TMI Tax Updates - e-Newsletter
July 19, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Service Tax Central Excise Indian Laws

Articles

1. PRINCIPLES OF NATURAL JUSTICE. PART-2

   By: Sadanand Bulbule

2. GLOBAL MINIMUM TAX: Rules on Corporate Restructurings and Holding Structures – Multi-Parented MNE Group

   By: Amit Jalan

3. LLP and Partnership Firm: Meaning and Differences

   By: Ishita Ramani

4. No suppression of fact when reliance placed on judgement was later overturned

   By: Bimal jain

5. Carbon Credit Trading Scheme 2023: An opportunity for ESG compliant Companies and Consultants

   By: Vivek Jalan

6. No penalty in case of commission of illegal act without mens rea

   By: Bimal jain

News

1. Auction for Sale (issue/re-issue) of (i) ‘7.17% GS 2030’, (ii) ‘New GS 2037’ and (iii) ‘7.25% GS 2063’

2. India is now a part of resilient supply chains amongst trusted partners due to efforts of industry: Shri Piyush Goyal

Notifications

GST

1. 26/2023 - dated 17-7-2023 - CGST

Waives the amount of late fee referred to in section 47 of the CGST Act - Extension to amnesty for GSTR-10 non-filers.

2. 25/2023 - dated 17-7-2023 - CGST

Delay filing Annual return - Amenity benefit - Extension to Amnesty for GSTR-9 non-filers.

3. 24/2023 - dated 17-7-2023 - CGST

Amnesty scheme for deemed withdrawal of assessment orders issued under Section 62 - Date extended.

4. 23/2023 - dated 17-7-2023 - CGST

Extension of time limit for application for revocation of cancellation of registration under CGST Act.

5. 22/2023 - dated 17-7-2023 - CGST

Extension of amnesty for GSTR-4 non-filers

6. 21/2023 - dated 17-7-2023 - CGST

Due date for furnishing FORM GSTR-7 for April, May and June, 2023 for registered persons whose principal place of business is in the State of Manipur - Date extented.

7. 20/2023 - dated 17-7-2023 - CGST

Due date for furnishing FORM GSTR-3B extended for quarter ending June, 2023 for registered persons whose principal place of business is in the State of Manipur

8. 19/2023 - dated 17-7-2023 - CGST

Due date for furnishing FORM GSTR-3B for April, May and June, 2023 extended for registered persons whose principal place of business is in the State of Manipur

9. 18/2023 - dated 17-7-2023 - CGST

Due date for furnishing FORM GSTR-1 extended for April, May and June, 2023 for registered persons whose principal place of business is in the State of Manipur

Income Tax

10. 50/2023 - dated 17-7-2023 - IT

Income-tax (Twelvth Amendment) Rules, 2023 - (i) Amends Rule 21AK regarding Exemption from income tax u/s 10(4E) to the non-residents, (ii) Amends Rule 114AAB regarding Exemption from obtaining PAN u/s 139 for non-residets having income from specified funds, and (iii) Amends Form 10CCF with regard to reporting u/s 80LA

Highlights / Catch Notes

GST

• Shifting Transmission Lines for NHAI Road Widening Taxed at 18% GST Under Service Head 998631.

  Case-Laws - AAR : Levy of GST - rate of GST - shifting of transmission lines on request of NHAI (Contribution work) for widening of road by NHAI - The services of shifting of Transmission Lines on the request of NHAI would be classified under Service Head 998631 and would attract GST @ 18 % (CGST 9% + SGST 9%). - AAR
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• "Dhathri Dahasamani" Classified Under GST Heading 2103 90 40, Not a Food Preparation, 12% Tax Rate Applied.

  Case-Laws - AAR : Classification of goods - rate of GST - Dhathri Dahasamani - The product “Dhathri Dahasamini” is not capable of being used as a food preparation for human consumption in its own right; i.e., the product cannot be used as such either directly or indirectly or after processing (such as cooking, dissolving or boiling in water, milk or cither liquid etc.) for human consumption. - Classifiable under Heading 2103 90 40 - Liable to GSt @12% - AAR
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• Kerala land use change payment taxable under GST; Section 27A, Kerala Conservation Act 2008, triggers reverse charge mechanism.

  Case-Laws - AAR : Taxable Supply or not - Payment made to the Government of Kerala - the activity of allowing change of nature of the unnotified land subject to conditions and on payment of prescribed fees in terms of the provisions of Section 27A of the Kerala Conservation of Paddy Land and Wetland Act 2008 as inserted by the Kerala Conservation of Paddy Land and Wetland (Amendment) Act, 2018 - It an activity undertaken by the State Government as a public authority - Liable to GST under reverse charge (RCM) - AAR
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Income Tax

• Court Rules No TDS Deduction Needed on Interest Payments to Jammu Development Authority u/s 194A Exemption.

  Case-Laws - HC : TDS u/s 194A - non-deduction of TDS on account of interest paid to the Jammu Development Authority [JDA] - the assessee was under no obligation to deduct TDS on interest payments made to the JDA on its fixed deposits in terms of Section 194A - JDA being a corporation established by the State Act. i.e the Development Act 1970 was, thus, outside the purview of sub-section (1) of Section 194A. - HC
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• High Court Quashes Income Tax Reassessment Notice; Lack of Evidence on Alleged Bogus Entries u/s 147.

  Case-Laws - HC : Reopening of assessment u/s 147 - Reopening beyond period of four years - reasons to believe - Even assuming, Revenues’ case is petitioner should have disclosed that these were bogus or accommodation entries, still there is nothing on record to indicate that petitioner was aware that these were bogus shares capital/premium from bogus paper companies, viz., SHPL and SCPL and were accommodation entries. - Notice quahsed and set aside - HC
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• Assessing Officer Must Specify Invoked Provision for Penalties u/s 271(1)(C) of Income Tax Act, Rules High Court.

  Case-Laws - HC : Penalty u/s 271(1)(C) - manadation of recording satisfaction which limb of the provisions of Section 271(1)(c) of the Act was triggered - In a given case, both limbs may get attracted, but even in such situation the AO would need to set forth his prima facie, satisfaction in the penalty notice. - HC
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• Penalty for Deemed Dividends u/s 271(1)(c) Overturned; Assessee Not a Registered Shareholder in Loaning Company.

  Case-Laws - AT : Penalty levied u/s 271(1)(c) - addition u/s 2(22)(e) - deemed dividend - While levying the penalty, the deeming provisions can be applied to a limited extent and instant case was concerned with the imposition of penalty under section 271(1)(c), which was not sustainable in so far as the assessee-company was not a registered shareholder of loan advancing company who had vien loan / advance to the assessee-company. - AT
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• Commissioner Incorrectly Classified Donations as Fees; Assessee Granted Registration u/ss 12AB and 80G.

  Case-Laws - AT : Grant of registration u/s 12AB & 80G Denied - receipts from parents of children - The factual aspects clearly demonstrate that the payments made by parents are in the nature of mere voluntary contributions and not in the nature of recovery of charges/fee. Had it been from parents of all children and it would have been systematic in terms of periodicity and amount, there might have been a signal of charge/fee but that is absent. Therefore, the Ld. CIT(E) is not correct in perceiving the amounts received by assessee as charge/fee. - Benefit of registration allowed - AT
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• Tax Deduction for Infrastructure Upheld: CFS and ICDs Recognized as Inland Ports u/s 80IA(4) of Income Tax Act.

  Case-Laws - AT : Deduction u/s. 80IA(4) - infrastructure activities with respect to CFS and ICDs - Customs clearance also takes place in the inland container depot, the assessee’s claim that the inland container depots were inland ports under Explanation (d) to sec. 80IA(4) required to be upheld - AT
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• Court Upholds Addition u/s 68 for Unexplained Creditworthiness and Fabricated Documents in Share Capital Case.

  Case-Laws - AT : Addition u/s 68 - creditworthiness of investor unexplained - the documents submitted to prove the genuineness of transaction are itself from to be malaises created with the intention to cover up the true nature of transaction and thus the CIT(A) rightly held that the amount received by the appellant company as share capital and premium are nothing but arranged transactions to introduce its unaccounted income/money as share capital - Additions confirmed - AT
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• Court Rules on Discrepancies in Flat Booking Prices; No Evidence of Extra Payments Beyond Recorded Rates Found.

  Case-Laws - AT : Difference in rate of booking price - sale / booking of flats - different rates have been quoted/booked for the same area and the same project - On money paid by investor - Since, there is no iota of evidence that the assessee has received any extra money over and above the booking rate shown by the assessee in the books of account, addition in our opinion is based on surmises, conjectures and presumption. - AT
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• Denial of Section 12AA Registration Overturned: Dissolution Clause Absence Not a Valid Reason for Rejection.

  Case-Laws - AT : Denial of Registration u/s 12AA - Charitable purpose u/s 2(15) - dissolution clause in the trust deed not exists - Although the inclusion of dissolution clause in the trust deed is not mandatorily required and absence of such clause cannot be a sole basis for rejecting application seeking registration u/s. 12AA - AT
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• PCIT Initiates Second Revision u/s 263 to Address Disputed Investment; No Limitation on Correcting A.O.'s Oversight.

  Case-Laws - AT : Revision u/s 263 - Invocation of revision proceedings for the second time - As pertinent to point out that there was no bar on limitation by the ld. PCIT to invoke section 263 for the second time considering the order to be erroneous insofar as it is prejudicial to the interest of the Revenue for the reason that the A.O. has not gone into the issue of the impugned investment which was part of the first section 263 proceeding. - AT
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• Section 69B: Buyer Not Liable for Unexplained Investment Due to Seller's Absence in Tax Assessment.

  Case-Laws - AT : Addition u/s 69B - differential amount between value as per registered purchase deed vis-a-vis guideline value determined by Stamp Valuation Authority - Merely because the seller was not present in person before the AO, the assessee cannot be alleged to have made any unexplained investment which could entitle the AO to make addition u/s. 69B of the Act - AT
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Customs

• High Court Grants Exemption from Basic Customs Duty for Wind Generator Parts Assembled On-Site; Appeal Dismissed.

  Case-Laws - AT : Exemption from basic customs duty - actual user condition - BCD concession towards import of blades / towers and foundation mounting parts etc. - Parts of wind operated electricity generators - it is alleged that parts of WOEG including blades were first sold by the respondent and thereafter assembled at the customer’s site. - High Court has considered the similar matter and allowed the benefit of exemption - Appeal fo the revenue dismissed - AT
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• Court Reassesses Tug and Barge Valuation; Freight Costs Excluded from Assessed Value, Case Remanded for New Decision.

  Case-Laws - AT : Valuation - tug towing a barge - inclusion of freight - It was contended that, the tug arrived on its own propulsion that did not involve payment of any freight at all and the barge, towed by the said tug, did not incur any additional charges on freight. - In the case of the import in question, with no expense having been borne on account of any other person till the time and place of importation, these elements are beyond the pale of ascertained value. - Matter restored for fresh decision - AT
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Indian Laws

• Court Rules in Favor of Accused in Cheque Dishonor Case: No Existing Debt or Liability Proven.

  Case-Laws - HC : Dishonour of Cheque - existence of debt/liability or not - rebuttal of presumption - the Complainant ought to have been substantiated his contention that in fact he has given on a hire Poclain machine to the accused - It is one thing to say that you cannot take up plea and another thing to say that plea is not proved. In this case defence taken by the accused was permissible and he has proved it also. - HC
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Central Excise

• Erroneous Refund Recovery Denied: No Fraud or Misrepresentation Found, Extended Limitation of Section 11A Not Applicable.

  Case-Laws - HC : Recovery of erroneous refund - The extended period of limitation provided under proviso to sub section 1 of section 11A is not attracted as there are no material on record to demonstrate that the purported erroneous refund was sanctioned in favour of the respondent-assessee on the basis of some fraud, collusion or misstatement /misrepresentation of facts and, that too, with an intention to evade payment of excise duty. - HC
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Case Laws:

• GST

• 2023 (7) TMI 708
  Seeking grant of Regular bail - Section 132 of the Central Goods and Services Tax Act, 2017 read with Section 132 of Union Territory Goods and Services Tax Act, 2017 read with Section 132 of the State(s) Goods and Services Tax Act, 2017 and Section 20 of Integrated Goods and Services Tax Act, 2017 - HELD THAT:- The present is a third successive bail petition and the amount involved in the present case is about Rs.188 crores. As per the learned counsel for the parties, the petitioner has already faced incarceration for about 2 years and the maximum sentence provided under the GST Act is stated to be 5 years. The criminal complaint is stated to be at the pre-charge stage only. Furthermore, it is neither the case of the respondent nor it has been argued by the learned counsel for the respondent that in case the petitioner is released on bail then he may abscond or flee from justice or may influence the witness or may tamper with the evidence. Considering the long custody of the petitioner which is about 2 years, this Court deems it fit and proper to grant regular bail to the petitioner. Consequently, the present petition is allowed and the petitioner is ordered to be released on regular bail on furnishing bail bond/surety bond to the satisfaction of the trial Court/Duty Magistrate concerned, if not required in any other case. Application allowed.

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• 2023 (7) TMI 707
  Validity of SCN - SCN does not disclose any detailed reasons for proposing the demand - Violation of principles of natural justice - HELD THAT:- As apparent from the face of the impugned Show Cause Notice, the same did not clearly specify grounds on which a demand was proposed to be raised. Although, the said Show Cause Notice did indicate a table mentioning the quantum of tax and interest; it is not clear whether the said tabular statement was related to the proposed demand or called upon the petitioner to justify the same. Admittedly, the concerned officer did not afford the petitioner any further opportunity of being heard and passed the impugned order raising a demand of Rs.29,17,30,644/-. The said order under Section 73 of the Act neither deals with the submissions made by the petitioner in its reply dated 01.09.2022 nor mentions any reason for raising the said demand - the procedure of affording the petitioner an opportunity to be heard prior to the expiry of the time afforded to him for responding to the impugned show cause notice, cannot be appreciated. An opportunity to be heard is not required to be a mere formality. It is to enable the noticee to canvas its case before the concerned officer. The purpose of eliciting a reply to the show-cause notice is to enable the noticee to place his stand on record. Thus, it is apposite that the noticee be permitted to file a reply prior to being afforded a hearing. The impugned order cannot be sustained - Petition allowed.

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• 2023 (7) TMI 706
  Cancellation of GST registration - it is claimed that the cancellation is not on the ground on which the show cause notice was issued - HELD THAT:- There is much substance in the contentions as urged on behalf of the petitioners inasmuch as the impugned order cancelling the registration of the petitioners appears to be on a ground completely outside of scope of show cause notice issued to the petitioners. This would certainly cause prejudice to the petitioners as the petitioners never anticipated such reason as set out in the impugned order. It is opined that certainly a prejudice was caused to the petitioners considering the principles of natural justice. In the circumstances, the impugned order is required to be quashed and set aside with liberty to the respondents to issue a fresh show cause notice to the petitioners as permissible in law and after hearing the petitioners, an appropriate order in accordance with law be passed. Petition disposed off.

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• 2023 (7) TMI 705
  Levy of GST - rate of GST - Shifting of transmission lines on request of NHAI (Contribution work) for widening of road by NHAI - construction and installation sub-station / transmission lines on behalf of big industries/ other third parties for power supply (contribution works) - Input Tax Credit on material and services used in works (either the work done by PSTCL itself or on turnkey basis) as the property remains under the ownership of PSTCL. Shifting of Transmission Lines on request of NHAI for widening of road - HELD THAT:- The work to be executed by the applicant includes construction of new towers, erection, sagging and dismantling of existing towers. Since these transmission lines are the property of PSTCL and require the modification on the need of NHAI, the overall cost of Highway diversification along with cost of shifting, dismantling and raising of transmission lines are borne by NHAI. We further observe that services like supervision are also charged by PSTCL for shifting/raising of power transmission lines. While going through the copy of contract/ agreement with NHAI, it is found that after finalization of route plan a detailed estimate for composite work (containing detail of material, labour cost and supervision charges) is prepared and the party is told to deposit the amount of estimate alongwith applicable GST @18%. The GST is deposited with the GST department after raising a tax invoice of advance. The material (i.e. conductor, tower material, cement, steel, nut bolts etc.) is used from the stores of PSTCL, already purchased by PSTCL in bulk through tendering process on which the applicable GST has already been paid. For labour part also a sub contract is done through tendering process. The term works contract has been restricted to contract for building construction, fabrication etc of any immovable property but there should be a transfer of property in goods involved in the execution of such contract. Since in the case of contributory work undertaken by the applicant the ownership of the transmission lines/ towers still lies with the applicant, the supply of goods and services cannot be said to be classified under works contract . Therefore such supplies made shall be treated as a composite or a mixed supply as the case may but can not be treated as a Works Contract for the purpose of GST - the services provided by the applicant to the third parties as Contribution Work falls under HSN/SAC 998631 which will attract GST @ 18% (CGST 9% + SGST 9%), as per Annexure to Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017 (as amended). In the present case, since the whole cost i.e. total cost of material, labour and supervision charges incurred by the applicant are recovered from the NHAI, the same shall be the transaction value. This is irrespective of the fact that being a transmission licensee, the ownership of the transmission system requiring modification/ augmentation/shifting/additions remains with the applicant even though the cost/charges are borne by NHAI. Thus according to Section 15(2)(b) of CGST Act, 2017, the cost of such asset/infrastructure incurred by the third party is to be included in the value of supply for the purpose of levy of GST. When the applicant incurred such cost, then GST would automatically be leviable on total transaction value without any recourse to Section 15(2)(b) of CGST Act, 2017. Therefore, value shall be the transaction value, i.e. the price actually paid or payable in terms of Section 15 of the CGST Act, 2017. GST to be charged on construction and installation of sub-station / transmission lines on behalf of big industries / other third parties for power supply - HELD THAT:- The work includes fabrication and supply of all types of transmission line towers and accessories, supply of earth wire, hardware fittings and conductors, earth wire accessories and OPGW and associated fittings and accessories and Tower Earthing required for complete execution of the Package, transportation, insurance, detailed survey of route alignment, profiling, tower spotting, optimization of tower location, soil testing, geotechnical investigations, piling, casting of foundation for tower footings, installation of Tower Earthing, erection of towers, tack welding of bolts and nuts, painting, fixing of insulator strings, stringing of conductors and earth wires/OPGW along with necessary line accessories, stringing of power lines, supply and erection of span markers, testing and commissioning of the erected transmission lines and other activities as may be required for completion of the project - the total cost of material, labour and supervision charges are to be paid by the third party to PSTCL and the goods i.e. asset is not transferred to third party and remains the property of PSTCL. Therefore the taxability of the supply made in this case also shall be similar. Whether ITC is available to the applicant on the material and services used in above works (either the work done by PSTCL itself or on turnkey basis) as the property remains under the ownership of PSTCL? - HELD THAT:- The applicant is undertaking Contribution Work i.e. creating infrastructure for electricity transmission on the request of NHAI/ Third party and recovering the same from the NHAI/ Third party. In terms of section 16(1) of the CGST Act, 2017 every registered person would be eligible to take the input tax credit on the receipt of goods or services which are intended to be used in the course or for the furtherance of business - in the present case, the transmission lines have been laid by which the electricity would be transferred. In terms of the aforesaid provision, the goods/services used in shifting, laying and setting up wires/towers for transmission of electricity for the furtherance of business and the input tax credit is admissible on the same in the purview of Section 16(1). Section 17 of the CGST Act 2017 which deals with Apportionment of credit and blocked credit. On bare reading of the said Section we find that none of the clauses is applicable to the instant case. Since GST is being charged on the shifting of transmission lines/ towers done on a specific request which has been discussed in detail in the preceding paras, Input tax credit would be available to the applicant on all the material and services used in above works (either the work done by PSTCL itself or on turnkey basis) even if the property remains under the ownership of PSTCL.

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• 2023 (7) TMI 704
  Exemption from GST - hostel accommodation provided by the Applicant to the students for residential purposes charging less than Rs. 7,000/- per day during the period from 01.08.2021 to 12.07.2022 - hostel accommodation provided by the Applicant to the students for residential purposes charging less than Rs. 1, 000/- per day during the period from 13.07.2022 till today and also similar transaction to be undertaken in future - S.No. 12 and / or 14 of the Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017. HELD THAT:- From the reading of Sl.No. 12 and 14 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, it is clear that the word Hostel is not mentioned anywhere. If the Government had intended to exclude Hostel services, then it would have been mentioned in the list as the word Hostel is neither a new word or uncommon word. Also, the Room or unit accommodation services provided by Hostels is clearly mentioned under HSN code 996322. From the documents provided by the applicant, it is clear that from 01-07-2017 to 15-07-2018 applicant provided commercial rental services discharged all GST liabilities. From 16-07-2018 applicant entered into an agreement with Sharda University for letting out property and till 15-07-2021 discharged all liabilities. From 01-08-2021 applicant started providing hostel services to the students of Sharda University and some other institutions. This means from 01-08-2021 applicant is not letting out property and hence will not fall under any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce either wholly or partially. From the submitted record, it is clear that the applicant directly provides hostel services to students and receipt is generated in the name of V S Institute Hostel Private Limited. On going through the exemption Entry No. 14 of Notification No. 12/2017-CT (R) dated 28.06.2017 as well as CBIC s Circular No. 32/06/2018-GST dated 12th February 2018, it is found that the description of service is user based, meaning that, if the accommodation is used for residential or lodging purpose than it is immaterial who the user is. The said entry mentions Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes . The word hostel not being specifically mentioned implies that the same would be covered under the term whatever name called . The services provided by such hostel, for residential or lodging purposes would be covered by the scope of notification entry where the declared tariff of a unit of accommodation below one thousand rupees per day till 17.07.2022. Principal Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 was amended by Notification No. 04/2022 Central Tax (Rate) dated 13.07.2022 w.e.f. 18.07.2022 in which entry No. 14 has been omitted. Similarly through Notification No. 03/2022 Central Tax (Rate) dated 13.07.2022 w.e.f. 18.07.2022 Principal Notification No. 11/2017 Central Tax (Rate) entry at serial no. 7, the word above One Thousand Rupees but has been omitted. Hence from 18 07 2022 onward services provided by applicant will be covered by the relevant entry of Notification No. 11/2017 Central Tax ( Rate ) as amended and will be taxable @ 12% if unit accommodation per day is less than Rs 1000/-. Thus, hostel accommodation provided by the Applicant to the students for residential purposes charging less than Rs. 1,000/- per day during the period from 01.08.2021 to 12.07.2022 is exempted from GST liability under the Sl.No. 12 and / or 14 of the Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 - the hostel accommodation provided by the Applicant to the students for residential purposes charging less than Rs. 1,000/- per day during the period from 13.07.2022 till today and also similar transaction to be undertaken in future is not exempted from GST liability under the Sl.No. 12 of the Exemption Notification No. 12/2017-CT(Rate) dated 28.06.2017 as amended vide Notification No. 04/2022-CT (Rate) dated 13.07.2022.

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• 2023 (7) TMI 703
  Classification of supply of goods - rate of GST - HSN Code - Solar power based devices - applicability of Entry No. 201A of Schedule II of Notification No. 1/2017-CENTRAL TAX (RATE), DATED 28-6-2017, as amended vide Notification No. 8/2021-CENTRAL TAX (RATE) [G.S.R. 693(E)/F. NO. 190354/206/2021 -TRU] DATED 30-9-2021 [Attached]. HELD THAT:- As per Rule 3 (a) of General Rules for the interpretation of import tariff, The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. Thus, the Solar Home Lighting System to be classified under heading 94055040 and is taxable GST @ 12%.

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• 2023 (7) TMI 702
  Classification of goods - rate of GST - Dhathri Dahasamani - classifiable under HSN 0910 91 00 or under HSN 2106 90 50 or under HSN 2103 90 40 - entry number 44 of schedule I prescribed by notification number 1/2017-CT(R) dated 28.06.2017 as amended - HELD THAT:- The rules for interpretation of the First Schedule of the Customs Tariff Act, 1975 including the Section and Chapter Notes and the General Explanatory Notes are applicable for interpretation of the GST Tariff / Rate Schedule. Accordingly the circulars issued by the CBIC and the ratio of various judgments of the Supreme Court, High Court and Tribunals regarding the classification of commodities under the Central Excise and Customs Tariff are equally applicable and have precedent value in relation to the classification of goods under the GST Tariff / Rate Schedule as the classification under the Central Excise and Customs Tariffs and the GST Tariff / Rate Schedule are aligned and based on the Harmonised System of Nomenclature Codes. [HSN Codes]. The classification of the subject product namely; Dhathri Dahasamini has to be determined keeping in view the principles mentioned above Admittedly, the product is predominantly made of ingredients falling under Heading 1211 of the Customs Tariff Act. Heading 1211 covers plants and parts of plants of a kind used primarily in perfumery, in pharmacy or for insecticidal, fungicidal or similar purposes, fresh or chilled. As per the list of ingredients of the product given by the applicant, it is seen that there is only one ingredient; i.e; Chukku [Ginger: 0910 11 20 - Dried, unbleached] which falls under Chapter 9 of the First Schedule to the Customs Tariff Act; 1975 and all the other ingredients fall under Heading 1211 of Chapter 12 of the First Schedule to Customs Tariff Act, 1975. The subject product; Dhathri Dahasamani contains only one ingredient namely; Chukku [Ginger: 0910 11 20 - Dried, unbleached] that fall under Chapter 9 and the percentage of the ingredient is only 8%. The subject product is primarily a mixture of Karingali, Pathimukam and Ramacham falling under Heading 1211; which together constitute 80% of the ingredients. The above ingredients together with Naruneendi and Chandanam both falling under Heading 1211 constitute 92% of the ingredients. Therefore, 92 % of the ingredients of the subject product fall under Heading 1211 and hence it cannot be considered as a mixture of products; of Headings 0904 to 0910 with the addition of other substances; but having the essential character of the goods of Chapter 9. Therefore, the product cannot be classified under the CTH 0910 91 00 - Mixtures referred to in Note 1 (b) to Chapter 9 of the First Schedule to Customs Tariff Act, 1975. The product Dhathri Dahasamini is not capable of being used as a food preparation for human consumption in its own right; i.e., the product cannot be used as such either directly or indirectly or after processing (such as cooking, dissolving or boiling in water, milk or cither liquid etc.) for human consumption. Applying the principles of Rule 3 of the General Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975 - it is concluded that the product, Dhathri Dahasamini is appropriately classifiable under Heading 2103 90 40 of the First Schedule to the Customs Tariff Act, 1975 and liable to GST at the rate of 12% (6% - CGST + 6% SGST] as per entry at SI.No. 44 of Schedule II of Notification No, 01/2017 - Central Tax (Rate) dated 28.06.2017.

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• 2023 (7) TMI 701
  Taxable Supply or not - Payment made to the Government of Kerala - Reverse charge liability under Notification No. 13/2017 CT (Rate) dated 28-06.2017 - payment made to the Government of Kerala under Section 27A of The Kerala Conservation of Paddy Land and Wetland Act, 2018 for change of description of land from wetland to ordinary land in Government of Kerala village office records - permission for construction of office complex for the purpose of business. Contention of the applicant is that the activity being undertaken by the State Government as a public authority in relation to a function entrusted to a Panchayat under Article 243 G of the Constitution is neither a supply of goods nor a supply of service in terms of Notification No. 14/2017 CT (Rate) dated 28.06.2017. HELD THAT:- The Kerala Conservation of Paddy Land and Wetland Act, 2018 is an act to conserve the paddyland and wetland and to restrict the conversion or reclamation thereof, in order to promote growth in the agricultural sector and to sustain the ecological system, in the State of Kerala. As per Section 2 (i) and (xviia) Of the said Act as amended by the Kerala Conservation of Paddy Land and Wetland (Amendment) Act, 2018; Change of nature of unnotified land means such act or series of acts whereby the nature of an unnotified land is changed or has been changed irreversibly and in such a manner that it cannot be reverted back to the original condition by ordinary means; and unnotified land means the lands within the area of jurisdiction of the Committee which have been included as paddy land or wetland in the basic tax register maintained in Village offices, but are not notified as paddy land or wetland under sub-section (4) of section 5 or where data bank has not been published under the provisions of clause (i) of sub-section (4) of section 5, the lands which are already been filled up on the date of commencement of this Act and axe not paddy land according to the report of the Kerala State Remote Sensing Centre and the Local Level Monitoring Committee or where the report of the Kerala State Remote Sensing Centre is not available, lands which are not paddy land according to the report of the Local Level Monitoring Committee. On a combined reading of the definitions and the provisions of Section 27A of the Act as extracted above, it is clear that the provision is about restrictions that may be imposed and the levy of fees and hence it is essentially an activity of permitting the use of unnotified land for residential, commercial or other purposes. The permission for conversion of unnotified land which has been included as paddy land or wetland in the basic tax register maintained in Village offices for residential, commercial or another use subject to conditions and levy of fees is primarily an activity in the interest/or for the benefit of the persons who are applying for such conversion. The fees charged by the State Government for permitting the conversion of unnotified land which have been included as paddy land or wetland in the basic tax register maintained in Village offices for residential, commercial or other users can only be considered a consideration/compensation charged for conferring such private benefit at the cost of the public good of conservation of paddy land and wetland. It is concluded that though the activity of allowing change of nature of the unnotified land subject to conditions and on payment of prescribed fees in terms of the provisions of Section 27A of the Kerala Conservation of Paddy Land and Wetland Act 2008 as inserted by the Kerala Conservation of Paddy Land and Wetland (Amendment) Act, 2018 is an activity undertaken by the State Government as a public authority the same cannot be considered to be an activity in relation to any function entrusted to a Panchayat under Article 243 G of the Constitution. Therefore, the activity cannot be treated as neither a supply of goods nor a supply of service in terms of Notification No. 14/2017 Central Tax (Rate) dated 28.06.2017 as amended.

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• Income Tax

• 2023 (7) TMI 700
  Income attributable to the assessee s PE in India - Deployment of assets in India - as decided by HC [ 2022 (9) TMI 311 - DELHI HIGH COURT] ITAT held that CIT(A) rightly attributed 15% of the revenue to the Respondent s PE in India - HELD THAT:- The issues which arise in this petition have been considered and held against the Revenue in Director of Income Tax, New Delhi Vs. Travelport Inc. [ 2023 (5) TMI 227 - SUPREME COURT] by affirming the judgment of the High Court. His submission is placed on record. Special leave petition is dismissed.

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• 2023 (7) TMI 699
  Permissible deduction in the hands of the assessee - marked to market loss on open equity stock future contracts - ITAT had specifically rejected the Department s contention that the market loss of stock in trade, is not an ascertained liability. Thereby deduction of the amount, on account of the market loss suffered on stock in trade, was held in favour of the assessee as relying upon case of United Commercial Bank, Calcutta v. Commissioner of Income Tax, W.B.-III, Calcutta [ 1999 (9) TMI 4 - SUPREME COURT] HELD THAT:- We have considered the reasoning of both the forums. Upon reading the High Court s impugned judgment, no infirmity is seen. As such, no interference is called for in the present matter. Special Leave Petition stands dismissed.

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• 2023 (7) TMI 698
  Exemption u/s 80-IC - Availability of exemption to the appellants herein having regard to the decision of Classic Binding Industries [ 2018 (8) TMI 1209 - SUPREME COURT] - 100% or 25% - whether Assessees were entitled to 100% exemption and this Court in the case of Aarham Softronics [ 2019 (2) TMI 1285 - SUPREME COURT] has held that the judgment in Classic Binding Industries case had omitted to take note of the definition of Initial Assessment Year contained in Section 80-IC and had instead based its conclusion on the definition contained in Section 80-IB, which did not apply to the case at all? HELD THAT:- We find that the judgment referred to above, squarely applies to the case at hand and therefore, the High Court, which has stated that the substantial questions of law were answered against the Assessees and in favour of the Revenue on the basis of Classic Binding Industries case, will have to be now set aside. Consequently, the Assessees succeed and are entitled to 100% exemption. In this regard, it is relevant to notice that in the case of Tejpal Chaudhary, the Assessing Officer has clearly held that the Assessee was entitled to exemption under Section 80-IC but to the extent of 25% only which is now held to be 100%. The finding that the Assessee was entitled to deduction has attained finality. In so far as the case of M/s. Friends Alloys is concerned, the Revenue has conceded to the fact that the said Assessee is entitled to exemption.

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• 2023 (7) TMI 697
  Claim for credit in respect of advance tax paid by a declarant under the Scheme, 2016 - character of the advance tax - Income Declaration Scheme, 2016 - Is advance tax entitled to the same dispensation as is given to the TDS? - HC held [ 2022 (2) TMI 344 - BOMBAY HIGH COURT] advance tax paid by the petitioner was not relatable to the income for the relevant assessment years, which petitioner disclosed. If the said payment is not apportionable towards any other liability, there is no justifiable reason to deprive the declarant from getting the credit for the same against the liability under the Scheme, 2016 - HELD THAT:- This Court is not inclined to interfere with the impugned order and judgment of the High Court. The special leave petition is dismissed on the ground of delay.

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• 2023 (7) TMI 696
  Reopening of assessment u/s 147 - Reasons to believe - HELD THAT:- Whether it is a disclosure or not within the meaning of Section 147 would depend on the facts and circumstances of each case and nature of document and circumstances in which it is produced. The duty of the assessee is to fully and truly disclose all primary facts necessary for the purpose of assessment. It is not part of his duty to point out what legal inference should be drawn from the facts disclosed. It is for the ITO to draw a proper inference. In this case, petitioner had filed all details and the subject of brought forward unabsorbed depreciation was also considered while passing the assessment order u/s 143(3) - AO had in his possession all primary facts and it was for him to draw proper inference as to whether the brought forward unabsorbed depreciation should be adjusted against capital gains or profit and gains from business or profession. There was nothing more to disclose and a person cannot be said to have omitted or failed to disclose something when, of such thing, he had no knowledge. We are satisfied that petitioner had truly and fully disclosed all material facts necessary for the purpose of assessment. Not only material facts were disclosed by petitioner truly and fully but they were carefully scrutinized and the figures of income as well as deductions were worked out carefully by the AO - Decided in favour of assessee.

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• 2023 (7) TMI 695
  Benefits under KVSS - Determining the amount of tax payable by the Petitioner pursuant to a declaration filed under the Kar Vivadh Samadhan Scheme, 1998 ( KVSS ) - Settlement of tax payable - HELD THAT:- Under the provisions of section 88(a)(i) of the Finance Act, on the basis of the tax arrears / disputed tax, the disputed income of the assessee has to be worked out, and, in order to claim benefits under KVSS, the assessee, if it is a company or a firm, has to pay taxes at the rate of thirty-five per cent of the disputed income so worked out. In order to arrive at the disputed tax, the total assessed tax for that particular year would have to be worked out, and, from the same, the taxes which may have been paid by the assessee have to be deducted. That disputed tax has to be total tax determined and payable but which remains unpaid, as per the provisions of Section 88(f), tax which remains unpaid as on the date of making declaration. To calculate tax which remains unpaid, it is obvious that, whilst deducting from the total assessed tax the tax already paid, effect would have to be given to any refund issued by the Revenue to the Assessee and to any interest paid thereon by the Revenue to the Assessee. If effect is not given to the said Refund and interest paid by the Revenue to the Assessee, then the figure of disputed tax which would be arrived at would not be tax which remained unpaid. Respondent no. 2, whilst calculating the disputed tax, has correctly taken the assessed tax and deducted the tax paid by the Petitioner by way of advance tax and tax deducted at source after deducting therefrom a sum which had been paid to the Petitioner by way of refund and interest under section 143 (1)(a) of the Act. After deducting the said sum from the tax paid Respondent no. 2 has correctly arrived at the figure as the amount of tax paid. After deducting the said amount from the said sum, Respondent no. 2 has correctly calculated the disputed tax and, on the basis of the said sum, has correctly worked out the amount payable by the Petitioner under the KVSS. In our view, the said calculation made by Respondent no. 2 is in consonance with the provisions of the Finance Act and cannot be faulted. While considering this argument of the Petitioner, it is important to keep in mind the fact that the Revenue refunded tax to the Petitioner, and paid interest thereon, because the Petitioner had not disclosed and calculated tax properly. This being the situation, the Petitioner cannot take advantage of its own wrong and claim that the interest which has been paid to it should not be reduced while computing the disputed tax. We are not inclined to entertain such an argument at all, and, in any case, definitely not whilst exercising our Writ Jurisdiction.

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• 2023 (7) TMI 694
  Reopening of assessment u/s 147 - notices were issued in the name of deceased Assessee - Scope of alternative statutory remedy - HELD THAT:- It is well settled law that an alternative statutory remedy does not operate as a bar to maintainability of a writ petition in at least three contingencies, namely, where the writ petition has been filed for enforcement of the Fundamental Rights or where there has been a violation of the principles of natural justice or where the order or notice or proceedings are wholly without jurisdiction or vires of an Act is challenged. In the present case, the notice dated 31.03.2021 u/s 148 was issued to deceased assessee after the date of his death (08.07.2020) and thus inevitably the said notice could never have been served upon him. Consequently, the jurisdictional requirement u/s 148 service of notice was not fulfilled. Scope of invocation of Section 292BB - In the case on hand, the assessee was dead. It was the assessee s son, who appeared and perhaps cooperated. Therefore, the primary condition for the invocation of Section 292BB is absent in the case on hand. Thus this Court holds that the notice and all consequential proceedings in the name of the deceased assessee are null and void and consequentially the impugned notice dated 31.03.2021 u/s 148 of the Income Tax Act is quashed - Decided in favour of assessee.

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• 2023 (7) TMI 693
  TDS u/s 194A - non-deduction of TDS on account of interest paid to the Jammu Development Authority[JDA] - Declaration of local area and constitution of Development Authority - HELD THAT:- Authority is a body corporate known by the name of Jammu Development Authority and shall have perpetual succession and a common seal etc. That being the position, there can hardly be any dispute that JDA is a corporation constituted under the State Act i.e the Development Act 1970. S.O 3489 of 1970 clearly notifies a corporation established by a Central, State or Provincial Act exempt from the operation of sub-section (1) of Section 194A - JDA is not incorporated like the company which is incorporated under the Companies Act or the Cooperative Society which is registered under the Cooperative Societies Act. The JDA is a statutory body which owes its origin to the Development Act 1970 and is regulated in its functions by the provisions of Development Act 1970 and the rules framed thereunder. The JDA is similar to the Agra Development Authority constituted under the provisions of Uttar Pradesh Urban Planning and Development Act, 1973 and NOIDA established under Uttar Pradesh Industrial Area Development Act, 1976. Both the aforesaid Authorities too have been constituted under the similar Development Acts legislated by the State of Uttar Pradesh. We hold that ITAT committed no error of law in confirming the order of CIT(A) deleting the non-deduction of TDS on account of interest on fixed deposits paid to the Jammu Development Authority even when JDA is a taxable entity. We further hold that the assessee was under no obligation to deduct TDS on interest payments made to the JDA on its fixed deposits in terms of Section 194A - JDA being a corporation established by the State Act. i.e the Development Act 1970 was, thus, outside the purview of sub-section (1) of Section 194A.

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• 2023 (7) TMI 692
  Incomes not included in total income u/s 10(23C)(iiiac) - assessee had received a grant - whether the petitioner was wholly or substantially financed by the government of National Capital Territory of Delhi [ GNCTD ]? - Whether interest earned had to be added to the grants? - CIT-A and ITAT reversed view taken by A - HELD THAT:- The view taken by the Tribunal and the CIT(A) is wholesome. The provisions of Section 10(23C)(iiiac) of the Act provided for exemption to an assessee, who fulfills the conditions contained therein. This exemption is extended to a hospital or other institution, which receives and treats persons suffering from illness or mental defectiveness or receives and treats persons during convalescence or those requiring medical attention or rehabilitation, and exist solely for philanthropic purposes and not for purposes of profit and is wholly or substantially financed by the Government. The exemption makes it clear that the grant should exceed such percentage of total receipts (and not total income) including voluntary contribution as may be prescribed. The explanation appended to Section 10(23C)(iiiac) was inserted via Finance Act 25 of 2014, with effect from 01.04.2015. The threshold has been pegged at 50%. Notably, the period we are concerned with is FY 2012-13 (AY 2013-14). In the instant case, upon reading the provisions of Section 10(23C)(iiiac) of the Act and Rule 2BBB of the Rules, it is clear that in the given period, the government had to either directly fund the concerned hospital or institute or seek adjustment by factoring in the interest earned on previous grants. In case there was no adjustment, then, the interest, even according to Mr Maratha, would have to be returned to the concerned government for being credited to the Consolidated Fund of India. That being the position, we are of the view that no interference is called for with the impugned order. No substantial question of law arises for consideration.

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• 2023 (7) TMI 691
  Reopening of assessment u/s 147 - Reopening beyond period of four years - reasons to believe - bogus shares capital/premium from bogus paper companies - HELD THAT:- As Section 147 of the Act is very clear that no action shall be taken under the said Section after the expiry of 4 years from the end of the relevant assessment years unless any income chargeable to tax has escaped assessment by reason of the failure on the part of assessee to disclose fully and truly all material facts. First of all, it is not spelt out in the reasons to believe as to what was the material fact which was not truly and fully disclosed. Having considered the submissions of petitioner during the course of original assessment proceedings and the findings of CIT(A) as well as ITAT, we are also satisfied that there was no failure on the part of petitioner to disclose fully and truly any material fact. Even assuming, respondents case is petitioner should have disclosed that these were bogus or accommodation entries, still there is nothing on record to indicate that petitioner was aware that these were bogus shares capital/premium from bogus paper companies, viz., SHPL and SCPL and were accommodation entries. We hereby quash and set aside the notice issued u/s 148. Decided in favour of assessee.

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• 2023 (7) TMI 690
  Penalty u/s 271(1)(C) - manadation of recording satisfaction which limb of the provisions of Section 271(1)(c) of the Act was triggered - whether proceedings were triggered against the respondent/assessee for concealment of income or furnishing inaccurate particulars? - Tribunal concluded, that the penalty order could not be sustained - HELD THAT:- There cannot be any dispute, that the AO failed to clearly reflect his satisfaction in the penalty notice, as to which limb of the provisions of Section 271(1)(c) of the Act was triggered vis-a-vis the respondent/assessee. As indicated above, in a given case, both limbs may get attracted, but even in such situation the AO would need to set forth his prima facie, satisfaction in the penalty notice. The reason, perhaps, why the Legislature has provided for two circumstances in Section 271(1)(c) to our minds, emanates from the need to distinguish between the gravity and consequences which may accompany concealment of particulars of income, as against a case which involves furnishing inaccurate particulars. The quantum of penalty, that the AO may levy, would depend on which slot and/or limb of Section 271(1)(c) of the Act, the assessee s infraction falls in. No substantial of law.

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• 2023 (7) TMI 689
  Unaccounted gold found in search - unaccounted investment - search and seizure, carried out u/s 132 - approval for release of the seized gold weighing 100.350 grams of the petitioner - HELD THAT:- Admittedly, in the case of the petitioner, there is no demand remains outstanding or pending, for any of the liabilities referred to in the aforesaid provisions for any assessment year, after giving effect to the order of the Appellate Authority dated 25.02.2021. Therefore, merely, because, some demand is pending qua M/s. Anant Jewellers, it is not open to the Respondent-authorities to continue to withhold the gold, weighing 100.350 grams, which is of the ownership of the petitioner. Considering the provisions of Section 132B of the Act as well as the observations made in RAKESHKUMAR BABULAL AGARWAL [ 2022 (3) TMI 527 - GUJARAT HIGH COURT] we are of the considered view that, since, the order passed by the Appellate Authority has attained finality, as the Respondent-authorities have not challenged the same before a higher forum, we are left with no other option, but, to accept the case put forth by the petitioner that the gold in question belongs to him and he had accounted the same in his books of accounts. Therefore, the Respondent-authorities ought not to have withheld the gold in question. Petition allowed. Respondent No. 1 is DIRECTED to grant approval for release of the remaining seized gold, weighing 100.350 grams, in favour of the petitioner, at the earliest.

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• 2023 (7) TMI 688
  Reopening of assessment u/s 147 - validity of order passed u/s 148A(d) - Period of limitation - HELD THAT:- We are in agreement with revenue that the notice dated 23.05.2022 issued u/s 148A(b) of the Act cannot be declared as being untenable in law, since even according to assessee the limitation qua AY 2019-20 would have expired only on 31.03.2023. Merely because there is a reference to the judgment of Supreme Court in Ashish Aggarwal s case [ 2022 (5) TMI 240 - SUPREME COURT ] which according to assessee would not apply qua the AY in issue, it would not render the notice untenable, as it is common case of counsel for parties that after 01.04.2021, notices could have been issued only under the new regime. Assessee cannot but accept that the notice dated 23.05.2022 has been issued under the new regime, i.e., u/s 148A(b) of the Act. Since proceedings on the very same aspects have been dropped in for the past AYs, that aspect required attention of the assessing officer - We are conscious of the fact that the rule of res-judicata does not apply, i.e., that each AY is different. That being said, if the reasons for reopening are consistently similar or same, the AO needs to apply the principle of consistency, before passing the assessment order. [See Radhasaomi Satsang [ 1991 (11) TMI 2 - SUPREME COURT ] Revenue on instructions, states that personal hearing has already been granted to the authorised representative of the petitioner. AO will pass a speaking assessment order wherein the aforementioned aspect would be dealt with, i.e., that assertion that assessments have been completed for the AYs 2018-19 and 2020-21, involving aspects which are subject matter of the AY in issue. WP is disposed of, in the aforesaid terms.

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• 2023 (7) TMI 687
  Deduction u/s 10A - claim allowed for initial years - HELD THAT:- Issue are covered by the decision in CGI Information Systems and Management Consultants Pvt. Ltd. [ 2022 (10) TMI 1186 - KARNATAKA HIGH COURT] in assessee s own case. Nature of expenses - expenses incurred towards subscription of Microsoft licences - treated as capital in nature on the basis that the said software was an operating system software - HELD THAT:- It is not disputed that software licence fee is paid annually. Revenue s contention that software is embedded into personal computer and the computer has been treated as a capital expenditure, on the face of it, is untenable because there is no dispute with regard to expenditure which is an annual subscription charge. Once the payment is for a fixed period, it is obvious that the said software cannot be used after expiry of that year. As decided in Toyota Kirloskar Motors [ 2013 (2) TMI 108 - KARNATAKA HIGH COURT] when the life of a computer or software is less than two years and as such, the right to use it for a limited period and without renewing the licence or without paying the fee on such renewal, it is not possible to use those software in those circumstances the findings recorded by the authorities that the fee paid for obtaining the software and the licence and for renewing the same is to be construed as only revenue expenditure - Decided in favour of assessee. Disallowance of the provision for expenses - Addition on the basis that they were contingent in nature and the details as to the manner of creation of the provisions were not furnished - HELD THAT:- The contention urged on behalf of the Revenue that the determined amounts were not made available before the Revenue is factually incorrect and therefore untenable. Now, the point that remains to be considered and answered is whether the above seven expenditures could be allowed or not. The specific contention of the assessee is that these expenditures are ascertained liabilities as on the date of closure of books of account. The objection raised by the Revenue that there are possibilities of employees leaving the company and not getting paid is also untenable because the percentage of the employees leaving their employment will be minimal and in such an event, the assessee is duty bound to reverse the entry in the following year. Since, the provisions made are ascertained figures, the dis- allowance made by the AO and confirmed by the two authorities is perverse and unsustainable. Entitlement to tax credit withheld in the US and Canada - as argued assessee has availed of deduction u/s 10A. Therefore, the assessee is not entitled to the benefit under DTAA - HELD THAT:- As noticed that the AO has assessed the income of the assessee - assessee is liable to pay tax on the said income. If the argument of Revenue that the assessee has availed of deduction u/s 10A is to be accepted, the assessee s income will have to be re-computed and after giving deduction u/s 10A, if the assessee becomes liable to pay tax, he must be entitled to tax credit. As brought to the notice of this court that section 10A deduction has been allowed by this court [ 2022 (10) TMI 1186 - KARNATAKA HIGH COURT] - In view of our findings, notwithstanding section 10A deduction, the assessee shall be entitled for tax credit (See : Wipro Ltd v. Dy. CIT [ 2015 (10) TMI 826 - KARNATAKA HIGH COURT] ). Accordingly, this question is answered in favour of the assessee.

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• 2023 (7) TMI 686
  Penalty levied u/s 271(1)(c) - addition u/s 2(22)(e) - Deemed dividend - assessee contended that deeming fiction provided u/s 2(22)(e) for the purpose of making addition towards loans and advances borrowed from a company in the hands of the director cannot be extended to penalty provisions provided u/s 271(1)(c) to hold that non disclosure of deeming dividends in the return of income would amount to furnishing of inaccurate particulars of income - HELD THAT:- While levying the penalty, the deeming provisions can be applied to a limited extent and instant case was concerned with the imposition of penalty under section 271(1)(c), which was not sustainable in so far as the assessee-company was not a registered shareholder of loan advancing company who had vien loan / advance to the assessee-company. As decided in the case of Shri P.James [ 2017 (11) TMI 1820 - ITAT MUMBAI] penalty cannot be levied u/s 271(1)(c) towards addition made for loans and advances by invoking deeming provisions of section 2(22)(e) of the Act. Therefore, we direct the AO to delete penalty levied u/s 271(1)(c) - Appeal filed by the assessee is allowed.

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• 2023 (7) TMI 685
  TP Adjustment - Tonnage Tax Scheme Applicable - whether the TP provisions are applicable to the assessee company covered under the Special Provisions relating to income of shipping company as prescribed under Chapter XII-G of the Act? - HELD THAT:- In the instant case, the assessee has applied for registration for approval U/s. 115VP(3) of the Act allowing the company to exercise option under the Tonnage Tax Scheme. JCIT, Kakinada Range vide F.No. Tonnage Tax/2013-14, dated 27/06/2013 granted approval for a period of ten years effective from the AY 2014-15 from the date on which such option has been exercised by the assessee. As per the submissions of the Ld. AR, the assessee has exercised its option for the first time for the AY 2017-18. We also find that the proviso to section 115VB of the Act does not cover the charter of ships to others. Since the assessee has exercised its option under Tonnage Tax Scheme as per the provisions of Chapter XII-G of the Act, the provisions of Chapter-X cannot be applied in the computation of total income by the assessee. We therefore direct the TPO / AO to delete the additions made on account of Transfer Pricing adjustment. Appeal of assessee allowed.

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• 2023 (7) TMI 684
  Disallowance of delayed payment of employees contribution to the provident fund u/s 36(1)(va) - HELD THAT:- The fact clearly shows that now this issue is squarely covered by the decision of Checkmates Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] According to that decision if the employees contribution to the provident fund is not deposited within prescribed the due dates as per the Provident Fund Act, that same becomes a income of the assessee u/s 2(24)(x) and if same was not deposited within the due date prescribed of the respective statute, same is not allowable to the assessee as deduction under the head of business and profession. Therefore, this appeal is those squarely covered against the assessee. Counting due date of depositing employees contribution to the provident fund - Whether Shall be counted from the end of the month in which salary is actually paid? - HELD THAT:- There is no relevance of the date of the payment of wages for reckoning the limit of 15 days. Even in that case also, it was not decided that due date is to be taken from the date of payment. The issue before the honourable High Court was that whether the employer can decide a wage month or not. Therefore, even otherwise, that decision does not help the case of the assessee. Therefore, as the law is clear and not at all ambiguous, as held by the two honourable high courts, there is no reason to set-aside issue back to the file of the learned assessing officer to take any other due date other than the date to be taken from the date when the wages becomes due. Accordingly, this argument is also rejected.

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• 2023 (7) TMI 683
  Grant of registration u/s 12AB 80G Denied - receipts from parents of children - assessee is a society engaged in charitable activity for welfare of children suffering from autism [serious and non-curable disease] - HELD THAT:- In so far as 1st reason of receipts from parents of children is concerned, we find that (i) the assessee has not received amounts from parents of all 13 children residing in assessee s campus, the receipts were from parents of 7 children only; and (ii) the receipts are not systematic i.e. neither in all months nor of identical or constant amounts. Furthermore, as argued by Ld. AR, there is no agreement creating any obligation or commitment on the part of parents to make payment to assessee. These factual aspects clearly demonstrate that the payments made by parents are in the nature of mere voluntary contributions and not in the nature of recovery of charges/fee. Had it been from parents of all children and it would have been systematic in terms of periodicity and amount, there might have been a signal of charge/fee but that is absent. Therefore, the Ld. CIT(E) is not correct in perceiving the amounts received by assessee as charge/fee. Regarding 2nd reason of payments to Shri S.K. Shrivastava and Shri Naveen Agrawal, on perusal of evidences placed by Ld. AR, we prima facie find that the payments are in the nature of re-imbursements of actual expenses incurred by those persons for the purposes of assessee. Regarding 3rdreason of issuance of receipts before grant of provisional registration , Ld. AR has demonstrated that there had been a confusion due to MM/DD/YYYY format in place of DD/MM/YYYY only and also there is a clear assertion by Ld. AR that the assessee has not issued any certificate in Form No. 10BE for donations prior to grant of provisional registration. During hearing, the Ld. DR, though dutifully supported the order of CIT(E), but could not rebut or contradict the submissions of Ld. AR. Thus concluded none of the reasons assigned by Ld. CIT(A) for rejection of registration is valid. Therefore, we are inclined to quash both of the impugned orders passed by Ld. CIT(E) denying registration to assessee u/s 12AB and 80G. We also direct Ld. CIT(E) to grant registration to the assessee u/s 12AB and 80G as applied for. Decided in favour of assessee.

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• 2023 (7) TMI 682
  Miscellaneous Applications seeking recall of the common ex-parte order - appeals relate to estimation of the income of the assessee - Whether there was sufficient cause for the assessee in not appearing before the Tribunal on the date of hearing? - HELD THAT:- Having regard to the submissions made by learned AR, we are of the view that there was sufficient cause for the assessee in not appearing before the Tribunal on the date of hearing. Accordingly, in exercise of powers given under Rule 24 of the Appellate Tribunal Rules, 1963, we recall the impugned orders. AR submitted that the issue contested in these appeals relate to estimation of the income of the assessee and accordingly prayed that the appeals may also be taken up for hearing. DR also agreed to the same. Accordingly, the appeals were taken up for hearing and we deal with them by separate order. MA of assessee allowed.

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• 2023 (7) TMI 681
  Deduction u/s. 80IA(4) - infrastructure activities with respect to CFS and ICDs - HELD THAT:- As respectfully following the decision in the assessee s own case for the AY 2011-12 [ 2015 (12) TMI 365 - ITAT VISAKHAPATNAM ] as well as the ratio laid down in the case of M/s. Container Corporation [ 2018 (5) TMI 359 - SUPREME COURT ] and M/s. AL Logistics (P) Ltd [ 2015 (1) TMI 401 - MADRAS HIGH COURT ] decision of Continental Warehousing Corporation [ 2015 (5) TMI 656 - BOMBAY HIGH COURT ], as having regard to the provisions of the Customs Act, the communication issued by the Central Board of Excise and Customs as well as the Ministry of Commerce and Industry, the object of including inland port as an infrastructure facility and also that customs clearance also takes place in the inland container depot, the assessee s claim that the inland container depots were inland ports under Explanation (d) to sec. 80IA(4) required to be upheld - we find no infirmity in the order of the Ld. CIT(A) while allowing the assessee s appeal.

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• 2023 (7) TMI 680
  Revision u/s 263 - cash deposits unexplained - as per CIT AO had failed to verify the authenticity of the assessee s claim that the cash deposits in his bank account were sourced from his business of trading of agricultural and forest produce - HELD THAT:- As it is a matter of fact borne from record that the A.O while framing assessment had summarily accepted the explanation of the assessee and had not carried out any verification on the aforesaid issue, i.e. source of the cash deposits in his bank account, though the same had formed the very basis for reopening of the assessee s case u/s. 147 of the Act, therefore, as per Explanation 2 of Section 263 the order passed by the A.O u/s. 143(3)/147 as observed by the Pr. CIT and, rightly so, is to be deemed to be erroneous in so far it is prejudicial to the interest of the revenue u/s. 263 of the Act. Our aforesaid conviction that failure of the A.O to carry out necessary verification while framing assessment and summarily accepting the explanation of the assessee would render the order passed by him amenable for revision u/s. 263 of the Act is supported by the Judgment of Deniel Merchants (P) Ltd. [ 2017 (12) TMI 476 - SUPREME COURT] We thus uphold the order passed u/s. 263 - Decided against assessee.

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• 2023 (7) TMI 679
  Disallowance of interest expenditure - diversion of funds - nexus between the loan funds and the interest free advances confirmed or not? - HELD THAT:- AO has not established the fact that the secured loan availed from State Bank of India was uitilized for advancing interest free loans to the three persons. The revenue could not controvert the fact that the funds advanced by the assessee were only after withdrawing the share capital from M/s KVR Industries. Hence, respectfully following the decision of Rohit Kochar [ 2018 (12) TMI 208 - ITAT DELHI] quash the order passed by the Ld.CIT(A) and direct the AO to delete the addition made towards disallowance of interest - Decided in favour of assessee.

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• 2023 (7) TMI 678
  Disallowance of interest u/s.14A r.w.r. 8D - assessee stated that it has not received any exempt income during the year, therefore, no disallowance need to be made - HELD THAT:- The assessee has not earned any exempt income during the year under consideration is not disputed, therefore, the ratio laid down in the case of Era Infrastructure (India) Ltd [ 2022 (7) TMI 1093 - DELHI HIGH COURT] squarely apply wherein the Hon ble High Court has held that no disallowance need to be made if there is no exempt income. Decided in favour of assessee. Disallowance of interest - CIT(A) applying the percentage of 6% as against 12% applied by the AO in respect of disallowance of interest - HELD THAT:- As the interest free funds available with the assessee are far more in excess of the loan/ advance given to the subsidiary. Hon ble Supreme Court in the case of Reliance Industries [ 2019 (1) TMI 757 - SUPREME COURT] has held that no disallowance of interest expense is warranted when interest free funds available are far more in excess of the interest free advance. No merit in the additions made by the AO, therefore, the AO is directed to delete the additions. Decided in favour of assessee.

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• 2023 (7) TMI 677
  Addition u/s 68 - creditworthiness of investor unexplained - non discharge on mandatory onus - arguments of assessee are that all the transactions are among sister concerns which are asset to tax and scrutinized u/s. 143(3), it is not the case where cash has been deposited and entries are taken, additions have been made on the basis of conjectures and surmises despite the fact that the assessee has successfully explained not only source but also sources of the source of receipt of share application money and premium - HELD THAT:- The identical issue was placed in the case of Riddhi Promoters Pvt. Ltd. [ 2015 (4) TMI 338 - DELHI HIGH COURT] wherein examining the requirement of sec 68 as held that it is not sufficient that the identity of share applicant or the creditor should be establish by the assessee to discharge the initial onus upon the assessee but under the requirement of sec 68 the assessee has to further satisfied the revenue as to the creditworthiness of share applicant/creditor and genuineness of transaction. In the present case the assessee has failed to discharge such mandatory onus. Thus we reach to a logical conclusion that the documents submitted to prove the genuineness of transaction are itself from to be malaises created with the intention to cover up the true nature of transaction and thus the CIT(A) rightly held that the amount received by the appellant company as share capital and premium are nothing but arranged transactions to introduce its unaccounted income/money as share capital through group concerns to give a clear color to the undisclosed income of assessee. Accordingly, grounds of assessee are dismissed.

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• 2023 (7) TMI 676
  Difference in rate of booking price - sale / booking of flats - different rates have been quoted/booked for the same area and the same project - On money paid by investor - assessee has shown the rate of booking in the range of Rs. 5000/- per sq. ft. to 6500/- per sq. ft whereas, the website of the assessee quoted the rate @9,500/- sq. ft. - HELD THAT:- Revenue cannot force the assessee to sell its space at a particular rate and the department cannot dictate terms to the assessee to sell at a particular rate. The whole addition made by the Assessing Officer in the instant case, in our opinion is purely based on presumptions and surmises and not based on any cogent or corroborative evidence. Since, the buyers to whom the space have been sold have admitted to have purchased at the price shown by the assessee in the books of account and since no addition has been made in the hands of those buyers and the basis of entire addition is on account of the price quoted in website, therefore, we find force in the arguments of the learned counsel for the assessee that such addition made by the AO merely on presumptions and surmises is not sustainable. We find the website does not give the rate as to whether it is carpet area or built up area or super built up area or the amenities, the quality of construction, special locational benefits and other value added facilities, etc. Nothing has been mentioned about the responsible person for contact or any address, as per the snapshot shown in the assessment order. Even the post search enquiry also does not reveal any on money paid by any of the investor. Assessee has already demonstrated that these are two independent units sold to two different persons and in fact the assessee has sold the above two flats @ Rs. 6000/- per sq. ft. Whereas the average price of the two flats comes to Rs. 5000/- per sq. ft. We, therefore, find merit in the argument of the assessee that the same cannot be the basis for making huge addition by adopting the rate of Rs. 8,075/- per sq. ft. Since, there is no iota of evidence that the assessee has received any extra money over and above the booking rate shown by the assessee in the books of account, addition in our opinion is based on surmises, conjectures and presumption. Decided in favour of assessee. Addition on account of notional interest - As we find that the CIT(A) has given a categorical finding that the advances made by the assessee are in the ordinary course of its business and are given in compliance of its business objective. We also find that the CIT(A) has given a finding that no interest expenditure has been incurred towards the payment of any unsecured loans the only interest payment has been made towards the acquisition of land and paid to the Noida authorities which is also capitalized towards work in progress. No reason to interfere with the findings of the CIT(A). Ground dismissed. Appeals by the revenue are dismissed.

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• 2023 (7) TMI 675
  Denial of Registration u/s 12AA - Charitable purpose u/s 2(15) - dissolution clause in the trust deed not exists - HELD THAT:- CIT(E) has not made any allegations or has not made any adverse comment or conclusion, except omission of dissolution clause in the trust deed, regarding charitable objects of the assessee and the genuineness of its activities. Therefore in our humble opinion although the inclusion of dissolution clause in the trust deed is not mandatorily required and absence of such clause cannot be a sole basis for rejecting application seeking registration u/s. 12AA - See judgement of Tara Educational Charitable Trust [ 2014 (7) TMI 869 - ITAT MUMBAI] and Geeta Lalvani Foundation [ 2015 (1) TMI 1368 - ITAT MUMBAI] - Decided in favour of assessee.

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• 2023 (7) TMI 674
  Disallowance @ 10% of total expenses - Addition made on the basis that the assessee failed to furnish the supporting evidences - HELD THAT:- As we allow the application of the assessee and admit these evidences. Upon admission of the additional evidences, parties have agreed that the issue may be restored to the file of the AO for fresh adjudication. The impugned order is hereby set aside and the AO would verify the correctness of the claim of the assessee and decide the issue afresh after giving adequate opportunity of hearing to the assessee. Thus, Ground raised by the assessee are allowed for statistical purposes. CIT(A) empowered by law for setting aside the issue to file of the AO for fresh adjudication - CIT(A) in case of appeal against an order of assessment, he may confirm, reduce or annul the assessment. However, in the present case, the Ld.CIT(A) has set aside the issues for fresh adjudication after making verification. This act of Ld. CIT(A) in our considered view is in excess of powers conferred on him. CIT(A) ought to have verified himself or should have sought a Remand Report from AO in this regard. Therefore, considering the totality of facts, we hereby modify the order of Ld.CIT(A). AO is hereby, directed to delete the addition in respect of disallowance of exchange fluctuation loss. As the issue is squarely covered by the judgement of Woodward Governor India Private Limited [ 2009 (4) TMI 4 - SUPREME COURT ] Ground Nos. 4 to 4.1 raised by the assessee are allowed for statistical purposes. Disallowance of reversal of cenvat credit - We remit this issue to the file of AO for verification of correctness of the claim of the assessee that the amount in question is actual reversal of cenvat credit, if found correct, same may be deleted. Appeal of the assessee is partly allowed for statistical purposes.

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• 2023 (7) TMI 673
  Disallowance of cost of improvement in incurred by the appellant on the property which was sold by him - HELD THAT:- We have no hesitation that the AO examined and verified a note book mentioning the date and amount of labour bills and vouchers submitted by the assessee and thereafter drawn a sustainable conclusion that the bills/ vouchers submitted by the assessee are not acceptable documentary evidence to substantiate the fact of incurring as cost of improvement of the land during FY 1996-97. Therefore, we decline to accept the contention of assessee and thus, ground No. 1 of the assessee is dismissed. Deduction claimed u/s. 54F - Investment in new residential house - Proof of construction of the residential house - HELD THAT:- In the present case, the valuation report and other documentary evidence including change of land use (CLU) certificate issued by the Haryana Govt authorities and the certificate issued by Sarpanch of Village Biranwas, Tehsil Kotkasim Distt. Alwar, Rajasthan clearly reveals that the assessee has constructed residential buildings comprising of two rooms, kitchen, toilet having electricity and water connection and a borewell with a septic tank which was being used as residential unit. Therefore, we are unable to agree with the basis taken by the ld CIT(A) that in proportion to the size of plot/ land the constructed portion is very small and thus, the exemption benefit u/s 54F of the Act cannot be extended to the cost of land appurtenant to the house. Therefore, on the basis of foregoing discussion we reach to a legal conclusion that the assessee, for claiming deduction u/s 54F submitted sufficient and all possible documentary evidence under his command, before authorities below to show that the assessee purchased land, constructed a residential unit consisting of two rooms, kitchen and bathroom with electricity and water facility supported by connection of borewell and septic tank built therein. The change of land use certificate reveals that the assessee before construction of said unit obtained permission from the competent authority before using agricultural land for the purpose of construction of residential house pertaining entire 1.26 hectre of land. Therefore, authorities below have erred in dismissing the claim of the assessee for deduction u/s 54F and hence, the AO is directed to allow the same to the assessee. Ground of the assessee are allowed.

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• 2023 (7) TMI 672
  Disallowance u/s 14A r.w.r. 8D - claim of the assessee that it has incurred NIL expenses for earning exempt income - necessity of recording satisfaction by AO - HELD THAT:- A perusal of the assessment order shows that nowhere the AO has recorded any satisfaction nor there is any finding in respect of correctness of the claim of the assessee that it has incurred NIL expenses for earning exempt income. As decided in Maxopp Investment Vs. CIT [ 2018 (3) TMI 805 - SUPREME COURT] applying the theory of apportionment, the AO needs to record satisfaction that having regard to the kind of the assessee, suo moto disallowance u/s 14A was not correct. It will be in those cases where the assessee in his return has himself apportioned but the AO was not accepting the said apportionment. In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, nature of loan taken by the purchasing the shares/making the investment in shares is to be examined by the AO - We direct AO to delete the addition - Decided in favour of assessee.

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• 2023 (7) TMI 671
  Exemption u/s. 54 denied - long term capital gains from sale of a residential house - new property was acquired by the assessee beyond the time limit - at time of purchase of residential flats the building was under construction - As per AO assessee had booked the residential flats, beyond one year before the date of transfer of a residential house and the possession of flat was received after two years from transfer of a residential house, hence, the assessee is not eligible to claim exemption - HELD THAT:- A perusal of the schedule of payment annexed to the Agreement of Sale as Annexure-F shows that the payments are related to the stage of construction i.e. after the completion of construction upto a particular level, the assessee was required to pay specified percentage of the total consideration. The final installment was to be paid at the time of handing over of possession of the Flat. The assessee received possession of completed flats within three years from the date of transfer of old residential house. The Tribunal in the case of Mustansir I Thahasildar [ 2017 (12) TMI 1060 - ITAT MUMBAI] has held that where the assessee has acquired a flat in a building under construction, it would be a case of construction and not purchase of property. Co-ordinate Bench dehors the fact that the assessee had booked a new flat prior to one year from the date of transfer of old flat, since, the building in which new flat was booked was under construction, the assessee fulfils the condition ie. the assessee within a period of three years after the date of transfer of old flat constructed a residential house in India. In the instant case the assessee acquired possession of new flat on 26/11/2014 and old residential property was sold on 04/08/2012. The construction of flat completed within 3 years from the date of transfer of old residential asset. The section is silent about commencement of construction. The section only mandates that a residential house is constructed within three years after the date of transfer. In the case of CIT vs. Hilla J B Wadia [ 1993 (3) TMI 7 - BOMBAY HIGH COURT] has held that where an assessee has utilized capital gains from transfer of old residential asset towards purchase of flat in a building under construction, this must also be viewed as a method of constructing residential tenement. The only other condition that has to be satisfied is that the assessee must have acquired a right to a specific flat in such a building under construction. No contrary decision is brought to the notice of the Bench. In light of facts of the case and decisions referred above, we accept the appeal of assessee. The assessee is eligible to claim exemption u/s. 54 as the construction of residential house completed within three years from the relevant date. Decided in favour of assessee. Penalty u/s 271(1)(C) - disallowing assessee s claim of exemption u/s. 54 - HELD THAT:- penalty levied u/s. 271(1)(c) of the Act is not sustainable. It is not the case of Assessing Officer that the assessee has not made full disclosure of capital gains from sale of long term capital asset. The case of the Revenue is that the assessee has made wrong claim of exemption u/s. 54 of the Act on the long term capital gain. In the case of Reliance Petroproducts (P) Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] has held that merely because the assessee has claimed expenditure for which claim was not accepted or was not acceptable to the Revenue that by itself would not attract penalty u/s. 271(1)(c). Merely for the reason that the assessee had made claim of exemption u/s. 54 of the Act which was not acceptable to the Assessing Officer, penalty u/s. 271(1)(c) of the Act cannot be levied. Decided in favour of assessee.

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• 2023 (7) TMI 670
  Revision u/s 263 - source of investment in unlisted equities was part of the proceeding - imitation by the ld. PCIT to invoke section 263 for the second time - HELD THAT:- As no enquiry is said to have been made on this issue of investment in unlisted equities and thereby no addition to this extent was made. On perusal of the records, we do not find any documentary evidences furnished by the assessee in support of its claim that the impugned investment was made in F.Y. 2011-12 by way of furnishing the bank statement or any other supporting documents to explain the source of the investment made by the assessee in M/s. Armani Industries (I) Pvt. Ltd. As pertinent to point out that there was no bar on limitation by the ld. PCIT to invoke section 263 for the second time considering the order to be erroneous insofar as it is prejudicial to the interest of the Revenue for the reason that the A.O. has not gone into the issue of the impugned investment which was part of the first section 263 proceeding. It is apparent that the A.O. has not enquired into the issue of investment made by the assessee and it does not fall in the case where the assessee has enquired into the issue and taken one of the plausible view. As the order of the ld. PCIT invoking section 263 is valid since the assessment order sought to be revised was erroneous insofar as it is prejudicial to the interest of the Revenue. Decided against assessee.

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• 2023 (7) TMI 669
  Undisclosed income offered in the statement during the course of search and seizure operation - Addition based on the basis of statement of assessee recorded during search and post search period - HELD THAT:- Addition on the standalone basis of statement of assessee u/s. 132(4) of the Act cannot be held as sustainable in absence collaborative evidence found in supports such addition Assessee right from search and seizure operation till filing of return could not find any substantive material or investment which could be considered for supporting the surrender of reaming amount Rs. 6.5 crore and the AO has made addition in hands of assessee only on the basis of statement of assessee recorded during search and post search period and letter dated 23.04.2012 of the assessee without any supporting and collaborative adverse or positive material against the assessee showing earning of undisclosed income during the relevant financial year. CIT(A) was right in deleting the unsustainable addition made by the AO as relying on case of Ultimate Builders [ 2019 (9) TMI 1172 - ITAT INDORE] - We are unable to see any ambiguity, perversity or any other valid reason to interfere with the findings arrived by the Ld. CIT(A) Assessment u/s 153A - Addition u/s. 69C - unexplained expenditure - Addition relying on loose papers - HELD THAT:- We are in agreement with the conclusion drawn by the CIT(A) that the impugned loose papers and documents were found seized from the premises of third party. Therefore, presumption u/s. 292C of the Act will apply to said searched entity, i.e. third party only and not to the assessee enabling the AO to make addition in the hands of assessee in the assessment order passed u/s. 153A/143(3) of the Act. Our conclusion also gets support from the order of ITAT Delhi Bench in the case of Trilok Chand Chaudhary [ 2019 (9) TMI 95 - ITAT DELHI] Disallowance of over draft interest claimed - HELD THAT:- Undisputedly the appellant from the partnership firm to whom loans were provided has earned remuneration/salary income which has been duly shown in the return filed by the appellant which was accepted by the AO along with tax thereon. Under identical facts and circumstances in the case of Sudhir Dattaram Patil [ 2004 (12) TMI 625 - ITAT MUMBAI] held that the assessee entitled deduction of interest paid on money/amounts borrowed for investment in the partnership firm in which he has become a partner against the amount received by him from the firm as remuneration/salary and assessed under the head profit and gains of business or profession. This factual position of the present case has not been negated or diluted by the AO nor by the Ld. CIT(DR), during argument before this Bench. Therefore ground of Revenue also dismissed. Unaccounted unexplained investment on the protective basis in the hands of the assessee and has made addition in the case of seller on substantive basis - HELD THAT:- As in the case of Agrawal Buildcon [ 2022 (1) TMI 1385 - ITAT INDORE] where the substantive addition has been made, the Tribunal was pleased to dismiss the Departmental appeal on the ground that firstly the Department has failed to controvert the fact that the additions have been made on the basis of statement of power of attorney holders, secondly the addition was made without providing any opportunity of cross examination of the third party on whose statement the addition had been made and thirdly, the addition had been made merely on the basis of oral evidences and there is no other positive evidence on record which could prove that the sellers have received on money and offered the same and lastly the addition seems to be made on assumption and presumption as except the copy of registered sale deed, no other incriminating material was found during search proceedings which could indicate that alleged on money has been paid by the assessee - thus the order of the Ld. CIT(A) was correct and accordingly be upheld. Addition u/s 69B - differential amount between value as per registered purchase deed vis-a-vis guideline value determined by Stamp Valuation Authority - HELD THAT:- Section 69B as applicable only when the AO successfully discharge onus, lay on his shoulder, establishing that the assessee has made investments which is not recorded in the books of accounts of the assessee or the amount recorded in the books pertaining to the transaction exceeds the actual consideration paid by the assessee and in such a situation when the assessee offers no explanation about such excess amount or the explanation offered by him is, in the opinion of the A.O., not satisfactory. In the present case the assessee requested to call upon the seller to explain the situation but the summon issued u/s. 131 of the Act to the seller was served and the replied in writing to dak of the AO. Merely because the seller was not present in person before the AO, the assessee cannot be alleged to have made any unexplained investment which could entitle the AO to make addition u/s. 69B of the Act. Therefore the Ld. CIT(A) was right in deleting the addition on this issue.

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• 2023 (7) TMI 668
  Revision u/s 263 - Validity of Assessment Order u/s 143(3) as notice issued in the name of the amalgamating company - as per CIT AO has not conducted any inquiry regarding taxability of the capital gain and hence, the assessment is erroneous and also prejudicial to the interest of revenue - HELD THAT:- As assessee has brought to the notice of the Assessing Officer the real fact that the assessment which the Assessing Officer finalized is of the existing company i.e. Vodafone Idea Limited. In our considered view, the fact that the Aditya Birla, erstwhile name, is non-exist at the time of passing of the order by the Assessing Officer and Assessing Officer also aware of the fact of merger, therefore, the fact in the present appeal are exactly similar to the facts in the case of Pr.CIT v. Maruti Suzuki India Limited [ 2019 (7) TMI 1449 - SUPREME COURT] Thus we hold that the order passed u/s. 263 of the Act is equally bad in law considering the fact that we already held that the original assessment order passed u/s. 143(3) is bad in law and an order passed which is not proper and non-est, the same order cannot be the subject matter of the revision u/s. 263 of the Act. Respectfully following the decision of Westlife Development Ltd. [ 2016 (6) TMI 1208 - ITAT MUMBAI] we are inclined to quash the revision order passed u/s. 263 of the Act and accordingly, ground raised by the assessee

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• Customs

• 2023 (7) TMI 667
  Exemption from basic customs duty - actual user condition / use of the goods for specified purpose - BCD concession towards import of blades / towers and foundation mounting parts etc denied - N/N. 21/2002-Cus. dated 01.03.2002 read with Notification No.12/2012-Cus. dated 17.3.2012 - Violation of the condition of notification, as the imported blades were sold and were not put to use by the respondent for the specified purpose - HELD THAT:- The very same issue was considered by the jurisdictional High Court in the case of NORDEX INDIA PRIVATE LIMITED, (FORMERLY KNOWN AS ACCIONA WINDPOWER INDIA PRIVATE LIMITED) REP. BY ITS DIRECTOR MR. PRASHANTH PANDARISH VITTAL VERSUS COMMISSIONER OF CUSTOMS [ 2022 (8) TMI 1214 - MADRAS HIGH COURT] wherein the Hon ble High Court has considered the practical difficulties of the importer to transport blades from the port to the factory and thereafter to the customer s site, where it was held that The exemption cannot be denied unless it is seen that it has been made to evade duty, it leads to evasion of duty. In this case, it is not so. The Rotor Blades has been fixed in the Windmill, which is a vital component for completion of the Windmill project. After considering the facts of the case and perusing the records, the judgment of the Hon ble Jurisdictional High court in the case of Nordex India Pvt. Ltd. is squarely applicable to the instant case. Following the same, the demand proposed in the SCN is on misconception of facts and law - the appeal filed by the department is dismissed.

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• 2023 (7) TMI 666
  Classification of imported goods - stainless steel tube fittings couplings, tees, crosses - to be classified under tariff item 7307 2200 or under tariff item 7307 2900 of First Schedule to the Customs Tariff Act, 1975 - N/N. 50/2017-Cus dated 30th June 2017 - HELD THAT:- Neither of the lower authorities have examined the meaning of the expression threaded elbows and sleeves as declared and have come to the conclusion that the imported goods do not match the description therein. There is no record of any evidence that the said finding is based upon visual examination of goods or scrutiny of any documents pertaining to the import. Furthermore, it is seen that, without reference to the entries within heading 7307 of First Schedule to Customs Tariff Act, 1975, the HSN Explanatory Notes have been relied upon. Crucial to the displacement of a tariff item as declared, is the available of an alternative tariff item that must, independently conform to the goods. This has been held in the decision of the Hon ble Supreme Court in HPL CHEMICALS LTD. VERSUS CCE, CHANDIGARH [ 2006 (4) TMI 1 - SUPREME COURT] holding that If the Department intends to classify the goods under a particular heading or sub- heading different from that claim by the assessee, the Department has to produce proper evidence and discharge the burden of proof. In the present case the said burden has not been discharged at all by the Revenue. With the two rival classifications at the eight digit level within the same heading the resort to one alternative classification that is a residual entry, it would appear that the lower authorities have not given any justification for discarding the claim by the appellant or preferring the revised one over the declared one. The entire process of re-determination of the classification is not in accordance with the decision of the Hon ble Supreme Court - Impugned order set aside - appeal allowed.

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• 2023 (7) TMI 665
  Valuation - tug towing a barge - inclusion of freight - It was contended that, the tug arrived on its own propulsion that did not involve payment of any freight at all and the barge, towed by the said tug, did not incur any additional charges on freight. - Re-ascertainment of assessable value - rejection of declared value - HELD THAT:- The age of both the tug and the barge are irrelevant in the proceedings which rests upon non-fulfillment of requirement pertaining to declaration of cargo brought into India in import general manifest and incorrectness of the value declared in the bill of entry for assessment. The confiscation and penalties merely follow from the findings of the adjudicating authority on these violations. Two parties, buyer and seller, are essential, and that too at the time and place of importation, to a transaction envisaged in section 14(1) of Customs Act, 1962 and, thereby, to rule 3 (1) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 failing which recourse must be had to rule 3(4) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The assessment has necessarily to take recourse to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 on the basis of framework prescribed therein. While certificate of chartered engineer may serve in assisting the assessing officer, it lacks the statutory credibility inhering in application of mind, in accordance with the Rules, by the proper officer. No reason has been assigned by the adjudicating authority for adoption of the value and nor is there any narration of ascertainment of the correctness of the value declared in the certificate obtained after arrival of the vessels - adjustment under rule 10, under the authority of rule 3(1), of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, and in the event of adoption of rule 4 or rule 5 therein for arriving at transaction value, with no reference in rule 7, rule 8 and rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 for such adjustment, precludes lack of authority of law for the addition of freight to the barge. The recourse to rule 3(4) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 has not been in conformity with the framework of the mechanism for resort to section 14(2) of Customs Ac, 1962. Insofar as the tug is concerned, the declared value had been accepted and it is only the addition of freight and insurance that was in question - recourse to rejection of declared value is an assessment exercise arising from the specific circumstances in which rule 12 provides the means. Rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 stands on a different footing as freight and insurance is, by default, presumed to be included in the declared value. In the instant case of the tug, it is an undisputed fact that there was no transaction involved at the time and place of entering into India - In the case of the import in question, with no expense having been borne on account of any other person till the time and place of importation, these elements are beyond the pale of ascertained value. Revenue is in appeal against incomplete adjudication, as it were, in the impugned order for ignoring failure to declare the goods at the time of import and for not imposing penalty under section 114AA of Customs Act, 1962, As the issue of valuation of the tug and barge had been adjudged improperly by not being in conformity with section 14 of Customs Act, 1962, it has to be re-determined in terms of the legal provisions. The appeal of Revenue, by not challenging the acceptance of the purchase price of the tug for which reason it is to be kept out of de novo proceedings and as all other issues remain open, is thus, rendered infructuous. Matter remanded back to original authority for fresh decision - appeal allowed by way of remand.

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• 2023 (7) TMI 664
  Smuggling - Gold Bar - Indian Currency - corroborative evidence brought in by the Department to support their allegation or not - reasonable belief that the gold is of foreign origin, or not - HELD THAT:- It is an admitted fact that the verification was conducted in the premises of the Appellant which is located in Kolkata which is not any border town of India. The Appellant has provided the details of Trade Licence of his Melting House, Profit Loss Account, Balance Sheet, Fixed Assets Schedule, Income Tax Returns etc. Out of the 12 pieces of gold found in the vault, only one piece was with marking of MELTER ASSAYER . There was no marking in the balance 11 pieces of gold bar. Therefore, on the basis of this one piece itself, the Department cannot come to a conclusion that all the 12 pieces are of foreign origin. When the Appellant has provided the details of his mother s address and has stated that he has given 330 grams of gold, it is seen that the Department has not carried out any verification to ascertain the veracity of this claim. The Department has also not made any efforts to verify the claims that he has undertaken melting works for various persons by making any enquiry from them. In the case of AADIL MAJEED BANDAY VERSUS C.C. AMRITSAR [ 2021 (5) TMI 282 - CESTAT CHANDIGARH ] , the Tribunal has held that revenue has failed to discharge that they are initial burden that on reasonable belief that the goods in question are smuggled goods. Further, it has been found that only market enquiry was done for valuation and purity of the goods in question. No fact has been brought on record by way of testing of the goods in question that the marking made on the goods are genuine or not. As no such investigation has been done to establish that the goods in question are of foreign origin, therefore, the provision of Section 123 of the Customs Act is not applicable to the facts of this case. Appeal allowed.

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• Service Tax

• 2023 (7) TMI 663
  Reversal of CENVAT Credit - buying SIM cards at a discounted price and then selling the SIM cards to a lesser discounted price in the retail market thereby earning a profit through difference of discounts - Revenue alleged that the appellant was selling the SIM cards without any further processing and therefore as per Rule 3(5) of the Cenvat Credit Rules, 2004, they were liable to reverse the equal amount of credit availed on the inputs. HELD THAT:- The appellant has been filing Service Tax returns regularly and paying service tax. The details of credit availed and utilized by them have been disclosed in the ST-3 returns filed by them. The value of taxable services rendered by them have been disclosed in their Balance Sheets. The two issues have been raised by the department during the course of audit, from the data disclosed by the Appellant. Thus, it is observed that the appellant has not suppressed any information from the department. All the details have been taken from their audited balance sheet. In such cases suppression of fact with an intention to evade payment of duty cannot be alleged. In the present case also, the details have been taken by the Audit party from the audited balance sheet. The department has not established any suppression on the part of the Appellant. The impugned order is also silent on this - the provisions of section 78 are not applicable in this case. Accordingly, penalty imposed under 78 is liable to be set aside. Appeal allowed.

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• Central Excise

• 2023 (7) TMI 662
  Seeking closure of proceedings initiated by virtue of two show cause notices - denial of CENVAT Credit - HELD THAT:- The proceedings which were commenced by virtue of the two show cause notices, have not been concluded although over a decade has passed. Be that as it may, it is found that submission made by learned Additional Solicitor General as to concluding the proceedings within the time frame to be fixed by this Court needs to be accepted. The matter remanded to the Commissioner of GST (adjudicating Authority) with a direction to conclude the proceedings within a period of eight weeks from 10.08.2023 - appeal allowed by way of remand.

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• 2023 (7) TMI 661
  Recovery of erroneous refund which was sanctioned under Notification No. 56 of 2002-CE - refund was granted on the basis of any approval, acceptance and assessment relating to the rate of duty - extended period of limitation - HELD THAT:- From a reading of Section 11A of Central Excise Act, it clearly transpires that when any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer, may within six months from the relevant date, serve a notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made to show why he should not be asked to pay the amount specified in the notice. Indisputably, in the instant case, the period of six months from the relevant date has since expired. To put it more clearly, the expression relevant date is defined under sub-section 3 (ii) of Section 11A of the Act. Neither side has disputed that the limitation, provided for issuance of show cause notice in terms of sub-section 1 of section 11 A of the Act had expired much prior to the issuance of show cause notice to the respondent - The sine quo non for invoking the proviso is to demonstrate by reference to material on record that the assessee had claimed and has been paid erroneous refund of the excise duty by reason of fraud, collusion or any willful misstatement or suppression of facts or contravention of any provisions of the Act and the rules framed thereunder and that this fraud, collusion, willful misstatement or suppression of facts etc., is made with an intention to evade payment of duty by the assessee or his agent. There are no sufficient material on record to come to the conclusion that the respondent, with an intention to evade payment of duty, suppressed or misstated any facts relating to the manufacturing process and the product which it produced and passed on by payment of excise duty. Whether the product produced by the respondent is a Gibbereillic acid simplicitor or is a plant growth regulator containing Gibbereillic acid as dominant ingredient, is a question of fact which cannot be gone into by this Court hearing an appeal on a substantial question of law - the extended period of limitation as provided under provision to sub -section (1) of Section 11A was not invocable for the simple reason that the twin factors which are sine quo non for invoking the proviso were missing in the instant case. The Supreme Court in Grasim Industries Ltd vs Commissioner of Central Excise [ 2011 (8) TMI 689 - SUPREME COURT] has only held that, once a show cause notice, in terms of section 11A of the Act has been issued by the revenue department to the assessee for recovery of erroneous refund made to it, the remedy of the aggrieved assessee is provided under section 11A itself. The judgment therefore cannot be held to lay down a proposition of law that section 11A is invocable even in a case where there is no erroneous refund, rather the refund of the excise duty is pursuant to a speaking order passed by the Adjudicating Authority after following due process of law. Such order passed by the Assessing Authority is appealable under Section 35 of the Act or the competent Authority of the revenue may invoke Section 35E of the Act and direct the concerned Authority to take an appropriate remedy against such order sanctioning erroneous refund, if any, in favour of the assessee. In the instant case, the refund sanctioned by the adjudicating authority in favour of the respondent was after proper application of mind and by passing of speaking orders and therefore, cannot be termed as erroneous refund for the purposes of section 11A of the Act. The extended period of limitation provided under proviso to sub section 1 of section 11A is not attracted as there are no material on record to demonstrate that the purported erroneous refund was sanctioned in favour of the respondent-assessee on the basis of some fraud, collusion or misstatement /misrepresentation of facts and, that too, with an intention to evade payment of excise duty. The revenue has also failed to make out a case of unjust enrichment having failed to show as to how the respondent has been benefited by such purported erroneous refund sanctioned in its favour by the Competent Authority. There are no merit in this appeal - Appeal dismissed.

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• 2023 (7) TMI 660
  Clearances made to Mega Power Projects under International Competitive Bidding - Final product supplied against the international competitive bidding - intermediate goods - Denial of benefit of N/N. 67/95-CE dt. 16.03.1995 as the final products are exempted from the whole of duty of excise - whether the appellant is liable to pay duty on intermediate goods? HELD THAT:- The Tribunal after following the decision in the BHARAT ALUMINIUM CO. LTD. VERSUS COMMISSIONER OF C. EX., RAIPUR [ 2017 (4) TMI 276 - CESTAT NEW DELHI] , the decision in M/S. KEI INDUSTRIES LTD., N HASHMI VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2016 (12) TMI 532 - CESTAT NEW DELHI] held that duty demanded on intermediate products cannot sustain. It is not in dispute that the clearances were made to Mega Power Projects under International Competitive Bidding. Following the decision, it is held that the demand confirmed by impugned orders in Appeal Nos.E/40280-40282/2016 cannot sustain and requires to be set aside. Appeal allowed.

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• 2023 (7) TMI 659
  Valuation - inclusion of Recovery of VAT/CST - remission of unpaid VAT by the State Government - appellant was availing the exemption on goods purchased whereas in the case of sale of finished goods availing the benefit of sales tax deferment - CBEC Circular No. 378/11/98/-CX dated 12.03.1998 - HELD THAT:- The fact is not under dispute that in the present case the nonpayment of sales tax /VAT is not on account of exemption but on account of remission granted by the State Government. The Adjudicating Authority has confirmed the demand relying on the Hon ble Supreme Court Judgment in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [ 2014 (3) TMI 42 - SUPREME COURT] whereas the said judgment was distinguished by this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, MUMBAI-I VERSUS M/S WELSPUN CORPORATION LTD. [ 2017 (5) TMI 177 - CESTAT MUMBAI] on the ground that in Super Synotex (India) Ltd the sales tax/ VAT was not paid by the assessee on the ground that the same was exempted at the time of removal of goods whereas in the present case VAT/Sales tax was very much payable while clearing the goods and subsequently the same was remitted by the State Government. This Tribunal considering the identical facts of remission of VAT/Sales tax in the case of Welspun Corporation Ltd held that the sales tax/VAT /CST actual payable but since the same was remitted it cannot be said that the sales tax/ VAT/CST was not payable. Therefore in terms of Section 4 (4) (d) (ii) of the Central Excise Act, 1944, the same is deducted from the assessable value. The ratio of the decision of Welspun Corporation Ltd is clearly applicable in the present case - the demand in the present case is not sustainable - Appeal allowed.

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• 2023 (7) TMI 658
  Clandestine removal - suppression of facts - appeal filed by the Company only not by the Director in his individual capacity - Non-mentioning of the Company s name - typographical error - HELD THAT:- On perusing the Form EA-1 filed by the Appellant, it is seen that each and every page of this Appeal has been signed by Jugal Kishore Kaushik as a Director signing the Appeal for M/s Vikas Forge Pvt. Ltd. Apart from this, in the EA 1 Serial No. 6 (iii), it is clearly indicated that the amount of duty of Rs.1,27,720/- is being contested. Therefore, it is clear that this Appeal is filed by the Company only not by the Director in his individual capacity. Non-mentioning of the Company s name at Serial No. 2 could be on account of typographical error. If the Commissioner (Appeals) had carefully looked at these details, he would not have come to the erroneous conclusion. It is clear that the Appellant Company had filed their Appeal before the Commissioner (Appeals) which was erroneously taken by him as an Appeal filed by the Director - matter remanded to the Commissioner (Appeals) to decide the Appeal filed by the present Appellant i.e. Vikas Forge Pvt. Ltd. against the duty of Rs.1,27,720/- confirmed against them in the OIO No. 13/AC/CE/HND-I/ADJN/2014 dated 27.02.2014. Since in the OIA passed by the Commissioner (Appeals), the penalty imposed against the Director has already been set aside, it is not open for the Commissioner (Appeals) to consider this issue for disposal - appeal disposed off.

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• Indian Laws

• 2023 (7) TMI 657
  Dishonour of Cheque - existence of debt/liability or not - firm of complainant, not registered - no prove the mercantile transaction - rebuttal of presumption - bar under Section 69(2) of the Indian Partnership Act. Bar under Section 69(2) of the Indian Partnership Act - HELD THAT:- It is observed that bar under Section 69(2) of the Indian Partnership Act will not come in the way of the Complainant in filing the complaint under Section 138 of the Negotiable Instruments Act. Proof of the debt/liability - HELD THAT:- It is true that the Respondent-accused has not denied execution of the cheque in the notice reply at Exh. 45. He has stated that he has issued the cheque at the instance of one Bhalerao. Even in his statement under Section 313 of the Criminal Procedure Code, he has stated the same fact while answering question no. 4. If it is so then presumption under Section 139 of the Negotiable Instruments Act will come into picture or not and by way of seeing whether it is rebutted by the accused or whether the findings of the trial Court are correct or not. Rebuttal of presumption - HELD THAT:- It is settled law that the presumption can be rebutted by adducing evidence separately or by cross-examining the Complainant. In case of PANKAJ MEHRA VERSUS STATE OF MAHARASHTRA [ 2000 (2) TMI 718 - SUPREME COURT] there is observation of the Hon ble Supreme Court to interpret the meaning of the word the drawer of such cheque fails to make the payment and the drawer refuses to make the payment . Failure to make payment can be for various reasons:- when there is failure to make payment, offence is committed. In nutshell, this failure to make payment has been interpreted in wider sense - In case of K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Anr. [ 1999 (9) TMI 941 - SUPREME COURT] , the Hon ble Supreme Court opined that once the signature on cheque is admitted, presumption comes into picture and burden is on accused to rebut the presumption, there cannot any dispute on this preposition of law. It is true that accused has not examined the said Bhalerao at whose instance the cheque was issued. He has examined the Jugalkishor Bansilal Tiwari as owner of the J. K. Construction. He has also produced work orders. He has taken on hire the Poclain machine from the Complainant - the Complainant ought to have been substantiated his contention that in fact he has given on a hire Poclain machine to the accused, this is not plea which is taken by way of after thought while cross-examining the Complainant. This plea was taken while dealing notice reply. There are no fault in the findings of the trial Court. On one hand he has denied the relationship with the Complainant and on the other hand he has brought on record through evidence of Mr. Tiwari that in fact it is Tiwari who has taken a machine on hire from the Complainant and not by him. It is sufficient to rebut the presumption - Learned Advocate for the Appellant relied upon these observations to contend that Respondent cannot take up a plea that there was no mercantile transaction. This argument is illogical. Because Section 139 of the Negotiable Instruments Act itself say about rebuttal of presumption. It is one thing to say that you cannot take up plea and another thing to say that plea is not proved. In this case defence taken by the accused was permissible and he has proved it also. There are no fault in the findings recorded by the trial Court. It cannot be said that findings are perverse. Hence no interference is wanted - appeal dismissed.

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