TMI Tax Updates - e-Newsletter
July 1, 2023
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Determination of GST / Assessment under GST - To be followed by scrutiny of returns / assessment u/s 61 or not? - Section 73 and 74 are not controlled by Section 61 alone as argued by the petitioner. The proceedings u/s 74 can be taken up by resorting to the audit of accounts u/s 65 also - It should be carefully observed that Section 74 starts with the clause “where it appears to the proper officer that any tax has not been paid”. The word “appears” has a wider amplitude subsuming in it not only Section 61 and 65 but also any other credible information from a different source. If the intendment of legislature is to make Section 74 bound by Section 61 and 65 alone, that fact would have been clearly depicted in Section 74. - HC
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GST:
Scope of Supply - work done by the applicant (NHAI) in shifting the transmission lines for the widening of road under the supervision of MVVNL - GST is not payable on the full amount of work done for shifting the transmission lines by NHAI - GST is only leviable on supervision charges charged by MVVNL. - AAR
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GST:
Scope of Supply - providing food to the employees at subsidized price - The applicant is not liable to pay GST on the amount deducted/ recovered from the employees. Further the applicant is recipient of canteen service to facilitate the employees and Canteen Service Provider raises the Bill of canteen charges inclusive of GST as per the contract - ITC of the GST paid on canteen charges is available to the applicant on the food supplied to the employees of the applicant company as under Section 46 of the Factories Act, it is mandatory to provide canteen facility to the employees. - AAR
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GST:
Levy of GST - free replacement under guarantee period - That under guarantee and free replacement no consideration shall be chargeable from the buyer against the supply of replaceable goods, and as such no GST could be charge and payable to the Govt. The replaced items shall be of NIL value. In as much as the consideration for replaced goods has already been included as and when the original supply was made for the first time to the Indian Railways. - GST is not leviable - AAR
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GST:
Exemption from GST - Duty Credit Scrips issued under RoSCTL scheme issued by Directorate General of Foreign Trade - Duty Credit Scrips issued under RoSCTL Scheme is not taxable - The benefit of exemption is applicable to all the duty credit scrips, excluding ineligible Duty Credit Scrips - AAR
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Income Tax:
Reopening of assessment u/s 147 - reason to believe - Claim of deduction on account of payment made to settle a class action suit - AO observed the same as in the nature of penalty and proposed to disallow u/s 37(1) - A.O. had no reason to believe that the payment made towards settlement of the class action suit was a payment towards a penalty imposed and on that account we hold that there was no reason for the A.O. to believe that income had escaped assessment. - HC
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Income Tax:
DTVSV - Miscellaneous Application u/s 254 (2) rejected as not covered under the Direct Tax Vivad Se Viswas Act, 2020 as it was not filed in pursuance of an appeal ‘dismissed in limine’ - The qualifying words ‘in limine’ that apparently restrict the eligible assessees for availing settlement under the DTVSV, are contrary to its object and reasons - FAQ No. 61 of the Circular 21 of 2020 issued by the CBDT is struck down. - HC
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Income Tax:
Reopening of assessment - migration to new PAN from old PAN - undisclosed time deposits - It was the duty of the Respondent No. 1 to have examined and verified the contentions of the Petitioner in respect of cancellation of the old PAN and the returns filed under the new PAN before the issuance of the impugned Order and the impugned notice. - In the absence of any clear answer to the query and any clear stand of the department, the notice issued u/s 148 and order u/s 148A quashed - HC
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Income Tax:
Reopening of assessment u/s 147 - Reopening based on the order of SEBI in cases of reversal trades and accommodation entries - As evidenced that there is no live link or nexus with the alleged orders passed by SEBI as alleged by the Respondent. Besides the Respondent has failed to aver the particulars of the information available which has led to the belief that income has escaped assessment. There appears no new tangible material available on record to conclude that income had escaped assessment - It is clearly a ‘change of opinion’ - Notice quashed and set aside - HC
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Income Tax:
Rejection of ITR by the CPC as defective u/s 139(9) - Return of income filed u/s 44ADA declaring the professional income as well as income from trading in shares - Condonation of delay in filing the application for rectification of error - one of the authorities of the Revenue considered the case of the petitioner and thereby granted relief in favour of the petitioner. - The delay in filing the application for rectification of error committed in the return of income is condoned. - HC
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Income Tax:
Addition u/s 56(2)(viib) - share capital and premium received by the assessee - method of valuation as per Rule 11U and 11UA - When shares were issued at premium based on valuation report from prescribed expert using DCF method of valuation, the said sum cannot be disregarded merely because the projection of revenues thereon did not match with actual revenues of subsequent years. - AT
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Income Tax:
Additions u/s 68 - Low profit ratio - the assessee has discharged his onus before the revenue authorities. AO and the ld. CIT(A) rejected the explanation of the assessee solely based on the limited issue of low profit - There were no enquiries made nor any evidence to reject the documents/evidences filed by the assessee - AT
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Income Tax:
Reopening of assessment - bad debts written off disallowed - To reopen the already concluded assessment on the same very issue would be nothing but review of the order and on mere change of opinion which is impermissible - AT
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Income Tax:
Levy of penalty u/s 271(1)(c) - Disallowances against Credit card expense and computer expenses - considering the amount involve, the contention of the revenue authority that the assessee concealed his income by claiming deduction of impugned credit card expense and computer expenses, cannot be accepted. - AT
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Customs:
Levy of interest during the period of protection granted by the High Court - Imposition of safeguard duties - imports of Aluminum Foil - Interim order was being passed by the Court with effect from 19th August 2009, an amendment came to be incorporated to the provisions of Section 8C of the Act by insertion of Sub-section (5A) by Finance No. 2 Act, 2009 with retrospective effect - The protection was vacated as on 11.6.2010 - No interest would be demanded for the period of interim protection - HC
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Customs:
Levy of Penalty on Customs Broker License - The Tribunal on facts found that it is not the case of the revenue that the documents for undertaking the KYC of the importer were not taken by the respondents and the only allegation was that the respondent Customs Broker had not physically met and physically verified the premises. - Penalty was rightly deleted - HC
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Customs:
Exemption from duty of customs - Project Import - failure on the part of the importer to meet the Project Import regulations - The appellant registered its Project Contract for import of capital goods, but it has not disputed the missing of two items which therefore resulted in denying the concurrent benefit of exemption. For this, differential duty was demanded, which is as per law - AT
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Customs:
Refund of Customs Duty paid - Assessment of Bill of Entry not challenged - No application would lie for refund of any duty from such self-assessment since the refund authority cannot assume the role of an adjudicating / assessing authority. This is because the scope of refund is limited as against the scope of adjudication proceedings and hence, the authority considering any refund application cannot revisit the adjudication proceedings for which he has no jurisdiction - AT
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Customs:
Benefit of exemption from customs duty - Uninterrupted Power Supply - The applicant has wrongly interpreted the notification by stating that UPS proposed to be imported by the applicant are intended to be used in operation of machines which either ultimately qualify as Telecommunication apparatus or ADP machine or where ADP machine is an integral part of the whole machine/system - AAR
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Direct Taxes:
Indirect contribution of wife in the purchase of the property - Joint properties purchased by husband and wife [housewife] - legal owner - the 1st defendant/wife has contributed equally, though not directly but indirectly by way of looking after the home and taking care of the family for more than a decade and managing the household chores, thereby releasing the husband for gainful employment and made his stay comfortable in abroad and also to reduce the expenses and save the money for future benefit of the family including for purchasing of the assets - the 1st defendant are entitled to equal shares in the property - HC
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Direct Taxes:
Benami transaction - Co-owner of the property or not - there is no written documents, in support of the plaintiff's plea that there was a partnership arrangement between the parties to develop the suit property and share the profits - the suit is barred by Section 4 of Prohibition of Benami Property Transaction Act even assuming the plaintiff proved that he contributed for purchase of the suit property in the name of the first defendant. - HC
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IBC:
Approval of resolution plan - Seeking to restrain the Respondents from proceeding with the Challenge Process - the CoC has approved the Resolution Plan of Respondent No. 3 by majority of 94.96%, does not find any violation of Regulation 39 (1A) of the CIRP Regulations or any other provisions of the Code. - No reason to interfere in the CRIP - AT
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IBC:
Locus Standi of shareholder of the Corporate Debtor to challenge the Resolution Plan - Seeking for forensic audit of the Books of Accounts of the Corporate Debtor, and not to approve the Resolution Plan till the disposal of the Application - CIRP proceedings (proceedings in rem) - subsequent to the approval of the Resolution Plan of the CoC and before the approval by the Adjudicating Authority, no modifications / alterations can be called for as IBC is a time bound process. - NCLT rightly rejected application of the shareholder - AT
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SEBI:
Penalty for violation of Section 15HB of SEBI Act, 1992 - justification for the Tribunal to reduce the penalty below Rs. 1,00,000/- which is the minimum as permissible - Tribunal has not taken into consideration the effect and mandate of Section 15HB of the SEBI Act, 1992 - Order of tribunal modified to levy minimum penalty of Rs. 1 Lac. - SC
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Central Excise:
Method of Valuation - Lead Acid Battery - MRP based value or transaction value - there is no difference in the nature of the clearance made to individual customer wherein the valuation was admittedly done by the appellant under Section 4 A and the nature of clearance made to the dealers. Therefore, the clearance made to dealers is also to be valued under Section 4 A of Central Excise Act, 1944. - AT
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VAT:
Opportunity of hearing was granted or not - By various show cause notices, the Petitioner was called upon to file all the evidences in support of its return of income and furthermore order sheet annexed to the Petition records that the Petitioner’s accountant refused to sign the proceedings sheet in relation to the circular transaction query raised by Respondent No. 2. Therefore, prima facie, the contention of the Petitioner that opportunity of hearing was not given may not be correct. - HC
Articles
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (6) TMI 1301
Seizure of goods alongwith vehicle - evasion of tax or not - goods were being transported on stock transfer basis from the additional place of business to the principal place of business - HELD THAT:- Be that as it may, since the learned counsel for the petitioners has stated that the petitioners have got their prima-facie case and the impugned seizure of the goods and vehicle is in derogation of the provisions of law, therefore, it is deemed appropriate that the liberty be given to the petitioners to file an application for provisional release of the goods as well as the vehicle before the adjudicating authority i.e. opposite party no. 2(Assistant Commissioner, Sector-3(Mobile Squad), State Tax Office, GST Bhawan, Vikas Bhawan, Road, Barabanki) within a period of 7 days from today taking all the pleas and grounds, which are available to them. Petition disposed off.
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2023 (6) TMI 1300
Determination of GST / Assessment under GST - To be followed by scrutiny of returns / assessment u/s 61 or not? - Attachment of Bank account of petitioner - requirement of scrutiny of return submitted by the petitioner for the relevant period. Whether proceedings u/s 74 of APGST Act cannot be independently initiated without having recourse to the scrutiny u/s 61 of the said Act? - HELD THAT:- Section 73 and 74 are not controlled by Section 61 alone as argued by the petitioner. The proceedings u/s 74 can be taken up by resorting to the audit of accounts u/s 65 also - It should be carefully observed that Section 74 starts with the clause where it appears to the proper officer that any tax has not been paid . The word appears has a wider amplitude subsuming in it not only Section 61 and 65 but also any other credible information from a different source. If the intendment of legislature is to make Section 74 bound by Section 61 and 65 alone, that fact would have been clearly depicted in Section 74. In Doypack Systems Pvt Ltd. V. Union of India [ 1988 (2) TMI 61 - SUPREME COURT] the Apex Court observed thus In the present case as already stated supra the phrase where it appears is a free, unfettered and unbound usage made by legislature and therefore in our view, the source for the proper officer to proceed under this provision can be held to be either under Section 61 or 65 or some other information but cannot be constricted to Section 61 or 65 alone to reach Section 74 cannot be accepted. The decision of High Court of Madras (Madhurai Bench) in Vadivel Pyrotech Private Limited s case [ 2022 (10) TMI 784 - MADRAS HIGH COURT] cited by the petitioner can be distinguished on facts. In that case the writ petitioner filed his return for the Assessment Year 2018-19 and later it was taken up for scrutiny by the proper officer u/s 61 of Tamil Nadu Goods and Services Taxes Act (TNGST Act) by issuing notice in Form ASMT 10 dated 22.12.2021 by pointing out certain discrepancies between GSTR3B GSTR 1 and GSTR 2A returns filed by the petitioner calling upon him to pay the tax of of Rs.13,54,250/- along with interest Rs.13,54,250/- along with interest and it was held that It is trite law that when the Act prescribes the method and manner for performing an act, such act shall be performed in compliance with the said method and manner and no other manner. Thus it is clear that the above observation was made by learned single Judge in the factual back ground that at the inception itself the proceedings were taken worth u/s 61 of TNGST Act but not u/s 74 as in our case. Therefore, the above decision is of no avail to the petitioner - in the present case, this point is decided against the petitioner. Whether the attachment of the bank account of the petitioner is illegal? - HELD THAT:- As can be seen that the main allegation under impugned notice dated 06.07.2022 is that the petitioner has passed fraudulent ITC to the purchasers without actual supply of goods/services. In that context while issuing show cause notice to the petitioner, respondent authorities seems to have made provisional attachment of the bank account of the petitioner by resorting to Section 83 of APGST Act.. Since the petitioner has not so far filed his objections/ reply to the notice, at this juncture it cannot be concluded that the attachment is illegal. There are no merits in the writ petition. However, since it is the submission of the petitioner that he received impugned show cause notice only on 16.07.2022 i.e., after expiry of time granted for submitting explanation which was dated 13.07.2022 and though this fact was brought to the notice of the 3rd respondent he refused to receive the explanation and relevant documents, in the interest of justice, it is considered apposite to permit the petitioner to submit his explanation along with relevant material. This writ petition is disposed of giving liberty to the petitioner to file his explanation / objections along with the relevant materials before the 3rd respondent within three (3) weeks from the date of receipt of copy of this order, in which case the 3rd respondent shall receive the said explanation and material and consider the same after affording an opportunity of personal hearing to the petitioner and pass appropriate order in accordance with governing law and rules expeditiously.
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2023 (6) TMI 1299
Refund of input tax credit - rejection on the ground of time limitation - HELD THAT:- Learned counsel for the respondents who has filed his statement of objections does not dispute the said submission made by petitioner s counsel. However he contends that the order of rejection was passed by the Assistant Commissioner prior to the notification dated 15.07.2022 and therefore no fault can be found in the same. Be that as it may be, the fact remains that this Court has already considered the question involved in this writ petition in M/S MANGALORE REFINERY AND PETROCHEMICALS LTD VERSUS UNION OF INDIA, COMMISSIONER OF CENTRAL TAX, THE ASSISTANT COMMISSIONER OF CENTRAL TAXES [ 2023 (1) TMI 1265 - KARNATAKA HIGH COURT] and therefore, even this writ petition is required to be disposed of in terms of the orders passed in the said petition by the Co-ordinate Bench of this Court. The impugned order passed by the 3rd respondent is set aside and the petitioner s application for refund is restored and the 4th respondent is directed to consider the same afresh in accordance with law - Petition allowed.
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2023 (6) TMI 1298
Scope of Supply - work done by the applicant (NHAI) in shifting the transmission lines for the widening of road under the supervision of MVVNL - Applicability of GST on the full amount of work done for shifting the transmission lines by NHAI - payment of same amount of GST on the same transaction to two separate entities, amounting to double taxation or not - HELD THAT:- The applicant is a Central Government entity whose primary work is building roads and bridges. Shifting, dismantling arid raising of transmission lines is done by the applicant as and when required for safe electrical clearances during the widening of the National Highways, which is an ancillary to its main work. In the process of the activity, nowhere any assets are transferred to the applicant and therefore ownership lies with the MVVNL. It is merely an activity where just shifting of power transmission towers/lines is done to widening of the National highways. It is observed that MVVNL is not supplying any material or goods or services to the applicant, except the supply of services of supervision and shut down with GST duly charged thereon, which can be used in the shifting or modification of transmission lines. Every material and labour involved in the work is being purchased by the NHAI or its contractors and ITC is claimed against this transaction and TDS is being deducted by the NHAI on payments made to their contractors. The MVVNL is only supplying the services of supervision and shutdown to the NHAI. It is observed that MVVNL is not a supplier of goods or services in relation to shifting of transmission lines and other assets which are required to be shifted during construction or widening of roads, the work being undertaken by NHAI itself. Hence, there is no relationship between NHAI and MVVNL which can be categorized as that of supplier and recipient except for the services of the supervising the whole operation for which NHAI is paying consideration along with GST leviable thereon. The supplier in the instant operation is the contractor who is undertaking the work of shifting transmission lines and not the MVVNL who are just supplying services of supervision and not that of construction or replacement of transmission lines. MVVNL is not demanding the cost of total project of shifting of transaction lines rather they are only concerned with supervision charges and GST on the estimated project cost. It is nothing but a case of double taxation because the project cost is being borne by NHAI through its contractors where GST is charged and paid and ITC being availed. But by demanding GST only and not the cost of project being undertaken by NHAI, M/s MVVNL have shown utter disregard to canons of taxation - the element of consideration is not involved in the activity and therefore the said activity i.e. shifting of transmission lines for widening of roads is not a supply under Section 7 of GST Act, 2017. Thus, assets constructed by the applicant do not fall under category of goods, thus no supply is involved. Therefore, the applicability of GST does not arise.
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2023 (6) TMI 1297
Scope of Supply - providing food to the employees at subsidized price as per terms and conditions of the employment contract - subsidized deduction made from the salary of employees who are availing facility of food in the factory - consideration of supply of service or not - aplicability of GST on the amount deducted from the salaries of employees - input tax credit on the GST charged by third party contractor for canteen services availed by it for its employees. HELD THAT:- M/s Shriram Pistons and Rings Limited has arranged a canteen facility for its employees, which is run by a Canteen Contractor M/s P.J. Banan. As per their arrangement, part of the Canteen charges is borne by M/s Shriram Pistons and Rings Limited whereas the remaining part is borne by its employees. The said employees portion of canteen charges is collected by M/s Shriram Pistons and Rings Limited and paid to the Canteen Service provider. M/s Shriram Pistons and Rings Limited submitted that it does not retain with itself any profit margin in this activity of collecting employees portion of canteen charges. M/s Shriram Pistons and Rings Limited vide letter dated 15-11-2022 has submitted that more than 2000 employees are working in its factory. The applicant is not liable to pay GST on the amount deducted/ recovered from the employees. Further the applicant is recipient of canteen service to facilitate the employees and Canteen Service Provider raises the Bill of canteen charges inclusive of GST as per the contract. The applicant collects/ recoveres the partial amount from the employees and is required to pay the gross amount inclusive of GST to the canteen service by adding residual amount in the employees portion and is required to pay gross amount of Bill inclusive of GST to the Canteen Service Provider. ITC on canteen charges on the food supplied to employees of the applicant company - HELD THAT:- The proviso of Section 17 (5)(b) stipulates that ITC shall be available on the GST paid where it is obligatory to provide a benefit for an employer to its employees in terms of any law for the time being in force - in view of the above clarification ITC of the GST paid on canteen charges is available to the applicant on the food supplied to the employees of the applicant company as under Section 46 of the Factories Act, it is mandatory to provide canteen facility to the employees.
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2023 (6) TMI 1296
Levy of GST - if goods are supplied as free replacement under guarantee period without any consideration - HELD THAT:- The applicant is engaged in supply of Elastomeric pads without any consideration (free of cost) during the warranty period as mentioned in para 9 of vide P.O. No. 38201145101516 dated 30.04.2021 of Principal Chief Material Manager, South Central Railway to the M/s Prag Industries (India) Pvt. Ltd. It is an admitted fact that the warranty is a promise or guarantee for the goods/services supplied by the applicant. That under guarantee and free replacement no consideration shall be chargeable from the buyer against the supply of replaceable goods, and as such no GST could be charge and payable to the Govt. The replaced items shall be of NIL value. In as much as the consideration for replaced goods has already been included as and when the original supply was made for the first time to the Indian Railways. During the warranty period the goods and service have been supplied to customers as free of charge. No separate consideration is charged and received at the time of replacement. The value of supply made earlier includes the charges to be incurred during the warranty period. Therefore the replacement of the goods and service rendered during the warranty period without consideration does not attract GST separately. The issue has been decided in IN RE: M/S. SOUTH INDIAN FEDERATION OF FISHERMEN SOCIETIES [ 2022 (3) TMI 1299 - AUTHORITY FOR ADVANCE RULING, TAMILNADU] where it was held that the replacement of the goods and service rendered during the warranty period without consideration does not attract GST separately. Thus, GST is not leviable, if goods are supplied as free replacement under guarantee period without any consideration.
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2023 (6) TMI 1295
Exemption from GST - Duty Credit Scrips issued under RoSCTL scheme issued by Directorate General of Foreign Trade - exempt under GST schedule I, SI. No.-122A HSN code 4907 or not - applicability of N/N. 35/2017-Central Tax (Rate) dated 13th October 2017 to all duty credit scrips or not. HELD THAT:- As per the para 3.02 of the chapter 3 of the FTP, Duty Credit Scrips shall be granted as rewards under MEIS and SEIS. The Duty Credit Scrips and goods imported / domestically procured against them shall be freely transferable. The Duty Credit Scrips can be used for: (i) Payment of Basic Customs Duty and Additional Customs Duty specified under sections 3(1), 3 (3) and 3 (5) of the Customs Tariff Act, 1975 for import of inputs or goods, including capital goods, as per DOR Notification, except certain specified items. From this, it is clear that the duty credit scrips are the instruments to award incentives to the exporters with the objective of the export promotion by allowing them to set off the basic customs duty against it. It is also to be noted that the duty credit scrips are not allowed to set off the IGST/CGST/SGST liability. The manner of issue of duty credit for goods exported under the Scheme for Rebate of State and Central Taxes and Levies, subject to such conditions and restrictions as specified herein, in accordance with Government of India, Ministry of Textiles' Notification No. 12015/11/2020-TTP dated the 13th August, 2021 has been discussed in Notification No. 77/2021-Customs (N.T.) dated 24th September, 2021. Duty Credit Scrips issued under RoSCTL Scheme is not taxable falling under HSN code 4907 inserted vide SI. No.-122A under Notification No.35/2017-Central Tax (Rate) dated 13.10.2017. Regarding, whether it is applicable to all duty credit scrips or not? It appears that it is applicable to all the duty credit scrips. It is pertinent to mention that only specific entry has been exempted i.e. Duty Credit Scrips.
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2023 (6) TMI 1234
Condonation of delay of 10 days in filing appeal - Validity of assessment order - time limitation for filing of appeal - HELD THAT:- In the present case, the appeals have, admittedly, been filed within 10 days after the statutory period of 120 days. In such circumstances, there is nothing untoward in the return of the appeals under Rc 344/2023/A1 dated 26.04.2023 from the office of the Deputy Commissioner (ST), GST-Appeal, Chennai -II citing delay beyond the condonable period. Thus, an explanation has been given to the effect that the petitioner was unaware of the orders having been issued as it had been sent to the Consultant's email id and also to the effect that the sole proprietor was unwell at the relevant point in time. The challenge to the orders of assessment rejected - the request for condonation of delay of 10 days is allowed - petition disposed off.
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Income Tax
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2023 (6) TMI 1294
Reopening of assessment u/s 147 - reason to believe - tangible material for purposes of reopening an assessment - necessity of disposing of the objections to the re-assessment - claim of deduction on account of payment made to settle a class action suit - AO observed the same as in the nature of penalty and proposed to disallow u/s 37(1) - HELD THAT:- According to the law, which is applicable to the present case, as it existed before 1st April 2021, with a view to invoke the provisions of section 147 for reopening, AO had to satisfy the jurisdictional condition of his reason to believe that income chargeable to tax had escaped assessment . If the reopening of the assessment is beyond the period of four years from the end of the relevant assessment year, an additional jurisdictional condition has to be satisfied that in a case where an assessment u/s 143(3) of the Act had been completed, the assessee had failed to disclose fully and truly all material facts necessary for assessment during such assessment proceedings. In the instant case, AO has in fact alleged that the petitioner had failed to disclose fully and truly material facts necessary for the assessment for the assessment year 2013- 14. A bald statement made in the reasons recorded would not satisfy the jurisdictional condition as prescribed for purposes of invoking section 147 of the Act. Whether or not there was in fact a failure to disclose fully and truly can be seen from the material on record. In the present case, as stated in the preceding paragraphs, the claim of the petitioner with regard to deduction of on account of settlement of class action suit was not only specifically reflected in the relevant documents but the issue had also been specifically gone into by the AO. A specific query was raised by the Assessing Officer during the scrutiny assessment proceedings as is reflected from the order-sheet dated 16th November 2016 whereby the Assessing Officer had sought specific details of claims made under class action suit (Rs. 161.63 crore) and had sought justification for its allowability. The query so raised was responded to by the petitioner which was before the AO. Finally, an order of assessment came to be passed on 3rd January 2022 wherein the claim was not disallowed. It, therefore, is clear that the issue with regard to the claim of deduction on account of payment made to settle a class action suit was not so embedded in the documents as could not with due diligence have been noticed by the Assessing Officer rather in this case, the claim had been noticed, queries raised, response called, which came to be furnished, and therefore, must be deemed to have been considered. In such a case, it cannot by any stretch of imagination, be said that there was any failure to disclose fully and truly any of the material facts. In the present case, a bald assertion made in the reasons recorded that what was paid was in fact was a penalty would not make the deduction liable to be disallowed in terms of Explanation 1 to section 37 of the Act. For purposes of reference, Explanation to Section 37 envisages that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure. The argument that the petitioner had failed to provide to the Assessing Officer a copy of the plaint/suit filed against the petitioner before the Court in USA which it is alleged constitutes a failure on the part of the assessee to disclose fully and truly a material fact, in our opinion, does not at all impress or appeal to us in any manner. Nothing could have prevented the Assessing Officer from calling for a copy of the pleadings which were filed before the Court in USA if at all it was found to be necessary. Therefore, the argument advanced clearly deserves to be rejected. A reference to the agreement would show that what was agreed to be paid was on account of a pure settlement between the parties. It was also made clear in the agreement that the settlement was being arrived at for purposes of avoiding expense, risk and uncertainty and further that the agreement would not be construed as an admission by the defendants of any wrongdoing or that the plaintiff s claim had any merit or that the defendants have any liability to the plaintiffs or class members on those claims. The agreement also reflects that the same would not be construed as an admission of wrongdoing or liability on the part of any party to the said agreement. Even the order passed by the Court recording approval to the said agreement did not even in the least refer the amount payable in any manner as a penalty amount. A.O. had no reason to believe that the payment made towards settlement of the class action suit was a payment towards a penalty imposed and on that account we hold that there was no reason for the A.O. to believe that income had escaped assessment. In the light of the above to hold that what was paid by the petitioner was a penalty, in fact, would be without any basis and aimed at reviewing an order passed earlier by the AO who had specifically gone into the allowability of the claim. We also have no hesitation in holding that a mere assertion in the absence of any material would not constitute a tangible material for purposes of reopening an assessment. Decided in favour of assessee.
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2023 (6) TMI 1293
Validity of Reopening of assessment - notice issued in name of non-existent entity - factum of amalgamation was brought to the notice of the AO as acknowledged by the DCIT - HELD THAT:- It is not denied that the notice issued under section 148 of the Act was issued in the name of a non-existent entity, i.e., Times Infotainment Media Ltd. which had ceased to exist pursuant to the Scheme of Amalgamation and arrangement having been approved as passed by this Court with effect from 1st April 2013. As not denied, as can also be seen from the material on record, that the factum of amalgamation of TIML was very much within the knowledge of the respondents. If that be so, then issuance of the impugned notice under section 148 in the name of a non-existent entity would render it void. As relying on case of CLSA India Private Limited [ 2023 (2) TMI 469 - BOMBAY HIGH COURT] we hold that the impugned notice issued u/s 148 is unsustainable in law and is accordingly set aside. Decided in favour of assessee.
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2023 (6) TMI 1292
Reopening of assessment u/s 147 - notice after a period of four years - Reasons to believe - Whether case reopened on account of change of opinion ? - HELD THAT:- As the principle of change of opinion cannot be a basis for reopening completed assessments where AO has applied his mind and taken a conscious decision on a particular matter in issue. Moreover, the decision of the AO u/s 143(3) dated 22nd December 2017 is against the Petitioner who has filed an appeal therefrom that is pending adjudication before the CIT (A). A perusal of the reasons recorded by Respondent No. 1 indicates that the Respondent No. 1 has relied upon facts and figures available from the audited account. It appears that there was no tangible material available on record to conclude that income had escaped assessment. The ratio in the case of Ananta Landmark [ 2021 (10) TMI 71 - BOMBAY HIGH COURT] is clearly applicable to the facts of this case. Thus AO has acted in excess of the limit of his jurisdiction to reopen the assessment in the exercise of powers under section 147 r.w.s. 148 of the Act. Decided in favour of assessee.
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2023 (6) TMI 1291
Miscellaneous Application u/s 254 (2) rejected as not covered under the Direct Tax Vivad Se Viswas Act, 2020 ( DTVSV-A ) as it was not filed in pursuance of an appeal dismissed in limine - HELD THAT:- As with regard to the condition in answer to FAQ 61, viz. Appeal dismissed in limine we are of the view that the qualifying words in limine that apparently restrict the eligible assessees for availing settlement under the DTVSV, are contrary to its object and reasons. The Apex Court in the case of UCO Bank, Calcutta [ 1999 (5) TMI 3 - SUPREME COURT ] and Commissioner of Central Excise, Bolpur vs Ratan Melting Wire Industries [ 2008 (10) TMI 5 - SUPREME COURT ] the additional qualification viz. in limine added to the word Appeal is adverse to the assessee, against the mandate of DTVSV-A and thus contrary to law. It would be appropriate that the ratio laid down in the above cases with regard to construing a remedial statute be followed in the present case in as much as DTVSV-A is a beneficial statute. The Delhi High Court in the case of Medeor Hospital Limited v Principal Commissioner of Income Tax [ 2022 (11) TMI 26 - DELHI HIGH COURT ] and Tushar Agro Chemical [ 2021 (7) TMI 1267 - GUJARAT HIGH COURT ] have held that CBDT cannot issue circulars adverse to the assessee. For the reasons aforesaid we hold that the FAQ 61 of the circular 21/2020 dated 4th December 2020 issued by the CBDT to the extent that it restricts appeals to the ones dismissed in limine are not only adverse to the interest of the assessee but also contrary to the object and reasons of DTVSV-A. ORDER: FAQ No. 61 of the Circular 21 of 2020 issued by the Respondent no. 1 is struck down. The impugned rejection order dated 3rd August 2021 passed by Respondent No. 2 is quashed and set aside. The Respondent No. 2 is directed to issue acknowledgment in Form 3 against the application made by the Petitioner in Form 1 and Form 2.
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2023 (6) TMI 1290
Reopening of assessment - migration to new PAN from old PAN - undisclosed time deposits - What was procedure for the cancellation of PAN that the Petitioner failed to follow? - HELD THAT:- The Counsel were unable to point out any regulation, circular or a procedure that could help the assessee cancel the PAN. We also examined the record which evinced that, the Petitioner has filed their returns under the new PAN. The perusal of the notice also indicates that the Respondent No. 1 has failed to acknowledge the correspondence by the Petitioner with the Respondent No. 1. It was the duty of the Respondent No. 1 to have examined and verified the contentions of the Petitioner in respect of cancellation of the old PAN and the returns filed under the new PAN before the issuance of the impugned Order and the impugned notice. A failure of duty of Respondent No. 1 has led to filing of this Petition which in our view could be easily avoided along with its cascading effect on the Courts which are already overburdened. This is yet another in the case of Bhavna Steel v ITO-5(1)(1) [ 2023 (6) TMI 402 - BOMBAY HIGH COURT] where the assessee has sought to cancel the old PAN and the IT department has failed to do it. The Respondents ought to prominently display the steps for cancellation of a PAN on their website apart from sending a link for cancellation in the covering letter when a PAN is provided to an assessee. In the absence of any clear answer to the query and any clear stand of the department, we are prima facie of the view that the Petition deserves to be allowed without further procrastination.
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2023 (6) TMI 1289
Reopening of assessment u/s 147 - notice after a period of four years - Reasons to believe - Whether case reopened on account of change of opinion ? - Reopening based on the order of SEBI in cases of reversal trades and accommodation entries - HELD THAT:- The criteria for reopening of assessment after a period of four years are no longer res integra in view of the judgment of this Court in the case of Ananta Landmark P. Ltd [ 2021 (10) TMI 71 - BOMBAY HIGH COURT ] wherein this Court held that, where assessment was not sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income, but was a case wherein assessment was sought to be reopened on account of change of opinion of AO the reopening was not justified. Where primary facts necessary for assessment are fully and truly disclosed the AO is not entitled to reopen the assessment on a change of opinion. Also held that while considering the material on record, when one view is conclusively taken by AO, it would not be open for the AO to reopen the assessment based on the very same material and take another view. In the present case, the Respondent No. 1 has received information from ITO (I CI) Unit 2(3) Mumbai, that SEBI passed orders in cases of reversal trades and accommodation entries. Even though the Petitioner has explained the transactions done, through note No. 17 submitted along with the Profit and Loss Account and other supporting documents, the Respondents have mindfully taken a stand, that at this stage, they are not required to look into the sufficiency and correctness of the information and can consequently reopen the case. Once the Petitioner provided the all the details, explanations and documents against the reasons for reopening. AO considering the principle of shifting of onus under the evidence act, must necessarily carefully examine the material and then give particulars and reason/s to disbelieve the assessee, whilst rejecting the objections, to shift the onus on the assessee, as failure to do so, does not discharge the onus shifted upon him (AO) by the assessee by submitting all documents and explanations, and provides no reason for the Court to disbelieve the assessee. There is an essential distinction between burden of proof and onus of proof: burden of proof lies upon a person who has to prove the fact and which never shifts. Onus of proof shifts. Such a shifting of onus is a continuous process in the evaluation of evidence. See R V E Venkatachala Gounder v Arulmigu Vishwesaraswami V. P. Temple anr. [ 2003 (10) TMI 639 - SUPREME COURT ] As evinced that there is no live link or nexus with the alleged orders passed by SEBI as alleged by the Respondent. Besides the Respondent has failed to aver the particulars of the information available which has led to the belief that income has escaped assessment. There appears no new tangible material available on record to conclude that income had escaped assessment. In our view it is clearly a change of opinion . Decided in favour of assessee.
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2023 (6) TMI 1288
Reopening of assessment in the name of deceased assessee - Whether a curable defect u/s 292B? - HELD THAT:- The impugned notice for reopening the assessment was issued on a dead person. There are several judgments of different High Courts holding that the notice issued on a dead person or reopening of assessment of a dead person is null and void in law and the requirement of issuing a notice to a correct person is not merely a procedural requirement but a condition precedent for a notice to be valid in law. In the case of Principal Commissioner of Income Tax, New Delhi vs Maruti Suzuki India Ltd. [ 2019 (7) TMI 1449 - SUPREME COURT] the Apex Court has held that the notice issued and the order passed in the name of an old entity is bad in law and that such error was not curable u/s 292B of the Act as the same constitutes a substantive illegality and not a mere procedural violation. This Court holds that the notice and all consequential proceedings in the name of a deceased assessee are null and void - Decided in favour of assessee.
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2023 (6) TMI 1287
Rejection of ITR by the CPC as defective u/s 139(9) - Condonation of delay in filing the application for rectification of error committed in the return of income - removal of defects in return of income - Return of income filed u/s 44ADA declaring the professional income as well as income from trading in shares - HELD THAT:- As decided in ADCC Infocom (P.) Ltd [ 2023 (4) TMI 245 - BOMBAY HIGH COURT] wherein the expression genuine hardship has been discussed, if the facts of the present case are examined, we are of the view that the petitioner has pointed out genuine hardship caused to the petitioner as a result of which the mistake committed in the return could not be rectified, as suggested by the CPC within the stipulated period. As in the present case one of the authorities of Revenue i.e. PCIT-1 passed an order on 07.09.2021 in favour of the petitioner, wherein as specifically observed by the said authority that, in view of the genuine hardship faced due to lockdown in Ahmedabad city due to the corona pandemic, the assessee could not comply with the notice issued by the CPC, Bangalore within the stipulated period and by giving the said finding, the order was passed by the said authority in favour of the petitioner. As observed hereinabove, the said authority was not having jurisdiction to pass said order and therefore the same was withdrawn. Be that as it may, the fact remains the one of the authorities of the Revenue considered the case of the petitioner and thereby granted relief in favour of the petitioner. Thus, in view of the aforesaid facts and circumstances of the present case, the case of the petitioner deserves consideration. Hence, petition is allowed.
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2023 (6) TMI 1286
Reopening of assessment - income of the petitioner HUF be not made subject matter of re-assessment - petitioner while taking exception to the impugned notice and order inter alia submits that subsequent to allotment of new PAN Card in the year 2016 it has all along been filing returns of the income for the succeeding assessment years including 2016-17 with new PAN Card number and amount allegedly deposited in the bank maintained by the petitioner has been well reflected in the return filed for the assessment year 2016-17 and assessed HELD THAT:- There is no jurisdictional error on the part of the Assessing Officer while he passed the impugned order under clause (d) of Section 148A. Nevertheless, it is apposite to observe that the order passed under clause (d) of Section 148A is not the substitute of the order of assessment if any to be passed by the AO during the course of the re-assessment proceedings. AO is statutorily obliged to look into the entire material placed before him before he reaches the conclusion that the income found has escaped assessment warranting re-assessment and tax thereupon. Consequently, we though decline to interfere but direct the Assessing Officer to extend liberty to the petitioner to file complete documents with reference to and in context of the amount found deposited in the bank account of the petitioner mentioned above and such other documents as he may be advised to file. The Assessing Officer is hereby directed to process reassessment with due advertence to the record placed before him, pursuant to the notice under Sec.148.
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2023 (6) TMI 1285
Unexplained investments made by the payment in cash - assessee could not specifically explain the source of making payment to Sh. Jagat Bhushan Batra - HELD THAT:- AR had placed on record a copy of the assessment order framed in the hands of Sh. Rameshwar Havelia u/s 153A(1)(b) r.w.s.143(3) by DCIT, Central, Circle, Dehradun (who is the same officer assessing the assessee also), wherein, the AO of Sh. Rameshwar Havelia had categorically stated that it is Sh. Rameshwar Havelia, who had made cash payment of Rs. 1 crore to Sh. Jagat Bhushan Batra. Hence, the receipt of money in cash by the assessee from Sh. Rameshwar Havelia is proved beyond doubt by the orders of the Income Tax Department itself. Hence, the source for making payment to Sh. Jagat Bhushan Batra of Rs. 1 crore in cash stands clearly proved and explained. Hence, in our considered opinion, there cannot be any unexplained investment made by the assessee in the sum of Rs. 1 crore in the facts and circumstances of the instant case. Since the search assessment order of Sh. Rameshwar Havelia for assessment year 2015-16 could not be placed on record by the assessee before the CIT(A) as it was obtained by him after passing of order of learned CIT(A), this fact could not be addressed by the assessee before the learned CIT(A). These are only orders of the Income Tax Department, which clearly shows a divergent stand taken by the very same AO for the very same assessment year for two different assessees on the very same transaction. Hence, we direct the learned AO to delete the addition made in the sum of Rs. 1 crore paid in cash to Sh. Jagat Bhushan Batra. Decided in favour of assessee. Capital gain computation - denial of deduction on account of cost of acquisition and expenses incurred in connection with transfer of property - HELD THAT:- A sum as paid by the assessee to Sh. Sandeep Kumar towards demarcation of land would be construed as cost of improvement eligible for deduction while computing capital gains. Further, the commission payment to Sh. Sandeep Kumar for sale of two plots is to be construed as expenses incurred in connection with transfer and eligible for deduction while computing capital gains. Payment as commission to Smt. Rajni Aswal for sale of third plot, we find that the assessee has placed on record the confirmation from Rajni Aswal together with her income tax return and computation of total income evidencing the fact of offering the commission income in her hands. These documents are enclosed - We hold that this commission payment is to be construed as expenses incurred in connection with transfer of land and accordingly eligible for deduction while computing capital gains. Thus out of the total disallowance made by the AO while computing capital gains expenses incurred for performing Puja of the land as this has got nothing to do with the property and cannot be construed as an expenses incurred in connection with the transfer of the property and sum paid to a civil contractor, Sh. Sandip Kumar from whom the work of demarcation and construction of partition for three plots sold was carried out need to be disallowed and remaining amounts should be allowed as deduction while computing capital gains.
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2023 (6) TMI 1284
Addition u/s 143(3) - rejecting the books of accounts of the assessee u/s 145(3) - HELD THAT:- As during the appellate proceedings assessee has not furnished any evidences, where the ld. CIT(A) relied on the detail findings and reasons given by the ld. AO in his assessment order which have not been explained by the assessee and no evidence to the contrary has been submitted either at the stage of assessment or appellate. Before us taking into consideration the facts and circumstances of the case and the submissions by the ld. DR, the Bench confirm and uphold the order of the ld. CIT(A) as per rejection of books of accounts of trading of bullions and jewellery of the assessee u/s 145(3) of the Act by invoking the provisions of Section 145(3) of the Act as the assessee did not produced books of account, bills/vouchers of all the expenses even before us and the addition made by the AO amounting is hereby confirmed - Decided against assessee.
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2023 (6) TMI 1283
Mis-match in the Form No. 26AS - Mis-match arises due to TDS deposit under wrong major head - denial of credit of TDS - HELD THAT:- As deductor has deducted the tax at source and deposited the same which is appearing in the challan status in TIN Website but the same is not appearing in 26AS of the assessee. It is the case of the assessee is that these TDS deposits belongs to him on the basis of manual form No. 16 issued by the employer, therefore, because these TDS amounts do not reflect in 26AS of the assessee. Since there is a mis-match of amount deposited by Texl Export Pvt. Ltd. and TDS reflected in 26AS of the assessee, the CIT(A) has remanded the matter to the file of A.O. for de-novo verification. No reason to interfere with the direction of the CIT(A) to the A.O. for the de-novo verification, accordingly, find no merit in the grounds of Appeal of the assessee. We deem it fit to direct the A.O. to comply with the directions of CIT(A) and pass order in accordance with law within six months from the date of the receipt of this order. Thus, the Grounds of Appeal of the assessee are dismissed.
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2023 (6) TMI 1282
Addition u/s 56(2)(viib) - share capital and premium received by the assessee - revenue dismissing the DCF method of valuation as adopted by assessee - HELD THAT:- Usage of DCF method for the purpose of valuation of shares is an approved method in Rule 11U and 11UA of the Income Tax Rules. On perusal of the said Rules, an option is given to the assessee to choose either of the methods prescribed therein. Hence, the rejection of valuation report submitted by the assessee using DCF method by the lower authorities is hereby dismissed. As per DCF method of valuation, the fair market value of the shares have been arrived at Rs. 1136.92 and Rs. 992 per share by Chartered Accountant namely Sh. A.K. Agarwal and Sh. Deepak Kumar Agarwal respectively. Assessee had ultimately issued shares to the aforesaid five share holders at a price below the fair market value of shares determined by the valuers in the valuation report. Obviously, the fair market value determined in the valuation report by the valuers represent the maximum value beyond which the shares could not be issued by any company. Hence, we do not find any justification in the action of the lower authorities in dismissing the DCF method of valuation and substitute it with any of the method of valuation and making addition u/s 56(2)(viib) of the Act. Issue in hand is squarely covered by the decision of this Tribunal in the case of Cinestaan Entertainment (P.) Ltd.[ 2019 (6) TMI 1367 - ITAT DELHI] wherein it was held as per section 56(2)(viib) of the Act read with Rule 11U and 11UA of the Rules, the assessee has an option to do valuation of shares and determine fair market value either using DCF method or NAV method and Assessing Officer cannot examine or substitute his own value in place of value determined. When shares were issued at premium based on valuation report from prescribed expert using DCF method of valuation, the said sum cannot be disregarded merely because the projection of revenues thereon did not match with actual revenues of subsequent years. We direct the Ld. AO to delete the addition made u/s 56(2)(viib) - Ground raised by the assessee is allowed.
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2023 (6) TMI 1281
Income tax demands post approval of resolution plan - treatment to remaining demands and liabilities consequent to the NCLT approved Resolution Plan - HELD THAT:- As decided in Ghanshyam Mishra Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Ltd.[ 2021 (4) TMI 613 - SUPREME COURT ] NCLT order approving the Resolution Plan is binding upon the Central Government including the statutory authorities like the Income-tax Department and all claims pertaining to the period prior to the date of order of NCLT stand extinguished. Thus statutory demands of the Revenue stand extinguished consequent to approval of Resolution Plan and vesting of the Management of the company in the hands of Successful Resolution Applicant. The provision of subsection (1) of Section 31 of the IBC and judgment of Hon ble Supreme Court relied upon by the learned AR leave no doubt that all the claims of Revenue for the period prior to institution of CIRP stand extinguished. Moreover, in the case in hand even demands of Department have been considered, adjudicated and payments have been made to the Income-tax Department consequent to the Resolution Plan. Consequently, appeals of Revenue are left with no merit and the same are dismissed.
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2023 (6) TMI 1280
TP Adjustment - comparable selection - TPO included APITCO Ltd. as comparable for bench marking the international transaction - assessee is primarily engaged in the business of providing integrated range of Project Management, Cost Management and Management Consultancy Services to any entity engaged in the field of construction projects - HELD THAT:- APITCO provides numerous services which are not provided by the assessee, the assessee is not involved in to skill development entrepreneurship development and training, research studies, asset reconstruction and management Services, Energy Related Service, Tourism Infrastructure Development and Environmental Management. By going through the financial statement of the company for the Financial Year 2011-12, it is found that the APITCO is held by public share holder whereas the assessee is held by Private Limited Company. Services description suggests that APITCO works predominantly on government initiative project. More than 75% of the Revenue earned by the APITCO in the Financial Year 2011-12 was from the activities like Skill Development, Cluster Development, Research Studies, Micro Enterprises Development, Environmental Management etc. But the assessee is only engaged in providing Project Management, Cost Management and Management Consultancy Services. Thus, functionally APITCO is not a comparable company to the assessee. We are of the opinion that APITCO is functionally different and the same should be excluded from the list of comparables selected by the TPO.Appeal of the assessee is allowed.
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2023 (6) TMI 1279
Denying the exemption u/s. 11 - non-filing of Auditor s Report in Form No. 10B along with the return of income - HELD THAT:- In the present case clearly shows the audit report itself was dated 21-11-2018 which demonstrates that at the time of filing return of income audit report was not ready, consequently we can say the claim u/s. 11 was not quantified. We note that it is a substantial failure of the assessee in getting the books of account audited before prescribed due date and also before filing the return of income. Thus, there is no dispute, the audit report was not ready before filing return of income, in the absence of which the assessee however, claimed exemption u/s. 11 of the Act without auditor s quantification. Thus, no infirmity in the order of NFAC, Delhi in confirming the intimation issued by the CPC, Bangalore u/s. 143(1) of the Act denying the exemption u/s. 11 of the Act. Thus, the grounds raised by the assessee fails and are dismissed.
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2023 (6) TMI 1278
Revision u/s 263 - as per CIT(A) interest income earned by the assessee out of surplus funds is not eligible for deduction in terms of provisions of section 80P(2)(d) - HELD THAT:- We are of the considered view that section 80P(4) is of relevance only in a case where the taxpayer, who is a co-operative bank, claims a deduction u/s 80P which is not the facts of the present case. Therefore, we find no merits in the aforesaid reasoning adopted by the PCIT vide impugned order passed u/s 263. Claim of deduction u/s 80P(2)(d) it is also pertinent to note that all co-operative banks are co-operative societies but vice versa is not true. We find that the coordinate benches of the Tribunal have consistently taken a view in favour of the assessee and held that even the interest earned from the co-operative banks is allowable as a deduction under section 80P(2)(d) of the Act. AO has rightly allowed the claim of deduction under section 80P(2)(d) of the Act in respect of the interest earned from the co-operative banks and thus the assessment order cannot be held to be erroneous. As in Malabar Industrial Co. Ltd.[ 2000 (2) TMI 10 - SUPREME COURT ] held that in order to invoke section 263, the assessment order must be erroneous and also prejudicial to revenue, and if one of them is absent, i.e., if the order of the Income-tax Officer is erroneous but is not prejudicial to Revenue or if it is not erroneous but is prejudicial to Revenue, recourse cannot be had to section 263 of the Act. Since both the conditions for invoking the provisions of section 263 of the Act are not satisfied in the present case, therefore the impugned order passed by the learned PCIT under section 263 of the Act is quashed - Decided in favour of assessee.
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2023 (6) TMI 1277
Deduction u/s. 80P - income derived from business activities including interest income earned from fixed deposits with other cooperative banks - HELD THAT:- As relying on assessee own case [ 2020 (12) TMI 341 - ITAT CHENNAI] we are of the considered view that the assessee is entitled for deduction u/s. 80P(2)(a)(i) in respect of income derived from its business activity including interest income earned from fixed deposits with other cooperative banks/societies. CIT(A), after considering relevant facts has rightly directed the AO to delete additions made towards disallowance of deduction claimed u/s. 80P(2)(a)(i) and thus, we are inclined to uphold the findings of the ld. CIT(A) and dismiss appeals filed by the revenue.
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2023 (6) TMI 1276
Addition u/s 14A - notional expenses incurred for earning of exempt income - Scope of newly inserted explanations to Section 14A - HELD THAT:- Where the assessee has not derived any tax exempt income from investments, then no disallowance is attracted u/s 14A of the Act. Recent decision in the case of PCIT Vs. Era Infrastructure (India) Ltd [ 2022 (7) TMI 1093 - DELHI HIGH COURT] wherein, it has been held that the aforesaid explanation inserted to Section 14A of the Act is applicable prospectively. Appeal of assessee allowed.
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2023 (6) TMI 1275
Revision u/s 263 - as per CIT(A) assessment order passed u/s 147 of the Act as erroneous and prejudicial to the interest of the revenue - As assessee company had a balance of investments in unquoted shares on which it had earned a dividend income which the assessee company had claimed as exempt income in the return filed in response to the notice u/s 148, but AO had not made any disallowance u/s 14A of the Act r.w.r. 8D - HELD THAT:- Assessment was reopened on a particular issue of having received of Rs. 10,00,000/- as accommodation entry from entry provider, whose statement was recorded in a search action exercised in the case of some third party. AO examined that particular issue and made addition in respect of the said entry received by the assessee. The issue relating to any other transaction was not the subject matter of the reassessment proceedings. Assessment in this case was reopened to examine a particular issue and that issue was examined by the Assessing Officer and the addition was made and ultimately the matter was settled by the assessee by availing Vivad Se Viswas Scheme. The items/issue on which the PCIT has sought to revise the order were not the subject matter of the reassessment order, therefore, in the light of the decision of Alagendran Finance Ltd [ 2007 (7) TMI 304 - SUPREME COURT ] it cannot be said that the reassessment order passed by the AO was erroneous, therefore, the revision jurisdiction exercised by the ld. PCIT, in this case, cannot be held to be justified. Decided in favour of assessee.
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2023 (6) TMI 1274
Addition of share application money u/s 68 - Valuation of shares u/s 56(2)(viib) - Addition made based on the bank statements and lack of creditworthiness of the applicant parties - CIT(A) held that the assessee has received Part in the earlier years and held that no addition u/s 68 called for in the current year and part amount be treated u/s 56(2)(viib) - HELD THAT:- CIT(A) has not brought out any defect in the methodology and summarily rejected the valuation made under the prescribed rules. Hence, we cannot support the decision of the ld. CIT(A) on this issue. The appeal of the assessee on this ground is allowed. Additions u/s 68 - Low profit ratio - HELD THAT:- With regard to Rs. 9,00,000/- received on 04.09.2014 by the assessee during the year which has been confirmed by the ld. CIT(A) u/s 68, we find that the assessee has discharged his onus before the revenue authorities. AO and the ld. CIT(A) rejected the explanation of the assessee solely based on the limited issue of low profit - There were no enquiries made nor any evidence to reject the documents/evidences filed by the assessee. Hence, we hold that no addition u/s 68 is called for in this case.
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2023 (6) TMI 1273
Deduction u/s. 80P(2)(a)(i) - interest income earned from the credits given to its members and interest income earned from the funds parked/invested in the commercial bank i.e United Bank of India - claim denied on interest income earned from the funds invested in the United Bank of India stating that the said interest income was not earned by the assessee from the activity of providing credit facilities to its members but the same was an interest income from the funds deposited with commercial bank - HELD THAT:- The interest which accrues on funds not required immediately by the assessee for its business purposes and which have been invested as investment in commercial banks cannot be said to be attributable either to the activity mentioned in section 80P(2)(a)(i) of the Act or in section 80P(2)(a)(iii) of the Act and that the said interest income is liable to be taxed u/s 56 - the claim of the assessee that the said interest income earned by the assessee from its funds deposited in commercial bank is eligible for deduction u/s 80P(2) of the Act, has rightly been rejected by the lower authorities. Interest income be treated as business income of the assessee has also been rightly rejected by the lower authorities in the light of the aforesaid decision of the hon ble Supreme Court in the case of Totgar s Co-operative Sale Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] . Interest earned on the bad debt fund and reserve fund maintained as per the provisions of section 81 82 of the West Bengal Co-operative Societies Act, 2006 - As in South Eastern Railway Employees Cooperative Credit Society Ltd [ 2016 (9) TMI 814 - CALCUTTA HIGH COURT] held that the expenditure incurred for earning of interest income from the funds parked in the commercial bank is liable to be set off/deducted from the said income, which is the amount of interest paid for that funds to the members. Such interest expenditure held to be deductible out of the interest income earned from deposits in the commercial bank, is further liable to be deducted from the business expenditure of the eligible business and after subtracting the said interest expenditure related to the deposits in the commercial bank, the business profits of the assessee would increase which would be accordingly eligible for deduction u/s 80P of the Act. Thus the matter is remanded to AO with a direction (a) to work out the interest earned on the bad debt fund and reserve fund maintained as per the provisions of section 81 82 of the West Bengal Co-operative Societies Act, 2006 and to allow benefit u/s 80P on that interest income and (b) to ascertain the interest paid to the members for the purpose of earning the interest on the funds deposited in the commercial bank and to allow deduction of such interest from the interest income earned by the assessee from investment in the commercial bank and (c) to subtract/deduct such interest from the expenses of eligible business and the consequent increased amount of profits of eligible business will be eligible as deduction u/s 80P of the Act. Thus, Ground Nos.1 to 3 are accordingly partly allowed in favour of the assessee. Income from holiday homes - Whatever the income earned by the assessee from the activity of providing of credit facilities to its members, is eligible for deduction u/s 80P - if such income is further invested for any other activity, the income generated from such an activity cannot be said to be attributable to the activity of providing credit facilities to its members. Therefore, this contention of the ld. counsel is not tenable. In view of this, it is held that the income from holiday homes is to be treated as business income of the assessee but the same will not be eligible for deduction u/s 80P - However, the assessee will be entitled to claim the deduction of admissible expenditure/depreciation etc. on such business income from holiday homes.
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2023 (6) TMI 1272
Estimation of income - Bogus purchases - commission expenditure u/s 69C of the Act @ 3% - HELD THAT:- As it is not in dispute that the assessee had made bogus purchases from Giriraj Global Limited and bogus sales to Barsana Fabtex Pvt. Ltd. Hence, to that extent two accommodation entries had indeed been obtained by the assessee, i.e., one for purchase and one for sales. It is not in dispute before us that the average rate of commission for obtaining accommodation entry is 1.5% per transaction. Hence, we hold that the ld.CIT(A) was justified in upholding the addition made on account of commission expenditure u/s 69C of the Act @ 3% - We do not deem it fit to interfere in the said order of the ld.CIT(A) in this regard. We are in agreement with the observation of the ld.CIT(A) that out of bogus purchase made from Giriraj Global Limited, the assessee had made bogus sales to Barsana Fabtex Pvt. Ltd., i.e., bogus sales has been made out of bogus purchases. When both the transactions are bogus, only the profit element embedded thereon could be brought to tax. This has been rightly done by the ld.CIT(A). Determination of gross profit @ 11.69% on the corresponding purchases of Rs. 27,22,028/- attributable to genuine sales made to Anirudh Raj Builders Pvt. Ltd. - We find that though the purchases made from Giriraj Global Limited is bogus, the sale made to Anirudh Raj Builders Pvt. Ltd. is genuine and this fact is not doubted by the Revenue. Hence, it would be just and fair to bring to tax only the profit embedded in the value of such disputed purchases. This profit has been consistently estimated by this Tribunal @ 12.5% on the value of disputed purchases which has been approved by the Hon ble Bombay High Court and the Hon ble Gujarat High Court. Hence, we deem it fit and appropriate, in the facts and circumstances of the instant case, to estimate the profit element embedded in the value of disputed purchases at 12.5% instead of 11.69% made by the ld.CIT(A). Accordingly, the grounds raised by the assessee as well as the Revenue on merits are disposed of in the aforesaid manner.
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2023 (6) TMI 1271
Penalty u/s 271(1)(c) - Non specification of clear charge - HELD THAT:- There is no dispute with regard to the fact that the notice issued by the AO does not disclose the specific charge. As in the case of Pr.CIT vs M/s. Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT ] has decided the issue in favour of the assessee. Thus facts are not under dispute regarding the notice being defective. Therefore, we, hereby delete the impugned penalty imposed u/s 271(1)(c) - Decided in favour of assessee.
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2023 (6) TMI 1270
Income accruing or arising in India - bonus is received by the assessee form the Singapore Company in respect of employment services rendered by the assessee in Singapore - Denying relief u/s 90 - HELD THAT:- Assessee herein was a non resident when he was rendering employment in Singapore Company in pursuance of which employment, the assessee was given bonus in June 2011. Also during the period for which bonus is received, the assessee was serving only in Singapore and not in India. On perusal of the provisions of section 5(1) of the Act, the said bonus income would have to be construed as income accruing or arising to him in India and it is also received during the year by the assessee. Hence, the bonus received by the assessee, being a resident would be taxable for the year under consideration in India. As in terms of section 90 entire taxes paid by the assessee in Singapore for the very same salary and bonus component, would be eligible for tax credit for the assessee. We are unable to apprehend ourselves to accept to the tax credit calculation determined by the ld. AO in the instant case by working out @5.92% which has no support from the provisions of Act or in DTAA. Hence, the said determination of foreign tax credit by the AO is hereby rejected. Direct the ld AO to allow the foreign tax credit in full in respect of tax paid in Singapore for the very same salary and bonus income. Ground raised by the assessee are allowed.
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2023 (6) TMI 1269
Reopening of assessment - bad debts written off disallowed - HELD THAT:- The details of bad debts written off were called for by Ld. AO during the course of original assessment proceedings. The assessee had supplied the requisite details. After considering the assessee s reply, AO disallowed bad debts to the extent of Rs. 204.26 Lacs and chose not to make any further addition on this account. There is no further discussion whatsoever in the assessment order, in this regard. When the complete details were asked for and the same were duly furnished by the assessee and Ld. AO chose to disallow a part of the same, it could rightly be concluded that the issue was duly considered by AO with due application of mind and a conscious decision was taken in the matter. To reopen the already concluded assessment on the same very issue would be nothing but review of the order and on mere change of opinion which is impermissible as per the decision in the case of CIT vs. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] . Therefore, impugned order could not be faulted with and we concur with the same.
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2023 (6) TMI 1268
TP Adjustment - Arm's Length Price (ALP) - US-AE transactions and Non-AE transactions - transaction with US-AE as agreed in the MAP may be considered for the transaction with US-AE for such period that is not covered in the MAP - assessee is praying for the rates agreed in the MAP with the US-AE transactions during April to December 2012 to be considered for the transactions between January to March 2013 which is relevant FY to the Assessment Year under consideration which was not considered in MAP - HELD THAT:- It is obvious that the transaction with an entity is to be considered in a consolidated way, and cannot be bifurcated according to the calendar year prevalent in that contracting state. We therefore direct the Ld.AO/TPO to consider the rate applied in the MAP for the transactions that entered by the assessee with US-AE for the period April 2012 to December 2019 to the transactions that the assessee entered with the US-AE during January 2013 to March 2013. In respect of non-US transaction, we note that the assessee in the TP study report gave bifurcation of the revenue earned from USAE and non-AE. The relevant extract is placed at page 2 of the 92CA order. Both the transactions are in respect of SWD segment. We note from the order passed u/s. 92CA that the ALP was computed only having regards to the US-AE transaction. In other words, the Ld.TPO treated the non-AE transaction to be at arms length. This we notice from the computation of ALP of the 92CA order wherein the price received considered by the Ld.TPO pertains to the US-AE transaction alone. However in the event there is any transaction with a non-AE is considered in a consolidated way in the said amount by the Ld.TPO, the same may be considered in accordance with the ratio laid down in case of J.P. Morgan Services India (P.) Ltd. ( 2019 (4) TMI 219 - BOMBAY HIGH COURT ). Decided in favour of assessee. Depreciation on computer servers and software at 15% by considering it as plant and machinery - HELD THAT:- We find that the issue is no longer res-integra and has been decided in the case of Mphasis Ltd. [ 2014 (8) TMI 690 - KARNATAKA HIGH COURT] wherein held that computer accessories such as switches and routers form part of peripherals of computer system and hence entitled to depreciation at 60%. Following the same, we allow this ground by the assessee. Direct the Ld.AO to grant the depreciation to assessee at 60% on computer servers, software and networking equipments as it falls under the category computers. Computation of deduction u/s. 10AA - AO reduced the expenditure incurred in foreign currency and communication expenses and insurance expenses as not contributable to the delivery of articles or things or computer software outside India - HELD THAT:- We note that this issue is no longer resintegra by virtue of the decisions passed in case of CIT vs. Mphasis Ltd. [ 2019 (11) TMI 1383 - SUPREME COURT] held that since the services rendered were in respect of software development or production of computer software which are technical in nature, the said expenses incurred in foreign currency for providing technical services outside India, cannot be excluded from the export turnover. We direct the Ld.AO to compute the deduction u/s. 10AA in accordance with the principles laid down by Hon ble Supreme Court hereinabove. Non-grant of foreign tax credit- AR submitted that relevant documents in respect of the same were filed before the Ld.AO however the same has not been considered - HELD THAT:- In the interest of justice, we remand this issue to the Ld.AO to verify the documents and to consider the claim in accordance with law. Non-grant of MAT credit - AO has not granted the MAT credit to the extent of difference assessed tax computed under normal provisions of the act and MAT computation - HELD THAT:- We remand this issue to the Ld.AO and direct to compute the MAT credit available to the assessee in accordance with law. Assessee is directed to file relevant details in respect of the same.
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2023 (6) TMI 1267
Addition on account of profit from future options - assessee has failed to tender evidence and explanation in this regard - assessee has stated that the figure mentioned in his ledger with regard to individual share brokers and that ascertained in the SCN are different and imaginary - CIT-A deleted the addition as AO 's working of net gain from the brokers gain/loss statement is misleading figure and not the actual profits - HELD THAT:- The main reason for discrepancies as analysed by the CIT(A) and noted by CIT(A) that in the working profits from Motilal Oswal Sec. Ltd., all the transactional value of F O rolled over was misread as profits by the AO - Once this column of rolled over F O transaction are considered properly, the assessee s profit working was found to be correct. Similarly, in the case of Jainam Share, the share trading and commodity trading transactions were added with F O transactions leading to incorrect loss figure. CIT(A) held that the difference in profits worked out by the AO from Future Option transactions are incorrect and not sustainable. Thus, the addition was deleted and only addition pertaining to incorrect loss computation by the assessee was confirmed by ld CIT(A). There is no infirmity in the order passed by ld CIT(A). Grounds of appeal of the Revenue are dismissed. Unexplained increase in capital - CIT(A) deleted the addition as held that the capital accumulation was fully explained by assessee on the basis of capital in the Income Tax Return and accumulated incomes duly shown in the return of income - HELD THAT:- The assessee has furnished summary of capital balance starting from AY 2011-12 taking capital as on 31.03.2011 and duly explained capital accumulation till current assessment year. CIT(A) after considering submissions and explanations of the assessee, observed that the capital accumulation was fully explained by the assessee on the basis of capital in the Income Tax Return of assessment year 2011-12 and accumulated incomes duly shown in the return of income for assessment years 2012-13, 2013- 14, 2014-15 and current assessment year. In the remand report on this issue, the Assessing Officer has not given any adverse comments, therefore CIT(A) held that the addition is not sustainable in the eye of law and deleted the addition. We have gone through the above findings of ld CIT(A) and noted that conclusions arrived at by the CIT(A) are correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss ground No.2 raised by the Revenue. Addition of investments in Future Option and equities - CIT-A deleted the addition - HELD THAT:- No concrete findings of defects in assessee s submission could be pointed out by the assessing officer. AO had accepted the withdrawals from firms and bank transfers upto Rs. 62,95,655/-and adding the profits on F O, STCG, LTCG and other profits duly adds upto investments of Rs. 1,49,96,114/-. Thus, assessee s explanation of source of fund for Rs. 1,49,65,879/- was found to be duly explained. Hence, CIT(A), based on the above facts, held that there is no case for sustaining addition as unexplained investment, therefore CIT(A) deleted the same. As gone through the above findings of CIT(A) and noted that conclusion reached by ld CIT(A) is correct therefore we agree with the findings of ld CIT(A) and dismiss ground No.3 raised by the revenue.
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2023 (6) TMI 1266
Levy of penalty u/s 271(1)(c) - Addition confirmed by CIT(A) for concealment of income - HELD THAT:- We find that the quantum proceeding and the penalty proceeding are different. Any addition or disallowances made under quantum proceeding do not ipso facto empower the revenue authority to levy penalty u/s 271(1)(c) - In the penalty proceeding it has to be proved by the revenue based on cogent material that the assessee has either concealed income or furnished inaccurate particulars of income. Disallowances made during the quantum proceeding is of interest expenses which was considered as excessive by the Revenue authority - What is transpired that it is not the case that claim of the assessee altogether found incorrect or assessee has not incurred such interest expenses. As such it is a case where revenue authority was of opinion that the assessee was paying interest at excessive rate as compared to market rate. Hence, in our considered opinion, the same does not amount to concealment of income or furnishing incorrect particular of income. Penalty u/s 271(1)(c) of the cannot be levied merely for the reason that certain claim made by the assessee is not allowable or excessive in the opinion of revenue authority. In holding so we draw support and guidance from the judgment of Reliance Petroproducts Pvt .Ltd [ 2010 (3) TMI 80 - SUPREME COURT] The addition made was based on estimation of reasonable rate of interest. As such the assessee paid interest at different rate, the AO estimated different and the learned CIT-A further estimated different rate of interest. It settled position of law by the various High Court that the no penalty under section 271(1)(c) can be sustained in case of estimated addition. See Norton Electronics System Pvt. Ltd [ 2014 (2) TMI 606 - ALLAHABAD HIGH COURT] - Thus in view of the above discussion we are of the opinion that no penalty u/s 271(1)(c) of the Act can be levied on addition/disallowances of interest expenditure found to excessive as compared to market rate. Nature of expenses - computer repair maintenance expenses and excess depreciation - purchase of computer to be treated as revenue or capital expenditure - HELD THAT:- Again it is case of difference of opinion where assessee claimed certain deduction in the return of income which was not accepted by the AO. Hence, the question of concealment of income or furnishing inaccurate particular of income does not arise as held by the Hon ble Supreme Court in case Reliance Petroproducts Pvt .Ltd (supra). Therefore, we are of the opinion that no penalty under section 271(1)(c) of the Act can be levied on addition/disallowances of computer repair maintenance expenses and excess depreciation. Disallowances against Credit card expense and computer expenses respectively for the reason that same were either not supported by the documentary evidences or held as personal in nature - The question has been answered in preceding paragraph of this order that the quantum and penalty proceeding are different and any addition/disallowances made in quantum proceeding do not ipso facto empower the revenue authority to levy penalty under section 271(1)(c) - As such revenue authority have to prove based on cogent material that the assessee has concealed income willfully with mala fide intension. There is no such finding of the Revenue authority in the penalty proceeding. Further considering the amount involve we do not agree with contention of the revenue of authority that the assessee concealed his income by claiming deduction of impugned credit card expense and computer expenses. We hereby set aside the finding of the learned CIT(A) and direct the AO to delete the penalty levied - Decided in favour of assessee.
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2023 (6) TMI 1265
Disallowance being 10% of office expenses - HELD THAT:- As we note that ITAT Ahmedabad in the assessee s own case for assessment year 2007- 08 [ 2010 (7) TMI 1222 - ITAT AHMEDABAD] allowed the appeal of the assessee on this identical issue as held no quantum of amount is specified as to how which expenditure was not supported by any bills/vouchers. AO has also not pointed out as to which of the expenditure was inadmissible in nature. It, therefore, appears that the AO has made ad hoc addition of 15% out of the total expenditure. - Decided in favour of assessee. Disallowance of Attimari Coolie expenses - CIT(Appeals) held that considering the fact that the entire expenditure has been made in cash, the genuineness of expense cannot be verified, accordingly disallowed 25% of such expenses u/s 37 - HELD THAT:- As decided in assessee own case [ 2018 (7) TMI 2312 - ITAT MUMBAI] as held as the assessee filed ledger account of Attimari Coolie Expenses and also vouchers for payment of such charges on sample basis.Going by the decision of G.G. Joshi [ 1993 (9) TMI 39 - GUJARAT HIGH COURT] and findings of CIT(A), we find no infirmity in the order of CIT(A). Hence, this issue of Revenue s appeal is dismissed. Inclusion of excise duty component in the closing stock of consumables - HELD THAT:- As excise law, an assessee incurs liability to pay excise duty only upon both events taking place, namely, manufacture of excisable goods and removal of excisable goods and for purpose of Income-tax Act, position in law is not different. Therefore, excise duty cannot be included in value of closing stock of finished goods at end of accounting period. In view of the above decisions including one rendered by the jurisdictional Gujarat High Court in the case of Narmada Chematur Petrochemicals [ 2010 (4) TMI 1198 - GUJARAT HIGH COURT] ground number 4 of the assessee s appeal is allowed. Disallowance out of consultancy expenses by treating the expenses as capital in nature - HELD THAT:- The assessee has produced copy of the contract with M/s B.J. Services for our perusal as wellwhich indicates that these expenses have been incurred for carrying out high pressure pneumatic testing of piping system by use of liquid / gaseous nitrogen and the same have been incurred during the course of business of the assessee. As in the appellate order, Ld. CIT(A) has not given any specific reason why these expenses are required to be capitalized by the assessee, incurred during the course of execution of contract of the assessee with M/s Toyo Engineering. Therefore, services are revenue in nature - CIT(A) also required the assessee to capitalize some other expenses viz. management consultancy for software development and management consultancy fee for finance matters etc., however no specific reason has been assigned why the above expenses were required to be capitalized by the assessee. We are of the considered view that the expenses are revenue in nature and in the light of above discussion, ground Number 5 of the assessee s appeal is allowed. Penalty u/s 271(1)(c) - ITAT has restricted the disallowance to 25% of the expenses on estimated basis - HELD THAT:- In the case of Vision Research Management (P.) Ltd [ 2014 (11) TMI 1228 - ITAT LUCKNOW] ITAT held that imposition of penalty upon assessee u/s 271(1)(c) on basis of ad hoc and estimated disallowance/addition, without bringing any clinching material suggesting concealment of income or furnishing of inaccurate particulars of income, was not justified. Again, in the case of Gurunanak Oil Agency [ 2013 (3) TMI 718 - ITAT JODHPUR] held that where additions were based on estimated disallowance of expenses, penalty under section 271(1)(c) could not be imposed. In view of the above, we are of the considered view that this is not a fit case of imposition of penalty. Decided in favour of assessee.
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Benami Property
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2023 (6) TMI 1264
Joint properties purchased by husband and wife [housewife] - legal owner - exclusive right over the properties - Property purchased out of the monies earned by the plaintiff [husband] and by the indirect contribution made by 1st defendant [wife] - plaintiff was working abroad and sending money to the 1st defendant [wife] - suit properties, items 1 to 4 were purchased in the name of the 1st defendant benami out of the money sent by the plaintiff while he was in abroad and that the plaintiff took possession and managed the said properties as his own properties after returning from abroad - 1st defendant failed to prove that she had sufficient funds of her own to purchase the 4th item of the suit properties. The plaintiff and the 1st defendant are husband and wife, married as living in Neyveli. The plaintiff got a job in a Steel Company in Saudi Arabia, and left for Saudi Arabia, the 1st defendant [wife] continued to live in Neyveli children and she was entrusted with the funds of the plaintiff - During his visit to India between 1983 and 1994, he brought various articles of value, jewellery and cash. The 1st defendant [wife] had no income of her own and was only managing and administering the affairs of the plaintiff prudently and operating the accounts and thus was acting in effect as the agent in a fiduciary capacity. While managing the affairs of the plaintiff, she purchased items 1 to 4 properties on behalf of the plaintiff utilizing the funds of the plaintiff. HELD THAT:- This Court is of the considered view that the 1st defendant/wife has contributed equally, though not directly but indirectly by way of looking after the home and taking care of the family for more than a decade and managing the household chores, thereby releasing the husband for gainful employment and made his stay comfortable in abroad and also to reduce the expenses and save the money for future benefit of the family including for purchasing of the assets. Though the properties purchased in the name of the 1st defendant, she alone cannot claim exclusive right over the properties merely because the title deed is in her name since the documentary evidence would establish that the 1st defendant/wife purchased the properties out of the direct financial contribution of the plaintiff also. Likewise, the plaintiff also cannot claim absolute right merely on the basis that he had sent the money to purchase the properties and the 1st defendant is only holding the property in trust as ostensible title over the properties in fiduciary capacity, as already discussed based on Ex.A1 to Ex.A11, this Court arrives at the conclusion that since Item Nos.1 and 2 have been purchased from and out joint contribution of spouses, viz., the plaintiff by earning and the 1st defendant indirectly by way of her invaluable services as home maker, whereby reducing the expenses of her husband which lead her husband to save more and this way the wife had contributed indirectly to purchase the property item Nos.1 and 2, which aspect cannot be ignored as the same could be decided based on Ex.A1 to Ex.A11. This Court has no hesitation to hold both the plaintiff and the 1st defendant are entitled to equal shares in the present facts of the case over the Item Nos.1 and 2 of the schedule mentioned properties and to that extent the judgment and decree of the First Appellate Court are set aside. Item No.4 of the schedule mentioned properties - 1st defendant also failed to produce any documentary proof to show that this property was purchased by selling her ancestral property. In the absence of the documentary evidences on the part of the 1st defendant, a presumption can be drawn by this Court to the effect that this property was purchased from and out of the monies earned by the plaintiff and by the indirect contribution made by the first respondent and further as stated above, both the spouses, have directly or indirectly contributed in acquiring the properties, likewise, the item No.4 also. Accordingly, this Court holds that both the plaintiff and the 1st defendant are entitled to equal share over the item No.4 of the schedule mentioned properties and to that extent the judgment and decree of the First Appellate Court is set aside. No hesitation to hold both the plaintiff and the 1st defendant are entitled to equal shares in the present facts of the case over the Item Nos.1 and 2 of the schedule mentioned properties and to that extent the judgment and decree of the First Appellate Court are set aside. Benami transaction - As benami transaction would not attract in respect of the properties purchased for the benefit of the husband and the 1st defendant is only holding the property in trust for the benefit of her husband. Though they have taken a stand that the Benami Transactions would not be applicable, this Court already arrived at the conclusion that the suit properties have been purchased by the joint contribution made by the plaintiff and the 1st defendant equally, Section 3, 4 or 5 of the Benami Transaction Act would not attract in the present case. This Court is of the view that Item Nos. 1, 2 and 4 of the schedule mentioned properties were purchased from and out of the joint contribution made by both the plaintiff and the 1st defendant and they are entitled to equal shares over the item Nos.1, 2 and 4 of the schedule mentioned properties. Accordingly, the Substantial Questions of Law Nos.2, 4, 5, 6 and 7 are answered. Property of a female Hindu to be her absolute property - 3rd item of the suit properties was purchased by the 1st defendant by pledging her jewels and that she is the owner of the said property - When this property was purchased in the name of the 1st defendant by pledging her jewels, it should be considered that the 1st defendant alone is the full owner of the property and not a limited owner. Merely the plaintiff/husband helped her for redeeming the jewels, would no way, create a right in his favour over the property. Only Ex.A15 shows that the jewels were redeemed out of the monies received from the plaintiff. ExA14 is the document, which establishes that the money had been received by pledging the 1st defendant/wife's jewels for the purchase of Item No.3 of the schedule mentioned properties. Therefore, I do not find any error in the judgement of the First Appellate Court in holding that the Item No.3 of the schedule mentioned properties belongs to the 1st defendant only. Jewels in the 5th item locker were purchased by the plaintiff for the benefit of the 1st defendant and that the plaintiff is not entitled to the same - relationship of husband and wife between the plaintiff and the 1st defendant came to an end by dissolution of the marriage - The correspondences took place between the 1st defendant and the plaintiff, clearly reveals that the plaintiff had not bought the same on his own volition, but only on requests made by the 1st defendant persistently to gift her jewels, the plaintiff in order to fullfill her wishes, bought the jewels, sarees, etc., and presented her. Therefore, once he presented the gifts, he is not entitled to claim it back though he purchased out of his own earnings. Therefore, this Court is of the view that the Item No.5 of the schedule mentioned properties belongs to the 1st defendant. Thus, do not find any error in the judgment and decree of the First Appellate Court on this aspect of Item No.5. Accordingly, the substantial question of law No.3 is answered in favour of the 1st defendant. This Court holds as regards Item Nos. 1, 2 and 4 of the schedule mentioned properties, that both the plaintiff and the 1st defendant are entitled to half share each and as far as Item No.3 and 5 of the schedule mentioned property are concerned, the 1st defendant is the absolute owner of the same.
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2023 (6) TMI 1263
Benami transaction - Relief of declaration and partition seeked - suit for declaration as the co-owner to the extent of 21,000 Sq.ft of the suit property and for consequential relief of partition and separate possession of plaintiff's share in the suit property - plaintiff also sought for the relief of permanent injunction restraining the defendants from encumbering the suit property or changing the physical features of the suit property by putting up construction -Whether plaintiff is entitled to the relief of declaration that the plaintiff is the owner of 21,000 sq.ft out of 85,949 sq.ft in the suit schedule property? - Whether the plaintiff is entitled to the relief of partition by metes and bounds as prayed for? HELD THAT:- Admittedly, in this case, there is no written documents, in support of the plaintiff's plea that there was a partnership arrangement between the parties to develop the suit property and share the profits. The learned senior counsel appearing for the plaintiff empathetically submitted that the partnership arrangement can be formed even orally and it is not necessary that it should be only by way of written documents. As rightly contended by defendants even in the plaint averments, the plea regarding the oral partnership is very vague and bereft of material particulars. The plaintiff has not pleaded the date, place etc., in which the oral agreement was entered into. There is no plea in whose presence the oral arrangement between the parties was entered into. Even during trial, the plaintiff has not examined any independent witnesses in support of the oral partnership agreement. Therefore, except the interested testimony of PW.1, there is no other acceptable evidence available on record to suggest oral partnership agreement. In such circumstances, we cannot come to a conclusion that there was an oral partnership agreement between the plaintiff and the contesting defendants . Main legal plea raised by the contesting defendants is that the plaintiff is not entitled to maintain a suit prayer that he is a co-owner of the suit property on the ground that he contributed financially for purchase of the suit property - As there is some evidence available on record atleast to show that the plaintiff contributed to the extent of Rs. 96,38,266/- to enable the first defendant to acquire land with an extent of 9168 sq.ft. However, there is no evidence available on record to support the case of the plaintiff that he contributed Rs. 2,16,38,266/- to enable the first defendant purchased the suit property to the extent of 21,000 sq.ft. In any event, even assuming the suit property was purchased by first defendant out of the contribution made by the plaintiff, it is the case of the plaintiff that it was purchased in the name of the first defendant for the benefit of future business entity to be formed by plaintiff and the defendants 1, 9 and 10. Therefore, it can only be treated as property purchased in the name of first defendant for the benefit of plaintiff and the contesting defendants. In such circumstances, the same would come under the Prohibition of Benami Property Transaction Act, as per the definition contained in Prohibition of Benami Transaction Act. As far as contention raised by the learned Senior Counsel for the plaintiff that the 1st defendant stands in fiduciary capacity and hence exception recognized under Benami Prohibition Act gets attracted, is concerned, as discussed earlier, this Court already concluded that the plea of oral partnership was not proved by plaintiff. Hence, there is no fiduciary relationship between the plaintiff and the 1st defendant. The plaintiff cannot seek a declaration that he is the co-owner of the property and for consequential relief of partition and permanent injunction in view of the specific bar contained under Section 4 of the Act. This Court comes to a conclusion that the suit is barred by Section 4 of Prohibition of Benami Property Transaction Act even assuming the plaintiff proved that he contributed for purchase of the suit property in the name of the first defendant. Therefore, issues No.3 and 4 are answered against the plaintiff. Relief of declaration and partition as prayed for denied - The plaintiff is not entitled to any relief and the suit is dismissed.
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Customs
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2023 (6) TMI 1262
Seeking release of seized export goods - Potassium Gold Cyanide (PGC) - related precious metals like Gold Bars, Strips, and Dust - case of Revenue is that as the issues are pending consideration of the department, the reliefs as prayed for in the petition are not to be considered at this stage, as the petition according to him itself is premature. HELD THAT:- In the facts and circumstances of the present case, it is opined that the concerned Authorities need to adjudicate the show cause notices dated 1st July 2022 and dated 5th July 2022, as expeditiously as possible and in accordance with law. The proceedings arising from the provisional release are already pending before the Tribunal, and as the present proceedings are pending, the said appeal was not being heard - the Tribunal is requested to take up the appeal and decide the same as expeditiously as possible and within a period of three months from today. Petition disposed off.
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2023 (6) TMI 1261
Levy of Penalty on Customs Broker License - Failure to advice their client only to comply with the provisions of the Customs Act and other allied acts and rules and regulation - failure to verify the correctness of Importer Exporter Code (IEC) number, goods and services tax identification tax (GSTIN) identity of client - Contravention of regulation 10(d) and regulation 10(n) of The CBLR. Failure to advice their client only to comply with the provisions of the Customs Act and other allied acts and rules and regulation - HELD THAT:- The learned Tribunal on facts found that the value as has been given in the Bill of Entry was enhanced by the approved valuer and further enhanced by the assessing officer of the Customs Department. Therefore, the learned Tribunal came to the conclusion that in the background of those facts the respondent Customs Broker cannot be held guilty for not able to find out correct value of the goods, as could be seen from the facts of the case that the valuation which was done by the department was much higher than the valuation as suggested by the Government approved valuer which was higher than the value which was declared in the Bill of Entry filed by the respondent. Therefore, on facts the tribunal has come to such a conclusion, we cannot disturb the said finding while examining the correctness of the order passed by the learned tribunal in an appeal filed under section 130 of the Act as we are required to see whether any substantial question of law arises for consideration. Therefore, the factual finding rendered by the tribunal cannot be interfered. Failure to verify the correctness of Importer Exporter Code (IEC) number, goods and services tax identification tax (GSTIN) identity of client - HELD THAT:- The Tribunal noted that admittedly the appellant has taken up such verification on the basis of the documents which were available in the Government website and this was held to be sufficient compliance of regulation 10(n) of the Act - the Tribunal on facts found that it is not the case of the revenue that the documents for undertaking the KYC of the importer were not taken by the respondents and the only allegation was that the respondent Customs Broker had not physically met and physically verified the premises. The matter being entirely factual no substantial question of law arises for consideration in this appeal - Appeal of Revenue dismissed.
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2023 (6) TMI 1260
Levy of interest during the period of protection granted by the High Court - Imposition of safeguard duties - imports of Aluminum Foil - I nterim order was being passed by the Court with effect from 19th August 2009, an amendment came to be incorporated to the provisions of Section 8C of the Act by insertion of Sub-section (5A) by Finance No. 2 Act, 2009 with retrospective effect - The protection was vacated as on 11.6.2010 - HELD THAT:- It is not in dispute that the proceedings have remained pending as they stood on 11th June 2010, that is when the Court passed the modified interim order. Never an application was made by the Respondents after 11th June 2010 for vacating of the said orders. The Bank Guarantee as furnished by the Petitioner in pursuance of the order dated 11th June 2010 passed by the Court, has continued to remain with the Respondents, the validity of which has been extended from time to time. The bond as furnished by the Petitioner also has continued to remain valid. Almost about 13 years having lapsed after the order dated 11th June 2010, the Respondents are yet to pass a final assessment order. However in the intervening period there was a self-assessment as made by the Petitioner in the year 2017, in pursuance of which the Petitioner deposited duty amounting to Rs. 97,44,034/-. When the interim protection granted to the Petitioner continuous to operate the only apprehension of the Petitioner, today is that although the Respondents may take forward the matter to pass a final assessment order, however, in the peculiar facts and circumstances of the case and more particularly in view of the interim order passed by this Court dated 8th May 2009, as modified by order dated 11th June 2010, in the final assessment order which may be passed, the Petitioners ought not to be subjected to the levy/payment of interest. Such apprehension of the Petitioner is in the light of the letter of Assistant Commissioner (H) dated 28th March 2017, addressed to the Petitioner a copy of which has been placed on record. This is certainly not a case where the Petitioner ought to be foisted with interest under Section 28AA of the Customs Act as made applicable by Sub-section 5A of Section 8C of the Customs Tariff Act. It may be observed that the Respondents also, were in no manner aggrieved by the self-assessment as undertaken by the Petitioner under which duty was paid - the Respondents are directed to proceed to pass a final assessment order, however, without levy of any interest on the assessment which may be arrived. Application disposed off.
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2023 (6) TMI 1259
Maintainability of appeal - import of Superior Kerosene Oil (SKO) or not - prohibited goods or not - discharge of burden of prove - re-testing of the samples - mis-declaration and mis-classifications of goods - absolute confiscation - penalty - HELD THAT:- It is required to be noted that whether the subject goods fall within one category or other would essentially be a question of fact. However, even while deciding the same, if the Tribunal overlooks certain basic principles of law applicable to the case on hand and records a finding which could be termed as perverse, then definitely, such decision of the Tribunal would give rise to a question of law. In the case of Rajkamal Industrial Pvt. Ltd. [ 2022 (2) TMI 264 - GUJARAT HIGH COURT] , this Court held Where the determination of an issue depends upon the appreciation of evidence or materials resulting in ascertainment of basic facts without application of any principle of law, the issue raises a mere question of fact. In the present case, to arrive at the conclusion that the product is SKO, there are eight parameters which need to be tested. As per the Test Report, three parameters were tested. However, the Test Report of the Chemical Examiner categorically suggests that the goods imported by the importer are meeting with the specification of Kerosene - In the case of Rajkamal Industrial Pvt. Ltd., 14 parameters were tested and on the basis of the report submitted by the concerned laboratories, this Court has, after applying the principle of reasonable doubt and preponderance of probability quashed and set aside the order passed by the learned CESTAT and the Tax Appeals filed by the Revenue were allowed. The appeal is admitted for considering the following substantial questions of law: (i) Whether the Tribunal was right in holding that the Department has not discharged the onus to establish the cargo as Superior Kerosene Oil (SKO)? (ii) Whether in the facts and circumstances of the case, the CESTAT was correct discarding Chemical Examiner s Report as inconclusive, especially when the importer had not sought re-testing of the samples before the Original Adjudicating Authority or during investigation? (iii) Whether in the facts and circumstances of the case, the CESTAT was correct in setting aside the directions of absolute confiscation of Prohibited Goods under section 111(d), 111(m), 111(o) 118 and penalty under section 112(a) of the Customs Act by the Adjudicating Authority, despite the mis-declaration and mis-classifications of goods?
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2023 (6) TMI 1258
Classification of imported goods - tomato dry flavour - to be classified under CTH 3302 1010 or under Tariff Item 2106 9060? - benefit of exemption of concessional rate of Basic Customs Duty (BCD) of 10% under Customs Notification No. 21/2002, Sl.No.119 - HELD THAT:- The appellant s submission is that the subject goods consists of various odoriferous substances and what is imported i.e., the tomato flavour, is of synthetic origin, which makes it classifiable under CTH 3302 1010. The Ld. adjudicating authority has relied on Chapter Note 2 to Chapter 33 of the Customs Tariff Act, 1975, which states that odoriferous substances in Chapter Heading 3302 refers only to substances of Chapter Heading 3301 to odoriferous constituents isolated from those substances or to synthetic aromatics, and also referred to the HSN, which states that the goods which qualify for classification under Chapter Heading 3302 should be mixtures, whether or not combined with a diluent or carrier or containing alcohol, of products of other Chapters (e.g., spices) with one or more odoriferous substances (essential oils, resinoids, extracted oleoresins or synthetic aromatics), provided these substances form the basis of the mixture. The odoriferous substances can be of synthetic origin, which fact is omitted to be noted by the Ld. adjudicating authority. The appellant has been arguing that the tomato flavour is of synthetic origin though it may contain some natural odoriferous substances and it cannot be directly or indirectly used in food preparations. In this regard, the appellant has also put forth that it is not necessary that it should be made of essential oil, resinoid or oleoresin alone to merit classification under Chapter Heading 3302 and that in any case, the product contains garlic oil, which is an oleoresin - A closer study indicates that the item which is imported is of synthetic origin and consists of odoriferous substances, which is an industrial raw material for making food flavours and the same cannot be directly used in any food preparations for human consumption. Chapter Heading 3302 covers both natural and/or synthetic mixtures of odoriferous substances - the item imported is correctly classifiable under CTH 3302 1010 of the Customs Tariff Act, 1975. Appeal allowed.
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2023 (6) TMI 1257
Doctrine of Merger - Appeal dismissed on being time barred - Project Import - Exemption from duty of customs - failure on the part of the importer to meet the Project Import regulations - HELD THAT:- In the first round of litigation before this forum, an appeal was filed by the importer and this Bench, after hearing both sides and after waiving the pre-deposit in V. Mohan [ 2010 (6) TMI 334 - CESTAT, CHENNAI ] chose to set aside the impugned order by observing that the appellant had no knowledge of the adjudication against M/s. Powmex Steels Ltd. at any date prior to 28.07.2007. Further, the above order of this Bench has been accepted by both the parties and thus, has attained finality - By the time the above order of this Bench was passed, the second Show Cause Notice dated 27.07.2004 was already on board and we do not see any whisper about the same anywhere in the order of this Bench and in particular, any issue being made as to the Show Cause Notice being issued much after the period of limitation. Hence, we can only say that the contention of the appellant cannot be accepted as, apparently, it has missed the bus. Further, when the order of this Bench which was passed against the Order-in-Appeal wherein the Order-in-Original was challenged, which was passed on the second Show Cause Notice, has become final now, we have to only hold that by virtue of the doctrine of merger, the orders of the lower authorities have merged with the order of this Bench and it is only consequent to the directions of this Bench that the de novo Order-in-Original dated 26.07.2012 was passed. The appellant registered its Project Contract for import of capital goods, but it has not disputed the missing of two items which therefore resulted in denying the concurrent benefit of exemption. For this, differential duty was demanded, which is as per law - Appeal dismissed.
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2023 (6) TMI 1256
Service of SCN - SAD refund - whether the appellant is served with Order-in-Original in time as held in the impugned Order-in-Appeal? - HELD THAT:- The sanction was granted as early as 11.03.2010, and the receipt of the refund has also been acknowledged by the assessee in its various letters addressed to the Revenue authorities, including the Commissioner of Customs. Hence, to say that the sanction was ordered as per the order in original is not correct. This is the usual practice by the original authority wherein the Order-in-Original itself contains the printed number of the order as well as the date. There is some insertion by hand, but unfortunately, there are no initial for carrying out the correction or insertion which is essential; hence, the said insertions do not impress us. But in any case, as it is observed that the date of sanction was much earlier, the contentions of the assessee is accepted that it did not receive the Order-in-Original until 06.01.2011, when it had an occasion to meet the Commissioner of Customs (Export). These facts are not disputed by the Revenue - the impugned order, insofar as it relates to the issue on limitation, deserves to be set aside as unsustainable. The first appellate authority has not given any findings on the merits of the case, though he has discussed about the same in the impugned order - it is deemed appropriate that matter remanded back to the file of the first appellate authority for disposal of the appeal on merit alone, since it is satisfied that there is no delay in filing the appeal before the first appellate authority. The appeal of the appellant stands allowed by way of remand.
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2023 (6) TMI 1255
Refund of Customs Duty paid - Assessment of Bill of Entry not challenged - Import of non-coking coal in bulk - assessable value was worked out by adding 2% of CIF value on high seal sales load at the time of assessment of import of goods, which the assessee wanted to be re-assessed by adding Rs.33/- per M.T. - whether the incidence of duty has been passed on to the ultimate consumer? - Right to appeal. HELD THAT:- Value addition, if any, as prescribed under Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, could always be a point of dispute since a claim for such addition by an importer needs to be supported by documentary evidence, to the satisfaction of the adjudicating authority. Further, the satisfaction of the assessing officer / adjudicating authority is paramount since he is the proper officer under the statute who is to be satisfied in the first place as to such claims by an importer. Hence, these aspects could only be considered during adjudication proceedings and not in any other proceedings. It is the settled position of law that the right to appeal is available to an assessee as well as the Department, even against self-assessment; until and unless the self-assessment is modified and the duty thereafter is re-determined, no application would lie for refund of any duty from such self-assessment since the refund authority cannot assume the role of an adjudicating / assessing authority. This is because the scope of refund is limited as against the scope of adjudication proceedings and hence, the authority considering any refund application cannot revisit the adjudication proceedings for which he has no jurisdiction. This is also in view of separate statutory provisions being provided for, for both refund as well as adjudication proceedings. The Hon ble Supreme Court in the case of M/s. ITC Ltd. [ 2019 (9) TMI 802 - SUPREME COURT] has held that even an order of self-assessment is an order against which an appeal would lie, provisions of Section 27 cannot be invoked in the absence of amendment or modification having been made in the bill-of-entry and that refund proceedings are in the nature of execution for refunding amount. The refund application is clearly not maintainable by applying the ratio decidendi in M/s. ITC Ltd. - Appeal of Revenue allowed.
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2023 (6) TMI 1254
EPCG License - cancellation on the ground that the Appellant was not entitled to import the capital goods under concessional rate of Customs Duty - seeking waiver of interest and penalty - HELD THAT:- The facts are not in dispute and both sides agree that the EPCG Licences were issued in 2007 but were cancelled by DGFT in 2013. So far as the Customs Duty initially saved is concerned, in terms of Notification No.97/2004-Cus and 64/2008-Cus, the Appellant has the liability to discharge the Customs Duty along with applicable interest as per Para 2(5) of these Notifications, if the conditions of these Notifications are not fulfilled. Therefore when Licence has been cancelled and Customs Duty is paid, the interest liability on such Customs Duty payment cannot be waived. Hence, the prayer of the Appellant to waive the interest is rejected. However, going through the documents submitted by them, it is seen that the Appellant has written a letter on 30/12/2013 submitted to the Department on 02/01/2014 wherein they have requested to Commissioner to realize the Customs Duty by encashing the Bank Guarantee. It is seen from letter F. No. S60(MISC)-265/14A.EPCG dated 12/08/2016 issued by the office of the Deputy Commissioner of Customs, the Bank Gurantee has been enchased on 07/03/2014 and 25/02/2015. This means that the encashment is after more two months in respect of two Bills of Entry and after about one year four months in respect of the other two Bills of Entry. The Adjudicating Authority is directed to re-calculate and requantify the interest payable by taking the realization date as 03/01/2014 as their consent to the Department for encashment of Bank Guarantee was given on 02/01/2014 itself. Appeal disposed off.
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2023 (6) TMI 1253
Benefit of exemption from customs duty - Uninterrupted Power Supply - General purpose UPS or to be used with automatic data processing machine (ADP) - merits classification under Sub-heading 85044090 of the First Schedule to the Customs Tariff Act, 1975 or not HELD THAT:- Even if words, 'solely and principally' have not been used to describe usage of static converter for applicability of notification; the words and phrases used in the notification are sufficient to suggest and clarify that exemption from Basic Custom Duty is applicable to only those static converters which are meant for automatic data processing machine and units thereof, and telecommunication apparatus other than static converters for cellular mobile phones; - The applicant has wrongly interpreted the notification by stating that UPS proposed to be imported by the applicant are intended to be used in operation of machines which either ultimately qualify as Telecommunication apparatus or ADP machine or where ADP machine is an integral part of the whole machine/system The subject goods which are meant only for automatic data processing machine and units thereof, and telecommunication apparatus other than static converters for cellular mobile phones are eligible for exemption from Basic Customs Duty under serial number 4 of the notification No 25/2005-Cus. dated 01.03.2005. Such exemption is not available to static converters meant for machines of healthcare, infrastructure sector etc., machines which can indirectly be considered as ADP machine etc.
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Securities / SEBI
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2023 (6) TMI 1252
Penalty for violation of Section 15HB of SEBI Act, 1992 - justification for the Tribunal to reduce the penalty below Rs. 1,00,000/- which is the minimum as permissible - HELD THAT:- Tribunal has not taken into consideration the effect and mandate of Section 15HB of the SEBI Act, 1992. Taking into consideration the facts and circumstances of this case, there appears no justification in calling upon the respondent and we modify the order impugned and the penalty of Rs.75,000/- as inflicted upon noticee no.5 (Mr. Sandip Ray) and noticee no.6 (Mr. Rajkumar Sharma), as referred to in para no. 13 of the order impugned, is modified and substituted to Rs.1,00,000/- in terms of Section 15HB of SEBI Act, 1992 and with this modification the present appeals stand disposed of. We make it clear that if the respondents have any objection in reference to the modification made by this Court, they are always at liberty to make an application, if so advised.
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Insolvency & Bankruptcy
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2023 (6) TMI 1251
Seeking to restrain the Respondents from proceeding with the Challenge Process - modification in the Resolution Plan more than once either by way of revision or by way of challenge mechanism - seeking direction to accept the Resolution Plan of the Appellant as submitted on 28/10/2022 - seeking restrain on 1st Respondent from considering any of the Resolution Plans submitted after 20/10/2022. HELD THAT:- The insertion of Regulation 39(1A) was especially that a objection to maximise the value of the assets and to reduce any delay in timelines by several resubmissions or addendums which the Resolution Applicants seek to submit - The NCLAT, Principal Bench, New Delhi, in VISTRA ITCL (INDIA) LTD. VERSUS TORRENT INVESTMENTS PVT. LTD. ORS. AND INDUSIND INTERNATIONAL HOLDINGS LTD. VERSUS TORRENT INVESTMENTS PVT. LTD. ORS. [ 2023 (3) TMI 176 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] addressed to the question whether Regulation 39(1A) contains an implied prohibition on the jurisdiction of the CoC to enter into any further negotiation with the Resolution Applicant or to further ask the Resolution Applicant to increase its Resolution plan value, where it was held that The Adjudicating Authority further fell into error in coming to a conclusion that there is no power with the CoC to enter into negotiations with the Resolution Applicant, after the Challenge Mechanism and the exercise of the commercial wisdom is circumscribed by the framework for value maximization provided under the Code read with the Regulations. In the instant Case, keeping in view the facts of the matter that the decision to conduct the Swiss challenge was approved by the CoC by majority of 99.18% during the 43rd Meeting held on 29/12/2022 that the decision of CoC to conduct the Challenge Process is supported by Causes 1.17, 1.18 and 7.2 of the RFRP that the voting window commenced on 06/01/2023 vest the Challenge Process conducted on 04/01/2023 and such voting window remained open upto 16/01/2023 and only after closing the voting lines, the CoC has approved the Resolution Plan of Respondent No. 3 by majority of 94.96%, does not find any violation of Regulation 39 (1A) of the CIRP Regulations or any other provisions of the Code. There are no substantial reasons to interfere in the well considered Order of the Adjudicating Authority - appeal dismissed.
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2023 (6) TMI 1250
Locus Standi of shareholder of the Corporate Debtor to challenge the Resolution Plan - Seeking for forensic audit of the Books of Accounts of the Corporate Debtor, and not to approve the Resolution Plan till the disposal of the Application - CIRP proceedings (proceedings in rem) - HELD THAT:- In an Insolvency process, when an insolvency of Debtor is imminent, the fiduciary duty of the Directors and Managers, who are Agents of the Shareholders, shifts to the Creditors to preserve the value of the Enterprise for maximising the returns for Creditors. The Legislature in its wisdom, has curtailed the Rights of the Shareholders based on the established Principles of Creditors in the control framework. The Court provides the shareholders right to file a Claim only in the Liquidation Process as stakeholders and the advances of stakeholders as stated in Regulation 2(k) includes shareholders only because unlike CIRP, in Liquidation, distribution to stakeholders is in accordance with the waterfall mechanism. Shareholders are excluded from representation, participation or voting in the CoC and are represented in the CoC only through the Directors and can speak only through the Directors. This Tribunal, is of the considered view that once the CIRP is triggered, the Management of the affairs of the Corporate Debtor lies with the Interim Resolution Professional and the shareholders do not have a Right to file any claim in the CIRP but can only do so in the Liquidation Process. It is seen from the provisions of the Code that the Shareholders are excluded from representation, participation or voting in the CoC and are represented in the CoC only through the Directors - The CIRP proceedings are proceedings in rem, to the extent that once a Petition filed by a Financial Creditor/ Operational Creditor against the Corporate Debtor is admitted, it becomes a collective Creditors Proceedings and all Creditors, pool their Security Interest, in a common manner and the same is distributed as provided for, under Section 30(4) of the Code, subsequent to the approval of the plan by the CoC. The Provisions of the Code does not provide for the shareholders to seek representation, participation, or otherwise and to agitate their views only through the Directors. Keeping in view, the scope and intent of the Legislature, and that the I B Code, 2016 is a distinct shift from Debtor in Possession to Creditor in Control Insolvency System, where the Shareholders have a limited role and are only confined to co-operate with the Resolution Professional as specified under Section 19 of the Code, are entitled to receive the Liquidation value of its equity, if any, in accordance with Section 53 of the Code, it is concluded that a Shareholder has no locus standi to challenge the Resolution Plan. The Learned Counsel for the Appellant has strenuously argued that had the Transaction Audit been carried out, the Resolution Plan would not have been approved. It is not in dispute that the Appellant is one of the largest shareholders of the Corporate Debtor and not having raised these issues earlier, at the later stage, contends that other shareholders and Directors have indulged in Fraudulent Transactions - there are force in the Contention of the Learned Senior Counsel Mr. E. Om Prakash, that these issues were never raised earlier, no action was taken and that there are other remedies in Law for any of these grievances. The discretion of the Tribunals, is circumscribed by Section 31 limited to scrutiny of the Resolution Plan, if it is in violation of Section 30 of the I B Code, 2016. The Hon ble Apex Court, in the matter of EBIX SINGAPORE PRIVATE LIMITED VERSUS COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS LIMITED ANR., KUNDAN CARE PRODUCTS LIMITED VERSUS MR AMIT GUPTA AND ORS. AND SEROCO LIGHTING INDUSTRIES PRIVATE LIMITED VERSUS RAVI KAPOOR RP FOR ARYA FILAMENTS PRIVATE LIMTIED ORS. [ 2021 (9) TMI 672 - SUPREME COURT ] has clearly laid down that subsequent to the approval of the Resolution Plan of the CoC and before the approval by the Adjudicating Authority, no modifications / alterations can be called for as IBC is a time bound process. This Tribunal finds no infirmity in the Order of the Learned Adjudicating Authority in the Approval of the Plan or in the rejection of application - appeal dismissed.
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Service Tax
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2023 (6) TMI 1249
Principles of natural justice - proper application of mind by adjudicating authority or not - Levy of service tax - Business Auxiliary Service - Retention of Freight - service charges, for services provided by the petitioner to its client for transportation of goods by the airlines - HELD THAT:- It appears to be quite peculiar that initially the adjudication of the show cause notices was taken up by respondent no. 3, however, in view of the order passed by respondent no. 5, the same was transferred/assigned to respondent No. 2, as the incumbent who was earlier holding the post of respondent no. 3-Commissioner of CGST, during the pendency of adjudication of the show cause notices, was promoted to the post of Principal Commissioner. It also appears that the additional written submissions, which were quite material on law and facts, were in fact placed on record by the petitioner inadvertently before respondent no. 3, hence, the same could not be taken into consideration by respondent No. 2 when he passed the impugned orders. Thus certainly on such premise, there was a prejudice which was suffered by the petitioner in non-consideration of such submissions. Any breach of the principles of natural justice would be required to be attributed as an incurable defect qua the impugned order. It would be appropriate in the facts and circumstances of the present case that respondent No. 2 takes a holistic view of the matter considering the decision of the tribunal in EMU Lines Pvt. Ltd. vs. Commissioner of CGST and Central Excise, Belapur [ 2023 (6) TMI 64 - CESTAT MUMBAI] , which considers a prior decision of the tribunal in Greenwich Meridian Logistics (I) Pvt. Ltd. [ 2016 (4) TMI 547 - CESTAT MUMBAI] . On a perusal of the impugned order, it appears that such decision has not been considered. Respondent No. 2 needs to hear the petitioner afresh on the show cause notices, and after taking into consideration the facts of the case - the impugned order dated 29 May, 2019 passed by respondent No. 2 is required to be quashed and set aside relegating the petitioner to the jurisdictional Commissioner as may be intimated by the respondents to the petitioner at least two weeks in advance, for an appropriate order to be passed in accordance with law - Petition allowed.
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2023 (6) TMI 1248
Maintainability of petition - availability of alternative and efficacious remedy - Validity of the demand -cum- show cause notice - service tax on service component of contractual receipts, which are otherwise exempt from the incidence of service tax - HELD THAT:- It would be relevant to refer to the decision of the Supreme Court of India in the case of The State of Maharashtra Ors. v. Greatship (India) Ltd., [ 2022 (9) TMI 896 - SUPREME COURT] , wherein it has been observed and held that No valid reasons have been shown by the assessee to by-pass the statutory remedy of appeal. This Court has consistently taken the view that when there is an alternate remedy available, judicial prudence demands that the court refrains from exercising its jurisdiction under constitutional provisions. Therefore, in the light of the observations made by the Supreme Court of India in the herein before referred case of Greatship (India) Ltd., the existence of an alternative relief would dissuade the Court from entertaining the writ petition. The Court is of the considered opinion that as the writ petition does not disclose any documents by which prima facie satisfaction can be recorded that all receipts for which TDS was deducted which is reflected in Form 26AS are entitled for exemption, hence, the decisions cited by the petitioner cannot be applied under the facts unique to this case - The direction to relegate a tax payer to avail statutory remedy, which is more efficacious is the principle of self-restrain adopted by the Constitutional Courts. Therefore, as alternative and efficacious remedy is available to the petitioner, this Court is not inclined to entertain this writ petition and therefore, this writ petition challenging the legality of the impugned order-in- original stands dismissed at the motion stage without issuance of notice upon the respondents. It is provided that if the petitioner is advised to seek alternative and efficacious remedy by filing a statutory appeal, the period spent from 21.03.2022 till the date of delivery of order i.e. 22.06.2023, would be entitled to be excluded from computation of limitation. Petition dismissed.
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2023 (6) TMI 1247
Demand of Service Tax confirmed on account of difference in ST 3 return vs ITR filed by the Appellant - case of appellant is that NO DUE CERITIFCATE DATED 16.12.2016 received from the service tax department for the alleged financial year 2015-16 - Invocation of extended period of limitation - HELD THAT:- The appellant s business was scrutinised by the service tax department for FY 2015-16 for which a NO DUE certificate was already issued to the appellant by the same service tax department based on ITR filings on 2016. Thus, issuance of present SCN by the department in 2021 based on the same ITR findings cannot be sustained as the department was already in knowledge of the activities of the Appellant and had also given a no due certificate to the appellant. For issuance of SCN involving extended period of limitation, suppression has to be brought on record which has not been done in this case by the revenue. Though the appellant had not appeared in the adjudication proceedings, yet the certificate issued by the department in 2016 clearly establishes that the records were already scrutinised by the revenue in 2016 itself and hence department cannot invoke extended period of limitation to confirm the demand for the same year. The impugned order dated 16.02.2022 set aside on grounds of limitation itself and the appeal stands allowed.
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2023 (6) TMI 1246
Business auxiliary services - place of provision of services - import of service or not - export orders procured from foreign agents - technical inspection and certification services provided at the discharge Port by non-resident service provider - reverse charge mechanism - extended period of limitation - HELD THAT:- It is well settled that the burden of proving malafide i.e. an intent to evade is upon the revenue as held by the decision of the Hon ble Supreme Court in the case of Uniworth Textiles Ltd. reported in [ 2013 (1) TMI 616 - SUPREME COURT] - In the instant case, the Appellant had specifically averred before the adjudicating as well as the first appellate authority that they acted upon a legal opinion dated 20 March 2008 wherein they were advised about the non-taxability of the said services, which aspect has neither been dealt with nor controverted by the revenue. Therefore, the plea of bonafide belief appears to be available to the Appellant in light of the decision of this Tribunal in Delhi International Airport case [ 2019 (2) TMI 869 - CESTAT NEW DELHI] . Moreover, it is also not in dispute that both these services (i.e., business auxiliary services and technical inspection certification services) were used for export and therefore, exempted vide Notification No. 41/2007- ST dated 6 October 2007 albeit by way of refund. Therefore, there is considerable force in the contention of the Appellant that the situation would have been revenue neutral and under such circumstances, no intention to evade can be attributed on the part of the Appellant - the demand beyond the normal period cannot sustain and deserves to be set aside. Even on merits, it is found that technical inspection and certification services were rendered at the discharge Port outside India and therefore could not be said to have been imported under Rule 3(ii) of the Taxation of Services (provided from outside India and received in India) Rules, 2006 being covered by Section 65 (105) (zzi) of the Finance Act, 1994 and there was no scope to invoke Rule 3(iii) of the said Rules. The entire demand with respect to Foreign Commission Agent for the period October 2007 to March 2011 is hit by limitation and the demand under Technical Inspection and Certification for the period October 2007 to March 2012 is not sustainable on merits and limitation - Appeal allowed.
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2023 (6) TMI 1245
Levy of service tax - alleged consulting engineers services on the Royalty payments made to the foreign company by the appellant - reverse charge mechanism - HELD THAT:- The demand of Service Tax prior to 18.04.2006 is not sustainable as the charging Section 66A of the Finance Act, 1994 for levy of Service Tax on the services provided to the foreign service provider on reverse charge basis was enacted only with effect from 18.04.2006. In view of the ratio laid down in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA [ 2008 (12) TMI 41 - BOMBAY HIGH COURT] , which has been upheld by the Hon ble Supreme Court in UNION OF INDIA VERSUS INDIAN NATIONAL SHIPOWNERS ASSOCIATION [ 2009 (12) TMI 850 - SC ORDER] , the appellant cannot be fastened with Service Tax liability for the Royalty payments made under consulting engineer service prior to 18.04.2006. The second proviso to sub-rule (1) to the Rule 6 clearly provides that notwithstanding the time of receipt of payment towards value of service, no Service Tax shall be payable for the part or whole of the value of services which is attributable to services provided during the period when such services were not taxable. As such, the impugned order holding that the taxable event is not the provision of the service but the date on which the value of taxable service is paid, is not legally maintainable. Hence, the demand of tax confirmed in this regard is not sustainable. The appellant was issued with a Show Cause Notice C.No.IV/16/172/2003-STC dated 14.10.2003 for the period from 1997 to 2001 demanding appropriate Service Tax on Royalty paid which was dropped vide Order-in-Appeal No. 109/2004 dated 08.09.2004, indicating that the Department was well aware of the activities of the appellant such as payment of Royalties to foreign collaborators under consulting engineer service. The demand of Service Tax on the appellant for the normal period is confirmed - penalties imposed are also set aside - appeal allowed in part.
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2023 (6) TMI 1244
Refund of excess service tax paid - HELD THAT:- As regard the appellant s submission that the amount of Rs. 39, 46,367/- is not payable for various reasons has not been considered by the lower authority. Therefore, this matter needs to be remanded back to the Adjudicating Authority for re- quantification of the demand after considering the submission of the appellant. The Adjudicating Authority also needs to look into the aspect of larger period of demand and imposition of penalty under Section 78 of Finance Act, 1994. Appeal allowed by way of remand.
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2023 (6) TMI 1243
Extended period of limitation - SCN issued after more than five years - levy of service tax on the differential value on the basis of gross receipts - HELD THAT:- The appellant have submitted calculation of service tax liability, both at the assessment stage and before the Commissioner (Appeals). Both the Court below without finding any error in the said calculation have arbitrarily rejected the same and have made their own calculation, resulting into confirmation of demand and imposition of penalty. It is found that such rejection of calculation of service tax and the ST3 Return filed by the appellant is bad in law, without finding any fault or error in the same. The ST-3 Returns submitted by an assessee is binding on the Department, unless the Department finds material faults or errors in the same. Further, issue of show cause notice on the apparent difference in the gross turnover as per balance sheet or ST-3 Return, as compared with Form 26 AS have been deprecated by this Tribunal in several matters. Form 26 AS is not the prescribed document in the scheme of Service Tax Assessment and the same cannot be adopted blindly without any attempt to reconcile the difference. On perusal of the calculation submitted by the appellant of their tax liability, there are no error found in the same. Further, the appellant against the tax liability of Rs.72,724/-, have already paid an amount of Rs.76,908/-. Thus, have paid higher amount than the tax liability. Thus, the whole exercise is unwarranted and mis-conceived on the part of the Department. The show cause notice is hit by limitation as the same has been issued after more than five years - Appeal allowed.
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Central Excise
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2023 (6) TMI 1242
Recovery of dis-allowed CENVAT Credit - contravention of Rule 8(3A) ibid restricting utilization of Cenvat credit during the period of default - HELD THAT:- Hon ble Gujarat High Court in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT ] has declared the words without utilizing Cenvat Credit under Rule 8(3A) as ultra vires which means that the assessee can discharge duty by utilizing Cenvat Credit which is what exactly has been done in the instant case by the Appellant. The said judgment has been followed by the Hon ble Calcutta High Court in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS [ 2017 (8) TMI 1515 - CALCUTTA HIGH COURT] which is not stayed by the Hon ble Supreme Court. The Hon ble Calcutta High Court in the said case, has declared the provisions of Rule 8(3A) ibid as invalid and further has held that the Revenue cannot take a different stand and parity has to be extended to the assessee. The demand in the instant case has been raised for contravention of Rule 8(3A) ibid restricting utilization of Cenvat credit during the period of default which provision has been declared ultra vires/invalid by Court, hence the demand cannot be sustained and the Appeal, thus, succeed on this count.
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2023 (6) TMI 1241
Clandestine Removal - Kamdhenu brand of the iron and steel products - evasion of service tax on royalty received from various franchisees - admissible evidences - HELD THAT:- In the present case the departments case doesn t have any merits as the report itself being in dispute, no reliance can be made on the same to confirm the demand on the Respondent herein - no attempt has been made by the revenue to counter the findings of the adjudicating authority and thus the view taken by the Ld. Adjudicating authority cannot be accepted. Further, the deficient quantity of 20.798 MT of MS Ingot cannot be considered as concrete Circumstantial evidence in regard to allegation of huge evasion of Central Excise duty by resorting to clandestine manufacture and sale of 35948.0799 MT of MS Bars Rods by the Respondent. It is a settled proposition that demand cannot be raised on assumptions and presumptions in cases of clandestine removal. There are no infirmities in the impunged order and hence the same is sustained - appeal dismissed.
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2023 (6) TMI 1240
Method of Valuation - Lead Acid Battery falling under sub heading 85071000 of the Central Excise Tariff Act, 1985 - to be valued under Section 4 of the Central Excise Act, 1944 or Section 4A of the Central Excise Act, 1944? - suppression of facts - extended period of limitation - HELD THAT:- The entire defence of the appellant is on the basis of the affidavit which was filed belatedly that the Lead Acid Batteries cleared by the appellant which is used for automobiles were correctly valued under Section 4A on the ground that they had supplied the uncharged batteries and the charging was carried out at the dealers place which activity amounts to manufacture. Therefore, any goods cleared which is subjected to further manufacture should be valued under Section 4 and not 4 A - It is found that other than affidavit there is no documentary evidence produced by the appellant to establish the claim of the appellant that the battery was cleared uncharged and at the dealers place the batteries were charged before selling to the customers. From the finding of the Adjudicating Authority it is clear that except affidavit there is no other evidence to show that the battery cleared by the appellant was uncharged Lead Battery. Therefore, there is no difference in the nature of the clearance made to individual customer wherein the valuation was admittedly done by the appellant under Section 4 A and the nature of clearance made to the dealers. Therefore, the clearance made to dealers is also to be valued under Section 4 A of Central Excise Act, 1944. Extended period of limitation - Suppression of facts - HELD THAT:- The appellant have not disclosed that whether the battery was cleared charged or uncharged. Moreover, the affidavit was also filed belatedly, this fact was not declared during statement of the director recorded at the time of investigation - the appellant have suppressed the vital fact from the department about the nature of clearance. In this fact, the extended period was rightly invoked in the present appeal. There are no infirmity in the impugned order - appeal dismissed.
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2023 (6) TMI 1239
Refund of Cenvat credit - Sugar cess - rejection on the only ground that the matter is pending and has not attained finality - HELD THAT:- The appellant has produced records, to show that the appeal filed by the revenue against the Tribunal s order dated 07.08.2019 is pending before the Hon ble High Court at Calcutta in CEXA 9/2020 and there has been no orders passed by the Hon ble High Court granting stay of operation of the said order of the Tribunal. The revenue department has not been able to produce any document to show that the order has been stayed by any higher authority. Under this factual background, both the lower authorities were not correct in rejecting the refund claim of the appellant on the ground of pendency of proceedings when no stay has been given by any higher court in the earlier order regarding eligibility of Cenvat credit. It is further noted that the Ld. Commissioner (Appeals) had also passed orders on various other grounds which was never alleged while issuance of the show cause notice and thus the appellate order to that extent goes beyond the allegations raised in the SCN and cannot be sustained on this ground also. Appeal allowed.
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2023 (6) TMI 1238
Imposition of penalty under Rule 26(2) of the Central Excise Rules, 2002 - Appellant has paid duty of equivalent amount to the government and also filed its ER 1 return timely disclosing all transactions - HELD THAT:- The said rule would be applicable in case wherein ineligible Cenvat credit has been passed to recipients in cases without supply of goods and such related transactions - The present case is a case wherein there is no allegation by the department that the appellant has issued invoices without supply of goods. Infact all the transactions have been recorded in ER 1 returns and disclosed by the appellant to the department. Hence, it cannot be understood as to how the penalty under Rule 26(2) of the CER, 2002 can be imposed in such bonafide cases. Further, neither the SCN nor the OIO has brought out any evidence of connivance between the appellant and TIL in the stated transactions. The entire demand of penalty set aside - appeal allowed.
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CST, VAT & Sales Tax
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2023 (6) TMI 1237
Rejection of rectification of assessment order - admission of Appeal without any pre-deposit - case of petitioner is that impugned orders are passed without giving opportunity of hearing insofar as, disallowance of input tax credit qua all the parties is concerned - violation of principles of natural justice - HELD THAT:- The Petitioner has approached this Court under Article 226 of the Constitution of India, in order to bypass the mandatory provision under the MVAT Act, 2002 which required pre-deposit of 10% of the tax for entertaining the appeal. In the facts of the present case, this approach of the Petitioner cannot be accepted moreso because against order rejecting the rectification, it had filed an appeal because according to the Petitioner against such rejection of rectification order no pre-deposit is required to be made. [This clearly shows that the present petition is filed to bypass the mandatory pre-deposit provision in entertaining the appeal]. The issue raised in the assessment order interalia qua circular trading requires factual determination which this Court cannot go into in exercise of its jurisdiction under Article 226 of the Constitution of India. It is also important to observe that by various show cause notices, the Petitioner was called upon to file all the evidences in support of its return of income and furthermore order sheet annexed to the Petition records that the Petitioner s accountant refused to sign the proceedings sheet in relation to the circular transaction query raised by Respondent No. 2. Therefore, prima facie, the contention of the Petitioner that opportunity of hearing was not given may not be correct. The decision of the Supreme Court in the case of State of Tripura Vs. Manoranjan Chakraborty Ors. [ 2000 (11) TMI 1079 - SUPREME COURT] relied upon by the Petitioner does not assist the case of the present Petitioner in the facts of the present case. The decision of the Supreme Court was in connection where there is a high ended assessment and gross injustice done. Therefore, the decision of the Supreme Court is not applicable to the facts of the present case. The issue raised in the present petition qua opportunity of hearing would require examination of the factual matrix in the complexion of the proceedings as they stand, which can be effectively adjudicated more appropriately by the Appellate Authority - the Petitioner relegated to avail the alternative remedy of an appeal - petition disposed off.
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2023 (6) TMI 1236
Calling for the records pertaining to the Petitioner s case and after going into the validity and legality thereof to quash and set aside the impugned Order - direction to Respondents themselves, their officers and subordinates to withdraw and/or cancel the impugned Order dated 11.12.2018 passed by the Respondent No. 2; and to refrain from taking any steps or proceedings in pursuance of and/or in furtherance of and/or in implementation of impugned Order dated 11.12.2018 passed by the Respondent No. 2 - benefits of the exemption granted vide Notification No. DNH/CST/4-1/99/4 dated 31.12.1999 and Notification No. ADM/LAW/CSR/2/84 dated 04.01.1984 without the production of C Forms. HELD THAT:- The petitioner has drawn our attention to the judgment and order dated 30 August, 2012 passed by a co-ordinate bench of this PRISM CEMENT LTD AKSHAY RAHEJA VERSUS STATE OF MAHARASHTRA, FINANCE DEPARTMENT OTHS. MUMBAI [ 2013 (7) TMI 668 - BOMBAY HIGH COURT ] to the order passed on Voltas Ltd. and Anr. Vs. Commissioner of Sales Tax, Dadra Nagar Haveli, Silvassa and Ors.) dated 03 September, 2012, as also to another order of even date in case of Universal Comfort Products Pvt. Ltd. Anr. Vs. Commissioner of Sales Tax, Dadra Nagar Haveli, Silvassa Ors. to contend that the issue as arising in the present petitions is squarely covered by the decision in Prism Cement Ltd. Anr. Vs. State of Maharashtra and Ors. as also in cases of Voltas Ltd. and Anr. Vs. Commissioner of Sales Tax, Dadra Nagar Haveli, Silvassa and Ors. and Universal Comfort Products Pvt. Ltd. Anr. Vs. Commissioner of Sales Tax, Dadra Nagar Haveli, Silvassa Ors. The orders passed by the Division Bench in Voltas Ltd. and Anr. Vs. Commissioner of Sales Tax, Dadra Nagar Haveli, Silvassa and Ors. by which the Division Bench disposed of the said case following the decision in case of Prism Cement Ltd. Anr. Vs. State of Maharashtra and Ors held that the petitioners have challenged the validity of the Circulars at Exhibits S, U, V W to the petition. Counsel for the parties state that this Court in the case of Prism Cements Ltd. V/s. State of Maharashtra Ors. has quashed similar circulars issued by the Commissioner of Sales Tax, State of Maharashtra. Petition allowed.
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2023 (6) TMI 1235
Sale of High Speed Diesel (for short HSD ) to various private industries of three States viz. Gujarat, Maharastra and Madhya Pradesh at concessional rates of sales tax without complying with the mandatory requisite permission from the Ministry of Petroleum Natural Gas - diversion thereof has caused huge revenue loss to the Government and wrongful gain to the concerned - whether C.B.I. had any case to even lodge a prosecution? HELD THAT:- Admittedly CVC too had not found any case against the accused to grant sanction. The compilation and circulation by OCC on 08.07.1991, of the Guidelines for Release of Petroleum Products and Lubricants to Direct Consumers have not been denied, which suggests that the same was in force and all oil companies were following the guidelines since 1991. The charge-sheet has been filed for period between 1997-2000. The guidelines of OCC dated 08.07.1991 had not found any change. Mr. Shastri had referred in his Fax message of no change in the guidelines for allocation of HSD to processors. According to him, HSD allocation to the processors is approved by the MoP NG based on the certification and recommendation of the TEC of the Oil Companies. The guidelines referred and relied upon does not reflect any certification and recommendation of the TEC to the oil companies, and, when a clarification was sought by P. Sudarsnam by a letter dated 23.08.1999, Mr. Shastri states before the C.B.I. that there was no change in the allocation policy and requested P.Sudarsnam of IOC not to make HSD supplies to the processors without the Ministry s allocation / Linkage, and, since clarification was sought by the E.D., IOC from OCC, reply was sent by OCC, which stated by Mr. Shastri, according to the existing guidelines available, the directions were to be followed by the oil companies necessarily, and according to him the clarification was in accordance with the existing guidelines of the Ministry, and, in the present case, to his clarification on behalf of OCC, Ministry did not issue any such amendment, which implies, concurrence of the MoP NG on the particular issue, upon which the Oil Companies were required to act accordingly. It is required to be noted that TEC was dissolved with effect from 01.04.2002; the non-requirement of the TEC had been noted in the letter dated 27.03.2002. The C.B.I. while filing the F.I.R. has failed to take a clarification from the authorized person of the Ministry as to why the Circular dated 02.01.1981 was only addressed to IOCL for the utilization of HSD from Koyali Refinery and not for any other oil companies. While the guidelines of the OCC does not refer to the requirement of TEC recommendation for uplifting HSD from any other oil companies. All the letters/circulars referred earlier hereinabove with the communication starting from 1988-1996 require TEC evaluation only for supplying LSHF-HSD/High Flash-HSD, LDO and Crude Sludge to processors for the manufacture of petroleum specialities - All the companies were clear on the fact that in the year 1991, the MoP NG had issued the instruction vide letter/circular dated 2/6.1.1981 for instituting a procedure for utilization of HSD from Koyali Refinery and not from any other refineries, and the Ministry had addressed by Circular dated 17.03.1988 to all the oil companies regarding the constitution of TEC on supply of feed-stock for the production of petroleum specialities, by making a reference to the Ministry s letter dated 02.01.1981, for reconstitution of the TEC; it was clarified that it would initially look into the supply of LSHF-HSD, LDO and Crude Sludge for the manufacture of petroleum specialities. There was no reference with regard to the supply of regular HSD. There was no reason for the C.B.I. to file charge-sheet against any of the accused. None of the communications of the Ministry, except of 02.01.1981, for the utilization of HSD from Koyali Refinery, required any TEC recommendation for lifting of HSD from any other companies. The C.B.I. failed to take into account that the Ministry had never called for any clarification from any other company during the period between 1997 2000 in connection with the alleged facts noted in the F.I.R., the officers, who were working in the company, would go by the understanding of the Circulars. The learned Special Judge observed that as per the record, four oil companies are of Gujarat, Maharashtra and Madhya Pradesh and there is no evidence to show that the officers of the oil companies had gathered, or met sales tax officers or staff or purchasers with an intention to commit the alleged offence - For the offence under the P.C. Act, the learned Special Judge found that there is no prima facie evidence to show that the applicants had accepted any gratification from any person as a motive or reward, and the applicants accused had followed all the instructions issued by the MoP NG and acted in discharge of the duties; no sanction has been brought on record by the C.B.I., while sanction has been refused against the officers of the oil companies and against refusal C.B.I. had written to Central Vigilance Committee, but the said committee to confirm the order of non-issuance of sanction against the officers of the oil companies and therefore, no summons were issued against those accused persons. The Petroleum Rules, 2002 came into force on 13.03.2002. A technical body being Oil Industry Safety Directorates Standards (OISD) had been formed for assisting the safety council constituted under the MoP NG. The rules deals with restrictions of delivery and dispatch of petroleum in all classes A, B and C, the requirement of the licence for the import of petroleum, and the dispute with regard to the HSD would have to be resolved by the Board, which is governed by the Petroleum and Natural Gas Regulatory Board Act, 2006. The legal provision of the Petroleum Act and rules thereunder become relevant in this case, since chargesheet came to be filed on 25.03.2009. This Court finds that the Special Judge has not committed any error in discharging the accused. No sanction has been granted for prosecuting the officers of the oil companies. The assessment made by the Special Judge discharging the accused is consistent with the record - the orders passed by the learned Special Judge discharging the accused respondents herein are just and correct, the findings are in accordance to the documents on record, the accused are rightly discharged, as there are no sufficient grounds for proceedings against them. All the present revision applications fail merits and are dismissed as rejected.
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