was of the year 2017-18 and on the date, when the assessing officer completed the assessment, the law on the subject as laid down in the case of Vijay Shree Ltd.[ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] - Thus AO had followed the decision of this Court in the said case and had completed the assessment. AO having followed the decision of the Jurisdictional High Court which held the field, at the relevant point of time, the assessment cannot be held to be prejudicial to the interest of revenue. Decided in favour of assessee.
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2023 (4) TMI 246
Rectification of mistake - jurisdiction of the AO u/s 154 - Debatable issue - allowing of book loss or unabsorbed depreciation while computing the book profit u/s 115JB - HELD THAT:- Sub-section (1) of Section 154 says that with a view to rectify any mistake apparent from the record, an Income Tax authority referred to in Section 116 may do any one of the Acts as mentioned in Clauses (a) to (d) of Section 154(1). The other Sub-sections deal with matters where the issue has been considered and decided in a proceeding by way of an appeal or revision relating to the orders referred in Sub-section(1) of Section 154 - Thus, the Section empowers the authority only to rectify mistakes by amending an order passed by it or amending any intimation or deemed intimation under Sub-section (1) of Section 154 or amending an intimation under Section 200A(1) or amending an intimation under Section 206CB. However, in the instant case the Assessing Officer sought to invoke the said power and revise the entire assessment. The assessee carried the matter on appeal to the learned Tribunal and the Tribunal after noting the issue involved in the case and having examined the evidences and records and the income tax return of the assessee in respect of the earlier years, found that the claim made by the assessee is correct to the extent and the finding of the Commissioner of Income Tas (Appeals) cannot be sustained. More importantly, the Tribunal, in our view, rightly held so far as the issue of allowing of book loss or unabsorbed depreciation while computing the book profit under Section 115JB, the issue being a debatable issue, cannot be subject matter of proceedings under Section 154 - Decided against revenue.
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2023 (4) TMI 245
Condonation of delay in filing income tax return - delay of 36 days in filing the loss return - HELD THAT:- As during the relevant period, COVID- 19 pandemic was in second phase. Though, the date has been extended till 15/02/2021, the fact remains that during this period, new variant of virus of COVID-19 was emerged. That apart, there is a statement on oath of the Chartered Accountant of the petitioner contending that there was marriage of her elder sister on 16/02/2021 and she was discharging her family obligations. Rather, she has taken the responsibility mentioning that there was failure on her part to file return of income tax of the petitioner before the due date. As it is settled principle that for the mistake on the part of the professionals, the litigant should not suffer. Thus firstly, the affidavit of the Chartered Accountant, which has neither been disputed nor controverted by the respondents. Secondly, due to fault on the part of professional, the party should not suffer. Thirdly, that the delay is only of 36 days. Considering the phrase genuine hardship used in Section 119(2)(b) of the Act, to be construed liberally, as held in various decisions of the Apex Court and various High Courts, we find that the case of the petitioner comes within the sweep of phrase genuine hardship , particularly, when there is no allegation of mala fide or deliberate delay on the part of the petitioner. The impugned order deserves to be set aside and hereby set aside. The delay of 36 days in filing the loss return for the Assessment Year 2020-2021 is hereby condoned. The Income Tax Authorities to act accordingly.
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2023 (4) TMI 244
Revision u/s 263 by CIT - selecting a return under CASS - expressions 'erroneous', 'erroneous assessment' and 'erroneous judgment' - order of assessment being erroneous and prejudicial to the interest of Revenue - non-consideration of any issue or an issue arising under Section 56(2)(viib) read with Section 68 by the AO - HELD THAT:- The picking up of a return under CASS for scrutiny must be restricted only to the selected reasons. Therefore, it is procedurally legal for the Assessing Officer to confine the scrutiny to the limited reasons selected under CASS. AO are not allowed to expand the limited scrutiny introduced through the faceless interface of scrutiny to other aspects, because the ease desired through CASS is effaced. The CBDT, in its jurisdiction, inputs received and wisdom, restrained the AO to the reasons for selecting a return under CASS and computing the assessment. In this case, it is not a complaint of the assessee that the Assessing Officer committed a breach of the binding instructions communicated through the Circulars read above. However, the extended argument by referring to the circulars is that omission to notice an error under Section 56(2)(viib) by the Assessing Officer cannot be termed as erroneous, much less prejudicial to the interest of the Revenue. By resorting to a different method, a larger tax can be levied and collected cannot be the sole consideration to attract section 263, as prejudicial to the interest of the Revenue, unless the said method is the only mode legally applicable [ S.S. Muddanna v. State of Karnataka, [ 1991 (1) TMI 425 - KARNATAKA HIGH COURT] The expressions 'erroneous', 'erroneous assessment' and 'erroneous judgment' have been defined in Black's Law Dictionary, Sixth Edition, page 542. According to the definition, 'erroneous' means 'involving error; deviating from the law'. 'Erroneous assessment' is an assessment that deviates from the law and is therefore invalid. It is a defect that is jurisdictional in its nature and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, 'erroneous judgment' means 'one rendered according to the course and practice of the Court, but contrary to law, upon a mistaken view of law, or erroneous application of legal principles. Error', here, should be an error in approach, error in computation, error in applying the relevant law or facts, or error in selecting a principle which would not govern the fact situation; arbitrary exercise of quasi-judicial power certainly would fall within the scope of section 263. For the limited purpose of examining whether the assessment order has looked at the computation obligated under Section 56(2)(viib), it is more than clear that the effect of these entries is not at the first instance captured in CASS and prevented by Circulars while taking up scrutiny assessment. It is an error going by the literal meaning excerpted above. The supervisory power, which is axiomatic given the precedents on the point, would take within its reach even the orders wherein the proceedings are dropped, or the proceedings are filed. By juxtaposing the Circulars and Section 263 of the Act, we are convinced that the Circulars are not applicable vis- -vis the power under Section 263. The Commissioner has supervisory jurisdiction not only on a proceeding dropped or filed by the Assessing Officer but the legality of a proceeding resulting in an assessment. In the said context, the Commissioner certainly has jurisdiction to find out the omission in the assessment order. In the case on hand, the Commissioner has precisely done the same and recorded the views for setting aside the assessment dated 16.12.2016. The reasoning in para 3 of the Commissioner s order dated 29.03.2019, namely that the Assessing Officer is seen not to have examined the above issue, which resulted in the said order being erroneous insofar as it is prejudicial to the interest of the Revenue is the background of an assessment order but not by referring to the Circulars. A contrary view would restrict the discretion to be exercised by the Commissioner under Section 263 of the Act vis- -vis limited scrutiny under CASS. For the above reasons, questions 1 to 3 are answered in favour of the Revenue and against the assessee. Whether, on the facts and circumstances of the case, the order is erroneous insofar as it is prejudicial to the interest of the revenue? - We are convinced that the Tribunal s order on the twin requirements, whether the assessment order is erroneous and prejudicial to Revenue's interest, needs to be re-examined. The argument that the Tribunal either has substituted or expanded the reasoning of the Commissioner is not without merit. By relying on the decisions relied on by the assessee, this finding of the Tribunal warrants our interference. Therefore, the findings recorded by the Tribunal on this behalf need to be set aside, and the matter remitted to Tribunal for reconsideration afresh.
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2023 (4) TMI 243
Validity of order u/s 144 - addition being share of assessee in sale of property - assessee claims for 54F exemption denied - HELD THAT:- We find that the assessee is an illiterate farmer and claims that he was not properly presented in the assessment and appellate proceedings. Moreover, the assessee claims that he was misguided by the consultant. We further note that the assessee claims for u/s 54F exemption has also been denied by referring the decision of the Hon ble Apex Court in the case of Goetze (India) Ltd [ 2006 (3) TMI 75 - SUPREME COURT] We find in the interest of justice will be well served if the matter is remitted to the file of the Assessing Officer to consider the issue afresh. As regards, the assessee claims for exemption u/s 54F of the Act, we note that in Goetze (India) Ltd. (supra) the Hon ble Apex Court has expounded that the said decision would not impinge upon the powers of ITAT in dealing with the claim otherwise than by revised return. Accordingly, we direct that the above ground be admitted and decided as per law. Appeal of the assessee is allowed for statistical purposes.
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2023 (4) TMI 242
Unsecured Loans u/s 68 - receipts of share capital/share premium received from investor - CIT(A) did not agree with the submissions of the assessee and held that the receipt from the investors was not proved by substantial documentary evidence - plea of the assessee that there is no transaction among the parties except the allotment of shares for which the payment was made in the preceding financial year - HELD THAT:- We find that without examining the aforesaid aspect the plea of the assessee was rejected. The assessee has not produced the parties as required by the AO during the remand proceedings. Therefore, in view of the aforesaid findings, we deem it appropriate to remand this matter to the file of the AO for de novo adjudication after necessary examination/verification of the various aspects as highlighted above. Grounds raised by the assessee as well as by the Revenue allowed for statistical purposes.
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2023 (4) TMI 241
Deduction u/s 54B - DR rejected the exemption as assessee has not purchased the land in his own name and the purchase deed is in the name of the wife of the assessee - HELD THAT:- It is an undisputed fact that the assessee s share including cheque and cash. The purchase of the agricultural land was in the same financial year i.e. 2009-10 and the purchase deed dated 27.04.2010 is in the name of assessee s wife. This fact was also not disputed. The amount given to the seller was from the assessee which can be seen from the documents provided by the assessee during the assessment proceedings as well as before the CIT(A). The assessee has demonstrated that the amount was paid in cheque and remaining amount was paid on various dates in cash. The remand report is solely relying on the statement of the Notary but the actual transaction was not disputed by the AO as well as the CIT(A). Thus, the claim made by the assessee that of deduction u/s 54B was justifiable as the purchase was made in the name of assessee s wife for which the assessee has paid the entire - Therefore, the CIT(A) was not right in denying the said claim. Appeal of the assessee is allowed.
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2023 (4) TMI 240
Penalty u/s 271(1)(c) - Defective notice u/s 274 - non striking off irrelevant part in notice - HELD THAT:- As is evident from notice it is an omnibus notice without identifying the charge by striking off of the limb which is not applicable. In such circumstances, the penalty levied cannot be sustained. See case of Md. Farhan A. Shaikh . [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] - Similar proposition was laid down in SAHARA INDIA LIFE INSURANCE COMPANY, LTD. [ 2019 (8) TMI 409 - DELHI HIGH COURT] - Thus, since the penalty notice is omnibus and the charge has not been specified, the penalty is not sustainable. Disallowance of expenditure in connection with QIP and disallowance of claim of deduction u/s 80-IB on the ground of allocation of interest expenses - It cannot be said that there is concealment of income or furnishing of inaccurate particulars of income on the issue on which the penalty has been levied. All due disclosures are there. Primary dispute is with respect of nature of expenses i.e. revenue vs capital. These particulars have been completely disclosed in Income Tax Return. Hence if the claim is not accepted merely on the ground of the same being classified capital by Revenue authorities, in such as a situation the case of Reliance Petro products [ 2010 (3) TMI 80 - SUPREME COURT] comes to the rescue of the assessee. In this case it was held that mere disallowance of a claim which is not ex-facie bogus cannot lead to levy of penalty. In these circumstances, in our considered opinion, the assessee deserves to succeed.
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2023 (4) TMI 239
Income deemed to accrue or arise in India - applicable treaty is Indo-US Tax Treaty - PE in India - Receipts from the Indian customers as subscription fees - treating it as Fees for Technical Services ('FTS') - HELD THAT:- Article 7 of India-US DTAA, the income from subscription to Assessee s data base is in the nature of business profit, therefore, the same is not taxable in India as the assessee has no permanent establishment in India. By respectfully following the ratio laid down by the Mumbai Tribunal in the case of Elsevier Information System GmbH[ 2019 (5) TMI 405 - ITAT MUMBAI] in the absence of any material available on record to prove that the assessee is providing full fledged service and solutions for legal professions, we are of the opinion that the A.O. has committed an error in making the addition.The payment received by the assessee is in the nature of Business Profit which cannot be brought to tax in India in the absence of PE. Accordingly, the grounds of both the appeals of the assessee are allowed.
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2023 (4) TMI 238
Nature of gain on sale of property - LTCG or STCG - short term capital gain arose on sale of residential property as per revenue - cost of acquisition determination - Property transfer by way of Power of Attorney - HELD THAT:- As per the sale deed, the assessee became the owner of the property through Power of Attorney executed by Bharat Sareen wherein, there was no mentioning of the that the property devolved in favour of the assessee though any gift deed . We have perused the gift deed which is unregistered one. Since the gift deed falls under the documents which registration is compulsory as per section 17 of the Registration Act, 1908 the unregistered instrument of gift of immovable property does not have any legal sanctity. Therefore, considering the fact that the above property has been assigned by Shri Bharat Sareen by way of POA in favour of the assessee vide Power of Attorney and the same was sold by the assessee on 18.06.2008, the holding period of the same was not more than 36 months in the hands of the assessee - Lower authorities have committed no error in treating the same as short term capital gain . Decided against assessee. Benefit of exemption u/s 54 - Denial of deduction of basement floor on the ground that the benefit of can be passed on the assessee only in respect of one residential property instead of claim of 3 properties - HELD THAT:- In the case of Tilokchand Sons [ 2019 (4) TMI 713 - MADRAS HIGH COURT] has held that where the assessee HUF sold its residential house and invested capital gain in purchasing more than one residential houses within stipulated time limit assessee would be entitled to benefit of exemption u/s 54. Similarly in the decision of Khoobchand M. Makhija [ 2013 (12) TMI 1525 - KARNATAKA HIGH COURT] held that acquisition of more than one residential house by assessee out of capital gains would not dis-entitle assessee from availing benefit conferred u/s 54 We are of the opinion that revenue/ department have erred in denying exemption claimed u/s 54 of the Act insofar as the basement floor is concerned. Therefore, we direct the AO to give the benefit of exemption u/s 54 of the Act in respect of Basement Floor. Appeal filed by the assessee is partly allowed.
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2023 (4) TMI 237
Revision u/s 263 - unexplained deposit of cash by the assessee during demonetization period - whether order passed by the Ld. AO erroneous so as to prejudicial to the interest of the Revenue due to lack of enquiry? - HELD THAT:- We find that in this case proper and adequate enquiry has been conducted by the Ld. AO in regard to the entire aspect of the matter, particularly, the Court case relating to the dispute on the land and the orders passed by different judicial forums and upon adequate examination of the records placed by the assessee, the assessment was completed. Simply because the money was deposited during demonetization the same cannot lead to the conclusion of having any ingenuine plea of the assessee as narrated above - order passed by the Ld. PCIT quashing the order passed by the Ld. AO holding it erroneous and prejudicial to the interest of the Revenue due to lack of adequate enquiry is not sustainable in the eye of law. Decided in favour of assessee.
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2023 (4) TMI 236
Addition u/s 69C - unexplained expenditure @12% of the entire expenditure on Lorry Hire Charges - assessee is a goods carrier /transporter operating huge fleet of good carriers by hiring from the market - CIT(A) allowed the appeal of the assessee after referring to the website VAHAN, came to the conclusion that most of the vehicles which have been stated to be either motor cycles or motor cars and tractors were in fact not so but the goods carrier and only in few cases there was no information available on the website of the Ministry - HELD THAT:- CIT(A) examined the expenses claimed by the assessee comprising bills, vouchers and came to the conclusion that the order passed by the AO is just on extrapolation and on presumption basis without any verification of details/information as filed by the assessee. CIT(A) has given some example of vehicles registration status on VAHAN portal which duly explained the nature of the vehicles. We have examined the same and found no infirmity or any deficiency in the observations of Ld. CIT(A). Merit in the contention of assessee that the addition has been made as unexplained expenditure u/s 69C of the Act which is incorrect and against the provision of Act as the said explanation deals with the disallowance and addition of expenditure the source whereof is not explained by the assessee. In the present case the source is not in dispute as the assessee has duly accounted for the expenses in the books of accounts and there is no dispute as to the source of this expenditure as added u/s 69C - AO has made disallowance by extrapolation and on presumption and surmises which was rightly reversed by the Ld. CIT(A). Accordingly we uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue.
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2023 (4) TMI 235
Revision u/s 263 - short-term capital gain arose to a partnership firm as taxable either in the hands of the firm or in the hands of the partner on its dissolution/discontinuation - whether any gain is available or not? - HELD THAT:- The assessee has specifically pointed out that purchaser took responsibility of the loan required to be paid by the assessee on these assets and such low liability - CIT only took into consideration the Written Down Value of the assets in the books of account and failed to recognize the loan liability. This transaction is not to be examined in isolation. The assessee has disposed of its assets and the purchaser has discharged the liability. No short-term capital gain has arisen to the assessee and if arisen, then it is to be set off with the ultimate loss going to be suffered by the assessee on account of loan liability, thus in practicality, no gain to the assessee. Commissioner has not recorded any factual finding when assessee has brought all these details to its notice. He simply set aside the assessment for de novo enquiry. The section does not contemplate so, Commissioner has to demonstrate as to how the order is erroneous and only thereafter for verification purposes, he can set aside. In the present case, when the assessee brought it to the notice of the ld. Commissioner that block of assets have been sold and which does not give rise to any capital gain, then he should have recorded specific finding as to how this claim of the assessee is factually incorrect and only thereafter the issue can be set aside to the ld. Assessing Officer for verification of those details and re-adjudication. It is to be appreciated that both the authorities were aware about the fact that block of assets have been sold. AO has specifically took into cognizance this fact and thereafter disallowed the depreciation. Thus it cannot be said that AO has not conducted inquiry and has not gone through the complete details before accepting the claim of assessee. AO has made reference to these facts as also the balance-sheet. The impugned order is not sustainable, it is quashed. Appeal of the assessee is allowed.
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2023 (4) TMI 234
Revision u/s 263 by CIT - claim of deduction on account of bad debt actually written off in the books of the assessee - Assessee stated that in the year under consideration he had actually written off the amount of bad debts in the books of account and thus the same was claimed as deduction from the computation of income which was allowed by the AO after due examination and verification of the records and application of mind - HELD THAT:- AO has duly examined and verified the records in respect of claim made by the assessee in the relevant disclosures were made in the audited financial statements of the assessee for AY 2011-12, placed on record. Assessee had given advance in earlier years for supply of raw material to Greysham Co. Pvt. Ltd. Supplies were made to the assessee in the earlier years. Subsequently, dispute arose between the assessee and the supplier company resulting in the claim of bad debts by the assessee towards the balance advance lying with the supplier. The said advance against the supply of raw material is claimed by the assessee as a business loss and is allowable in computing the income of the assessee under the Act. From the above noted facts and observations, we find that the revisionary proceeding invoked by Ld. CIT did not meet the twin criterion enunciated in section 263 of the Act. Hon'ble Supreme Court in the case of Malabar Industries [ 2000 (2) TMI 10 - SUPREME COURT] held that this phrase i.e. prejudicial to the interest of the revenue'' has to be read in conjunction with an erroneous order passed by the AO. Their Lordships held that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the AO adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law. Thus we are convinced to quash the impugned revisionary order passed u/s. 263 - Decided in favour of assessee.
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2023 (4) TMI 233
Disallowance of deduction of interest paid to Canara bank in the computation of total taxable income - HELD THAT:- As following the decision of the Tribunal in the case of assessee s sister concern in identical facts and circumstances [ 2021 (12) TMI 140 - ITAT CHENNAI] the deduction claimed regarding interest expenditure need to be allowed. Disallowance made since no TDS was deducted while making payment to M/s.Edelweiss under Section 40(a)(ia) of the Act - In light of this particular reason emanating from this appeal, we set aside the impugned order of the Ld.CIT(A) and restore the matter back to the file of the AO with a direction that if M/s.Edelweiss has shown the amount in question in the return of income for AY 2015-16 and offered for tax the same, then there is no need of ANY disallowance u/s.40(a)(ia) of the Act. Therefore, only for limited purpose, we remit this issue back to the file of the AO - Appeal of the assessee is allowed for statistical purposes.
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2023 (4) TMI 232
Validity of reopening of assessment - non issue of mandatory notice u/s 143(2) - HELD THAT:- As issuance of notice u/s 143(2) of the Act is mandatory for the AO to proceed with the assessment u/s 143(3) of the Act, even in cases pertaining to the reopening of the assessment u/s 147 of the Income-tax Act. We hold that the assessment order is bad in law for the reason that the assessing authority passed the order u/s 143(3) of the Act without issuing mandatory notice u/s 143(2) of the Act. Accordingly, the assessment order is, hereby, quashed. Decided in favour of assessee.
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2023 (4) TMI 231
Undisclosed income u/s 69 - messages found from the mobile phone of the assessee and inventorized that the assessee was involved in hawala transactions - HELD THAT:- Since the Ld. AO herself while passing the assessment order in the case of M/s MG Oils observed that cash was deposited in the bank account of few of the customers by the assessee or by the staff of the firm, M/s MG Oils, this in itself proves that the entire amount of cash received by the assessee as noticed through the messages found from his mobile phone was related to the customers of M/s MG Oils to whom sales were made and duly accounted for in the books of accounts of M/s MG Oils and accordingly, there was no justification for making separate addition to the total income of the assessee on this count. Thus, considering the entire aspect of the matter, we are of the considered opinion that there was no justification for making addition to the total income of the assessee on account of amount worked out on the basis of alleged suspicious messages relating to hawala transactions found from the mobile phone of the assessee by treating it as undisclosed income u/s 69 and the CIT(A) rightly deleted the impugned addition without any ambiguity so as to warrant interference. Decided in favour of assessee.
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2023 (4) TMI 230
Revision u/s 263 - As per CIT AO had failed to make inquiries with regard to the expenses to be disallowed incurred for earning exempt income, as per the provisions of section 14A - HELD THAT:- Where the assessee had pointed out to the Ld.PCIT that his calculation of disallowable expenses was based on incorrect facts, the ld.Pr.CIT was duty bound to consider this contention of the assessee, and thereafter give his finding on the same, that despite the said contentions and taking note of the same also, expenses were still liable to be disallowed under section 14A of the Act, and the AO having made no inquiry, the assessment order therefore ought be held to be erroneous so as to cause prejudice to the interest of the Revenue. No such exercise having been done by the ld.Pr.CIT in the present case; his finding of the error, merely on the ground that no inquiry was made by the AO on the issue of 14A, without dealing with the contentions made by the ld.counsel for the assessee before him, is not tenable in law. Explanation 2 to section 263 is clearly not applicable in the present case. For this reason, order of the CIT, we hold, is to be set aside. Revisionary power u/s 263 of the Act has been invoked for an inconsequential and immaterial issue; as per the Ld.PCIT s calculation a disallowance of barely 10% of the income returned by the assessee, the exercise of revisionary power for a trivial issue, that too on the basis of assuming incorrect facts ,is nothing but an arbitrary exercise of the extraordinary power of revision as per section 263 of the Act. Appeal of the assessee is allowed.
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2023 (4) TMI 229
Revision u/s 263 - Disallowance of brought forward business loss as substantial change (more than 51%) in shareholding pattern - as per provisions contained u/s 79 the assessee company cannot set off its brought forward business loss of preceding assessment years which made the assessment order passed under section 143(3) dated 06/12/2019 erroneous insofar as it is prejudicial to the interest of the Revenue - HELD THAT:- Assessee drew our attention towards notice issued by the Assessing Officer during the assessment proceedings under section 142(1) of the Act requesting various details wherein a pertinent question has been put to the assessee that There is substantial increase in share capital during the year, please furnish name and address of person who has invested in share capital . Similarly, in another notice issued under section 142(1) AO put a question as to the substantial increase in share capital during the year under consideration and in response thereto, the assessee has duly replied, which has also been extracted in impugned order passed by Ld.PCIT. Thus factum of changes in the shareholding pattern has been duly disclosed by the assessee in its tax audit report (Form 3CA / 3CD) in the year under consideration - ultimate holding company was Sodexo SA, France. Moreover, when beneficial ownership is with ultimate holding company, loss cannot be disallowed. However, in the instant case, no such loss was claimed by the Assessee. PCIT has proceeded on wrong premise that the Assessing Officer has failed to do and did not conduct any enquiry qua the issue flagged by him - AO has passed the assessment order after enquiry and due verification on the basis of submissions and details furnished by the assessee by taking plausible view - Decided in favour of assessee.
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2023 (4) TMI 228
Revision u/s 263 - Nature of capital gain - assessee has shown Long Term Capital Gain instead of short term capital account - order passed by AO erroneous or prejudicial to the interest of Revenue - HELD THAT:- AO has made the inquiry in respect of the LTCG earned on the piece of agriculture land in question and the appellant had offered the detailed explanations substantiated by the cogent and authentic evidences such as registered purchase deed, registered sale deed, computation of LTCG etc., which has, after the examination and verification of the same, rightfully been accepted by the AO. On going through the copy of the purchase deed of the said land, we find that direct possession of the land in question had been handed over/transferred to the appellant being one of the co-owners/ purchaser of the land on 17 04 2008 only and not on 17 05 2010 as presumed by PCIT. Payment consideration as also the possession of the said land had been completed in the F.Y. 2007 08 (as clearly demonstrated in the said registered purchase deed), which is very much supported from the records of the Sub Registrar. Hence, so far first issue is concerned, order passed by the assessing officer is neither erroneous nor prejudicial to the interest of Revenue. Applicability of section 50C - Enhancement of the sale consideration on the basis of the valuation made by the DVO vis-a-vis the sale consideration claimed by the assessee does not arise, since the detailed explanation duly substantiated by cogent evidence was given to the AO vide submissions dated 6.8.2015, 04.01.2016, and 22.3.2016 and the same has been rightfully accepted by the AO - as argued that it is not a case of non-application of judicious and fair mind on the part of the AO as the matter has been duly considered by the AO at the time of assessment proceedings. Assessee has also contended that even after consideration of the report of the DVO and enhancement to the sale consideration share of the assessee, the difference between the valuation by the DVO and the actual sale consideration would be below 10 %. Deduction u/s 54B - AO had conducted the in-depth examination and verification of corroborative documents/materials submitted during the course of assessment proceedings and after application of fair and judicious mind, the AO had rightfully allowed the claim u/s 54B of the Act. We note that Pr. CIT had made the endeavor to substitute his personal view against the plausible view taken by the AO within the frame work of the provisions of the law and thus, there is no force in the inferences drawn by the Pr. CIT taking shelter under Explanation 2(a) of section 263 the Act. Assessee during the assessment stage has submitted all the documents, details and the explanations required by the AO and just because the Assessing Officer does not bring these facts in his assessment order does not mean that assessing officer has not conducted proper enquiry during the assessment stage. Distinction between lack of inquiry and inadequate inquiry - If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. Therefore, in the assessee`s case, it cannot be said that it is a case of 'lack of inquiry'. Appeal filed by the assessee is allowed.
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2023 (4) TMI 227
Addition u/s 68 - non-submission of details of investors - Unexplained source of capital contribution - HELD THAT:- CIT(A) concluded that the source and the flow of funds in the hands of the partner/ capital contributor Shri Arvind Billa is clear and have been explained. Shri Arvind Billa had withdrawn the money from M/s AFFY Parenterals in which he was 80% partnership. The amount withdrawn from the partnership M/s AFFY Parenterals was duly received in the HDFC Bank account being the personal bank account of Shri Arvind Billa. It was from this bank account that the amount was received as capital contribution in M/S AFFY Food Tech LLP. From the details filed before the A.O., it was clear that the source / capacity/genuineness stand explained. It is also fact on record that Shri Arvind Billa duly appeared before the A.O. in remand proceedings. As such, all requirements at the end of appellant stand fulfilled. The A.O. has also confirmed this fact in his report - Addition as deleted by the ld. CIT(A) stands confirmed in the absence of any material contra brought before us. The appeal of the revenue on this ground is dismissed. Disallowance of Salary Expenses - no details were filed, the AO disallowed 75% of the salary expense - CIT(A) deleted the addition based on the report of the AO wherein the AO submitted that the requisite details were duly provided - HELD THAT:- As noted from the AO's report and from the assessee's submissions that the requisite details were duly provided to the A.O. at the time of assessment itself - there is no basis for ad-hoc disallowance of 75% of wages. A.O. has not pointed out in his assessment as to which 75% of wages were not incurred for purposes of business. CIT(A) Correctly deleted the addition based on the report of the AO wherein the AO submitted that the requisite details were duly provided. Hence, the addition made by the AO on the grounds that no details were filed cannot be upheld. The order of the CIT(A) is affirmed on this ground. Appeal of the Revenue is dismissed.
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2023 (4) TMI 226
Addition u/s 69A - treating the cash deposit as unexplained income of the assessee - Addition u/s 115BBE - Assessee is stated to have started its own Jewellery business and claimed to have made regular purchases of jewellery - whether CIT(A) has erred taxing the above amount @ 60% by not accepting the contention of assessee that section 115BBE substituted by Taxation Laws (Second Amendment Act), 2016 which received the assent of President on 17-12-2016 and made applicable from 01-04-2017 is not applicable to A.Y. 2017-18? - HELD THAT:- Admittedly, the Photostat copy of Franchisee Agreement allegedly entered between the assessee with M/s. Nakshatra Brands Ltd., Mumbai was neither before the AO at the time of assessment nor before the ld. CIT(A) at the time of appellate proceedings. Even before the Bench, no application for additional evidence as prescribed under Rule 29 of Income Tax (Appellate Tribunal) Rules, 1931 has been moved. In this situation, the Bench cannot accept the unverifiable Photostat copy of alleged agreement. It is also noted that even before the Bench no documents in the shape of bills etc. containing complete details of the alleged purchases who allegedly purchased jewellery in cash has been placed on record. Bench has also considered the citations referred by the assessee but the same are not found applicable in the case of the assessee on factual aspect. Bench does not find merit in the submissions of the assessee and find no infirmity in the order of the ld. CIT(A) which is sustained. Thus the appeal of the assessee is dismissed.
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2023 (4) TMI 225
Deduction u/s 80-IB(10) - principle of consistency - HELD THAT:- As decided in Maps Enzymes Limited[ 2019 (8) TMI 1061 - GUJARAT HIGH COURT] when the department thought fit to grant the deduction for four consecutive years, there was no reason to raise any objection with regard to admissibility of such deduction under Section 80JJA in the fifth and the final assessment year 2008-09. Assessee cannot be denied the benefit of the exemption claimed u/s 80IB (10) of the Act as deduction was allowed by the revenue in the initial assessment year. Accordingly, we do not find any merit in the appeal filed by the Revenue. Hence, the ground of appeal of the revenue is hereby dismissed. Deduction u/s 80IB(10) - not allocating the common expenses to the eligible and non-eligible units based on the turnover which has resulted higher amount of deduction to the assessee - HELD THAT:- We note that there is a defect in adopting the basis of allocating the common expenses between eligible and non-eligible projects on turnover ground. It is for the reason that, there can be a situation where the sale of a particular project is of negligible value in a particular year whereas the cost of construction has already been incurred by the assessee. In that eventuality, the financial positions of the assessee will represent distorted position if the common expenses are allocated based on turnover. Thus, assessee has rightly adopted the basis of allocating the common expenses based on the area of construction of eligible and non-eligible projects. Hence, no merit in the ground of appeal raised by the revenue. Thus, the ground of appeal of the revenue is hereby dismissed. Alternate addition made by the AO - AO allocated the common expenses between the sales of all the projects and working progress shown of all the projects being eligible and non-eligible projects and made the addition - HELD THAT:- There is no dispute to the fact that the Revenue in the earlier year has not allocated any common expenses incurred by the assessee on projects in the ratio of the units sold and the units shown as work in progress. Accordingly, we are of the view that the principle of consistency has to be adopted as held by the Hon ble Supreme Court in the case of Excel Industries[ 2013 (10) TMI 324 - SUPREME COURT] . In the long run, there will not be any impact on the income of the assessee. It is for the reason that if any addition is made to the work-in-progress shown at the end of the financial year which will certainly enhance the income of the year in dispute but this closing work in progress will become the opening work-in-progress in the subsequent year and the profit of the subsequent year will be reduced by the same amount of addition made in the year under consideration - we direct the AO to delete the addition made by him. Decided in favour of assessee.
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2023 (4) TMI 224
TP Adjustment - comparable selection - R. Systems International Limited failed the different financial year filter adopted by the TPO - HELD THAT:- There is no dispute that R. Systems International Ltd. is following different financial year and the assessee objected inclusion of the comparable which is having different financial year. Being so, as recorded by the Ld. DRP itself, R. Systems International Ltd. fails the financial year filter. Accordingly, we direct the TPO/AO to exclude R. Systems International Ltd. as a comparable to the assessee s case. Accordingly, this company R. Systems International Ltd. is to be excluded from the list of comparables. This ground of the appeal of the assessee is allowed. Persistent Systems Ltd. - This comparable fails the functionality test and this company Persistent Systems Ltd. is not functionally similar to assessee s case as held by the coordinate bench of the Tribunal in the case of M/s. SAP Labs India Pvt. Ltd. . [ 2022 (7) TMI 1391 - ITAT BANGALORE] Thus we direct the AO/TPO to exclude this company Persistent Systems Ltd. from the list of comparables. Nihilent Ltd. - This comparable fails the functionality test and this company Nihilent Ltd. is not functionally similar to assessee s case as held by the coordinate bench of the Tribunal in the case of M/s. SanDisk India Device Design Centre Pvt. Ltd. [ 2022 (6) TMI 1299 - ITAT BANGALORE] . Thus we direct the AO/TPO to exclude this company Nihilent Ltd. from the list of comparables. OFS Technologies Ltd. - This comparable fails the functionality test and deserves to be excluded. Determining the Arm s length margin by applying Rule 10CA of the I.T. Rules, 1961 - As there are sufficient comparables available in the present facts of the case for the year under consideration, we uphold the applicability of Rule 10CA of the I.T. Rules subject to our findings herein below and the question of excluding high margin companies cannot be agreed with. Accordingly, this ground of appeal of the assessee in Ground No.7.9 is dismissed. We direct the AO/TPO to verify the functional similarities of these 3 comparables being 1) Threesixty Logica Pvt. Ltd. 2) Cybage Software Ltd. and 3) Concilient Technologies Ltd. and then to apply Rule 10CA of the I.T. rules in accordance with law. In the event these comparables found to be not functional, they may be excluded. Ordered accordingly.
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2023 (4) TMI 223
TP Adjustment - comparable selection - HELD THAT:- We direct the AO/TPO to exclude the comparables on the basis of high turnover. Since the assessee s turnover is only Rs.32.81 crores on the basis of turnover filter, selected comparables to be excluded. This ground of appeal is allowed. Order u/s 92CA(3) suffers from several computational errors which has led to incorrect computation of adjustment made in respect of the subject transaction - HELD THAT:- At the time of hearing, the Ld. A.R. submitted that there are various computational errors which lead to incorrect computation of ALP and this may be corrected. We acceded to the request of the Ld. A.R. Accordingly, any computational error committed by AO/TPO to be corrected. Accordingly, the issue remitted to AO/TPO to correct the mistake in computation of adjustments made in respect of international transactions while determining the ALP. Non-granting of working capital adjustment - HELD THAT:- We inclined to remit the issue to the file of AO/TPO to determine the correct working capital adjustment.
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2023 (4) TMI 222
Validity of order passed by the A.O u/s 143(3) - invalid jurisdiction assumed by the A.O - jurisdiction of Income-Tax Officer, Ward-1(2), Jabalpur - which AO vested with jurisdiction over the assessee s case? - HELD THAT:- Admittedly, no order u/s.127 of the Act evidencing any transfer of the case of the assessee from the Income-Tax Officer, Ward-2(2), Bilaspur i.e. the jurisdictional Officer to the Income-Tax Officer, Ward-1(2), Jabalpur is available on the assessment record. On the contrary, as observed by us hereinabove, though the jurisdictional history of the assessee reveals that his case on 27.09.2013 was transferred from the Income- Tax Officer, Ward-1(2), Jabalpur to the Income-Tax Officer, Ward-2(2), Bilaspur, but as to on what basis the jurisdiction over his case which since last many years had remained vested with the Income Tax Officer, Ward-2(2), Bilaspur (as evidenced on a perusal of the income tax returns of the preceding years) on the first occasion was transferred to the Income-Tax Officer, Ward-1(2), Jabalpur remains an unresolved mystery till date. On a specific query by the bench as to on what basis the jurisdiction over the case of the assessee was vested with the Income- Tax Officer, Ward-1(2), Jabalpur, the Ld. DR could not give any plausible answer. Only contention of the Ld. DR was that the case of the assessee was allocated to the Income-Tax Officer, Ward-1(2), Jabalpur on the basis of PAN jurisdiction. Thus we are unable to concur with the Ld. DR that the Income-Tax Officer, Ward-1(2), Jabalpur was validly vested with the jurisdiction over the case of the assessee on the basis of allocation of his case on PAN data base. Our aforesaid view that an invalid jurisdiction assumed by the A.O cannot be held to be correct by drawing support from PAN jurisdiction is supported by the order of NVS Builders (P.) Ltd. [ 2018 (4) TMI 381 - ITAT DELHI] and that of Cosmat Traders P. Ltd. [ 2021 (4) TMI 1020 - ITAT KOLKATA] We, concur with the contention advanced by the Ld. AR that as the impugned assessment u/s. 143(3), dated 12.03.2014 had been framed de hors any valid notice issued by the jurisdictional AO i.e. Income Tax Officer, Ward-2(2), Bilaspur, therefore, the same cannot be sustained - Appeal of assessee allowed.
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2023 (4) TMI 209
Deduction u/s 80P - assessee claimed that the interest income should be allowed after adjustment of expenditure - HELD THAT:- In section 80P(2)(a)(i), the assessee is entitled to deduction related interest earned from nominal member. The verification is required related to investment to nominal member as per the activity of the trust in purview of Karnataka Co-op Society Act. We remit back the issue to the AO for adjudication in light of the observation of the bench. The assessee is not more eligible for u/s. 80P related to interest income. But the assessee is eligible for the deduction related to proportionate expenditure on income, which was earned u/s. 57 of the Act. The assessee shall be entitled for proportionate expenditure cost incurred in mobilising the deposit placed in the bank. We fully relied on case of Totgars Co-operative Sale Society Ltd,[ 2015 (4) TMI 829 - KARNATAKA HIGH COURT ] - Related to the submissions of challan for deduction of tax at source is also liable for verification before the lower authority. We remit back the matter to the AO for further verification and allow the assessee for legitimate claim of expenses related to the income earned u/s. 57 -The ground relating to deduction u/s 80P(2)(a)(i) of the Act is remitted back to the file of AO for fresh consideration. Disallowance u/s 40(a)(ia) - Assessee has already filed necessary proof for withholding the taxes at sources, this requires examination at the end of AO. Accordingly, the issue is remitted back to the file of AO for reconsideration.
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2023 (4) TMI 208
Unexplained investment - AO observed that the assessee has made investments in construction of certain colleges - reference made u/s 142A - AO observed that the valuation shown by DVO was higher than the investment recorded by assessee in its books of account - Assessee argued AO made reference u/s 142A dated 24.09.2014 to DVO without rejecting books of accounts of assessee - HELD THAT:- As observed that the Ld. AO has not rejected books of assessee. We further observe that the Ld. AO made reference to DVO on 24.09.2014 and the DVO submitted report on 04.03.2015. Thus, the event of making reference to DVO had taken place before 01.10.2014 and that too without rejecting books of account. In such a situation, we suffice it to say that the Ld. AO was not justified to make a reference in the light of decision of Sargam Cinema [ 2009 (10) TMI 569 - SC ORDER] and the provision of sub-section (2) of section 142A. Assessment u/s 153A - Addition has been made in an unabated assessment year without having incriminating material, hence the same is not sustainable - HELD THAT:- As respectfully following the decision of Hon ble jurisdictional in Gahoi Dal Oil Mills [ 2019 (7) TMI 1050 - MADHYA PRADESH HIGH COURT] we find merit in the submission of Ld. AR that the addition made by Ld. AO without having any kind of incriminating-material is unsustainable. Decided in favour of assessee. Exemption u/s 11 - Denial of claim as activities of assessee were not genuine - HELD THAT:- We find merit in the submission of Ld. AR that the Ld. AO has not made any comment in the assessment-order for assessee s ineligibility to exemption. CIT(A) has called for a specific remand-report from AO on this issue but the Ld. AO has not made any reporting on this issue, which clearly showed that there was nothing to justify denial of exemption. Weightage in the submission of Ld. AR that there is neither any kind of illegality in the working of society observed by revenue-authorities nor any kind of infringement of section 11 or 13 is available on record. Faced with such situation, we are of the considered view that the assessee was entitled to exemption u/s 11 and the Ld. CIT(A) has rightly directed the Ld. AO to grant the same. Unexplained investment - As per AO impugned land had been purchased/registered which was below the prevailing market price of land in that area and hence the assessee must have paid on-money @ 110% - HELD THAT:- Firstly, we observe that the Ld. AO had no evidence or material to establish the factum of payment of on-money. He has simply framed a view that the assessee must have paid on-money and such view was framed on the basis of so-called prevailing market price . Secondly, we note that the Ld. AO had no basis to estimate the prevailing market price . He has simply presumed on-money payment @110% and thereby made a mathematical working of prevailing market price - Thus, we fully agree with the findings made by Ld. CIT(A) that the Ld. AO has made addition on the basis of mere presumption, conjecture and guesswork. Needless to mention that there is no provision in Income-tax Act, 1961 which authorizes the AO to make such hypothetical addition. Being so, we have no hesitation in holding that the Ld. CIT(A) has rightly deleted the addition. Unexplained expenses - Assessee strongly claims that the impugned excel-sheet was not found from the hard disc of assessee as alleged by Ld. AO and despite repeated request of assessee, the source of excel-sheet had not been provided - HELD THAT:- On a careful scrutiny of assessment-order, we also observe that the Ld. AO has himself mentioned in Para 12.1 The excel sheet does not contain the year wise breakup. A reasonable estimate of these year wise is as under . This categorical mention by Ld. AO clearly admits that there was no basis for attributing the transactions to AY 2009-10 under consideration. CIT(A) has also held that there is no corroborative evidence qua the alleged transactions noted in the excel-sheet. Thus, there are serious infirmities in the addition made by Ld. AO. CIT(A) has considered those infirmities in the light of decided rulings and thereafter taken a conscious view to delete the addition. We do not find anything wrong in the action of Ld. CIT(A). Therefore, this ground of revenue is also dismissed.
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Customs
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2023 (4) TMI 221
Confiscation of goods - redemption fine - penalty - appeal disposed off as not maintainable since it was filed beyond the period of 60 days period prescribed under Section 128 of the Customs Act without an application seeking condonation of the delay - HELD THAT:- The respondent in the decision of High Court in ORIENTAL TRIMEX LTD. VERSUS THE COMMISSIONER OF CUSTOMS IMPORT [ 2022 (10) TMI 751 - DELHI HIGH COURT] in favour of the assessee and setting aside the decision of the Larger Bench - it was held by Delhi High Court that The respondent/revenue, having sold the goods, which it could not have done, since the appeal was pending at the relevant time, we find that there is no good reason for adjustment of redemption fine. Both sides agree that the question of law in this matter was answered in favour of the assessee and against the Revenue by the High Court of Delhi - Learned authorised representative for the Revenue has also placed on record a letter from the Deputy Commissioner (Legal), Commissioner of Customs (Import), ICD, Tughlakabad confirming that the decision of the High Court has been accepted by the department. In other words, there is no further appeal pending before the Supreme Court and the matter has attained finality. Revenue s appeal cannot be allowed as the question of law has been decided in favour of the assessee by the High Court and the decision has also attained finality - appeal of Revenue rejected.
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2023 (4) TMI 220
Levy of safeguard duty in terms of notification No. 02/2014-Customs dated 13.08.2014 - import of Seamless Steel Tubes - section 8B (1) of the Customs Tariff Act, 1975 (referred to as CTA) read with Rule 12, 14 and 17 of the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 - first contention of the appellant is to the issuance of the show cause notice on the ground that once the bill of entry is finalized, the proper course was to challenge the assessment by way of an appeal - HELD THAT:- Rule 14 of the Safeguard Rules provides that the date of imposition of safeguard duty shall be the date only after publication of the Notification in the official gazette and therefore the safeguard duty shall not be applicable in the case of goods cleared vide Bill of Entry No. 6459749 dated 18.08.2014 as the same is prior to the publication of the Notification. It is a settled principle of law that a notification comes into force from the date of its publication in the official gazette. In view of the reasoning above, we are not inclined to accept the submissions of the revenue that rule 14 being subordinate legislation cannot take precedence over the statutory provisions for the simple reason that the notification being subordinate legislation cannot go contrary either to the Act or the Rules. The reason for implementing the notification immediately on the same day was the underlying object for introducing the safeguard duty and the purpose which it sought to achieve, i.e. to safeguard the interest of the domestic industry. This is evident from the notification when it says that the Director General (Safeguard) in his final findings has come to the conclusion that increase in imports of Seamless Pipes and Tubes into India has caused serious injury to the domestic producers of Seamless Pipes and Tubes necessitating the imposition of safeguard duty on import of these goods into India. It is thus concluded as under: (i) The notice under section 28 of the Customs Act, 1962 have been validly issued by the Department for the non-levy of safeguard duty. (ii) That in terms of sub-section 9 of section 8B of CTA, the provisions of Customs Act are applicable to the safeguard duty chargeable under the section, including those relating to the date of determination of rate of duty, assessment, non-levy, short-levy, refunds, interests, appeals, offences and penalties. (iii) Therefore, the rate of duty and tariff valuation of imported goods shall be determined under section 15(1) of the Customs Act, 1962 in the following manner:- a. Where goods are cleared for home consumption under section 46, the rate of duty shall be as on the date on which the Bill of Entry is presented. b. Where goods are cleared from the warehouse under section 68, the date the goods are actually removed from the warehouse substituted by the Finance Act, 2003 w.e.f. 14.05.2003 to read as, a bill of entry for home consumption in respect of such goods is presented under that sections . (iv) The relevant date for determining rate of duty is not with reference to the entry of the vessel into the territorial waters in India before the presentation of the Bill of Entry. Therefore, to say that the goods were shipped from the country of origin prior to the issuance of the Notification on 13.08.2014 and, therefore, the safeguard duty is not applicable, is clearly untenable. . (v) The Notification No. 02/2014-Customs dated 13.08.2014 has been validly issued under section 8B of CTA, read with Rule 12, 14 and 17 of the Rules, imposing the safeguard duty on Seamless Steel Tubes. (vi) That Rule 14 of the Rules provides that safeguard duty levied under Rule 10 or 12 shall be effective from the date of publication in the official gazette. (vii) In the present case, the notification in question, though issued on 13.08.2014 was published in the official gazette on 25.08.2014. In terms thereof:- a. Bill of Entry No. 6459749 dated 18.08.2014 having been presented for clearance of goods though after the issuance of the Notification in question but before it was published so as to be effective and, therefore, the Notification imposing the safeguard duty shall not be applicable to the said Bill of Entry. b. Bill of Entry No. 6690337 dated 08.09.2014 having been presented after the Notification in question was published on 25.08.2014 and, therefore, the same was effective on that date. The appellant is liable to pay the safeguard duty in respect of the Bill of Entry No. 6690337 dated 08.09.2014.
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2023 (4) TMI 219
Classification of imported goods - plastic trigger sprayer for plastic bottles lotion pump for plastic bottle and fine mist sprayer for plastic bottles - whether classifiable under 84242000 as held by the Commissioner (Appeals) in the impugned order or under CTH 96161000 as claimed by the Revenue? - HELD THAT:- The imported goods samples of which were produced by the learned counsel for the respondent have been perused. These are mounts which can be screwed on top of any bottle and can be used to dispense the contents of the bottle either in the form of a spray or as a gel. These were used, according to the learned counsel, on a large scale during COVID pandemic to sanitize hands using a gel or spray sanitizers. These are not mechanical appliances for spraying covered under Chapter 8424. These can be mounted on the bottles and used to dispense sanitisers and other liquids or gels. They can only be called Scent sprays and similar toilet sprays, and mounts and heads therefor . This heading covers not only the sprays but also the mounts and heads for the sprays. What were imported were mounts which could be fixed on any bottle. There is a very specific heading for such goods 9616 10 10 --- Scent sprays and similar toilet sprays . Learned counsel for the respondent argued that the mounts are not for scents or toilet sprays but for sanitisers this heading should not apply. This submission cannot be accepted. The issue of classification of mounts and heads used to spray/ dispense liquid soap was decided by this Tribunal in COMMISSIONER OF CUSTOMS, MUMBAI VERSUS RECKIT COLMAN OF INDIA LTD. [ 2005 (4) TMI 407 - CESTAT, MUMBAI ] where it was held that The use of the mounts to dispense and thus spray liquid Soap is not in doubt. We therefore cannot share the classification of Mounts and Heads for toilet sprays/dispensers to be under 84.24 the view of CC (A). We would uphold the lower authorities classification under 9616 with the consequence as arrived. The fact that the mounts were used on bottles of toilet sprays in Reckitt and Coleman and in this case they are used for sanitizers makes no difference. Appeal of Revenue dismissed.
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Insolvency & Bankruptcy
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2023 (4) TMI 218
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - We thus do not find any substance in the submission of the learned counsel for the petitioner that entry tax legislation is not covered by Entry 52 List II? - whether the debt was mired in disputes prior to issue of demand notice? - HELD THAT:- This examination would be in line with the well settled test that has been laid down in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT ] as to how the Adjudicating Authority has to examine an Application under Section 9 - It was held that Further, the appellant has withheld amounts that were due to the respondent under the NDA till the matter is resolved. Admittedly, the matter has never been resolved. Also, the respondent itself has not commenced any legal proceedings after the e-mail dated 30th January, 2015 except for the present insolvency application, which was filed almost 2 years after the said e-mail. All these circumstances go to show that it is right to have the matter tried out in the present case before the axe falls. There is a clear admittance of operational debt which was due and payable on the part of the Corporate Debtor and that the operational debt was beyond the threshold limit of Rs.1 lakh. Further, it is pertinent to add here that the Corporate Debtor has admitted that not only was the Operational Creditor entitled to receive payment, but the payment claimed was made in terms of the MoU and invoices were annexed with the claim. It is also unequivocally clear that even on the date of filing of reply to the Section 9 application by the Corporate Debtor, by their own admission, the operational debt which had become due and payable remained unpaid. Therefore the logical corollary is that default had been committed qua the operational debt owed to the Operational Creditor. There are force in the contention of the Appellant that the Adjudicating Authority has committed gross error in ignoring the fact that the Corporate Debtor has admitted its liability to pay the Appellant for services rendered as a real estate agent. There is also substance in the argument that the Corporate Debtor have themselves admitted that the invoices were in terms of the MoU and issued after the Corporate Debtor had confirmed that consideration amount from the allottees had been received. That being so the claims of operational debt cannot be viewed to be pre-mature and hence the ratio of K. Kishan supra is inapplicable given the present set of facts. The operational debt which had admittedly become due and payable having not been disputed prior to issue of demand notice and not been discharged by the Corporate Debtor, this is a fit case for admission of CIRP - the Adjudicating Authority has erroneously rejected the application under Section 9 of IBC. The impugned order is set aside with the following directions:- (i) The Corporate Debtor will release payment of Rs.12,72,741.74 by way of Demand Draft in favour of the Operational Creditor being the admitted and undisputed operational debt. (ii) The above payment shall be released within 30 days from the date of uploading of this order failing which the Corporate Debtor would come under the rigours of CIRP on the expiry of said 30 days period. (iii) In case, the Operational Creditor refuses to accept the above sum as payment towards operational debt, the Section 9 petition shall become infructuous and deemed to have been dismissed. (iv) No order as to costs.
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2023 (4) TMI 217
Approval of Resolution Plan - allocation of meagre amount (not an issue here) - It is submitted that one of the objection raised by M/s Vedanta Ltd. was with regard to conflict of interest between the Successful Resolution Applicant and the Financial Creditors, which was dealt and rejected by the Adjudicating Authority - HELD THAT:- The commercial wisdom of the Committee of Creditors in approval of a resolution plan is to be given due regard is the settled law of the Hon ble Supreme Court in Essar Steel India Ltd. Committee of Creditors vs. Satish Kumar Gupta [[ 2019 (11) TMI 731 - SUPREME COURT] ] - Approval of Resolution Plan by the Adjudicating Authority can be questioned on a limited ground that plan is violative of any statutory provision including provision of Section 30 Sub-section (2) of the I B Code. One of the submission which has been raised by learned counsel for the Appellant is that very limited amount has been paid to the Appellant and other creditors that comes to 0.0969% of the admitted claim - Present is not a case that it is contended that payment to the other creditors/ Operational Creditors is less than the liquidation value. The allocation in the plan to the creditors can be questioned when the plan value earmarked for them is less than the liquidation value. Mere allocation of meagre amount cannot be a ground to question the resolution plan. The order approving the Resolution Plan, need not be interfered - appeal dismissed.
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Service Tax
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2023 (4) TMI 216
Levy of service tax - right to use radio frequency - declared service or not - Whether MTNL is liable to pay service tax on the compensation of ₹458.04 crores received by it from the Government of India on surrender of spectrum 800 MHz CDMA? - SCN issued beyond the period stipulated under Section 73(1) of the Act or not - HELD THAT:- The impugned show cause notice does not disclose any material that could suggest that MTNL had knowingly and with a deliberate intent to evade the service tax, which it was aware would be leviable, suppressed the fact of receipt of consideration for rendering any taxable service. On the contrary, the statements of the officials of MTNL, relied upon by the respondents, clearly indicate that they were under the belief that the receipt of compensation/financial support from the Government of India was not taxable. Absent any intention to evade tax, which may be evident from any material on record or from the conduct of an assessee, the extended period of limitation under the proviso to Section 73(1) of the Act is not applicable. The facts of the present case indicate that MTNL had made the receipt of compensation public by reflecting it in its final accounts as income - merely because MTNL had not declared the receipt of compensation as payment for taxable service does not establish that it had willfully suppressed any material fact. MTNL s contention that the receipt is not taxable under the Act is a substantial one. No intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return. Undisputedly, the act of transferring radio frequencies now falls within declared service by virtue of clause (j) of Section 66E of the Act. There would be no reason for the Parliament to amend Section 66E of the Act to specifically include the assignment of the right to use radio frequency spectrum or its transfer as a separate declared service if the same was covered under Section 66E(e) of the Act - the assignment by the Government of the right to use radio frequency spectrum or its subsequent transfer does not constitute declared service under Clause (e) of Section 66E of the Act; it does so under Clause (j) of Section 66E of the Act. However, no service tax on such services prior to 14.05.2016 - Petition disposed off.
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2023 (4) TMI 215
Refund of Service Tax paid on the services exported under Notification No. 11/2005-ST dated 19.04.2005 - whether refund can be rejected without putting the appellant on notice for the ground on which refund was rejected - date of export of service - HELD THAT:- Insofar as the rejection of refund of Rs.13,77,971/- is concerned, the appellant were not issued with a show cause notice for the ground on which the same was rejected. The appellant did not get opportunity to present their case. Therefore, that part of the order is not sustainable since the appellant could not present their case and adjudicating authority has made up his mind without taking into consideration the facts and contention of the appellant on the issue. Insofar as the rejection of refund of Rs. 27,33,267/- is concerned, it is to be examined whether the export took place on 30.06.2012 or after that. It is crucial to examine the issue because after 01.07.2012 the said Notification No. 11/2005-ST did not have force of law. The notification states that the services should be exported in terms of Rule 3 of Export of Service Rules, 2005 to be eligible to avail the benefit of said notification - Taking the relevant invoice into consideration which was raised on 30.06.2012, it is very clear under the said Rule 3 of Export of Service Rules, 2005 that export of service was provided on 30.06.2012. The said Notification No. 11/2005-ST was applicable to the appellant for the subject export - the impugned order is set aside - appeal allowed.
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2023 (4) TMI 214
100% EOU - Refund of unutilized Cenvat Credit - export of services - appeal filed beyond the period of one year from the dates of export invoices or not - time limitation - non-reversal of credit as required under Notification No. 27/2012-CE (NT) dated 18.06.2012 - certain portion of the credit has been disallowed for the reasons of non-registration of the premises, missing invoices, excess credit wrongly taken, service provider s registration number not available. Whether the refund claims filed by the appellants are time barred or not, in terms of the provisions of Section 11 B of the Central Excise Act, 1944 read with Notification No. 27/2012 CE (NT) dated 18.06.2012? - HELD THAT:- Section 11B of the CEA, 1944 has been drafted to prescribe a procedure for claiming of refund of central excise duty under various circumstances within one year from the relevant date. The relevant date has been defined in the explanation to this Section for various purposes. As far as the export of services is concerned, no relevant date was prescribed in this Section because this was meant for refund of duty of excise and not for export of services. Since the Notification No. 27/2012 CE (NT) dated 18.06.2012 required the claim to be made before the expiry of a period specified under Section 11 B and this Section does not specify what is the relevant date in case of export of services, the Tribunal has, in a series of decisions, held that relevant date in case of export of services is the date of realization of the foreign exchange. The reason for this is the export of services is not complete unless the foreign exchange is realized as per Rule 3 (2) (b) of export of services Rules, 2005. Therefore, unless the foreign exchange is realized, the export is not complete and therefore the relevant date must be the date of realization of foreign exchange. In the present case, the exports were made and refund claims filed before the issuance of the above notification. The lower adjudicating authority reckoning the date of export invoice as the relevant date, rejected these refund claims as time barred - there is no ground that Section 11 B mandates that the date of invoice must be considered as the relevant date. The residual category under Section 11 B is the date of payment of duty. In case of export of services as in these appeals there is no payment of duty at all. Rejection of a portion of the refund claims for the reason that they are not eligible for availment of Cenvat credit under Cenvat Credit Rules, 2004, on account of missing invoices, excess credit wrongly taken, Not being related to output service, non-mentioning of service provider s registration number on the input/input service invoices etc. - HELD THAT:- In the grounds of appeal the appellants have admitted that certain excess credit was wrongly taken by them amounting to Rs.7,819/- and a few invoices involving a credit of Rs. 1,91,935/- were not submitted which were categorized as missing. The appellant is required to reverse this input tax credit as admitted by them. The denial of refund claims filed is not in accordance with law - Appeal allowed.
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2023 (4) TMI 213
Classification of services - cargo handling services or not - providing services of loading, supervisions, weighment and inspection and inter-carting services for the raw materials and finished goods within the factory premises of M/s Essar Steel Ltd. (M/s ESL) - whether the activity carried out by the Appellant for DTA and SEZ Unit of M/s Essar Steel Ltd. is taxable under the head of Cargo Handling Services and liable to service tax? - HELD THAT:- From the definition of taxable service, it is clear that loading, unloading, handling of cargo for all modes of transport and any other service incidental to freight would be covered by the definition of cargo handling . The definition also very clearly specifies that mere transportation of goods will not be considered as cargo handling service. The definition itself clarifies that if the activity is only of transportation, then the said activity cannot be called as cargo handling service. Appellant s services only involved movement of goods within the factory premises of M/s Essar Steel Ltd. Further the activity undertaken by the Appellant did not involve any packing or unpacking. From the work order referred in the impugned matter it is also clear that Appellant were concerned only with the movement of material within the factory area of M/s Essar Steel. In the present matter appellant merely shifts goods within the plant area and were not carrying any cargo. The Tribunal has dealt with the identical issue in case of SAINIK MINING ALLIED SERVICES LTD. VERSUS COMMR. OF C. EX., CUS. ST [ 2007 (11) TMI 90 - CESTAT, KOLKATA] related to transportation of coal within a colliery area where a demand under Cargo Handling Service was made against the contractors. The Tribunal in this case held that the dominant activities undertaken being primarily within a mine, the said activity is not taxable as Cargo Handling Service. In the present case too, the service provided for the authorized operation by the appellant to the SEZ based service recipient, demand of service tax is not sustainable - Appeal allowed.
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Central Excise
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2023 (4) TMI 212
Recovery of irregular CENVAT Credit and Education Cess Secondary Higher Education Cess - non-production of required evidence in support of their job work claim - N/N. 214/86-CE. - HELD THAT:- In terms of sub rule (I) of Rule (3) of the CENVAT Credit Rules,2004, a manufacturer of finished goods is allowed the benefit of availment of CENVAT Credit on any inputs used in the manufacture of intermediate goods, processed by way of job work, availing the benefit of exemption as contained in MF, DR Notification No. 214/86-CE dated 25.03.1986, and received by them for use in or in relation to, the manufacture of final product - For failure to demonstrate adherence to legal prescriptions, the authorities below did not find sufficient merit in the appellants claim. They held the entire issue to be violative of the provisions of law, thereby denying the appellants the benefits sought upholding the Show Cause Notice. The prescription entitling for availment of the exemption is in effect a mandatory requirement, in the absence of which consequential benefits do not flow, the onus to establish their entitlement to availment utilization of the said credit calls for adherence, to the norms specified. These are as stated mandatory requirements and non-adherence thereto is liable to denial disallowing of the said credit. The conditions stipulated can certainly not be considered merely procedural but is a sine qua non to the availment of the exemption contained in the notification ibid. The non-repudiation of the claims of the department doubting the authenticity and manipulation of the evidence tendered by the appellant as concocted, fabricated and after thought pointed out inter-alia by way of specific examples, the invocation of the willful misstatement/ suppression clause in the show cause notice in terms of the proviso to Section 11A is upheld. Besides, it is an admitted position that the appellant could produce no document whatsoever, in support of their contention for credit availment for the year 2006-07. There are no merit in the appeal filed by the assessee - appeal dismissed.
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2023 (4) TMI 211
100% EOU - disallowance of concessional rate of duty in regard to tipping bodies - benefit of the notification dated 31.03.2003 dis-allowed alleging that the goods cleared to DTA are not similar to the goods exported to the appellant as EOU - whether the tipper bodies cleared by the appellant into DTA, who is 100% EOU, are eligible for the benefit of concessional rate of duty under Notification No.23/2003 CE? HELD THAT:- It can be seen that the appellant has been permitted to clear/sell containers of iron/steel/aluminum/stainless steel/etc. (other than Marine Freight Containers). The allegation of the Department is that the appellant have exported only Marine Freight Containers and Special Purpose Containers. The tipper body and Steel Structures cleared by them are not similar to the goods exported as required under 6.8 of the Foreign Trade Policy - In the case in hand, the product in dispute is Tipping Body . The authorities below have decided that it is different from Marine Freight Containers and Open Top Containers. The words used in para 6.8 (a) of FTP is that the EOU unit may sell products in DTA which are similar to the goods that are exported by the unit. The word used is similar and not identical. It can be seen that the open top containers exported by the appellant is similar to the tipper body used for transportation. It is not necessary that the goods cleared into DTA have to be identical to the goods exported by the EOU. Further, permission has been granted by the MEPZ to clear containers which are similar - the denial of the benefit of the notification is not justified. The impugned order demanding differential duty is set aside. Appeal allowed.
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2023 (4) TMI 210
Refund in respect of the captioned clearances - Area based exemption - case of the department is that in case of depot clearance the price at which the goods are actually sold the duty is payable on such transaction value charged from depot in terms of Rule 7 of Central Excise Valuation Rules, 2000 - extended period of limitation - HELD THAT:- The dispute about valuation of the excisable goods, the appellant have not contested strongly. Moreover, we also find that there is no dispute that in case of sale through depot, the transaction value prevailing at depot at the time of sale of goods shall be the transaction value for charging excise duty in terms of Section 4 of Central Excise Act, 1944. Therefore, on merit the demand is sustainable. However, the appellant have made out strong case on limitation. The appellant though working under the self-removal procedure, but they were working under Notification No.39/2001-CE. As per the said notification, the appellant had been filing their refund claim regularly in respect of all the clearances made from their factory. It is very obvious that the department before sanctioning the refund claim was under taking scrutiny of all the records such as duty paying invoice, payment through CENVAT, Payment through PLA, etc., Therefore, it can be conveniently construed that there was no suppression of fact on the part of the appellant. Extended period of limitation - HELD THAT:- In the present case since the appellant was admittedly entitled for the refund of duty demanded in the impugned order there cannot be any intention to evade payment of duty. In this circumstances, we are of the clear view that there is absolutely no mala fide intention to evade the payment of duty on the part of the appellant. Therefore, the demand for extended period is not sustainable. In the present case the SCN was issued on 09.03.2011 for covering the period of 2005-06 to April, 2009. Hence, the entire demand is time bar. The appeal is allowed on the ground of time bar.
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