TMI Tax Updates - e-Newsletter
August 17, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Period of limitation - appeal rejected on the ground of time limitation - the legislative intent was not to apply the Limitation Act in the proceedings to be taken under the CGST Act. If the intention had been otherwise, there would have been no occasion for conferring specifically power to the High Court to entertain an appeal after the expiry of the period of limitation of 180 days if it was satisfied that there was sufficient cause for not filing it within such period as Section 5 of the Limitation Act would have become applicable by virtue of Section 29(2) of the Limitation Act. Absence of the words 'but not thereafter' as appearing in the Act of 1996 is of no moment. - HC
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GST:
Grant of statutory bail - This petition is allowed to the extent that as regards the provisions of the HGST Act, 2017, the FIR is hereby quashed; but with it made absolutely clear that as regards the offences alleged to have been committed in terms of Sections 420, 467, 468, 471, 201, 120-B of the IPC, such proceedings would continue and be taken to their logical conclusion by the investigating agency in Haryana and the competent court to which the report under Section 173 Cr.P.C. is submitted. - HC
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Income Tax:
Revision u/s 263 - assessee had claimed losses on account of commodities - derivatives - speculation loss or not - Transaction in question involved settlement otherwise than the actual delivery or transfer of any commodity - PCIT proceeded on a different angle which were not the materials based on which show cause notice was issued. Thus, a fundamental error has been committed by the PCIT by proceeding based upon certain alleged facts which were never brought on record at the time of issuance of the show cause notice. When the matter was carried on appeal to the tribunal, the tribunal examined the documents and found that the transaction done by the assessee was an eligible transaction in respect of trading in derivatives - HC
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Income Tax:
Penalty levied u/s 271D and 271E - accepting deposits by way of journal entries - assessee had accepted/paid loans in contravention of provision of section 269SS/269T - the Hon’ble Bombay High Court has specifically observed that irrespective whether the transaction was bonafide or non-bonafide, repayment of loan by debiting amount through journal entries was in the nature of contravention of section 269T. - Levy of penalty confirmed - AT
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Income Tax:
Correct head of income - rental income earned by the assessee - Tribunal recorded its unequivocal finding that the lease deed under consideration was composite one and that it answered the description under section 56(2)(iii) of the Act. Another objection of the Revenue that it is related party transaction has also been rejected by the Tribunal by saying that no adverse view has been taken in determination of ALP with AE by the Ld. TPO nor provisions of Section 40A(2) have ever been invoked. - decided in favour of the assessee - AT
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Income Tax:
Revision u/s 263 - penalty proceedings u/s 271AAB(1A) - The mandate under section 263 of the Act do not give any power to CIT to impose his satisfaction over the satisfaction of AO as to whether the penalty proceedings are toinitiated or not and if initiated under which section/clause. In our view, on examination of assessment record, the PCIT cannot direct initiation of penalty proceedings because penalty proceedings are not part of assessment proceedings. - AT
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Income Tax:
Addition u/s 69A/68 - The assessee has earned the commission income from Mauritius and having Non-Resident status under section 6 of the Income Tax Act. The assessee has transferred such funds to India through NRE account at Bank of Baroda, Satellite Branch. Thus the income earned by the assessee accrues or arises or is deemed to accrue or arise into India is not covered under the charging Section 5 of the Income Tax Act. What is not charged u/s. 5 of the Act cannot be taxed u/s. 68 or 69A of the Act. - AT
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Income Tax:
Revision u/s 263 - Excessive payment to related party or not - Payments for job work not verified by AO at "fair market value" under section 40A(2)(b) - the onus is on the revenue to record reasons why payment by the assessee is excessive/unreasonable so as to invoke provisions of section 40A(2)(b) of the Act. For the foregoing reasons, in our view, PCIT has erred in facts and law in holding that the order is erroneous and prejudicial to the interests of the revenue - AT
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Customs:
Levy of penalty u/s 112(b)(i) of the Customs Act 1962 - smuggling of Gold activity - reliability of statements - The appellant cannot come within the ambit of Section 112(b) because appellants had never acquired possession or in any way concerned in any of the activities mentioned in the Section or any measure dealing with any goods which the appellants knew or had reason to believe are liable to confiscation. In the absence of the department having proved the knowledge of the appellant in the activities relating to the smuggled gold, there were no grounds for imposition of penalty on him - AT
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Indian Laws:
Dishonor of Cheque - insufficient funds - vicarious liability of the petitioner u/s 141 of NI Act after tendering such resignation - the complainant should specifically state as to how and in what manner the accused was responsible - petitioner tendered resignation on 13th March, 2020, and the company in its meeting of Board of directors took the decision on 22nd November, 2021 yet such aspect is inconsequential - A bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible for the conduct of the business of the company without anything more as to the role of the Director is not sufficient to make him liable. - HC
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Indian Laws:
Dishonor of Cheque - insufficient funds - while furnishing the cheque to prove the bona fide, it is clearly stated that two cheques had been honoured but three cheques were requested not to be presented till arrangement of funds. Still the Respondent was hasty in presenting the cheque not heeding to the request of the Petitioner - The facts reminds the Shakespeare's Play “Shylock”. The Complainant is that on nature which cannot be entertained by the Court. - It is a purely abuse of process of Court committed by the Respondent/Complainant. - HC
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Indian Laws:
Validity of Sale Certificate issued in favour of the Auction Purchaser - This is a case where the Company, with its own independent identity, is contesting the proceedings. It is apparent that the Directors were also contesting the matter by filing the Section 17 application. Even the legal representatives of one of the deceased Directors were party to the application under Section 17. Further, DRAT came to the conclusion that the original order passed by the DRT has been arrived at after a detailed consideration and that there is no justifiable ground for invoking the review jurisdiction. For granting or refusing to grant an interim order, the above referred facts were more than sufficient. - The High Court was not justified in staying the operation of the order of the DRAT - SC
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PMLA:
Money Laundering - Provisional attachment of property - Admittedly, the original complaint and its annexures were voluminous running into almost 5000 pages and it needs time to peruse the voluminous documents served upon them and to comprehend them and to ascertain the facts in accordance with the internal records and collate the supporting documents for preparation of reply. Any inadequate reply would affect the defence of petitioners. Therefore, not granting extension of time period to reply to the impugned show-cause notice would be depriving them of their right to put forth defense against the provisional attachment order and to present evidence in support of their defense. The same was in violation of principles of natural justice violating the opportunity of providing a fair hearing. - HC
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Service Tax:
Refund of unutilised CENVAT Credits accumulated on account of export of services - The amendment to he Notification No. 27/2012-CE (NT) can have prospective effect and the relevant date for the purpose of deciding the time limit for consideration of refund claim under Rule, 5 of CENVAT Credit Rules, 2004 may be taken as the end of the quarter in which FIRC is received, in case where refund claims are filed on a quarterly basis. - AT
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Service Tax:
Extended period od limitation - No positive act of the appellant is brought to the notice by the department which may be sufficient to hold that the act amounts to committing fraud or collusion etc. Above all, as already held that appellant is a public entity acting under the mandate of statute for the infrastructural development in these areas of Haridwar and Roorkee, question of suppression of facts by such public entity otherwise does not arise. - the show cause notice raising demand for the year 2012 to 2014 cannot be issued in the year 2018. Such show cause notice is definitely barred by time. - AT
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Central Excise:
Job Work - liability of duty on principal supplier or job-worker - since, the job worker has carried out all the activities which as per the department amounts to manufacture, the job worker is alone to pay the excise duty, therefore, the duty demand raised against the appellant is not sustainable, hence, the same is liable to be set aside. - AT
Articles
Notifications
GST - States-
16/2022-State Tax - dated
22-7-2022
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Himachal Pradesh SGST
Seeks to amend Notification No. 14/2019-State Tax, dated the 28th March, 2019
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15/2022-State Tax - dated
22-7-2022
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Himachal Pradesh SGST
Seeks to amend Notification No. 10/2019-State Tax, dated the 7th March, 2019
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13/2022-State Tax - dated
22-7-2022
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Himachal Pradesh SGST
Modification of the notifications of the Government of Himachal Pradesh, No. 35/2020-State Tax, dated the 23rd June, 2020, and No. 14/2021-State Tax, dated the 15th June, 2021, dated the 21st June, 2021
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13/2022-State Tax - dated
8-8-2022
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Maharashtra SGST
Seeks to extend dates of specified compliances in exercise of powers under section 168A of MGST Act
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12/2022-State Tax - dated
8-8-2022
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Maharashtra SGST
Seeks to extend the waiver of late fee for delay in filing FORM GSTR-4 for FY 2021-22.
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11/2022-State Tax - dated
8-8-2022
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Maharashtra SGST
Seeks to extend due date of furnishing FORM GST CMP-08 for the quarter ending June, 2022 till 31.07.2022
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1314-F.T. - dated
5-8-2022
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West Bengal SGST
Waiver of interest for some specified Electronic Commerce Operators
News
Case Laws:
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GST
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2022 (8) TMI 632
Seeking direction to authority concerned to consider and dispose of the representation given by the appellant - time limitation - HELD THAT:- Identical order was put to challenge in KAVITA JAISWAL VERSUS DESIGNATED COMMITTEE, KOLKATA NORTH COMMISSIONERATE ORS. [ 2022 (8) TMI 9 - CALCUTTA HIGH COURT] where it was held that Since the appellant had benefit of order of status quo in pending writ petition the respondent authorities are directed not to take any coercive action against the appellant till the writ petition is heard and disposed of. Interim order, already granted, shall remain in force for a period of eights weeks or till the writ petition is heard, whichever is earlier. The facts of the case on hand are identical to that of the aforementioned decision except of the slight change of dates - In the instant case, the writ petition was filed during March, 2021 and on 29th April, 2022 the learned writ Court permitted the affidavit-in-opposition filed by the respondent be kept on record and directed that the respondent shall not take any coercive action against the appellant for recovery of the demand in question. This interim order had continued till the writ petition was disposed of by the impugned order. The order dated 29th June, 2022 is set aside and the writ petition is restored to its original file and number and be heard and decided by the learned Single Bench on merits and in accordance with law - Since the appellant had the benefit of order of status quo pending writ petition, the respondent authorities are directed not to take any coercive action against the appellant till the writ petition is taken up for hearing by the learned Single Bench.
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2022 (8) TMI 631
Period of limitation for filing an appeal - Disallowance of CGST input credit - appellant preferred an appeal on 16.12.2019 under Section 107 (1) of the Chhattisgarh Goods and Service Tax Act, 2017 before respondent No.3 and had deposited 10% of the amount in dispute - appeal rejected on the ground of time limitation - HELD THAT:- A reading of Section 29(2) would go to show that the section is divided into two parts, manifested by the expression and . The first part stipulates that the limitation period prescribed by the special law or local law will prevail over the limitation period prescribed in the Schedule to the Limitation Act. The second part of Section 29(2) of the Limitation Act ordains that the Sections 4 to 24 of the Limitation Act will apply for determining the period of limitation only insofar as, and to the extent which, they are not expressly excluded by such special or local law. CGST Act is a special law which prescribes a specific period of limitation in Sections 107(1) and 107(4), and therefore, the provisions of CGST Act will apply. It is also to be noted that there is no provision under the Limitation Act dealing with the subject matter of appeal under the CGST Act. On due consideration of the scheme of the C.E. Act, the Hon'ble Supreme Court concluded that the time-limit prescribed under Section 35-H(1) to make a reference to the High Court is absolute and unextendable by a Court under Section 5 of the Limitation Act. It was also observed that it is the duty of the Court to respect the legislative intent and by giving liberal interpretation, limitation cannot be extended by invoking the provisions of Section 5 of the Limitation Act. In respect of an appeal to the High Court, the Legislature has not provided any specific time limit for entertainment of an appeal after expiry of the period of limitation if it is satisfied that there was sufficient cause for not filing the same within the period of limitation. In respect of an appeal under Section 107(1) of CGST Act, it is provided that the appeal may be filed within three months from the date on which the decision or order is communicated to such person. Section 107(4) of CGST Act lays down that on sufficient cause being shown, the Appellate Authority may allow the appeal to be presented within a further period of one month. The same would go to show that the legislative intent was not to apply the Limitation Act in the proceedings to be taken under the CGST Act. If the intention had been otherwise, there would have been no occasion for conferring specifically power to the High Court to entertain an appeal after the expiry of the period of limitation of 180 days if it was satisfied that there was sufficient cause for not filing it within such period as Section 5 of the Limitation Act would have become applicable by virtue of Section 29(2) of the Limitation Act. Absence of the words 'but not thereafter' as appearing in the Act of 1996 is of no moment. There are no merit in this appeal and accordingly, the writ appeal is dismissed.
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2022 (8) TMI 630
Grant of statutory bail - contention is that once proceedings under one particular Act have already been initiated, i.e. either under the State Act or under the Central Act, then similar proceedings would not be initiated on essentially the same cause of action by the proper (designated) officer under the other Act. HELD THAT:- With even the Excise Taxation Commissioner not denying that the cause of action as regards FIR No.0008 lodged against the petitioner on 05.01.2019 at Police Station Kanina, District Mahendergarh, is the same cause as initiated by the Directorate General, GST (Intelligence) on 07.09.2018, this petition is allowed to the extent that as regards the provisions of the HGST Act, 2017, the FIR is hereby quashed; but with it made absolutely clear that as regards the offences alleged to have been committed in terms of Sections 420, 467, 468, 471, 201, 120-B of the IPC, such proceedings would continue and be taken to their logical conclusion by the investigating agency in Haryana and the competent court to which the report under Section 173 Cr.P.C. is submitted. The petition stands disposed of.
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Income Tax
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2022 (8) TMI 629
Revision u/s 263 - assessee had claimed losses on account of commodities - Transaction in question involved settlement otherwise than the actual delivery or transfer of any commodity - Tribunal allowed assessee appeal - HELD THAT:- Fundamental error has been committed by the PCIT by proceeding based upon certain alleged facts which were never brought on record at the time of issuance of the show cause notice. When the matter was carried on appeal to the tribunal, the tribunal examined the documents and found that the transaction done by the assessee was an eligible transaction in respect of trading in derivatives and that M/s. Godavari Exim Pvt. Ltd. was registered with MCX Stock Exchange which was a notified stock exchange. Since PCIT had travelled beyond what was the allegation in the show cause notice, the tribunal had to clarify the factual position. Therefore, a query has been raised to the learned Advocate who appeared for the assessee before the tribunal and it was submitted that after passing order u/s 263 Ld. Advocate had made enquiries in the stock exchange and found that the said M/s. Godavari Exim Pvt. Ltd. had surrendered its membership of MCX Stock Exchange and after surrendering the same it was engaged in transport business.' Assessee has produced before us a copy of the circular dated 8th September, 2016 which is a public notification of resignation of membership and the name of the said M/s. Godavari Exim Pvt. Ltd. finds place where they have sought to surrender their membership. Last of the transaction done by the said company was on 30th March, 2016. After issuing the notification and giving sufficient time for any objection to be received, and in the absence of any objection by circular dated 11th January, 2017, the resignation/surrender of membership in the currency derivatives of M/s. Godavari Exim Pvt. Ltd. was accepted and SEBI has also cancelled the certificate of registration for the member and they have ceased to be a member of MCX Stock Exchange. These documents which were noted by the tribunal would also ensure in favour of the respondent/assessee.
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2022 (8) TMI 628
Validity of reopening of assessment u/s 148 - non-issuance of sanction order under Section 151 by competent authority - Maintainability of writ petition when alternative statutory remedy is available - Ld. Single Judge observed that writ petition can be entertained in exceptional circumstances and the case presented by the petitioner was not a case of that kind which required invocation of power under Article 226 of the Constitution of India and holding thus, relegated the petitioner to avail alternative remedy available under Section 246(A) - HELD THAT:- HELD THAT:- We concur with the observation of the learned Single Judge that present is not a case warranting exercise of powers under Article 226 of the Constitution of India, having regard to the fact that the petitioner has adequate efficacious alternative remedy. We are, however, of the opinion that if the learned Single Judge wanted the petitioner to avail alternative remedy, findings as recorded in paragraphs 6 and 7 ought not to have been recorded. We are not inclined to examine in the present proceeding whether the findings recorded by the learned Single Judge is correct or not, as we have opined that the petitioner may avail alternative remedy. In order not to cause any prejudice to the petitioner, we make it clear that the findings recorded by the learned Single Judge will not come in the way of the petitioner urging the very same points as well as other points before the appellate authority and the appellate authority, without being influenced by any such findings recorded by the learned Single Judge, in the event of filing of any appeal, shall decide the same in accordance with law.
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2022 (8) TMI 627
Revision u/s 263 - addition u/s 68 - unexplained cash credit - AO was of the opinion that the agricultural income shown by the assessee is not actually representing from the agricultural operations and therefore the same was treated as unexplained cash credit - Submission of additional evidences - additional evidence cannot be placed by the assessee for the admission before the Tribunal as a matter of right - HELD THAT:- Additional evidences were collected from the 3rd parties and the assessee has put lot of efforts in obtaining the same from the concern parties. Furthermore, we note that these additional documents filed by the assessee go to the root of the matter and therefore in the interest of justice and fair play, the consideration of these documents at the end of the AO is necessary. Accordingly, we exercise our power granted under rule 29 of ITAT rules and admit these additional evidences and set aside the issue to the file of the AO for fresh adjudication as per the provisions of law and in the light of the additional evidences as discussed above. Hence the ground of appeal of the assessee is allowed for the statistical purposes.
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2022 (8) TMI 626
Reopening of assessment u/s 147 - Unexplained cash credit u/s 68 - M/s Abhinav Cooperative Group Housing Society is non-existent entity - HELD THAT:- Assessee has produced several documents to substantiate contention that M/s Abhinav Cooperative Group Housing Society was in existent, ie: The letter dated 26/12/2017 from M/s Abhinav Cooperative Group Housing Society written to A.O confirming the transaction of cash receipts, copy of the Assessee s letter dated 14/11/2018 along with audit report and financial of M/s Abhinav Cooperative Group Housing Society Ltd. since from 2008 onwards and also produced copy of ITR computation, balance sheet and tax audit report for Financial Year 2009-10. The above documents produced by the assessee along with paper book has neither disputed nor question by the Ld. DR. The above documents clearly negate the contention of the Department that the M/s Abhinav Cooperative Group Housing Society is nonexistent entity. Therefore, in our opinion, the Ld. A.O and the Ld.CIT(A) have committed error in finding the fact and making addition on the ground that M/s Abhinav Cooperative Group Housing Society is nonexistent entity. Therefore, in our considered opinion, the grounds of Appeal filed by the assessee are deserves to be allowed.
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2022 (8) TMI 625
Penalty levied u/s 271D and 271E - assessee had accepted/paid loans in contravention of provision of section 269SS/269T - CIT(A) deleted the penalty on the ground that accepting deposits by way of journal entries was a transaction in the nature of the bonafide and not with a view to avoid tax - HELD THAT:- In the Ground No. 2 raised before the Ld. CIT(A), there was no such issue of bonafide nature of the transaction, still he decided that too against the finding of the Hon ble Bombay High Court in the case of the Triumph International Finance (I) Ltd. [ 2012 (6) TMI 358 - BOMBAY HIGH COURT] wherein the Hon ble Bombay High Court has specifically observed that irrespective whether the transaction was bonafide or non-bonafide, repayment of loan by debiting amount through journal entries was in the nature of contravention of section 269T . In view of the above, the finding arrived by the Ld. CIT(A) in para 5.3, being contrary to the decision of the Hon ble Bombay High Court, is set aside. The Hon ble Bombay High Court in the case of Triumph International Finance (I) Ltd. (supra) allowed the appeal of the assessee on the basis of existence of reasonable cause for such contravention however, in the present appeal no such issue has been raised before the lower authorities.Appeal of revenue allowed.
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2022 (8) TMI 624
Correct head of income - rental income earned by the assessee - assessable as income from house property or income from other sources claimed by the assessee - HELD THAT:- It is not in dispute that in preceding years the assessee has been claiming that the rental income earned by it from let out building space along with inbuilt infrastructure and other amenities is taxable as income from other sources and not as income from house property. The Revenue has been rejecting the assessee s claim on the flimsy ground that claim has not been made in the returns but the claim is made during the course of assessment proceedings. With a view to satisfy the Revenue and to overcome the above disability, the assessee after having filed the original return for AY 2013-14 filed revised return claiming therein that the rental income is assessable under the head income from other sources . Adopting the reasons given in earlier years, analyzing the nature of lease agreement, holding that the assessee is not receiving composite rent as recommended by the Hon ble Supreme Court in Sultan Brothers Pvt. Ltd. [ 1963 (12) TMI 4 - SUPREME COURT] and that the lease deed is between related parties, the Ld. AO made the impugned disallowance which is confirmed by the Hon ble DRP. Testing the facts of the assessee s case on the touchstone of the various quoted decisions Tribunal recorded its unequivocal finding that the lease deed under consideration was composite one and that it answered the description under section 56(2)(iii) of the Act. Another objection of the Revenue that it is related party transaction has also been rejected by the Tribunal by saying that no adverse view has been taken in determination of ALP with AE by the Ld. TPO nor provisions of Section 40A(2) have ever been invoked. Admittedly, as Ld. AO says in para 4.3 of his order, in AY 2013-14 [ 2021 (6) TMI 538 - ITAT DELHI] also the facts of the case are similar to that of the earlier years. On such admitted fact situation, the co-ordinate benches of the Tribunal have decided this issue in earlier years as also in subsequent years in favour of the assessee. Therefore, there is no reason for us to deviate from the same in the absence of any fresh adverse material in the records. Accordingly the modified ground No.1, 2.1 and 2.2 are decided in favour of the assessee with the direction to the Ld. AO to follow the decision of the Hon ble Delhi High Court in Jay Metals [ 2017 (7) TMI 618 - DELHI HIGH COURT] in respect of the assessee s claim of expenses and depreciation under section 57 of the Act extracted by the Tribunal in para 22 of its order [ 2021 (1) TMI 537 - DELHI HIGH COURT] for AY 2011-12 and 2012-13. We order accordingly.
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2022 (8) TMI 623
Revision u/s 263 - penalty proceedings u/s 271AAB(1A) - As per CIT AO did not take a conscious decision relating to noninitiation/ incorrect initiation of penalty which cause prejudice to the revenue - HELD THAT:- AO has initiated penalty proceedings u/s 271 AAB(1A) with the observations that the amount of investment made by the assessee for purchase of motorcycle in cash is added to his total income treated as unexplained investment u/s 69 and tax is charged as per provisions of section 115BBE. Assessee has offered Rs.1,25,000/- for taxation during search proceedings in statement u/s 132(4), however, the assessee has not included Rs.1,25,000/- in the return filed u/s 153A, therefore, penalty proceedings u/s 271AAB(1A) is initiated accordingly. AR argued that the AO has taken conscious decision to initiate the penalty proceedings u/s 271AAB(1A) of the Act. It may be noted that both u/s 271(1)(c) and u/s 271AAB it is the AO who is to satisfy himself whether on the additions made, penalty proceedings is required to be initiated or not and also the section under which it is to be initiated. The mandate under section 263 of the Act do not give any power to CIT to impose his satisfaction over the satisfaction of AO as to whether the penalty proceedings are toinitiated or not and if initiated under which section/clause. In our view, on examination of assessment record, the PCIT cannot direct initiation of penalty proceedings because penalty proceedings are not part of assessment proceedings. Thus, the PCIT s revisionary decision relating to non-initiation/incorrect initiation of penalty which without holding that assessment order passed by the AO as erroneous and prejudicial to the interest of revenueis vague and bad in law. Respectfully, following the jurisdictional High Court in the case of CIT Vs. Keshrimal Parasmal [ 1985 (5) TMI 34 - RAJASTHAN HIGH COURT] we hold that the PCIT is not entitled to direct the AO to initiate penalty proceedings. Accordingly, the order passed under s. 263 is quashed. - Decided in favour of assessee.
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2022 (8) TMI 622
Allowable business expenses - NRI desk expense - as observed amount has not been debited in profit and loss account - assessee was also requested to recast its books of account of permanent establishment in India and explain as to why these expenses should not be considered in Head Office expenses as per section 44C - assessee submitted that NRI desk expenses have been certified by independent firm of Chartered Accountants as having been incurred by the Head Office for and on behalf of the assessee Bank s Indian branches - HELD THAT:- We find that coordinate bench of the Tribunal in assessee s own case in ADIT v/s Bank of Bahrain and Kuwait [ 2011 (1) TMI 923 - ITAT, MUMBAI] for the assessment year 2002 03, while restricting the applicability of section 44C of the Act only in respect of allocable expenses and at the same time fully allowing direct staff cost. Departmental Representative could not show us any reason to deviate from the aforesaid order and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the order passed by coordinate bench of the Tribunal in assessee s own case cited (supra), we find no infirmity in the impugned order passed by the learned CIT(A). Accordingly, the sole ground raised in Revenue s appeal is dismissed.
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2022 (8) TMI 621
Exemption u/s. 11 - exemption denied on violation of provisions u/s. 13 - Scope of second proviso to section 13(1)(c)(ii) of the Act - HELD THAT:- As in view of the fact following the order latest being in A.Y. 2013-14 we deem it proper to remand the matter to the file of AO for its fresh consideration to pass order in accordance with the directions rendered by this Tribunal in A.Ys. 2010-11 and 2011-12 [ 2017 (6) TMI 1369 - ITAT PUNE] Capital expenditure incurred towards Mandir and Vidyalaya - CIT(A) allowing exemption u/s. 11 without appreciating the expenditure on the objects of the trust is negligible as compared to expenditure incurred on maintenance of commercial property - HELD THAT:- We note that the case of the AO is that the expenditure incurred on other than the object is Rs.423.38 lakhs which was incurred for the purpose of commercial adventure. He also found that the said amount is part of total expenditure incurred - contention of ld. AR is that the AO nowhere held the said expenditure incurred into violating the objects of trust and no adverse remark as held by the assessee violated the provisions of section 13 of the Act while incurring the said expenditure. CIT(A) by placing reliance on the decision of St. George Forana Church [ 1987 (7) TMI 44 - KERALA HIGH COURT] held that where surplus funds were utilized for additions to a building, which was let out and the income thereof applied for charitable or religious purposes, the utilization of such surplus was held to amount to application of income for religious or charitable purposes. CIT(A) placed reliance on the decision of Karimla Trust [ 2007 (9) TMI 229 - JHARKHAND HIGH COURT] which held that breach of conditions would not disentitle assessee from getting benefits. CIT(A) examined the issue in detail from Page No. 11 of the impugned order and held the assessee is entitled to claim exemption u/s. 11 of the Act. Thus, we agree with the reasons recorded by the CIT(A) and it is justified. Thus, ground No. 6 raised by the Revenue is dismissed. Non-applicability of section 60 - HELD THAT:- The provisions u/s. 60 of the Act explains all the income arising to any person by virtue of a transfer is chargeable to Income Tax as the income of the transferor shall be included in his total income. As we discussed above that the assessee is a trust applying its income towards its objective and other trust Lohia Pratisthan also running school in the said premises. Therefore, we find force in the arguments of ld. AR that the exemption u/s. 11 is to be examined independently and the provisions u/s. 60 is not applicable to the facts on hand. On examination of the reasons recorded by the CIT(A) we note that the assessee in the capacity of owner is not deriving any income from the other trust to which a property has been given to run a school. Therefore, we find no infirmity in the order of CIT(A) in holding the non-applicability of section 60 of the Act. Thus, we agree with the reasons recorded by the CIT(A) - ground raised by the Revenue is dismissed.
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2022 (8) TMI 620
Addition u/s 14A - interest expenses addition - Sufficiency of own funds - HELD THAT:- As in case of Gujarat Fluoro chemicals Ltd.[ 2020 (10) TMI 252 - GUJARAT HIGH COURT] reiterated that where interest free funds available with assessee were far more than gross investment, it could safely be harboured that interest bearing funds was not invested by assessee and, thus, no disallowance under section 14A to be made. In view of the consistent position taken by the Gujarat High Court, as applied to the facts instant case, in our considered view, no disallowance is called for in respect of interest expenses under section 14A when the assessee is having sufficient interest-free funds at the disposal in excess of investment made in instruments yielding exempt income. Disallowance of administrative expenses - As quantification was not permissible under rule 8D for the impugned assessment year, the disallowance had to be made on the basis of reasonableness and fairness. The Mumbai ITAT in the case of Taj Sats Air Catering Ltd. [ 2012 (4) TMI 305 - ITAT MUMBAI] held that where assessee had not allocated any expenditure for earning interest free dividend income, reasonable disallowance was justified. The Ahmedabad in the case of Sun Pharmaceutical Industries Ltd.[ 2017 (6) TMI 1323 - ITAT AHMEDABAD ] directed the A.O. to compute the disallowance for administrative expenditure as per the formula given under Rule 8D We are of the considered view that Ld. CIT(Appeals) has not erred in facts and in law in confirming disallowance in respect of administrative expenditures and directing the A.O. to compute the disallowance for administrative expenditure made by the AO as per the formula given under Rule 8D.
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2022 (8) TMI 619
Addition u/s 69A/68 - Unexplained investment from NRE account which was transferred from Mauritius Branch of Bank of Baroda - unexplained credit entries from undisclosed source - addition of unexplained investment u/s. 69A on the ground that the assessee failed to explain the source of credit entries in NRE account - assessee has failed to substantiate his source of income in India and abroad with documentary evidence, though multiple opportunities were provided by the AO during the course of assessment proceedings - HELD THAT:- NRE account refers to foreign funds deposited with a financial institution that allows for the efficient conversion and transfer of Indian and foreign currency both within and outside India. One can deposit Indian rupees into NRE account. The only way to deposit in NRE account is by way of foreign currency remittance. Thus entries in NRE account of Bank of Baroda, Satellite Branch, the Assessing Officer is not correct in invoking Section 69A as unexplained investment by the assessee. The assessee has earned the commission income from Mauritius and having Non-Resident status under section 6 of the Income Tax Act. The assessee has transferred such funds to India through NRE account at Bank of Baroda, Satellite Branch. Thus the income earned by the assessee accrues or arises or is deemed to accrue or arise into India is not covered under the charging Section 5 of the Income Tax Act. What is not charged u/s. 5 of the Act cannot be taxed u/s. 68 or 69A of the Act. In our considered view, the income of the non-resident is not chargeable under Section 5(2) and the provisions of Section 69A cannot override the provisions of Section 5(2). As relying on FINLAY CORPORATION LTD. [ 2003 (1) TMI 266 - ITAT DELHI-D] we have no hesitation in confirming the order passed by the Ld. CIT(A) and delete the addition being addition made u/s. 69A of the Act. - Decided in favour of assessee.
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2022 (8) TMI 618
Revision u/s 263 - Claim of depreciation on Windmill - MAT computation - assessee had purchased windmill and claimed depreciation @ 80% on the same under the Income Tax Act - PCIT was of the view that depreciation claimed @ 80% by the assessee while computing books profits under section 115JB of the Income Tax Act is not permissible and instead, the assessee should have claimed depreciation @ 15.33% as per the Companies Act for the purpose of calculation of book profits under section 115JB - HELD THAT:- As decided in SONA WOOLLEN MILLS P. LTD. [ 2006 (10) TMI 99 - PUNJAB AND HARYANA HIGH COURT] the assessee is eligible to claim higher rate of depreciation and Income Tax Act. The Delhi ITAT in the case of HAL Offshore Ltd. [ 2019 (9) TMI 896 - ITAT DELHI] held that where depreciation provided in profit and loss account is at same rate as provided for purpose of profit and loss account being laid before Annual General Meeting (AGM), no addition could be made to assessee's income on ground that while calculating total income as per section 115JB, assessee had adopted rate of depreciation as per Income-tax Act instead of Companies Act in profit and loss account. The Andhra Pradesh High Court in the case of Deccan Tools Industries (P.) Ltd. [ 2014 (11) TMI 49 - ANDHRA PRADESH HIGH COURT] held that where for purpose of section 115J, assessee claimed depreciation at rates provided under Income-tax Rules, action of Assessing Officer in redrawing profit and loss account and adopting rates prescribed under Companies Act, was totally unauthorized. Thus we are of the considered view that in the instant facts, PCIT erred in facts and law in holding that the assessment order was erroneous and prejudicial to the interests of the revenue so far as ground number 3 of the assessee's appeal is concerned. Excessive payment to related party or not - Payments for job work not verified by AO at fair market value under section 40A(2)(b) - In the case of CIT v. Indo Saudi Services (Travel) (P.) Ltd. [ 2008 (8) TMI 208 - BOMBAY HIGH COURT] the Bombay High Court held that where revenue was not in a position to point out how assessee evaded payment of tax by alleged payment of higher commission to its sister concern, since sister concern was also paying tax at higher rate, disallowance of alleged excess commission paid to sister concern was not justified. In view of the above decisions, as applied to the assessee set of facts, Ld. PCIT in the 263 proceedings has held that the assessment order is erroneous and prejudicial for the reason that the assessee has not been able to bring on record comparable cases in order be able to substantiate that the payment is not unreasonable or excessive as per provisions of section 40A(2) (b) - Such onus cannot be cast upon the assessee to prove that payment made is not excessive/unreasonable by bringing on record instances of comparable cases. As held by various Courts/Tribunals, the onus is on the revenue to record reasons why payment by the assessee is excessive/unreasonable so as to invoke provisions of section 40A(2)(b) of the Act. For the foregoing reasons, in our view, PCIT has erred in facts and law in holding that the order is erroneous and prejudicial to the interests of the revenue, so far as ground number 9 of the assessee's appeal is concerned.
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2022 (8) TMI 604
Deduction u/s 54F - dates relevant for examining the claim of the assessee for computation of business income - Whether Tribunal has erred or not in denying the deduction under section 54F on the investment made prior to the date of transfer of original asset? - whether or not the denial of deduction for investment prior to transfer can be denied at all in respect of a house constructed within time? - HELD THAT:- CIT (Appeals) has not noted all the sequential events in the explanation given by the assessee. But has arrived at a quick finding for extending the relief under Section 54F - Turning to the findings of the Tribunal, we are of the view that the Tribunal has given importance only to the time of the payments made by the assessee or sanction of the loan by the ICICI Bank in favour of the assessee s husband. The test ought to be when the residential house was completed. Either the finding on the crucial aspect is incomplete or not satisfactory. As rightly argued by Mr Kumar relevant to the consideration is when the assessee has completed the residential house. Even assuming the loan was sanctioned in February 2012, that by itself is not conclusive. According to him, the conclusive circumstance is the completion of construction of a residential house three years from the sale of the original asset. As we notice a serious flaw in the application and appreciation of Section 54F to the circumstances stated by the assessee, we prefer to remit the matter to the CIT(Appeals) for a decision afresh. Hence for statistical purposes, the questions are answered in favour of the assessee and against the Revenue.
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2022 (8) TMI 603
Disallowance of Employees Contribution to PF u/s 36(1)(va) - scope of amendment to Section 43B - HELD THAT:- As there was a delay in depositing employee s as well as employer s contribution to the Employee s Provident Fund/ESI fund. However, the amount was deposited before the due date of the filing of the return. We find that the issue is covered in favour of the assessee as the assessment year involved is AY 2017-18 and the Explanation- 5 inserted by Finance Act, 2021 to Section 43B w.e.f. 01.04.2021 is not applicable to the assessment year under consideration. - Decided in favour of assessee. Disallowance of corporate social responsibility (CSR) expenses u/s 37 - expenditures incurred by the assessee company for the purpose of business or not? - HELD THAT:- As per provisions of Section 135 of the Companies Act, a company, having net worth of Rs. 500 Cr. or more, or turnover of Rs. 1000 Cr. or more, or net profit of Rs. 5 Cr. or more during any financial year, is obliged to spend at least 2% of the average net profits of the company made during the three immediate preceding financial years on Corporate Social Responsibility. There is no pleading that the company has spent more than the amount as it was required to spend as per the provisions of Section 135 of the Companies Act in an earlier years which, as per the provisions of sub-Section 5 to Section 135 of the Companies Act, can be set off against the requirement of Corporate Social Responsibility in succeeding three financial years. Hence, there is nothing on the file to show that the assessee had incurred more than the required expenditure on CSR in earlier years which could have been set-off against the liability on CSR of the current year. Even otherwise, there is nothing on record to show that the assessee company was exempt from spending any amount on Corporate Social Responsibility as required under Section 135 of the Companies Act. The matter is restored to the file of the ld. AO to verify the aforesaid contention of the assessee that the assessee was not required to spend any amount under Section 135 of the Companies Act on Corporate Social Responsibility and, further, that whether the amount spent by the assessee on Corporate Social Responsibility during the year was over and above its statutory liability under Section 135 of the Companies Act. As if it is found that the aforesaid plea of the assessee that the Corporate Social Responsibility expenditure was over and above its statutory obligation under Section 135 of the Companies Act is wrong and false then the finding of the ld. AO disallowing the aforesaid expenditure being hit by the provisions of Explanation 2 to Section 37 of the Act will stand affirmed. Appeal of the assessee is treated as allowed for statistical purposes.
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2022 (8) TMI 602
Assessment u/s 153A - Addition u/s 68 - objection of the assessee are that no assessment proceedings were pending in respect of the assessment year under consideration as on the date of the search and also addition has been made without any reference to incriminating material - HELD THAT:- We find that Revenue has not challenged the fact of non-pendency of any assessment on the date of search. From the assessment order, we find that addition in dispute in ground No. 5 and 6 have been made on the basis of ITS details. Regarding the ground No. 7 also though the AO has not referred to any incriminating material but the Ld. CIT(A) has made general observation that the assessee was engaged in obtaining accommodation entries. We find that there is no specific reference of any incriminating material for sustaining the addition in dispute of ₹32,50,000/- which was made by the Assessing Officer under section 68 of the Act. Both the conditions of the decision in the case of Kabul Chawal [ 2015 (9) TMI 80 - DELHI HIGH COURT] that for making addition under section 153A of the Act, firstly, the assessment proceedings should be pending as of the date of the search and secondly, there should be incriminating material for making the addition, are not fulfilled. - Decided in favour of assessee.
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2022 (8) TMI 601
Addition of Unexplained Credit - Addition as non genuine sundry creditors - HELD THAT:- We find that the Addition arises out of reconciliation difference in assessee s capital account with CEM wherein the assessee is a partner. For the said reason, the assessee would not be figured as debtors in the books of that firm. Assessee was successful in reconciling the two differences and the allegation of AO regarding unexplained cash credit would have no legs to stand. It is undisputed finding that contract receipts pertaining to firm was wrongly credited in assessee s account and the same has already been offered to tax by the firm. Therefore, this addition has rightly been deleted by Ld. CIT(A). Addition of unexplained investment - Assessee had adequate funds to meet the expenses and also to make investments. The same is further supported by the workings made by CIT(A) which has been extracted by us in preceding - Therefore, the action of CIT(A) in deleting the addition could not be faulted with. DR has pleaded that the drawings was not accounted for by the firm in the reconciliation statement given during the remand proceedings. We find that the same is also not factually correct. The assessee, in its reconciliation statement given to Ld. CIT(A), has reversed contract receipts of Rs.312.50 Lacs and added drawings - The net difference. In the statement given on 08.01.2020, the amount shown is Rs.275 Lacs and Rs.2 Lacs which totals to Rs.277 Lacs. Therefore, there is difference in presentation only but the net impact is the same.
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2022 (8) TMI 600
Rectification of mistakes - estimation of Net profit - application of net profit rate @ 8% - Best Judgment assessment - addition being hire charges separately - HELD THAT:- We find that the adjustments made in the order passed u/s. 154 are not apparent mistakes on records, because the ld.AO has passed best judgment assessment order based on financial statements placed before him and therefore, the adjustments made by the ld. AO in the order passed u/s. 154 of the Act treating the hire charges as part of the contract receipts and again adding them to the total income and also adding the amount of interest on NSC/FD as part of the gross contract receipts and not allowing the claim of partner s remuneration and interest, which have been allowed in the regular assessment proceedings by no stretch of imagination are mistakes apparent from records. Therefore, in our considered view all the adjustments made in the order(s) u/s. 154 of the Act dt. 11.12.2015 and 15.1.2016 have no legs to stand and therefore, the alleged addition in challenge before us arising out of the said order stands deleted. Accordingly, all the effective grounds raise are allowed. Reopening of assessment u/s 147 - taxing the interest income as income from other sources and not treating it as part of gross contract receipts - HELD THAT:- We find that the reason for which the case has been reopened relates to interest income - This interest income has been duly shown in the audited financial statement and tax audit report and it is not a case that the assessee failed to disclose such income in the I.T return. The ld. AO has not received any information from outside source, which the assessee failed to furnish/disclose in the return of income or concealed any particulars. Thus, it is a clear case of change of opinion as the ld. AO passed best judgment assessment order after going through the financial statements and details appearing in the audit report and the audited balance sheet, which included the interest income on FDR/NSC and took a plausible view and estimated the net profit @ 8% of the gross contract receipts as against 0.39% declared by assessee. This action of ld.AO is sufficient to indicate that ld.AO has considered all aspects and took a best judgment to assess the assessee s income at much higher than the income declared in Audited Financial Statements. We find that on the very same issue of taxability of interest income on FDR/NSC the ld.AO wants to change his opinion and also wants to tax it separately as income from other sources . It is judicially well settled that for mere change of opinion, reopening of assessment is not allowed. We, therefore, are of the considered view the re-opening proceedings carried out by the ld.AO are bad in law and liable to be quashed. Accordingly, we quash the re-opening proceedings and delete the addition(s) so made in this assessment. Assessee appeal allowed.
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2022 (8) TMI 599
Unexplained cash deposits - Addition u/s 69A - cash deposits during the demonetization period - HELD THAT:- The undisputed fact is that flat belonging to the assessee has been sold as per the registered deed dated 14.08.2013. According to the assessee, this flat was sold for Rs.44,70,000, whereas, the sale deed reflected only an amount of Rs.27,00,000. The assessee claims that she has received balance consideration of Rs.17,70,000 in cash. The entire sale consideration which is in the range of Rs.44 lakh for each of the flats, has been offered to tax by the assessee and her mother in their respective income tax returns, which find place in the paper book compilation filed by the assessee. It is also an undisputed fact that the assessee has in her return of income has declared the total sale consideration at Rs.44,70,000/- as being the full sale consideration for sale of property. The return of income filed by the assessee is prior to demonetization period. This demonstrates the bonafides of the assessee in declaring the entire receipts, i.e. both in cheque and cash. In view of the above, it is clear that FMV of flat sold as disclosed in the return of income filed by the assessee. Therefore, cash receipt on sale of flat on 14.08.2013 cannot be brushed aside as untrue. Why the delay in depositing the above cash receipt on account of sale of flat? - In respect of the inordinate delay in depositing the cash into the bank account, the argument of the assessee is that the revenue has not brought anything on record to suggest that the cash was utilised or put to use in any other manner. It is further stated that the assessee was not present in India to spend the money and same was lying with her father. As stated that only on annual visits to India, the assessee used to spend money for her personal purposes. The balance cash remaining with her father was deposited into bank account after demonetization (After assessee specifically came down to India for depositing balance cash which was available with her father). The above submission of the assessee on surrounding circumstances, cannot be stated to be untrue. The sale of flat itself was through assessee s father, the Power of Attorney Holder. The cash was received by the assessee s father and has been in his possession. The assessee being an NRI visits India very rarely and spends money for her personal purposes on such visits. On perusal of the assessee s bank statement, find that there is hardly any cash withdrawal for the period September 2013 (i.e., the period of sale of second flat) upto the date of cash deposits. Therefore, an inference can be drawn that a small portion of cash was utilized out of cash which was in the possession of the assessee s father, whenever she visits India. Revenue has not brought anything on record to suggest that the cash which was received for the sale of flat was utilized or put to use in any other manner. Further, the Revenue has not been able to bring on record that the assessee being an NRI, has any other source of income, not disclosed to the Department. Thus cash deposits are out of sale proceeds received by the assessee from the sale of the property and the same was available for making deposit to the extent of Rs.14,41,000 during the period of demonetization. Therefore, the addition made u/s 69A is hereby deleted. It is ordered accordingly.
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2022 (8) TMI 598
Correct head of income - sale consideration received by the appellant on sale of shares - business income or capital gain - HELD THAT:- From the transactions and covenants of agreement mentioned, it clearly emanates that the business was being carried out by M/s KLIPL and assessee was simply a shareholder and not directly into the business so it can be affirmed that the transactions of assessee with LOPAREX BV was transfer of shares and not of business itself. The assessee had rightly declared income under the head Capital gains. No portion of considerations can be attributed for the purposes of sec 28(va) hence we set aside the finding of Ld. CIT(A)., attributing 5% of the consideration as income covered by sec 28(va). Exemption income u/s 10(35) on dividend income received on the units of Mutual fund - assessee also claimed short term capital loss (STCL) - whether said transactions are not hit by the provisions of sec 94(7)? - HELD THAT:- In the assessee s case, units were purchased much before 3 months period prior to record date, hence condition prescribed in clause (a) of sec 94(7) is not satisfied hence sec 94(7) can t be applied to the assessee s case. A.O. has not brought any evidence on record about motive of the assessee in indulging the transaction to earn loss. It is also on record that the transactions entered into by the assessee is with the SEBI regulated mutual fund scheme of a very big and reputed asset management company. Even remotely it can t be assumed that the intentions of the assessee are to earn the loss with the gloves in hand with a reputed AMC. We are in agreement with a finding of Ld. CIT(A) and sustained the deletions made by him. Hence this ground of appeal filed by revenue is dismissed.
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2022 (8) TMI 597
Deduction of the interest on bank deposits u/s.80P(2)(a)(i) - HELD THAT:- As in the case of the assessee before us the surplus funds parked by way of short-term deposit with the co-operative bank, viz. Jila Sahakari Kendriya Bank are inextricably interlinked, or in fact interwoven with its business of providing credit facilities to its members, therefore, the same as claimed by the Ld. AR, and rightly so, would duly be eligible for deduction u/s. 80P(2)(a)(i). We, thus, in terms of our aforesaid observations, direct the AO to allow deduction u/s. 80P(2)(a)(i) on the interest income earned by the assessee society on its deposits with the co-operative bank.Ground of appeal No.1 raised before us is allowed. Deduction of the income from paddy procurement business u/s 80P(2)(a)(iii) - HELD THAT:- We, though concur with the claim of the AR that the assessee society is entitled for deduction of its income from paddy procurement business u/s.80P(2)(a)(iii), but restore the matter to the file of the A.O for the limited purpose of restricting the said claim of deduction to the extent of the profit relatable to the marketing of the agricultural produce of the members of the assessee society. In the course of the set-aside proceedings the AO shall re-adjudicate the assessee s claim for deduction under Sec. 80P(2)(a)(iii) i.e. after determining as to what extent the assessee society had facilitated the marketing of the agricultural produce grown by its members, and thus, restrict it s claim for deduction u/s. 80P(2)(a)(iii) only to the extent of the profit relatable thereto. The assessee shall in the course of the set-aside proceedings furnish the requisite details/documents that are called for by the A.O. Addition on account of TDS on commission received from paddy procurement business - HELD THAT:- As stated by the ld. AR, and rightly so, the Tribunal in the case of Gramin Sewa Sahakari Samiti Maryadit Ors [ 2022 (3) TMI 75 - ITAT RAIPUR] had after necessary deliberations on the issue in hand remanded the matter to the file of the A.O, with a specific direction i.e, to restrict its claim for deduction as regards its profit from PDS only to the extent of its net profit i.e., after considering the proportionate expenses. We on the same terms restore the matter to the file of the AO, with a direction to restrict the assessee s claim for deduction as regards its profit from PDS only to the extent of its net profit i.e., after considering the proportionate expenses. Thus, the Ground of appeal No.1 (iv) is allowed for statistical purposes. Entitlement of a co-operative society for claim of deduction u/s 80P(2)(d) qua the dividend received on shares of a co-operative bank is squarely covered by the aforesaid decision of the Tribunal in [ 2022 (3) TMI 75 - ITAT RAIPUR] therefore, principally concurring with the claim of the ld. AR we herein vacate the disallowance of the assessee s claim for deduction u/s 80P(2)(d) qua the dividend received on shares of a co-operative bank, viz. Jila Sahakari Bank. Thus, the Ground of appeal No.1(v) raised in appeal by the assessee is allowed in terms of our aforesaid observations.
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2022 (8) TMI 596
Addition u/s 80IB - Claim denied as assessee deemed not carrying on the manufacturing operations - AR submitted that the assessee is an SSI Unit engaged in the manufacture of forgings, tractor and auto part - HELD THAT:- We find that nothing has been brought on record by the Revenue either during the course of proceedings before the lower authorities or before us that there has been any change in the nature of manufacturing activities being carried out by the assessee in the earlier years and in the year under consideration. The assessee has been claiming deduction u/s 80IB in the earlier years in respect of its own sales as well as labour income and which has been allowed by the AO in terms of order passed u/s 143(3) r/w 153A - There is nothing on record that the claim of deduction so allowed in the earlier years has subsequently been withdrawn. Therefore, following the principle of consistency where there are no changes in the facts and circumstances of the case as well as following the legal proposition so laid down in the aforesaid decision by the Hon ble High Court, the assessee shall be eligible for grant of deduction u/s 80IB for the impugned assessment year. The order so passed by the ld CIT(A) is thus set-aside and the ground of appeal taken by the assessee is allowed. Addition u/s 36(1)(iii) - AO worked out disallowance on the entire investment made during the preceding year @12% p.a. and after deducting the interest already disallowed by the assessee, disallowed a sum on the ground that the assessee is paying huge amount of interest and other borrowings - HELD THAT:- Assessee has contended that besides the loan of Rs 15 lacs, rest all payments towards the purchase of machinery has been funded through internal accruals however it has failed to support and demonstrate the same through its financials and/or documentation either before the lower authorities and even before us, nothing has been brought on record to support the said contention. Regarding other contention of the assessee that where the borrowed funds were raised and utilized, it enters the common pool of funds available with the assessee, in such a scenario, average rate of interest should be applied instead of rate of interest in respect of particular borrowing, we find merit in the said contention and remand the matter to the file of the AO to verify the average rate of interest prevailing on borrowings done by the assessee during the year under consideration and determine the amount of interest so determined for the purposes of making the disallowance under section 36(1)(iii). Needless to say, the assessee be given credit for interest already capitalized in the books of accounts. In the result, the ground of appeal is allowed for statistical purposes.
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2022 (8) TMI 595
Addition u/s 14A - Expenditure on exempt income - HELD THAT:- As the issue is squarely covered in favour of the assessee and the AO has not brought out the nexus that the assessee has made investments in the instrument given to rise to exempt income out of interest bearing funds, we presume that the investment came out of available interest free funds. Hence, we delete the disallowance and allow the appeals of the assessee on this issue. Disallowance of expenses relatable to exempt income u/r.8D(2)(iii) of the Rules, i.e. average value of investment @ 0.5% i.e. particularly in AY 2012-13 - We direct the AO to verify the investments which give rise to exempt income and consider for disallowance u/r.8D(2)(iii) of the Rules, only those investments which has given rise to exempt income only and accordingly, make disallowance. Similar is the position in AY 2013-14, wherein u/r.8D(2)(iii) of the Rules, the disallowance and for the AY 2014-15, the disallowance - Similar are directions in these two assessment years. AO will verify the instrument giving rise to exempt income and only for those instruments, the investment will be considered for making disallowance u/r.8D(2)(iii) of the Rules and accordingly, this common issue is decided in terms of above directions. Consequently, the appeal filed by the assessee is partly allowed for statistical purposes. Disallowance of staff training expenses - assessee stated that persons were deputed for higher studies only after taking the large business interest of the assessee company into consideration and its large number of associated companies - as argued company sponsored the persons and deputed them for higher study on the understanding that on completion of advanced study, they would return to India and serving the company or in any of its group/associated company promoted by the group concern in a position of responsibility - HELD THAT:- After hearing both the sides and going through the facts of the case, we noted that this issue is exactly identical and there is no change in facts in these two years also, what was before the ITAT in AY 2010-11 [ 2015 (7) TMI 1411 - ITAT CHENNAI] and hence, taking the issue as covered, we decide the issue against the assessee. This issue in both the appeals of the assessee is dismissed. Disallowance of foreign travel expenses - Allowable revenue expenses u/s 37 - HELD THAT:- Before us, assessee only made bald submission that the assessee has spent money towards travel expenditure of Consultants of the assessee company and for this, he relied on the decision of JK Industries Ltd. v. CIT [ 2011 (3) TMI 23 - CALCUTTA HIGH COURT] - Now, we noted that the Hon ble Madras High Court has categorically held that expenses on foreign travel, wife of Director of assessee s company, the assessee has to show that the expenditure is incurred for the business purpose. Here, even now, on a query from the Bench, the ld.Counsel could not produce any evidence or explain how the business expenditure incurred for foreign travel of sister of Director of the assessee company that Ms.Anitha Raajyalaxmi Ratnam, is for the purpose of business. He failed to do so. In the absence of any evidence, we have no alternative except to confirm the addition. Disallowance of medical expenses of family member of the Director of the assessee company - HELD THAT:- Hon ble Madras High Court relied on the decision in the case of Gordon Woodroffe Leather Manufacturing Co. [ 1961 (12) TMI 4 - SUPREME COURT] wherein, certain tests laid down by the Hon ble Supreme Court were that the payment should have been made as a matter of practice which affected the quantum of salary. There should be expectation by the employee for payment of medical expenses. The sum of money was expended on the ground of commercial expediency and in order to facilitate indirectly the carrying on of the business of the assessee. If any one of the tests was not satisfied that medical expenditure incurred on by an employee should not be allowed as a valid business expenditure in the hands of the assessee u/s 37 - Based upon the above points, the High court held that the expenditure in connection with the payment of Medical expenses met out by the company even though, the same had been spelt out in the letter of appointment cannot be regarded as sufficient for treating the expenditure as business expenditure. As in the case of CIT v. TIAM House Service Ltd. [ 1998 (11) TMI 45 - MADRAS HIGH COURT] wherein, the decision of the Hon ble Supreme Court was followed. We are of the view that these expenses incurred towards medical expenses of the relative of the Director of the assessee company in foreign currency are personal in nature and not in relation to any business connection. Hence, the lower authorities have rightly disallowed the same and we confirm the same. Disallowance of Interest for diversion of borrowed funds to subsidiary company at Lower rate of Interest - HELD THAT:- Assessee stated at the best, the matter can be referred back to the file of the AO for verification of the actual availability of surplus funds. Since, assessee has filed these details before us as the assessee is having surplus funds with it for making advance to TVS Srichakra Ltd. according to us, in such situation, no disallowance has been made in view of the decision of the Hon ble Bombay High Court in the case of CIT v. Reliance Utilities and Power Ltd.,. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] Accordingly, we remit this issue back to the file of the AO with the above directions. This issue is allowed for statistical purposes. TDS u/s 194C - disallowance made in respect of freight charges paid for non-deduction of TDS - HELD THAT:- We noted that CIT(A) has given exactly the same findings that there are penal provisions for the lapse, no disallowance can be made by invoking provisions of Sec.40(a)(ia) and accordingly, respectfully following the decision of the Hon ble Madras High Court in the case of Dilip Kumar [ 2019 (11) TMI 987 - MADRAS HIGH COURT] and we dismiss this appeal filed by the Revenue.
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Customs
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2022 (8) TMI 617
Levy of penalty u/s 112(b)(i) of the Customs Act 1962 - smuggling of Gold activity - reliability of statements - request for cross examination rejected - HELD THAT:- The role of the Appellant in the whole episode has been derived only from the statement of Ms. DivyaKishorBhundia only Statement of said person remained uncorroborated during the investigation. As per the department Shri Rutugna being the mastermind of the smuggling racket, however during the investigation Shri Rutugna has nowhere stated the name of Appellant as connected to his alleged activity of smuggling of gold - Upon perusal of the statements, it is nowhere found that the Appellant had knowledge about the said alleged smuggling of gold activity. The department except the statement of Ms.Divya Kishore Bhundia nowhere produce any evidences to show that Appellant was involved in smuggling gold activity. The Department has not taken any steps to confirm with Shri Rutugna whether the Appellant also involved with him. The evidence on record is not sufficient to hold that the appellant was involved in alleged activity of smuggling of gold - It is well settled law that the statements of the co-noticee cannot be adopted as a legal evidence to penalize the accused unless the same are corroborated in material particulars by independent evidence. The statement of co-accused cannot be relied upon, particularly when appellant has denied his involvement in respect of the goods in question. There is absolutely no evidence on record connecting the appellant with the commission of any offence in relation to the alleged gold smuggling activity. Merely because the Appellant is engaged in the business of Gold and Silver, that would not ipso facto make the appellant in any way privy to the commission of any offence with reference to the alleged gold smuggling activity - there is absolutely no evidence on record connecting the appellant with the commission of any offence in relation to the alleged gold smuggling activity. Merely because the Appellant is engaged in the business of Gold and Silver, that would not ipso facto make the appellant in any way privy to the commission of any offence with reference to the alleged gold smuggling activity. The appellant cannot come within the ambit of Section 112(b) because appellants had never acquired possession or in any way concerned in any of the activities mentioned in the Section or any measure dealing with any goods which the appellants knew or had reason to believe are liable to confiscation. In the absence of the department having proved the knowledge of the appellant in the activities relating to the smuggled gold, there were no grounds for imposition of penalty on him - It is now well established that mensrea is an important ingredient for imposing a penalty on the persons enumerated in Section 112(b) of the Customs Act. The evidence brought out by the department nowhere suggests that the appellant was aware that the goods in question were smuggled into the India. The penalty imposed on Appellant, therefore, cannot be sustained. The appellant is not liable for imposition of penalty under Section 112(b) of the Customs Act, 1962 - Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 616
Classification of goods - unflavoured supari (betel nut product) - to be classified under CTH 21069030 or under CTH 08028000? - benefit of concessional rate of duty under Sl. No. (i) of Notification No. 96/2008 - HELD THAT:- It has to be stated that the appellant is not contesting the classification or the valuation of the goods. It is also to be stated that even prior to passing of the impugned order, the appellant had requested for permission to re-export the goods. The adjudicating authority has allowed such request. However, redemption fine of Rs.15 lakhs has been imposed. The enhanced valuation of the goods has happened for the difference in the classification adopted by the appellant. The appellant has adopted the classification under Chapter 21 on the view that the goods are in the nature of betel nut products. Taking note of the fact that the goods are not cleared for home consumption and the appellant has also incurred huge detention-cum- demurrage charges, we are of the view that the redemption fine and the penalty imposed by the adjudicating authority is on the higher side, we hold that reducing the redemption fine to Rs.4,00,000/- and penalty to Rs.5,00,000/- would meet the ends of justice - the impugned order is modified to the extent of reducing the redemption fine to Rs.4,00,000/- (for the purpose of re-export only) and also reducing the penalty imposed under sec. 112(a)(i) to Rs.5,00,000/- without disturbing other directions in the order. The appeal is partly allowed.
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Insolvency & Bankruptcy
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2022 (8) TMI 615
Dissolution of the corporate Applicant - Section 59 of the IBC, 2016 read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - HELD THAT:- On examining the Application, documents annexed therewith and the submissions made by the Applicant/Liquidator, it emerges that affairs of the Company have been completely wound up and its assets have been completely liquidated and there is no litigation pending against the Company. It is further observed that ROC and Income Tax has filed its reports in response to the compliance affidavit dated 20.04.2022. On perusal of the affidavits, it is observed that the ROC and Income tax has no objection. That inspite of notice none appeared on behalf of the IBBI and accordingly no objection was raised. In view of the facts placed on record, averments and the submissions made by the Liquidator, the Company deserves to be dissolved. The Company is hereby dissolved with immediate effect - Application allowed.
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2022 (8) TMI 614
Seeking orders for Liquidation of the Corporate Debtor - Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 (the Code) and Rule 11 of NCLT Rules, 2016 - HELD THAT:- Despite all possible steps as required under the Code, taken during the CIRP, the CoC did not receive any viable proposal for revival of the Company. The counsel submits that the decision in the IAs pending, will not have any bearing on the allowing of this application. Application allowed.
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PMLA
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2022 (8) TMI 613
Seeking direction to 1st respondent to grant extension of time to the respective petitioners to prepare a reply to the show cause notice, for a further period of two months - seeking direction to exclude the two month period from the computation of 180 days under Section 5(3) of the Prevention of Money Laundering Act, 2002 - HELD THAT:- The petitioners have to collect information and submit effective reply. It is also not in dispute that several documents running into about 5000 pages were furnished to the petitioners along with the show cause notice. They have to go through the same and submit explanation effectively. It is also not in dispute that C.Parthasarathy, Chairman of Karvy Group of Companies is involved in several crimes and he was arrested. He was released on bail only on 25.06.2022. The Courts concerned have imposed several conditions including the condition of his appearance before the Investigating Officer concerned and to cooperate with him by furnishing information/documents as sought by him in concluding investigation. It is also not in dispute that one crime is pending in Bangalore and that he has to appear before the Investigating Officer in the said crime. In proof of his hospitalization from 25.06.2022 and 30.06.2022 and sending of sample to biopsy, he has filed medical reports which are not disputed by 2nd respondent/Investigating Agency. No doubt that the adjudicating process as envisaged under Section 8 of the Act is timebound process. Timelines are mentioned therein - the petitioners are entitled to grant of extension of some reasonable time to submit reply to the show cause notice, dated 22.04.2022. According to this Court, two months time from today is reasonable. These Writ Petitions are disposed of granting two months time from today to the petitioners in both the writ petitions to submit their explanation/reply to the show cause notice dated 22.04.2022.
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2022 (8) TMI 612
Money Laundering - Provisional attachment of property - proceeds of crime - Sections 5 and 8 of the PMLA, 2002 - HELD THAT:- The powers of provisional attachment of the property is detailed under Section 5 of the Act. The said Act empowers the Director or Deputy Director authorized to provisionally attach a property for (180) days if he has reason to believe that it is pertaining to proceeds of crime. The Adjudicating Authority (PMLA) was a quasijudicial authority established under the PMLA, 2002. The proceedings before the adjudicating authority were time-bound as per the provisions of PMLA, 2002. For passing order under Section 8(3) in connection with provisional attachment order, the Act prescribes a statutory time limit that the same had to be passed within (180) days from the date of provisional attachment order. The Adjudicating Authority in the impugned show-cause notice provided a detailed note regarding the time limitation of the proceedings emphasising the necessity for adherence to the due dates prescribed - The petitioners were served with show-cause notice under Section 8(1) of the PMLA Act on 22.04.2022 and the same was received by them on 09.05.2022. The original complaint and the documents relied upon were served on them on 10.05.2022. Admittedly, the original complaint and its annexures were voluminous running into almost 5000 pages and it needs time to peruse the voluminous documents served upon them and to comprehend them and to ascertain the facts in accordance with the internal records and collate the supporting documents for preparation of reply. Any inadequate reply would affect the defence of petitioners. Therefore, not granting extension of time period to reply to the impugned show-cause notice would be depriving them of their right to put forth defense against the provisional attachment order and to present evidence in support of their defense. The same was in violation of principles of natural justice violating the opportunity of providing a fair hearing. It is considered fit to direct the 1st respondent to grant extension of time for one (01) month to the petitioners to prepare a proper response to the impugned show-cause notice. For the purpose of computing the period of (180) days, the period during which the proceedings were extended shall be excluded as per the third proviso to Section 5 of the PMLA Act inserted by way of Amendment Act No.13 of 2018 w.e.f. 19.04.2018 - Petition disposed off.
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Service Tax
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2022 (8) TMI 611
Refund of unutilised CENVAT Credits accumulated on account of export of services - expiry of the period of limitation of one year, counted from the date of realisation of export proceeds - time limitation - N/N. 27/2012-CE (NT) - HELD THAT:- In CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [ 2018 (2) TMI 946 - CESTAT BANGALORE] the amended clause B of para 3 of Notification No. 27/2012-CE (NT) was dealt with and a finding was made to the effect that such an amendment can have prospective effect and the relevant date for the purpose of deciding the time limit for consideration of refund claim under Rule, 5 of CENVAT Credit Rules, 2004 may be taken as the end of the quarter in which FIRC is received, in case where refund claims are filed on a quarterly basis. The Appellant is entitled to get refund amount of Rs.1,01,841/-, Rs.1,44,215/-, Rs.1,51,869/- and Rs.1,50,650/- respectively as prayed in all these appeals with applicable interest and the Respondent-Department is directed to pay the same within 2 months of communication of this order - Appeal allowed.
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2022 (8) TMI 610
Non-payment of service tax - registration with the Service Tax Department not taken - Construction of residential complex service - renting of immovable property service - charitable activity or not - applicability of exemption under clause (4) of Mega Notification No. 25/2012 dated 20.06.2012 - failure to comply with the provisions of Section 68 of Finance Act, 1994 read with Rule 6 of Service Tax Rules, 1994 - Financial Year 2012-13 to 2014-15 - extended period of limitation. Whether the various fees collected by the appellant can be held as consideration for rendering any service by the appellant to someone else? - HELD THAT:- It is observed that the Adjudicating Authority has confirmed the demand on several kinds of fees collected by the appellant for the sole reason that as per clause (c) of Section 65 B (44) the fees taken in any Court or Tribunal only are excluded. The Section is silent about excluding any other fee. But the fact remains is that the appellant is an entity created as an Urban Development Authority in terms of Section 4 of Uttar Pradesh Urban Planning and Development Act, 1973 for development work of Haridwar Roorkee prior to creation of state of Uttrakhand with the objects to promote and secure the development of the area and accordingly, to execute works in connection with the supply of water and electricity, sewage and to provide and to maintain other services and amenities for purposes of development. There is no denial that the appellant therefore is a statutory authority - no Revenue benefits have been incurred by the appellant from the amounts of several different kind of fees collected by them, the entire amount so received been deposited in the Government Treasury, irrespective for any specified purpose. Reliance on the Circular No. 192/02/2016 dated 13.04.2016 is absolutely wrongly on the part of the Adjudicating Authority. It is Circular No. 89/7/2006-ST dated 18.12.2006 according to which the fee and charges since are collected as per statute, they cannot be termed as consideration - the confirmation of demand of Rs. 2,31,84,581/- as a liability towards various amount received by the appellant on account of various fee is not sustainable. The order to that extent is hereby set aside. Whether income under free hold lease rent, miscellaneous receipt and Harilok Maintenance are consideration towards providing a service by the appellants? - HELD THAT:- The amounts received by appellant towards free hold lease rent, maintenance charges are received as quid pro quo to providing Renting and Maintenance Services, hence are the monetary benefits to the appellant. Irrespective it being statutory body, these amounts are liable to tax. We further observe that the findings of adjudicating authority regarding misc. receipts and the service tax liability there upon has not contested by the appellant. Accordingly, it is held that on the income under heads of Free Hold Lease Rent, Miscellaneous Receipt and Harilok Maintenance Service , the appellant was liable to pay service tax. Extended period od limitation - HELD THAT:- The demand in question pertains to the period 2012-13 and 2013-14. The show cause notice is given in April 2018 i.e. much beyond the period of normal limitation. The extended period can only be invoked in terms of proviso to Section 73 (1) of Finance Act, 1994 i.e. only in the cases where ingredients of fraud, collusion, willful mis-statement, suppression of facts etc. with an intent to evade tax are present - No positive act of the appellant is brought to the notice by the department which may be sufficient to hold that the act amounts to committing fraud or collusion etc. Above all, as already held that appellant is a public entity acting under the mandate of statute for the infrastructural development in these areas of Haridwar and Roorkee, question of suppression of facts by such public entity otherwise does not arise. The Hon ble High Court Calcutta in the case of INFINITY INFOTECH PARKS LTD. VERSUS UNION OF INDIA [ 2014 (12) TMI 36 - CALCUTTA HIGH COURT] has held that once there is no allegation in the show cause notice of any conscious act on the part of the assessee that constitutes fraud, collusion, willful mis-statement, suppression of facts or contravention of any provision of the Finance Act, 1994 or any rule made their under with intent to evade service tax, the extended period of time while issuing said show cause notice cannot be invoked. Thus, the show cause notice raising demand for the year 2012 to 2014 cannot be issued in the year 2018. Such show cause notice is definitely barred by time. Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (8) TMI 609
Proceedings amounting to manufacture or not - activity of unloading of chemicals of Chapter 29 from the tankers and re-packing and labeled in small drums by the job workers - liability of duty on principal supplier or job-worker. If at all the activity carried out at the job worker s end is amount to manufacture whether the appellant is liable to pay the duty on such activity? - HELD THAT:- If at all the activity amounts to manufacture the job worker is a manufacturer in the eyes of Central Excise Act, 1944 to hold a person as manufacturer. The ownership of goods is not relevant, therefore, in the present case even though the goods belongs to the appellant but the entire activities were carried out by the job worker. From the detailed finding of the Larger Bench in THERMAX BABCOCK AND WILCOX LTD., THERMAX LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2017 (12) TMI 266 - CESTAT MUMBAI] , it is settled that irrespective of the ownership of goods whoever undertakes the manufacturing activity he has to pay the duty. Applying the ratio of the Larger Bench in the present case since, the job worker has carried out all the activities which as per the department amounts to manufacture, the job worker is alone to pay the excise duty, therefore, the duty demand raised against the appellant is not sustainable, hence, the same is liable to be set aside. Since, the issue that who is liable to pay the duty has been decided, the issue whether the activity per se is amount to manufacture or otherwise is not decided. The appellant in any case is not liable to pay the excise duty in the facts and circumstances of the present case - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (8) TMI 608
Constitutionality of Section 3A of the Luxuries Tax Act - territorial jurisdiction to entertain the writ petition - whether this Court would have the territorial jurisdiction under Article 226 of the Constitution of India against the appellate order dated 31.05.2019 passed by the fourth respondent upholding the order dated 04.02.2017 passed by the second respondent? HELD THAT:- Admittedly, the show cause notice issued by the Commercial Tax officer, Visakhapatnam, dated 07.08.2015, has been challenged separately by way of another writ petition. But it is yet to come up for hearing. Therefore, if the claims of both the Commercial Tax Officers are actually sustainable in law, assuming that they are sustainable, the petitioner can always raise a valid point that there cannot be overlap of the claims. There cannot be two demands by two different authorities in respect of one liability. But that is a matter that does not strike at the root of the issue of jurisdiction of the respondent. Therefore, the second contention of the learned counsel for the petitioner also does not appeal to entertain the writ petition, especially at the stage of show cause notice, when the Supreme Court has granted liberty to whoever it is to issue show cause notice and proceed further. Therefore, there are no justification to entertain the writ petition at this stage. This Court held that the revised show cause notice was issued on liberty being given by Supreme Court. Therefore there was no justification to entertain the challenge to the said show cause notice. In so far the jurisdiction of the Commercial Tax Officer, Visakhapatnam or for that matter Assistant Commissioner of Commercial Taxes, Warangal is concerned, view taken by this Court was that - that is a matter which does not strike at the root of the issue of jurisdiction of the taxing authorities. Since it has not collected luxury tax, it is not liable to pay such tax, be it to the second respondent or to the third respondent. In the circumstances, to restrain the third respondent to perform its statutory duties following the liberty granted by the Supreme Court would not be justified - no action of the third respondent is under impugnment in the present writ proceeding. Therefore, no order against the third respondent is warranted. The writ petition is dismissed.
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Indian Laws
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2022 (8) TMI 607
Dishonor of Cheque - insufficient funds - cheques in question has been issued after tendering of resignation by the petitioner (resignation from Directorship) or cheques were issued prior to the date of generation of Form no. DIR-12 and during his tenure of Directorship? - vicarious liability of the petitioner u/s 141 of NI Act after tendering such resignation. Whether the petitioner was in any way connected with the affairs of the company when the cheques were issued or whether he was continuing as a Director of the company when the cheques were issued? HELD THAT:- A prosecution under Section 138 of the Act could be launched not only against the company on behalf of which the cheque has been dishonoured but it could also be initiated against every person who at the time the offence was committed, was in charge of and was responsible for the conduct of the business of the company. In fact, Section 141 of the Act deems such persons to be guilty of such offence, liable to be proceeded against and punished for the offence, leaving it to the person concerned to prove that the offence was committed by the company without his knowledge or that he has exercised due diligence to prevent commission of such offence. To fasten vicarious liability under section 141 of the Act on a person, the law is well settled by the Hon ble Supreme Court in catena of decisions that the complainant should specifically state as to how and in what manner the accused was responsible. A bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible for the conduct of the business of the company without anything more as to the role of the Director is not sufficient to make him liable. Whether the petitioner at the material time of offence was in charge of the affairs of the company and responsible for the conduct of the business of the company? - HELD THAT:- It is found from the documents appended to the petition that the petitioner sent an application (Annexure P1 at page 13 of the petition) to the Board of Directors of M/s Arcuttipore Tea Company Ltd. tendering resignation from the Directorship on 13th March, 2020. The extracts of the minutes of the Board of Directors dated 22nd November 2021 (at page 20 of the petition) shows that it was resolved that the resignation of the petitioner from the Directorship of the company is accepted with effect from 13th March, 2020 - At the time of hearing learned advocate for the opposite party-complainant fairly submitted that the petitioner is not the drawer/signatory of the cheques that were dishonoured. These facts leave no manner of doubt that on the date of offence the petitioner was not a Director of the company and he had nothing to do with the affairs of the company. Therefore the petitioner being the erstwhile Director of the company, who was not in charge of affairs of the company and was not responsible for the conduct of the business of the Company at the relevant time, cannot be held liable for an offence under Section 138 of the Act. In view of the materials discussed the accusation against the petitioner cannot stand and it would be travesty of justice if the petitioner is relegated to trial and is asked to prove his defence before the trial court. Therefore for promotion of justice or to prevent the injustice or abuse of process it would be proficient to exercise jurisdiction under Section 482 of the Code of Criminal Procedure - The criminal proceeding under section 138 of the Negotiable Instruments Act, pending before the learned Judicial Magistrate, 4th Court, Siliguri stands quashed so far as the present petitioner (Accused no.5) is concerned. Application disposed off.
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2022 (8) TMI 606
Dishonor of Cheque - preponderance of probabilities - Burden to prove (reverse onus clause) - rebuttal of presumption available under Section 139 of Negotiable Instruments Act, 1881 - HELD THAT:- It has been held by Hon'ble Supreme Court in RANGAPPA VERSUS SRI MOHAN [ 2010 (5) TMI 391 - SUPREME COURT ] that Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under section 139 is a device to prevent undue delay in the course of litigation. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. In the case in hand, the petitioner has not disputed cheque in question and signatures found therein. The petitioner admitted that cheque in question belongs to him and they bear his signature. When the drawer has admitted the issuance of cheque as well as the signature present therein, the presumption envisaged under Section 118 read with Section 139 of NI Act would operate in favour of the complainant. The said provisions lays down a special rule of evidence applicable to negotiable instruments The trial court after examining all the evidences, both oral and documentary, concluded that on behalf of the complainant/O.P.No.2 sufficient material has been brought on record to prove that the complainant gave loan amount to the accused and in lieu of the loan amount accused issued cheque Ext.1 in favour of the complainant/O.P.No.2 and on presentation of the said cheque in the bank, it was dishonoured. Thereafter, legal notice was sent. These factual findings goes to show that all the requirements to establish a case under Section 138 of the N.I. Act has been fulfilled by the complainant. No interference is required so far as judgment of conviction is concerned and the same is hereby sustained. However, so far as compensation amount and sentence is concerned, the learned Appellate Court has sustained the compensation amount of Rs.9 lakhs and sentenced the petitioner to undergo S.I. for a period of 1 year - Having regard to the facts of the case and looking to the continuity of litigation, since the case is of the year 2009 and 13 years have elapsed; interest of justice would be sufficed if the sentence part is modified in lieu of compensation itself. Thus, the sentence of one year is hereby modified to the extent that the petitioner shall pay an amount of Rs.1 lakh over and above 9 lakhs compensation and after paying Rs.10 lakhs in total shall be discharged from his liability of bail bond. The instant criminal revision application is disposed of.
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2022 (8) TMI 605
Dishonor of Cheque - insufficient funds - seeking compounding of all the offences or withdrawal of the Complaint - section 138 of NI Act - HELD THAT:- After dishonour of cheque, when the Complaint had been filed and pending trial, the Accused had settled the entire amount. Here in this case, the Accused had settled it on the first date of hearing before the learned Judicial Magistrate. Still the Complainant prevented the Court from proceedings with compounding offence on the basis of a reported ruling which was prevented to the learned Magistrate from ordering the closure of proceeding or by dropping further proceedings. Considering the facts with the subject matter of the case during the period of Covid lock down through out India each and every citizens of the country facing financial problem. Ignoring those circumstances, he placed reliance on the decision of the Hon'ble Supreme Court in M/S. METERS AND INSTRUMENTS PRIVATE LIMITED ANR. VERSUS KANCHAN MEHTA [ 2017 (10) TMI 218 - SUPREME COURT] and had exhorting pressure on the Accused, who had already settled the dues and, who had already requested the Complainant not to proceed with lodging the Complaint under Section 138 of Negotiable Instruments Act was ignored by the Complainant. Those facts reminds the Shakespeare's Play Shylock . The Complainant is that on nature which cannot be entertained by the Court. It is a purely abuse of process of Court committed by the Respondent/Complainant. Therefore, in the light of the above, the rulings cited by the learned Counsel for the Respondent/Complainant is rejected. Considering the request of the Petitioner to the Complainant while furnishing the cheque to prove the bona fide, it is clearly stated that two cheques had been honoured but three cheques were requested not to be presented till arrangement of funds. Still the Respondent was hasty in presenting the cheque not heeding to the request of the Petitioner - Petition allowed.
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2022 (8) TMI 594
Validity of Sale Certificate issued in favour of the Auction Purchaser under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - time limitation - application dismissed on the ground that it was filed beyond the statutory period of limitation of 45 days - HELD THAT:- According to Section 17(1), the period of 45 days is mandated to commence from the date on which a measure under Section 13(4) has been adopted, which in the facts of the present case is the date when the secured asset is sold in favour of Respondent No.7. This is a case where the Company, with its own independent identity, is contesting the proceedings. It is apparent that the Directors were also contesting the matter by filing the Section 17 application. Even the legal representatives of one of the deceased Directors were party to the application under Section 17. Further, DRAT came to the conclusion that the original order passed by the DRT has been arrived at after a detailed consideration and that there is no justifiable ground for invoking the review jurisdiction. For granting or refusing to grant an interim order, the above referred facts were more than sufficient. The reason for providing a time limit of 45 days for filing an application under Section 17 can easily be inferred from the purpose and object of the enactment. In TRANSCORE VERSUS UNION OF INDIA [ 2006 (11) TMI 349 - SUPREME COURT] this Court held that the SARFAESI Act is enacted for quick enforcement of the security. It is unfortunate that proceedings where a property that has been brought to sale and third-party rights created under the provisions of the Act, have remained inconclusive even after a decade. The High Court was not justified in staying the operation of the order of the DRAT which came to the conclusion that there was no error apparent on the face of record for the DRT to invoke the review jurisdiction and recall its order dismissing the application under Section 17 of the Act - Appeal allowed.
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