TMI Tax Updates - e-Newsletter
May 24, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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High Court: Registration cancellation during pandemic set aside, registration restored with return filing deadline.
The Calcutta High Court considered the maintainability of a petition challenging the cancellation of registration u/s non-filing of returns for six consecutive months. The court noted the absence of an appeal by the petitioner, allowing the revenue to argue the availability of an alternative remedy, rendering the writ petition not maintainable. Acknowledging the impact of the pandemic on business operations and return filings, the court emphasized the need for a sympathetic approach. Consequently, the court set aside the cancellation order, restoring the petitioner's registration and directing the filing of returns from a specified period. Failure to comply within three weeks would result in automatic re-cancellation. The petition was disposed of accordingly, ensuring justice while balancing the interests of the petitioner and the government.
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Madhya Pradesh High Court directs release of original documents seized by Respondent, allows cross-examination of witnesses, and ensures principles of natural justice are upheld.
The Madhya Pradesh High Court directed the Respondent to release the original documents seized from the Petitioner's premises within 30 days of issuing the show cause notice, as per u/s 67(3) of the CGST Act and u/r 27 of the Central Excise Rules 2017. The Petitioner is entitled to both certified copies of relied documents and original copies of non-relied documents for a fair defense. The court emphasized the Petitioner's right to cross-examine witnesses relied upon in the show cause notices to ensure a fair hearing and adherence to principles of natural justice. The Respondents were ordered to provide all original seized documents to the Petitioner for preparing a reply, thereby allowing the petition.
Income Tax
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Guidelines for compulsory selection of returns for Complete Scrutiny in FY 2024-25 issued by CBDT. Key parameters include surveys u/s 133A, searches u/s 132, and notices u/s 142(1) & 148.
The guidelines for compulsory selection of returns for Complete Scrutiny during FY 2024-25 outline the parameters and procedures for such selection. Key parameters include cases from surveys u/s 133A, search and seizure cases u/s 132/132A, non-filing of returns in response to notices u/s 142(1), cases with notices u/s 148, cases involving registration/approval under sections like 12A, 12AB, and cases with recurring issues of law or fact. The selection requires prior administrative approval and timely transfer to Central Charges u/s 127. Specific timelines for actions and notices u/s 143(2) are provided. Cases selected for scrutiny by International Taxation and Central Circle charges will be handled by respective charges.
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In a case of undisclosed investment in family property, High Court upholds ITAT's decision confirming the addition.
In the case before Punjab and Haryana High Court, undisclosed investment made to acquire rights in family property was deemed as undisclosed income for the block period. The revenue authorities found a receipt during search indicating the sister-in-law confirmed receiving the amount with no further payment due. The Income Tax Appellate Authority rejected the sister-in-law's certificate as biased towards the appellant. The court upheld the ITAT's decision that the property was handed over after full payment, supported by a demand draft receipt. The appellant's subsequent payments to the sister-in-law were not considered relevant as they were made after the search and without clear indication of settling the remaining amount. The appeal was dismissed, affirming the ITAT's order.
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Reassessment Order validity questioned due to CIT(A) errors. AO appeal allowed due to lack of independent decision by CIT(A).
In the case of 2024 (5) TMI 1099 before ITAT Mumbai, the issue was the validity of a reassessment order. The CIT (A) passed an order that contained different grounds than those raised by the assessee, indicating a lack of independent application of mind. The assessment order referred to in the caption did not match the one in the body of the order. The facts in the assessment order differed from those mentioned by the CIT (A). The grounds of appeal were also different between what the assessee submitted and what the CIT (A) included in the order. The ITAT found the CIT (A) had engaged in a 'cut & paste' exercise without proper consideration, leading to an unsustainable and perverse order. Consequently, the ITAT allowed all grounds of appeal, directing the CIT (A) to reconsider the case based on the actual facts and provide the assessee with a fair hearing. The appeal of the AO was allowed.
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ITAT Kolkata held that addition u/s 50C not sustainable as lower authorities failed to refer to DVO for fair property value.
In the case of 2024 (5) TMI 1097 before the ITAT Kolkata, the issue revolved around the addition made u/s 50C of the Income Tax Act. The assessee had contended that the fair market value of the property was lower than the value adopted by the stamp duty authority and requested a reference to the Departmental Valuation Officer (DVO) as per the provisions of section 50C. Both the Assessing Officer and CIT(A) rejected this contention without providing any reason, thereby not following the statutory provisions of section 50C(2). The ITAT held that the addition made by the Assessing Officer was not sustainable in law. Citing the decision in Hari Om Garg [2019 (5) TMI 1834 - ITAT Agra] and other High Court cases, the ITAT ruled in favor of the assessee, ordering the deletion of the addition. The appeal of the assessee was allowed, and the addition made by the lower authorities was deemed unsustainable and ordered to be deleted.
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ITAT Hyderabad directed TP adjustment to be based on transactions with AEs only. Manufacturing segment to consider TNMM, trading segment to consider RPM. Segmentation issue remanded.
The case involves Transfer Pricing (TP) adjustments and the classification of segments for benchmarking purposes. The Appellate Tribunal held that TP adjustments should be based on transactions with Associated Enterprises (AEs) only. The Tribunal directed the Assessing Officer/TPO to consider only the operating profit/cost of AE segments and to apply the Transactional Net Margin Method (TNMM) for services rendered to AEs. The issue of using Resale Price Method (RPM) for the trading segment was also referred back to verify if value addition was made. The classification of the assessee as a manufacturing segment was questioned, and the Tribunal directed verification based on transaction volumes. The Tribunal agreed with the DRP that TP adjustments should be limited to AE transactions only when TNMM is adopted as the Most Appropriate Method (MAM). The appeal was allowed for statistical purposes.
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ITAT Mumbai allowed 50% deduction u/s 80G for donation exceeding 10% of income to approved educational institution.
In the case before ITAT Mumbai, the issue revolved around the deduction u/s 80G for a charitable trust. The assessee, now assessable as an AOP, had donated an amount exceeding 10% of its gross total income to an approved educational institution. The CIT(A) held that Section 80G(4) does not restrict donations to 10% of total income, allowing 50% deduction. The matter was remanded to verify deductions for entities u/s 80G(3)(a)(iiif). The Tribunal upheld this decision, dismissing the appeal. Additionally, the claim for deduction u/s 80GGA, though not separately mentioned in the return, was considered valid as it was included under Chapter VIA. Lastly, disallowance of carry forward of excess expenditure was deemed irrelevant as the assessee did not claim benefits u/s 11 and 12.
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ITAT Mumbai allowed the exemption u/s 54 for LTCG as construction not started within 3 years. AO directed to tax only unutilized amount u/s 45.
In the case of 2024 (5) TMI 1094 before the ITAT Mumbai, the issue revolved around the denial of exemption claimed u/s 54 of the Income Tax Act. The Tribunal acknowledged the challenges faced by house buyers in delayed construction projects. It was noted that the assessee had utilized only a portion of the Long Term Capital Gain for a new residential house. The Tribunal directed the Assessing Officer to tax only the balance amount u/s 45, in line with the proviso to section 54(2) of the Act. The AO was instructed to allow exemption for the amount utilized for the new residential flat. Consequently, the appeal was partly allowed on this ground.
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ITAT Delhi held that as the assessee lacked books of accounts, Sec 68 doesn't apply. Assessee proved lender's creditworthiness, identity, and transaction genuineness.
Addition u/s 68 of the Income Tax Act. The assessee, who did not maintain books of accounts, received interest-free loans from Shri Anil Kumar Singh through normal banking transactions. The ITAT held that since the assessee did not maintain books of accounts, section 68 was not applicable. The assessee successfully proved the identity, creditworthiness of the lender, and the genuineness of the transaction by providing documents such as balance sheets and tax audit reports of the lender. The lender's tax audit balance sheets confirmed the loan amount, and the source of the source for the unsecured loan was not required to be proved. The lender's cash deposits were from available cash balances, and there were no adverse comments by the Tax Auditor. The loan to the assessee was reflected in the lender's audited balance sheet, establishing the genuineness of the transaction and the creditworthiness of the lender.
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ITAT Chennai held no disallowance u/s 14A r.w.r. 8D as no exempt income earned. Re-examine TDS u/s 195 on technical services considering DTAA. Dismissed prior period expenditure claim.
In the case before ITAT Chennai, the issue of disallowance u/s 14A r.w.r. 8D was considered. The CIT(A) found that no exempt income was earned by the assessee, leading to full relief being granted. The order of the CIT(A) and AO regarding disallowance was set aside, directing the AO to delete the addition from the total income. Regarding TDS u/s 195 for listing charges paid to Bank of New York, it was noted that DTAA provisions were not considered. The AO was directed to re-examine the issue in light of DTAA provisions. The claim of prior period expenditure was dismissed as it cannot be allowed in the assessment of a specific year. The writing off of carbon income was remanded to the AO for re-examination based on past treatment by the Department. The issue was decided in favor of the assessee for statistical purposes only.
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HC revoked provisional attachment order u/s 281B for Fixed Deposit Receipts due to business hardship. Attachments released.
The High Court considered a petition seeking revocation of a provisional attachment order u/s 281B of Fixed Deposit Receipts (FDRs). The ACIT (Hq) on behalf of PCIT (Central), Kanpur Nagar, approved the extension of the attachment. The assessee requested release of FDRs due to business hardship. The High Court order was referenced. The Ld. PCIT (Central) Kanpur revoked all provisional attachments u/s 281B. Immediate steps were directed for releasing the FDRs, with an action report due within a week. Corrective action was noted in response to the petition.
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ITAT allowed additional evidence on LTCG & deduction u/s 54F. CIT(A) erred in not admitting evidence.
In the case before ITAT Delhi, the issue was the admissibility of additional evidence related to Long Term Capital Gains (LTCG) and deduction under section 54F. The assessee submitted evidence to prove that the agricultural land sold was not a capital asset and that the sale consideration was reinvested as per section 54F. The Tribunal held that the additional evidence should be considered under Rule 46A, despite not being presented before the Assessing Officer (AO). The CIT(A) erred in not admitting the evidence, citing a Supreme Court decision. The Tribunal emphasized that the CIT(A) has powers equal to the AO and can accept additional claims without the need for the assessee to revise the return. The appeal was allowed for statistical purposes.
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ITAT held interest u/s 220(2) not applicable as FBT demand not properly notified to assessee. Lack of notice served by Revenue.
The ITAT Delhi held that interest levied u/s 220(2) on non-payment of FBT demand, adjusted against a refund due, was not justified as no intimation or notice of demand was served on the assessee regarding the FBT liability u/s 115WE. The assessee had deposited the FBT demand suo motu, but it was still recovered from the refund along with interest. The tribunal found that the mere appearance of the demand on the e-filing portal did not absolve the Revenue from properly serving the intimation and demand notice. The Revenue failed to provide evidence of serving the notice. While the assessee had paid the FBT liability, it did not create an interest liability u/s 220(2). The appeal of the assessee was allowed.
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ITAT restricted addition u/s 68 to 0.75% of transaction value due to lack of details, setting a consistent view based on previous cases.
The ITAT Surat dealt with a case involving unexplained credit u/s 68. The assessee received a commission of 0.50% per Rs. 100 but failed to provide details of transactions or persons involved. The Tribunal noted the absence of specific details and the peculiar nature of the business. Previous cases were cited where additions were restricted to 0.125% to 0.35%. Following a consistent approach, the Tribunal limited the addition to Rs. 75 per lakh, equivalent to 0.75% for Rs. 100. The total credit in the bank account was found to be Rs. 2.07 crores after considering cheque and cash deposits. The Tribunal allowed the appeal partly, directing the assessing officer to adjust the assessment accordingly.
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ITAT held interest on outstanding receivables as international transaction, requiring separate benchmarking. ALP to be determined using LIBOR+200 points.
The ITAT Hyderabad addressed a Transfer Pricing (TP) Adjustment issue regarding interest on outstanding receivables, determining if it constitutes an international transaction. Referring to the amendment to Section 92B of the Act by the Finance Act, 2012, the Tribunal held that interest on outstanding receivables is indeed an international transaction requiring separate benchmarking. The Tribunal noted that the DRP directed the AO to use the SBI short-term deposit interest rate as the Arm's Length Price (ALP) interest rate and adjust income based on a credit period of thirty days or as per the agreement/invoice. The Tribunal directed the AO/TPO to compute the interest rate on similar foreign currency receivables/advances as LIBOR+200 points, applying the appropriate credit period. The Tribunal allowed the grounds in part, emphasizing the need for accurate computation and adherence to the specified credit period.
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ITAT held that cash deposits during demonetization were justified as the AO did not find any discrepancies in the assessee's books of accounts.
The ITAT Delhi ruled on an appeal regarding addition u/s 68 r.w.s. 115BBE for unexplained cash deposits during demonetization. The assessee explained that the deposits were from sale proceeds and past savings. The tribunal held that the AO did not find any discrepancies in the recorded purchases, sales, and stocks. Without evidence of non-genuine transactions or book rejection, assuming cash deposits based on higher turnover is unjustified. Therefore, the addition u/s 68 was deleted in favor of the assessee.
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ITAT allowed the deduction u/s 80JJAA as the assessee's CA filed Form 10DDA before the due date, even though it was accepted later.
The ITAT Ahmedabad ruled in favor of the assessee regarding the addition u/s 80JJAA claim denial. The chartered accountant filed Form 10DA before the return filing deadline, which was not disputed by the Department. Although the report was not accepted by the assessee before the due date, it was later accepted before the assessment order was passed. Citing a Gujarat High Court case, the Tribunal held that the filing of the report is procedural, and if available to the assessing officer before assessment, the deduction claim cannot be denied. The appeal of the assessee was allowed.
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ITAT condoned delay in filing appeal for registration u/s 12A & 80G. Trust's application restored for de-novo consideration by CIT.
The ITAT Ahmedabad addressed a case involving a delay in filing an appeal against the denial of registration u/s 12A and 80G, impacting exemption u/s 11. The Tribunal considered the reasons for the delay, noting the operational challenges faced by the assessee. Citing the principle that rules of procedure serve justice, the Tribunal condoned the delay in the appeal filing. Regarding the denial of registration, the Tribunal found that the assessee, an educational trust, was engaged in activities that warranted charitable status. The matter was remanded to the CIT for reevaluation. As the issue of exemption u/s 11 was linked to the registration matter, it was also remanded to the Assessing Officer for appropriate action post reevaluation of registration.
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ITAT: CIT's revision u/s 263 on limitation period. Requisite action. Transfer expenses, CLU charges, deduction u/s 54F reviewed. Assessee's appeal partly allowed.
The ITAT Chandigarh considered a revision u/s 263 by CIT regarding the period of limitation for completing requisite action. The assessment order was passed on 18/02/2014, and any issues requiring revision should have been addressed by 31/03/2016, within two years from the end of the relevant financial year. The revisionary order was found valid for transfer expenses, CLU charges, and deduction u/s 54F arising from reassessment. However, the revisionary proceedings related to the sale of land in District Solan were deemed barred by limitation as they pertained to the original assessment, not the reassessment. The availability of documentary evidence for transfer expenses and CLU charges was confirmed, and the AO's decision was upheld as not prejudicial to revenue. The deduction u/s 54F was restricted to Rs. 30,49,998 as determined by the Ld. Pr. CIT. The Assessee's appeal was partly allowed.
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HC held that TDS u/s 194H not applicable to transactions between appellant and distributors of SIM. Relationship is not that of agent but principal-principal.
The Delhi High Court addressed a case involving TDS u/s 194H for non-deduction of TDS on transactions between the Appellant and distributors regarding the sale of SIM cards/Recharge Vouchers. The key issue was determining whether the relationship between the Appellant and distributors was that of principal and agent or principal and principal. The court referred to the Supreme Court decision in Bharti Cellular Limited, emphasizing that the term "agent" involves a specific legal relationship where one party has the power to affect the legal position of the principal through contracts or property disposition. The court held that the Appellant was not obligated to deduct tax at source on certain payments received by distributors, and Section 194-H was deemed inapplicable to the case. Consequently, the appeals by the cellular mobile service providers were allowed, overturning the judgments of the High Courts of Delhi and Calcutta. The appellant was not considered an assessee in default.
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ITAT held that land was not registered in the name of assessee, hence not a capital asset. Not taxable as capital gain.
The ITAT Hyderabad held that the capital asset, as defined in section 2(14) of the Act, must be held by the assessee and not connected with their business or profession. In this case, the land in question was owned and registered in the name of A. Vindhyavali, not the assessee. Therefore, it was not a capital asset in the hands of the assessee, and no addition could be made for capital gains arising from its sale. The AO's reliance on sale deeds was justified as the AO mentioned them in relation to the agricultural land and the sale cum GPA entered by the assessee. The CIT(A) granted relief based on registered documents, which are admissible in law as "documents in rem." The decision was made in accordance with the Transfer of Property Act and did not violate principles of natural justice or Rule 46A of the IT Rules. The deletion of the addition towards capital gains from the land sale was upheld, ruling in favor of the assessee.
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ITAT deleted the additions as unexplained investment, for payment made to company. Assessee's explanations on genuine transactions accepted.
The ITAT Delhi held that the addition for unexplained investment made to a company was unjustified. The Tribunal found that the total investments were made through a banking channel, specifically after withdrawals from an Axis Bank Account. The source of deposits in the account was explained and admitted, making the addition on account of withdrawals irrational. The addition from an undisclosed source related to a bridal business was based on suspicion, with the AO and CIT(A) erroneously holding 30% of deposits. The Tribunal considered the nature of the business and calculated the security amount at 10% of the hire charges. The assessee satisfactorily explained the bank entries, leading to the appeal being allowed due to a miscarriage of justice.
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ITAT held that addition u/s 68 for unexplained cash credit is not justified as loans amount received during the earlier year.
The ITAT Mumbai, in a case involving addition u/s 68 for unexplained cash credit from loans taken from various parties, held that only loans taken during the current assessment year are relevant for consideration. Continuing loans from earlier years are not relevant for the current assessment year if additions were already made in those years. The genuineness of transactions u/s 68 needs to be proven only for credits recorded in the current assessment year. Repayment of loans taken during the current year demonstrates genuineness. The assessee provided relevant documents to prove transactions, and the AO's reliance on survey reports to analyze creditworthiness was deemed insufficient. The ITAT concluded that loans were taken and repaid through banking channels, and directed the AO to delete the proposed additions. The assessee's ground was allowed.
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Order u/s 92CA: High Court held that the AO's second reference post limitation period was unwarranted as TPO had already acted on ITAT's directions.
The Delhi High Court examined the validity of an order passed u/s 92CA and jurisdiction to pass an assessment order post-limitation period. The court held that once the Transfer Pricing Officer (TPO) passed an order in accordance with ITAT directions, the Assessing Officer (AO) was obligated to pass an assessment order within nine months. The court found that the AO's failure to do so rendered a subsequent reference to the TPO unwarranted. The court emphasized that the ITAT directions did not require a fresh reference, and the AO's actions were legally unjustified. The court concluded that the AO was barred from passing further assessment orders for the relevant assessment year, granting relief to the petitioner.
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ITAT upheld the deletion of addition u/s 68 as bogus share application money. Commission expenses disallowed by AO were deemed unnecessary.
The ITAT Jodhpur dealt with a case involving addition u/s 68 of the Income Tax Act concerning alleged bogus share application money. The Investigation Wing provided specific information, but the CIT(A) deleted the addition after finding the investor companies' identity, creditworthiness, and genuineness were proven by the assessee. The tribunal upheld the CIT(A)'s decision, stating the AO lacked a basis for the addition. The commission expenses for the alleged bogus share application money were deemed unnecessary due to the genuine nature of the funds. The reassessment proceedings' validity was not directly addressed by the CIT(A) but was considered decided against the assessee based on a legal precedent. The tribunal allowed the assessee to argue the reassessment issue despite not appealing the CIT(A)'s decision, in line with ITAT Rules.
Customs
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Amendments to Duty Drawback Rates effective from 03.05.2024. Enhanced rates for specific items.
The Circular No 04/2024-Customs issued by CBIC, highlights the amendments to the All Industry Rates (AIRs) of Duty Drawback effective from 03.05.2024. Changes include clarifying the unit of "counts" in Chapter 52 as "counts in New English (Ne)" and enhancing AIRs/caps for various items like marine products, bags, linen articles, radar apparatus, unmanned aircraft, and rationalizing caps for specific goods like Golf Gloves. New tariff items are created for better product differentiation, and descriptions for Golf Gloves are modified. Additionally, duty drawback rates are provided for defense sector products. Trade/field formations are advised to issue suitable Public Notice/Standing Order for guidance, and any implementation challenges should be reported to the Board.
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Duty Drawback not disbursed in some cases due to unvalidated Bank details by PFMS. Take action on ICEGATE for registration/modification.
The Public Notice issued by the Office of Principal Commissioner of Customs addresses the non-disbursal of Drawback to certain exporters due to their bank account details not being validated by PFMS. A list of 369 pending shipping bills for different exporters is provided. Exporters are advised to register or modify their AD code/bank account details through ICEGATE portal and submit necessary documents electronically. Once approved, the shipping bills will be processed for Drawback disbursal. Compliance with the DG Systems ICEGATE Advisory is crucial for exporters to receive their entitled benefits.
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Refunds of IGST on exports delayed due to SB005 error. Exporters must ensure invoice details match in GSTR 1 and shipping bill.
The Public Notice issued by the Office of Principal Commissioner of Customs addresses the issue of IGST refunds on exports that remain unprocessed due to SB005 error, which is caused by invoice mismatch. Exporters are advised to ensure that invoice details in GSTR 1 and shipping bills align to avoid this error. Customs officers can now verify information and sanction refunds for correct invoice details despite discrepancies in shipping bills. Exporters must provide a concordance table linking GST invoices with shipping bill invoices for error rectification. A fee of Rs.1000 per shipping bill is required for this service. Refund claims will only be processed for cases with SB005 error code. Difficulties should be reported to the Asst Commissioner of Customs.
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Export of Silk Waste under HS code 5003 requires inspection/test report from Central Silk Board for clearance. Charges borne by exporter.
The Government of India, through a public notice, has outlined regulations for the export of Silk Waste falling under ITC (HS) code 5003. Export clearance now requires an inspection report from Authorized Officers of the Central Silk Board (CSB) or a test report from Textile Testing Labs under CSB. The CSB has designated specific officers for inspection and certification of silk goods for export. Exporters are responsible for any testing/inspection charges. All silk waste export consignments must undergo 100% examination in the presence of a CSB authorized officer, with the inspection report shared with the docks admin section for clearance. Until CSB is registered as a PGA in ICEGATE/ICES, export clearance will be based on the test report/inspection certificate from the CSB authorized officer. Stakeholders are advised to comply with these requirements, and any implementation issues should be reported to the Commissioner of Customs in Chennai.
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Instruction issued for review of G-Card holders' requirement at Customs stations and conducting G-Card exams as per CBLR, 2018. Annual review mandated for uniformity.
Instruction No. 12/2024-Customs, dated 01-05-2024, addresses the review of the necessity of G-Card holders at Customs stations and the conduct of G-Card examinations as per Regulation 13 of CBLR, 2018. Regulation 13 allows Customs Brokers to employ individuals based on business volume, requiring them to pass an exam for a Form-G or Form-H identity card. To ensure consistency, annual reviews of G-Card requirements will be conducted by Principal Chief Commissioners or Chief Commissioners in Customs Clearance Facilitation Committee meetings, with outcomes discussed in Customs Consultative Group meetings. This aims to streamline G-Card examination practices and ensure trained personnel for efficient EXIM consignment clearance. Any implementation challenges should be reported to the Board.
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Verification of authenticity of UAE-issued Certificate of Origin with added security features like QR code and password under India-UAE CEPA. Customs to implement new procedure.
The Instruction No. 11/2024-Customs issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes & Customs, addresses the verification of authenticity and genuineness of Certificate of Origin (CoO) issued by UAE Authority under the India-UAE Comprehensive Economic Partnership Agreement (CEPA). The UAE has introduced a new security feature in the form of a password on the CoO for verification purposes. This change aligns with the Operational Certificate Procedures (OCPs) agreed upon in the CEPA. Customs formations are instructed to implement the new verification procedure outlined by UAE in conjunction with the OCPs of the CEPA.
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Acceptance of Korea's e-CoO under India-Korea CEPA via EODES clarified in Customs Instruction No. 10/2024 for preferential benefits. Compliance details provided.
The Instruction No. 10/2024-Customs issued by the Government of India clarifies the acceptance of Electronic Certificates of Origin (e-CoO) from Korea under the India-Korea Comprehensive Economic Partnership Agreement. The e-CoOs must adhere to specified requirements, including being issued in the prescribed format with a QR code. They are considered equivalent to manually issued certificates. Importers must upload e-CoOs on e-Sanchit for preferential benefits. A system in ICES verifies e-CoO details electronically, eliminating the need for physical defacement. Customs formations are instructed to implement this procedure. Advisory No. 31/2023 provides additional procedural guidance.
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Procedure for filing Bill of Entry amendments: Online filing via Common Portal or Service Centre. Self/auto approval & officer approval process outlined.
The procedure for filing and processing Bill of Entry amendment requests is governed by Section 149 of the Customs Act, 1962. Importers/Customs Brokers can file online amendments through the Common Portal or Service Centre. Amendments fall into two categories: self/auto approval and approval by the officer. Various scenarios dictate the approval process based on when the amendment is filed. Requests are categorized into three types: IGM amendments, typographical errors, and major amendments. Conversion of bill of entry types requires approval from Additional/Joint Commissioner. Amendments after Out of Charge require manual OOC cancellation. Pre-approval of physical/e-office file amendments is discontinued. Amendments are not allowed until examination report completion. All necessary documents must be uploaded in e-Sanchit for verification. Importers/Customs Brokers can directly file online amendments and officers must approve or reject based on Customs Act provisions.
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Undervaluation of timber imports - Burden of proof - Third-party documents and statements - CESTAT set aside the demand following Beena Sales Corporation decision.
CESTAT AHMEDABAD held that in a case involving undervaluation of timber imports, the burden of proof lies on the authorities to establish duty demand, penalty, and interest. Referring to the Beena Sales Corporation case, where similar evidence was relied upon, the Tribunal found the decision applicable and upheld by the Supreme Court. Consequently, the impugned orders were deemed unsustainable and set aside, with all appeals allowed and consequential relief granted.
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CESTAT held revocation of Customs Broker license unjustified as appellant verified client documents from official government websites, finding no violation of Regulation 10(n).
CESTAT New Delhi overturned the revocation of a Customs Broker license, forfeiture of security deposit, and penalty imposition due to alleged involvement in fraudulent IGST refunds. The Tribunal held that the appellant had diligently verified client documents from official government websites, meeting obligations u/s Regulation 10(n) of CBLR, 2018. Relying on precedent (Mauli Worldwide Logistics), the Tribunal found no justification for license revocation as the appellant had no reason to doubt document genuineness. The decision emphasized the reliability of official government websites for verification. Consequently, the impugned order was set aside, and the appeal was allowed.
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CESTAT ruled 'Grid-Tied Solar Inverter' not part of 'Solar Power Generating System' for duty exemption under Notification No.12/2012-CE.
The case before CESTAT Bangalore involved the interpretation of an exemption notification u/s 12/2012-CE for Additional Duty. The issue was whether a "Grid-Tied Solar Inverter" could be considered a "Solar Power Generating System" for claiming the exemption. The Tribunal held that while the inverter is used in a solar system, it does not constitute the entire system. The respondent failed to satisfy the conditions of the notification, thus not eligible for the exemption. The Commissioner's view of liberal interpretation was rejected, citing the burden of proof on the Revenue. The decision was in line with the Supreme Court's ruling in Dilip Kumar and Company case. The impugned order was set aside, and the appeal was allowed.
DGFT
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Export Obligation: 3% non-achievement amount applies to AA issued u/s Para 4.49(b) post 01.04.2023. 10% CIF value applies to AA u/s Para 4.49(a)(ii) post 01.04.2023.
The Policy Circular No. 02/2024 issued by the Directorate General of Foreign Trade provides clarification on the applicability of payment requirements for non-achievement of minimum Value Addition as per Para 4.49 (b) and 10% of CIF value as per Para 4.49 (a) (ii) of HBP 2023. It states that Advance Authorizations issued before 01.04.2023 are governed by the provisions of the relevant Handbook of Procedure (HBP) under which they were issued, excluding clubbing and extension provisions. The payment provisions specified in Para 4.49(a) (ii) and 4.49(b) apply only to authorizations issued on or after 01.04.2023. The clarification does not allow for a refund of already paid fees.
FEMA
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RBI issues new Directions u/s 10(4) & 11(1) of FEMA for Margin in Derivative Contracts, superseding previous Circular.
The Reserve Bank of India (RBI) issued Circular No. 05 on May 08, 2024, regarding Margin for Derivative Contracts. This circular supersedes the previous Circular No. 10 of 2021. It pertains to the Foreign Exchange Management Act, 1999, and is issued u/s 10(4) and 11(1) of the Act. The circular applies to Authorized Dealer Category-I (AD Cat-I) banks and Authorized Dealer Category-III Standalone Primary Dealers (AD Cat-III SPDs). The new Directions are effective immediately and replace the previous circular. The aim is to regulate margin requirements for derivative contracts involving residents in India and outside India.
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RBI updates Master Direction on Risk Management and Inter-Bank Dealings, including amendments for Standalone Primary Dealers and reporting of derivative contracts.
The RBI issued amendments to the Master Direction on Risk Management and Inter-Bank Dealings, applicable to Standalone Primary Dealers (SPDs) u/s 10(1) of FEMA, 1999. The amendments reflect provisions for SPDs and include updated reporting directions for OTC foreign exchange derivative contracts and foreign currency interest rate derivative contracts to the Trade Repository of Clearing Corporation of India Ltd. These amendments come into force immediately, superseding previous circulars. Authorised Persons, including Authorised Dealer Category-I banks and SPDs u/s 10(1) of FEMA, 1999, must comply with these directions issued u/s 45W of RBI Act, 1934 and sections 10(4) and 11(1) of FEMA, 1999, without prejudice to other legal requirements.
Corporate Law
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Relaxation of additional fees & extension of last date for filing Form LLP BEN-2 & Form 4D under LLP Act, 2008 - MCA Circular.
The Ministry of Corporate Affairs has issued General Circular No. 03/2024, relaxing additional fees and extending the last date for filing Form No. LLP BEN-2 and LLP Form No. 4D under the Limited Liability Partnership Act, 2008. The Circular addresses the notification of rules related to significant beneficial owners and beneficial interest declarations. LLPs can now file these forms without additional fees until 01.07.2024, in line with the transition to MCA-21 version-3. This decision aims to encourage compliance among reporting Limited Liability Partnerships. The Circular is approved by the competent authority as indicated by Dr. Amit Kumar, Deputy Director (Policy).
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High Court held that SFIO investigation u/s 212 of Companies Act lacked public interest, causing harm to company. Sanction set aside as arbitrary and illegal.
The Madhya Pradesh High Court examined the scope of judicial review u/s 212(1)(c) of the Companies Act, 2013 regarding the Central Government's sanction for an investigation by the SFIO. The court held that SFIO investigation on transactions already addressed u/s 66 of the IBC would amount to double jeopardy. It emphasized the necessity of public interest for such investigations and found no such element in this case. The court noted that the company's functions were halted due to CIRP and pending liquidation, indicating no public interest or prima facie case for the investigation. The court ruled the sanction as arbitrary, illegal, and lacking a reasoned order, thus setting it aside and quashing any actions taken based on it.
Indian Laws
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Collector (Stamp) lacks power to recall order u/s 47-A of Indian Stamp Act - Authority must adherence to statutory limits
The case before the Allahabad High Court involved the jurisdiction of the Collector (Stamp) to recall or review an order under Section 47-A of the Indian Stamp Act, 1899, in the context of alleged forgery of documents. The court held that the Collector (Stamp) lacks the power to recall or review an order under Section 47-A as no such authority is provided for in the Act. Quasi-judicial authorities must operate within the statutory framework and cannot exceed their mandate. This limitation on review powers ensures adherence to the principle of separation of powers and upholds the legislative scheme. As the Collector (Stamp) exceeded his authority in conducting the review, the court quashed the impugned order and allowed the writ petition.
SEBI
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SEBI issues Master Circular for Alternative Investment Funds incorporating provisions until March 31, 2024.
The Master Circular for Alternative Investment Funds (AIFs) issued by SEBI consolidates regulatory requirements for AIFs. It supersedes previous circulars and incorporates provisions issued until March 31, 2024. AIFs must also comply with SEBI requirements for market intermediaries. Any prior actions under rescinded circulars are deemed under the new Circular. Trustees/sponsors must ensure compliance and submit a "Compliance Test Report." The Circular is issued u/s 11(1) of the SEBI Act to protect investor interests and regulate the securities market.
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SEBI mandates standardized half-yearly reporting for Investment Advisers starting March 31, 2024. Reports due within 7 working days post-period.
SEBI has issued a circular specifying a standardized format for periodic reporting by Investment Advisers (IAs) u/s 15(12) of the SEBI (Investment Advisers) Regulations, 2013. The Investment Advisers Administration and Supervisory Body (IAASB) will administer and supervise these reports u/s 14 of the IA Regulations. IAs must submit half-yearly reports ending on September 30 and March 31. The first report for the period ending March 31, 2024, is due within fifteen days of the IAASB circular, and subsequent reports are due within seven working days post-period. This circular is effective immediately and issued u/s 11(1) of the SEBI Act, 1992.
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Entities allowed to use e-KYC Aadhaar Authentication services of UIDAI in Securities Market as sub-KUA u/s 11A of PMLA, 2002.
The circular allows certain entities to utilize e-KYC Aadhaar Authentication services of UIDAI in the securities market as sub-KUA. The Master Circular on KYC norms for the securities market details the provision for Aadhaar-based e-KYC process u/s 11A of the Prevention of Money Laundering Act, 2002. Department of Revenue, Ministry of Finance issues notifications for entities permitted to use Aadhaar authentication services u/s 11A. A recent notification, S.O. 1863(E) dated April 30, 2024, identifies an entity authorized for such services. The entity must comply with SEBI circular and UIDAI guidelines. This circular is issued u/s 11(1) of the SEBI Act to safeguard investor interests and regulate securities markets.
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SEBI enhances digital on-boarding for Portfolio Managers, introduces fee calculation tool, additional fee disclosures, and MITC document. Circular effective from Oct 01, 2024.
SEBI issued a circular to Portfolio Managers regarding digital on-boarding and transparency enhancements. Changes include digital on-boarding process simplification, fee calculation tool provision, additional fee disclosures, and MITC document requirement. Clients must understand fees and charges structure, with modifications effective from October 01, 2024. APMI to specify standard procedures. No extra fees beyond agreement terms allowed. Circular effective October 01, 2024, u/s 11(1) of SEBI Act, 1992, u/r 43 of SEBI Regulations, 2020. APMI to issue standard procedures by July 31, 2024.
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SEBI sets a framework for stock exchanges to supervise Research Analysts and Investment Advisers, effective July 25, 2024, ensuring compliance and efficiency.
SEBI issued a circular on May 2, 2024, establishing a framework for the administration and supervision of Research Analysts (RAs) and Investment Advisers (IAs). Recognized Stock Exchanges will act as RAASB and IAASB u/s 14 of the RA Regulations (2014) and IA Regulations (2013). Applicants for RA/IA registration must enlist with RAASB/IAASB. The existing IAASB framework is rescinded, but actions under it remain valid u/s 30A of IA Regulations. The framework becomes effective on July 25, 2024. SEBI retains core functions like registration and enforcement, while RAASB/IAASB handles administrative tasks. The circular is issued u/s 11(1) of the SEBI Act, 1992.
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SEBI mandates PMS distributors to register with APMI for oversight. Effective Jan 01, 2025. Compliance with SEBI regulations.
SEBI has issued a circular regarding the collective oversight of distributors for Portfolio Management Services (PMS) through the Association of Portfolio Managers in India (APMI). The circular mandates that portfolio managers ensure distributors comply with SEBI regulations and the Code of Conduct. A working group reviewed the regulatory framework, leading to a public consultation. As per the circular, distributors must register with APMI, with criteria to be set by APMI. Effective from January 01, 2025, APMI will release registration criteria by July 01, 2024. The circular is issued u/s 11(1) of the SEBI Act, 1992 and Regulation 43 of SEBI (Portfolio Managers) Regulations, 2020, to safeguard investor interests and regulate the securities market.
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SEBI eases rules for fund managers of mutual funds investing in commodities and overseas securities, making appointments optional with expertise requirements.
SEBI issued a circular to promote ease of doing business for mutual funds investing in commodities and overseas securities. The circular modifies clauses in the Master Circular for Mutual Funds. For commodity-based funds, appointment of a dedicated fund manager is optional, but expertise is required. Similarly, for overseas investments, a dedicated fund manager is optional, with expertise necessary. Boards of AMCs must ensure compliance and reporting to trustees periodically. The circular is issued u/s 11(1) of SEBI Act, 1992, to protect investor interests and regulate the securities market. Contact details for further information are provided.
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SEBI exempts jointly held Mutual Fund folios from mandatory nomination requirement to simplify compliance and reduce costs. Circular effective from April 30, 2024.
The circular exempts jointly held Mutual Fund folios from the requirement of nomination, as per Clause 17.16 of the Master Circular. Failure to nominate by June 30, 2024, for individual unit holders would freeze folios for debits. The decision aims to simplify compliance and reduce costs. Other nomination provisions remain unchanged. Issued u/s 11(1) of SEBI Act, 1992, and Regulations 29A and 77 of SEBI (Mutual Funds) Regulations, 1996, to protect investor interests and regulate the securities market. Circular available on SEBI website. Signed by Peter Mardi, Deputy General Manager, Investment Management Department.
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Relaxation granted for changes in Private Placement Memorandum of Alternative Investment Funds without filing through Merchant Banker.
The relaxation in the requirement of intimation of changes in the terms of Private Placement Memorandum (PPM) of Alternative Investment Funds (AIFs) through a Merchant Banker has been outlined. Specific changes in the PPM that are not mandated to be filed through the Merchant Banker are detailed in Table 2. This relaxation provides flexibility in the reporting process for certain modifications within the PPM of AIFs, streamlining the regulatory procedures u/s relevant legal provisions.
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SEBI circular allows Category I and II AIFs to create encumbrance on equity of investee companies for debt raising, subject to certain conditions and compliance requirements.
SEBI has amended AIF Regulations to allow Category I and II AIFs to create encumbrances on equity holdings in investee companies for debt raising. Encumbrances without disclosure must obtain investor consent by Oct 24, 2024, or be removed by Jan 24, 2025. Borrowings against encumbered equity must be used for investee company purposes only. Duration of encumbrance cannot exceed scheme tenure. AIFs with foreign investments must comply with RBI guidelines. AIFs must not be liable beyond encumbered equity in case of borrower default. Encumbrance does not permit guarantee extension. No encumbrances on foreign investments. SFA will set implementation standards for infrastructure sector debt raising. Compliance Test Report must include adherence to circular. Circular effective immediately u/s 11(1) of SEBI Act to protect investor interests and regulate securities market.
Service Tax
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Corporate guarantee fees are not subject to service tax under reverse charge mechanism pre-July 2012. Post-July 2012 liability already paid, cannot be demanded again. - AT
The case involved a dispute regarding the applicability of service tax on corporate guarantee fees u/s 65(12)(a)(ix) of the Finance Act. The tribunal held that providing a corporate guarantee does not constitute Banking and Other Financial Services (BOFS) and is not related to lending activity. Citing precedents, the tribunal concluded that the corporate guarantee does not fall within the ambit of lending activity. The demand for service tax u/s reverse charge mechanism prior to 01.07.2012 was set aside as corporate guarantee does not qualify as BOFS. For the period post 01.07.2012, since the appellant had already paid the tax liability, it cannot be demanded again. The tribunal also found that the invocation of the extended period was unjustified as there was no evidence of mala fide intention to evade payment. Consequently, the demand for the period from 2009-2010 to 1st July 2012 was set aside, and the appeal was allowed.
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Liquidated damages received for penalty/late delivery charges are not subject to service tax u/s 66E (e) of Finance Act, 1994. - AT
The case before CESTAT Chandigarh involved the levy of service tax on "liquidated damages in contracts" for penalty/late delivery charges, under section 66E (e) of the Finance Act, 1994. The appellant, a Central Government Public Sector Undertaking, challenged the tax liability. The Tribunal referred to a recent circular by the Department of Revenue stating no liability for service tax/GST on such damages. Previous Tribunal decisions supported the appellant's position that these damages are not subject to service tax. CESTAT held the impugned order as legally unsustainable and allowed the appeal, providing consequential relief as per law.
Central Excise
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CESTAT held that recovery of refunded service tax was improper as the Tribunal's decision was final and unchallenged.
The case involves the recovery of a refund of service tax paid for services rendered to Electro Motive Diesel, Inc (EMD) and whether it qualifies as an export of services. The appellant challenged the show cause notice u/s 11A of the Central Excise Act after the Tribunal's order granted them a refund. Previous decisions in the appellant's favor were cited. The Revenue failed to challenge the final order or refund, which had attained finality. The Revenue erred in attempting to recover the refunded amount without a stay or higher forum intervention. The lower authorities exceeded their jurisdiction by criticizing the Tribunal's decision. The Tribunal set aside the impugned order, allowing the appeal.
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CESTAT held that chassis doesn't emerge at intermediary stage for dumpers, hence NCCD not leviable.
The case before CESTAT Bangalore involved the levy of National Calamity Contingent Duty (NCCD) on chassis captively consumed in the manufacture of Dumpers. The tribunal held that the chassis did not come into existence at the intermediary stage, as per Chapter Heading and HSN Notes, and therefore, was not dutiable. The question of captive consumption and exemption under N/N. 67/95 did not arise. The impugned order was set aside, and the appeal was allowed. The decision was based on the interpretation of legal provisions and previous rulings in the appellant's favor.
VAT
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Benefit of Special Package of Incentives allowed since the petitioner was entitled to sales tax exemption. Condition imposed on effective steps date struck down. - HC
The Punjab and Haryana High Court granted sales tax exemption to the petitioner in accordance with the "Special Package of Incentives to Information Technology Industry, 2000" without imposing any additional conditions. The court held that the State Government cannot deny benefits available under the Industrial Incentive Policy itself. The condition imposed in the Amendment Rules regarding the effective date was struck down. The order withdrawing the exemption was quashed, and the exemption certificate granted to the petitioner was ordered to be reinstated. The petition was allowed.
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Secured creditors have priority over State Tax Authorities u/s 26-E of SARFAESI Act, 2002 for sale proceeds of assets - HC
The Bombay High Court ruled on the priority of secured creditors u/s 26-E of the SARFAESI Act, 2002 over State Tax Authorities' claims. Section 26-E grants priority to secured creditors whose security interest is registered with CERSAI before any other registration. In the case, the Petitioner bank registered its charge prior to State Tax Authorities' attachment order. Previous judgments support the priority of secured creditors in such cases. The Court held that State Tax Authorities must seek satisfaction from sale proceeds, not the asset sold under SARFAESI Act. The petition was allowed.
Articles
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2024 (5) TMI 1091
Direction to release/ provide the original copy of documents seized by the Respondent from the premises of the Petitioner during various searches conducted - cross-examination of witnesses whose evidence has been relied upon in the SCN - opportunity to provide personal hearing to the Petitioner - violation of principles of natural justice - HELD THAT:- It is apparent from bare perusal of Section 67 (3) of the CGST Act and Rule 27 of the Central Excise Rules 2017 that it is the duty of Respondent to release the non-relied upon documents within a period of 30 (thirty) days from the issuance of the show cause notice - Provided that the Principal Commissioner of Central Excise or Commissioner of Central Excise, as the case may be, may order for the retention of such books of accounts or documents, for reasons to be recorded in writing and the Central Excise Officer shall intimate to the assessee or such person about such retention. This court is of the considered opinion that, besides the certified copies of relied documents which goes without saying are necessary for filing reply and preparing defence, the petitioner is entitled to receive original copies of non-relied documents so as to enable him to prepare his defence/reply as fair hearing requires that petitioner is given due opportunity to raise all defences which are available to him under the law on the basis of the documents, facts, circumstances and the legal provisions as the petitioner deems appropriate. Right of petitioner to conduct cross-examination of witnesses whose evidence has been relied upon in the SCNs during adjudication proceedings - HELD THAT:- This court is of the considered opinion that right of fair hearing and personal hearing requires that the petitioner be given right to cross examine witnesses whose evidence has been relied upon in the show cause notices dated 08.06.2022 and 03.08.2022 and it is expected from the adjudicating authority that the said right to cross-examine would be afforded to the petitioner at appropriate stage of proceedings, as principles of natural justice are required to be adhered to while conducting adjudication proceedings. It is deemed appropriate to direct the Respondents to handover all the original documents to petitioner which have been seized by them and not relied on by Respondents while issuing Show Cause notices dated 08.06.2022 and 03.08.2022, so that the petitioner is enabled in submitting his reply - petition allowed.
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2024 (5) TMI 1090
Maintainability of petition - appealable order - Cancellation of registration of the petitioner - non-filing of return for consecutive six months - HELD THAT:- In the instant case, the petitioner has not preferred any appeal. This allows the revenue to raise the point of alternative remedy for which the writ petition is not maintainable. It is also correct that during March, 2020 and 28th February, 2022, the situation in the country owing to pandemic was not normal. The business entities have suffered commercial loss during this period for lack of business, at the same time filing of the returns have become irregular owing to prevailing condition at the relevant point of time. The petitioner s default took place during the pandemic and, as such, a sympathetic consideration is required to be given keeping in mind that by retaining the order of cancellation, the petitioner will be deprived of carrying on his business which will ultimately result into the loss to the Government exchequer. The justice will be sub-served, if, it is directed that the order impugned dated 25th January, 2022 be set aside particularly when the default in filing the return for six consecutive months being the only ground for cancellation. The order dated 25th January, 2022 cancelling the petitioner s registration is set aside and the registration is restored back to its original position. The department is directed to permit the petitioner to file the return for the period from December, 2020 till date. If the petitioner fails to file the return within a period of three weeks from date, the restoration of the registration will be again automatically cancelled. The petition is disposed off.
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2024 (5) TMI 1089
Maintainability of petition - availability of statutory alternative remedy - Rejection of refund of tax - relevant date - rejection on the ground that the taxpayer failed to meet the deadline for submitting the application on 29.02.2024 - whether the petitioner s application was within the period of two years from the relevant date or not? - HELD THAT:- The petitioner has got the statutory alternative remedy of appeal against the order of rejection of claim for refund. The argument as advanced, is not such an argument, which cannot be taken before the appellate authority. The relevant date requires determination in view of Section 54 (14), explanation 2 (a) (i) of the Act on consideration of the documents, as submitted, filed by the petitioner, to arrive a conclusion, on what date the ship in which goods were loaded left India. In the exercise of the writ jurisdiction, this Court considers it not appropriate, at this stage to determine such question which is a disputed question of fact and requires for its determination the evidence. The said exercise, can be done effectively by the appellate authority. Consequently, we are not inclined to entertain the writ petition. This Writ Petition is dismissed, on the ground of availability of statutory alternative remedy.
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2024 (5) TMI 1088
Maintainability of petition - availability of alternative remedy - ITC of the GST on the job work manufacturing service - applicability of circular dated 17.07.2023 - HELD THAT:- The aspect of applicability of Circular dated 17.07.2023 to the petitioner s case, can be looked into by the Appellate Authority if such a plea is raised before the Appellate Authority. It is not such a ground which cannot be taken in appeal. Any plea of the order being without jurisdiction, or in violation of the principles of natural justice or in violation of the Fundamental Rights has not been raised before us during arguments. There is also no challenge to the vires of any statutory provisions - Any judgment on the point has not been placed before us to take a view contrary to the prima facie view taken in the order dated 02.04.2024 on entertainability of the writ petition in the presence of statutory alternative remedy of appeal. The writ petition is dismissed only on the ground of availability of the statutory alternative remedy.
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Income Tax
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2024 (5) TMI 1100
Undisclosed investment made to acquire the rights of his sister-in-law in the family property - undisclosed income for the block period - receipt was found by the revenue authorities during search which reflected that sister-in-law has stated that she has received the amount and no further payment is due from the appellant assessee. HELD THAT:- Income Tax Appellate Authority has reached to the conclusion that such certificate could not be relied upon as it was apparent that she was trying to support the case of the assessee, who was her brother-in-law. The contention of appellant that she should have been called and her statement should have been recorded is found to be without any basis. Once there is no denial to the receipt, which was found during search and the same is genuine, it would be assumed that the property was handed over after the entire payment was made. There is a demand draft receipt and the remaining amount has been presumed to be paid by the appellant. Such a course adopted by the ITAT cannot be in any manner to be perverse. We are not impressed by appellant for his placing documents to show that subsequently the assessee has also paid to sister-in-law the amount of Rs. 5,00,000/- in different installments from 2003 to 2006, as there is no mention that the amount is being paid in lieu of the remaining amount due i.e. Rs. 5,00,000/-. We also find that the said course adopted is subsequent to the search and findings of the AO. The appeal fails and is dismissed. The order passed by the ITAT is upheld.
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2024 (5) TMI 1099
Validity of reassessment Order - difference in grounds pointed out by CIT(A) and grounds raised by assessee - copy-paste order passed by CIT(A) - Non independent application of mind - as per AO CIT (A) has captioned one order but has stated something in order which is absolutely irrelevant to the matter HELD THAT:- In this case CIT (A) has decided altogether different grounds of appeal which were not there in the appeal memo in Form no 35 before him, but has taken grounds of appeal which are not at all issues in appeal and allowed the appeal of the assessee a) Reference of assessment order in caption of the order of ld CIT (A) is correct but the reference of the assessment order in the body of the appellate order is different. b) Facts stated in assessment order are not at all facts mentioned by the ld CIT (A). Both are strangely different. c) Statement of facts reproduced by the ld CIT (A) in appellate order is not the statement of facts submitted before us by the ld. AO. d) Grounds of appeal of the assessee before ld CIT (A) are different then grounds of appeal reproduced by the ld CIT (A)in body of appellate order is different Reading of each of the grounds of appeal raised by the ld AO, we are of the view that those are emphatic, clear and forthright. All the grounds of appeal are appropriate and are submitting in guarded words to set aside the appellate order passed by National Faceless Appellate Authority in most casual manner. Thus, we are constrained to state that this is the perfect case of 'cut paste' that too without application of mind. Without mincing many words, we find that order of the ld CIT (A) is passed without application of mind, devoid of any merit, unsustainable and perverse. Thus, for the reasons stated above we allow all the grounds of appeal, direct the ld CIT (A) to look in to the facts and pass the order on the merits of the case, after giving proper opportunity of hearing to the assessee/appellant. Appeal of AO allowed.
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2024 (5) TMI 1098
LTCG - denying exemption u/s 54F - absence of any corroborative evidence establishing the investment in the new house property by the assessee - Admission of additional evidence by assessee HELD THAT:- Though the assessee fails to produce bills / vouchers of construction activity, the claim of deduction u/s 54F cannot be denied without considering the relevant documents which are furnish before us as additional evidence u/r 29 of the ITAT Rules. Since, such additional evidence is not before the CIT(A), there is no occasion for him to decide the issue, considering the information emanating from such documents. Thus in the interest of principle of natural justice, the matter should be restored back to the file of Ld. CIT(A) for fresh adjudication. Assessee appeal is partly allowed for statistical purpose.
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2024 (5) TMI 1097
Addition invoking the provisions of section 50C - Reference to DVO - market/fair value of the property was less than the value adopted by stamp duty authority and that the matter may be referred to the DVO as per the provisions of section 50C - HELD THAT:- AR has duly demonstrated from the assessment order as well as from the appellate order of the CIT(A) that the assessee right from the very beginning claimed that the fair market value of the property was less than the stamp duty value adopted by the stamp duty authority/collector rate and that the matter may be referred to Departmental Valuation Officer to ascertain the correct and fair value of the property at the time of transaction. The said contention of the assessee has been rejected by both the lower authorities without assigning any reason. Both the lower authorities, therefore, have failed to act according to the statutory provisions of section 50C(2) of the Act and summarily rejected the plea of the assessee to get fair value of the property from the Departmental Valuation Officer without assigning any reason. The addition made by the Assessing Officer under the circumstances is not sustainable in the eyes of law. The issue is squarely covered by the decision of Hari Om Garg [ 2019 (5) TMI 1834 - ITAT AGRA] while referring to the various decisions of the Hon ble High Court including that of Sunil Kumar Agarwal Vs. CIT [ 2014 (6) TMI 13 - CALCUTTA HIGH COURT] has held that the additions made by the Assessing Officer under such facts and circumstances are not sustainable and the same are liable to be set aside. Addition made by the lower authorities is not sustainable and the same is accordingly ordered to be deleted. Appeal of the assessee stands allowed.
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2024 (5) TMI 1096
TP Adjustment - clubbing the segments into one for the purpose of benchmarking - HELD THAT:- We find that the assessee provided the CMA certified segmental information derived from the audited segment reporting disclosures of the annual financial statements and such details could be found in the Paper Book. In the case of TPSC (India) Private Limited [ 2024 (4) TMI 132 - ITAT HYDERABAD] followed the decision of Tara Jewels Exports (P.) Ltd [ 2015 (12) TMI 1130 - BOMBAY HIGH COURT] wherein also a similar question of restricting the benchmarking to the international transactions entered into by the assessee with AEs was in question, and held that when the details as to the international transactions with AEs and non-AEs are available, the margins relating to the AE segment alone should be considered. The Bench restored the issue to the file of the learned Assessing Officer/learned TPO to consider the same. Adjustment has to be done to arrive at ALP by considering the transactions with AEs only. For undertaking such an exercise, we restore the issue to the file of the learned Assessing Officer/learned TPO. Grounds are allowed accordingly. MAM Selection - Non-consideration of TNMM for manufacturing segment - We accept the contention of the assessee and restore this issue to the file of the learned Assessing Officer/learned TPO with a direction to consider only the operating profit/operating cost of AEs segment only and to consider the internal TNMM where the services are rendered by the assessee to AEs and non-AEs are similar. This ground is treated as allowed for statistical purposes. Non-consideration of RPM for trading segment - We find that the ledger copies and segmental financials at gross level were submitted before the Revenue authorities in support of the contention of the assessee that it did not involve any value addition activity and merely, they were selling goods as they were purchased in the same. Since it is a verifiable fact, we restore the issue to the file of the learned AO/TPO to verify whether the assessee is not making any value addition to the goods purchased from the AEs before they are sold and if segmental financials are available, to the extent of such sales without making any value addition, to accept the RPM as the MAM. Classification of the assessee as manufacturing segment and benchmarking the same accordingly - There is no contradiction to the fact pleaded by the assessee that AE transactions of the assessee are very low at 5.2% when compared to the third party transactions in manufacturing segments. If that is true, it would be unreasonable to classify the operations of the assessee under manufacturing segment. Hence, this issue is restored to the file of the learned Assessing Officer/learned TPO to verify the fact as to the volumes of the operations of the assessee and if the majority of the transactions of the assessee with AEs relate to the trading segment, it would be reasonable to classify the assessee for the purpose of economic analysis for aggregation under trading segment. This ground is accordingly treated as allowed for statistical purposes. Whether the TP adjustment should be restricted to the AE transactions only? - DRP was of the opinion that having adopted the TNMM as the MAM, comparison is possible only with such entities, whose P L Account is available at entity level and, therefore, the profit of the tested party at entity level could be compared with the average of profit levels of the comparables irrespective of its PLI - We are of the considered opinion that to the facts of the case, the view taken in the case of TPSC (India) Private Limited [ 2024 (4) TMI 132 - ITAT HYDERABAD] is applicable on all fours and following the same, we direct the learned Assessing Officer/learned TPO to consider the margin analysis to AE segment alone. This ground is allowed. Appeal of the assessee is treated as allowed for statistical purposes.
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2024 (5) TMI 1095
Deduction u/s 80G - donation made in excess of 10% of gross total income -assessee is a charitable trust - Assessee has already surrendered his registration u/s 12A and is now assessable as an Association of Person (AOP) - as per CIT(A) on perusal of Section 80G(4) it does not restrict the donation given to such entity by restricting it to the 10% of the total income - HELD THAT:- The deduction under Section 80G of the Act was made by the assessee as it donated ₹1,42,33,000/- to Tata Institute of Social Sciences, Deonar, Bombay which is approved university or educational Institution by prescribed authority as per notification dated 15th December, 1993. Thus deduction u/s 80G was not restricted to 10% of the gross total income as deduction granted to the specified entities and therefore, 50% of the above amount was allowed. CIT (A) has restored the matter back to the file of the learned Assessing Officer to grant deduction to the assessee under Section 80G of the Act to the entities registered u/s 80G(3)(a)(iiif) of the Act after verification. Thus, according to him on perusal of Section 80G(4) of the Act, it does not restrict the donation given to such entity by restricting it to the 10% of the total income. Provision of section 80 G (4) are as under :- [(4) Where the aggregate of the sums referred to in sub-clauses (iv), (v), (vi) [, (via)] and (vii) of clause (a) and in 2[clauses (b) and (c)] of sub-section (2) exceeds ten per cent of the gross total income (as reduced by any portion thereof on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of ten per cent of the gross total income shall be ignored for the purpose of computing the aggregate of the sums in respect of which deduction is to be allowed under sub-section (1)]. Indeed donation u/s 80 G (2) (iiif) is not mentioned u/s 80 G (4) of the Act. Thus, ld CIT (A) is correct and hence we confirm his order. Accordingly, we do not find any merit in ground no.1 of the appeal, hence, dismissed. Deduction u/s 80GGA - claim not made in the return of income but shown separately in the computation of total income - HELD THAT:- We find that it cannot be said that assessee has not claimed such deduction in the return of income filed in ITR 5 as same was clubbed with deduction u/s 80G of the Act. Assessee claimed it in the return of income albeit clubbed it with the different section. The deduction is claimed under Chapter VIA of the Act. It is not the claim of the Revenue that in ITR filed by the assessee such functionality was available at that time. In view of this, we do not find any infirmity in the order of the learned CIT (A) in directing the learned Assessing Officer to verify the same and grant in order giving effect to the appellate order if available to the assessee. Therefore, the ground no.2 of the appeal is dismissed. Disallowance of carry forward of excess expenditure - HELD THAT:- This ground is infructuous, as assessee has not claimed benefit of section 11 and 12 of the Act. Therefore, there is no question of granting the benefit of deficit of this year to the assessee to be carried forward in the next year.
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2024 (5) TMI 1094
LTCG - denial of exemption claimed u/s 54 - construction of the project had not started till the completion of a period of three years - HELD THAT:- The plight of the house buyer is not hidden from anyone, and in the recent past, due to one or the other reason various housing projects by well-known builders across the country were delayed for no fault of the purchaser, who continues to await the delivery and possession of his/her flat. Even in these circumstances, the house buyer, who intends to take the benefit of section 54 of the Act, cannot be blamed if the construction of the flat is not completed within the period of three years from the sale of the original asset. Since in the present case it is undisputed that out of Long Term Capital Gain of Rs. 99,35,840/- earned by the assessee, she has only utilised Rs. 50,86,472 in the new residential house, therefore, in view of the provisions of the proviso to section 54(2) of the Act the balance amount should be charged to tax u/s 45 of the Act in the year under consideration, being the year in which the period of three years from the date of transfer of the original asset expires. AO though considered to tax the part of the capital gain amount which had not been utilised by the assessee for the purchase of a new residential house within the prescribed period, however, proceeded to make the addition of the entire Long Term Capital Gain of Rs. 99,35,840 earned by the assessee. Accordingly, we direct the AO to restrict the addition on account of Long Term Capital Gain only in respect of the balance amount not utilised by the assessee for the purchase or construction of a new residential house. AO is directed to allow the exemption to the extent of Rs. 50,86,472 being the amount paid for the new residential flat by the assessee. As a result, grounds no. 3 raised in assessee s appeal is partly allowed,
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2024 (5) TMI 1093
Addition u/s 68 - assessee does not maintain books of accounts - whether assessee had proved identity, creditworthiness of lender and genuineness of transaction? - HELD THAT:- As assessee does not maintain books of accounts, hence Section 68 of Income Tax Act perse is not applicable. Appellant / assessee got interest free loans from Shri Anil Kumar Singh through normal banking transactions. The assessee filed documents showing creditworthiness of Shri Anil Kumar Singh as observed by the CIT(A). Shri Anil Kumar Singh, lender is an income tax assessee. Assessee filed balance sheets and tax audit reports of lender. Tax audit balance sheets for year ending 31.3.2017 and 31.3.2018 under head loan and advances mentions Smt. Alka Singh Rs. 25,00,000/-. Tax audit balance sheet for year ending 31.3.2019 mentions Smt. Alka Singh Rs. 20,00,000/- and tax audit balance sheet for year ending on 31.3.2020 does not mention name of Smt. Alka Singh as the amount reflected was refunded back. Source of source need not be proved for unsecured loan for the year under consideration. Further the lender had made cash deposits out of available cash balances. No adverse comments were given by Tax Auditor of the lender in the tax audit report in this regard. The loan given to assessee is duly reflected in audited balance sheet of the lender. In view of the above, genuineness of transaction and credit worthiness of the lender stands established. Therefore the appellant / assessee had proved identity, creditworthiness of lender and genuineness of transaction to show that the case comes within the purview of provisions of section 68 of the Income Tax Act, 1961. Assessee appeal allowed.
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2024 (5) TMI 1092
Disallowance u/s 14A r.w.r. 8D - expenses incurred on exempt income - HELD THAT:- CIT(A) observed that if the appellant does not have any exempt income no disallowance can be made. Therefore, it is proved that the assessee did not earn any exempt income during the year under consideration. We observe that the assessee has succeeded in convincing the CIT(A) that no exempt income was earned during the year under consideration. As no exempt income was earned by the assessee, full relief has to be given to the assessee instead of partial relief. Accordingly, we decide the issue of disallowance made u/s 14A r.w.r 8D in favour of the assessee fully and set aside the order of the ld. CIT(A) dated 25.10.2018 as well as the order of the ld. AO dated 31-03-2015 to that extent as related to disallowance and direct the ld. AO to delete the addition from the total income of the assessee. TDS u/s 195 - Listing charges paid to Bank of New York - assessee paid charges to the Bank of New York, and no TDS was deducted - HELD THAT:- We observe that the provisions of Section 9(1)(vii) of the Act was examined by the ld. CIT(A), but examination of the provisions of DTAA on the issue was not done. Therefore, this issue of addition on account of technical services provided to the assessee should be re-examined by the AO by taking into consideration of the DTAA provisions also. We direct the ld. AO to re-examine the issue in the light of the provisions of DTAA after giving a reasonable opportunity of being heard to the assessee. Disallowance of prior period expenditure - claim of the assessee is that due to dispute on the bill amount, the same could not be paid during the relevant period - HELD THAT:- After carefully observing the issue, we find that the observation of the ld. CIT(A) is correct. The prior period expenditure cannot be allowed in assessing the income of a particular year. We upheld the observations of the ld. CIT(A) on this issue of prior period expenditure. Thus, this ground of the assessee on prior period expenses is dismissed. Writing off of Carbon Income - Recognizing income from expected sale of carbon credits based on the generation of electricity from the 18 MW wind farm project at Karnataka in the earlier years - HELD THAT:- We observe that, the assessee from the year of 2007-08 to 2011-12 had offered income from carbon credit and the Department had accepted it as other income. Now the assessee write off this amount due to non-recognition of the project. It is therefore, our considered opinion is that the treatment which was given by the Department to the income of the assessee on carbon credit during the last five years i.e. from the year 2007-08 to 2011-12, the same treatment has to be given by the Department. Accordingly, we remand this issue to the file of the AO to re-examine this issue of disallowance on carbon credit afresh. Accordingly, we set-aside the order of the ld. CIT(A) on this issue. Thus, we decide this issue in favour of the assessee for statistical purposes only.
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2024 (5) TMI 1087
Delay in filing special leave petition - Nature of expenses - re-characterizing revenue expenses incurred by as capital expenditure by AO - correct approach in law and on the facts adopted or not? - As decided by HC [ 2023 (10) TMI 329 - DELHI HIGH COURT] on perusal from the assessment order would show that what worried the AO was that the assessee had made no effort to earn income. Proposition put forth by the AO that since there is no income chargeable u/s 28 of the Act, therefore, no expenses could be claimed by an assessee u/s 30 to 37 of the Act, in our view, is completely unsustainable. This position has also been affirmed by the Tribunal. HELD THAT:- There is delay of 152 days in filing the present special leave petition. Even on merits, we do not see any good ground and reason to interfere with the impugned judgment. Recording the aforesaid, the application for condonation of delay and consequently the Special Leave Petition are dismissed.
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2024 (5) TMI 1086
Carry forward and set off of unabsorbed depreciation without any limitation of period - carry forward after period of 8 years - As decided by HC VISHALDEEP SPINNING MILLS LTD [ 2023 (7) TMI 20 - GUJARAT HIGH COURT] once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997- 98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever - HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed.
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2024 (5) TMI 1085
Validity of order passed u/s 92CA - jurisdiction to pass an assessment order post limitation period - second reference made to TPO - objection of limitation noting that Section 144C (8) - petitioners had argued that the period of nine months when computed from the passing of the order of the ITAT would have come to an end on 31 December 2018 - HELD THAT:- The order of the ITAT dated 14 July 2017 and to the extent that certain aspects were remanded for the consideration of the TPO directly were neither questioned nor assailed at any time by the respondents. In fact, and as the writ petitioners have rightly pointed out, the aforesaid directions as framed were duly acknowledged and accepted and which fact becomes evident from not only the various notices which were issued by the jurisdictional AO and form part of our record such as but also by the action of the TPO itself which had proceeded to pass an order on 17 October 2017. It thus becomes apparent that the principal order of the ITAT dated 14 July 2017 had come to be duly implemented by the TPO on 17 October 2017 itself. Once the TPO had proceeded to pass the order of 17 October 2017, all that the AO was obliged to do was pass an assessment order in accordance with the procedure prescribed in Section 92CA (4) of the Act. The original order of assessment dated 21 February 2014 ceased to exist in light of the directions as framed by the ITAT on 14 July 2017. Consequently and in terms of the aforesaid order of the ITAT, a fresh order of assessment was liable to be drawn before the expiry of nine months from the end of the relevant financial year. It is conceded on behalf of the respondents that the aforesaid period undoubtedly came to an end on 31 December 2018. We, additionally, find that the prescription of nine months would also be applicable to a fresh order which is liable to be made in accordance with Section 92CA of the Act. This since Section 153 of the Act speaks not merely of assessments but also orders that are liable to be framed u/s 92CA. The order which is spoken of in Section 92CA of the Act, as explained above, is the one which the TPO may come to make in accordance with sub-section (3) thereof. It is thus manifest that the assessment exercise was liable to be concluded within a period of nine months when computed from 14 July 2017. Although the TPO had acted in pursuance of the order of the ITAT and proceeded to pass an order on 17 October 2017, the jurisdictional AO for reasons unknown and undisclosed, chose not to pass a consequential assessment order as mandated by Section 92CA (4) of the Act. What the AO, however, chose to do was make a fresh reference on 27 December 2018 requiring the TPO to pass an order in accordance with the judgment of the ITAT dated 14 July 2017. That reference was clearly unmerited since the TPO was obliged to act in accordance with the directions of the ITAT. It had in any case already taken all consequential steps in terms thereof and passed an order on 17 October 2017. We are therefore of the firm opinion that in light of the directions as were formulated by the ITAT and stood embodied in its order of 14 July 2017, no fresh reference as the AO chose to make was warranted. Once the ITAT had chosen to remit the matter directly to the TPO, the said authority was legally obliged to proceed in accordance therewith and did not need to derive any authority from a reference being independently made by the AO. Section 92CA (1) reference rests solely upon the AO being of the opinion that a reference is required to be made to the TPO for computation of ALP. That power stands conferred upon the AO and is available to be exercised in the course of assessment. Section 153 (3) of the Act speaks of assessments as well as orders under Section 92CA that may be required to be made pursuant to an order passed by an ITAT in exercise of its appellate jurisdiction comprised in Section 254 of the Act. In our considered opinion, the reference which the AO proceeded to frame on 27 December 2018 was thus clearly superfluous and in any case cannot be sustained on the basis of Section 153 (4) of the Act. Whether Order of 14 July 2017 should be construed as being a reference governed by Section 153 (4) and consequently the expanded period of limitation of twelve months becoming applicable? - We find ourselves unable to sustain that submission bearing in mind the indubitable position which emerges from a plain reading of Section 153 (3) of the Act and which encompasses and makes adequate provisions for a fresh order u/s 92CA (4) being liable to be made pursuant to an order of the ITAT u/s 254 of the Act. Since the aforesaid contingency is already provisioned for in sub-section (3), there would exist no justification for such an order of the ITAT being placed or viewed as traceable to sub-section (4) of Section 153 of the Act. Tested on the undisputed facts, we find that the period of nine months when reckoned from 14 July 2017 undoubtedly came to an end on 31 December 2018. Once that terminal point was reached, the respondent clearly stood deprived of jurisdiction or authority to pass an order of assessment pursuant to the directions of the ITAT. We have already found that the TPO had acting in terms of the directions as framed by the ITAT already passed a consequential order on 17 October 2017. All that was required of the respondents thereafter was for the AO to frame an order of assessment in accordance therewith. This, for reasons unfathomable, was something which the AO failed to do. The second reference which was thereafter framed by the AO and was dated 27 December 2018 for reasons aforenoted was clearly unwarranted and in any case cannot be viewed as conferring a fresh lease of life to the power to assess. Thus while we refuse to interfere with the order of the DRP impugned herein, we allow the instant writ petition and hold that the second respondent stands barred in law from passing any further orders of final assessment pertaining to AY 2009-10. The petitioner shall consequently be entitled to all consequential reliefs.
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2024 (5) TMI 1084
Provisional attachment order u/s 281B - seeking revocation of the attachment of Fixed Deposit Receipts (FDRs) - HELD THAT:- By communication issued by ACIT (Hq) on behalf of PCIT (Central), Kanpur Nagar, as intimated to the DCIT approval was accorded for extension of provisional attachment u/s 281B of the FDRs in the above mentioned case. Reference is also invited to the letter dated 07.02.2024 filed by the assessee to this office vide which the assessee has requested for releasing the FDR in view of the hardship faced in the business of the assessee. Your attention is also invited to the Hon'ble High Court order [ 2024 (5) TMI 979 - ALLAHABAD HIGH COURT] in the above matter. Considering the petition of the assessee and Hon'ble High Court Order as directed to convey that the Ld. PCIT (Central) Kanpur has been pleased to revoke all the provisional attachments made u/s 281B of the IT. Act, 1961 of the FDRS in the above mentioned case Therefore directed to request you to kindly take immediate necessary steps for releasing all the FD etc, under intimation to this office. An action taken report must be sent to this office positively within a week of receipt of the letter. In view of the above, we find corrective action has been taken, in the present petition.
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2024 (5) TMI 1083
Nature of receipt - money receipt on account of relinquishment of its right to operate a hotel as a licensee - capital receipt or business receipt - HELD THAT:-Appellant has carried us to various findings recorded by the AO in the assessment order, terms of agreement, settlement agreement and the consent terms recorded by the sole Arbitrator. As respondent/assessee states that he shall argue the matter tomorrow. In view of the aforesaid, put up tomorrow [i.e. 15.5.2024] for further hearing at 10.30 am.
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2024 (5) TMI 1082
Estimation of income - bogus purchases - Assessee approached the co-ordinate Bench for A.Y. 2012-13 wherein the addition was restricted to 3% of gross profit - As assessee has already declared gross profit rate of 1.42% for the year, balance 1.58% was confirmed - HELD THAT:- By this time neither the registry nor the parties informed the Bench that AO has filed an appeal against the same order though the appeal of the Revenue was filed on 3rd October, 2023. Had it been known to the Bench that the cross appeal of the Revenue is pending, perhaps that would have been heard and disposed off together. It would have been duty of the Registry to tag the cross appeals and fixed them together for hearing. However, in this case as the issue is already decided by the co-ordinate Bench that assessee should have been earned the excess gross profit of only 1.58%, the appeal of the Revenue becomes infractuous. Accordingly, we dismiss the same.
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2024 (5) TMI 1081
Admissibility of additional evidence - LTCG - Deduction u/s 54F - Evidences filled by assessee to establish the fact that agricultural land at the time of sale was not a capital assets and that otherwise the sale consideration was invested in accordance with provisions of section 54F was rejected for the reason that the same were not placed before the AO - HELD THAT:- We are of considered view that same certainly would require taking into consideration the evidences which were filed as additional evidences by invoking provisions of Rule 46A. We are of considered view, that CIT(A) has fallen in error in not admitting the additional evidence and the additional grounds by relying on the decision of Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] - There is no justification to deny the additional ground and additional evidences for mere failure to take the same before the AO. The settled proposition of law being that powers of CIT(A) are co-terminus to AO - There is no prohibition under law that as CIT(A) cannot accept additional claim without assessee revising the return. Accordingly, we considered it to be an appropriate case to allow the appeal for statistical purposes only.
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2024 (5) TMI 1080
TP Adjustment - interest on outstanding receivables - international transaction or not? - Determination of Arm's Length Price (ALP) - HELD THAT:- The issue is no longer res integra. Hon'ble Bombay High Court took a view in the case of CIT Vs. Patni Computer Systems [ 2013 (10) TMI 293 - BOMBAY HIGH COURT] on the amendment to Section 92B of the Act by way of Finance Act, 2012 with retrospective effect from 01/04/2002 that, the interest on outstanding receivables is an international transaction, and it certainly requires separate benchmarking. There is no dispute that the learned DRP in the directions dated 08/06/2022 directed AO to adopt the SBI short term deposit interest rate for the subject year as the ALP interest rate and re-compute the adjustment to be made to the total income by applying credit period of thirty days or as per the agreement or invoice. There is no appeal by the Revenue as to this direction in respect of application of credit period of thirty days or as per the agreement of invoices. AO is, therefore, under the obligation to verify the invoices and apply the credit period of either thirty days or as per agreement or invoices, whichever is longer. Rate of interest - We are of the considered opinion that the ends of justice would be met by accepting the interest rate on similar foreign currency receivables/advances as LIBOR+200 points, by applying the credit period of thirty days or as per agreement or invoice. Accordingly, we direct AO/TPO to re-compute the same. Grounds are allowed in part accordingly.
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2024 (5) TMI 1079
Capital Gain on sale of plant - real owner - capital asset in the name of assessee or not? - HELD THAT:- As abundantly clear that the assessee has never admitted that the sale cum GPA executed by M/s. Deccan Townships Pvt Ltd with regard to remaining 10 acres was in the name of the assessee - also not admitted by the assessee that the assessee will submit the capital gain computation and pay the resultant tax in due course. As abundantly clear there was no admission in the eyes of law to pay the tax dues based on the statement recorded u/s. 132 rather the assessee has only sought time to file the copy of the sale deed for the remaining Ac 10-00 gts of land and paying the taxes after computing the capital gains. In fact, this statement was also retracted by the assessee before filing the return of income. Even otherwise, no addition can be made in the hands of the assessee, u/s 153A in the absence of incriminating material. Undoubtedly, the capital asset has been defined in section 2(14) of the Act which provides that an asset which is held by the assessee and not connected with the business or profession of the assessee is required to be treated as capital asset. Admittedly, the land admeasuring Ac. 10-00 is owned and registered in the name of A. Vindhyavali and not in the name of the assessee. The registered document clearly shows that the property was owned, registered and held by Smt. A. Vindhyavali who is not connected with the assessee in any manner. Thus, it is clear that the land owned by Smt. A. Vindhyavali was not a capital asset in the hands of the assessee and therefore, no addition can be made in respect of such land for capital gains arising out of the sale of the capital asset. Admittedly, the assessee was only the owner of Ac. 22-27 gts, and assessee has offered the STCG in the FY 2019-20 relevant to the AY 2020-21. This has been recorded by the AO in the order itself. With respect to the objection of the Revenue that no opportunity of hearing was given to the AO before relying upon the sale deeds. It will be sufficient to mention here that the AO mentioned about the sale deeds with respect to the agricultural land and AO further referred to the sale cum GPA entered by the assessee. CIT(A) has granted the relief based on the Agreement of sale cum GPA dated 19/08/2019 wherein it is clearly mentioned that the assessee was only the owner of Ac. 22-27 gts. Though the ld.CIT(A) had also referred to the other registered sale deed in the name of Smt. A. Vidhyavali for the purpose of concluding that the assessee was not the owner of the Ac. 10-00 gts. CIT(A) has decided the issue solely on the basis of registered documents which are admissible in law as they are documents in rem and we also draw the strength from Explanation to Section 3 of the Transfer of Property Act, 1882 which provided that any document which is registered shall be deemed to have notice of registration . CIT(A) had decided the issue on the basis of the documents available with the Ld. AO. Thus, there is no violation of the principle of natural justice and Rule 46A of the IT Rules, 1962. There is no error in the reasons given by the learned CIT (A) to delete the addition made by the AO towards the capital gain derived from sale of land. Decided against revenue.
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2024 (5) TMI 1078
Unexplained investment - Addition for payment made to company - submissions of assessee regarding genuine share transactions denied - HELD THAT:- It is a fact that the total investment were through banking channel and specific after withdrawals from Axis Bank Account - Once source of deposits of this account is explained and admitted then again making addition on account of withdrawals from there amount it unjustified. Assessee had made withdrawals in Goa during family visit, The addition is on account of credit in bank account or somewhere else is totally irrational. Once the source of deposit is explained then making of addition on account of withdrawals of amount is erroneous. Addition from undisclosed source which is part of circulation of cash transaction is regarding the bridal business. Assessee claimed that deposits were taken from customers as security and later on when bridal dresses and ornaments were returned the same were refunded. AO and CIT(A) erred in holding 30% of deposits merely on the basis of suspicion. Considering the nature of business of hiring bridal items by the assessee the gross income generated therefrom of Rs. 4,25,562/- and accepted by the department, the security amount can easily be calculated at 10% times of the hire charges, which works out at Rs. 38,68,745/-. Therefore assessee had satisfactorily explained the bank entries regarding cash deposits and withdrawals. In view of above material facts and circumstances passing of impugned orders has led to miscarriage of justice which is required to be remedied. Assessee appeal allowed.
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2024 (5) TMI 1077
Delay in filing of appeal against order denying grant of registration u/s 12A and 80G - Exemption u/s 11 - Delay in filing of appeal by approximately 4 years - HELD THAT:- From the contents of the Affidavit filed by the accountant, it is seen that the assessee was operating in remote part of the village with only one accountant, who was working on a part time basis. In the case of Collector Land Acquisition, Anantnag vs. MST Katiji and others [ 1987 (2) TMI 61 - SUPREME COURT] held that it is well established that rules of procedure are handmaid of justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. Accordingly, there is no mala fide intention in filing appeal against the order denying grant of registration u/s 12AA r.w.s. 80G of the Act. Accordingly, in the interest of justice, we are hereby condoning the delay. Non-granting of registration u/s 12A and 80G - CIT observed that though the assessee is an educational trust, but it is collecting substantial amounts from it s students towards meal and hostel fees, registration fees, admission fees etc, thus the assessee is primarily running a profitable business and not doing any charitable activity - HELD THAT:- On going through the facts of the instant case, considering the model of education, being residential boarding and hostel facility, followed by the assessee / applicant trust, the fact that on identical set of facts the assessee / applicant trust has also been granted provisional registration from A.Y. 2022-23 to A.Y. 2024-25, we are of the considered view that it is a fit case where the matter should be restored to the file of Ld. CIT for de-novo consideration of assessee s claim for registration u/s 12A/80G of the Act, after giving due opportunity of hearing to the assessee. Accordingly, in the interest of justice, looking into the facts of the instant case, we are hereby restoring the matter to the file of Ld. CIT for de-novo consideration and to pass appropriate orders, in accordance with law, after giving due opportunity of hearing to the assessee to present it s case on merits. Denial of exemption u/s 11 as assessee did not have the requisite registration under Section 12A - HELD THAT:- Since we have already restored the issue regarding grant of registration under Section 12A of the Act to the file of CIT for de-novo consideration, accordingly, the present issue also is directed being restored to the file of Assessing Officer with a direction to pass appropriate orders in light of disposal of application of the assessee for grant of registration under Section 12A of the Act, in the set-aside proceedings.
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2024 (5) TMI 1076
Addition u/s 80JJAA - claim denied Assessee failed to file the Form 10DDA within the prescribed time under the Statute - HELD THAT:- From the facts placed on record, it is observed that the chartered accountant of the assessee filed Accountant s report in Form 10DA before the due date of filing of return of income. This position has not been disputed by the Department. Admittedly, the above report was not accepted by the assessee before the due date of filing of return of income. Report in Form 10DA filed by the accountant of the assessee was accepted by the assessee on 06.01.2023, whereas in this case the order u/s 143 (1) was passed on 16.03.2023, denying the claim of deduction u/s 80JJA which means that at the time when the order u/s 143(1) of the Act was passed by the CPC, the assessee had accepted the Report filed by the accountant of the assessee in Form 10DA. It would be useful to reproduce the relevant extracts of the decision of in the case of Association of Indian Panel Board Manufacturer [ 2023 (3) TMI 1374 - GUJARAT HIGH COURT ] in which the Gujarat High Court, while dealing with similar issue held that although the requirement of furnishing report was mandatory, filing thereof is a procedural aspect. Once, it is seen that the audit report, in Form 10B was available with the assessing officer at the time of framing of assessment, even though the same may not have been filed along with the return of income, the assessee is entitled to claim of exemption u/s 11(1) and 11(2) of the Act. We are of the considered view that the claim of the assessee/appellant for deduction u/s 80JJA of the Act cannot be denied for the reason that firstly, the chartered accountant of the assessee had uploaded Form 10DDA before the due date of filing of return of income, and it was only because of procedural lapse/mistake on the part of the appellant/assessee that the aforesaid form could not be accepted before the due date of filing of return of income, secondly, the assessee/appellant had duly accepted the Form 10DDA before the return of income was processed by the CPC on 16.03.2023, thirdly, the Gujarat High Court, has on similar facts observed that although the furnishing of report for claiming the deduction/exemption is mandatory requirement, the mode and stage of filing thereof is a procedural aspect and if the requisite audit report is available with the assessing officer before the assessment order is framed, then the claim of deduction cannot be denied to the assessee/appellant, even if the audit report may not have been filed along with the return of income. Appeal of the assessee is allowed.
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2024 (5) TMI 1075
Addition u/s 69 - Addition based on assessee made disclosure of his income during the course of survey operations - AO taxed this amount u/s 115BBE - CIT(A) confirmed the addition by holding that the appellant had failed to explain the source of investment - HELD THAT:- Both the AO as well as the CIT(A) had fell in serious error in resorting to the provisions of section 69, inasmuch as, the investments were not made during the previous year relevant to the assessment year under consideration. No doubt, the admission is extremely an important piece of evidence but it cannot be said that it is conclusive as observed in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [ 1971 (9) TMI 64 - SUPREME COURT ] It is always open to an assesee to show that it is incorrect. From the material on record, it is patently clear that the acquisition of assets in respect of which the addition was made were acquired prior to the previous year relevant to the assessment year under consideration. Therefore, provisions of section 69 cannot be invoked for the year under consideration. The question of offering any explanation in support of the source for the acquisition of the said assets does not arise for the year under consideration as said investment was not made during the previous year relevant to the assessment year under consideration. Therefore, the reasoning adopted by the CIT(A) is totally contrary to the settled position of law, which cannot be appreciated/sustained. Assessee appeal allowed.
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2024 (5) TMI 1074
Additions made based on the statement recorded during the course of survey - Estimation of gross profit rate - the assessee by way of an Affidavit retracted the statement recorded u/s. 133A - HELD THAT:- We find that the AO is not correct in making the addition as the undisclosed income of the assessee, whereas CIT(A) has made thorough analysis of the income of the assessee project-wise and estimated the gross profit at 12.5% which does not require any interference. CIT(A) given direction to the reopen the other Assessment Years and recompute the income for the Assessment Years 2009-10 to 2016-17. Thus the grounds raised by the Revenue is devoid of merits and the same is hereby dismissed. Appeal filed by the Revenue is hereby dismissed.
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2024 (5) TMI 1073
Addition u/s 68 r.w.s. 115BBE - unexplained cash deposits during the demonetization period - assessee explained that this amount was deposited out of sale proceeds and past savings - HELD THAT:- AO did not point out any discrepancy in the purchases, sales and stocks recorded by the assessee in the books of accounts. In the circumstances, only an assumption that there could be some cash deposits based on the higher turnover in cash sales when compared to the cash sales made by the assessee in the immediately preceding assessment year is not correct. Thus, in the absence of any adverse finding by the AO that the purchases, sales and stock are not genuine and in the absence of rejection of books of account, there is no justification in assuming that the assessee has made cash deposits outside the books of accounts. Thus, the addition made by the AO u/s 68 of the Act is delete. Decided in favour of assessee.
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2024 (5) TMI 1072
Unexplained credit u/s 68 - addition of entire credit entry by holding that the assessee failed to substantiate the transaction in any document - assessee received commission of 0.50% per Rs. 100/- - assessee failed to produce the details of any person for whom the assessee discounted cheque or given cash after receiving cheque or draftand no details were provided by the assessee, no bifurcation of amount was provided by the assessee - As assessee submits that the assessee used to earn commission in such manner from very small means of persons as nature of business does not require any capital to be invested. In the bank account, no huge balance ever remained at any point of time. Merely the assessee was unable to file party wise details, entire bank transaction cannot be taxed as income. HELD THAT:- We find that no details of customer or persons to whom the assessee made transactions is given. Assessee in his submission explained that no details of such persons are maintained and the nature of business is peculiar. This Tribunal in various cases as relied by the ld. AR of the assessee has made/restricted the addition @ 0.125% to 0.35%, however, this combination in case of ITO Vs Shri Deepak Viothaldas Suchak [ 2021 (8) TMI 1028 - ITAT SURAT] wherein the ld. CIT(A) restricted the addition on similar type of transaction @ Rs. 50 per lac on total turnover of Rs. 98.22 crores. However, on appeal before the Tribunal, this combination increased the disallowance to Rs. 75 per lac, therefore, taking a consistent view, the addition made in the assessment order in the case of assessee is restricted to Rs. 75/- per lakh i.e. 0.75% for Rs. 100/-. On perusal of details of entire transaction, we find that amount deposited through cheque is of Rs. 2.05 crore and cash deposited only Rs. 18.7 lacs. The cheque returns amount is aggregating Rs. 17.22 lacs. Thus, net credit in the bank account is only Rs. 2.07 crores. Hence, the assessing officer while giving effect of this order shall consider aggregate amount in bank account of Rs. 2.07 Crore. With this observation, the grounds of appeal raised by the assessee is allowed partly
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2024 (5) TMI 1071
Interest levied u/s 220(2) on non-payment of FBT demand, including interest - as against refund due, an amount was adjusted, which comprised of outstanding Fringe Benefit Tax (FBT) demand u/s 115WE - case of the assessee that no intimation or notice of demand was served on the assessee qua the FBT liability - As submitted, suo motu, the assessee deposited FBT demand , despite that, FBT demand was again recovered from the refund due along with the interest levied u/s 220(2) - HELD THAT:- There cannot be levy of interest under section 220(2) of the Act for alleged non-payment of FBT liability. Furthermore, the record reveals that once the assessee came to know the fact that the demand relating to FBT liability was appearing in the portal of the Income Tax Department, it had opened a communication channel with the AO continuously seeking information regarding service of intimation and demand notice creating such liability. However, the requests of the assessee failed to evoke any response from the AO. These are admitted facts on record on record as learned first appellate authority has not disputed assessee s claim. The reason for negating assessee s claim is, the assessee was aware of the tax liability uploaded by Revenue on e-filing portal. Mere reflection of demand on e-filing portal does not absolve Revenue from properly serving the intimation and demand notice qua the FBT liability pertaining to assessment year 2009-10. Pertinently, in course of hearing of the present appeal, a report of the AO was called for with regard to assessee s claim of non-service of intimation and demand notice pertaining to FBT liability. However, the Revenue has failed to furnish any material before us, which can establish that the intimation and demand notice concerning FBT demand was ever served on the assessee. Though, it may be a fact that the assessee might have discharged the FBT liability appearing on the portal of the Income Tax Department in the year 2018, but that act of the assessee, by itself, cannot fasten interest liability under section 220(2) of the Act upon the assessee. Assessee appeal allowed.
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2024 (5) TMI 1070
Revision u/s 263 by CIT - Period of limitation - requisite action should been completed by which date? - HELD THAT:- In the instant case the assessee originally filed his return of income declaring total income which was assessed to tax u/s 143(3) vide order dt. 18/02/2014 wherein the addition was made towards interest on saving bank account and the assessed income determined at Rs. 3,69,540/- while passing the assessment order. Therefore if any of the aforesaid issues which is found to be erroneously dealt with by the AO and therefore call for revisionary proceedings u/s 263 then the requisite action should been completed by 31/03/2016 i.e; within two years from the end of the financial Year in which the assessment order was passed which is F.Y. 2013-14. Transfer expenses, CLU expenses and claim of deduction u/s 54F - As we find that the same are clearly emerging from the reassessment order passed u/s 143(3) r/w 147 of the Act and the impugned revisionary order so passed by the PCIT setting aside the reassessment order is thus not barred by limitation as the limitation period will start from passing of the reassessment order and not the original assessment order. Sale of the land situated at District Solan the same is subject matter of original assessment proceedings and not the subject matter of reassessment proceedings and therefore, the period of limitation for passing the revisionary order under section 263 would run from the date of the original assessment order and not the reassessment order. Thus, to this extent of subject transaction of Rs 23.99 lacs, the present revisionary proceedings under Section 263 are barred by limitation and the findings of the Ld. PCIT are hereby set aside as not sustainable in the eyes of law. Transfer expenses and CLU charges we find that the relevant material is available on the record and are admittedly part of the assessment records. Therefore the finding of the Ld. Pr. CIT that no documentary evidence is available on the record is not factually correct. Further, in absence of any adverse finding recorded by the Ld. Pr. CIT regarding contents of the material so available on record and which has apparently been considered by the AO while allowing the claim of the assessee, the order so passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue. Quantum of deduction under Section 54F of the Act, as submitted by both the parties, we upheld the findings of the Ld. Pr. CIT and the claim of deduction under Section 54F should therefore be restricted to Rs. 30,49,998/- as so computed by the Ld. Pr. CIT and therefore to this extent, the order of the Ld. Pr. CIT is sustained. Appeal of the Assessee is partly allowed.
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2024 (5) TMI 1069
Addition u/s 68 - Unexplained Cash Credit - loan taken from various parties - amount received during the earlier years and current year - Genuineness of loans and interest payments - HELD THAT:- We observe that except M/s.Frontline Diamond Pvt. Ltd., all other loans taken from other parties are continued from earlier assessment years. Therefore, the addition can be made only to the extent of loan taken by the assessee during the current assessment year. Therefore, the other continuing loans which are brought forward from earlier assessment years has no relevance to the current assessment year considering the fact that the AO in those assessment years is already proceeded to make the additions in those assessment years. The assessee has to prove genuineness of the transactions u/s 68 only to the extent of credit recorded during the current assessment year. New loans taken by the assessee during the current assessment year - When the assessee repays the loan which was taken from this party, therefore, this itself shows that assessee has demonstrated the genuineness of the transaction. Assessee has submitted all the relevant documents relating to above transactions before the Tax Authorities and AO merely relying on the survey report and analyses the creditworthiness of the parties on the basis of earning capacity of the parties, the AO has made the above said additions. Therefore, in our considered view the assessee has taken the loan from all the above said parties through banking channels and repaid the same as discussed above. The addition can be made during the current assessment year only to the extent of the loan taken by the assessee during the current assessment year can be considered for discussion. Assessee has submitted the relevant documents and proved the genuineness of the transactions and repaid all the loans taken by the assessee partly during the current assessment year and balance in the subsequent assessment years. Therefore, the additions proposed by the AO is not proper - we direct the AO to delete the addition proposed in this case. Accordingly, Ground raised by the assessee is allowed.
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2024 (5) TMI 1068
Addition u/s 68 - bogus Share Application Money received from various paper companies - specific information was received from the Investigation Wing - CIT(A) deleted addition - HELD THAT:- CIT(A) on a very detailed examination was satisfied about identity, creditworthiness and genuineness of the investor companies and held that the assessee had discharged the primary onus to prove their identity, creditworthiness, and genuineness. We, therefore, concur with the finding of the CIT(A) that the AO has made an addition under section 68 of the Act without any basis. CIT(A) has analyzed the transaction with each share holder and assigned reasons as to why the share capital have to be treated as genuine and has rightly deleted the addition. There is no reason to interfere in this finding of fact particularly since nothing has been shown by the department to conclude that the finding of fact was perverse in any manner whatsoever. We hold that the impugned order it did not suffer from any legal infirmity or perversity to the facts on record. We hold that the CIT(A) has been legally justified in deleting the addition made by the AO u/s 68 - Accordingly, the decision of the CIT(A) on the first issue of deleting addition of share capital is sustained. Thus, the 1st ground of appeal of the department is rejected. Commission expenses paid for bogus share application money - The share application money received by the assessee is genuine. Therefore, payment of brokerage/commission does not arise. Hence, the disallowance made by the AO, on account of payment of brokerage/commission is uncalled for and needs to be deleted. Validity of reassessment proceedings - CIT(A) did not adjudicate this ground by holding that since the addition made by the AO have already been deleted, this ground has become academic in nature - HELD THAT:- Hon ble Madras High Court in case of CIT Vs. India Cements Ltd. [ 2019 (8) TMI 1485 - MADRAS HIGH COURT] has held that issue of validity of reassessment raised by assessee before CIT(A), taken note of by CIT(A) and not decided by him in view of decision on merits should be taken to have been decided against the assessee. Though assessee did not file an appeal against the order of CIT(A) could support the order on that issue in appeal filed by the department in light of Rule 27 of ITAT Rules and thus Tribunal was right in permitting the assessee to argue on the issue relating to the validity of reassessment proceedings.
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2024 (5) TMI 1067
TDS u/s 195 - FTS payments - non deduction of TDS - disallowance u/s 40(a)(i) - I nterpretation of 'Make Available' clause - demand u/s 201(1) and 201(1A) - as argued source of payment being located in India, the payer being in India, India being following source rule, the exception to Section 9(1)(vii)(b) of the Act is not attracted - HELD THAT:- We notice that for the Assessment Years 2011-12 to 2017-18, the Tribunal, vide its consolidated order [ 2020 (3) TMI 1438 - ITAT BANGALORE ] had decided the issue in favour of the assessee. The Tribunal had examined in detail the agreement entered into by the assessee with its payee and the nature of services rendered, etc. Thereafter, it was concluded by ITAT that the payments cannot be attributed as FTS and assessee cannot be made liable under section 201 of the Act. In light of the above orders of the Tribunal which was confirmed by the Hon ble High Court [ 2023 (3) TMI 422 - KARNATAKA HIGH COURT ] in assessee s own case for Assessment Years 2011-12 to 2017-18, we reject the contentions raised by the Department.
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Customs
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2024 (5) TMI 1066
Seeking permission to file Review Petition - Condonation of delay - HELD THAT:- Application for condonation of delay of 331 days in filing Review Petition is dismissed. Application for permission to file Review Petition is rejected. However, having carefully gone through the Review Petition, we are satisfied that there is no error apparent on the face of the record or any merit in the Review Petition, warranting reconsideration of the order impugned. The Review Petition is, accordingly, dismissed.
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2024 (5) TMI 1065
Undervaluation - Imports timber from various countries - contemporaneous imports - Burden of proof - duty demand - penalty and interest - third-party documents and statements - HELD THAT:- In the case of Beena Sales Corporation [ 2019 (3) TMI 982 - CESTAT AHMEDABAD] , it can be seen that all the documents and evidences are common which have been relied upon in the present cases also, therefore, the above decision in Beena Sales Corporation, is directly applicable in the present appeals also. Moreover, the decision of Beena Sales Corporation has been upheld by the Hon ble Supreme Court. Thus, following the Beena Sales Corporation decision, the impugned orders are not sustainable. Accordingly, the impugned orders are set aside. All the appeals are allowed with consequential relief.
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2024 (5) TMI 1064
Revocation of Customs Broker license - non-existent - forfeiture of security deposit - levy of penalty - involvement in fraudulent IGST refunds, who were not traceable, along with the details Customs Brokers involved in the clearance of the alleged risky consignments - violation of Regulation 10(n) of CBLR, 2018 - HELD THAT:- Following the decision of this Tribuanl in Mauli Worldwide Logistics [ 2022 (7) TMI 368 - CESTAT NEW DELHI] , we are of the view that revocation of the customs broker licence is not justified. The appellant had verified the antecedents and correctness of IEC, KYC documents, GST and other documents of their clients from the Government s official website (DGFT, GST and Income Tax Department) before the clearance of the goods. As noted by the Tribunal there cannot be more reliable data than the official government website. Consequently, there was no reason for the appellant to have suspected the genuineness of the documents when the contents thereof matched with the details available on the official government website. Therefore, we do not find any violation of the obligation in terms of Regulation 10(n) by the appellant. The impugned order revoking the Customs Brokers Licence, forfeiting the amount of security deposit and imposition of penalty needs to be set aside. The appeal is, accordingly, allowed.
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2024 (5) TMI 1063
Exemption of Additional Duty under Notification No.12/2012-CE - Whether Grid-Tied Solar Inverter can be considered as Solar Power Generating System for claiming the benefit of exemption - HELD THAT:- The Solar Power Generating System primarily consists of (1) Solar Photovoltaic Module (2) Mounting Structure for Solar Photovoltaic Module (fixed tilt or tracking type) and (3) Solar Inverter. Undoubtedly, the item imported item Grid Tied Solar Inverter is used to convert solar DC power to AC power and forms part of a solar system but cannot be construed to be the Solar System itself. The respondent had imported the product vide Bill of Entry No.6067001 and claimed exemption from Additional duty of customs under the amended Notification No. 12/2012 which clearly allows parts of the solar system only if condition 2 is satisfied and since, the respondent had not satisfied the condition laid down in the Notification, the question of extending the benefit of the notification did not arise. The Commissioner (Appeals) s view that the exemption Notification should be liberally interpretated and the burden of prove that the Respondent is not eligible for the benefit lies on the Revenue falls flat in view of the above observations of the Hon ble Supreme court in the case of Dilip Kumar and Company [ 2018 (7) TMI 1826 - SUPREME COURT] . The impugned order is set aside and the appeal is allowed.
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Corporate Laws
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2024 (5) TMI 1062
Investigation under Section 212 (1) (c) of the Companies Act, 2013 - scope of judicial review - whether the Central Government has applied its mind and formed an opinion and whether there exist material and circumstances to form such opinion are open to judicial review? - HELD THAT:- Once the liquidator and the authorities have taken action against the company for the alleged transactions covered under section 66 of the IBC, there is no question of SFIO carrying out investigation with respect to the same transactions and same cause of action, more particularly on the ground of public interest, which will otherwise amount to double jeopardy. In the present case the Application under section 66 is pending therefore investigation by the SFIO pursuant to sanction under section 212 would amount to double jeopardy. There is no element of public interest involved in the present case. Factual Existence of public purpose and interest is by the language of section 212 (1) (c) a condition precedent to order investigation - it is abundantly clear that there did not exist requisite material and circumstances based on which the Respondent No. 1 could have ordered investigation at the behest of SFIO. The commencement of investigation under section 212 of the Companies Act has far fetched impact on the functioning of a Company. Mere commencement of investigation by SFIO may cause serious injury as soon as it is made and such injury may not be capable of being entirely erased. These powers cannot be used ordinarily or in normal circumstances or in a mechanical way - there is no opinion formed by the Central Government as contemplated and mandated under section 212 of the Companies Act. Merely ordering investigation in a routinely fashion and in a mechanical way, as is done in the present case, would not qualify as forming of opinion for the purposes of Section 212 of the Companies Act. In the present case, the functions of the Company have come to stand still since its admission under the CIRP by order passed by the NCLT Mumbai dated 03.03.2020 and is pending liquidation, further there is an Application under section 66 of the IBC for recovery of monies which will be decided on its own fate, therefore, in our opinion there is no public interest involved or even a prima-facie case made out for initiation of investigation under section 212 of the Companies Act, even assuming the material and circumstances available with the Central Government at the time of passing the impugned sanction to be true and correct. An order of sanction under Section 212 of the Companies Act, 2013 needs to be a reasoned order, there needs to be existence of opinion formed by the Central Government on the basis of material facts and circumstances warranting such investigation and in compliance with principles of natural justice - the impugned sanction dated 30.11.021 fails on all counts. The sanction dated 30.11.2021 under Section 212 (1) (c) of the Companies Act, 2013 is arbitrary, illegal and bad in law and ought to be set aside. Any steps taken in furtherance of the sanction dated 30.11.2021 deserves to be quashed and set aside - Petition allowed.
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Service Tax
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2024 (5) TMI 1061
Classification of services - Business Support Service or not - Tribunal held that, the activity undertaken by the appellant is not classifiable under service tax category of the Business Support Service‟ and therefore, not taxable - Appeal allowed - HELD THAT:- Delay condoned. In view of order passed by the Coordinate Bench of this Court in C.A. No. 1335 of 2022 titled as Commissioner of Service Tax Vs. Inox Leisure Ltd. , No case is made out to interfere with the impugned Order passed by the Customs, Excise and Service Tax Appellate Tribunal - Appeal is disposed of.
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2024 (5) TMI 1060
Demand of service tax - Banking and Other Financial services (BOFS) - reverse charge mechanism - lending activity Or an activity in relation to lending - Applicability of service tax on corporate guarantee fees prior to and post 01.07.2012 - Invocation of the extended period for demand - HELD THAT:- We observe that the Show Cause Notice itself recites that the parent company of appellant has given the corporate guarantee. Though there is guarantee fee agreements dated 25.06.2009 30.06.2013 executed between appellant and the parent company by virtue of which appellant is paying guarantee fee. But since it is already held that providing corporate guarantee cannot be called as providing BOFS, prior to 01.07.2012, the amount in lieu thereof cannot qualify for the definition of consideration as mentioned above. Apparently parent company of appellant is not in business of lending. To our opinion the act of providing a corporate guarantee is a separate mechanism to secure the lending transaction and is not related to the lending activity. It stated that the definition of Banking and Other Financial Services provided in Section 65(12)(a)(ix) of the Finance Act is restrictive and thus, the terms lending succeeded by the term namely has to be interpreted in a restrictive manner restricting the service only to lending activity. It further submitted that corporate guarantee is provided by a third party who is not privy or party to the loan or lending transaction. Therefore, the activity of the providing corporate guarantee is neither a lending activity nor an activity in relation to lending. We draw our support from the case of Olam Agro India Ltd. V. Commissioner of Service Tax, [ 2013 (11) TMI 1503 - CESTAT NEW DELHI] wherein it was held that a corporate guarantee does not fall within the ambit of Banking and Other Financial Services u/s 65(12) of the Finance Act , as well as upon the case Sterlite Industries Ltd. vs. Commr. of Central Excise [ 2013 (8) TMI 452 - CESTAT CHENNAI] , to hold that the providing of corporate guarantee does not fall within the ambit of lending activity in terms of Section 65(12)(a)(ix) of the Finance Act. Hence, we hold that question of the activity of extending corporate guarantee by the appellant to its associate companies cannot be called as service in terms of above provision in section 65 B (44) of the Act. Hence we hold service tax cannot be demanded from the appellant under reverse charge mechanism for the period prior 01.07.2012. Demand for the period post 01.07.2012 - Admittedly the tax liability on this amount stands already paid by the appellant along with the amount stands already paid by the appellant along with the amount of interest in May 2015 against the acknowledgment by the department for the same. Thus the liability was discharged prior to issue of the Order-in-Original. But the authorities below have not taken the payment into consideration since the payment stands already made, it cannot be demanded again. We also observe that there is no evidence on record with respect to the observations of ld. Commissioner in Order-in-Original that the corporate guarantee given by the appellant has benefited the associate enterprises in two ways as quoted above. We further observe that issue is no more res-integra as has also been conceded on behalf of the department. Invocation of extended period - We observe that appellant has claimed that there was a lack of clarity on the issue of service tax on Guarantee Fee before July 1, 2012, and that there was no intention to evade payment. Respondent has failed to prove any mala fide intention on the appellant s part. Hence, it is held that extended period is wrongly been invoked. Thus, it is held that for the entire period from financial year 2009-2010 to 1st July, 2012 the Act of receiving a corporate guarantee from parent company was not an act of receiving Banking and Financial Services. The demand confirmed for the said period is hereby set aside. Hence, the order under challenge is hereby set aside. As a result thereof, the appeal in hand is allowed.
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2024 (5) TMI 1059
Refund of service tax - works contract services provided to government authorities - exempt by virtue of Notification No. 25/2012-ST - entitlement to refund in terms of section 102 of the Finance Act - Whether the contracts, on the basis of which the appellant rendered services, were executed prior to March 01, 2015 or not - HELD THAT:- From the record, it is clear that all the contracts were executed before March 01, 2015. The Assistant Commissioner recorded a categorical finding of fact, after examination of all the contracts, that they had been executed before March 01, 2015. It also transpires from the aforesaid chart that the agreements were executed prior to March 01, 2015 and the work orders were subsequently issued to the appellant on March 10, 2015. It also needs to be noted that the appellant had filed the refund claim within six months from the date of enactment of the Finance Bill i.e. May 14, 2016 along with copies of the contracts. What is relevant for the purpose of section 102 of the Finance Act is the date on which the contracts were executed and not the date of the work orders. The Commissioner (Appeals) has considered the date of the work orders as the relevant date and, therefore, recorded a finding in the impugned order that the appellant would not be entitled to refund since the contracts under consideration were executed after March 01, 2015. Thus, the order dated September 19, 2017 passed by the Commissioner (Appeals) cannot be sustained and is set aside. The appeal is, accordingly, allowed.
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2024 (5) TMI 1058
Levy of service tax - Liquidated damages in the contracts towards penalty/late delivery charges - section 66E (e) of the Finance Act, 1994 - applicability of circular issued by the Department of Revenue - appellant is a Central Government Public Sector Undertaking - HELD THAT:- Ld. Chartered Accountant further submitted that the Department of Revenue has recently issued Circular No. 178/10/2022-GST dated 3rd August 2022 in which they have clarified that there is no liability of payment of Service Tax/GST on liquidation damages charged by the company. We find that identical issue in the appellant s own case has been decided by various Benches of Tribunal and which has consistently held that liquidated damages collected by the appellant as penalty/late delivery charges cannot be subjected to service tax u/s 66E (e) of the Finance Act. In this regard, we may refer the Final Order [ 2023 (4) TMI 54 - CESTAT NEW DELHI ] passed by the Principal Bench in the appellant s own case where identical issue was involved. Thus, we are of the considered view that the impugned order is not sustainable in law, therefore, we set aside the impugned order by allowing the appeal of the appellant with consequential relief, if any as per law.
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Central Excise
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2024 (5) TMI 1057
Clandestine removal - shortage of stock found during joint stock taking conducted by the officers in the presence of the Director of the company - demand of duty and disallowance of credit - demand of duty confirmed on the alleged clandestine removal of goods, on the basis of the data recovered from the CPU - Penalties imposed on the Managing Director and Director. Demand of Central Excise duty and the disallowance of CENVAT credit on the basis of the shortages noticed during the joint stock verification done - HELD THAT:- The verification of stock was done in the presence of the Director. The weighment sheet is prepared on the basis of weight of each article as provided by the Director multiplied by number of such articles. Counting numbers of the articles was noted down in the rough sheets at the time of stock taking which has been authenticated by the Director on the spot and he has confirmed the shortage in his statement dated 23.08.2008. Subsequent retraction of the statement and alleging that the stock taking was not done properly, seems to be an afterthought - the stock verification has been done properly and there is no reason to suspect the findings arrived at during the course of the stock verification by the officers - there are no infirmity in the findings of the Ld. Commissioner insofar as the demand based on the shortage of stock is concerned. Demand on the alleged clandestine clearances - HELD THAT:- The demand has been confirmed for the financial years 2004-2005 and 2005-2006 whereas the search was conducted on 23.08.2008. The demand is confirmed based on the print out retrieved from the computer CPUs that was admittedly in the official use of the appellant-assessee - The pen drives recovered from the office premises of the appellant-assessee are floating devices. Many staff from the office would have used the pen drive to store data. Thus, it is required to identify the person who entered the data in the computer. It is also observed that the author of the computer printout recovered from the Appellant's office has not been established in this case. Without identifying the author who entered the data, the information available in the pen drive cannot be relied upon to demand duty - the investigation has not brought in any corroborative evidence to substantiate the allegation of clandestine removal - the charges of clandestine removal against the appellant assessee M/s. Mittal Iron Foundry Pvt. Ltd. in the impugned order is not sustainable. Penalties imposed on the Managing Director Shri Ramjilal Agarwal and the Director Shri Vijay Kumar Agarwal, under Rule 26 of the Central Excise Rules,2002 read with Rule 15 of the CENVAT Credit Rules, 2004 - HELD THAT:- It is observed that they were in charge of the day-to-day affairs of the company. They admitted the shortage noticed during the joint stock verification. Thus, they are liable for penalty for the shortages noticed during joint stock verification. However, the demand raised on clandestine removal is not substantiated. Accordingly, we hold that they are liable for penalty, but the penalty can be reduced commensurating with the offence. Since the demand is confirmed only relating to the shortages found, it is observed that the penalty of Rs. 10,00,000/- imposed on each can be reduced to Rs. 1,00,000/- each, to meet the ends of justice. Appeal disposed off.
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2024 (5) TMI 1056
Recovery of the refund of service tax paid - vice of judicial discipline - services rendered to Electro Motive Diesel, Inc (EMD) - export of services or not - Whether the refund granted to the appellant pursuant to the Tribunal's order can be challenged by way of a show cause notice u/s 11A of the Central Excise Act. - HELD THAT:- There is no doubt that the issue has been considered in the earlier decisions passed in the case of the appellant themselves, where the Tribunal in NATIONAL ENGG. INDUSTRIES LTD. VERSUS COMMR. OF C. EX., JAIPUR [ 2007 (12) TMI 170 - CESTAT, NEW DELHI] dealt with the similar issue while allowing the appeal observed ' In the present case, it is revealed from contract that the appellant would be paid USD equipment (sic) (equivalent) to non-convertible Indian Rupee at the Rate of Exchange prevailing on the date of supply order. It is noted that the equivalent amount of foreign exchange payable to the appellant was not released to the Indian Railways, and therefore, the appellant complied with the provision of Rule 3(1)(b) of the Rules.'. Similarly, in the final order in the case of the appellant in NATIONAL ENGINEERING INDUSTRIES LTD. VERSUS COMMR. OF C. EX., JAIPUR [ 2011 (9) TMI 759 - CESTAT, NEW DELHI] , the issue decided in favour of the appellant was whether the service provider appellant in India getting rupee value equivalent to commission amount of 5% US $ shall be liable to service tax on the allegation of nonfulfilment of condition of Rule 3(1)(3) of Export Service Rules, 2005. Admittedly, neither the final order nor the consequential order of refund was challenged by the Revenue and had thereby attained finality. If the Revenue was agreed by the grant of the refund amount, the proper remedy was to approach the proper forum by way of appeal and not by issuing the show cause notice as they have done in the present case. May be, the matter was subjudiced before the Supreme Court, however, there was no stay of the impugned order and, therefore, the Revenue was bound to implement the order of the Tribunal as confirmed by the High Court of Rajasthan. The authorities below have seriously erred in upholding the recovery of the refunded amount from the appellant. Once the issue has been decided by the Tribunal that the appellant is entitle to the refund, the authorities below have no jurisdiction to order for recovery of the said refunded amount unless the order of the Tribunal granting refund is stayed or set aside by a higher forum, which is not in the present case. Infact the lower authorities further exceeded the brief by commenting critics on the decision rendered by the Tribunal which is much superior in hierarchy. The impugned order is, therefore, set aside. Appeal allowed.
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2024 (5) TMI 1055
Clandestine manufacture and surreptitious removal - demand based on statements of the buyers and the appellants recorded during the course of investigation - retraction of statements - HELD THAT:- The statements of the appellants have been retracted, but statements have not been tested in terms of section 9D of the Central Excise Act, 1944 to know the veracity of the statements by examination in chief and after examination in chief of all third party statements, cross-examination of the said statements is required to be done. All these aspects are missing in this case - From the investigation and facts, it is not coming out anywhere that the payment received in the bank account of M/s. Bharat Suppliers was sent to appellant No.1, 2 or 3 by any means and there is no admission to that extent by the appellants. Admittedly, in the case in hand this Tribunal in the case of M/S ARYA FIBRES PVT. LTD., M/S NOVA PETROCHEMICALS LTD. AND OTHERS VERSUS CCE AHMEDABAD-II [ 2013 (11) TMI 626 - CESTAT AHMEDABAD ] has laid down the certain parameters to establish clandestine removal of goods, the show cause notice is not in conformity with the criteria in the case of Arya Fibres Pvt.Ltd. The allegation of clandestine removal of goods is not sustainable. Moreover, the statements which has been relied by the adjudicating authority in the impugned order, are not tested as per procedure prescribed under section 9D of the Central Excise Act, 1944 to find out the genuineness of the statements recorded during the course of investigation - the allegatoin of clandestine removal of goods by appellant No.1 is not sustainable against the appellants, the same has been alleged on assumption and presumption without corroborative evidences, therefore, no demand of duty is sustainable against the appellants alleging clandestine removal of goods, consequently, no penalty can be imposed on the appellants. It is further noted that the Ld.Counsel for the appellant has taken the ground that they have paid the entire amount of duty along with interest and 25% penalty under protest, the same is required to be refunded to the appellant as the said amount has been paid by the appellant after adjudication of the case. Therefore, bar of unjust enrichment is not applicable to the facts of this case. The amount of duty, interest and penalty paid by the appellant after adjudication and under protest for entertaining the appeals filed by the appellant is refundable to the appellant - Appeal disposed off.
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2024 (5) TMI 1054
Valuation - balance amount collected subsequent to installation of the bearings in the project - Amount received towards supply of goods or services? - Required to be added in the assessable value or not - Non-following of CAS- 4 valuation - extended period of limitation - HELD THAT:- In the present case, without any dispute, the Appellant has divided the contract into two parts and paid any Excise Duty on 70% of the value treating the same as the value of goods supplied. For the balance 30% value of the contract, they have not paid any Excise Duty. For the second portion of this contract value amounting to 30% realization by the Appellant would in fact should be termed as service and the Department should have demanded Service Tax on the same. Considering the fact that the main contractor HCC was awarded the contract under Works Contract and both materials and services are involved even in respect of the goods to be cleared by the Appellant, it is clear that designing, installation etc. form part of the services rendered by the Appellant. Therefore, the Revenue is in error in treating this as a valuation case by enhancing the value of manufactured goods to arrive at the quantified/confirmed demand. Non-following of CAS- 4 valuation - HELD THAT:- Since this is not a case where the Appellant is supplying to their own unit and the goods are not cleared on stock transfer basis, they are not required to follow CAS-4 value. Even otherwise, irrespective of the value declared for the manufactured goods cleared, in the normal course on the balance 30% portion the appellant would have been liable to pay the Service Tax. However, the Department has failed to issue the Show Cause Notice demanding the Service Tax. The confirmed demands are not sustainable on merits - the confirmed demand and penalty on the Appellant company is set aside. Time Limitation - HELD THAT:- The SCN has been issued within one year from the date of Audit getting the reply from the appellant. But it is noted that the appellants are registered manufacturer. As such they have been filing their Monthly Returns showing the value adopted by them. Even under the self assessment regime, scrutiny of the ER-1 Returns are still to be taken up by the Range officials. There is nothing to indicate that the self-assessed ER-1 were taken up for scrutiny and any query was raised towards the assessable value adopted by the appellant for their clearances. Therefore, the confirmed demand for the extended period is set aside. The confirmed demand is not sustainable against the Appellant company, the question of imposing penalty on the Director would not arise. Accordingly, the penalty imposed on him is also set aside. Appeal allowed.
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2024 (5) TMI 1053
Penalty u/r 26 of the Central Excise Rules, 2002 imposed on the appellants as company - appellant failed to verify the payment of excise duty in the invoice - HELD THAT:- From plain reading of the legal provisions contained in Rule 26, it transpires that the penalty under this rule can be imposed in specified situations given therein. One such situation is, that a person who does any act in acquiring possession or who in any manner deals with, the excisable goods which he knows that these are liable to confiscation can be imposed with penalty. The second situation is in respect of person, who is liable to pay duty upon issue of excise invoices, but issues such invoice without delivery of goods or issues it wrongly to enable the recipient to claim undue benefit. Thus, these provisions make it essential that a person should have the knowledge of the fact that the subject goods are being liable to confiscation. As the acquisition of such knowledge is related to individual persons, it is apparent that such penalty under Rule 26 ibid is applicable on individual persons and not on legal person. Further, in the present case, the appellants are not the person, who are issuing excisable invoices for the CDs/DVDs. The only allegation on the appellants is that they did not verify the payment of excise duty in the invoice. It is seen from the contract entered with M/s M/s KRCD (India) Pvt. Ltd., that the price is inclusive of all excise duty and other taxes. Inasmuch as the appellants have specifically indicated in contract that the price is inclusive of excise duty, there does not appear to be any ground for the appellants to believe that the DVDs or CDs have been supplied without payment of excise duty. Thus, on the above basis also, the imposition of penalty under Rule 26 is not sustainable. The issue is no more in dispute as in a number of orders, the Tribunal has held that penalty under Rule 26 can be imposed only on individuals and not on company - in the case of Kakateeya Fabs (P) Ltd. [ 2017 (9) TMI 13 - CESTAT NEW DELHI ], the Tribunal has held that that penalty under Rule 26 cannot be imposed on company firm or organization. The impugned order to the extent it has imposed penalty under Rule 26 of Central Excise Rules, 2002, on the appellants is not legally sustainable - the impugned order set aside - appeal allowed.
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2024 (5) TMI 1052
Calculation of education cess and higher secondary education cess on the excise duty chargeable on the goods cleared by 100% export oriented unit into DTA - HELD THAT:- It is found that even though in the matter the issue in hand is pending before Hon ble Supreme Court in case of SARLA PERFORMANCE FIBERS LTD. VERSUS COMMISSIONER OF C. EX., VAPI [ 2010 (2) TMI 335 - CESTAT, AHMEDABAD] , there is no stay granted to the Revenue. Moreover, in the appellant s own case MEGHMANI DYES INTERMEDIATES LTD. VERSUS COMMR. OF C. EX., AHMEDABAD [ 2010 (4) TMI 1026 - CESTAT AHMEDABAD] following the decision of Sarla Performance Fibres Limited, this Tribunal has passed the order in their favour and the same was upheld by the Hon ble Supreme Court in COMMISSIONER VERSUS MEGHMANI DYES INTERMEDIATES LTD. [ 2014 (11) TMI 615 - SC ORDER] . The Tribunal in the case of M/s. Sarala Performance Pvt. Ltd. held that once the measure of Customs duty equivalent to Central Excise duty had been calculated, there was no need to levy Education Cess separately for clearances by 100% EOU to DTA. In view of the above decision of the Tribunal which was upheld by the Hon ble Supreme Court in the appellant s own case, the present appeal does not survive - appeal of Revenue dismissed.
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2024 (5) TMI 1051
Clandestine removal - demand based on the finding that weight of physical stock of grey fabrics ( finished goods) less than the weight recorded - clandestinely removal of duty free raw material by manufacturing and clearing grey fabric (finish goods) showing the excess weight than the actual weight of grey fabrics - invocation of extended period of limitation - confiscation - levy of redemption fine and penalty - Cross-examination of witnesses - admissible evidences or not - violation of principles of natural justice. Principles of natural justice - HELD THAT:- It is found that in this matter earlier the matter was remanded by this Tribunal vide order dated 26.11.2014 with a direction to comply with the principles of Natural Justice. In the remand proceedings the appellant have specifically requested for cross-examination of the witnesses who have given the statements including the 3 buyers of the alleged clandestinely purchased goods. However, Learned Adjudicating Authority has not granted the cross examination. Cross-examination of witnesses - admissible evidences or not - HELD THAT:- From the statutory provision of Section 9D, it is settled that the statements which have not passed the test of examination-in-chief and/ or cross-examination of witnesses, are not admissible in evidence. Therefore, the case based on the statements will not stand. As regard other evidence that there is a difference in weight since, it is also based on statement, the allegation majority stand diluted on this account also. Demand based on the finding that weight of physical stock of grey fabrics ( finished goods) less by 7156.720 Kgs since the recorded stock was 13257 Kgs admeasuring 66426 linear meters - HELD THAT:- It is admitted fact that there is no difference in the length of the fabrics. Moreover, the officer also found that even length in linear meter matching there is different recorded weight of 6100 Kgs. In this position, the allegation is clearly based on assumption that 7156.720 Kgs of raw material (PFY) used in these finished goods ( grey fabrics) was removed clandestinely - the weight of the finished goods (grey fabric) cannot be assumed or counted to be the same as the imported raw material PFY to allege such illicit removal of PFY. Admittedly the raw material used in manufacturing process would be much less than weight of finished goods. Hence mererly by taking statements which are not admissible, the clandestine removal is not established - there is no evidence that due to difference in weight as stated by these buyers whose statements have already been discarded, there is no financial flow on this account. This further reinforced that the buyer s statements are not correct. It is found that the department could not establish clandestinely removal of goods. Therefore, the entire demands including penalties are not sustainable - appeal allowed.
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2024 (5) TMI 1050
Valuation - inclusion of investment subsidy received by the appellant from the Government of Rajasthan under the Rajasthan Investment Promotion Policy, 2010 in the assessable value - Recovery of central excise duty with interest and penalty - HELD THAT:- The issue was examined by the Tribunal in M/S HARIT POLYTECH PVT. LTD. VERSUS COMMISSIONER, CENTRAL EXCISE CGST- JAIPUR I, GANPATI PLASTFAB LTD., M/S APEX ALUMINIUM EXTRUSION PVT. LTD., M/S MAHA MAYAY STEELS, M/S. TIRUPATI BALAJI FURNACES PVT. LTD., M/S. TRANS ACNR SOLUTIONS PVT. LTD., M/S. FRYSTAL PET PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS CGST- ALWAR [ 2023 (3) TMI 1120 - CESTAT NEW DELHI] and it was observed that 'The subsidy amount, therefore, cannot be included in the transaction value for the purpose of levy of central excise duty under section 4 of the Excise Act.' The order dated 10.05.2019 passed by the Commissioner cannot be sustained and is set aside - Appeal allowed.
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2024 (5) TMI 1049
Valuation - trade discount offered by the appellants to BEST, being a bulk buyer - additional consideration for sale of CNG - due to technical necessity of the product, the compressors or dispensers are to be installed at the premises of BEST for supply of CNG to their buses and outside vehicles or not - HELD THAT:- The valuation provisions contained in section 4 of the Central Excise Act, 1944 was substituted by Finance Act, 2000, w.e.f. 01.07.2000. The said amended provisions have considered different transaction values for the price charged to different customers for assessment purpose, subject to the condition that such transactions are purely based on commercial consideration, buyer and seller are not related to each other and the price charged is the sole consideration for such sale at the time and place of delivery - no evidence is forthcoming that the discount offered by the appellants to BEST was in lieu of the infrastructural facilities extended to them. Hence, the transaction value should be considered as the price at which the CNG were supplied by the appellants to BEST and such price should be considered as the value for the purpose of assessment and discharge of central excise duty liability. The issue arising out of present dispute is no more open for any debate, in view of various orders passed by the Tribunal in the case of the appellants themselves for earlier period, holding that deduction of trade discount from assessable value is admissible on sale transactions - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE, MUMBAI-V VERSUS M/S MAHANAGAR GAS LTD. [ 2019 (9) TMI 746 - CESTAT MUMBAI] where it was held that ' No investigation has been conducted by the revenue to establish the allegation that the discount offered by the respondent to BEST was in lieu of all infrastructural facilities extended by BEST to the respondent.' There are no merits in the impugned order, insofar as it has upheld confirmation of the adjudged demands on the appellants - appeal allowed.
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2024 (5) TMI 1048
Levy of National Calamity Contingent Duty (NCCD) - chassis emerges at the intermediary stage and is captively consumed in the manufacture of Dumpers - captively consumed chassis or are they exempted vide N/N. 67/95. Whether chassis emerges at the intermediary stage and is captively consumed in the manufacture of Dumpers? - HELD THAT:- There is no whisper of Chapter Note 3 in any of these notices and no new facts have been brought out to show that in view of these changes, the chassis comes into existence even though it is not culminated into a drive away chassis - the change in the Chapter Note, whether or not fitted with a cab will not make any change in the decision rendered earlier because the criteria based on HSN was whether it is a drive away chassis. From the Chapter Heading and the HSN Notes reproduced below, it is clear Chassis fitted with engines and with their transmission and steering gear and axles fall under Chapter 8706. The Commissioner at para 88/88.1 states this heading covers the Chassis frames or the combined to Chassis body frame work for the motor vehicles of headings 8701 to 8705 fitted with their engines and with their transmission and steering gear and axis (with or without wheels). That is to say goods of this heading are motor vehicles without bodies. The above explanation to emphasise the necessity of steering mechanism for qualifying to be called Chassis. There is nothing new in the present show-cause notices nor in the impugned order to be decided afresh since all these factors have been already considered and the decision has been rendered in favour of the appellant. As seen from the Chapter Headings and the HSN Notes, nothing has changed and therefore, the orders discussed above in the appellant s own case has attained finality. Accordingly, the Chassis does not come into existence at the intermediary stage and therefore, the question of dutiability does not arise. Whether NCCD is leviable on these captively consumed chassis or are they exempted vide N/N. 67/95? - HELD THAT:- Since it is held that the Chassis does not come into existence at the intermediary stage and therefore, the question of captive consumption does not arise, consequently, the question whether exemption is available to NCCD under N/N. 67/95 becomes only academic and not delved into. The impugned order is set aside - Appeal allowed.
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2024 (5) TMI 1047
Process amounting to manufacture or not - assembling of various parts and components of furniture imported in CKD condition and also procured indigenously, at the premises of the appellant or at the site of the customers - Furniture classifiable under CSH 9403 of CETA,1985, within the meaning of Section 2(f) of Central Excise Act, 1944 or not - extended period of limitation - imposition of penalties on the Appellant and the Director - Cum-tax value Cenvat credit is admissible if the process of assembly of furnitures is held to be excisable or not. Excisability - HELD THAT:- On the facts whether the workstations installed at the site of the customers become immovable, hence not excisable, the Ld. Commissioner analysing the statements furnished by the Manager and the Supervisor of the appellant and the cross examination of the said witnesses and other evidence has categorically held that with minor damages and scratches, the workstations installed in the premises of the customer from the imported and indigenously procured parts and components could easily be shifted to other premises, hence, these furniture(work stations) are movable and accordingly excisable - the statements/depositions given by the witnesses before the Department have not been retracted, hence are reliable evidences. The witnesses also cross examined before the adjudicating authority. No contrary evidence has been placed by the Appellant to support their argument that after assembling and then fixing the workstations to the ground / floor at the customers premises, it becomes immovable; hence not excisable. This Tribunal also in the case of Leo Circuit Boards Pvt. Ltd. [ 2015 (5) TMI 659 - CESTAT MUMBAI ] more or less confronted with more or less a similar issue of excisability of assembly of Lottery Terminal out of CKD kit supplied by M/s. Pan India Network Infravest P. Ltd. By referring to the list of parts that have been assembled at the site of the customers, even though fully manufactured and cleared in CKD condition by the supplier and later assembled at the site, this Tribunal came to the conclusion that such assembly of different parts brought in CKD condition to bring into existence of Lottery Terminal, would result into manufacture . Classification of goods - HELD THAT:- In the present case, undisputedly the entire parts and components of the furniture, workstations are not imported but certain indigenous parts and components are procured are also used in assembling the parts/ components of furnitures imported in CKD condition - assembly of parts and components of the furniture i.e. workstations in the premises of the customers would result into manufacture of excisable goods viz. furniture classifiable under CTH 9403 and attracts duty. Invocation of extended period of limitation - HELD THAT:- There is merit in the argument of the appellant that on a bona fide belief that excise duty on assembly of furnitures at the site of the customers will not be payable as customs duty has already been paid at the time of its import in CKD condition albeit certain parts used were procured indigenously, excise duty was not discharged on assembly of the same - The judgment of the Hon ble Supreme Court in Craft Interiors Pvt. Ltd. s case [ 2006 (10) TMI 2 - SUPREME COURT ] was delivered in the year 2006 and the present demand is confirmed invoking suppression of facts for the period 2004 to 2006-07. In these circumstances, confirmation of duty invoking extended period of limitation cannot be sustained. Thus, the demand, by issuing show-cause notices from time to time, should be limited to the normal period of limitation. Penalty - HELD THAT:- There are no substances in imposing penalty on the appellant for failure to discharge service tax on the assembled furniture during the relevant period. Penalty on Director - HELD THAT:- There are no justification for imposition of penalty on the Director. Consequently, the appeals filed by the Director are allowed. Cum-duty benefit - CENVAT Credit - HELD THAT:- In the event, the appellant had issued proper invoices indicating sale price of the goods and genuineness of which has not been disputed, the appellants are eligible for the benefit of cum-duty price in view of the amendment to Section 4 of the Central Excise Act, 1944 w.e.f. 14.05.2003 - Also, the appellants are entitled to avail cenvat credit on the inputs on production of evidences of payment of duty on the said inputs to the satisfaction of the adjudicating authority. The impugned orders are modified and the cases are remanded to the adjudicating authority to compute the demands with interest for the normal period of limitation only; also the benefit of cum-duty price and cenvat credit be allowed subject to production of necessary documents. As observed above, no penalty is imposable. Appeal disposed off.
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CST, VAT & Sales Tax
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2024 (5) TMI 1046
Grant of sales tax exemption to the petitioner without imposing any condition in consonance with the Industrial Policy named Special Package of Incentives to Information Technology Industry, 2000 - HELD THAT:- A bare perusal of the record shows that after issuance of Special Package of Incentives for Information Technology Industry Policy dated 15.03.2000 , the petitioner immediately took effective steps to get itself registered and was granted exemption Certificate on 26.09.2001 for a period of ten years i.e from 07.09.2000 to 06.09.2010. In Suprabhat Steel Ltd s case [ 1998 (11) TMI 530 - SUPREME COURT] , it has been observed that issuance of such notifications entitles the industrial units to avail of the incentives and benefits declared by the State Government in its own industrial incentive policy. But in exercise of such power, it would not be permissible for the State Government to deny any benefit which is otherwise available to an industrial unit under the Incentive Policy itself. The Industrial Incentive policy is issued by the State Government after such Policy is approved by the Cabinet itself. Such notification is issued to carry out the objectives and the policy decisions taken in the Industrial Policy itself. If any notification issued by the government order in exercise of powers conferred in the Act, is found to be repugnant to the Industrial Policy declared in a government resolution, then the said notification must be held to be bad to that extent. As held by Hon ble Supreme Court in Suprabhat Steel Ltd s case, the State Government cannot deny any benefit which is otherwise available to an Industrial Unit under the Incentive Policy itself and in the present case, the benefit of exemption was available to the petitioner under the Special Package of Incentive for Information Technology Industry Policy . The condition imposed in Sub Para V of Rule 2 of Amendment Rules dated 16.09.2004 with respect to the date i.e 30.04.2000 by which effective steps are to be taken is struck down. Order dated 28.06.2002 withdrawing the exemption from payment of sales tax is quashed. Exemption Certificate granted to the petitioner on 26.09.2001 is ordered to be revived. The petition stands allowed.
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2024 (5) TMI 1045
Refund claim - correctness in rejecting the claim of the appellant in view of Section 15A even though it does not bar the refund in case of generation of bye products while manufacturing taxable goods - appellant had paid voluntary tax for the Assessment Years 1998-99 and 1999-2000 - HELD THAT:- The present facts of the case reveal that the impugned order was passed on 30.11.2012 by the Haryana Tax Tribunal against the order passed in revision by the Revisional Authority dated 14.12.2006. The Act of 1973, which empowered authority to suo moto revise, stood repealed w.e.f. 01.04.2003 after coming into force of the Act of 2003. Thus, on the date when the Revisional Authority exercised its power, the Act stood already repealed and the powers under Section 40 of the Act of 1973 Act was no more available with it. Therefore, the order of the Revisional Authority and the consequential orders of the Haryana Tax Tribunal, therefore, have become non-est, and accordingly this VAT Appeal stands allowed and the question framed at the time of admission need not required to be answered. The order passed by the Haryana Tax Tribunal stands quashed. Appeal allowed.
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2024 (5) TMI 1044
Priority of secured creditors u/s 26-E of the SARFAESI Act, 2002 over State Tax Authorities' claims - provisions of Chapter IV-A, and more particularly Section 26-E of the SARFAESI Act, 2002 which was brought into force on 24th January, 2020 - HELD THAT:- Once a security interest of the secured creditor is registered with CERSAI, and its registration is prior to any other registration, then, that secured creditor would get priority towards the sale proceeds of that particular asset over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government, State Government or local authority. In the facts of the present case, the Petitioner bank s borrowers had availed of financial assistance. To secure the same, on 15th July, 2015, the borrowers created a mortgage on the secured asset by deposit of title deeds. The intimation of mortgage was also given to the Joint Sub-Registrar, Haveli-22, Pune on the very same date. Thereafter, on 25th July 2015, the Petitioner bank duly registered its charge on the secured asset with CERSAI. In contrast, the State Tax Authorities have issued an attachment order only on 11th February, 2021 and have not even registered the same as contemplated under Section 26-B (5) of the SARFAESI Act, 2002. The Full Bench of this Court in the case of Jalgaon Janta Sahakari Bank Ltd v/s Joint Commissioner of Sales Tax Nodal [ 2022 (9) TMI 163 - BOMBAY HIGH COURT] and a Division Bench judgment of this Court in the case of Indian Overseas Bank (supra). In fact, in Indian Overseas Bank [ 2024 (3) TMI 1134 - BOMBAY HIGH COURT] , this Court has clearly held that once the security interest is enforced, the State Tax Authorities would have to look to the sale proceeds to satisfy their claim subject to the priority of the secured creditor but cannot chase the very same asset [which is sold by the Petitioner bank under the SARFAESI Act, 2002] in the hands of the purchaser. The petition is allowed.
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Indian Laws
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2024 (5) TMI 1101
Jurisdiction - power of Collector (Stamp) to recall or review an order by him under Section 47 of the Indian Stamp Act, 1899 - orgery of certain documents - whether the Collector (Stamp) who acts as a quasi-judicial authority possesses any power, inherent or statutory, to recall/review an order passed under Section 47-A of the Act? - HELD THAT:- Upon a perusal of the Act, it is apparent that no such power seems to be made available to the Collector. The Division Bench of this Court in Milap Chandra Jain s case 1988 (7) TMI 420 - ALLAHABAD HIGH COURT ] examined this particular issue and held that 'The submission cannot be accepted as sub-section (4) comes into play only if the matter had not already been referred to the Collector under sub-section (1) or sub-section (2) of Section 47-A. In the present case, the dispute had already been specifically referred to and answered by the Collector under Section 47-A of the Stamp Act.' The Collector (Stamp) cannot recall and/or review his own order as no such power has been conferred under Section 47-A of the Act. A quasi-judicial authority is limited in its functionality in as much as it has to act within the four corners of the statute from which it derives its authority. If the statute does not provide for a particular act, the same cannot be undertaken by that authority. Any such action taken de hors the legislative intent would amount to an overreach and beyond the power of the said authority. The rationale behind limiting the review powers of quasi-judicial authorities lies in ensuring adherence to the principle of separation of powers and preserving the integrity of the legislative scheme. Quasi-judicial authorities, being creatures of statute, must operate within the boundaries set forth by the legislature and therefore they cannot exceed their statutory mandate - The legislature, in its wisdom, may choose to grant limited review powers to certain quasi-judicial authorities based on the nature of the disputes they adjudicate and the need for effective administration of justice. In the instant case, it is clear that no such power was present with the Collector (Stamp), and therefore, the exercise of review carried out by the Collector (Stamp) is bad in law. In light of the same, the impugned order dated February 3, 2023 is quashed and set-aside - the writ petition is allowed.
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