TMI Tax Updates - e-Newsletter
May 30, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Seeks to waive off late fee under section 47 for the period from 01.05.2022 till 30.06.2022 for delay in filing FORM GSTR-4 for FY 2021-22 - Notification
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GST:
Deposit of tax during the course of search, inspection or investigation. - there may not be any circumstance necessitating `recovery' of tax dues during the course of search or inspection or investigation proceedings. However, there is also no bar on the taxpayers for voluntarily making the payments on the basis of ascertainment of their liability on non-payment/ short payment of taxes before or at any stage of such proceedings.
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GST:
Pure service - Benefit of exemption from GST - Governmental Entity or not - Renting of immovable Property Services i.e. 'Pure Service' provided by the applicant to PCSCL, a Government Entity, are not by way of any activity in relation to functions entrusted to a Municipality under article 243W of the Constitution or entrusted to a Panchayat under Article 243 G of the constitution and therefore, the impugned service supplied by the applicant is not exempt - taxable @18% of GST - TDS liable to be deducted - AAR
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GST:
Exemption from GST - The training and coaching in Football, Basketball, Athletic, Cricket, swimming, Karate, Dance by the applicant would be covered under Entry No. 80 of Notification No. 12/2017-CTR as amended and 'Physical fitness' training and 'summer coaching’ are not covered under the said Entry No. 80 mentioned above. Therefore, the benefit of exemption will be available to the applicant only in respect of training and coaching in respect of Football, Basketball, Athletic, Cricket, swimming, Karate and Dance. - AAR
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Income Tax:
Strictures against the Income Tax Office - abuse of authority by the revenue officers, ignoring the provisions of law - Notes
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Income Tax:
Reopening of assessment u/s 147 - Thus this Court is of the view that despite lapse of four years and a scrutiny assessment, there is fresh tangible material in the present case in the form of information of beneficiaries of bogus LTCL/STCL report prepared by the office of Deputy Director of Income Tax (Investigation) which reveals that Mahanivesh (India) Ltd. is a penny stock whose share price was manipulated in trade by way of a complex web of pre-arranged or artificial transactions to book long term/short term capital gain/loss to the beneficiaries. - this Court is of the view that the matter requires no interference in writ jurisdiction - HC
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Income Tax:
Reopening of assessment u/s 147 - Validity of a notice issued u/s 148 - The petitioner had not disclosed the amount of reimbursement of expenses claimed by it and the actual amount received by it towards reimbursement. It had not submitted the details of expenses incurred by it for verification during the assessment proceedings. It did not produce any ledger, bills and vouchers of expenses incurred on behalf of the Principal Companies. Thus the petitioner did not make a “full and true” disclosure of all the material facts which resulted in an income having escaped assessment. - Review petition dismissed - HC
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Income Tax:
TP adjustment - Intragroup services filed by the assessee from its AE - Either way when the Revenue seeks to disturb the Most Appropriate Method adopted by the assessee, it is incumbent on the part of the Revenue to adopt any of the other prescribed methods in the statute i.e. Rule 10B of the Rules. Without resorting to any of the methods for the purpose of determining the ALP of international transaction, the ld. TPO erred in determining the ALP of intragroup services at Rs.’Nil’. - AT
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Income Tax:
Validity of reopening of assessment u/s 147 - approval u/s.151 - No wonder that the assessee’s claim before the ld. CIT(A) is ambivalent, stating that the proceedings had been initiated without obtaining of Approval or the Approval is not in accordance with law, clearly indicating of the assessee being not aware of or, in the least, not sure of the actual facts of the case. Rather, the assessee’s request dated 11/11/2016 to the AO cannot be regarded as a valid request in law as the assessee had till then admittedly not furnished any return in response to the notice u/s. 148(1), which was filed only on 18/11/2016. - AT
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Income Tax:
Bogus LTCG - bogus share transaction - As in so far as cancellation of registration of sub-broker by the NSE through whom the assessee had sold shares of Buniyad Chemicals, it would not make the transaction of sale of shares bogus. - By furnishing cogent evidence, assessee has discharged her onus in proving that she was holding the shares since 2004 and had sold the shares during the relevant period. - AT
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Income Tax:
Assessment u/s 153A - There is no specific provision in the Act requiring the assessment u/s 153A to be made after issuing notice u/s 143(2) - there is no legal impediment in making an addition, otherwise than on the basis of any incriminating material found during search, in an assessment u/s 153A for a year whose assessment was not pending on the date of search. - AT
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Customs:
Levy of Anti Dumping Duty - likelihood of recurrence of dumping and injury in the event of expiry of duty - the designated authority should re-examine whether the cessation of anti-dumping duty would likely lead to continuation or recurrence of injury so as to warrant imposition of anti-dumping duty for a further period of five years. It needs to be noted that the designated authority had recorded a categorical finding that cessation of anti-dumping duty would lead to continuation or recurrence of dumping and even with regard to the injury aspect, the designated authority did hold that cessation of anti-dumping duty would lead to continuation or recurrence of injury, but it further held that such injury was not strong enough to warrant continuation of anti-dumping duty for a further period of five years. - AT
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Customs:
Levy of penalty u/s 112(a) and 114AA of the Customs Act - detention of yacht - suspicion of foul play - evasion of Customs Duty - The initial burden to prove proper importation, under Section 123 ibid. was on the notices, some of whom have accepted the liability and thereby resulting in the non-discharge of the burden. The natural consequence which flows from the above is that the burden cast on the notices remained un-discharged and hence, they have to suffer consequence, namely the penalties in this case. This is because, they have all been identified to be part of different sides but of the same transaction. - AT
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Customs:
Classification of goods - Air conditioners with both heating and cooling functions - Since we have held that the classification of the impugned goods as determined by the adjudicating authority cannot be upheld, and the classification as claimed by the appellants at the time of filing the Bill of Entry is correct classification, benefit of exemption Notification No 85/2004-Cus as claimed by the appellants under heading 84151010 and 84151090 is admissible to them - AT
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Customs:
Misdeclaration and undervaluation of imported goods - Cosmetic goods - not supported with certificate of the Controller of Drugs and Cosmetics Organization (CDSCO) - Absolute Confiscation - Under sub-rule(3) of Rule 131 of the said Rules, the Collector of Customs(now Commissioner) is duty bound to communicate to the importer to exercise their option either to re-export the goods to the country of origin or allow the Central Government to take possession of it and destroy the same accordingly. Therefore, it is a statutory right available to an importer which cannot be overlooked by the department; the importer should have been allowed to exercise the option to re-export the goods, as prayed for. - AT
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Customs:
100% EOU - Scope of letter of permission (LOP) - The entire case of revenue is based on the fact that appellant had manufactured these finished products which were not as per LOP, using the raw material imported duty free. We do not find any merits in these arguments as the appellants have consumed the duty free raw material for achieving the export obligations on yearly basis and on whole as per the LOP issued to them and amended from time to time. No evidence has been produced by the revenue that the terms of LOP have been violated in terms of quantity or value as specified in the said LOP. - AT
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Indian Laws:
Writ jurisdiction with respect to order of National Consumer Disputes Redressal Commission. - Notes
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IBC:
Initiation of CIRP - existence of debt and dispute or not - Having regard to the admission of the liability in the correspondences and in the ledger confirmation letters read with the invoices raised over a period of time from 2016 onwards for supply of both Cane Trash and Cotton Stalk, this Tribunal is of the earnest view that the ‘dispute’ raised by the Appellant at this belated stage, having accepted the fuel over a duration of time, is a patently feeble argument, unsupported by any substantial evidence. - AT
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SEBI:
Modification in Cyber Security and Cyber resilience framework of Qualified Registrars to an Issue and Share Transfer Agents (“QRTAs”) - Circular
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SEBI:
Modification to Standard Operating Procedure in the cases of Trading Member / Clearing Member leading to default - Circular
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Service Tax:
Excess utilisation of cenvat credit - Whether the appellant is liable to pay interest and penalty on account of alleged excess utilisation of cenvat credit - The demand of interest on alleged excess utilisation of cenvat credit amounts to double demand of interest, as the appellant has already deposited interest on the delayed payment of tax at the applicable rate under Section 75 of the Act. Thus, the second demand of interest is in the nature of double jeopardy, which is not tenable - AT
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Central Excise:
Extended period of limitation - Debonding of an EOU - allegation of short-paid duty at the time of De-bonding - On the basis of the ‘No Dues Certificate” issued by the concerned jurisdictional authorities, Development Commissioner has issued the Final Debonding Order. If it is the case of the revenue that “No Dues Certificate” was obtained by the appellant by taking recourse to suppression. misstatement, misdeclaration, fraud, connivance or in contravention of the provisions of the law, which would have led to invocation of extended period of limitation as provided for by Section 11 A of the Central excise Act, 1944, revenue ought to have informed the Development commissioner and requested for initiation of proceeding against the appellants in terms of Foreign Trade Development Act. - Demand set aside - AT
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Central Excise:
Recovery of wrongfully availed CENVAT Credit - capital goods - As there is no denial of the fact that appellants have utilized theses capital goods for manufacture and clearance of the finished goods on payment of duty, in the manner as prescribed by the amended rule 6 (4) the CENVAT Credit could not have been denied. In view of this we do not intend to dwell on the issue of classification/ misclassification of the finished goods, which have been raised by the impugned order. - Credit allowed - AT
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VAT:
Interpretation of statute - Levy of VAT - credit note received subsequent to the date of the invoice - Determination of Turnover - Input Tax Credit - Large Bench Decision - In the scheme of value addition and payment of tax on such value addition, the levy of tax is justified on value addition, but, without value addition, sale, or purchase, and for the amount retained by the dealer value-added tax is demanded contrary to Section 11(3) Fifth proviso of the Act. - HC
TMI Short Notes
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (5) TMI 1357
Direction for opening of GST site - HELD THAT:- There will be a direction to the 3rd/4th respondent to keep open the GST site so as to enable the petiitoners to continue their trading activities in relation to the stocks held by them at the time of passing of Ext.P3 order for a period of two weeks from today. Respondents may bring up the case for variation of the interim order, if so advised.
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2022 (5) TMI 1356
Levy of GST - services provided by the applicant to NMMT under the Agreement, by way of supplying, operating and maintaining air-conditioned electrically operated buses - appropriate SAC (Services Accounting Code) for classifying the services provided by the applicant - applicable GST rate - input tax credit of tax paid on the procurement of input supplies used in supplying services to NMMT under the Agreement. HELD THAT:- In view of powers under provisions of Section 102 and 104 of CGST Act, this authority is empowered to take decision as per law, after affording opportunity of hearing to the applicant. In response to the notice for the hearing to be held on 15.03.2022, the applicant sought further date of one month which was granted. Hence, sufficient time has been granted to the applicant to put forth their case. The applicant has failed to prove how the provisions of the said circular dated 6/10/2021 are not applicable to the facts of the case of the applicant. In fact, the applicant has not argued the case on merits in view of the provisions of the Circular mentioned above and had also not brought out the fact that the said Circular was in existence during the earlier hearing which led to the issuance of Order No. 60/2020-21/B-116 dated 21/12/2021. The arguments were made by the Authorised representatives only on non applicability of Sections 102 and 104 to their case which are not at all acceptable in view of the relevant GST provisions. There is no denial by the applicant that provisions of said circular are not applicable to the facts of present case. The applicant has nowhere explained that on facts, provisions of said circular are not applicable in present case. On the contrary, this is indirect admission by the applicant that the provisions of the said circular are very much applicable to the facts of the present case. Thus, the decision given earlier cannot be said to be founded on sound legal footing. Hence, the above mentioned provisions of the GST Laws come into play. This Authority directs the applicant to follow the provisions of the circular dated 6/10/2021 which is of prior date than the date of the decision of this Authority in the earlier ARA order dated 21.12.2021. The grounds raised during present hearing by the applicant are merely and purely of technical nature and in substance the facts of the present case warrant application of the said circular. The technical objections are also not founded on sound principles of law because, if one reads the texts of above sections, under which present order is being passed, a reasonable mind will come to conclusion that there is no merit in the objections taken by the applicant.
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2022 (5) TMI 1355
Pure service - Benefit of exemption from GST - Governmental Entity or not - Renting of immovable Property Services - collection of utility charges (eg. Electricity charger) from PCSCL as Reimbursement - Whether PCSCL is termed as Government or Local Authority of Government Authority or Governmental Entity as per GST Law? - HELD THAT:- Section 95 of the CGST Act, 2017 states that, advance ruling means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant - As per the submissions made, it is seen that the subject question raised is pertaining to the recipient of the impugned supply and is not 'in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant' and therefore cannot be answered in terms of the provisions of Section 95 of the CGST Act, 2017. Whether PCSCL is eligible to take claim benefits of Government or Local Authority of Governmental Authority or Governmental Entity tee. Exemption as per Notification 12/2017-Central Tax (Rate) dated 28/06/2017)? - HELD THAT:- The question pertains to the recipient of the impugned supply and therefore cannot be answered in terms of the provisions of Section 95 of the CGST Act, 2017. Whether Renting of immovable Property Services provided to PCSCL exempt as per GST Law. If taxable then at what rate GST will be applicable? - HELD THAT:- In the instant case, pure services (in the form of Renting of immovable Property services), are supplied by the applicant to PCSCL. Thus, the first part of the conditions mentioned at Sr. No. 3 of the aforesaid Notification is satisfied in the subject case - The second condition to be satisfied for availing exemption under the above referred Notification is that such pure services, as are being rendered in the subject case, should be supplied to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity. Thus, it is needed to discuss whether PCSCL can be considered as a Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity - PCSCL cannot be considered as a Central Government, State Government or Union territory or local authority. Whether PCSCL' would be covered under the definition of 'Government Entity'/Governmental Authority as given in Notification No. 32/2017 dated 13.10.2017? - HELD THAT:- A 'Government Entity' must be either set up by an Act of Parliament or State Legislature or established by any Government, with 90 per cent. or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority - In the subject case, from the submissions made by the applicant, it is seen that, the Government of Maharashtra and the PCMC has 50:50 percent stake in PCSCL which would imply that PCSCL is controlled by the Government of Maharashtra since, PCMC is also a local authority under the Government of Maharashtra. PCSCL is constituted and established by the State Government of Maharashtra to carry out the function entrusted to it by the State Government i.e. to carry out the function of implementing Smart Cities Project of the Government of India, in the State of Maharashtra and therefore PCSCL is clearly covered under the definition of 'Government Entity' as can be seen from the definition of a Government Entity'. The Smart Cities Mission is a vision of the Government of India to drive economic growth and improve the quality of life of people by enabling local area development and harnessing technology, especially technology that leads to Smart outcomes, area-based development which will transform existing areas, including slums, into better planned ones, thereby improving liveability of the whole City. In some cases, new areas to be developed around cities in order to accommodate the expanding population in urban areas - it is clearly seen that even though the pure service (renting of immovable property services) is provided to PCSCL, a Government Entity, the said service, per se, cannot be considered as an activity in relation to any function entrusted to a Municipality under Article 243W of the Constitution, or entrusted to a Panchayat under Article 243 G of the Constitution because the activity of renting of immovable property does not find mention in either Article 243 G or Article 243 W of the Constitution. Thus, Renting of immovable Property Services i.e. 'Pure Service' provided by the applicant to PCSCL, a Government Entity, are not by way of any activity in relation to functions entrusted to a Municipality under article 243W of the Constitution or entrusted to a Panchayat under Article 243 G of the constitution and therefore, the impugned service supplied by the applicant is not exempt under the relevant provisions of Notification No. 12/2017 - CTR dated 28.06.2017 as amended from time to time and therefore the applicant has to discharge GST @ 18%. Whether Utility charges recovered from PCSCL are exempt as per GST Law. If taxable then at what rate GST will be applicable? - HELD THAT:- The applicant has mentioned only a couple of lines in respect of the said matter, namely it has been mentioned that, the applicant collects utility charges (eg. Electricity charges) from PCSCL as Reimbursement and the said Utility charges are reimbursement of cost of actual facility used as per bill issued payable to third party - Other than above the applicant has neither made detailed submissions nor have submitted the relevant agreements with PCSCL for collection of the said utility charges and in view of incomplete details we cannot answer the said question. Whether PCSCL liable to deduct tax at source [GST TDS as per provisions of G5T Law)? - HELD THAT:- GST Law mandates Tax Deduction at Source (TDS) vide Section 51 of the CGST/SGST Act 2017, Section 20 of the IGST Act, 2017 and Section 21 of the UTGST Act, 2017. GST Council in its 28th meeting held on 21.07.2018 recommended the introduction of TDS from 01.10.2018 - TDS provision are made operative with effect from 01.10.2018 for which Notification No. 50/2018-Central Tax dated 13.09.2018 has already been issued in this regard by CBIC. PCSCL is liable to deduct TDS in the subject case, in respect of payments made to the applicant against receipt of renting of immovable property services.
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2022 (5) TMI 1354
Exemption from GST - Entrance / Admission fees which forms part of corpus fund - Annual Subscription fees - Annual Maintenance fees - amount / fees collected towards rendering training / coaching in recreational sports activities - Football / Basketball/ Athletic / Cricket / Swimming coaching fees - Summer coaching fees - Dance coaching - Karate / Physical fitness - entry no. 80 of notification 12/2017-CTR dated 28th June, 2017 - Principles of mutuality - HELD THAT:- As per clause (aa) of Section 7 (1) of the CGST Act, the activities or transactions, by a person, other than an individual, to their members or constituents or vice versa, for cash, deferred payment or other valuable consideration. The said clause (aa) clearly specifies that all or any activates or transactions by a person (in this case, the applicant) to their members will be treated as 'supply' and therefore, fees/contributions from the members, recovered for expending the same for the administration of the club, its maintenance and for provision of services, etc. to its members amounts to or results in a supply - in view of the amended Section 7 of the CGST Act, 2017, we find that the applicant and its members are distinct persons and the fees received by the applicant, from its members are nothing but consideration received for supply of goods/services as a separate entity - Entrance/Admission fees, Annual subscription Maintenance fees etc are liable to tax under the GST Laws. Whether the amount / fees collected towards rendering training / coaching in recreational sports activities i.e. Football, Basketball, Athletic, Cricket, swimming, Summer coaching, Dance coaching and Karate / Physical fitness, are exempt from payment of GST under Entry No. 80 of Notification 12/2017 CTR dated 28th June, 2017? - HELD THAT:- They are registered under Section 12AA of the Income Tax Act and are providing training and coaching in Football, Basketball, Athletic, Cricket, swimming, Karate, Dance, Physical fitness and 'summer coaching' - Football, Basketball, Athletic, Cricket, swimming, and Karate are sports and 'Dance' would be covered under Arts. However, Physical fitness can neither be considered as sports nor Arts or culture. Further, the term 'summer coaching' is a general term which cannot be said to cover sports, Arts or culture. The training and coaching in Football, Basketball, Athletic, Cricket, swimming, Karate, Dance by the applicant would be covered under Entry No. 80 of Notification No. 12/2017-CTR dated 28.06.2017 as amended and 'Physical fitness' training and 'summer coaching are not covered under the said Entry No. 80 mentioned above. Therefore, the benefit of exemption as per Entry No. 80 of Notification No. 12/2017 - CTR dated 28.06.2017 as amended will be available to the applicant only in respect of training and coaching in respect of Football, Basketball, Athletic, Cricket, swimming, Karate and Dance.
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Income Tax
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2022 (5) TMI 1353
Reopening of assessment u/s 147 - bogus LTCG/STCL - penny stock purchases - Whether there was no failure on the part of the Petitioner to fully and truly disclose material facts and information before the Assessing Officer during original assessment proceedings.? - HELD THAT:- As this Court finds that it contains a detailed report vis-a-vis beneficiaries of bogus LTCG/STCL pertaining to the Financial Year 2012-13 (Assessment Year 2013-14). The scrip sold by the Petitioner i.e. Mahanivesh (India) Ltd. is a subject matter of the said report. The report concludes that Mahanivesh (India) Ltd. is a penny stock and that the share price of Mahanivesh (India) Ltd. has been manipulated and bogus profits and losses have been booked in the name of the beneficiaries by trading in the scrip. The Petitioner has been identified and enlisted in the said report along with other beneficiaries. Thus this Court is of the view that despite lapse of four years and a scrutiny assessment, there is fresh tangible material in the present case in the form of information of beneficiaries of bogus LTCL/STCL report prepared by the office of Deputy Director of Income Tax (Investigation) which reveals that Mahanivesh (India) Ltd. is a penny stock whose share price was manipulated in trade by way of a complex web of pre-arranged or artificial transactions to book long term/short term capital gain/loss to the beneficiaries. It is also stated in the said report that the petitioner-assessee was involved in the trade of penny stock, inasmuch as, it had sold shares of Mahanivesh (India) Ltd. in the concerned assessment year. Consequently, this Court is of the view that the present case is not a case of change of opinion. Accordingly, the judgment of the Supreme Court in Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] is not applicable to the present case. Consequently, as the file produced by the Assessing Officer has a note wherein, the Principal Commissioner of Income Tax has granted his approval/sanction and the said document has not been challenged as forged or fabricated, this Court is of the view that prior sanction is on record. Keeping in view the aforesaid, this Court is of the view that the matter requires no interference in writ jurisdiction.
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2022 (5) TMI 1352
Reopening of assessment u/s 148A - Bogus Long Term Capital Gains ( LTCG ) - HELD THAT:- Petitioner has not been provided an adequate opportunity to put forward its defense/reply as the annexure accompanying the notice enumerating the reasons for initiating reassessment pertained to the Assessment Year 2015-16 and not 2018-19. It is pertinent to mention that the allegation mentioned in the 148A(b) and demand notice pertained to claim of bogus LTCG on purchase and sale of shares of Achal Investments Ltd. and not with regard to alleged accommodation entries provided by Shri Naresh Jain. Consequently, this Court is of the view that the principles of natural justice have been violated on the present case. Accordingly, the show cause notice dated 21st March, 2022 issued under Section 148A(b), the order dated 27th March, 2022 issued under Section 148A(d) and the notice dated 27th March, 2022 issued under Section 148 of the Act for the Assessment Year 2018-19 are quashed. If the law permits the respondents/revenue to take further steps in the matter, they shall be at liberty to do so. Needless to state that if and when such steps are taken and if the petitioner has a grievance, he shall be at liberty to take his remedies in accordance with law.
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2022 (5) TMI 1351
Reopening of assessment u/s 147 - Validity of a notice issued u/s 148 - petitioner had received payments under Sections 194 I and 194 J also, but it had not shown the said receipts in his Profit and Loss account and had not given any explanation for the same - HELD THAT:- As the reassessment has been ordered because the A.O. has recorded his reasons to believe that the petitioner had received payments under Section 194 J also, but it had not shown the said receipts in his Profit and Loss account and had not given any explanation for the same. The petitioner had not disclosed the amount of reimbursement of expenses claimed by it and the actual amount received by it towards reimbursement. It had not submitted the details of expenses incurred by it for verification during the assessment proceedings. It did not produce any ledger, bills and vouchers of expenses incurred on behalf of the Principal Companies. Thus the petitioner did not make a full and true disclosure of all the material facts which resulted in an income having escaped assessment. In the instant case, the notice under Section 148 of the Act has been issued by the Assessing Officer after an investigation was carried out and after going through the income tax return and other related documents of the petitioner and after forming reason to believe that the petitioner did not truly and fully disclose all the material facts, because of which income has escaped assessment. Thus the reassessment has been ordered upon discovery of apprehended untruthfulness of facts previously disclosed, which came to light after an investigation and, therefore, the judgment in Phool Chand Bajrang Lal [ 1993 (7) TMI 1 - SUPREME COURT] does not support the petitioner and as per the law laid down in Srikrishna [ 1996 (7) TMI 2 - SUPREME COURT] the reassessment proceedings have rightly been initiated. The judgment passed by this Court has also been sought to be reviewed on the ground that various case laws relied upon by the petitioner in support of its claim have not been considered by this Court. In the judgment sought to be reviewed, the judgments of Aventis Pharma Ltd. Versus ACIT [ 2010 (3) TMI 317 - BOMBAY HIGH COURT] and Arun Gupta versus Union of India, [ 2015 (2) TMI 213 - ALLAHABAD HIGH COURT] cited by the learned counsel for the petitioner have been referred to and dealt with. This Court is not obliged to refer to each and every judgment forming part of a compilation of judgments submitted after conclusion of oral submissions, which judgments were not placed before the Court during oral submissions Therefore, this submission also stands rejected. We do not find any error apparent on the face of the record in the judgment and the order sought to be reviewed. The application for review of the judgment and order lacks merit and, is accordingly dismissed.
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2022 (5) TMI 1350
Reopening of assessment u/s 147 - Period of limitation - receipts of gifts - addition u/s 56 on non-disclosure of the market value of the shares separately by the petitioner in its returns - number of WIPRO shares received as a gift were disclosed, but neither the book value nor the market value of the shares was disclosed in the Balance Sheet - petitioner merely disclosed the receipt of gifts in the balance sheet as part of long term investments at NIL value and neither the book value nor the market value of the shares of Wipro Ltd., were disclosed by the petitioner - whether on 31.03.2021, the respondents were entitled to reopen the assessment proceedings of the petitioner for the assessment year 2012-13 after the expiry of four years as contemplated in Section 147? - HELD THAT:- Revenue are entitled to invoke the proviso to Section 147 of the I.T. Act and reopen the proceedings even after the prescribed period of four years only if the petitioner - assessee had failed to fully and truly disclose all material facts for the purpose of assessment; failure on the part of the assessee to fully and truly disclose all facts which are material, relevant and germane for the purpose of assessment is a sine qua non for the purpose of reopening the assessment. In the present case details contained in the income tax returns submitted by the petitioner clearly falsifies the allegation of the respondents that the book value of the shares had not been mentioned/stated by the petitioner; so also, undisputedly, in order to attract Section 56 (2) (vii) (c) of the I.T. Act, the aggregate fair market value should exceed Rs. 50,000/-; the aforesaid details mentioned in the income tax returns are sufficient to indicate that even if the market value of 49,07,14,120 shares is taken at 1 paise per share, it would exceed the aforesaid fair market value of Rs. 50,000/- for the purpose of income tax; in other words, in the light of all the details furnished by the petitioner in the returns including the total number of shares, the methodology adopted to compute/quantify the number of shares, the total number of shares for the previous assessment year, the face value/book value of the shares being shown as Rs. 2/- each and the total market value of the quoted investments including the gifted shares coupled with the fact that the market value of the shares of Wipro Ltd., which is the public limited company whose share value is available readily in the public domain, it cannot be said that the petitioner had failed to fully and truly disclose all material facts necessary for its assessment. Thus in the light of all the aforesaid material and relevant facts being fully disclosed by the petitioner in its returns, which were more than sufficient to complete the assessment, mere non-disclosure of the market value of the shares separately by the petitioner in its returns cannot lead to an inference that the petitioner has not fully and truly disclosed all material facts necessary for assessment; to put it differently, so long as all other material and relevant facts had been furnished and disclosed and it can be clearly discerned from the returns and the documents that the market value of the shares was in excess of Rs. 50,000/-, simply because the market value of 49,07,14,120 shares had not been separately stated/mentioned, it cannot be said that the respondents were entitled to take shelter under the proviso to Section 147 of the IT. Act and seek to reopen the concluded proceedings of 2016 beyond the period of limitation on 31.03.2021. The material on record also discloses that at the time of assessment proceedings, it was not the case of the respondents that the market value of the shares was a material fact that was not disclosed by the petitioner; on the other hand, in its notice dated 09.06.2015 issued under Section 142(1) of the I.T. Act, the only details sought for by the respondents was with regard to the complete list of donors with address, PAN and the amount donated. In the said notice, though there is a separate column which enables the respondents to seek details with regard to computation of income, audit report along with financial statements/schedules, additional information in this regard with regard to non-furnishing of the market value of the shares was not sought for by the respondents in the aforesaid notice dated 09.06.2015 (Annexure-G). This circumstance is also a pointer to the fact that the details furnished by the petitioner in its returns were sufficient and that the petitioner had fully and truly disclosed all material facts. In the instant case, all relevant material facts viz., details of shares for the assessment years 2011-12 and 2012-13 have been stated including the breakup, face value of the shares at Rs. 2/- per share, the details of the shares for the previous year, market value of all the quoted investments including the shares etc., have been furnished by the petitioner and accepted at the time of assessment without any demur; under these circumstances, the respondents are not entitled to invoke the proviso to Section 147 of the I.T. Act in order to contend that the income from the shares has escaped assessment on account of failure on the part of the petitioner to fully and truly disclose all material facts. Viewed from this angle also, the impugned notice and the reasons assigned by the respondents deserve to be quashed. It is the settled legal position that an assessee is under a duty or obligation to disclose only the basic and primary facts relating to his assessment and thereafter, it is for the Assessing officer to make further enquires and draw inferences and if he does not do so for any reason, then the Revenue cannot contend that there was any failure or omission on the part of the assessee. In the instant case, after being in possession of all the relevant facts relating to the gifts of shares received by the petitioner, the Assessing officer consciously chose not to apply Section 56(2)(vii)(c) of the I.T. Act. However, after the expiry of the period of four years mentioned in the proviso to Section 147, the A.O has attempted to take a new view, which is not permissible in law. - Decided in favour of assessee.
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2022 (5) TMI 1349
Validity of assessment - determination of the value for the purpose of computation of income - violation of the principles of natural justice - challenge to the impugned order is primarily on the ground that it is in violation of the principles of natural justice, as the petitioner was not heard before the impugned order was passed - second ground on which the impugned order is challenged is on account of the fact that despite the petitioner requesting for cross-examination of the persons from whom a statement was obtained by the Income Tax Department, they were not allowed to be cross-examined - HELD THAT:- The dispute in this present case pertains to sale of 110 cents of land out of total extent of 8.59 acres. It is the specific case of the petitioner that though the sale deed, dated 26.02.2007 declares a sale consideration as Rs. 15,00,000/-, receipt of such confirmed in the said sale deed, the petitioner has not received a single penny from the buyer. That apart, it is submitted that the petitioner was not the sole owner of the property but a co-owner along with the sibling and that tax if can be demanded only on the proportionate value. Even as per the petitioner, the petitioner has not received any consideration from his buyer, namely, V.Palanikumar. Therefore, the petitioner s demand for cross-examination of his sibling is an exercise in futility. In the remand report that they had categorically stated that they had given up their rights and it is the petitioner who sold the land to V.Palanikumar after given their power in his favour. Thus, no useful purpose will be served by summoning his siblings for cross-examination. No merits in the arguments advanced by the learned counsel for the petitioner that there was a violation of principles of natural justice as no cross-examination was not allowed to cross-examine the petitioner s siblings. As the far as the cross-examination of the buyer, V.Palanikumar is concerned, was also irrelevant as documents namely sale deed speak for itself. Whatever, the sale consideration declared in the sale deed, dated 26.02.2007 is of no relevant. The value that has to be determined under Section 50 C of the Income Tax Act. If the guideline value is more than the value declared in the document, then guideline value is relevant for payment of tax. whether the petitioner has received the aforesaid amount is of no consequence. As long as a sale was effected the petitioner is bound by Section 50 C of the Income Tax Act. Argument that value has to be redetermined under Section 50 C (2) was taken up for the first time. It is evident that the petitioner is dragging on the proceedings to stall recovery of the tax amount. We do not find any merits in this writ petition. Therefore, the writ petition stands dismissed.
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2022 (5) TMI 1348
Reopening of assessment u/s 147 - assessment was reopened beyond 4 years - AO reopened the assessment based on the information received from investigation wing that the assessee is also one of the beneficiaries of pre arranged bogus long term capital gains - HELD THAT:- There is no failure on the part of the assessee to furnish all necessary material for the purpose of assessment. The Ld.CIT(A) considered the ratio laid down in the above said decisions and passed order saying that the reassessment was initiated only to verify the genuineness of the exemption claimed in the original return. Suspicion cannot be the basis for reassessment and more so when the reassessment is governed by the proviso to sec.147 of the Act. Therefore, we are of the firm view that the Ld.CIT(A) has rightly appreciated the ratio laid down in USHA EXPORTS VERSUS ASSISTANT COMMISSIONER OF INCOME TAX [ 2019 (12) TMI 1210 - BOMBAY HIGH COURT] and quashed the reassessment proceedings as void-ab-initio. We do not find any infirmity in the order passed by the Ld.CIT(A). Hence, the grounds raised by the revenue are dismissed.
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2022 (5) TMI 1347
Validity of assessment u/s 153C - Search operation u/s. 132 conducted in the residential premises of Sri Kondrothu Venkata Rama Rao and subsequently the assessee was subjected to search operation - HELD THAT:- In the instant case, the Ld. AO ought to have issued notice u/s. 153A of the Act instead of notice u/s. 153C of the Act. Further, the Act also indicates that in case any documents relating to person other than the person searched was found, then the notice to be issued to such other person is u/s. 153A r.w.s 153C. Therefore, the initiation of proceedings u/s.153C of the Act in the case of the assessee who is other than the person searched is not valid. The same view was also taken by the Ld. CIT(A) while allowing the legal ground raised before him and held that the notice issued U/s. 153C of the Act is invalid in the case of the assessee. It is not out of place to mention that any defects in notices u/s. 153A / 153C of the Act, whereby the Assessing Officer assumes jurisdiction, are not curable U/s. 292BB of the Act even the assessee participated in the assessment proceedings without objection. Therefore, it can be safely concluded that in the instant case, since the issue of notice u/s. 153C is invalid and consequently, the assessment order passed U/s. 143(3) r.w.s 153C is bad in law and void ab initio. Accordingly, we uphold the decision of the Ld. CIT(A) on the issue of legal ground and dismiss the grounds raised by the Revenue.
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2022 (5) TMI 1346
Powers of the Commissioner (Appeals) in dismissing the appeal - Disallowance u/s.54F - proportionate expenditure further incurred after purchase of new house to make it habitable - CIT(Appeals) dismissed the appeal for non-prosecution on the part of the assessee - HELD THAT:- We are unable to persuade ourselves to accept the manner in which the appeal of the assessee has been disposed off by the CIT(Appeals). In our considered view, once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. In fact, a perusal of Sec.251(1)(a) and (b), as well as the Explanation‟ to Sec.251(2) of the Act, reveals, that the CIT(A) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per mandate of law, the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non-prosecution. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas (HUF) [ 2016 (5) TMI 290 - BOMBAY HIGH COURT] We, thus, not being persuaded to subscribe to the dismissal of the appeal by the CIT(Appeals) for non-prosecution, therefore, set-aside his order with a direction to dispose off the same on merits. Assessee appeal allowed for statistical purposes.
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2022 (5) TMI 1345
Delayed Employee's Contribution towards PF and ESIC - amendment was brought in finance Act 2021 w.e.f 1-4- 2021 - HELD THAT:- The amendment was brought in finance Act 2021 w.e.f 1-4- 2021.The law was not framed/amended in the relevant Assessment year and any legal proposition which cast additional burden/liability on the assessee shall be applicable prospectively. We considering the overall facts, circumstances, judicial decisions, are of the reasoned view that the amendment to section 36(1)(va) of the Act will not be applicable to assessment year 2018-19. The assessee has deposited the employee s contribution of Provident fund ESIC before the due date of return of income u/sec 139(1) of the Act. Accordingly, we set-aside the order of the CIT(A) and direct the assessing officer to delete the disallowance and allow the grounds of appeal in favour of the assessee.
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2022 (5) TMI 1344
Levied penalty u/s 271C - short deduction/non deduction of tax at source alleging default committed by the assessee u/s 194C on payment of External Development Charges (EDC) to Haryana Urban Development Authority (HUDA) - assessee contends that the payment to HUDA is, in effect, payment to State Government and therefore such payment is exempt from obligations to deduct TDS in view of Section 196 - HELD THAT:- As identical issue has been examined by the Co-ordinate Bench in the case of Perfect Constech Pvt. Ltd. vs. Additional Commissioner of Income Tax [ 2020 (12) TMI 1158 - ITAT DELHI] wherein found that the provisions of Section 194C are not applicable on payments to agencies like HUDA on behalf of the State Government. The imposition of penalty under Section 271C was consequently found to be unsustainable in the absence of default of Section 194C. The facts and issue being identical, in the light of the clarification noted above coupled with view taken by the Coordinate Bench in the identical facts situation, we see no reason to depart therefrom. Consequently, we find merit in the plea raised on behalf of the assessee for cancellation of penalty imposed under Section 271C of the Act. - Assessee appeal allowed.
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2022 (5) TMI 1343
Rectification u/s 154 - adjustment towards prior period expenditure by way of rectification resulting in increase in the assessed income - HELD THAT:- We find palpable merit in the plea of the assessee that there is no bar per se for claim of prior period expenses as revenue expenditure in appropriate factual matrix in the light of the decision of the Hon ble Supreme Court in the case of CIT vs. Hero Cycles Pvt. Ltd. [ 1997 (8) TMI 6 - SUPREME COURT] . The Hon ble Delhi High Court in the case of CIT vs. Jagjit Industries Ltd. [ 2010 (9) TMI 58 - DELHI HIGH COURT] has held that the claim of prior period expenses is permissible in the given factual matrix. On a broader reckoning, it is plain and simple that mere claim of prior period expenses in a relevant assessment year cannot be disallowed outright without examining the factual matrix. - in the case of Hero Cycle (supra) has inter alia observed in paragraph 3 of the judgment that Rectification under section 154 of the Act can only be made when glaring mistake of fact or law has been committed by the officer passing the order becomes apparent from the record. Rectification is not possible if the question is debatable. Moreover, the point which was not examined on facts or in law cannot be dealt as mistake apparent on the record. The dispute raised a mixed question of fact and law. Thus the action of the Assessing Officer is clearly without jurisdiction to invoke Section 154 of the Act with a view to engage in making adjustments on such debatable issues in an abstract manner. The action of the Assessing Officer is thus without sanction of law and requires to be reversed. Increase in the assessed income on account of provision for leave encashment outstanding as on date of filing of return - We concur with the contentions raised on behalf of the assessee without any demur. The Assessing Officer could not have enhanced the assessed income towards provision for leave encashment by way of rectification under Section 154 of the Act at the relevant time contrary to judgment rendered by Hon ble Calcutta High Court . [ 2007 (6) TMI 175 - CALCUTTA HIGH COURT] under Section 154 of the Act. The action of the Assessing Officer is thus reversed and position of the assessee is restored. Appeal of assessee allowed.
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2022 (5) TMI 1342
Assessment u/s 153A - incriminating material found during the course of search or not? - HELD THAT:- The impugned assessment order clearly shows that the impugned additions are devoid of any incriminating material found at the time of search. We are of the considered opinion that on the given facts of the case, the ratio laid down by the Hon'ble Supreme Court in the case of Singhad Technical Education [ 2017 (8) TMI 1298 - SUPREME COURT ] squarely apply wherein the Hon'ble Supreme Court has held that the nexus between issue of notice u/s 153C of the Act and incriminating material found as a result of search must exist. - Decided against revenue.
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2022 (5) TMI 1341
Assessment u/s 153C - Uncertain investment in unquoted shares - chargeability of Income found as a consequence of Search - addition based on Protective or substantive basis - substantive addition has to be made at the hands of the SVP group entities - as alleged by the AO, the assessee did not furnish complete details and was non-cooperative. Based on seized material, the assessing officer found that a number of companies had advanced share application money to SVP Group concerns - Commissioner (Appeals) held that the amount declared to have been invested by the assessee has to be assessed at the hands of the real beneficiaries i.e. the five flagship companies of SVP Group. Thus, he directed the assessing officer to delete the additions made at the hands of the assessee on substantive basis and to make such additions on protective basis, since, the substantive addition has to be made at the hands of the SVP group entities - HELD THAT:- As brought to our notice by the learned Departmental Representative that, in the meanwhile, the Tribunal has decided the appeals of SVP Group entities. A perusal of the aforesaid order of the co-ordinate Bench reveals that the Tribunal has granted partial relief while deciding the appeals. This being the factual position, to what extent the aforesaid decision of the Tribunal in case of SVP Group entities would influence the protective additions made at the hands of the assessee to make them substantive, needs to be examined. Therefore, due to the changed scenario because of the decision of the coordinate Bench in the case of SVP Group entities, referred to above, the issues arising in these appeals are restored back to the assessing officer for fresh adjudication. The assessing officer must analyze the order of the co-ordinate Bench in case of SVP Group entities (supra), to find out to what extent the substantive additions made at the hands of the SVP Group entities corresponding to the protective additions made at the hands of the present assessee have been reduced and accordingly proceed to make additions if warranted, on substantive basis at the hands of the present assessee. Needless to mention, before deciding the issues, assessing officer must extend reasonable opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.
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2022 (5) TMI 1340
Penalty u/s 271(1)(c) - addition made on account of social forestry expenses - CIT-A deleted the penalty levy - HELD THAT:- CIT(A) deleted the penalty on the ground that in assessee s own case for the A.Y. 2011-12 identical issue had been decided in favour of the assessee and against the revenue by the earlier ld. CIT(A) by following the decision of Hon'ble Supreme Court in the case of Reliance Petroproducts (P) Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] as held that mere making of claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding income of the assessee. No new facts and circumstances has been brought on record by the ld. CIT-DR to controvert the findings so recorded by the ld. CIT(A), therefore, considering the totality of facts and circumstances, we do not find any reason to deviate from the findings of the ld. CIT(A), which we affirms the same. Addition u/s 80IA - CIT(A) has deleted the addition by observing the fact that the Assessing officer has not found any specific instance of furnishing of inaccurate particulars or concealment of details. All details were furnished, including audited accounts and impugned addition is a result of change in method/manner of allocation of expenses to the different units, which was a difference of opinion. CIT(A) by following the decision of Hon'ble Supreme Court in the case of Reliance Petroproducts [ 2010 (3) TMI 80 - SUPREME COURT] and Shri Rama Multi Tech [ 2013 (1) TMI 800 - GUJARAT HIGH COURT] Gujarat Insecticides Ltd. [ 2013 (10) TMI 159 - GUJARAT HIGH COURT] had deleted the penalty levied by the Assessing officer. No new facts and circumstances has been brought on record by the ld. CIT-DR to controvert the findings so recorded by the ld. CIT(A), therefore, considering the totality of facts and circumstances, we do not find any reason to deviate from the findings of the ld. CIT(A), which we affirms the same. Addition of club expenses - CIT(A) had deleted the penalty levied with regard to club expenses. No new facts and circumstances has been brought on record by the ld. CIT-DR to controvert the findings so recorded by the ld. CIT(A), therefore, considering the totality of facts and circumstances, we do not find any reason to deviate from the findings of the ld. CIT(A), which we affirms the same. Addition on account of deployment of funds credited to capital work - Hon'ble Supreme Court in case of CIT v. Bokaro Steel Ltd. [ 1998 (12) TMI 4 - SUPREME COURT] and in the case of NTPC Sail Power Company P. Ltd [ 2012 (10) TMI 524 - DELHI HIGH COURT] held that interest earned on surplus funds which are inextricably linked to the setting up of the project is a capital receipt not to be taxed as revenue receipts. CIT(A) has also held that the accounting treatment given by assessee results only in delaying the tax effect, (in form of reduction in claim of depreciation as the project cost is reduced) so it is a dispute of year of taxation. It was further held that the accounting treatment was explained in notes to accounts forming part of balance sheet. CIT(A) held that Assessing officer has not given finding of any instance of furnishing inaccurate particulars or of concealment of particulars of income. The impugned penalty levied on addition made due to difference in opinion cannot be sustained and the ld. CIT(A) had deleted the penalty. Disallowance under Section 40(a)(ia) - disallowance is made solely for not making TDS. The Assessing Officer has not questioned genuineness of expenses or questioned the purpose of expenses. The explanation of the assessee was that they believed that no TDS to be made as per ratio lay down by Hon'ble Supreme Court in CIT v. Kotak Securities Lid. [ 2016 (3) TMI 1026 - SUPREME COURT] CIT(A) has further held that the assessee s case is squarely covered by decision of Dahyabhai Veliibhc Patel [ 2013 (1) TMI 849 - ITAT AHMEDABAD] as held that when genuineness of expenditure is not questioned disallowance made merely on ground that TDS is not deducted penalty u/ 271(1)(c) cannot be imposed. No new facts or law is brought to our notice to take other view, therefore, considering the totality of facts and circumstances, we do not find any reason to deviate from the findings of the ld. CIT(A), which we affirms the same. Decided against revenue.
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2022 (5) TMI 1339
TDS u/s 195 - withhold tax on payment to non-resident companies - payments made to Intelsat Corporation, USA/IGSM, UK/MEASAT, Malaysia for transponder charges - whether payment did not constitute royalty u/s 9(1)(vi) of the Act or under the relevant DTAA? - CIT(A) has deleted the addition - HELD THAT:- As decided in own case [ 2018 (7) TMI 2248 - ITAT MUMBAI] since no income was chargeable in the hands of the recipient, there was no liability on the part of the assessee to deduct tax at source on the similar payments for transponder facility. Further, the Ld. CIT(A) has followed binding precedents of jurisdictional High Court in the case of New Sports Broadcast Put Ltd [ 2019 (6) TMI 250 - BOMBAY HIGH COURT] wherein it is held that transponder charges are not in the nature of 'Royalty income in the hands of recipients despite amendment to section 9(1) (vi) of the Act. In view of binding precedent of the Tribunal and Hon'ble High Court followed by the Ld. CIT(A) in respective impugned orders, we do not find any error or infirmity in the impugned orders passed by the Ld. CIT(A) on the issue in dispute relevant to the orders of Assessing Officer u/s 195(2) of the Act. Accordingly, we uphold the finding of the Ld. CIT(A) in impugned orders. Grounds raised by the Revenue in these appeals are accordingly dismissed
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2022 (5) TMI 1338
TP Adjustment - payments made for Technology License renewal fees and management fees - whether the transaction ought to be benchmarked separately or whether TNMM could be adopted? - HELD THAT:- The subject payments (Management fee and Technology License Renewal Fee) are incurred with respect to the manufacture of industrial adhesives. It is undisputed that the assessee is engaged only in the manufacture, and marketing and therefore dependent on its group companies for intellectual property, skills, expertise, know-how, specialization and technology which are developed in-house by the group in all core areas of its business, benefits also the assessee in the form of consistency in business practice, the economics of scale with regard to global sourcing. The process improvements are also passed on by the group companies to the assessee and same is evident from facts on record. The subject payments are duly supported by agreements which details the nature of services performed by the associated enterprises to the assessee company. Given the above factual background, we find that the management fee and technology license fee are interlinked and interconnected with the business of manufacture. Given the difficulty / impossibility in computing ALP using CUP and considering the close nexus between the manufacturing activity and payment of management / license fees, the method to be adopted for benchmarking the above international transactions by the assessee ought to be TNMM. The TPO is accordingly directed to consider TNMM as MAM for determination of ALP for payment of license and management fees. The contention of the TPO that the assessee has not submitted the documentary evidence for the benefit received on account of services rendered is factually incorrect in view of voluminous evidences filed as a paper book. The assessee has also submitted a detailed note explaining the benefits received on account of payment of license and management fees. The TPO and the DRP have failed to consider the same in an objective manner. The Delhi High Court in CIT v EKL Appliances Ltd. [ 2012 (4) TMI 346 - DELHI HIGH COURT] held that so long as the expenditure or payment has been demonstrated to have been incurred or laid out for the purpose of business, it is no concern of the TPO to disallow the same on any extraneous reasoning. The TPO and the DRP in the present case have summarily rejected the evidences and submissions of the assessee on the 'benefit test' without bringing on record any contrary material. TPOs reasoning of constructing a hypothetical CUP based on the study of third party scenario is not envisaged as per the benchmarking exercise laid out in rule 10B. TPO has also not explained the basis or reasoning in support of his impugned conclusion that no third party would make payment for services in a hypothetical CUP. The orders passed by the lower authorities therefore cannot be sustained. Payments made for commercial service (IT support services) , the issue pertains to only A.Y. 2011- 2012 (see ground 8). The assessee has submitted that the cost allocation is on the basis of a number of IT users, i.e., head count. Since centralized IT services of the TOTAL group are distributed among all divisions, subsidiaries and associates who use this facility, the basis of cost allocation is reasonable and cannot be faulted. In addition to listing the services availed, the assessee has also furnished copies of invoices evidencing payments to the AE. The AR for the assessee invited our attention to the DRP directions for the A.Y. 2012-2013 and 2013-2014, wherein relief has been allowed considering the above basis to be the scientific basis of cost allocation. We direct the TPO to consider the above evidence, and if the facts remain the same as in the case of subsequent years, allow appropriate relief to the assessee.
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2022 (5) TMI 1337
Belated payment of employees contribution towards PF ESI made after the due dates specified in the relevant statute - HELD THAT:- As the issue involved in the present case as well as all the material facts relevant thereto are similar to the case of Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] we respectfully follow the decision of Hon ble jurisdictional High Court rendered in the said case and uphold the impugned order of the learned CIT(A) confirming the disallowance made by the Assessing Officer on account of belated payment of employees contribution towards PF ESI. - Decided against assessee.
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2022 (5) TMI 1336
Penalty levied u/s 271(1)(c) - addition of capital gain on account of transfer of land/acquisition of land - HELD THAT:- The land transferred by individual assessee(s) does not falls in the Municipal Area. Hazira Notified area is not a Municipal area or deemed municipal area, therefore, the receipt/gain on transfer of land is not taxable under Income tax Act. Further, the assessees on their alternative pleas were also held eligible for exemption under section 10(37) of the Act as the land was compulsorily acquired by Government of Gujarat by completing statutory formalities under Land Acquisition Act, 1882. The land was used for agriculture purpose for two years prior to its acquisition. And the assessee(s) fulfilled all the requisite condition for seeking exemption under section 10(37) of the Act. The other addition made under the head capital gains against the cost of pucca structure, the assessee's were allowed 60% as cost of acquisition or cost of improvement, against the relief of 50% as allowed by Ld. CIT(A). Further, in some cases, the agricultural income offered by assessee(s) were treated as income from other sources has been held as income from agricultural activities . Thus, in quantum appeals all the assessee was granted substantial relief in deleting major part of additions and only part of capital gains only on account of cost of improvement on pucca structure was partly upheld on estimation basis. Therefore, all substantial additions were either deleted or upheld only on estimation basis. In our considered view no penalty under section 271(1)(c) of the Act is levieable on all the assessee(s). - Decided in favour of assessee.
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2022 (5) TMI 1335
Short deduction of TDS - common area maintenance charges (CAM charges) - TDS @10% u/s. 194I OR 2% u/s. 194C - Default u/s 201(1) - HELD THAT:- As decided in own case [ 2022 (4) TMI 1278 - ITAT BANGALORE ] CAM charges would be subjected to deduction of tax at source u/s. 194C of the Act at 2%. The assessee has applied the right rate of tax for deduction at source at 2% on CAM charges and therefore the assessee cannot be held to be an assessee in default u/s. 201(1) of the Act Since the appeal is allowed in favour of the assessee stating that the assessee could not be held to be an assessee in default u/s.201(1), the interest charged by the AO u/s.201(1A) which is consequential in nature is rendered infructuous - Decided in favour of assessee.
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2022 (5) TMI 1334
Revision u/s 263 by CIT - eligibility of claim of agricultural income to be exempt as contemplated under section 10 (1) - scope of agreement entered into by the assessee with the farmer - proof of specific query relating to agricultural income - HELD THAT:- We have perused the agreement with the farmer relied by the Ld.AR. This agreement reveals that, the farmer was absolute owner or the leased land and, the assessee agreed to supply fertilisers and pesticides as per the schedule therein at specified time. It is also agreed by the assessee that, a particular variety of seed would be supplied to the farmer on credit basis. Before us, the assessee has not filed any agreement, showing the lands being leased in favour of the assessee. It is submitted that these were the documents filed by the assessee in reply to the query raised by the Ld.AO at the time of original assessment proceedings. Even there are no agreements placed before us that reveals ownership in land by the assessee, on which farming was carried out. From the materials placed before the Ld.AO it is prima facie inferred that the no details are filed by the assessee and the Ld.AO has not verified the exemption claimed by the assessee under section 10(1) of the Act. Thus, in our view, the original assessment is completed without proper enquiries, that necessitated the Ld.Pr.CIT to issue section 263. Ld.Pr.CIT has directed the Ld.AO to carry out necessary verification in respect of the exemption by the assessee under section 10(1) of the Act. This in no manner will prejudice the assessee. We direct the Ld.AO to grant proper opportunity of being heard to the assessee - Decided against assessee.
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2022 (5) TMI 1333
Late deposit of employee's share towards Provident Fund by resort to provisions of Section 36(1)(va) read with section 2(24) - HELD THAT:- It is seen that in the facts of the present case no doubt that there was a delay in the payments of PF in respect of employees contribution as far as time line set out by the relevant statute is concerned. However, it is not disputed that the payments of PF amounting to Rs. 4,62,844/- was paid well before the furnishing of the return. Accordingly, considering the position of law as has been consistently considered by the ITAT we allow the ground. The amendments carried out in section 36(1)(va) and 43B by the Finance Act, 2021 consistently have been held to be prospective in nature and and will kick in from 2020-21 Assessment Year - Appeal of assessee allowed.
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2022 (5) TMI 1332
Disallowance of write off of property advances - assessee submitted that the amount so written off represents 'property advances' made to various parties during the normal course of business, which became irrecoverable - A.O. noticed that the assessee has written off it as bad debts - AO has disallowed part of claim of the assessee only for the reason that the quantum of advance given is on higher side, while the A.O. has himself allowed the claim in respect of smaller advances observing that they are incidental in the business of real estate development - HELD THAT:- From the assessment order, we notice that the A.O. has fixed a limit of Rs. 50 lakhs for this purpose and accordingly, disallowed advances exceeding Rs. 50 lakhs. Admittedly, that cannot be a criterion for making disallowance of the claim made by the assessee - AO has allowed claim in respect of a party, but disallowed similar claim made in respect of very same person only for the reason that the said advance is on higher side. This stand of the AO is also not acceptable. CIT(A) has expressed the view that the assessee has not proved before the A.O. that the attempts made by it for recovery of the amount has failed and further the debtors were not financially sound to repay the debt. We notice that the assessee has canvassed its claim as bad debts u/s. 36(1)(vii) of the Act and hence it has placed its reliance on the decision rendered in the case of TRF Limited [ 2010 (2) TMI 211 - SUPREME COURT] - CIT(A) also appears to have proceeded on that line only by observing that writing off of bad debt is not an empty formality and assessee cannot convert any live amount to bad debt only on the basis of technical rule of write off. In our view, the advances given for purchase of land in the normal course of business of carrying on real estate development, if not recoverable could be allowed as either trading loss u/s. 28 of the Act or as expenditure u/s. 37 of the Act. In fact, the AO has accepted the loss to the extent of Rs. 1.94 crores specifically observing that these kinds of payments/write off are incidental to the business, meaning thereby, the AO has actually applied the provisions of Sec. 28/37 - Before us, the Ld. A.R. has furnished a written submission explaining the reasons, which compelled the assessee to write off these amounts. We noticed that the Ld. CIT(A) has proceeded to examine the claim as bad debts u/s. 36(1)(vii) of the Act and the AO has disallowed the claim only for the reason that the amount written off are larger advances. In our view, the criteria applied by the AO for allowing the claim to the extent of Rs. 1.94 crores should be applied to other advances also. We are of the view that the claim of the assessee is required to be examined either u/s. 28 or u/s. 37 of the Act. Accordingly, we are of the view that this issue requires fresh examination at the end of the A.O. Accordingly, we set aside the order passed by the Ld. CIT(A) on this issue and restore the same to the file of the A.O. with the direction to examine the claim of the assessee u/s. 28/37 of the Act. The assessee should be given adequate opportunity of being heard.
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2022 (5) TMI 1331
Addition u/s 68 - Assessee was unable to prove that it carried out any business of jewellery or job receipts and, therefore, AO is justified in taxing the entire receipts from income from other sources liable to be added u/s 68 - HELD THAT:- Here in this case, the scope of assessment was circumscribed to the issue flagged in limited scrutiny through CASS to examine the cash deposits during the demonetisation period, i.e., 09.11.2016 to 30.12.2016 - AO instead of examining this issue has travelled beyond and has held that entire receipts shown by the assessee as business income is income from undisclosed sources and entire receipts have been added u/s 68 of the Act. First of all, there is no cash deposits post-demonetisation period i.e. 09.11.2016 to 30.12.2016, albeit present appeal pertains to FY 2014-15 and in this year only cash deposited in the bank account on various dates, which is clear from the bank statement and which has been stated to be received from job receipts and making of jewellery. Thus, the entire premise on which case was selected for scrutiny was non-existent and accordingly, AO could not have travelled beyond that for enlarging the scope of assessment by making addition on a different ground. The CBDT vide its Instruction No.20/2015 dated 29.12.2015 and Instruction No.5/2016 dated 14.07.2016 has categorically held that AO cannot travel beyond the scope of limited scrutiny and in case the AO wants to convert the limited scrutiny into complete scrutiny then he has to seek approval from concerned Pr.CIT or CIT which has to be given in writing after getting satisfaction from the merits on the issues. In this case, no approval has been taken by the AO from concerned Pr.CIT/CIT before making any addition beyond the scope of limited scrutiny. Accordingly, we hold that the entire addition which has been made cannot be sustained and the same is beyond the scope and violation of limited scrutiny. Accordingly, on this ground alone, the addition is deleted and the appeal of the assessee is allowed.
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2022 (5) TMI 1330
Addition on account of large increase in Sundry Creditors with respect to turnover during the year - A/R submitted that it is an admitted fact that during the course of assessment proceedings the assessee could not substantiate the increase in the quantum of sundry creditors through documentary evidence - CIT-A deleted the addition - HELD THAT:- We find that the Ld. CIT(A) has recorded a clear finding regarding domestic creditors as well as overseas creditors that their identity, credit-worthiness and genuineness of the transactions have been duly verified by the AO during the remand proceedings and no adverse finding has been recorded in this regard. During the course of hearing, nothing has been brought to our notice to disturb the said findings of the Ld. CIT(A) and therefore, the said findings remain unrebutted before us. Regarding the general trade practice of import against letter of credit, the Ld. CIT(A) has sought explanation from the assessee where the assessee has submitted that due to long standing business dealings with the suppliers of gypsum in Pakistan, they have not insisted on supply against letter of credit and the supplies have been regularly made against payments through regular banking channels and such practice is going on for a long time and being satisfied, CIT(A) has accepted the said explanation and we do not find any perversity in the said findings of the Ld. CIT(A) given the facts of the present case as against the general trade practice. In light of the same, we hereby confirm the findings and order of the Ld. CIT(A) and the ground of appeal taken by the Revenue is dismissed.
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2022 (5) TMI 1329
Late deposit of employees' contribution to ESI PF - Deposits well before the due date of filing of return of income u/s. 139(1) - HELD THAT:- CIT(A) has referred to the amendment brought in by the Finance Act, 2021 wherein an explanation has been introduced to Sections 36(1)(va) and u/s. 43B of the Income Tax Act. It is a consistent position across various Benches of the Tribunal including Chandigarh Benches that the amendment which has been brought in by the Finance Act, 2021 shall apply w.e.f. assessment year 2021-22 and subsequent assessment years and the impugned assessment year being assessment year 2019-20, the said amendment cannot be applied in the instant case. Therefore, the addition made by way of adjustment while processing the return of income u/s. 143(1) so made by the CPC towards the deposit of employees' contribution towards ESI and PF paid before the due date of filing of the return of income u/s. 139 of the Act, is hereby directed to be deleted and the ground of appeal is allowed.
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2022 (5) TMI 1328
Validity of reopening of assessment u/s 147 - approval u/s.151 - As argued non-obtaining of approval by the AO from the Pr. CIT-1, Jabalpur, or of it being not in accordance with law - HELD THAT:- We are unable to appreciate the assessee s case. True, the ld. CIT(A) has failed to consider the assessee s plea and issue a finding thereon, so that the assessee s grievance in the matter is understandable. However, the fact of the matter is that there is nothing on record to exhibit that the assessee did indeed request the AO to provide a copy of the said approval. Then, again, what, one wonders, prevented the assessee to seek an inspection of his assessment record (either directly or even under the RTI Act) to ascertain if the same had indeed been obtained, or, as inferred, not. In its absence, this remains no more than a bald allegation, i.e., without any basis, even as the presumption in law (section 114(e) of the Indian Evidence Act) is that all judicial and official acts are regularly performed, so that the said presumption would have to be, for us to entertain the assessee s claim, rebutted. This is particularly so as the AO categorically states (at para 1 of his order) that notice u/s. 148 was issued on 30/03/2016 after taking approval from the appropriate authority . No wonder that the assessee s claim before the ld. CIT(A) is ambivalent, stating that the proceedings had been initiated without obtaining of Approval or the Approval is not in accordance with law, clearly indicating of the assessee being not aware of or, in the least, not sure of the actual facts of the case. Rather, the assessee s request dated 11/11/2016 to the AO cannot be regarded as a valid request in law as the assessee had till then admittedly not furnished any return in response to the notice u/s. 148(1), which was filed only on 18/11/2016. There is no claim and nothing on record to exhibit that a request was made after the filing of the return. We are unable to appreciate the assessee s case. True, the ld. CIT(A) has failed to consider the assessee s plea and issue a finding thereon, so that the assessee s grievance in the matter is understandable. However, the fact of the matter is that there is nothing on record to exhibit that the assessee did indeed request the AO to provide a copy of the said approval. Then, again, what, one wonders, prevented the assessee to seek an inspection of his assessment record (either directly or even under the RTI Act) to ascertain if the same had indeed been obtained, or, as inferred, not. In its absence, this remains no more than a bald allegation, i.e., without any basis, even as the presumption in law (section 114(e) of the Indian Evidence Act) is that all judicial and official acts are regularly performed, so that the said presumption would have to be, for us to entertain the assessee s claim, rebutted. This is particularly so as the AO categorically states (at para 1 of his order) that notice u/s. 148 was issued on 30/03/2016 after taking approval from the appropriate authority . No wonder that the assessee s claim before the ld. CIT(A) is ambivalent, stating that the proceedings had been initiated without obtaining of Approval or the Approval is not in accordance with law, clearly indicating of the assessee being not aware of or, in the least, not sure of the actual facts of the case. Rather, the assessee s request dated 11/11/2016 to the AO cannot be regarded as a valid request in law as the assessee had till then admittedly not furnished any return in response to the notice u/s. 148(1), which was filed only on 18/11/2016. There is no claim and nothing on record to exhibit that a request was made after the filing of the return. Addition u/s 68 - additions by the AO are on the premise that the assessee has abysmally failed to substantiate his claim of being engaged in the cheque issuing business, i.e., on receipt of cash or local cheque, issuing outstation cheque in the case of the lat ter - Even if the party depositing the cheque, and the outstation party to whom the corresponding cheque is issued, are, as would appear, different, as it is only that which would provide a basis or a rationale to the transaction, both the parties are known and, thus, available for confirmation. A one-to-one correlation between the debits and credits, with the two parties having trade relations, would at once establish that the assessee is not the beneficiary of the sums deposited in his bank accounts. The same would also exhibit if the commission stands paid in his bank accounts, or outside it. For example, a cash deposit of Rs. 1,00,200, as against a remittance of Rs. 1,00,000, would clearly exhibit both, the extent of commission as well as prove the transaction to be a financial accommodation transaction. No such attempt has been made by the assessee at any stage, whose case remains, thus, wholly unsubstantiated, accepted by the ld. CIT(A) without any evidence whatsoever; rather, claiming that the AO had accepted the assessee s claim as to cheque issue business , as well as income therefrom. As question that still survives is if the assessment as made can be upheld? In our clear view, the answer is No . The reason is simple. The starting point of the investigation process is the search on 21/03/2016 on three individuals who had admitted running a racket of providing financial accommodation entries at a commission @ 0.15% to 0.2%. The assessee is a part of this racket. If that be true, how can the sum deposited in the bank accounts be regarded as that of the account holders, i.e., the persons doing the said business? Yes, we are conscious that the investigation report clearly states of this being done through layering . But, then, there has been no further investigation by the Revenue in the matter. Sure, we say so only on the basis of the material on record, and it may well be that there has been an omission in bringing it on record, but there is even no whisper of any further investigation. This perhaps also explains as to why the assessee did not provide the names and addresses of his customers, who are stated to be the beneficiaries of the amounts received in the assessee s bank accounts, explaining thus the nature and source of the credits (receipts or deposits) in his bank accounts, as he is obliged to under law (s. 69A). Further, why should, in that case, the assessee have transactions with the persons searched, as the investigation of these accounts disclosed, and which in fact led to the issue of notice u/s. 148(1) in his case? Surely, there are gaps in the factual framework, as suggested by the explanation furnished and the material found and analysed by the Revenue (through the Investigation Wing), and which remain unaddressed. Neither the assessee has stated the truth nor has the Revenue made any further investigation in the matter. Following the money trail would have surely led to a better clarity on facts. However, the very fact of it being a part of such racket implies it to be an organized business. As such, it caters to some persons, even if unidentified, outside the assessee. A business implies an exchange. The two facts, i.e., the money laundering and financial accommodation business, on one hand, and the money in his bank account/s belonging entirely to the assessee, on the other, are inconsistent with each other, so that the latter, an inferential fact, which is under dispute, cannot hold. Even if therefore the assessee is unable to establish the source of the moneys deposited in his bank accounts, given the fact of such business being undertaken, only the peak balance in his bank accounts could be added as unexplained money u/s. 69/69A. The second aspect of the matter would be the income earned through such business, which the assessee admits at Rs. 1.51 lacs, albeit, sans any evidence. The only material on record in this respect, i.e., income arising from business, is the stated consideration of 0.15% - 0.2% on turnover, also admitted by the assessee. It is inconceivable though that such a meagre commission is charged for assuming such a high risk; the illegality factor alone (i.e., even ignoring the service component of the activity undertaken, which involves transmission of liquid cash, which itself involves high risk) scaling up the risk factor inordinately, while, as simple economic theory and plain common sense advocate, there is a positive correlation between the risk return. Further, it also doesn t explain cash deposit of Rs. 6 lacs in Bank Account # 2, against which there are, as afore-stated, no corresponding debits, i.e., on the basis of the material on record, including the explanation furnished. The peak balance of the two bank accounts for the relevant year is not on record. Also, we are conscious that it may be that there are business transactions subsequent to the date of the peak balance/s, so that the income attributable to those transactions, though not manifesting in the form of bank balance/s (or, more aptly, a higher bank balance/s), would warrant being assessed as income, i.e., in addition to the peak balance/s. We are also, in view of the unsatisfactory factual determination (for which it is the assessee, being in the know of his financial affairs and obliged by law to explain the same, who, having failed to, is principally responsible), and the long period that has since lapsed, disinclined to restore the matter back, and consider it proper to, under the given facts and circumstances, adjudicate the matter on the basis of the material on record. In our considered view, the assessee s income for the relevant year shall comprise following: a) the excess of the aggregate credits over aggregate debits for the year in bank account # 1, i.e., Rs. 45,200; and b) the unexplained cash deposit of Rs. 6 lacs in bank account # 2. The assessee shall thus stand to be assessed for a total income of Rs. 6,45,200, as business income, as against the returned income of Rs.1,51,000. This is as there is nothing on record to suggest the assessee, who did not file any return u/s. 139, but only (on 18/11/2016) after being served the notice u/s. 148(1) on 02/04/2016, carrying on any other business or vocation during the year.
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2022 (5) TMI 1327
Disallowance u/s 14A r.w.r. 8D - as submitted assessee has not earned any income exempt - HELD THAT:- As admitted by the DRP, it is clear that the assessee has not earned any income exempt under the tax during the relevant year under consideration. Hence, the ratio laid down in the case of Cheminvest Limited [ 2015 (9) TMI 238 - DELHI HIGH COURT] is clearly applicable to the case of the assessee as confirmed by SURESH VERMA [ 2018 (7) TMI 385 - SC ORDER] - thus we are of the considered view that there cannot be a disallowance u/s 14A of the Act when the assessee has not earned any income exempt under the Income-tax Act. We, therefore, direct the AO to delete the addition made on account of disallowance u/s 14A of the Act r.w.r.8D of the I.T.Rules. This ground is allowed in favour of the assessee. Disallowance on account of deduction claimed u/s 43B towards interest payment - payment is done by the assessee before the due date for filing the return of income u/s.139(1) - HELD THAT:- From the reading of the section it is clear that the assessee is entitled to claim deduction in the year in which the actual payment happens provided the said payment is done by the assessee before the due date for filing the return of income u/s.139(1) of the Act. We notice that the assessee has submitted the bank statements in support of the payment made towards interest before the DRP - We also notice that the evidence submitted by the assessee in the form of bank statements has not been properly examined by the lower authorities. Actual payment is the very basis on which deduction u/s.43B is to be allowed and the bank statement substantiating the payments needs to be verified. Hence we remit the issue back to the AO to verify the evidence afresh. Needless to say, the assessee should be given a proper opportunity of being heard by the AO. This ground is allowed for statistical purposes.
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2022 (5) TMI 1326
TP adjustment - Intragroup services filed by the assessee from its AE in the facts and circumstances of the instant case - determining the ALP of those transactions at Rs. Nil - HELD THAT:- We find that the ld. DRP having stated that CUP is the Most Appropriate Method to be adopted in this case did not bother to bring in comparable instances to determine the ALP using CUP whereas the assessee has adopted TNMM as the Most Appropriate Method and had benchmarked the same by bringing in the comparable companies and had benchmarked the same. No error was found in the said method by either of the lower authorities. Either way when the Revenue seeks to disturb the Most Appropriate Method adopted by the assessee, it is incumbent on the part of the Revenue to adopt any of the other prescribed methods in the statute i.e. Rule 10B of the Rules. Without resorting to any of the methods for the purpose of determining the ALP of international transaction, the ld. TPO erred in determining the ALP of intragroup services at Rs. Nil . This issue is fully settled by the Co-ordinate Bench decision of this Tribunal in the case of Lintas India Pvt Ltd., vs. DCIT [ 2019 (8) TMI 922 - ITAT MUMBAI] Thus we hold that the Revenue is not justified in determining the ALP of intragroup services at Rs.Nil. Accordingly, the transfer pricing adjustment made thereon are hereby directed to be deleted. Accordingly, the ground Nos. 1 2 raised by the assessee are allowed.
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2022 (5) TMI 1325
Reopening of assessment u/s 147 - Notice after expiry of more than 4 years - difference in income as the contract receipt shown in the profit and loss account and Form 26AS - difference in amount as per TDS certificates and as shown in the accounts of the assessee - HELD THAT:- As during the course of assessment proceedings, the assessee had filed the duly explained the difference in response to the query raised by the Assessing Officer on same point and assessee had filed the reconciliation statement based and TDS certificate and also the contract receipt shown in the books of accounts. It was demonstrated that there was certain mistake in the TDS certificate due to wrong inclusion of reimbursement of service tax. There was TDS deduction taken on a gross amount including service tax which was included in the TDS certificate. All those reconciliations were filed before the AO during the course of the original assessment proceedings which has been accepted by the Assessing Officer. Same thing was further explained post completion of assessment in response to notice under Section 154 of the Act as incorporated supra. Now again in the garb of escapement of income, a notice under Section 148 of the Act was issued mainly to review the same thing, which was already explained before the AO and have also been accepted. Thus, clearly there was no failure on the part of the assessee to disclose fully and truly all material facts during the course of original assessment proceedings, albeit the re-opening is based on purely change of opinion, which is impermissible. Accordingly, the entire proceeding u/s 148 is hereby quashed being without jurisdiction. - Decided in favour of assessee.
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2022 (5) TMI 1324
Bogus LTCG - bogus share transaction - AO made addition by treating capital gain on sale of shares as income from other sources - HELD THAT:- The assessee sold 8500 shares of Buniyad Chemicals during Financial Year 2006-07, which were debited in the Demat account on 07/08/2006. The closing balance as per Demat account statement as on 31/08/2006 was 15100 shares. The transaction of 8500 shares during the financial year 2006-07 is further substantiated by contract note - The assessee has also placed on record a copy of her bank statement with IDBI Bank to show that the assessee has received a sum of Rs.5,03,621.91 towards sale consideration of shares by clearing on 15/07/2006. This date is same as the date of sale of shares mentioned in the contract note and proximate to the date of debit of shares in the Demat account of the assessee. The examination of documents on record clearly indicate that the assessee was holding shares of Buniyad Chemicals at least from the Financial Year 2004-05 and that the assessee had sold 8500 shares of Buniyad Chemicals during Financial Year 2006-07. As in so far as cancellation of registration of M/s. Alliance Intermediaries and Network Pvt. Ltd. as sub-broker by the NSE through whom the assessee had sold shares of Buniyad Chemicals, it would not make the transaction of sale of shares bogus. By furnishing cogent evidence, assessee has discharged her onus in proving that she was holding the shares since 2004 and had sold the shares during the relevant period. The Revenue has neither controverted nor rejected the Demat account statement of the assessee. After examining the documents on record, we merit in the appeal of assessee. The addition made by the Assessing Officer by treating capital gain on sale of shares as income from other sources is directed to be deleted.
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2022 (5) TMI 1323
Reopening of assessment u/s 147 - deemed dividend under section 2(22)(e) - HELD THAT:- The very beginning of the first line the AO has started with the words that upon verification of the case records it is seen that assessee has received loans and advances from Vananchal Infrastructure Pvt. Ltd. during the year ended 31.03.2012 and thereafter in the second para it was mentioned that there was no deliberation on this issue in the assessment framed u/s 143(3) and thus the AO has not formed any opinion about the deemed dividend and finally the AO noted that he has reason to believe that income has escaped assessment within the meaning of section 147. In our view, this is nothing but the reopening of assessment on the basis of material which was available before the AO in the original assessment proceedings as there was no tangible material before the AO and therefore this is a patent case of review of the earlier assessment framed on the basis of same materials which is not permissible under the Act. The case of the assessee finds support from the decision of CIT Vs Kelvinatpor India Ltd.[ 2010 (1) TMI 11 - SUPREME COURT] wherein it has been held that the re-opening can be made on the basis of tangible materials before the AO and not otherwise. Therefore, we are inclined to set aside the order of Ld. CIT(A) and the reopening of assessment is quashed as being invalid and contrary to law. Appeal of assessee allowed.
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2022 (5) TMI 1297
Assessment u/s 153A - Validity of assessment u/s 153A when no incriminating material relatable to that assessment year was found during the course of search and seizure operations conducted by Revenue u/s 132(1) - Difference in opinion - Third Member decision - HELD THAT:- As the purpose and purport of framing assessment u/s 153A is to assess or reassess the total income including undisclosed income, and even in the cases where assessment or reassessment proceedings are already completed and assessment orders were passed , which were subsisting when search operations took place, the AO would be competent to reopen the assessment proceedings already made and determine the total income of the tax-payer including undisclosed income, notwithstanding that the assessee has filed return of income before the date of search which stood processed u/s 143(1)(a) of the 1961 Act . The Revenue succeeds on this issue. Whether assessment framed u/s 153A can be sustained in the absence of notice being issued under the provisions of Section 143(2)? - HELD THAT:- Admittedly notices u/s 153A as well Section 142(1) was issued by Revenue. The assessee did not file return of income within stipulated time as provided in the notice issued u/s 153A of the 1961 Act. This issue should not detain us for long . The Hon ble Madras High Court in recent decision in B.Kubendran v. DCIT [ 2021 (4) TMI 467 - MADRAS HIGH COURT] has recently after detailed discussion considering the distinction between provisions of Section 158BC and 153A decided this issue in favour of Revenue , by holding that in framing assessment u/s 153A , due regard must be given to principles of natural justice, which requirement shall stand satisfied either by issuance of notice u/s 143(2) or questionnaire u/s 142(1) was issued by the AO. Thus in framing assessment u/s 153A, due regard must be given to principles of natural justice, which requirement shall stand satisfied either by issuance of notice u/s 143(2) or questionnaire u/s 142(1) issued by the AO. - There is no specific provision in the Act requiring the assessment u/s 153A to be made after issuing notice u/s 143(2) - Thus, we hold this issue in favour of Revenue in the instant case. Addition u/s 68 - unexplained Credit in bank accounts - We are of the considered view that the appellate order passed by ld. CIT(A) cannot be sustained and is liable to be set aside . We are of the considered view that one more opportunity be provided to assessee to bring on record complete details/evidences in support of its contentions - assessee has also submitted before the Bench that all the necessary documents such as bank statements etc of Shri Ajeya Singh will be produced . Thus, we are setting aside the matter to the file of the AO for fresh adjudication of the issue on merits. Needless to say that the AO shall provide proper and adequate opportunity of heard to the assessee in set aside proceedings. The AO shall admit all the evidences /explanations submitted by assessee in set aside proceedings and adjudicate the matter on merits in accordance with law. The appeal of the Revenue is allowed for statistical purposes. Assessment u/s 153A - undisclosed income or an income escaped assessment - Income not detected during the course of search and seizure proceedings - HELD THAT:- It can be easily seen that the Hon'ble Supreme Court in Pr. CIT VERSUS MEETA GUTGUTIA [ 2018 (7) TMI 569 - SC ORDER] has simply dismissed the SLP filed by the Revenue finding no merit in the same. It is not a case of the Hon'ble Supreme Court either considering and deciding the issue on merits in an appeal or giving reasons at the stage of dismissal of SLP. Applying the principles laid down by the Hon'ble Supreme Court in the three cases discussed above, there remains no doubt whatsoever that the dismissal of SLP in Meeta Gutgutia (supra) with the remarks - `We do not find any merit in this petition. The special leave petition is, accordingly, dismissed - are no different from the remarks Special Leave Petition is dismissed on merits or Dismissed on merits , which have been held by the Hon ble Apex Court as dismissal of SLP without reasons, not leading to any declaration of law by the Hon'ble Supreme Court. In the hue of the above discussion, the judgment of the Hon ble Delhi High Court in Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] cannot be construed to have either been affirmed by the Hon ble Supreme Court or merged in the order dismissing the SLP against it. This judgment, ergo, ranks pari passu with Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and other judgments of Hon ble High Courts deciding the issue in favour of assessee, without getting elevated to the status of that of the Hon'ble Supreme Court. The sequitur is that the ratio decidendi laid down by the Hon ble jurisdictional High Court in Raj Kumar Arora [ 2014 (10) TMI 255 - ALLAHABAD HIGH COURT] still holds the field and is binding on all the authorities under the jurisdiction of the Hon ble Allahabad High Court. In view of the foregoing discussion and respectfully following the binding precedent, I agree with the learned AM that there is no legal impediment in making an addition, otherwise than on the basis of any incriminating material found during search, in an assessment u/s 153A for a year whose assessment was not pending on the date of search. Whether CIT(A) is justified in deleting the additions instead of restoring the matter to the file of AO - HELD THAT:- The ld. JM countenanced the deletion of the addition on the two legal issues discussed above, viz., the failure of the AO to issue notice u/s 143(2) before making assessment u/s 153A and the addition being not based on any incriminating material. Neither did he go into the merits of the addition, nor record his disagreement with the ld. AM on the issue of restoration of the matter to the AO. In the absence of any difference of opinion between the ld. Members on this issue, a fortiori, is that the view taken by the ld. AM restoring the matter to the AO for fresh decision will prevail as the same has not been dissented with by the ld. JM. I answer this question in negative by holding that the ld. CIT(A) was not justified in deleting the addition. Rather he should have restored the matter to the file of AO.
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Customs
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2022 (5) TMI 1322
Jurisdiction - power of DRI to issue SCN - When jurisdictional High Court judgments are available upholding the competency of the DRI to issue show cause notice under Section 28 of the Customs Act, 1962 whether the CESTAT is correct in remanding the appeal? - power to remand the case without deciding the issues raised therein on the ground that jurisdiction of the officer to issue show cause notice is under dispute - HELD THAT:- The issues involved herein have been considered and decided by a Co-ordinate Bench of this Court, in the case of THE COMMISSIONER OF CUSTOMS VERSUS M/S. BOX CORRUGATORS AND OFFSET PRINTERS [ 2020 (5) TMI 475 - MADRAS HIGH COURT] where it was held that in view of the fact that the learned Tribunal has clearly protected the interest of both the Revenue as well as the Assessee by directing the Assessing Authority to keep the matter pending and maintain status quo till the Hon'ble Supreme Court decides the appeal of the Revenue in the case of Mangli Impex, filed against the decision of the Delhi High Court, we do not find any reason to interfere with the decision of the Tribunal, as in our opinion, no question of law arises for consideration in this appeal. Following the latest decision in THE COMMISSIONER OF CUSTOMS VERSUS SHRI SANKET PRAFUL TOLIA [ 2021 (6) TMI 432 - MADRAS HIGH COURT] , which are squarely covered by the issue involved herein, all these Civil Miscellaneous Appeals are allowed by setting aside the order impugned herein and the matters are remanded to the Tribunal with a direction to keep the same pending and await the decision of the Hon'ble Supreme Court in the appeals filed against the decision in Mangali Impex . However, it is made clear that the appellant shall not initiate any coercive action against the respondent(s)/assessee(s) and await the final decision in the appeals, which have been restored to the file of the Tribunal. Application disposed off.
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2022 (5) TMI 1321
Levy of Anti Dumping Duty - likelihood of recurrence of dumping and injury in the event of expiry of duty - modification of Second Sunset Review - likelihood of recurrence of dumping and injury in the event of expiry of duty - Customs Notification No. 44/2021-Customs (ADD) dated 12.08.2021 - HELD THAT:- Section 9A of the Tariff Act deals with anti-dumping duty on dumped articles. It provides that if any article is exported by an exporter or producer from any country to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such article. Margin of dumping has been defined to mean the difference between the export price and the normal value. The export price means the price of the article exported from the exporting country. Normal value has been defined to mean the comparable prices for the like article when destined for consumption in the exporting country - Sub-section (5) of section 9A of the Tariff Act provides that anti-dumping duty imposed shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition. The first proviso stipulates that if the Central Government, in a review, is of the opinion that the cessation of such duty is likely to lead to continuance or recurrence of dumping and injury, it may, from time to time, extend the period of such imposition for a further period upto five years and such further period shall commence from the date of order of such extension. What also transpires from the final findings is that continued dumping by the subject countries in India has continued despite the imposition of anti-dumping duty. The designated authority, while examining the aspect of likelihood of injury , recorded a finding that likelihood or recurrence of injury to the domestic industry was not strong enough to warrant continuation of duties beyond 11 years - What was required to be examined by the designated authority was whether withdrawal of anti-dumping duty would lead to continuance or recurrence of dumping as well as injury to the domestic industry. Mere continued levy of anti-dumping duty for 11 years cannot be made a ground to conclude that there is no requirement to continue anti-dumping duty. The applicant had requested for imposition of anti-dumping duty on a narrower scope of the product under consideration and had not made any claim for enlargement of the product under consideration in the sunset review proceedings. It is the prerogative of the domestic industry to make a claim for imposition of duty on the types of product and neither section 9A (5) of the Tariff Act nor rule 23 of the Anti-Dumping Rules bars the designated authority from restricting the scope of the product under consideration in a sunset review. No prejudice can be said to have been caused to the foreign exporters if the product under consideration is restricted in a sunset review and in fact the foreign exporters would benefit if the anti-dumping duty is not levied on the products excluded from the scope of the product under consideration. The inevitable conclusion, therefore, that follows from the aforesaid discussion is that the designated authority should re-examine whether the cessation of anti-dumping duty would likely lead to continuation or recurrence of injury so as to warrant imposition of anti-dumping duty for a further period of five years. It needs to be noted that the designated authority had recorded a categorical finding that cessation of anti-dumping duty would lead to continuation or recurrence of dumping and even with regard to the injury aspect, the designated authority did hold that cessation of anti-dumping duty would lead to continuation or recurrence of injury, but it further held that such injury was not strong enough to warrant continuation of anti-dumping duty for a further period of five years. Appeal is allowed to the extent that the designated authority shall re-examine and give a fresh finding as to whether cessation of anti-dumping duty would likely lead to continuation or recurrence of injury so as to warrant imposition of anti-dumping duty for a further period of five years. The final findings dated 30.07.2021 of the designated authority, therefore, stand modified to this extent.
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2022 (5) TMI 1320
Levy of penalty u/s 112(a) and 114AA of the Customs Act - detention of yacht - allegation is that yacht was declared as TP Cargo and simultaneously filing another IGM for the same yacht being filed raised the suspicion of foul play - evasion of Customs Duty - HELD THAT:- The final order of Settlement Commission leads us to an irrefutable conclusion that there was indeed an attempt to improperly import certain goods (Yacht here) which ultimately was confiscated within the meaning of Customs Act. It is a single transaction and all the notices are a part of the same transaction, may be of different sides of the same coin. In its order, the Settlement Commission had also imposed fine as well as penalty on the applicants/co-applicants before it, which have been paid by them. Hence, clearly, the improper importation stands established, we only have to look into the magnitude of active/passive contribution by each of the appellants before us, in assisting the main culprit in the activity of improper importation. It has been brought on record that Shri Gautama Dutta was instrument in instructing the other appellants Shri Sohel Kazani of M/s. Assar Lines and M/s. Interport Impex Pvt. Ltd. based on which an email was sent by Shri Sohel Kazani to Link Shipping Management System. Shri Kiran Kamat, MD of Link Shipping Management System has also admitted that they had acted as agents of the vessel MVA during its call at the port of Mumbai and carried out all acts and things for discharge of cargo (i.e. Yacht Tian) at Bombay Port, which action was based on the instructions of their principal. Shri Kiran Kamat, MD has also specifically admitted that it was based on the request of M/s. Assar Lines that the cargo in question was declared as transhipment cargo. The initial burden to prove proper importation, under Section 123 ibid. was on the notices, some of whom have accepted the liability and thereby resulting in the non-discharge of the burden. The natural consequence which flows from the above is that the burden cast on the notices remained un-discharged and hence, they have to suffer consequence, namely the penalties in this case. This is because, they have all been identified to be part of different sides but of the same transaction. Thus, revenue has made out a case for the levy of penalty on the appellants - the impugned order modified to the limited extent by sustaining penalty to the extent of 15% of penalty imposed on them by the adjudicating authority.
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2022 (5) TMI 1319
Classification of goods - Air conditioners with both heating and cooling functions under Custom Tariff - parts of Air Conditioner - admissibility of exemption under Notification No. 85/2004 (Cus) dated 31 August 2004 or Notification No. 46/2011 (Cus) dated 1 June 2011 - whether Air Conditioners need to be assessed on the basis of MRP/ RSP for the purpose of levy of countervailing duty - Confiscation - penalties - HELD THAT:- The impugned goods namely RAC and CMVRF air conditioners are classified under the heading 841501010 and 84159000 as claimed by the appellants while filing the Bill of entry benefit of the exemption notifications as claimed under the Notifications 85/2004 CUS dated 31/08/2004 (S1.No.49), notification no.46/2011-Cus dated 01/06/2011 (SI.No. 1103 (1)) will be admissible to them. Adjudicating authority in para 6.2.4.1, 6.2.4.2 and 6.2.4.3 has after referring to the said notifications opined stating that the benefit of exemption under these notifications is admissible to the all goods classified under heading 8415010 and since he has held that these goods are classifiable under headings 84158110, 84158190, 84158210 i.e. the headings not specified under these exemption notifications, hence benefit of these exemption notification is not admissible to them. Since we have held that the classification of the impugned goods as determined by the adjudicating authority cannot be upheld, and the classification as claimed by the appellants at the time of filing the Bill of Entry is correct classification, benefit of exemption Notification No 85/2004-Cus as claimed by the appellants under heading 84151010 and 84151090 is admissible to them. Applicability of RSP based assessment for determination of the countervailing duty - HELD THAT:- The demand that arises on the basis of RSP based assessment and determination of countervailing duty needs to be upheld. As the same has not be quantified separately the matter needs to be remanded back to the original authority for re-quantification of the demand on this account. In the analysis specific references have been made to mis-declarations etc, in respect of the declaration of RSP for the purpose of determination of the countervailing duty. In view of the specific findings recorded for determining the demand on account of mis-declaration/ non-declaration of RSP while determining the countervailing duty we are of the view that extended period of limitation will be invokable as per proviso to section 28 (1)/ Section 28 (4) of the Customs Act, 1962. The issue of classification of RAC and CMVRF air conditioners, upholding the classification as claimed by the appellants while filing the bill of entry, to be correct - benefit under the exemption notifications as claimed by them under notification No 85/2004-Cus to be admissible to them - the assessment for determination of countervailing duty to be made on the basis of the RSP, and not on the basis of the transaction value as claimed by the appellant. The matter needs to be remanded back to adjudicating authority for determination and re-quantification of demand accordingly - Appeal allowed by way of remand.
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2022 (5) TMI 1318
Misdeclaration and undervaluation of imported goods - Cosmetic goods - not supported with certificate of the Controller of Drugs and Cosmetics Organization (CDSCO) - Absolute Confiscation - levy of penalty u/s 112 (a) 114 AA of the CA, 1962 - whether the request for re-export of the imported cosmetics of 2,19,435 pieces, without CDSCO certificate, and 35,712 pieces with CDSCO certificate be allowed or otherwise? - HELD THAT:- There is no doubt that since the goods are not supported with CDSCO certificate definitely be considered as prohibited under the Drugs and Cosmetics Act, 1940 and the rules made thereunder and the consequence thereof is confiscation. But, simultaneously, it cannot be ignored that some procedure has been prescribed under Drugs and Cosmetics Rules, 1945 to mitigate such a situation where the imported cosmetics are found to be in contravention with the provisions of Drugs and Cosmetics Act and the rules made thereunder. Under sub-rule(3) of Rule 131 of the said Rules, the Collector of Customs(now Commissioner) is duty bound to communicate to the importer to exercise their option either to re-export the goods to the country of origin or allow the Central Government to take possession of it and destroy the same accordingly. Therefore, it is a statutory right available to an importer which cannot be overlooked by the department; the importer should have been allowed to exercise the option to re-export the goods, as prayed for. Also, the principle laid down by this Tribunal in NATHI MAL RUGAN MAL VERSUS COMMISSIONER OF CUSTOMS, NHAVA SHEVA, RAIGAD [ 2018 (11) TMI 99 - CESTAT MUMBAI] relied by the Commissioner in directing absolute confiscation is not applicable to the facts of the present case, for the simple reason that the Tribunal in the said case was confronted with the question whether after allowing redemption of the goods on payment of appropriate fine, the assessee be forced to export the goods only and not allowed to dispose the same in any other manner including clearance for home consumption. In the present case, however, no such situation arose. On the contrary, the Appellant has requested for re-export of the goods. There are no justification in the impugned order directing absolute confiscation of the imported cosmetics of 2,19,435 pieces, instead of allowing re-export of the same following the procedure laid down under Rule 131(3) of the Drugs and Cosmetics Rules, 1945. The said order of confiscation is set aside and the re-export of 2,19,435 pieces is allowed. In view of the prayer for re-export of the balance 35,712 pieces valued at Rs.20,95,104/- (supported with CDSCO certificate), confiscation is also set aside and the appellant is permitted to re-export the goods. The question of mis- declaration becomes immaterial in view of the prayer for re- export, in accordance with law. We also observe that the appellant has already suffered loss in the whole process (part charges, demurrage, etc.) and thus, the fine and penalties imposed on all the appellants is set aside. The penalties imposed on all the individual appellants viz. Shri Sunil Yadav - Director, Shri Siddiq Yusuf Merchant, and also on Shri Sandip Tandekar - Power of Attorney Holder of CHA also set aside. Appeal allowed.
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2022 (5) TMI 1317
Mis-declaration of imported goods - Superior Kerosene Oil (SKO) - rejection of declared value - redetermination of assessable value - confiscation - redemption fine - penalty - HELD THAT:- The matter needs to be reconsidered by the adjudicating authority after allowing re-test as requested by the appellant vide their letter dated 17.01.2020. The matter is remanded back to the adjudicating authority to decide the matter after causing re-test as requested by the appellant - appeal allowed by way of remand.
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2022 (5) TMI 1316
100% EOU - letter of permission mentioned the finished goods for exports as Capsules/Tablets of Pharmaceutical Formulations - SCN were for issued demanding Customs/ Excise duty on raw materials procured claiming exemption as above and used for finished products, which were not listed in their Letter of Permission - HELD THAT:- It was never the case of the revenue that the raw materials as imported were not used for the manufacture of the finished goods finally exported as required for fulfillment of export obligations of the EOU. Appellants have in their reply before the adjudicating authority taken the stand that all the injections and suspensions were exported after May, 2006 - the issue of achieving the NFE as per the LOP over the period of entire five years (including annual achievement) from the date of start of commercial production is the question to be examined by the DGFT who has issued the LOP. It is not for the Custom/ Central Excise Authorities to interfere in the manner. It is not even the case for the revenue that any investigations were undertaken by the DGFT in this regards. The entire case of revenue is based on the fact that appellant had manufactured these finished products which were not as per LOP, using the raw material imported duty free. We do not find any merits in these arguments as the appellants have consumed the duty free raw material for achieving the export obligations on yearly basis and on whole as per the LOP issued to them and amended from time to time. No evidence has been produced by the revenue that the terms of LOP have been violated in terms of quantity or value as specified in the said LOP. IN absence of any such allegation or finding by the relevant authorities the violations if any cannot be termed to be anything more than technical violations as pleaded by the respondents and held by Commissioner (Appeals). The amount of duty involved is less than Rs.50,00,000/- and the same could have been dismissed as withdrawn in terms of litigation policy Circular No. F. No. 390/Misc/116/2017-JC dated 22.08.2019. The appeals filed by the revenue are dismissed.
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Corporate Laws
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2022 (5) TMI 1315
Seeking grant of Bail - second bail application - fraudulent merchantine trade - wrongful loss to the Public Sector Banks - siphoning of Bank funds through merchantine trade - falsification of financial statement of the Companies involved in the matter by not showing true and fair views - HELD THAT:- As is evident from the record, earlier an F.I.R. was lodged on behalf of the C.B.I. on the basis of same set of facts on which present compliant has been filed. Applicant was enlarged on bail. Thereafter, he was again arrested in the present matter started by the S.F.I.O. Applicant moved bail application before this Court, which was rejected. Thereafter, he approached the Apex Court and was allowed on interim bail. Applicant withdrew the Special Leave Petition with liberty to approach the High Court or the court below. Thereafter, this second bail application has been moved. Although, technically, this is the second bail application moved before this Court, but submission raised on behalf of the S.F.I.O. that bail application is not maintainable directly before the High Court is not tenable. Present bail application can be entertained and decided by the High Court. Perusal of the record also reveals that one Udai J. Desai had also approached this Court for bail, but bail prayer made by him was rejected by this Court. Thereafter, he approached the Apex Court and he was allowed on bail. Another co-accused Vishwanath Gupta had applied for anticipatory bail, which was allowed by the coordinate bench of this Court, as is clear from the record. Order passed on the anticipatory bail application was challenged before the Apex Court, which was dismissed. Applicant is allowed to be released on bail - application allowed.
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Securities / SEBI
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2022 (5) TMI 1314
Insider trading - Selling the shares during the UPSI period - violating Regulation 4(1) of the PIT Regulations - HELD THAT:- Explanation demonstrated the circumstances for selling the shares of the company during the UPSI period in order to avoid the company from down-graded to a nonperforming asset. In our view, such explanation given by the appellants which has not been considered by the WTM is sufficient to prove his innocence of trading while in possession of the UPSI. Such explanation will come within the purview of the proviso to Regulation 4(1) of the PIT Regulations and consequently, the appellants cannot be charged for violating Regulation 4(1) of the PIT Regulations. A finding has been given that the appellants were aware of the losses incurred by the company and, therefore, they have sold off their shares in order to avoid further losses. In this regard, we find that the financial results were declared on November 29, 2017 on that date the closing price of the scrip of the company was Rs 21.60 per share. The declaration of the financial results on November 29, 2017 did not have a great impact in the price of the scrip on November 30, 2017. We find that the closing price of the scrip of the company on November 30, 2017 was Rs. 20.20 on NSE and Rs. 20.25 on BSE. Thus, there was hardly any price difference in the price of the scrip between 29th and 30th November 2017 and, therefore, it is incorrect to contend that the sale of the shares was made by the appellants for the purpose of avoiding further losses. We are also find that the sale amount of the shares was not retained by the appellants for their personal use or gain. But the said money was infused in the company for its working capital. We are satisfied that the appellants have successfully discharged their burden under Regulation 4(1) of the PIT Regulations. We find that in the given circumstances, the appellants cannot be charged for insider trading - For the reasons stated aforesaid, the impugned order cannot be sustained and is quashed. The appeal is allowed.
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2022 (5) TMI 1313
Insider trading - as noted suspected entities had traded in the mentioned scrip on the basis of unpublished price sensitive information ( UPSI for short) in contravention to the provisions of SEBI Act, 1992 and SEBI (Prohibition of Insider Trading) Regulations, 2015 ( PIT Regulations - Whether appellants were not privy to any inside information and were therefore not in possession of UPSI? - HELD THAT:- There is no doubt that information of sale of ILPL was in the public domain since July 15, 2016 but this information which came into the public domain was not treated to be an UPSI by the WTM on the ground that the resolution passed by IVL on July 15, 2017 was only a raw information and there was no crystallized offer through an identified purchaser or ascertained consideration amount for the purpose of crystallizing the UPSI. If the information of sale of ILPL by IVL on July 15, 2016 was not a UPSI and was in the public domain then the purchase of shares by the appellants between July 15, 2016 to March 1, 2017 could not be made the basis of UPSI. We, thus, conclude that since there was no UPSI during this period the trades executed by the appellants were not violative of Regulation 4(1). The EGM of IIL was held on March 1, 2017 on which date it authorized the Board of Directors to give a loan upto Rs. 600 crores or could acquire upto Rs. 600 crores. Thus, this information of acquisition, if any, came into existence on March 1, 2017. Thus, UPSI period can start from March 1, 2017 onwards till March 14, 2017. The appellants alleged that they were never in possession of UPSI. In this regard the resolution of IVL on July 15, 2016 to sell ILPL can be the starting point of UPSI. The WTM has however disregarded this date as not a UPSI. We also find that this information came in the public domain and therefore the decision to sell ILPL was not a price sensitive information nor was it an UPSI. WTM has strongly relied on the fact that the appellant Pia Johnson was a member of the managing committee appointed by the Board of Directors of IVL who were authorized to authorize IDSL to sale its stake in ILPL. Based on this fact, the WTM concluded that the appellant Pia Johnson had inside information and was in possession of UPSI. This fact that the appellant was a member of the managing committee can create a suspicion that the appellant could be in possession of UPSI but in our opinion the appellants were successful in proving that they had no UPSI. It has come on record that no meeting of this managing committee was ever held and therefore there was no occasion to discuss the sale of ILPL. Further, we find that there is no finding that the resolution of IIL on March 1, 2017 or notice dated January 25, 2017 or resolution of Board of Directors of IREL on February 3, 2017 was known to the appellants. The appellants had nothing to do with IREL or IIL and therefore there can be no presumption that the appellants had information that IIL was in the process of purchasing ILPL. We also find that during the investigation the statement of the two CEOs of IVL and IREL were recorded and both the CEOs clearly stated that the information regarding sale of ILPL was not made known to others and that the appellants had no knowledge of the deal. These statements has not been considered by the WTM coupled with the fact that Mr. Gurbans Singh in his statement categorically made statement that he only came to know only in March 2017 that ILPL was up for sale. Thus the trades made by Mehul Johnson in March 2017 cannot be said to be made when in possession of UPSI. We are satisfied that the appellants were not in possession of UPSI when they purchased the shares of IVL during the alleged UPSI period as per the show cause notice. In our view, the appellants have successfully discharged the burden under the proviso to Regulation 4 of the PIT Regulation. Considering the aforesaid, the impugned order cannot be sustained and are quashed. The appeals are allowed with no order as to costs.
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Insolvency & Bankruptcy
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2022 (5) TMI 1312
Initiation of CIRP - existence of debt and dispute or not - whether the Demand Notice was either delivered or rejected ? - NCLT admitted the application - HELD THAT:- It is an admitted fact that the Operational Creditor and the Corporate Debtor entered into a Fuel Supply Agreement (FSA) on 14.10.2015 whereunder the Corporate Debtor had agreed to purchase Biomass Fuel form the Operational Creditor on the terms and conditions stated in the said Agreement. It is seen from the FSA that five types of fuel Cotton Stalk, Cane Trash, Corn Cob, Soya Hush and Juliflora were agreed to be supplied individually or in a combination thereof. A perusal of the invoices raised by the Operational Creditor from 01.06.2016 to 26.04.2016 show that the total amount was Rs.1,79,13,261/- for Biomass Fuel, Cane Trash and Cotton Chip. The material on record establishes that this amount has been acknowledged by the Corporate Debtor in their ledger and in the confirmation letter dated 01.04.2016 and 01.05.2016. The amounts were repeatedly requested to be paid by the Operational Creditor vide emails dated 09.04.2016, 19.04.2016 and 17.08.2016 - Article 6.1 of the Fuel Supply Agreement that Fuel would be supplied by the Operational Creditor, the rate whereof, would be agreed by and between the parties as per mutual discussions in the yearly collection and supply plan. To state that the Application was non-compliant of Section 8 of the Code and deserves to be dismissed, is unsustainable. Having regard to the admission of the liability in the correspondences and in the ledger confirmation letters read with the invoices raised over a period of time from 2016 onwards for supply of both Cane Trash and Cotton Stalk, this Tribunal is of the earnest view that the dispute raised by the Appellant at this belated stage, having accepted the fuel over a duration of time, is a patently feeble argument, unsupported by any substantial evidence. Appeal is devoid of any merit and is dismissed.
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2022 (5) TMI 1311
Approval of Resolution plan - submission which have been much pressed by the learned Counsel for the Appellant is the publication issued by IRP being not in compliance of Section 15 and Regulation 6(1) of 2016 Regulations - HELD THAT:- Regulation 6, sub-regulation (2) (b) provides for public announcement be published and in sub-clause (b)(i) the public announcement should be in one English and one regional language newspaper with wide circulation at the location of the registered office and principal office, if any, of the corporate debtor and any other location where in the opinion of the Interim Resolution Professional, the corporate debtor conducts material business operations. The public announcement made in Annexure A-2, itself indicates that Claim Form can be downloaded from the website of the Board also. From the facts and pleadings as noted above, it is clear that the publication was made not only at the registered and corporate office of the Corporate Debtor, but several other places at Kolkata, Guwahati, Shilong and Itanagar etc. In regional newspaper, publication was made at Guwahati, Jorhat and Lakhimpur where registered office and factory premises of the Corporate Debtor was situated. The publication, thus, was not only confined to registered office and corporate office of the Corporate Debtor, but publication was made at other locations also, where in the opinion of IRP, Corporate Debtor conducts material business operations - The statutory requirement cannot be stretched to mean that publication has to be made from all places where the Corporate Debtor is receiving goods and supplies. The mandatory requirement is to publish in one English and one regional newspaper with wide circulation at the location of the registered and corporate office of the Corporate Debtor and any other location, where in the opinion of the IRP the Corporate Debtor conducts material business operations. The IRP has made publication at other places as noted above, which indicates that there is compliance of requirement of Regulation 6, sub-regulation (2)(i). It is further noticed that there was compliance of Regulation 6(2)(ii) and (iii), since the publication was uploaded on the website of the Corporate Debtor as well on the website of the Board. There are no error in the publication made by the IRP under Section 15 read with Regulation 6(1) of 2016 Regulations - appeal dismissed.
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2022 (5) TMI 1310
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Debt or not - existence of debt and dispute or not - HELD THAT:- The Financial Creditor did not place any document on record wherein the Financial Creditor sought to recall the amount that was invoked. No document has been filed to show that there has been any sort of communication between the Corporate Debtor and the Financial Creditor. Hence, there is a debt that is apparent on record and there was a default with respect to the State Bank of India, but once the guarantees were invoked, no notice was given to the Corporate Debtor. This appears to us to be a petition filed for the purposes other than for resolving the insolvency of the Corporate Debtor. Such purposes are to be frowned upon under the Code - Petition dismissed.
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2022 (5) TMI 1309
Seeking Liquidation of Corporate Debtor - no Resolution Plan has been approved by the CoC - CoC by 100% voting share approved liquidation of the Corporate Debtor - HELD THAT:- This is a case where Resolution Plan, though received, but the same was not approved by the CoC., and the period of CIRP has expired. Therefore, there is no alternative but to order the liquidation of the Corporate Debtor. The Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code read with sub-section (1) thereof - Application allowed.
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2022 (5) TMI 1308
Liquidation of Corporate Debtor - Section 33(1) read with 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Since no resolution plan has been received by this Adjudicating Authority before the expiry of the maximum insolvency resolution process period and furthermore, the CoC has decided to liquidate the Corporate Debtor, therefore, the Corporate Debtor has to be ordered for Liquidation. Application allowed.
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2022 (5) TMI 1307
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is clear from the pleadings that the Operational Creditor has supplied the goods to the Corporate Debtor as evident from invoices annexed. Furthermore, there is no evidence placed by the corporate debtor on record to show that there is pre-existing dispute before issuing statutory notice u/s. 8 of IBC, 2016. The Corporate Debtor also issued cheques to discharge its liability as is evident from the ledger account, which amounts to acknowledgement of debt and same got dishonored on presentation. Therefore, default in payment of outstanding principal amount is evident from the bank statement annexed with petition - Since, all the conditions are satisfied by the operational creditor, hence, this authority is inclined to initiate the CIR Process of Corporate Debtor, therefore, the captioned petition is admitted. Petition admitted - moratorium declared.
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2022 (5) TMI 1306
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Whether the documentary evidence furnished with the application establishes an operational debt as claimed by the Operational Creditor and the Corporate Debtor defaulted in payment of the said operational debt? - HELD THAT:- When the Corporate Debtor having duly acknowledged various invoices referred to by the applicant and further stated that the industrial equipments/consumable products supplied by the Operational Creditor are received in good condition, the Corporate Debtor is precluded from contending contra, that too in its counter. It may be stated herein that prior to receipt of Demand Notice dated 20.03.2019 the Corporate Debtor never raised any such plea or any dispute. So much so, the submission of the learned counsel for the Corporate Debtor that the seal and signature of some of the invoices are forged and fabricated is baseless and hence rejected. The ledger filed by the Operational Creditor for the period for the period from 01.04.2014 to 31.03.2019 in respect of the goods delivered under various invoices mentioned above, is not disputed by the Corporate Debtor. The Corporate Debtor has not placed any material to show that for the goods received under the invoices, the Corporate Debtor had made necessary payment. Therefore, we find sufficient force in the plea of the learned counsel for the Operational Creditor that the Corporate Debtor had defaulted in discharge of operational debt. Thus, existence of operational debt and its default by the Corporate Debtor since established, it is a fit case to put the Corporate Debtor under CIRP. Petition admitted - moratorium declared.
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Service Tax
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2022 (5) TMI 1305
Excess utilisation of cenvat credit - Whether the appellant is liable to pay interest and penalty on account of alleged excess utilisation of cenvat credit accrued at a later date on which appropriate interest has been paid by the appellant? - non-inclusion of value of free supplies made by their customers for provision of services by the appellant - HELD THAT:- The demand of interest on alleged excess utilisation of cenvat credit amounts to double demand of interest, as the appellant has already deposited interest on the delayed payment of tax at the applicable rate under Section 75 of the Act. Thus, the second demand of interest is in the nature of double jeopardy, which is not tenable - the demand of both tax and interest is set aside - decided in favor of appellant. Whether the appellant is liable to pay service tax with interest and penalty for not including the value of free supplies received from the customer/ principal, in provision of the services? - HELD THAT:- The issue is no longer res integra and it has been clarified by the Hon ble Supreme Court in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] that the free issue or supply of material to the contractor or service provider, are not be clubbed in the gross value for determination of service tax liability. The ruling of Hon ble Supreme Court is applicable in the facts of the case and thus the demand is fit to be set aside - the issue is decided in favour of the appellant-assessee. Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 1304
Levy of service tax - Management, Maintenance or Repair Service - collection from the lessees of the plots, an annual fee for providing such services, calling it as service charge - HELD THAT:- Hon ble Bombay High Court IN COMMISSIONER OF CENTRAL EXCISE, NASHIK VERSUS MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION [ 2018 (2) TMI 1498 - BOMBAY HIGH COURT] has considered the issue in the case of the appellant where it was held that MIDC is a statutory Corporation which is virtually a wing of the State Government. It discharges several sovereign functions - the Revenue ought not to have compelled MIDC to prefer Appeals before Appellate Tribunal - The said order of Hon ble Bombay High Court has been accepted by the Board as per letter F No. 276/203/2017-CX.8A dated 15.02.2018. Since the issue is squarely covered in favour of the appellant in their own case, the impugned orders cannot be sustained - appeal allowed.
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Central Excise
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2022 (5) TMI 1303
CENVAT Credit - Dutiable as well as exempt goods - Bagasse and Press Mud - non-maintenance of separate accounts for input services used on manufacture of goods chargeable to duty and exempted goods - HELD THAT:- As could be noticed in the Appellant s own case pertaining to the previous period, reference has been made to the Hon'ble Allahabad High Court s judgment striking down the amended Rules 6 and quashing Revenue s Circular dated 25.04.2016. It can also be noticed from the judgment of in M/S VIKAS SSK LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, AURANGABAD [ 2022 (1) TMI 1251 - CESTAT MUMBAI] that Hon'ble Allahabad High Court had even observed that the judgment of Hon'ble Supreme Court in UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT] still holds the field even after the insertation of explanation, that was further explained through Circular dated 25.04.2016. This appeal for the period from February, 2016 to June, 2017 relates to post-amended period but judicial decisions is consistent in this aspect that Bagasse and Press Mud are non-excisable agricultural products to which Rules 6(3)(i) would not be applicable - Appeal allowed.
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2022 (5) TMI 1302
Extended period of limitation - Debonding of an EOU - allegation of short-paid duty at the time of De-bonding - wrongful availment of duty concessions vide Central Excise Notification No. 23/2003-CE dated 31st March 2003 read with Para 6.8 of FTP - penalty - HELD THAT:- The appellants have made complete declaration in respect of their finished goods as well WIP - Indigenous while making the request for de-bonding. These were examined and verified by the jurisdictional Central Excise Authorities while issuing the No Dues Certificate to the appellant. Even the figures stated in the declaration made by the appellant in their declaration, no dues certificate issued by the authorities do tally. Subsequent to issue of the no due certificate by the jurisdictional officer, the revenue could not have proceeded to issue the show cause notice dated 09.02.2016, by taking the same figures as declared by the appellant to the jurisdictional authorities as early as in 2013. These figures also are reflected in the no dues certificate issued by the jurisdictional authorities. On the basis of the No Dues Certificate issued by the concerned jurisdictional authorities, Development Commissioner has issued the Final Debonding Order. If it is the case of the revenue that No Dues Certificate was obtained by the appellant by taking recourse to suppression. misstatement, misdeclaration, fraud, connivance or in contravention of the provisions of the law, which would have led to invocation of extended period of limitation as provided for by Section 11 A of the Central excise Act, 1944, revenue ought to have informed the Development commissioner and requested for initiation of proceeding against the appellants in terms of Foreign Trade Development Act. There are no ingredients for invoking the extended period of limitation as per Section 11 A of Central Excise Act, 1944 to be present in this case. Since demand cannot be sustained on the issue of limitation we do not discuss the issue on the merits. Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 1301
Recovery of wrongfully availed CENVAT Credit - capital goods - manufacture of exempt products only or not - Rule 6(4) or Rule 6(5) of Cenvat Credit Rules, 2004 - incorrect classification of Jointing Compound - interpretation of Rule 6 (4) of CENVAT Credit Rules, 2004 - HELD THAT:- Even if at the time of the receipt of the capital goods, the finished goods manufactured and cleared by the appellant were exempt from payment of duty or attracted duty at nil rate, but subsequently the capital goods were utilized for manufacture and clearance of the goods on payment of duty, then the CENVAT credit in respect of such capital goods could not be denied subject to the restrictions as per the Notification No. 13/2016-CE (NT) dated 1.3.2016. In the terms of amendment made the capital goods should have been utilized for manufacture and clearance of goods on payment of duty within two years of the commercial operation of the capital goods. The facts as have been recorded by the Commissioner, admit that indeed these capital goods were utilized within the period of two years from the start of their commercial operations for manufacture and clearance of the finished goods on payment of duty. It is not even the case of revenue that throughout these capital goods were exclusively used for manufacture and clearance of finished goods exempt from payment of duty. As there is no denial of the fact that appellants have utilized theses capital goods for manufacture and clearance of the finished goods on payment of duty, in the manner as prescribed by the amended rule 6 (4) the CENVAT Credit could not have been denied. In view of this we do not intend to dwell on the issue of classification/ misclassification of the finished goods, which have been raised by the impugned order. Extended period of limitation - penalty - HELD THAT:- All the facts in respect of availment of CENVAT Credit on the capital goods, input services and the clearance of the finished goods were in the knowledge of the department throughout. Even if there were some interpretational issues the same cannot be said to be the reason for invoking the extended period. There is no position to sustain the impugned order on merits or on limitation - Since the demand do not sustain on merits and also on limitation, the confiscation and penalties imposed too cannot be sustained - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (5) TMI 1300
Interpretation of statute - Levy of VAT - credit note received subsequent to the date of the invoice - Determination of Turnover - Input Tax Credit - Large Bench Decision - construction of Explanation VII to Section 2(lii) and the Fifth proviso to Section 11(3) of the Act - Whether the bar on assessment set out in the fifth proviso to Section 11(3) of KVAT Act 2003 would preclude operation of the extended definition of turnover provided under Explanation VII to Section 2(lii) of KVAT Act? HELD THAT:- On perusal of entire records, following summary is arrived at: (a) The definition of the word turnover in Section 2(lii) is applicable unless the context otherwise demands. (b) The deemed turnover subject to satisfying a condition stipulated in Explanation VII could arise if the context in which the demand allows such definition to operate. (c) The Legislature incorporated the second limb to the Fifth proviso to Section 11(3) and by such amendment, the Legislature has taken out from the purview of assessment, credit notes received subsequent to invoice and payment of tax by the manufacturer/supplier and not claiming refund or adjustment of input tax. (d) In cases in which tax is paid at the time of invoice, and no adjustment of input tax is claimed by the manufacturer or the supplier, then, even if the dealer sells it at a lesser price and claims input credit proportionate to the sales price, and subsequently receives credit note from manufacturer/supplier, such credit notes, discount, loss on recoupment is not included for assessment, subject to manufacturer/supplier not claiming refund or adjustment of input tax already deposited. In other words, the credit notes not affecting input tax already deposited cannot be treated as taxable turnover by the extended meaning of Section 2 subsection (lii) Explanation VII of the Kerala Value Added Tax Act. (e) In the scheme of value addition and payment of tax on such value addition, the levy of tax is justified on value addition, but, without value addition, sale, or purchase, and for the amount retained by the dealer value-added tax is demanded contrary to Section 11(3) Fifth proviso of the Act. The matters are directed to be placed before the Single Bench.
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Indian Laws
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2022 (5) TMI 1299
Dishonor of Cheque - validity of summon order - signed and unsigned cheques going missing - HELD THAT:- Since this is a case where, while disposing of a petition under Section 482 Cr.P.C. against the summoning orders on the very same grounds was disposed of by a co-ordinate Bench of this Court, permitting him to raise these grounds before the learned Trial Court, all that this Court can now consider is whether the conclusions drawn by the learned Trial Court are in any way perverse, misplaced or based on no material. With regard to the other argument that the petitioner has already resigned or that the cheques were lost from his possession, these were rightly held by the learned Trial Court to be the defence of the petitioner to be established by him. Even before this Court, the petitioner relies only on his resignation letter, which has been generally addressed to the Board of Directors, with copies to another Director, the Registrar of Companies (ROC) and the Chartered Accountant. But, there is nothing to show that this was accepted by the Board of Directors and the necessary corrections carried out in the records of the ROC. Of course, the petitioner would have an opportunity to establish all these facts before the learned Trial Court. There being no error or perversity in the impugned order, no interference is called for by this Court in exercise of its inherent powers under Section 482 Cr.P.C. - Petition dismissed.
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2022 (5) TMI 1298
Dishonor of Cheque - amicable settlement arrived between the parties - Extension of time for deposit of the amount - HELD THAT:- This Court is of the considered view that it will be in the interest of justice in case this petition is allowed as prayed for by extending the time to deposit the balance amount of Rs. 68,000/- as the Court is satisfied that non-deposition of the same by the petitioner by the date fixed was not an intentional act. As far as the contention of learned Counsel for the respondent that respondent be compensated for the delay caused in deposit of the amount, this Court is of the considered view that as the delay in deposition of the amount is not substantial, therefore, in the peculiar facts of the case, this Court is not passing any order, directing the petitioner to deposit additional amount. This petition is disposed of by extending time for deposition of the balance amount up to 20th May, 2022.
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