TMI Tax Updates - e-Newsletter
August 7, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

TMI Short Notes

1. Interpreting the CGST Act: A Landmark Judgment on Record Maintenance, Confiscation, and Penalties

  GST:

2. Excess Stock Findings: Invoking Sections 73 and 74 of UPGST Act, Not Section 130

  GST:

3. Judicial Restraint in SARFAESI Cases: Navigating Alternative Remedies and Writ Jurisdiction

  Indian Laws:

Articles

1. On the recent Hon’ble Supreme Court judgment in respect of Advocate Enrolment Fee – An Open and Personal Epistle

   By: Venkatesh S

2. REGISTRATION OF MUTUAL FUND

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Trade Connect ePlatform being setup to connect Indian Exporters, MSMEs and Entrepreneurs, Indian Missions Abroad, Export Promotion Councils and other Partner Government Agencies

2. 15.53 lakh direct jobs created by recognized startus

3. Govt policies boosting foreign investments in India

4. Centre for Trade and Investment Law, IIFT celebrates Seventh Anniversary

5. Quality Council of India introduces QCI Surajya Recognition & Ranking Framework to Drive Excellence in Key Sectors

6. 52.81 crore PM Jan-Dhan accounts with deposit balance of Rs. 2,30,792 crore opened as on 19.07.2024 under PMJDY

Notifications

Companies Law

1. G.S.R. 476 (E) - dated 5-8-2024 - Co. Law

Companies (Adjudication of Penalties) Amendment Rules, 2024 - Adjudication of penalties

LLP

2. G.S.R. 475(E) - dated 5-8-2024 - LLP

Limited Liability Partnership (Amendment) Rules, 2024. - STRIKING OFF NAME OF DEFUNCT LLP

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2024/109 - dated 6-8-2024

Amendment to Master Circular for Infrastructure Investment Trusts (InvITs) dated May 15, 2024 - Board nomination rights to unitholders of InvITs

2. SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2024/108 - dated 6-8-2024

Amendment to Master Circular for Real Estate Investment Trusts (REITs) dated May 15, 2024 – Board nomination rights to unitholders of REITs

3. SEBI/HO/IMD/PoD1/CIR/P/2024/106 - dated 5-8-2024

Valuation of Additional Tier 1 Bonds (“AT-1 Bonds”).

4. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/90 - dated 27-6-2024

Master Circular for Mutual Funds

5. SEBI/HO/DDHS-PoD-2/P/CIR/2024/43 - dated 15-5-2024

Master Circular for Real Estate Investment Trusts (REITs)

6. SEBI/HO/DDHS-PoD-2/P/CIR/2024/44 - dated 15-5-2024

Master Circular for Infrastructure Investment Trusts (InvITs)

Income Tax

7. 08/2024 - dated 5-8-2024

Non-applicability of higher rate of TDS/TCS as per provisions of section 206AA/206CC of the Income-tax Act, 1961, in the event of death of deductee/collectee before linkage of PAN and Aadhaar

Highlights / Catch Notes

GST

• Petition dismissed for violation of natural justice principles. Inadequate time given for GSTR mismatch reply. Adjournment denied due to no written reply.

  Case-Laws - HC : Violation of principles of natural justice challenged through ex-parte demand order and show cause notice (SCN). Impugned SCN provided less time than stipulated u/s 73(2) of UP GST Act for submitting reply, citing mismatch in GSTR filed. Court held that adjournment application would have been entertained if petitioner had given written reply to SCN and then sought adjournment. Neither application dated 23.1.2024 nor 15.4.2024 received by respondents. Court opined law relied upon by petitioner's counsel from M/s Mohan Agencies case inapplicable. Petition dismissed.
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• Jurisdiction challenge rejected for non-participation. 10% deposit within 8 weeks for fresh hearing. File replies in 12 weeks. Final order in 2 months.

  Case-Laws - HC : Jurisdiction challenge to assessment orders passed by different officer from investigating officer. Petitioner negligent in non-participation in proceedings emanating from notices. Opportunity given subject to 10% disputed tax deposit within 8 weeks. Impugned quashed orders treated as addendum to notices. Petitioner to file separate replies within 12 weeks. Final orders on merits to be passed within 2 months thereafter. Petition disposed.
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• Petition disposed, awaiting SC verdict on GST levy on mining under reverse charge. Recovery proceedings stayed pending appeal disposal. No pre-deposit needed.

  Case-Laws - HC : The High Court disposed off the petition, awaiting the final decision of the Supreme Court in UDAIPUR CHAMBERS OF COMMERCE AND INDUSTRY & ORS. VERSUS UNION OF INDIA & ORS. regarding the levy of GST on mining activities under the reverse charge mechanism. The recovery proceedings pursuant to the impugned orders shall be kept in abeyance pending disposal of the appeal by the Supreme Court. The petitioner is given liberty to file a statutory appeal without pre-deposit, in view of the Supreme Court's decision.
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• Writ against GST adjudication order dismissed for violating natural justice. Petitioner can approach Appellate Authority after statutory pre-deposit.

  Case-Laws - HC : Writ petition challenging adjudication order u/s 73(9) of West Bengal GST/CGST Act, 2017, dismissed. Proper officer failed to call for records before passing order, violating natural justice principles. Statutory pre-deposit required for appeal not made. Petitioner permitted to approach Appellate Authority after making statutory pre-deposit. Writ petition disposed of.
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• High Court Grants Bail in Fake GST Entities Case Due to Long Custody and Completed Investigation.

  Case-Laws - HC : Grant of regular bail in case involving sale/purchase of fake GST entities, issuance of fake firms and fraudulent beneficiaries of fake GST ITC. Considering attending circumstances, materials on record, law laid down in Ratnambar Kaushik and Satendra Kumar Antil cases, maximum punishment of up to 5 years, petitioner's custody for over 4 months, offence based on documentary evidence, investigation concluded, final P.R. submitted, HC persuaded to release petitioner on bail on stringent terms and conditions. Petitioner directed to be released on furnishing bail bond of Rs.50,000/- with two local solvent sureties each of like amount to satisfaction of court in seisin over matter and subject to fulfilment of conditions imposed. Bail application allowed.
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• Tax liability order set aside due to non-receipt of notice. Reconsider 5% tax demand within 2 weeks & reply to show cause.

  Case-Laws - HC : Petition challenging assessment order and consequential bank attachment was allowed. Impugned order imposing tax liability on allegation of sale suppression based on purchase-outward supply value difference was set aside. Petitioner claimed unawareness of proceedings due to non-receipt of show cause notice. Considering petitioner's assertion and nature of confirmed tax proposal, reconsideration warranted by remitting 5% of disputed tax demand within two weeks and submitting reply to show cause notice within said period. Petition disposed of.
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• Hostel accommodation exempt for 10 months (Serial No. 12). Short stay (1-2 months) for new students taxable (Serial No. 3).

  Case-Laws - AAR : Hostel accommodation services provided for 10 months' duration are exempt under Serial Number 12 of Notification 12/2017-Central Tax (Rate), as per the Madras High Court ruling in Thai Mookambikaa Ladies Hostel case. However, such services for 1-2 months to new students during vacation are not exempt under Serial Number 3. For old students extending stay by 1-2 months after 10 months' residence, the extension is considered long-term tenure, eligible for exemption under Serial Number 3.
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Income Tax

• Higher TDS/TCS rate exemption if deductee/collectee expired before linking PAN-Aadhaar by 31.05.2024 for transactions until 31.03.2024.

  Circulars : In certain cases where higher rate of TDS/TCS was applicable u/ss 206AA/206CC of the Income-tax Act, 1961 for transactions until 31.03.2024, but the deductee/collectee passed away on or before 31.05.2024 before linking PAN and Aadhaar, the deductor/collector shall not be liable to deduct/collect tax at higher rate u/ss 206AA/206CC. The deduction/collection shall be as mandated under other provisions of Chapter XVII-B or Chapter XVII-BB of the Act.
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• ITAT dismissed appeal citing low tax effect; Revenue can recall if exceptions. Assessee cited Circular & HC judgment. HC quashed ITAT order, remanded matter.

  Case-Laws - HC : ITAT dismissed assessee's appeal citing low tax effect as per CBDT Circular No.3/2018, giving Revenue liberty to recall dismissal if covered by exceptions. Assessee contended ITAT rightly relied on Circular No.5/2017 and Bombay HC judgment that mere audit objection insufficient for recall. HC allowed Revenue's petition, quashed ITAT order, remanded matter to ITAT to enable Revenue to point out accepted audit objection, holding CBDT circular u/s 268A binding, but clarifying appeal possible if contrary to SC judgments.
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• Uniform Application of Section 153C: Key Procedures for Non-Searched Entities in Income Tax Assessments.

  Case-Laws - HC : Section 153C applies equally to all non-searched entities, without creating a separate regime where the AO of the searched and non-searched entity are the same. The First Proviso to Section 153C(1) regulates the date from which the six-year period or the "relevant assessment year" for the non-searched entity is reckoned. The material unearthed during the search must be independently evaluated to determine if it impacts the total income of the non-searched person. The satisfaction arrived at u/s 153C is the cornerstone for initiating proceedings. The physical transmission of documents is merely a step to enable the AO to examine whether an assessment u/s 153C is liable to be initiated. In cases with a common AO, the commencement point would be the date when the AO forms satisfaction regarding the non-searched entity, even without an actual exchange of material between separate authorities.
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• Reassessment nullified for 2020-21 due to lack of evidence on alleged IGST refund issue. Disallowed expenses unrelated to that year.

  Case-Laws - HC : Reopening of assessment u/s 147 was challenged due to lack of material relating to alleged wrongful IGST refunds for assessment year 2020-21. Disallowable expenditure pertained to financial years 2017-18 and 2018-19, corresponding to assessment years 2018-19 and 2019-20. Petitioner's reply revealed IGST refund issue was concluded in its favor. High Court found reassessment unsustainable due to absence of relevant material for assessment year 2020-21, deciding in favor of assessee.
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• Scrutinizing Tax Search Legality: Proportionality, Privacy, and Statutory Safeguards in Focus; Evidence Admissibility Impacted.

  Case-Laws - HC : Legality of search u/s 132 scrutinized through Articles 21 and 265 - Doctrine of Proportionality applicable for statutory violations impacting right to privacy. Necessity to examine if search strictly adhered to statutory/constitutional safeguards and resultant impact on admissibility of illegally obtained evidence under Pooran Mal case. Non-communication of reasons for centralization u/s 127 renders transfer void unless assessee acquiesced - Section 292B applicability to be examined. Assessments u/s 153A contingent on seized incriminating material - Sinhgad principles on relevance of seized materials. Individual examination of Section 153C notices mandated instead of generalization. Provisional attachments u/s 281B to be re-examined. Validity of Section 143(2) notices and 143(3) orders open for consideration based on jurisdictional issues. Matter remanded for fresh adjudication.
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• Court allowed delayed tax filing for 72-yr-old citing depression, old age & small income. Relied on precedent for leniency.

  Case-Laws - HC : Court condoned delay in filing IT returns for senior citizen aged 72 years due to genuine hardship of depression and old age. Despite 15-year delay, considering petitioner's small-scale profession, no scrutiny by tax authorities, and long pendency, court invoked Section 119(2)(b) of Income Tax Act and CBDT Circular 09/2015 allowing up to 6 years' condonation on genuine hardship. Relying on precedent, court held petitioner deserved lenient treatment in peculiar facts, allowing writ petition.
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• Refund delay at CPC despite order; Court directs timely refund credit or cheque/pay order with interest to avoid public loss.

  Case-Laws - HC : Refund processing delayed due to technical glitches at Central Processing Center (CPC), despite Assessing Officer's order. Court expressed concern over non-payment of admitted refund resulting in interest payment from public money, causing loss to nation. Directed CPC to credit refund to Petitioner's account by specified date, failing which physical cheque/pay order with interest u/s 244A of Income Tax Act to be issued. Non-compliance viewed as willful disobedience of court order.
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• Reassessment proceedings beyond 3 years invalid if sanction by lower authority. Order & notice quashed, following Siemens case.

  Case-Laws - HC : Sanction by Principal Commissioner of Income Tax instead of Principal Chief Commissioner of Income Tax u/s 151(ii) for reassessment proceedings beyond three years from end of assessment year is invalid. Consequent order u/s 148A(d) and notice u/s 148 are quashed and set aside. Decided in favor of assessee, following Siemens Financial Services Private Limited case.
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• Addition of capital by partners can't be taxed in firm's hands. Deduction u/s 35AD denied for lack of CA certificate.

  Case-Laws - AT : Addition of capital contribution by partners in assessee firm cannot be made in hands of firm; any addition, if required, should be in hands of individual contributing partners. Regarding deduction u/s 35AD, assessee did not furnish requisite form certified by Chartered Accountant as mandated by Section 80-IA(7); Assessing Officer erred by not inquiring into this aspect before allowing substantial deduction u/s 35AD; assessment order held erroneous and prejudicial to Revenue's interest on this issue.
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• Court Dismisses Revenue's Claims; Disallows Fictitious Losses and Unexplained Credits Due to Lack of Evidence.

  Case-Laws - AT : Assessment u/s 153A lacked incriminating material - additions arbitrary. Fictitious commodity losses disallowed due to absence of tangible evidence of undisclosed income or unaccounted assets. Reassessment requires incriminating material as per Saumya Construction case. Unexplained credits u/s 68 deleted as AO failed to verify "source of source" despite assessee providing information. Disallowance u/s 14A r.w.r.8D deleted for unabated years lacking incriminating material, following Saumya Construction and Kabul Chawla cases. Assessee being share dealer doesn't exempt from Section 14A. Revenue's grounds dismissed, assessee's allowed.
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• Export turnover doesn't qualify for 10A exemption. Exclude forex expenses from both turnovers for parity. Interpret 10A liberally.

  Case-Laws - AT : Export turnover brought into India does not qualify as 75% of total turnover for claiming exemption u/s 10A. Expenditure incurred in foreign exchange must be excluded from both total turnover and export turnover to maintain parity. Section 10A, being a beneficial provision, should be interpreted liberally to promote exports. Excluding foreign exchange expenses from export turnover but not total turnover would defeat the purpose. The ITAT directed the Assessing Officer to compute 75% of total sales on gross receipts u/s 10A(2)(ia) and allowed the assessee's appeal.
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• Interest income from co-op bank allowed u/s 80P(2)(d), subject to verification. Non-co-op bank interest not deductible.

  Case-Laws - AT : Deduction u/s 80P(2)(d) was allowed for interest income earned by the assessee from fixed deposits and savings accounts with Ahmedabad District Co-operative Bank Limited, a registered cooperative society. However, the Assessing Officer was directed to verify if the entity is a cooperative bank duly registered under the relevant Act. Interest income received from a savings account with Axis Bank, a non-cooperative bank, was held not deductible u/s 80P(2)(d) based on Supreme Court's decision in Totgar's case and ITAT's decision in Sardar Patel Co-operative Credit Society Limited's case. The assessee's appeal was partly allowed.
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• Capital gains on gifted flats taxed upon transfer, using original acquisition date; swapping units redefines rights, not new allotment.

  Case-Laws - AT : Regarding capital gain on sale of flats, the ITAT held that for gift transactions, capital gain is not taxable at the time of gift, but is brought to tax when the gifted asset is subsequently transferred by adopting the date and cost of acquisition of the previous owner. For indexation benefit, the index cost will be taken from the previous year in which the previous owner had acquired the property. Regarding swapping of two units for one unit, the ITAT held that the builder-buyer agreement was not a fresh allotment or an exchange deed, but a redefinition of existing rights. The date of acquisition should be reckoned from the date of original allotment, and not the subsequent agreement. Therefore, the income cannot be treated as short-term capital gain. The assessee's appeal was allowed.
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• Tax Authorities Fail to Prove Treaty Shopping; Appeal Allowed for Investment Platform with Legitimate Activities.

  Case-Laws - AT : The Appellant, a Mauritian entity, is controlled and managed by its board of directors in Mauritius, comprising two Mauritian resident directors and one US resident director. Board meetings were physically chaired in Mauritius, with the majority of directors being Mauritian residents. The tax authorities failed to rebut the statutory evidence of the Tax Residency Certificate with cogent evidence and merely based on suspicion and inferences, held the assessee engaged in treaty shopping. The assessee had no funds of its own due to its nature as an investment platform, and any gains would be transferred to initial investors. The assessee's association with Cayman Island entities does not taint its genuine activities as an investment platform. The minuscule percentage of funds invested in India compared to investments across various economies rebuts inferences questioning the substance over form. The assessee's appeal was allowed.
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• Calculating book profit u/s 115JB excludes capital gains from flat sales with indexed cost benefit. Strict adherence to Schedule VI mandated.

  Case-Laws - AT : Computation of book profit u/s 115JB does not allow inclusion of capital gain from sale of flats with indexed cost benefit. Section 115JB requires calculation of book profit in accordance with Part-II and Part-III of Schedule VI of Companies Act, subject to adjustments provided therein. Absence of specific clause allowing claimed benefit precludes assessee from calculating book profit by including net gains from sale of capital assets after claiming indexed cost of acquisition. Appeal dismissed, confirming view taken by CIT(Appeals).
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• Transfer pricing: Royalty upheld; Ad expenses remanded; Third-party ads deleted; IT/Consultancy costs deleted. Comparables revised.

  Case-Laws - AT : Transfer pricing issues: Royalty arrangement including trademark, know-how upheld based on CUP method over TNMM. Advertisement expenses remanded for fresh determination. Reimbursement of third-party advertisement expenses deleted as commercial expediency beyond TPO's jurisdiction. IT cost allocation and consultancy services/HR cost reimbursements deleted following past orders. Comparables for marketing support services: APITCO, HCCA Business Services, Quippo Valuers, TSR Darashaw excluded; ITDC (ARMS segment), Overseas Manpower, ICRA Management Consulting included based on functional comparability and consistency. TPO directed to recompute ALP for marketing support services accordingly.
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• Professional Fees to Non-Residents Allowed Without TDS; CSR Expenses Accepted; Market Research Excluded from Technical Services.

  Case-Laws - AT : TDS disallowance for professional fees paid to non-residents without TDS deduction was deleted as the payees did not have a fixed base or permanent establishment in India. Disallowance for payments to non-residents for services rendered outside India like VAT compliance, segregation charges for warehousing and delivery, advertisement expenses was deleted as the services did not constitute technical services and the non-residents had no permanent establishment in India. Expenditure towards corporate social responsibility was held allowable as revenue expenditure for the relevant years. Disallowance of interest on interest-free advances to a foundation was remitted back for verification of availability of interest-free funds. Disallowance u/s 80G was remitted back for verification of the donation certificate. Disallowance for market research expenses paid to a US entity was deleted as it did not constitute fees for technical services under the India-US tax treaty.
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• Cooperative society earning interest & dividend from deposits with Delhi State Coop Bank eligible for deduction u/s 80P(2)(d).

  Case-Laws - AT : Deduction u/s 80P(2)(a) is allowed for a cooperative society earning interest and dividend income from deposits with a Delhi State Cooperative Bank registered under the Cooperative Societies Act. The assessee is entitled to deduction u/s 80P(2)(d) as the Cooperative Bank is a society, following the Mantola Cooperative Thrift & Credit Society case. The Totgar's Cooperative Sale Society case is distinguishable as surplus funds were deposited with commercial banks, not cooperative societies. The assessee is eligible for deduction u/s 80P(2)(d).
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• Assessee proved financial credibility; Revenue failed to disprove genuine transaction. CIT(A) rightly deleted AO's addition.

  Case-Laws - AT : Assessee furnished sufficient documents proving financial creditworthiness, undisputed by Revenue. Revenue failed to provide any material disproving genuineness of transaction between assessee and supplier continuing from preceding year. Merely relying on information from Investigation Wing insufficient. No infirmity found in CIT(A)'s order deleting addition made by AO. Revenue's appeal dismissed.
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• Agriculture land sold not a capital asset as located outside municipal limits & village population below threshold. No tax on gains.

  Case-Laws - AT : Agriculture land sold by assessee not a capital asset u/s 2(14)(iii) as it was situated outside municipal limits of Mohali as per notification and population of village below prescribed threshold. Long term capital gains on sale of agriculture land, being not a capital asset, cannot be taxed. Addition made by AO deleted. Grounds allowed in favor of assessee.
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Customs

• Customs authorities can continue inquiry & impose penalty despite revoking broker's license suspension. Temporary order revocation /= inquiry closure.

  Case-Laws - HC : Revocation of Customs Broker license suspension does not preclude authorities from proceeding with inquiry and imposing penalty under Regulation 17. Suspension order is temporary, subject to revocation or continuation based on circumstances under Regulation 16(2). Mere revocation of suspension does not prohibit conclusion of inquiry for penalty imposition under Regulation 17. High Court upholds CESTAT's view, dismissing appeal.
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• Appeal Allowed: Bonded Warehouse License Reinstated, Penalty Overturned u/ss 58B & 117 of Customs Act.

  Case-Laws - AT : Appellant's undertaking and declaration of not being penalized under Customs Act or related laws was correct. Cancellation of Special Bonded Warehouse License u/s 58B and penalty u/s 117 of Customs Act were set aside. Relying on precedents, it was held that penalty imposed for contravention u/s 46 does not constitute an 'offence' under the Act. When two expressions are used in the same notification, different meanings must be assigned. The impugned order cancelling the license was unsustainable and the appeal was allowed.
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• Authorities Overrule Goods Valuation; Section 14, Rule 3(1) Prevail Over NIDB Data in Customs Value Dispute.

  Case-Laws - AT : Valuation of imported goods was rejected by authorities, enhancing value based on contemporaneous import data of similar goods. However, transaction value declared by appellant was determinable u/s 14 of Customs Act, 1962, read with Rule 3(1) of Valuation Rules. Rejecting declared transaction value without legal sanction is unsustainable. NIDB data alone cannot justify value enhancement, as it merely serves as a guideline unless value falls within parameters of identical or similar goods. Rejection of transaction value and value enhancement by department are unsustainable. Impugned orders set aside. Appeal allowed.
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• MCPCB classified as 'Printed Circuits' under 8534 0000, not 9405 9900. Tribunal upholds specificity of 8534 0000 over Revenue's claim. Order set aside.

  Case-Laws - AT : The MCPCB (Metal Core Printed Circuit Board) is to be classified under Heading 85.34 (Tariff Item 8534 0000) as 'Printed Circuits' and not under Heading 94.05 (Tariff Item 9405 9900). The Tribunal has consistently held that MCPCB should be classifiable under Tariff Item 8534 0000. The specificity of description for classification under Tariff Item 8534 0000 is more appropriate than the classification claimed by the Revenue under Tariff Item 9405 9900. The impugned order upholding the adjudication order and rejecting the appellant's appeal lacks merits and is set aside. The appeal is allowed.
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• Mis-declaration of goods in SEZ unit attracts penalty u/s 112(a) & 114A. Option for reduced 25% penalty if duty+interest paid timely.

  Case-Laws - AT : Mis-declaration of quantity and value of goods in SEZ unit - penalty u/ss 112(a) and 114A of Customs Act 1962. Option for reduced 25% penalty u/s 114A to be extended if duty, interest, and 25% penalty paid within one month. Penalty u/s 112(a) set aside as Section 114A penalty imposed. Director's penalty u/ss 112(a) and 114A reduced considering undertaking to pay duty, interest, and penalty, and overall facts. Appeals partly allowed.
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• Cocoa powder import from Malaysia: FTA benefit denial challenged. Customs must verify origin certificate retroactively.

  Case-Laws - AT : Denial of FTA benefit on import of Cocoa powder from Malaysia was challenged. The issue is res-integra, relying on SHIRAZEE TRADERS VERSUS C.C. -MUNDRA [2024 (1) TMI 781 - CESTAT AHMEDABAD], where it was held that to displace the certificate of origin issued by Malaysian authority, the verification process by Indian Customs Authorities to issuing authorities for retroactive check is required. Since facts and charges are identical, the ratio of the above decision is directly applicable. The impugned orders are unsustainable. Appeal allowed.
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SEZ

• Board Approves SEZ Proposals: Co-Developer Status, Area Adjustments, Extensions, De-Notifications, and More.

  Circulars : The Board of Approval (BoA) for Special Economic Zones (SEZs) considered various proposals related to SEZs, including requests for co-developer status, increase/decrease in area, de-notification, extension of validity, conversion of processing to non-processing area, and miscellaneous matters. The key decisions were: Approving co-developer proposals with conditions like adherence to SEZ Act/Rules, taxability examination, and lease period compliance. Permitting decrease/increase in co-developer area and partial surrender, subject to duty/tax repayments and undertakings. Allowing de-notification of entire SEZs and processing area conversion to non-processing u/r 11B, with duty/tax remittances and differential payment undertakings. Granting extensions of validity for developers/units, some deferred. Approving proposals related to restricted items, gate construction, demarcation requests, and transfer of approvals, with some deferred for next meeting. Decisions on appeals were deferred to enable parties to present through video conferencing.
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Corporate Law

• Govt introduces e-adjudication platform for company penalties. Notices, filings, hearings, orders & payments go digital.

  Notifications : The Central Government has amended the Companies (Adjudication of Penalties) Rules, 2014, introducing an electronic adjudication platform for proceedings related to adjudication of penalties by adjudicating officers and Regional Directors. All notices, filings, evidence submission, hearings, witness attendance, order issuance, and penalty payment shall occur electronically through this platform. If email addresses are unavailable, notices will be sent by post or published on the platform. The Annexure to the Rules has been substituted with a new one.
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State GST

• Insurance Companies Not Liable for GST on Salvage Deductions; Insurers Pay GST When Salvage Ownership Transfers.

  Circulars : Circular clarifies that insurance companies are not liable to pay GST on salvage/wreck value deducted from claim settlement amount, as salvage remains property of insured. However, if claim settled without salvage deduction, salvage becomes property of insurer who must discharge GST on subsequent supply. For total loss cases where salvage deducted from claim amount as per policy terms, no GST payable by insurer on salvage value as ownership remains with insured. For claims settled at full insured value without salvage deduction, salvage ownership transfers to insurer necessitating GST payment on eventual sale.
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• GST Clarifies Time of Supply for Spectrum Usage; Continuous Service Rules Apply to Telecom Operators with Deferred Payments.

  Circulars : Clarification provided on time of supply of services for spectrum usage and other similar services under GST. For spectrum allocation, where telecom operator opts for deferred payment, it constitutes continuous supply of services as defined u/s 2(33) of WBGST Act. Time of supply governed by section 13(3) of WBGST Act, being earlier of payment date or 60 days from document issue date. Frequency Assignment Letter not considered invoice for 60-day period calculation. Invoice required on or before due date per section 31(5)(a). For upfront payment, GST payable when payment made or due, whichever earlier. For deferred instalments, GST payable as instalments due or paid, whichever earlier. Similar treatment for other natural resource allocations constituting continuous supply.
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LLP

• 2024 LLP Rules amend defunct LLP strike-off process, empowering Centre for Accelerated Corporate Exit alongside Registrar for streamlined exit.

  Notifications : The Limited Liability Partnership (Amendment) Rules, 2024 amend Rule 37 of the Limited Liability Partnership Rules, 2009 regarding striking off defunct LLPs. It inserts references to the Centre for Processing Accelerated Corporate Exit, established by the Central Government under the Companies Act, 2013, empowering it to strike off names of defunct LLPs alongside the Registrar. The amendment facilitates accelerated exit for defunct LLPs through the dedicated Centre, streamlining the process.
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SEBI

• SEBI consolidates circulars for Mutual Funds. New Master Circular supersedes previous one. Rescinded circulars listed, actions remain valid.

  Circulars : Master Circular consolidates SEBI circulars applicable to Mutual Funds. It supersedes previous Master Circular dated May 19, 2023, incorporating new circulars issued until March 31, 2024. Rescinded circulars listed in Appendix, but actions taken under them remain valid. Compliance reports required as per new Master Circular. Issued under SEBI Act to protect investor interests and regulate securities market.
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• SEBI mandates valuation of AT-1 Bonds by MFs based on Yield to Call, aligning with NFRA's Ind AS 113 recommendation for market valuation.

  Circulars : SEBI has directed that valuation of Additional Tier 1 Bonds (AT-1 Bonds) by Mutual Funds shall be based on Yield to Call, aligning with NFRA's recommendation for market-based measurement under Ind AS 113. For other purposes, deemed maturity of perpetual bonds shall continue as per existing guidelines to capture liquidity risk. The circular aims to protect investor interests and regulate securities market.
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• AMCs Must Implement Systems to Detect Market Abuses, CEO/MD & Compliance Officer Held Accountable, Reports to SEBI Required.

  Circulars : AMCs to establish mechanism for identification, monitoring, and deterrence of potential market abuse including front-running and fraudulent transactions. Mechanism to comprise enhanced surveillance systems, internal controls, escalation processes. CEO/MD and CCO accountable. Develop alert generation, processing systems. Examine recorded communications, access logs. Maintain entry logs. Frame policies, procedures approved by Board. Take action on suspicious alerts. Escalate to Board, Trustees. Implement whistle-blower policy. Periodic review. Exchanges, depositories to enable data sharing. Report examined alerts, action to SEBI. AMFI to prescribe implementation standards in consultation with SEBI.
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• SEBI renews recognition of National Commodity Clearing Ltd as clearing corp from 10/09/2022 to 09/09/2025 under regulations.

  Notifications : Securities Exchange Board of India granted renewal of recognition to National Commodity Clearing Limited as clearing corporation for three years from September 10, 2022 to September 9, 2025 under Securities Contracts (Regulation) Act, 1956 and Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018. Renewal subject to conditions specified by SEBI from time to time. Clearing corporation to comply with such conditions.
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• Amended ICDR Norms: Senior management under KMP disclosure, offer doc details on remuneration, shareholding & agreements mandated.

  Notifications : SEBI amended Issue of Capital and Disclosure Requirements Regulations, 2018 to include senior management under key managerial personnel disclosure norms. Key changes: defined senior management; mandated disclosures about senior management in offer documents; required details on remuneration, shareholding, agreements with senior management; aligned with Companies Act, 2013 definition of key managerial personnel.
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Service Tax

• Tax Dispute Resolved: Deadline Extension Leads to Successful Amnesty for Appellants Under Sabka Vishwas Scheme 2019.

  Case-Laws - AT : The appellants made the payment on 25.08.2020 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS). The dispute was whether this payment would entitle them to discharge obligations under SVLDRS and avail amnesty from interest and penalty. The CESTAT held that the appellants were trying to pay before 30.06.2020, but faced technical glitches. The Department was exploring possibilities to extend the scheme for those issued SVLDRS-3 before 30.06.2020 but couldn't pay. The Supreme Court had extended limitation periods due to the pandemic. The Madras High Court held that the time limit for SVLDRS payment was extended till 30.09.2020. Since the appellants discharged their liability within this permissible time, they were entitled to a discharge certificate under SVLDRS-4, without interest or penalty. The appeal was allowed.
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• Breach of Contract Penalties Not Taxable as Service Consideration u/s 66E(e.

  Case-Laws - AT : Liquidated damages arising from breach of contract or forfeiture of amounts like salary or bond money do not constitute consideration for a declared service u/s 66E(e). A service under this section requires an agreement specifically referring to activities like refraining from, tolerating, or doing an act, with consideration flowing for such activity. Any amount charged without nexus to the taxable service cannot be part of the taxable value. Compensation received for financial damages lacks consideration and nexus with any taxable service. The appellant forfeited amounts from the buyer for cancelling a purchase order, treated as breach of contract. Such forfeited amounts do not qualify as consideration for a declared service. Cancellation of contract itself is not a service. Hence, forfeited amounts cannot be taxed as consideration for services.
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Central Excise

• Valuation excludes 3rd party inspection & transport charges. "By reason of sale" doesn't negate charging section. Demand without evidence unsustainable.

  Case-Laws - AT : Valuation - third party inspection charges cannot be included in transaction value - Supreme Court held cost of transportation from place of removal to delivery excluded from price - expression "by reason of sale, or in connection with sale" in definition of transaction value does not negate charging section - demand for duty on third party inspection charges set aside. Demand based solely on statement of Director without corroborative evidence unsustainable - Continental Cement case followed - demand set aside. Penalty on Director unjustified, set aside. Appeals allowed.
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• Agricultural Equipment Classification Dispute: Demand Dismissed Due to Time Bar; Assessee Entitled to CENVAT Credit.

  Case-Laws - AT : The appellant classified goods, gears for rotary tiller and parts of rotary tiller, under central excise sub-heading 82349090 instead of heading 848340000. The demand was set aside on the ground of time limitation. The Tribunal held that when there is a dispute of classification, malafide intention cannot be attributed to the assessee. The assessee recorded all transactions in books, and there was no suppression of facts or malafide intention for misclassification. The assessee was entitled to CENVAT credit on inputs used for manufacturing the final product. The classification of goods meant for agricultural equipment is highly debatable. In case of interpretation of classification, the extended period of limitation shall not apply, and the demand will not sustain on the ground of time bar. The Commissioner (Appeals)'s order setting aside the demand on time bar was upheld, and the Revenue's appeal was dismissed.
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• Tribunal Overturns Penalties for 100% EOU, Upholds Transaction Value in DTA Sales After 17-Year Delay.

  Case-Laws - AT : The appellant, a 100% EOU, faced allegations of undervaluation of finished goods cleared into the domestic tariff area (DTA). The key issues were whether the DTA clearance value should be the transaction value at which goods were sold to domestic buyers or the value demanded by the department, and whether the abnormal delay of 17 years in adjudicating the show cause notice was justified. The Tribunal held that the department failed to produce evidence supporting the undervaluation allegation or showing that the declared transaction value was not the actual price paid by buyers. The sale was made to independent buyers on a principal-to-principal basis, and there was no allegation of price manipulation. Citing the Supreme Court's ruling in Eicher Tractors Ltd., the Tribunal stated that unless special circumstances exist, the transaction value cannot be disregarded. As per proviso to Section 3(1) of the Central Excise Act, 1944, the assessable value for DTA clearances by a 100% EOU should be determined u/s 14 of the Customs Act, 1962, comparable to contemporaneous import prices of identical or similar goods. However, the department did not provide such details. Consequently, the Tribunal set aside the impugned order rejecting the appellant's DTA sale price and the imposed penalties, allowing the appeal.
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Case Laws:

• GST

• 2024 (8) TMI 308
  Violation of principles of natural justice - Challenge to ex- parte demand order and SCN - impugned SCN had given less time than is provided u/s 73(2) of the U.P. GST Act for submitting reply - mismatch in the GSTR filed by the petitioner - HELD THAT:- The adjournment application would have been entertained in case the petitioner would have given a written reply to the show cause notice and then asked for adjournment of personal hearing. Neither application dated 23.1.2024 nor application dated 15.4.2024 was received in the office of respondents. This Court is of the considered opinion that the law sought to be relied upon by counsel for the petitioner as settled in M/s Mohan Agencies Versus State of U.P. Another in Writ Tax No. 58 of 2023 dated 13.2.2023, is inapplicable in the facts of the case. Petition dismissed.

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• 2024 (8) TMI 307
  Violation of principles of natural justice - order challenged on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand on merits - cancellation of the GST registration - HELD THAT:- The petitioner has placed on record the order of cancellation of registration. Such order discloses that the cancellation was with effect from 31.08.2018. On examining the impugned order, it is evident that the tax proposal was confirmed because the tax payer did not appear for the personal hearing or respond to the show cause notice. The petitioner has also placed on record a copy of the electronic credit ledger. Prima facie, this document discloses that credit was available to the extent of Rs. 5,09,847/- in the IGST column and Rs. 30,377/- each in the CGST and SGST column. In these circumstances, albeit by putting the petitioner on terms, reconsideration is necessary. The impugned order dated 20.12.2023 is set aside on condition that the petitioner remits 5% of the disputed tax demand as agreed to within a period of fifteen days from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to submit a reply to the show cause notice - petition disposed off.

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• 2024 (8) TMI 306
  Rejection of appeal on the ground of time limitation - Delay of 5 days - appeal filed beyond the statutory period of limitation under Section 107 of the TNGST Act, 2017 - HELD THAT:- It is noticed that the appeal made before the first respondent is dated 24.04.2024. Though the limitation for filing an appeal under Section 107 GST would have expired on or before 20.03.2023, the petitioner had another 30 days period for filing of application to condone the delay upto 19.04.2023 explaining sufficient cause to condone the delay. Hence, there is a marginal delay of only 5 days in filing the appeal beyond the condonable period. Prima facie , the Court is of the view that the order rejecting the appeal cannot be faulted as the second respondent is statutory authority and duty bound to comply with the provisions relating to limitation. At the same time, it is noticed that the petitioner may have a case on merits as the dispute arose on account of the variance between the Returns filed by the petitioner and the inward supply in GSTR 2A and the auto populated information in GSTR 2B. The Court is of the view that the first respondent can dispose of the appeal on merits as no assessee will gain by deliberately delaying in filing the appeal where such assessee is aggrieved by the order passed by the Original Authority - Considering the fact that the petitioner may have a case on merits, the Court is of the view that there can be a positive direction to the first respondent to dispose of the appeal on merits and in accordance with law without reference to limitation. Petition disposed off.

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• 2024 (8) TMI 305
  Challenge to Assessment Orders passed by the second respondent - challenge to Circular No.13/2022 TNGST dated 08.11.2022 and Circular No.11/2023 dated 27.05.2023 - jurisdiction to pass impugned order - the order has been passed by an Officer different from the Officer, who investigated the case - HELD THAT:- The petitioner has been negligent in not participating in the proceedings, which emanated from the notices issued by the second respondent in DRC 01 for the respective Assessment Years. There is no excuse for the petitioner to have ignored the notices and now, present a Writ Petition in W.P.(MD)No.17818 of 2024 as a fait accompli stating that the Circulars are void and contrary to the provisions of the Act. Since the petitioner has not filed reply, one opportunity is being given to the petitioner subject to the petitioner depositing 10% of the disputed tax to the credit of the respondent Department from its Electronic Cash Register within a period of eight weeks from today. The impugned order which stands quashed for the respective Assessment Years shall be treated as Addendum to the respective notices in DRC 01. The petitioner shall file a separate reply for each of the Assessment Years within a period of 12 weeks from today. The fourth respondent shall pass final orders on merits within a period of two months thereafter - Petition disposed off.

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• 2024 (8) TMI 304
  Violation of principles of natural justice - petitioner fairly concedes that the petitioner failed to reply to the same and participate in the personal hearing pursuant to the personal hearing notices issued thereafter - HELD THAT:- The Court is of the view that the petitioner deserves fair chance to reply the same in view of the peculiar circumstance of this case as the demand was earlier dropped vide order in GST ASMT 12 dated 07.06.2024, pursuant to the notice in ASMT 10 dated 30.11.2021 and notice in DRC 01A also dated 30.11.2021. Although the petitioner has not responded to the notices that preceded the impugned order, the Court is of the view the interest of justice will be served if the petitioner is given one opportunity to participate in the impugned order proceedings subject to the petitioner filing a reply to the notice in DRC 01 dated 19.03.2024 together with the deposit of 10% of the disputed tax. Subject to the petitioner depositing 10% of the disputed tax from its Electronic Cash Register to the credit of the respondent within a period of 30 days from the date of receipt of a copy of this order, the impugned order is set aside and the case is remitted back to the respondent to pass fresh orders on merits. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice that preceded the impugned order. Petition disposed of by way of remand.

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• 2024 (8) TMI 303
  Challenge to assessment order - petitioner failed to respond to notices - discrepancy between the Return filed by the petitioner in GSTR 1 and GSTR 3B - time limitation - HELD THAT:- Considering the fact that the petitioner has deposited 10% of the disputed tax, the Court is inclined to direct the petitioner to deposit another 15% of the disputed tax to the credit of the second respondent from its Electronic Cash Register within a period of 30 days from the date of receipt of a copy of this order. Subject to above deposit, the impugned order is set aside and the case is remitted back to the second respondent to pass a fresh order on merits and in accordance with law. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice that preceded the impugned order. This Writ Petition is disposed of.

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• 2024 (8) TMI 302
  Grant of regular bail - sale/purchase of fake GST entities - issuance of fake firms and the fraudulent beneficiaries of the fake GST ITC - HELD THAT:- On a careful conspectus of the attending circumstances as well as materials on record and, on a careful reading of the judgment cited by both sides, this Court is of the considered view that, so far as the grant of bail to the accused persons is concerned, the law laid down by the Hon ble Supreme Court in Ratnambar Kaushik s case [ 2022 (12) TMI 263 - SUPREME COURT ] and Satendra Kumar Antil s case [ 2021 (10) TMI 1296 - SUPREME COURT ] holds the field and the same is also applicable to the facts of the present case. Keeping in view the principle laid down by the Hon ble Supreme Court in the above noted two judgments, this Court observes that the maximum period of punishment prescribed is up to 5 years and that the petitioner, at his point, has been in custody for more than four months. It is also seen that the offence alleged is based on documentary evidence and that the investigation has been concluded and the final P.R. has been submitted. In such view of the matter, this Court is persuaded to release the petitioner on bail on stringent terms and conditions. It is directed that the Petitioner be released on bail on furnishing a bail bound of Rs.50,000/- with two local solvent sureties each of the like amount to the satisfaction of the court in seisin over the matter and subject to fulfilment of conditions imposed - the bail application of the Petitioner stands allowed.

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• 2024 (8) TMI 301
  Violation of principls of natural justice - petitioner was unaware of the notices that preceded the respective assessment orders and thus, failed to participate in the proceedings before the respondent - HELD THAT:- The Court is of the view that the petitioner has made out prima facie case as the live honey bees traded by the petitioner may not be liable to GST in terms of Schedule 1 of the GST Act, 2017. The Schedule has been downloaded by the petitioner from the Central Board of Indirect Taxes and Customs website. As far as the packing materials are concerned, it appears to be a part of the composite supply with the exempted product as defined in Section 2(30) read with Section 8(a) of the respective GST enactments. The petitioner has made out a prima facie case on merits and warranting interference. Further, the petitioner has neglected in not responding to the respective notices that preceded the respective impugned orders. The Court is of the view that the impugned orders can be set aside on terms. The petitioner shall deposit a sum of Rs. 1,00,000/- to the credit of the respondent from its Electronic Cash Register within a period of 30 days from the date of receipt of a copy of this order - The impugned orders, which stand quashed, shall be treated as addendum to the respective show cause notices that preceded the respective impugned orders. Petition disposed off.

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• 2024 (8) TMI 300
  Levy of GST - mining activity - reverse charge mechanism - HELD THAT:- The main issue insofar as levy of GST on the mining activities is concerned, the final decision of the Hon ble Supreme Court is awaited as per the recent order of the Hon ble Supreme Court dated 24.07.2024 in the batch of cases in UDAIPUR CHAMBERS OF COMMERCE AND INDUSTRY ORS. VERSUS UNION OF INDIA ORS. [ 2024 (8) TMI 254 - SC ORDER] . The cases are likely to be listed for hearing during the third week of August, 2024. The recovery proceedings pursuant to the impugned orders shall be kept in abeyance pending disposal of the appeal by the Hon ble Supreme Court. The petitioner is given liberty to file a statutory appeal to keep the issue alive. However, there shall be no pre-deposit, in view of the decision of the Hon ble Supreme Court. Petition disposed off.

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• 2024 (8) TMI 299
  Challenge to impugned order - demand confirmed on the petitioner for the respective assessment years based on the data retrieved by the Department from the profit and loss account and the balance sheet of the petitioner - HELD THAT:- The Court is inclined to come to partially rescue the petitioner by quashing the impugned orders and remitting the cases back to the respondent to pass fresh orders on merits and in accordance with law, subject to the petitioner depositing 25% of the balance disputed tax i.e., Rs. 18,13,582/- (Rs. 27,00,468/- - Rs. 8,86,886/-) to the credit of the respondent from its Electronic Cash Register within a period of 30 days from the date of receipt of this order. The impugned orders, which stand quashed, shall be treated as addendum to the respective show cause notices that preceded the respective impugned orders. It is expected that the petitioner shall file reply to the respective show cause notices that preceded the respective impugned orders within a period of 30 days from the date of receipt of a copy of this order together with the above deposit. The respondent shall, thereafter, pass fresh orders on merits and in accordance with law as expeditiously as possible preferably within a period of two months. These Writ Petitions are disposed of.

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• 2024 (8) TMI 298
  Challenge to assessment orders passed against the petitioner based on the difference in the Return filed by the petitioner in GSTR 1 and GSTR 3B - demand of the tax regarding transportation charges - service was availed by the petitioner from the third party or not - HELD THAT:- The Court is inclined to come to the rescue of the petitioner by quashing the impugned orders and remitting the cases back to the respondent to pass fresh orders on merits and in accordance with law, subject to the petitioner depositing 30% of the disputed tax to the credit of the respondent from its Electronic Cash Register from the date of receipt of a copy of this order. The impugned orders, which stand quashed, shall be treated as addendum to the respective show cause notices that preceded the respective impugned orders. Writ Petitions are disposed of.

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• 2024 (8) TMI 297
  Challenge to adjudication order passed under Section 73 (9) of the West Bengal GST/CGST Act, 2017 - proper officer failed to call for the records prior to passing the adjudication order - violation of principles of natural justice - statutory pre-deposit not made, for maintaining appeal - HELD THAT:- Admittedly in this case, it is noticed that the subject matter of challenge in the writ petition is an adjudication order passed by the proper officer under Section 73 (9) of the said Act in respect of the tax period April 2018 to March 2019. A consequential demand along with the summary of the order has also been issued. Although Revenue has submitted that there is no irregularity in the order impugned as there has been no disclosure by the petitioner no. 1, however, since, there is a statutory remedy in the form of an appeal, without going into the issue as to whether the explanation offered by the petitioner no. 1 to the show-cause notice is a proper explanation, the petitioner no. 1 should be permitted to approach the Appellate Authority. Further since, the statutory remedy requires a pre-deposit to be made for maintaining the appeal, petitioner no. 1 cannot, in the given facts, be permitted to maintain an appeal without making such statutory pre-deposit. The writ petition stands disposed of.

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• 2024 (8) TMI 296
  Violation of principles of natural justice - petitioners were not given adequate time to respond to the notices - HELD THAT:- There are substantial merit in the said contentions in as much as Section 61 of the CGST Act requires a minimum period of 30 days before any further steps can be taken by the authorities. These Writ Petitions are allowed setting aside the impugned demand order and remanding the matter to the assigning authorities for taking appropriate action after granting adequate time in accordance with provisions of the CGST Act and the rules made there under for the petitioners to file their responses.

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• 2024 (8) TMI 295
  Challenge to assessment order and the consequential bank attachment - SCN and impugned order were uploaded in the view additional notices and orders tab of the GST portal - petitioner unaware of the proceedings until the bank account was attached - HELD THAT:- On perusal of the impugned order, it appears that tax liability was imposed on the allegation of sale suppression based on the difference between purchase value and outward supply value. The petitioner has asserted that it could not participate in proceedings on account of being unaware of the same. By taking the said assertion into account and by taking into account the nature of the confirmed tax proposal, the interest of justice warrants reconsideration subject to putting the petitioner on terms. The impugned order is set aside on condition that the petitioner remits 5% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to submit a reply to the show cause notice - Petition disposed off.

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• 2024 (8) TMI 294
  Eligibility for exemption under Serial Number 12 of Notification 12/2017-Central Tax (Rate) dated 28th June 2017 - hostel accommodation services provided by the Applicant. Hostel accommodation services provided by the Applicant for duration of stay of 10 months - HELD THAT:- The decision of Hon ble Madras High court in case of Thai Mookambikaa Ladies Hostel [ 2024 (3) TMI 1271 - MADRAS HIGH COURT ] in deciding that Supply of hostel accommodation services to students with mandatory supply of meals and other necessary amenities, for duration of stay of 10 months-is covered by the Entry at Sr No 12 of Notification 12/2017-Central tax (Rate) dated 28th June 2017 and exempted from tax. Decision of the Supreme Court in the case of JEEWANTI PANDEY [ 1981 (10) TMI 188 - SUPREME COURT] followed, whereas the issue of Residence has been decided. Hostel accommodation services provided by the Applicant for duration of stay of one or two months to new students during vacation period - HELD THAT:- The Supply of hostel accommodation services to students with mandatory supply of meals and other necessary amenities, for duration of stay of 1 to 2 months during vacation period to new students, is not eligible for benefits of exemption as per Entry at Sr No 3 of notification No 12/2017-Central tax (Rate) dated 28 June 2017. Hostel accommodation services provided by the Applicant for duration of stay of one or two months to old students during vacation period - HELD THAT:- The earlier tenure of residence of 10 months is extended for further period of one month or 2 months by the old student will not change the nature of their earlier stay of 10 months (Residence) to temporary accommodation status hence, such supplies considering the earlier tenure 10 months will also be long term tenure and are considered as residence and eligible for benefits of exemption as per Entry at Sr No 3 of notification No. 12/2017-Central tax (Rate) dated 28 June 2017.

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• Income Tax

• 2024 (8) TMI 293
  Limitation for initiation of proceedings u/s 153C - HELD THAT:-Section 153C applies equally to all non-searched entities and neither carves out an exception nor does it create a separate regime pertaining to a contingency where the AO of the searched and the non-searched entity are one and the same. If the submission of Mr. Mann were to be accepted, it would amount to the Court carving out an exception in respect of those cases where the jurisdictional AO of the searched and non-searched entity were the same. This would also lead and constrain the Court to restrict the application of the First Proviso to Section 153C (1) of the Act only to those cases where the AO of the non-searched entity be one different from that of the searched person. This would clearly amount to a reconstruction of Section 153C and creating an exception which the Legislature chose not to introduce. The First Proviso to Section 153C (1) has been consistently recognized as not being concerned merely with the aspect of abatement, which is spoken of in the Second Proviso to Section 153A (1) of the Act, but also to regulate the date from which the six-year period or the relevant assessment year insofar as the non-searched entity is concerned, is to be reckoned. This position has been consistently followed not just by this Court but also by the Supreme Court in Commissioner of Income Tax 14 vs. Jasjit Singh [ 2023 (10) TMI 572 - SUPREME COURT] . The material and documents unearthed in the course of the search have to be independently evaluated before a reassessment exercise can be initiated against a non-searched person. Unless the AO of that other person is satisfied that the material so gathered is likely to have an impact on the determination of the total income of such other person , the mere receipt of documents would not suffice. It thus becomes apparent that it is the satisfaction arrived at under Section 153C which constitutes the cornerstone of that provision and the primary ingredient for Section 153C being set into motion. In our considered opinion, the actual or physical act of transmission of documents is merely a step in aid of formation of opinion whether an assessment u/s 153C is liable to be initiated. It is in that sense merely a machinery provision put in place to enable the AO of the non-searched person to examine whether an assessment is liable to be commenced u/s 153C - Thus, even in a case where the AO of the searched and the non-searched party be one and the same, it would be the formation of an opinion that the material is likely to have a bearing on the determination of the total income.. which would constitute the core and the heart of Section 153C. A harmonious interpretation of the main part of Section 153C and its Proviso lead us to hold that in cases where the jurisdictional AO is common, the commencement point would have to be construed as the date when the satisfaction is formed by the said AO with respect to such other person. In our considered view, even though there may not have been an actual exchange of material unearthed in the course of the search between two separate authorities, it would be the date when the AO records its satisfaction with respect to the non-searched entity which would be of seminal importance and constitute the bedrock for commencement of action u/s 153C.

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• 2024 (8) TMI 292
  Validity of order of the ITAT regarding low tax effect - Reopening of assessment u/s 147 - AO accepted the audit objection and case was reopened - assessee has earned exempt income and claimed interest expenses however the assessee did not show any expenditure separately which was incurred for earning exempt income - AO passed order u/s 143(3) r.w.s.147 making proportionate disallowance u/s 14A r.w.r. 8D of the Rules - Tribunal dismissed the appeal by order on the ground of low tax effect as per CBDT Circular No.3/2018 dated 11th July, 2018, with liberty to the Revenue to recall of dismissal of appeal if the matter is covered by the permissible exceptions mentioned in the said Circular. Assessee submitted that the petitioner, at no point of time, has placed on record the audit objections or drawn attention of the Tribunal with regard to the audit objections which was accepted and which was the basis of the re-opening of the assessment and Tribunal has rightly relied on the Circular No.5/2017 to dismiss the Miscellaneous Application filed by the Revenue as well as in light of the decision of Principal CIT v Nawany Construction Co. (P.) Ltd. [ 2018 (9) TMI 800 - BOMBAY HIGH COURT ] wherein it is held that mere raising of the audit objection is not sufficient for recall of the order. HELD THAT:- As it appears that the coordinate Bench of this Court, by judgment and order [ 2022 (7) TMI 1530 - GUJARAT HIGH COURT] in similar facts where appeals have been dismissed by the Tribunal, allowed the Special Civil Applications filed by the Revenue by quashing and setting aside the order passed by the Tribunal and remanding the matter back to the Tribunal as held Circular issued by the CBDT under Section 268A of the Act of 1961 is held binding on the Department thus appeal cannot be filed, if it is barred. It is, however, with a clarification that if the issue decided by the CIT (Appeals) or Tribunal is contrary to the judgments of the Supreme Court, the Department can prefer an appeal, however, care would be taken to file it only in those cases where the order passed by the CIT (Appeals) or the Tribunal is contrary to the ratio propounded by the Supreme Court on the same issue. In doing so, sanctity of Article 141 of the Constitution of India would be maintained, thereby, serious consequences of taking different view would also be avoided. In view of the above, this petition also succeeds and is accordingly allowed. The impugned order [ 2019 (1) TMI 1865 - ITAT, AHMEDABAD ] is hereby quashed and set aside and the matter is remanded back to the Tribunal so as to enable the Revenue to point out the fact about the audit objection which was accepted by the Revenue. Rule is made absolute to the aforesaid extent.

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• 2024 (8) TMI 291
  Reopening of assessment u/s 147 - petitioner had wrongly availed of Integrated Goods and Service Tax [ IGST ] refunds - HELD THAT:- The allegation which stood laid related to the receipt of illegitimate refunds of IGST pertaining to AY 2020-21. However, on an ex facie examination of the information which appears at page no. 113 of our record, the disallowable expenditure was concerned only with Financial Years [ FYs ] 2017-18 and 2018-19 and thus corresponding to AYs 2018-19 and 2019-20. There was thus a complete absence of any material which could be said to have any bearing insofar as AY 2020-21 is concerned. We additionally take note of the detailed reply which was submitted by the writ petitioner in response to the original notice and which is dated 10 March 2023. As is manifest from a reading of the extracts forming part of that reply the aspect of refund was ultimately brought to a close and concluded in favour of the writ petitioner. Unable to sustain the impugned action of reassessment - Decided in favour of assessee.

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• 2024 (8) TMI 290
  Validity of search under Section 132 - Lack of jurisdiction in authorizing the search in view of non-existence of the circumstances enumerated in Clauses (a) to (c) to Section 132 which is a condition precedent / sine qua non to invoke the power of search u/s 132 - value of Evidence obtained in illegal search - HELD THAT:- Now that it is beyond the pale of any doubt that right to privacy is an intrinsic part of Article 21 of the Constitution of India, and a search without authority / sanction of law or in disregard of the statutory safeguards may constitute an infringement of the right to privacy, thus the need to comply with the statutory safeguards assumes greater significance and any violation would have to be tested applying the Doctrine of Proportionality. We say so, for any violation of the statutory safeguards relating to search may well touch on the right to privacy guaranteed under the Constitution thereby rendering the action susceptible to challenge on the ground of not just being illegal but also being unconstitutional which could change the complexion of the consequences that may ensue. This would be clear if we bear in mind that any action that is unconstitutional is rendered void . Though the validity of Section 132 of the Act, has been upheld, however, the individual search can be questioned as being violative of the statutory conditions or the guarantees under the Constitution. As the various aspects discussed on the use of illegally more importantly unconstitutionally obtained evidence has not been examined through the prism of Articles 21 and 265 of the Constitution of India. That apart there is no reference to the recent judgments of 1st and 2nd Puttaswamy s case [ 2018 (9) TMI 1733 - SUPREME COURT] , [ 2017 (8) TMI 938 - SUPREME COURT] wherein Right to Privacy was held to be a fundamental right which inheres in Article 21, which may possibly necessitate a paradigm shift as to the nature of enquiry, which Courts may have to undertake while examining cases of search allegedly involving violation of the statutory and constitutional safeguards. In the light of the above discussion, we are of the view that it is necessary to examine closely if the search is made strictly in accordance with law and whether violation of any of the statutory/constitutional safeguards renders the action/search vulnerable to challenge as offending Articles 21 and 265 of the Constitution of India. It may also be necessary to examine the resultant impact, if any, on the decision of the Supreme Court in Pooran Mal [ 1973 (12) TMI 2 - SUPREME COURT] wherein it was held that illegally obtained evidence can be used if the test of relevancy is satisfied. We intend to clarify that the above discussion was for the limited purpose of highlighting the contours of the enquiry that may have to be made while dealing with the allegations of illegal search and violation of human rights offending Article 21 and 265 of the Constitution of India which was not made and also its resultant impact on the decision in Pooran Mal s case insofar as it finds that illegally obtained evidence can be used as long as it satisfies the test of relevance. We have not decided the above aspects on merits. In the circumstances, we are inclined to remand the matter to the learned Judge leaving it open to the parties to raise the contentions on the above aspects before the learned Judge. Challenge to Centralisation of Assessment - as argued appellants that non-communication of the reasons for transfer under Section 127 of the Act vitiates the transfer - We are unable to concur with the order of the learned Judge, insofar as it finds that non-communication of order/ reasons under Section 127 of the Act is only a procedural irregularity inasmuch as it runs contrary to the judgment of the Supreme Court in the case of Ajantha Industries [ 1975 (12) TMI 1 - SUPREME COURT] Though there is no doubt that law is well settled that in respect of the transfer of income-tax cases from one Officer to another Officer, the procedure as laid down under the provisions of Section 127 of the Act is to be followed and opportunities as contemplated thereunder must be afforded to the assessee, failing which, the order of transfer is rendered a nullity. The above view has exceptions. If an assessee has acquiesced in the jurisdiction of the assessing officer to whom a case has been transferred under Section 127 of the Act, he cannot subsequently object to the jurisdiction of the Officer and seek to get the order of transfer quashed by invoking the jurisdiction of the Court under Article 32 or 226 of the Constitution of India. [Pannalal Binjraj vs. Union of India [ 1956 (12) TMI 1 - SUPREME COURT] Ram Kumar Sitaram vs. Certificate Officer,[ 1962 (12) TMI 72 - CALCUTTA HIGH COURT] ] Thus where the assessee has acquiesced in the jurisdiction of the transferee-authority, all statutory rights which the assessee gets by virtue of Section 127 of the Act vanish and therefore, the assessee cannot assert that without affording opportunity as required under Section 127 of the Act, the case has been transferred. Thus it may be necessary to examine if there has been acquiescence on the part of the assessee in which event the non furnishing of reasons pales into insignificance. The above enquiry was apparently not made by the learned judge inasmuch as the learned judge was of the view that communication of reasons u/s 127 is not mandatory. It may also be required to be examined if the Respondents can take shelter under Section 292B of the Act which provides that no assessment or other proceedings shall be invalid or deemed to be invalid by reason of any mistake, defect or omission, if in substance and effect the assessment / proceeding is in conformity with or according to the intent of the Act. Validity of assessment u/s 153A - Whether assessments u/s 153A ought to be made only on the basis of the seized material and thus transfer of the seized material is a pre-condition to issuance of notice u/s 153A? - As in case, any incriminating material is found in unabated / completed assessments, the assessing officer would assume jurisdiction to assess or reassess on the basis of such incriminating material. However, in case, no incriminating material is unearthed during the search, the assessing officer cannot assess or reassess taking into consideration other materials in respect of completed / unabated assessments. The order of the learned Judge insofar as it finds that even in the absence of seized material being handed over to the assessing officer, the assessing officer is under a mandate to issue a notice under Section 153A of the Act may have to be re-examined in the light of the law laid down by the Supreme Court in Abhisar Buildwell [ 2023 (4) TMI 1056 - SUPREME COURT] where a distinction is made between abated and unabated assessments and the need of incriminating material for assumption of jurisdiction to make the assessment or reassessment. Since we are inclined to remand the matter for reconsideration on the issue whether possession of incriminating material is a sine qua non for issuance of notice under Section 153 A of the Act, we would think that certain aspects of the question raised in the context of Section 132 (9A) of the Act may overlap with the above issue. We are thus inclined to leave it open to both the parties to put forth their submissions with regard to Section 132 (9A) of the Act, as well. Notices u/s 153C - We find that the learned Judge has erred in generalizing the challenge to the notices under Section 153C of the Act issued to 12 entities on the basis of a satisfaction note for a single entity nor has the learned judge applied the principles in Sinhgad [ 2017 (8) TMI 1298 - SUPREME COURT] wherein it was held that seized materials must pertain to relevant assessment years in question. Instead, the learned Judge has chosen to pass an order rejecting the challenge to Section 153C made by Ramamoorthy Srithar, Srithar Sudha, Nandhini Transports Pvt. Ltd., Kandasamy Thirumoorthy, Thirumoorthy Kala, Manickam Karthikayen, Kaycee Distillers, Chandran Somasundaram, C.Mariappan, Shanmugakani Sivajothi, Somasundaram Rishi Sharaan and Leela Distillers on the basis of the notice issued to Anitha Bottles. It is trite law that assessments for each entity have to be made individually and there cannot be generalization. It is also trite law that each assessment year is a distinct unit even with regard to the very same assessee. Thus, generalization on the basis of a note issued to a different entity on the crucial aspect of existence of jurisdictional fact necessary to assume jurisdiction under Section 153C of the Act, vitiates the proceedings necessitating examination of the above aspects independently for each of the assessees / appellants. Challenge to Provisional Attachments u/s 281B - provisional attachment passed during the pendency of assessments was challenged and the same was rejected by the learned judge - As Ld Judge has rejected the challenge to the provisional attachments for want of clarity and absence of relevant materials being placed. In the light of the fact that we have already expressed our mind to remand the issue on several crucial aspects and this being incidental and the learned judge having rejected the challenge on the ground of lack of clarity and ambiguity, we think it appropriate to permit both the parties to raise contentions, if any, available on the aspect of provisional attachment before the learned Judge. Challenge to notices under Section 143 (2) and orders under Section 143 (3) of the Act - Since the various aspects which were considered and with regard to which we have remanded the matter to the learned judge go to the root of jurisdiction and have a material bearing on the validity of the notices issued under Section 143(2) of the Act and orders of assessment u/s 143(3) of the Act, we leave it open to both the parties to raise the contentions before the learned judge even with regard to the validity of the notices and orders under Section 143(2) and 143 (3) of the Act respectively. Thus, the order passed by the learned Judge in the writ petitions is set aside and the matter is remanded to the learned Judge for reconsideration afresh.

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• 2024 (8) TMI 289
  Delay filling IT returns - Seeking condonation of delay u/s 119 (2) (b) of the Income Tax Act for claiming the refund - petitioner, submits that the petitioner, a senior citizen now aged about 72 years, faced genuine hardship, and thus, ought to have been granted benefit under Section 119 (2) (b) - HELD THAT:- This Court finds that the senior citizen/considerable age, depression, as mentioned coupled with the fact that the petitioner is not on the wrong side of the law/revenue collections as he is not facing any kind of scrutiny or action by the respondents, and thus, he deserves to be dealt with leniently in this peculiar factual matrix. This Court has also heavily relied on the fact that the tenure of filing the returns sought to be filed in the present case begins about 15 years ago, the impugned order is of 2016, this writ petition is pending for last 07 years and the age of the petitioner is around 72 years, which do not warrant complete remand of the matter. The core law of Section 119 (2) (b) of Income Tax Act read with CBDT Circular No.09/2015 dated 09.06.2015, both reproduced above, clearly reflect that if there is a genuine hardship, then a condonation of upto six years can be permitted. Considering the overall perspective and peculiar facts of this case, including the age of the petitioner, the Section 119 (2) (b) of Income Tax Act read with CBDT Circular No.09/2015 dated 09.06.2015, which prescribes 06 years delay condonation on genuine hardship and the precedent law laid down in the matter on B.M. Malani s case [ 2008 (10) TMI 2 - SUPREME COURT] this Court is of the firm opinion that the depression, old age, long pendency of the issue and the petitioner s status as a small-scale surveyor with no negativity in revenue collection by the tax authorities (like scrutiny) attached, have to be considered as genuine hardship. WP allowed.

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• 2024 (8) TMI 288
  Refund not been processed further due to technical glitches faced by the Central Processing Center ( CPC ) - technical error appearing in the portal has been deleted, but the refund is yet to be made - as stated that once the manual order passed by AO, is successfully accounted at CPC, the amount of refund determined by the AO will be released in accordance with the provisions of the Income Tax Act, 1961- HELD THAT:- As we have observed in many matters, non-payment of admitted refund results in payment of interest to Assessee out of public money and that is loss to the nation. We fail to understand how the Income Tax Department treats it so casually when tax payers money is used to pay interest. Efforts should be made to see that public money is not paid as interest and refund is issued promptly. Since it is almost three weeks since the AO has passed the order, we direct the CPC to ensure that the refund is credited to Petitioner s account not later than 9th February 2024, failing which on 13th February 2024 Petitioner shall be handed over a physical cheque/pay order for the entire refund together with interest under Section 244A of the Act up to the date of giving the cheque. Failure to pay shall be viewed as a willful disobedience of this order.

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• 2024 (8) TMI 287
  Challenge to constitutional validity of Section 22 read with Sub Section (1) and Sub Section (5) of Section 23 of the Income Tax Act, 1961 - Matter Stand over to 15th April 2024.

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• 2024 (8) TMI 286
  Validity of reassessment proceedings - Correct Sanctioning Authority u/s 151(ii) - Validity of approval granted by Principal Commissioner of Income Tax (PCIT) instead of Principal Chief Commissioner of Income Tax (PCCIT) u/s 151(ii) - HELD THAT:- Petitioner is correct in saying that the AY is 2018-19 and, therefore, since more than three years have expired from the end of the assessment year, Sanctioning Authority u/s151(ii) of the Act should be the Principal Chief Commissioner of Income Tax ( PCCIT ) and not the PCIT. As held in Siemens Financial Services Private Limited [ 2023 (9) TMI 552 - BOMBAY HIGH COURT] the sanction is invalid and consequently, the order and the consequent notice u/s 148A(d) and Section 148, respectively, of the Act should be quashed and set aside. Thus order passed u/s 148A(d) and notice issued under Section 148 of the Act both are quashed and set aside. Decided in favour of assessee.

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• 2024 (8) TMI 285
  Disallowance of deduction u/s. 80P(2)(d) - interest received by the assessee from The Sabarkantha District Central Co-operative Bank - HELD THAT:- As in [ 2024 (4) TMI 1160 - GUJARAT HIGH COURT] issue stood decided in favour of the tax-payer. However, similar directions as were given by Division Bench in the appellate order in the case of Sardar Patel Co-operative Credit Society Limited [ 2024 (4) TMI 1161 - ITAT AHMEDABAD] are now given by us to the AO to verify that the entity from whom the interest income is claimed to have been earned by the assessee namely The Sabarkantha District Central Co-operative Bank, Khedbrahma which is claimed to be a Co-operative societies is duly registered under the Cooperative Societies Act or under the State Act, and to this limited extent, we are directed AO to verify the facts before granting relief to the assessee. The appeal of the assessee is allowed as indicated above.

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• 2024 (8) TMI 284
  Revision u/s 263 - capital contribution by the 10 partners in the assessee firm - HELD THAT:- Since the assessee had furnished details of all the 10 partners and all the 10 partners were available before the tax authorities, then, in that case, addition if any, could have been made in the hands of the individual partners who had contributed capital in the assessee firm, and not in the hands of the assessee firm. Accordingly, the assessment order, in so far as the issue of capital contribution is held not to be erroneous as prejudicial to the interest of Revenue. Decided in favour of assessee. Claiming deduction u/s 35AD in terms of 80-IA(7) - HELD THAT:- In the present case, admittedly, no separate form was filed by the assessee under the Income Tax Rules. On going through the case records it is observed that no specific query regarding claim of deduction u/s 35AD was raised by the AO, during the course of assessment proceedings. In our considered view, looking at the relevant provisions reproduced above, the assessee in order to claim deduction u/s 35AD of the Act is required under law to furnish requisite form, duly certified by Chartered Accountant in terms of Section 80-IA(7) of the Act. The issue is also not whether it is mandatory or merely procedural to file such requisite form as envisaged u/s 80-IA(7) of the Act but it is a fact that no specific query was made by the AO with respect to his specific issue in hand before us. The assessee has claimed substantial amount of deduction u/s 35AD of the Act and the AO did not enquire into the aspect of whether the assessee had furnished the requisite form as required for claim of such deduction u/s 35AD of the Act. Accordingly, on this issue we are of the considered view that the Ld. Assessing Officer erred in not conducting the requisite enquiry and we hold that Ld. CIT(A) has not erred in facts and in law in holding that the assessment order is erroneous, in so far as prejudicial to the interest of the Revenue so far as this issue is concerned. Decided against assessee.

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• 2024 (8) TMI 283
  Assessment u/s 153A - incriminating material during the search the addition was arbitrary - Fictitious Commodity Losses - assessment order lacked tangible evidence, such as undisclosed income or unaccounted assets, to substantiate the alleged fictitious losses - HELD THAT:- The principle that reassessment should be based on incriminating material is likely to hold, even under the new provisions, as the rationale behind requiring tangible material for reopening an assessment remains a cornerstone of the reassessment process. The Supreme Court in the case of CIT v. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] emphasized that the AO must have tangible material to justify the reopening of assessments. This principle continues to be relevant under the amended Sections 147 and 148 of the Act. The judicial principles laid down in the Saumya Construction case [ 2016 (7) TMI 911 - GUJARAT HIGH COURT] regarding the necessity of incriminating material for reassessment of completed assessments are still relevant. Therefore, the judgment in Saumya Construction Pvt. Ltd. (supra) retains its relevance and can be relied on to support the argument that reassessment post-search should be based on incriminating material, ensuring that the reassessment process is grounded in tangible evidence. Given the lack of incriminating material and the reliance on judicial precedents, the additions made by the AO are not sustainable and void ab initio. CIT(A) has provided a thorough analysis of the legal principles and factual background, leading to the conclusion that the additions cannot be sustained and directed AO to delete the additions made on account of fictitious commodity losses from respective assessment years. Thus, these grounds of appeal related to fictitious commodity losses by revenue for AYs 2009-10 to AY 2014-15 are dismissed. Unexplained Credit u/s 68 - AO and CIT(A) have not made any efforts to verify the source of source despite the assessee providing sufficient information, we are of the opinion that the addition cannot be sustained. Therefore, we direct the AO to delete the additions on account of both unsecured loans and interest thereon. The grounds of revenue are dismissed and that of assessee are allowed in case of all relevant assessment years. Disallowance u/s 14A r.w.r.8D - CIT(A) deleted these additions stating that these assessments are relating to unabated years and there is no incriminating material related to the issue - AO s application of Rule 8D is not justified without recording satisfaction regarding the correctness of the assessee s claim. The assessee, being a dealer in shares and securities, earns dividend income incidental to its business. However, this does not automatically exempt the assessee from the provisions of Section 14A. CIT(A) s deletion of the additions is upheld as the assessments pertain to unabated years. AO made the disallowance without any incriminating material found during the search, in line with the principles laid down in Saumya Construction Pvt. Ltd. [ 2016 (7) TMI 911 - GUJARAT HIGH COURT] and Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] We, therefore, uphold the order of the Ld.CIT(A) and delete the disallowances made by the AO u/s 14A r.w. Rule 8D. These grounds of the Revenue are dismissed and that of assessee s CO are allowed.

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• 2024 (8) TMI 282
  Exemption claimed u/s.10A - denial of claim as export turnover brought into India does not amount to 75 percent of the total turnover of the STP unit - as submitted by the assessee that, it treated export credits of the bank account maintained by it in the USA as export proceeds and that, this a/c was operated with the approval of the RBI - whether sales from STP units exceeded 75% of the total turnover during the relevant period as per the law applicable for relevant Assessment Year? HELD THAT:- Expenditure incurred in foreign exchange are to be excluded from total turnover and what is excluded from total turnover is also excluded from export turnover . Thus, the export turnover, in the numerator must have the same meaning as the export turnover, which is a constituent element of the total turnover in the denominator. We note that the revenue in the present facts of the case, computed export turnover based on the definition of export turnover as appearing in section 80HHE in peacemeal, without considering the other related provisions. Even otherwise section 10A(2)(ia) compares the export proceeds with total sales. It is not in dispute that, section 10A is a beneficial section like section 80HHE. Section 10A is intended to provide incentive to promote exports. In fact section 10A is meant to provide a larger benefit than that is provided by section 80HHE, by providing the tax holiday to the assessee. If the expenditure incurred in foreign currency are excluded from export turnover but not from total turnover, the benefit granted by section 10A would be considerably reduced. This, in our opinion, cannot be the scheme of the Act. In any event, the EXIM policy explained hereinabove is clear on this aspect. Hon ble Supreme Court in the case of K.P. Varghes [ 1981 (9) TMI 1 - SUPREME COURT] held that, a literal construction that leads to absurdity, unjust result or mischief should be avoided. Similarly Hon ble Supreme Court in the case of Bajaj Tempo Ltd [ 1992 (4) TMI 4 - SUPREME COURT] with respect to relief for new industrial undertaking under section 15C of the Income-tax Act, 1922, held that, such provisions should be construed liberally. A literal Construction which defeats the very purpose of enacting the provision should be avoided. Thus The definition of the export turnover , in sec. 10A excludes from its ambit any expenses incurred in foreign exchange in providing technical services outside India for the year under consideration. We therefore direct the Ld.AO to compute the 75% of total sales on gross receipt u/s. 10A(2)(ia) of the Act. Appeal filed by the assessee stands allowed.

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• 2024 (8) TMI 281
  Deduction u/s. 80P(2)(d) - interest income earned by the assessee from FDR maintained with Ahmedabad District Co-operative Bank Limited and also interest on saving bank account - HELD THAT:- We decide this issue in favour of the assessee that interest income earned from deposits with Cooperative Banks shall be allowed as deduction u/s 80P(2)(d). However, similar directions as were given by Division Bench in the appellate order in the case of Sardar Patel Co-operative Credit Society Limited [ 2024 (4) TMI 1161 - ITAT AHMEDABAD] are now given by me to the AO to verify that the entity from whom the interest income is claimed to have been earned by the assessee namely Ahmedabad District Co-operative Bank is Cooperative Bank which is a Co-operative societies duly registered under the Co-operative Societies Act or under the State Act, and to this limited extent we directed AO to verify the facts before granting relief to the assessee. Interest income received by assessee from saving bank account maintained with Axis Bank - As the same shall not be allowed as deduction, keeping in view decision of Hon ble Supreme Court in the case of Totgar [2010 (2) TMI 3 - Supreme Court ] as well decision of Sardar Patel Co-operative Credit Society Limited[supra]. The assessee has claimed that it has not invested surplus funds in its bank account, but there is no evidence to support its contentions. The appeal of the assessee is partly allowed as indicated above.

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• 2024 (8) TMI 280
  Nature of Capital gain on sale of flat - LTCL as STCG - claiming indexation on payment basis - two small units were swapped for the bigger unit - Assessee claimed long term capital loss on the said property on the basis that same was held by him and his mother/grandmother from FY 2010-11 who subsequently assigned their rights in favour of the Assessee - order of the CIT(A) is that the swapping of two units T3-002 and T3-003 for one unit of T10-412 is considered as an exchange - AR submitted that benefit of indexation ought not to be denied to the Assessee merely because the allotment was finalized in 2018 as substantial payments were made by the Assessee before that time. HELD THAT:- Faridabad Flat - We are of considered view that the transaction of gift is not regarded as transfer and accordingly capital gain arising from such transfer is not made chargeable to tax u/s 45. However, this capital gain by implication is brought to tax at second stage when capital asset becoming the property of the assessee under gift is subsequently transferred by him by adopting the date and cost of acquisition of the capital asset of the previous owner as the date and cost of acquisition of the assessee. This precisely is the scheme of the Act as laid out in the relevant provision. Under similar circumstances in the case of Manjula J. Shah [ 2009 (10) TMI 646 - ITAT MUMBAI] has held that for the purpose of calculation of indexed cost, the index cost will be taken from the previous year in which the previous owner had become the owner of the property Delhi Flat - order of the CIT(A) is that the swapping of two units for one unit - As we take into consideration the agreement dated 29.10.2018 by which the builder Pureearth Infurastructure Ltd. along with promoter Basant Projects Ltd., had entered into agreement to sell, it comes up that consequent to a settlement agreement executed between DCM, Pureearth and Flat owner association on 10th May, 2003 before the Hon ble Delhi High Court, Pureearth had acquired development rights and Pureearth had further entered into a join development agreement with Basant Projects Ltd. and DCM for development and construction of the said land. The agreement has reference to earlier allotted apartments which meant the booking of space or area or unit or apartment already made to old flat buyers through erstwhile builders, DCM and Pureearth in the project . It further comes up that the amount of Rs. 40,36,702/- already paid were adjusted as a consideration. Thus, we are of the considered view that Pureearth, was a successor in interest of Ansal-DCM properties and the builder-buyer agreement dated 29.10.2018 as executed was not a fresh agreement of allotment or an exchange deed, but, the assessee as a vendee and the Pureearth and Basant as promoters had only redefined and fortified their respective rights and corresponding liablites, arising from the booking of a flat initiated with Ansal-DCM properties in the year 1989. CIT(A) had fallen in error in considering the acquisition of flat T10-412 as an exchange without appreciating that for a transaction to fall into the category of exchange, there should be in existence properties which is not established and further builder-buyer agreement specifically mentions that due to change in the area and location, the consideration amount is increased and the amount already paid for erstwhile units were adjusted. So, the transaction is not at all of nature of exchange. Thus, we are of the considered view that date of acquisition of property has to be reckoned from the date of allotment by Ansal-DCM properties in the year 1989. Thus, the tax authorities have fallen in error in considering the income as short-term capital gain. Assessee appeal allowed.

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• 2024 (8) TMI 279
  Taxability of capital gain in India v/s Mauritius - residential status and beneficial ownership of Mauritian entities for applicability of the tax treaty - As per AO assessee entity is a conduit, created and run for treaty shopping. Thus for merely holding the TRC, the assessee cannot claim absolute immunity HELD THAT:- The Appellant is controlled and managed by its board of directors in Mauritius which comprised of two Mauritian resident directors (Moussa Taujoo and Dilshaad Rajabalee) and one US resident director (Steven Boyd) and all meetings physically chaired in Mauritius with majority of its board of directors being the residents of Mauritius. We have been appraised of the all the board minutes forming part of record before the Assessing Officer which shows that the Appellant was controlled and managed by its board of directors in Mauritius and all decisions with respect to the affairs of the company were taken by the Board itself in Mauritius. All SPAs for sale / transfer of shares have been executed by the Mauritian resident directors. Tax authorities below have failed to rebut the statutory evidence of the TRC with cogent evidence, and merely on the basis of suspicion and inferences, the assessee is held to be engaged in treaty shopping. The fact that the assessee had no funds of its own was due to the nature of its operation as investment platform and certainly when any gain is made out from the dis-investment, the benefit has to be transferred to those who had initially invested trusting the fund management skill of assessee. No doubt, the assessee is a dropdown entity associated with the entities operating in Cayman Island, but that does not taint the genuine activities as investment platform and the doctrine of substance over form cannot be stretched to the extent, that merely because the assessee has associated enterprises operating from the Cayman Island, the investments which were made in a prestigious Indian company, in a initial years of its growth, would also become tainted. Lastly, the minuscule percentage of the fund of the assessee, invested in India, as compared to the investments it has made across various economies, rebuts all the inferences drawn by the tax authorities below, questioning the substance over form of assessee and the same cannot be sustained.Assessee appeal allowed.

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• 2024 (8) TMI 278
  Computation of book profit u/s 115JB - inclusion of capital gain from the sale of flats - HELD THAT:- We completely agree with the finding of the Hon ble Court that section 45 read with section 112 of the Act, which is part of the Income Tax Act deals with the calculation of long-term capital gain and capital asset held for more than three years and the assessee is eligible for indexed cost benefit even if it is subjected to section 115JB of the Act. However, in the instant case, since the issue is only relating to computation of book profit under section 115JB of the Act and not the computation of income under section 45 of the Act, therefore, the judgment of Best Trading and Agencies Limited [ 2020 (9) TMI 94 - KARNATAKA HIGH COURT] will not be of any help to the assessee. Therefore, since the issue before us is only that whether the assessee is eligible to calculate book profit by including net gains from sale of capital assets, after claiming indexed cost of acquisition and the book profit is to be calculated in accordance with Part-II and Part- III of Schedule VI of Companies Act and subject to the adjustments provided under section 115JB of the Act and in absence of any specific clause under section 115JB of the Act, which could provide alleged benefit claimed by the assessee, we are inclined to hold against the assessee and confirm the view taken by the ld. CIT(Appeals). Appeal of the assessee is dismissed.

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• 2024 (8) TMI 277
  Addition on account of payment of royalty - consideration paid for use of trademark and know-how - whether royalty arrangement which includes royalty not only for trademark and tradename but also for technical know-how and designs? - TPO has applied Transactional Net Margin Method (TNMM) on entity level and disregarded Comparable Uncontrolled Price (CUP) - TPO also included amount of third party AMP Expenses while computing the amount of adjustment for royalty, applied the TNMM Method and determined the Arm s Length Margin at 5.42% - TPO added advertisement expenses (including a mark-up of 10%) to the payment made by assessee in accordance with the Trademark and Know-how License Agreement ( License Agreement ), in addition to the royalty payment. HELD THAT:- Following the principle of consistency, the TNM Method is rejected in the current year too, and the Assessee s use of CUP is upheld. Accordingly, following the co-ordinate Bench orders [ 2011 (11) TMI 194 - ITAT DELHI] , the issue of royalty is decided in favour of the assessee and against the Revenue. Adjustment on account of advertisement expenses - As we found that the addition on account of advertising expenses incurred by the assessee according to the License Agreement was not done in earlier years. Therefore, the issue of advertisement expenses incurred by the assessee is remanded to the file of the TPO for fresh determination in accordance with law after allowing a reasonable opportunity of being heard to the assessee. Accordingly, Ground 3 and sub-grounds are partly allowed for statistical purposes. Reimbursement of Advertisement expenses - assessee submitted before the TPO that these expenses were incurred by its AE with respect to Indian catalogue and brochure, Indian advertisement campaigns and related travelling and accommodation expenses of models for advertisement campaigns etc - TPO questioned the reason for the 3rd parties to issue bills in the name of the assessee and for that reason according to him the receipt of services is not proved - HELD THAT:- observations of the TPO in our view is fallacious in as much as the case of the assessee is that the 3rd party had executed the work on account of advertisement relating to Assessee s business and the expenditure thereof was met by Assessee s AE on behalf of the assessee. The Assessee s AE raised back-to-back invoices on the assessee for such expenses, which is clearly fortified by the material referred to before us, which also shows that there is no margin earned by the AE. Be that as it may, the TPO has no locus-standi to opine on the necessity or otherwise for the incurrence of expenditure. TPO does not has a jurisdiction to question the commercial expediency of the assessee have incurred such expenditure and his jurisdiction extends only to benchmark the transaction in terms of mandate of Section 92(1) of the Act. The aforesaid proposition is well founded in light of decision in the case of CIT vs. EKL Appliances Ltd. [ 2012 (4) TMI 346 - DELHI HIGH COURT] - Addition deleted. IT Cost Allocation - assessee claimed to have received information technology support services from its AE in the nature of Computer Assistance Designing Techniques including software like CAD, Orchidie, Iris, Citirix, Rtbenet etc. which were used by it in its manufacturing process. - TPO determined the ALP of these intra-group services to be zero as the assessee could not provide any evidence of requisition or receipt or cost-benefit analysis - HELD THAT:- While respectfully following the consistent view taken by the Tribunal in Assessee s own case for the Assessment Years 2009-10 [ 2017 (10) TMI 1259 - ITAT DELHI] we hold that the impugned addition cannot be sustained. We therefore direct the TPO/AO to delete the adjustment made on account of IT Cost Allocation. Consultancy Services - HR Cost - assessee hired the services of an employee (Mr. Daniel Hueng) to provide consultancy with regards to quality control. Salary and perquisites of this employee was paid by the AEs and reimbursed by BIPL on a cost-to-cost basis - TPO determined the ALP of this reimbursement to be zero as the assessee could not provide any documentary evidence of exclusive receipt of services from employee and categorized his services to be in the nature of shareholder service - HELD THAT:- The assessee has availed consultancy services from an employee based out of Hong Kong and has reimbursed the salary and related expenses of this employee to its AE. Since this is similar to the issue of expatriate cost in previous years, we find no reason to take a different view for this assessment year. While respectfully following the consistent view taken by the Tribunal in Assessee s own case for the Assessment Years 2007-08, 2008-09 and 2009-10 [ 2017 (10) TMI 1259 - ITAT DELHI] , we hold that the impugned addition cannot be sustained. We, therefore, direct the TPO/AO to delete the adjustment made on this issue. Adjustment on account of provision of Market Support Services - Comparable selection - HELD THAT:- APITCO Ltd. is a government company set up for specific government purposes. It provides diversified high end technical services, that are different in nature than the support services. Further, this company has been consistently excluded on the basis of functional comparability by the coordinate benches and the exclusion is upheld by the Hon ble High Court. Therefore, we agree with the contention of the assessee to exclude this company from the list of comparables. HCCA Business Services Pvt. Ltd. has total fixed assets to the tune of Rs. 6.27 Cr. As per Schedule-D of fixed assets out of the same, business and commercial rights are of Rs. 3.75 Cr. and Computer software is of Rs. 1.15 cr. This highlights the difference in the asset holding of the assessee company vis-a- vis comparable company. Further, it is observed that the comparable company has claimed software development cost of Rs. 1.5 Cr. during financial year 2008-09. This shows that the company has a dependency on the technology to deliver the functions. Since the functions performed by the comparable are dependent on the technology and are therefore, not comparable with the tested party. Accordingly, HCAA is not a good comparable in this case. Quippo Valuers and Auctioneers Pvt. Ltd service is in the nature of valuation and auctioning, which are different from the assessee. Further, this company has been excluded on the basis of functional comparability by in Adidas Technical Services Pvt Ltd. [ 2016 (2) TMI 916 - ITAT DELHI] . Therefore, we agree with the contention of the assessee and uphold the decision of the ld. CIT(A) to exclude this company from the list of comparables. TSR Darashaw Ltd provides registrar and transfer agent services, records management services and payroll and trust fund services. All these segments are functionally different from the marketing support activities performed by the assessee. Further, this company has been consistently excluded on the basis of functional comparability by the coordinate benches and the exclusion is upheld by the Hon ble High Court. India Tourism Development Corporation Ltd (ITDCL) is a government company engaged in operation of hotels, restaurants, shops and also earns revenue from consultancy and ticketing systems. TPO has observed that the functions performed by ARMS are close to the functions performed by the tested party. The segmental data is available of the Annual Report, therefore, ARMS segment of ITDC is a good comparable with the tested party. Therefore, in this background, in our considered view, the Ld. CIT(A) has rightly directed the AO to include ITDS (ARMS segment) as a good comparable if the assessee provides the segmental financial results for benchmarking analysis. In view of above, we do not find any infirmity in the action of the Ld. CIT(A). Overseas Manpower Corporation Limited is a good comparable and directed the AO to include it in the final matrix of comparables. As held in the case of Chryscaptial Investment Advisors (India) Pvt. Ltd. [ 2015 (4) TMI 949 - DELHI HIGH COURT] the company cannot be rejected merely on account of wide fluctuation in margin (profit/loss) if it is otherwise comparable. ICRA Management Consulting Services Ltd - TPO/AO included the company as a comparable in AY 2009-10, AY 2011-12 and AY 2012-13. In the current year, no different facts were brought on record. Therefore, no difference is warranted in its treatment. Following the principle of consistency, we agree with the contention of the assessee and uphold the decision of the ld. CIT(A) to include this company. In view of above, the TPO/AO is directed to give effect and re-compute the arm s length price for the marketing support services segment.

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• 2024 (8) TMI 276
  TDS u/s 195 - disallowance of professional fee paid to EVA Delith, Germany without deduction of TDS - addition u/s 40(a)(i) - HELD THAT:- As Ms. Eva M.Delith does not has fixed base in India nor she did visited India at all for the period during the previous year relevant to the assessment years under appeals and hence, her income is taxable only in Germany. Hence, there is no need to deduct TDS out of the remittances made to her. Therefore, the disallowance made by invoking the provisions of section 40(a)(i) of the Act is not warranted and the same is deleted. Since the facts are identical in other four assessment years i.e., 2012-13 to 2015-16 also, taking a consistent view, the disallowance made by invoking the provisions of section 40(a)(i) of the Act towards payments made to Ms. Eva M.Delith is not warranted and the same is deleted. Accordingly, this issue raised by the assessee in all these five assessment years is allowed. Disallowance of professional fee paid to BDO Deutsche Warentreuhand, Germany towards local VAT compliance support services rendered outside India u/s. 40(a)(i) - HELD THAT:- Admittedly, the party BDO Deutsche Warentreuhand, Germany is a foreign party providing professional services in making VAT return and compliance services in Germany. This issue now stands covered in favour of assessee by the decision of Co-ordinate Mumbai Bench of this Tribunal in the case of BSR Co. [ 2016 (5) TMI 356 - ITAT MUMBAI] held that the different types of professional services rendered to an Indian company by overseas companies outside India in relation to audit, taxation, transfer pricing, information technology, background checks etc., would be independent personnel services and since these professional overseas companies had not fixed base or PE in India, the payments made to them would not be chargeable to tax in India and consequently, no TDS is to be deducted. Consequently, no disallowance under 40(a)(i) of the Act can be made. Hence this issue of assessee s appeal is allowed. Disallowance of segregation charges paid to non-residents towards warehousing, unpacking, repacking of goods and supplying to customers in Germany u/s. 40(a)(i) - HELD THAT:- We noted that the assessee company is exporting their products being automobile components to their clients at Germany mostly to M/s. Volkswagen. As its client is having several factories in Germany and client is insisting for supplying of their products to various factories as per their requirement and hence, there are segregation charges as the agent has to store the component in their warehouses hired by assessee and store the components as and when they are shipped in bulk from India and pack it and repack it at the required lots and deliver it to the clients factory. Hence, these payments are made to non-resident and from the very nature of services, these cannot be called as technical services and even there is no permanent establishment of the payee. Once there is no PE in India of either the agents or the supplier company i.e., Volkswagen, no TDS is to be deducted for the same in view of the decision in the case of Turbo Energy Ltd. [ 2017 (5) TMI 1749 - ITAT CHENNAI] Services rendered by the non-resident do not fall under the category of technical and managerial services and even these services were rendered outside India and there is no permanent establishment or business connection with the non-resident in India. Accordingly, we are of the view that providing of the services outside India cannot be taxed in India as the non-resident has no permanent establishment in India - Decided in favour of assessee. Payment to Union of Japanese Scientists and Engineers (JUSE), Japan in connection with 60th Anniversary Deming Prize for non-deduction of tax u/s. 40(a)(i) - We noted that the assessee has applied for and has won deming award from Japanese Scientists and Engineers (JUSE) and for that purpose, the assessee has advertised in the deming prize advertisement towards 60th anniversary. This payment is not in the nature of technical services but this will fall under business income and that also out of India. As pointed out by ld.counsel that this issue is squarely covered by the decision Brahmos Aerospace Pvt. Ltd. [ 2016 (9) TMI 705 - ITAT DELHI] wherein held that payments made to foreign entities are in nature of rent, advertisement and exhibition expenses and therefore are in the nature of business receipts in hands of payee. Such business receipts are taxable in India only if payee had PE in India within meaning of relevant DTAA. From the facts, it has been observed that foreign entities did not have PE in India and therefore payments were not chargeable to tax in India. Accordingly, the assessee was under no obligation to deduct taxes at source while making these payments. Disallowance made by AO towards corporate social responsibility - HELD THAT:- We are of the view that these expenditures are in the nature of revenue because all these expenditures are for the welfare of the community and from the very nature mentioned above, we are convinced that these expenditures are allowable as revenue. Even the amendment blocking these expenditures is from 01.04.2015 relevant to assessment year 2015-16. The issue before us is for assessment years 2011-12 to 2013-14 and hence, we direct the AO to allow these expenses. Disallowance of interest free advances given to Rane Foundation after taking loan on interest from bank - only plea of assessee before us was that the assessee has sufficient interest free funds available and hence, no interest apportioning can be disallowed on the ground that interest free advance was given to Rane Foundation - HELD THAT:- This issue is squarely covered by the decision of Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] Hence, we remit this issue back to the file of the AO for verification purpose and he will verify whether the interest free funds are available with the assessee, which is more than the interest free advances given to Rane Foundation. In term of the above, this issue is allowed in both the assessment years 2011-12 2012-13 subject to verification by the AO. Disallowance of claim u/s. 80G - We find force in the arguments of ld.counsel and as agreed by ld. Senior DR, the matter is restored back to the file of the AO and AO is directed to verify the certificate given by Rane Foundation, wherein assessee has contributed Rs. 40 lakhs. Accordingly, this issue is allowed for statistical purposes. Disallowance of claim of market research and development expenses paid in USA by non-deduction of TDS - addition invoking the provisions of section 40(a)(i) - HELD THAT:- DTAA between India-USA and Article 12(4)(b) of the DTAA and noted that the Hon ble Karnataka High Court in the case of CIT vs. De Beers India Minerals (P) Ltd. [ 2012 (5) TMI 191 - KARNATAKA HIGH COURT] has considered identical issue although in term of DTAA between India and Netherland but these are identical to the clauses India-Us DTAA The company has entered into an agreement with Rane Holdings America Inc., for carrying out market survey for its company product in USA and the scope of services is to provide market related information and research but there is no provision for making available any technical knowledge by the non-resident. Therefore, in our view, the payment will constitute business profit as it will not constitute fee for technical services under DTAA between India-USA under Article 12(4)(b) of the DTAA and hence, no disallowance can be made. Taking a consistent view, no disallowance can be made by invoking the provisions of section 40(a)(i) of the Act towards market research and development expenses paid to Rane Holdings America Inc. Decided in favour of assessee.

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• 2024 (8) TMI 275
  Deduction u/s 80P(2)(a) - assessee is a Co-operative society and it has earned interest and dividend income by making deposits with the Delhi State Co-operative Bank Ltd. which is registered under Co-operative Societies Act - HELD THAT:- For the purpose of section 80P(2)(d) of the Act, the assessee would be entitled for deduction u/s 80P(2)(d) of the Act. In the light of the decision of the Co-ordinate Bench of the Tribunal The Mantola Cooperative Thrift Credit Society Lt [ 2020 (7) TMI 715 - ITAT DELHI] wherein it has been held that the Co-operative Bank is a society. Therefore, the deduction would be allowable u/s 80P(2)(d) of the Act. The judgement rendered in the case of Totgar s Co-operative Sale Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] would not be applicable since the facts are clearly distinguishable wherein surplus of the funds was not deposited with any Cooperative Society but were deposited to the Commercial banks. Therefore, authorities below mis-directed itself in applying the ratio in the case of Totgar s Co-operative Sale Society Ltd.[supra] - Therefore, hold that the assessee would be eligible for deduction u/s 80P(2)(d) of the Act. Decided in favour of assessee.

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• 2024 (8) TMI 274
  Bogus purchases - HELD THAT:- The assessee has made the purchases from M/s. Kasturi Commodities Pvt. Ltd, therefore, the examination of the creditworthiness of M/s. Kasturi Commodities Pvt. Ltd is of no relevance. On the other hand, the assessee has furnished sufficient documents to prove its financial creditworthiness which has not been disputed by the Revenue. The present case, apart from placing reliance on the information received from the Investigation Wing, the Revenue has not brought any material on record, not even an iota of aforesaid information, to disprove the genuineness of the transaction between the assessee and M/s. Kasturi Commodities Pvt. Ltd., which is continuing from the preceding year. Therefore, no infirmity in the impugned order passed by the CIT(A) deleting the addition made by the AO. As a result, the sole ground raised by the Revenue is dismissed.

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• 2024 (8) TMI 273
  LTCG computation - gains on sale of the agriculture land - capital asset u/s 2(14) - deduction u/s 54B - assessee could not furnish documentary evidence regarding cost of acquisition of agricultural land sold by him, AO calculated long term capital gains by taking cost of acquisition as Nil - AO has not accepted the partial Investment made by the Assessee in the purchase of Agricultural land in the name of his wife HELD THAT:- We find that there is no restriction in assessee pleading before the CIT(A) by way of an alternate ground that the land sold being an agriculture land falls outside the definition of a capital asset u/s 2(14)(iii) and the sale proceeds arising from the sale thereof cannot be brought to tax. The same being a legal ground and infact emerging from the findings of the AO where the AO has held that even though the land is an agricultural land, the same falls within the municipal limits of Mohali and thus exigible to tax. In the instant case, the assessee has submitted the necessary documentation issued by the Competent authorities that the agriculture land at Village Raipur Khurd was not situated within the jurisdiction of municipality of Mohali as per Government notification dated 28/01/2014 and secondly, the assessee has also submitted that the population of Village Raipur Khurd was 907 persons as per latest published Census of Punjab 2011 which is less than the prescribed threshold of 10000 persons as so provided in the statue. We thus find that both the conditions are cumulatively satisfied in the instant and the agriculture land so sold qualify for exclusion and cannot be classified as capital asset in terms of section 2(14)(iii)(a) of the Act. As given that population of Village Raipur Khurd was 907 as per latest census, even as per section 2(14)(iii)(b), one of the essential conditions of population exceeding the threshold is not satisfied and the subject agriculture land will stand excluded and cannot be classified as capital asset. In light of the same, long term capital gains on sale of the agriculture land, being not a capital asset cannot be brought to tax and the addition so made is hereby directed to be deleted. Ground no. 1-3 are allowed in favour of the assessee.

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• 2024 (8) TMI 253
  Denial of deduction u/s 80P(2)(d) with respect to interest income earned from FD kept with Co-operative banks - HELD THAT:- We decide this issue in favour of the assessee that interest income earned from deposits with Co-operative Banks shall be allowed as deduction u/s 80P(2)(d). However, similar directions as were given by Division Bench in the appellate order in the case of Sardar Patel Co-operative Credit Society Limited [ 2024 (4) TMI 1161 - ITAT AHMEDABAD] are now given by me to the AO to verify that the four entities from whom the interest income is claimed to have been earned by the assessee namely Kadi Nagarik Co-operative Bank, Mehsana Urban Co-operative Bank, Rajkot Nagarik Co-operative Bank and Kalol Nagarik Co-operative Bank are Cooperative Banks which are Co-operative societies duly registered under the Co-operative Societies Act or under the State Act, and to this limited extent directed AO to verify the facts before granting relief to the assessee. Disallowability of expenses incurred against commission and other income - Since, there is prima-facie alleged discrepancy in the disallowance by the AO u/s 80P itself to the tune of Rs. 11,12,839/- as against the claim of the assessee that it earned interest income of Rs. 16,89,753/- from the amount deposited in FDR and saving bank with Co-operative Banks, it became necessary to verify this aspect also. Deduction u/s 80P(2)(d) - As observed that one of the plea taken by Revenue that the assessee has claimed deduction u/s 80P(2)(a)(i) and now deduction u/s 80P(2)(d) cannot be allowed to the assessee as the assessee has not filed revised return of income and time for filing revised return of income has already expired, and in this context it will be relevant and suffice here to refer to department circular No. 14(XL-35) dated 11.04.1955. Reference is also drawn to the decision of Hedrick and Struggles Inc [ 2023 (8) TMI 159 - DELHI HIGH COURT] The appeal of the assessee is allowed as indicated above. We order accordingly.

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• Customs

• 2024 (8) TMI 272
  Revocation of Custome Broker license - levy of penalty - no new material gathered during the inquiry - HELD THAT:- The mere fact that the suspension of license had come to be revoked, cannot possibly be viewed as restricting the respondents from proceeding further in accordance with Regulation 17. As is manifest from the provisions made for the suspension of license, the same is liable to be invoked where the authorities be of the opinion that immediate action is warranted. Such an order of suspension is liable to be either revoked or continued dependent upon the circumstances which may prevail and as contemplated under Regulation 16 (2). Merely because the suspension of that license was revoked, the same would not interdict the conclusion of the inquiry for imposition of penalty as contemplated in terms of Regulation 17. There are no ground to interfere with the view as expressed by CESTAT - appeal dismissed.

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• 2024 (8) TMI 271
  Cancellation of Special Bonded Warehouse License u/s 58B of the Customs Act 1962 - levy of penalty u/s 117 of the Customs Act - whether the undertaking and the declaration given by the appellant that he had not been penalised for an offence under the Customs Act or the Central Excise Act or Chapter V of the Finance Act is correct or not? HELD THAT:- It would be appropriate to refer to the judgment of Bombay High Court in DEVIDAYAL ELECTRONICS WIRES LTD. AND ANOTHER VERSUS UNION OF INDIA AND ANOTHER [ 1981 (1) TMI 78 - HIGH COURT OF JUDICATURE AT BOMBAY ]. The Bombay High Court held that since the Notification used the word factory and also the word industrial unit in the same Notification, it has to be assumed that the said two words were intended to bear different meanings. The Court, therefore, held that the words industrial unit must mean something other than factory . It would also be pertinent to refer to the decision of the Supreme Court in COMMISSIONER OF TRADE TAX, UP. VERSUS SS. AYODHYA DISTILLERY AND OTHERS (OTHER APPEALS) [ 2008 (12) TMI 394 - SUPREME COURT ] . The issue that arose before the Supreme Court was whether paddy husk can be treated as rice husk . The Supreme Court held that when two expressions have been used in the same Notification, two different meanings should be assigned thereto. The order dated 24.01.2022 passed by the Additional Commissioner, that alone has been made the basis for cancelling the License issued to the appellant, does not penalise the appellant for an offence under the provisions of the Customs Act. Only a penalty has been imposed upon the appellant for contravention of the provisions of section 46 of the Customs Act. The order dated 17.08.2023 passed by the Commissioner, therefore, cannot be sustained - impugned order set aside - appeal allowed.

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• 2024 (8) TMI 270
  Valuation of imported goods - rejection of declared value - declared value of imported goods was lower than the contemporaneous import of similar goods - enhancement of value on the basis of contemporaneous import data of similar goods - HELD THAT:- There is no finding of the Ld. Authorities that the invoices issued by suppliers are fake or fabricated and that the transaction value shown therein has not been actually paid by the Appellant. Since the transaction value is determinable under Section 14 of the Customs Act, 1962, read with Rule 3(1) of the Valuation Rules, the question of resorting to assessment under Rule 5 does not arise. The transaction value declared in the instant case has been rejected without the sanction of law, hence not sustainable. It is also found that in number of case it was held by the Tribunal and courts that only NIDB data cannot be a basis for enhancement of value. It has been held that the NIDB data can be a guideline for the customs to arrive at the value of the goods but the NIDB data cannot be applied directly unless the value given therein falls within the parameters of identical goods or similar goods. The rejection of the transaction value and enhancement of the value by the department in this case are not sustainable in law. Therefore, the impugned orders are set aside - Appeal allowed.

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• 2024 (8) TMI 269
  Classification of imported goods - Metal Core Printed Circuit Board (MCPCB) - to be classified under Heading 85.34 (Tariff Item 8534 0000) as Printed Circuits or under Heading 94.05 (Tariff Item 9405 9900)? - HELD THAT:- The issue arising out of the present dispute is no more res integra in view of various orders passed by this Tribunal on identical set of facts. Since the Tribunal has taken the view that the product in question i.e., MCPCB should be classifiable under Tariff Item 8534 0000, different view cannot be taken to sustain classification of the same goods under Tariff Item 9405 9900, as claimed by the Revenue. Reliance can be placed in CROMPTON GREAVES CONSUMER ELECTRICALS LTD VERSUS COMMISSIONER OF CUSTOMS (NS-V) [ 2022 (9) TMI 1130 - CESTAT MUMBAI] where it was held that The specificity of description in the claimed classification is not anywhere matched by the description within which the assessing authorities have sought to place the impugned goods. Moreover, it is clear from the description that parts , if at all finding fitment within heading 9405 of First Schedule to Customs Tariff Act, 1975, should not be specified or included elsewhere. There are no merits in the impugned order, insofar it has upheld the adjudication order and rejected the appeal filed by the appellant - the impugned order is set aside - appeal allowed.

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• 2024 (8) TMI 268
  Condonation of delay in filing appeal - no sufficient cause for the delay - classification of imitation jewellery - HELD THAT:- The issue is regarding classification of imitation jewellery . As the Commissioner (Appeals) has already decided the issue on merits in the case of the appellant in the common order dated 12.10.2021, it is considered appropriate to decide this appeal instead of remanding the matter to the Commissioner (Appeals). In view of the order passed by the Commissioner (Appeals), it has to be held that imitation jewellery would merit classification under Customs Tariff Heading 7117 and would be eligible for exemption from payment of Special Additional Duty under the Notification dated 17.03.2012. The impugned order dated 12.10.2021 passed by the Commissioner (Appeals) relating to the appeal filed against the order dated 24.03.2020 passed by the Deputy Commissioner is set aside with consequential relief, if any, to the appellant - Appeal allowed.

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• 2024 (8) TMI 267
  SEZ unit - mis-declaration of the quantity as well as the value of the goods - penalty u/s 112(a) and/or 114(A) of the Customs Act 1962 - seeking relief of reduced penalty of 25% - relief sought on the ground that the adjudicating authority has not extended the option in the impugned order - HELD THAT:- The statutory provision provides that the adjudicating authority must give an option for reduced penalty in the case the appellant pay the amount of duty, interest and 25% penalty under Section 114A within a period of one month form the date of order. Since, no such option was granted, the same option can be extended now. Accordingly, the appellant s penalty shall stand reduced to 25% under Section 114A subject to condition that the appellant pay total duty confirmed, interest thereon as per law and 25% penalty under Section 114A within a one month form the date of this order. From the 5th Proviso to Section 114A, it is crystal clear that where any penalty has been levied under Section 114A no penalty shall be levied under Section 112 or 114. In view of this clear legal position, since the penalty has been imposed under Section 114A, no penalty under Section 112(a) will survive. Accordingly, the penalty imposed under Section 112(a) is set aside. Penalty on the Director - HELD THAT:- It is found that though the director, Shri Kamal Makkar, was directly involved in overall affair of filling bill of entity and knowing the mis-declaration of the goods is liable for penalty. However, taking into consideration that the appellant company has under taking to pay duty, interest and penalty and considering overall facts and circumstances of the case - the penalty imposed on the director Shri Kamal Makkar, needs to be reduced. Accordingly the penalty on Shri Kamal Makkar is reduced from Rs. 5 Lakh to Rs. 3 Lakh under Section 112(a) and from Rs. 2 Lakh to Rs. 1 Lakh under Section 114A. Both the appeals are partly allowed.

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• 2024 (8) TMI 266
  FTA benefit on import of Cocoa powder from Malaysia - Denial of benefit of Notification issued under FTA - denial on the ground that there was an intelligence that the value addition of 35% in respect of cocoa powder supplied from Malaysia is not fulfilled - HELD THAT:- The issue is no longer res-integra - reliance placed in the case of SHIRAZEE TRADERS VERSUS C.C. -MUNDRA [ 2024 (1) TMI 781 - CESTAT AHMEDABAD] where it was held that We find that to displace the certificate of origin issued by the Malaysian authority, which is in the nature of documentary evidence, the verification process by the Customs Authorities of India reference to issuing authorities to do a retroactive check is required. In the present instance no such request for verification report in respect of the appellant has been brought on record. We find that this fails to comply with the requirement of the Annexure-III (ibid) of the relevant free trade agreement. Since the facts and charges levelled in those cases and in the present case are identical, the ratio of the above decision are directly applicable in the present case - the impugned orders are not sustainable - Appeal allowed.

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• Service Tax

• 2024 (8) TMI 265
  CENVAT Credit - duty paying documents - credit can be availed on e-statement issued by NPCI during the period April 2009 to March 2012 or not - It is the allegation of the Department that since the e-statement does not contain the particulars as required under Rule 9 of the CENVAT Credit Rules, 2004, cenvat credit is not admissible - HELD THAT:- The issue is no more res integra and considered by this Tribunal in the case of M/S. THE KARUR VYSYA BANK LTD. VERSUS CCE ST, TRICHY [ 2019 (2) TMI 1383 - CESTAT CHENNAI] , wherein it is observed From a perusal of the statement issued by NPCI, we note that it is a self-contained document incorporating all the mandatory requirements of proviso to Rule 4A and in any case, NPCI is not a private body just to ignore its statement; as to the nature of service, there is an agreement in place. The credit is allowed - the impugned order is set aside and appeal is allowed.

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• 2024 (8) TMI 264
  Time limitation for making payment under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - whether the payment made on 25.08.2020 by the Appellant would entitle the Appellant to legally discharge the obligations under SVLDRS and therefore, entitled to amnesty from payment of interest and penalty or otherwise? - interest - penalty - HELD THAT:- The admitted facts are not in dispute as regards the dates on which it was to be paid as per the Department except that Appellants have said that date was further extended to 30.09.2020 and the actual date of payment i.e., 25.08.2020. The Appellants have also produced documents to substantiate their claim that they were trying to pay before 30.06.2020 and in support of that they have furnished a copy of challan in which a challan was generated for payment of the determined amount where the last date has been indicated as 30.06.2020. However, according to them, because of various technical glitches they were not able to transmit this money and subsequently they tried many times but unfortunately they were not able to remit and finally on 25.08.2020, they were successful in remitting the said amount - even for the period beyond 30.06.2020 the Department was exploring various possibilities as to allow the scheme to those people who had been already issued SVLDRS-3 prior to 30.06.2020 but were not able to pay. In fact, as pointed out by the Appellant, the Department floated an internal letter dt. 14.07.2020, seeking certain information from the field formations to find out likely impact by extending the date. One of the major factors which was considered by the Hon ble High Court was Hon ble Supreme Court s judgment in its suo moto Writ Petition IN RE : COGNIZANCE FOR EXTENSION OF LIMITATION [ 2020 (5) TMI 418 - SC ORDER] extending the period of limitation in all proceedings irrespective of limitations prescribed under general or special laws w.e.f. 15.02.2020 till further orders. In fact, the Hon ble Supreme Court in M/S. SS GROUP PVT. LTD. VERSUS AADITIYA J. GARG ANR. [ 2021 (1) TMI 804 - SUPREME COURT] , held that the period of limitation which was extended earlier vide Order dt.30.06.2020 was still operative. Similarly, in the case of N. SUNDARARAJAN (FORMER PARTNER) M/S. YARN BLISS, N. SUNDARARAJAN (FORMER PARTNER) M/S. WINACO YARN AGENCIES VERSUS UNION OF INDIA, THE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, THE DEPUTY COMMISSIONER, THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE GST [ 2021 (12) TMI 339 - MADRAS HIGH COURT] , the Hon ble High Court has referred to Parliament Enactment of Taxation and Other Laws (Relaxation and Amendment of certain provisions) Act, 2020 and held that in terms of the above Act, the time limit prescribed under Chapter V of the Finance Act for completion of certain action as stipulated under Chapter V is extended till 30.09.2020 and finally held that time limit of completion of payment of taxes as quantified in Form SVLDRS-3 is still extended till 30.09.2020. The Appellants have discharged their liability as determined under SVLDRS Scheme within permissible time limit and therefore, they were entitled for discharge certificate under SVLDRS-4. Since they have rightly discharged the amount determined under SVLDRS-3, there shall not be any case for any interest or penalty. Accordingly, the demand confirmed by the Department for recovering interest and penalty and upheld by Commissioner (Appeals) vide his Impugned Order is not sustainable. Appeal allowed.

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• 2024 (8) TMI 263
  Levy of service tax - declared service - liquidated damages arising out of breach of contract forfeiture of salary or payment of bond amount - agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act - HELD THAT:- The activities that are contemplated under Section 66E(e) ibid are activities where the agreement specifically refers to any of the activities, there is a flow of consideration for such activity. Thus, a service conceived in an agreement where one person, for a consideration, agrees to an obligation to refrain from or tolerate or do an act, would be a declared service under Section 66E(e) ibid. Any amount charged which has no nexus with the taxable service and is not a consideration for the service provided does not become part of the value which is taxable. In other words, the amount charged has to be necessarily a consideration for the taxable service provided under the Finance Act. Resultantly, it becomes clear that, the compensation received for making good the financial damages/injury cannot be said to be consideration at all and has no nexus with any taxable service. It is observed that the appellant had agreed to sell TMT Bars to M/s. Shri Kapileswar Steel Raipur pursuant to the order for supply placed by the later. However, Shri Kapileswar cancelled the said purchase order. This cancellation has been treated as a breach of contract. Appellant vide two letters dated 28.02.2013 and 31.03.2013 has conveyed that the amount of Rs.18,90,000/- and Rs.10,50,000 respectively has been forfeited by the appellant subsequent to buyer failing to perform his part of contract with the appellant. The act of forfeiting the amount in the given circumstances doesn t confirm to the meaning of Declared Service . It becomes abundantly clear that the issue of considering a forfeited amount as an amount of consideration towards declared services stands already settled in favour of the assessee. The same is already held to not to be the consideration towards any service. In fact the cancellation of contract itself is already held to not to be a service. Appeal allowed.

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• 2024 (8) TMI 262
  Short payment of service tax - Transport of Passengers Embarking in India for International Journey by Air Service - HELD THAT:- The Passenger Service Fee (PSF) and Airport taxes collected by the Appellant is under an obligation in connection with operations of its business and not towards providing of the taxable service as a service provider and for this reason the amount so collected is booked as a liability in their books of accounts which gets reduced when the payment is remitted to the airport authorities on whose behalf it has been collected. It is coming out from the SCN that with respect to remaining two heads i.e Fuel and Insurance Surcharge an amount of Rs. 23,02,960/- has already been paid by the appellant alongwith the interest as is recording in para three of the SCN. However, none of the Adjudicating Authorities below have taken note of this amount and the demand on four of the heads has been confirmed. The Commissioner (Appeals) has remanded the matter directing the adjudicating authority to re-calculate the demand of Service Tax in the light of the findings arrived at by the Commissioner (Appeals) and to rework the demand alongwith the interest - Appeal allowed by way of remand.

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• 2024 (8) TMI 254
  Mining lease - levy of service tax - royalty - whether the royalty under the Act of 1957 is a consideration or not and further if that is consideration , then what would be the effect pertaining to payment of service tax? - HELD THAT:- The compilations together with the written submissions shall be in the electronic form and shall be emailed to the Court Master at [email protected] on or before 7 August 2024. List the matters for hearing in the third week of August 2024.

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• Central Excise

• 2024 (8) TMI 261
  Method of valuation - respondents and M/s Everest Flavours Ltd. are related to each other in terms of Section 4 (3) (b) of the Central Excise Act, 1944 or not - Inter-connected Undertakings - mutuality of interest - valuation to be done under proviso to Rule 9 read with Rule 8 of the Valuation Rules i.e 110% of cost of production? - Extended period of limitation - penalties. HELD THAT:- It is found that no effort seems to have been made by the Revenue to ascertain the actual price of the goods, except alleging that the goods cleared by the respondents are over-valued to avail additional refund. While the Show Cause Notice does not give the constitution of both the respondent and M/s Everest Flavours Ltd., the Review Order lists out Directors in each of the companies. The grounds taken in Review are beyond the scope of the Show Cause Notice and the same cannot be taken in view of the finding of the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, SURAT VERSUS BESTA COSMETIC LTD. [ 2005 (3) TMI 130 - SUPREME COURT] where it was held that Additionally, before us, a ground was sought to be raised that BHPL bears the entire advertisement cost of the product of the assessee. This was not a ground which was urged on behalf of the Revenue at any stage of the proceedings and we do not permit them to raise it now. This appeal is accordingly dismissed without any order as to costs. Extended period of limitation - penalties - HELD THAT:- The respondents have not indulged in any suppression, mis-declaration etc. with intent to evade payment of duty; they have been not only filing the Returns but also availing refund/ credit of duty paid in terms of Notification No.56/2002 which was scrutinized by the Revenue from time to time; the respondents would be eligible for refund of duty paid by them and as such, the issue is revenue neutral to themselves; therefore, under the circumstances, extended period cannot be invoked and no penalty can be levied. The appeal filed by the Revenue cannot be sustained both on merits and limitation - there are no reason whatsoever to interfere with the impugned order - appeal of Revenue dismissed.

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• 2024 (8) TMI 260
  Valuation - inclusion of third party inspection charges in the transaction value - Demand on the basis of statement of Director without any corroborative /cogent material brought on records - Penalty on Director. Valuation - inclusion of third party inspection charges in the transaction value - HELD THAT:- It is settled principle that basic feature of Section 4 has never changed even after the two amendments. Thus, the definition of transaction value after amendment, means the price actually paid or payable for the goods, when sold, and include in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling, organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. The Hon ble Supreme Court in the case of Purolator India Ltd. [ 2015 (8) TMI 1014 - SUPREME COURT] has held that Section 4(2) pre-2000 made it clear that where the price of excisable goods for delivery at the place of removal is not known, and the value thereof is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery is to be excluded from such price. Hon ble Supreme Court in the case of CCE, Pondicherry vs. Acer India Ltd. [ 2004 (9) TMI 106 - SUPREME COURT] wherein it has been held that only because the expression, by reason of sale, or in connection with the sale has been used in the definition of transaction value , the same by itself would not take away the rigors of charging section. Thus, the demand of duty in respect of third party inspection charges cannot be sustained and is accordingly set aside. Demand on the basis of statement of Director without any corroborative /cogent material brought on records - HELD THAT:- The issue has been examined by the Hon ble Allahabad High Court in the case of M/S. CONTINENTAL CEMENT COMPANY VERSUS UNION OF INDIA OTHERS [ 2014 (9) TMI 243 - ALLAHABAD HIGH COURT] where it was held that to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department. - The demand on this count is also not sustainable and is set aside. Penalty on Director - HELD THAT:- There is no justification in maintaining the penalty imposed upon the Director and accordingly the same is set aside. The appeals filed by the Appellants are allowed.

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• 2024 (8) TMI 259
  Classification of goods - gear for Rotary Tiller and Parts of Rotary Tiller - to be classified under central excise sub heading 82349090 or under heading no. 848340000? - demand barred by time limitation or not - entitlement to cenvat credit of duty paid on the material used in the manufacture of aforesaid final product. HELD THAT:- It is observed that Learned Commissioner (Appeals) has cited the fact that other manufacturers of the identical goods were also classifying the gears under CETH 84329090 as per para 23.11 of Order-In-Original. Therefore, this is one of the reason that the appellant had a bona fide belief about the classification which is of no fault in the said finding. It is further found that various courts have taken a consistent view that when there is dispute of classification, the malafide intention cannot be attributed to the assesse and it cannot be said that the assesse has intention to evade payment of duty. In the present case, the respondent has recorded all the transactions in question in their books of account, therefore, it cannot be assumed that the respondent can suppress the fact. Moreover, the respondent was entitled for the cenvat credit of inputs used for the manufacture of their final product which amounts to substantial reduction of the duty liability on the final product. It is also observed that undisputedly manufactured goods i.e. gears are used in the agricultural equipment, therefore, the bonafide belief of the respondent that it is correctly classifiable as parts of rotary tiller cannot be doubted - there is no suppression of fact or malafide intention on the part of the respondent for mis- classification of the goods i.e. gears and accordingly, the demand was rightly set aside on the ground of time bar. The classification of goods particularly in the facts of the present case is highly debatable in as much as the manufactured goods meant for agricultural equipment in a common sense can be classified as parts of agricultural equipment under CETH 84329090 but as per the strict interpretation of interpretative rule for classification the goods may be classifiable under 84834000 - since admittedly the issue of classification in the present case involved serious interpretation, this is also a reason that there is no mala fide intention on the part of the respondent to evade excise duty as there was no suppression of fact. In various judgments it is settled that in case of interpretation of classification of goods, the extended period of limitation shall not apply and demand will not sustain on the ground of time bar - reliance placed in the case of M/S SHAH FOILS LTD., SHRI KARTIK RAMESH SHAH, SUNCITY SHEETS PVT LTD, MUKESH AGARWAL VERSUS C.C. MUNDRA [ 2024 (5) TMI 336 - CESTAT AHMEDABAD] where it was held that In these facts, since no suppression of fact is there and the show cause notice was issued beyond two years from the import, the entire demand is time barred. In this regard, the judgments cited by the appellant support their case on limitation also. The order of the Learned Commissioner (Appeals) setting aside the demand on time bar does not suffer from infirmity. Hence, the finding of the Commissioner (Appeals) agreed on the aspect of time bar. Since we decided the matter on time bar, no conclusive finding given on the merit of the case. The setting aside of the demand ordered by the Commissioner (Appeals) upheld - the Revenue s appeal is dismissed.

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• 2024 (8) TMI 258
  100% EOU - abnormal delay of 17 years in adjudication of the impugned SCN - whether the Appellant had resorted to undervaluation of finished goods cleared by them in DTA? - whether the value of the DTA clearances made by a 100% EOU should be the transaction value at which the goods have been sold to domestic buyers or it has to be the value at which department demanded duty? - HELD THAT:- The department has not produced any evidence in support of allegation of undervaluation with any documentary evidence such as DTA invoices issued by other manufactures showing more DTA sale price than the Appellant at the relevant period in the year 2000. It is evident that the Appellant has submitted the data and details in their application for DTA sale to the Development Commissioner. Based on submitted details and scrutiny of the other records the Learned Development Commissioner had granted permission for DTA sale. It is not the case of the department that the Appellant had supplied goods in DTA in excess of the permitted value. The DTA sale was made to several independent buyers on principal to principal basis. There is not a whisper of allegation that the sale price for such DTA sale was depressed or suppressed or manipulated in any manner whatsoever. In the instant case the department could not show any evidence that the transaction value declared by the appellant was not price actually paid by the buyer. There is also no documentary evidence produced by the revenue that the value adopted for DTA sale is a manipulated one. The sale has been made to the independent buyers and the price is the sole consideration of sale. In case of EICHER TRACTORS LTD. VERSUS COMMISSIONER OF CUSTOMS, MUMBAI [ 2000 (11) TMI 139 - SUPREME COURT ] the Hon ble Apex Court held that unless the special circumstances exists, the Transactional value cannot be rejected. In these circumstances, the transaction value declared by the appellant cannot be dis-regarded. In terms of the provisions of proviso to Section 3(1) of Central Excise Act, 1944, while the duty payable in respect of the goods cleared by a 100% EOU into DTA is the aggregate value of duties of customs on import of like goods into India, the assessable value for this purpose is to be determined under Section 14 of the Customs Act, 1962. Therefore, the assessable value of the goods cleared into DTA must be comparable with the contemporaneous import price of identical goods or similar goods into India in comparable quantity. However in the present matter there are no details in this regard produced by the department - the impugned order rejecting the DTA sale price of the appellant unit is not correct. It is settled law that when there is no duty demand, there could be no penalty. Therefore, the penalties imposed are liable to be set aside. The impugned order is set aside - appeal allowed.

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• 2024 (8) TMI 257
  Quantum of duty computation/the cum-duty price - Section 4 of the Central Excises Act, 1944 - HELD THAT:- Section 4 of the Central Excises Act, 1944 provides for valuation of excisable goods for purposes of charging of duty of excise. Under Section 4(1), the duty of excise is chargeable on any excisable goods with reference to the value which is deemed to be the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade where the buyer is not a related person and the price is the sole consideration for the sale. Section 4(4)(d)(ii) states that value in relation to any excisable goods does not include the amount of duty of excise, sales tax and other taxes, if any, payable on such goods and, subject to such rules as may be made, the trade discount, etc., is also to be allowed as a deduction. Following the revenue s proposal of valuation under section 4, after extending the benefit of cum duty price in this matter the duty liability would come down to Rs. 5,42,846/- - in terms of section 4 of the Central Excise Act, 1944, the correct differential duty demand comes to Rs.5,42,845.96 which stands confirmed. The remaining demand of duty, corresponding penalty and interest, if any, are set aside - appeal is partly allowed.

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• CST, VAT & Sales Tax

• 2024 (8) TMI 256
  Levy of penalty under Section 54(1)(14) of the U.P. Value Added Tax Act, 2008 - contravention of the provisions of Section 50 of the Act, 2008 - Form 38 remains unfilled - existence of mens rea/guilty mind - HELD THAT:- Perusal sub Section 6 of Section 28A itself indicates that penalty can be imposed only after giving opportunity of being heard that the goods were being so transported in an attempt to evade payment of tax due or likely to be due under the Act and therefore mens rea becomes essential ingredient, and therefore the facts in the case of M/s Guljag Industries [ 2007 (8) TMI 344 - SUPREME COURT] are distinguishable in respect to the provisions of the Act, 2008 applicable in the State of Uttar Pradesh. Non-filling up of column no. 6 i.e. not mentioning of bill / cash memo / chalan / invoice number may lead to an inference that in case of non-checking of goods the declaration form may be re-used for importing goods of same quantity, weight and value to evade payment of tax but it cannot be the sole ground to impose penalty under Section 54(1)(14) of the Act, 2008. Satisfaction has to be recorded after giving opportunity to the dealer / person and after considering all the relevant materials / evidences on record that there was an intention to evade payment of tax. The guilty mind is necessary to be established to impose penalty under Section 54(1)(14) of the Act, 2008. In the present case also the vehicle was accompanied by Form 38 and all other documents were being carried along with other documents and only due to human error column would remain unfilled. It was the duty of the Officer managing the Check Post who after discovering that some column of Form 38 found unfilled should have filled the same himself in the light of Circular dated 03.02.2009 and should have allowed the vehicle to proceed alongwith the goods. It is undisputed that the goods transported were the same which were mentioned in the various documents (bill/builty/challan etc.) carried by the driver of the vehicle. This Court finds no merit in the contention raised by learned Standing Counsel appearing on behalf of the revenue. The revision is accordingly allowed.

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• 2024 (8) TMI 255
  Condonation of delay of 933 days in re-presenting the appeal - delay was not properly explained by the Commercial Taxes Department - HELD THAT:- As per Section 58(1)(a) of the TNVAT Act, 2006, any officer prescribed by the Government or any person objecting to an order passed by the Appellate Deputy Commissioner under Sub-Section (3) of Section 51 of the Act, or by the Appellate Joint Commissioner under Sub-Section (3) of Section 52 of the Act, or by the Joint Commissioner under Sub- Section (1) of Section 53 of the Act, may appeal against such order to the Appellate Tribunal, within a period of 120 days, in the case of an officer so prescribed by Government. It is to be noted that out of 933 days, the delay of almost 365 days can be attributed to the lockdown imposed by the Government due to the outbreak of Covid-19 Pandemic in 2020 with effect from 24.03.2020, leaving 568 days (933 365). A reading of Regulation 7(3) of the Tamil Nadu Value Added Tax Appellate Tribunal Regulations, 2011 indicates that there is no restriction in time. The second respondent Secretary is required merely to consider whether there is sufficient cause for the delay to cure the defects before re-presenting the appeal within time - The copy of the affidavit filed by the Commercial Tax Department in support of the Miscellaneous Application for condonation of delay of 933 days in re-presenting the appeal, has also not been filed by the petitioner before this Court. There are no error in the impugned order. The respondent was not under any impediment while condoning the delay of 568 days excluding the 365 days during the Covid-19 Pandemic as the Commercial Tax Department is overburdened with litigations and it is not easy to adhere the time lines - petition dismissed.

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