TMI Tax Updates - e-Newsletter
May 3, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Refund of unutilized Input Tax Credit (ITC) - Export of services or not - the services rendered by the petitioner are not intermediary services - Recipient of the services in the present case is admittedly outside India and the professional services rendered by the petitioner would fall within the scope of definition of export of services under Section 2(6) of the IGST Act. - HC
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GST:
Validity of Advance Ruling application obtained - matter was alreay pending before DG GST Intelligence - suppression of material facts or not - Taxpayer has not brought the issue to the notice of the Authority for Advance Ruling at any stage of the Advance Ruling proceedings including at the time of the personal hearing - The Order is declared as void ab initio as per section 104(1) of CGST/TGST Act, 2017 - AAR
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GST:
Classification of supply - Motor vehicles - supply of Ambulances (Mobile Common Service Centers) for providing health services - The transaction of supply of ambulances to government of Tripura is an interstate supply which attracts tax under IGST head. The rate of tax applicable to the commodity under HSN 8703 is 28% for all transactions after 30.09.2021. It is very clear that this transaction does not fit to the description of vehicle under the tariff heading 8702 as the vehicle, supplied by applicant to government of Tripura, is a seven seater and is meant to transport less than ten or more persons, including the driver, as stated by the applicant. - AAR
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Income Tax:
Income from house property or income from other sources - receipt of compensation for non-occupancy - when any receipt falls under a specific Head, but the same cannot be computed under that head, then it cannot be assessed as income of the assessee under any other head - we hold that the amount is not taxable as income from other sources - AT
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Income Tax:
Penalty u/s 271E and 271D - cash deposits and repayment of deposits - assessee is a co-operative society involved in the activity of granting thrift and credit facilities to its members who are the taxi operators - none of the deposits or repayments have been doubted or found to be ingenuine - assessee has discharged the onus which lay upon it to establish the existence of reasonable cause for violation of the provision of section 269SS and 269T - No penalty - AT
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Income Tax:
Disallowance u/s 40A(3) - when the percentage of income is determined for the assessee while rejecting the books of accounts then that itself covers all other expenses disallowances and no further disallowance in such a case is called for u/s 40A(3) of the Act again separately - AT
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Income Tax:
Non-deduction of TDS - When the assessee has submitted necessary declaration in Form Nos.15G/15H for non-deduction of TDS and also for reversal of TDS deduction on interest payment, then, in our considered view, the AO ought to have accepted the claim of the assessee, because, as per law, if relevant declaration in Form Nos.15G/15H is submitted before the end of the relevant financial year, then, the question of deduction of TDS on interest payments does not arise. - AO to verify the claim of assessee - AT
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Income Tax:
Penalty levied u/s 271B - failure to file the tax audit report within due date - when the Tax Audit Report was made available to the Assessing Officer before completion of assessment proceedings, then for venial technical breach without any mala fide intention, penalty cannot be levied u/s 271B - AT
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Customs:
Misconduct - Disciplinary Action against the erstwhile Deputy Commissioner of Customs, Central Excise - DEPB Scheme - Imposing penalty of withholding of 30% of monthly pension for the period of 5 years - Since the Adjudication Proceedings (in the main case) were dropped after passing of the penalty order, the said circumstance has not been considered while imposing penalty on petitioner. - matter restored back - HC
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Customs:
Valuation of vessel - rejection of declared value - price variation clause - Since the new MoA dated 22.11.2012 has not been found to be incorrect or fabricated and there was variation in the specification of the goods imported, the Revenue cannot reject the price mentioned in the MoA dated 22.11.2012. - AT
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Customs:
Redemption Fine - Since the goods imported were in the nature of offending goods having been mis-described in the Bill of Entry, the action in rem is still required to be legally scrutinised. It is a fact that, while imposing redemption fine no market inquiry to arrive at the correct quantum was done. The higher side of the imposable redemption fine as per Section 125 of the Customs Act, 1962 is dependent upon such determination. - AT
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Customs:
Import of Aircraft - Benefit of exemption - the Civil Aviation Authority has not treated the operation of the aircraft for the period 05.01.2008 to 04.04.2008 and May to August 2008 as being private aircraft and in fact issued permit on 04.04.2008 for Non- Scheduled operations in terms of recommendations dated 23.03.2007 and renewed such permits from time to time till date supports the case of the appellant that the aircraft was used for non-scheduled operations for hire or reward. - AT
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Customs:
Change in Classification of goods (different from one proposed in SCN) - The claim of the Revenue that the adjudicating authority can classify the goods in a Customs Tariff Heading different from the one proposed in show cause notice, cannot be accepted - AT
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Service Tax:
Extended period of limitation - the reason of fraud or collusion or suppression of facts, etc., “with intent to evade payment of service tax” is a necessary ingredient. However, the Revenue has only stated suppression of facts with an intention to evade payment of Service Tax when, clearly, the facts and figures were only collected from the books / ST-3 returns of the appellant - Demand set aside - AT
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Service Tax:
Levy of Penalty - It is a fit case of waiver of penalties proposed under Section 76, 77 & 78 of the Act ibid, in terms of Section 80 of the Finance Act. 1994 - it is found that being a Government defence organisation no malafide intention can be attributed to the omissions which have occurred on the part of the noticee. - AT
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Central Excise:
CENVAT Credit - Invalidation of advance authorization - As per Cenvat Credit Rules, there is no bar for the input received by an assessee that such input is otherwise dutiable or not for availing Cenvat credit. The only condition attached to the Rules is that the input received by the assessee shall be duty paid. Therefore, for this reason also Cenvat credit at the appellant’s end cannot be denied. - AT
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VAT:
Validity of assessment order - concealment of Gross Turn Over (GTO) - Section 35(7) contemplates of such a proceeding against an assessee regarding whom the Assessing Officer is satisfied that he has resorted to selling of goods at a higher price than shown in his invoices - the proviso to Section 35 (7) of the JVAT Act firstly stipulates that the reasons must be recorded by the prescribed authority for initiating the proceeding and secondly, the principles of natural justice should be followed. - Though in the instant case the second ingredient of the proviso has been fulfilled; however, there is no document to suggest that the assessing officer has recorded his reason before initiating the proceeding. - HC
Articles
Notifications
News
Case Laws:
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GST
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2023 (5) TMI 75
Cancellation of GST registration of petitioner - without considering the reply, the final order (impugned order) came to be passed - principles of natural justice - HELD THAT:- The Petitioner should be given an opportunity before the final order of cancellation of registration is made. However, we do not intend to restore registration till the final order is passed and would continue suspension as per show cause notice. The impugned order dated 15 September 2022 is quashed and set aside. The show cause notice dated 5 September 2022 stands restored to the file of Respondent No. 2 along with directions for suspension of registration - petition disposed off.
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2023 (5) TMI 74
Seeking rectification in GSTR-1 - respondents-GST Department did not take any action on the request of the petitioner-firm - HELD THAT:- It is opined that when the petitioner-firm has filed representation with a prayer for rectification in the GSTR -1, the respondent No.3 may considered the same. This writ petition is disposed of with a direction to the respondent No.3 to consider and decide the representation (Annexure-1) filed by the petitioner-firm on 01.10.2022 strictly in accordance with law within a period of six weeks from today.
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2023 (5) TMI 73
Refund of unutilized Input Tax Credit (ITC) - Export of services or not - petitioner is an Indian branch of Ernst Young Ltd. (EYLUK) and is providing professional services in India on behalf of EYLUK - intermediary service or not - period April, 2020 to March, 2021 - HELD THAT:- This Court in a recent judgment M/S. ERNST AND YOUNG LIMITED VERSUS ADDITIONAL COMMISSIONER, CGST APPEALS -II, DELHI AND ANR. [ 2023 (3) TMI 1117 - DELHI HIGH COURT ] filed by the present petitioner in relation to the same services for the period December, 2017 to March, 2020, had held that There is no dispute that the recipient of Services that is EY Entities are located outside India. Thus, indisputably, the Services provided by the petitioner would fall within the scope of the definition of the term export of service under Section 2(6) of the IGST Act. It is not disputed that the decision rendered by this Court is fully applicable to the facts of the present case. This Court while considering ERNST AND YOUNG LIMITED, has categorically held that in terms of Section 13(8) of the IGST Act the services rendered by the petitioner are not intermediary services and the same are required to be determined on the basis of the location of the recipient of the services. Recipient of the services in the present case is admittedly outside India and the professional services rendered by the petitioner would fall within the scope of definition of export of services under Section 2(6) of the IGST Act. The impugned order is set aside - petition allowed.
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2023 (5) TMI 72
Validity of Advance Ruling application obtained - matter was alreay pending before DG GST Intelligence - suppression of material facts or not - HELD THAT:- Section 98(2) of the CGST/TGST Act, 2017 states that Authority for Advance Ruling shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act. Therefore the application was liable to be rejected under Section 98(2) of the CGST/TGST Act, 2017. Taxpayer has not brought the issue to the notice of the Authority for Advance Ruling at any stage of the Advance Ruling proceedings including at the time of the personal hearing dated 28.06.2022. Therefore the applicant has obtained the Advance Ruling by suppressing the facts and hence the Order issued is liable to be declared as void ab initio. The Order is declared as void ab initio as per section 104(1) of CGST/TGST Act, 2017 and thereupon all the provisions of CGST/TGST Act, 2017 or the rules made thereunder shall apply to the applicant as if such advance ruling had never been made.
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2023 (5) TMI 71
Classification of supply - Motor vehicles - supply of Ambulances (Mobile Common Service Centers) for providing health services - supply of goods or services or both - rate of GST - determination of liability to pay tax on goods or services or both - admissibility of input tax credit on purchase of vehicles and other components - HELD THAT:- The scope of supply of Motor vehicles includes sale, transfer, barter, exchange, renting, disposal or leasing of such vehicles. The applicant is involved in supply of Motor vehicles in the form of Ambulances (Mobile Common Service Centers) to Government of Tripura. Therefore the applicant is in the business of further supply of Motor vehicles which he purchases - As per Section 17(5)(a) of CGST/TGST Act 2017 the ITC on purchase of such vehicles which are meant for further supply of such motor vehicles is not a blocked credit as the definition of supply includes sale, transfer, barter, exchange, renting, disposal or leasing of such vehicles. The transaction of supply of ambulances to government of Tripura is an interstate supply which attracts tax under IGST head. The rate of tax applicable to the commodity under HSN 8703 is 28% for all transactions after 30.09.2021. It is very clear that this transaction does not fit to the description of vehicle under the tariff heading 8702 as the vehicle, supplied by applicant to government of Tripura, is a seven seater and is meant to transport less than ten or more persons, including the driver, as stated by the applicant. Further they are eligible for taking input tax credit on the tax charged on any supply of goods or services which are used or intended to be used in the course of furtherance of this business provided the applicant fulfils the conditions for availment of ITC as detailed in provisions of Section 16 of CGST/TGST Act 2017 - The applicant shall utilize the input tax credit in the electronic credit ledger as prescribed under Section 49 of the CGST Act, 2017 read with Rule 88A of the CGST Rules pertaining to order of utilization of input tax credit.
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Income Tax
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2023 (5) TMI 70
Assessment u/s 153A - incriminating material found during the search or not? - HELD THAT:- This issue has been decided by the Ld. CIT(A) against the assessee. Since the findings of the Ld. CIT(A) remain uncontroverted by the assessee, we decline to interfere and endorse the findings of the Ld. CIT(A). This ground is rejected. Estimation of income - bogus purchases - inflation of purchase price so as to suppress true profits - HELD THAT:- Here are evidences to support the contention of the AR that the corresponding material was received and consumed and the corresponding job-work was job done. As such AO has not adversely commented on this aspect. In fact, the AO has not found any fault with the books of accounts which are audited. It is also an important fact that GP ratio of this assessment year works out to be 15.28% whereas much lower GP ratio (12.56%) has been accepted in the A.Y. 2012-13. Not having doubted the consumption/sales, the motive behind obtaining bogus bills thus, appears to be inflation of purchase price so as to suppress true profits.There is nothing in the order of the Ld. CIT(A) requiring our intervention. Accordingly, we reject these grounds of the assessee in all the AYs involved.
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2023 (5) TMI 69
Estimation of income - bogus purchases - HELD THAT:- As following the order passed in JK Surface Coatings [ 2021 (10) TMI 1323 - BOMBAY HIGH COURT ] we are of the considered view that in the light of the gross profit earned by the assessee in the earlier years on the basis of which profit element was fixed at 6.5% of the alleged bogus purchases, we direct the AO to charge the assessee at the gross profit rate @ 6.5% on bogus purchases - Appeal filed by the assessee is partly allowed.
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2023 (5) TMI 68
Disallowance in respect of provision for bad-debts - revenue argued that the standard assets are those assets which are adequately serviced by the borrowers; those assets can t be said to be bad debts . Therefore, the assessee has wrongly characterized them as bad debt - HELD THAT:- As the provision made by a banking company in respect of standard assets, as per RBI guidelines, is very much allowed as deduction u/s 36(1)(viia). Ld. DR is not able to point out any contrary decision on this issue. Though we agree in principle that the provision made for standard assets is also eligible for deduction yet we are of the view that there is a strong necessity to verify whether the claim made by assessee is within the permissible limit prescribed in section 36(1)(viia) or not; therefore it would be appropriate to refer this issue back to the file of Ld. AO for the limit purpose of such verification. AO will verify the permissible limit and allow deduction within such limit. We order accordingly. We also direct the assessee to provide necessary information/calculation to Ld. AO to enable him to make such verification. These grounds are, thus, allowed in terms indicated here. Disallowance in respect of various provisions claimed by assessee - Appropriation of profits - Whether CIT(A) has erred in deleting the impugned disallowance ignoring the fact that they were provisions and not real expenditure; therefore the same were allowable to the extent of 20% of profit of business in terms of section 36(1)(viii) - HELD THAT:- The provisions/transfer to funds are allowable as deduction u/s 37(1) only if at least one of the conditions exists i.e. (i) there is an over-riding statute by which the amounts transferred to funds do not remain with / under the control of assessee; or (ii) if the assessee has actually spent moneys for the relevant purposes during the previous year. In the present case, the provisions of section 43A of MP/CG co-operative Societies Act relied upon by Ld. AR talks of appropriate of profits only. There is no material available on record by which it can be verified that either of the two conditions, as narrated earlier, is satisfied. During the course of hearing, we tried to ascertain the position of each individual item comprised from available documents in Paper-Book but could not reach to any conclusion. Therefore, the matter requires a complete verification at the stage of AO. Being so, we are of the view that this issue should be remanded to the file of Ld. AO who will make necessary verification with regard to existence of the conditions, after calling for the relevant details from assessee and thereafter take a final call in the matter. This ground is thus allowed in terms indicated here.
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2023 (5) TMI 67
Estimation of agricultural income - allowing part income as agricultural rest as income from other sources - demand was raised against the assessee pursuant to the order passed u/s 154 and a bona fide error has occurred while furnishing appeal form no.35 before the CIT(A) which were a rectifiable mistake - HELD THAT:- The interest of justice will be well-served if the assessee is given an opportunity to present her case before the CIT(A). It is directed that the ld. CIT(A) will give opportunity to the assessee to rectify the mistake in furnishing Form no.35 and thereby considering the appeal of the assessee if the same has been preferred against the assessment order dated 20.12.2019 and thereafter the ld. CIT(A) will give proper opportunity to the assessee to furnish the necessary documents and to present her case and thereafter to decide the appeal of the assessee in accordance with law.
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2023 (5) TMI 66
Income from house property or income from other sources - correct head of income - receipt of compensation for non-occupancy - HELD THAT:- The facts of the present case and facts in the case of Datar Co., [ 1999 (6) TMI 66 - ITAT PUNE] and Rama Leasing Company [ 2007 (10) TMI 440 - ITAT MUMBAI] are identical. In all these cases assessee had received compensation for pre-mature termination of the lease. ITAT has held that the compensation received by the assessee assumes the nature of income from House Property; however, it is not chargeable to tax as only Annual value of the property can be assessed under the head Income from House property. In the case under consideration the Compensation and security deposit forfeiture have roots in the Leave and License Agreement pertaining to the impugned property. The Compensation and security deposit forfeiture are emanating from the Leave License Agreement and they are specifically mentioned in the said Leave License Agreement. As observed by the ITAT in the case of Datar Co [ 1999 (6) TMI 66 - ITAT PUNE] the compensation partakes the character of Income from House Property. Therefore, when any receipt falls under a specific Head, but the same cannot be computed under that head, then it cannot be assessed as income of the assessee under any other head - we hold that the amount is not taxable as income from other sources. Accordingly, the AO is directed to delete the said amount. Decided in favour of assessee.
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2023 (5) TMI 65
Levy of late fee u/s 234E - late filling of TDS return - divergent views of different High Courts - HELD THAT:- When two different views of Court are available on an issue, then the view which favors the Assessee or the judgment which favours the Assessee should be followed. Admittedly there is no contrary judgment of the jurisdictional High Court against the Assessee on the issue under consideration hence, by following the judgment of Fatheraj Singhvi Ors. vs. Union of India [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] , we are of the considered view that late fee can not be levied u/s 234E of the Act for late filling of TDS Return which pertains to the period prior to 01-06-2015 and consequently inclined to delete the late fees of Rs. 32800/- levied by the AO and affirmed by the ld. CIT(A). Appeal filed by the Assessee stands allowed.
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2023 (5) TMI 64
TP Adjustment - reimbursement of expenditure - assessee recovered the salary and travel related expenses incurred on certain employees working for Ocimum Biosolutions (Inc) which has been reimbursed on cost to cost basis - TPO, opined that no independent party would render such services without any markup, thus proceeded to make the addition on an estimate of 10% - HELD THAT:- We are of the considered opinion that in case of reimbursement at cost of the expenditure on behalf of the AE, which does not form part of the expenditure claim as operating cost of the assessee, shall not be considered as assessee s business receipt. Whether or not this particular reimbursement amount was not routed through P L Account, but it remained only a balance sheet entry is a verifiable fact. If it is so, no addition could be made on the assumption that generally, the AE will not undertake such an exercise without any markup. We, therefore, direct AO to verify the facts and if this amount is not routed through the P L Account, and remained only a balance sheet entry, then the addition shall be deleted. Business advances - We agree with the DR and in the interest of justice, we set aside this issue to the file of the learned Assessing Officer/learned TPO for verification whether these trade advances are the result of the regular business transactions of the assessee with its AEs on account of any business expediency. We accordingly direct the learned Assessing Officer/learned TPO to cause such verification and if it is found to be so, then, no adjustment is warranted and the same has to be deleted. For this purpose, the issue under grounds No. 14 to 23 is restored to the file of the learned Assessing Officer/learned TPO. Corporate guarantee - As respectfully following the view taken in the case of Glenmark Pharmaceuticals Ltd. [ 2013 (11) TMI 1583 - ITAT MUMBAI] we deem it just and proper to accept the ALP of corporate guarantee at 0.53%. we accordingly directing the learned Assessing Officer/learned TPO to adopt the same. Grounds answered accordingly. Disallowance of interest on TDS - As brought to our notice that in the decision in Taksheel Solutions Ltd [ 2016 (7) TMI 840 - ITAT HYDERABAD] has taken a view that interest on TDS is not interest paid on income tax per se, and the same cannot be disallowed. Respectfully following the same, we direct the learned Assessing Officer/learned TPO to delete the same.
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2023 (5) TMI 63
Penalty u/s 271E and 271D - cash deposits and repayment of deposits were found to be in contravention of section 269SS and 269T - penalty after the expiry of limitation period - whether or not penalty is barred by limitation within the meaning of section 275(1)(c) - HELD THAT:- We hold that the initial first SCN dated 04.05.2016 and other notices issued before 29.11.2016 by the Ld. JCITs were legally valid and penalty order should have been passed within the specified date upto which the period of limitation as per the provisions of section 275(1)(c) subsisted. This has not been done. Initiation of penalty proceedings by issuing fresh SCN dated 29.11.2016 and consequent levy of impugned penalty under section 271D and 271E are not in accordance with law having been passed beyond the time limit described under section 275(1)(c) of the Act. We, therefore, hold that the impugned penalty imposed under section 271D and 271E of the Act is not sustainable and both the impugned penalty orders passed under section 271D and 271E of the Act on 24.04.2017 are liable to be quashed. Reasonable cause for violation of the provision of section 269SS and 269T - As assessee has discharged the onus which lay upon it to establish the existence of reasonable cause for violation of the provision of section 269SS and 269T of the Act. In our opinion, the explanation offered by the assessee before the Ld. JCIT/CIT(A) was reasonable but was discarded merely because they proceeded on the premise that breach of condition provided under section 269SS and 269T shall necessarily lead to penal consequences which understanding in our humble opinion is not in accordance with law. We, therefore, cancel the penalty levied under section 271D and 271E. Appeals filed by the assessee are allowed.
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2023 (5) TMI 62
Bogus loss from currency derivative transaction - CIT-A deleted the disallowance - HELD THAT:- We observe that while adjudicating in the favour of assessee the Ld. CIT(A) has erred in completely ignoring the surrounding circumstances and making no observation whatsoever in respect of the fact that assessee incurred a huge loss of Rs. 7.06 crores on the MCX Stock Exchange and that too within a period of 30 days, the fact that assessee incurred such substantial loss through dealings with a broker situated in Calcutta having no office in Ahmedabad, CIT(A) erred in ignoring the fact that the enquiries by investigation was revealed that broker was engaged in providing accommodation entries and in the list of beneficiaries, the name of assessee was appearing as one of the persons receiving accommodation entries etc. Therefore,CIT(A) has failed to take into cognizance the aforesaid glaring discrepancies raised by the AO as part of the assessment order, while affording relief to the assessee. CIT(A) has failed in making any observation with respect to the aforesaid issues pointed out by the Ld. AO and hence the Ld. CIT(A) has not analyzed the facts and circumstances of the case comprehensively, while adjudicating the issue in favour of the assessee.T he issue is being set-aside to the file of the Ld. CIT(A) to pass a fresh order in light of the observation/discrepancies pointed out by the Ld. AO in the assessment order. In result, the appeal is set-aside to the file of the CIT(A) with the above observations. Appeal of the Revenue is allowed for statistical purposes.
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2023 (5) TMI 61
Disallowance u/s 40A(3) - income is estimated as a percentage of turnover - income of the assessee has been determined on the percentage of turnover by the CIT(A) and the books of accounts have been rejected u/s 145 - HELD THAT:- As when the income is determined through percentage of the turnover rejecting the books of accounts, the A.O becomes powerless to again go through the books of accounts and make separate addition u/s 40A(3) of the Act. Hon ble Madhya Pradesh High Court [ 2003 (3) TMI 10 - MADHYA PRADESH HIGH COURT] has held that when the income is determined by the A.O applying the net profit rate no further disallowance u/s 40A(3) of the Act is applicable. Reverting to the facts of the present case, ld. CIT(A) had arrived at percentage of income @ 5% of the genuine turnover and rejected the books of accounts of the assessee u/s 145 of the Act. This determination of income is not contested by the assessee and is accepted. Hence when the percentage of income is determined for the assessee while rejecting the books of accounts then that itself covers all other expenses disallowances and no further disallowance in such a case is called for u/s 40A(3) of the Act again separately as has already been held in several judicial aforestated pronouncements. In view thereof, we set aside the findings of the ld. CIT(A) on this issue and direct the A.O to delete the addition u/s 40A(3) of the Act from the hands of the assessee. CIT(A) considering the commission received @ 1% of the sales to BBIL - HELD THAT:- When the Tribunal accepted the percentage of commission at 0.15% disclosed by the assessee, it was held that this finding is plausible one and it cannot be said that rate of commission was arrived at in an arbitrary manner. We observe that the facts are absolutely identical and it is the case of providing accommodation entries to entry seekers . In such circumstances, the Hon ble High Court in Alag Securities Pvt. Ltd [ 2020 (6) TMI 304 - BOMBAY HIGH COURT] has upheld the view taken by the Tribunal in that case upholding the receipt of commission at 0.15%. Thus we set aside the findings of the ld. CIT(A) on this issue and direct the A.O to reduce the rate of commission received on bogus sales turnover from 1% to 0.15%. Ground No. 3 of assessee s appeal is partly allowed.
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2023 (5) TMI 60
Penalty levied u/s 271C - non deduction of TDS on the payments made to HUDA - assessee contended that penalty notice issued does not specify the section under which the assessee should have deducted tax at source and hence, proceedings arising from the show-cause notice as well as order of imposing penalty is liable to be quashed - HELD THAT:- We observed that identical issue of whether penalty u/s 271C of the Act can be levied for non deduction of TDS on the payments made to HUDA by the assessee came up before this Tribunal in the case of Vipul Ltd [ 2022 (8) TMI 34 - ITAT DELHI] and also in the case of Sirur Developers Pvt. Ltd [ 2022 (9) TMI 1450 - ITAT DELHI] as held levy of penalty u/s 271C of the Act cannot be sustained. Thus we delete the penalty levied u/s 271C of the Act. Grounds raised by the assessee are allowed.
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2023 (5) TMI 59
Characterization of receipt - receipts from the builder for alternate accommodation - receipt shown as a capital accounts receipt from the builders - AO rejected the submissions of the assessee and held that it is not a capital receipt and clearly a revenue receipt in the form of alternate accommodation rent provided by the builder for development of his residences - also assessee has not utilized any amount of its receipt for his alternate accommodation, he treated the above amount as income of the assessee and taxed under the head income from other sources . HELD THAT:- It is fact on record that assessee has received from the builder for alternate accommodation. However, assessee has not utilized these funds for any accommodation. However, he adjusted and lived with his parents. It clearly indicates that even though assessee has not utilized the rent received for his accommodation, however, he has faced hardship by vacating the flat for redevelopment and also adjusted himself during the period. As relying on case of Smt Delilah Raj Mansukhani [ 2021 (3) TMI 252 - ITAT MUMBAI ] we also hold that the above receipt of compensation for hardship is in the nature of capital receipt. Accordingly, the addition made by the Assessing Officer is deleted. Ground raised by the assessee is allowed.
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2023 (5) TMI 58
Short deduction of TDS on interest payment - reversal of TDS deducted on submission of relevant Forms - assessee submitted that the bank has deducted TDS wherever interest payment exceeds prescribed limit, but as and when parties submitted Form Nos.15G/15H, then, TDS deduction has been reversed- as per AO once TDS has been deducted, it cannot be reversed or retained, but it can only be remitted to the account of the central government - HELD THAT:- It is a common practice in banking sector that wherever senior citizens submit declaration in Form Nos.15G/15H, TDS is not deducted on interest payments even if such payment is in excess of threshold limit. In this case, there is no dispute with regard to the fact that the assessee has deducted TDS wherever interest payments exceed threshold limit, but reversed such TDS deduction on interest payment as and when the parties submit Form Nos.15G/15H within the same financial year. When the assessee has submitted necessary declaration in Form Nos.15G/15H for non-deduction of TDS and also for reversal of TDS deduction on interest payment, then, in our considered view, the AO ought to have accepted the claim of the assessee, because, as per law, if relevant declaration in Form Nos.15G/15H is submitted before the end of the relevant financial year, then, the question of deduction of TDS on interest payments does not arise. AO is required to re-examine the claim of the assessee in light of relevant Forms submitted by the assessee. Thus, we set aside the order of the Ld.CIT(A) and restore the issue back to the file of the AO and direct the AO to re-verify the claim of the assessee and decide the issue in accordance with law.
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2023 (5) TMI 57
Unexplained cash deposited in bank account - compensation on account of acquisition of land by the Government - assessee contended that his only plea was that since he was not offered adequate opportunity of hearing both before the AO and the Ld.CIT(A), and could not make out his case suitably before them - HELD THAT:- Assessee s consistent stand has been that the cash found deposited pertained to the amount which he received from the Government as compensation on account of acquisition of land under Land Acquisition Act which he withdrew and redeposited in his bank account over a period of time so as to keep cash handy for purchase of new land. On account of the assessee having been unable to avail opportunity of hearing before both the AO and the ld.CIT(A) for bonafide reasons, as noted above, in the interest of justice, we agree with the ld.counsel for the assessee that the assessee be granted further opportunity of hearing so as to plead and give due explanation duly substantiated with evidence for the source of cash deposited in his bank account. Accordingly, restore the issue back to the file of the AO for considering of the issue afresh after providing due opportunity of hearing to the assessee in accordance with law. Grounds of appeal of the assessee are allowed for statistical purposes.
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2023 (5) TMI 56
Penalty levied u/s 271B - assessee has not filed the tax audit report within due date - Assessee assigning reasons for the delay that the appointment of Statutory Auditor was not in the control of the assessee and the C AG has appointed the Statutory Auditor on 10.08.2017 and the Statutory Auditor accepted the audit by 27.03.2019 - HELD THAT:- Considering submissions that the audit report under section 44AB of the Act were furnished during the course of assessment proceedings under section 143(3) of the Act, which was also considered by the Assessing Officer before concluding the assessment, thus, we are of the considered opinion that when the Tax Audit Report was made available to the Assessing Officer before completion of assessment proceedings, then for venial technical breach without any mala fide intention, penalty cannot be levied under section 271B of the Act. See case of Balaji Logistics [ 2022 (9) TMI 1432 - ITAT CHENNAI ] Thus it is not a fit case for the levy of penalty under section 271B of the Act and accordingly, the penalty levied stands deleted. Decided in favour of assessee.
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2023 (5) TMI 55
Accrual of income - amount received as advances and retained by the assessee was not refunded to the companies - HELD THAT:- CIT(A) has stated that the profits retained from SRM and Good Earth by the assessee has already been considered while computing the profits from the four projects in the above given assessment years. Accordingly, the ld. CIT(A) has observed that there is no need to retain the above addition separately. Thus, we find no infirmity in the order passed by the ld. CIT(A) on this issue. Accordingly, the ground raised by the Revenue is dismissed. Confirmation of net profit @ 30% being sale of lands at Chavadi - We find that the above estimation of net profit is on higher side. Thus, in the absence of any comparables, we are of the considered opinion that the estimation of net profit @ 15% on sale of the plots would be reasonable. Accordingly, we set aside the order of the ld. CIT(A) on this issue and direct the AO to estimate the net profit @15% towards sale of plots. Thus, the ground raised by the assessee is partly allowed.
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2023 (5) TMI 54
Rectification of mistake u/s 154 - levying interest u/s 234A - HELD THAT:- Assessee had filed her former return u/s. 139 (4) of the Act without payment of self assessment tax qua the admitted income - Revenue could hardly dispute that sec.139(9) of the Act is a specific provision wherein an AO could held a return as a defective one after following the due procedure as per Explanation (c) (i) thereto which treats a return filed by an assessee to be defective only if there is self-assessment tax claimed to have been paid and not otherwise. It is in this factual backdrop that the tribunal s learned coordinate bench in Meters and Instruments Pvt. Ltd [ 1991 (9) TMI 123 - ITAT DELHI-D ] has carved out a clear-cut distinction between cases where an assessee claims payment of tax and otherwise. We are of the opinion that the assessee s above former return dated 08.02.2013 could not have been treated as a defective one so as to trigger applicability of sec.234A interest herein levied in sec.154 rectification proceedings in issue. Both the learned lower authorities action to this effect stands reversed therefore. The assessee s arguments stands accepted in very terms - Assessee appeal allowed.
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2023 (5) TMI 53
Revision u/s 263 - Disallowance u/s. 40(a)(ia) - scope of amendment made to section 40(a)(ia) - amount of tax deducted at source is deposited before the due date for filing the return of income - HELD THAT:- As decided in Calcutta Export Co case [ 2018 (5) TMI 356 - SUPREME COURT] clearly laid down the ratio that the amendment to section 40(a)(ia) with respect allowability of the expenses on which tax is deducted incurred during the year that is remitted to Government account on or before the due date for filing the return of income u/s.139(1) being curative in nature is retrospective. In assessee s case the tax deducted during the period from 1.10.2008 to 28.2.2009 was credited to the Govt. account during May, 2009 to July, 2009 i.e. before the due date for filing the return of income u/s.139(1). Therefore respectfully following the ratio laid down by the Apex Court, we hold that no disallowance is warranted in assessee s case for the impugned amount and the disallowance made by the AO is deleted. Appeal by the assessee is allowed.
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Customs
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2023 (5) TMI 52
Misconduct - Disciplinary Action against the erstwhile Deputy Commissioner of Customs, Central Excise - DEPB Scheme - Imposing penalty of withholding of 30% of monthly pension for the period of 5 years - failure to perform supervisory duties - HELD THAT:- Petitioner at the relevant time was working in the capacity as Assistant Commissioner of Central Excise and the Customs establishment at Miraj was under his jurisdiction. True it is that being an Assistant Commissioner of Central Excise, petitioner was not supposed to personally examine the exported goods. He would be assisted in this regard by the Superintendent of Central Excise and Inspector of Central Excise posted under him. However, in the present case petitioner, being posted in a senior position as Assistant Commissioner, ought to have smelt a rat in the unusual methodology adopted by the exporter in procuring the goods meant for export at Mumbai and taking the circuitous route of carrying them to Miraj for examination by Customs Authorities. After examination, the goods were transported back to Mumbai for being exported. If the exporter weas taking such a circuitous route thereby spending extra time, energy and money for examination of goods at Miraj, petitioner ought to have been more cautious and ought to have performed his supervisory duties by either himself examining some of the samples and/or sending them to experts/labs for examination for determination of market value. Therefore the finding of guilt recorded in disciplinary proceedings would not suffer from the vice of perversity. Since the Adjudication Proceedings were dropped after passing of the penalty order, the said circumstance has not been considered while imposing penalty on petitioner. Since the imposition of penalty on the petitioner is one of the factors taken into consideration by the Disciplinary Authority for imposition of penalty on petitioner and since the penalty under the Adjudication Proceedings has subsequently been set aside, the matter needs to be reconsidered by the Disciplinary Authority in the light of the orders passed by the CESTAT and Adjudicating Authority. Petition allowed by way of remand.
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2023 (5) TMI 51
Valuation of vessel - rejection of declared value - price variation clause - finalization of provisional assessment under section 18(1) of the Customs Act, 1962 - HELD THAT:- The original MoA mentioned LDT of 4999.20 MT and the MoA entered between the appellant and Ace Exim Private Limited contains net LDT as 4485.20MT - It is quite apparent that so long as the transaction value is real and there are reasons for any change in the transaction value and the MoA is genuine then the price declared therein should be accepted. The Revenue has relied on the decision of the Tribunal in the case of Great Eastern Shipping Co. Ltd. [ 2014 (5) TMI 164 - CESTAT MUMBAI ]. It is seen that the said decision relates to the relevant date for determination of rate of duty and tariff valuation. In the said case, it has been held that the rate of duty and tariff valuation applicable on date of entry inward would apply. It is noticed that in the instant case, there is no tariff valuation involved but it is valuation on the basis of transaction value and thus in the said decision it is not applicable to the facts of this case. It is seen that the acceptance of original declared price is dependent on the fact that there is no variation in the nature of goods which had been contracted. In the instant case, it is seen that the LDT of the goods appearing in the original MoA is different from the LDT mentioned in the later MoA in these circumstances, the decision of Tribunal in the case of Lucky Steel Industries [ 2006 (6) TMI 246 - CESTAT, MUMBAI ] may not be applicable. Similarly in the case of MALWI SHIP BREAKING VERSUS COMMISSIONER OF CUSTOMS, JAMNAGAR [ 2007 (11) TMI 530 - CESTAT, AHMEDABAD] relied on by the Revenue, it has been clearly held that there was no discrepancy in the list of items agreed upon and the items actually reported as seen from the surveyor report. The fact in the instant case is different and therefore, the said decision also has no applicability in the instant case. It is found that the genuineness of the MoA dated 22.11.2012 has not been doubted. It is also noted that the LDT mentioned in the MoA dated 05.11.2012 between Ace Exim Pvt. Ltd. and Alang Auto Gen. Engg. Pvt. Ltd. was not found to be correct when the surveyor boarded vessel. The MoA dated 22.11.2012 contains a different a LDT which is lower by 507 MT - Since the new MoA dated 22.11.2012 has not been found to be incorrect or fabricated and there was variation in the specification of the goods imported, the Revenue cannot reject the price mentioned in the MoA dated 22.11.2012. There are no merit in the impugned order - appeal allowed.
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2023 (5) TMI 50
Levy of Redemption Fine and penalty u/s 112(a) of Customs Act - Rejection of refund claim - rejection on the ground that the appellant did not challenge the assessment order which has become final - goods CTH 72163200 is eligible for concessional rate of duty @5% as per Sr. 190B of Notfn No.21/2002-Cus or not - HELD THAT:- The SCN was waived and enhancement of value was accepted by the appellant only, while seeking clearance of the goods. There are merit in the submission made by the appellant, on the point of action in personam , that the Commissioner should not have imposed penalty under Section 112(a),while giving finding of the non- imposition of penalty under Section 114A, due to lack of mens rea. Such a course of action could have only been done by affording full opportunity to the appellant, including in relation to justification or otherwise of quantum of penalty, which as per records does not appear to be the case. Even under section 128 A(3) cited in the impugned order, Commissioner (Appeals) while deviating from show cause notice/Order-In-Original is required to do natural justice based inquiry before doing modification of this nature. Imposition of penalty u/s 112(a) therefore does not appear proper in the facts of this matter. Since the goods imported were in the nature of offending goods having been mis-described in the Bill of Entry, the action in rem is still required to be legally scrutinised. It is a fact that, while imposing redemption fine no market inquiry to arrive at the correct quantum was done. The higher side of the imposable redemption fine as per Section 125 of the Customs Act, 1962 is dependent upon such determination. However, with in this highest limit, redemption fine as a norm can be imposed to nullify profit likely to be earned through goods held liable to be confiscated - the statutory course of ascertaining the market price and reducing it by duty chargeable may not be feasible. However, the transaction value taken by the department and accepted by the appellants seeking release of goods was taken of Rs. 47 Lakhs approximately and as against this, the declared value was of Rs. 22 Lakhs and appellant had paid the total duty of approx. Rs. 12 Lakhs. The Commissioner (Appeals) has accepted that there has been a mistake and not deliberate misdeclaration. Since, the matter pertains to year-2008, the remand at this stage may not serve any useful purpose. As the facts of the matter indicate a wrong dispatch, but the goods were eventually cleared at the behest of the appellants who agreed to take the release of goods even at the enhanced value, indicates that margin of profit even after paying duty was present - the redemption fine is reduced to Rs. 4 Lakhs - the penalty of Rs. 4 Lakhs imposed under Section 112(a) by the order of Commissioner (Appeals) is set aside - appeal allowed in part.
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2023 (5) TMI 49
Import of Aircraft - Benefit of exemption - Violation of user condition - Condition No. 104 of N/N. 21/2002-Cus. as amended by N/N. 61/2007-Cus. - Improper availment of benefit of exemption under the said Notification - appellant were granted Non-Scheduled Air Transport (Passenger) - revenue contended that appellants are granted permit for Non-Scheduled Air Transport Service (Passenger), whereas the appellants provided Charter services - demand of differential Customs duty alongwith penalty - HELD THAT:- After discussing the relevant provision the Larger Bench of Tribunal in interim order M/S VRL LOGISTICS LTD VERSUS COMMISSIONER OF CUSTOMS, AHMEDABAD [ 2022 (8) TMI 720 - CESTAT AHMEDABAD (LB)] observed that the above exemption notification does not prohibit a non-scheduled (passenger) service permit holder to use the Aircraft for charter operations. By following the above finding of Larger Bench of Tribunal, it is found that contention of revenue in the present case that the appellants were issued a permit for providing non-scheduled (passenger) services but the imported aircraft has been put to non-scheduled (charter) services and therefore, the exemption should be denied is without substance. When exemption is available for use under either category, such an objection by the Department is without merit particularly when evidence has been provided by the Appellants that the Civil Aviation Requirements (CAR) permit such use vide DGCA s clarifications and the DGCA authorities have not taken any action against such use. The letter dated 08.08.2008 issued by DGCA states that a non-scheduled (passenger) permit holder can conduct charter operation and such operation would be within the purview of the non-scheduled (passenger) services permit holders. Whether use of Aircraft for the period involved was partly without remuneration and is not public transport hence, for private use? - HELD THAT:- The appellant had published tariff for charter service, the appellant has produced advertisement in various media and invoices raised on various customers for use of aircraft to support its case that the aircraft was used for remuneration and was used for providing Air Transport Service . This is not a case where aircraft is not allowed to be used for any remuneration or whatsoever which is duly supported by the invoices produced by the appellant - the aircraft is permitted to be used from the date of its import till the date for Non-Scheduled chartered operations and permission granted to the appellant is being renewed from time to time till date. This also supports our views that aircraft is not used for private use. The question whether Air Transport Undertaking by the appellant is public transport or private has to be determined with reference to the appellant s status as Air Transport Undertaking and not in reference to the certain non-remuneration flights undertaken during certain period i.e. 05.01.2008 to 04.04.2008 and May to August 2008. The appellant s status of Air Transport Undertaking is not in dispute. In view thereof, it cannot be held that use of aircraft by the appellant was a private use because of some of the non remuneration flights claimed to have been undertaken by the appellant during the said period. The aircraft is not used for private purpose in breach of the undertaking and conditions of the notification - the Civil Aviation Authority has not treated the operation of the aircraft for the period 05.01.2008 to 04.04.2008 and May to August 2008 as being private aircraft and in fact issued permit on 04.04.2008 for Non- Scheduled operations in terms of recommendations dated 23.03.2007 and renewed such permits from time to time till date supports the case of the appellant that the aircraft was used for non-scheduled operations for hire or reward. Thus, there is no post import condition in the notification hence, the duty demand, imposition of penalties and confiscation of the aircrafts are not sustainable. The appellants are legally eligible for exemption notification. Accordingly, the impugned orders are set aside - Appeal allowed.
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2023 (5) TMI 48
Seeking change in Classification of goods (different from one proposed in SCN) - Hot Rolled Flat Products - to be classified under heading 72199090 or under heading 72192141? - whether the goods are covered by the Notification No. 1/2013-Cus (SG) dated 14.01.2013 imposing safeguard duty on Hot Rolled Flat Products? - HELD THAT:- The Hon ble Apex Court has considered practically identical issue in the case of WARNER HINDUSTAN LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, HYDERABAD [ 1999 (8) TMI 75 - SUPREME COURT] where it was held that The correct course for the tribunal to have followed was to have dismissed the appeal of the Excise Authorities making it clear that it was open to the Excise Authorities to issue a fresh show cause notice to the appellant on the basis that the tablets were classifiable under Heading 17.04 as items of confectionary. The claim of the Revenue that the adjudicating authority can classify the goods in a Customs Tariff Heading different from the one proposed in show cause notice, cannot be accepted - appeal of Revenue dismissed.
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2023 (5) TMI 47
Refund of SAD - Rejection on he ground of time limitation (refund claim has been filed beyond the period of 12 months) - HELD THAT:- The observation of Hon ble Bombay High Court in the case of M/S. CMS INFO SYSTEMS LIMITED VERSUS THE UNION OF INDIA OTHERS [ 2017 (1) TMI 786 - BOMBAY HIGH COURT] have been differed and differentiated by this Tribunal in COMMISSIONER OF CUSTOMS, NEW DELHI VERSUS S.R. TRADERS [ 2020 (12) TMI 503 - CESTAT NEW DELHI] which ruling have been upheld by Hon ble Delhi High Court in COMMISSIONER OF CUSTOMS VERSUS S.R. TRADERS [ 2022 (4) TMI 1167 - DELHI HIGH COURT] . The Hon ble Bombay High Court in the case of M/s CMS Info Systems Ltd. did not consider the issue whether limitation can start to run prior to right to claim crystallizes. It is further found that the ruling of Delhi High court in SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2014 (4) TMI 870 - DELHI HIGH COURT] have been followed by this Tribunal and also by the Delhi High Court in several similar matters, and repeatedly held that limitation cannot be introduced for the first time by way of subordinate legislation. Further, it is matter of common sense that limitation cannot start to run prior to right to claim arises. There are no error in the impugned order-in-appeal - Appeal of Revenue dismissed.
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2023 (5) TMI 46
Refund of SAD - time limitation prescribed under N/N. 102/2007 - rejection holding the claim to have been filed beyond a period of one year as prescribed under Notification No.93/2008 - HELD THAT:- No doubt the period involved in the said decision is of the year 2007 when Notification No.102/2007 had no time limit prescribed for filing the refund claim of SAD. However, in August, 2008 the said Notification got amended vide Notification No.93/2008 wherein one year time period was prescribed for filing the refund claim. Section 27 of Customs Act, 1962 talks about the refund and a time limit has also been prescribed therein. The same has been taken note of by Hon ble Delhi High Court even in SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2014 (4) TMI 870 - DELHI HIGH COURT] - Keeping in view the amendment to be subsequent to the Sony s decision that this Tribunal vide the decisions as relied upon by ld. D.R. had upheld the rejection of SAD refund claim on the basis of time limit. In the recent decision of COMMISSIONER OF CUSTOMS ICD TKD VERSUS THERMOKING [ 2022 (8) TMI 936 - DELHI HIGH COURT] , Hon ble High court of Delhi has also discussed Section 27 of Customs Act. However, still the earlier decision of Sony India has been impressed upon holding that the limitation cannot be prescribed by a Notification, thus, holding the Notification No.93/2008 as a flawed one. In view of those findings subsequent to the earlier findings of this Tribunal and also in view of the Code of judicial protocol, it is the recent decision of Hon ble High Court of Delhi in Termoking which has to be followed. The Hon ble High Court has held that refund of SAD cannot be rejected on the grounds of limitation. The order under challenge is hereby set aside - Appeal allowed.
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2023 (5) TMI 43
Compounding order - Appellant approached the Hon ble High Court of Telangana on the ground that proper justification was not done by the Adjudicating Authority (The Chief Commissioner) while passing the Order - Jurisdiction of CESTAT to hear the Appeal against the Order passed by Chief Commissioner in terms of Section 129A of the Customs Act, 1962 - HELD THAT:- From the order passed by the Hon ble Telangana High Court in order dated 14.11.2018, it is seen that the High Court has not taken any view that Tribunal does not have jurisdiction to decide the Appeal. On the other hand, the maintainability of appeal has been allowed to be decided by the Tribunal itself. From the judgment of Gujarat High Court in the case of Commissioner of Central Excise Vs Girish B. Mishra [ 2013 (6) TMI 179 - GUJARAT HIGH COURT ], it is observed that the very issue was before the Hon ble Gujarat High Court. The Hon ble High Court did not entertain the Appeal filed by the Revenue on the issue of jurisdiction of the Tribunal while deciding the appeal filed against Compounding Order passed by the Chief Commissioner. Based on the Order passed by the Hon ble Telangana High Court as well as the decision of the Hon ble Gujarat High Court, which is in force as on date, it is found that the appellant requires to be given an opportunity once again to go before the Chief Commissioner/ Principal Chief Commissioner. The matter is remanded to the Chief Commissioner/ Principal Chief Commissioner who will give opportunity to the Appellant to make all their oral and written submissions along with documentary evidence and follow principles of natural justice while deciding the matter - Appeal allowed by way of remand.
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Insolvency & Bankruptcy
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2023 (5) TMI 44
Forfeiture of the EMD and part consideration - Jurisdiction/power of Liquidator to forfeit the EMD - case of appellant is that the forfeiture of the amount under the terms and conditions of Tender Document is in nature of penalty hence can be recovered only in accordance with Section 74 of Indian Contract Act by bringing action by the Liquidator - Defect in title of the Corporate Debtor or not - Suppression by Liquidator, crucial information from the Appellant and other bidders. Jurisdiction/power of Liquidator to forfeit the EMD - compensation for breach of contract - HELD THAT:- For purpose of this case, law as laid down in Paragraph 43.7 is relevant where Hon ble Supreme Court in KAILASH NATH ASSOCIATES VERSUS DELHI DEVELOPMENT AUTHORITY [ 2015 (1) TMI 1377 - SUPREME COURT ] has clearly held that when forfeiture takes place under the terms and conditions of a public auction before agreement is reached, Section 74 would have no application. The statement of law in paragraph 43.7 is fully applicable in the case of the present case. The present is a case where Appellant participated in the e- Auction conducted by the Liquidator under the Liquidation Process Regulations, 2016. Section 74 of the Indian Contract Act has no application in the case of Auction conducted by the Liquidator under the Liquidation Process Regulations, 2016. The terms and conditions of the sale as finalized by the Liquidator under which the e-Auction was held is binding on all including the bidders. Bidders give an unqualified undertaking for participation in the e-Auction after knowing fully well of clauses of the e-Auction Process Document and undertook to abide by the clauses. The submission of the Appellant can not be accepted that Appellant s EMD can not be forfeited even though he has committed default in making the payment of balance amount and the Liquidator should file a suit for forfeiting amount deposited by the Appellant. Such preposterous argument can not be accepted in view of the fact that Liquidation Process is conducted under the statutory Liquidation Process Regulations, 2016. The terms and conditions of the Process Document has been framed as per statutory empowerment given to the Liquidator by Schedule I of the Liquidation Process Regulations, 2016 - When the clauses of the Process Document, clearly empowers the Liquidator to forfeit the EMD and any payment made in event default is committed by the Highest Bidder, no exception can be taken to the action of the Liquidator in cancelling the sale and forfeiting the amount deposited by the Appellant - there are no substance in the submission of Learned Counsel for the Appellant that Liquidator was not empowered to forfeit the EMD. Defect in title of the Corporate Debtor or not - Suppression by Liquidator, crucial information from the Appellant and other bidders - HELD THAT:- The process document under which e-Auction has been held and the e-Auction Notice has described the price of the land which was sought to be auctioned - the issue raised by the email dated 17th June, 2022 by the Appellant that name of the land is not in the name of the corporate debtor is only a ruse not to make payment within time allowed by law. Admittedly, the land was in the name of Anil Products Limited which was the earlier name of the Corporate Debtor changed in to Anil Limited. The title of the land shall be of the corporate debtor Anil Limited by change of the name the title to the land will continue with the corporate debtor and the earlier name of the corporate debtor in the revenue record has no bearing in the title. Thus, there was neither defect in the title nor the fact that process of change of the name in the revenue record was underway was any reason for Appellant not to make the payment of balance consideration within time. Property tax dues in respect of land was outstanding - HELD THAT:- Liquidator has submitted that all dues were paid and No Dues Certificate was issued. Liquidator further submitted that in any view of the matter, these issues were required to be done by the Liquidator before transferring the property in question in favour of the Appellant but that itself could not have been any ground available to the Appellant to refuse to deposit the balance consideration within time allowed by the law. Similarly, the argument that properties were attached towards nonpayment of property tax dues also can not raise any fetter in the title, right of the corporate debtor and further when No Dues Certificate were obtained by the Liquidator subsequently it can not be said that title of the corporate debtor was defective due to above reason - There was no title defect in the Corporate Debtor. Permission of the Deputy Collector for sale - Intimidation regarding entry in the revenue record - HELD THAT:- It is satisfying that issues regarding entry in the revenue record, permission of the Deputy Collector for sale were issues which had no effect on the title of the corporate debtor and the issues were raised by the Appellant to avoid payment of balance amount and to buy time in which Appellant failed. There are no substance in the submissions that there was defect in title. Appeal dismissed.
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PMLA
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2023 (5) TMI 88
Seeking grant of Regular Bail - money laundering - predicate offences - petitioner not being released on account of production warrants - rigour of Section 45 of the PMLA Act met or not - HELD THAT:- In the instance case, it is an admitted case that even after the issuance of production warrants, the accused persons have not been formally arrested as yet by the ED. The petitioners were in custody in predicate offences for more than 9 years and no admittedly, have been admitted to bail for the predicate offences. However, admittedly, they have not been released on account of production warrants issued by the learned Trial Court subsequent to the filing of the complaint by the ED. Since the petitioners have yet not been taken into formal custody in this case, the bail applications filed by the accused persons are infructuous - Hence, the bail applications along with pending applications are dismissed.
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Service Tax
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2023 (5) TMI 87
Levy of Service Tax - construction service - scope of exclusion definition of residential complex under Section 65(91a) of the Finance Act, 1994 - whether the Revenue is justified in demanding Service Tax from the appellant for the construction service provided by them for the period from April 2009 to June 2010? HELD THAT:- At paragraph 19 of the impugned order, the Learned Commissioner has observed, after scrutinizing the agreements, that (i) the appellants are the builders of the concerned flats; (ii) the appellants are only constructing the flats to the respective allottees, etc., which, per se, makes it clear that the activity undertaken by the appellant in the capacity of a developer was in the nature of works contract service . The issue has been laid to rest by various co-ordinate Benches of the CESTAT wherein the decision of the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] has been followed - the co-ordinate Hyderabad Bench, in the case of COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, VISAKHAPATNAM - I VERSUS M/S PRAGATI EDIFICE PVT LTD (VICE-VERSA) [ 2019 (9) TMI 792 - CESTAT HYDERABAD] has held that After 1-7-2010, Service Tax is chargeable under the head of construction of complex services if it is service simpliciter and under works contract service if it is a composite works contract. In view of the order of the Hyderabad Bench, it is clear that no Service Tax could be levied on construction of residential complex on the appellant. The period of dispute here is from April 2009 to June 2010 and hence, no Service Tax was exigible on the appellant. Appeal allowed - decided in favour of appellant.
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2023 (5) TMI 86
Levy of service tax - inclusion of copyright under IPR service - it is contended that amounts received as royalty and paid to the music directors / music companies was required to be included in the value - demand for the period from 01.05.2006 to 31.05.2007 under business support service - Demand from 01.06.2007 onwards under development and supply of content service - Section 67 of the Finance Act, 1994 read with Rule 5 of the Rules ibid. - suppression of facts or not - extended period of limitation. Suppression of facts - extended period of limitation - HELD THAT:- The royalty was collected from their customers i.e., the operators, in addition to the service charges, with the Service Tax payable, and the Service Tax so collected on the service charges was remitted to Government account. That is to say, they did not collect or pay any Service Tax on the amount of royalties collected by them since the same was relating to the copyrights held by the respective owners and that the same was payable only when the same was used / enjoyed - It is also a fact borne on the record, at paragraph 9.1 of the Order-in-Original, that but for the audit, the issue could not have come to light. It is an undisputed fact that such audits took place in the years 2009 and 2010, during which time the fact of alleged non-offering of the Service Tax on the royalties was noticed by the audit party. Thus, the Revenue cannot stake a claim that the matter had remained suppressed. When each and every fact was very much available with the Revenue, what is that which was suppressed is not clear. We say so because, the non-payment of Service Tax on royalty having been noticed during audits conducted since 2009 appears to have been pointed to the appellant and the appellant appears to have replied thereto - the reason of fraud or collusion or suppression of facts, etc., with intent to evade payment of service tax is a necessary ingredient. However, the Revenue has only stated suppression of facts with an intention to evade payment of Service Tax when, clearly, the facts and figures were only collected from the books / ST-3 returns of the appellant - it is very difficult for us to accede to the Revenue s stand that the appellant had suppressed facts with an intent to evade payment of Service Tax. It would have been a different matter altogether had the appellant even collected the Service Tax on the royalties as well and pocketed it, but it is not so here in the case on hand. On merits - HELD THAT:- The royalty was collected from their customers i.e., the operators, in addition to the service charges, with the Service Tax payable, and the Service Tax so collected on the service charges was remitted to Government account. That is to say, they did not collect or pay any Service Tax on the amount of royalties collected by them since the same was relating to the copyrights held by the respective owners and that the same was payable only when the same was used / enjoyed. The demands were proposed by the lower authority, by holding that the payment of royalty was an expenditure incurred by the appellant on behalf of the service recipient. The differential tax has been arrived at as per Section 67 of the Finance Act, 1994 read with Rule 5 of the Rules ibid. In view of the decision of the Hon ble Supreme Court inUNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT ], the Revenue could not have proposed and confirmed the demand under Section 67 of the Act read with Rule 5 ibid., since it is by virtue of the mode of computation provided here that the differential tax was arrived at and demanded and this runs counter to the ratio decidendi of the Hon ble Apex Court in M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. . Hence, the demand cannot sustain on merits. Neither on limitation nor on merit could the demand impugned before us be sustained and hence, the impugned order is set aside - Appeal allowed.
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2023 (5) TMI 85
Levy of Service Tax - Business Support Services - additional amount received towards excess yield - transportation charges - business auxiliary services - Irregular availment of cenvat credit on debit notes - suppression of facts or not - extended period of limitation penalty. Irregular availment of cenvat credit on debit notes - HELD THAT:- The appellants have produced copies of the Debit Notes and Invoices issued by their service provider. These Debit Notes as well as Invoices contain all the details required to enable them to take the credit. Therefore there is no error in the appellant taking the CENVAT credit of Rs 1,23,90,055/-. The appeal to this extent is allowed on merits. Demand of service tax under Business Support Services - HELD THAT:- The appellant has submitted that as the matter pertains to the year 2005 and the appellant s company is non-functional now, they will not be in a position to provide a copy of the earlier CTA Agreements entered into between KPCL and the then CTA. In the absence of this important document, it may not be possible for the Tribunal to come to a conclusion on this issue on merits. It is on record that the appellant is a Pvt Limited Company and they have been maintaining proper records and filing Statutory Documents before various Authorities. There is no allegation that they have failed to file any returns with the Department. Apart from this, it is on record that Audit was taken up in 2007, wherein the CTA and other charges being collected and Excess Yield consideration were also noted and were allowed to be deducted from the total consideration value from the Service Tax to be paid by the appellant. This shows that even the Audit Team was carrying the same view till the audit was conducted in 2007. Extended period of limitation - suppression of facts or not - HELD THAT:- There are no reason to fasten the allegation of suppression on the appellants. Accordingly, in respect of the confirmed demands the Appeal is allowed on limitation alone - As the appellant has submitted that they are not contesting these issues on merits, the Department is to work out the balance amount, if any, to be paid under these Heads for the normal period along with interest. Penalties - HELD THAT:- Since there is no suppression in this case, the penalties are set aside. Appeal allowed in part.
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2023 (5) TMI 84
CENVAT Credit - trading activity - non-maintenance of separate records - income from derivatives (trading profit) - investment made by the appellant towards buying and selling of derivatives amounts to trading of derivatives or not - Rule 6(3) of the Cenvat Credit Rules, 2004 - suppression of facts or not - extended period of limitation - HELD THAT:- This is an admitted fact that the appellants were regularly submitting Returns and there is no allegation that the appellant had suppressed or omitted any facts while submitting such Returns. The appellant is registered with the service tax department under different categories; they are engaged in the trading of derivatives during the period from October 2011 to March 2016. Even if it may be negligible, it is an admitted fact that they have not maintained separate account for Cenvat credit availed for discharging the service liability for the taxable service provided by them. On going through the case laws submitted by the learned Counsel for the appellant in ACE CREATIVE LEARNING PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BENGALURU SOUTH GST COMMISSIONERATE [ 2021 (4) TMI 687 - CESTAT BANGALORE] where this Tribunal has taken a decision regarding exempted service of trading in mutual fund and also held that extended period of limitation not invokable where Revenue s case is based on balance sheet, Returns and other records of the assessee and also as per the provisions of Securities Contracts (Regulation) Act, 1956. Extended period of limitation - HELD THAT:- The extended period of limitation cannot be invoked in the present case - the appellant is liable for reversal of credit only for the normal period and the order invoking demand for the extended period of limitation is set aside. As per the submissions made by appellant, pro-rata reversal for the period from 2014-15 is Rs.1,65,675/- and for the financial year 2015-16 is Rs.1,16,896/-. However, there is no finding given by adjudicating authority regarding amount payable for the normal period. The matter is remanded to adjudicating authority to re-determine the amount by way of short payment of service tax with interest as per provision of Section 75 of Finance Act, 1994 read with Rule 14 of Cenvat Credit Rules, 2004 only. Since there is no allegation regarding suppression of fact by the assessee in their Returns, the extended period of limitation is not applicable and penalty imposed by the impugned order is also set aside. The appeal is partially allowed and is remanded to adjudication authority.
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2023 (5) TMI 83
Refund of accumulated CENVAT credit - export of output services during the period October December 2008; July September 2009; July September 2013 and October December 2014 - failure to submit copy of CENVAT credit Register and duty-paid input invoices, category-wise CENVAT credit availed on input credit availed - receipt of FIRC through Indian rupees towards export proceeds and question of compliance with Rule 3(2)(b) of ESR, 2005 - HELD THAT:- There is merit in the submissions advanced by the learned AR that the said issue has attained finality after passing of the Order-in-Appeal No.1687 to 1688/2016 dt.25.11.2016 as no appeal has been preferred by the appellant on the said finding of the learned Commissioner (Appeals) before the appropriate forum. In the said remand Order, the original adjudicating authority was only directed to examine the evidence to ascertain the nexus between the input service and the export output service to determine the cash refund of accumulated credit - the same cannot be agitated again before this Tribunal while challenging the second Order passed by the Ld. Commissioner(Appeals). Failure to submit copy of CENVAT credit Register and duty-paid input invoices - HELD THAT:- Appellant submits that they can place all the records as and when directed by the Department to establish the nexus between the input services and export of output services and assist the department in clarifying the glaring calculation error while computing the refund claims - Learned AR for the Revenue has no objection in remanding the matter to the adjudicating authority. Considering the submissions of both sides, it is appropriate to remand the matter to the adjudicating authority to consider all the relevant documents that are on record and that would be produced by the appellant during the course of adjudicating process to establish the nexus between the input services and export of output services, and calculation error in the computation of refund claims except the issue of realisation of FIRC through Indian currency, which has attained finality in the previous proceedings in Order-in-Appeal No.1687 to 1688/2016 dated 25.11.2016. Appeal allowed by way of remand.
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2023 (5) TMI 82
Levy of Service Tax - Construction of Residential Complex Service - construction service in respect of residential complex namely Vicenza Repreat having more than 12 units - case of the department is that the appellant failed to obtain service tax registration for the same and also failed to pay the service tax and filing of ST-3 returns for the said period - HELD THAT:- There is no dispute on the fact that the appellant have been providing the construction of residential complex along with material and they have paid the VAT to the State Government. In this regard, they have also produced the VAT returns. In this fact, there is no doubt that the service provided by the appellant is of Works Contract. It is also the fact that the appellant even before 01.06.2007 right from the beginning providing the service of Works Contract i.e. Construction of Residential Complex along with Material under payment of VAT. The hon ble Supreme Court clearly held in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] that Works Contract Service prior to 01.06.2007 cannot be levied with service tax. Since the levy became effective from 01.06.2007, the appellant have correctly obtained the registration and started paying service tax under Works Contract Service. The reason for denial of Works Contract Service by the learned Commissioner (Appeals) is that the appellant should opt for the Works Contract Service - this option can be exercised only when the assessee wish to shift from one service to Works Contract Service which is not the case here. The appellant have been providing Works Contract Service right from the beginning i.e. before 01.06.2007 therefore, on the very same service with effect from 01.06.2007, the service tax is leviable under Composition Scheme i.e. Works contract Service therefore, the appellant have rightly not paid the service tax before 01.06.2007 and correctly paid the service tax under Works contract Service with effect from 01.06.2007 therefore, the demand in the present case is not sustained. Appeal allowed.
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2023 (5) TMI 81
Levy of Penalty - Business Auxiliary Service - empanelment fees recovered from the empanelled venders as commission shown under the head rebate - issue of liability of the appellant stands already decided as against the appellant and that the appellant has already deposited the amount of demand alongwith the amount of interest - HELD THAT:- It is a fit case of waiver of penalties proposed under Section 76, 77 78 of the Act ibid, in terms of Section 80 of the Finance Act. 1994 and even after non existence of the Section 80, it is found that being a Government defence organisation no malafide intention can be attributed to the omissions which have occurred on the part of the noticee. The Hon ble Tribunal in similar circumstances has waived the penalties in terms of Section 80 of the Act ibid. - reliance can be placed in the case of NAGAR NIGAM, KOTA VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I [ 2009 (12) TMI 457 - CESTAT, NEW DELHI] , COMMISSIONER OF CENTRAL EXCISE, JALANDHAR VERSUS M/S GENERAL MANAGER, TELECOM [ 2012 (8) TMI 499 - CESTAT, NEW DELHI] and ANDHRA PRADESH TOURISM DEVELOPMENT CORPN. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD [ 2012 (5) TMI 346 - CESTAT, BANGALORE] . There are no reason to differ from the said findings specifically when in the present appeal also the appellant has deposited the entire amount of demand confirmed and the amount of interest imposed - the order of Commissioner (Appeals) is modified by setting aside the order of imposing penalty upon the appellant. Appeal allowed in part.
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2023 (5) TMI 80
Levy of service tax - renting of immovable property service - demand on the ground that by way of the agreements with the distributor appellant has rented its theater for screening films - HELD THAT:- From the decision in M/S. MOTI TALKIES VERSUS COMMISSIONER OF SERVICE TAX, DELHI I [ 2020 (6) TMI 87 - CESTAT NEW DELHI] the apparent facts of that case are that The appellant is the owner of a cinema hall situated at Chandni Chowk, New Delhi and is engaged in the business of exhibiting films in its theatre. The copy right over the films is owned by the distributors. The appellant enters into agreements with the film distributors to obtain such copy rights under which the right to exhibit the films is transferred to the appellant, either temporarily or in perpetuity, depending upon the nature of the agreements between the parties. The perusal is sufficient to hold that the facts of the present appeal are identical. Perusal is sufficient to accept the contention of the ld. Counsel for the appellant that the order under challenge in that case is verbatim to the order in appeal in the present case - The Hon ble Bench while adjudicating the said issue has held that Though, renting of immovable property is a declared service under section 66E of the Finance Act, then too under section 67(1) of the Finance Act, the value shall, in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him. The appellant is not receiving any payment from the distributor and, therefore, no service can be said to have been provided by the appellant. The demand in the present case alongwith the penalty imposed is held to be liable to be set aside - Appeal allowed.
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Central Excise
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2023 (5) TMI 79
Refund of Service Tax paid - CHA service - N/N. 41/2007-ST dated 06-10-2007 - HELD THAT:- As per clause (d) of the proviso of the notification, it is seen that the manufacturer shall not avail CENVAT Credit if refund claim is filed under the said Notification. It implies that the manufacturer has an option to avail credit instead of filing the refund. The issue has been analysed by the Tribunal in the case of MONARCH CATALYST PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE-I [ 2016 (2) TMI 64 - CESTAT MUMBAI ] where it was held that as per Notification 41/2007-S.T., dated 6-10- 2007 as superseded by Notification 18/2009-S.T., dated 7-7-2009, the appellant has an option either to avail Cenvat credit or to claim refund and the appellant has chosen to claim Cenvat credit and this fact has been reflected in the records of the appellant also, but the respondent has never raised any objections all through. Earlier to the present audit, the department has conducted the audit on two occasions but the department never raised this issue. The demand cannot sustain - Appeal allowed.
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2023 (5) TMI 78
Levy of Excise Duty - Job-Work - independent manufacturers having little or no supervision by the assessee company - HELD THAT:- It is held in COMMISSIONER OF CENTRAL EXCISE, KOLKATA II VERSUS M/S. COMET TECHNOCOM (P) LTD. ORS. [ 2020 (2) TMI 306 - CALCUTTA HIGH COURT ], that if the job workers are proved to be independent contractors with little or no supervision by the assessee then they are the manufacturers and the liability of paying excise duty is with them. From the above it would be evident that in the present case, the job workers of the assessee company were independent contractors/manufacturers and hence, the assessee company and/or its directors cannot be saddled with any liability of payment of excise duty and/or consequential penalty with respect to the goods so manufactured by the said job workers. Appeal allowed.
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2023 (5) TMI 77
CENVAT Credit - Invalidation of advance authorization - applicability of N/N. 44/2001-CE (NT) dated 26.06.2001 under which the supplier was not supposed to pay any excise duty - supplies made without availing exemption on payment of duty, on such duty Cenvat credit is not admissible - denial of credit only on the ground that supplier was supposed to avail exemption Notification No. 44/2001-CE (NT) dated 26.06.2001 and since the supplier has not availed exemption, duty paid on the said goods shall not available Cenvat credit to the appellant as recipient of the goods - HELD THAT:- The Notification No. 44/2001-CE (NT) is indisputably a conditional one. In terms of Section 5A of Central Excise Act, 1944 it is not compulsion for the assessee to avail a conditional notification - From the plain reading of Section 5A, sub section (1A) it is clear that only compulsion on the assessee is to avail exemption which is absolute and the said compulsion is not applicable in respect of conditional notification. In the present case, Notification No. 44/2001-CE (NT) being a conditional one, it is optional for the assessee to either avail the said conditional notification or not. Therefore, when the supplier has not availed exemption notification 44/2001-CE (NT) and cleared the goods on payment of duty, such payment of duty cannot be disputed. Consequently, appellant s availment of Cenvat credit of such duty cannot be questioned. Moreover, irrespective of the fact that whether at the supplier s end duty is payable or otherwise, if the duty has been paid on the goods at the recipient end, for the purpose of availment of Cenvat credit, no question can be raised. As per Cenvat Credit Rules, there is no bar for the input received by an assessee that such input is otherwise dutiable or not for availing Cenvat credit. The only condition attached to the Rules is that the input received by the assessee shall be duty paid. Therefore, for this reason also Cenvat credit at the appellant s end cannot be denied. On the issue that whether the payment of duty can be disputed while allowing Cenvat credit at the recipient end of the inputs, in the case of Pearl Polymers Limited [ 2016 (12) TMI 337 - CESTAT CHANDIGARH ], the Tribunal has held that the payment of duty under Serial No. 3 of Notification 23/2003 is not disputed by the parties. The duty cast on the appellant is to verify that the 100% EOU has paid duty under Sr. No. 3 of the said notification when the duty has been paid under Sr. No. 3 of Notification 23/2003-C.E., the same is sufficient to entitlement to the credit to the appellant. In that circumstance, I hold that the appellant has correctly availed the Cenvat credit. On both the counts i.e. on the issue of availment of exemption Notification No. 44/2001-CE (NT) dated 26.06.2001 by the supplier and also where even if the duty is not payable by the supplier but the same was paid, Cenvat credit cannot be denied at the recipient end - Appeal allowed.
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CST, VAT & Sales Tax
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2023 (5) TMI 76
Validity of assessment order - concealment of Gross Turn Over (GTO) - it is alleged that AO despite taking actual figure of sale price, has taken the value of goods sold on the basis of average IBM rate prevalent for the said month as well as average sale price of three nearby mines-M/s. Orissa Manganese Minerals Ltd., M/s. Rungta Mines Ltd., M/s. Misri Lal Jain and Sons Co. Ltd. Determination of sale price on the basis of average sale price of I.B.M. as the average sale price of I.B.M. is only for the purpose of determining royalty payable on minerals and the same cannot be the basis of determination of sale price, or otherwise? - imposition of penalty under Section 40 (1) of the JVAT Act, 2005 is sustainable in the eye of law, especially when the original proceedings were initiated under Section 40 (2) of the JVAT Act, 2005? HELD THAT:- After going through the proviso to Section 35 (7) of the Act it appears that the statute specifically postulates that prescribed authority shall record his reason before initiating the proceedings and no order shall be passed under this sub section without giving the dealer an opportunity to be heard. Section 40(1) provides for Assessment in cases where turnover has escaped assessment on account of reasons indicated under Clause (a) to (e). In cases of concealment or failure to disclose willfully etc. the penal provisions under proviso to 40(1) provide imposition of three times the amount of additional tax assessed. Section 35(7) contemplates of such a proceeding against an assessee regarding whom the Assessing Officer is satisfied that he has resorted to selling of goods at a higher price than shown in his invoices - the proviso to Section 35 (7) of the JVAT Act firstly stipulates that the reasons must be recorded by the prescribed authority for initiating the proceeding and secondly, the principles of natural justice should be followed. Though in the instant case the second ingredient of the proviso has been fulfilled; however, there is no document to suggest that the assessing officer has recorded his reason before initiating the proceeding. It is reiterated that recording of satisfaction is sine qua non before proceeding to impose tax and penalty upon the assessee under Section 35(7) read with Section 40(1) of the JVAT Act. Any such satisfaction is to be based on tangible materials as are found by the assessing officer as the provisions are penal in nature where an assessee is found to be indulging in tax evasion by suppression or concealment of actual sales or turnover by selling goods at a higher price than shown by him. The matter is therefore required to be remanded to the assessing officer to comply the provisions of Section 35(7) of the Act for initiating the proceeding, if he finds any evidence that the goods have been sold at higher price than shown by the dealers - As such, on remand, the AO shall proceed strictly in accordance with law. The petitioner shall be at liberty to raise all the grounds available to him before the AO which shall be considered accordingly. Learned Tribunal has completely failed to consider that the requirement of law for initiating a proceeding under Section 35(7) by recording reasons has not been fulfilled by the Assessing Officer even after remand by the Appellate Authority on the first instance. Petition allowed by way of remand.
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Indian Laws
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2023 (5) TMI 45
Seeking removal of defendants 2 to 8 from the Trusteeship of the 1st defendant Maha Semam Public Charitable Trust - seeking direction to defendants 2 to 8 to render accounts relating to the Maha Semam Public Trust properties along with the original documents, title deed etc - seeking to order inventory of the movable and immovable properties of the 1st defendant Maha Semam Trust - seeking for settling a scheme for a proper administration of the 1st defendant Maha Semam Trust in future - seeking to direct payment of cost of this suit. Prima Facie case - HELD THAT:- The control of the 9th respondent Company was transferred to M/s.DWM [a foreign investor] following the revocation of proxies on 25.10.2011 coupled with the subsequent change in Board composition by resignation of 2nd and 9th respondents successively on 25.10.2011 and 29.11.2011 respectively. These facts are not in dispute as the plaintiffs have not denied the factual events stated in the counter affidavit filed by the 9th respondent before the Hon ble Judge. Therefore, the prayer in OA.No.520/2013 even on the date of application is not maintainable. As it is pointed out earlier, there cannot be an injunction to over turn an event that has occurred by operation of law. The very object behind this litigation by filing a suit under Section 92 of CPC is on the basis of serious allegation that the 2nd respondent/2nd defendant, the promoter of 9th respondent Company after his induction in the 1st respondent Trust, diverted the funds of the Trust by formulating a systematic and a calculated design. It is admitted that no document is produced by the petitioners to show systematic diversion of funds of Trust in favour of 9th respondent Company. The plaintiffs now rely upon the interim report of the Advocate Commissioner pointing out that he could not collect the Books of Accounts and other details from the 1st respondent/Trust. The object of the Trust is not to carry on business and no activity with profit motive. No one could assume accumulation of huge funds by Trust. The 9th respondent is an independent Company incorporated under the Companies Act, 1956. The 2nd respondent is not in the Management of 9th respondent Company and is no more in control of 9th respondent Company after the increase of share capital with the investment of Rs.50 Crores from M/s.DWM. The Court is unable to find anything to probablise the case of petitioners. This Court has already referred to the findings of the Hon ble Judge regarding collusion among family members of the 1st respondent Trust. It appears that the 1st plaintiff is no more. The petitioners are not the shareholders or persons interested in the affairs of the 9th respondent Company. This Court is also convinced that the suit was engineered by the 2nd respondent/2nd defendant in collusion to get an order what the 2nd respondent may require but would not get directly against 9th respondent. In the case on hand, this Court has already found that the Hon ble Judge while disposing of the application, has gone in depth to lift the veil and identify the real cause for the litigation and the real person behind the litigation. Therefore, the conduct of petitioners in this case militates against the bona fide as held by this Court earlier. Further, from the whole gamet of facts, this Court finds that the petitioners have not come to Court with clean hands. Legal Injury - HELD THAT:- The Hon ble Judge already recorded the finding that the petitioners have not come with clean hands. In the present case, this Court has already indicated that the petitioners have not sought for any interim relief to protect the interest of the 1st respondent/Trust in relation to the mischief as stated in the plaint, played by the 2nd defendant and his family members who allegedly diverted funds of Trust. This would also show the conduct of the petitioners targeting the 9th respondent Company alone - this court finds no prima facie case or balance of convenience in favour of petitioners/plaintiffs to grant any interim injunction as prayed for and we also find that serious injury is likely to be caused to the 9th respondent in case this Court extend the order of status quo any further. Petition dismissed.
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