TMI Tax Updates - e-Newsletter
June 6, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Law of Competition Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Document Identification number (DIN) and earlier computer generated numbers . Circular no. 19 of 2019 dated 14.08.2019 should be applicable to earlier notices , orders etc.

   By: DEVKUMAR KOTHARI

2. TDS on insignificant winnings from online games

   By: Mukund Garg

3. PROCEDURE FOR INITIATION OF CORPORATE INSOLVENCY RESOLUTION PROCESS BY OPERATIONAL CREDITOR(S)

   By: DR.MARIAPPAN GOVINDARAJAN

4. Refund of CENVAT credit pertaining to the period prior to registration cannot be denied

   By: Bimal jain

News

1. Third G20 International Financial Architecture Working Group (IFA WG) Meeting in Goa Aims to Strengthen Financial Resilience and Give Voice to Global South

2. At Startup20's 3rd meeting in Goa, G20 nations join forces to propel global startup ecosystem growth and innovation

3. DRI seizes 10 kg smuggled gold worth ₹6.2 crore (approx) at Mumbai airport, 2 held

Notifications

GST - States

1. 05/2023-State Tax (Rate) - dated 9-5-2023 - Gujarat SGST

Extension in exercising option by GTA to pay GST under forward charge by amending Notification No. 11/2017-State Tax (Rate) 30th June, 2017

2. 09/2023-State Tax - dated 20-4-2023 - Gujarat SGST

Extension of limitation under Section 168A of CGST Act w.r.t. proceedings under section 73

3. 08/2023-State Tax - dated 20-4-2023 - Gujarat SGST

Amnesty to GSTR-10 non-filers in form of waiver of late fees

4. 07/2023-State Tax - dated 20-4-2023 - Gujarat SGST

Rationalisation of late fee for GSTR-9 and Amnesty to GSTR-9 non-filers in form of waiver of late fees

5. 07/2023 –State Tax - dated 24-5-2023 - Maharashtra SGST

Rationalisation of late fee for GSTR-9 and Amnesty to GSTR-9 non-filers

6. 03/2023 –State Tax - dated 24-5-2023 - Maharashtra SGST

Extension of time limit for application for revocation of cancellation of registration

7. 02/2023 –State Tax - dated 24-5-2023 - Maharashtra SGST

Amnesty to GSTR-4 non-filers

LLP

8. G.S.R. 411(E) - dated 2-6-2023 - LLP

LLP Form No. 3 modified regarding information with regard to LLP Agreement and changes, if any, made therein - Limited Liability Partnership (Amendment) Rules, 2023

Circulars / Instructions / Orders

Customs

1. 14/2023 - dated 3-6-2023

Electronic Repairs Services Outsourcing (ERSO) – initiation of pilot at ACC Bengaluru

Highlights / Catch Notes

GST

• Court Orders Tax Refund Due to Non-Compliance with Rule 142(2) and Section 74(1) of CGST Act; 6% Interest Applied.

  Case-Laws - HC : Seeking refund the amount, which was recovered illegally from the petitioner - there is 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. It is the duty of the officer to inform the taxpayers regarding the provisions of voluntary tax payment through DRC- 03. - However, in the present case, Neither the department has followed the provisions of Rule 142 (2) of the CGST Rules nor has issued any notice under Section 74 (1) of the CGST Act. - Amount to be refunded with simple interest at the rate of 6% p.a. - HC
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• Petitioner granted stay of demand under B.G.S.T. Act by depositing 20% of disputed tax u/s 112(9).

  Case-Laws - HC : Stay of Demand - availability of statutory remedy of appeal - non-constitution of the Tribunal - Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. - HC
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• Anticipatory bail sought in GST evasion case for alleged nonpayment and abetment; custodial interrogation may be required.

  Case-Laws - HC : Seeking grant of anticipatory bail - alleged nonpayment of dues - abetment in GST evasion - The narration itself is adequate and demonstrates that the accused persons were hand in glove with each other to squeeze the money from the complainants. It is also pertinent to note that an investigation against the accused persons is still pending and, therefore, custodial investigation may further lead to recovery and disclosure of facts for the allegedly misappropriated goods. - HC
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Income Tax

• Taxpayer Exempt from Interest Penalty for One-Day Delay Due to Bank Website Outage, Section 201(1A) Applied.

  Case-Laws - AT : Interest liability - Default u/s 201(1A) and interest u/s 201(1A) - delay of 1 day - Corporation Bank Website was not working on 07.11.2016 - The reason stated by the assessee had not been found to be false. Even though the chargeability of interest u/s 201(1A) of the Act, as rightly pointed out by the ld. DR is automatic in nature, still the same cannot be levied on the assessee in the peculiar facts and circumstances of the instant case, as the interest liability had been fastened on the assessee for reasons beyond the control of the assessee. - AT
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• DRP Rules No Transfer Pricing Adjustments for Intra-Group Services in Sanand Plant Development Case.

  Case-Laws - AT : TP adjustment - intra-group services - Infrastructure consultancy and support charges - DR was unable to controvert the factual finding of the DRP that infrastructure and consultancy services were for development of a new plant in Sanand - these services cannot be held to be supervisory and stewardship services rendered by the AE to the assessee, as contended by the TPO and as argued by the ld.DR before us. - No TP additions - AT
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• IT and SAP charges paid to foreign entities by Indian subsidiaries not deemed income in India under India-Portugal DTAA Article 12(4)(a).

  Case-Laws - AT : Income deemed to accrue or arise in India - amounts received by the assessee from its Indian subsidiary towards IT and SAP charges - the services rendered under IT and SAP Services Agreement are not ancillary and subsidiary to the services rendered under the Technical Collaboration Agreement. Moreso, when the IT and SAP Services Agreement was in existence much prior to the Technical Collaboration Agreement. - The receipts in dispute cannot be treated as FTS under Article 12(4)(a) of India – Portugal DTAA - AT
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• Taxpayer's Gratuity Payments to LIC Fund Allowed Despite Missing Tax Authority Approval Document; Full Disclosure Upheld.

  Case-Laws - AT : Disallowance of Gratuity paid towards LIC fund which was not approved by Income Tax Authority - CIT-A allowed the claim of assessee - Merely because the petitioner did not provide an additional declaration in the return that the scheme though approved, the pentioner is unable to produce a copy of the order approved by the Commissioner after long gap of time, cannot be categorized as failure on the part of the petitioner to disclose truly and fully all material facts. - AT
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• Assessee's Late Submission of Form 27C Rejected; Timing Limitations Confirmed During Assessment Proceedings.

  Case-Laws - AT : Short computation of TCS - Period of limitation for submission of Form 27C - the claim of the ld. Counsel for the assessee that there is no time limit prescribed for obtaining declaration Form 27C is not correct, and it cannot be obtained and furnished by the whimps and fancy of the assessee. - the assessee could not even obtain declaration in Form 27C within the reasonable time and claimed to have obtained said form at the time of assessment proceedings. - AT
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• Education Cess Disallowance Reinstated u/s 40(a)(ii) Following Finance Act 2022 Amendment; Assessee Concedes.

  Case-Laws - AT : Disallowance of education cess on income tax and dividend distribution tax u/s 40(a)(ii) - Assessee has fairly conceded that as per amendment vide Finance Act, 2022 disallowance made by the Ld. CIT(A) on account of education cess on income tax and dividend distribution tax is not sustainable in the eyes of law. So the deletion of education cess on income tax and dividend distribution tax made by the Ld. CIT(A) is not sustainable in the eyes of law and disallowance made by the AO is ordered to be restored. - AT
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• Section 69 Addition for Unexplained Share Investment Dismissed; Transfer Occurred in Different Assessment Year, Evidence Supports Taxpayer.

  Case-Laws - AT : Addition u/s 69 - unexplained investment - share transactions - Year of assessment - the transaction for legal transfer of shares actually took place in the subsequent assessment year but not in the year under consideration. - Thus addition cannot be sustained merely on assumption and presumption where the evidence clearly supports the contention of the assessee. - AT
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Customs

• Customs Duty Refund Denied Due to Lack of Evidence; Doctrine of Unjust Enrichment Applied, Section 28C Cited.

  Case-Laws - AT : Refund of Customs Duty paid in excess - doctrine of unjust enrichment - In the present case, barring CA certificate, no other evidence has been produced by the Respondents before the Adjudicating Authority. As against this, the Department has clearly brought out certain evidence like the Respondents having not shown this amount as “receivables” in their books of account during the relevant time or not having produced any documents etc., as envisaged under Section 28C of the Customs Act. - the Order of the Commissioner (Appeals) allowing the refund is not correct - AT
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• Customs Broker License Revocation Overturned: Undervaluation Allegations Don't Justify Penalties, Officers Still Responsible Under Act.

  Case-Laws - AT : Revocation of customs broker licence - undervaluation - The logical and sequential arrangement of the obligations devolving on customs brokers does not admit of any scope to cite the same fact as act of omission or commission manifesting as breach thereto of two, or more, of the prescriptions of proper conduct. - The Regulations have not, in any way, discharged ‘proper officer of customs’ from responsibility for undertaking functions under the Act and neither does the Act contemplate that the customs broker is the authorized person to whose compliance with the Regulations customs officers subordinate their statutory powers. - There are no reason that the detriment and penalty imposed in the orders should be allowed to survive - AT
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• Customs broker license remains intact as minor discrepancies in shipping bills don't trigger Regulation 10(d) action.

  Case-Laws - AT : Revocation of customs broker licence - There are, apparently, discrepancies in the declaration contained in the shipping bills. That the declarations should match the facts relating to exports is, no doubt, ideal. However, tendency to be casual about particulars that are ‘not material’ is a human failing. There is no evidence that the enumerated discrepancy has impacted the sub-stantiveness of either the export or of the quantum of refund eligible. - The facts do not invite the invoking of consequence of regulation 10(d) of Customs Broker Licencing Regulations, 2018 either. - AT
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• Manufacturer Wins Exemption from Anti Dumping Duty on Seamless Tubes; Refund Approved for Appellant.

  Case-Laws - AT : Rejection of refund of Anti Dumping Duty - appellant being an authorised manufacturer is entitled to exemption from Anti Dumping Duty on the seamless tubes purchased from the importer (Neel Metal Products) which have borne Anti Dumping Duty at the stage of import. - Refund of ADD paid allowed - AT
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• Refund of Customs Duty Approved: Respondent Overcomes Unjust Enrichment Barrier by Retaining Imported Goods.

  Case-Laws - AT : Refund of Customs Duty - unjust enrichment - In this case, the goods brought under the impugned Bills of Entry are still in use by the respondents themselves and the Director (Operations & Technical) of the respondents, has also certified the same. In that circumstances, the respondent has passed the bar of unjust enrichment as the goods are in the possession of the respondent/importer. - AT
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• Court Rules Supplementary Show Cause Notice Issued Before March 2018 Legally Unsustainable u/s 124 Second Proviso.

  Case-Laws - AT : Power of Dept to issue supplementary SCN - challenged on the ground that the same is without jurisdiction and the law does not permit issuance of such supplementary Show Cause Notice - the issue of Supplementary Notice to the Appellant on 18.5.2017, prior to insertion of Second Proviso to Section 124, which came into effect from 29.3.2018, is legally not sustainable - AT
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• Customs Re-Classification of Imported Oil Challenged: Improper Re-Valuation and Duty Demand Unjustified Under Review.

  Case-Laws - AT : Valuation of imported goods - machinery oil /machinery lubricant oil - The basis of re-valuation by the department is re-classification of goods and when the re-classification is itself not proper, question of re-valuation of imported goods and/ or demand of any differential duty on the same, cannot arise. - AT
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• Imported Goods Valuation Cannot Increase Based Solely on NIDB Data Without Supporting Evidence, Says Commissioner (Appeals).

  Case-Laws - AT : Valuation of imported goods - NIDB data cannot be the basis to enhance the declared value in the absence of any corroborative evidence or contemporaneous import. In that circumstances, the rejection of enhanced value by the ld. Commissioner (Appeals) in the impugned order is correct. - AT
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• Appellant Granted Customs Duty Exemption After Valid Certificate of Origin Confirmed, Overturning Initial Denial.

  Case-Laws - AT : Exemption from Basic Customs Duty - invalid Certificate of Origin - the appellant had produced the rectified certificate of origin, which have been wrongly treated as issue of certificate retrospectively. Accordingly, the certificates of origin submitted by the appellant are in order. - benefit of exemption allowed - AT
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Indian Laws

• Court Rules CCI Can't Force ICAI to Outsource CPE Programs; Economic Activities Not Always Subject to Competition.

  Case-Laws - HC : Validity of CPE program being conducted by ICAI - Conducting the programs on its on instead of outsourcing - This Court is unable to accept that the jurisdiction of the CCI extends to compelling a statutory body to outsource functions that it performs in discharge of its statutory duties notwithstanding that the same may fall within the sphere of economic activity. It would be erroneous to assume that if any activity falls within the broad definition of economic activity, it would be necessary to create an open market for the same. This Court is unable to accept that the CCI can compel an organisation or an enterprise to outsource its activities. - HC
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IBC

• Corporate Insolvency Resolution Process: Debt Must Exceed Threshold for Adjudicating Authority to Consider Application. Limitation Period Crucial.

  Case-Laws - AT : Initiation of CIRP - Quantum of Debt - Period of Limitation - once the ‘threshold on debt’ is crossed, the Adjudicating Authority has to admit or reject the Application based on the Provisions of the Code. - AT
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Service Tax

• Authorities Must Provide Reasons for Rejecting Assessee's Objections in SVLDRS-3 Form: A Case on Tax Dispute Resolution.

  Case-Laws - HC : Validity of SVLDRS-3 filed - amount in arrears - reasons for discarding the objections raised - If SVLDRS-2A has a column 'Reasons for Disagreement' and the assessee has detailed such reasons, the authority ought to have assigned at least brief reasons in the remarks column in SVLDRS-3 while deciding on the quantification and rejecting the 'Reasons for Disagreement'. - HC
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• Reversal of CENVAT Credit Not Required for Unsold Areas Post-Completion Certificate; Rule 6 Inapplicable Pre-April 2016.

  Case-Laws - AT : Reversal of CENVAT Credit proportionate pertaining to unsold area of flat/residential complex for which they got occupation certificate on 27.01.2017 - the respondent cannot be expected to pay an amount equal to 8%/10% of sale price of immovable property after obtaining such completion certificate where no service tax is paid as if it is sale of immovable property since Rule 6 of the Rules perse does not apply to the present case until 13.4.2016 at all. - AT
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Central Excise

• Court Criticizes Union Territory for Withholding Budgetary Support Scheme Benefits; Confirms Petitioner's Entitlement Finalized.

  Case-Laws - HC : Budgetary Support Scheme - scheme introduced in lieu of grant of General Exemption and refund of goods and services tax where eligible - There are no reason to not grant the benefit as prayed for by the petitioner. At the same time, we are upset by the response of the authorities of the Union Territory which has deliberately denied the petitioner the benefit which ought to be rightly theirs, as the Union Government has also held that the Petitioner’s claim had attained finality - HC
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• High Court Rules GP Coils, Sheets, and Aluminum Sections as Capital Goods; Appellant Entitled to CENVAT Credit.

  Case-Laws - HC : CENVAT Credit - capital goods or not - GP coils, GP sheets, aluminum sections used in making air ducts for humidification machinery - The Tribunal was not justified in rejecting the claim of the appellant for availing cenvat credit in respect of aforementioned GP sheets and coils etc. by treating them as capital goods - HC
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• CENVAT Credit Dispute: Appellant Wins Right to Claim Steel Items as Production Inputs, Not Capital Goods.

  Case-Laws - AT : CENVAT Credit - inputs or capital goods or used for the manufacture of the final product - steel items - appellant is not even claiming the Cenvat credit in respect of these goods as capital goods. These goods were used as input for manufacture and supply of the finished goods. In view of the fact, entire proceedings initiated against the appellant for denial of CENVAT credit treating these as Capital Goods are ill founded and cannot be sustained. - AT
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Case Laws:

• GST

• 2023 (6) TMI 186
  Seeking grant of anticipatory bail - HELD THAT:- Looking to the role attributed to the petitioner(s) and the observations made by the High Court that the GST number, name of the firm were fabricated and other details were found to be non-existent. No case for anticipatory bail is made out - The Special Leave Petitions stand dismissed.

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• 2023 (6) TMI 185
  Cancellation of GST registration of petitioner - impugned SCN does not specify any reason for proposing the cancellation of the petitioner s GST registration - time limitation - HELD THAT:- Undisputedly, the impugned show cause notice is vague and fails to satisfy the necessary requirement of a valid show cause notice - there is merit in the petitioner s contention that the impugned show cause notice and any further orders passed pursuant thereto are liable to be set aside. The impugned order dated 23.08.2022 indicates that the petitioner s registration was cancelled for the reason that it was found to be non-existent. The petitioner s appeal against the said order was rejected as being barred by limitation. Although the impugned show cause notice is vague and liable to be set aside; however, the petitioner is now aware of the reason why its registration was cancelled. The impugned order dated 23.08.2022 and the Order-in-Appeal dated 19.04.2023 are set aside - Petition disposed off.

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• 2023 (6) TMI 184
  Provisional Attachment of Bank Accounts - order passed without any reason to believe that such an order is necessary for protecting the interest of the Revenue - period of one year has expired since the date of the impugned order and in terms of Sub-section (2) of Section 83 of the CGST Act - HELD THAT:- It is not considered apposite to pass any further orders except to direct that the petitioner would not be impeded to operate the bank accounts, on account of the impugned order. The petitioner has also filed a list of fifteen bank accounts including the bank accounts maintained with IndusInd Bank which were attached by separate orders passed on 20.04.2022. Mr. Singla fairly states that although the said bank accounts as set out in the Annexure P-62 of the petition, have been provisionally attached by the separate orders, the said orders have also ceased to be operative by efflux of time, by virtue of Section 83(2) of the CGST Act. This Court considers it apposite to direct that the concerned banks shall not obstruct operation of the bank accounts on account of the provisional attachment orders dated 20.04.2022. Petition disposed off.

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• 2023 (6) TMI 183
  Seeking refund the amount, which was recovered illegally from the petitioner - no GST DRC-04 has been issued by respondent No. 3 - amount recovered by the respondents without passing any adjudicating order or following any procedure under Sections 73/74 of the Act - HELD THAT:- In the facts of the present case, after the search was conducted on 25.02.2021, amount of Rs. 35,73,147/- (Tax of Rs. 29,48,601/-, interest of Rs. 1,82,255/- and penalty of Rs. 4,42,291/-) was deposited by the petitioner under Section 74 (5) of CGST Act, 2017. As per Rule 142 (2) of the CGST Rules, when a payment is made in FORM GST DRC-03, the proper officer has to issue acknowledgment, accepting the payment made by the said person in FORM GST DRC-04. In the present case, the said payment was made way back on 26.02.2021. Till date, neither they have issued FORM GST DRC-04 nor issued any notice under Section 74 (1) of the CGST Act. The respondents have not followed the Govt. instruction No. 01/2022-23 dated 25.05.2022 (Annexure P-10) issued by the CBIC. In these instructions, it is clarified that there is 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. It is the duty of the officer to inform the taxpayers regarding the provisions of voluntary tax payment through DRC- 03. However, in the present case, as per these instructions, the petitioner has deposited the amount of Rs. 35,73,147/-, but the officer has not issued DRC-03 till date. Neither the department has followed the provisions of Rule 142 (2) of the CGST Rules nor has issued any notice under Section 74 (1) of the CGST Act. The respondents are directed to return the amount in question to the petitioner along with simple interest at the rate of 6% per annum from the date of deposit till the payment is made - Petition allowed.

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• 2023 (6) TMI 182
  Maintainability of petition - availability of statutory remedy of appeal - non-constitution of the Tribunal - Section 112 of the Bihar Goods and Services Tax Act - Stay of demand - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves. Petition disposed off.

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• 2023 (6) TMI 138
  Seeking grant of anticipatory bail - alleged nonpayment of dues - forged bill indicating the purchase of the recovered clothes - HELD THAT:- From the perusal of the case diaries and the investigation, so far taken place, it is apparent that accused Harsh Garg and Sarvesh alias Vinod purchased the goods from the complainants named in the various FIRs and after constituting the fake firm induced the complainants to sold their goods and later on fled away from the place of business, switched off their mobiles and in conspiracy with the present petitioners misappropriated the goods received from complainant and illegally sold it in the market. The investigation also reveals that the accused-petitioners submitted a forged bill showing the purchase of the recovered clothes indicating a fake Firm viz. Vandana Fabrics and also illegally supplied the goods in the market. Thus, causing loss to the complainants in tune of approximately rupees three crores. It is further to notice that the so called documents submitted by the accused-petitioners, stating the purchase of clothes, were found to be forged and fabricated as the GST number, name of the Firm and other details were non existing. The investigation further demonstrates that accused-petitioners were constantly in touch with main accused Harsh Garg and Sarvesh alias Vinod through calls indicating their active role in commission of the crime and deceiving the complainants by extracting money in tune to rupees three crores. The narration itself is adequate and demonstrates that the accused persons were hand in glove with each other to squeez the money from the complainants. It is also pertinent to note that an investigation against the accused persons is still pending and, therefore, custodial investigation may further lead to recovery and disclosure of facts for the allegedly misappropriated goods. The petitioners have so far evaded the custodial investigation by filing the criminal misc. petitions under Sections 482 Cr.P.C., which resultantly culminated in its dismissal and a further effort to escape from the arrest through the present bail applications, also miserably errs - this Court is not inclined to grant the anticipatory bail to the accused-petitioners. Bail application dismissed.

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• Income Tax

• 2023 (6) TMI 181
  Computing capital gains - FMV determination of property under dispute - HELD THAT:- Since, the impugned property is covered under the proceedings under Urban Land Ceiling and Regulation Act, 1976, it is impracticable to fetch a higher market value. In the instant case, since the property is under dispute and the proceedings are pending before the Hon ble High Court of Andhra Pradesh, we are of the considered view that this property cannot fetch a fair value when compared to the properties which are not under litigation. The value as per the rent capitalization method is also far below to the actual consideration received by the assessee. We therefore are of the considered view that the sale consideration received by the assessee is to be adopted for the purpose of computing capital gains and accordingly the Ld. AO is hereby directed to consider Rs.1,38,33,333/- being the share of the assessee from the impugned sale of land and thereby allow the appeal of the assessee.

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• 2023 (6) TMI 180
  Addition u/s.68 - unexplained share capital - CIT(A) deleted the addition by accepting the assessee s contention that the credit to share capital was only through journal entries - HELD THAT:- Assessee transferred Rs.6.00 crore to share application money account from various accounts and all the transfers were made out of respective opening balances. Once the position is such, we fail to understand the logic of the addition u/s.68 just on the passing of transfer entries. Present AO of the assessee, appeared before the ld. CIT(A) on 29-07-2019, who: affirmed that share capital of Rs.6,00,00,000/- was not received in the current year and unsecured loans/sundry creditors were converted in the share capital . Thus, it is abundantly clear that the transfer to share capital account was only by means of transfer entries, which, obviously, cannot lead to addition u/s.68 - Decided in favour of assessee. Addition u/s 41(1) - HELD THAT:- This section gets triggered on cession of trading liability. If the amount is still payable and the assessee admits the liability to pay, no addition can be made under this provision. Here is a case in which the assessee categorically admitted before the ld. CIT(A) that the accounts with these suppliers/creditors were running and continuous. Nothing has been brought on record to controvert this submission of the assessee. If the accounts are running and continuous and the assessee admits the amounts still to be payable, obviously section 41(1) cannot be invoked. - Decided in favour of assessee. Addition of advances received during the year - as per AO since the assessee was not carrying on any business operations held that, in the absence of any confirmation about the genuineness of the creditors, the amount was liable to be added - CIT noticed that there were opening balances in these accounts, thus directed to delete the addition to this extent and upheld the remaining addition - HELD THAT:- There can be no case of the Revenue for confirming the addition because the opening balances cannot be added in the assessment of the current year. Once the ld. CIT(A) has recorded that there were opening balances to the extent of Rs.6.06 crore, which finding has remained uncontroverted on behalf of the Revenue, we find no reason to disturb the same. The impugned order is, therefore, upheld on this score as well.

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• 2023 (6) TMI 179
  Addition u/s 69A - unexplained cash credits in bank account - HELD THAT:- As observed that the assessee made total cash deposits during the financial year 2016-17 including the demonetisation period aggregating to Rs.3,26,61,800/- as against the gross turnover declared by the assessee at Rs.2,91,73,740/-. Hence, the onus passed on the assessee to explain the sources for cash deposits amounting to Rs.34,88,060/- made in the bank accounts of the assessee. The contention of the assessee that the amounts were received from Shri B.Suryanarayana, Proprietor, Kartikeya Wines was not substantiated by the assessee by providing any confirmation letter from Shri B.Suryanarayana before the revenue authorities or before us. Assessee has not accounted both the transactions i.e. payment to APBCL or amount received from Shri B.Suryanarayana. Since the assessee failed to bring any material on record in support of his explanation, find that the Ld.revenue authorities have rightly held the amount as unexplained - Decided against assessee.

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• 2023 (6) TMI 178
  Exemption u/s 11 - application seeking registration u/s 12AA denied - CIT(E) concluded that the assessee trust was not created for any general welfare of the employees - Assessee is a non-profit organization established with the objective of promoting social and economic development with women s full participation and is incorporated as a company registered u/s 25 of the Companies Act, 1956 - HELD THAT:- On going through the objects of the said trust and the reply given by the assessee before the ld.CIT(E), we are of the considered opinion that the assessee s activity falls squarely within the object of advancement of general public utility as defined in section 2(15) of the Act. Hence, apparently, the activity carried out by the assessee is a charitable activity as per section 2(15) of the Act. It is not in dispute that the assessee s case does not fall within the ambit of proviso to section 2(15) of the Act, which provides a restriction, if the charitable purpose is not for advancement of general public utility. Hence, the assessee s case does not fall within the ambit of proviso to section 2(15) of the Act. Trust created for the purpose of discharging statutory obligations of another parent trust - Any trust that has been created for the purpose of managing the statutory obligations of employees of the parent trust would certainly fall within the ambit of advancement of general public utility and, hence, to be considered as a charitable activity as defined u/s 2(15) of the Act. We direct the ld.CIT(E) to grant registration u/s 12AA of the Act to the assessee trust. Accordingly, the grounds raised by the assessee are allowed.

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• 2023 (6) TMI 177
  Default u/s 201(1A) and interest u/s 201(1A) - delayed remittance of TDS by one day on two occasions -delay of 1 day in remittance of TDS - HELD THAT:- For delay of 1 day in remittance of TDS for the month of October 2016, the assessee had submitted that Corporation Bank Website was not working on 07.11.2016 , which is a designated bank for collection of TDS. Also submitted that the assessee had never defaulted in remittance of TDS except for the months of October and November 2016, wherein there was delay by 1 day in each of the months. TDS was remitted to the account of the Central Government on 08.11.2016. In our considered opinion, this delay in remittance of TDS by one day is due to the technical glitches / reasons beyond the control of the assessee and hence we hold that the assessee cannot be penalized by way of interest u/s 201(1A) of the Act for the same. Chargeability of interest u/s 201(1A) is automatically calculated by the CPC based on the dates mentioned by the assessee in its quarterly results and the same is mandatory in nature - We are unable to comprehend ourselves to accept to this argument of the ld.DR, in as much as, the delay had occurred not due to willful default on the part of the assessee, which is evident from the reason stated. Reason stated by the assessee had not been found to be false. Even though the chargeability of interest u/s 201(1A) as rightly pointed out by the DR is automatic in nature, still the same cannot be levied on the assessee in the peculiar facts and circumstances of the instant case, as the interest liability had been fastened on the assessee for reasons beyond the control of the assessee. There is no default committed by the assessee while remitting the TDS for the month of October 2016 on 08.11.2016. Delay in remittance of TDS for the month of November 2016 - AR before us submitted that though the transaction is made online by the assessee, still when the transactions are routed through National Electronic Fund Transfer (NEFT) mode, still the bank takes few hours to process the said payment and accordingly the bank after processing mentions the date of execution as the immediately succeeding day. This fact is also evident from the fact that the time of execution of the said TDS remittance is mentioned in the tax paid challan as 04:45:20 hours, which is 4.45. AM and 20 seconds. This clinching evidence goes to prove that the assessee had made the remittance on the previous day itself i.e on 08.12.2016 and bank had taken its usual time for processing the said payment. The reason stated by the assessee had not been found to be false. Even though the chargeability of interest u/s 201(1A) of the Act, as rightly pointed out by the ld. DR is automatic in nature, still the same cannot be levied on the assessee in the peculiar facts and circumstances of the instant case, as the interest liability had been fastened on the assessee for reasons beyond the control of the assessee. There is no default committed by the assessee while remitting the TDS for the month of November 2016 on 08.12.2016. Accordingly, we direct the ld. AO to delete the interest charged u/s 201(1A) of the Act for the alleged default for the month of November 2016. Appeal of assessee allowed.

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• 2023 (6) TMI 176
  Income deemed to accrue or arise in India - elements necessary for make available clause - Income earned by the Appellant characterized to be in the nature of Fees for Included Services/ Fees for Technical Services under the Act and the India-USA Tax treaty and is consequently subject to tax in India - assessee before us is a US entity and there is a DTAA between India and USA - whether the technical services are made available to Indian customers/ clients? - HELD THAT:- In the instant case, the Indian customers/clients have to repeatedly seek the assessee s services in respect of testing/research followed by a report on the outcome of such testing/research undertaken by the assessee. Assessee is neither involved in supporting a system which is put in place or is already in place by the Indian customers/clients nor getting its Indian customers/clients equipped to carry on the testing/research independently of the assessee. The utility of the services available in the form of a report, though highly technical in nature, comes to an end, little thereafter, if not immediately, after its rendition. Support that the Indian entity seeks after the report is delivered is to understand the report from the assessee. Elements necessary for make available is absent in the services rendered by the assessee to its Indian customers/ clients, inasmuch as even for the said reports, the customers have to continuously refer to the assessee and the same is not freely made available to the Indian customers. Thus, technical services rendered by the affiliates do not make available technical knowledge, experience, skill, know-how or process while preparing these reports for their, Indian customers/ clients. In light of the aforementioned judicial decisions, we are of the considered view that the service recipient of the assessee is unable to make use of the said technology only by itself in its business or for its own benefit without recourse to the assessee year after year. Decided in favour of assessee.

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• 2023 (6) TMI 175
  TP adjustment - determining ALP of the international Transaction of Information Technology Consulting Charges at NIL - HELD THAT:- The basis for determining the ALP at Nil by the AO/DRP, being that no services as such were rendered by the AE, we find is totally contrary to facts and in fact is without considering and addressing the voluminous evidences filed by the assessee demonstrating the fact of having received services for implementation of SAP software. All the evidences filed by the assessee in this regard, as noted above by us, are to the effect that there was an agreement entered into by the AE for provision for these services the evidences demonstrate rendering services, by way of bills raised on the assessee by the AE; the fact of the services rendered are also demonstrated by the minutes of the meeting, and engagement of employees of the AE for the implementation of SAP projects. We also agree with assessee that merely because cost paid by the assessee for the implementation of the SAP software was disproportionately high, as compared to the cost of software itself, that alone cannot be basis for arriving at the conclusion that no services were rendered by the AE to the assessee. Such high cost for services rendered for implementing a software does raise doubts, but mere suspicion cannot be the basis for holding that no services were rendered by the AR for the said purpose, more particularly when the assessee had filed evidences showing rendering of services. It is for the Department to make further inquiry to find out whether any constructive services as such was rendered by the AE or not to the assessee. Without pointing out any infirmity in the evidences furnished by the assessee, demonstrating rendering of IT services, the Revenue authorities, we hold could not have casually gone on to state that no services were rendered by the AE to the assessee, and that the evidences did not establish nature of services rendered. We do not agree with the AO/DRP that no services were rendered by the AE to the assessee on account of IT consultancy services, and we therefore, direct the deletion of the adjustment made to the same by treating the ALP of the said services at NIL as opposed as claimed by the assessee. TP adjustment made in relation to international transactions of payment of guarantee fees to its AE - ALP as determined at NIL by AO/TPO, objection of the assessee to which, was dismissed by the DRP - HELD THAT:- We agree with the TPO that there was no rendering of any service of guarantee in the present case by the AE to the assessee, warranting payment of guarantee, if at all. It is not denied that the loan had been taken by the assessee for acquiring long term assets i.e. land etc. and therefore, the assets itself could serve as a collateral securities, doing away the need for any guarantee to be provided, more particularly, considering that the assessee was a financially sound company, as the loan could have been sufficiently guaranteed by the collateral securities itself. Also, as rightly noted by the TPO, the assessee had been advanced loan at PLR rate itself, and no benefit, as such had accrued to the assessee on account of guarantee provided, if any, by its AE - considering all the above, we agree with the TPO that the assessee was unable to demonstrate rendering of services of any sort of guarantee by the AE to the assessee, and therefore, we hold, the TPO/DRP has rightly determined the ALP of the transactions at NIL. Basis for rejecting the comparable provided by the assessee for benchmarking its transactions using CUP was also not controverted by the ld.counsel for the assessee before us. TPO had pointed out that while the comparable transaction was a short term loan transaction which the assessee had shown to have attracted interest rate at 16%. The transactions undertaken by the assessee with its AE for borrowing of Rs. 100 crores was for the acquisition of capital assets, and was a long term borrowings, therefore, noting this basic distinction in the character of two transactions, the comparable selected was not suitable and appropriate, and has been rightly rejected by the Revenue authorities, we hold. We confirm the upward adjustment made on account of guarantee fees and dismiss ground no. 4 raised by the assessee. DRP classifying office equipment under the head furniture and fittings instead of plant machinery and thereby disallowing differential depreciation - HELD THAT:- We hold that the assessee is entitled to claim of depreciation at 15% on office equipments and disallowance of excess depreciation made by the AO by treating these assets as furniture and fittings entitled to depreciation at the rate of 10% is directed to be deleted. Ground of the assessee s appeal is allowed. Disallowing provision for advertisement expenses - HELD THAT:- As noted that basis of making disallowance was contrary to the facts of the case, since it has been demonstrated before us that complete details of this provision made by the assessee had been furnished to the DRP, pointing out the specific expenses in relation to which the provision had made by the assessee. The assessee clearly had demonstrated that it was not an adhoc provision made by it, but based on specific bills of advertisement expenses incurred by the assessee. DRP for the reason best known chose to ignore this evidence filed by the assessee. The order passed therefore by the DRP disallowing the expense is grossly incorrect and unjustified, we hold that the assessee having proved by way of evidence that provision or advertisement expenses were not adhoc in nature -no reason to make the impugned disallowance. Decided in favour of assessee. Disallowing devaluation of inventory - HELD THAT:- Assessee consistently following the system all along and the system was in compliance with AS-2 and section 145A of the Act also. Assessee, had furnished details of each and every inventory which it had devalued, substantiating its basis of the devaluation on age-wise analysis giving complete details of last date on which inventory was purchased showing that they were slow moving items, and based on age-wise analysis adopted by the assessee company, assets were accordingly devalued. The assessee, we have noted, has adopted a scientific basis of reduction in value of its inventory based on age-wise analysis and has been applying it universally to all its inventory consistently from year to year. We fail to understand what further evidence the assessee was required to furnish to justify its claim. The claim of the assessee being based on scientific basis, approved by the statutory auditors also, and which has been following consistently year to year, we find no reason or justification for disallowing the same. The claim of the devaluation of inventory is accordingly allowed. Capitalising interest expense to the capital work-in-progress ( CWIP ) - As per assessee assessee was that the assessee had sufficient own interest free funds for investing in CWIP and presumption therefore was that interest bearing funds were utilized for the said purpose warranted no disallowance of interest as per the provisions of section 36(1)(iii) - HELD THAT:- Assessee has demonstrated that it was consistently following AS-16 which prescribes basis for accounting of interest cost in relation to fixed assets, and had demonstrated so also from its financial statement pertaining to the succeeding year and this fact was certified by the statutory auditors and even the tax auditors and further noting the fact that the assessee had sufficient interest free funds of its own for investing in CWIP, we hold that there was no basis with the Revenue nor any justification for holding that the assessee had huge interest bearing funds for CWIP and thus capitalizing the interest - we direct the deletion of disallowance of interest expenditure. Addition being provision for product support - assessee has made only provision in the P L account and failed to produce any evidence to prove - DRP deleted the addition - HELD THAT:- As noting the facts that the issue stood decided in favour of the assessee by the ITAT in the earlier years, the DRP agreed to the objection of the assessee to the disallowance made by the AO for provision for products support/services, and accordingly, the DRP directed the AO to delete the disallowance so made. Before us, the ld.DR was unable to point out any infirmity in the order of CIT(A). DR was also unable to distinguish the earlier year case of the assessee with the present one - since the issue already stands decided in favour of the assessee in earlier years by the ITAT, we see no reason to interfere in the order of the DRP directing the deletion of product supports/service charge. TP adjustment proposed by the TPO on account of intra-group services - adjustment related to template charges and infrastructure consultancy charges - HELD THAT:- DR before us has been unable to controvert the fact demonstrated by the assessee as above, both to TPO and the DRP that template charges was paid for acquiring the SAP software which was developed by its AE for streamlining the business transactions of the assessee. We, therefore, agree with the DRP that the cost of acquisition of software cannot be treated at NIL. Since undisputedly, the purpose of the software was to smoothen the business activity and information management system in the assessee-company, it cannot be said to be providing services only of supervisory and stewardship nature. Benefits from this software surely arose to the assessee directly. The ld.DR was unable to point out as to how this SAP software provided to the assessee was only for the purpose of playing a supervisory role - we concur with the DRP that TPO had erred in treating intra-group services of template acquired by the assessee as being in the nature of supervisory services. We accordingly uphold the order of the DRP directing deletion of adjustment made to the template charges by determining ALP at NIL. Infrastructure consultancy and support charges paid by the assessee - As noted from the orders of the authorities below that the assessee had explained the services rendered by the AE in relation to the said expenditures being for setting up of plant at Sanad; that the AE was providing consultancy and support services for the development of this infrastructure of the assessee for which these charges had been paid. DR was unable to controvert the factual finding of the DRP that infrastructure and consultancy services were for development of a new plant in Sanand. We therefore see no reason to interfere in the order of the DRP holding that these services cannot be held to be supervisory and stewardship services rendered by the AE to the assessee, as contended by the TPO and as argued by the ld.DR before us. Thus uphold the order of the DRP directing the deletion of adjustment made to the infrastructure consultancy and support services by the TPO at NIL.

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• 2023 (6) TMI 174
  Revision u/s 263 by CIT - CIT setting aside order passed u/s 143(3)/147 as erroneous in so far as it is prejudicial to the interest of the Revenue - as submitted A.O rectified his order u/s 154 and made additions to the income, based on audit objections - HELD THAT:- AO had already passed the order u/s 154 of the Act on 14/02/2020 by making very same addition which was the subject matter of order impugned of the PCIT dated 15/03/2021, we are of the opinion that, the order passed by the Ld. PCIT u/s 263(1) of the Act in directing the A.O. to frame the assessment order once again will amounts to double jeopardy to the Assessee - order passed u/s 263(1) of the Act by the PCIT is quashed. Decided in favour of assessee.

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• 2023 (6) TMI 173
  Income deemed to accrue or arise in India - amounts received by the assessee from its Indian subsidiary towards IT and SAP charges - Whether can be treated as Fees for Technical Services (FTS) under India Israel Double Taxation Avoidance Agreement (DTAA) read with India- Portugal DTAA? - assessee is a non-resident corporate entity incorporated in Israel - HELD THAT:- FAA while coming to the conclusion that the services rendered under IT and SAP Services Agreement are ancillary and subsidiary to royalty agreement, has completely misconceived the facts, as, he was under an impression that the Technical Collaboration Agreement existed prior to IT and SAP Service Agreement. Whereas, factually, it is not so. FAA aso fell into such factual error because while invoking Article 12(4)(a) of India Portugal DTAA, he did not afford any opportunity to the assessee to have his say. As examining the nature of services rendered under the IT and SAP Service Agreement and the Technical Collaboration Agreement, we are convinced that the services rendered under IT and SAP Services Agreement are not ancillary and subsidiary to the services rendered under the Technical Collaboration Agreement. Moreso, when the IT and SAP Services Agreement was in existence much prior to the Technical Collaboration Agreement. The receipts in dispute cannot be treated as FTS under Article 12(4)(a) of India Portugal DTAA and made taxable at the hands of the assessee in India. Accordingly, the disputed additions in both the assessment years are deleted. Assessee appeal allowed.

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• 2023 (6) TMI 172
  Addition u/s 11(3) - sale transaction of trust property - assessee claimed capital gain and the duly reflected in the return of income at Column No.4(vi) as a part of accumulation set apart for the year under consideration out of income earned on account of capital gain during the year - HELD THAT:- In the present case, where the impugned addition was made on the basis that the assessee failed to file requisite report as required in Form No.10B.Appeal of the assessee is allowed for statistical purposes. Assessee has himself accepted that mistake was committed while filing statutory return of income by admitting that the same capital gain as income u/s 11(3) when the same is indeed set apart for a specified purpose Setting up free coaching cum Study Centre for BPL Card Holders and Other admitted in Form 10B, thereby, the amount set apart is not to be treated as income, though, the same was mistakenly admitted as income of the appellant s trust under Section 11(3) of the Act in the return of income. Assessee has himself accepted that mistake was committed while filing statutory return of income by admitting that the same capital gain as income under Section 11(3) of the Act, when the same is indeed set apart for a specified purpose Setting up free coaching cum Study Centre for BPL Card Holders and Other admitted in Form 10B, thereby, the amount set apart is not to be treated as income, though, the same was mistakenly admitted as income of the appellant s trust under Section 11(3) of the Act in the return of income. The learned authorities below ought to have considered and verify the facts as well as the bona fide mistakes - set aside the orders of the authorities below and restore the issue to the file of the AO to verify the grievance of the assessee. If, it is found correct, the issue may be decided in accordance with law.

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• 2023 (6) TMI 171
  Exemption u/s 80P - interest income earned on fixed deposits with other co-operative banks - HELD THAT:- As relying on Vaibhav Nagari Sahakari Pat Sanstha Maryadit [ 2023 (6) TMI 95 - ITAT PUNE] interest income earned on fixed deposits with other co-operative banks qualifies for exemption u/s 80P(2)(d) - direct the CPC to rectify the intimation and allow the exemption u/s 80P(2)(d) - Decided in favour of assessee.

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• 2023 (6) TMI 170
  Disallowance of commission expenses - AO observed that the payments under the head commission made to various persons engaged in marketing and distribution network and therefore estimated that the minimum rate of 2% on total sales claimed by the assessee - HELD THAT:- Above commission payment are made by the assessee by cheques and appropriate TDS is deducted and remitted to the Government account and the parties also assessed to Income Tax. The assessee is also maintaining its books of accounts in ERP system, Commission is calculated at the end of the relevant quarter and after due verification of sales target achieved, payment received against sales etc, and on the basis of debit note received from dealers, the commission expenses is accounted in the books of the assessee company. AO also found that similar commission expenses is being accepted by the department and which is not disputed by the A.O. Thus CIT(A) deleted the addition correctly - Decided against revenue. Disallowance of Gratuity paid towards LIC fund which was not approved by Income Tax Authority - CIT-A allowed the claim of assessee - HELD THAT:- This issue is been settled in the case of Valsad District Central Co-Op. Bank Ltd.[ 2019 (5) TMI 1979 - ITAT SURAT] as held petitioner produced what it had been producing all along namely, the contribution made towards the fund and the agreement of the LIC to manage the fund. If the Assessing Officer had any doubt about such a claim, it was always open for him to examine it, ask the petitioner to fulfill further requirements. Merely because the petitioner did not provide an additional declaration in the return that the scheme though approved, the pentioner is unable to produce a copy of the order approved by the Commissioner after long gap of time, cannot be categorized as failure on the part of the petitioner to disclose truly and fully all material facts. Also in M/S. TAMILNADU MARITIME BOARD [ 2020 (10) TMI 798 - MADRAS HIGH COURT] held that contribution made towards fund was to be treated as business expenditure and the same was allowable u/s. 37(1) of the Act, even though the said fund was unapproved by Income Tax Department - no hesitation in confirming the deletion made by the Ld. CIT(A) - Decided against revenue.

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• 2023 (6) TMI 169
  Exemption u/s 11 and 12 - Assessment of trust - violation of Section 12AA - whether assessee is eligible to take corpus donation without availing the registration U/s 12AA? - AR submitted that the assessee is eligible the exemption u/s 10(23C) as the gross receipt is below the Rs.1 crore during impugned assessment year - HELD THAT:- From the factual matrix and considering the order of the revenue authorities, it is found that the grievance of the revenue is related to unverified corpus donation. The entire corpus donation was taken in the total income and was taxed accordingly. There is no point that the assessee cannot take the corpus donation without availing the registration u/s 12AA. But the unverified corpus donation is the moot point of the grievance of the revenue. The assessee filed a written submission with details of the payment and assessee is also interested re verification of the evidence before the ld. assessing authority. DR had not made any strong objection against this assessee s submission. Accordingly, the matter is remitted back to the ld. AO for further verification of the corpus donation received by the assessee for this impugned assessment year. Appeal of the assessee allowed for statistical purposes.

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• 2023 (6) TMI 168
  Disallowance of employees contribution to PF/ESI u/s 36(1)(va) read with section 2(24)(x) - adjustment made while processing the return u/s 143(1) - information given in the audit report relied upon - HELD THAT:- The crux of the entire decision of Kalpesh Synthetics Pvt. Ltd. vs. DCIT [ 2022 (5) TMI 461 - ITAT MUMBAI] is that even when the factual information given in the audit report indicates the disallowance u/s 36(1)(va), however, that is subject to the law laid down by the courts and if the Jurisdictional High Court has interpreted the provisions in any other manner then the decision of the Hon ble High Court would prevail over the indication given in the tax audit report. The above views of in Kalpesh Synthetics Pvt. Ltd. in no manner is suggestive that the adjustment u/s 36(1)(va) cannot be made while processing the return u/s 143(1) of the Act, rather, the above view is limited to the proposition that if the law laid down by the High Court/Supreme Court is otherwise as compared to the factual information given in the audit report, then the law laid down by the Hon ble High Court/Supreme Court would prevail over the tax audit report. As observed above, the law has been settled in the case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] - The law declared by the Hon ble Supreme Court is to be treated as if the same was the right interpretation since the date of the inception of the relevant provision and, therefore, even as per the decision of the Coordinate Bench of the Tribunal in Kalpesh Synthetics Pvt. Ltd. vs. DCIT (supra), the issue is required to be decided in favour of the Revenue and against the assessee.

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• 2023 (6) TMI 167
  Exemption u/s 54 - LTCG - Assessee bought new house beyond period of three years - as per AO assessee made booking of new residential house as after due date of filing return of income and execution of sale deed of new house took place not within three years from the date of sale - HELD THAT:- Assessee has paid Rs. 28.00 lacs within three years form the date of sale of old house. The date and payment on various dates as recorded is not disputed by revenue. Such details of payment were furnished before lower authorities. Only the sale deed of new house was executed 18/12/2015. As decided in a recent decision in Harminder Kaur [ 2021 (2) TMI 580 - ITAT DELHI ] while following the earlier decisions of Jagruti Aggarwal [ 2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT ] held that where the assessee sold residential house and utilized the sale consideration for booking flat in housing project which was yet to be constructed, since assessee had made entire payment toward investment in new flat within period of three years from the date of transfer of original asset, amount was to be treated as invested in purchase / construction of new residential property and assessee is to be allowed exemption u/s 54. Also in Dr Dharmista Vs ITO [ 2022 (10) TMI 544 - ITAT MUMBAI ] held that exemption u/s 54 should be allowed if the amount is invested on or before due date of filing return of income under section 139(4). Thus, direct AO to allow exemption u/s 54 to the assessee. Assessee appeal is allowed.

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• 2023 (6) TMI 166
  Short computation of TCS - Period of limitation for submission of Form 27C - HELD THAT:- It is the duty of the seller to recover TCS at the time of sale or receipt of money or obtain declaration in Form 27C from the buyer of goods. The person responsible for selling specified goods should collect TCS as prescribed under the Act or obtain declaration in Form 27C and also submit said Form to the Principal Chief Commissioner or Chief Commissioner of Income-tax on or before the 7th day of the month next following the month in which the declaration is so furnished to him Even if declaration in Form 27C is not collected on the date of sale or receipt of money, but said Form should be obtained within the reasonable time and filed before the concerned authorities on or before 7th day of the month in which said Form is collected. Therefore, we are of the considered view that, the claim of the ld. Counsel for the assessee that there is no time limit prescribed for obtaining declaration Form 27C is not correct, and it cannot be obtained and furnished by the whimps and fancy of the assessee. In the present case, the assessee could not even obtain declaration in Form 27C within the reasonable time and claimed to have obtained said form at the time of assessment proceedings. Therefore, we are of the considered view, that there is no error in the reasons given by the AO and the CIT(A) to reject the claim of the assessee and made additions towards short collection of TCS and interest thereon. Alternate plea of assessee in the second round of proceedings before the CIT(A) and argued that the assessee is able to collect declaration in Form no. 27BA in terms of provisions of section 206C(6A) and rule 37J of I.T. Rules, 1962, where the Accountant has certified that the purchasers have filed the return of income - No doubt, if the buyer furnished a certificate from the accountant in terms of section 206C(6A) of the Act r.w.r. 37J(1) of the IT Rules, 1962, then the assessee shall not be treated as an assessee in default, but fact remains that said exercise should be done by the assessee within the reasonable time. In this case, the assessee claims to have obtained Form no 27BA on 24.04.2021, after seven years from the end of relevant assessment years in which default u/s. 206C(1) of the Act has been noticed. In our considered view, law can provide immunity to the assessee, in a case where it has acted in bonafied and within the reasonable time. Therefore, we are of the considered view that, there is no merit in alternate plea made by the ld. Counsel for the assessee, in light of Form 27BA obtained after a gap of seven years and thus, we reject alternate claim of the assessee. Assessee appeal dismissed.

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• 2023 (6) TMI 165
  Disallowance of claim of sales tax incentive - HELD THAT:- When the issue in question has already been decided in favour of the assessee even in earlier years A.Y. 2003-04 [ 2009 (12) TMI 945 - ITAT MUMBAI] as well as this issue has also been decided in case of DCIT vs. Reliance Industries Ltd [ 2003 (10) TMI 255 - ITAT BOMBAY-J] wherein it is held that sales tax subsidy received under the package scheme incentives 1997 is for the purpose of industrial development of the backward districts as well as generation of employment, thus, establishing a direct nexus with the investment in fixed capital assets and as such a capital asset. Revenue has failed to bring on record any distinguishable facts qua the year under assessment vis- -vis earlier years i.e. A.Y. 2010-11. Decided against revenue. Nature of receipt - Excise duty collected by the assessee was capital in nature - HELD THAT:- When the issue has already been decided in favour of the assessee by examining the objective of grant of excise duty incentive vide memorandum issued by Ministry of Garments Industry, decision rendered in case of Shree Balaji Alloys [ 2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] which has been affirmed in case of Ponni Sugars Chemicals Ltd. [ 2008 (9) TMI 14 - SUPREME COURT] holding that excise duty refund granted with the object of social problem of unemployment in the state by accelerating the industrial development was a capital receipt, we find no illegality or perversity in the impugned findings returned by the CIT(A) holding receipt of excise duty by the assessee as capital in nature. Decided against the Revenue. Allowance of foreign exchange fluctuation loss on reinstatement of loan - claim disallowed by the AO on the ground that the assessee company has capitalized it in the books of account - HELD THAT:- CIT(A) by following the order passed u/s 143(3) for A.Y. 2009-10 in which year foreign exchange fluctuation loss amortised in the books was allowed. Assessee company has claimed the foreign exchange fluctuation loss to in the revised return. When the Revenue has itself allowed the claim of the assessee of foreign exchange fluctuation loss amortised in the books in A.Y. 2009-10 and 2011-12 no extraneous reasons have been brought on record by Revenue as to why it should not be allowed for the year under consideration. For earlier two years Revenue has accepted the decision of AO allowing the foreign exchange fluctuation loss amortised in the books .No illegality or perversity in the impugned findings returned by the Ld. CIT(A) - Decided against the Revenue. Weighted deduction on R D expenses u/s 35(2AB) - claim disallowed by the AO on failure of the assessee to bring on record certificate issued by the prescribed authority [Secretary of Department of Scientific and Industrial Research, Government of India(DSIR)] - CIT(A) allowed the same by thrashing the facts in the light of case of Zeus Numerix Private Ltd [ 2015 (4) TMI 1247 - ITAT MUMBAI] - HELD THAT:- CIT(A) has discussed the law laid down in case of Sandan Vikas (India) Ltd. [ 2011 (2) TMI 66 - DELHI HIGH COURT] and Claris Lifesciences Ltd [ 2008 (8) TMI 579 - GUJARAT HIGH COURT] on the issue in question where it is held that for the purpose of section 35(2AB) existence of recognition is relevant and not the date of recognition or not of date mentioned in the certificate of DSIR or even the date of approval. In the instant case it is undisputed fact that R D centre to be run by the assessee company has been recognized. When it is so the Ld. CIT(A) has rightly allowed the benefit of deduction claimed by the assessee under section 35(2AB) of the Act. So finding no illegality or perversity in the impugned order passed by the Ld. CIT(A) - Decided against the Revenue. MAT computation - AO disallowed the exclusion of sales tax incentives, excise duty exemption and exclusion of profits on sale of assets while computing the book profit u/s 115JB - HELD THAT:- When a receipt is not in the nature of income it is not to be formed part of the taxable profit and as such sales tax incentive and excise duty exemption and profit on sale of fixed assets are not chargeable to tax, hence rightly ordered to be excluded from computing the book profit under section 115JB by the Ld. CIT(A). No illegality or perversity in the impugned order passed by the Ld. CIT(A). Decided against the Revenue. Disallowance of education cess on income tax and dividend distribution tax u/s 40(a)(ii) - HELD THAT:- As in view of the amendment made vide Finance Act, 2022 with retrospective effect from 01.04.2005 to section 40(a)(ii) for the purpose of section 40, the term Tax shall include and shall be deemed to have always included any sur-charge or cess by whatever name called, on such tax - education cess on income tax and dividend distribution tax is integral part of income tax under the Income Tax Act payable by the assessee covered by provision of section 40(a)(ii). Assessee has fairly conceded that as per amendment vide Finance Act, 2022 disallowance made by the Ld. CIT(A) on account of education cess on income tax and dividend distribution tax is not sustainable in the eyes of law. So the deletion of education cess on income tax and dividend distribution tax made by the Ld. CIT(A) is not sustainable in the eyes of law and disallowance made by the AO is ordered to be restored. Hence, ground raised by the Revenue is allowed.

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• 2023 (6) TMI 164
  Deduction u/s 80P(2)(d) - interest income earned by the Cooperative Society on its investment made with co-operative bank - HELD THAT:- As in case of Totgar s Co-operative Sale Society Ltd. [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] and case of State Bank of India [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] had held that interest income earned by a co-operative society on its investment held with co-operative bank would be eligible for claim of deduction u/s 80P(2)(d) of the Act. So following the decision rendered above and Palm Court M Premises Co-operative Society Ltd. [ 2022 (9) TMI 650 - ITAT MUMBAI] we are of the considered view that assessee society who has earned an amount from its investment of surplus fund with co-operative banks is entitled for deduction u/s 80P(2)(d) - CIT(A) has erred in upholding the denial of deduction by the AO to the assessee under section 80P(2)(d) - Decided in favour of assessee.

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• 2023 (6) TMI 163
  Addition u/s 69 - unexplained investment - share transactions - Year of assessment - addition invoking the provisions of section 115BBE - an Ikrarnama relating to transfer of shares in Paradizo Resort was retrieved from the mobile phone of Sh. Ashok Jain[ brother of assessee] - HELD THAT:- As in the year under consideration the shares were not transferred as contended by the ld. AO and the unexplained investment as contended by the assessing officer in fact inkling based on the unsigned ikrarnama found. Addition was made based on the suspicion and the consideration fixed vide ikrarnama in fact not flowed and in fact there is no support found from the seized record to substantiate the view taken by the revenue. The asset is not transferred and it is the ld. AO reported the shares were reflected in the subsequent return and the capital gain is also offered. Thus, in the absence of any tangible material found from the search proceeding except the unsigned ikrarnama we do not see any force in the argument advanced by the ld. DR. DR did not controvert the detailed finding on facts given by the ld. CIT(A) holding that alleged shares were transferred in the subsequent years which were not only disclosed by the assessee in his return of income but due taxes were paid thereon and the same is reiterated before us by the ld. AO in his status report. Thus, we concur the detailed finding of the ld. CIT(A) holding that the transaction for legal transfer of shares actually took place in the subsequent assessment year but not in the year under consideration. Thus addition cannot be sustained merely on assumption and presumption where the evidence clearly supports the contention of the assessee.. There is no tangible material evidence except the unsigned ikrarnama where in itself the details of the cheque payments mentioned are duly recorded. The subsequent transfer of shares duly recorded in the year of transfer and offered for tax, support the finding of the ld. CIT(A). - Decided against revenue.

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• Customs

• 2023 (6) TMI 162
  Non-fulfilment of condition of the advance authorization - locally procured Coco Butter as 50 MT of Coco Butter (imported) was lost during transit from the port to the factory - demand of duty was confirmed on the ground that imported goods were not used in the manufacture of goods exported - violation of any of the conditions of N/N. 93/2004-Cus dated 10.09.2004. HELD THAT:- Learned counsel for the appellant-Revenue has not been able to cite any judgment on the proposition that once the export obligation has been discharged and the assessee has redeemed its bond executed with the licensing authority i.e. DGFT, the Customs Authorities can initiate proceedings against such assessee. Moreover, it is not the case of the Revenue that there is violation of any of the conditions of notification No. 93/2004-Cus dated 10.09.2004. After going through the impugned order, no illegality, much less perversity has been found therein warranting interference by this Court. The impugned order has been passed after appreciating the evidence in the right perspective. No substantial question of law arises for consideration. Appeal dismissed.

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• 2023 (6) TMI 161
  Applicability of doctrine of unjust enrichment - Refund of Customs Duty paid in excess - failure to recognize the refund as duty receivables for the said period in their Books of Account - Section 27 of the Customs Act, 1962 - HELD THAT:- The Department has mainly relied upon statutory provisions whereby certain presumptions are made with regard to passing of incidence of duty unless there is evidence to the contrary. Admittedly, in this case, on reassessment the rate of duty was reduced and as consequence respondents filed refund claims. The Respondents, at that point of time, were aware of the quantum of refund even though they had to go through the procedural requirement of filing refund claim. In fact they have clearly specified the amount of refund which they were eligible as consequence to reassessment also. At this point also they have not shown this amount as receivable in any of their books of account nor any such evidence was produced before the competent authority sanctioning refund to the effect that they had not passed on total amount of applicable Customs Duty to their customers except for the CA s Certificate. The statutory provisions concerning grant of refund and application of unjust enrichment are very clear. The Respondents were required to give clear evidence to the sanctioning authority that they had not collected the duty or had only partially collected the duty instead of full duty by way of any relevant document. They have clearly failed to do so. In fact, the statutory provisions clearly provided for the documents which would show the element of duty in the price and if such documents were produced it would have clearly shown the exact amount of duty included in the price or otherwise. They have not produced any such documents. Therefore, in the absence of any such evidence, merely producing CA certificate would not suffice to shift the burden of presumption for the purpose of Section 27 read with Section 28C of the Customs Act. In the present case, barring CA certificate, no other evidence has been produced by the Respondents before the Adjudicating Authority. As against this, the Department has clearly brought out certain evidence like the Respondents having not shown this amount as receivables in their books of account during the relevant time or not having produced any documents etc., as envisaged under Section 28C of the Customs Act. All these evidence leading to the conclusion that they have treated the duty as an element of expenditure and therefore, forming part of the Profit Loss account and not as receivables - in the facts of the case, they have clearly not been able to clear the bar of unjust enrichment by not having produced sufficient evidence before the original authority. Thus, in the absence of any verifiable and positive evidence from the Respondents, the Original Authority has rightly granted the refund on merits but ordered for crediting it to Consumer Welfare Fund and therefore, there is not infirmity in the Order of the Original Authority which was, however, set aside by the Commissioner (Appeals) as discussed in foregoing paras, therefore, the Order of the Commissioner (Appeals) is not correct and is liable to be set aside and the Order of the Original Authority is liable to be restored. The Impugned Orders of the Commissioner (Appeals) setting aside the Orders of the Original Authority, are set aside - Appeal allowed.

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• 2023 (6) TMI 160
  Revocation of customs broker licence - forfeiture of security deposit - levy of penalty - overvaluation of Export goods - breach of regulation 10(d), 10(e), 10(m) and 10(n) of CBLR - HELD THAT:- The facts ascertained during the examination, or unearthed in the subsequent investigations, and emplaced, at times, in the notice commonly to evince breach of several of the enumerations of proper conduct in regulation 10 of Customs Brokers Licensing Regulations, 2018 are incorrect declaration of weight, value and description, resort to common heading of ITC (HS) classification and lack of conformity of heading incorporated in shipping bills with that in invoices of the supplier of the goods. In addition, reliance has been placed on the admission of the Director of the appellant-company that they did not interact directly with the client. It would not be out of place to take note that the refund of tax, consequent upon completion of export, is limited to tax discharged on procurement and there is no allegation that they would, in consequence of the declarations, be entitled to a whit more than that; nor is there any controverting of the claim of the exporter to be entitled to the refund. The logical and sequential arrangement of the obligations devolving on customs brokers does not admit of any scope to cite the same fact as act of omission or commission manifesting as breach thereto of two, or more, of the prescriptions of proper conduct. Of the four charges brought against the appellant, the first deals with responsibility to advice conformity with applicable law and consequence of discard of advice; the second with only ascertained information to be furnished to a client. Undervaluation is a determination on the part of the customs authorities and, in the absence of finding that the purported transaction price is supplemented by additional consideration or is partially reimbursed to exporter, any revision is merely exercise of empowerment to restrict benefit or recover duty; recourse to some rule of valuation is part of procedure of assessment which the licencing authority can hardly fasten on customs broker as normative conduct. Even the difference in weight, at about 10% of that declared, is so marginal, and with no discrepancy in declaration of quantity, as to have little impact on diligent completion of assessment - The lack of any discussion on the norms actuated for compliance with the obligation in regulation 10(e) of Customs Broker Licencing Regulations, 2018 and of flouting of the norms flowing from the few available facts puts paid to the finding that this obligation has been breached. There are, apparently, discrepancies in the declaration contained in the shipping bills. That the declarations should match the facts relating to exports is, no doubt, ideal. However, tendency to be casual about particulars that are not material is a human failing. There is no evidence that the enumerated discrepancy has impacted the sub-stantiveness of either the export or of the quantum of refund eligible. Not does it essay that the discrepancies came about because compliance with the law had not been insisted upon by the customs broker or that the discrepancies were so crucial to the outward clearance and benefit as to prevent the appellant from noticing those and reporting inappropriate action on part of the client to customs authorities. The facts do not invite the invoking of consequence of regulation 10(d) of Customs Broker Licencing Regulations, 2018 either. The Regulations have not, in any way, discharged proper officer of customs from responsibility for undertaking functions under the Act and neither does the Act contemplate that the customs broker is the authorized person to whose compliance with the Regulations customs officers subordinate their statutory powers. There are no reason that the detriment and penalty imposed in the orders should be allowed to survive - appeal allowed.

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• 2023 (6) TMI 159
  Rejection of refund of Anti Dumping Duty - applicability of Exclusion Clause No. (VI) of Notification No. 7/2017-Cus (ADD) dated 17.02.2017 - HELD THAT:- The rejection of refund is on the face of it illegal and against the provisions of law particularly, Section 27 (1) (b) of the Act. Section 27 (1) (b) provides for refund to a person, when such person has borne the duty or interest, which was not legally chargeable from him under the scheme of the Act r/w Rules and notification thereunder. Admittedly, in the facts of the present case, appellant being an authorised manufacturer is entitled to exemption from Anti Dumping Duty on the seamless tubes purchased from the importer (Neel Metal Products) which have borne Anti Dumping Duty at the stage of import. Accordingly, the appellant is entitled to refund of the amount of Anti Dumping Duty Of Rs. 40,21,173/- and the impugned order is set aside. The adjudicating authority is directed to disburse the said amount of Anti Dumping Duty within a period of 45 days from the date of receipt of this orders alongwith interest @ 6% p.a. starting from the end of 3 months from the date of application, till the date of disbursement - appeal allowed.

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• 2023 (6) TMI 158
  Refund of Customs Duty - import of second hand vessel for dredging purposes, called CSD Aquarius along with accessories - rejection on the ground of limitation and on the ground of unjust enrichment - lower authority credited the refund to the Consumer Welfare Fund on the ground that the present contract price is higher than the previous one, after importation of dredger, and held that it has passed duty to the incidence to other - HELD THAT:- The findings of ld. Commissioner (Appeal) have not been controverted by the Revenue with documentary evidence. Merely saying that the Chartered Accountant s Certificate cannot be relied upon to hold that the bar of unjust enrichment is passed - In this case, the goods brought under the impugned Bills of Entry are still in use by the respondents themselves and the Director (Operations Technical) of the respondents, has also certified the same. In that circumstances, the respondent has passed the bar of unjust enrichment as the goods are in the possession of the respondent/importer. There are no infirmity in the impugned order, accordingly, the same is upheld - the appeal filed by the Revenue is dismissed.

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• 2023 (6) TMI 157
  Power of Dept to issue supplementary SCN - challenged on the ground that the same is without jurisdiction and the law does not permit issuance of such supplementary Show Cause Notice - independent SCN or supplementary SCN - issuance of SCN prior to insertion of second proviso to Section 124 of the Customs Act, 1962 - HELD THAT:- A reading of Section 124 before the insertion of Second Proviso with effect from 29/3/2018, would clarify that there was no mention of any Supplementary Show Cause Notice that can be issued. In other words, Section 124 was silent as to whether Show Cause Notice once issued, can be followed by another Supplementary Show Cause Notice or not. The amendment carried out by way of Second Proviso clarifies that Supplementary Show Cause Notice can be issued for any Show Cause Notice already issued as per the circumstances and manner that may be prescribed. The circumstances and manner have been prescribed subsequently in June 2019. Therefore, a harmonious reading of Section 124 prior and subsequent to the amendment, would clarify that till the amendment was carried out, there was no specific provision to issue the Supplementary Show Cause Notice. There is nothing to indicate that this Proviso has been brought into effect with a retrospective date. Therefore, a proper and harmonious reading of Section 124, after the addition of the Second Proviso will clarify that only from 29/03/2018, the Department was empowered to issue a Supplementary Show Cause Notice in respect of the Show Cause Notice already issued by them. If the Supplementary Show Cause Notice was issued prior to 29.3.2018 and no amendment was carried out on 29.3.2018 by way of insertion of Second Proviso, the appellant would not have been in a position to challenge the issuing of the Supplementary Show Cause Notice, since the Section 124 was silent, neither allowing nor disallowing the issuing of Supplementary Show Cause Notice. But insertion of the Second Proviso to Section 124 on 29.3.2018, without any clause towards its being retrospective in nature, the clarification has been now brought in only with effect from 29.3.2018 that Supplementary Show Cause Notice can be issued. Therefore, while the appellant could not have challenged the issue of Supplementary Show Cause Notice prior to 29.3.2018, only this amendment carried out to Section 124 would give him the right to do so, which has been taken by him in the present proceedings before the High Court, Adjudicating Authority and this Tribunal. The question also arises as to whether the Supplementary Show Cause Notice issued on 18/5/2017 is to be considered as a Supplementary Notice to the Show Cause Notice or is to be treated as a separate Show Cause Notice. The facts themselves clearly prove that the Department has mentioned very clearly that it is a Supplementary Notice to Show Cause Notice F. No. DRI/KZU/AS/ENO-13/2016/2981 to 2986 dated 26.8.2016. The Addendum issued on 22/9/2017 specifies that it is an Addendum to Supplementary Notice to Show Cause Notice F. No.DRI/KZU/AS/ENO-13/2016/2981 to 2986 dated 26.8.2016 - the very fact that the Adjudicating Authority has held at Para 8.4 of Order in Original that this is not a Supplementary Show Cause Notice but it is an independent Show Cause Notice shows that even he had the doubt that they did not have the power to issue the Supplementary Show Cause Notice as the Second Proviso was inserted only with from 29.3.2018. In order to overcome the action already taken to issue the Supplementary Show Cause Notice, he takes the stand that it is only a Show Cause Notice and not Supplementary Show Cause Notice. Therefore, it cannot be held that the Notice issued to the Appellant is an independent Show Cause Notice. Holding that the issue of Supplementary Notice to the Appellant on 18.5.2017, prior to insertion of Second Proviso to Section 124, which came into effect from 29.3.2018, is legally not sustainable - appeal allowed.

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• 2023 (6) TMI 156
  Valuation of imported goods - machinery oil /machinery lubricant oil - rejection of declared value - redetermination of value - Ash content in the samples - HELD THAT:- With respect to rejection of declared value under Rule 12 of Customs Valuation Rules, 2007 and/ or re-determination of the same under Rule 5 ibid is seriously bad in law since for rejection of transaction value, the Ld. Commissioner could not allege that the transaction value of the import consignments of the Appellant were fake and/or forged. There is nothing on-record even to suggest that the transaction value of import was not the correct value for the purpose of assessment. It is settled position of law that unless the transaction value could be established to be improper upon the finding that import invoices were either fabricated or fake or that any relationship exists between the importer and the exporter, the transaction value has to be accepted as correct value for assessment under Rule 3 of the Customs Valuation Rules, 2007. That in the present case, there is nothing on record to show that the transaction value of imports were not actual value of transaction. The basis of re-valuation by the department is re-classification of goods and when the re-classification is itself not proper, question of re-valuation of imported goods and/ or demand of any differential duty on the same, cannot arise. When the Test Reports of examiner cannot classify the goods specifically as base oil , rejection of classification and /or re-valuation of imported goods, is not permissible in law. Re-classification cannot even be reason of re-valuation of imported consignment. Moreover, the attempt of the authority to classify the imported goods as base oil is bereft of any evidence and hence, not maintainable. There is no merit in the impugned order and the same is liable to be set aside - Appeal allowed.

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• 2023 (6) TMI 155
  Valuation of imported goods - import of old and used worn clothing completely fumigated - restricted goods or not - rejection of declared value - enhancement of value - contemporaneous imports not available - reduction in the quantum of redemption fine and penalty - HELD THAT:- For import of impugned goods that during the impugned period, there was a restriction for import of the impugned goods and no market price is available to ascertain the import price of the impugned goods. Further, NIDB data cannot be the basis to enhance the declared value in the absence of any corroborative evidence or contemporaneous import. In that circumstances, the rejection of enhanced value by the ld. Commissioner (Appeals) in the impugned order is correct. In the case of NAVPAD ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS, COCHIN [ 2008 (3) TMI 604 - CESTAT, BANGALORE] , it has been held that there is no evidence brought out by the Revenue to show that the appellant has paid more than what he has been declared to the Customs. Therefore, in such circumstances, the Tribunal took a view to impose fine and penalty at 10% 5% respectively. As the ld. Commissioner (Appeals) has relied upon various judicial pronouncements in the impugned order for reduction of fine and penalty. There are no merits in the Revenue s appeals, therefore, the same are dismissed.

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• 2023 (6) TMI 154
  Exemption from Basic Customs Duty - invalid Certificate of Origin - scrutiny of COO certificates revealed that it did not bear the Seal and Signature of the Exporter and also the Round Seal of Tanzania Chamber of Commerce - HELD THAT:- The rejection of certificate of origin is bad as it was a case of minor discrepancy and was fit to be ignored in terms of Rule 18 of the said rules. Further, the appellant had produced the rectified certificate of origin, which have been wrongly treated as issue of certificate retrospectively. Accordingly, the certificates of origin submitted by the appellant are in order. Therefore, the appellant is held entitled to the benefit of exemption/concessional tariff under Notification No. 96/2008-Cus. The impugned order is set aside and the appeal is allowed with consequential benefits.

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• Insolvency & Bankruptcy

• 2023 (6) TMI 153
  Initiation of CIRP - Quantum of Debt - Period of Limitation - NCLT admitted the application - Directors of the Financial Creditors who submitted the application and Corporte directors are same - Interest on debt - jurisdiction to determine the amount in Default - HELD THAT:- It is not in dispute that the 1st Respondent s Society was formed by the same set of Directors, who are in control of the Corporate Debtor. It is seen from the Investigation Report that the Society was used as a channel to pool in funds from large number of small investors to fund the financial requirement of the Corporate Debtor. The Corporate Debtor is in the business of Real Estate and Construction and has secured the funds from the general Public through the 1st Respondent / Financial Creditor. The Balance Sheet on 31/03/2011 of the Corporate Debtor Company shows that a major chunk of the deposited amount of the 1st Respondent has been taken by the Corporate Debtor by way of Cash Credit Facility. As per the Books of Account, the loan received by the Corporate Debtor at that point of time was Rs.11,03,82,823/-. The limit of Cash Credit Facility was decided as Rs. 14 Crores without following the regulations. The Investigation Report establishes that the disposing of the said loan itself is a violation of Karnataka Souharda Sahakari Act, 1997 and the byelaws of the 1st Respondent s Society. The Special Officer had categorically stated that the reversal of interest waiver, which the Appellant is relying upon to establish their case that the Quantum of Debt is incorrect, is practically inaccurate. Moreover, once the threshold on debt is crossed, the Adjudicating Authority has to admit or reject the Application based on the Provisions of the Code. Time Limitation - HELD THAT:- It was decided that once the threshold is crossed, it is not for the Adjudicating Authority to decide the exact Quantum of Debt , but what has to be examined is whether there is a Debt and Default . The grounds raised by the Company Secretary appearing on behalf of the Appellant that the Company was not in Default , is not supported by any documentary evidence. The Balance Sheet for the year ending 31/03/2018 clearly includes the amount due and payable. The total Debt as on 31/03/2020 stood at Rs. 12,09,45,192/- which includes the rebate amount drawn by the Corporate Debtor and the Corporate Debtor was not in any position to pay. The Liquidator had since proceeded with the filing of the Application under Section 7 of the Code. The Argument of the Appellant that the Application is barred by Limitation, is unsustainable, keeping in view that the material on record, evidences the amount payable by the Corporate Debtor and it is also recorded in the Balance Sheet. The loan demand was made on 04/12/2017 and the Notice was served on 01/03/2018 and the Section 7 Application was filed on 16/06/2020. Therefore, viewed from any angle, the Application cannot be said to be barred by Limitation. In the instant case, the record establishes that there is a debt and a default and the Application is complete and the Adjudicating Authority has rightly admitted the Application under Section 7 of the Code. The argument of the Appellant that the Adjudicating Authority has no jurisdiction to determine the amount in Default unless the dispute is decided by the Court of Deputy Registrar of Co-operative Society, cannot be sustained as the RP was in receipt of the Order dated 11/10/2021 whereby the Deputy Registrar of Co-operative Societies, Bangalore had allowed the JRD/KSCFL/4638/2018-19 and had held that the Corporate Debtor is liable to pay a sum of Rs. 5,13,71,863/- towards principal and Rs. 1,67,86,388 towards interest. Therefore, the case of the Appellant that the Corporate Debtor was not in default , the debt amount was not crystallized , and that the Deputy Registrar of Co-operative Societies should first decide the disputed amount, fails. It is pertinent to mention that the Adjudicating Authority has rejected the Resolution plan, though approved by the CoC, on the ground that it does not satisfy the provisions of Section 29A(G) read with Section 240 A of the Code - Appeal dismissed.

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• 2023 (6) TMI 152
  Seeking Condonation of Delay of 49 days in filing of the Claim under Form C - Sufficient cause for delay - whether the Adjudicating Authority was justified in rejecting the Condonation of Delay of 49 days in filing the Claim together with the delay in filing the Application before the Adjudicating Authority? - HELD THAT:- A brief perusal of the material on record shows that the CIRP commenced on 21.03.2022, a public announcement was made on 25.03.2022, the last date for filing of the Claims was 04.04.2022, the expiry of 90 days is 19.06.2022, whereas the Appellant had filed the Claim before the RP on 07.08.2022, which is indeed the 139th day of the commencement of the CIRP. The ground taken by the Counsel for the Appellant that it was initially filed under Form B as an Operational Creditor which was rejected vide email communication dated 03.08.2022, and thereafter the Appellant had resubmitted her Claim under Form C on 07.08.2022, does not strengthen or substantiate her case as the timelines given under IBC are to be strictly adhered to and any latches on behalf of the Appellant in filing, the Claim under a wrong category cannot be a substantial ground for condoning the delay. It is clear that the actual time period of delay in submitting the Claim Form is 125 days. It is also significant to mention that the Appellant approached the Adjudicating Authority, vide I.A.1522/22 with a further delay of 100 days, and the only reason that was given is that they were seeking legal advise, which the Adjudicating Authority has rightly held is only a bald explanation and does not construe a sufficient cause for the delay. Had there been a substantial ground, the case of N BALAKRISHNAN VERSUS M. KRISHNAMURTHY [ 1998 (9) TMI 602 - SUPREME COURT] , could have been applied to the matter on hand. But the fact of the matter is that the Appellant has given no substantial grounds to condone the delay. IBC is a time bound process, which has been repeatedly held by the Hon ble Supreme Court in a catena of Judgements and at the cost of repetition, the explanation given by the Appellant herein is neither substantial nor can be construed as a sufficient cause. This Appeal fails and is dismissed accordingly.

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• 2023 (6) TMI 151
  Seeking approval of the Resolution Plan - validity of MSME status provided to the Corporate Debtor - HELD THAT:- In the instant case, the Resolution Applicant registered as an MSME only after the initiation of CIRP. This Tribunal in the case of Digamber Anand Rao Pingle Vs. Shrikant Madanlal Zawar Ors. [ 2021 (7) TMI 456 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] , wherein the Promoter of the Corporate Debtor had filed an Appeal against the Liquidation Order passed by the Adjudicating Authority claiming that the Corporate Debtor was an MSME and that he could file a Resolution Plan, but this Tribunal observed that as the Application for MSME certificate was made after the commencement of CIRP, such unauthorized Application cannot be considered and cannot tide over ineligibility under Section 29-A. The ratio of this matter is squarely applicable to the facts of this case and the matters of eligibility under Section 29-A as observed by the Hon ble Supreme Court in a catena of Judgements, cannot be undermined. There are no grounds to interfere with the well-reasoned Order of the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench) - appeal dismissed.

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• Service Tax

• 2023 (6) TMI 150
  Validity of SVLDRS-3 filed - amount in arrears - Rule 2(b) of Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 - It is submitted that, as SVLDRS-3 impugned in the present case has not recorded reasons for discarding the objections raised under SVLDRS-2A, it is apparent that the Authority has rejected the contentions which are apparently contrary to law in light of the submissions made and requires to be set aside. HELD THAT:- The said Form does assign any reason to reject the objections raised in SVLDRS-2A. Accordingly, the manner of consideration is not evident except for the conclusion. Prima facie, there appears to be ground for reconsideration of the contentions raised with an open mind, despite the conclusion already having been arrived at. The Authority to take note of the contentions and observations passed and to re-look into the matter. The Authority to keep in mind the scope of Section 126 read with Rule 6 of Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 and reconsider the matter. If SVLDRS-2A has a column Reasons for Disagreement and the assessee has detailed such reasons, the authority ought to have assigned at least brief reasons in the remarks column in SVLDRS-3 while deciding on the quantification and rejecting the Reasons for Disagreement . The matter is remitted to the Authority for reconsideration.

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• 2023 (6) TMI 149
  Demand of service tax alongwith interest and penalty - transaction in purchase and sale of commodity (Trading) - apparent difference in the turnover shown in the balance sheet as well as in the ER-1 returns - failure to produce documentary evidence to establish that the disputed income (escaped turnover) is related to commodity trading - HELD THAT:- Appellant have lead sufficient evidence and explained the apparent difference. Both the Court below have not found anything erroneous or misgiving in the cogent explanation given by the appellant corroborated by books of accounts and vouchers. Undisputedly, appellant has profit from trading in commodities Rs. 8,52,60,853/- during the period. Further, the contentions are also supported by the certificate of the Chartered Accountant. It is further found that there is a categorical finding recorded by the Commissioner (Appeals) in favour of the appellant to the effect that the appellant have properly explained the apparent difference supported by books of accounts- commodity trading account, ledger etc. Thus, in spite of finding that the apparent difference is properly reconciled, still the Commissioner (Appeals) have rejected the appeal by some irrelevant observations without there being any finding of fact against the pleadings of the appellant. Impugned order set aside - appeal allowed.

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• 2023 (6) TMI 148
  Valuation of services - Business Auxiliary Service - cost of raw material and other reimbursable charges are not includable in the taxable value - Rule 5 (1) of Service Tax Valuation Rules - time limitation - HELD THAT:- As the issue involved in this matter has been settled by the decision of the Hon ble Apex Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] wherein it has been held that reimbursable expenses are not to be included in valuation of taxable service therefore, the reimbursable expenses cannot be includble in the assessable value of taxable service provided by the Appellant. Further the amount retained by the brand owner is also not includble in taxable value of service as per CBEC Circular dated 30th October 2009. Therefore, the impugned order is set aside and Appeal is allowed. Time Limitation - HELD THAT:- As the impugned period is 2015-17, wherein the Show Cause Notice has been issued to the Appellant on 20th October 2020, which is highly time barred as earlier. As earlier show Cause Notice of the same issue had been issued to the appellant on 16/09/2014. Therefore, the Show Cause Notice is barred by limitation. Accordingly, Appeal succeeds on limitation. Appeal allowed.

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• 2023 (6) TMI 147
  Reversal of CENVAT Credit proportionate pertaining to unsold area of flat/residential complex for which they got occupation certificate on 27.01.2017 - Revenue was of the view that the amount reversed has not been determined properly in the manner as prescribed by the formula - HELD THAT:- The issue involved is no more res integra covered squarely by the decision of Hon ble High Court of Gujarat in the case of THE PRINCIPAL COMMISSIONER VERSUS M/S ALEMBIC LTD. [ 2019 (7) TMI 908 - GUJARAT HIGH COURT] , wherein the Hon ble High Court has held that Thus, in the light of the provisions of Rule 3 of the Rules, respondent cannot avail full Cenvat credit on input services received after obtaining completion certificate. Hence, the respondent cannot be expected to pay an amount equal to 8%/10% of sale price of immovable property after obtaining such completion certificate where no service tax is paid as if it is sale of immovable property since Rule 6 of the Rules perse does not apply to the present case until 13.4.2016 at all. There are no merits in the impugned order - appeal allowed.

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• 2023 (6) TMI 146
  Reversal of CENVAT Credit - common input services for providing both taxable and non-taxable service - Rule 6(3A) of the Cenvat Credit Rules, as amended by Notification No. 13/2016-CE (NT) dated 01.03.2016 - time limitation - suppression of facts - penalty - HELD THAT:- From perusal of the rule, it is evident that the rule is applicable only in respect of the common credit taken for provision of both taxable and exempted services. The approach adopted by the Commissioner by taking total credit for three years i.e. April 2015 to 30.06.2017 for the reversal cannot be justified accordingly. Even otherwise, the appellant was providing upto 15.01.2016 taxable services only on which they were paying the required service tax. Accordingly taking the value of the total Cenvat credit for the period April 2015 to 30.06.2017 cannot be justified. The appellant was required to reverse under Rule 6(3A) credit of Rs.1,96,730/- which they paid along with interest on 04.01.2020. It is now settled law that procedural violation while making the above reversal should not come in way allowing the benefit under Rule 6(3A). Commissioner also does not do so. Commissioner has imposed penalty in terms of Rule 15(2) of the Cenvat Credit Rules, 2004 read with the provisions of Section 11AC of the Central Excise Act, 1944. Commissioner has in the impugned order concluded that appellant has willfully suppressed the facts from the revenue to avoid the reversal of the common credit taken by them for providing the taxable and exempted services, as required in terms of Rule 6 of the CENVAT Credit Rules, 2004. This finding of fact has not been seriously challenged/ disputed by the appellant. However, taking note of the fact that actual amount of credit that was required to be reversed and not reversed is only Rs.1,96,730/-, the penalty imposed upon the appellant under Section 78 of the Finance Act reduced to Rs.1,96,730/-. The option given by the Commissioner for payment of 25% of the penalty in case the amount determined is paid along with interest and reduced penalty within 30 days of communication of this order will be available to the appellant. Appeal allowed in part.

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• Central Excise

• 2023 (6) TMI 145
  Rebate on Central Excise on excess production - demand notice barred by time limitation or not - only ground taken in the demand notice is that exemption from duty can not exceed the leviable duty itself. HELD THAT:- Supreme Court in the case of Raj Bahadur [ 1996 (7) TMI 146 - SUPREME COURT ] has held that notice fails to refer to any of the acts of commission or omission enumerated in the relevant proviso to Rule 10, the notice, given more than six months after the date of the order of refund, is time-barred. Thus failure of the excise tax authority to lay out the grounds for extending the limitation period is a sufficient ground for quashing such demand notices and therefore further proceedings on the basis of such faulty notices are without jurisdiction. The judgment of the Division Bench of Bombay High Court in the case of Someshwar Sahakari Sakhar Karkhana Ltd. [ 1987 (11) TMI 85 - HIGH COURT OF JUDICATURE AT BOMBAY ] also does not hold good in the light of aforesaid judgment of Supreme Court in the case of Raj Bahadur [ 1996 (7) TMI 146 - SUPREME COURT ] Even otherwise counsel for the tax authority could not produce any final assessment before this Court. Further provisional assessment is provided under Rule 9B of the Rules of 1944. As per the same, instance of provisional assessment arises when (a) the assessee is unable to determine the value of excisable goods and (b) when the asessee is unable to determine the correct classification of the goods. Before approving the provisional assessment, the assessee is also asked to furnish a security bond. In the present case, learned counsel for the authorities could not show any such bond or order approving the provisional assessment - The demand cum show cause notice is issued under Rule 10, but there is no reference to any final assessment carried out by the authorities in support of its demand. In the case of Assistant Collector of Central Excise, Calcutta Division vs. National Tobacco Co. India Ltd. [ 1972 (8) TMI 45 - SUPREME COURT ], a three judges bench of the Supreme Court has held that fullfilment of conditions provided in the Rule 9B of the Rules of 1944 is required to be followed for an assessment to be called as provisional assessment. The demand cum show cause notice dated 08.04.1980 is held to be time-barred and therefore impugned orders dated 26.08.1992, 08.01.1993 and 05.02.1999 passed on the basis of the said time-barred notice are hereby set aside - petition allowed.

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• 2023 (6) TMI 144
  Budgetary Support Scheme - scheme introduced in lieu of grant of General Exemption and refund of goods and services tax where eligible - benefit of notification no. 01/2010-CE dated 06.02.2010 - HELD THAT:- The approach of the committee appears to deny the benefit of the budgetary support to the petitioner which has attained finality as per the affidavit of the Union Government itself and the benefit ought to have been released to the Petitioner. In the last paragraph of the report, it discloses the committee therefore owes an explanation with regard to the part of industries department that conditions do not seem to be fulfilled. However, if the department of Customs and Central Excise, deems it fit that the necessary procedure has been followed by the unit holder for seeking incentive as per their terms and conditions, the present committee doesn t reserve any right of decline. Thus, the report itself reflects that their observations and opinions notwithstanding if the Customs and Central Excise Department is satisfied that the petitioner is eligible for the Budgetary Support, the Committee does not have any right to decline the same. There are no reason to not grant the benefit as prayed for by the petitioner. At the same time, we are upset by the response of the authorities of the Union Territory which has deliberately denied the petitioner the benefit which ought to be rightly theirs, as the Union Government has also held that the Petitioner s claim had attained finality - while holding that the petitioner is entitled to receive the budgetary support as already arrived at forthwith and the same should be released without any further delay. At the same time on account of the delay caused by the Union territory of almost five years we impose a penalty of 9% interest on the total amount due to the petitioner from 18.05.2017, till the date of payment which shall be paid by the Union Territory. The costs so imposed be recovered by the Union Territory from the Officers so identified on account of whose indolence, delay in disbursing the reimbursement of GST has occurred. The petition stands finally disposed of.

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• 2023 (6) TMI 143
  CENVAT Credit - capital goods or not - GP coils, GP sheets, aluminum sections used in making air ducts for humidification machinery - Rule 2 (a) of CCR, 2004 - HELD THAT:- In the instant case, the GP sheets etc. are required for proper functioning of air humidifiers machine which ultimately supports the working of machinery and plant etc. of the appellant Company used in manufacture of cotton yarn and, therefore, they are integral part of the machinery as well as capital goods, as these ducts hold the air humidifier machine in position which ultimately helps in proper manufacturing of final product. It is not the case of the revenue that these items were not required to be used for making ducts. They might not be falling under Rule 2 (a) (A) (i) of the Rules, 2004 but they certainly fall under Rule 2 (a) (A) (iii) of the Rules, 2004 and can also be treated as spares and accessories of the capital goods i.e. humidifier machine. The GP sheets and GP coils etc. used as ducts for the humidifier machine also fall within the definition of inputs as given in Rule 2 (k) of the Rules, 2004 which says that input includes goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. Learned counsel for the revenue had vehemently argued that this explanation was no more available to the appellant in view of amendment dated 07.07.2009 in Explanation 2 of Rule 2 (k). As per this amendment, the inputs only include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer but does not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods. On applying the user test also, the case of the appellant can be stated to be squarely covered with the ratio of law as laid down in the above cited authorities. As such, there cannot be any hesitation to hold that the GP coils, GP sheets or aluminum sections which were used for preparing air ducts for the humidifier machine installed in the factory premises of the appellant were not only inputs but could also be treated as components or accessories of the humidifier machine and as falling within the definition of Rule 2 (a) (A) (iii) of the Rules, 2004 and were entitled to cenvat credit. The Tribunal was not justified in rejecting the claim of the appellant for availing cenvat credit in respect of aforementioned GP sheets and coils etc. by treating them as capital goods and as a consequence thereof, the revenue was also not entitled to claim any interest or impose any penalty on the amount of cenvat credit as taken on GP coils, GP sheets and aluminum sections etc. Appeal allowed - the issue answered in favour of the appellant assessee and against the revenue.

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• 2023 (6) TMI 142
  Date of debonding of the EOU - depreciation on account of capital goods should have been allowed only up to the date of cancelation of warehousing license that is 31.12.2002 and not thereafter, or not - HELD THAT:- Revenue has filed this appeal relating upon para 5.4 without taking into account the observations made in earlier para 5.1 it is quite clear that the unit was working as and EOU which beyond 31.12.2002 and has achieved NFE thereafter. As unit continue to work as EOU a warehousing license would have been extended thereafter also accordingly we do not find any merits in the appeal were by demand is to be made by determining depreciation up till 31.12.2002. It is also noted that the exemption notification also do not require the determination of duty on the date of expiry of warehousing license but it is till the date of payment of duty that is for Commissioner has held. There are no merits in the appeal filed by the Revenue which is dismissed.

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• 2023 (6) TMI 141
  CENVAT Credit - inputs or capital goods or used for the manufacture of the final product - steel items such as Plate, Angles, Beam, Channels Rounds during the period 2008-09 to 2010-11 - HELD THAT:- From the factual verification done by the jurisdictional it is quite evident that appellant is not even claiming the Cenvat credit in respect of these goods as capital goods. These goods were used as input for manufacture and supply of the finished goods. In view of the fact, entire proceedings initiated against the appellant for denial of CENVAT credit treating these as Capital Goods are ill founded and cannot be sustained. Appeal is allowed in view of the factual verification report filed.

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• CST, VAT & Sales Tax

• 2023 (6) TMI 140
  Rejection of application of the complainant seeking for benefits under Karasamadhana Scheme - rejection only on the ground of the assessee not being eligible for refund of any amount that may become excess as a result of adjustment of amount or the penalty or interest paid by him at the time of filing the appeal - Circular No. 1/2018-19 dated 13.08.2018 - HELD THAT:- The Endorsement records the facts including filing of the appeal and in the conclusion it is observed that the Assessee has withdrawn its petition from the KAT and subsequently, filed an application under Karasamadhana Scheme and that there was recovery of arrears of Rs. 43,23,703/-. It is further observed that only after full recovery of arrears, the assessee has withdrawn the petition to obtain benefit under Karasamadhana Scheme and filed application requesting for refund of interest amount. The Authority in the impugned endorsement has rejected the application referring to the Circular No. 1/2018-19 dated 13.08.2018. It must be noticed that there is some ambiguity in the Endorsement and if the Endorsement is construed as having rejected the application only on the ground of Clause 2.4, which in substance has been referred to by placing reliance on the Circular dated 13.08.2018 at the concluding part of the impugned endorsement, there is no clarity as regards satisfaction of Clause 2.4 insofar as Clause 2.4 refers to the amount paid at the time of filing the appeal. In this case, the peculiar facts are that the petitioner has paid 30% of the amount due on 17.01.2013. If that were to be so, the question that requires adjudication by the Authority is whether a subsequent recovery from the banker of the petitioner after the appeal was taken on record and payment was made is an amount that could be taken note of. Learned counsel for the petitioner has specifically raised a contention that Clause 2.4 refers only to the amount paid at the time of filing the appeal and accordingly, the subsequent recovery cannot be an amount deemed to have been paid by the petitioner and accordingly, recovery of 70% of the demand from the petitioner s banker, ought not to be taken note of, while invoking Clause 2.4 is also an aspect that is required to be considered by the Authority. In light of the same, the matter requires reconsideration at the hands of the Authority after hearing the petitioner. Petition allowed by way of remand.

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• Law of Competition

• 2023 (6) TMI 139
  Validity of CPE program being conducted by ICAI - Conducting the programs on its on instead of outsourcing - Scope and Jurisdiction of the Competition Commission of India (CCI) to Intervene - principal grievance of the Informant (respondent) stems from the fact that only ICAI and its organs are conducting the structured learning activities and ICAI has not affiliated or recognized any other body to conduct such learning activities - amounts to foul of Section 4 of the Competition Act or not. Whether the grievances articulated by the Informant constitutes an abuse of dominant position as contemplated under Section 4 of the Competition Act? HELD THAT:- The CCI has proceeded on the basis that ICAI carries out both regulatory functions as well as other economic activities like conducting professional courses including the CPE program and publication of books relating to the profession of accountancy. The CCI had observed in the impugned order that these economic activities of ICAI could be differentiated from the regulatory activities of regulating the CA profession and in view of these non-regulatory activities, ICAI falls within the definition of an enterprise under the CCI Act. The CCI concluded that the relevant market for the purposes of the inquiry be the organizing recognised CPE Seminars/Workshops/Conferences in India . The CCI held that while OP [ICAI], as a regulator of the accounting profession, has all the powers to prescribe a policy for continuous up gradation of its members through the CPE Policy and recognition of POUs, however, on its non-regulatory function of organizing CPE Seminars, restricting the same only to itself and its organs, prima facie, appears to be an arbitrary exercise of powers and thus in contravention of Section 4 of the Competition Act. The Informant has no grievances at least none that fall within the scope of the Competition Act regarding the manner in which the seminars are organized or conducted by ICAI. Although, the Informant has mentioned that the seminars are used for elected members of the Council to secure face time with the members, there is no allegation that the conduct of the seminars itself amount to ICAI abusing its position as a service provider. The fundamental premise of the CCI that ICAI has abused its dominant position, with regard to a non-regulatory activity is flawed. As noticed above, the Informant has in unambiguous terms articulated his grievance in the information filed by him. He alleges that the ICAI is abusing its dominant position as a Regulator to create a monopoly in the service of providing CPE seminars, clearly violating Section 4(1) of the Competition Act . The grievance of the Informant, thus, is with regard to the decision of ICAI in making it mandatory for its members to undertake a structured learning program by attending the CPE seminars organized by ICAI and POUs, which according to the Informant and the CCI, are an extended arm of ICAI - essentially, the Informant seeks a review of the decision taken by ICAI in exercise of its statutory powers to regulate the profession of accountancy. It seeks that ICAI should recognize other bodies/organizations to discharge its function of providing education for professional accountants for maintenance of the professional standards, instead of ICAI restricting the said function in house. Whether the CCI as a market regulator for ensuring fair competition in the markets, exercises powers to review the decisions of other statutory regulators, which are taken by them in exercise of their regulatory functions and which have no interface with trade or commerce? - HELD THAT:- The Competition Act does not contemplate the CCI to act as an appellate court or a grievance redressal forum against such decisions, which are taken by other regulators, in exercise of their statutory powers and are not interfaced with trade or commerce. A statutory body may in course of its functions, also make decisions which involve trade and commerce. As an illustration, the concerned body may purchase equipment and consumables or avail services of professionals. There is no cavil that any decision in this regard may, if it falls foul of the provisions of the Competition Act, be examined by the CCI. This Court is unable to accept that the jurisdiction of the CCI extends to compelling a statutory body to outsource functions that it performs in discharge of its statutory duties notwithstanding that the same may fall within the sphere of economic activity. It would be erroneous to assume that if any activity falls within the broad definition of economic activity, it would be necessary to create an open market for the same. This Court is unable to accept that the CCI can compel an organisation or an enterprise to outsource its activities. The structured program is conducted only by ICAI and its organs. The credits for unstructured training are based on self-declaration, the same in effect requires the professional chartered accountants to certify that they have devoted certain time for professional development. Importantly, there is no other body or institution, which is engaged in the activity of providing professional training to acquire the classification of a chartered accountant or for the continuing education program. The impugned order is set aside - Petition allowed.

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