TMI Tax Updates - e-Newsletter
July 8, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
-
GST:
Levy of GST - Works contract - pre and post GST period - Revenue authorities directed to determine the amount of VAT payable for the period prior to 1.7.2017 and GST payable for the subsequent period as per relevant VAT / GST law. - HC
-
Income Tax:
Validity of assessment u/s 144-B r/w Section 143(2) - Faceless assessment - Portal window was closed, for filing of reply - It is an open and shut case before us that the Petitioner indeed sought an adjournment till 16.12.2022 vide his email dated 08.12.2022, which is not denied by the Department. Clause (xiii) of Section 144B(1) indicates that the Assessee can file a reply on the date and time as specified or also within the extended time on the basis of his request application. There is no dispute that the Department shut down the window on 09.12.2022 and neither accepted the request of the Petitioner, nor rejected it. - Matter restored back - HC
-
Income Tax:
Addition u/s 14A r/w rule 8D - There being no income for shares hence obviously there are no administrative and other expenses incurred. In such facts of the case, no disallowance u/s 14A r.w. rule 8D is warranted as no borrowings were used in acquisition of these shares nor any administrative expenses etc. were incurred. The assessee also not earned exempt income and hence section 14A is inapplicable. - AT
-
Income Tax:
Agricultural income - sale of timber of the trees that were grown on the border of his land - ITO clearly observed that when he visited land, he found around 30 stems of the cut trees and remaining stems he could not observe for the reasons that since three years elapsed, due to irrigation for growing the further crops same stems must have buried, or being covered by bushes and forest trees which he found actually existing on the spot. This fact establishes that there were trees and those were cut. - Assessee produced the tree cutting permission issued by the Tahsildar - No Additions - AT
-
Income Tax:
Addition u/s 68 - Cash deposited in Bank - Assessee re-circulated those moneys by way of deposits, withdrawals and redeposits in the Bank A/c from time to time and the deposits/withdrawals made in current year also have the same genesis but since the assessee is a medical challenged retired employee, a complete track of the same could not be maintained/explained. - the assessee is unfit to earn any income due to several diseases and the only source of income is pension - Additions deleted as assessee has satisfactorily explained the source of cash deposits - AT
-
Income Tax:
Levy of penalty u/s 271D - Cash transaction in connection with violation of section 269SS - reasonable cause - Sale of residential flats to an agriculturist - cash sale consideration is very much reflected in the Registered Sale Deed as executed by the Purchaser - Levy of penalty is discretionary and not automatic - A careful reading of Section 273B encompasses that certain penalties “shall” not be imposed in cases where “reasonable cause” is successfully pleaded. - No penalty - AT
-
Customs:
Valuation of imported goods - safranal - redetermination/rejection of value - the value of Aroma Chemical while being imported as “Safranol” though was at reduced price for subsequent transaction but the same cannot be rejected for it being the transaction value. The transactions are held to be the ordinary sales. - AT
-
Customs:
Valuation of imported STBs for the purpose of levy of CVD - Transaction Value or Retail Sale Price (RSP) - There is no element of sale involved in as much as the ownership of the STBs were never passed on by the appellants to the subscribers. Thus, in absence of any element of sale i.e., transfer of property in goods from one person to another, the question of affixation of RSP in the packages would not arise and if the importer choose to do so, the same cannot be questioned, in the absence of any specific statutory provisions in vogue, restricting such practice - CVD has to be assessed in general on the transaction value - AT
-
Indian Laws:
Force of judgement of High Court in different / another State - The law is settled to the effect that once a provision of the Central Law or a Rule is held to be unconstitutional by a High Court, the same would stand effaced from the statute book in respect of the entire Nation and it cannot be said that it would not be valid within the jurisdiction of the particular High Court and it would be valid in other areas. - HC
-
IBC:
Difficulty faced by the Successful Auction Purchaser of Corporate Debtor as Going Concern - Scope of E-Auction documents, conditions and agreements - Discharge of past statutory dues and liabilities including tax dues - Liberty granted to file an Application before the Adjudicating Authority claiming reliefs/concessions/directions which may be necessary for operationalisation of the Corporate Debtor as per terms and conditions of the process document. - AT
-
IBC:
Initiation of CIRP - Period of limitation - Date of default - breach of guarantee - The application u/s 7 was filed on the basis of breach of guarantee and inability of the ‘Corporate Debtor’ to repay the outstanding dues and therefore breach of guarantee date becomes the cause of action as well as the date of default as indicated in Part IV of the Application - Application was filed within 1 months from the date of default - Hence, averments of the ‘Appellant’ that the application was barred by limitation does not succeed. - AT
-
Service Tax:
Penalty on tax liability discharged under RCM on legal services - The issue of levy of service tax on legal services is undisputedly a question of law pending consideration before the Hon’ble High Court of Delhi. Imposition of penalty in these circumstances, does not at all arises. Otherwise also, there is no evidence of any positive act on the part of the appellant proving that appellant had intention to evade the payment of duty. In these circumstances, the order of imposition of penalty is held unreasonable. - AT
-
Service Tax:
Refund of service tax - Period of limitation - Relevant Date - Refund application filed after the favorable decision of Appellate Authority - Explanation B in Clause (5) of Section 11B of the Act defines Relevant Date. Sub-clause (ec) thereof clarifies that where the duty becomes refundable as a consequence of judgement decree order or direction of appellate authority Appellate Tribunal or any Court, the date of such judgement decree, order or direction shall be the relevant date. - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
-
GST
-
2023 (7) TMI 291
Seeking grant of Anticipatory Bail - export of goods to Dubai but no one came to collect goods at Dubai - opening bogus firms to claim GST refunds - HELD THAT:- Looking at the material collected against the present applicant so far and coupled with the fact the applicant did not appear before the GST Investigation Wing despite service of three summons under Section 70 of the Central Goods and Service Tax Act, 2017. Meharban Singh is still in custody. The statement of Meharban Singh, Shubham Singhal, Chetan Narwani, Kapil Manglani, Akash Singh Kushwaha and Rakesh Prajapti, reveals that the applicant is the main accused in these GST refunds by forming fake firms . GST-RI and GST-3B sales and purchase of as many as 25 bogus firms are liable to be investigated, hence, looking to the gravity of the offence and huge amount of refund of GST through bogus firms, no case is made out for grant of anticipatory bail. Hon'ble Apex Court in the case of Y.S. JAGAN MOHAN REDDY VERSUS CENTRAL BUREAU OF INVESTIGATION [ 2013 (5) TMI 896 - SUPREME COURT ] held that The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Application dismissed.
-
2023 (7) TMI 290
Levy of GST - Works contract - pre and post GST period - HELD THAT:- These petitions are to be disposed off in terms of the order passed in SRI CHANDRASHEKARAIAH, M/S. GOVINDE GOWDA AND SONS, M/S. D.K. CONSTRUCTIONS, M/S. SRI AYYAPPA CONSTRUCTIONS, M/S. ANNAPOORNESHWARI CONSTRUCTIONS, M/S. BHOOMIKA BUILDERS, VERSUS THE STATE OF KARNATAKA, THE UNION OF INDIA, THE GOODS AND SERVICES TAX COUNCIL, PRINCIPAL COMMISSIONER OF CENTRAL TAX, COMMISSIONER OF COMMERCIAL TAXES, CAUVERY NEERAVARI NIGAMA LIMITED, AND OTHER [ 2023 (6) TMI 93 - KARNATAKA HIGH COURT] , where it was held that Revenue authorities directed to determine the amount of VAT payable for the period prior to 1.7.2017 and GST payable for the subsequent period as per relevant VAT / GST law. Petition disposed off.
-
Income Tax
-
2023 (7) TMI 289
Rate of deduction of tax in the case of a non-resident who does not have a PAN - provisions of Section 206AA overrides the provisions of the Double Tax Avoidance Agreement or not? - DTAA between India and Netherlands - As per HC [ 2022 (8) TMI 40 - DELHI HIGH COURT] DTAA acquires primacy in such cases, where reciprocating states mutually agree upon acceptable principles for tax treatment, the provision in Section 206AA (as it existed) has to be read down to mean that where the deductee i.e the overseas resident business concern conducts its operation from a territory, whose Government has entered into a Double Taxation Avoidance Agreement with India, the rate of taxation would be as dictated by the provisions of the treaty HELD THAT:- HC's impugned order does not call for interference. The special leave petition is accordingly dismissed.
-
2023 (7) TMI 288
Addition u/s 68 - penny stock purchases - As decided by HC name of the appellants were neither quoted by any of persons nor any material relating to the assessee was found at any place where investigation was done by the investigation Wing - HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is accordingly dismissed.
-
2023 (7) TMI 287
Income deemed to accrue or arise in India - Income received from sale of software licenses - Royalty under Article 12 of India Singapore Agreement - amounts paid by the concerned persons resident in India to non-resident - foreign software suppliers - Whether transaction constitutes as taxable income deemed to accrue in India u/s 9(1)(vi)? - HELD THAT:- The issue raised by the Revenue in the present special leave petition is covered against them vide judgment of this Court dated 02.03.2021 in Engineering Analysis Centre of Excellence Private Limited vs. The Commissioner of Income Tax Anr. [ 2021 (3) TMI 138 - SUPREME COURT] As Revenue states that a review petition has been filed against this judgment, which is currently pending, and the right of the Revenue to revive the present special leave petition may be reserved, in case the review petition is allowed. Recording the aforesaid, the special leave petition is dismissed, as the same is covered by the aforesaid decision of this Court.
-
2023 (7) TMI 286
Validity of best judgement assessment - statutory notices served on the wrong e-mail address - HELD THAT:- AO, inadvertently, issued statutory show cause notices to the petitioner at the e-mail address, which was clearly not in use. The record reveals that the AO was aware of the e-mail addresses that the petitioner was using. Given this position, we cannot but accept, that the requirement to serve statutory show cause notice, before taking recourse to best judgment assessment, has not fructified. The first proviso to Section 144 mandates issuance of a show cause notice before taking recourse to the best judgement route. Therefore, for the reasons given hereinabove, the impugned assessment order is set aside.
-
2023 (7) TMI 285
Estimation of income - bogus purchases - Tribunal reducing the addition to 8% of the value of the tainted purchases as against 12% of the same as held by the CIT(A) - HELD THAT:- What is sufficient reason would vary from case to case, we are satisfied that what has weighed in the mind of ITAT is that assessee had already declared 7.5% as gross profit. Of course, assessee had taken a stand that deference between 12% and 7.5% should be sustained and gross profit of 4.5% be applied. It is this proposal, we feel, made ITAT come to a mid figure of 8%. These are all calculations arrived at on the basis of the facts before ITAT and what is argued before the ITAT. What would be actual profit margin in the business that the assessee was carrying on and the matter of calculation before the concerned authority, whether the purchases were bogus and the parties from whom such purchases were allegedly made were bogus are essentially questions of fact for which evidence will have to be led. No substantial question of law arises.
-
2023 (7) TMI 284
Validity of assessment u/s 144-B r/w Section 143(2) - assessee seeked adjournment request as more time sought to file reply and when Petitioner attempted to upload it's answer/ explanation, he was intimate that the portal window was closed, than he emailed the National Faceless Assessment Centre (NFAC) but without responding whether, the Department was extending time or not Assessment Order was passed. HELD THAT:- Section 144B(1)(xii)(b) indicates that after the show cause notice is issued stating the variations prejudicial to the interest of the assessee, which are proposed to be made to the income of the assessee, he has to be called upon to submit as to why the proposed variation should not be made. Such show cause notice shall be served on the assessee through the National Faceless Assessment Centre. Clause (xiii) of Section 144B(1) mandates the Assessee to file his reply to the show cause notice on the date and time as specified therein or such time as may be extended on the basis of the application made in this regard to the NFAC, which shall forward the reply to the Assessment Unit. It is an open and shut case before us that the Petitioner indeed sought an adjournment till 16.12.2022 vide his email dated 08.12.2022, which is not denied by the Department. Clause (xiii) of Section 144B(1) indicates that the Assessee can file a reply on the date and time as specified or also within the extended time on the basis of his request application. There is no dispute that the Department shut down the window on 09.12.2022 and neither accepted the request of the Petitioner, nor rejected it. This Writ Petition is allowed. The impugned Assessment Order is quashed and set aside.
-
2023 (7) TMI 283
Validity of reopening of assessment - misalignment in the allegation made in the notice issued u/s 148A(b) and the case related information details (CRID) - HELD THAT:- The core of the petitioner s defense that the CRID which is appended to the notice issued u/s 148A(b) does not align with what is indicated in the body of the notice. This, on the face of it, appears to be correct. It appears that the CRID which has been furnished to the petitioner, along with the notice dated 23.05.2022, does not concern the petitioner. CRID in fact refers to one Mr Rahul Dureja, although we are told that the PAN referred to therein concerns the petitioner. Thus the best way forward would be to set aside the order issued u/s 148A(d).
-
2023 (7) TMI 282
Exemption u/s. 11 - delay in filing Form No. 10B [not filed before the date specified u/s. 139] - HELD THAT:- It is no more res integra that filing of Form 10B as required u/s. 12A are directory in nature, as such the Assessing Officer are not powerless to allow an assessee to file Audit Report, if not filed along with return, any time before completion of assessment. See Association of Indian Panel Board Manufacturer [ 2023 (3) TMI 1374 - GUJARAT HIGH COURT ] and Shree Bhairav Seva Samiti [ 2022 (12) TMI 445 - ITAT MUMBAI ] Audit Report in Form 10B though filed belatedly by the assessee, the same was not considered and verified by the Assessing Officer both u/s. 143(1) proceeding as well as in u/s. 154 proceeding, so the said orders are hereby set aside. Further there is no regular assessment orders passed u/s. 143(3) of the Act in the assessee case, therefore we hereby direct the Jurisdictional Assessing Officer to verify the Form No. 10B and then allow the claim of exemption u/s. 11 - Appeal filed by the Assessee is allowed for statistical purposes.
-
2023 (7) TMI 281
Addition u/s 14A r/w rule 8D - assessee company has made investment in shares of unlisted companies from which either exempt income is generated or no income is generated - sufficiency of own funds - CIT(A) partly allowed the appeal restricting the disallowance on the fresh investment made during the year - HELD THAT:- Assessee made investment in shares of group companies which are partly old investment carried forward from earlier years - interest free funds apart from borrowings are much more than its investment in shares and there is no nexus in between the fresh investment with the interest bearing borrowed funds. AO has also not denied the said facts. There being no income for shares hence obviously there are no administrative and other expenses incurred. In such facts of the case, no disallowance u/s 14A r.w. rule 8D is warranted as no borrowings were used in acquisition of these shares nor any administrative expenses etc. were incurred. The assessee also not earned exempt income and hence section 14A is inapplicable. See South Indian Bank Ltd. case [ 2021 (9) TMI 566 - SUPREME COURT ] Assessee made the investments from its interest free funds/ income and it does not come under the purview of Section 14A to make disallowance by the lower authorities. Decided in favour of assessee.
-
2023 (7) TMI 280
Delayed payment of employees contribution to Provident Fund (P.F)/Employees State Insurance Corporation (E.S.I.C) u/s 36(1)(va) - assessment u/s 143(1) - HELD THAT:- We find that the Hon'ble Supreme Court in Checkmate Services Pvt. Ltd. ( 2022 (10) TMI 617 - SUPREME COURT] held that the payment towards employees contribution to P.F./E.S.I.C., after the due date prescribed under the relevant statute is not allowable as a deduction u/s 36(1)(va). As employees contributions to P.F./E.S.I.C. were deposited after the due date prescribed under the relevant statute sole ground raised by the assessee is dismissed.
-
2023 (7) TMI 279
Levy of fees u/s 234E - failure to file return of TDS u/s 201A(1) r.w.s. 194IA - Scope of amended with effect from 01.06.2015 - HELD THAT:- The issue in the present appeal was dealt with in the case of Rajesh Kourani [ 2017 (7) TMI 458 - GUJARAT HIGH COURT] who after distinguishing the decision in the case of Fatheraj Singhvi Vs. Union of India [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] observed that section 234E was introduced to make TDS provisions stringent which is a charging section and section 200A on the other hand is a machinery provisions for making prima facie adjustment. Late filing fee imposed by AO in respect of delayed filing of TDS statement which is after the effective date of 01.06.2015 for the amendment brought in section 200A, no reasons to interfere with the finding CIT(A) who had confirmed the fee imposed by the learned AO u/s 234E of the Act. Accordingly, appeal of the assessee is dismissed.
-
2023 (7) TMI 278
Deduction u/s 11 - not filing the return of income within time as prescribed u/s 139(1) as required u/s 12A(1)(ba) r.w.s 139(4A) - return of income filed by the assessee is a belated return - CIT-A deleted the addition - HELD THAT:- The issue is squarely covered by the decision of Bangarh Educational Welfare Trust [ 2022 (1) TMI 1321 - ITAT KOLKATA] taking note of the CBDT Circular No.F.No.173/193/2019-ITA-I dated 23.04.2019 held since section 139(1) and section 139(5) are part of section 139 only and in this section 139 and sub-section (5) provides the mechanism to file a belated return, therefore, for A.Y 2018-19, even if the assessee files the return before the last date of filing of belated return the same should be treated as due compliance to section 12A(1)(ba) of the Act. For the year under appeal, the belated return could have been filed before 31.03.2019, and since the assessee has filed the return on 15.11.2018, therefore, considering the directions of CBDT Circular dated 23.04.2019, which are binding on the Revenue authorities, we are of the view that the assessee has fulfilled the conditions provided under sub-clause (ba) of section 12A(1) of the Act and has filed the return of income within the time allowed - Decided in favour of assessee.
-
2023 (7) TMI 277
Agricultural income or Income from other sources - sale of timber of the trees that were grown on the border of his land - AO did not agree with the contention of the assessee on the ground that the land of the assessee is situated in urban area; assessee is, therefore, an urban land holder and accordingly there cannot be any agricultural income nor any exemption u/s 10(1) - HELD THAT:- When once the assessee produced the commercial crops like chilies and cotton, it is too much to expect that all the chilies and cotton grown on 11 acres of land would be kept by the assessee for his own consumption or that he has given all such produce for charity, without deriving any income what-so-ever. Assessee is an agriculturist, eking out livelihood from agricultural operations, which would be culminated by realization of the amount by sale of the harvested agricultural produce. Agriculturists are not regular business men, who would keep the books of accounts or the vouchers and bills on a professional basis. ITO clearly observed that when he visited land, he found around 30 stems of the cut trees and remaining stems he could not observe for the reasons that since three years elapsed, due to irrigation for growing the further crops same stems must have buried, or being covered by bushes and forest trees which he found actually existing on the spot. This fact establishes that there were trees and those were cut. Assessee produced the tree cutting permission issued by the Tahsildar, Khammam, which shows that there were 120 teak wood trees and 21 bamboo trees planted about 15 years back in the land of assessee and the assessee sought the permission to cut and to sell the same. There is no reason to suspect the sale of wood, because the assessee obtained permission from the Tahsildar and the ITO observed that there was evidence of cutting of trees. The assessee satisfactorily explained the agricultural income of Rs. 4 lakhs and no addition is warranted - Decided in favour of assessee.
-
2023 (7) TMI 276
Investment write off - business loss OR capital in nature - assessee ceased to function and its books of accounts, files, records and other documents were taken in possession by official liquidator and other investigating agencies - HELD THAT:- Official liquidator had sold the investments held by the assessee and the amounts were appropriated by the Official Liquidator but no details were made available to the assessee. Consequently, it was not possible to update the accounts of the company. The balances as on 31.03.1999 were carried forward from year-to-year till 2013. After revival of the company, a review of the investments, current assets and current liabilities was made and necessary accounting entries were affected in the books of accounts in this year in order to reflect the correct balances. It could thus be seen that it was case of restatement of assets and liabilities at correct value in the absence of information forthcoming from official liquidator. No real income accrued to the assessee. Upon perusal of financial statements, it could be seen that the assessee has not earned any income from business operations but the credit to Profit Loss Account merely constitutes similar write-backs etc. Therefore, the disallowance as made by lower authorities could not be upheld. AO is directed to re-compute the income / loss of the assessee.
-
2023 (7) TMI 275
Disallowance of Customs Duty paid as prior period expenses - assessee could not perform the obligation of export and accordingly, claimed the sum so paid as prior period items - AO disallowed the same on the ground that the expenditure was not related to previous year - HELD THAT:- The expenditure has been crystallized only during this year. The incentive received in earlier year as been considered as income in earlier years. In this year, the assessee could not perform export obligation and accordingly, held liable to pay the said amount. Therefore, the deduction of the same is allowable to the assessee. The corresponding grounds stands allowed. Disallowance of Deferred Revenue Expenditure - Due to severe technical issues, the expenditure incurred on raw material, power and consumable etc. during the intervening period between the date the project was ready to commence commercial production and the date on which commercial production actually began was treated as deferred revenue expenditure in the books of account and same was written-off over a period of 5 years - HELD THAT:- From the computation of income of subsequent years as placed on record, it could be seen that the expenditure in those years has been reversed in the computation of income and the deduction of the same has not been claimed by the assessee. The action of the assessee is in accordance with the decision of Taparia Tools Ltd. [ 2015 (3) TMI 853 - SUPREME COURT] which held that when a particular course of action was permissible in law to the assessee as it was in consonance with the provisions of the Act which permits the assessee to claim the expenditure in the year in which it was incurred, merely because a different treatment was given in the books of account cannot be a factor which would deprive the assessee from claiming the entire expenditure as a deduction. The entries in the books of account are not determinative or conclusive and the matter is to be examined on the touchstone of provisions contained in the Act. Deduction of the expenditure, in full, could have been claimed by the assessee in the first year itself. Since the assessee has not furnished complete details of the expenditure, we restore the matter back to the file of AO with a direction to the assessee to furnish the details of the expenditure. If the same is found to be revenue in nature, the deduction of the same would be available in full. The corresponding ground stand allowed for statistical purposes.
-
2023 (7) TMI 274
Addition u/s 68 - Cash deposited in Bank - Unexplained deposits - As submitted assessee has re-deposited cash out of preceding withdrawals coupled with the inability of assessee to earn any income from any source (except pension) - HELD THAT:- The explanation offered by Ld. AR from assessee s side with regard to the source of deposits are satisfactory and therefore no addition could be made on account of unexplained cash. As rightly contended by Ld. AR that the withdrawals of cash from the bank a/c prior to deposits is not disputed by revenue. Notably, the assessee has also given a convincing explanation for the reason behind cash withdrawals and re-deposit in bank a/c, which is the medical exigencies caused by Bhopal Gas Tragedy. If the sources of deposits are explained from prior cash withdrawals and the department has not disputed prior cash withdrawals, subsequent deposits cannot be treated as explained and no addition could be made. Assessee re-circulated those moneys by way of deposits, withdrawals and redeposits in the Bank A/c from time to time and the deposits/withdrawals made in current year also have the same genesis but since the assessee is a medical challenged retired employee, a complete track of the same could not be maintained/explained. We find weightage in this submission of AR. Also the assessee is unfit to earn any income due to several diseases and the only source of income is pension. Thus the assessee has satisfactorily explained the source of cash deposits - Decided in favour of assessee.
-
2023 (7) TMI 273
Exemption u/s 11 and 12 - assessee cannot be considered to cover by the proviso to section 2(15) of the Act and cannot withdraw the claim of exemption u/s. 11 - HELD THAT:- The Hon ble Supreme Court Judgment in Civil Appeal [ 2022 (10) TMI 948 - SUPREME COURT] which has settled the issue by dismissing the Revenue s appeal. Hon ble Supreme Court in the very same case of ACIT vs. Ahmedabad Urban Development Authority reported [ 2022 (11) TMI 255 - SUPREME COURT] wherein it has been clearly held that the Revenues Appeals are dismissed as far as statutory Corporations/Boards Rate of depreciation on the basis of normal commercial principles not as per section 32 of the Act not applicable to exempt person - HELD THAT:- The Co-ordinate Bench of the Tribunal held that the fixed assets served some special purpose of the working of the assessee and thereby considered as plant and machinery in the working process of the assessee. CIT(A) has not justified in holding that the income of exempt person has to be calculated on the basis of normal commercial principles and by Rule of accountancy. We hold that the assessee is entitled to claim the depreciation as plant and machinery as the assessee in promoting public objects which are activities in the nature of trade, commerce or business but without commercial motive. Ground raised by the Assessee allowed. Accumulation of income - whether application of income shall precede accumulation by directing A.O. to allow accumulation u/s. 11(1)(a) from income remaining after deducting amount applied for the objects of the assessee trust - HELD THAT:- As relying on Gnyan Dham Vapi Charitable Trust [ 2020 (10) TMI 238 - ITAT AHMEDABAD] and Maharshi Karve Stree Shikshan Samstha Karvenagar [ 2019 (1) TMI 1260 - ITAT PUNE] we hereby set aside the order passed by the Ld. CIT(A) and held that when application of income is more than receipts of year, excess application of income i.e., expenditure in the hands of the assessee can be carried forward to succeeding Year. Ground raised by the Assessee allowed.
-
2023 (7) TMI 272
Assessment u/s 153A - incriminating material found during the course of search or not? - treatment of profit on sale of flats as long term capital gain was treated as business income and also denying interest deduction u/s 36(1) (iii) - HELD THAT:- No infirmity in the order of the LD CIT (A) in holding that there is no incriminating material found during the course of search to treat the income offered as capital gain on sale of flats as business income of the assessee. Such additions made without any reference to incriminating material, cannot be permitted as it is against the provisions of the Act and also the decisions rendered by Hon ble Bombay High Court [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] and confirmed by Hon ble supreme court in [ 2023 (4) TMI 1056 - SUPREME COURT] . Disallowance u/s 36(1) (iii) - Also here there is no incriminating material on record to justify such disallowance. The said disallowance has been made by the AO without making reference to any incriminating material which is evident from the assessment order. Correct head of income - sale of investment property - intention of the assessee - Nature of gain or profit on sale of 6 out of 7 flats sold by the assessee - Profit and Gains of Business or Profession OR Income from Capital Gain - HELD THAT:- Intention shown from the main object clause of memorandum of Association and conduct of the assessee shown from the accounting treatment and period of holding of the apartments are also another factor showing as investor looking to earn income from rental and appreciation in the value of assets held by it. In view of above facts we hold that conduct of the assessee is more like to earn the lease rent from the property and not to exploit these properties as business assets. Assessee has not undertaken any other projects of similar nature which could even remotely indicate that the assessee had intention and mindset of a businessman looking to earn profits by taking risks and engaging in multiple activities at once. The position that the assessee s activities are in the nature of an investor and it is not acting as a builder and developer was accepted by the revenue in the course of regular assessment proceedings u/s 143(3) Principle of res judicata v/s consistency - It is true that the principle of res judicata does not apply to income tax proceedings as each assessment year is treated as a distinct unit, but that does not mean consistency in manner in which assessment proceedings are conducted should be ignored especially when there are no material changes in the facts and circumstances of the case. The authorities are not permitted to take a different view in subsequent years when the law and facts are the same as earlier years. As in the case of Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] stated that an accepted position in one assessment year cannot be allowed to be changed in a subsequent assessment year where the parties have allowed that position to be sustained by not challenging the order. We reversing the order of the ld CIT (A) direct the AO to treat the proceeds received on sale of properties as income from Capital Gains . Accordingly, the Appeal filed by the assessee is allowed. Addition u/s 69C - addition based on a word document found during the course of search proceedings and statement recorded u/s 132(4) of the Act in relation to such word document - HELD THAT:- In the case at hand, the document relied upon by the department was not even a part of regular books of account but merely a loose document which did not even have a date of such transaction which are essential features of an authentic document. No doubt it is a computer document so there is no question of any signature or handwriting, to that extent the argument of the ld AR is rejected. No doubt same also needs to be corroborated. Case of Lavanya Land Pvt. Ltd. [ 2017 (7) TMI 141 - BOMBAY HIGH COURT] is also directly applicable to the facts of the case at hand as observed that the department had not placed on record any evidence to prove that huge amounts of cash had actually exchanged hands. In the present case also, there is no material on record to show that payment of Rs. 20,00,000/- was actually made to a person named Nazir as mentioned by Mr. Vishal Singh in his statement recorded u/s 132(4) of the Act which was subsequently retracted. Accordingly, the addition made u/s 69C of the Act by the Assessing Officer and sustained by ld CIT [A] is reversed and addition is directed to be deleted. Disallowance u/s 14A r.w.r. 8D - Suo moto disallowance made by assessee - sufficiency of own funds - HELD THAT:- Assessee had sufficient non-interest bearing funds to cover the amount of investment in mutual funds which yielded exempt income. Accordingly, presumption is available that the investment was made by the assessee out of its own funds and no interest bearing funds were utilized and no expenditure incurred in order to earn exempt income. This leads to a conclusion that no interest disallowance is warranted under the provisions of section 14A r.w.r. 8D of the Act. Administrative expenses u/r 8D (2) (iii) - We direct the ld AO to restrict the disallowance to the extent of only 0.5% of average of exempt income yielding investments. In this case the average of such mutual fund investments - Therefore, we partly allow the appeal of the assessee.
-
2023 (7) TMI 271
Levy of penalty u/s 271D - cash transaction in connection with violation of section 269SS - Sale of residential flats to an agriculturist in cash - Scope of reasonable cause - HELD THAT:- As assessee sold immovable property to an agriculturist from a small village, wherein Banking facilities are not available. However the above cash sale consideration is very much reflected in the Registered Sale Deed as executed by the Purchaser. When the Purchaser was summoned u/s. 133(6) of the Act by the A.O. he was satisfied with the reply of the Purchaser and passed the assessment order accepting the Returned Income without making any additions. Thus, the grievance made out by the assessee is found to be genuine and reasonable cause. Levy of penalty under Section 271D in our considered opinion is unwarranted. Levy of penalty is discretionary and not automatic - A careful reading of Section 273B encompasses that certain penalties shall not be imposed in cases where reasonable cause is successfully pleaded. As in the case of Maa Khodiyar Construction [ 2014 (7) TMI 137 - GUJARAT HIGH COURT] held that no penalty is leviable u/s. 271D for cash loans exceeding Rs. 20,000/- from agriculturists living in remote areas when transaction were not doubted. Decided in favour of assessee.
-
Customs
-
2023 (7) TMI 270
Refund u/s 27 and 27A of the Customs Act, 1962 - HELD THAT:- The impugned order is set aside and the matter remanded to the original authority for fresh consideration after hearing the parties based on the outcome of Special Leave Petition filed against the order of the Bombay High Court in the case of M/S. CMS INFO SYSTEMS LIMITED VERSUS THE UNION OF INDIA OTHERS [ 2017 (1) TMI 786 - BOMBAY HIGH COURT ]. Petition disposed off.
-
2023 (7) TMI 269
Valuation of imported goods - safranal - redetermination/rejection of value - for subsequent imports of safranal the same was misdeclared as Aroma Chemical K -100 by way of affixing / getting affixed secondary sticker showing description of goods safranal - reduction of value in very short time - penalty - HELD THAT:- The Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (hereinafter called as Valuation Rules) were framed as per the second proviso to sub-section 1 of section 14. It has 13 Rules in all of which Rules 1 and 2 are Preliminary Rules. Rule 3 states that subject to Rule 12, the value shall be the transaction value adjusted according to Rule 10. Rule 10 provides for certain costs to be included in the transaction value. Rule 12 provides for the proper officer to reject the transaction value if he has reason to doubt its truth and accuracy. Thus, unless the proper officer rejects the transaction value under Rule 12, the valuation has to be based on transaction value as per Rule 3 with some additions, if necessary, as per Rule 10 - In case the valuation cannot be done under Rule 3 /Rule 10. It must be done sequentially under rules 4 -9 sequentially. It is observed from the extract of Emails placed on record that after receiving the first consignment in February, 2016 there is a common order confirmation for purchase of 5000 Kg. safranal . However, prior to the said order was completely dispatched there have been exchange of emails for modifying the agreed price at the rate of 428 USD per Kg. to 408 USD per Kg. and based on said communication that the order confirmation got modified with respect to undispatched quantity of safranal . These observations, are sufficient to hold that though the time period has been short but there is a reasonable genesis for reduction in price while importing Aroma chemical as safranal . It is also observed that a certificate being issued by M/s.Givaudan, the importer, acknowledging the quantity imported by the appellant and the prices for the same. The said certification is in complete conformity of the description and the price in the impugned bill of entries. These observations are also sufficient to hold that the findings of adjudicating authority below in para 38.2 of the order that there was no written proof regarding the offer of discount and even the declaration of overseas supplier i.e. M/s. Givaudan is silent about the price are wrong being contrary to the documents on record - the value of Aroma Chemical while being imported as Safranol though was at reduced price for subsequent transaction but the same cannot be rejected for it being the transaction value. The transactions are held to be the ordinary sales. Penalty - HELD THAT:- The entire case made out against the appellant is therefore, held to be an act of misunderstanding and the findings are nothing but the result of presumptions and assumptions. Once there was no intent to evade the customs duty and the required duty has already been paid by the appellant. Once, there is no evidence of alleged misdeclaration and undervaluation for the reasons as discussed above, there arises no question of imposition of penalty either on the importing firm or on its director. Hence, the orders under challenge cannot be sustained. The order under challenge is hereby set aside - Appeal allowed.
-
2023 (7) TMI 268
Valuation of imported STBs - to be determined for the purpose of levy of CVD in terms of Section 3(2) of the Customs Tariff Act, 1975 read with Section 14 of the Customs Act, 1962 as claimed by the appellants; or, on the basis of Retail Sale Price as per the first proviso to Section 3(2) of the Act of 1975 (supra) read with Section 4A of the Central Excise Act, 1944, as claimed by the Revenue? HELD THAT:- On a conjoint reading of Rule 6(1)(e) ibid and Rule 2(m) ibid, it transpires that affixation of RSP under the former rule would arise only in cases/situations, where the packages are to be sold to the ultimate consumers. In other words, till the time there is no element of sale involved in transferring the title of the goods form the seller to the buyer, the requirement to affix RSP would not arise - on perusal of the audited Balance Sheet for the relevant period, we also find that the appellants have claimed depreciation on the STBs, meaning thereby that those STBs are their fixed assets. Since such declarations made in the Balance Sheet is a requirement under the company law statute and being approved by the statutory auditors, the same cannot be questioned by the Customs department in saying that such disputed goods were sold by the appellants to their subscribers in order to be categorized under the LM Act and PC Rules for assessment of the disputed goods under the RSP basis. There is no element of sale involved in as much as the ownership of the STBs were never passed on by the appellants to the subscribers. Thus, in absence of any element of sale i.e., transfer of property in goods from one person to another, the question of affixation of RSP in the packages would not arise and if the importer choose to do so, the same cannot be questioned, in the absence of any specific statutory provisions in vogue, restricting such practice - An identical issue came up for consideration in the case of Jayanti Food Processing (P) Ltd. (supra) [ 2007 (8) TMI 3 - SUPREME COURT] and upon analysis of the statutory provisions, the Hon ble Supreme Court have held unless there is an element of sale, as contemplated in Section 2(v). Rule 6(1)(f) will not be attracted and thus such package would not be governed under the provisions of SWM (PC) Rules which would clearly take such package out of the restricted arena of Section 4A(1) of the Act and would put it in the broader arena of Section 4 of the Act. The Co-ordinate Bench of the Tribunal at Chennai in the case of the appellants themselves in M/S. TATA SKY LIMITED VERSUS THE COMMISSIONER OF CUSTOMS [ 2019 (10) TMI 1562 - CESTAT CHENNAI] , has set aside the CVD demand. In view of the fact that CVD has to be assessed in general on the transaction value provided under Section 4 ibid, which admittedly has been done by the appellants, the submissions made by the learned AR not agreed that the valuation has to be done on RSP basis in the present case. Thus, we are of the considered view that the judgement in the case of Jayanti Food Processing (P) Ltd. would not be of any help to the Revenue for deciding the appeal differently. Rather, the ratio of the said judgement supports the case of the appellants inasmuch as element of sale is only the condition precedent for determination of the issue, whether the valuation of imported goods for CVD purpose has to be done on transaction value basis or on RSP basis. There are no merits in the impugned order passed by the learned Commissioner (Appeals), in so far as he had endorsed the views of the original authority that the subject assessments should be done on RSP basis - the impugned order is set-aside - appeal allowed.
-
Insolvency & Bankruptcy
-
2023 (7) TMI 267
Maintainability of application - initiation of CIRP - financial creditor and the corporate debtor are related parties and family owned companies or not - existence of debt and dispute or not - Appellant is entitled for an opportunity by the Adjudicating Authority especially in view of the fact that MoU dated 27.09.2017 could not be brought on record before the Adjudicating Authority or not? - HELD THAT:- The Corporate Debtor having not filed any Reply in spite of ample opportunity being granted by the Adjudicating Authority and the Application to recall the order proceeding ex-parte having also been dismissed, Appellant cannot be allowed to contend that one more opportunity be given to the Appellant - It is relevant to notice that amounts which was advanced by the Financial Creditor to the Corporate Debtor were amounts advanced from the year December, 2013 to December, 2017. The reasons by the Corporate Debtor not filing the Reply and placing any reliance on the MoU before the Adjudicating Authority are not forthcoming. Whether the Adjudicating Authority committed any error in accepting the Financial Debt and Default on the part of the Corporate Debtor? - HELD THAT:- The Adjudicating Authority has rightly placed reliance on the financial statement of the Corporate Debtor as well as those of Respondent No. 1 both reflecting the amount as short term loan. When balance sheet and financial statement as on 31st March, 2017 and 31st March, 2018 was filed along with Section 7 Application which statements were prepared in due course and are not subject of any dispute, we are of the view that acknowledgment as contained in the Financial Statements cannot be wished away by the Appellant relying on unregistered MoU dated 27.09.2017 which was never brought on record before the Adjudicating Authority. It is well settled preposition that balance sheets and financial statement of the Corporate Debtor can be looked into for finding any acknowledgement - This Tribunal in Shailesh Sangani v. Joel Cardso, [ 2019 (3) TMI 1192 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] laid down that when promoter, director or shareholder of the Corporate Debtor as a stakeholder to improve financial health of the company and to boost its economic prospects, advance an amount, the same would have the commercial effect of borrowing on the part of the corporate debtor notwithstanding the fact that no provision is made for interest thereon. The findings recorded by the Adjudicating Authority that financial debt and default is proved is supported by the financial statements and balance sheets of the Corporate Debtor and Financial Creditor which were brought on record along with Section 7 Application. There is no infirmity in the findings of the Adjudicating Authority that debt and default is proved. The Liquidator filed Section 7 Application after obtaining order by the Adjudicating Authority permitting the Liquidator to file Section 7 Application. Section 7 Application was filed by the Respondent No. 1 and the Corporate Debtor failed to discharge its financial debt due to the Financial Creditor. The allegations of the Appellant that in collusion with current stakeholders, Section 7 Application was filed by Respondent No. 1/Liquidator is rejected. Thus, Adjudicating Authority has rightly come to the conclusion that financial creditor has successfully proved the financial debt and default on the part of the Corporate Debtor in initiation of Section 7 Application - there are no error in the order impugned passed by the Adjudicating Authority admitting Section 7 Application, there is no merit in the Appeal, the Appeal is dismissed.
-
2023 (7) TMI 266
Difficulty faced by the Successful Auction Purchaser of Corporate Debtor as Going Concern - Scope of E-Auction documents, conditions and agreements - Discharge of past statutory dues and liabilities including tax dues - Liquidation of Corporate Debtor - HELD THAT:- When the process document clearly contemplated such consequences the said consequences shall ensue on sale as going concern and if any roadblocks come into ways of successful resolution applicant, necessary directions, clarifications can very well be issued by the Adjudicating Authority on an Application filed under Section 60(5)(c) of the Code - Further the process document clearly contemplated that transfer of ownership of the corporate debtor shall take place by way of writing off entire existing shareholding of the corporate debtor and issuance of fresh equity shares to the successful bidder. The share shall be included in the name of Successful Bidder and will not be issued in any other name. In view of the subsequent facts and notices brought on record by the Appellant and other terms and conditions of the process document as extracted, the ends of justice will be served in granting liberty to file an Application before the Adjudicating Authority claiming reliefs/concessions/directions which may be necessary for operationalisation of the Corporate Debtor as per terms and conditions of the process document. While granting such liberty to the Appellant it is observed that law is well settled, a successful bidder who is declared as successful bidder of sale as going concern can seek access of the Adjudicating Authority and may pray for necessary directions in accord with and in consonance with the process document in the liquidation proceedings. In result, appeal partly allowed and it is held that applicant s prayers i.e. relief/concessions/directions needs consideration by the Adjudicating Authority for which liberty granted to the Applicant to make a fresh Application containing prayers which may be commensurate and in accord with terms and conditions of the process document of e-auction process document. Appeal disposed off.
-
2023 (7) TMI 265
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - service of demand notice or not - existence of debt and dispute or not . Demand Notice not served on the Corporate Debtor - HELD THAT:- When in the Section 9 Application, the Operational Creditor has filed the original postal receipt for dispatch of Notice and service of Notice from the website of Postal Department and there being no challenge to the service report downloaded from the website of the Postal Department, there is no infirmity in the finding of the Adjudicating Authority that Demand Notice was served. It is further relevant to notice that in the Settlement Agreement, which was entered between the Operational Creditor and the Corporate Debtor on 27.09.2021, the Settlement Agreement also referred to Demand Notice dated 15.10.2018 sent on 18.10.2018 - there are no merit in submission of the learned Counsel for the Appellant that Demand Notice was not served on the Corporate Debtor. The Operational Creditor is at liberty to submit Demand Notice either in Form-3 or Form-4. When Notice is issued in Form-4, copy of the Invoice is required to be attached with the Notice. The Demand Notice issued by the Operational Creditor was in Form-3, hence, no infirmity can be found in the Demand Notice, if invoices were not attached. In the Application, which was filed under Section 9 Demand Notice dated 15.10.2018 clearly mentions that debt of 92,70,000/- is due and payable on the basis of supply, installation, testing and commission Agreement dated 05.02.2013 - the basis of the Demand Notice was Supply Agreement and acknowledgement letter issued by the Corporate Debtor. No invoices were referred to in the Demand Notice. Hence, submission of the Appellant that Demand Notice should have been accompanied with the invoices cannot be accepted. The present is a case where the Demand Notice issued by the Operational Creditor on the basis of supply and installation Agreement and the acknowledgement letter issued by the Corporate Debtor. In the facts of the present case, Notice having not been issued in Form-4, cannot be faulted with. There can be no defect and infirmity in Demand Notice issued in Form-3 in the facts of the present case. Thus, the submission of learned Counsel for the Appellant that Demand Notice is defective, cannot be accepted. Whether the operational debt was due and not paid by the Corporate Debtor? - HELD THAT:- The Demand Notice was issued for an amount of Rs.92,70,000/- for which amount Section 9 Application was filed. The Corporate Debtor and Operational Creditor entered into a Settlement Agreement on 27.09.2021, which Agreement was also brought on the record. The Settlement Agreement between the parties acknowledged the liability of Corporate Debtor for an amount of Rs.92,70,000/- It is further relevant to notice that although Corporate Debtor agreed to pay sum of Rs.60,00,000/-, but an amount of only Rs.25 lakhs was paid and the second installment of Rs.20 lakhs to be paid on or before 15.12.2021 and third installment of Rs.15 lakhs on or before 15.03.2022 were not paid. Thus, there was clear default on the part of the Corporate Debtor of acknowledged debt and on the date when Section 9 Application was heard on 25.01.2023, the operational debt remained unpaid. The Adjudicating Authority after considering all materials on record returned a finding that Operational Creditor has proved the debt and default, which is more than Rs.1 lakh. Challenge in the present appeal is to the admission order passed by the Adjudicating Authority in Section 9 Application filed by the Operational Creditor. The Assignment Deed in favour of Respondent No.3 on 03.02.2023 was not the subject matter of any issue between the parties in Section 9 Application. On the basis of the Assignment, Respondent No.3 has only prayed to be impleaded in this Appeal to support the impugned order. Respondent No.3 was impleaded in this Appeal by order dated 20.03.2023 - the Assignment in favour of Respondent No.3 is not subject matter of any dispute in the present Appeal, except that Respondent No.3 has been impleaded to advance submission on behalf of it to support the impugned order - thus for the purpose of this case, various arguments made by the Appellant regarding Assignment dated 03.02.2023, needs no consideration. There are no grounds made out to interfere with the impugned order passed by the Adjudicating Authority admitting Section 9 Application. In result, the Appeal is dismissed.
-
2023 (7) TMI 264
Applicability of principles of res-judicata - admission of belated claim filed by individual homebuyers as well as the Appellant - HELD THAT:- A three Member Bench of this Appellate Tribunal had also occasion to consider the question as to whether a decision which has also been final between the parties can be retrospective on the strength of overruling of an earlier judgment. The three Member Bench of this Tribunal inRaghavendra G. Kundangar Ors. vs. Shashi Agarwal Anr. [ 2022 (8) TMI 1157 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ], where it was held that the principle of resjudicata, though a part of CPC, it would be applicable to the proceeding of this Tribunal and IBC. Only to prevent the abuse of process of law and give a finality to any proceeding, or orders, and to avoid an endless litigation to frustrate the very object of enacting IBC, the claim of appellants is liable to be rejected. Thus, substantial prayer made by the Appellant to admit the claim of the Appellant having been finally rejected upto the Hon ble Supreme Court, could not have been entertained and deserve to be rejected. The present is a case where although Appellant has not filed any claim but the booking amount of the 50 flats as is claimed by the Appellant is reflected in the Resolution Plan itself which indicate that the said was part of the Information Memorandum - The present is a case where Appellant could not have prayed for any direction on the basis of orders of this Tribunal in Puneet Kaur vs. K.V. Developers Pvt. Ltd. Ors. [ 2022 (6) TMI 108 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] because the Resolution Plan notice the claim of the Appellant of booking of 50 units. It is noted that in so far as 9 units which according to the Appellant are in his possession, Resolution Professional has submitted that necessary transfer documents shall be executed in event the Appellant complies the necessary terms and conditions. Hence, the said prayer needs no consideration. The Adjudicating Authority did not commit any error in rejecting I.A. No. 3640 of 2022 filed by the Appellant. There is no merit in the Appeal - Appeal dismissed.
-
2023 (7) TMI 263
Initiation of CIRP - Period of limitation - Date of default - breach of guarantee - Penalty on tax liability discharged under reverse charge on legal services - Application filed u/s 7 of IBC, debarred by law of limitation or not - liability of the Corporate Debtor based on the tripartite agreement and Deed of continuing Guarantee. Time Limitation - HELD THAT:- It is seen from the tripartite agreement that certain warranties were given by the Corporate Debtor and the same also contained general conditions of the contract. As per Sub-clause 5 of the tripartite agreement it is responsibility of the Corporate Debtor for making payment in case of default by the farmer - It is therefore clear that the Corporate Debtor was obliged for collection and deduction of principal and interest of the farmers loan and make payment to the Respondent No. 1 . The Deed of Guarantee is continuing one and is to remain in force till such time the borrowers repay the loans. It is also observed that monthly MIS have been provided by the Respondent No. 1 to the Corporate Debtor on regular basis relating to outstanding debts from the farmer borrowers. Subsequently on the default by farmer- borrowers, the Financial Creditors invoked the Deed of Guarantee dated 03.10.2013 for repayment of outstanding dues through legal notice dated 07.04.2021 which has been replied by the Corporate Debtor on 16.04.2021 denying outstanding dues. The application under Section 7 was filed by the Respondent No. 1 on the basis of breach of guarantee and inability of the Corporate Debtor to repay the outstanding dues and therefore breach of guarantee date becomes the cause of action as well as the date of default as indicated in Part IV of the Application under Section 7 was 15.04.2021, whereas the Respondent No. 1 filed the application under Section 7 on 24.04.2021 which is fully covered under Limitation Act, 1963. Hence, averments of the Appellant that the application was barred by limitation does not succeed. Liability of the Corporate Debtor is based on the tripartite agreement and Deed of continuing Guarantee, both documents signed on 03.10.2013 - HELD THAT:- In the present case, as required in the agreement, the Respondent No. 1, sent from time to time the list of outstanding debts from the farmer- borrowers to the Corporate Debtor in form of the monthly MIS. It is also undisputed fact that from time to time the Financial Creditor has received the payment of dues and only on the default, the legal notice was issued and based on the continuing Deed of Guarantee and the Corporate Debtor was called upon to settle outstanding dues on account of farmer- borrowers loans within seven days and due to non-payment of such loans, amounting to Rs. 5,41,34,813/-, the date of default was treated as 15.04.2021. Thus, it is evident that there was clear liability on the part of the Corporate Debtor to make the payment on demand on breach/ default by farmer- borrowers and hence, the Adjudicating Authority has passed correctly the impugned order treating outstanding money as a financial debt of more than Rs. 1 Crore for which default took place on 15.04.2021 and therefore, rightly approved initiation of the CIRP against the Corporate Debtor . The other issue raised by the Appellant regarding the applicability of Vidarbha Industries Power Limited [ 2022 (7) TMI 581 - SUPREME COURT ] is not directly relevant, looking into the various facts and circumstances as brought out in the present appeal. Appeal dismissed.
-
Service Tax
-
2023 (7) TMI 262
Levy of Service Tax - Banking and other Finance Services - Foreign Bank charges, charged by Foreign to Indian Bank and the Indian bank collected as reimbursement from the appellant - HELD THAT:- In this fact, it is clear that if at all there is a service provider and Service recipient relationship, it is between the Foreign Bank and Indian Bank. Accordingly in India the actual service recipient is Indian Bank for liable to pay the Service Tax under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994. Therefore in any case the service tax demand cannot be raised from the appellant being not covered under category of service recipient. This issue in the appellant s own case has been considered by this Tribunal in DISHMAN PHARMACEUTICALS CHEMICALS LTD VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [ 2022 (12) TMI 1146 - CESTAT AHMEDABAD ] wherein this Tribunal held that when the assessee is not directly making the payment to the Foreign Banker towards any service provided by the said Foreign Banker to the Indian Bank, the assessee is not liable to pay service tax. Thus, it can be seen that the issue is no longer res-Integra. Accordingly, following the above decision, the demand in the present case is not sustainable - appeal allowed.
-
2023 (7) TMI 261
Wrong availment of Cenvat credit - Employee Insurance - Non-reversal of Cenvat credit under Rule 6(3) of Cenvat Credit Rules, 2004 - Non-payment of Service Tax under RCM on legal charges. Cenvat credit availed by the company on Group Personal Accident Policy, Group Term Life Policy and Group Mediclaim Policy taken for employees - HELD THAT:- The bare perusal of definition of Input service shows that it would mean any service used by the manufacturer/the service provider whether directly or indirectly, in or in relation to the manufacture of final product and include services used in relation to the activities relating to business or capital goods. That apart, the definition of input services is too broad. It is inclusive also in definition what is contained in the definition is only illustrative in nature. However, holding that the activities relation to business and any services rendered in connection therewith would form the part of input services - The Hon ble High Court of Bombay in the case of M/S. COCA COLA INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, PUNE-III [ 2009 (8) TMI 50 - BOMBAY HIGH COURT] has held that expression means and includes is exhaustive and expression business is an integrated/continued activity and is not confined or restricted to mere manufacture of the product. Therefore, activities in relation to business can cover all activities that are related to the functioning of the business - The Hon ble High Court also held that once the cost incurred by the service has to be added to the cost, and is so assessed, it is a recognition by Revenue for the services having a connection with the manufacture of the final product. This Tribunal also in the case of M/S RAJRATAN GLOBAL WIRE LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, UJJAIN [ 2021 (4) TMI 400 - CESTAT NEW DELHI] has held that once there is no evidence that the insurance service was obtained for the personal use of the employee of assessee, it is definitely an eligible input service for which the assessee is entitled to claim the Cenvat credit. Above all, department has conceded for this issue to no more res integra and to have been decided in favour of the assessee - it is held that the Cenvat credit availed by the appellant on the various insurance policies taken for its employee were eligible for availment is permissible. The order of reversing/disallowing the same is therefore liable to be set aside. Method/option of Cenvat credit reversal under Rule 6 of Cenvat Credit Rules pertaining to non-taxable service provided by the appellant in the state of Jammu Kashmir - HELD THAT:- The adjudication authority has held that appellant is required to reverse the Cenvat credit on common input services on the ground that the appellant has also provided non-taxable services in the State of Jammu Kashmir. Since, there is no denial that appellant was providing taxable as well as non-taxable services, the proportionate reversal of Cenvat credit has to be done in accordance of Rule 6(3) of CCR, 2004 - It is an admitted fact that the assessee herein have calculated the CENVAT Credit in terms of clause (c) read with clause (h) and have deposited the amount so determined, by 30th June in the succeeding financial year as prescribed. Rule 6 cannot be used as tool of oppression to extract the amount which is much beyond the remedial measure and what cannot be collected directly and cannot be collected indirectly, as well. Accordingly, in case of substantive compliance made by the assessee i.e. calculation of the amount of Cenvat credit proportionate reversal on annual basis and payment of the amount before the prescribed date, substantial benefit cannot be denied as it tantamount to not availing of input service credit on common inputs which are going into exempted services - reversal of Cenvat credit on common input services has wrongly been ordered by the adjudicating authority below. Penalty on tax liability discharged under reverse charge on legal services - HELD THAT:- Apparently and admittedly, the liability on this count stands already discharged by the appellant. The adjudicating authority has still made appellant liable for payment of interest. But we are of opinion that there is no evidence on record about the discharge of said liability beyond the reasonable time. The question of payment of interest does not at all arises - It is also observed that the issue of levy of service tax on legal services is undisputedly a question of law pending consideration before the Hon ble High Court of Delhi. Imposition of penalty in these circumstances, does not at all arises. Otherwise also, there is no evidence of any positive act on the part of the appellant proving that appellant had intention to evade the payment of duty. In these circumstances, the order of imposition of penalty is held unreasonable. Thus, it is held that there was no shortcoming as were pointed out against the appellant (3 in number). The order confirming the demand based on alleged said short comings is therefore not sustainable. Same is accordingly, hereby set aside - appeal allowed.
-
2023 (7) TMI 260
Liability of Service tax - Erection, Commissioning and Installation services - appellant being a sub-contractor required to pay service tax when the main contractor has paid the service tax on the entire work - extended period of limitation - penalty - HELD THAT:- The issue whether sub-contract is liable to pay service tax on the services on which the main contractor had paid the service tax, there were contrary decisions on this issue among the various benches of the Tribunal and the matter was referred to the Larger Bench and the Larger Bench has settled the issue in the case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI] wherein the Larger Bench has observed that A sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub- contractor in pursuance of the contract. There are no hesitation to hold that the appellant/sub-contractor is liable to pay the Service Tax even if the main contractor has discharged the liability. The issue no merits is found against the assessee and in favour of the Department. Extended period of limitation - HELD THAT:- The issue whether in such cases extended period of limitation can be invoked or not was also considered by various benches of Tribunal and in this regard the Delhi Tribunal in the case of M/S MAX LOGISTICS LIMITED VERSUS CCE, JAIPUR [ 2016 (9) TMI 1024 - CESTAT NEW DELHI] where it was held that The service. tax liability is as such on the arrangement based on agreement which is also the basis for payment of full service tax by RSIC. In other words, the service tax liability of both RSIC and the appellant has common source agreement. As such, we find the demand for extended period is not sustainable in the present case. The appellant being sub-contractor is liable to pay service tax on Erection, Commissioning and Installation service. But, extended period cannot be invoked to demand service tax from the appellant. In the present case, the period of dispute is from October, 2004 to March 2009 and as per the appellant the demand for the period April, 2004 to September 2008 amounting to Rs. 6019732/- is beyond limitation and is not sustainable and the demand for the normal period from October,2008 to March 2009 amounting to Rs. 11,53,446/- can be upheld. Hence for the purpose of computing the demand of service tax for the normal period along with interest, the matter remanded to the original authority with the direction to do this exercise within a period of two months after receiving the certified copy of this order. Penalty - HELD THAT:- The penalty cannot be imposed as there was no intention to evade payment of service tax. The appeal is partly allowed and remanded back to the original authority for determining the tax liability of the appellant for the normal period along with interest.
-
2023 (7) TMI 259
Refund of service tax - Period of limitation - Relevant Date - Refund application filed after the favorable decision of Appellate Authority - Applicability of Section 11B read with Section 35F - HELD THAT:- The amount in question i.e. of Rs.12,00,290/- alongwith interest of Rs.35,342/- was deposited by the appellant on 09.08.2015, at the stage of investigation itself towards the partial discharge of the liability pointed out by the audit team. Hon ble Apex Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT ] has held that the amount paid pending investigation is nothing but the amount paid under protest - the ground of rejecting this amount is that the same cannot be an amount covered under section 35F of Central Excise Act. Hence, section 11 B of the Act shall be applicable for refund of this amount. This section provides a period of limitation and the refund claim is beyond the said period of limitation. The amount of pre-deposit being an amount under section 35 F that the refund thereof under section 35 FF has been ordered by the adjudicating authorities below. However, the amount of Rs.12,00,290/- with interest is not an amount of pre-deposit - No doubt, Hon ble Apex Court in the case of Mafatlal Industries has held that no claim of refund of any duty shall be entertained except in accordance with the provisions of the statute and every claim of excise duty can be made only under and in accordance with section 11 B in the forms provided by the Act. But present is observed to not to be the case of refund of the duty. The Department cannot retain the same and the amount has to be refunded alongwith the interest to the assessee. It is further observed that even if seen through the prism of section 11B of Central Excise Act the period of one year mentioned therein has to reckon from the relevant date. Explanation B in Clause (5) of Section 11B of the Act defines Relevant Date. Sub-clause (ec) thereof clarifies that where the duty becomes refundable as a consequence of judgement decree order or direction of appellate authority Appellate Tribunal or any Court, the date of such judgement decree, order or direction shall be the relevant date. In the present case the refund claim was filed pursuant to the order passed by the Commissioner (Appeals) dated 18.01.2021. The claim was filed on 25.01.2021 i.e. within less than a week of the aforesaid order. The refund of Rs. 12,00,290/- with interest of Rs.35,342 has wrongly been rejected. Department is held liable to refund the said amount also alongwith the interest - the Department is directed to grant interest on the said amount at the rate of 12% from the date of deposit till the date of payment. Appeal allowed.
-
2023 (7) TMI 258
Levy of Service Tax - tolling operations undertaken by the appellant - contravention of provisions of Section 68, 69 70 of the Finance Act, 1994 and Rules, 4, 5, 6 and 7 of Service Tax Rules, 1994 by providing the said taxable services without obtaining registration and without payment of service tax - HELD THAT:- This issue has been considered by various benches of the Tribunal and in the appellant s own case for the earlier period it has been held that the collection of toll by the assessee would not be considered as Business Auxiliary Service provided to NHAI as the assessee is not rendering any service which is incidental or auxiliary on behalf of NHAI and the NHAI is not undertaking any business activity. In the appellant s own case PNC CONSTRUCTION CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH [ 2012 (12) TMI 878 - CESTAT, NEW DELHI] , the Tribunal has held that the activities of the appellants in respect of toll fee collection cannot be held to be a service provided to NHAI falling under the category of BAS. The impugned order is not sustainable in law - Appeal allowed.
-
2023 (7) TMI 257
Valuation of services - commercial or industrial construction service - abatement of 67% under the notification dated 1.3.2006 - inclusion of value of free of cost items in the gross value for availing abatement - extended period of limitation. Whether the value of free of cost items can be included in the gross value for availing abatement? - HELD THAT:- This issue has been settled by the Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] , which decision affirmed the decision of the Larger Bench of the Tribunal in M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. [ 2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] where it was held that sub-section (4) of Section 67 states that the value shall be determined in such manner as may be prescribed, however, it is subject to the provisions of sub-sections (1), (2) and (3). Moreover, no such manner is prescribed which includes the value of free goods/material supplied by the service recipient for determination of the gross value. Thus, the value of materials provided free of cost by customers to the appellant cannot form part of the taxable services rendered by the appellant as neither any price was charged by the appellant for such items, nor any monetary benefit accrued to the appellant from such supplies against provision of the service. The free of cost material cannot, therefore, be included in the gross value for claiming abatement. The denial of the abatement under the notification dated 01.03.2006, cannot be sustained. Whether abatement under the notification dated 01.03.2006 is extendible on subsequent reversal of credit? - HELD THAT:- The appellant had reversed CENVAT credit amounting to Rs. 13,82,845 which was taken in the ST-3 returns during the relevant period. Such reversal of credit would be equivalent to non-availment of credit. Hence, abatement under the notification dated 01.03.2006 could not have been denied to the appellant and the demand is liable to be set aside. In this connection reliance can be placed on the judgement of the Supreme Court in CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT] , wherein it was held that credit reversed is equivalent to non-availment of credit. In this view of the matter it would not be necessary to examine the contention raised by the learned counsel for the appellant that the extended period of limitation could not have been invoked in the facts and circumstances of the case. The impugned order dated 19.01.2015 passed by the Commissioner cannot be sustained and is set aside - Appeal allowed.
-
2023 (7) TMI 256
Rejection of Refund claim - rejection on the ground that the refund claim is filed beyond the period of limitation and fails to pass the bar of unjust enrichment - withdrawal under National Litigation Policy on 27.02.2016 - HELD THAT:- At the time when the ld. Commissioner (Appeals) passed the order for dropping the proceedings against the appellant, the decision of the Hon ble Apex Court was not available. Therefore, the appellant was not liable to pay any service tax for the impugned period. Moreover, the appeal filed by the Revenue against the order of the ld. Commissioner (Appeals) has already been withdrawn under National Litigation Policy on 27.02.2016, thereafter, no demand is sustainable against the appellant and the amount paid by the appellant on 26.02.2011 is only a deposit. In view of this, no limitation is applicable. Further, no bar of unjust enrichment is applicable in the facts and circumstances of this case, as the appellant has also made the payment for the period from 10.09.2004 to 15.06.2005 on 26.02.2011. The appellant is entitled for refund claim and the decision in the case of M/S. TIGER LOGISTICS (INDIA) LTD. VERSUS COMMISSIONER OF SERVICE TAX-II, DELHI [ 2022 (2) TMI 455 - CESTAT NEW DELHI ] is not applicable to the facts and circumstances of the present case where it was held that In this case, once the service tax, admittedly due, has been paid, albeit late and on that basis we have accepted the plea of the appellant that section 73(3) applies and no SCN should have been issued at all, the appellant cannot claim refund of the service tax paid. This would also apply to any service tax paid beyond the period of five years. There are no merit in the impugned order and the same is set aside - appeal allowed.
-
Central Excise
-
2023 (7) TMI 255
Levy of penalty u/r 26 of Central Excise Rules, 2002 - issuing Cenvat Credit invoices without supplying the goods for fraudulent passing of Cenvat credit - no proper cross examination was conducted by the Adjudicating Authority - principles of natural justice - HELD THAT:- Both the appellant have given inculpatory statements. The Adjudicating authority has conducted the cross-examination though some discrepancy was raised by the Learned Chartered Accountant during the hearing before the Adjudication authority but the fact that the cross examination has been conducted and nothing contrary to the statement given under Section 14 of the Central Excise Act, 1994 by the present appellants have come on record. Therefore, both the present appellants have direct involvement in passing of fraudulent Cenvat credit to M/s Nakoda Alloys Pvt. Ltd. The penalty was imposed under Rule 26(2) of Central Excise Rules, 2002 which has come into force with effect from 01.04.2007. Therefore, for all the transactions made prior to 01.04.2007 the Penal Provision Rule 26(2) cannot be applied retrospectively. Therefore, in respect of the transactions only made after 01.04.2007 the penalty under Rule 26(2) of Central Excise Rules, 2002 shall be applicable. In this case no penalty can be imposed under Rule 26(2) of Central Excise Rules, 2002. As regard the appeal of M/s Goodluck Empire some of the transactions were made after 01.04.2007, in respect of these transactions the appellants are liable to penalty under Rule 26(2) of Central Excise Rules, 2002. The penalty of M/s. Goodluck Empire is reduced from Rs. 8,20,000/- to Rs. 2,00,000/- - Appeal allowed in part.
-
2023 (7) TMI 254
Recovery of CENVAT Credit - credit availed lying unutilized - retrospective amendment of Notification 33/99-CE dated 08/07/99 through section 153 of the Finance Act 2003 - HELD THAT:- The demands in these cases have arisen due to retrospective amendment of Notification 33/99-CE dated 08/07/99 through section 153 of the Finance Act 2003 - The amendment envisaged that CENVAT Credit availed shall be payable retrospectively within a period of 30 days from the day the Finance Bill received the assent of the president and in the event of non payment of duty, 15% interest shall be payable from the date immediately after the expiry of the period of 30 days. The Appellants stated that the retrospective amendment only validates recovery of CENVAT Credit availed between 08/07/199 to 22/12/2002. The demands in these three cases have gone beyond 22/12/2002 and sought recovery of CENVAT Credit lying unutilzed as on 28/02/2003. They cited the decision of the Tribunal Kolkata in the case of M/S HUNWAL TEA ESTATE VERSUS COMMISSIONER OF CENTRAL EXCISE, DIBRUGARH [ 2018 (7) TMI 1356 - CESTAT KOLKATA] where under the same facts and circumstances, the Tribunal Kolkata has set aside the demand and allowed their appeal - the decision of the Tribunal in the case of Hunwal Tea Estate is squarely applicable in this case. The retrospective amendment has validated recovery of Cenvat credit availed for the period from 08/07/99 to 22/12/2002 only. Whereas, the demand in these cases have gone beyond 22/12/2002 and demanded recovery of CENVAT credit availed upto 28/02/2003. The the demands in the impugned orders are not sustainable and liable to be set aside - Appeal allowed.
-
2023 (7) TMI 253
CENVAT Credit - input services - Manpower Recruitment Service - arranging for bringing managers in the factory for supervising/looking after the manufacturing operations - period from June, 2015 to April, 2016 - HELD THAT:- Although the said Order-in-Appeal dated 22.2.2017 on identical issue was cited by the appellant before the learned Commissioner (Appeals) herein also but the said authority misdirected itself, that the period involved in that Order-in-Appeal dated 22.2.2017 was upto the year 2010, whereas infact the period involved therein was from April, 2013 to September, 2014 i.e. period after the amendment and that is why for the next period i.e. May, 2016 to June, 2017 (i.e. the period immediately subsequent to the period involved herein) the Adjudicating Authority therein while relying upon the said Order-in- Appeal dated 22.2.2017 has dropped the demand against the appellant for the very same services in issue therein. Time and again it has been held by the Tribunal that the revenue is not permitted to take contrary view on identical issue. If they are permitted to do so then the law will be in a state of confusion and will place the authorities as well as the assessees in a quandary. A similar view has been taken by this Tribunal in the matter of VISTEX ASIA PACIFIC P LTD. VERSUS COMMISSIONER OF CGST, MUMBAI SOUTH [ 2023 (7) TMI 52 - CESTAT MUMBAI] . As the issue has already been settled in favour of the appellants by the authorities below for different period, therefore, the issue involved herein is decided in favour of the appellant as there are no justification to take a contrary view. The appeal filed by the appellant is allowed.
-
Indian Laws
-
2023 (7) TMI 252
Appointment as Member in the District Consumer Redressal Commission in the State of Tamil Nadu - notification dated 17.07.2022. The challenge is mainly on the ground that the impugned notifications issued on 17.07.2022 are based on the Rules framed by the Central Government in the year 2020 are bad in law, in view of the fact that some of the Rules particularly Rule 3(2)(b), 4(2)(c) and Rule 6(9) have been declared ultra vires the Constitution of India and as such the notifications issued based on the non-existent rule is bad in law. HELD THAT:- It is found that no notification was even issued by the State of Tamil Nadu as on 22.10.2021. The earliest notification calling for applications for the post of President and Members of the District Forum was made on 19.12.2021, i.e., after the order dated 22.10.2021. The impugned notifications have been made on 17.07.2022. It should be pointed out at this juncture at the risk of repetition that both these notifications were subsequent to the Nagpur Bench of Bombay High Court in VIJAYKUMAR BHIMA DIGHE, DR. MAHINDRA BHASKAR LIMAYE VERSUS UNION OF INDIA, STATE OF MAHARASHTRA, NATIONAL CONSUMER DISPUTES REDRESSAL FORUM, STATE CONSUMER DISPUTE REDRESSAL COMMISSION, THE MAHARASHTRA STATE CONSUMER, THE SECRETARY MINISTRY OF CONSUMER [ 2021 (9) TMI 1499 - BOMBAY HIGH COURT] declaring Rule 3(2)(b), 4(2)(c) and 6(9) as unconstitutional. Therefore, legally and technically those Rules were not in the statute book on the date when the notifications calling for appointment were issued. The State had successfully dragged its feet on the appointments, despite the fact that the Hon'ble Supreme Court was monitoring the action taken by the States in filling up the vacancies in the Consumer Fora. A bare perusal of records of the proceedings of the Hon'ble Supreme Court in THE SECRETARY MINISTRY OF CONSUMER AFFAIRS VERSUS MAHINDRA BHASKAR LIMAYE AND ORS. [ 2023 (3) TMI 1379 - SUPREME COURT] would show that the Hon'ble Supreme Court had not suspended the operation of the judgement of the Nagpur Bench of Bombay High Court pending the said Special Leave Petition, which was later converted into Civil Appeal in Civil Appeal No. 831 of 2023. It is thus concluded that the Rules relating to experience viz., Rules 3(2)(b), 4(2)(c) and 6(9) were not in the statute book on the date when the impugned notifications were issued by the State. Therefore, the candidates who did not satisfy the required experience as per the Rules which were struck down were disabled or prevented from applying. The affirmation of the judgement of the Bombay High Court by the Hon'ble Supreme Court on 03.03.2023 would made things worse for the respondents. The law is settled to the effect that once a provision of the Central Law or a Rule is held to be unconstitutional by a High Court, the same would stand effaced from the statute book in respect of the entire Nation and it cannot be said that it would not be valid within the jurisdiction of the particular High Court and it would be valid in other areas. This position was reiterated by the Hon'ble Supreme Court in KUSUM INGOTS ALLOYS LTD. VERSUS UNION OF INDIA [ 2004 (4) TMI 342 - SUPREME COURT] . The impugned notifications are quashed. The State Government will take appropriate action to make appointments afresh in accordance with the directions of the Hon'ble Supreme Court in The Secretary Ministry of Consumer Affairs Vs. Dr.Mahindra Bhaskar Limaye and others - Petition allowed.
|
