TMI Tax Updates - e-Newsletter
April 24, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Seeking renewal of registration of Goods Service Tax (GST) - cancelled due to non-filing of returns - The appellant faced the risk of irreparable loss and exclusion from tender enlistment if registration renewal was not decided by March 31, 2024. The appellant's registration had been cancelled due to non-filing of returns, prompting the dispute. The appellant sought restoration of registration upon payment of outstanding dues. The court considered the urgency and the interests of both the revenue and the appellant. Ultimately, the court directed the GST Authority to restore the appellant's registration for 30 days, allowing them to settle outstanding dues by filing returns.
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GST:
Validity Of order passed without signed by the authority - Principles of natural justice - Avoidable mistake - Scope of Section 160 of GST - Despite the respondent's argument that the order was uploaded by the competent authority, the Court relied on previous decisions to establish that an unsigned order cannot be considered valid. It emphasized the importance of signatures and concluded that the order in question lacked legal standing. Consequently, the Court allowed the petition and directed the respondent authorities to issue fresh orders in compliance with the law.
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GST:
Demand of GST - The High court noted that the return of documents raised a disputed question of fact, which could not be decided in the writ jurisdiction without further evidence. For the period from July 2017 to March 2018, the court granted the petitioner protection similar to that in a previous case. However, for the period from April 2018 to January 2023, the court dismissed the writ petition, citing the existence of a statutory alternative remedy of appeal. The court did not find grounds to entertain the writ petition for this period.
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GST:
Validity Of Order for Cancellation of Registration passed in Form GST REG-19 - non-application of mind - No opportunity of hearing - The High Court partially allowed the writ petition, quashing the impugned order of cancellation. It directed the petitioner to submit a reply to the show cause notice within three weeks, along with the copy of the court's order, for reconsideration by the competent authority.
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Income Tax:
Reopening of assessment u/s 147 - second re-assessment notice u/s 148A - The High Court noted that the petitioner did not challenge the earlier re-assessment order dated 28.03.2022, which had become final. Therefore, there was no basis for initiating a subsequent re-assessment proceeding. The Court held that in the absence of any declaration annulling or setting aside the previous re-assessment order, the Assessing Authority lacked jurisdiction to issue the second re-assessment notice. Thus, the proceedings initiated through the notice dated 30.07.2022 were declared as without jurisdiction and nullity.
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Income Tax:
Reopening of assessment u/s 147 - non independent application of mind by AO - Scope of borrowed satisfaction - The Appellate Tribunal found that the reopening was solely based on assumptions without concrete evidence linking the assessee to the alleged transactions. It was observed that the Assessing Officer did not adequately apply his mind before issuing the notice, and the conclusions were merely a reproduction of the investigation report. Citing precedents, the Tribunal emphasized the necessity of an independent application of mind by the Assessing Officer and concluded that the notice was invalid.
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Income Tax:
TDS u/s 194H - Higher rate of TDS @20% in absence of PAN - Commission paid to Primary Agriculture Cooperative Society (PACS) - The Tribunal examined the nature of transactions between the appellant and PACS. It found that the State Government, through its nodal agencies, controlled and directed the activities of PACS in procuring food grains, indicating an agency relationship. Consequently, the commission paid by the appellant to PACS was deemed liable for TDS under Section 194H. It also observed errors in the calculation of TDS, considering that PACS likely had PAN details and that the commission rate was not accurately applied.
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Income Tax:
Validity of assessment order u/s. 147 r.w.s 144 - Assessee being Non-Resident Indian - The AO assessed the property below its market value, leading to an addition of income from other sources. The appellant contested this assessment, alleging procedural lapses including the failure to consider evidence and the non-referral of the matter to the Valuation Officer. Additionally, objections raised before the DRP were not adequately addressed. The Tribunal remitted the matter back to the AO for de novo consideration, granting the appellant another opportunity to present their case.
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Income Tax:
Denial of deduction u/s. 10(23C) - Despite the filing of Form 10B during the appellate proceedings, the Tribunal ruled that the primary requirement for claiming deduction under Section 11 was not fulfilled in the return. The appellate authority's decision to not entertain the additional claim for exemption under Section 11 was upheld, emphasizing that the remedy for such cases lies in Section 119 of the Act. The Tribunal dismissed allegations of breach of natural justice and upheld the imposition of interest charges under Section 234B/C.
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Income Tax:
Rectification u/s 154 - Characterization of receipts - Exemption of interest on enhanced compensation from tax denied u/s. 10(37) - However, the Appellate Tribunal dismissed the appeal, affirming the Assessing Officer's decision to tax 50% of the interest. The Tribunal held that the interest did not fall under section 28 of the LAA and was taxable as income. The plea for rectification under section 154 was rejected as there was no mistake in the assessment order.
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Income Tax:
Reopening of assessment u/s 147 - absence of valid approval to be obtained u/s 151 - The Appellate Tribunal noted that the approval obtained from the Additional Commissioner of Income Tax was not in accordance with the provisions of Section 151, which required approval from a higher authority after the lapse of four years from the relevant assessment year. Therefore, the Tribunal quashed the reassessment order on the grounds of the lack of valid approval, thereby allowing the appeal of the assessee.
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Income Tax:
Revision u/s 263 - debatable issue - taxability of interest received by the Assessee on the enhanced compensation u/s 28 of the Land Acquisition Act - The Appellate Tribunal examined the issues raised and found that the initiation of proceedings under section 263 lacked merit, as the order passed under section 154 of the Act rectifying the mistake apparent from the record was valid. Moreover, the Tribunal recognized the debatable nature of the taxability issue and emphasized that when two plausible views exist, the jurisdictional PCIT cannot assume jurisdiction under section 263 of the Act.
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Income Tax:
Deduction u/s 80P2(a)(i) - Interest on fixed deposits - The Appellate Tribunal noted that the deductions available under Section 80P(2)(a) are activity-based, and the interest income earned by the assessee, derived from its activities, qualifies for the deduction. The Tribunal distinguished the facts of the present case from precedent cases cited by the revenue authorities, emphasizing that the interest income in question was attributable to the activities listed under Section 80P(2)(a)(i). The Tribunal concluded that the interest income earned by the assessee should be allowed as a deduction under Section 80P(2)(a)(i) of the Income Tax Act. - Tribunal allowed the appeal of the assessee.
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Customs:
Revocation of Customs Broker license - The Tribunal found no evidence of a direct violation by the appellants in terms of authorization processes as the appellants did receive documents from a third party, which was not prohibited. The Tribunal observed that the appellants could not have been expected to advise compliance about illegal activities they were not aware of, thus dismissing this charge. Based on these findings, the Tribunal concluded that there was no sufficient basis for the revocation of the license or the forfeiture of the security deposit for alleged violations of Regulations 10(a), 10(d), and 10(m). However, they deemed a minor penalty appropriate for the partial non-compliance with Regulation 10(n).
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Customs:
Valuation of exported CD ROMS - Import of goods by availing excess export promotion benefits i.e. DEBP/DEEC Credits - The Tribunal notes that the DEPB licenses issued to the Respondents were not canceled by the DGFT, indicating their validity. After thorough examination, the Tribunal concludes that the disputed matter is settled in favor of the Respondents based on previous judgments and the lack of valid grounds for the Revenue's claims. It upholds the impugned orders and dismisses the appeals filed by the Revenue.
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Customs:
Seeking grant of bail - custody for more than 41 days - Smuggling - Gold - Indian and Foreign currency - The applicant claimed innocence, stating that he was falsely implicated and had no knowledge of the smuggling activities. However, the respondent presented evidence linking the applicant to the syndicate, including statements from co-accused individuals and significant recoveries of cash and gold from premises associated with the applicant and his wife. Despite being in custody for over 41 days, the applicant failed to persuade the court to grant bail without conditions. The court, acknowledging the seriousness of the offense and the potential risk of the applicant engaging in further smuggling activities, granted bail but imposed strict conditions.
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Corporate Law:
Approval of scheme of amalgamation - Application of the "Alter Ego" Principle - Violation of Section 233 of the Companies Act, 2013 - requirement of holding at least ninety percent of the total numbers of shares - The complainant (opposite party) argued that the petitioner made a false declaration regarding the approval of the amalgamation scheme, misleading the authorities by stating that the scheme was approved by the requisite majority of members, which did not constitute 90% of total members but rather those present and voting. - The High Court hold that by targeting the petitioner (the Company Secretary) alone, without implicating the corporation or other responsible individuals, the prosecution is deemed to be fundamentally flawed and an abuse of the legal process. The petitioner, acting in his official capacity, should not bear sole responsibility for corporate actions unless specific wrongdoing on his part can be demonstrated.
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Indian Laws:
Arbitral Proceedings - Computation of one-year period for completing the proceedings - exclusion of days during which the proceedings were stayed - The High Court acknowledged the stay of proceedings ordered by the Court and held that the period during which the proceedings were stayed should be excluded from the calculation of the one-year period for making the award. They emphasized the principle that periods of stay ordered by courts should be excluded when calculating timelines. The Court reiterated the importance of adhering to the provisions of the Arbitration and Conciliation Act, 1996, to ensure the expeditious resolution of disputes.
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IBC:
Rejection of application filed by the Appellant (Suspended Director) before the Adjudicating Authority - Challenging the authority of another director's actions and Approval of Resolution Plan CIRP - The tribunal finds that the original order dismissing the appellant's application overlooked critical facts and allegations of unauthorized and potentially fraudulent actions by the involved directors. The Tribunal sets aside the lower tribunal's order for failing to consider these issues adequately and not providing the appellant a fair opportunity to contest the unauthorized actions and their implications on the insolvency process.
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IBC:
Fixation of IRP fees - lack of earnestness and proficiency on the part of the IRP - The Appellate Tribunal finds that the IRP's fees were initially quoted at a higher amount but were subsequently reduced by 50% to align with regulatory provisions. - While acknowledging delays in the CIRP process, the Tribunal attributes some of the responsibility to the Appellant for not showing optimal interest and decisiveness in furthering the process. It cites instances where the Appellant deferred decisions, contributing to the delay. - Ultimately, the Tribunal upheld the Adjudicating Authority's decision and directed the Appellant to pay the IRP's fees and CIRP expenses.
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IBC:
Admission of Section 9 application filed by Operational Creditor - time limitation - Section 10A of IBC - The Tribunal found that apart from the lease rental of April 2021, the entire claim fell within the Section 10A period, rendering the application invalid. It also noted the contradiction in admitting the application after rejecting the Amendment Application, which acknowledged the Section 10A bar. Additionally, it clarified that the default must precede the issuance of the demand notice for the application to be valid under Section 9(1). As the default was claimed to have occurred before the notice, the application was deemed barred by Section 10A.
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IBC:
Approval of Resolution plan - Propriety of the valuation exercise conducted by the RP - The tribunal dismissed concerns regarding the SRA's competence, noting that the resolution plan included a clear and feasible strategy for running the corporate debtor effectively under new management. The tribunal found that the plan aimed to preserve the corporate debtor as a going concern. - The tribunal addressed the valuation concerns by referring to the dual valuation reports provided during the CIRP process and found no significant discrepancy warranting the engagement of a third valuer. - The tribunal clarified that the resolution plan does not extinguish the liabilities of personal guarantors. - The tribunal's decision reinforces the principle that the commercial wisdom of the Committee of Creditors (CoC) is paramount.
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PMLA:
Maintainability of the instant petition against Enforcement Case Information Report (ECIR) - Money Laundering - scheduled offences - predicate offence - scope and spirit of Section 482 of the Cr.P.C. - The High Court clarified that an ECIR is an internal administrative document of the ED and does not hold the same legal status as an FIR. Referring to Supreme Court observations, the High Court concluded that an ECIR cannot be equated with an FIR and does not fall under the purview of the inherent jurisdiction conferred upon the Court by Section 482 of the Cr.P.C. The petition for quashing the ECIR under Section 482 of the Cr.P.C. was dismissed on the grounds of maintainability.
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Service Tax:
Short/non-payment of service tax - Jurisdiction to raise the Demand - The Tribunal notes that during the period in question, the Appellant was registered in Mumbai and paid Service Tax accordingly. As the transactions were conducted under the Mumbai jurisdiction, the Kolkata Revenue officials lacked jurisdiction to demand Service Tax. Therefore, the Tribunal sets aside the demand for the period under the extended period of limitation.
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Service Tax:
Refund of Cenvat Credit - 100% EOU / STPI unit - Export of services as well as providing services to Domestic Tariff Area (DTA) units - The tribunal upheld the orders denying the refund claims and the imposition of penalties, stating that the appellant’s operations did not comply with the legal requirements for separate entity maintenance and tax liabilities on inter-unit services.
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Central Excise:
Refund claim - rejection on the grounds of unjust enrichment - The tribunal noted that invoices presented by the appellant showed the duty being passed onto the consumers. The tribunal stressed that uniform prices before and after the duty imposition did not conclusively prove that the duty was absorbed by the appellant. The tribunal dismissed the appeal, confirming that the amount was rightly credited to the Consumer Welfare Fund, adhering to the principles of unjust enrichment.
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VAT:
Interest on delayed refund - relevant time for calculation of interest - Considering Section 30 of the Act, which stipulates interest on delayed refunds, the court examined both parties' submissions. The court held that the petitioner had made the refund claim within the stipulated time frame, and there was no evidence of delay attributable to them. Therefore, the petitioner was entitled to interest on the delayed refund.
Articles
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2024 (4) TMI 895
Seeking renewal of registration of Goods Service Tax (GST) - cancelled due to non-filing of returns - portal open for a limited time period - HELD THAT:- This Court is of the considered view that the interest of the revenue as well as that of the appellant can be protected if the West Bengal GST Authority is directed to restore the appellant s GST registration and open the portal for a limited time period to enable the appellant to file the return and pay off the amount on account of interest, penalty and late fees including any amount due as tax within the said time frame. Therefore, we direct the West Bengal GST Authority to restore the appellant s GST registration and open the portal for a period of 30 days from date to enable the appellant to file the return and to pay any amount due as tax together with interest, penalty and late fees within the said period. In case the appellant fails to file the return and pay the interest, penalty and late fees including any amount due as tax within the time period stipulated here-in-before, this order shall not have any force and the respondent GST Authority will be entitled to block the portal and the order cancelling the registration shall automatically stand revived. Thus, the appeal being MAT and the writ-petition being WPA are disposed of.
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2024 (4) TMI 894
Validity Of order passed without signed by the authority - Principles of natural justice - Avoidable mistake - Scope of Section 160 of GST - HELD THAT:- In M/s. SRK Enterprises case (cited supra), this Court referred to the previous order of the Co-ordinate Bench in the case of A.V. Bhanoji Row vs. Assistant Commissioner (ST) [ 2023 (2) TMI 1224 - ANDHRA PRADESH HIGH COURT] and held that the signatures cannot be dispensed with and the provisions of Section 160 169 of the CGST Act, 2017 would not come to the rescue. Thus, we allow this petition and set aside the proceedings/order issued by respondent No. 1 dated 05.06.2023. The respondent authorities to pass fresh orders in accordance with law, expeditiously. The Writ Petition stands allowed in part in the aforesaid terms.
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2024 (4) TMI 893
Appealable Order - Validity of final assessment order - Return of the documents - violation of the principles of natural justice - HELD THAT:- The submission as advanced by the petitioner s counsel with respect to the return of the documents raises a disputed question of fact. There is specific mention in the order that the documents were returned. The question whether they were returned or not returned or said P. Nagesh, was the person authorized by the petitioner to receive those documents or not, deserve not to be entered into and decided, in the exercise of the writ jurisdiction, being the disputed questions of fact, might be requiring proof of so many other factual aspects. Consequently, we do not find any ground of violation of the principles of natural justice, on the argument advanced, so as to entertain the writ petition and to by-pass the statutory remedy of appeal. The writ petition is dismissed on the ground of statutory alternative remedy for the period with effect from April, 2018 to January, 2023. It is clarified that the writ petition survives for the period from the July, 2017 to March 2018.
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2024 (4) TMI 892
Validity Of Order for Cancellation of Registration passed in Form GST REG-19 - non-application of mind - No opportunity of hearing - managing partner of petitioner s firm i.e., the deponent, was not able to concentrate on the business operations as he was attacked with paralytic stroke - Violation of Principles of natural justice - HELD THAT:- Admittedly, the petitioner did not file reply to the show cause notice we find force in the submission of the learned counsel for the petitioner that the order suffers from non-application of mind and has been passed mechanically. On the said point there is no contrary instructions to the learned Government Pleader. Any counter affidavit denying the averments in para-4, of the writ affidavit, has not been filed inspite of opportunity granted. The petitioner has also annexed documents (P3) in support of para 4 of the writ affidavit. We have no reason to disbelieve the same. Consequently, we are of the view that the cause shown for not being able to file the reply to show cause notice is sufficient. The petitioner deserves opportunity of hearing to be granted in consonance with the principles of natural justice. Thus, we allow the writ petition and quash the impugned order dated 16.06.2023. Writ Petition stands allowed partly.
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Income Tax
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2024 (4) TMI 891
Validity of Reopening of assessment u/s 147 - reason to believe - documentary evidence of purchase, delivery and payment to show the genuineness of the transactions entered into - Learned advocate Mr. Karan Sanghani prays for time to call for the original papers containing the documents which are supplied by the petitioner in reply to the notice under Section 148A(b) of the Income Tax Act, 1961. Stand over to 05th March, 2024. To be listed on top of the Board.
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2024 (4) TMI 890
Accrual of income in India - Royalty receipts - income earned from licensing/sale of software and subscription received against cloud services offered by assessee - scope of Indo-USA DTAA - delay of 301 days in filing SLP - HELD THAT:- As following the earlier order passed in SLP (C) [ 2024 (3) TMI 670 - SC ORDER] we condone the delay and dismiss the special leave petitions on the basis of the earlier judgment of this Court in the case of Engineering Analysis Centre of Excellence Private Limited vs. Commissioner of Income Tax and Anr. [ 2021 (3) TMI 138 - SUPREME COURT] Pending application(s), if any, shall also stand disposed of.
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2024 (4) TMI 889
Reopening of assessment u/s 147 - second re-assessment notice u/s 148A - scope of new regime of reopening of assessment after introduction of provisions of section 148/148A - petitioner participated in the initial re-assessment proceedings, thus consequently, re-assessment orde was passed by the Assessing Authority - Without any challenge rais ed by the petitioner to the reassessment order and that order not set aside by any authority or Court, the petitioner has been visited with second re-assessment notice for A.Y. 2017-18 and Assessing Authority has invoked Section 148-A of the Act - HELD THAT:- As it could not be disputed that neither the petitioner challenged that reassessment order nor that order was revised by the Commissioner nor there was any declaration made by the Supreme Court in rem to annul or in all assessment orders other than those that may have been specifically under challenge in the proceedings before the Supreme Court in Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] Since in the present case, re-assessment order had already been passed on 28.03.2022, there was no proceeding pending as may have been influenced or affected or governed by the subsequent order of Supreme Court dated 04.05.2022 in in Ashish Agarwal case. It is fundamental, there may exist one assessment order for an assessee for one assessment year. In absence of any declaration of law to annul or set aside the pre-existing re-assessment order dated 28.03.2022, we find no jurisdiction existing with the Assessing Authority to again re-issue the impugned notice. The proceedings are wholly without jurisdiction and a nullity. Accordingly, the re-assessment proceedings initiated in the case of the petitioner for A.Y. 2017-18 under Section 147 read with Section 148 of the Act, vide re-assessment notice dated 30.07.2022 is quashed - WP allowed.
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2024 (4) TMI 888
Addition of unsecured loans / bogus advances against sales - unexplained cash credit u/s 68 - CIT(A) deleted addition - HELD THAT:- We find that the CIT(A) had categorically observed that the assessee had produced the books of accounts along with day to day purchase, transactions of sales in the succeeding year where sales to these two parties were part of the total sales and declared in the VAT returns which has been accepted. Further the income tax returns of Asst Year 2016-17 also reflected the total sales made by the assessee which admittedly included the sales made to these two parties. The stock registers maintained by the assessee clearly indicated the outflow of stocks from the side of the assessee. All sales were made through regular banking channels and not through cash. The TIN of these two parties do existed and disclosed in the VAT returns filed by the assessee. F-Forms in the case of the assessee qua the sales made to these two parties were accepted by the VAT authorities. Hence it is established beyond reasonable doubt that the amounts received from these two parties are not merely loan simplicitor but only advance received for sale of goods. It is a fact that the sale of goods had indeed happened to these two parties from the assessee which was duly accepted by the revenue in Asst Year 2016-17 and also by the VAT authorities. Hence there is no question of treating the amounts received as advance for sale of goods as unexplained cash credit u/s 68 of the Act during the year under consideration. Accordingly, we do not find any infirmity in the order passed by the ld. CIT(A) granting relief to the assessee. Decided against revenue. Bogus purchases - AO disbelieved the entire contentions of the assessee and proceeded to treat the purchases made from this supplier as ingenuine and disallowed a sum - CIT(A) deleted addition - HELD THAT:- We find that the ld. CIT(A) had given a categorical observation that on perusal of the documents filed by the assessee before the ld. AO, the details of purchase of rice from M/s Prashant Agro Foods and corresponding sales of such purchases were duly verifiable from the day to day stock register which was duly attested by the Market Committee, Karnal. Purchase of goods from M/s Prashant Agro Foods had been shown as goods received in the stock register. Similarly when those goods are sold, corresponding outflow of stock entry was duly recorded in the stock register. We find that the ld. CIT(A) had referred to the yield of rice that could be derived by the assessee and had compared the same with comparable instances. CIT(A) had even compared the yield of rice derived during the year at 68.36% which was 67% in the immediately preceding assessment year. CIT(A) also observed that the books of accounts and the book results were not rejected by the ld. AO and purchases from M/s Prashant Agro Foods alone had been doubted by the ld. AO. Even for this disputed purchases, the corresponding sales had been accepted by the ld. AO. Accordingly, he deleted the disallowance of purchases correctly - Decided against revenue.
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2024 (4) TMI 887
Deduction u/s 80P(2)(d) - interest received from the investments with the cooperative bank - HELD THAT:- As considered the order of the Ld. CIT(A) for the A.Y. 2017-18. We find that identical grievance was raised before the Ld. CIT(A) on identical set of facts and after considering the facts and the submissions and drawing support from various judicial decisions, the Ld. CIT(A) allowed the claim. It is true that revenue has not filed any appeal against the order of the Ld. CIT(A) which means the issue has attained finality in the previous assessment year. On finding parity of facts, we do not find any reason why the similar claim of deduction under section 80P(2)(d) of the Act should not be allowed during the year also. Therefore, we direct the Assessing Officer to allow the impugned claim of deduction. Appeal filed by the assessee is allowed.
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2024 (4) TMI 886
Reopening of assessment u/s 147 - non independent application of mind by AO - Scope of borrowed satisfaction - information received from Asst. DIT-(Investigation), Unit 2(1), Kolkata, AO was informed that large value of cash was deposited into several bank accounts maintained with ICICI Bank which were immediately transferred to other bank accounts - HELD THAT:- Entire reopening is based on the assumption that assessee has been benefited by the impugned / alleged colorable transactions but without any backing of any demonstrative evidences to show that the assessee has purchased cheque from Wheelers Developers Pvt Ltd., by paying cash to it. We find that the entire process of reopening is based upon only and only the investigation report from ADIT (Investigation), Kolkata. We are of the considered view that the AO has not applied his mind before issuing notice u/s 148. Assuming, yet not accepting, that the assessee is a beneficiary, then we are unable to understand how a loan amount can be a matter of escapement of income u/s 148 for the simple reason that loan amount is a capital receipt and the only liability cast upon the assessee is to discharge the onus cast upon it by the provisions of section 68 - We find that the conclusions of the AO are at best the reproduction of the conclusions in the investigations report and indeed it is a borrowed satisfaction . The impugned notice issued u/s 148 of the Act is bad in law and accordingly, we set-aside assessment order framed pursuant to the said notice is quashed. The appeal of the assessee is allowed.
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2024 (4) TMI 885
Assessment u/s 153A - Deemed dividend addition u/s 2(22)(e) - incriminating material found in the course of search or not? - HELD THAT:- The issue is no longer res integra. The judgment rendered by the Hon ble Apex Court in the case of Pr.CIT vs. Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] would squarely apply to the facts of the case and thus the scope of assessment under Section 153A is restricted to the incriminating material found in the course of search of the assessee owing to the fact that such assessment stood concluded / completed and thus do not get abated by operation of law. Guided by the principles laid down in the case of Abhisar Buildwell (supra), we find force in the legal plea raised on behalf of the assessee. Hence, in the absence of any incriminating material found in an unabated assessment, the additions made by the AO in the captioned appeal require to be quashed. Appeal of the assessee is allowed..
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2024 (4) TMI 884
TDS u/s 194H - Commission paid to Primary Agriculture Cooperative Society (PACS) - Non deduction of TDS - Higher rate of TDS @20% in absence of PAN - HELD THAT:- Since assessee corporation is paying commission to PACS which are working as agents, we are inclined to hold that commission paid by assessee to PACS is liable for deduction of tax at source u/s 194H of the Act. We, however, notice that assessee did not get proper opportunity of hearing before the assessing officer and even before ld. CIT(A). We also note that the assessing officer has calculated the TDS at the maximum rate of 20% on account of non-availability of PAN even though all PACS are having bank accounts. We also note that commission has been calculated by applying the rate of Rs. 31.25/- on the transaction for F.Y. 2011-12 but the said rate of Rs. 31.25/- was finalised on 26.07.2013 which indicates that correct amount of commission has not been calculated by the ld. AO. It is also observed that deductee, PACS are having banking facility and certainly must be having PAN and had the details of the same been made available to the assessing officer, TDS may not have been calculated at the maximum rate of 20%. Therefore, considering all in order to compute the correct amount of commission paid and in order to ascertain the correct amount of tax to be deducted at source u/s 194H of the Act, the matter is restored to the file of the AO for carrying out necessary verification and calculation. Assessee is also directed to provide full co-operation to the assessing officer by placing all relevant material in order to get the needful information about correct amount of commission and correct amount of TDS u/s 194H of the Act. Accordingly, effective grounds of appeal raised are allowed for statistical purposes.
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2024 (4) TMI 883
Validity of assessment order u/s. 147 r.w.s 144 - AO proceeded to complete the assessment by treating the difference amount between the SRO value and the actual sale consideration paid as income from other sources - HELD THAT:- AO ought to have considered the submissions, explanations and the evidences submitted before him while making the addition. It is also pertinent to mention here that during the assessment proceedings, if at all the AO is not convinced with the submissions made by the assessee with regard to the valuation of the property, AO is supposed to refer the matter to the Valuation Cell to obtained the market value of the property purchased by the assessee which was not done by the Ld. AO in the present case. Appeal filed by the assessee is allowed for statistical purposes DRP ought to have considered the submissions and the evidences produced before the Ld.AO, which were stated to be not properly appreciated by the Ld. AO, while rejecting objections raised by the assessee. Considering the prayer and the submissions of the AR and the nature of issues involved in the appeal, in the interest of justice, we hereby remit the matter back to the file of Ld. AO for de-novo consideration thereby providing one more opportunity to the assessee of being heard in accordance with the principles of natural justice. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (4) TMI 882
Estimation of income - bogus purchases - CIT(A) confirmed disallowance/ addition to the extent of 12.5% - HELD THAT:- As apparent that assessee has purchased material from party A and procured bogus bills of the same material from party B. In this circumstance all the judicial precedents cited before us shows that only profit element embedded therein should be added. Therefore, AR has submitted that the profit element in case of assessee in Steel and Pipe business is merely 2 to 3 %. Therefore, over and above the normal profit earned by the assessee, there are certain other expenses and credit of the taxes and duties which is required to be added to the total income of the assessee. We deem it appropriate and fit to adopt the addition to the extent of 4% of bogus purchases in the hands of the assessee. Appeal of the assessee is partly allowed.
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2024 (4) TMI 881
Denial of deduction u/s. 10(23C) - Form 10B essential for claiming exemption was not furnished - intimation u/s. 143(1) - no exemption u/s. 11 of the Act was claimed rather the assessee had claimed exemption u/s. 10(23C)(iv) - as argued while filing the return, the above exemption was wrongly claimed u/s. 10(23C) of the Act instead of Section 11 in the return of income and as issue was debatable in nature and did not fall within the purview of prima-facie adjustment , as envisaged u/s. 143(1) - According to the Ld.AR, the claim of exemption u/s. 11 of the Act was maintainable and the Audit Report in Form 10B necessary for claiming this deduction was subsequently filed during the appellate proceedings before the Ld. JCIT(A) and, therefore, the denial of the genuine claim was not justified. Additional claim of deduction u/s. 11 of the Act made before the Ld.JCIT(A) was not entertained, who while rejecting the claim had directed the assessee to avail the remedy u/s. 119 HELD THAT:- There is no denial to the fact that the claim for deduction u/s. 11 of the Act was not made in the return of income. The assessee had claimed deduction u/s. 10(23C) of the Act in the return. As the Form 10B essential for claiming exemption u/s. 10(23) was not furnished, the CPC had rightly rejected the claim. Therefore, the adjustment as made by the CPC, while processing the return, cannot be faulted. The contention of the assessee that the issue was debatable has no substance. The matter was only factual in nature and the CPC had made the adjustment u/s. 10(23C) as the mandatory Form 10BB was not available. As no deduction u/s. 11 of the Act was claimed in the return, the CPC never had the opportunity to examine the admissibility or rejection of this claim. Exemption u/s. 11 of the Act claimed in the appellate proceedings before the Ld.JCIT(A) was not entertained - It is seen from the intimation u/s. 143(1) of the Act that Form 10B was filed along with the return of income. However, no exemption u/s. 11 of the Act was claimed rather the assessee had claimed exemption u/s. 10(23C)(iv) of the Act as appearing at Sl.No.1 of the intimation. It is found from the Sl.No. 5 and 6 of the intimation that there was a common column for claim of exemption u/s. 10(23C)(iv) of the Act as well as for exemption u/s. 11 of the Act. Therefore, it was not apparent as to whether the total exemption as appearing in Sl.No.6 of intimation was in respect of section 11 or u/s. 10(23C)(iv) of the Act. CPC did not allow the claim of the assessee, but in the notes there is no mention as to why the claim of the assessee as made in the return was disallowed. However, there was a note at Sl.No.5 which stated that if the assessee considered that any part of the intimation was required to be rectified, then rectification u/s. 154 of the Act may be filed. Assessee in place of filing the rectification, preferred an appeal before the Ld.JCIT(A) and claimed for deduction u/s. 11. As already mentioned earlier, the Ld.JCIT(A) did not allow the claim of the assessee and advised to avail the remedy u/s. 119 of the Act. As already mentioned earlier, it is not clear from the intimation as to why the adjustment of Rs. 12,16,737/- was made while processing the return u/s. 143(1) of the Act. The exact reason for disallowing the claim of the assessee has also not been mentioned in the intimation. The audit report in Form 10B is a common audit report for deduction u/s 10(23C) and for section 12A of the Act, which entitles for deduction u/s 11 of the Act. Therefore, the CPC may have made a query as to under which section the deduction was claimed before disallowing the claim of the assessee. Revenue is, therefore, directed to intimate the exact reason for disallowing the claim of the assessee while processing the return. Thereafter, the assessee may file an application u/s. 154 of the Act to rectify the mistake in the intimation, as deemed proper. The assesse is also free to avail the remedy u/s. 119 of the Act, if he so desires. Appeal filed by the assessee is partly allowed.
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2024 (4) TMI 880
Rectification u/s 154 - Characterization of receipts - Exemption of interest on enhanced compensation from tax denied u/s. 10(37) - HELD THAT:- Sections 56(2)(viii) and 57(iv) came on the statute w.e.f. 01.04.2010, i.e., AY 2010-11 onwards. The decision in Ghanshyam (HUF) [ 2009 (7) TMI 12 - SUPREME COURT] is for AY 1999-00. The said decision by the Hon'ble Apex Court thus has no bearing on the said provisions, invoked by the AO in bringing the impugned interest to tax. Even as observed by the Bench during hearing, it is only where a Constitutional Court declares the same as ultra vires the Act (i.e., on a view that interest u/s. 28 of LAA is capital in nature), that would entitle the assessing authority to disregard the same. The Hon'ble Apex Court per it s Constitutional Bench decision in Punjab Distilling Industries Ltd. [ 1965 (2) TMI 6 - SUPREME COURT] explained that there is no conflict between a receipt being capital in nature and, by fiction of law, an income chargeable to tax under the Act. That is, the nature of the receipt as capital, which is the purport of the decision in Ghanshyam (HUF) (supra), would not per se preclude interest from being, at the same time, subject to tax. Further, per it s larger bench decision in Sham Lal Narula (Dr.)[ 1964 (4) TMI 10 - SUPREME COURT] , not referred to in it s later decision in Ghanshyam (HUF)(supra), the Apex Court held the provisions of s. 28 and 34 of LAA as analogous, i.e., compensatory, and, thus, not part of compensation. The decision in P.V. Kurien [ 1962 (3) TMI 123 - KERALA HIGH COURT] holding interest on enhanced compensation as capital in nature, was negated by the Hon ble Court. The upshot thereof is that even de hors s. 56(2)(viii), applied by the AO, it may not be possible to say that interest u/s. 28 of LAA is not income, much less of it being regarded as so by him as mistaken , liable to be rectified u/s. 154. Assessee s appeal is dismissed.
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2024 (4) TMI 879
Reopening of assessment u/s 147 - absence of valid approval to be obtained u/s 151 - who is competent authority for approval in this case? - notice issued beyond period of four years - Principal Chief Commissioner of Income Tax/ Chief Commissioner of Income Tax Principal Commissioner of Income Tax/ Commissioner of Income Tax OR Additional Commissioner - HELD THAT:- The erstwhile provisions of Section 151 postulates permission of Pr.CCIT/CCIT/Pr.CIT/CIT before issuance of notice u/s 148 of the Act after the lapse of 4 years. Ostensibly, the re-assessment proceedings u/s 147 r.w. Section 148 in the instant case has been initiated without valid approval u/s 151 of the Act. Needless to say, Section 151 of the Act serves as a cardinal safeguard for valid initiation of re-assessment proceedings and requires to be strictly followed. The satisfaction on an escaped income by Principal Chief Commissioner / Chief Commissioner / Principal Commissioner / Commissioner of Income Tax u/s 151(1) is thus incumbent before the proceedings u/s 147 is set in motion. In the instant case as noted, the approval has been obtained from Addl. CIT not competent for granting requisite approval u/s 151 of the Act. Such remissness on the part of the AO have rendered the entire re-assessment proceedings invalid and bad in law. As held in the case of Dr. Sashi Kant Garg [ 2005 (8) TMI 81 - ALLAHABAD HIGH COURT ] the irregularity in obtaining the sanction of the competent authority is the substantive defect incurable under the provisions of the Act . Consequently, the re-assessment order stands quashed as pleaded on behalf of the assessee at the threshold. In view of such conclusion, other aspects of grievances are thus not required to be addressed. Appeal of the assessee is allowed.
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2024 (4) TMI 878
Revision u/s 263 - taxability of interest received by the Assessee on the enhanced compensation u/s 28 of the Land Acquisition Act - scope of debatable issue - AO while passing the order u/s 154 of the Act by accepting one of the views, deleted the addition - HELD THAT:- As the taxability of interest received by the Assessee on the enhanced compensation u/s 28 of the Land Acquisition Act is a debatable issue, wherein two views are plausible. The A.O. while passing the order u/s 154 of the Act by accepting one of the views, deleted the addition. It is well settled law that when two views are plausible and the issue is also a debatable one, the PCIT cannot assume jurisdiction as held by the Jurisdictional High Court in the case of CIT Vs. Hindustan Coca Cola Beverages Pvt. Ltd.[ 2011 (1) TMI 138 - DELHI HIGH COURT] in view of the above discussion, we find no error in the order made under Section 154 of the Act by rectifying the mistake apparent from the record and the Ld. PCIT committed error in quashing the said order by invoking the provision of Section 263 of the Act. Accordingly we quash the impugned order of the Ld. PCIT by allowing the Grounds of appeal of the Assessee.
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2024 (4) TMI 877
Deduction u/s 80P2(a)(i) - allowance of interest on deposits earned by the cooperative society from fixed deposits in various bank accounts - HELD THAT:- On similar set of facts, this Tribunal in the case of The Kakateeya Mutually Aided Thrift and Credit Coop Society Ltd. [ 2023 (9) TMI 211 - ITAT VISAKHAPATNAM] held in favour of the assessee, relying on the decision of Vavveru Co-operative Rural Bank Ltd [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] as held assessee has invested surplus funds out of the activities carried out as per the provisions of section 80P(2)(a) of the Act. We therefore are of the view that interest income should be allowed as deduction U/s. 80P(2)(a)(i) of the Act and thereby the Ld. CIT(A)- NFAC has rightly held by deleting the addition made by the Ld. AO and hence we find no infirmity in the order of the Ld. CIT(A) -NFAC. Appeals of the assessee are allowed.
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Customs
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2024 (4) TMI 876
Smuggling - Gold - suppression of bill for the purchase of gold despite its seizure from his bag - retraction of statement given under section 108 of Customs Act - reliability of the statements - accused admitted the commission of offence or not - validity of judgment of acquittal of the accused - it was held by High Court that The prosecution had not examined any witness or produced any document to show such previous conduct by the accused, and on the other hand, the evidence of DW1 indicates that the accused had been coming down to Kerala for business purposes, which evidence could not be dented by the prosecution during cross-examination. Therefore, the impugned judgment cannot be said to be perverse or impossible - HELD THAT:- There are no reason to interfere with the impugned order(s) - SLP dismissed.
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2024 (4) TMI 875
Revocation of Customs Broker license - forfeiture of security deposit - levy of penalty - gold smuggled in a consignment of medical equipment, Air Nebulizer - violation of Regulations 10(a), 10(d), 10(m) and 10(n) of CBLR. Violation of of Regulation 10(a) - failure to check whether third person Shri Ravindra Sonar (from whom CB accepted the documents) is an authorised representative of the importer firm M/s Albela Traders and has power to authorize the appellants CB for filing the documents or not - HELD THAT:- In the absence of any document to prove the claim of that the appellants had acted in an unauthorized manner in mis-declaration of the goods or in smuggling of the contraband, it is difficult for fastening such liability on the appellants CB for holding them responsible for violation of Regulation 10(a) ibid. Violation of Regulation 10(d) ibid - HELD THAT:- In the instant case, the smuggling of gold in imported consignment was found by the department only on the basis of specific investigation conducted by the DRI authorities, and it was a case of concealment of gold in the declared imported goods. It is also a fact that there was no misdeclaration in any of the documents or in the imported goods. Hence, the appellants CB cannot be found fault for the reason that they did not advise their client importer to comply with the provisions of the Act. The act of smuggling is a conspiracy created by the smuggling syndicate in which there was no role of appellants CB. Further, the voluntary statement given by Ms. Priya Hemant Bandarkar, Proprietor of the appellants CB firm on 04.04.2019 clearly show that such smuggling activity in the imported consignment was not known to the appellants CB. Thus, there is no possibility for the appellants CB to bring it to the notice of the Deputy Commissioner of Customs (DC) or Assistant Commissioner of Customs (AC) about the misdeclaration of imported goods involving smuggling of gold - the violation of Regulation 10(d) ibid, as concluded in the impugned order is not sustainable. Violation of Regulation 10(m) - HELD THAT:- There is no case of importer or any other person having complained about the inefficiency or delay in clearance of the imported goods by the appellants CB. In the DRI investigation report recorded in inquiry proceedings also it was brought out that the smuggling of gold has been orchestrated by a syndicate in which none of the appellants CB s employees or proprietor is involved. Therefore, the conclusion arrived at by the learned Commissioner of Customs that the appellants have failed to discharge their obligations cast on him under Regulation 10(m) ibid is factually not supported by any evidence and thus it is not legally sustainable. Violation of Regulation 10(n) - HELD THAT:- In the present case, the appellants CB had obtained the KYC documents and submitted the same to the Customs Department. Thus, there are no legal basis for upholding of the alleged violation of Regulation 10(n) ibid by the appellants in the impugned order on this basis. There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the CB license of the appellants; and for forfeiture of entire security deposit, inasmuch as there is no violation of Regulation 10(a), 10(d) and 10(m) of the CBLR, 2018, and the findings in the impugned order is contrary to the facts on record. However, in view of the failure of the appellants to have acted in a proactive manner in fulfillment of the obligation under Regulation 10(n) ibid, particularly when they had received the documents from importer through intermediary, we find that it is justifiable to impose a penalty of Rs.10,000/-, which would be reasonable. The impugned order is set aside - appeal allowed.
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2024 (4) TMI 874
Valuation of exported CD ROMS - Import of goods by availing excess export promotion benefits i.e. DEBP/DEEC Credits - intention of fraudulently obtaining excess DEBP/DEEC Credits, which were subsequently utilized for duty free import thereby causing loss of the Customs Duty - mis-declaration of value - suppression of facts - whether the duty foregone amount is liable to recovered from the respondents? - HELD THAT:- The transaction value declared is fair and the exports are genuine, the second allegation that respondents are not eligible for the DEPB entitlements, automatically loses its sanctity. Since the issue is no longer res integra, the instant revenue s appeals can not be sustained. The department s appeal does not allege that the licences had been cancelled by the Additional Directo rGeneral of Foreign Trade in the instant case. Clearly, the facts are on record that the DGFT has not cancelled the DEPB credit scrips and same were valid in the eyes of law. The DGFT has still not cancelled or modified the DEPB licences already granted. So it is clear that DGFT does not agree with the contention of the department. The allegation of the revenue that the exports have been misdeclared and DEPB scrips have been sought for and obtained fraudulently and imports have been made using invalid DEPB scrips, cannot be agreed upon. If it is the case of the department that DEPB scrips are fraudulently obtained by the respondents, It would have been appropriate that the department and customs authorities should have taken steps to get the DEPB scrips cancelled by making reference to the DGFT authorities who issued the scrips. Without taking any such action, to say that the DEPB scrips issued by competent authorities are invalid and fraudulently obtained is not proper and legal. The Hon ble Bombay High Court in the case of PRADIP POLYFILS PVT. LTD. VERSUS UNION OF INDIA [ 2004 (1) TMI 93 - BOMBAY HIGH COURT] considered the scope of jurisdiction of the customs authorities to question the validity of DEPB licences and held Once the licensing authorities have held that the export product is covered under the DEPB Scheme and have issued the DEPB licence, it is not open to the Customs authorities to hold that the said export product is not covered under the DEPB Scheme and have issued the DEPB licence, it is not open to the Customs authorities to hold that the said export product is not covered under the DEPB Scheme. As valid DEPB scrips have been used for import of the goods by the respondents, there are no reason for demand of duty or confiscation of the goods, or imposition of penalties. In the light of this, no valid grounds have been brought out to interfere with findings of the Ld. Adjudicating authority. There is no infirmity in the impugned orders and they need to be upheld - appeals filed by the revenue are dismissed.
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2024 (4) TMI 873
Seeking grant of bail - custody for more than 41 days - Smuggling - Gold - Indian and Foreign currency - HELD THAT:- There is possibility that, there may be more recovery and more involvement of the persons who are yet to be arrested. But it is required to note that as per their statement they themselves were not bringing gold from the Dubai but the part of smuggling. It is not disputed that there is huge recovery of Indian and foreign currency with gold and silver bars. But thereafter no further progress in the investigation is shown. Moreover, no further statement of the accused is recorded on the basis of further investigation. Already there was sufficient time with the respondent to investigate about his further involvement in the alleged smuggling. The prosecution is suspecting that he may again involved himself in similar type of activity. But care can be taken by imposing certain conditions to prevent him from engaging in smuggling activity. Therefore considering all these circumstances and already the seized currency and other goods were with the respondent it is just and proper to enlarge her bail on certain conditions. Accused is allowed to be released on bail, subject to fulfilment of conditions imposed - bail application allowed.
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2024 (4) TMI 872
Seeking grant of bail - custody for more than 41 days - Smuggling - Gold - Indian and Foreign currency - HELD THAT:- There is possibility that, there may be more recovery and more involvement of the persons who are yet to be arrested. But it is required to note that as per their statement they themselves were not bringing gold from the Dubai but the part of smuggling. It is not disputed that there is huge recovery of Indian and foreign currency with gold and silver bars. But thereafter no further progress in the investigation is shown. Moreover, no further statement of the accused is recorded on the basis of further investigation. Already there was sufficient time with the respondent to investigate about his further involvement in the alleged smuggling. The prosecution is suspecting that he may again involved himself in similar type of activity. But care can be taken by imposing certain conditions to prevent him from engaging in smuggling activity. Therefore considering all these circumstances and already the seized currency and other goods were with the respondent it is just and proper to enlarge him bail on certain conditions. Accused is allowed to be released on bail, subject to fulfilment of conditions imposed - bail application allowed.
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Corporate Laws
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2024 (4) TMI 871
Violation of Section 233 of the Companies Act, 2013 - requirement of holding at least ninety percent of the total numbers of shares, for approval of scheme of amalgamation - non-application of mind - HELD THAT:- In the present case it is evident that the trial Judge has taken cognizance without any application of judicial mind. The order taking cognizance in this case has been only a formality - There is absolutely no application of mind. Cognizance has been taken casually without any prima facie findings. There is also no reason for the petitioner to commit fraud by making a false statement as the petitioner has the option to take recourse to Sections 233(5), 233(6) and Section 232 of the Companies Act - The Companies are also at liberty to once again convene a meeting of the shareholders, secured creditors and unsecured creditors to comply with the provision of Section 233(1)(b) of the Act, as per the circular/letter no. 2/31/2013-CAA-CL-V-Pt-2 dated 24.08.2017 of the Ministry of Corporate Affairs, New Delhi. It is clear from the petition of complaint that neither the Company nor the persons, who were in-charge of the day affairs of the company, have been made parties in the case. Without the Company and the persons responsible for the day to day affairs of the Company, the prosecution of the petitioner alone, who acted on behalf of the company is bad in law and thus clearly an abuse of the process of law. The proceedings pending before the Learned, 2nd Special Court, Calcutta at West Bengal under Section 448 of the Companies Act, 2013 for alleged violation of Section 233 of the Companies Act, 2013, is bad in law and thus liable to be set aside - revision allowed.
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Insolvency & Bankruptcy
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2024 (4) TMI 869
Rejection of application filed by the Appellant (Suspended Director) before the Adjudicating Authority - Challenging the authority of another director's actions and Approval of Resolution Plan CIRP - The appellant contends that the reply filed by another director on behalf of the Corporate Debtor was unauthorized and vexatious, intended to obscure alleged collusions and mismanagement. - HELD THAT:- The Adjudicating Authority in the impugned order has although noted certain submission of the Appellant made in the application but held that there being no authorization of the Board of Directors to file the application, application appears to be frivolous and seem to have been filed with the view to delay the proceeding. Appellant in the application has not claimed the application is being filed by any authorization of the Board. In the reply which was filed by Respondent No.2, which is also on the record, does not indicate that Respondent No.2 claimed any board resolution for filing reply on behalf of the Corporate Debtor. When reply filed by Respondent No.2 dated 09.05.2023 did not claim any board resolution for filing reply, we fail to see that how the application filed by the Appellant can be rejected on the ground that there is no board resolution supporting filing of the application. Appellant has filed the application as Director of the Corporate Debtor to bring various facts which according to the Appellant indicate that there is collusion between Respondent No.2, 3 and the Financial Creditor and several relevant facts have not been brought before the Adjudicating Authority by Respondent No.2 in his reply. The facts and material brought on the record does indicate that there has been serious dispute between the Directors inter se and a Memorandum of Understanding was also executed on 2901.2022, in which Memorandum of Understanding both the Appellant as well as Respondent No.2 and 3 with other persons were parties. The observations of the Adjudicating Authority that application has been filed to delay the proceeding also does not commend us. 11.05.2023 was the first date of hearing on which order was reserved. The application was filed within three days i.e. on 14.5.2023, hence, conclusion drawn by the Adjudicating Authority that application has been filed to delay the proceeding is without any basis. The impugned order set aside - appeal allowed.
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2024 (4) TMI 868
Direction for payment of fees to the Interim Resolution Professional and reimbursement of Rs 9 lakhs as CIRP expenses - wrong fixation of IRP fees - lack of earnestness and proficiency on the part of the IRP - HELD THAT:- There is no dispute over the fact that only three CoC meetings were held. The 1st, 2nd and 3rd meetings of the CoC were held on 24.06.2019, 13.11.2019 and 31.01.2020 respectively and all the three meetings were attended by the Authorised Representatives of the Appellant. However, when the decision-making process is analysed, it is noticed that that there were clear signs of lethargy and tendency on the part of the Appellant to defer decisions. Coming to the subject matter of ratification of CIRP expenses incurred by the IRP and appointment of legal counsel; to approve fees to be paid to the IRP @ Rs. 2 lakhs per month and appointment of Resolution Professional and to fix his fees, it is found that this had figured in the agenda for discussion in the first CoC meeting itself but remained inconclusive since the Appellant had informed that they would convey the approval only after securing internal approval from their competent authority. The same paralysis in decision-making continued in the second CoC meeting wherein though the extension of the 90 days of the CIRP of the Corporate Debtor was agreed to by the CoC, on the issue of IRP fees and CIRP expenses it was informed that they would convey the approval within 15 days after securing internal approval from their competent authority. The Appellant which had been delaying the CIRP process by deferring to take decisions in the CoC meetings on the ground that approval of higher authorities was required. There is substance in the contention of the IRP that the Appellant displayed non-responsive behaviour and lackadaisical approach in the CoC meetings inspite of being the sole CoC member. During the entire CIRP process, the CoC neither approved the fees of the IRP nor did it raise any objection to the quantum of fees claimed by the IRP - when the IRP has on his own reduced his fees by 50% shows that his endeavours has been to keep his fees reasonable, there was no error on the part of the Adjudicating Authority to agree to the reduced quantum of fees. The IRP had also submitted the detailed chart of CIRP expenses before the Adjudicating Authority. Even the CIRP expenses has been reduced from Rs.11.91 lakhs to Rs.9 lakhs. Hence, there are no cogent ground to entertain any doubt on the application of mind on the part of the Adjudicating Authority in finding the IRP fees and CIRP expenses to be reasonable. There are no reason to interfere in the impugned order passed by the Adjudicating Authority. The Appellant is directed to pay the erstwhile IRP/Respondent No.1 the fees of Rs 33 lakhs within one month from the date of the order - In so far as, payment of Rs 9 lakhs CIRP expenses is concerned, in terms of orders of this Tribunal dated 01.11.2023, any dues thereof which still remain payable maybe made directly to the bank accounts of those who have incurred the expenses as per details to be provided by the IRP. Appeal dismissed.
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2024 (4) TMI 867
Admission of Section 9 application filed by Operational Creditor - time limitation - Section 10A of IBC - HELD THAT:- Section 10A of the Code prohibited filing an application under Sections 7, 9 10 for any default arising on or after 25.03.2020. The prohibition continues for one year from 25.03.2020 i.e., upto 24.03.2021. On looking into the Part IV of the application as well as the statement showing particulars of claim it is clear that apart from lease rental from April 2021, all claim was within the 10A period. For lease rental of April 2021, no CIRP can be commenced since it did not fulfil the threshold. The Adjudicating Authority was of the view that Company Petition is hit by Section 10A and not maintainable. Despite the above observation, the Adjudicating Authority proceeded to admit Section 9 application by the impugned order. It is further relevant to notice that in paragraph 5 of the order dated 09.02.2024, Adjudicating Authority noted the Operational Creditor s admission, that amount falls within a period stipulated in Section 10A of the Code - Section 10A came to considered by the Hon ble Supreme Court in Ramesh Kymal Vs. Siemens Gamesa Renewable Power (P) Ltd. [ 2021 (2) TMI 394 - SUPREME COURT] , Hon ble Supreme Court after noticing the legislative scheme noticed that Section 10A provides that no application for initiation of CIRP can be initiated for a default occurring on or after 25.03.2020. The Hon ble Supreme Court held that the expression shall never be filed with the clear indicator that the intent of legislature is to bar the institution of any application . When there is a bar of initiation of an application, the mere fact that in the Reply filed of the Corporate Debtor no plea of the Bar was taken is in consequential. Further, Adjudicating Authority itself is aware of plea of Section 10A and has rejected the Amendment Application filed by the Operational Creditor on the ground that Company Petition is barred by Section 10A. Adjudicating Authority committed an error in proceeding to admit Section 9 application without adverting to the bar under Section 10A. Although in paragraph 5 itself the bar of Section 10A was noted which was admission of the Operational Creditor itself. The purpose and object of Section 9 sub-Section (1) Section 10A is entirely different. The scheme of the Sections 8 9 clearly indicate that Demand Notice can be issued only when there is a default, thus default has to be prior to Demand Notice. In the present case Demand Notice was issued dated 20.04.2021 and the default in the Part IV mentions from March 2020. The lease rental period which was claimed in the Part IV was from March 2020 till April 2021 - even if the lease rental of April 2021 is excluded, the entire claim of Operational Debt falls within 10A period and no application ever could have been filed for the default of the lease rental during the 10A period. The application filed by the Operational Creditor was clearly hit by Section 10A and ought not to have been admitted. Adjudicating Authority committed error in admitting Section 9 application disregarding the bar under Section 10A - The application filed by the Operational Creditor under Section 9 was clearly barred by Section 10A, and the Adjudicating Authority committed an error in admitting Section 9 application by the impugned order dated 09.02.2024. The Corporate Debtor is freed from CIRP. The IRP fee and expenses as fixed by the Adjudicating Authority in the impugned order i.e., ₹2,00,000/- shall be paid by Operational Creditor to the IRP if not already paid - the impugned order is set aside - appeal allowed.
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2024 (4) TMI 866
Approval of Resolution plan - Propriety of the valuation exercise conducted by the RP - lenders of the Corporate Debtor are allowed to pursue the personal guarantees given by the Appellant - Corporate Debtor intended to be kept as a going concern or not - resolution plan was within the contours of Section 30(2) of the IBC or not. Propriety of the valuation exercise conducted by the RP - HELD THAT:- The RP did not violate the CIRP Regulations in the conduct of the valuation exercise. The RP had followed Regulation 27 to disclose the estimated fair and liquidation value of the Corporate Debtor. Further, we find that the CoC had duly considered and deliberated upon the valuation reports before deciding not to have any report from a third valuer. That being the considered business decision of the CoC, the supremacy of the commercial wisdom cannot be questioned by the Appellants. In fine, there are no infirmity in the conduct of the valuation exercise. Tenability of the contention of the Appellants that the resolution plan by allowing the lenders of the Corporate Debtor to pursue the personal guarantees given by the Appellant was in violation of law as after the transfer of debts, the liability of the Corporate Debtor would stand extinguished - HELD THAT:- The Appellant was never discharged from its liability qua the personal guarantees under the resolution plan. Moreover, under Section 128 of the Contract Act, the liability of the borrower and guarantor are coextensive and the lender can choose to recover the outstanding shortfall amount from either of them. The contract of guarantee is an independent contract from the Loan Agreement and hence the contract of guarantee does not end if the borrower has failed to discharge the entire liability. Now when we apply the ratio of the judgement of the Hon ble Supreme Court in Lalit Kumar Jain Vs UOI and Ors [ 2021 (5) TMI 743 - SUPREME COURT ] to the present resolution plan, the personal guarantor is not discharged of his liabilities under the contract of guarantee. The release or discharge of a principal borrower from the debt owed by it to its creditor by operation of law or due to insolvency proceedings or liquidation does not absolve the guarantor of his liability which arises out of an independent contract. There is no specific bar under the IBC that a creditor cannot claim its remaining debt from the guarantor which has not been recovered from the Corporate Debtor - when the CoC in its wisdom has approved the resolution plan which provided for the continued rights of the Financial Creditor against the personal guarantor and did away with the subrogation rights of the personal guarantors, the contention of the Appellant that the liability of the personal guarantors should stand extinguished, not being in sync with the commercial wisdom of the CoC, is clearly devoid of merit. Allegation that the SRA did not intend to keep the Corporate Debtor as a going concern - HELD THAT:- The SRA did not conceal the fact that he was submitting his plan along with his associates and since there is no bar in bringing other associates as co-applicants, there was nothing irregular in the submission of resolution plan by the SRA along with associates. All that the RP was required to do in such circumstances was to check the eligibility of the associates and this prescriptive requirement of Section 29A of IBC was complied with by the RP. To field response to the third issue raised by the Appellant, it is held that there is no irregularity in the conclusion of the Adjudicating Authority that the RP had carried out the verification exercise in terms of Section 29A of the IBC. Whether the resolution plan was within the contours of Section 30(2) of the IBC in that it did not contravene the provisions of any law for the time being in force and that no material irregularity was committed by the RP in the CIRP process? - HELD THAT:- The law is thus well settled that commercial wisdom of the CoC approving the Plan cannot be interfered and it can be interfered only when there is statutory non-compliance, i.e., noncompliance of Section 30(2). The Adjudicating Authority has duly analysed the contents of the resolution plan of the SRA which has been approved by the CoC on 26.02.2020 with 99.69% vote share. Furthermore, in the present case, no grounds have been made that resolution plan approved by the CoC and the Adjudicating Authority violates any of the provisions of Section 30(2). Hence the resolution plan passes the muster - Given that the CoC has considered the resolution plan and passed the same with requisite majority and given the well settled legal position that the Adjudicating Authority has limited scope of judicial review available to it and cannot interfere on merits with the commercial wisdom of the CoC, there was no error committed on the part of the Adjudicating Authority in approving the resolution plan. There are no ground in this appeal to interfere with the impugned order of the Adjudicating Authority approving the Resolution Plan. There is no merit in the Appeal - appeal dismissed.
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PMLA
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2024 (4) TMI 865
Maintainability of the instant petition - Money Laundering - scheduled offences - predicate offence - scope and spirit of Section 482 of the Cr.P.C. - whether the ECIR can be quashed in the exercise of its inherent jurisdiction under Section 482 Cr.P.C. by this Court? - HELD THAT:- On a minute perusal of the observations of Hon ble the Supreme Court in Vijay Madanlal Choudhary s case [ 2022 (7) TMI 1316 - SUPREME COURT] , it can be safely culled that an ECIR cannot be kept at the same pedestal as an FIR. It is crucial to note that an ECIR is not registered under the Cr.P.C., unlike a First Information Report (FIR), which is mandatorily registered under Section 154 of the Cr.P.C., and subsequently forwarded to the Illaqa Magistrate as per the provisions of Section 157 of the Cr.P.C.. Additionally, there exists no legal obligation to provide a copy of the ECIR to an accused, and the absence of such provision does not in any manner impinge upon any constitutional or statutory rights of a person. Thus, an ECIR is an administrative document prepared by the officers of the ED. It precedes the commencement of the prosecution against individuals involved in the offence of money laundering, which in turn is governed by special statute i.e. PMLA. This Court unhesitatingly concurs with the contentions made by the learned counsel for the respondent-ED that the ECIR is an internal administrative document of the ED. Consequently, in the considered opinion of this Court, since the ECIR precedes the stage of criminal prosecution and proceedings, it thus falls outside the purview of the inherent jurisdiction conferred upon this Court by Section 482 of the Cr.P.C. Therefore, the prayer of the petitioner for quashing of the ECIR under Section 482 of the Cr.P.C. cannot be entertained. The present petition fails on grounds of maintainability itself, and is dismissed as such.
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Service Tax
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2024 (4) TMI 864
Classification of services - transporting coal from one location to another - GTA services or cargo handling service - reverse charge mechanism - HELD THAT:- When WCL required a service provider to move the coal from one location to another and for this purpose, engaged the service of the appellant, the essential part of the contract is of transportation. Loading and unloading are incidental to it. Loading and unloading per se are of no use except when they are in conjunction with the transportation. The intention of the WCL is to transport coal and in the process, it also gets loaded on to the truck and unloaded at the destination. While the activities such as packing, loading, unloading and unpacking may take substantial time and may even take longer than the actual transportation, the main purpose of the contract is to transport the goods from the old to the new residence which is the essential character of the service and packing, loading, unloading and unpacking are mere incidental activities to the main function of transportation. WCL has already paid service tax on reverse charge basis on the transportation of coal under reverse charge. Therefore, the demand of service tax on the same service again from the appellant classifying it as cargo handling service cannot be sustained. The impugned order is set aside - appeal allowed.
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2024 (4) TMI 863
Resolution of dispute under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Seeking withdrawal of appeal - HELD THAT:- It is found that no order has been passed by the Appellate Authority on the merits of the case and the appeal has been dismissed as withdrawn for the reasons that Applicant had opted for SVLDRS Scheme. As the issue was not finally settled under the said scheme and no SVLDRS-4 issued, the matter has to be considered on the merits and final decision taken. Undisputedly the matter was not settled under the SVLDRS Scheme and as the matter has not been settled under the said scheme right to appeal which is enshrined in the Finance Act, 1994 cannot be denied. Right of appeal is a statutory right and could not have been denied/ modified. The fact about non settlement of the case under SVLDRS, was thus brought to the notice of the Commissioner (Appeal) before the dismissal of appeal. The Right of Appellant to get a decision on merits thus could not have been denied to them just for the reason that they had filed a declaration under SVLDRS, which was not accepted by the revenue authorities, and discharge certificate issued - As the Appellate Authority has not considered the issue on the merits and dismissed the appeal as withdrawn on the basis of submission that Appellant proceeded for settlement of the case under SVLDRS Scheme. The matter needs to be remanded back to the Appellate Authority for appropriate decision after consideration of the issues on merit. Appeal is allowed and the matter remanded back to the Commissioner (Appeals) for decision on merits.
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2024 (4) TMI 862
Short/non-payment of service tax - Jurisdiction to raise the Demand - amount reimbursed by ABP to the Appellant on actual basis towards the direct cost of ABP operations in terms of the written agreement - relevant period is July 2004 to March 2007 - invocation of Extended period of Limitation - HELD THAT:- The demand is made clearly indicating the Service Tax payable, Service Tax paid and short payment of Service Tax. For the period 2004-2005 and 2005-06, they have held that no Service Tax is paid for the period 2006-2007. They have taken into account the Service Tax paid by the Kolkata unit and have arrived at the short payment of Service Tax. It is seen from the record that the Appellants were not registered at Kolkata during the period 2004- 2005 and 2005-2006 towards the billing done during this period. The Appellants have provided all the Service Tax details to the Department for the transactions carried out by Mumbai Unit. During that period, they have paid the Service Tax and filed their Returns at Mumbai. In the present case, Kolkata Revenue officials did not have the jurisdiction to demand the Service Tax amount when Service Tax was paid at Mumbai and Returns were being filed over there. In view of the same, the confirmed demand of Rs. 51,43,753/- for the period 2004-2005 and 2005-2006 is legally not sustainable. We set aside the impugned Order and allow the Appeal to this extent. Service Tax paid/payable during the period 2006-2007 - HELD THAT:- The Agreement very clearly specifies that the consideration to be paid to the Appellants are under different headings and they were to be re-reimbursed the direct cost incorporated by them. Accordingly, they have engaged PP Enterprises and for the payment made to them, the Appellants have raised Debit Note for getting the re-imbursement from ABP. This exact amount paid by Appellant to PPE is being reimbursed by ABP. It is found from Annexure C of the Show Cause Notice that Re-imbursement payment is not included in the Trial Balance . This shows that this amount is not being treated as part of the income (consideration) by the Appellant. Therefore, the amount paid by ABP for PpE transactions are on account of re-imbursement of expenses only. Hence, the entire confirmed demand is not sustainable on merits. Extended period of Limitation - HELD THAT:- Admittedly, the Appellants were registered with the Central Excise Department either at Mumbai or at Kolkata and they have been paying the Service Tax on the commission amount received by them and also filing their ST-3 Returns. All the transactions have been properly recorded in their Books of Account and the values have been derived by the Department from their Balance Sheet, P L Account and Trial Balance - the confirmed demand for the extended period is set aside on account of time bar. Appeal allowed on merits as well as on limitation.
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2024 (4) TMI 861
Refund of Cenvat Credit - 100% EOU / STPI unit - Export of services as well as providing services to Domestic Tariff Area (DTA) units - section 11B of the Central Excise Act, 1944 - disallowance of CENVAT Credit, wrongly taken by the party on ineligible input services - demand alongwith interest and penalty - Time Limitation - HELD THAT:- The manner in which the issue has been handled and decided by the lower authorities is not only unique but is totally alien to the legal provisions outlined by Finance Act, 1994 and the rules made there under. In case the revenue authorities were of the view that certain amount of tax due was not paid by the appellant, then the proper course would have been to confirm the demand under Section 73 of the Finance Act, 1994 and recover the amount so confirmed, from the amounts admissible as refund to the appellants by appropriating the same against amounts confirmed. It could have been adjusted against the amount available in the CENVAT credit as admissible credit. Non payment of some amounts towards due service tax liability cannot be reason for denial of CENVAT Credit or the refund under Rule 5. All operate under separate sphere and needs to be examined as per the parameters laid down as per law. Time Limitation - HELD THAT:- There are no merits in the impugned order in view of the decision of larger bench in case of CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [ 2018 (2) TMI 946 - CESTAT BANGALORE] where it was held that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis. Penalty - HELD THAT:- As the demand made in the orders of the lower authorities is not sustainable, the penalty imposed also is set aside. There are no merits in the impugned order on any count - appeal allowed.
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Central Excise
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2024 (4) TMI 860
Reversal of proportional CENVAT Credit - manufacture as well as trading activity - demand on the ground that the sale of tyre tube and flap in set to their depot is a trading activity which as per amendment made on 01.04.2011 such trading activity is a exempted service accordingly proportionate credit is required to be reversed - HELD THAT:- The activity of selling the tyre duly fitted with tube and flap whether a trading activity or otherwise is pending before the Hon ble Supreme Court in appellant s own case in SLP (CE) No. 34310-34311/2011 wherein two orders were issued by the Hon ble Supreme Court dated 14.10.2011 and 08.11.2011. In view of this position unless it is decided that the activity is a trading activity or otherwise the consequential liability of proportionate credit in respect of service tax cannot be concluded. Moreover the appellant have vehemently argued that the quantification of proportionate credit is incorrect, this is also reason that the matter needs to be reconsidered as regard the correct quantification of the demand. In this position the entire matter on all the issues need to be reconsidered only after the outcome of the Hon ble Supreme Court judgment in the appellant s SLP pending. The impugned order is set aside - Appeal is allowed by way of remand to the adjudicating authority for passing a fresh order.
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2024 (4) TMI 859
Refund claim - rejection on the grounds of unjust enrichment - requirement to be credited to Consumer Welfare Fund constituted under Section 12C of Central Excise Act 1944 - HELD THAT:- It is quite evident that the appellant has categorically stated in the letter that they are charging the central excise duty from their customer, while maintaining the selling price at the same level by increasing the discount given from 40% to 52.10%. Undisputedly appellant himself admits that they are charging the central excise duty from their customers. That being so the burden of duty paid has been passed on the customer. The reason for giving additional discount to the customers can be many including the product competitiveness. Appellant have argued that they had increased the discount percentage on the goods so that the burden of duty is not passed on. However this argument though attractive is without any merits. From the table in para 4.11 it is evident that for determination of the assessable value they have claimed deduction of 40% or 52.10% whereas the price of the goods to the customer remained the same. What they have recovered from the customers is the price of the goods and not the cum duty price. Above analysis clearly establishes that the appellant has passed on the burden of the duty paid on to their customers. In case of COMMISSIONER OF C. EX., MUMBAI-II VERSUS ALLIED PHOTOGRAPHICS INDIA LTD. [ 2004 (3) TMI 63 - SUPREME COURT] , Hon ble Supreme Court has held even on merits, the respondent has failed to make out a case for refund. Since relevant factors stated above have not been examined by the authorities below, we do not find merit in the contention of the respondent that this Court should not interfere under Article 136 of the Constitution in view of the concurrent finding of fact. If on examination of facts and documents the conclusion is that burden of the duty has been passed on to the customers the refund could not have been directed to the appellants but would have to be credited to the consumer welfare fund. There are no merits in this appeal - appeal dismissed.
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2024 (4) TMI 858
Levy of Excise Duty - appellant has retained certain portion of freight without paying the same to the transporters on such freight amounts retained - place of removal - Extended period of limitation - HELD THAT:- It is seen from the record that the appellant is paying VAT at their factory gate as is evidenced by the invoices enclosed with the appeal papers. Therefore, the place of removal in this case would be the factory gate of the appellant. This issue is no more res integra. The Hon ble Supreme Court in the case of COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. [ 2015 (10) TMI 613 - SUPREME COURT ] has held The fact in the present case 'deliverable state of goods, arises only at the time of safe delivery of goods at the customers' premises specified in the purchase order However, with reference to section 24 of the Sales of Goods Act, it was observed that in the instant case the property in the goods have passed only at the site of buyer. Therefore such place constitutes the 'place of removal of goods for section 4 of the Central Excise Act. Extended period of Limitation - HELD THAT:- There are substantial force in the appellant s contention that the issue was that of interpretation and was resolved only after the judgment of the Hon ble Supreme Court in Ispat Industries case. Therefore, the confirmed demand for the extended period is liable to be set aside on account of limitation also. The appeal is allowed both on merits as well as on account of limitation.
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CST, VAT & Sales Tax
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2024 (4) TMI 857
Interest on delayed refund - relevant time for calculation of interest - HELD THAT:- Reference may be had to Article 25 of the Schedule to the Limitation Act, which stipulates that the period of limitation for money payable for interest upon money due from defendant to the plaintiff is 3 years and the time from which the period begins is when the interests become due. In terms of Section 30 (4) of Delhi Sales Tax Act, 1975, interest becomes due and payable on delayed refund on expiry of 90 days from the date of making the claim under Sub-Section 3. Accordingly, the period of limitation for claiming interests on the delayed payment would be three years from the expiry of 90 days. Since the refund was delayed, for every passing month the interest accrued @1.5% per month. Accordingly, with every passing month with effect from the commencement of the period of limitation, interest for the preceding one month in the block of three years would extinguish and interest for succeeding one month would accrue. Petitioner would be entitled to interest for a period of three years immediately preceding the filing of the subject petition till the date payment was made of the petitioner. Since the delay is beyond the period of one month as provided under Section 30 (4), the rate of interest applicable would be 1.5% per month - this petition is disposed off.
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Indian Laws
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2024 (4) TMI 870
Arbitral Proceedings - Computation of one-year period for completing the proceedings - Rejection of request of the petitioner to extend the time and proceeded to post the proceedings for issues - exclusion of days during which the proceedings were stayed, for calculation of timeline of twelve months for completion of proceedings - HELD THAT:- From the order sheet of the Arbitral proceedings, it is seen that the petitioner who is respondent before the Arbitral Tribunal, took more than three to four adjournments to file its objection statement and also to file counterclaim. Thereafter, it took several adjournments and also sought extension of time to file surrejoinder. Admittedly, the Arbitral Tribunal entered reference on 17.11.2022, since then, the petitioner has filed six writ petitions challenging different interlocutory orders passed by the Arbitral Tribunal. It is deemed appropriate to dismiss the present writ petition with costs of Rs. 25,000/-, payable to the Karnataka State Legal Services Authority . The above cost shall be paid within two weeks from today and shall produce receipt for having paid before the Arbitral Tribunal - the question of maintainability of writ petition raised by respondents need no perusal. There is no merit in the writ petition - Petition dismissed.
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