TMI Tax Updates - e-Newsletter
May 1, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Levy of GST - license fee granted to the Private Contractors to run parking of vehicles - liability of the licensees are well enumerated with reference to Section 7 and Schedule II to the Act. As discussed above, when the liability is unambiguous and the nature of services are also falling within the scope of Section 7 r/w Schedule II, then there is no reason to consider the claim of the writ petitioners for invoking Section 32 of the Act. - HC
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GST:
Cancellation of petitioner's registration - without resorting to the power of suspending the registration, if there is any, the respondent surely cannot block the petitioner’s GST account on the official portal. Any such action would prevent the petitioner from carrying on his business in lawful manner. Such an action would have the effect of suspension of the petitioner’s registration. - HC
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Income Tax:
Reopening of assessment u/s 147 - huge difference between data reflected in Form 26AS and assessee's statement - The grounds placed before this Court for reopening of assessment is “sufficient reason” to believe that there is escapement of income and the “sufficiency” of the reasons cannot be gone into by the High Court in a writ proceedings under Article 226 of the Constitution of India. The contents of the breakup details, evidences, documents, invoices etc., have to be adjudicated during the course of hearing and certainly, not by the High Court in a writ proceedings - HC
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Income Tax:
Property attached in respect of arrears of tax due to the Income Tax Department - The tax liability of the aforesaid firms of which the fourth respondent and her husband were the partners are subsequent to the commitment in the sale agreement dated 30.6.1994. Therefore, there is no justification in not releasing the registered sale deed in favour of the petitioner as the petitioner is a bonafide purchaser who has purchased the property after a long drawn litigation . - HC
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Income Tax:
Reopening of assessment u/s 147 - It cannot be stated that the impugned notice has been issued merely on account of change of opinion. Further, the petitioner has also not clearly explained how a reduction in the value of inventory was made at the time of filing of the returns. In these proceedings, the petitioner is hiding behind the cloak of the few ratios of the Court which may not be applicable to the facts of the case. - HC
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Income Tax:
Reopening of assessment u/s 147 - addition u/s 68 - Merely on an allegations levelled by DIT (Inv.), as in this case explaining the general modus operandi carried out by un-scrupulous persons in suspected transactions to earn bogus LTCG, can only raise suspicion in the mind of the AO (which fact we have pointed out earlier) which is not sufficient/requirement of law for reopening of assessment. - AT
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Income Tax:
TDS at the higher rate of 20% in case of payee without PAN under the provisions contained u/s 206AA - CIT (A) has erred in holding that in this case, provisions contained u/s 206AA overrides beneficial provisions of DTAA between India and Neitherland. Consequently, assessee has rightly deducted the tax @ 10% as per provisions contained under DTAA as section 206AA cannot have overriding effect on DTAA, hence no demand is payable by the assessee. - AT
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Income Tax:
Loss on purchase of land or earnest money paid - The undisputed fact is that the assessee is engaged in the business of real estate and that these payments were made in the course of business and that the earnest money was forfeited resulting into business loss of the assessee. - Such loss is allowable as a deduction - AT
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Income Tax:
Loss is negative profit. Both positive and negative profits are of revenue character. Both must enter into computation, wherever it becomes material, in the same mode of the taxable income of the assessee. Therefore, the trading loss of a business is deductible in computing profits earned by the business even though there is no specific provision for allowance thereof. - AT
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Customs:
Benefit under Service Exports from India Scheme (SEIS) - once it is held that the Impugned Orders have been passed on basis of Instructions which are otherwise ultra vires the Act, the petitioner cannot be denied the benefit of an original adjudication on merits and the decision on an appeal under Section 15 of the Act in accordance with law, and be relegated only to a remedy of review. - HC
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Customs:
Verification regarding the Certificate of Origin produced - Concessional rate of Customs Duty - The said verification cannot be treated as prima facie verification under Rule 6(1)(b) of the CAROTAR, 2020, rather it would prima facie come under Rule 6(1)(C) of the CAROTAR, 2020. Thus, Rule 5(b) of CBEC’s circular No.38/2016-customs dated 22.08.2016 will apply in the present case. - HC
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Customs:
Application for contempt proceedings - The jurisdiction under the Contempt of Courts Act is not to be invoked unless the Court finds that the act on the part of the authority is deliberate and in willful disobedience of the order of this Court. Unless a real and serious prejudice is shown, which can be regarded as a substantial interference with the due course of justice, this jurisdiction would not be available. - HC
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Customs:
Classification of imported goods - LCD-Module - the imported LCDs were used in the manufacture of instrument cluster and that these are not part of speedometer - thus, the impugned order classifying the said goods under 90299000 is not legally sustainable - AT
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Customs:
Refund of SAD - rejection on the ground that the appellant has neither paid VAT nor CST on the imported goods - When goods imported are otherwise, not fully exempted from VAT/sales tax, non-refund of 4% SAD paid on the concerned importers at the stage of import of these goods would amount to unintended taxation and uncalled for discrimination against the importer for no fault of theirs. - AT
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Indian Laws:
Dishonor of Cheque - insufficiency of funds - they had an existing liability to the complainant and in the discharge of such liability the petitioners jointly issued the impugned cheque to the complainant which was later dishonoured for insufficiency of fund. The courts below have returned the findings of guilt of the petitioners on proper appreciation of evidence and held the petitioners guilty and sentenced them appropriately. - HC
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IBC:
Maintainability of application - initiation of CIRP - It appears to the naked eye that the last balance confirmation letter in which there is a signature appears to be forged. Hence, the balance confirmations cannot be considered under section 18 of the Limitation Act, 1872 as acknowledgements. - Tri
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PMLA:
Money Laundering - siphoning of funds - The Adjudicating Authority does not become functus officio on expiry of the period of 180 days from the passing of the order of provisional attachment unless such order is confirmed under Section 8(3) in view of the provisions of Section 5(3) of the PMLA, the Adjudicating Authority in the instant case, is, free to proceed with the Complaint Case being Complaint no. 1262 of 2020 till the Sec. 8(2) stage i.e., to give a finding whether the property is involved in money-laundering or not. - HC
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Central Excise:
CENVAT Credit - input services - Outward Transport Service - the valuation of goods is on MRP basis. In such circumstances as per the plain reading of the Input Service definition Cenvat Credit on Outward Transportation Services is admissible up to the place of removal. In the present case depot being the place of removal, outward transportation service was used undisputedly up to the place of removal - credit allowed - AT
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VAT:
Rate of tax - there cannot be two sales tax, one for the supply inside the State and the other for another State supply. Once the concession is extended as far as the supply within the State is concerned, then the same benefit is to be extended in respect of interstate supply. - the concessional tax granted to the petitioner with reference to supply of plywoods, within the State is to be extended in respect of supply of plywoods to interstate to the Indian Railway - HC
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VAT:
Levy of Sales Tax - works contract or not - conversion of corrugated box - addition made only on estimation without having any rational nexus with materials on record - The agreement between the Petitioner and M/s. IDL does not answer the characteristics of a works contract as defined in Section 2 (jj) of the OST act. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (4) TMI 1232
Demand of tax with penalty - petitioner was not afforded reasonable opportunity of presenting his case before the said authority - violation of principles of natural justice - HELD THAT:- In plain terms the order passed by the said authority suffers from grossest possible violation of principles of natural justice. Having issued notice calling upon the petitioner why certain demand of tax with penalty not be confirmed he passed the final order confirming the demand on the same date as the notice and long before the time he had granted the petitioner to respond to the notice. We may recall the show-cause notice was issued on 06.11.2018 which required the petitioner to appear before the said authority on 23.11.2018. Without permitting the petitioner to appear and file reply and oppose the demands the Inspector confirmed the demand by passing separate orders on 06.11.2018. This was wholly impermissible - Petition disposed off.
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2021 (4) TMI 1223
Seeking enlargement of applicant on Regular Bail - applicant has undergone almost 16 months of incarceration and now prays for the release - HELD THAT:- The issue decided in the case of PARESH NATHALAL CHAUHAN VERSUS STATE OF GUJARAT [2020 (5) TMI 170 - GUJARAT HIGH COURT] where it was held that The loss of ₹ 60 Crores to the public exchequer so far cannot be considered as a small amount. It appears that it is only owing to timely detection of the crime that the loss so far is ₹ 60 Crores; it would have been much-much more in absence of detection of the crime. It is not as if the petitioner stopped at ₹ 60 Crores; in all probability he would have continued the racket in absence of its detection.
The present application is filed seeking the same prayer. This Court is of the considered opinion that there is no substantial change in circumstances after the rejection of the earlier application. The aspect of recovery of amount of ₹ 14,10,87,517/- till 17.03.2020 as mentioned in the affidavit dated 08.04.2020 was before the passing of the order dated 05.05.2020 by this Court in Criminal Misc. Application No.6237 of 2020 - Application dismissed.
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2021 (4) TMI 1222
Bail application - evasion of tax - inculpatory statement of the applicant under duress and coercion - It is submitted that the present offence is triable by the Magistrate and considering the burden of work and pending cases in trial court the applicant may be released on bail as the applicant is in jail since 14.12.2020 - HELD THAT:- Keeping in view nature of allegations, gravity of offences, role attributed to the accused, without discussing the evidence in detail, at this stage, this Court is inclined to grant regular bail to the applicant.
The applicant shall deposit an amount of ₹ 2,00,000/- before the State Tax Officer and on depositing the aforesaid amount and producing appropriate document with regard to the depositing of the amount the applicant is ordered to be released on regular bail and further the applicant shall also file an undertaking to deposit the remaining amount of ₹ 13,00,000/- within the period of eight weeks - application allowed.
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2021 (4) TMI 1219
Grant of Bail - pendency of the trial on the ground that chargesheet was not filed - evasion of tax by creating fake invoices - HELD THAT:- Without discussing the evidence in details as well as without going into details, primafacie, this Court is of the opinion that this is a fit case to exercise the discretion to enlarge the applicant on bail. Hence, the application is allowed and the applicant is ordered to be released on bail in connection with the complaint being ACST/FSU11/ PUNDRIK TRIVEDI/201920/ B64 dated 27.01.2020 and complaint dated 24.03.2020 filed in Criminal Case No. 30267 of 2020 on executing a bond of ₹ 50,000/- with two local sureties of ₹ 25,000/- each to the satisfaction of the trial Court and subject to the conditions imposed.
Application allowed.
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2021 (4) TMI 1213
Refund of IGST - goods exported out of India - grievance of the petitioner is that exports were made in September 2017, but till date, IGST is not refunded to the petitioner - HELD THAT:- The issue involved decided in case of M/S. PRECOT MERIDIAN LIMITED VERSUS THE COMMISSIONER OF CUSTOMS, THE ASSISTANT COMMISSIONER OF CUSTOMS [2020 (1) TMI 90 - MADRAS HIGH COURT] where it was held that respondents are directed to refund the amount of IGST paid by the petitioner for the goods exported from India which are zero rated supplies, within a period of six weeks from the date of receipt of a copy of this order.
The first respondent herein is directed to sanction the refund of IGST of ₹ 2,54,449/- paid by the petitioner in respect of the goods exported i.e 'Zero Rated Supplies' made vide shipping bills mentioned herein above along with entitled interest @ 9% to the petitioner till the date of actual refund, within a period of six weeks from the date of receipt of a copy of this order - petition allowed.
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2021 (4) TMI 1212
Refund of IGST - Export of goods - zero rated supplies - grievance of the petitioner is that exports were made in September 2017, but till date, IGST is not refunded to the petitioner - HELD THAT:- The issue involved decided in case of M/S. PRECOT MERIDIAN LIMITED VERSUS THE COMMISSIONER OF CUSTOMS, THE ASSISTANT COMMISSIONER OF CUSTOMS [2020 (1) TMI 90 - MADRAS HIGH COURT] where it was held that respondents are directed to refund the amount of IGST paid by the petitioner for the goods exported from India which are zero rated supplies, within a period of six weeks from the date of receipt of a copy of this order.
The first respondent herein is directed to sanction the refund of IGST of ₹ 2,35,008/- paid by the petitioner in respect of the goods exported i.e 'Zero Rated Supplies' made vide shipping bills mentioned herein above along with entitled interest @ 9% to the petitioner till the date of actual refund, within a period of six weeks from the date of receipt of a copy of this order - petition allowed.
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2021 (4) TMI 1209
Levy of GST - license fee granted to the Private Contractors to run parking of vehicles - HELD THAT:- The license, rental, lease amounts to supply and as per Schedule II of the Act, license to occupy the land and renting of an immovable property, are also supply of services - It is an admitted fact that all the writ petitioners are Contractors, who were granted license to run parking areas for vehicles in the Railway premises by the Southern Railway. All the writ petitioners participated in the tender process and were successful in the tender and entered into an agreement with the Southern Railway, agreeing certain terms and conditions stipulated.
When there is no provision to collect the GST from the contractors on the license fee, then the terms and conditions of the agreement became null and void and therefore, the conditions imposed in the agreement would not be binding on the contractors. In this regard, the learned counsel for the petitioner relied on Section 32 of the CGST Act and sub-clause (2) to Section 32 stipulates that “no registered person shall collect tax except in accordance with the provision of this Act or the Rules made thereunder” - In the present cases, even before the introduction of the present CGST Act, the Contractors were paying the taxes based on the erstwhile Act, mainly Service Tax Act. After the implementation of the CGST Act, when there is prohibition of unauthorised collection of tax, the demand now made by the Southern Railways is in violation of the provisions of the CGST Act and therefore, the writ petitions are to be allowed.
When there is a specific bar under the Act, more specifically, under Section 32, there is no reason whatsoever to make a demand for recovery of GST from the writ petitioners. Such a collection of tax is unauthorised and it is clarified that the collection of tax in such circumstances, more specifically, from the licensees are impermissible - In these cases, the respondent-Railways have treated the parking as rented out of property and therefore, the same would not fall under the provisions of the CGST Act and the writ petitioners are not liable to pay the tax.
This Court is of the considered opinion that, the liability regarding tax regime is concerned, the Courts are expected to adopt strict interpretation of law. Liberal interpretation is impermissible, which can be adopted only in respect of certain welfare legislations and as far as the tax laws are concerned, it is to be borne in mind that strict interpretation of provisions are to be adopted, so as to recover taxes from the assessees by following the procedures contemplated - In the present cases, liability of the licensees are well enumerated with reference to Section 7 and Schedule II to the Act. As discussed above, when the liability is unambiguous and the nature of services are also falling within the scope of Section 7 r/w Schedule II, then there is no reason to consider the claim of the writ petitioners for invoking Section 32 of the Act.
It is made very clear that the Southern Railways is liable to pay service tax for the license fee collected from the respective contractors and the respective contractors are liable to pay service tax for the collections made from the end users/customers in respect of the parking slot services. Such contractors are bound to register their name under the CGST Act, by following the procedures contemplated therein there are two services involved in the entire transactions and the first service is from the Railway to the contractors and the second service is from the contractors to the customers/end users - there are two services involved in the entire transactions and the first service is from the Railway to the contractors and the second service is from the contractors to the customers/end users.
Petition dismissed.
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2021 (4) TMI 1177
Refund of GST - rejection of ITC debited relating to export of goods without payment of duty - rejected on the ground that appellant have not submitted the supporting documents in respect of the refunds filed under Rule 92(3) of CGST Rules, 2017 and Circular No.79/53/2018- GST dated 31.12.2018 - HELD THAT:- There are force in the appellant’s plea that the said impugned order was passed without issue of deficiency memo in GST Form -03 and also without issue of RFD-08 without being heard to him. Further, it is also provided in Rule 92(3) of CGST Rules, 2017 that no application for refund shall be rejected without giving the applicant an opportunity of being heard - the adjudicating authority while rejecting the refund claims of the appellant neither deficiency memo in Form GST RFD-03 nor show cause notice in Form RFD-08 has been issued and also any relevant provisions of law/rules for rejection of their refund claims has been discussed.
It is also found that non-passing of speaking order indeed amount to denial of natural justice. Before passing of order atleast deficiency memo and show cause notice and at least speaking order should have been passed by giving proper opportunity of personal hearing in the matter to the appellant and detailing factors leading to rejection of refund claims. Such order is not sustainable in the eyes of law - In view of the above legal provisions provided in CGST Act and Rules made thereunder it would be appropriate at the part of adjudicating authority to provide the proper opportunity of being heard to the appellant and pass of fresh speaking order accordingly impugned order is set aside - appeal allowed by way of remand.
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2021 (4) TMI 1203
Cancellation of petitioner's registration - no reasons cited for such cancellation - principles of natural justice - HELD THAT:- Whatever be the tax demand of the department against the petitioner, the action under challenge cannot survive the test of law. The impugned notice has been issued only for cancellation of registration, that too without citing any particular reason. The reason stated is picked up from the statute itself namely, non-compliance of any specified provisions of GST Act or the Rules made thereunder.
Without specifying which provisions of the Act or the Rules and in what manner the petitioner has approached, granting hearing to the petitioner would be an empty formality. This apart, admittedly, so far no order cancelling the petitioner’s GST registration has been passed. If that be so, without resorting to the power of suspending the registration, if there is any, the respondent surely cannot block the petitioner’s GST account on the official portal. Any such action would prevent the petitioner from carrying on his business in lawful manner. Such an action would have the effect of suspension of the petitioner’s registration.
SCN is quashed on the ground of being vague and imprecise - the respondents are directed to unblock the petitioner’s GST account on its official portal - Petition disposed off.
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Income Tax
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2021 (4) TMI 1201
Disallowance of depreciation on Intangible assets - HELD THAT:- As decided in own case [2020 (2) TMI 936 - ITAT PUNE]Tribunal allowed depreciation on Intangible assets of Non compete fees, Distribution net work rights and Customer list (depreciation on Goodwill was suo motu allowed by the AO). The authorities below have relied on their respective orders for the earlier years, which have been adjudicated by the Tribunal. In absence of any distinguishing facts having been brought to our notice by the ld. DR, respectfully following the precedent, we hold the assessee entitled to depreciation u/s.32(1)(ii) of the Act on the opening written down value of Non compete fees, Distribution of net work rights and Customer list.
Depreciation o goodwill - The Hon’ble Supreme Court in Smifs Securities Ltd [2012 (8) TMI 713 - SUPREME COURT] has allowed depreciation on goodwill. Respectfully following the same, we direct to allow depreciation on Goodwill also. The impugned order is overturned pro tanto resulting into grant of depreciation on opening written down value of the intangible assets.
Addition to the Intangible asset of Non compete fees and claimed depreciation thereon also - AR submitted that the assessee, while entering into original agreement with CRIL, agreed for certain more payment in future years on the basis of a formula. The said amount of ₹ 1.00 crore was stated to be pursuant to such formulae - HELD THAT:- No calculation in accordance with the formula has been placed on record. In these circumstances, we set aside the impugned order on this score and remit the matter to the file of the Assessing Officer for examining true nature of ₹ 1 crore. If the same is found out to be correct in accordance with the terms of the agreement as to the quantum and nature, then deprecation on such additional amount of ₹ 1 crore should also be granted. In the otherwise scenario, the AO is free to decide the issue as per law. Needless to say, the assessee will be granted reasonable opportunity of hearing.
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2021 (4) TMI 1237
Deduction u/s 80-IA - AO held by the Assessing Officer that deduction computed under Section 80-IA of the Act could not be allowed against any source other than business - HELD THAT:- In the case before us, there is no discussion about Section 80-IA(5) by the Appellate Authority, nor the Tribunal and the High Court. However, we have considered the submissions on behalf of the Revenue as it has a bearing on the interpretation of sub-section (1) of Section 80-IA of the Act. We hold that the scope of sub-section (5) of Section 80- IA of the Act is limited to determination of quantum of deduction under sub-section (1) of Section 80-IA of the Act by treating ‘eligible business’ as the ‘only source of income’. Sub-section (5) cannot be pressed into service for reading a limitation of the deduction under sub-section (1) only to ‘business income’. An attempt was made by the learned Senior Counsel for the Revenue to rely on the phrase ‘derived … from’ in Section 80-IA (1) of the Act in respect of his submission that the intention of the legislature was to give the narrowest possible construction to deduction admissible under this sub-section. It is not necessary for us to deal with this submission in view of the findings recorded above. For the aforementioned reasons, the Appeal is dismissed qua the issue of the extent of deduction under Section 80-IA of the Act.
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2021 (4) TMI 1235
Orders passed by the Settlement Commission u/s 245D - sole grievance of the petitioner stems out of factual matters which have been duly considered by the second respondent after a thorough enquiry and a detailed 'speaking order' has been passed by the second respondent in this regard - HELD THAT:- In view of the fact that the petitioner could able to establish that the first respondent has not approached the second respondent/Settlement Commission with true and full disclosure of his income and during the course of proceedings, offered additional income and the findings of the Settlement Commission would also confirm the same, the said offerings of the additional income would be sufficient for the purpose of arriving a conclusion that the first respondent filed an application under Section 245C of the Act without disclosing true and full income.
Thus, the second respondent/Settlement Commission ought to have rejected the application, at the stage when it noticed that the first respondent has not disclosed true and full facts which was not done. Thus, the Settlement Commission has committed an error apparent and allowed the application filed by the first respondent which is in violation of the provisions of the Act. Thus, the order impugned passed by the second respondent in proceedings dated 14.09.2015 is quashed and the writ petition stands allowed
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2021 (4) TMI 1234
Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - petition raises issues concerning wrongful assumption of jurisdiction by the assessing officer under the 2015 Act, and the violation of the principles of natural justice - HELD THAT:- The matter would require consideration.
Revenue's counter-affidavit, in this behalf, will be relevant. This is especially so, as Mr. Anand vehemently argues that the issues that arise in other writ petitions, to which a reference has been made to by Mr. Vohra, do not overlap with those, that have been raised in the instant petition.
It would, therefore, be in the interest of both parties to file, at least, the grounds taken in the other petitions, to which a reference has been made in the instant petition.
Accordingly, issue notice. Mr. Anand accepts notice on behalf of the revenue.
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2021 (4) TMI 1199
Refusal for grant of registration u/s 12A - Charitable activity u/s 2(15) - HELD THAT:- Though the assessee university was formed in 2008, till the A.Y 2014, it was not required to file any return of income and therefore, the assessee’s contention that it was not aware of the requirement of filing returns of income appears to be bonafide - the assessee has made an application for registration only w.e.f. A.Y 2019-20 onwards. In such circumstances, the requirement of law is that the CIT (E) has to consider whether the objectives of the assessee were charitable in nature and if the activities have already begun, then whether the assessee is carrying on its activities in accordance with such objectives.
Therefore, we agree with the learned Counsel for the assessee that the CIT (E) has not looked into the objectives of this University while considering its application for registration u/s 12A of the Act. Further, from the very next A.Y i.e. 2020-21 onwards, the assessee has been granted registration u/s 12A - it is evident that the CIT (E) while granting the registration, was satisfied about the charitable nature of assessee’s activities. In view of the same, we deem it fit and proper to remand the issue to the file of the CIT (E) with a direction to grant registration u/s 12A if the objectives and activities of the assessee are the same as were considered by the CIT (E) while granting registration u/s 12A of the Act for the A.Y 2020-21 onwards - Assessee’s appeal is treated as allowed for statistical purposes.
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2021 (4) TMI 1198
Rectification u/s 154 - AO erred in taxing the same income of assessee twice, once at special rate of 15% under Double Taxation Treaty between UK and India as per Article 13 of the said treaty and again as normal business income at the rate of 40% being the rate applicable to foreign companies - HELD THAT:- On perusal of the original as well as return of income filed in compliance to defective memo under section 139(9), we find that the assessee was having very casual approach towards filing returns of income. The return of income filed by the assessee on 30/09/2014 contains parts A and B.
After these two parts, there is a verification by the assessee and thereafter different schedules are available in the return of income. In the part A-TI (computation of income), the assessee declared [in the row 2(i)] profit and gains from business other than speculative business at ₹ 26,43,090/-. The assessee also declared income chargeable to special rates as per schedule ‘SI’ at ₹ 26,43,090/-. The Learned Counsel has claimed before us that income of the assessee was liable under section 44D has been but in the return of income filed on 30/03/2015 in the row 34(vi) (on page 58 of the paper-book) the income again section 44D reported as nil. Thus, definitely, return of income has been filed in negligent and casual manner with errors and omissions.
On perusal of the order under section 143(1) dated 10/03/2016 , available on page 78 to 83 of the paper-book, we find that in row having serial No. 10, income chargeable to tax at a special rate has been reported NIL in both columns, i.e., as provided by the taxpayer as well as computed under section 143(1) of the Act. Despite nil income reported in both columns, against Serial No. 10, the Assessing Officer in serial No. 22 has computed tax at special rate of ₹ 3,96,464/- in both the columns for taxpayer as well as under section 143(1) of the Act. Thus, there is an apparent mistake of computing tax at a special rate without any income reported for tax at a special rate.
This apparent mistake in the order under section 143(1), the finding of the Ld. CIT(A) that there is no mistake in the order of the Assessing Officer, is not correct. It is evident that the assessee is at fault for not reporting the income in proper columns, but the Assessing Officer, has also committed apparent mistakes of computing tax without considering the income for special rate. In view of the above observation and in the interest of the substantial justice, we set aside the order of the Learned CIT(A) on the issue in dispute and restore the matter back to the file of the Assessing Officer for deciding the rectification application of the assessee on merit keeping in view the cardinal principle that assessee cannot be taxed twice for the same income, one under the head “profit and gain of business and profession” and other under “special rate specified in DTAA”. It is needless to mention that the assessee shall be provided adequate opportunity of being heard. The grounds of the appeal of the assessee are accordingly allowed for statistical purposes.
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2021 (4) TMI 1197
Rectification u/s 254 - denial of deduction u/s 80-IA on interest on Income Tax refund and interest earned by the assessee on Fixed Deposits (FDs) held with the bank - HELD THAT:- We find that that the circumstances under which deposits were kept with the bank were duly noted in para 5.4 as well as in para 7 of the order. The argument that FDR would have direct nexus with assessee’s business activities and therefore, the same should be treated as part and parcel of the business activities was duly taken note of in para 7 of the order. However, the point of dispute was not the circumstances under which the deposits were held by the assessee and whether the same were part & parcel of business activities.
The same is evident from the fact that Ld. AO, in all the years, had accepted interest on FDR as Business Income only. Rather the point of dispute was whether the assessee was eligible for deduction on interest on FDR within four corners of Sec. 80-IA or not. In fact, the assessee has claimed deduction u/s 80-IA even on interest on Income Tax refund which is ultimately assessed as ‘Income from Other Sources’. Therefore, the fact that FDRs were kept out of commercial expediency and the same was part and parcel of business activities was not under dispute. The assessee claimed deduction u/s 80-IA on interest on FDRs which was assessed as ‘Business Income’ and also claimed similar deduction on interest on Income Tax Refund which was assessed as ‘Income from other sources’. Therefore, the first agreement would not convince us to alter the order, in any manner.
So far as the case laws are concerned, the decision of Hon’ble Apex Court in Liberty India Ltd. [2009 (8) TMI 63 - SUPREME COURT] was rendered on 31/08/2009 and it was concerned with deduction of DEPB Credit / duty drawback in the context of Sec.80-IB read with Sections 80-I and 80- IA. A principle was laid down therein that the words “derived from” is narrower connotation as compared to the words “attributable to” and by using the words “derived from”, the parliament intended to cover sources not beyond the first degree.
During the course of hearing of the appeal, Ld. Sr. Counsel primarily relied upon the decision of Hon’ble Delhi High Court in CIT V/s Eltek SGS (P) Ltd.[2008 (2) TMI 17 - DELHI HIGH COURT] which was rendered on 19/02/2008
However, following Liberty India, the decision of Hon’ble Delhi High Court in Eltek SGS stood reversed by Hon’ble Apex Court on [2010 (3) TMI 1255 - SC ORDER] Therefore, the ratio of this decision rendered by Hon’ble Delhi High Court and other decisions, which followed this decision, was no longer applicable.
Lastly, the two decisions of Hon’ble Rajasthan High Court and Hon’ble Madras High Court have been cited for the first time during the hearing of this application. These decisions are from non jurisdictional High Court and the same were not cited during the hearing of the appeal. Therefore, non consideration of these decisions would not make the order erroneous which would call for any interference in terms of mandate of Section 254(2).
We find that the provisions of Section 254(2) have narrow application and envisage rectification of mistakes which are apparent from record. There is power to rectify but not to review the order. The arguments of Ld. Sr. Counsel, if accepted, would amount to review of the order which is impermissible.
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2021 (4) TMI 1196
Exemption u/s 11 - registration granted by the CIT under Section 12AA of Act is validly in operation - CIT-A allowed exemption - HELD THAT:- CIT(A) has followed the finding of the Hon’ble Jurisdictional High Court in the case of the assessee in earlier year and held that the activity of authority of developing of land etc. are charitable in nature and eligible for registration under section 12AA of the Act. The Ld. CIT(A) has accordingly found the claim of the assessee for exemption under section 11 of the Act in order and also observed that assessee has applied more than 85% of the total income towards charitable purposes. The registration granted by the CIT under Section 12AA of Act is validly in operation in the relevant year and not withdrawn. Thus, the assessee was entitled for exemption under Section 11 subject to fulfilling the conditions contained therein. In view of binding precedent followed by the learned CIT(A), we do not find any error in the order of the Learned CIT(A) on the issue in dispute and accordingly we uphold the same. The additional ground and ground No. 1 of the appeal of the Revenue are accordingly dismissed.
Addition of transfer to infrastructure development funds - claim of the Revenue is that amount has not been considered for application of funds and therefore this issue might be restored back to the file of the Assessing Officer as decided in the case of Khurja Development Authority - HELD THAT:- Exemption under section 11 is allowed, if 85% of the funds received are applied for charitable purposes in the year under consideration and, if there is any short fall in application of such funds, the assessee has to follow the procedure prescribed for getting benefit of section 11
CIT(A) has noted that the assessee had produced before him prescribed form as laid down in the Rules, with the request for carry forward of the amount for utilization in subsequent years and, thus, has fulfilled the requirement as prescribed in Explanation –I to Section 11 of the Act. Before us, the learned DR failed to controvert this finding of the Learned CIT(A). In our opinion, in the instant case before us, the assessee has fulfilled the requirement of law and we do not find any reason for restoring the matter to the Assessing Officer. We do not find any error in finding of the Learned CIT(A) on the issue in dispute and accordingly we uphold the same. The ground No.2 of the appeal of the Revenue is also dismissed.
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2021 (4) TMI 1230
Reopening of assessment u/s 147 - undisclosed contract receipts - HELD THAT:- The reasons for reopening of assessment intimated to the writ petitioner reveals that from revised 26AS details, the assessee company has received contract receipts of ₹ 5,78,10,06,904/-, on which, tax at source has been deducted to the tune of ₹ 12,54,24,815/-. The assessee company claimed the TDS of ₹ 12,41,50,256/-. However, the assessee company credited P & L account as contract receipts and sales for ₹ 521,79,70,864/- only. Thus, the assessee has not offered receipts of ₹ 56,30,36,040/- for taxation, resulting in escapement of income due to failure on the part of the assessee company to correctly account its income. Thus, the Assessing officer has reason to believe that income of ₹ 57,97,88,686/- has escaped assessment within the meaning of Section 147 of the Income Tax Act due to the failure on the part of the assessee company to disclose fully and truly all material facts necessary for its assessment.
in the presence of materials on record, if the power under Section 147 is invoked by the competent authority, then the authorities competent must be allowed to proceed with the reopening proceedings by following the procedures as contemplated. High Court cannot adjudicate the disputed facts and materials to form an opinion in a writ proceedings. The High Court, under Article 226 of the Constitution of India, is empowered to scrutinize the process, through which, the decision is taken and the reasons and in consonance with the statutory requirements, but not the decision by itself. Thus, the scope of Article 226 of the Constitution of India cannot be expanded for the adjudication of the disputed facts and circumstances with reference to the documents, evidences produced by the respective parties and such an adjudication must be allowed to be done by the competent authorities under the provisions of the Statutes by following the procedures as contemplated and by affording opportunity to the assessee.
As in these writ petitions, the respondent could able to establish that sufficient materials are available for the purpose of reopening of assessment for the Assessment Years 2009-10 and 2010-11 and thus, the respondent must be allowed to proceed with the reopening of assessment by following the procedures as contemplated and the writ petitioner is bound to co-operate by defending their case by availing the opportunities to be provided under the Statute. - Decided against assessee.
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2021 (4) TMI 1228
Reopening of assessment u/s 147 - notice issued on non-existig entity - Scheme of Amalgamation - HELD THAT:- When Section 170(ii) contemplates that the successor Company is liable and responsible, mere service of notice in respect of company, which was not existing cannot be a ground to assail the proceedings instituted for reopening of assessment under Section 147.
On perusal of the said letter reveals that the address of the sender as well as the change of the address is one and the same. HCL Peripherals Limited merged with HCL Corporation Limited with effect from 01.04.2009 and both the offices are running in the same premise. Further, acknowledgement of the notice issued by the respondent has not been disputed by the petitioner. Therefore, Section 170(ii) would be applicable in the present case and the said ground cannot be considered for the purpose of quashing the entire proceedings initiated under Section 147 of the Act. Even on merits, the respondent could able to establish that there is a "reason to believe" in view of certain new materials noticed in the matter of purchased units of mutual funds to the extent of ₹ 52,39,18,310/-.
his being the facts and circumstances established, the petitioner has to participate in the reassessment proceedings by submitting their documents, evidences to establish their case. Thus, the respondents have to proceed with reopening of the assessment already made and the proceed with the assessment by following the procedures as contemplated under the Act and by affording opportunity to the assessee. In view of the fact that the petitioner has not established any acceptable reason for the purpose of assailing the impugned order, the writ petition stands dismissed.
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2021 (4) TMI 1227
Reopening of assessment u/s 147 - LTCG on sale property - HELD THAT:- Sale consideration shown by the assessee in the return of income for the assessment year 2013- 14 is not disputed. The document registered, which is now in appeal under Section 47A of the Indian Stamps Act is also not in dispute. Thus, the market value as stated in the document is disputed and the actual market value and the stamp duty paid is also in dispute. Thus, the disputes are providing new material facts and informations to the Income Tax Department for reopening of the assessment.
The manner in which the sale deed was valued by the assessee and the stamp duty paid at the time of registration as well as the appeal filed under Section 47A of the Indian Stamp Act and the actual market value prevailing during the relevant point of time with reference to the subject property, provides new information and an additional material, which were not considered by the Assessing Officer at the time of original assessment. Thus, the said factors would be new material for the purpose of reopening of assessment. Thus, the reopening of the assessment by the Assessing Officer is in consonance with the provisions of Section 147 and no further inference is required from the hands of this Court.
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2021 (4) TMI 1226
Reopening of assessment u/s 147 - huge difference between data reflected in Form 26AS and assessee's statement - HELD THAT:- As seen from the Form 26AS downloaded that assessee was in receipt of income of ₹ 419,47,44,777/-, whereas the total amount credited in P & L account is ₹ 387,30,50,376/-. In this context, the Assessing officer relied on the breakup details. In view of large discrepancy and mismatch, the Assessing officer has reason to believe that income of ₹ 41,59,51,722/- has escaped assessment within the meaning of Section 147 due to the failure on the part of the assessee to disclose all and true material facts necessary for assessment.
The rectification application dated 20.07.2011, submitted by the assessee company was also considered by the Assessing Officer and the Assessing Officer verified the informations provided in the rectification application and found that very Form 26AS that was downloaded in view of assessee's application for the rectification, it was found that there was huge mismatch in receipts appearing in 26AS vis-a-vis receipts credited in P & L Account. Assessing Officer has reason to believe that the income of the assessee as escaped assessment and decided to reopen the assessment. This apart, the Assessing officer relied on the MB Shah Commission, set up by the Government of India to enquire into the cases of illegal mining in the State of Odisha. The petitioner/assessee was a raising contractor, employed by one KJS Ahulwalia, who was a lessee found in the Shah Commission report. For all these reasons, the Assessing officer has reason to believe for reopening of assessment.
The respondents have placed on record the materials and informations and evidences that gave them reason to believe that there is escapement of income.
The grounds placed before this Court for reopening of assessment is “sufficient reason” to believe that there is escapement of income and the “sufficiency” of the reasons cannot be gone into by the High Court in a writ proceedings under Article 226 of the Constitution of India. The contents of the breakup details, evidences, documents, invoices etc., have to be adjudicated during the course of hearing and certainly, not by the High Court in a writ proceedings - there is no illegality or irregularity as such, which can be attached to the reasoning of the competent authority for arriving a conclusion that there is a reason to believe for reopening of assessment. Thus, the grounds raised in the present writ petition are neither candid nor convincing and the petitioner has to co-operate with the Assessing Officer in the reassessment proceedings by availing the opportunities to be provided as contemplated under the Statute. WP dismissed.
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2021 (4) TMI 1225
Violation of the provisions of the Act - final assessment order passed erroneously, even while the title of the order reads as “Draft Assessment Order u/s 143(3) r.w.s. 144C - HELD THAT:- Prima facie, we are of the view that the petitioner appears to be correct in its contention, that there is a violation of the provisions of the Act.
Assessing Officer was perhaps required to pass, in the first instance, an order under Section 144 C (1) of the Act, which would have enabled the petitioner to file, if so aggrieved, its objections with the Dispute Resolution Panel.
Mr. Zoheb Hossain, who appears on advance notice, contends that for the moment, he does not have instructions in the matter. He, however, says that the timeline for passing the draft assessment order, as of now, expires on 30.06.2021.In the aforesaid circumstances, issue notice, both in the writ petition and the interlocutory application.
Mr. Hossain accepts service on behalf of the respondent/revenue. In the interregnum, there shall be a stay on the operation of the impugned order.
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2021 (4) TMI 1224
Cancellation of registration u/s 12AA(3) - Principal Commissioner or Commissioner power to cancel registration - HELD THAT:- As scope of Sections 11, 12, 12A and 12AA of sub-clause (3) in the aforementioned paragraphs, the Principal Commissioner or Commissioner was vested with the power even prior to 01.06.2010 to cancel the registration made u/s 12A of the Act, if the Commissioner is satisfied that the activities of such Trust or Institution are not genuine or are not being carried out in accordance with the objects of the Trust or Institution, as the case may be, and he shall pass an order in writing cancelling the registration of such Trust or Institution.
In the present case, the Commissioner of Income Tax in impugned proceedings considered the merits and demerits of the case and assigned reason for cancellation of registration, which reads as under:-
“3. Coming to the merits, search and seizure operations on 06.06.2007 at your premises, inter alia, have brought to light the following violations:
a) Capitation Fee was collected by the assessee Trust.
b) The funds of the Trust at least to the tune of ₹ 22 crores have been misused by the Trustees.
c) The provisions of Tamil Nadu Educational Institutions [Prohibition of Capitation Fee] Act, 1992 have been grossly violated.
d) The provisions of Section 11(2) of the I.T. Act, 1961, have not been adhered to.”
The reasons assigned for the purpose of cancellation are undoubtedly in consonance with the powers conferred on the Commissioner under sub-clause (3) to Section 12AA of the Act and therefore, the order of cancellation can at any stretch of time be stated as infirm or perverse.
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2021 (4) TMI 1193
Rejection of books of accounts - Estimation of profit - assessee submitted that he had maintained regular books of account and got audited them u/s 44AB - HELD THAT:- We are of the view that since the books of account of the assessee are subject to audit u/s 44AB of the Act and bills & vouchers were not available and before the AO the assessee confessed that he destroyed the bills/vouchers after incurring the expenditure. Considering the prayer of the assessee & in the interest of justice as well as looking into the facts of the case, we direct the AO to estimate the profit @ 8% on direct contract receipts and @ 3% on sub-contract works. Accordingly, ground raised by the assessee on this issue is partly allowed.
Long term capital gains on the sale of landed - HELD THAT:- The contention of the assessee is that the purchase consideration of the property is at ₹ 1,49,00,000/- and the AO while making the assessment for AY 2008-09 has determined the total purchase of the property at ₹ 3.5 crores. Therefore, to meet the ends of justice, we remit the issue back to the file of the AO with a direction to ascertain the correct purchase value of the property and decide the issue in accordance with law after providing reasonable opportunity of being heard to the assessee in the matter. The assessee is directed to substantiate his claim by way of documentary evidence. This ground is allowed for statistical purposes.
Unexplained cash credit - HELD THAT:- On perusal of record and submissions of the assessee, the assessee could not satisfy the basic ingredients laid down in section 68 of the IT Act even though the revenue authorities provided sufficient opportunities to the assessee to substantiate his claim by way of documentary evidence as per the requirement of section 68 of the Act. Therefore, we are of the considered view that the CIT(A) has rightly decide the issue against the assessee and accordingly, we uphold the order of the CIT(A) and dismiss the ground raised by the assessee on this issue.
Unexplained investments in form of pro-notes in the hands of the assessee in respect of the following pro-notes found and seized by the department at the time of search - HELD THAT:- The submission of the assessee is that these three pro-notes were not in the name of the assessee and it was in the name of others as per the above table. We are of the view that if the AO was not satisfied with the submission of the assessee, he could have summoned the persons, whose names are appeared on the pro-notes, but, without doing the same, he had made addition in the hands of the assessee is not proper and not in accordance with law. We find force and substance in the arguments advanced by the ld. AR of the assessee and therefore, we direct the AO to delete the addition made in the hands of the assessee.
Addition of interest income accrued - HELD THAT:- On perusal of the interest calculation done by the AO @ 20% on the entire pro-notes, we are of the view that the calculation done by the AO is not correct.
The assessee has admitted the interest of ₹ 2,17,101/-. The AO has calculated the interest on the entire amount of ₹ 33,76,000/- whereas we have directed the AO to delete the additions of ₹ 9,00,000 + 1,26,000/- + 23,50,000/- on the ground that the source of the same were explained by the assessee. We have observed that the assessee has explained the source of ₹ 23,50,000/- and directed the AO to delete this addition; however, he is liable for interest income thereon only @ 24% as offered on the pro-notes as observed by the AO. Therefore, we direct the AO to recalculate the interest on ₹ 23,50,000/- . This ground is partly allowed.
Unexplained investment in jewellery - HELD THAT:- During the course of search, gross weight of jewellery at 751.5 grams were found. On perusal of the submissions made by the assessee before the CIT(A) that there are four members in his family consisting of his wife, unmarried daughter, son and himself. Assessee quoted Instruction No. 1916 of 11/05/1004 of CBDT and according to which, he is entitled to have 950 grams of jewellery and the assessee is having the less than the entitled quantity. However, the AO denied to give benefit as per the said Instruction of CBDT on the ground that as per the above Instruction certain jewellery not to be seized. We are of the view that various courts have decided the issue in favour of the assessee in the light of the above Instruction issued by the CBDT - We direct the AO to delete the addition made in the hands of the assessee on account of jewellery.
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2021 (4) TMI 1220
Promulgation of the Ordinance titled The Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 - members whose tenures subsisted up until that date, have had their tenures brought to an end - Members entitled to claim compensation not exceeding three months’ pay and allowances for the premature termination of their respective tenures - HELD THAT:- Insofar as this Court is concerned, for the moment, we cannot issue any directions with regard to the pending cases, filed before the Authority for Advance Rulings [in short the “AAR”].
Having said so, we tried to impress upon Mr. Venkataraman that if some interim arrangement could be made, till the Board for Advance Ruling is constituted, then, perhaps, some pending cases could be disposed of, as has been done in the case of the Income Tax Settlement Commission.
Mr. Venkataraman will revert on this aspect of the matter. As prayed, another four weeks are granted to the respondents to file their counter-affidavits in the captioned matters. Rejoinders, thereto, if any, will be filed before the next date of hearing.
List for directions on 24.05.2021.
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2021 (4) TMI 1192
Reopening of assessment u/s 147 - addition u/s 68 on account of unexplained cash credit and u/s 69C on account of unexplained expenditure - HELD THAT:- As decided in SHRI UDIT KUMAR DUGAR [2019 (5) TMI 430 - ITAT KOLKATA] from a reading of the reasons recorded by AO to justify re-opening of assessment, clearly show that the AO has taken note of the information from the DIT(Inv.) and taken the contents of the information given by DIT (inv) as gospel of truth against the assessee [without any verification or enquiry] to form a conclusion about escapement of income without independent application of mind by himself is nothing but an action taken by AO based on the strength of borrowed belief of DIT (inv) and not that of AO, which vitiates the very assumption of jurisdiction by AO to re-open the assessment, which finding of us will be clear when we analyze the reasons recorded in detail infra.
From the aforesaid reasons recorded by AO it is evident that other than the general information given by DIT (inv) there is no other material the AO collected himself after preliminary enquiry which could have enabled him at the time of recording reasons to come to a conscious independent conclusion that “income of the assessee has escaped assessment”. According to us, the information given by DIT(Inv) can only be a basis to ignite/trigger and be the starting point to enquire; and at that stage the information of DIT (Inv.) can be termed as a foundation only to form “reason to suspect” and not reason to believe escapement of income which is the jurisdictional fact & law required to enable the AO to successfully assume jurisdiction to reopen as envisaged u/s. 147 of the Act. And the reason to suspect cannot be the basis for usurping jurisdiction to reopen u/s. 147 of the Act, for conducting roving/further examination to be resorted by him in order to strengthen the suspicion to an extent which can later transform the suspicion to create the belief in his mind that income chargeable to tax has escaped assessment. Merely on an allegations levelled by DIT (Inv.), as in this case explaining the general modus operandi carried out by un-scrupulous persons in suspected transactions to earn bogus LTCG, can only raise suspicion in the mind of the AO (which fact we have pointed out earlier) which is not sufficient/requirement of law for reopening of assessment. - Decided in favour of assessee.
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2021 (4) TMI 1191
Deduction u/s 80IC - whether CIT (A) has erred in deleting the disallowance of addition made u/s 80IC by the AO by granting 25%/30% of the deduction instead of 100% claimed by the assessee during the year under assessment? - Revenue contended that when initially assessee has availed deduction u/s 80IC for a period of 5 years @ 100%, it would be entitled to deduction on substantial expansion for remaining five assessment years @ 25%/30% - HELD THAT:- Hon’ble Supreme Court in case of Aarham Softronics [2019 (2) TMI 1285 - SUPREME COURT] in the preceding para after duly discussing the decision rendered by Hon’ble Supreme Court in case of Classic Binding Industries [2018 (8) TMI 1209 - SUPREME COURT], reached the conclusion that when the assessee has carried out substantial expansion in the existing unit immediately on completion of first five years i.e. FY 2011-12 and duly complied with the conditions laid down in clause (ix) sub-section 8 of section 80IC, it is entitled for deduction u/s 80IC for the year under assessment. So, we are of the considered view that ld. CIT (A) has decided the issue in controversy in favour of the assessee by duly relying upon the order passed by the coordinate Bench of the Tribunal in case of Tirupati LPG Industries Ltd. [2014 (1) TMI 1689 - ITAT DELHI] and has rightly deleted the addition made by the AO on account of disallowance u/s 80IC. So, finding no scope to interfere into the findings returned by the ld. CIT (A), grounds no.1, 2, 3 & 4 are determined against the Revenue.
Addition on ad hoc basis @ 10% on account of interest expenses on car having element of personal use, tour and travelling expenses and conveyance expenses respectively - HELD THAT:- When undisputedly assessee has claimed the expenses on the basis of its audited financials which have not been disputed by the AO, the ad hoc additions on the basis of surmises are not permissible under law. Moreover when it is not the case of the AO that these expenses have not been made wholly and exclusively for the purpose of business by the assessee, there is no ground to disallow the same. So, we are of the considered view that when AO has proceeded to make aforesaid disallowances without assigning any reason but on the basis of surmises, the disallowances are not sustainable in the eyes of law, hence there is no scope to interfere into the deletion made by the ld. CIT (A). - Decided against revenue.
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2021 (4) TMI 1190
TDS at the higher rate of 20% in case of payee without PAN under the provisions contained u/s 206AA - Section 206AA overriding effect on DTAA or not? - DTAA between India and Neitherland - Short deduction of TDS - non-provision of PAN in case of Engine Lease Finance B.V. (ELFC), a non-resident company, taxed resident in Neitherland, which was not mentioned at the time of return as the foreign company did not have PAN.HELD THAT:- As engine is a part of aircraft and cannot be said to be an aircraft and payment made for rent of engine are covered under equipment as per Article 12 (4) of the DTAA between India and Neitherland; that under Article 12(4) of the DTAA between India and Neitherland, the term “royalty” does not cover use of, or the right to use equipment itself; that rental of aircraft engine is neither a copyright nor a payment of any information; that under Article 12(6) of the DTAA, fee for technical services also does not include the amount paid for services that are ancillary and subsidiary to the rental of ships, aircrafts, containers or other equipment used in connection with the operation of ships or aircrafts in international traffic; the assessee is entitled for beneficial provisions of DTAA.
So, following the order passed by the coordinate Bench of the Tribunal in cases of DDIT (IT-II), Pune vs. Serum Institute of India Ltd. [2015 (6) TMI 26 - ITAT PUNE], DCIT vs. M/s. Infosys BPO Ltd. [2020 (1) TMI 1011 - ITAT BANGALORE] and the judgment of Hon’ble Delhi High Court in case of Danisco India Pvt. Ltd. vs. UOI[2018 (2) TMI 1289 - DELHI HIGH COURT] we are of the considered view that ld. CIT (A) has erred in holding that in this case, provisions contained u/s 206AA overrides beneficial provisions of DTAA between India and Neitherland. Consequently, assessee has rightly deducted the tax @ 10% as per provisions contained under DTAA as section 206AA cannot have overriding effect on DTAA, hence no demand is payable by the assessee. Hence, question framed is decided in favour of the assessee.
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2021 (4) TMI 1189
Disallowance being brokerage paid - HELD THAT:- Disallowance was made based on the conclusion drawn by the Assessing Officer on the first time of disallowance of loans, forfeits the earnest money deposit. There is evidence of payment and services. No enquiries were made by the Assessing Officer. No adverse evidence is collected. Inference was drawn without any basis. The said payment was made for the purpose of business. In view of the above discussion and consistent with the view taken by us in the previous disallowance, we uphold the order of the ld. CIT(Appeals) and dismiss this ground of Revenue.
Loss on purchase of land or earnest money paid - HELD THAT:- We find that the Assessing Officer in this case has not made any enquiry or investigation, based on which he has come to the abovestated conclusions-
Nobody was examined. No questions were asked to third parties. No information was called for from third parties. There is no evidence collected against the claim of the assessee.
In our view, there is no contradiction between the versions of agreements for sale and the submissions made by the assessee- firm to the arbitrator that the assessee- firm was desirous to develop the plots of land for earning profit and that there were fall in prices of properties. No adverse inference can be drawn.
Before arbitrator, ld. Counsel stated that the assessee entered into the agreement with the hope they will be able to arrange a partner who will finance and that they tried to arrange finances for this deal. There is no evidence to controvert this submission. The arbitrator has given a finding of fact that the value of the property declined between the period 04. 01.2013 to 18. 02. 2013. The Assessing Officer has not found any evidence to controvert these findings of the arbitrator. Genuineness of this agreement to sale cannot be disputed by the Assessing Officer unless he examined the sellers of the land and unless he collects evidence to show that these are manipulated agreements which are arranged in connivance with other parties, for financial gain of the assessee and others involve in the events.
This observation cannot lead into a conclusion that the agreements are bogus. The fact that agreements were entered into, amounts were paid and the fact that these advances or earnest money was forfeited by the seller is not controverted with evidence by the Assessing Officer.
The undisputed fact is that the assessee is engaged in the business of real estate and that these payments were made in the course of business and that the earnest money was forfeited resulting into business loss of the assessee.
Such loss is allowable as a deduction as held in JWALA PRASAD RADHA KISHAN VERSUS COMMISSIONER OF INCOME-TAX, UTTAR PRADESH. [1970 (7) TMI 10 - ALLAHABAD HIGH COURT], Inden Bislers [1972 (9) TMI 28 - MADRAS HIGH COURT] and Kishangunge Madira Sangh [1986 (9) TMI 45 - RAJASTHAN HIGH COURT]
Addition of commission - HELD THAT:- As the persons who received the commission confirmed the same and submitted their income tax details, (ii) income-tax details demonstrated that these commission agents have disclosed the amount in question as their income by filing the return of income. Nothing is brought on record by the Assessing Officer to dislodge the claim of the assessee or to show that the money paid as commission has come back to the assessee. Thereafter the ld. CIT(Appeals) relied on the judgment of the Hon’ble Jurisdictional High Court in the case of Alpha Hydronics Pvt. Limited [2014 (11) TMI 1156 - CALCUTTA HIGH COURT] and allowed the claim of the assessee. We find no infirmity in the order of the ld. CIT(Appeals).
Capital gain declared u/ s 45 (4) - transaction of retirement of partners - partners who contributed the land in the partnership at the time of jointing the firm took it back at the time of retirement at the same value - HELD THAT:- We find that the assessee has suo motu offered to tax the amount of gain that arose on this transaction of retirement of partners under the head “long-term capital gains”. It is not a case where the assessee claims that the partners of the assessee- firm retired and consequent to settlement of accounts these retiring partners had withdrawn such land from the firm. The ld. Counsel for the assessee states that the land contributed to the assessee-firm by the partners at the time of formation of the firm had withdrawn by the partners at the time of retirement from the firm. This cannot be a case of settlement of accounts on retirement. It is not a case where retiring partners are merely releasing or relinquishing all their rights and interest in the firm on retirement and receiving the value of one’ s interest in the firm. No such documentary evidence was produced before us or before the lower authorities. No relief can be granted to the assessee in the absence of any details. This issue requires investigation into fresh facts which are not on record. Hence this additional ground cannot be admitted. Under these circumstances, we dismiss this ground of Cross Objection.
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2021 (4) TMI 1218
Property attached in respect of arrears of tax due to the Income Tax Department - HELD THAT:- In this case, the petitioner has been fighting for her rights over the property in terms of a sale agreement dated 30.06.1994. The Hon’ble Supreme Court ultimately accepted the contention of the petitioner that the third and fourth respondent’s mother late Mrs.J.Padmini ought to have executed a sale deed in favour of the petitioner in terms of the aforesaid sale agreement dated 30.06.1994.
The third and the fourth respondents who were minors at the time of execution of the sale agreement on 30.06.1994 ought to have executed the sale deed in favour of the petitioner. Therefore, the subsequent tax liability of the fourth respondent and her husband for the Assessment Years 2012-13 and 2013 -14 cannot be to the disadvantage of the petitioner, since the petitioner has been diligently litigating since 2004. Therefore, fruits of the decree in a contested suit cannot be denied merely because the seller or one of the persons had incurred subsequent tax liability. The fruits of a decree will date back to the date of the suit.
Section 281 of the Income Tax Act, 1961 applies only to a situation where an assessee during the pendency of any proceeding under the Act, or after completion thereof, but before the service of a notice under Rule 2 of the Second Schedule, creates a charge on, or parts with the possession (by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever) of, any of his/her assets in favour of any other person.
Only such charge or transfer is void as against any claim in respect of any tax or any other sum payable by the assessee as a result of completion of the said proceedings or otherwise.
In this case admittedly the transfer was on account the final culmination of the litigation by the order of Hon’ble Supreme Court.There was only a delay in the execution of sale deed due to the pendency of the proceedings as the third and fourth respondent’s mother declined to execute sale deed under the sale agreement dated 30.6.1994.
Therefore the impugned communication dated 06.07.2018 asking the petitioner to obtain clearance from the second respondent cannot be countenanced. Further as per proviso to section 281 of Income Tax Act, 1961 such charge or transfer shall not be void if it is made-
(i) for adequate consideration and without notice of the pendency of such proceeding or, as the case may be, without notice of such tax or other sum payable by the assessee ; or
(ii) with the previous permission of the Assessing Officer.
The tax liability of the aforesaid firms of which the fourth respondent and her husband were the partners are subsequent to the commitment in the sale agreement dated 30.6.1994. Therefore, there is no justification in not releasing the registered sale deed in favour of the petitioner as the petitioner is a bonafide purchaser who has purchased the property after a long drawn litigation .
This Court is inclined to allow this writ petition as prayed for. Thus, this writ petition deserves to be allowed. The second respondent is directed to release the sale deed dated 29.06.2018 registered vide Document No. 89 of 2018 in favour of the petitioner within a period of two weeks from date of receipt of this order.
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2021 (4) TMI 1214
Application u/s 245D (4) to Settlement Commission rejected - learned Senior Standing Counsel is of the opinion that in the present case, the Settlement Commission formed an opinion that the petitioner had not made full and true disclosure with reference to certain incriminating evidence. Therefore, the order of rejection is in consonance with the provisions of the Act - HELD THAT:- This Court is of the considered opinion that it is a pre-requisite condition that an assessee, who approaches the Settlement Commission under Section 245C of the Act, must disclose true and full income. How to form an opinion regarding true and full disclosure of the assessee.
Undoubtedly, it is a difficult procedure to be adopted and further, various facts and circumstances are also to be ascertained. Thus, the procedures are contemplated under Section 245D of the Act. Various stages are provided for the purpose of deciding the application filed under Section 245C. While the process of adjudication of an application is in progress, the Authorities Competent are empowered to provide additional informations, report enabling the Commission to decide the issues in a proper perspective.
The application filed under Section 245C is a special provision contemplated for the purpose of settling the cases in a speedy manner, only in the event of furnishing the true and full disclosure of income by an assessee along with the application.
Doubts raised based on incriminating evidence by the Department and the particulars produced by the assessee are sufficient enough to form an opinion that there was no true and full disclosure. The true and full disclosure contemplated under the provision must be understood that the said disclosure must be an acceptable disclosure with reference to the documents and evidences available with the Department. The very settlement is a consensus to arrive a settlement and the parties are expected to be fair and honest. With this idea, the concept of true and full disclosure is contemplated in the provision.
As far as the writ proceedings are concerned, such disputed facts and circumstances with reference to the documents and evidence cannot be adjudicated under Article 226 of the Constitution of India. Such an adjudication must be done by the Competent Authority by conducting a fullfledged enquiry/trial. In the event of rejection of an application filed under Section 245C, the matter shall go before the Assessing Officer before whom the assessee would get an opportunity to submit his explanation or documents or otherwise. Thus, the High Court under Article 226 cannot adjudicate or made any finding with reference to the disputed facts. Thus, the contention raised by the writ petitioner in this regard need not be considered.
The entire findings of the Settlement Commission reveal that certain contra materials were produced by the Department before the Settlement Commission and disputed statements are also made. All such disputed statements and evidences cannot be adjudicated by the High Court.
This being the factum, this Court is not inclined to entertain the writ petition and further, the procedures followed for deciding the issues as well as the decision arrived are in consonance with the provisions of the Act and there is no perversity or infirmity as such. Accordingly, the writ petition stands dismissed.
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2021 (4) TMI 1211
Reopening of assessment u/s 147 - assessee has claimed erroneous reduction in the value of inventory being flats under construction as per joint venture development, which will be complete on receipt of share of flats apart from cash by the assessee company as agreed in the Joint Venture document which has not taken place during the year - HELD THAT:- In the reasons given for reopening the assessment, it is stated that the issue of reduction in respect of inventory was not considered during the course of scrutiny proceeding.
As further stated that the Tripartite agreement dated 12.3.2012 and the financial submitted by the petitioner are itself tangible materials for reopening of the assessment and there was no change of opinion by the AO.
The impugned order further states that the assessment were scrutinised to find out the difference between the opening stock of the current year with the closing stock of the previous year and the details and evidence were called for were restricted to that issue only and that the issue relating to reduction in the value of inventory was not considered during the course of scrutiny and therefore the notice has been issued to reopen the assessment.
As find substantial merits in the submission of the learned counsel for the respondent. The assessment is driven based on the returns filed by an assessee and therefore it is for the assessee to make correct computation of income for the purpose of payment of income tax. If there is any irregular claim for deduction/exemption, the respondent assessing officer is well within his rights to reopen the assessment as long as which reopening of the assessment is not on account of any change of opinion as has been held by the Honourable Supreme Court has followed by all the High Courts.
It cannot be stated that the impugned notice has been issued merely on account of change of opinion. Further, the petitioner has also not clearly explained how a reduction in the value of inventory was made at the time of filing of the returns. In these proceedings, the petitioner is hiding behind the cloak of the few ratios of the Court which may not be applicable to the facts of the case. Therefore, In my view, the respondent Income tax Department was justified in reopening the assessment under section 148 of the Income Tax Act, 1961. It is still open to the petitioner to substantiate its defence before the respondent by filing suitable reply and explain how the computation of the income was made for the purpose of payment of tax and thus, the taxable income was correctly determined.
Therefore, am inclined to dismiss this writ petition. I however give liberty to the petitioner to participate in the proceedings pending before the respondent. The petitioner may therefore file additional reply, if any, within a period of 30 days from date of receipt of copy of this order before the respondent explaining its stand. The respondent is directed to examine the issue a fresh and pass an assessment orders on merits in accordance with law within a period of 90 days from the date of receipt of copy of this order.
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2021 (4) TMI 1188
Addition on account of the amount deposited in the saving bank account of the assessee maintained with Punjab National Bank - as per CIT-A substantial deposits both in cash and cheque and the agriculture income had been found to be deposited in the assessee's bank account by means of account payee cheques, in these circumstances, there was an onus on the assessee to explain the sources of deposits in cash which had not been cogently done. He therefore sustained the addition - HELD THAT:- As the assessee was an aged person who was an agriculturist at the relevant time and was selling the agriculture produce therefore his source of income was only the agricultural income which has been accepted by the Department. The assessee was not having any other source of income or doing any other business/profession, therefore the explanation given by the assessee for depositing the amount of ₹ 48,56,000/- out of withdrawals of ₹ 68,00,000/- appears to be plausible. In that view of the matter the impugned addition made by the A.O. and sustained by the Ld. CIT(A) is deleted. Appeal of the Assessee is allowed.
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2021 (4) TMI 1187
Rejection of books of accounts - Estimation of profit - AO estimated the profit at 15% of gross receipt - CIT(A), on the basis of the offer given by the assessee to buy peace and to avoid future litigation, sustained the addition of 1% of the turnover over and above the returned income - HELD THAT:- When, in the preceding three years the net profit rate had varied from 4.26% to 5.94%, it is not understood as to how and why the ld.CIT(A) has accepted the offer given by the assessee of additional income of 1% of the turnover which makes the net profit rate of 2.84%. Considering the totality of the facts of the case and considering the fact that net profit rate from A.Y. 2007-08 to 2009-10 varied from 4.26% to 5.94% and the net profit rate for the current year was shown at 1.84%, estimation of net profit rate of 4.5% under the facts and circumstances of the case will meet the ends of justice. Accordingly, the order of the CIT(A) is modified and the AO is directed to adopt the net profit rate of 4.5% on the turnover of ₹ 14,85,42,058/- as the net income of the assessee. The grounds raised by the Revenue are accordingly partly allowed.
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2021 (4) TMI 1186
Addition of provisions for liquidated damages - HELD THAT:- Since, the matter stands adjudicated and allowed for several years prior, in the absence of any material change, we hereby hold that the addition made by the AO cannot be sustained.
Advance and deposits written off - HELD THAT:- We are in agreements with the fundamentals argued that it is a generally accepted principle that losses, other than capital losses, which arise out of and are incidental to the business of assessee must be necessarily deducted in the ascertainment of profits of the business u/s 28 - Section 28 of the Act provides for taxation of ‘profits and gains’ of any business or profession. From the charging provisions of the Act, it is discernible that the words ‘income’ or ‘profits and gains’ should be understood as including losses also, so that, in one sense ‘profits and gains’ represent ‘plus income’ whereas losses represent ‘minus income’. In other words, loss is negative profit. Both positive and negative profits are of revenue character. Both must enter into computation, wherever it becomes material, in the same mode of the taxable income of the assessee. Therefore, the trading loss of a business is deductible in computing profits earned by the business even though there is no specific provision for allowance thereof.
As decided in MYSORE SUGAR COMPANY LIMITED [1962 (5) TMI 3 - SUPREME COURT] while computing the ‘assessable profits and gains’, an appellant is entitled to claim incurred for the purpose of its business but not covered under any specific clause.
On going through the facts and circumstances of the instant case, keeping in view the judgments of Hon’ble Supreme Court since the amount has been incurred during the regular course of business, the same is allowed to be claimed under expenses for the year.
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2021 (4) TMI 1185
Revision u/s 263 - subsidy amount received by the assessee attracts the provisions of Explanation 10 to section 43(1) of the Act is not proper - HELD THAT:- As subsidy is for cost of plant & machinery and technical civil works. Therefore, we are not inclined to accept the submission of the ld. AR that the subsidy was not for the cost of the particular assets and as per the above scheme, there is a restrictive clause that the subsidy shall be kept by the beneficiary in the form of fixed deposits without any interest which has been complied by the assessee. It is clear from the financial statements under Schedule XIV that the deposits with the bank (against subsidy received) ₹ 50 lakhs. The assessee cannot utilize the funds till the locking period as framed by the Govt. of India for enjoying the subsidy to the beneficiary.
There is no doubt that as per the section 43(1) Explanation 10, the assessee should reduce the cost of the fixed assets from the subsidy amount, but, in the impugned AY, the assessee has been barred by limitation as provided in the scheme. Considering the above scheme framed by the Govt. of India, under which, the assessee has received the subsidy, ld. Pr. CIT has not justified for this impugned AY revising the assessment framed u/s. 143(3) of the Act by exercising powers u/s. 263 of the Act. Therefore, the finding of the Pr. CIT that the subsidy amount received by the assessee attracts the provisions of Explanation 10 to section 43(1) of the Act is not proper and the same is not applicable to the case of the assessee. Therefore, we set aside the order passed by the Pr. CIT and restore the order of the AO. Appeal of the assessee is allowed.
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2021 (4) TMI 1205
Revision u/s 263 - Tribunal quashing the order of the Commissioner of Income Tax passed u/s 263 as non-speaking and cryptic order - HELD THAT:- The first reason cited in the show cause notice was that deduction under Section 10B has been allowed without excluding other incomes. The assessee placed on record the copy of the assessment order dated 30.12.2011 passed under Section 143(3) read with Section 147 wherein AO has categorically stated that the assessee has not claimed deduction under Section 10B. Therefore, the finding of the Commissioner of Income Tax that the assessee has claimed deduction under Section 10B is factually incorrect.
So far as the genuineness of the expenditure claimed in the profit and loss account were not verified by the Assessing Officer and the Balance Sheet items and details of annexure were not examined at the time of assessment. The Tribunal, while setting aside the order of Commissioner of Income Tax, held that the Commissioner of Income Tax cannot direct the AO to conduct roving enquiry without any specific directions with regard to specific expenditure or income claimed or suppressed by the assessee. Tribunal observed that the order passed by the Commissioner of Income Tax is a non-speaking and cryptic order. Commissioner of Income Tax has not given any valid reason to come to the conclusion that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue.
No error or irregularity in the order passed by the Tribunal. - Decided in favour of assessee.
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Customs
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2021 (4) TMI 1233
Interpretation of statute - Paragraph 3.09(2)(i) of the FTP in so far as it excludes “Service Providers in Telecom Sector” from the benefit of SEIS - Benefit under Service Exports from India Scheme (SEIS) - Duty Drawback Scrips on foreign exchange remittance - HELD THAT:- The “Service Providers in Telecom Sector” meant and included only the Telecom Service Providers of services mentioned therein. The ambit and scope of such exclusion was not of Service Providers who render services to such Telecom Service Providers - Though, a similar list is not appended to FTP or HBPv1, there is no reason for a different interpretation to be placed to FTP 2015-20. Clearly, what was made ineligible for availing benefit of SEIS in terms of paragraph 3.09(2)(i) are the Telecom Service Providers and not the Service Providers who provide services to such Telecom Sector.
The Foreign Trade Policy is clear and unambiguous inasmuch as it excludes the Telecom Service Providers from the benefit of the SEIS and not the Service Providers who provide services to such Telecom Service Providers. As noted hereinabove, the ambit of the term was clearly spelled out in S.No. 2(C) of Appendix-10 to HBPv1 to FTP 2009-14. No different intention regarding the same is discernible from the FTP 2015-20 - the ‘Service Provider’ is one who in terms of a license granted under Section 4 of the Indian Telegraph Act, 1885 provides Telecommunication Services as defined under Section 2(k) of the TRAI Act. I see no reasons to interpret ‘Service Providers in Telecom Sector’ in the FTP differently.
Thus, exclusion of ‘Service Providers in Telecom Sector’ from benefit of SEIS is of a service provider providing telecom services. The Impugned Instructions dated 22.05.2019, therefore, sought to impose fresh restrictions on the eligibility of the service providers entitled to the benefit under SEIS, which amounted to amendment in the policy, and is therefore, ultra vires the Foreign Trade Policy - there is no ambiguity in the FTP on the scope of exclusion from SEIS benefit as provided in Paragraph 3.09(2)(i) thereof, even if one is to hold otherwise, the above principles would apply and the interpretation sought to be placed by the respondent on the said provision cannot be sustained.
Where the impugned Instructions/Circular dated 22.05.2019 has been issued under the instructions of the DGFT itself, the remedy of appeal under Section 15 of the Act would clearly be otiose and redundant. As far as the remedy under Section 16 of the Act is concerned, once it is held that the Impugned Orders have been passed on basis of Instructions which are otherwise ultra vires the Act, the petitioner cannot be denied the benefit of an original adjudication on merits and the decision on an appeal under Section 15 of the Act in accordance with law, and be relegated only to a remedy of review.
The respondents are directed to consider the claims of the petitioner(s) under the SEIS afresh and in accordance with FTP 2015-20 - Petition allowed.
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2021 (4) TMI 1231
Verification regarding the Certificate of Origin produced - Concessional rate of Customs Duty - whether the verification is random verification falling under Rule 6(1)(c) of the CAROTAR, 2020 or the verification falls under the category leveled by Rule 6(1)(b) of the CAROTAR, 2020? - HELD THAT:- The petitioner has brought categorical allegation against the respondents that he has furnished all requisite documents and information for clearance but the imported goods have been ware-housed without any reason being disclosed to the petitioner whether those goods were held up for any verification regarding the Certificate of Origin produced by the petitioner for availing the concessional rate of the customs duty or for any other reason. This allegation has been levelled in para-7 of the writ petition and in reply thereof, the respondents have evaded any specific reply - The said reply does not conform to any verification under Rule 6(1)(b) of the CAROTAR, 2020 which is structured on the failure to provide the requisite information, as no such information was asked from the petitioner. The said verification cannot be treated as prima facie verification under Rule 6(1)(b) of the CAROTAR, 2020, rather it would prima facie come under Rule 6(1)(C) of the CAROTAR, 2020. Thus, Rule 5(b) of CBEC’s circular No.38/2016-customs dated 22.08.2016 will apply in the present case.
The respondents are directed to release the imported goods under the Bill of Entry No.659390/INP/AGT-LCS/2020-21 dated 26.12.2020 on obtaining an indemnity bond to be submitted by the petitioner binding himself to deposit the duty meaning the difference between the duty that would be assessed by the competent authority on verification and the preferential duty which has been paid by the petitioner - Petition allowed.
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2021 (4) TMI 1229
Verification of the Country of Origin Certificate - whether the process of verification is random in nature or it is a verification which falls under Rule 6(1)(b) of the CAROTAR, 2020? - HELD THAT:- Even though the petitioner has brought allegation against the respondents by stating that he has met all the requirements for getting the clearance, but it has been found by the customs that he has made some inaccurate statement in respect of minimum value addition in Bangladesh. That apart, some components contributing to the price could not be figured out. Thus, the verification on deficiency is prima facie justified. Within a short while, the reason for ware-housing had been disclosed to the petitioner. The petitioner was apprised of his right of exercising option for the provisional assessment of the duty subject to the final decision.
The petitioner therefore might get the imported goods released on furnishing the Bank Guarantee (BG) for an amount of ₹ 12,74,031/-, but the petitioner has not done so in terms of the communication dated 17.10.2020 [Annexure-E to the reply]. In the facts and circumstances as surfaced, this court is not inclined to interfere in the manner as asked for - The petitioner may take release of the imported goods covered by Bill of Entry No.659, 629/IMP/AGT-LCS/2020-2021 dated 29.09.2020 without prejudice to his claim - Petition dismissed.
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2021 (4) TMI 1195
Condonation of delay in filing appeal - time limitation - Commissioner (Appeals) did not inform the appellant with regard to the issue of delay and had heard the appeal on merits - appellant was not put to notice with regard to the issue of delay - HELD THAT:- It is seen that the Commissioner (Appeals) has computed the period of limitation from the date of dispatch of the Order-in-Original . As per section 128 Clause (1) of Customs Act, 1962, the person aggrieved by the decision/order has to file the appeal within 60 days from the date of communication to him of such decision or order. The word used is “communication”. It implies that the Order-in-Original has to be put to the knowledge of the aggrieved person. Mere dispatch of the order cannot be communication of the decision/order. Further, section 153 speaks about service of order/decision. The word used is ‘service’ of the order/decision and not dispatch of the order/decision. The words “service” as well as “communication” has to be construed to mean that such order is served or put to the knowledge of the aggrieved person.
When there is a defect in filing the appeal which can be rectified, the same has to be pointed out to the appellant before the appeal is heard on merits. The Appellant cannot be deprived of the remedy of appeal in a hyper-technical manner. Such ways adopted to increase disposals is deprecated.
The appeals are remanded to the Commissioner (Appeals), who shall give an opportunity to the appellant to file an application for condonation of delay - Appeal allowed by way of remand.
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2021 (4) TMI 1194
Classification of imported goods - LCD-Module - classified under CTH 90139010 having a Nil rate of BCD or Original dated 12.10.2009 holding that LCD modules imported by the appellant shall be classified? - HELD THAT:- The appellant has imported 576 pieces of LCD modules and accordingly filed bill of entry giving the details of the same and the goods were physically examined by the officers of SIIB and the stand of the appellant from the very beginning was that as per the technical write up, which was submitted to the Department, clearly shows that these LCD are used in the instrument cluster manufacture by the appellant and which instrument cluster in turn disclosed the main Kilometer reading, Day Trip reading and Clock and all these details are matched with the details in bill of entry - the Order-in-Original was passed without issuing the SCN which is also in violation of principles of natural justice, in view of the decision in the case of ZINC PRODUCTS VERSUS UNION OF INDIA [1991 (2) TMI 126 - HIGH COURT OF JUDICATURE AT MADRAS].
The appellants have been earlier importing the said items and the appellants vide its letter dated 30.11.2009 informed the Customs Authorities that since April 2009, they had seven instances of import of LCD and in five of them, the item was correctly dispatched as Liquid Crystal Display and in the remaining two, though, the imported item was merely a Liquid Crystal Display which was mentioned as LCD module incorrectly and that the imported LCDs were used in the manufacture of instrument cluster and that these are not part of speedometer - thus, the impugned order classifying the said goods under 90299000 is not legally sustainable
Appeal allowed - decided in favor of appellant.
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2021 (4) TMI 1210
Validity of SCN - Case of petitioner is that the SCN was issued by an incompetent authority, not having jurisdiction under the provisions of the Customs Act, 1962, and therefore, the entire proceedings are liable to be set aside - proper authority as contemplated under Section 28(4) of the Customs Act - HELD THAT:- The High Court cannot adjudicate the facts and merits with reference to documents and evidences. Trial is not entertainable under Article 226 of the Constitution of India. All such procedural aspects are to be followed by complete adjudication/trial by the original authorities as well as by the appellate authorities under the provisions of the Statute and the powers under Article 226 of the Constitution of India is limited to find out whether the processes contemplated under the Statutes and the procedural aspects are followed by the competent authorities as well as the appellate authorities or not. The High Court, under Article 226 of the Constitution of India, is not expected to usurp the powers of the appellate authorities by adjudicating the merits of the matter on certain documents and evidences - Powers of the High Court under Article 226 of the Constitution of India cannot be extended nor widened so as to allow lay hands on the facts and circumstances by conducting the trial, nor certain facts and circumstances with reference to documents and evidences can be assumed or presumed or inference can be drawn, which is not preferable.
Usurping the powers of the appellate authorities by the High Court by invoking its powers under Article 226 of the Constitution of India is certainly unwarranted. The parties must be provided an opportunity to approach the appropriate authorities for redressal of their grievances in the manner known to law. In the event of entertaining all such writ petitions, the High Court will not only be over-burdened, but usurping the powers of the appellate authority is certainly not desirable - Jurisdictional error should not result in exoneration of liability. Jurisdictional error, if any committed, is technical, and thus, rectifiable. In such circumstances, the Courts are expected to quash the order passed by an incompetent authority and remand the matter back for fresh adjudication. Contrarily, if an assessee is exonerated from liability, undoubtedly, the purpose and object of the Act is defeated.
Large number of writ petitions are filed without exhausting the statutory appeal remedies and High Court is also entertaining such writ petitions in a routine manner. Keeping such writ petitions pending for long time would cause prejudice to the interest of the assessee also. Thus, such statutory provisions regarding the appeal are to be decided at the first instance, enabling the litigants to avail the remedy by following the procedures as contemplated under law. Such writ petitions are filed may be on the ground of jurisdiction or otherwise.
This Court has no hesitation in arriving at a conclusion that the petitioners are bound to exhaust the appellate remedy, either under Section 128 or Section 129 of the Customs Act, respectively - Petition dismissed.
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2021 (4) TMI 1208
EPCG Scheme - fixation of annual average turnover - export fabrics - issuance of Export Obligation Discharge Certificate - HELD THAT:- To discharge the export obligation for import of capital goods for a sum of ₹ 2,88,57,944.00.( ₹ 57,73,588 x 8) in eight years, the average export performance of the petitioner per year would be only ₹ 36,07,243/-. Therefore, it would have been sufficient for the petitioner to maintain an average export performance of ₹ 36,07,243/- per annum only i.e [₹ 2,88,57,944.00/8] - However, the average export performance to be achieved by the petitioner in a year was fixed in the EPCG license dated 6.1.2005 at ₹ 1,97,93,333.33 per annum. The said average export performance of ₹ 1,97,93,333.33 per annum almost equivalent to 68% of the total export obligation to be achieved by the petitioner over a period of eight years for a value of ₹ 2,88,57,944.00 under the said license. Thus, the calculation of average export performance of ₹ 1,97,93,333.33 per annum in the licence was skewed.
Failure of the petitioner to achieve a average export performance for the appellant to ₹ 1,97 93,333.33 per annum cannot be to the disadvantage of the petitioner, if the petitioner was in a comfortable position to achieve the export obligation of ₹ 2,88,57,944.00 - In this case, it is the case of the petitioner that between 2002-2003 and 2004-2005 the petitioner had exported goods worth ₹ 39,55,76,700.00 which exceeded the overall export obligation to be achieved by the petitioner for a sum of ₹ 2,88,57,944.00. This would require a proper examination both by the officers of the Ministry of Commerce i.e. the respondent Nos.1 and 3.
Case remanded back to the respondents under the Ministry of Commerce and the Ministry of Finance to re-examine the issue a fresh in the light of the above observation and after considering the submission of the petitioner. Benefit of several amnesty schemes which were issued by the Ministry of Commerce from time to time may also be extended if the petitioner is otherwise entitled to the same - petition allowed by way of remand.
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2021 (4) TMI 1206
Application for contempt proceedings - Interest on Refund of duty - principles of unjust enrichment - case of appellant is that the amount of refund was directed to be credited to the Consumer Welfare Fund under Section 27(2) of the Customs Act, 1962 but the claim for interest was rejected - HELD THAT:- The Court has extracted the observations from the order-in-original dated 29.11.2019, which was impugned in the petition. The Court held and observed that “the process involved in processing the refund casts serious duty upon the concerned officer to advert to the facts pleaded before the authority for coming to the conclusion that though refund is payable but the same is required to be deposited and paid in the Consumer Welfare Fund for want of any document or other evidence to indicate that the payment of refund would not result into unjust enrichment to the recipient”. The Court found complete silence in the order impugned qua the contention of the applicant and accordingly, held that on the face of it, the order impugned indicated that the machinery in question, on which duty was paid and duty was sought to be claimed as refund, was not in any manner capable of being dealt with or for passing on, so as to pass on the burden of duty to the consumer or end-user.
The Court was quite annoyed by the fact that the contention raised by the applicant in relation to the duty paid on the machinery, which was sought to be claimed as refund, was not addressed since the contention of the applicant was all along that there was no consumer or end user and therefore, in no manner, goods were capable of being dealt with or passed on, so as to pass on the burden of duty to the consumer or the end-user. This being a vital aspect and as there was complete silence in answering this vital issue, the Court directed the authority to decide this issue which would have a bearing on the issue of refund given to the consumer welfare fund and interest. Thus, both the aspects of refund and interest, after affording opportunity to the applicant were to be concluded instead of ordering consideration of the aspect of interest alone.
The act, alleged to be willful and in complete defiance of the Courts directions, is an act which based on the interpretation of the order and on law and the same cannot be said to be in willful disobedience of the order of this Court. The jurisdiction under the Contempt of Courts Act is not to be invoked unless the Court finds that the act on the part of the authority is deliberate and in willful disobedience of the order of this Court. Unless a real and serious prejudice is shown, which can be regarded as a substantial interference with the due course of justice, this jurisdiction would not be available - in the instant case addresses the contention of the applicant, which, according to the Court, had not been dealt with in the previous order and if the same has also been addressed by giving cogent reasons, what all the applicant is expected to do is to question the outcome before the appellate authority or by way of appropriate legal challenge.
The non-grant of refund to the applicant and instead to the Consumer Welfare Fund and denial of interest are not the realms which need to be gone into in this application for contempt under the Contempt of Courts Act - application dismissed.
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2021 (4) TMI 1182
Refund of SAD - rejection on the ground that the appellant has neither paid VAT nor CST on the imported goods - benefit of exemption of CST on the goods imported availed - HELD THAT:- Issue decided in the case of M/S. KUBOTA AGRICULTURALL MACHINERY INDIA PVT. LTD. AND M/S. ACER INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI-IV [2017 (6) TMI 565 - CESTAT CHENNAI] where it was held that When goods imported are otherwise, not fully exempted from VAT/sales tax, non-refund of 4% SAD paid on the concerned importers at the stage of import of these goods would amount to unintended taxation and uncalled for discrimination against the importer for no fault of theirs.
The rejection of refund claim is unjustified - appeal allowed - decided in favor of appellant.
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2021 (4) TMI 1204
Refund of deposit - the deposit was paid under protest - refund of Additional Duty - HELD THAT:- There is nothing, which may prevent the respondent Department from granting the refund of ₹ 71,64,592/- (rounded off to ₹ 71.65 Lacs) made by the petitioner as Pre-deposit. The said amount was claimed by way of Pre-deposit during the investigation and was deposited by the petitioner “under protest”. It is his further say that the additional amount of Duty of ₹ 77,54,237.40 (rounded off to ₹ 77.54 Lacs) was deposited by the petitioner “under protest” for the purpose of getting the goods cleared under the various Bills of Payment. Thus, the total amount which needs to be refunded to the petitioner is ₹ 1.49 Crores (rounded off) - there being no objection on the part of the respondents in granting the refund of the amount of Pre-deposit of ₹ 71.65 Lacs (rounded off), we direct the respondents to refund the said amount of Pre- deposit within a period of Two Weeks from Today. The said amount shall be deposited in the Bank Account of the petitioner, details of which shall be furnished by the petitioner to the Department, on its Official Email ID.
Refund of amount of additional Duty collected by the respondent - HELD THAT:- The respondent Department cannot be a Judge in its own cause, more particularly, when no stay was sought for by the Department against the operation of the order passed by the Tribunal. Thus, subject to the petitioner, through its Managing Director – Shri Gyanchand Fulchand Jain, filing an Undertaking before this Court within a week that it would abide by the decision of the Apex Court eventually, the said amount of additional Duty of ₹ 77.54 Lacs (rounded off) shall be refunded to the petitioner within a period of Four Weeks from Today.
In absence of clarity in the affidavit in reply and for want of necessary instructions at the ends of learned Standing Counsel Mr. Priyank Lodha as to why Provisional Assessment of the goods is still being made under the CTH 8528 and not under the CTH 8517 when the Tribunal has held in favour of the petitioner, let specific instructions be obtained by the learned Standing Counsel Mr. Lodha before the next date of hearing in that regard.
List on 22.03.2021.
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Corporate Laws
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2021 (4) TMI 1180
Sanction of scheme of arrangement - not-for-profit Companies registered under Section 8 of the Companies Act, 2013 - Petitioner Companies belonging to the same management group or not - HELD THAT:- On perusal of the Scheme and the proceedings, it appears that the requirements of the provisions of section 230 and 232 of the Companies Act, 2013 are satisfied.
The Scheme of Arrangement envisaging amalgamation of UNM Foundation, the Petitioner Transferor Company with Tornascent Care Institute, the Petitioner Transferee Company, which is at Annexure- T to the petition is hereby sanctioned and it is declared that the same shall be binding on the Petitioner Companies, their shareholders and unsecured creditors and all concerned under the scheme - this Bench is of the opinion that in respect of any change in name, the Petitioner/Transferee Company shall comply Section 13 of the Companies Act separately/independently.
Petition disposed off.
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Insolvency & Bankruptcy
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2021 (4) TMI 1183
Validity of Resolution Plan - reinstatement of Committee of Creditors of the Corporate Debtor and the Resolution Professional - invitation of fresh Resolution Plans from interested parties for being considered by the Committee of Creditors of the Corporate Debtor - direction to invoke and appropriate the Performance Bank Guarantee - HELD THAT:- We are surprised the manner in which the members of the Committee of Creditors have not taken any steps for the proper implementation of the Resolution Plan even though long time has elapsed and no stay was granted by Hon'ble NCLAT. In the meantime, some of the Financial Creditors who have approved the Resolution Plan have filed IA for revoking the approval of Resolution Plan. In view of the same, we hereby direct the RP to reconvene the meeting of Committee of Creditors for considering whether this Resolution Plan is still required to be proceeded with or not in view of the inordinate delay that has taken place in implementing the Resolution Plan and also taking into consideration the changed circumstances.
Application disposed off.
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2021 (4) TMI 1181
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- On perusal of the documents produced by the Financial Creditor, it is pertinent to note that the first balance confirmation letter has the stamp of the Corporate Debtor but there is no signature, except "For Harsh" has been written below the stamp of the Corporate Debtor. The other balance confirmation dated 31.03.2017 has a stamp and signature but the signatory has not given his identification below the signature, hence we are unable to deduce if that has been endorsed by the Corporate Debtor. It appears to the naked eye that the last balance confirmation letter in which there is a signature appears to be forged. Hence, the balance confirmations cannot be considered under section 18 of the Limitation Act, 1872 as acknowledgements.
Petition dismissed.
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2021 (4) TMI 1179
Liquidation of Corporate Debtor - seeking direction to the petitioner or COC member to release an amount of ₹ 14,92,122/- to the applicant, the other professional and agencies as per the CIRP sheet - HELD THAT:- During the 3rd meeting of the CoC which was held on 19.09.2019, the CoC decided to liquidate the company as the unit is not in operation since long and there are no workers and employees. No Expression of Interest received from prospective resolution applicant, the Committee of Creditors approved the initiation of liquidation of the corporate debtor by passing the resolution and directed the Resolution Professional to file miscellaneous application and seek the further direction and order under section 33(1)(a) and 34(1) of the code from this Tribunal by passing the resolution with voting share of 100% of physically present.
It is observed from the minutes of the 3rd CoC meeting that the CoC has, with 100% majority, decided to liquidate the Corporate Debtor and relying on the settled principle of law regarding the Commercial Wisdom of the CoC - the application is allowed.
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2021 (4) TMI 1178
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt - annual listing fees and other charges as well as penalty - dues of BSE - application has been filed by B.S.E and due to default of Corporate Debtor - HELD THAT:- It is not in dispute that the Corporate Debtor is listed on B.S.E. It is also not in dispute that it is liable to pay annual listing fees and other charges and, if any, delay occurs in payment thereof, the Corporate Debtor is also liable to pay penalty. Four invoices have been raised. Two invoices pertain to period which is beyond three years and remaining invoices are within the period of limitation. The outstanding amount of invoices which are within the limitation period is more than ₹ 1,00,000/-. We have also perused the relevant Clause 38 of the original agreement as well as Clause 3 of renewal agreement. As per these clauses, the liability of the Corporate Debtor has accrued and remains to be paid. As far as the nature of such dues is concerned, it has been established beyond doubt that these are of the nature of operational debt. Further, B.S.E is not a Statutory Authority and it is a commercial entity established under a statute, hence, an entity of this nature, B.S.E can file an application under Section 9 of IBC, 2016.
Merely because in the authorization, it has been mentioned that the person was authorized to recover the dues, such authorization does not alter the nature of application. At this point of time, we consider it pertinent to mention that if this logic is applied then all applications filed under Section 9 can be dismissed because such petitions are essentially filed for this purpose only irrespective of wordings of authorization. Even, applications under Section 7 of IBC, 2016 have got primary purpose of recovery. The design of IBC, 2016 is successful because of two factors i.e., it is a regime where creditors take charge of the Corporate Debtor and stringent timelines have been provided so that timely resolution or liquidation can take place.
No specific guidelines either under statute or by judicial pronouncements have been provided in this regard and the criteria under IBC, 2016 is default and not inability to pay dues unlike earlier statutory legislations; hence, it is the need of the hour that some amendments/guidelines are provided as soon as possible although the legislature has increased the threshold limit of ₹ 1,00,000/- under Section 4 to ₹ 1,00,00,000/-. Further, this application has been filed by B.S.E and due to default of Corporate Debtor, many retail investors have got struck as they cannot exit/trade the shares of the Corporate Debtor held by them, hence, for this reason also application needs to be admitted.
The application is otherwise complete and defect free - Application admitted - moratorium declared.
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PMLA
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2021 (4) TMI 1221
Money Laundering - siphoning of funds - petitioners prayed for withdrawal of the writ petition on the ground that the order of provisional attachment had expired by efflux of time under the provisions of Section 5(1)(b) of PMLA - The petitioners were opposed on the ground that the order of provisional attachment according to the said respondents did not expire by efflux of time - bifurcation of offence under PMLA into "Scheduled Offence" and "Offence of money-laundering" - HELD THAT:- The Director or an Officer not below the rank of Deputy Director while exercising jurisdiction under Section 5(1), therefor, has the discretion either to provisionally attach the property or not to do so. If the officer chooses to provisionally attach the property, he has to forward a copy of the order along with materials in his possession to the Adjudicating Authority. The Prevention of Money-Laundering (Issuance of Provisional Attachment Order) Rules, 2013 specifies the manner of issuance of provisional attachment order. The manner of forwarding a copy of the order of provisional attachment of property with materials as required under Section 5(2) of PMLA is provided in Rule 3 of the Prevention of Money-Laundering (the Manner of Forwarding a Copy of the Order of Provisional Attachment of Property along with the Material, and copy of the Reasons along with the material in respect of Survey, to the Adjudicating Authority and its Period of Retention) Rules, 2005. Rule 6 of the 2005 Rules provides for the period of time such order of provisional attachment, the materials and copy of the reasons are required to be retained by the Adjudicating Authority. Section 5(2) of PMLA, therefor, does not trigger the initiation of any Adjudication under Section 8(1) of PMLA -
The Adjudicating Authority after conclusion of hearing under Section 8 (2) of PMLA, therefor can either declare that the property or properties are involved in money-laundering or hold that they are not so. The adjudication process, by the Adjudicating Authority is thus not dependent on the order of provisional attachment being in force, though the initiation of adjudication under Section 8(1) of PMLA had commenced after a complaint being lodged under Section 5(5) of PMLA pursuant to an order of provisional attachment under Section 5(5) of PMLA. Even Section 8(1) of PMLA empowers the Adjudicating Authority to form a prima facie independent opinion before issuing a notice under such Section after receiving a complaint under Section 5(5) of PMLA. The adjudication by the Adjudicating Authority is, therefor, independent of the fact whether the order of provisional attachment on the date of completion of the adjudication under Section 8(2) of PMLA is in operation or not.
In the instant case, the jurisdiction of the Adjudicating Authority was attracted on a complaint under Section 5(5) being lodged after an order for provisional attachment under Section 5(1) was made. The Deputy Director under PMLA in the instant case on 19th February, 2020 i.e., within 30 days from the date of passing the order of provisional attachment had filed the complaint under Section 5(5) of PMLA. The Adjudicating Authority on receiving the complaint under Section 5(5) upon having reasons to believe that the petitioner no. 1 has committed an offence under Section 3 or is in possession of proceeds of crime, served a notice under Section 8(1) of PMLA on 19th February, 2020 upon the petitioner no. 1 and its Directors calling upon them to indicate the source of income, earnings or assets out of which or by means of which the property attached under the provisions of Section 5(1) of PMLA was acquired. It is an admitted position that immediately upon expiry of the minimum 30 days' notice period for show cause under Section 8(1) was over, the country went into a national lockdown. As a natural consequence, the matter being fixed on 4th May, 2020 before the Adjudicating Authority for a hearing under Section 8(2) could not take place - The embargo to confirm an order of provisional attachment in a given case where such order of provisional attachment has lost its force by efflux of 180 days, however cannot be an impediment for the Adjudicating Authority in hearing a matter in terms of section 8(1) and 8(2) of PMLA. The narrow construction of the stature as sought to be made by the petitioners, therefore cannot be accepted as it will lead to holding 180 days to be the time period for completing adjudication under Section 8(2) of PMLA.
The Adjudicating Authority does not become functus officio on expiry of the period of 180 days from the passing of the order of provisional attachment unless such order is confirmed under Section 8(3) in view of the provisions of Section 5(3) of the PMLA, the Adjudicating Authority in the instant case, is, free to proceed with the Complaint Case being Complaint no. 1262 of 2020 till the Sec. 8(2) stage i.e., to give a finding whether the property is involved in money-laundering or not.
The order dated 26th March, 2021 is accordingly clarified that hearing of Complaint No. 1262 of 2020 now pending before the Adjudicating Authority shall continue up to the stage indicated in Section 8(2) of PMLA but the confirmation provided under Section 8(3) of PMLA shall take place after the final hearing of the writ petition depending upon the final result - Application disposed off.
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2021 (4) TMI 1202
Scheduled offence - proceeds of crime - Indian citizen or not - offence under Section 420 IPC - DEPB Scheme - HELD THAT:- From a reading of Section 2(u) of the PML Act which defines the expression “proceeds of crime”, it is limpid that the profit derived or obtained must be a result of a criminal activity which relates to a schedule offence. Even if we take the allegations in the FIR in Cr.No.123 of 2008 as gospel truth and that Viswanathan (A.1) had committed a criminal activity of obtaining an Indian passport and has thereby committed an offence under Section 420 IPC, there is no scope for him to obtain or derive any property as a result of the said criminal activity. To put it more plainly, Viswanathan (A.1) represented to the passport authorities that he is an Indian citizen and obtained passport suppressing the fact that he is a Sri Lankan citizen.
The Directorate of Revenue Intelligence had found only irregularities in the exports and had not launched a criminal prosecution against the petitioners. Even the adjudication order that was passed by the Commissioner of Customs has been set aside in appeal by the CESTAT.
An illegal immigrant from Bangladesh enters Kolkata; obtains Aadhaar card and ration card from the authorities concerned by projecting himself as a local Muslim; carries on a lawful business and earns by working hard; pays income tax, GST, etc. and buys properties. Can the properties purchased by him be categorised as proceeds of crime on the ground that subsequently, an FIR is registered against him under Section 420 IPC, provisions of the Passports Act and Foreigners Act on the ground that he is not an Indian citizen? The answer to this question is an emphatic 'No', for, there should be a nexus between the criminal activity and the property acquired therefrom. In the absence of this nexus, the provisions of the PML Act cannot be invoked.
This criminal original petition stands allowed.
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Central Excise
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2021 (4) TMI 1200
CENVAT Credit - input services - Outward Transport Service which is used for transportation of goods from the factory of the appellant to their various depots - place of removal - HELD THAT:- There is no dispute that in the present case Outward Transportation Service was used for transportation of goods from the factory of the appellant to their own depot. In this case even as per section 4 of the Central Excise Act, the place of removal is the depot and not the factory gate. Moreover, the valuation of goods is on MRP basis. In such circumstances as per the plain reading of the Input Service definition Cenvat Credit on Outward Transportation Services is admissible up to the place of removal. In the present case depot being the place of removal, outward transportation service was used undisputedly up to the place of removal.
The appellant are entitled for the Cenvat Credit in respect of the Outward Transportation Service - Credit allowed - appeal allowed - decided in favor of appellant.
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2021 (4) TMI 1207
Maintainability of petition - availability of alternative remedy - order passed against a dead person - HELD THAT:- The contention that the order was passed against a dead person is incorrect, as the legal representative/son of the deceased participated in the enquiry proceedings and thereafter, the final order was passed by the Commissioner and a copy of the same was also communicated to the son of the deceased. This being the factum, the grounds raised in the writ petition deserve no merit for consideration.
It is clear that the petitioner has to exhaust the statutory remedy provided under the Act and this Court, under Article 226 of the Constitution of India, cannot adjudicate disputed facts, which are all to be adjudicated with reference to the documents as well as the evidences to be produced before the competent authority and before the Appellate Tribunal. In the absence of establishing such facts with reference to the records, High Court cannot place appreciation on those facts now raised by the petitioner in the present writ petition.
The petitioner has to exhaust the statutory remedy, if at all chosen to do so. This being the factum established, the petitioner is at liberty to approach the Tribunal under Section 86 of the Act by following the procedures contemplated - Petition disposed off.
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2021 (4) TMI 1184
Reversal of CENVAT Credit - goods are cleared to National Electricals Equipments Corporation, Jaipur who in turn uses these goods for manufacture of goods to be exported - exempt goods as per N/N. 43/2001-C.E. (N.T.) dated 26/06/2001 or not - HELD THAT:- Similar issues has been examines in various decisions of Tribunal and higher forums. In the case of COMMISSIONER OF CENTRAL EXCISE, LUDHIANA VERSUS AARTI STEELS LTD. [2004 (2) TMI 397 - CESTAT, NEW DELHI], alloy and non alloy steel wires cleared under CT-2 certificate to cycle tyre manufacturers who exported goods at Nil rate of duty where the MODVAT credit was allowed - The said decision of Tribunal was upheld by Hon’ble Supreme Court reported at COMMISSIONER VERSUS AARTI STEELS LTD. [2004 (1) TMI 725 - SC ORDER].
The clearances made by appellant under notification 43/2001-CE (N.T.) on the strength of Annexure 45 cannot be held as exempted clearances and therefore, no reversal of Cenvat Credit is necessary - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (4) TMI 1217
Classification of goods - rate of tax - plywood when it is sold locally to Railways within the State and if sold to Railways under CST on interstate sales - eligibility for concessional rate of sales tax - HELD THAT:- The facts regarding supply of plywoods to the Indian Railways are not disputed by the respondents. The petitioner produced evidence and established that they are the supplier of plywoods to the Indian Railways. Therefore, they are entitled for the concessional rate of Sales Tax as contemplated under Entry 112 of Part-B of the First Schedule, which reads as “Railway wagons, engines, coaches and parts thereof”.
The Explanation to Section 8 of the Act, contemplates that “for the purpose of this sub-section, a dealer shall be deemed to be a dealer liable to pay tax under the Sales Tax Law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law” - the provisions of the Act is clear that the rate of tax on sales in the course of interstate trade or commerce is enumerated under Section 8(1) of the Act. Under sub section (2) of Section 8 of the Act, once the concession for rate of tax is extended to the dealer, who supplied the materials to the Indian Railways, then the said benefit extended under Entry 112 of Part-B of the First Schedule is to be extended to another State supply also. In other words, there cannot be two sales tax, one for the supply inside the State and the other for another State supply. Once the concession is extended as far as the supply within the State is concerned, then the same benefit is to be extended in respect of interstate supply. Admittedly, supply of plywoods in WP 10623 of 2008 is supplied to the Indian Railways, more specifically, for construction of Railway coaches.
This Court is of an opinion that the concessional tax granted to the petitioner with reference to supply of plywoods, within the State is to be extended in respect of supply of plywoods to interstate to the Indian Railway - Petition allowed.
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2021 (4) TMI 1215
Levy of Sales Tax - works contract or not - conversion of corrugated box - addition made only on estimation without having any rational nexus with materials on record - HELD THAT:- A careful perusal of the agreement between the Petitioner and IDL would show that what was entrusted by IDL to the Petitioner was in sum and substance, a job work. The quality of paper and the material to be supplied for making of the corrugated boxes was pre-determined. M/s. IDL also determined the dimensions of the boxes. The minutes of the meeting make it clear that after conversion of the material into corrugated boxes, they had to be sent back to M/s. IDL. What was paid for the job work was the conversion rate of ₹ 5.25 per box. Freight was borne separately by M/s. IDL. At no point in time was there any transfer of property in the boxes to the Petitioner.
After referring to the decisions in THE ASSISTANT SALES TAX OFFICER AND OTHERS VERSUS BC. KAME [1976 (12) TMI 164 - SUPREME COURT]; THE STATE OF PUNJAB VERSUS ASSOCIATED HOTELS OF INDIA LTD. [1972 (1) TMI 80 - SUPREME COURT]; HINDUSTAN AERONAUTICS LTD. VERSUS STATE OF KARNATAKA [1983 (12) TMI 259 - SUPREME COURT]; HINDUSTAN AERONAUTICS LIMITED VERSUS STATE OF ORISSA [1983 (12) TMI 260 - SUPREME COURT] and STATE OF TAMIL NADU VERSUS ANANDAM VISWANATHAN [1989 (1) TMI 359 - SUPREME COURT], this Court came to the conclusion that the very wording of the agreement made it clear that it was a job work. It was concluded that the photo identity cards supplied to the CEO are not commercial commodities and the same cannot be used or sold by the Petitioner to any other person. The material purchased and utilized in preparation of photo identity cards was very negligible and incidental.
The agreement between the Petitioner and M/s. IDL does not answer the characteristics of a works contract as defined in Section 2 (jj) of the OST act. There is also no element of sale as defined under Section 2 (g) thereof. The dominant object is indeed skill and labour to convert paper and board into corrugated cartons or boxes - Decided in favor of assessee.
Appeal allowed.
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Indian Laws
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2021 (4) TMI 1236
Dishonor of Cheque - insufficiency of funds - opportunity of hearing provided or not - Section 138 of NI Act - HELD THAT:- Petitioner filed the said petition dated 17/11/2015 in the trial court after the petitioner was examined under Section 313 Cr.P.C. and the case was listed for arguments. The trial court vide order dated 26/11/2015 disposed the petition holding that adequate opportunity was provided to the petitioner to rebut the case by adducing his own evidence and it would not be proper to turn back the clock without any justifiable ground. Section 243 Cr.P.C. provides that if the accused in a criminal trial who has entered upon his defence applies to the court for the purpose of examination or cross examination, or the production of any document or other thing, the magistrate shall issue such process unless he considers that such application should be refused on the ground that it is made for the purpose of vexation or delay or defeating the ends of justice. The court is required to record the reasons in writing while rejecting such application.
Admittedly the petitioners were jointly carrying on partnership business of manufacturing and selling of bricks in the name of “MAA Brick Society” and they used to operate the accounts of their company in their joint names. It has been proved beyond doubt that the complainant supplied coal to them for which they had an existing liability to the complainant and in the discharge of such liability the petitioners jointly issued the impugned cheque to the complainant which was later dishonoured for insufficiency of fund. The courts below have returned the findings of guilt of the petitioners on proper appreciation of evidence and held the petitioners guilty and sentenced them appropriately.
Revision dismissed.
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2021 (4) TMI 1216
Grant of regular bail - Smuggling - Heroine - Cocaine - Methaempthaine - Service of valid notice or not - HELD THAT:- Notice U/s 50 of the NDPS Act is a defective notice, it requires deep scrutiny of the statement of the witnesses and the documents and at the stage of bail, it would not be proper to minutely analyze the statement of the prosecution witnesses and the documents and in depth analysis of the case of the prosecution is not to be undertaken as it might prejudice the case of either of the parties. The question as to whether the petitioner and his co-accused were having common intention is also to be seen during the course of trial.
The allegations against the petitioner are that of dealing with the commercial quantity of the contraband and therefore, rigors of Section 37 NDPS Act are applicable. In the present case, there is nothing before this Court to believe that the petitioner/accused is not guilty or he would not commit the offence once granted bail. It is also pertinent to mention that the statements recorded U/s 67 of the NDPS Act are not exculpatory - no ground for bail is made out, the bail application is, therefore, dismissed.
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