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TMI Tax Updates - e-Newsletter July 21, 2022 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Refund of amount excessively debited from the Electronic Credit Ledger Account - Pre-deposit before filing of appeal - Since it is not in dispute that the petitioner has complied with the provisions laid down in Section 107(6)(b) of the CGST Act, it necessarily follows that the recovery proceedings for the balance amount shall be deemed to be stayed - the interest of the revenue has been well protected in the manner as specifically provided in the statute. This Court is thus of the considered view that the concerned respondent authority should be directed to restore back the amount which was debited from the electronic credit ledger account of the petitioner - HC Visit to Get Source GST: Maintainability of appeal - time limitation - It is undisputed fact on record that as the petitioner has received the Assessment Order on 21.11.2019, the last date for filing of appeal was 20th March, 2020 which fell within the condonable period of limitation specified under Section 107(4) of the CGST Act and appeal being filed on 26th July, 2021, the appeal should have been treated as filed within the period of limitation in view of Category- III specified in the Order dated 23.09.2021 of the Hon’ble Apex Court. - HC Visit to Get Source GST: Validity of summary of the order/demand notice in DRC-07 - allegation of wrongful availment of ITC without receipt of goods - It is evident that without proper opportunity of furnishing reply to the show-cause notice and without supplying the relied upon documents referred to in the inspection report, the petitioners have been prejudiced in defending themselves. The petitioners may have also lost the opportunity to cross-examine such persons as are relied upon by the tax authorities to support the impugned proceedings. Since the impugned proceedings are clearly in violation of principles of natural justice and the procedure prescribed under the JGST Act, the petitioners are justified in approaching this Court in writ jurisdiction. - HC Visit to Get Source Income Tax: Reopening of assessment u/s 147 - validity of notice u/s 148A - alleged income which is said to have escaped assessment is much below Rs. 50,00,000 - Only on the basis that the cash deposits chargeable to tax have escaped assessment, without anything more, the authority was not justified in jumping to the conclusion that the assessee may have more bank accounts. If such an interpretation is placed on the provision of Section 148A (d) of the Act with reference to expression ‘material available on record’, then in that case, it will open flood gate and even without availability of any material, the authority would be initiating proceedings u/s 148 of the Act, which will completely frustrate the object of incorporation of Section 148A in the Act. - HC Visit to Get Source Income Tax: Addition on account of excess share premium received by the assessee - exception to clause (viib) of sub-section (2) of section 56 - the assessee company does not fall in the negative list of the Third Schedule of SEBI (Venture Capital Funds) Regulations, 1996 in view of the nature of business carried on by it. We are of the considered view that the assessee fulfils the requisite conditions of being a Venture Capital Undertaking. Therefore, the case of the assessee falls within the ambit of the exclusionary provision contained in first proviso to clause (viib) of section 56(2) of the Act. - AT Visit to Get Source Income Tax: Addition u/s 68 - unsecured loans - addition only on the basis of the information received from the Investigation Wing ignoring - the investing company has sufficient source to explain the investment made to the assessee company. From the above what is clear is that the assessee has discharged the onus cast upon her as per the provisions of section 68 of the Act by filing necessary evidences. Therefore, once it is proved that the assessee has discharged her onus, then the onus shift to the Assessing Officer to prove otherwise. - AT Visit to Get Source Income Tax: TDS u/s 194J OR 192 - TDS on on-roll doctors, retainer doctors and consultant doctors - the provisions of section 194J are applicable to the assessee and not those of section 192 of the Income tax Act 1961 therefore, the appellant cannot be treated as an "assessee in default" in so far as the question of deducting tax at source in respect of doctors engaged as retainers and consultants was concerned. - AT Visit to Get Source Income Tax: Additional income from F&O transactions - In view of the peculiar nature of F&O transactions submitted by the Ld. AR, we are of the view that the Ld. AO has wrongly treated the open outstanding contracts as closing / opening stocks of the assessee and made re-working of profit. Therefore, the addition made by Ld. AO is not correct and deserves to be deleted. - AT Visit to Get Source Income Tax: Income accrued in India - income on account of sale of goods is taxable in India or not - the receipts on account of supply/sale of equipment Taurus 60 and other accessories cannot be taxed in India as all the activities in relation to manufacturing of the equipment took place outside India. - AT Visit to Get Source Customs: Validity of final/reassessment order of Bill of Entry - ex parte final assessment of the Bill of Entry - the respondent No.4 has made final assessment/re-assessment of the said Bill of Entry ex parte in January 2019 without affording any personal hearing to the petitioner nor any reason for the variation being made to the said Bill of Entry as filed by the petitioner was communicated. It is also undisputed that no speaking order in support of the finalized Bill of Entry which has been varied has been issued to the petitioner at any point of time. - matter restored back - HC Visit to Get Source Customs: Over-valuation of imported goods - application of rule 4 - value of identical goods - The contract between APML/APRL and EIF is for entire gamut of goods and services and hence cannot be compared with stand alone supply contract with Original Equipment Manufacturers. Invoices issued under two different sets of contractual obligation cannot be compared and relied upon to determine the value. Rule 11, therefore, has no application to the facts of the present case - the revenue has sought to invoke rule 9 by placing reliance on payments made by EIF to different vendors and/or manufacturers of the goods. The said evidence has been held to be not conclusive, as the revenue has considered the payment made through Axis Bank and Bank of Baroda only. - AT Visit to Get Source FEMA: Offence under FEMA - Scope of alternate remedy - violation of Section 4 of FEMA - examining sufficiency of reason or otherwise under Article 226 of the Constitution of India would prejudice the case of either of the parties. It is best left to the Competent Authority to examine the same when it considers the entire issue under sub-Section (3) of Section 37-A of FEMA. - HC Visit to Get Source Indian Laws: Dishonor of Cheque - legally enforceable debt or not - Since the accused rebutted the presumption whatever arisen by adducing oral and documentary evidence, the onus shifts again on the complainant to prove his financial capacity by adducing oral evidence, more particularly, when it is the case of giving loan by cash - In the present case, the complainant has miserably failed to discharge the burden cast on him and there is no cogent evidence to believe that the accused had, in fact, issued the alleged cheque in favour of the complainant towards discharge of legally enforceable debt. - HC Visit to Get Source IBC: Power of NCLT to condone the delay beyond 15 days - Condonation of Delay of 27 days in filing for restoration was admitted - It is beyond comprehension as to how such a prescription as regards the period of filing the appeal and the limited period for condonation of delay in filing such appeal could be imported for the purpose of consideration of the prayer for condonation of delay in filing an application for restoration - No other provision has been brought to our notice which limits or curtails the powers of the Tribunal to condone the delay in filing the application for restoration. It needs hardly any reiteration that the rules or procedure are essentially intended to serve the cause of justice and are not for punishment of the parties in conduct of their matters. - SC Visit to Get Source IBC: Relevant date for filing application by Personal Guarantor as well as Creditor - relevant time from which moratorium shall come into force - when shall the application be treated to be filed - The Adjudicating Authority after due consideration has taken correct view of the matter in holding that filing of the Application under Section 95 by the State Bank of India is on a date when Application was filed and allotted number electronically and the submission of the Appellant that date of filing of the Application shall be the date when Application is numbered has rightly been rejected. - AT Visit to Get Source IBC: CIRP - recovery of Provident Fund with interest - Tenability of the orders and the recovery notices which have been passed by the Respondent, admittedly, after the moratorium was imposed by this Learned Adjudicating Authority - In the present case, the Applicant (Liquidator) has contended that he has admitted certain claims in relation to the dues relating to the provident fund. The Applicant is required to make payments of the admitted dues in priority as has already been held in various cases by the Adjudicating Authority and the Appellate Tribunal. The Applicant (Liquidator) is duty bound, as per the Law laid down to ascertain and prioritise the payments of the social welfare dues. - Orders passed by the Respondent, the orders being in violation of the moratorium imposed are liable to be set aside. - Tri Visit to Get Source VAT: Levy of Entry Tax - Under Section 7 of the Act r/w rule 3(2) or 3(3), no return had been filed. Therefore invoking the best judgment theory, after collecting the details about the cost of the vehicle imported, duty paid on them, insurance charges, clearance charges etc., all put together which are liable to be calculated for the purpose of assessing the entry tax either at the rate of 12.5% or at the rate of 14.5%, accordingly, those amount were assessed. - Therefore, the said action taken on the part of the Revenue in completing the assessment based on the input supplied by the petitioners with regard to the value of the vehicle as well as the amount paid on such import by way of import duty etc., cannot be found fault with. - HC Visit to Get Source Articles GST rcm liability on residential unit used for business purpose and not on unit used for residential purpose Renting of Residential Dwelling - Impact of Tweaking the Exemptions on Industry No Service Tax leviable on the cleaning services provided to non-commercial building or premises RECENT DEVELOPMENTS IN GST Depreciation on Mollasses Tanks in sugar mills – some interesting issues, which can be applicable in many cases where depreciation is allowable. Notifications Central Excise 20/2022 - dated 19-7-2022 - CE Reduce rates of Road and Infrastructure Cess for exports of petrol and diesel - Seeks to amend No. 10/2022-Central Excise, dated the 30th June, 2022. 19/2022 - dated 19-7-2022 - CE Exemption to the excisable goods [Petrol, Diesel and Aviation Turbine Fuel] from Special Additional Excise Duty and Road and Infrastructure Cess when exported from units located in the Special Economic Zones (SEZ). 18/2022 - dated 19-7-2022 - CE Special Additional Excise Duty on production of Petroleum Crude and Aviation Turbine Fuel. 17/2022 - dated 19-7-2022 - CE Exemption to the excisable goods - reduce the Special Additional Excise Duty on exports of Petrol and Diesel - Notification No. 04/2022-Central Excise, dated the 30th June, 2022 amended. DGFT 22/2015-2020 - dated 20-7-2022 - FTP Import of Human Embryo - Amendment of import policy conditions for item under ITC(HS) Code 05119999 of Chapter 05 of ITC (HS), 2022, Schedule -I (Import Policy) GST - States 11/2022– State Tax (Rate) - dated 15-7-2022 - Bihar SGST Seeks to rescind Notification No. 45/2017-State Tax (Rate), dated the 14th November, 2017 10/2022– State Tax (Rate) - dated 15-7-2022 - Bihar SGST Seeks to amend Notification No. 2/2022-State Tax (Rate), dated the 31st March, 2022 09/2022– State Tax (Rate) - dated 15-7-2022 - Bihar SGST Seeks to amend Notification No. 5/2017-State Tax (Rate), dated the 29th June, 2017 08/2022– State Tax (Rate) - dated 15-7-2022 - Bihar SGST Seeks to amend Notification No. 03/2017-State Tax (Rate), dated the 29th June, 2017 07/2022– State Tax (Rate) - dated 15-7-2022 - Bihar SGST Seeks to amend Notification No. 02/2017-State Tax (Rate), dated the 29th June, 2017 06/2022– State Tax (Rate) - dated 15-7-2022 - Bihar SGST Seeks to amend Notification No. 01/2017-State Tax (Rate), dated the 29th June, 2017 05/2022– State Tax (Rate) - dated 15-7-2022 - Bihar SGST Amendment in Notification No. 13/2017-State Tax (Rate), dated the 29th June, 2017 04/2022– State Tax (Rate) - dated 15-7-2022 - Bihar SGST Seeks to amend Notification No. 12/2017-State Tax (Rate), dated the 29th June, 2017 03/2022– State Tax (Rate) - dated 15-7-2022 - Bihar SGST Seeks to amend Notification No. 11/2017-State Tax (Rate), dated the 29th June, 2017 Income Tax 84/2022 - dated 19-7-2022 - IT Payment on transfer of virtual digital asset - Due Date of payment of TDS - read [U] for the letter [T] if the deduction is on higher rate in view of section 206AB for non -filing of return of income - Corrigendum for Notification No. 67/2022 dated 21st June, 2022 Circulars / Instructions / Orders SEBI - SEBI/HO/MIRSD/SEC-5/P/CIR/2022/99 - dated 20-7-2022 Entities allowed to use e-KYC Aadhaar Authentication services of UIDAI in Securities Market as sub-KUA Income Tax - 15/2022 - dated 19-7-2022 Condonation of delay under Section 119(2)(b) of the Income-tax Act, 1961 in filing of Form No. 10BB for Assessment Year 2018-19 and subsequent years Income Tax - 16/2022 - dated 19-7-2022 Condonation of delay under Section 119(2)(b) of the Income-tax Act, 1961 in filing of Form No. 10B for Assessment Year 2018-19 and subsequent years Income Tax - 17/2022 - dated 19-7-2022 Condonation of delay under Section 119(2)(b) of the Income-tax Act, 1961 in filing of Form No. 9A and Form No. 10 for Assessment Year 2018-19 and subsequent years Customs - Instruction No. 15/2022 - dated 20-7-2022 Amendment to S. No. 515A of notification No. 50/2017-Customs News Need for diversification of trade basket, deeper cooperation in bilateral investment and skill development in key sectors: Smt. Patel tells the visiting Gabonese Industry Minister Shri Goyal emphasizes the need for India-Africa Trade and Investment Agreement. Union Minister of State for Commerce & Industry, Smt. Anupriya Patel meets Mr. Melaku Alebel, Minister of Industry, Ethiopia Case Laws: GST 2022 (7) TMI 869 Validity of assessment order - opportunity of hearing was given or not - violation of principles of natural justice - whether Assessment Order came to be passed by the Second Respondent basing on Facebook details and social media postings? - HELD THAT:- A perusal of the Order impugned, prima facie, show that the authorities gathered information from the platform of the Petitioner, which is used for promotion of business and basing on that G.S.T. was assessed. Prima facie it cannot be said that the Petitioner has not conducted any event during the relevant period. The Writ Petition is dismissed giving liberty to the Petitioner to approach the Appellate Authority and avail the remedy by putting forth the grievances on the factual aspects, and without going into the merits of the case. It is made clear that any observations made in this order are only for the purpose of passing this order and the same shall not influence the Appellate Authority while deciding the matter, in case any Appeal is filed. 2022 (7) TMI 868 Maintainability of appeal - failure to make pre-deposit of 7.5% of the duty and penalty - HELD THAT:- The grounds of extreme financial hardship during period is not such which can be outrightly rejected. In order to obviate the difficulties faced by litigants and the authorities, the Hon ble Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (3) TMI 497 - SC ORDER] has passed orders from time to time extending the period of limitation in judicial and quasi-judicial proceedings. The order in original was passed during the peak of first wave of covid. The grounds of extreme financial hardship is understandable. Petitioner is now ready and willing to avail the alternative remedy of appeal and comply the mandatory requirement of pre-deposit of 7.5% of the duty and penalty. As such, subject to the deposit of 7.5% of the duty and penalty amount within a period of two weeks, the Appeal shall be restored before the Commissioner (Appeals), Central GST CX-, Ranchi- Respondent no.2 - Petition disposed off. 2022 (7) TMI 867 Refund of amount excessively debited from the Electronic Credit Ledger Account - Pre-deposit before filing of appeal - time limitation - HELD THAT:- The petitioner has preferred an appeal before the appellate authority under the CGST Act against the order of adjudication dated December 3, 2021. There is some delay in preferring the said appeal and the learned Advocate for the petitioner contends that the period of limitation being extended by the Hon ble Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2022 (1) TMI 385 - SC ORDER] , the respondent authorities cannot contend that the appeal was filed beyond the prescribed period of limitation. However, this Court does not deem it necessary to decide such issue at this stage as this Court is now concerned as to whether there has been substantial compliance of the provisions laid down under sub-Section (6) of Section 107 of the CGST Act as the scope of this writ petition is whether the respondent authority can be directed to refund the amount debited from the Electronic Credit Ledger Account of the petitioner. Since it is not in dispute that the petitioner has complied with the provisions laid down in Section 107(6)(b) of the CGST Act, it necessarily follows that the recovery proceedings for the balance amount shall be deemed to be stayed - the interest of the revenue has been well protected in the manner as specifically provided in the statute. This Court is thus of the considered view that the concerned respondent authority should be directed to restore back the amount which was debited from the electronic credit ledger account of the petitioner on March 7, 2022 which is appearing from the document annexed as Annexure P/6 at page 70 of the writ petition. The concerned respondents are directed to restore the aforesaid amount, which was debited from the electronic credit ledger account of the petitioner on March 7, 2022 forthwith but positively within a period of two weeks from date - Application allowed. 2022 (7) TMI 866 Maintainability of appeal - time limitation - appeal rejected on the ground that the appeal was presented beyond the statutory period prescribed under Section 107(1) of the Central Goods and Services Tax Act, 2017 - allegation is that the cancellation of registration was not entertained by the Appellate Authority-Additional Commissioner, GST (Appeal) - HELD THAT:- This Court, having the opportunity to peruse the Order dated 23rd September, 2021 of the Hon ble Supreme Court in [ 2021 (11) TMI 387 - SC ORDER] , finds that the said Court in no ambiguous terms specified that the period from 15th March, 2020 till 2nd October, 2021 stands excluded for the purpose of computing the periods prescribed under any law which prescribes period(s) of limitation for instituting proceedings, outer limits (within which the Court or Tribunal can condone delay) . It is undisputed fact on record that as the petitioner has received the Assessment Order on 21.11.2019, the last date for filing of appeal was 20th March, 2020 which fell within the condonable period of limitation specified under Section 107(4) of the CGST Act and appeal being filed on 26th July, 2021, the appeal should have been treated as filed within the period of limitation in view of Category- III specified in the Order dated 23.09.2021 of the Hon ble Apex Court. The Additional Commissioner, GST (Appeal) conspicuously ignored to keep in view the purport of said Order. Therefore, there is warrant for intervention in the appellate order under challenge in the writ petition. The impugned Appellate Order dated 7th October, 2021 is hereby set aside and the appeal is restored to file - Petition disposed off. 2022 (7) TMI 814 Validity of summary of SCN - it s alleged that the summary of show-cause notice has pre-judged and pre-decided the entire issue and has in fact fastened the liability towards tax, interest and penalty upon the individual petitioners - opportunity of hearing not granted - violation of principles of natural justice - HELD THAT:- The adjudication proceedings in each case were based upon inspection undertaken on the basis of the intelligence inputs provided to the concerned circles by the headquarters of the State Tax Department. It is also evident from the records and the stand taken by the respondents in the counter affidavit that no relied upon documents in the inspection report were supplied to the petitioners. Respondents have now after producing the compilation of records of the proceedings in individual cases, not been able to dispute that no proper showcause notice was issued in terms of Section 74(1) of the JGST Act to the individual petitioners. In the absence of a proper show-cause notice the petitioners herein have been denied proper opportunity to defend themselves of the charges. The requirement of affording opportunity of hearing as contemplated in Section 75(4) of the JGST Act has also been denied. Section 75(5) provides that in case sufficient show-cause is shown by the person chargeable with tax, the proper officer shall grant time to the said person and adjourn the hearing for reasons to be recorded in writing provided that no such adjournment shall be granted for more than three times to a person during the proceedings. At this stage that the summary of show-cause notice in case of each of the writ petitioners is in the same format and language. It does not indicate any date for filing reply. The language employed also creates a clear impression that the liability towards tax, penalty and interest has been already pre-determined. None of the petitioners got any opportunity to reply to the summary of the show-cause notice either as no date or time was indicated therein. The adjudication order has been passed thereafter confirming this liability towards tax, penalty and interest indicated in the summary of show-cause notice in case of each of the writ petitioners - Learned counsel for the State has not been able to dispute that the summary of show-cause notice in Form GST DRC-01 in case of individual petitioners and the adjudication order also in case of individual petitioners are in the same language and format and that no opportunity whatsoever was given to the individual petitioners to furnish reply to the summary of show-cause notice. The summary of the order in Form GST DRC 07 has been issued in individual cases conveying the assessment of liability towards tax, interest and penalty adjudged by the State Tax Officer on wrongful availment of ITC without receipt of goods in contravention of Section 16(2) using fraudulent methods in case of individual petitioners in like manner. It is evident that without proper opportunity of furnishing reply to the show-cause notice and without supplying the relied upon documents referred to in the inspection report, the petitioners have been prejudiced in defending themselves. The petitioners may have also lost the opportunity to cross-examine such persons as are relied upon by the tax authorities to support the impugned proceedings. Since the impugned proceedings are clearly in violation of principles of natural justice and the procedure prescribed under the JGST Act, the petitioners are justified in approaching this Court in writ jurisdiction. The impugned show-cause notice, the adjudication orders and the summary of the order/demand notice in DRC-07 in the case of the individual petitioners cannot be sustained in the eyes of law and on facts - the respondents State Tax authorities are at liberty to initiate fresh proceedings by issuing a proper show-cause notice in respect of the individual writ petitioners relating to the relevant tax periods and take a decision thereupon in accordance with law - petition allowed. Income Tax 2022 (7) TMI 865 Reopening of assessment u/s 147 - validity of notice ssued u/s 148A - non-disclosure of cash deposited in the bank account - alleged income which is said to have escaped assessment is much below Rs. 50,00,000 - HELD THAT:- As while passing an order u/s 148A the authority is required to reach satisfaction to not only that income chargeable to tax has escaped assessment, but in case where three years have elapsed from the end of the relevant assessment year, the order u/s 148 for issuance of notice u/s 148 could be passed if there were no statutory impediment as contained in Section 149 Sub-section (1) (b) of the Act, referred to hereinabove. The authority, as is apparent, sought to bridge this statutory impediment not on the basis of any material available on record but only with the help of a surmise that the assessee may have some more accounts. Even before this Court, when the reply has been filed by the respondent, no material has been placed to show that at the time when the authority passed order under Section 148A of the Act, there was some material on record that the income chargeable to tax which escaped assessment amount to or is likely to amount Rs.50,00,000/- or more for that year. On conjoint reading of the provisions contained in Section 148A and what has been provided u/s 149, it is vividly clear that in order to initiate proceedings u/s 148A, it is not enough that in case where notice is proposed to be issued under Section 148 after three years have elapsed from the end of the relevant assessment year that there should exist material available on record to reach to conclusion that some income chargeable to tax has escaped assessment, but the amount should be more than Rs.50,00,000/-. Only on the basis that the cash deposits chargeable to tax have escaped assessment, without anything more, the authority was not justified in jumping to the conclusion that the assessee may have more bank accounts. If such an interpretation is placed on the provision of Section 148A (d) of the Act with reference to expression material available on record , then in that case, it will open flood gate and even without availability of any material, the authority would be initiating proceedings u/s 148 of the Act, which will completely frustrate the object of incorporation of Section 148A in the Act. It is well settled principle of interpretation that the taxing statute is required to be construed strictly. The interpretation as has been suggested by the learned counsel for the revenue cannot be placed upon the expression material available on record to include possibility of collection of any relevant or tangible material for opening of proceedings under Section 148A of the Act. Present is a case where the respondent has failed to place before the Court any material to suggest that the income exceeding Rs.50,00,000/- chargeable to tax has escaped assessment, which would warrant issuance of order under Section 148A (d) of the Act followed by issuance of notice under Section 148 of the Act. - Decided in favour of assessee. 2022 (7) TMI 864 Deduction u/s 35 (2AB) - Allowability of R D expenditure - HELD THAT:- CIT(A) noted that the income from contract research has been offered for taxation, the cost of contract research has not been claimed by the assessee for weighted deduction. The expenditure incurred by the assessee for mahapae unit were properly used by the above expenditure on contract research work, the Sinnar unit has nothing to do with the same. AO is incorrect in reducing the income of contract research activity from the eligible claim. Certain judicial precedent including the decision of Hon'ble Karnataka High Court [ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] was followed. He has also dealt with the issue that after the income and expenditure are adjusted it would amount to double taxation of income. In the result, we do not find any infirmity in the order of the learned CIT(A) in deleting the disallowance of deduction under Section 35(2AB) of the Act. Accordingly, the solitary ground of appeal raised by the learned Assessing Officer is dismissed. 2022 (7) TMI 863 Levy of penalty u/s 271(1) (c) - inaccurate particulars of income by claiming deduction under section 80IA on interest income - HELD THAT:- The quantum addition confirmed by the ITAT was challenged before the Hon'ble High Court and same was admitted which was posted for final hearing - Thus, it was also stated when the issue is pending before the Hon'ble High Court it became debatable issue and penalty cannot be levied. It was also stated that even after the addition confirmed by the co-ordinate Benches on the quantum proceedings, the income of the assessee is still assessed under Section 115JB of the Act. Circular dated 31 December 2015 was referred to that in cases prior to 1 April 2016 as any adjustment is made, the penalty cannot be levied under Section 271(1) (c) of the Act. Even on this ground, also penalty requires to be deleted. In view of the above arguments, where individually these arguments are tested for levy of penalty levied by learned CIT (A), penalty order suffers from severe infirmities. As following the decision in Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT ] where in it is held that Where assessment order clearly records satisfaction for imposing penalty on one or other, or both grounds mentioned in section 271(1)( c ), a mere defect in notice, not striking off irrelevant matter would vitiate penalty proceedings . Therefore, the appeal of the assessee deserves to be allowed on this point itself. Accordingly, we quash the penalty levied by the learned CIT (A) - Appeal of assessee allowed. 2022 (7) TMI 862 Addition on account of excess share premium received by the assessee - whether or not the case of the assessee is covered by the exception to clause (viib) of sub-section (2) of section 56? - HELD THAT:- We have perused the definition of Venture Capital Undertaking given in clause (c) of Explanation to section 10 (23FB) as also its (VCU) definition in clause (n) under the head definitions contained in the SEBI (Venture Capital Funds) Regulations, 1996 issued by the SEBI. The assessee is a private limited company engaged in the business of IT enabled and BPO services. The assessee thus satisfies the twin conditions prescribed under clause (n) of Regulation 2 of the Venture Capital Funds Regulations. Moreover, the assessee company does not fall in the negative list of the Third Schedule of SEBI (Venture Capital Funds) Regulations, 1996 in view of the nature of business carried on by it. We are of the considered view that the assessee fulfils the requisite conditions of being a Venture Capital Undertaking. Therefore, the case of the assessee falls within the ambit of the exclusionary provision contained in first proviso to clause (viib) of section 56(2) of the Act. CIT(A) referred to the decision of Kerala High Court in Sunrise Academy of Medical Specialities (India) (P) Ltd. [ 2018 (8) TMI 203 - KERALA HIGH COURT] . This decision is rendered in the context of first proviso to section 68 inserted by the Finance Act, 2012 w.e.f. 1.04.2013. The Hon ble Court held that section 56(2)(viib) is not controlled by section 68. CIT(A) lost sight of the second proviso to section 68 which carves out an exception to the first proviso which says that first proviso shall not apply if the person, in whose name the sum referred to therein is recorded, is a Venture Capital Fund or a Venture Capital Company as referred to in clause (23FB) of section 10. Hence, reliance by the Ld. CIT(A) on the decision (supra) is misplaced. Accordingly, we hold that the first proviso to section 56(2)(viib) is applicable to the case of the assessee and decide ground No. 2 in favour of the assessee. Nature of expenses - disallowance on account of company international system expense by treating it as capital expenditure - HELD THAT:- It is well settled that if the expenditure is not incurred for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business but for running of the business of the assessee more efficiently, it partakes the character of revenue expenditure. The case of the assessee has all along been that it made payment for getting access to pay roll services, subscription services etc. in software wherein the assessee does not get any right to exploit the software for commercial purposes as the ownership remains with the vendor itself. The invoices available on record support the contention of the assessee that payment was made for subscription services and use of software and not for any outright purchase. The reliance by the CIT(A) on the decision of Maruti Udyog [ 2004 (10) TMI 278 - ITAT DELHI-A] is misplaced as in that case the software was acquired by the assessee which was held to be capital asset and hence expenditure incurred on acquiring the software was held to be capital expenditure. In the case of the assesee before us there is no acquisition of software. The payment was made for mere usage of software. The ownership remained with the vendor. We, therefore, hold that the impugned expenditure is of revenue nature and is an allowable deduction. Accordingly, we set aside the order of the Ld. CIT(A) and allow ground No. 3 of the assessee. Ad-hoc disallowance of telephone and internet expenses account - AO disallowed 20% of the expenses claimed observing that utilisation of the services of telephone and internet for purposes other than business of the assessee cannot be denied - CIT(A) reduced disallowance to 10% of the expenses resulting in upholding of the impugned disallowance - HELD THAT:- AO/CIT(A) made the observation that there was twelve times increase in the expenditure as compared to the preceding year which is disproportionate but that alone cannot be the basis of disallowance. Genuineness of the expenditure has not been doubted. Moreover, the increase in revenue from Rs. 1,21,78,271/- in the last year to Rs. 5,64,16,108/- in this year has been overlooked by both Ld. AO and Ld. CIT(A). We, therefore, hold that the impugned disallowance is not justified at all. Accordingly, the order of the Ld. CIT(A) is set aside. AO is directed to delete the disallowance in toto and modify the assessment. Ground No. 4 is thus allowed. 2022 (7) TMI 861 Deduction u/s 80IB - Non filling of return of income before due date - HELD THAT:- As relying on case M/S VANSHEE BUILDERS DEVELOPERS P. LTD. [ 2012 (12) TMI 1056 - ITAT BANGALORE] the provisions u/s. 80AC of the Act requiring the assessee to furnish return of income before the due date specified u/s. 139(1) of the Act is mandatory and not directory. Therefore, we hold the assessee is not eligible for deduction u/s. 80IB(7) of the Act. For the AY 2008-09, the assessee filed its return of income on 20.3.2009 declaring an income of Rs.1,93,37,543 after claiming deduction of Rs.82,87,519 u/s. 80IB(7) - The facts for this year being identical with AY 2007-08, we hold that the assessee is not eligible for deduction u/s. 80IB(7) - During the course of haring, the ld. AR submitted that the assessee had made an application before the CBDT u/s. 119(2B) of the Act for condonation of delay in filing the return by the assessee. Accordingly, we direct the AO to decide the issue in accordance with law pursuant to the CBDT directions. 2022 (7) TMI 860 Exemption u/s 80G - charitable activity u/s 2(15) - appellant has been serving the liquors, which emanates from the bills of seminar along with hotel bills - Whether Serving of liquor cannot be charitable activities u/s 2(15)? - HELD THAT:- We are fully agree with the contention of the Ld. DR that serving of liquor is not charitable activity u/s 2(15) but the CIT (Exemption) has not mentioned the details of such activities conducted by the appellant in the order impugned. CIT(Exemption) has relied on various bills of the Appellant wherein the service of liquor has been mentioned, but the CIT(A) has not mentioned the details of clarification/reply given by the Applicant in the order impugned and not adjudicated the reply given by the Applicant. The order of the Ld.CIT(A) is non speaking one. Therefore, we deem it proper to set aside the matter to the file of the CIT(Exemption) to decide the matter afresh in accordance with law and pass appropriate speaking order. Needless to say that an opportunity of being heard be given to the Appellant herein. Accordingly, we allow the Assessee s Grounds of Appeal for statistical purpose. 2022 (7) TMI 859 Rectification u/s 154 - rectification application on the ground that the appellate order is not a speaking order on the issue involved - HELD THAT:- It was the case of the Assessee before CIT(A) that amount written back by the Assessee is not chargeable to tax on the ground that such income denotes write back of advertisement subsidy payable out of provisions for advertisement subsidy created in AY 2009-10 and the deduction for said provision has not been allowed in Assessment Year 2009-10 when it was created. CIT(A) has disposed of the rectification application against the assessee on the ground that such alleged error requires reconsideration of the entire matter and cannot be bracketed in the category of mistake apparent from record. We endorse the view taken by the CIT(A) on the touchstone of limited scope of Section 154 of the Act. In the absence of relevant facts emerging from records corroborated by documentary evidences, one cannot say that the income included by the assessee itself should be excluded for the purposes of computation. It is not known from the record that any such disallowance was carried out in the preceding assessment year 2009-10 while determining the taxable income of the assessee. The error committed thus cannot be bracketed in the league of apparent error contemplated under Section 154 - Appeal of the assessee is dismissed exparte. 2022 (7) TMI 858 Rectification u/s 154 - Credit of TDS - HELD THAT:- As position of law being clear, we have no hesitation to accept the plea of the assessee. Denial of TDS credit in contradiction to the plain provisions of Section 199 r.w. Section Rule 37BA is clearly in the league of apparent error and thus liable to be rectified u/s 154 of the Act. Hence, the assessee would be entitled to claim of credit of TDS corresponding to the income reported in Assessment Year 2016-17 itself, provided the assessee has not claimed any credit for TDS in earlier Assessment Year 2015-16. On being satisfied, the AO shall grant the TDS credit in terms of observations made hereinabove. The impugned order of the CIT(A) is set aside and the matter restored back to the file of the Assessing Officer for grant of credit in accordance with law. Appeal of the assessee is allowed for statistical purposes. 2022 (7) TMI 857 Capital gain - deduction of indexation value of fair market value as on 01/4/1981 - HELD THAT:- On perusal of Form No. 35 and grounds of appeal annexed therewith, we find that the assessee has raised specific ground of appeal for allowing indexation cost as on 01/04/1981. However, this ground of appeal has not adjudicated by the ld. CIT(A). We also find that the property was acquired prior to 01/04/1981 by the predecessor in interest of assessee, thus the cost of acquisition for the purpose of indexation has to be taken from the year 1981, therefore, we direct the Assessing Officer to grant deduction on the basis of indexed value as on 01/04/1981. Needless to direct that before passing the order on this issue/claim, AO shall grant opportunity of hearing to the assessee and to pass the order in accordance with law. The assessee is also directed to provide complete details to the assessing officer and not to cause further delay. In the result, the limited submissions made by the assessee against various grounds of appeal raised by the assessee are allowed for statistical purpose. 2022 (7) TMI 856 Characterization of income - agriculture income OR income from other sources - HELD THAT:- We find that lower authorities treated the amount as it was not a part of agricultural receipt and was shown as cash . We find that assessee failed to substantiate by any documentary evidence that any amount was received in cash from Shri Khedut Sahakari Khand Udhyog Mandli Ltd. Thus, we do not find any merit in the ground of appeal raised by assessee, hence, we affirm the order of Ld. CIT(A). This ground No1 of assessee s appeal is dismissed. Disallowances of expense on agricultural income - HELD THAT:- AO while passing the assessment order noted that assessee has claimed agricultural expenses only 15% (round figure), which is on lower side and Assessing Officer estimated the expenses of 40% and after allowing set off of the expenses shown by assessee worked out the disallowances - Before Ld. CIT(A) assessee contended that certain expenses were borne by Shri Khedut Sahakari Khand Udyog Ltd. We find that such contention of assessee was not accepted by the ld CIT(A) for want of corroborative evidence. Before us assessee vehemently relied upon the order of co-ordinate Benches of ITAT Ahmedabad in the case of Narendrasinh Anoopsinh Jadeja (HUF) [ 2010 (3) TMI 1273 - ITAT AHMEDABAD ] and also coordinate Bench of Chandigarh in the case of Shri Karanbir Singh Sandhu [ 2010 (3) TMI 1272 - ITAT CHANDIGARH ] We find that coordinate bench of Tribunal in Narendrasinh Anoopsinh Jadeja (HUF) [ 2010 (3) TMI 1273 - ITAT AHMEDABAD ] similar agriculture expenses were restricted to 30%. Therefore respectfully following the said judicial precedent, we direct the Assessing Officer to restrict the disallowance of agricultural expenses to the extent of 30% in place of 40%. The Assessing Officer is directed to re-compute the disallowance of expenses. 2022 (7) TMI 855 Deduction u/s 80B - deduction disallowed on the ground that the recipient M/s. Ashwini Rural Cancer Research and Relief Society did not enjoy the corresponding registration - HELD THAT:- We note during the course of hearing that the instant issue is no more res integra as the Tribunal learned co-ordinate bench order in revenue s appeal [ 2019 (3) TMI 723 - ITAT PUNE ] as held trust is registered u/s.12A of the Act and also have obtained its exemption u/s.80G of the Act. In view of the aforesaid facts and circumstances, relief granted to the assessee by the Ld. CIT(Appeals) is sustained. Disallowing sec. 35(2AB) deduction - form No. 3CL dt. 21-5- 2015 was received subsequent to the last date for filing of the revised return - HELD THAT:- Revenue s technical arguments fail to evoke are concurrence once it has come on record that the assessee had very well proceeded as per the prescribed authority DSIR s approval. And also that neither the Assessing Officer nor the CIT(A) have been able to find any fault therein. Faced with this situation and taking note of hon ble apex court in the case of Goetz India Ltd. [ 2006 (3) TMI 75 - SUPREME COURT ] and Pruthvi Brokers and Shareholders .[ 2012 (7) TMI 158 - BOMBAY HIGH COURT ], we exercise our statutory second appellate jurisdiction to accept the assessee s impugned claim in principle and direct the learned Assessing Officer to carry out all necessary factual verification in consequential proceedings. We order accordingly. Adhoc disallowance of vehicle expenses thereby quoting personal use - HELD THAT:- Assessee has already succeeded on this issue in A.Y. 2004-05 before the Tribunal - We adopt judicial consistency to hold that the learned lower authorities have erred in law and on facts in making the impugned disallowance in case of assessee company. Accepted accordingly. 2022 (7) TMI 854 Nature of receipt - VAT subsidy received from the Andhra Pradesh Government - revenue or capital expenditure - AO held that the said receipt is in the form of an incentive and therefore it is taxable as income - HELD THAT:- DR could not controvert the above decision of the Tribunal by filing any higher Court s decision having reversed or modified the above order of the Tribunal. Respectfully following the above decision of the Tribunal, CIT(A) has rightly directed the AO to delete the addition made at ₹.10,85,54,000/- on this count. We find no infirmity in the order passed by the ld. CIT(A). Thus, the ground raised by the Revenue is dismissed. Allowability of corporate social responsibility expenditure - assessee has claimed corporate social responsibility expenses which was debited under the head miscellaneous expenses - assessee has not proved that the said expenses had been incurred for the business purposes and since there is no provision exists in the Income Tax Act to allow the expenses which are expended for non-business purposes, ao disallowed the same - HELD THAT:- Respectfully following the above decision of the Tribunal assessee s own case for the assessment year 2011-12 [ 2016 (10) TMI 522 - ITAT CHENNAI] CIT(A) has rightly directed the Assessing Officer to delete the addition - Thus, we find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed. Disallowance of depreciation claimed u/s 32 - AO asked the assessee as to why the depreciation claimed at the rate of 80% should not be restricted to 15% since it will come under the category (xii) Renewable Energy devices being windmills and any specially designed device which run on windmills - HELD THAT:- As on perusal of the assessment order or appellate order, it is not clear as to whether the said windmills and any specially designed devices which run on windmills are installed on or before 31.03.2012 or on or after 01.04.2012. Accordingly, we direct the Assessing Officer to verify as to whether the windmills are installed on or before 31.03.2012 or on or after 01.04.2012 and decide the issue afresh in accordance with law after affording an opportunity of being heard to the assessee. We make it clear that if the said windmills and any specially designed devices which run on windmills are installed on or before 31.03.2012 then the assessee would be eligible for depreciation at 80% and if the same was installed on or after 01.04.2012 then the assessee would be eligible for claiming depreciation at 15% only. Disallowance of additional depreciation under section 32(1)(iia) - When asked about the mismatch of invoices, the assessee has submitted that the assets were purchased in earlier year and were kept in WIP and capitalized during the assessment year under consideration. However, the assessee could not furnish the details of capitalization/work in progress of earlier years or any credible evidence in support of the claim of additional depreciation on plant and machinery for the assessment year under consideration. Accordingly, the Assessing Officer disallowed the claim of additional depreciation for want of evidence. On appeal, since the assessee failed to furnish any material evidence in support of its claim, the ld. CIT(A) confirmed the disallowance made by the Assessing Officer. Even before the Tribunal, the assessee could not furnish any documentary evidence so as to justify the claim of additional depreciation. Thus, the disallowance additional depreciation claimed by the assessee confirmed by the ld. CIT(A) is sustained. Disallowance of license fee - AO was of the view that the tenure of the agreement dated 29.07.2011 by which the license fee paid to the licensor M/s. Wind Direct GmbH, a German company being long gives the assessee enduring benefit and therefore the same is capital in nature - HELD THAT:- Once it is clear that the payment of license fee is revenue in nature, in view of the above decision of the Tribunal reproduced hereinabove, wherein, the ratio laid down in the judgement of the Hon ble Supreme Court in the case of CIT v. I.A.E.C. (Pumps) Ltd. [ 1997 (4) TMI 14 - SUPREME COURT] has been relied upon, and no other higher Court s decision was brought on record to take a different view, we have no hesitation to hold that the license fee paid by the assessee towards know-how and technical assistance in pursuance of the agreement dated 29.07.2011 is revenue in nature. Accordingly, we set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to allow deduction of license fee as claimed by the assessee. Thus, the ground raised by the assessee is allowed. 2022 (7) TMI 853 Revision u/s 263 by CIT - withdraw the credit of TDS claimed and allowed in assessment completed under Section 143(3) of the Act with a direction to the AO to allow the same in the year when the corresponding income was offered by the assessee to tax after necessary verification - HELD THAT:- Issues pointed out by the PCIT in his impugned order were not that material or relevant to examine the claim of the assessee for deduction on account of land vacation compensation charges, and since the factual position which the learned PCIT wanted the AO to ascertain by making inquiry was clearly evident from the details and documents already filed by the assessee during the course of assessment proceedings including the agreement for vacating and handover, we are of the view that it is not a case where the AO can be said to have passed the order u/s 143(3) of the Act without inquiries or verification which should have been made in the facts and circumstances of the case as envisaged in Explanation 2(a) to Section 263 - In our opinion, there was thus no error in the order of the Assessing Officer passed under Section 143(3) of the Act on this issue as alleged by the learned PCIT calling for revision under Section 263 of the Act. We accordingly cancel the impugned order passed by the learned PCIT u/s 263 to the extent it revises the order of the Assessing Officer passed under Section 143(3) of the Act on the issue of assessee s claim for deduction on account of land vacation compensation charges. We, however, uphold the said order passed u/s 263 of the Act on the issue of the claim of the assessee for credit of TDS as the same was wrongly allowed by the Assessing Officer in the assessment order passed under Section 143(3) of the Act as agreed even by the learned Counsel for the assessee at the time of hearing before us. Appeal of the assessee is partly allowed. 2022 (7) TMI 852 Disallowance of Excess cane price - Disallowance of sale of sugar at concessional rate - HELD THAT:- In view of the statement made by both the sides that the facts in the present appeal is identical, the issue relating to excess sugarcane price paid by the assessee is restored to the file of Assessing Officer with similar directions as above in the case of Majalgaon Sahakari Sakhar Karkhana Ltd. [ 2019 (3) TMI 906 - ITAT PUNE] - AO shall decide the issue after affording reasonable opportunity of hearing to the assessee, in accordance with law. Appeal of the assessee is allowed for statistical purpose. 2022 (7) TMI 851 Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - as per assessee notice was issued for both the limbs without strike off irrelevant limb and specifying the charge for which the notice was issued - assessee submits that since the notice was issued without specifying the charge for which notice was issued the penalty proceedings initiated were bad in law - HELD THAT:- As could be seen from the above in the case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s.271(l)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. In SAHARA INDIA LIFE INSURANCE COMPANY, LTD. [ 2019 (8) TMI 409 - DELHI HIGH COURT] held that the notice issued by the Assessing Officer was bad in law if it did not specify under which limb of section 271(1)(c ) of the Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. Ratio of the full bench decision of the Hon'ble Bombay High Court (Goa) squarely applies to the facts of the assessee's case as the notice u/s. 274 r.w.s. 271(l)(c) of the Act was issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. Thus, respectfully following the said decision we hold that the penalty order passed u/s. 271(1)(c) by the Assessing Officer is bad in law and accordingly the penalty order passed u/s. 271(l)(c) of the Act for Assessment Year 2008-09 is quashed - Decided in favour of assessee. 2022 (7) TMI 850 Depreciation u/s 32 - non-compete fee paid to Dr.PV Venugopal is an intangible asset - HELD THAT:- We observed that the non compete fee paid to Dr.P.V.Venugopal upon the letter agreeing to refrain for a period of 18 months from entering into agreement as a non-compete fee has been held as capital expenditureand the issue has been examined by the AO and not allowed the depreciation on the capital expenditure incurred by the assessee and ld.CIT(A) has confirmed the order of the AO. We hold that the assessee is eligible to claim of depreciation on non-compete fee as intangible assets. Eligibility of deduction u/s. 80HHC - During the course of arguments the ld. AR undertook that if a chance is given again to the assessee, he would be eligible to produce the details whether it comes u/s. 28(iiib) or 28(iiid). Considering the prayer of the assessee, we are sending back again to the AO for computation of the eligibility deduction u/s.80HHC. In the result, the ground No. 2 is allowed for statistical purposes. 2022 (7) TMI 849 Levy of penalty u/s 271(1)(c) - Addition u/s 68 - assessee had failed to prove the identity and creditworthiness of the shareholders as well as genuineness of the transaction - HELD THAT:- A perusal of the concluding part of the assessment order reveals that the Assessing Officer, in this case, has initiated the penalty proceedings u/s 271(1)(c) of the Act on both limbs i.e. for concealing particulars of income and furnishing inaccurate particulars of income. We agree with the DR contentions in such cases both the limbs i.e. furnishing of inaccurate particulars of income and concealment of income overlap each other. Assessing Officer, in this case, has specifically mentioned that the penalty proceedings are initiated under both the limbs. All the facts relating to the share application money and share premium and that being not genuine transaction and the identity and creditworthiness of the share subscribers being not proved have been duly discussed in the assessment order and based on the aforesaid facts, the penalty proceedings have been initiated. It is not a case where the assessee was not aware of the facts of the case or the charge upon which the penalty proceedings have been initiated. The assessee neither come forward with any explanation during the penalty proceedings u/s 271(1)(c) of the Act nor during the appellate proceedings before the CIT(A). Even the assessee has failed to attend the proceedings before this Tribunal and no explanation has been put forth by the assessee in this case. - Assessee appeal dismissed. 2022 (7) TMI 848 Assessment u/s 153A - Addition u/s 68 - unsecured loans - No identity of the contributor/creditor as well as the genuineness of the transactions provided - search operation under section 132 - HELD THAT:- In the absence of incriminating material found as a result of search, no addition can be made in the assessment completed under section 143(3) r.w.s. 153A/153C of the Act, if such assessments are unabated on the date of search. See Meeta Gutgutia [ 2018 (7) TMI 569 - SC ORDER] In this case, there is no dispute with regard to the fact that the search was conducted on 18.12.2012 and as on date of search assessment for the assessment year 2011-12 is unabated and thus in the absence of any incriminating material, no addition can be made including the addition of share capital under section 68 of the Act. In this case, if we go through the addition made under section 68 of the Act, we find that there is no reference to any incriminating material and thus, we are of the considered opinion that the addition made under section 68 of the Act cannot be sustained and thus, we direct the Assessing Officer to delete the addition made in respect of share capital under section 68 of the Act in the case of Shri Pankaj Agarwal, Smt. Shobha Agarwal and Smt. Rita Agarwal. We find that the sole basis for the Assessing Officer to make the addition under section 68 of the Act is that investigation carried out by the Income Tax Department on certain entry providers and statement recorded from them. Except this, no other evidence was available with the Assessing Officer to prove that share capital received from M/s. Kaner Investments Ltd. is accommodation entry taken to convert unaccounted income of the assessee. On the other hand, the assessee has filed all the evidences including name and address of the creditors, confirmation from the parties, financial statements, etc. to prove the identity of the creditor and also filed necessary bank statement to prove the genuineness of the transaction. Further, the investing company has sufficient source to explain the investment made to the assessee company. From the above what is clear is that the assessee has discharged the onus cast upon her as per the provisions of section 68 of the Act by filing necessary evidences. Therefore, once it is proved that the assessee has discharged her onus, then the onus shift to the Assessing Officer to prove otherwise. In this case, except statement of third party, the Assessing Officer does not have any other evidence to justify the accommodation entry was provided to the assessee. In this case, the Assessing Officer has made the addition only on the basis of the information received from the Investigation Wing ignoring all the evidences filed by the assessee and thus, the Assessing Officer has erred in making the addition under section 68 of the Act. Accordingly, we direct the Assessing Officer to delete the addition made under section 68 of the Act. - Appeal of assessee allowed. 2022 (7) TMI 847 Validity of Reopening of assessment u/s 147 - Absence of primary document for necessary approval of higher authority - as per assessee no notice was available with file of the Assessing Officer and no reasons recorded reopening the case was available with the AO - HELD THAT:- We have observed that the department has failed to issue notice, failed to report the reasons for reopening the case and also failed to take the approval of the appropriate authority before as initiation of proceedings u/s 147 - These facts is not controverted by the ld. DR appearing on behalf of the revenue. Therefore, since the notice is not legally issued, the proceedings also not valid in the eye of law and thus, these additional technical grounds of the assessee is allowed without going into merits of the case. The appeal of the assessee is thus, allowed on technical grounds. Penalty u/s 271(1)(b) - Since, the very basis, upon which the proceedings is initiated and notice is alleged to have been issued, in fact is not issued and served upon the assessee as confirmed by the AO in his report dated 26.10.2021. In view of this fact being on record the subsequent levy of penalty of non-compliance on that notice has not valid force so as to levy penalty u/s. 271(b). In terms of this observation the appeal of the assessee is allowed on technical ground. Since, we have allowed the appeal of the assessee on technical ground 2022 (7) TMI 846 TDS u/s 194J OR 192 - TDS on on-roll doctors, retainer doctors and consultant doctors with regard to applicability of Section 194J and Section 192B and also Section 201(1A) - HELD THAT:- Having gone through the provisions of section 192, Section 194J, Section 201 of the Income tax Act 1961, facts of the instant case and the judicial pronouncements on the issue involved, we are inclined to hold that the provisions of section 194J are applicable to the assessee and not those of section 192 of the Income tax Act 1961 therefore, the appellant cannot be treated as an assessee in default in so far as the question of deducting tax at source in respect of doctors engaged as retainers and consultants was concerned. Appeal of revenue dismissed. 2022 (7) TMI 845 Assessment u/s 153A - As contended that the satisfaction recorded u/s 153C of the Act was vague and does not satisfy the well settled parameters in this regard - HELD THAT:- As we notice that the Ld CIT(A) has addressed both the issues by his detailed order, which we find to be reasonable and in accordance with law. Accordingly, we reject both the legal grounds urged by the assessee. Characterization of income - addition of agricultural income declared by the assessee treating it as income from other sources - HELD THAT:- Assessee is holding agricultural lands and the fact that cultivation was going thereon was also accepted. There may be genuine difficulty for the assessee in producing bills of past years, when the assessments were completed in 2008, in view of the fact that the agriculture market is mostly unorganised in our Country. We are also of the view that it is unreasonable not to accept the availability of agricultural income in AY 2001-02 to 2004-05, when the assessee is holding agricultural land. In fact, the AO has accepted part of agricultural income in AY 2002-03 and 2004-05.Accordingly, we are of the view that there is no reason to restrict the agricultural income to 40% of the bills produced. The generation of agricultural income without bills cannot be ruled out. Since there was failure on the part of the assessee in substantiating the quantum of agricultural income, in the facts and circumstances of the case, we are of the view that the entire income cannot be accepted. Accordingly, we are of the view that the agricultural income may be accepted to the extent of 70% of the amount declared by the assessee in all the years, i.e., from AY 2001-02 to 2007- 08.Accordingly, we modify the orders passed by Ld CIT(A) on this issue in all the years under consideration and direct the AO to accept agricultural income to the extent of 70% of the amount declared by the assessee in each of the years. Addition u/s 68 - AO noticed that the assessee has shown advance for purchase of a property - as submitted that the said property was proposed to be purchased jointly by the assessee along with others - HELD THAT:- As submission of the assessee that the property was proposed to be purchased jointly and the amount of Rs.8.00 lakhs was contributed by other co-owners for the land proposed to be purchased, meaning thereby, it is not a case of loans being taken by the assessee. If that is found to be true, in our view, the assessee cannot be assessed u/s 68 of the Act in respect of this amount, since the amount of Rs.8.00 lakhs cannot be considered to be investment made by the assessee. The factual position in this regard is required to be examined. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO for examining it afresh. If the assessee is considered to have made the entire investment of Rs.13.00 lakhs, then the assessee is liable to prove the cash credits of Rs.8.00 lakhs in terms of sec. 68 of the Act. Since the assessee has failed to prove the cash credits, the addition of Rs.8.00 lakhs is liable to be confirmed. On the other hand, if the assessee is not considered to have made the investments to the extent of Rs.8.00 lakhs, then the same is not assessable u/s 68 - we restore this issue to the file of AO. Unexplained investment - HELD THAT:- As assessee had declared agricultural income which has been accepted partly as agricultural income and partly as income from other sources. We notice that the investment of Rs.24,000/- also stands explained by the amount of agricultural income. Accordingly, we direct deletion. Unexplained investment in KVPs - HELD THAT:- As factual aspects have not been properly appreciated by the tax authorities. We also noticed that the addition has been made by computing the possible value of investment on the basis of interest income declared by the assessee. If the investment has not been made during the year under consideration, there is no requirement of making any addition. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO for examining the submissions of the assessee and for taking decision in accordance with the law in the light of discussions made supra. Purchase of galas and claimed the sources to be amount received from her husband - HELD THAT:- If the investments have been made out of cash withdrawals from Abhinav Bank and the funds available in the banks have been accepted, in our view, such withdrawals could be accepted as sources. In that case, there is no requirement for making any addition as unexplained investment. However, it is required to be shown that the funds available with Abhinav Bank has been accepted by the AO. We notice that relevant details are not available on record. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO for examining it afresh. Unexplained sundry creditors balance - HELD THAT:- In the interest of natural justice, we are of the view that the assessee may be provided with one more opportunity to prove the sundry creditors by obtaining confirmation from them. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO. After affording adequate opportunity to the assessee, the AO may take appropriate decision in accordance with law. Addition of payment of LIC premium as unexplained investment - HELD THAT:- As the assessee claimed that he has withdrawn a sum of Rs.51,480/- from his capital account and the said withdrawal was used to make the LIC payment. Since the explanation was found to be too general, the Ld CIT(A) confirmed the disallowance. In our view also, the explanation so furnished by the assessee does not explain the sources for making LIC payment - Accordingly, we confirm this addition. Addition relating to the value of computer and domestic equipments shown in Balance sheet - HELD THAT:- We notice that the AO has accepted the genuineness of deposit of Rs.1,00,000/-. Accordingly, we are of the view that the aggregate amount of Rs.1,90,000/- would explain the sources for making investments in computer and domestic appliances to the extent of Rs.1,54,750/-. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition of Rs.1,00,000/- confirmed by Ld CIT(A). 2022 (7) TMI 844 Revision u/s 263 by CIT - deduction u/s 80IC - HELD THAT:- We are in complete agreement with the Ld. AR that in the present case there was a merger of the order of the lower authorities with the order of the Tribunal for assessment year 2013-14 [ 2019 (9) TMI 142 - ITAT CHANDIGARH] wherein the Tribunal had ruled in favour of the assessee by holding that the assessee was eligible for deduction @ 100% u/s 80IC vis- -vis substantial expansion and, therefore, after such merger, Pr.CIT could not have legally and validly invoked the provisions of section 263 of the Act to set aside the matter again to the file of the AO for reconsidering the initial assessment year vis-a-vis substantial expansion. Thus, in our considered view, Pr.CIT has stepped beyond the power conferred upon him u/s 263 and we have no option but to hold that these powers were not exercised under correct appreciation of law. We, therefore, quash the proceedings u/s 263 of the Act and allow the grounds raised by the assessee. 2022 (7) TMI 843 Additional income from F O transactions - AO compared the details supplied by the assessee with the information received from stock exchange / commodity exchange and observed certain differences - HELD THAT:- We observe that the Ld. AR has explained the methodology of F O transactions in the first instance - AR has, by means of the illustrations of various transactions appearing in the Statement of M/s Max Stock Broking Pvt. Ltd., explained vehemently that the impugned purchase / sale transactions were the open outstanding contracts of F O which were done in the previous year 2014-15 and expired in the previous year 2015-16. AR is right in stating that these purchase / sale transactions, though outstanding on 31.03.2015, did not represent closing / opening stocks of assessee. We also find strength in the argument of the AR that the loss arising from daily marking of these open outstanding transactions is allowable as per the decision in DCIT Vs. Edelweiss Capital Ltd. ( 2012 (10) TMI 223 - ITAT, MUMBAI] - In view of the peculiar nature of F O transactions submitted by the Ld. AR, we are of the view that the Ld. AO has wrongly treated the open outstanding contracts as closing / opening stocks of the assessee and made re-working of profit. Therefore, the addition made by Ld. AO is not correct and deserves to be deleted. Accordingly, we accept the ground of assessee and delete the addition. - Decided in favour of assessee. 2022 (7) TMI 842 Disallowance of interest expenses - 1st allegation of the Revenue was that the necessary documents were not furnished by the assessee with respect to the interest expenses incurred - HELD THAT:- We disagree with the contention of the revenue on the reasoning that the assessee before the CIT-A has claimed to have furnished the necessary details to establish the genuineness of the interest expenses and this contention of the assessee was not controverted by the learned CIT-A. Accordingly we can safely infer that all the details relating to the interest expenses were available before the AO during the assessment proceedings. Besides the above we have referred the paper book filed by the learned AR running and note that the assessee has filed the capital account maintained in the partnership firm which is placed - DR at the time of hearing has also not brought anything on record contrary to the arguments advanced by assessee. Thus, we hold that the expense shown by the assessee in the form of interest to the partnership firm is genuine. Whether the interest expense can be adjusted against the interest income? - As relying on Raj Kumar Aggarwal [ 2014 (7) TMI 867 - ITAT AGRA] we hold that the interest expense was incurred by the assessee on the money borrowed from the partnership firm as he failed to recover the deposits from the company. Thus, in our considered view the interest expenses are directly connected to the interest income which the assessee has received on the deposits from the company and thus eligible for deduction. In view of the above the ground of appeal of the assessee is allowed. 2022 (7) TMI 841 Unexplained Cash Credit u/s. 68 - addition of the peak credit - assessee submitted that details contains in seized paper include cash deposited as well as cash withdrawal and therefore, redeposit should be considered as being made out of such withdrawal and only peak credit should be considered as unexplained - HELD THAT:- In the seized paper, the first payment of Rs.3,20,000/- has been shown and thereafter there is a receipt of Rs.30,000/- on 30.07.2007 and receipt of Rs.10,00,000/- on 14.08.2007. Further on 12.09.2007 Rs.5,00,000/- has been shown to be paid and on 30.09.2007 again Rs.5,00,000/- has been shown as receipt. The details of payments and receipts are recorded on one page and in chronological order. In such circumstances, the peak credit amount as worked out in table reproduced in earlier paragraph only remains as unexplained in the hands of the assessee. The finding of CIT(A) that there is no continuous deposit is without appreciation of the facts properly. The contention of the assessee of adopting peak credit is justified. Accordingly, we restrict the addition in the case to Rs.3,20,000/-. Appeal of assessee partly allowed. 2022 (7) TMI 840 Deduction u/s 10AA - assessee is a Diamond Trader and does its activities from its unit situated in the Special Economic Zone (SEZ), Surat - AO denied claim on the plea that Assessee is neither manufacturing any goods nor producing any goods for export [which was the view of AO s predecessor which the present AO has followed] - HELD THAT:- The term service is given an inclusive definition which includes trading activity. As per the first explanation trading will be treated as service if it is related to the import of the goods for the purpose of the export. In this case there is no dispute that goods imported by the assessee are in fact exported to other countries from its unit at Special Economic Zone. We note that the exemption provided u/s. 10AA which are special provision in respect of newly established units in Special Economic Zone are for income received by providing any services. The other activity entitled for exemption is income from manufacturing and production of article or thing. So what has to be seen is whether the service definition given in the SEZ Rules as above reproduced can be read into for the purpose of claiming exemption u/s. 10AA of the Act; so that assessee can avail the benefit envisaged u/s. 10AA of the Act. From the reading of the provisions it is clear that the provisions as specified under The Special Economic Zones Act, 2005 would have overriding effect on the Income Tax Act because Special Economic Zone Act, 2005 is a Special Act and a later Act of the Parliament. Be that as it may be, it has been brought to our notice by the Ld. AR that in the previous year (AY 2012-13), the AO had disallowed the deduction claimed by the assessee under section 10AA of the Act. (1st year) which was confirmed by the Ld. CIT(A). However, this Tribunal [ 2019 (11) TMI 513 - ITAT MUMBAI] was pleased to allow the same. In the light of the aforesaid decision of this Tribunal on the issue of deduction claimed under section 10AA of the Act, we respectfully following the same, allow the claim of assessee. Therefore, these grounds of appeal of assessee are allowed. Deduction under section 10AA of the Act in respect of Foreign Exchange Gains - HELD THAT:- We find that the Assessee which has set-up its registered unit at SEZ and which is eligible for claiming deduction u/s 10AA of the Act, is in receipt of Foreign Exchange Gain which is derived from the export business. Then according to us, Foreign Exchange Gain derived from the export business has be given the benefit of deduction u/s 10AA of the Act. The reasons is that when the profit and gains are allowable as deduction under section 10AA of the Act, the Foreign Exchange Gain which is derived/related to the export/sale consideration and which has first degree nexus with the export/sale consideration must get the benefit of deduction under section 10AA of the Act. Therefore, we allow the claim of the assessee . 2022 (7) TMI 839 Income accrued in India - income on account of sale of goods is taxable in India or not - CIT(A) held that the receipts on account of supply of equipment Taurus 60 and other accessories cannot be taxed in India as all the activities in relation to manufacturing of the equipment took place outside India - HELD THAT:- The purchase order in regard to supply of Taurus 60 and other accessories do not mention about any services in regard to installation and commissioning to be provided by the appellant company. No separate price for such services is quoted in the purchase order. The only basis for the assessing officer for concluding that the sale of equipment is concluded in India is that the appellant has admitted that it has supervised the turbine change out in India. As it is held in paragraphs above that the receipts on account of supply of equipment Taurus 60 and other accessories cannot be taxed in India as all the activities in relation to manufacturing of the equipment took place outside India and sale was carried out on a principle to principle basis. The transaction was at arm s length and the consideration is also received outside India in foreign currency. As in ISHIKAWAJIMA-HARIMA HEAVY INDUSTRIES LTD. VERSUS DIRECTOR OF INCOME-TAX [ 2007 (1) TMI 91 - SUPREME COURT] where income arises out of operations performed in more than one jurisdiction, then it has a nexus with each of the jurisdictions and no one state can exercise its right to tax the income which has not arisen in that state. Accordingly, only that part of the work which is attributable to business operations carried out by the Appellant in India is taxable in India. In the present case, therefore, at the most the supervisory services for installation and commissioning etc., provided in India at the premises of the buyer, can be considered to be taxed in India. The appellant had submitted during the assessment proceeding that it had offered tax on such services (Installation, commissioning and supervision) on gross basis at the rate of 10.506% u/s 115A of the Act. The assessing officer has not disputed this fact in the assessment order. He has not made any separate addition on this account. The only addition made by the assessing officer on account of sale of the machine to SI Group-India Ltd. As held that the receipts on account of supply/sale of equipment Taurus 60 and other accessories cannot be taxed in India as all the activities in relation to manufacturing of the equipment took place outside India. The services rendered by the personnel of the appellant company for the purpose of installation and commissioning of the turbine has accrued in India and therefore taxable in India. - Decided in favour of assessee. Customs 2022 (7) TMI 838 Validity of final/reassessment order of Bill of Entry - ex parte final assessment of the Bill of Entry - import of steam coal of Indonesian origin - opportunity of personal hearing provided or not - HELD THAT:- It is an undisputed fact that the petitioner imported 30720 metric ton steam coal and filed Bill of Entry No. 3415030 on 28.09.2017 which was assessed provisionally under section 18 of the Customs Act. It is also undisputed that the petitioner was never informed about the final assessment/re-assessment of the said Bill of Entry and for the first time, respondent No.4 by letter dated 05.07.2021 i.e. almost after two years and six months, informed the petitioner that the Bill of Entry No. 3415030 was finalized on 02.01.2019. Thus, the respondent No.4 has made final assessment/re-assessment of the said Bill of Entry ex parte in January 2019 without affording any personal hearing to the petitioner nor any reason for the variation being made to the said Bill of Entry as filed by the petitioner was communicated. It is also undisputed that no speaking order in support of the finalized Bill of Entry which has been varied has been issued to the petitioner at any point of time. It is clear that the respondent authorities is required to pass a speaking order on the reassessment within 15 days from the date of re-assessment of the Bill of Entry read with sub-section (2) of section 18 of the Customs Act. Respondent-authorities therefore, ought to have granted opportunity of hearing to the petitioner and thereafter ought to have passed a speaking order as contemplated under section 17(5) of the Customs Act - the final assessment order dated 02.01.2019 passed by the respondent No.4 on the Bill of Entry No. 3415030 and consequent further notices calling upon the petitioner to pay the amount of differential duty with applicable rate of interest are also set aside are set aside - respondents are directed to pass a fresh order of final assessment/re-assessment of the Bill of Entry after giving opportunity of hearing to the petitioner by passing a speaking order - application disposed off. 2022 (7) TMI 837 Over-valuation of imported goods - goods imported for setting up power projects - case of Revenue is that though the power sector projects carry NIL rate of duty and the goods were imported directly to India, but the documents were routed through an intermediary entity created by APML and APRL for the purpose of raising invoices with inflated prices - related parties or not - validity of invoices - validity of EPC contract - transactions between APRL/APML and EIF were at arm s length as per the assessment orders or not - tangible data or valid basis to justify gross over-valuation at the hands of an intermediary or not - whether relevant time/date for determining the relationship between the parties was the date of contract and not the actual date of import? Related parties or not - HELD THAT:- Merely because M V Rabade signed the contract both on behalf of APML and EIF will not have any bearing on the relationship aspect. It is not in dispute that M V Rabade signed the contract on behalf of APML in the capacity of a Director and he signed the contract on behalf of EIF as an authorised representative. The authorization given to M V Rabade by EIF has not been challenged in the show cause notice and as such this will not advance the case of the department on the relationship aspect between APML/APRL and EIF. Even otherwise, there is no variation in the ultimate price paid by APML/APRL to EIF from the agreed contractual price and these contracts were arrived at through international competitive bidding process - Learned senior counsel for the respondent also submitted that when clause (v) of rule 2 (2) was not mentioned in the show cause notice for establishing the relationship, it is not open to the appellant to place reliance on this rule to establish that the relationship stood established - there is substance in this submission made by the learned senior counsel for the respondent. Tender Process - Scope of SCN - HELD THAT:- The adjudicating authority correctly appreciated that the letter of credit was opened by APML and APRL in favour of EIF in terms of Annexure-2 of the contract dated 05.11.2009 and was in relation to the payments to be made to EIF for purchase of BTG. The submission that the letters of credit were opened as EIF was an intermediary invoicing agent is without any basis as the amount mentioned in the letters of credit were payable only on submission of shipping documents showing clearance of BTG consignments - There is also force in the submission of the learned senior counsel for the respondent that a belated challenge to the genuineness of the ICB process at the stage of appeal should not be entertained as this was not even a charge in the show cause notice. It is seen that the department had not at the stage of show cause notice questioned the ICB process followed by the respondent before awarding the contract to consortium led by SME/EIF - In the case of COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS M/S BALLARPUR INDUSTRIES LTD [ 2007 (8) TMI 10 - SUPREME COURT] , the Supreme Court held that show cause notice is the foundation of a matter and the department cannot travel beyond its contents. Documents not available as evidence - HELD THAT:- As the provisions of section 138C (4) of the Customs Act have not been satisfied for the reason that the certificate prescribed therein has not been furnished, the documents obtained by Department of Revenue Intelligence from various banks outside India cannot be admitted as evidence. Reliance cannot, therefore, be placed on these documents for this reason. The Supreme Court in COLLECTOR OF CUSTOMS, BOMBAY VERSUS EAST PUNJAB TRADERS [ 1996 (11) TMI 75 - SUPREME COURT] wherein it was held that presumption under section 139 (ii) of the Customs Act cannot be raised because the document did not bear any signature. The Supreme Court held that when the authenticity of the photocopies of the documents itself is suspected, the presumption under section 139(ii) of the Customs Act is not available - thus, the documents relied upon by the department are, therefore, inadmissible as evidence as the authenticity of the same has not proved in terms of the provisions of sections 138C (4) and 139 (ii) of the Customs Act. Whether the contract was EPC? - HELD THAT:- The scope of work mentioned in the EPC contract clarifies beyond doubt that what was awarded by APML and APRL to SME/EIF was a complete EPC contract which included supply and service components. The entire contract was awarded on a turnkey basis and a lumpsum price was fixed for the entire contract as a whole. The execution of another contract by EIF or any of the consortium partners would, therefore, have no relevance so far as APML and APRL are concerned. It is also not the case of the department that APML and APRL paid any amount over and above the agreed contract value. The said contract was for design, engineering, manufacturing, procurements, packing forwarding, supply, transportation, receipt, unloading, installation, erection, testing, commission and performance guarantee test and it was not merely a supply contract - The amount received by each consortium member or the amount paid by the consortium members to the vendors or service providers would not be relevant for APML or APRL. Even if it is assumed that the service and/or testing was to be done by the Original Equipment Manufacturers, as has been pointed out, the same will not change the nature of the contract awarded by APML and APRL to SME/EIF in as much as the responsibility to execute the contract would be that of SME/EIF only. It can, therefore, safely be concluded that APML and APRL had awarded contracts to EIF/SME which were in the nature of EPC. Whole effect of contract/effect of registration under PIR - appellant submitted that even if the imports are covered by a single contract, the assessment thereof is required to be carried out against individual imports, with the only difference being that all the imports are housed under Tariff Heading 98.01 of the Tariff Act - HELD THAT:- Heading 98.01 of the Tariff Act shall be available to the goods which are imported under a specific contract registered with the appropriate Customs House under PIR. What is evident from the provisions and requirements of PIR is that it recognises contracts of the nature that APML/APRL had executed with EIF and the other consortium members. Infact, PIR ensures that large infrastructure projects benefit from the duty exemption. As such, it is clear that what is registered is the contract as a whole. When considered in this light, the goods imported for the project become a subject matter of assessment as whole and individual consignments are not required to be separately assessed. It is, therefore, clear that PIR does not deal with import of individual consignment and the assessment of the goods imported for the project have to be dealt with together. Valuation - whether the value declared by APML and APRL is required to be rejected in terms of rule 12 of the Valuation Rules read with section 14 of the Customs Act and the same is required to be redetermined under rules 4/9 of the Valuation Rules read with section 14 of the Customs Act? - HELD THAT:- There is absolutely no evidence available on record which can doubt the correctness of the transaction value declared by APML/APRL. Therefore, the declared value is required to be accepted under rule 3 of the Valuation Rules read with section 14 of the Customs Act. Even otherwise, the value has to be redetermined under rule 4 by relying upon the value of identical goods. A plain reading of rule 4 would show that it speaks of identical goods imported at or about the same time as the goods being valued, which necessarily means that the identical goods should be goods other than the goods being valued and which are imported at or about the same time as the goods being valued. The contract between APML/APRL and EIF is for entire gamut of goods and services and hence cannot be compared with stand alone supply contract with Original Equipment Manufacturers. Invoices issued under two different sets of contractual obligation cannot be compared and relied upon to determine the value. Rule 11, therefore, has no application to the facts of the present case - the revenue has sought to invoke rule 9 by placing reliance on payments made by EIF to different vendors and/or manufacturers of the goods. The said evidence has been held to be not conclusive, as the revenue has considered the payment made through Axis Bank and Bank of Baroda only. The redetermination of the value of the goods under rule 4/9 of the Valuation Rules, cannot, therefore, be sustained and the adjudicating authority committed no illegality in rejecting this allegation made in the show cause notice. Incomplete Investigation - HELD THAT:- While the documents were received from Axis Bank and Bank of Baroda, the relied upon document at page 689 shows the name of Standard Chartered Bank as one of the other banks used by EIF. The same therefore, belies the case of the department that ORTTs and back-to-back invoices received from Bank of Baroda and Axis Bank are complete remittances made by EIF to Original Equipment Manufacturers. Merely because the department could not interrogate or make the Standard Chartered Bank join the investigation cannot be a reason to ignore the possibility of it acting as an active banker on behalf of EIF for the purpose of remitting the amount of Original Equipment Manufacturers. The burden was on the department to prove why the total remittance amount was only through these two banks and no other bank. It, therefore, follows that the investigation carried out by the revenue was incomplete. Confiscation of goods - prohibited goods or not - HELD THAT:- As the allegation of over-valuation has not been established, it is not necessary to examine this aspect. Thus, as none of the contention advanced by the learned special counsel for the appellant have any force, the order dated 22.08.2017 passed by the adjudicating authority dropping the proceedings that were initiated by issuance of a show cause notice dated 15.05.2014 does not call for any interference in this appeal - Appeal dismissed. Insolvency & Bankruptcy 2022 (7) TMI 836 Power of NCLT to condone the delay beyond 15 days - Condonation of Delay of 27 days in filing for restoration was admitted - restoration of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - time limitation - HELD THAT:- The orders of condonation of delay, restoration of the original petition and dismissal of the baseless appeal are sought to be questioned in this appeal before this Court. The grounds urged are essentially to the effect that only the application of condonation of delay was registered and the Tribunal had erred in allowing both the applications by its order dated 23.12.2021. It is also sought to be contended that the Tribunal could not have condoned the delay beyond 15 days - Both these grounds carry no substance and the appeal could only be dismissed at the threshold. There are no logic in the argument that the Tribunal could not have condoned the delay beyond 15 days. In support of this argument, learned counsel for the appellant would refer to the prescriptions in Section 61 of the Code, which provide for filing of appeal within 30 days and limiting the period for condonation of delay in filing the appeal to 15 days. It is beyond comprehension as to how such a prescription as regards the period of filing the appeal and the limited period for condonation of delay in filing such appeal could be imported for the purpose of consideration of the prayer for condonation of delay in filing an application for restoration - No other provision has been brought to our notice which limits or curtails the powers of the Tribunal to condone the delay in filing the application for restoration. It needs hardly any reiteration that the rules or procedure are essentially intended to serve the cause of justice and are not for punishment of the parties in conduct of their matters. No case for interference is made out - Appeal dismissed. 2022 (7) TMI 835 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - threshold amount involved in the application - time limitation - case of appellant is that cause of action arose as early in 2017 but the petition was filed on 16 December, 2020 hence time barred by Limitation Act, 1963 - HELD THAT:- It has been held by the Adjudicating Authority that last date of invoice was 01.02.2020 and date of filing of Application before NCLT, Mumbai was 31.12.2020 and therefore Section 9 Application was made well within the limitation - there are no inconsistency in order of Adjudicating Authority on this issue and therefore issue of limitation as raised by Learned Counsel for the Appellant cannot be agreed to. Monetary amount involved in the application - HELD THAT:- It is clear from the facts that the total amount for maintainability of claim will include both principal debt amount as well as interest on delayed payment which was clearly stipulated in the invoice itself. It is noted that the total principal debt amount of Rs. 97,87,220/- along with interest the total debt makes total outstanding as Rs. 1,60,87,838/-. Thus, the total debt outstanding of OC is above Rs. 1 crore as per requirement of Section 4 IBC read with notification No. S.O 1205 (E) dated 24.3.2020, and meets the criteria of Rs. 1 crore as per Section 4 of IBC and Application is therefore maintainable in present case. Appeal dismissed. 2022 (7) TMI 834 Relevant date for filing application by Personal Guarantor as well as Creditor - relevant time from which moratorium shall come into force - when shall the application be treated to be filed - whether the application can be treated to be filed only when it is numbered or not? - HELD THAT:- When as per Rule 10, sub-rule (2), when an electronic facility is available and an Application is filed in electronic form, the filing is complete as soon as it is registered electronically, we do not find any support from the statutory scheme to the submission of learned Counsel for the Appellant that petition would be treated as filed when it is numbered by the Registry. Numbering of an Application by Registry is a process, which is undertaken by the Registry as per the relevant rules and instructions. Several consequences ensue on filing of the Application in the Registry, if it is accepted that the filing shall be dependent on numbering of the Application by the Registry. It will lead to uncertainty regarding date of filing. When statutory consequences are provided, there has to be certainty regarding such consequences. We cannot accept any interpretation, which may lead to uncertainty regarding the date of filing, resulting in uncertainty, regarding enforcement of the Interim Moratorium - The statutory scheme, thus, does not in any manner support the submission of learned Counsel for the Appellant. Numbering of Application is essential for different purpose and cannot be equated with the filing as contemplated by the Rules. Hon ble Supreme Court in M/S. SURENDRA TRADING COMPANY VERSUS M/S. JUGGILAL KAMLAPAT JUTE MILLS COMPANY LIMITED AND OTHERS [ 2017 (9) TMI 1566 - SUPREME COURT ], which was a case where Hon ble Supreme Court had occasion to consider various provisions of the Code, where it was held that first stage is the filing of the application and thereafter the stage of scrutinizing the application for finding out the defects. The second stage is when Registry is to scrutinize the defect, which cannot be treated as first stage. The submission of the learned Counsel for the Appellant that when there are defects in the Application, it cannot be said to be filed in accordance with the Rules and such filing is non-est, is not in accordance with the Rules. We have noticed Rule 23, sub-rule (1) above, which contemplates that if there are certain non-compliance, the Application can be refused to be entertained. But Rule 10, sub-rule (2) of 2019 Rules, which provides for filing in electronic form, clearly indicates that when Application is registered in the electronic form, the filing is complete, which is not dependent on any further scrutiny in the Registry. The Adjudicating Authority after due consideration has taken correct view of the matter in holding that filing of the Application under Section 95 by the State Bank of India is on a date when Application was filed and allotted number electronically and the submission of the Appellant that date of filing of the Application shall be the date when Application is numbered has rightly been rejected. There are no error in judgment of Adjudicating Authority rejecting the objection of the Appellant and appointing Resolution Professional for submitting a report - appeal dismissed. 2022 (7) TMI 833 CIRP proceedings - scope of related party - COC claims - whether Financial Creditor i.e. Respondent No. 2 to Appeal is a related party of the Corporate Debtor so as to be not part of the CoC? - HELD THAT:- From the material on the record it is clear that Smt. Sunaina Singh, who is Director of the Financial Creditor at present was also Director of the Corporate Debtor but she resigned as Director of the Corporate Debtor on 25.03.2019 and w.e.f. 25.03.2019 Smt. Sunaina Singh has not been continuing as Director of the Corporate Debtor. Thus, there is no dispute that on the day when Section 7 Application was filed and the day when Section 7 Application was admitted Smt. Sunaina Singh was not Director of the Corporate Debtor, she having resigned six months prior to date of filing of the Section 7 Application. The fact that Smt. Sunaina Singh on 01.01.2019 requested the Corporate Debtor for redemption of non-convertible debentures and the fact that Smt. Sunaina Singh was a Director of the Corporate Debtor when non-convertible debentures were issued by the Corporate Debtor and held by Financial Creditor i.e. 13.01.2016, in view of the law laid down by the Hon ble Supreme Court in Phoenix ARC Pvt. Ltd. [ 2021 (2) TMI 91 - SUPREME COURT ] are not relevant criteria to hold Financial Creditor as related party to the Corporate Debtor. Thus, the present is a case where Smt. Sunaina Singh in praesenti was not a related party having resigned six months prior to filing of Section 7 Application. There is no averment or material on record to show that Smt. Sunaina Singh has resigned to cease to be Director of the Corporate Debtor with the sole intention of participating in the CoC and to sabotage the CIRP, by diluting the vote share of other creditors or otherwise - Appeal dismissed. 2022 (7) TMI 832 Seeking Liquidation of the Corporate Debtor - Section 33 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Since neither any Expression of Interest nor any Resolution Plan was received from any Resolution Applicant, the CoC approved the Resolution for initiating liquidation proceedings under Section 33 of the Code against the Corporate Debtor and authorised the RP to file an Application for Liquidation by passing the Resolution with 100% voting share. Further the CoC also resolved to appoint the RP, Mr. Lakshmikant Yeshwant Desai, as the Liquidator for the Corporate Debtor. This is a fit case for liquidation - Application allowed. 2022 (7) TMI 831 CIRP - recovery of Provident Fund with interest - Tenability of the orders and the recovery notices which have been passed by the Respondent, admittedly, after the moratorium was imposed by this Learned Adjudicating Authority - whether the Orders and Notices issued by the Respondent are in breach of the moratorium imposed by the Adjudicating Authority and whether the same could be passed during the Liquidation period? - HELD THAT:- The purpose of imposition of a moratorium has been expounded by the Hon ble Supreme Court in the case of P. Mohanraj and Others vs. Shah Borthers Ispat Pvt. Ltd, [ 2021 (3) TMI 94 - SUPREME COURT] wherein the Hon ble Supreme Court has held that the moratorium is imposed to shield the Corporate Debtor from pecuniary attacks to enable it to get a breathing space so that it can continue as a going concern to ultimately rehabilitate itself. A plain reading of section 14 of the Code shows that there is a complete prohibition imposed by the legislature on the institution of suits or continuation of proceedings against the Corporate Debtor including execution of any judgment, decree, or order in any court of law, tribunal, arbitration panel or other authority. Section 14 of the Code does not differentiate between any proceedings, whether they are assessment, quasi-judicial or judicial in nature. In fact, a moratorium is imposed on all proceedings irrespective of the nature. The object as succinctly put by the Hon ble Supreme Court is clearly to shield the Corporate Debtor from all pecuniary attacks - In the instance case, the Respondent, despite being aware of the initiation of moratorium has proceeded to initiate proceedings under Section 7 A of the EPF MP Act. The said proceedings, as per the contention of the Respondent are assessment proceedings. In this regard, we may refer to Section 7 A of the EPF MP Act to note the nature of eh proceedings. The Respondent has also contended that the dues being claimed by the Respondent are social welfare dues and the actions have been taken for the benefit of the employees and workmen. However, as rightly pointed out by the Applicant, the orders do not provide the details of the employees their P.F numbers, name of workers to whom these dues will be paid and workmen against whom such dues are being claimed. The dues are required to be relatable to employees and workmen. This is also clear from section 36 of the Code, which protects the social welfare dues of the employees and workmen of the Corporate Debtor and places any amount which is due to any workmen, employee from the provident fund, pension fund and gratuity fund outside the liquidation estate. The said amounts are therefore required to be relatable to employees and workmen, which is also clearly absent in the present case. The benefits such as provident fund, pension fund and gratuity fund are required to be protected and prioritised which is also the intent of the Code. It therefore goes without saying that the setting aside of the orders passed by the Respondent will not come in the way of the respective employees or workmen to file their respective claims, if any, with the Applicant under the provisions of the Code in respect of provident fund, pension fund and gratuity fund - In the present case, the Applicant (Liquidator) has contended that he has admitted certain claims in relation to the dues relating to the provident fund. The Applicant is required to make payments of the admitted dues in priority as has already been held in various cases by the Adjudicating Authority and the Appellate Tribunal. The Applicant (Liquidator) is duty bound, as per the Law laid down to ascertain and prioritise the payments of the social welfare dues. Without expressing any opinion on the merits of the Orders passed by the Respondent, the orders being in violation of the moratorium imposed are liable to be set aside. Consequently, the recovery notices are also set aside - Application disposed off. 2022 (7) TMI 830 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors or not - Whether an investment made by the Director of the Company falls under the definition of Operational Debt? - HELD THAT:- As envisaged under section 5(21) of the Code, an Operational Debt means a claim in respect of the provision of goods or services including employment or a debt in respect of the re-payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority - Further, section 5(20) of the Code an Operational Creditor meaning a person to whom an Operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. However in this instant matter the Petitioner, who is also one of the director of the Corporate Debtor, invested money in the Corporate Debtor for production of a movie. In light of the above facts and circumstances we are of the view that an Investment made by the director of the Company does not fall under the purview of an Operational Debt under the Code. Petition dismissed. 2022 (7) TMI 829 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- Upon perusal of the records of the Reply by the Corporate Debtor, it is undisputed that the credit facility/loan was disbursed by the SBI to the Corporate Debtor and the Corporate Debtor defaulted in repayment of such debts. The account of the Corporate Debtor was declared as the NPA on 29 March, 2012. However, vide Assignment Agreement dated 18 July, 2014, the SBI assigned the debt to the Financial Creditor. Time Limitation - HELD THAT:- As per the letter dated 20 April, 2022 from the Corporate Debtor to the Financial Creditor, it is apparent that the Corporate Debtor was very much aware of the assignments of debt to the Financial Creditor. In the said letter, the Corporate Debtor has categorically stated that the revised settlement amount was Rs.180 Lakhs, out of which the Corporate Debtor had paid Rs.27,00,000 to the SBI. Further, the assignment of debt of debt happened after the payment of Rs.27,00,000 to the SBI. Hence, the rest of the amount could not be deposited. However, the Corporate Debtor undertakes to pay the balance amount i.e., Rs.153 Lakhs - Further, from the Financial Statements for Financial years 2014-2015, 2015-2016, 2016-2017 and 2017-2018 of the Corporate Debtor it is clear that the Corporate Debtor has unconditionally acknowledged the debt. It is clear that the Financial Creditor has successfully satisfied this Adjudicating Authority of the existing debt and default - Application admitted - moratorium declared. 2022 (7) TMI 828 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Existence of debt and dispute or not - HELD THAT:- The Operational Creditor has not been able to make out any case for admission of this petition. Petition dismissed. 2022 (7) TMI 827 Exclusion of certain number of days from CIRP period - exclusion sought on the account of non-completion of the CIR Process during the IRP Period from the period of Corporate Insolvency Resolution Process of the Corporate Debtor - HELD THAT:- Reliance placed on the judgment of Hon'ble NCLAT referred to by the applicant in Quin Logistics India Pvt. Ltd. [ 2018 (6) TMI 904 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], wherein it is held that for the following good reason and unforeseen circumstances, the intervening period can be excluded for counting the total period of 270 days. Thus, the relief sought for by the applicant may be considered as a special case. However, before concluding, the fact is to be noted that the former IRP, Mr. Lukose Joseph has unnecessarily created a hurdle in the process on one pretext or the other and he has not followed the IBBI Regulations in its true spirit. A mere example is that even after his change and appointing the applicant as RP, he took one month to hand over the physical copies of the documents. Such action of IRPs appointed should be viewed seriously. The period of 139 days i.e., 10 days from 03.11.2021 to 12.11.2021, 72 days i.e., from 10.01.2022 to 23.03.2022 and another 57 days are excluded on account of non-completion of the Corporate Insolvency Resolution Process during the IRP Period from the period of Corporate Insolvency Resolution Process of the Corporate Debtor - application allowed. FEMA 2022 (7) TMI 826 Offence under FEMA - Scope of alternate remedy - violation of Section 4 of FEMA - Whether the writ petition is liable to be dismissed as not maintainable on the ground of availability of alternate remedy and the writ petition is premature? - HELD THAT:- FEMA is a complete Code in itself and is an act to consolidate and maintain law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange management in India. It also states that when statute creates a special mechanism for adjudication and when statute itself provides for remedy that too in a physical statute, a writ petition should not be entertained ignoring the statutory dispensation. The above judgment in Raj Kumar Shivhare [ 2010 (4) TMI 432 - SUPREME COURT ] was rendered on 12.04.2010 much prior to insertion of Section 37A of FEMA, but it would not make any difference. Under Section 37A of FEMA also special mechanism is provided to determine the violation of Section 4 of FEMA. Whether the Authorised Officer had reason to believe that any foreign exchange situated outside India is suspected to have been held in contravention of Section 4 or reasons recorded by the Authorised Officer would be sufficient to initiate action under Section 37-A of FEMA, are to be considered by the Competent Authority. At this stage, examining sufficiency of reason or otherwise under Article 226 of the Constitution of India would prejudice the case of either of the parties. It is best left to the Competent Authority to examine the same when it considers the entire issue under sub-Section (3) of Section 37-A of FEMA. Section 37A of FEMA provides mechanism to decide the contravention or otherwise of Section 4 of FEMA. The case of the petitioner is at the stage of sub-Section [1] of Section 37A of FEMA which is impugned in the present writ petition. Timeline is fixed under Section 37A of FEMA for conclusion of the proceedings initiated by the Authorized Officer. The Authorized Officer has passed seizure order which is in the nature of provisional order is to be placed before the Competent Authority within 30 days from the date of such seizure order. The impugned order is dated 29.04.2022 and the learned Additional Solicitor General Sri. M.B. Naragund has submitted that within 30 days i.e., on 27.05.2022 itself the Authorized Officer has placed the seizure order along with relevant material before the Competent Authority. Since the seizure order and relevant material is already placed before the Competent Authority, it would be appropriate for this Court to direct Competent Authority to issue notice of hearing to the petitioner, hear the petitioner as well as representatives of the Directorate of Enforcement and pass appropriate orders in accordance with law. The timeline of 180 days mentioned in sub-Section [3] of Section 37A is an outer limit. In the facts and circumstances, since the petitioner contends that seizure order has affected day-to-day business of the petitioner, it would be appropriate for this Court to direct the Competent Authority to dispose of the petition expeditiously but not later than 60 days from the date of making available copy of this order. The Competent Authority appointed by respondent No. 1 under Sub-section [2] of Section 37A of FEMA is directed to issue notice of hearing to the petitioner, hear the parties concerned and pass appropriate order either confirming or setting aside the seizure order within a period of 60 days from the date of making available a copy of this order. This Court, by order dated 05.05.2022 stayed the impugned order dated 29.04.2022 (Annexure-A) subject to condition that the petitioner shall operate Bank accounts which are seized under the impugned order, only for the purpose of meeting expenses for carrying out day to day activities of the Company and observed that order shall not confer any right on the petitioner to make payment in the form of royalty or in any other form to the Companies located outside India. Further, on 12.05.2022, this Court clarified that the petitioner is at liberty to take Overdraft and make payments from such Overdrafts to Foreign Entities excluding payment of royalty. Interest of justice would be met, if the above interim order is continued till orders are passed by the Competent Authority as stated above. The interim order passed by this Court on 05.05.2022 and clarified on 12.05.2022 would enure to the benefit of the petitioner, till the Competent Authority passes order under sub-Section (3) of Section 37-A of FEMA. PMLA 2022 (7) TMI 825 Seeking grant of Regular Bail - siphoning off of the funds - allegation of cheating a large number of innocent depositors and misappropriating their hard-earned money - scheduled offence or not - offences punishable under Sections 406, 408, 420 of IPC and Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- On perusal of the material available on record, admittedly, earlier, the case has been registered against this petitioner in Cr. No. 185/2017 for the offences punishable under Section 406, 408, 420 of IPC by the KSRUCS and the same has been investigated and charge-sheet also filed and bail was granted. It is also important to note that an application is filed under Section 167 of Cr.P.C. before the Trial Court and he was remanded to the custody and he has been in custody from January, 2022. It is also important to note that invoked the offence punishable under PML Act wherein an allegation is made that this petitioner being the Chairman of the KSRUCS, misappropriated the amount of Rs. 250 to 255 crore. It is also important to note that the statement of the petitioner was also recorded and admitted the fact that he had purchased the bungalow and car and also it is the case of the prosecution that he had indulged in siphoning off the amount of the depositors money. The brief summary of result of investigation under Section 50(3) of PML Act is also mentioned in paragraph 8 acquiring the properties in the name of his family members i.e., wife, son and also in the name of the car driver and also his friend and so also in the name of the Manager of KSRUCS and had indulged in transferring the property in the name of Ramathulla. The other contention of the counsel for the petitioner is that the petitioner is entitled for bail since the complaint was filed on 07.02.2022 and 60 days has been lapsed cannot be accepted at this juncture when the investigation is still going on and the specific allegations are made that further investigation is pending and hence, the question of invoking Section 167(2) of Cr.P.C. at this stage cannot be looked into and no such application is filed before the Trial Court and for the first time, raised said ground before this Court and hence, the petitioner is not entitled for the bail on the said ground and the High Court of Hyderabad remanded the matter for consideration when an application is filed under Section 167 of Cr.P.C. and the same is not a scenario herein and no specific date is found in the complaint. The bail petition is rejected. Service Tax 2022 (7) TMI 824 Extended period of limitation - Levy of Service Tax - Goods Transport Agency services - Manpower Services - liability of service received under reverse charge mechanism (RCM) - HELD THAT:- Both sides agree that the Appellant was otherwise liable to pay tax under RCM and, therefore, this aspect is not looked into, while disposing the present appeals. Extended Period of Limitation - HELD THAT:- The Appellant had made categorical submissions in this regard which finds mention in the order in appeal but there is no finding on the same. In any case, when the issue is no more res integra that where the assessee is entitled to claim cenvat credit of the tax paid under RCM, there cannot be any question of invocation of extended period. It is also a settled legal position that where there were divergent views on the issue and even if it is ultimately settled against the assessee, extended period cannot be invoked. It is also an admitted fact that the entire case was made out on the basis of information available in statutory books of account - the very basis of the show cause notice is the audit objection meaning thereby that the entire demand was raised on the basis of information found available in statutory books of the Appellant and hence even otherwise, there cannot be any scope for invocation of extended period. The judgment of Hon ble Allahabad High Court in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS TRIVENI ENGINEERING AND INDUSTRIES LTD. [ 2015 (1) TMI 760 - ALLAHABAD HIGH COURT] is squarely applicable to the facts of the present case, where it was held that mere suppression of facts without there being a deliberate act of fraud, etc. with the intention to evade payment of duty cannot entitle the department to invoke the proviso to Section 11A of the Act. The demands for the period beyond the normal period of limitation as applicable during the relevant period are set aside - Appeal allowed on the ground of limitation. 2022 (7) TMI 823 Levy of Service Tax - amount collected as liquidated damages - period from April 2016 to June 2017 - present proceedings arise from the subsequent show cause notice - HELD THAT:- The Additional Commissioner confirmed the demand of tax but this order was set aside by the Commissioner (Appeals) by order dated January 13, 2020. In regard to the show cause notice dated October 05, 2017 issued for the previous period pertaining to 2012-13 to 2015-16 though the adjudicating authority had confirmed the demand, but the said order was set aside by the Tribunal in M.P. POORVA KSHETRA VIDYUT VITRAN CO. LTD. VERSUS PRINCIPAL COMMISSIONER CGST AND CENTRAL EXCISE BHOPAL [ 2021 (2) TMI 821 - CESTAT NEW DELHI ]. The Tribunal examined whether the amount collected by the respondent towards liquidated damages would be for a declared service under section 66E(e) of the Finance Act, 1994 [the Finance Act], which is a service for agreeing to the obligation to refrain from an act, or to tolerate an act for a situation, or to do an act. The Tribunal noticed the earlier decisions of the Tribunal in M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI ], in M/S LEMON TREE HOTEL VERSUS COMMISSIONER, GOODS SERVICE TAX, CENTRAL EXCISE CUSTOM [ 2019 (7) TMI 767 - CESTAT NEW DELHI ] and M/S K.N. FOOD INDUSTRIES PVT. LTD. VERSUS THE COMMISSIONER OF CGST CENTRAL EXCISE, KANPUR [ 2020 (1) TMI 6 - CESTAT ALLAHABAD ] and held that service tax could not be demanded on the amount collected by the respondent towards liquidated damages. The Commissioner (Appeals) committed no error in setting aside the demand confirmed by the Additional Commissioner - Appeal dismissed. 2022 (7) TMI 822 Cash Refund of service tax paid - ocean freight - refund sought on the ground that appellant is entitled for Cenvat credit of service tax paid on ocean freight - Section 142(3) read with Section 11B - HELD THAT:- Identical issue decided in the case of GALAXY POLY PLAST INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA [ 2022 (7) TMI 567 - CESTAT AHMEDABAD ] where it was held that since now appellant argued that they are entitled to refund of service tax paid on ocean freight there will not have any effect on reference made by the Division Bench. Further this issue was not 3 EXCISE Appeal No. 10266 of 2020-SM examined by the lower authorities about the levy of service tax on ocean freight and also the judgment of Hon ble Gujarat High Court was not available before the lower authorities. The matter is remanded to the original authority. Central Excise 2022 (7) TMI 821 Irregular availment of Cenvat credit of service tax - input services - GTA Services - services used beyond the place of removal i.e. factory - HELD THAT:- The dispute in the present case pertains to the period prior to the amendment introduced vide Notification No. 10/2008-CE (N.T.) dated 1 March 2008 effective 1 April 2008 whereby the expression from the place of removal was substituted by the expression upto the place of removal . Therefore, the issue involved is squarely covered by para 7 of the decision of the Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. [ 2018 (3) TMI 993 - SUPREME COURT] where it was held that tax paid on the transportation of the final product from the place of removal upto the first point, whether it is depot or the customer, has to be allowed. It is also found that the factum of payment of service tax on a reverse charge basis is not at all in dispute in the Show-cause Notice - appeal allowed - decided in favor of appellant. 2022 (7) TMI 820 Benefit of conclusion of proceedings to co-noticees in the common SCN - Whether the appellants who are the co-noticees in the common show cause notice, whether they are entitled to benefit of conclusion of proceedings under Section 11A (1A) r/w proviso to sub Section 2 of Section 11A? - HELD THAT:- There is no ambiguity in the provisions as contained in Section 11A (1A) r/w proviso to sub-Section (2). Admittedly, in the facts of the present case, the manufacturer Shree Raj Pan Masala Pvt Ltd have deposited the duty alongwith interest and penalty (as stipulated), during investigation before issue of the show cause notice. Further, the benefit of conclusion has been granted by the learned Commissioner to the manufacturer-Shree Raj Pan Masala Pvt. Ltd. It is further that the learned Commissioner have failed to consider the scope and purport of the words used in the statute other person . The statute clearly provides that the benefit of conclusion shall be applicable in respect of such person , that is the manufacturer or the person of whom duty is demanded and other persons which refers to co-noticees like directors, transporters, godown keepers, employees etc. Thus, these appellants are also entitled to the benefit of conclusion in terms of the proviso to sub-Section 2 r/w sub-Section (1A) of Section 11A of the Central Excise Act. Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2022 (7) TMI 819 Levy of Entry Tax - entry of imported motor vehicles into the State of Tamil Nadu for the use or sale therein - existence of assessment order or not - whether demand for recovery of the tax can be made by the Revenue in the absence of assessment order - making an assessment, in view of the limitation under the provisions of the Entry Tax Act - HELD THAT:- Under the rule making power, the rule making authority, i.e., the Government of Tamil Nadu, made rules called The Tamil Nadu Tax on Entry of Motor Vehicles Rules, 1990, where rule 3 speaks about Submission of Returns and Payment of tax . The sub-rule 2 of rule 3 says that, an importer, who is a dealer in motor vehicles, liable to pay tax under the General Sales Tax Act shall furnish return for each month and each such return shall be furnished on or before the 20th day of the month immediately succeeding. Sub-rule (3) says that, an importer other than the one specified in sub-rule (2) shall furnish return for only the quarter in which an entry of motor vehicle into a local area is effected by him and such return shall be furnished on or before the last day of the month immediately succeeding the quarter - Therefore under sub-rule 3 of rule (3), a private importer, i.e., other than a dealer, shall furnish the return before the last day of the month immediately succeeding the quarter. These petitioners may not be the dealer but only can be treated as an individual, for their own use since they imported the vehicles concerned, they should have filed the return under rule 3(3). However, admittedly none of the petitioners have filed such return within the time. They stated that, the reason for non-filing of the return was that, before they imported the respective vehicles, the pari materia legislation of the State of Kerala was testified and it was declared so, that the entry tax cannot be levied on the imported vehicle - When that being the legal position when paria materia provisions was available in the Tamil Nadu Act, i.e., Entry Tax Act of Tamil Nadu, the petitioners and similarly placed persons were on the impression throughout the State that, the entry tax cannot be imposed against the imported vehicle. Under Section 7 of the Act r/w rule 3(2) or 3(3), no return had been filed. Therefore invoking the best judgment theory, after collecting the details about the cost of the vehicle imported, duty paid on them, insurance charges, clearance charges etc., all put together which are liable to be calculated for the purpose of assessing the entry tax either at the rate of 12.5% or at the rate of 14.5%, accordingly, those amount were assessed. Therefore, the said action taken on the part of the Revenue in completing the assessment based on the input supplied by the petitioners with regard to the value of the vehicle as well as the amount paid on such import by way of import duty etc., cannot be found fault with. Though in one case, the petitioner submitted that the vehicle purchased by him in 2005 was sold to some other party in 2009, therefore he is not liable to pay any tax is concerned, it is not the liability as on today but it was the liability at the time of importing the vehicle and brought the vehicle into the State of Tamil Nadu, i.e., in the year 2005. Therefore that argument also is liable to be rejected. Since the liability of the importers to pay the entry tax on the imported vehicle has already been held in unequivocal terms by this Court in V. KRISHNAMURTHY VERSUS STATE OF TAMIL NADU AND OTHERS [ 2019 (1) TMI 1714 - MADRAS HIGH COURT] followed by number of decisions, the petitioners are liable to pay the entry tax as demanded by the Revenue - Insofar as the levy of penalty for non-payment of the tax as levied or imposed against the petitioners is concerned, such a penalty can be imposed on the petitioners only after 29.01.2019 but not before that date. The Revenue is hereby directed to verify as to when these petitioners have paid the tax and if the tax in full paid as demanded by the Revenue on or before 29.01.2019, no penalty can be imposed on them - Instead if they paid only after 29.01.2019, penalty can be imposed on them, under Section 15 of the Act only from 29.01.2019 till the date of payment of the full tax - Petition disposed off. 2022 (7) TMI 818 Release of seized goods alongwith vehicle - evasion of tax - respondent submits that the distance between Kottayi to Kanjikode is very little and time delay of five hours is unexplained - HELD THAT:- The Intelligence Officer has reason to suspect that multiple transport of goods were done with the documents. The orders passed by the authorities need no interference, except to the extent of penalty. In view of the findings recorded in the orders impugned, it is opined that the penalty imposed be confirmed. The question of quantum of penalty amount alone is examined. Taking into consideration the attendant circumstances the value of goods transported etc., the penalty imposed be reduced by 50% - this Revision Petition is allowed in part and the penalty of Rs.55,880/- imposed by the Intelligence Officer is reduced to Rs.27,940/-. Indian Laws 2022 (7) TMI 817 Dishonor of Cheque - compounding of offences u/s 147 of the Negotiable Instruments Act, 1881 - section 138 of NI Act - HELD THAT:- The issue regarding compounding under the Negotiable Instruments Act at the stage of appeal as well as revision has come before this court as well as before the Hon'ble Supreme Court and they have upheld that the powers under Section 147 of the Negotiable Instruments Act can be invoked at any stage of the proceedings i.e. at the stage of trial, appeal or at the revisional jurisdiction and that the courts should be liberal in exercising such powers. It was also held in the matter of DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT] and KAUSHALYA DEVI MASSAND VERSUS ROOPKISHORE KHORE [ 2011 (3) TMI 1491 - SUPREME COURT] , to the effect that compromise in question would definitely go a long way to strengthen the mutual relationship between the parties and would serve as an ever lasting tool in their favour. Such an exercise would be in consonance with the spirit of Section 147 of the Negotiable Instruments Act. In view of the parties having settled the matter and the amount having been deposited by the petitioner with respondent No.1 and in light of the consent of the parties, it is deemed appropriate to invoke the power vested by virtue of Section 147 of the Negotiable Instruments Act, 1881 and allow the compounding of the offence under Section 138 of the Negotiable Instruments Act and set aside the judgments of both the Courts below - petition allowed. 2022 (7) TMI 816 Dishonor of Cheque - legally enforceable debt or not - discharge of initial burden of prove - rebuttal of presumption - acquittal of accused - Section and 138 and 139 of NI Act - HELD THAT:- It is well settled that the initial burden that the cheque was given and that it was issued in discharge of a legally enforceable debt has to be discharged before the presumption can be invoked. When the complainant fails to discharge the initial burden of showing that there was, in fact, a legally enforceable debt or liability due to him by the accused, the question of presumption under Section 139 of the Act in favour of the complainant, does not simply arise. The presumption contained under Section 139 of the Act arises only, when the initial burden lying on the complainant to show existence of legally enforceable debt or liability, is discharged. However, the accused by adducing oral evidence and filed Ex. D.1 to D.4 documentary evidence rebutted the presumption under Section 139 of the Act. Since the accused rebutted the presumption whatever arisen by adducing oral and documentary evidence, the onus shifts again on the complainant to prove his financial capacity by adducing oral evidence, more particularly, when it is the case of giving loan by cash - In the present case, the complainant has miserably failed to discharge the burden cast on him and there is no cogent evidence to believe that the accused had, in fact, issued the alleged cheque in favour of the complainant towards discharge of legally enforceable debt. The learned trial Court has rightly concluded that the complainant failed to prove the essential ingredient of the offence that the alleged cheque under Ex. P.1 for Rs. 6,20,000/- was issued by the accused against discharge of legally enforceable debt, as such, rightly dismissed the complaint and acquitted the accused under Section 255(1) Cr.P.C. for the offence under Section 138 of the Negotiable Instruments Act, 1881 - Appeal dismissed. 2022 (7) TMI 815 Dishonor of Cheque - Request of passport particulars in connection with the investigation into the affairs of M/s. Vasan Health Care Private Limited under Section 212 of the Companies Act, 2013 - criminal complaint under Section 138 of Negotiable Instruments Act, 1881, pending against the petitioner - HELD THAT:- This Court is not expressing any opinion as regard the merits of the contention of the petitioner, as the learned senior panel counsel for the respondent would submit that the said decision is not applicable to the facts of the instant case. No prejudice will be caused to the petitioner if he is directed to submit an explanation to the impugned communication received from the respondent, within a time frame to be fixed by this Court by giving reasons as to why the requirement for getting permission from the concerned Criminal Court with regard to the pendency of the criminal complaint under Section 138 of the Negotiable Instruments Act, is not required. No prejudice will also be caused to the respondent if the petitioner's explanation is considered on merits and in accordance with law, after affording a fair hearing to the petitioner including, granting him the right of personal hearing. This Court directs the petitioner to submit an explanation to the impugned communication dated 23.02.2022, giving his reasons as to why the requirement for obtaining permission from the concerned Criminal Court for renewal of his passport where a prosecution has been lodged under Section 138 of the Negotiable Instruments Act, is not required, within a period of one (1) week from the date of receipt of a copy of this order and on receipt of the said explanation, the respondent shall pass final orders on merits and in accordance with law - Petition disposed off.
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