TMI Tax Updates - e-Newsletter
August 19, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Classification of goods - rate of GST - different varieties of Flours - There are no merit to treat the subject goods as flour. As these products are not specifically mentioned under any specific Tariff item of HSN 2106, the products merit classification under the residual entry ‘other’ at HSN 21069099 as "Food preparations not elsewhere specified or included" - The products i.e. Gota Flour ii. Khaman Flour iii. Dalwada Flour iv. Dahiwada Flour v. Dhokla Flour vi. Idli Flour and vii. Dosa Flour are classifiable under HSN. 2106 90(Others) attracting 18% GST (9% CGST + 9% SGST) - AAR
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GST:
Admissibility of input tax credit - blocked credit or not - GST paid on the procurement of plant and machines including the service of installation and commissioning - Input tax credit is not admissible on Air-conditioning and Cooling System and Ventilation System, as this is blocked credit falling under Section 17(5)(c) CGST Act. - AAR
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GST:
Valuation - Reduction of subsidy for arriving at Ex-factory value in order to collect the GST on goods supplied to the customer under the rooftop solar project - The taxable Value on Tax invoice issued to the Customer shall be arrived after deducting the subject Subsidy from ‘System Cost’ and GST liability is on the Taxable Value. - There shall be no implication of Section 17(2) CGST Act, if taxable value is arrived after subtracting the subsidy amount from the system price. - AAR
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GST:
Subsidy or not - incentives received under “Atma Nirbhar Gujarat Sahay Yojna” declared by the Gujarat Govt. - The applicant has submitted that after disbursement of loan to the beneficiaries, they had forwarded the claim for incentive/subsidy through the office of District Registrar, Co-operative Society, Rajkot and after considering the said claim, the Govt. of Gujarat has sanctioned incentive - The subject incentive amount liable to GST. The said Incentive is not subsidy and does not merit exclusion from valuation under section 15(2)(e) CGST Act. The subject supply is covered at section 7(1)(a) CGST Act and not covered at section 7(2) CGST Act. - AAR
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GST:
Input tax credit - Central Air Conditioning Plant, Classified & Grouped under Plant & Machinery - ITC is blocked under Section 17(5)(c) CGST Act for: Central Air Conditioning Plant; Lift; Electrical Fittings; Fire Safety Extinguishers, Roof Solar Plant. - ITC is blocked under Section 17 (5) (d) CGST Act for : Architect Service and Interior Decorator fees. - AAR
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GST:
Input tax credit - GST charged by service provider on canteen facility provided to employees working in factory - levy of GST - nominal amount recovered by Applicants from employees for usage of canteen facility - ITC on GST paid on canteen facility is blocked credit under Section 17 (5)(b)(i) of CGST Act and inadmissible to applicant. - GST, at the hands on the applicant, is not leviable on the amount representing the employees portion of canteen charges, which is collected by the applicant and paid to the Canteen service provider. - AAR
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GST:
Levy of GST - Components supplied by the Vendors in a Sale-in-Transit to AHPL - The Components, which were supplied in Sale-in-Transit transaction, without payment of tax under the erstwhile Central Sales Tax regime, by the Applicant , i.e., AHPL to its Customer (i.e., TANGEDCO) in Tamil Nadu is a 'Supply' as per Section 7 of the CGST/TNGST Act 2017 and will attract levy of Goods and Services Tax. - AAR
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GST:
Classification of supply - supply of goods or supply of services - activity of Bus Body Building on the chassis supplied by the customer on job work basis - The bus body building on the chassis supplied by the customer is a supply under SAC 998881-motor Vehicle and trailer manufacturing services - applicable rate will be GST will be 18% - AAR
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GST:
Entitlement to avail and utilize ITC - the transfer of leasehold rights in the part property - the GST amount charged by IPL if such transaction is considered to be a supply - Section 17(5) of the Act, starts with the Non-obstante clause, ‘Notwithstanding anything contained in sub-section (1) of section 16’, which indicates that the provisions under Section 17(5) prevails over section 16(1) of the Act. From the explanation of ‘Plant and Machinery’, it is evident that while ‘Plant and Machinery’ includes foundation and structural supports required to fix apparatus, equipment, machinery on the earth, land building or other civil structures are specifically excluded. - The applicant is not entitled to avail and utilize ITC of GST charged by IPL - AAR
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Income Tax:
Disallowance u/s. 2(22)(e) - assessee has received unsecured loan and assessee company from whom it has obtained unsecured loan there were two common directors - Since the assessee company was not registered share holder in the company from whom the loan was obtained therefore no addition can be made as deemed dividend in the hands of the assessee company merely because there was a common shareholder in the payee company and the assessee company. - No additions - AT
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Income Tax:
Denial of exemption u/s.10(1) in respect of income returned as agricultural income on account of it being unproved - Safed Musli produced - agricultural expenditure Presumably incurred on the standing crops - Denial of deduction u/s. 80-JJA on the profits and gains of the business of sale of biofertilizer and biological agent - Decided partly in favor of assessee - AT
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Income Tax:
Exemption u/s 11 - grant of registration under section 12AA(l)(b)(II) denied - Charitable activity u/s 2(15) - The registration under section 12AA is only to the objects of the institution. The activities of an institution though genuine at the time of grant of registration may not remain so during its life span and the registration granted to it cannot be life time guarantee that it would remain so, that is why the law prescribes procedure for withdrawal of registration once granted. - AT
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Income Tax:
Revision u/s 263 - Deduction u/s 80P(2)(a)(i) - interest income was received by the assessee on deposits - section 80P(2)(d) of the Act specifically exempts interest earned from funds invested in cooperative societies. - However, interest earned from investments made in any bank, not being a co-operative society, is not deductible under section 80P(2)(d) of the Act. - The argument that co-operative Banks are also co-operative societies is without any basis - AT
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Income Tax:
Reopening of assessment u/s 147 - Jurisdiction of Income Tax Authorities - Power to transfer cases - the assessment framed by ACIT, Circle-23(1), Hooghly, is bad in law on two counts, firstly he did not have any pecuniary jurisdiction to frame the assessment and secondly he himself did not form any belief that the income of the assessee has escaped assessment nor did he issue notice u/s 148 of the Act which was sine qua non to assume jurisdiction to frame to assessment. - AT
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Income Tax:
Disallowance of claim of depreciation on the assets leased - operating lease - Allegation of the Revenue that the Assessee does not have any infrastructure is concerned, we are of the considered opinion that leasing business does not require any such elaborate infrastructure and any such multi-location, SCLB arrangement can be entered into without the physical movement of the assets depending on the commercial viability of the transaction. - AT
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Income Tax:
Revision u/s 263 by CIT - We are of a strong conviction that no infirmity emanates from the order passed by the Pr.CIT, who had rightly observed that the A.O without verifying the assessee’s claim for deduction of interest expenditure had summarily accepted the same on the very face of it. Our aforesaid conviction is fortified by the ‘Explanation 2(a)’ to Sec. 263 of the Act - AT
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Customs:
Classification of goods - API supari - chikni supari - unflavoured supari - flavoured supari - their correct classification is heading 0802 of the first schedule to the Customs Tariff Act, 1975. - AAR
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Customs:
Requirement with the compliance with mandatory BIS compliance - The appellant has given clear distinctions of tasks that can be performed by Hand blender and Hand Mixer - In view of these facts, the Handheld Blenders and Handheld Mixers are two different products and having different specifications, mechanisms, performance, speed, power and even built for performing different tasks. Further, the impugned goods are not liable to have a BIS compliance as mentioned in BIS Kitchen Appliances (Quality Control) Order, 2018 as the same is not applicable in the impugned goods. - AT
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Customs:
Relevant date for payment of Customs Duty - The respondent had submitted all the four Bills of Entry with the relevant documents on 05.07.2019 before 5 PM and the respondent cannot be blamed if for three consignments, Bills of Entry numbers were not generated because of some fault with the ICEGATE portal of the appellant on which the respondent was required to enter the Electronic Integrated Declaration and the supporting documents. The rate of Basic Customs Duty as applicable on 05.07.2019 would, therefore, be applicable and not the Basic Customs Duty as applicable on 20.07.2019, on which date the respondent had resubmitted the Bills of Entry with documents in view of the instructions issued by the Department. - AT
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Customs:
Smuggling - Gold Bars - Baggage Rules - personal effects - As per Section 129 (A) Customs Act, 1962, this Tribunal has no jurisdiction to decide any appeal in respect of an order which relates to any goods exported or imported as Baggage. - since appeal relates to Baggage, the same is not maintainable before the Tribunal - AT
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Indian Laws:
Dishonor of Cheque - Seeking compounding of offence at belated stage - compromise between the parties - In the instant case, the problem herein is with the tendency of litigants to belatedly choose compounding as a means to resolve their dispute, furthermore, the arguments on behalf of the opposite parties on the fact that unlike Section 320 Cr.P.C., Section 147 of the Negotiable Instruments Act provides no explicit guidance as to what stage compounding can or cannot be done and whether compounding can be done at the instance of the complainant or with the leave of the court. - HC
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Service Tax:
CENVAT Credit - Works Contract Service - Quiz Competition - It has been consistently held in various decisions that repair and maintenance of the office premises falling under the definition of Input Service and the assessee is entitle to avail credit of the same. However, CENVAT credit on conducing quiz competition (re- creational activities) cannot be allowed. - AT
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Central Excise:
Refund of accumulated credit - rejection on the ground that there was no “Physical Export” under Rule 5 - It is undisputed that for the period from January2014 to December-2014 the present appellant had claimed similar refund of Cenvat credit under Rule 5 of the said Rules on the ground that said credit remained unutilized due to clearances of the final products under ICB. - the clearances made by the appellant herein to ICB had to be considered as exports for being entitled to claim refund of Cenvat credit. - HC
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Central Excise:
Job-Work - liability to pay service tax - job-worker or principal - activity of manufacture undertaken by the job-workers, availing exemption under Notification - since the order attained finality, the Department cannot be permitted to contend that the activity undertaken by the appellant would amount to manufacture. - AT
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Central Excise:
Refund claim of the amount reversed under protest - if there is a short payment of duty, the only option for the Revenue is to follow the procedure prescribed under section 11A to recover such short paid duty. Even if the assessee pays the duty when pointed out by the Audit Party or Preventive team, such a payment of duty is only a deposit because any report or conversation with audit or preventive team is not a method of recovering short paid duty. Thereafter, a Show Cause Notice under Section 11A must be issued demanding the duty and proposing to appropriate the amount already deposited during audit or preventive checks towards this amount. This has not been done in this case. - The respondent is entitled for refund claim of the amount already reversed during the course of audit - AT
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Central Excise:
Refund claim of pre-deposit - applicability of time limitation - the order dated 30.06.2014 of adjusting the paid amount towards the sanctioned demand was passed during the pendency of the assessee’s appeal challenging the said demand before CESTAT and the demand stands set aside by CESTAT. Such act of the Department cannot be denied to be the coercive manner and since the payment was made pursuant to the direction of Departmental Authorities the same cannot be considered as voluntary payment and has to be treated as payment under protest. - Section 11B proviso is clear enough to say that the limitation of one year shall not apply where any duty/interest on such duty has been paid under protest - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2021 (8) TMI 741
Classification of goods - rate of GST - different varieties of Flours - Gota Flour - Khaman Flour - Dalwada Flour - Dahiwada Flour - Dhokla Flour - Idli Flour - Dosa Flour - HELD THAT:- Chapter Heading 2106 not confined to processed or semi processed food, cooked or semi cooked food, preserved food and ready to eat food. In fact, any product which is a food preparation and which is not elsewhere specified or included in the CTA, 1975, gets covered under HSN 2106. There are no merit to treat the subject goods as flour. As these products are not specifically mentioned under any specific Tariff item of HSN 2106, the products merit classification under the residual entry other at HSN 21069099. The 7 products of Mix Flour / Instant Mix Flour are appropriately classifiable under HSN 2106. Applicable rate of GST - HELD THAT:- The various Instant Mix / Ready Mix Flour being supplied by the applicant are classifiable under HSN 2106 and in precise subheading 2106 90 - Food preparations not elsewhere specified or included falling under Chapter Heading 2106 are covered under the aforesaid Entry at Sr. No. 23 of Schedule- III of Notification No. 1/2017-Central Tax, as amended, attracting Goods and Services Tax @ 18%, though some of the specific products of Chapter Heading 2106 excluded from this entry are covered under different entries of Schedule-I or Schedule-II, attracting Goods and Services Tax @ 5% or 12%. None of the aforesaid 7 products of various Instant Mix / Ready Mix Flour being supplied by the applicant are the products which have been excluded from the entry at aforesaid Sr. No. 23 of Schedule III or which have been specifically included in any other entry of other Schedule of Notification No. 1/2017-Central Tax, as amended or in any of the entries of Notification No. 2/2017-Central Tax.
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2021 (8) TMI 740
Admissibility of input tax credit - blocked credit or not - GST paid on the procurement of plant and machines including the service of installation and commissioning - Section 16 and 17 of the CGST Act, 2017 - HELD THAT:- The applicant has awarded a singleWork Order dated 1-9-20 to M/s Skai Air Control pvt.ltd., to supply, install and commission HVAC worksfor proposed Factory building, Assembly building, Admin Building, Staff facility(existing) associated works. We understand that HVAC acronym stands for Heating, Ventilation and Air Conditioning system. The said Work order covers the scope of supply, installation, testing and commissioning( SITC) and maintenance and warranty of subject Airconditioning Cooling system and the Ventilation system of the applicant and of its performance guarantee at site. The total contract value of the subject supply is inclusive of cost of materials, labour, machineries etc. and that GST will be payable extra at actual as per the statutory norm at the time of billing. The contract value is for the entire scope of supply. The applicant has entered into a work order for supply, installation, erection and commissioning (SITC), maintenance and warranty of HVAC worksin the Building comprising the Factory building, assembly building, the Admin Building and Canteen Building - all the parts of Air conditioning and cooling system get assembled at the site and fitted on the wall and roof and the floor of the building. All the different parts of Air conditioning and cooling system after being fitted in the building loose their identity as machines or parts of machines and become a system, namely Air conditioning and cooling system . This AC System is in nature of a system and not machine as a whole. It come into existence only by assembly and connection of various components and parts. Though each component is dutiable to GST, the air conditioning plant as such is not a good under HSN (customs Tariff Heading). We note that Air conditioning unit , however, is dutiable as per HSN but not Air conditioning plant . Whether the air conditioning plant is a movable or immovable property? - HELD THAT:- The supply of centralised air conditioning plant is covered at Section 17(5)(c) CGST Act - section 17(5) CGST Act is a Non obstante sub section, overriding the provisions of section 16(1) and Section 18(1) CGST Act. Ventilation system - HELD THAT:- The Ventilation system fitted in the building cannot be taken as such to the market for sale and cannot be shifted from oneplace to another as such to erect at another site. It can be shifted only after dismantling the said system which cannot be called Ventilation system after it is. The Ventilation system once installed and commissioned in the building is transferred to the building owner and this involves the element of transfer of property, thereby Ventilation system supply merits to be classified as work contract supply as the system per se is an immovable property - thus, Ventilation system is a combination of various components and partsresulted into an immovable property. Thus, Input tax credit is not admissible on Air-conditioning and Cooling System and Ventilation System, as this is blocked credit falling under Section 17(5)(c) CGST Act.
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2021 (8) TMI 739
Valuation - Reduction of subsidy for arriving at Ex-factory value in order to collect the GST on goods supplied to the customer under the rooftop solar project - refund for the excess amount of GST - direction to this effect should be given to all other supplier for collection of GST on subsidy amount or not - HELD THAT:- To accord the benefit to deduct subsidy portion for arriving at transaction value with the customer, the applicant was not able to produce evidence that the subsidy was indeed given/borne by the Government - the subsidy portion provided by the Government shall not be included in the value of the supply to arrive at the taxable value, as per Section 15(2) (e) CGST Act. The bidder rates in the EOI are inclusive of GST. Further, the Subsidy is calculated on the total rate in Rs.per Wp(DC). This rate is inclusive of GST. The applicant has collected Subsidy from the Government in this regard and this subsidy amount is inclusive of GST, the applicant is required by law to pay to the Government the said amount in the subsidy representing GST, irrespective of the position of law that subsidy portion is to be deducted from the value of supply charged to the customer, for arriving at the taxable value - the applicant sought Ruling on the implications of Section 17(2) CGST Act, if taxable value is derived after subtracting the subsidy amount from the system price. The provisions of Section 17(2) CGST are attracted when the applicant is effecting taxable supplies and exempt supplies. The subject supply of the applicant is a taxable supply and for the reason that taxable value for charging GST is arrived after subtracting subsidy, does not alter the nature of taxable supply. It remains taxable supply. Therefore, for this matter presented before us, there is no implication of section 17(2) CGST.
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2021 (8) TMI 738
Subsidy or not - incentives received under Atma Nirbhar Gujarat Sahay Yojna dated 16.05.2020 declared by the Gujarat Govt. - supply of service under the provisions of Section 7 under CGST Act or not - scope of Sub Section 2 of Section 7 of CGST Act - inclusion of incentive received under said scheme, in the alue of taxable supply or not - whether 2%/4% incentive received from the State Government, which is over and above the 6% interest received by State Government under the said Sahay Yojna, attracts GST? HELD THAT:- The applicant Bank has disbursed the loan of ₹ 1 lacs to customers @ 8% interest out of which customer is liable to pay interest @2% and remaining 6% interest amount is borne by the State Government. Further, the applicant received 4% as an incentive on the total loan amount disbursed to the customers, over and above the 6% interest amount paid by the Government. The subject incentive specifically provided to the applicant is for motivation and encouragement for the applicant to undertake this specific scheme. By this incentive, the State Government is incentivising the applicant to undertake this scheme and achieve success, for the incentive is not absolute but relative depending on the performance of the applicant. As the incentive is linked to the Amount of Loan disbursed in rupees, we note that the yardstick for incentivising the applicant is based on applicants willingness and performance to achieve targets, which in subject case is the amounts of loan disbursed, the highest incentive being 4% for more than 100 Crore rupees disbursed and the minimum being 2% for upto 10 crore rupees of loan disbursed. The subsidy is granted in public interest, related with welfare of the public or provided to a person/business by Governments, to rationalise the cost impact directly/indirectly on the public. The said incentive has no such bearing on reducing the interest burden of 2% on the customers of the applicant, but incentivising the applicant for its performance of business in said scheme. The issue is not taxability on 6% interest amount given by Government but on the subject incentive amount given over and above the 6% interest amount to the applicant. Further, on reading the schedule III to the Act, there are no merit to entertain subject matter to be covered at any of the 8 transactions mentioned therein. The subject incentive amount liable to GST. The said Incentive is not subsidy and does not merit exclusion from valuation under section 15(2)(e) CGST Act. The subject supply is covered at section 7(1)(a) CGST Act and not covered at section 7(2) CGST Act.
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2021 (8) TMI 737
Classification of supply - intermediary services - zero Rated Supply or Normal Rated Supply? - services provided on principal to principal basis - export of services - applicant provides service of conducting market survey, providing information on Indian market trends and/or marketing of products of foreign vendor in India - HELD THAT:- It is on record that the applicant had discussions with entrepreneurs as well as established manufacturers and supplied list of potential buyers to the service recipient. Without a copy of contract/Expression of Interest in this case, the scope of supply cannot be arrived at. We note that to exclude the supply from the scope of intermediary service, the applicant should supply such services on his own account. The applicant is a person who facilitates SITEC with the potential list of buyers besides the market analyses. Further with the limited material data submitted by the applicant, with no Expression of Interest/ Contract/ Agreement, we find it prudent to refrain from pronouncing a Ruling - Barring Self Assessment, the Assessment to tax is the function of Revenue. We shall not employ the concept of Best Judgement Assessment to pronounce our Ruling based on reasoning on limited information available, for without examination of relevant Agreement/ Contract, neither shall we trespass to declare subject supply taxable, if in legality it weren t, nor shall we declare it zero rated citing that applicant has noting contrary in his written submission sans Agreement/ Contract.
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2021 (8) TMI 736
Input tax credit - Central Air Conditioning Plant, Classified Grouped under Plant Machinery - New Locker Cabinet, lift, Roof Solar - Generator, Fire safety extinguishers - Classified Grouped under Locker Cabinets - Electrical Fittings, such as Cables, Switches, NCB and other Electrical Consumables Materials, Classified Grouped under Separate Block namely Electrical Fittings - Architect Service Fees and Interior Designing Fees, Charged to Profit Loss Account - ITC blocked vide Section 17(5) CGST Act or not. Central Air Conditioning Plant - HELD THAT:- The applicant entered into a contract for Supply, installation, erection and commissioning of Central Air Conditioning plant in the Administrative building. We note that this Plant is basically a system comprising of compressors, ducting, pipings, insulators etc. They are in the nature of systems and are not machines as a whole. They come into existence only by assembly and connection of various components and parts. Though each component is dutiable to GST, the air conditioning plant as such is not a good under HSN (customs Tariff Heading) - the Central Air Conditioning plant fitted in the building cannot be taken as such to the market for sale and cannot be shifted from one place to another as such to erect at another site. It can be shifted only after dismantling the plant which cannot be called Centralised Air conditioning plant after it is dismantled as such the most of the ancillary item like copper pipes, flexible water pipe etc may become obsolete and cannot be shifted at other site. The Central Air Conditioning Plant once installed and commissioned in the building is transferred to the building owner and this involves transfer of property. We thus find no merit to treat an entire Central Air conditioning system a movable property - the supply and erection of subject immovable property- Central Air conditioning system merit its classification under works contract service. Lift - HELD THAT:- The lift has passed the test of permanency as laid down by the Hon ble Supreme Court, in THE MUNICIPAL CORPORATION OF GREATER BOMBAY VERSUS THE INDIAN OIL CORPORATION [ 1990 (11) TMI 407 - SUPREME COURT] and find lift an immovable property. It is noted the applicant s submission that if somebody wants to purchase the lift, the whole Lift is to be dismantled and sold to him in parts. Thus, the subject supply merits classification under works contract service and is covered at Section 17(5) (c) CGST Act. We find no merit to deem lift as plant and machinery. Lift is in fact a part of the administrative building after being erected and installed - thus, lift is an immovable property after being erected and is attached to the building itself. Electrical Fittings, such as Cables, Switches, NCB and other Electrical Consumables Materials - HELD THAT:- The installation of electrical fittings are covered vide the definition of works contract, where these fittings are fitted/installed and usually concealed/ piped into the wall of the administrative building and transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. These electrical fitting cannot be shifted intact from one place to another without dismantling/ cutting the wire and switch board/ removing the swtiches, therefore, as per the test of permanency - We cannot envisage a building without light and and therefore by reason of this supply being essential and integral to the administrative block, we may confer this immovable property a subset within the immovable administrative building, treating the building a whole set. Roof Solar Plant - HELD THAT:- The Applicant entered into a comprehensive SITC Contract (Supply, Installation, Testing Commissioning) with the vendor for installation of Roof Solar Plant. The said Plant will be attached on the concrete base with the nuts and bolts. It is a system specifically to fit the dimensions and orientation of the needs of the applicant - for the purpose of valuation and tax rate, the said explanation to said sr no 234 has been inserted w.e.f 1-1-19. But plain reading of the said Schedule II sr no 6 (a) and the nature of supply at hand, we find this is a composite supply under works contract. The applicant submitted that if resold, the entire system needs to be dismantled and had to be reassembled at another site. Further the said system/ plant has different goods which when assembled and installed become a roof solar plant. The specific valuation and tax determination does not change the scope of supply under Works contract - thus, Roof Solar plant is a composite supply of works contract and covered at Section 17(5)(c) CGST Act. Fire Safety Extinguisher - HELD THAT:- The Fire Safety Extinguisher structure contains various types of metal pipes, different types of motors and equipments etc. and all these parts/equipments are assembled at site for the complete set of Fire Safety Extinguisher to came into existence. After assembly and installation at/in the Administrative building, the Fire Safety Extinguisher is commissioned and handed over to the owner of the building by the contractor. The said Fire Safety Extinguisher cannot be shifted as a whole as such to another place. For this it should be first dismantled piece by piece - the system assembled, erected and attached to the earth by a foundation is immovable property and supply is covered within the definition of works contract supply. Generator - HELD THAT:- The generator a movable item and its expense capitalised by the applicant and hold it supply of capital goods. Locker Cabinet - HELD THAT:- The locker cabinet are movable goods. Architect Service Fees and Interior Designer Fees - HELD THAT:- There are no merit to extend the explanation to subject administrative building, as the said administrative building is a new construction and not falling under reconstruction/ renovation/additions/alterations/repairs. Further the explanation defines an inclusive definition of Construction, defining construction to include, inter alia, re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property. This definition is not exhaustive and does not bar within the definition of Construction, new construction. Whether the supply of architect service or interior decorator service supplied for the new administrative building is revenue or capital expenditure, it does not matter as long as the construction is new and thereby subject supplies are covered at Section 17 (5) (d) CGST Act.
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2021 (8) TMI 735
Input tax credit - GST charged by service provider on canteen facility provided to employees working in factory - levy of GST - nominal amount recovered by Applicants from employees for usage of canteen facility - ITC to be restricted to the extent of cost borne by the Applicant (employer) or not - Section 17(5)( b) of CGST Act, 2017 - HELD THAT:- Sub clause of Section 17(5)(b)(i) ends with colon : and is followed by a proviso and this proviso ends with a semicolon - Colons and semicolons are two types of punctuation. Colons are used in sentences to show that something is following, like a quotation, example, or list. Semicolons are used to join two independent clauses/ subclauses , or two complete thoughts that could stand alone as complete sentences. That means they're to be used when you're dealing with two complete thoughts that could stand alone as a sentence. Section 17(5)(b)(i) sub-clause ending with a colon and followed by a provisio which ends with a semi colon is to be read as independent sub-clause, independent of sub clause Section 17(5)(b)(iii) and its proviso [of subclause iii]. Thereby, the provisio to section 17(5)(b)(iii) is not connected to the sub-clause of Section 17(5)(b)(i) and cannot be read into it. ITC on GST paid on canteen facility is blocked credit under Section 17 (5)(b)(i) of CGST Act and inadmissible to applicant - GST, at the hands on the applicant, is not leviable on the amount representing the employees portion of canteen charges, which is collected by the applicant and paid to the Canteen service provider.
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2021 (8) TMI 734
Classification of goods - Garbage Compactor and Hook Loader/ Garbage Tipper - classified under Chapter Heading 8705 (Special purpose motor vehicles other than those principally designed for transport of persons or goods) or not - rate of IGST at 18% in terms of Sl.No.401A of Schedule III of N/N. 01/2017 Integrated Tax (Rate) dated 28.06.2017 and CGST and SGST at the rate of 9% respectively in terms of the corresponding rate notification - HELD THAT:- The applicant is engaged in the manufacture and sale of commercial motor vehicles such as buses, trucks, light vehicles and parts thereof. They also manufacture and sell special purpose vehicles such as road sweeper truck, suction-cum-jetting machine, hook loader/garbage tipper and refuse/garbage compactor vehicle. The clearances have been effected by their Rajasthan and Karnataka units only and the applicant unit at Chennai has not received any orders for such supply presently. Though the applicant has stated that they intend to receive order for future supply, the applicant has not established this claim of theirs through any documentary evidence like tenders for proposed supply of such goods, etc, though the applicant's entity at Karnataka and Rajasthan have undertaken supplies of such goods. Further, the applicant did not dispute the fact that the products for which classification is sought is custom made as per the required specifications of the recipient/buyer. It is seen that special purpose motor vehicles are specially constructed or adapted and equipped with certain devices to enable them to perform the functions. Thus it is clear that such vehicles will be custom made for which purchase orders with the specification of the goods are necessary. To classify a product, the complete nature of the product and features of the product should be known - Here the products are not manufactured by the applicant as reported by the Jurisdictional Authority and no purchase orders/tenders for such supply have been produced by the applicant. As per Section 95 of the GST Act, Advance Ruling can be sought in respect of the proposed supplies. In the case at hand, the ruling sought on the classification of the product, can be decided only based on the nature, features, intended purposes. It is pertinent to note that the applicant themselves have stated that they had not made any supplies and only their entities in the State of Karnataka and Rajasthan have undertaken such supplies - the application requiring the classification of the said goods cannot be admitted for consideration in merits and the application is rejected.
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2021 (8) TMI 733
Levy of GST - Components supplied by the Vendors in a Sale-in-Transit to AHPL - HELD THAT:- The applicant based on the contract for the work of RMU at Sholayar Power House, has procured the Components/Spares to be supplied by them to TANGEDCO and have supplied them to TANGEDCO, raised commercial Invoices for such supply with the applicable GST. The applicant has purchased the components which is a 'Supply' wherein the applicant is the recipient and thereupon has transferred the title to TANGEDCO, i.e., made the supply of the components to TANGEDCO as per the contract conditions. The goods were delivered at the project site by the vendors of the applicant. In the Pre-GST regime, such transactions, inter-state, were exempted subjected to certain conditions as per CST Act. In the GST regime, every limb of supply with/between a supplier and receiver is to be considered as a supply. In the case at hand, the applicant provides composite supply of Works Contract to TANGEDCO based on the agreement entered into by the applicant vide contract agreement dated 21.07.2015. To fulfill the scope of the contract, they supply the Components/spares for the Operation and Maintenance period, as per para 3.01.04/3.01.05 of the Lr. of TANGEDCO dated 30.01.2018 and the cost of such supplies are included in the contract price. Thus, the supply of Components/spares for the Operation and Maintenance period are part of the supplies of Works Contract entered into with TANGEDCO and therefore liable to GST at the appropriate rates. The Components, which were supplied in Sale-in-Transit transaction, without payment of tax under the erstwhile Central Sales Tax regime, by the Applicant , i.e., AHPL to its Customer (i.e., TANGEDCO) in Tamil Nadu is a 'Supply' as per Section 7 of the CGST/TNGST Act 2017 and will attract levy of Goods and Services Tax.
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2021 (8) TMI 732
Classification of supply - supply of goods or supply of services - activity of Bus Body Building on the chassis supplied by the customer on job work basis - applicable rate of GST - SAC/HSN code - HELD THAT:- In the instant case, the bus body fabricated and mounted on the chassis supplied by the customer is delivered back to the customer charging a lump sum amount as job work charges. It is to be noted that ownership of the chassis remains with their customers and will not be transferred to the applicant at any point of time. The consideration is received only towards fabrication services besides own materials involved in the fabrication - Thus, it is evident that the activity undertaken by the applicant for Bus Body Building on the chassis supplied by the customer is to be classified as Job Work as per Schedule II of the CGST Act 2017, the said activity of bus body building on the chassis supplied by the customer by the applicant is supply of services. The bus body building on the chassis supplied by the customer is a supply under SAC 998881-motor Vehicle and trailer manufacturing services - applicable rate will be GST will be 18% as per entry no.26 of N/N. 11/2017-Central Tax (Rate) dt. 28.06.2017 (as amended) and SI.No.26 of Notification No.II(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017(as amended) respectively.
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2021 (8) TMI 731
Levy of GST - transfer of leasehold rights in respect of the consideration of ₹ 15 Crores received by them from M/s. INOX Air products Private Limited for the land allotted by SIPCOT - Subsequent transfer of SIPCOTs allotted land from the Applicant to M/s. Inox Air Products Private Limited - Scope of 'Supply' as defined under Section 7 of the Goods and Services Act 2017 - HELD THAT:- IPL was allotted and were holding lease of 15.34 acres of land in the SIPCOT Industrial Complex at Hosur(phase-II). The Original lease was entered into for a period of 99 years and the lease was entered into vide lease deed dt. 07.07.1993. INOX had approached them to transfer un-utilized portion of the allocated land to the extent of 5.00 acres for setting up a state of the art Ultra High Purity Cryogenic Liquid Medical and Industrial Oxygen Plant. A Memorandum of Understanding (MOU) has been entered into between the applicant and INOX on 20.11.2020 for transfer of leasehold rights for the remaining period of lease from IPL to INOX subject to the approval of SIPCOT in respect of the land measuring 5.00 acres. In the case at hand, it is seen that IPL had been allocated a certain land originally by SIPCOT for lease of 99 years. IPL had taken possession of the land for the purposes meant for allotment - The applicant while entitled to use the land for the purposes agreed upon, i.e., setting up manufacturing facility, is restrained to sub-let or transfer or permit occupation of any other person in the land allotted to them. However, the applicant can part with its interest in the leasehold held by them with the approval of SIPCOT, who may or may not grant the request with or without any further conditions. From the above facts of the case, it is evident that SIPCOT who owns the land has leased the allocated land to IPL for a period of 99 years. IPL by virtue of the lease conditions, do not possess the right to sub-let any part or whole of the property leased to them. However, IPL may transfer the leasehold rights to any other person with the approval of SIPCOT, who may or may not grant such approval. Thus, it is clear that the applicant holds the leasehold rights which he may agree to transfer to any other person but the applicant cannot per-se transfer the leasehold rights to such person - in the case at hand, IPL had agreed to transfer the leasehold rights held by them in respect of the land required by INOX to their favour for a consideration and requested SIPCOT to approve the same. SIPCOT has approved the request and stipulated the payment of differential cost of land processing fees by INOX and thereupon to execute the modified lease deed by both IPL and INOX for their respective leaseholds. In the case at hand, IPL vide the MOU has agreed to part with their interests in the leasehold rights held by them, on the land required by INOX; Since as per the lease deed executed between SIPCOT and IPL, IPL can part with their interests in the land leased to them only with the approval of SIPCOT, IPL has sought the approval of SIPCOT - The activity of IPL as seen from the Memorandum of Understanding executed between IPL and INOX and the approval letter of SIPCOT, is only a transaction in which IPL agrees to part with the leasehold interests it possess for the remaining lease period in favour of INOX with the approval of SIPCOT in respect of the land required by INOX. Therefore the activity is not transfer of leasehold rights by IPL to INOX but is an activity of agreeing to part with the leasehold interests IPL hold on the land to be leased to INOX by SIPCOT. If it were a transfer of leasehold rights, there should be an agreement for such transfer between IPL and INOX. It is stated by IPL that apart from the Memorandum of Understanding, there is no agreement between IPL and INOX. The activity undertaken by IPL in agreeing to part with the interests of the leasehold rights in the land required by INOX for furtherance of their business, against a consideration is an activity of 'agreeing to do an act', which is a taxable service classifiable under 'Other Miscellaneous Services', with SAC 9997.
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2021 (8) TMI 730
Entitlement to avail and utilize ITC - the transfer of leasehold rights in the part property - the GST amount charged by IPL if such transaction is considered to be a supply - HELD THAT:- In the case at hand, it is seen that INOX had paid consideration to IPL, for agreeing to part with their rights in the leasehold held by IPL, on the land required by the applicant. IPL had consented against such consideration and applied for withdrawing the leasehold held by them in favour of the applicant and on approval by SIPCOT, the applicant has entered into a lease agreement with SIPCOT on payment of necessary charges as required and acquired the leasehold rights for the land. Thus, it is evident that the amount paid is towards acquiring their entitlement to take on lease the land required for putting up a State of the art Ultra High Purity Cryogenic Liquid Medical and Industrial Oxygen Plant. The applicant is a registered person and therefore is entitled to avail credit of the supplies received by them in the course or furtherance of business as per Section 16(1) of the Act. The applicant has stated that as the Air Separation Unit (ASU) which is put up on the land leased is a Plant and Machinery , the restriction at Section 17(5)(d) is not applicable in respect of the goods and services used for the construction of such Plant and Machinery. Section 17(5) of the Act, starts with the Non-obstante clause, Notwithstanding anything contained in sub-section (1) of section 16 , which indicates that the provisions under Section 17(5) prevails over section 16(1) of the Act. From the explanation of Plant and Machinery , it is evident that while Plant and Machinery includes foundation and structural supports required to fix apparatus, equipment, machinery on the earth, land building or other civil structures are specifically excluded. The services availed from IPL is in relation to acquiring lease of the land. By the specific exclusion in the definition of Plant and Machinery , as land stands excluded from Plant and Machinery , the services availed and utilized for acquiring such land on lease is restricted under Section 17(5)(d) of the CGST Act 2017, though the activity is in the course or furtherance of the business of the applicant and the credit of GST if payable on such supply is not eligible as credit to the applicant. The applicant is not entitled to avail and utilize ITC of GST charged by IPL as the same is restricted under Section 17(5)(d) of the CGST/TNGST Act 2017, if such transaction is considered to be a supply.
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2021 (8) TMI 680
Refund claim - input tax credit on purchase and fabrication of cash carry van - refund claimed by placing reliance upon the Hon'ble AAAR, Maharashtra in IN RE: M/S. CMS INFO SYSTEMS LIMITED [ 2020 (6) TMI 643 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] in which AAAR ruled that the appellant is eligible to take the credit of tax paid on purchase of cash carry van or fabrication of the same - territorial jurisdiction for applicability of Advance Ruling - Time limitation for availing credit - HELD THAT:- The appellant is also holding the GSTN registration in the state of Rajasthan and accordingly, they filed the said refund claim in the jurisdiction of CGST Division-C, Jaipur (Rajasthan) - the appellant is referring the ruling of Appellate Authority for Advance ruling, Maharastra for claiming the refund whereas, it is observed that said ruling is binding only on the applicant who had sought ruling and on the concerned officer or the jurisdictional officer in respect such/particular applicant. The appellant can not take credit on the basis of ruling of AAAR of Maharastra as it is out of jurisdiction of Rajasthan as it is not binding/applicable in the state of Rajasthan, consequently, solely in the said fact the appellant is not entitled to get the said refund claim. The appellant obviously misconceive the fact by filing the said refund claim in the jurisdiction of Rajasthan accordingly, I do not accede to the plea of the appellant. Further, the adjudicating authority findings is agreed upon that the said AAAR, although it is at all not binding on the jurisdictional authority, the said AAAR order does not talk about any refund of ITC hence it is not eligible to them. Thus, there is no place in the provision of law for refund of such kind of ITC hence, it may be concluded that the said refund claim of appellant is beyond the provisions of law, and is not covered up in any of the provisions of CGST Act/Rules made there under accordingly, it may not be permitted. Time limitation for availing credit - HELD THAT:- Section 16 (4) of CGST Act, 2017 provides the time limit as well as manner of taking eligible credit. In the instant case, the appellant themselves admitted that since the time was expired/lapsed for taking credit as per the said provisions, that is why they filed the refund claim for the same - also, the AAAR, Maharastra ruling was not pertaining to a particular period of ITC rather the issue before the AAAR was whether, the appellant is entitled to avail ITC on purchase of cash carry van or its fabrication hence, it may not be completely/absolutely said that the said ITC was expired/lapsed due to the reason that issue was pending before AAR/AAAR, it can be said that if any ITC is expired or lapsed due to limitation of time, it may not in anyway refundable as it became dead ITC as per the said provisions of laws. Appeal rejected.
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Income Tax
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2021 (8) TMI 747
Deduction u/s 36(1)(viia) of provision for non-performing assets (NPA) - provision for Bad Doubtful Debts claimed by the assessee -HELD THAT:- As obvious that Co-ordinate Benches of ITAT, Delhi have decided identical issue in favour of the assessee in similar facts and circumstances, in Assessment Year 2012-13 and in Assessment Year 2013-14 in assessee s own case, [ 2019 (12) TMI 978 - ITAT DELHI] and in [ 2020 (1) TMI 1498 - ITAT DELHI] respectively. Neither side has brought any materials for our consideration to persuade us to take a view different from the view already taken by Co-ordinate Benches of ITAT, Delhi in assessee s own case in aforesaid appeals. This appeal filed by Revenue is dismissed.
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2021 (8) TMI 746
Capital gain computation - LTCG - addition invoking section 50C - as per AO assessee had transferred certain ancestral plot of land by way of his capital contribution as a partner in two partnership firms - HELD THAT:- As decided in own case [ 2019 (10) TMI 1453 - ITAT MUMBAI] once the price recorded in the joint venture's books is treated as full value of consideration, the provisions do not permit substitution of any value so as to make addition under section 45(3). In fact the approach of the A.O. is also not correct in the sense that under section 45(3) once the full value of consideration is taken as the amount recorded in the books of the joint venture, the capital gain can be worked out by reducing the cost of purchase as per the books of assessee. In case the A. O. substitutes the cost of purchase, by whatever means, then that cost price has to be adjusted in the capital gains. This may result in a loss of equal amount as the books of joint venture show the book value as consideration and substituted cost price (value determined by AO in the order) as a deduction. This working would result in a loss but not a gain. This simple arithmetic calculation was missed by the A.O and he ma de the addition under section 45 (3) which does not permit him to substitute the full value of consideration other than the amount recorded in the books of account of the joint venture. As the Assessing Officer's action is not according to the provisions of Sec 45 (3) , there is no justification or upholding the contentions of Revenue CIT(A) had rightly vacated the addition that was made by the A.O by substituting the market value of the property as per the ready reckoner rates u/s 50C, as against the amount recorded in the books of accounts‟ of the respective firms, which was adopted by the assessee as the full value of consideration received or accruing as a result of the transfer. - Decided in favour of assessee.
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2021 (8) TMI 745
Exemption u/s 11 - assessee is registered u/s 12A - grants received by donating the same to other societies engaged in similar objects - payment to other partner NGOs - HELD THAT:- We find that the Assessing Officer, in his order, itself has mentioned the fact of having incurred expenses towards payment to other partner NGOs. AO has further noted that these NGOs were also registered u/s 12A of the Act. The only reason for disallowing these expenses was that the assessee had not produced evidence which could prove that those NGOs, to whom assessee had made payments, had filed their respective returns of income. The other reason for disallowing these expenses was that the Assessing Officer, in earlier paragraph, had held that the assessee had not spent any expenditure on the objects stated in the Memorandum of Association. How the assessee got funds through grant received from reputed national and international organizations and how the assessee had spent on the objects through other various organizations engaged in similar activities. We further find that in assessment year 2013-14, similar denial of exemption u/s 11 of the Act was made and the Tribunal vide order [ 2018 (11) TMI 1864 - ITAT LUCKNOW] had confirmed the findings of learned CIT(A). We find that learned CIT(A) while deciding the above ground has considered various judicial pronouncements and has exhaustively dealt with the issue which needs no interference from our side - Decided against revenue.
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2021 (8) TMI 744
Exemption u/s 11 - registration u/s 12A - Scope of amendment to Section 12A - assessee vehemently submitted that the assessee is entitled first Proviso to section 12A(2) of the Act - HELD THAT:- It is admitted position under the law that the appeal is continuation of original proceedings. Even otherwise the ld CIT(A) has co-terminus power with that of the assessing officer. In view of the above and going by the principle of purposive interpretation of statues, an assessment proceeding which is pending in appeal before the appellate authority should be deemed to be 'assessment proceedings pending before the assessing officer' within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee who obtained registration under section 12AA of the Act during the pendency of appeal was entitled for exemption claimed under section 11of the Act. Taking the above facts and circumstances of the issue, we are of the view that the ld CIT(A) was also not justified in taking a similar stand that of the AO, without taking cognizance and intention of the amendment to section 12A of the Act. If no judicious or a liberal view is not taken either by the assessing authority or the appellate authority as in the case under consideration, the very purpose for which such an amendment to section 12A would be defeated. We find that similar view was taken by Coordinate bench in Badhte Kadam [ 2019 (7) TMI 1851 - ITAT RAIPUR] and case of Sree Sree Ramkrishna Samity [ 2015 (11) TMI 119 - ITAT KOLKATA] where it was held that amendment to Section 12A w.e.f. 01.10.2014 is retrospective. Thus considering the facts that assessee was granted registration under s.12AA w.e.f. 01.04.2015, vide order dated 09.05.2016, when the appeal of assessee was pending before learned CIT(A). Therefore we direct the Assessing Officer to grant the benefit of Section 11 12 for AY 2008-09. Appeal of the assessee is allowed.
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2021 (8) TMI 743
Assessability of the interest income accruing/arising from the funds that were deposited in the foreign bank account - unexplained funds invested in foreign bank account - claim of the assessee that the entire funds in the aforesaid foreign bank account were deposited by her mother, and thus, she only being a nominee - HELD THAT:- Tribunal while disposing off the appeals in the case of the assessee‟s mother, viz. Mrs. Pushpa N. Khimji [ 2019 (4) TMI 2003 - ITAT MUMBAI] , had observed, that the amounts deposited in the bank account with HSBC Bank, Zurich, belonged to Mrs. Pushpa N. Khimji (supra), and the same were received by her by way of inheritance on the death of her husband on 15.07.1988 Now when the deposits lying in the foreign bank account in question are undisputedly held to be belonging to and owned by Mrs. Pushpa N. Khimji, then, the interest income arising therefrom without any choice have to be brought to tax in her hands only. In case the interest income accruing/arising on the funds lying in the aforesaid bank account are divorced from the person who owns the said funds, then, the same, in our considered view would lead to incongruous results that would had never been intended by the legislature. Our aforesaid conviction is in fact fortified by the fact that the legislature in all its wisdom had in order to plug any diversion of income without there being any transfer of income yielding asset/source had specifically in Chapter V Sec. 60 to 65 of the Act provided for circumstances wherein income from revocable transfers would be related back and clubbed in the hands of the transferor. Deposits lying in the bank account in question with HSBC bank, Zurich undisputedly belong to and are owned by the assessee‟s mother, viz. Mrs. Pushpa N. Khimji. Although, it is a matter of fact borne from the record that the assessee as a joint holder of the aforesaid foreign bank account had all the rights of functional operations of the said account, but the same would by no means justify relating of any part of the interest income on such funds/deposits lying in the said foreign bank account in the hands of any other person except for the owner of said funds, viz. Mrs. Pushpa N. Khimji. Accordingly, in the backdrop of our aforesaid deliberations not being able to persuade ourselves to accept the view taken by the CIT(A) that 50% of the interest income i.e an amount of ₹ 93,528/- (50% of ₹ 1,87,056/-) was liable to be brought to tax in the hands of the assessee, we, thus, set-aside his order to the said extent and vacate the addition of ₹ 93,528/- that was sustained by him. The Grounds of appeal is allowed.
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2021 (8) TMI 742
Rectification of mistake u/s 254 - disallowance of its claim for deduction u/s 36(1)(iii) - Tribunal despite observing all had however, set-aside the issue to the file of the A.O with a direction to the assessee to establish that it had at the relevant point of time sufficient funds available with it to justify the capital advances/investments made qua the properties in question - HELD THAT:- Tribunal after exhaustive deliberations had formed a view that the matter as regards sustaining of the assessee s claim for deduction of interest expenditure u/s 36(1)(iii) of the Act, in all fairness, required to be revisited by the A.O for verifying the availability of the self-owned funds with the assessee, therefore, for the said reason it had restored the matter to his file with specific directions - the order passed by the Tribunal while disposing off the appeal could not be held to be suffering from a mistake apparent from record which would render it amenable for rectification under sub-section (2) of Sec. 254 of the Act, for the reason, that the assessee holds a conviction that the same ought not to have been restored, but should have been adjudicated by the Tribunal. At this stage, we may herein clarify, that in case if the adjudication of the assessee s claim for deduction u/s 36(1)(iii) of the interest expenditure could have been possible on the basis of the facts borne from the record, then, the same would not have been restored by the Tribunal but would have been adjudicated. As regards the claim of the ld. A.R that the Chart reflecting the availability of self-generated funds vis- -vis borrowed funds that was furnished by the assessee before the DRP, and was reproduced in its order, ought to have been summarily acted upon and accepted by the tribunal for adjudicating the issue, we are afraid is too wide a proposition to be accepted. As the facts claimed by the assessee in the Chart that was filed before the DRP not only required verification, but also had to be looked into in context of the relevant point of time of availability of such funds, therefore, the same could not have been acted upon on the very face of it for adjudicating the issue in hand. Be that as it may, we are of a strong conviction that the assessee by filing the present application under sub-section (2) of Sec. 254 of the Act is as a matter of fact seeking a review of the order passed by the Tribunal, which we are afraid is beyond the scope and gamut of the powers vested with the Tribunal. Accordingly, not finding favor with the aforesaid application filed by the assessee, we herein dismiss the same.
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2021 (8) TMI 725
Reopening of assessment u/s 147 - Reason to believe - HELD THAT:- In the present case, admittedly, the reopening is made within a period of four years. Thus, the reasons furnished for reopening, if satisfied, would be sufficient for continuance of reassessment proceedings and for its conclusion. Perusal of the reasons furnished as well as the objections raised and the disposal of such objections, as discussed would reveal that the petitioner has not substantiated the grounds raised for the purpose of setting aside the impugned order and therefore, this Court has no hesitation in arriving a conclusion that the reopening of assessment is made in consonance with the provisions of 147 of the Act and there is no infirmity or perversity as such. As far as the judgments relied on by the petitioners are concerned, the principles laid down by the Apex Court in RAYMOND WOOLLEN MILLS LIMITED VERSUS INCOME-TAX OFFICER AND OTHERS [ 1997 (12) TMI 12 - SUPREME COURT] are not in dispute. Application of principles with reference to the facts and circumstances of the case are of paramount importance. Even the respondents have not seriously disputed on the principles relied upon, but perusal of the reasons furnished, objections raised and the disposal of objections by the authority competent are sufficient enough to meet out the mandatory requirements as contemplated under Section 147 of the Act and thus, the reassessment proceedings are to be allowed and the said proceedings are to be concluded as expeditiously as possible. WP dismissed.
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2021 (8) TMI 718
Disallowance u/s. 2(22)(e) - assessee has received unsecured loan and assessee company from whom it has obtained unsecured loan there were two common directors - HELD THAT:- During the course of assessment on verification, the AO noticed that assessee has obtained unsecured loan from M/s. Cygnet Infotech Pvt. Ltd. and in both the companies there was common directors having share holding not less than 10% of the voting power. Without reiterating the facts AO was of the view that any payment in the nature of an advance or loan by a closely held company in which a share holder holds more than 10% of voting to any concern in which such share holder has a substantial interest is deemed as dividend, therefore, amount of unsecured loan given by Cygnet Infotech Pvt. Ltd. to the assessee company was treated as deeded dividend u/s. 2(22)(e) of the act on account of a common share holder holding more than 10% of voting power in these concerns. With the assistance of ld. representatives , we have gone through the judicial pronouncements of the Co-ordinate Benches of ITAT on the similar issue. Since the assessee company was not registered share holder in the company from whom the loan was obtained therefore no addition can be made as deemed dividend in the hands of the assessee company merely because there was a common shareholder in the payee company and the assessee company. Therefore, we do not find any error in the decision of the ld. CIT(A). Accordingly, the appeal of the revenue is dismissed.
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2021 (8) TMI 714
Disallowance u/s 36(1)(va) - contributions of employees towards welfare funds - employees s contribution towards ESI and PF - amount collected from employees towards contribution to welfare funds but deposited later than the scheduled dates as per provisions of PF Act, but deposited prior to filing the return under section 139(1) - HELD THAT:- Hon ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner Jaipur [ 2014 (5) TMI 222 - RAJASTHAN HIGH COURT] wherein the Hon ble High Court after extensively examining the matter and considering the various decisions of the Hon ble Supreme Court and various other High Courts has decided the matter in favour of the assessee and held PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income under section 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act. The addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the delayed deposit of the employees s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act in view of the binding decision of the Hon ble Rajasthan High Court. Appeal of the assessee is allowed.
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2021 (8) TMI 713
Addition by way of adjustment as not permissible while processing the return U/s 143(1)(a) - allowance of employees contribution to welfare funds - HELD THAT:- Assessee has deposited the employees s contribution towards ESI and PF well before the due date of filing of return of income u/s 139(1) and the last of such deposits were made on 14.04.2018 whereas due date of filing the return for the impugned assessment year 2018-19 was 31.10.2018 and the return of income was also actually filed on the said date. Admittedly and undisputedly, the employees s contribution to ESI and PF which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s 139(1) of the Act. The issue is no more res integra in light of series of decisions rendered by the Hon ble Rajasthan High Court starting from CIT vs. State Bank of Bikaner Jaipur [ 2014 (5) TMI 222 - RAJASTHAN HIGH COURT ] and subsequent decisions. We may refer to the initial decision of Hon ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner Jaipur wherein the Hon ble High Court after extensively examining the matter and considering the various decisions of the Hon ble Supreme Court and various other High Courts has decided the matter in favour of the assessee. The addition by way of adjustment while processing the return of income u/s 143(1) amounting to ₹ 1,25,431/- so made by the CPC towards the delayed deposit of the employees s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act in view of the binding decision of the Hon ble Rajasthan High Court. - Decided in favour of assessee.
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2021 (8) TMI 712
Unexplained deposits made in assessee s Bank Account - As argued cash withdrawn from the same Bank Account on prior dates was available with the assessee for redeposit in the same Bank Account - HELD THAT:- The benefit of cash withdrawn of ₹ 15,50,000/- on 22.05.2008 earlier from the date of deposit in the bank on 13-06-2008 has to be allowed to the Assessee unless the AO or the Ld. CIT (A) is able to show that the cash so withdrawn was spent elsewhere. It is discernable from the written submission of the assessee that the cash of ₹ 15,50,000/- was withdrawn 21days earlier by him on 22.05.2008, to the date of deposit in the bank on 13-06-2008. The AO/CIT(A) had led no evidence to show that the cash withdrawn by him had been spent and was not available for redeposit. In view of that the finding of the Ld. CIT(A) regarding allowed claim of the benefit to the tune of ₹ 4,45,000/- only out of the cash withdrawal of ₹ 15,50,000/- on 22.05.2008 is legally not justified. CIT(A) ought to have brought on record evidence to show that the balance cash of ₹ 11, 05000/- out of the total so withdrawn cash of ₹ 15,50,000/- was spent elsewhere. Thus in the light of facts of the assessees ownership of agricultural land and 33 buffaloes, the agricultural income shown at ₹ 6,50,000/- is quite reasonable and as such, accepted. Thus, the appellant assessee gets further relief of ₹ 2,50,000/- on account of agricultural income. Further, the remaining balance cash deposit of ₹ 2,73,004/- [16,28,004 13,55000 (11,05000+2,50000) can be allowed as explained as the personal saving out of agricultural income to the assessee, in the absence of any cogent evidence brought on record by either of the lower authorities to prove otherwise. Thus, the appellant assessee claims to have deposited ₹ 16,28,004/- out of his savings from agriculture income, sale of live stocks (33 buffalos) stands explained. - Decided in favour of assessee.
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2021 (8) TMI 711
TDS u/s 194IA - assessee has purchased an immovable property on 03.09.2014 for a consideration from UIT, Bhilwara - no tax was deducted on payment of his share to the transfer of the property assessee to be in default within the meaning of Section 201 - HELD THAT:- On harmonious reading of both sub-section (1) and sub-section (2) of section 194IA, the provisions provides that any person responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property exceeding ₹ 50 lacs shall be liable for deduction of tax at source at the rate of one percent of such sum. In the instant case, undisputedly, the total consideration for acquisition of the immovable property has been agreed at ₹ 1,26,00,000/-, at the same time, it is also an admitted fact that the assessee s share in the said immoveable property is only 1/4 th and the assessee is thus responsible for paying consideration of ₹ 31,50,000/-. Therefore, in the instant case, where the assessee is responsible for paying ₹ 31,50,000/- being the consideration for his share in the property and has actually paid ₹ 31,50,000/- only, there is no requirement to deduct tax at source in terms of section 194IA of the Act. We find that similar view has been taken by the Coordinate Bench in subsequent decision in case of Vinod Soni vs. ITO, TDS [ 2018 (12) TMI 636 - ITAT DELHI] where it was held that section 194-IA(1) is applicable on any person being a transferee, so section 194-IA(2) is also applicable only w.r.t. the amount related to each transferee and not with reference to the amount as per sale deed. Each transferee is a separate income tax entity therefore, the law has to be applied with reference to each transferee as an individual transferee / person. The contentions advanced by the ld CIT/DR that in case of joint owners of the property, the threshold limit of ₹ 50,00,000/- is to be determined property-wise and not transferee wise cannot be accepted. Thus assessee cannot be held as assessee in default on account of non-deduction of tax u/s 194IA and therefore, the demand U/s 201(1) and 201(IA) of the Act is hereby set aside. - Decided in favour of assessee.
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2021 (8) TMI 710
Denial of exemption u/s.10(1) in respect of income returned as agricultural income on account of it being unproved - Safed Musli produced - agricultural expenditure Presumably incurred on the standing crops - Denial of deduction u/s. 80-JJA on the profits and gains of the business of sale of biofertilizer and biological agent - HELD THAT:- Preponderance of probabilities weighs heavily in favour of the realization of the agricultural produce of the immediately preceding previous year, quantity of which as at the year-end is not in dispute. Why would not, one may ask, any prudent or reasonable person, who has in fact established himself in the market, sell his standing crops, realizing their value as well as his earnings therefrom? No impeding circumstance has been stated, much less shown by the Revenue. In fact, the same principle finds application by the Tribunal for AY 2005-06. The agricultural activity being proved, Musli was taken as sold at the going market rates, i.e., as recorded in books, despite the non-specification of the buyers. The sale of agricultural produce, i.e., as attributable to the standing crops, is though inferable, and toward which, therefore, further expenditure, as imputed on the basis of the reported profit rate, is adopted. The balance income of ₹ 2.58 lacs, i.e., the agricultural income returned over ₹ 26.84 lacs, would continue to be assessed as income from other sources, for assessment under which head of income there is ample authority, including the decisions relied upon by the Revenue in the instant case. Before parting with this order, it is deemed proper to dilate on an aspect of the matter. The assessment in the instant case was subject to revision on the ground that the AO had not initiated penalty proceedings u/s. 271(1)(c) while completing the assessment. The matter, in further appeal, was set aside by the Tribunal directing the Administrative Commissioner (CIT) to review afresh after allowing proper opportunity of hearing to the assessee. The revision order dated 29/3/2011 is not on record. It is thus not clear as to how could under section 263 proceedings the ld. CIT drop the disallowance of deduction u/s. 80- JJA, made in assessment, more so as the same was deemed erroneous and prejudicial to the interest of the Revenue on account of non-initiation of penalty proceedings. The same constitutes a valid ground for assuming jurisdiction u/s. 263 and, besides, the said aspect has attained finality. The ld. CIT could at best, upon hearing the assessee, regard the non-initiation of penalty proceedings qua the said disallowance as justified. The basis for not disallowing deduction u/s. 80-JJA, admittedly effected in the original assessment, by the AO in the second round is thus not clear. The same is clearly a question of law. It is deemed proper to state this aspect of the assessment as the said question, arising out of the assessment, was neither agitated before nor has been dealt with by the Tribunal. Sure, the non-disallowance of and, consequently, acceptance of the transactions of sale, similarly made, of bio-fertilizer and biological agents, was one of the grounds on which the assessee found favour with the Tribunal for AY 2005-06, and which could therefore be argued as a distinguishing feature for this year. This, however, shall have no impact on the instant adjudication inasmuch as the current year has already been found distinguishable on account of non-substantiation of his case by the assessee due to non-production of other relevant materials - Assessee s appeal is partly allowed.
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2021 (8) TMI 709
Exemption u/s 11 - grant of registration under section 12AA(l)(b)(II) denied - Charitable activity u/s 2(15) - 2nd round of proceedings - HELD THAT:- It is admitted fact that the main Object of the applicant trust are to impart education among the society without any caste, creed and Colour. We find that the trust deed submitted before the Ld. CIT was quite explanatory of the fact that the trust was created for imparting education. In the 2nd round of proceedings, the CIT(E), Chandigarh has rejected the application filed for registration u/s 12AA(1)(b)(ii) of the Act, exparte qua the assessee society during the covid period without appreciating the genuine difficultly and the circumstanced beyond the control of the assessee which prevented it to appear and make submission before the CIT(E) and that further he proceeded without considering the material documents on record and the direction of the Hon ble ITAT, Amritsar Bench, Amritsar in the instant case. CIT (E) has totally ignored the ground realities as were existing in Kashmir valley since August, 2019 due to abrogation of Article 370 and 35A of the Indian Constitution followed by complete lockdown due to COVID-19, which prevented the appellant assessee to pursue his proceedings before CIT(Exemptions) Chandigarh, certainly be considered in view of principles of natural Justice. Since, this matter has been come up in 2nd round before us, and taking into consideration of the genuine difficulty of the applicant, we proceed to decide it on merits of the case. Appellant society namely Anwar sultana Charitable Trust is solely created for imparting education. In compliance to the order of the Honorable Bench of ITAT Amritsar, the appellant submitted all the papers and documents required for the purpose of grant of Registration. However, the Worthy CIT(E) again rejected vide impugned order. CIT(E), while passing impugned order seems to be under hurry in passing exparte order in 2nd round and further to understand the definition of 'charitable activities' de hors requirement of law would only enable an institution to be granted registration under section 12AA of the Act as once registration is granted, the entire income of the institution would become exempt. The said view, in the light of precedents referred above is wholly opposed to law. The genuineness of activities would mean to see that activities are not camouflage, bogus, artificial and whether these are in accordance with the objects of the institution. The scope of enquiry does not extend beyond that point. On the other hand, the registration granted by Commissioner does not extend any exemption to an institution under section 11 except to the fact that such registration is mandatory for claiming exemption under section 11. Meaning thereby, in other words, exemption under section 11 can be availed by institution which are genuinely engaged in 'charitable activities. The registration under section 12AA is only to the objects of the institution. The activities of an institution though genuine at the time of grant of registration may not remain so during its life span and the registration granted to it cannot be life time guarantee that it would remain so, that is why the law prescribes procedure for withdrawal of registration once granted. The order under appeal is unsustainable and thus reversed. The Ld. CIT(E) is directed to grant registration to the appellant forthwith, preferably within one month time of furnishing copy of this order. - Decided in favour of assessee.
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2021 (8) TMI 707
Addition u/s 68 - Addition made on account of receipt of share application money - No cross examination of parties provided - CIT-A deleted the addition - HELD THAT:- As pointed out that from the audited financial statements of the investor companies, no where the name of Shri Shirish C Shah appears. More so, when the AO in order to investigate the transactions, had issued notices u/s 133(6) of the Act and summons u/s 131 which were duly responded directly by the investor companies before him. In any case, no opportunity of cross examination of Shri Shirish C Shah was even provided to the assessee by the ld AO. It is the primary duty on the part of the ld AO to provide cross examination of parties, in case, if he desires to place reliance on any statement against the assessee, in order to controvert the same. Admittedly, Shri Shirish C Shah becomes the witness of the department as it is the ld AO who is placing reliance on the statement given by him during his search proceedings. DR merely reiterated the observations of the ld AO that the directors of investor companies did not appear in person before him in response to the summons issued u/s 131 of the Act to them, eventhough the relevant details called for in the summons, were duly provided by them. Only this fact of non-appearance of those directors of investor companies in person, had drawn the ld AO to treat the receipt of share application monies as accommodation entries and thereby making addition u/s 68 in the hands of the assessee company (i.e recipient company). In view of the aforesaid observations, these arguments of the ld DR would not come to the rescue of the revenue. Accordingly, we hold that the CIT-A had rightly deleted the addition made u/s 68 in the hands of the assessee company, on which we do not find any infirmity. The ground raised by the revenue is dismissed.
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2021 (8) TMI 706
Revision u/s 263 - Deduction u/s 80P(2)(a)(i) - interest income was received by the assessee on deposits with co-operative banks and therefore deduction on the aforesaid sum ought to not have been allowed to the assessee by the AO either under section 80P(2)(a)(i) or 80P(2)(d) - HELD THAT:- As seen that the ratio laid down in the case of Totalgars Cooperative Sales Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] is that in the light of the principles enunciated by the Supreme Court in Totgars Co-operative Sale Society[ 2010 (2) TMI 3 - SUPREME COURT] in case of a society engaged in providing credit facilities to its members, income from investments made in banks does not fall within any of the categories mentioned in section 80P(2)(a) of the Act. However, section 80P(2)(d) of the Act specifically exempts interest earned from funds invested in cooperative societies. Therefore, to the extent of the interest earned from investments made by it with any co-operative society, a co-operative society is entitled to deduction of the whole of such income under section 80P(2)(d) of the Act. However, interest earned from investments made in any bank, not being a co-operative society, is not deductible under section 80P(2)(d) of the Act. CIT was therefore justified in exercising his powers of revision u/s.263 of the Act and directing the AO to tax interest income in question as it is neither of the nature specified in Sec.80P(2)(a)(i) or 80P(2)(d) of the Act. The argument that the view taken by the AO was a possible view and hence revision u/s.263 of the Act is bad is again not acceptable because, the view that ought to have been adopted was the later binding decision of the High Court in the case of Totagar co-opeartive sales society[ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] The argument that co-operative Banks are also co-operative societies is again without any basis in the light of the law explained in the case of Totagar co-opeartive sales society [supra] - We uphold the order of the CIT and dismiss the appeal of the assessee. Whether interest received from deposits with Mysore Chamarajanagar District Central Co-operative Bank made out of Reserve Fund in compliance with rule 23(2) of the Karnataka Co-operative Societies Rules, 1960 constituted its income from the business of providing credit facilities to the members and accordingly, ought to have held that the Income Tax Officer rightly allowed deduction thereof under section 80-P(2)(a)(i) of the Income Tax Act, 1961? - The issue raised by the Assessee in the aforesaid grounds require examination because if there are statutory compulsions that the money should be invested in a particular manner to run business of the Assessee then the interest income arising from such investments have business nexus and should be considered as income derived from the business of providing credit facility to the members. This aspect requires examination by the AO as it has not been raised before the CIT. We therefore modify the order of the CIT by remanding the issue raised alone to the AO for examination afresh. In other respects we confirm the order of the CIT.
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2021 (8) TMI 705
Revision u/s 263 - Deduction u/s 80P(2)(a)(i) - interest income was received by the assessee on deposits with co-operative banks and therefore deduction on the aforesaid sum ought to not have been allowed to the assessee by the AO either under section 80P(2)(a)(i) or 80P(2)(d) - HELD THAT:- As seen that the ratio laid down in the case of Totalgars Cooperative Sales Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] is that in the light of the principles enunciated by the Supreme Court in Totgars Co-operative Sale Society[ 2010 (2) TMI 3 - SUPREME COURT] in case of a society engaged in providing credit facilities to its members, income from investments made in banks does not fall within any of the categories mentioned in section 80P(2)(a) of the Act. However, section 80P(2)(d) of the Act specifically exempts interest earned from funds invested in cooperative societies. Therefore, to the extent of the interest earned from investments made by it with any co-operative society, a co-operative society is entitled to deduction of the whole of such income under section 80P(2)(d) of the Act. However, interest earned from investments made in any bank, not being a co-operative society, is not deductible under section 80P(2)(d) of the Act. CIT was therefore justified in exercising his powers of revision u/s.263 of the Act and directing the AO to tax interest income in question as it is neither of the nature specified in Sec.80P(2)(a)(i) or 80P(2)(d) of the Act. The argument that the view taken by the AO was a possible view and hence revision u/s.263 of the Act is bad is again not acceptable because, the view that ought to have been adopted was the later binding decision of the High Court in the case of Totagar co-opeartive sales society[ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] The argument that co-operative Banks are also co-operative societies is again without any basis in the light of the law explained in the case of Totagar co-opeartive sales society [supra] - We uphold the order of the CIT and dismiss the appeal of the assessee.
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2021 (8) TMI 703
Disallowance u/s.14A by applying computation mechanism provided in Rule 8D(2)(iii) - Voluntary disallowance made by the assessee - HELD THAT:- There was absolutely no satisfaction recorded by the ld. AO in his assessment order as to how the voluntary disallowance made by the assessee is incorrect having regard to the correctness of the accounts of the assessee. Such satisfaction is mandated to be recorded in terms of Section 14A(2) read with rule 8D(1) of the Rules. Non-recording of such mandatory satisfaction on an objective basis with cogent reasons would make the entire addition illegal. Accordingly, the grounds raised with regard to disallowance made u/s.14A of the Act both under normal provisions of the Act as well as in the computation of book profits u/s.115JB of the Act are hereby allowed. AO is directed to delete the entire disallowance made u/s.14A of the Act and retain the voluntary disallowance u/s.14A of the Act both under normal provisions as well as in the computation of book profits u/s.115JB of the Act. Disallowance of loss in connection with bonds/debentures written off - assessee had made investments in the debentures / bonds - HELD THAT:- Considering the fact that the debenture interest income earned by the assessee in the earlier years had been duly offered to tax under the head income from business and assessed as such, we hold that the loss by way of write off of investments which is arising in the ordinary course of business of money lending becomes allowable deduction u/s.36(1)(vii) of the Act. Accordingly, we hold that assessee would be entitled for deduction in respect of debentures / bonds written off u/s.36(1)(vii) of the Act. The grounds raised by the assessee in this regard are hereby allowed. Deduction for education cess on income tax paid during the year - HELD THAT:- We find that this additional ground raised by the assessee is purely a legal issue and does not involve verification of any facts and hence, we deem it fit to admit the same and take up for adjudication. We find that this issue is no longer res-integra in view of the decision of of Sesa Goa Ltd., vs. JCIT [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] as held for education cess, higher and secondary education cess are liable for deduction in computing income chargeable under the head profits and gains of business or profession . Accordingly, the additional ground raised by the assessee in this regard vide letter dated 04/10/2018 is hereby allowed. Non-granting of set off in respect of short term capital loss - HELD THAT:- We find that the ld. CIT(A) in his order had merely dismissed the claim of the assessee on the ground that the same does not arise from the order of the ld. AO. Admittedly, assessee had indeed disclosed deemed short term capital loss in the return of income. It is the duty of the ld. AO to look into the same and check the eligibility of set off of the same with other short term capital gains. This has admittedly not been done by the ld. AO in the instant case. Hence, we deem it fit and appropriate to remand this issue to the file of the ld. AO for denovo adjudication of the said issue raised in ground Nos. 10 11 of the assessee. Accordingly, the ground as allowed for statistical purposes.
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2021 (8) TMI 700
Reopening of assessment u/s 147 - Jurisdiction of Income Tax Authorities - Power to transfer cases - pecuniary jurisdiction to frame such assessment - reasons for forming belief of escapement of income by the assessee were recorded by the ITO, Ward-23(3), Hooghly and notice u/s 148 of the Act was also issued by the by the ITO, Ward-23(3), Hooghly but the assessment has been framed by the ACIT, Circle-23(1), Hooghly - HELD THAT:- As jurisdiction to transfer case from one Assessing Officer to other Officer lies with the Officers as mentioned in section 127(1) who are of the rank of Commissioner or above. No document has been produced on the file by the Department to show that the case was transferred by the competent authority from ITO, Ward-23(3), Hooghly to ACIT, Circle- 23(1), Hooghly. There is no document on the file that the ACIT, Circle-23(1), Hooghly had ever recorded any reasons to form belief that the income of the assessee has escaped assessment nor did he issue any notice u/s 147 of the Act. On the other hand, the ITO, Ward-23(3), Hooghly had recorded the reasons for reopening of the assessment and had issued notice u/s 148 of the Act, but did not proceed further with the framing of assessment. Under the circumstances, the assessment framed by ACIT, Circle-23(1), Hooghly, is bad in law on two counts, firstly he did not have any pecuniary jurisdiction to frame the assessment and secondly he himself did not form any belief that the income of the assessee has escaped assessment nor did he issue notice u/s 148 of the Act which was sine qua non to assume jurisdiction to frame to assessment. Decided in favour of the assessee.
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2021 (8) TMI 695
Reopening of assessment u/s 147 - Extension of period of limitation - unexplained share capital - HELD THAT:- We find that assessee duly filed the required information as required by Assessing Officer with respect to the query regarding share capital. There was only one query and which was duly replied and after that the Assessing Officer did not raise further query and made the assessment without making any additions on account of share capital. The query and its reply has already been made part of this order. CIT(A) in his order has held that since there was fresh material before the Assessing Officer, therefore, the extended period of six years will be applicable. However, while holding so he has not mentioned as to what is the failure on the part of the assessee in providing full and true information. In our view before coming to the second aspect of fresh material the Revenue has to establish failure on the part of the assessee to furnish full and fair disclosure which has not been done in the present case. Hon'ble Supreme Court in the case of NDTV vs. DCIT [ 2020 (4) TMI 133 - SUPREME COURT] has elaborately discussed this issue and has finally held that before coming to the second aspect of fresh material, the Revenue has to establish that there is a failure on the part of the assessee - benefit of extended period of limitation can be extended to six years under the first proviso to Section 147 of the Act only if Revenue can establish that the assessee had failed to disclose fully and truly all primary material facts necessary for the assessment. We find that Hon'ble Court has also dealt with the explanation-1 to the said provisions of Section 147 of the Act wherein it has been stated that filing of documents and production of books of account before Assessing Officer does not necessarily amounts to disclosure within the meaning of section. The Hon'ble Supreme Court while commenting on Explanation-1 has held that the duty of the assessee is to provide and file primary information and non disclosure of orther facts which may be termed as secondary facts is not necessary. In the light of the above judgment let us examine the primary documents which the assessee had filed before the Assessing Officer. As already noted in our order in the earlier part the assessee had filed during original assessment proceedings, copy of PAN card, copy of Bank Accounts of investors, acknowledgment of return of income of investors, confirmation of investment. These are all primary evidences which the assessee had filed and there was no further query from Assessing Officer and therefore, there is no failure on the part of assessee as the assessee had disclosed all the material facts which it was bound to disclose and if the Revenue wanted to further investigate the matter at that stage it could have easily directed the assessee to furnish more facts. The above documents filed during original assessment proceedings clearly contains the names, addresses, PAN numbers and copy of returns and copy of Bank account of investors and the Assessing Officer could have investigated further to examine as to whether these entities were entry providers or not. These documents also contain the fact that new shares of ₹ 10/- each were issued to new shareholders at a premium of ₹ 240/- each. The assessee during original assessment proceedings had filed copy of bank accounts of investors also and Assessing Officer could have examined bank accounts of such investors to examine as to whether any funds were rotated to make available funds in these bank accounts for making investment in the assessee s company. Nothing has been done by Assessing Officer and now it cannot be said that there was failure on the part of assessee to disclose full and true material facts. - Decided in favour of assessee.
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2021 (8) TMI 690
Disallowance of product development expenditure being treated as capital expenditure - HELD THAT:- It is a fact that the appellant has not claimed double deduction in respect of the said expenditure. Although the amount amortized in the books is different from the amount claimed as deduction it has neither written off the product development expenses in A.Y. 2016-17 nor claimed the same as deduction in furnishing the return of income for A.Y. 2016-16. Though the appellant has treated the capitalized R D expenses as revenue expenses and at the same time it has added back the amortized amount debited to P L Account resulting into income of ₹ 99,98,324/- as it appears from the record. Further that in the earlier Assessment Years the identical claim of product development expenses was allowed as revenue expenses. Therefore, taking into consideration the entire aspect of the matter the deletion of such addition of ₹ 5,31,82,295/- on account of capital expenditure as made by the Ld. AO has been rightly done by the Ld. CIT(A) without any ambiguity so as to warrant interference. Hence, the ground of appeal preferred by the Revenue is found to be devoid of any merit and, thus, dismissed. Addition u/s 36(1)(iii) - assessee made long-term capital advances for placing order for constructing building as per the terms to M/s. Riddhi Construction and No interest attributable to the funds utilized for purchasing of the capital asset has been capitalized during the year under consideration - HELD THAT:- Before us assessee which was brought to our notice depicting the opening balance of ₹ 346,621,488/- as on 31.03.2012 as the fund towards share capital and reserves and surplus of the assessee. Therefore, the assessee is not required to proof that no interest bearing fund is utilized for assessment made for purchases of capital when assessee s own fund is much more higher than the advances for such purchase of capital asset provided to the Riddhi Siddhi Construction. In that view of the matter addition of proportionate interest attributable to such funds on the basis of total interest paid is not permissible and hence the same is not sustainable in the eye of law and allowable to be deleted. With the above observation we allow the ground of appeal by deleting the above addition. Addition u/s 36(1)(va) of the Act on account of delayed payment of PF/ESIC - amount received by the assessee by way of employees contribution of EFP has not been deposited by the assessee in the employees account in the relevant fund on or before the due date - assessee s case is this that certain payments being employees contribution towards PF was made late but the entire contribution was paid during the Financial Year itself - HELD THAT:- Relying upon the judgment passed by the Hon ble Jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation, [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] both the authorities below has declined to allow such claim made by the assessee since the contribution of employees in PF has been failed to be deposited in the concerned account before the due date in terms of the provision laid down in Section 36(1)(va) r.w.s. 2(24)(x) of the Act. It is allowable, if only such employees contribution towards Provident Fund is credited by the assessee to the relevant account on or before due date as the crux of the order passed by the authorities below which according to us is without any ambiguity so as to warrant interference. Hence, we confirm the order passed by the authorities below. Assessee s this ground of appeal is, thus, found to be devoid of any merit and hence dismissed. Addition made u/s 56(2)(viib) - shares issued at premium - HELD THAT:- When shares are allotted on premium by a company in which public is not substantially interested, it is categorically stated that, any consideration received by such company for issue of shares that exceeds the face value of such shares, the aggregate consideration received by such company for such shares as exceeds the fair market value of the share. For calculation of the fair market value the method has been prescribed under Rule 11UA. Thus, it reveals from the records that the appellant itself has admitted that it has allotted shares at ₹ 250 whereas the fair market value of the share is ₹ 246/-. In that view of the matter the excess amount of ₹ 4 on number of shares allotted i.e. ₹ 4,83,200/- has rightly been added to the total income of the appellant under Section 56(2)(viib) of the Act. Addition as made by the authorities below is hereby confirmed. - Decided against assessee. Addition u/s 14A r.w.r. 8D - CIT-A deleted the addition - HELD THAT:- After perusal of the record it appears that the assessee has not earned any exempt income neither claimed any exempt income - As relying on CORRTECH ENERGY PVT. LTD. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] when there is no exempt income earned by the assessee no addition could be made under Section 14A of the Act, deletion of such addition made by the Ld. CIT(A) in our considered opinion, is without any ambiguity so as to warrant interference. Thus, Revenue s this ground of appeal is found to be devoid of any merit. Disallowance u/s 36(1)(iii) - Investment made by the assessee is not for the business purposes as of the opinion formed by the Ld. AO - HELD THAT:- Fact reveals from the balance sheet of the appellant that it had share capital of ₹ 8.80 crores and reserve and surplus amounting to ₹ 46.12. crores which proves that the assessee is having sufficient interest free funds available in his hand and therefore, disallowance made under Section 36(1)(iii) of the Act has been rightly deleted by the Ld. CIT(A).- Decided against revenue. Addition on account of interest received on short term loans and advances - Assessee has given short term loans and advances for supply of goods and for rendering services to various persons - HELD THAT:- Before the First Appellate Authority the assessee submitted that the said M/s. Parekh Polymers is an associated concern and it provided this fund to the said concern for business purposes towards supply of goods/services. Practically the Ld. AO has not invoked the provisions of Section 36(1)(iii) for non-related persons as the same were given for the business purposes. In that view of the matter the Ld. CIT(A) has not found it justified in invoking the provisions of Section 40A(2)(a) of the Act for disallowing proportionate interest expenses under Section 36(1)(iii) of the Act which in our considered opinion is just and proper so as to warrant interference. Thus, the same is hereby confirmed, thus, Revenue s this ground of appeal fails.
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2021 (8) TMI 688
Disallowance of claim of depreciation on the assets leased -operating lease - right of an assessee who is engaged in the business of leasing - AO disallowed the claim of depreciation on the ground that purchase of Plant and Machinery i.e., Oxygen Plants from M/s. BSL at an amount by obtaining loan from Banks by mortgaging such equipments/assets and thereafter on the same day leasing back of the asset to M/s. BSL for lease rent is nothing, but, a sham transaction - HELD THAT:- It is clear that the various allegations of the A.O. as well as the arguments of the Ld. D.R. has been answered in Brace Iron And Steel Pvt. Ltd [ 2020 (12) TMI 1256 - DELHI HIGH COURT] treating the Lease Agreement as genuine and thereby directing the respondent i.e., Tata Steel BSL Ltd., who has acquired M/s. BSL to make the payment as per the terms of the very same Lease Agreement which was doubted by the Revenue as sham and colourable. From the various details furnished by the assessee as well as submissions made before the Hon ble Delhi High Court, it is noted that the assessee is no way related to M/s. BSL. It has no concern or connection with the erstwhile M/s. BSL Group and the shareholding of the assessee-company is owned by SREI Alternative Investment Trust. The assessee has not been named in any charge-sheet filed by the SFIO. Therefore, the question of furtherance of business of M/s. BSL, in our opinion, does not arise. As been demonstrated before the Hon ble High Court that the terms of the Lease Agreement are at arm s length. When the entire transaction was appraised by Seventeen [ 17 ] Banks led by State Bank of India and since most of the Banks are Government of India undertakings, therefore, making a serious allegation treating the transaction as sham and colourable in absence of any evidence before the Revenue Authorities, in our opinion, is not justified. So far as the allegation of the A.O. that the assessee-company has no finance worth since it has paidup capital of ₹ 1 lakh only and it has no assets and had no business activity prior to its decision to purchase the plant and machinery of M/s. BSL at the end of 2014-2015 is also has no basis especially when the assessee belongs to the famous SREI International Group of Companies engaged in business of leasing, hire purchase etc., having huge net worth. Further, being the subsidiary of SREI Alternative Investment Trust, the assessee-company has backing of the SREI International Group of Companies and, therefore, the observations of the Revenue Authorities on this issue does not hold any merit. Clause-2.1 of the Lease Agreement that this Lease Agreement entered into is in the nature of an operating lease where the idea is not to finance the lessee, but, to enable the lessee to operate the asset and earn profits and where the assessee-lesser would be entitled to depreciation on the asset leased-out, since his business would be that of leasing and not mere money lending. We,find merit in the arguments of the Assessee that the assessee, in his capacity as the lessor-owner is entitled to claim depreciation under section 32 of the Income Tax Act,1961 which allows for depreciation on specified tangible assets and intangible assets, when such assets are owned, wholly or partly, by the assessee and are used for the purpose of its business or profession. A perusal of the object clause of the Memorandum of Association of the Company shows that the assessee is in the business of leasing of assets. Since in the instant case the assessee owned the asset as per the Purchase Agreement Dated 23.02.2015 and has utilised such assets for the purpose of its business, therefore, the requirement of Section 32 stands satisfied notwithstanding the non-usage of these assets by the assessee itself as the section only requires that the assessee must use the assets for the purpose of business and nowhere it mandates the usage of such assets by the assessee itself. Hon ble Supreme Court in the case of CIT vs., Shaan Finance Pvt. Ltd. [ 1998 (3) TMI 8 - SUPREME COURT] has clearly recognized the right of an assessee who is engaged in the business of leasing as being eligible for the investment allowance under section 32A if the ingredients in the said section stand met. Hon ble Supreme Court in the case of Mysore Minerals Ltd., [ 1999 (9) TMI 1 - SUPREME COURT] has held that registered ownership is not necessary. It has been held in the said decision that building owned by the assessee under section 32 of the I.T. Act means the person who having acquired possession over the building in his own right uses the same for the purpose of his business or profession though a legal title has not been conveyed to him/her as per the requirement of Law such as the Transfer of Property Act and the Registration Act, but, nevertheless is entitled to hold the property to the exclusion of all others. Lower authorities have also ignored the fact that the assessee company was incorporated with the objective of entering into such leasing arrangements which is evident from the object clause of the Memorandum of Association. Therefore, when the assessee had realised that BSL was undergoing a financial crunch it capitalized on the business opportunity and purchased the assets from the latter by way of a loan [against hypothecation of the assets], raising compulsory convertible debentures etc. Since BSL was interested in utilising the assets involved, the same were leased back to the latter under an operative lease, in return for an assured and profitable rental income. Allegation of the Revenue that the Assessee does not have any infrastructure is concerned, we are of the considered opinion that leasing business does not require any such elaborate infrastructure and any such multi-location, SCLB arrangement can be entered into without the physical movement of the assets depending on the commercial viability of the transaction. Since the A.O. in the instant case has not disputed the genuineness of the Asset Purchase Agreement Dated 23.02.2015 and the simultaneous Lease Agreement Dated 26.02.2015 entered into between both the parties for the SCLB transaction, therefore, we find merit in the arguments of the Learned Counsel for the Assessee that the transaction cannot be doubted by the A.O. in absence of any valid and sufficient material available to support such a conclusion. So far as the allegation of the A.O. that the assessee herein has purchased only oxygen plant devoid of building, civil work and other accompaniments is concerned, the same is also factually incorrect since the assessee in the instant case has purchased both oxygen plants and other related equipments and also other ancillary installation equipments which is clearly evident from Schedule-1 of the Asset Purchase Agreement Dated 23.02.2015 as well as from Schedule-1 of the Lease Agreement Dated 26.02.2015. Therefore, the allegation of the Revenue on this count also fails. A.O. has also failed to consider the fact that depreciation claimed either by BSL or the assessee under the SCLB transaction would amount to the same, showing that the situation is tax neutral. Therefore the assessee company cannot in any manner be accused of entering into the SCLB transaction with BSL as a tax evasion mechanism. SCLB transaction in the instant case can in no manner be called as a device to avoid the payment of legitimate tax when both the intention and the documentation/evidences at hand point towards the legitimate nature of the SLBC arrangement. It is the settled position of Law that the assessee is well within its rights to run its business activity in any such manner that it may deem fit and proper. Therefore, the very allegation that the SCBL transaction is a paper and dubious transaction is not correct in the absence of any conclusive evidence brought on record by the A.O. to that effect. In our opinion, the A.O. cannot step into the shoes of the businessman and dictate how to run the business. Lease Agreement entered into is in the nature of operating lease and that the assessee being the owner of the assets and leasing is one of its main objects as per its Object Clause in the Memorandum of Association, is entitled to claim depreciation on the assets leased as per the provisions of Section 32 read with Explanation 4A of Section 43(1). In view of our above discussion in the preceding paragraphs, we are of the considered opinion that the assessee is entitled to claim depreciation on the assets leased. Therefore, the Order of the Ld. CIT(A) on this issue is set aside and the first issue raised in the grounds of appeal challenging the disallowance of depreciation is allowed. - Decided in favour of assessee.
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2021 (8) TMI 686
Revision u/s 263 by CIT - claim for deduction of interest expenditure - interest expenditure on the capital borrowed for purchase /acquisition of the property - HELD THAT:- There would be no gainsaying that as per the Proviso to Sec. 36(1)(iii) of the Act, verification of the fact as to when the aforesaid new property, viz. Property Nos. 1001 and 1702 at Brindavan Terrace, Mumbai was occupied and put to use by the assessee for the purpose of his profession was indispensably required to have been done by the A.O for determining of the interest expenditure on the capital borrowed for purchase /acquisition of the said property, that would be allowable as a deduction, which we find he had failed to do. Apart from that, we concur with the Pr. CIT that the A.O had also failed to verify the claim of the assessee that the balance amount of interest expenditure pertained to the loans that were raised by the assessee for acquiring/purchasing the other three office premises of his at South Mumbai, Delhi and Chembur in the earlier years. As regards the claim of the ld A.R that the A.O in the course of the assessment proceedings had duly verified the assessee s claim for deduction of the interest expenditure, we are unable to persuade ourselves to accept the same. As is discernible from the reply dated 04.02.2017 filed by the assessee in compliance to the queries that were raised by the A.O u/s 142(1), dated. 29.01.2017, we find, that the assessee had therein only furnished the bifurcated details of the interest expenditure with reference to the banks/financial institutions from whom the same were raised. We are of a strong conviction that no infirmity emanates from the order passed by the Pr.CIT, who had rightly observed that the A.O without verifying the assessee s claim for deduction of interest expenditure had summarily accepted the same on the very face of it. Our aforesaid conviction is fortified by the Explanation 2(a) to Sec. 263 of the Act, as per which, where an order is passed by an A.O without making an inquiry and verification which in the opinion of Principal Commissioner or Commissioner should have been made, the order therein passed by him shall be deemed to be erroneous in so far it is prejudicial to the interest of the revenue. We, thus, are of the considered view that the Pr.CIT had rightly set-aside the assessment order passed by the A.O u/s 143(3), dated 18.03.2020, with a direction to him to pass a fresh assessment order after considering the aforesaid issue and allowing an opportunity of being heard to the assessee - Appeal filed by the assessee is dismissed.
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2021 (8) TMI 684
Addition u/s 68 - unsecured loans borrowed by the appellant company - assessee submitted that proper time was not given by AO to supply the requisite details - HELD THAT:- We note that very short time was granted by the Assessing Officer to the assessee to make the submission in connection with the loans. It is also the plea of learned Counsel of the assessee that certain crucial submissions were made before learned CIT(A), who has not considered the same. The assessee has also requested to admit additional evidence in connection with the loan creditors financials which were not before the Assessing Officer. CIT(A) also on the issue of opening balance of loan has remanded the matter to the Assessing Officer to make factual verification. Hence we deem it appropriate to remit the entire matter to the Assessing Officer. We make it clear that we have not considered the issue on merits in any manner whatsoever. Appeals are allowed for statistical purposes.
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2021 (8) TMI 683
Addition u/s 14A r.w.r.8D - non-satisfaction with the correctness of the claim suo-moto disallowed by the Appellant u/s. 14A - as argued AO without recording his dissatisfaction as regards the correctness of the assessee s claim for disallowance u/s 14A of the Act, had wrongly assumed jurisdiction and substituted the same by the amount of disallowance that was computed by him as per the methodology prescribed in Rule 8D - HELD THAT:- We find, that the A.O had most arbitrarily bypassed the Note on disallowance u/s 14A at Sr.No. 1.2 that was submitted by the assessee in order to support his claim that as sufficient own funds and interest free funds of ₹ 10.93 crore were available with it, therefore, no disallowance of any part of the interest expenditure was called for in its hands. In the totality of the aforesaid facts, the A.O in our considered view without recording his dissatisfaction as regards the correctness of the suo motto disallowance under Sec. 14A that was offered by the assessee in its return of income could not have dislodged and substituted the same by an amount that was computed by him by triggering the mechanism provided in Rule 8. The material aspect, viz. validity of the disallowance made by the A.O as per the mechanism provided in Rule 8D without recording of an objective satisfaction with regard to the incorrectness of the suo-motto claim of disallowance that was offered by the assessee u/s 14A of the Act, we find, despite having been specifically raised by the assessee before him was however not addressed and therein answered by the CIT(A) in the right perspective We are of the considered view, that as the A.O having regard to the accounts of the assessee, as were placed before him, had failed to record his dissatisfaction as regards the correctness of the suo motto disallowance that was offered by it under Sec. 14A in its return of income, therefore, he could not have validly resorted to sub-section (2) and (3) of Sec. 14A and computed the said disallowance as per the mechanism contemplated in Rule 8D. Accordingly, not being persuaded to accept the view taken by the CIT(A), we herein set-aside his order and vacate the additional disallowance made by the A.O. Appeal filed by the assessee is allowed.
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Customs
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2021 (8) TMI 729
Classification of goods - API supari - chikni supari - unflavoured supari - flavoured supari - boiled supari - to be classified under sub-heading 21069030 of the first schedule to the Customs Tariff act, 1975? - HELD THAT:- Classification of API supari, chikni supari, unflavoured supari, and flavoured supari was a subject matter in another advance ruling application. In the Ruling IN RE : M/S. SAMREEN INTERNATIONAL PVT. LTD. [ 2021 (3) TMI 1237 - CUSTOMS AUTHORITY FOR ADVANCE RULINGS] , I had the occasion to examine in detail the contentions of the applicant, the contending tariff entries, the relevant chapter and section notes, as well as the explanatory notes to the harmonised commodity classification system of the World Customs Organisation - It was concluded that all the five products placed before me for considerotion, i.e., API supari, chikni supari, unflavoured supari, flavoured supari, and boiled supari merit classification under chapter 8 of the customs tariff, and more precisely, under the heading 0802, and not under sub-heading 21069030, as contended. Accordingly, it is held that the benefit of the exemption contained at Sr. No. 103 of the Notification to. 50/2017-Cus., dated 30.06.2017 would not be available to the products, namely, API supari, chikni supari, unflavoured supari, flavoured supari, and boiled supari. The conclusions in the said proceedings remain equally valid in the present proceedings considering the fact that the products in question are identical. Therefore, in view of the aforesaid, any ruling in respect of boiled supari not given - In respect of the products API supari, chikni supari, unflavoured supari, and flavoured supari, it is held that their correct classification is heading 0802 of the first schedule to the Customs Tariff Act, 1975.
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2021 (8) TMI 727
Detention of petitioner - Smuggling - gold/gold jewellery - validity of action of Detaining Authority - right of making an effective representation is jeopardized - inordinate delay of impugned order of detention passed - non-application of mind - detaining authority has arrived at its subjective satisfaction without properly appreciating and satisfying itself qua the propensity of the detenu to continue indulging in prejudicial activities or not - delay on the part of the Central Government in deciding the representation filed by the detenu or not - grounds stated in detention order have been lifted from the grounds taken in an entirely different case. Whether the Detaining Authority acted independently and without any bias whilst passing the impugned order of detention? - HELD THAT:- The powers conferred under Section 3(1) of the COFEPOSA have not been complied with independently in the present case. We are also in agreement with the submissions made by learned Senior Counsel in this behalf that, there is nothing in Section 3 of the COFEPOSA or in the scheme of the Act, which suggests that the especially empowered officer must act only on receipt of the proposal of some other agency or Sponsoring Authority . In fact the expression Sponsoring Authority and Detaining Authority find no mention in the statute. Whether the detenu s constitutionally secured right of making an effective representation has been jeopardized, by the non-supply of legible and complete documents, inspite of the detenu s request in this regard, thereby rendering the order of detention illegal and bad? - HELD THAT:- In the present case, the denial by the official respondent to supply legible copies of the relevant documents to the detenu, despite his express request to do so, tantamount to denial of his constitutional right, thereby vitiating the detention order, founded on the said relevant material. Whether the order of detention is bad in law and vitiated on the ground of inordinate delay? - HELD THAT:- In the absence of any mention of such overseas evidence in the subject detention order, the same cannot be considered as germane in order to satisfactorily explain the delay occasioned in passing of the impugned order of detention. The Court can interfere with the order of detention on the ground of inordinate and unexplained delay, a fortiori, there has been substantial, unexplained delay in passing the impugned order of detention. As a result, in the absence of any satisfactory explanation for it, the inordinate delay leads to snapping of the required live and proximate link and direct nexus with the immediate need to detain the petitioner. Whether the impugned detention order is vitiated on account of nonapplication of mind? - HELD THAT:- A plain reading of the said grounds of detention clearly reflects the extensive reliance placed upon the said statements by the Detaining Authority, for arriving at its subjective satisfaction - once the Detaining Authority has relied upon the inculpatory statements of the co-accused, their retractions also assumed great relevance in the factual backdrop of the present case. Consequently, the admissibility of the said statements becomes questionable once there is a retraction, which issue merited consideration, not accorded to it by the Detaining Authority. Whether the detaining authority has arrived at its subjective satisfaction without properly appreciating and satisfying itself qua the propensity of the detenu to continue indulging in prejudicial activities? - HELD THAT:- The legal position that emerges on this aspect is that, if the documents are relevant and have a direct bearing on the case, they were required to have been placed before the Detaining Authority for its subjective satisfaction . The Detaining Authority did not consider the conduct of the detenu, post his enlargement on bail whilst rendering the impugned order of detention, since despite the release of his passport and the granting of the requisite permission to travel abroad, the detenu voluntarily chose not to travel overseas, clearly and unequivocally establishing his bona fides and debunking the arguments of his propensity to continue to indulge in prejudicial activities in the immediate future. This was never brought to the notice of the Detaining Authority, thereby precluding the latter from considering this relevant and germane circumstance, whilst arriving at its subjective satisfaction in this behalf - the Detaining Authority has erred in arriving at the finding qua the propensity of the detenu to involve himself in further prejudicial activities, by failing to consider the facts and circumstances. Delay on the part of the Central Government in deciding the representation filed by the detenu - HELD THAT:- There was massive delay of 57 days by the Central Government in dealing with the petitioner s representation - it is well settled that the right of the detenu to make a representation and have it considered by the appropriate Government with expedition, is a constitutional right under Article 22(5) of the Constitution of India and any unreasonable and unexplained delay in considering the representation is fatal to the continued detention of the detenu - there has been inordinate and unexplained delay on the part of the Central Government in deciding the statutory representation filed by the detenu. Whether the subject detention order stands vitiated for the reason that the grounds stated therein have been lifted from the grounds taken in an entirely different case? - HELD THAT:- The petitioner herein have produced certified copies of the detention order in the case of UNION OF INDIA, JOINT SECRETARY (COFEPOSA) , GOVT. OF INDIA, MINISTRY OF FINANCE VERSUS DIMPLE HAPPY DHAKAD [ 2019 (8) TMI 139 - SUPREME COURT] (filed by the detenu s wife) from the records available in the Supreme Court of India. A purposive, comparative consideration of the grounds of detention dated 17.05.2019 in Dimple Happy Dhakad (supra), also passed by Mr. R.P. Singh, the Detaining Authority in these proceedings and the impugned detention order, the inference clearly is that barring a few differences in the names and references etc mutatis mutandis the grounds are unerringly identical. The said comparison ground-for-ground leads but to one inescapable conclusion, that the entire exercise of passing the detention order was mechanical, as the grounds have been lifted from the grounds of an altogether distinct case. Such a blatant copy-paste job by the Detaining Authority demonstrates clear non-application of mind. The impugned order of detention is vitiated on this ground as well - issue decided in favour of the detenu and against the respondents - petition allowed.
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2021 (8) TMI 715
Confiscation of imported goods - levy of fine on re-export - levy of penalty - goods declared as Hand Mixer - requirement with the compliance with mandatory BIS compliance - Bill of Entry not certified by the BIS authorities - HELD THAT:- There is no dispute on the identity or declared description of the goods and the respondent has not held that the appellant had wrongly declared the description for the purpose of overcoming the BIS standard and there is no finding in the impugned order that what is under import is Handheld blender and not Handheld Mixer as declared by the appellant. Further it is found that without such an express findings, the conclusion drawn by the responded that the goods are covered by BIS Kitchen Appliances (Quality Control) Order is not sustainable. Handheld Mixer and the Handheld Blender are entirely different products having different specifications, mechanisms, performance, speed, power and even meant for performing different tasks. The differences between the two products have been cited above and perusal of those differences clearly shows that the language of the said standard itself would draw a clear distinction between Handheld Blender and Handheld Mixer - Further the contention of the Department that the said product was examined by the authorised officer of the BIS posted at Cochin and he has confirmed that the imported apparatus is liable for mandatory BIS compliance as Handheld Blender is without any basis and has been raised only for the first time at the time of argument. No such reference to the authorised officer of BIS or his opinion has neither been provided to the appellant nor made part of the impugned Order-in-Original and not even produced before this Tribunal. Therefore, this stand of the Department has no basis and is liable to be rejected. The appellant has given clear distinctions of tasks that can be performed by Hand blender and Hand Mixer and the said table has been reproduced above. In view of these facts, the Handheld Blenders and Handheld Mixers are two different products and having different specifications, mechanisms, performance, speed, power and even built for performing different tasks. Further, the impugned goods are not liable to have a BIS compliance as mentioned in BIS Kitchen Appliances (Quality Control) Order, 2018 as the same is not applicable in the impugned goods. The Customs authorities are directed to release the goods on payment of appropriate customs duty which the appellant has already paid as per his submissions - appeal allowed.
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2021 (8) TMI 704
Determination of rate of duty - Relevant date for payment of Customs Duty - Delay in filing of BE due to error on ICEGATE portal - requirement to pay Basic Customs Duty applicable on 05.07.2019, which is the date on which the respondent submitted the Bills of Entry with the requisite data for generation of numbers for the four Bills of Entry or it should be 19/20.07.2019, on which date the three Bills of Entry numbers were generated by the ICEGATE portal? - Section 15 of Customs Act, 1962. HELD THAT:- The respondent had submitted all the four Bills of Entry with the relevant documents on 05.07.2019 before 5 PM and the respondent cannot be blamed if for three consignments, Bills of Entry numbers were not generated because of some fault with the ICEGATE portal of the appellant on which the respondent was required to enter the Electronic Integrated Declaration and the supporting documents. The rate of Basic Customs Duty as applicable on 05.07.2019 would, therefore, be applicable and not the Basic Customs Duty as applicable on 20.07.2019, on which date the respondent had resubmitted the Bills of Entry with documents in view of the instructions issued by the Department. There is, therefore, no error in the order passed by the Commissioner (Appeals) requiring the Department to re-assess the three Bills of Entry with respect to the rate of Basic Customs Duty applicable on 05.07.2019. The issue arising before the Supreme Court in UNION OF INDIA OTHERS VERSUS M/S GS CHATHA RICE MILLS ANOTHER [ 2020 (9) TMI 903 - SUPREME COURT] was not about non-generation of Bills of Entry numbers, which is the issue in the present case. This judgment would, therefore, not come to the aid of the respondent. Appeal dismissed.
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2021 (8) TMI 698
Valuation of imported goods - Mix Hydrocarbon Oil - rejection of declared value - rejection of value based on contemporaneous import prices of Mix Hydrocarbon Oil by other importers from the same country of origin - Time Limitation - HELD THAT:- The learned Commissioner (Appeals) has not considered the merit of the assessment and dismissed the appeal as not maintainable. Once the appeal was dismissed as non maintainable no issue on merit stood decided. The present appeal was filed against the impugned order which was passed in the appeal filed against the OIO. Therefore, the appeal before the Commissioner (Appeals) was filed under legitimate right of the appellant. The earlier order dated 04.03.2010 and observation made there will not influence the present proceeding. It is also a fact that the appellant has not filed any appeal before the CESTAT against the Commissioner (Appeals) order dated 04.03.2010 therefore, finding of the Commissioner (Appeals) in the impugned order on this point is baseless. Time Limitation - HELD THAT:- The appellant was not given proper opportunity to explain the delay in filing an appeal - the Commissioner (Appeals) is directed to decide the issue of valuation as well as delay afresh, after giving opportunity to the appellant. The appeal is allowed by way of remand to the commissioner (Appeals).
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2021 (8) TMI 692
Smuggling - Gold Bars - Baggage Rules - personal effects - applicability of New Baggage Rules which came into existence post 2009-2014 vide N/N. 30/2016 Cus-NT dated 01.03.2016 - Jurisdiction under Section 129 (A) Customs Act, 1962 to decided an appeal - HELD THAT:- New Baggage Rules have come into existence post 2009-2014 vide Notification No. 30/2016 Cus-NT dated 01.03.2016. As per Rule 2(vi) personal effects is defined to mean things required for satisfying daily necessities but does not include Jewellery. The gold recovered though was not precisely jewellery but was definitely not the thing required for satisfying daily necessities. The substantial use of this metal in making jewellery is also a fact which takes the metal out of the scope of definition of personal effects in Rule 2(iv) of New Baggage Rules. These observations are held sufficient to hold that the gold bars recovered from the bags of the appellants intercepted at the airport (within the Customs area) are the goods imported as Baggage. As per Section 129 (A) Customs Act, 1962, this Tribunal has no jurisdiction to decide any appeal in respect of an order which relates to any goods exported or imported as Baggage. The appellants have brought the gold from outside India into their handbags without requisite declaration as required under section 78 of the Customs Act. Reliance placed in the case of SHRI PRAKASH CHANDRA SHANTILAL VERSUS CC AHMEDABAD [ 2012 (9) TMI 824 - CESTAT, AHMEDABAD] where it was held that In this case, whatever is brought by a passenger from abroad is considered as baggage and the passenger is required to make a declaration under Section 77 and till the goods are declared and cleared from Customs area (airport) after declaration, the goods remain imported goods and the person remains the importer. Going by this analogy also, the goods in this case can be considered as imported goods only and as already mentioned earlier, Section 129A provides that the Tribunal has no jurisdiction in respect of any goods imported or exported as baggage. Accordingly, it is held that since appeal relates to Baggage, the same is not maintainable before the Tribunal - Appeal disposed off.
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2021 (8) TMI 679
Validity of detention order - re-import of gold jewellery - allegation of misuse of Advance Authorization Scheme through circular trading of gold jewellery exported under the guise of exhibition from India through hand- carrying and subsequently re-importing (smuggling) the same fraudulently into India. Whether the Detaining Authority acted independently and without any bias, whilst rendering the impugned orders of detention? - HELD THAT:- The powers conferred under Section 3(1) of the COFEPOSA have not been complied with independently in the present case. We are also in agreement with the submissions made by learned Senior Counsel in this behalf that, there is nothing in Section 3 of the COFEPOSA or in the scheme of the Act, which suggests that the especially empowered officer must act only on receipt of the proposal of some other agency or Sponsoring Authority . In fact the expression Sponsoring Authority and Detaining Authority find no mention in the statute. There was nothing that prevented Mr. R.P. Singh, whilst acting as J.S. (COFEPOSA), from passing the impugned orders of detention at the first opportunity. Resultantly, the argument of pre-determined approach and bias stands established in the present case. Whether the impugned orders of detention passed are bad in law and vitiated on the ground of inordinate delay - HELD THAT:- Although it was urged before this Court by the respondents at the pre-execution stage about the overseas evidence received from Dubai in November, 2019; however, no reference to such evidence is to be found in the impugned detention orders - in the absence of any mention of such overseas evidence in the subject detention orders, the same cannot be considered as germane in order to satisfactorily explain the delay occasioned in passing the impugned orders of detention. The Court can interfere with the orders of detention on the ground of inordinate and unexplained delay, a fortiori, there has been a delay in passing the impugned orders of detention. As a result, in the absence of a satisfactory explanation, the inordinate delay leads to snapping of the live and proximate link and direct nexus between the alleged prejudicial activity and any immediate need to detain the petitioners. Whether the impugned detention orders are vitiated on the ground of non-application of mind? - HELD THAT:- Once the Detaining Authority has relied upon the inculpatory statements of the co-accused their retractions assumed great relevance in the factual backdrop of the present case. Consequently, the admissibility of the said statements becomes questionable once there is a retraction, which issue merited consideration, not accorded to it by the Detaining Authority. The legal position that emerges on this aspect is that, if the documents are relevant and have a direct bearing on the case, they must be placed before the Detaining Authority for its subjective satisfaction . Whether the detaining authority has arrived at its subjective satisfaction without properly appreciating and satisfying itself qua the propensity of the detenu to continue indulging in prejudicial activities? - HELD THAT:- The Detaining Authority whilst arriving at its subjective satisfaction failed to properly examine whether the detenus exhibited propensity to continue indulging in any prejudicial activities, for the reason that there was no consideration of the circumstance that IMNPL had been placed under the Denied Entity List, thereby clearly indicating and establishing that it could no longer import gold under the Advance Authorization Scheme; and completely eliminating the possibility of it misusing the said scheme. The consideration of the said aspect is conspicuous by its absence in the impugned detention orders - The Detaining Authority has erred in arriving at the finding qua the propensity of the detenus to involve themselves in further prejudicial activities, by failing to consider the facts and circumstances. Whether there has been delay on the part of the Central Government in deciding the representation filed by the detenus? - HELD THAT:- It would be relevant to consider the circumstance that both detenus were detained on 01.10.2020 and filed representations dated 16.10.2020 and 20.10.2020 respectively, with the Detaining Authority, as well as with the Central Government. Although the Detaining Authority rejected their representations on 03.11.2020, no decision, however, was taken by the Central Government on the detenus representations. Instead the Central Government made a reference dated 03.11.2020 to the Central Advisory Board, which gave its opinion qua the sufficiency of the grounds with regard to the detenus detention. The subject representations were finally rejected by the Central Government only on 23.12.2020, three days after confirmation by it of the orders of detention by the Central Advisory Board. Thus, insofar as the case of detenus Amit Pal Singh and Gopal Gupta are concerned, there was massive delay of 69 days and 65 days respectively by the Central Government in dealing with their representations - there has been inordinate and unexplained delay on the part of the Central Government in deciding the statutory representations filed by the detenus. Whether the detention orders stand vitiated owing to the reason that the grounds stated therein have been lifted from the grounds taken in an entirely different case? - HELD THAT:- A purposive comparative consideration of the grounds of detention in UNION OF INDIA, JOINT SECRETARY (COFEPOSA) , GOVT. OF INDIA, MINISTRY OF FINANCE VERSUS DIMPLE HAPPY DHAKAD [ 2019 (8) TMI 139 - SUPREME COURT] , also passed by Sh. R.P. Singh, the Detaining Authority in these proceedings; and the impugned detention orders, gives substance to the inference is that barring a few differences in the names and references etc -mutatis mutandis-the grounds are unerringly identical. The said comparison ground-for-ground leads but to one inescapable conclusion, that the entire exercise of passing the detention orders is mechanical, as the grounds have been lifted from the grounds of an altogether distinct case. Such a blatant copy-paste by the Detaining Authority demonstrates a clear non-application of mind - the impugned orders of detention are liable to be vitiated on this ground as well.
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Corporate Laws
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2021 (8) TMI 723
Charge created in respect of a property in favour of the petitioner by the corporate debtor - petitioner claims to be a financial creditor of the corporate debtor in the NCLT proceedings - dispute exists between the petitioner and the first respondent - HELD THAT:- The NCLT, Chennai has sought to pass the buck. The order may also seen to be irreverent and verging on the contumacious to remind this court that while the NCLT functions on a time bound basis, the time element may not apply to court proceedings. To such extent, the NCLT may do well to stay within the bounds of its authority and adhere to the limits of propriety in conformity with the superior authority that this court exercises. It is for the NCLT to decide whether the matter before it ought to be decided or not, whether any injunction operates or impedes the progress of the matter before it and the parties cannot be asked to approach this Court for this Court to hand-hold the NCLT and guide it through its proceedings. The NCLT would do well to confine itself to its area of specialisation and deal with the matter in accordance with law without waiting for any advice or assistance from this Court which this Court, in any event, is not obliged to extend. Petition disposed off.
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2021 (8) TMI 721
Seeking extension of time for making the payment of dividend to the remaining contributors - seeking directions regarding publishing of advertisements and notices and to make payment to advertisement agency from the fund of the company (In Liquidation) - HELD THAT:- The Official Liquidator is directed to make the payment of dividend to the remaining contributors strictly in accordance with law within a period of 60 days from today. The Official Liquidator shall be required to publish one more advertisement in daily news paper Rajasthan Patrika (Hindi) and Hindustan Times (English) through advertisement agency publish the notice in Form No.63 under Rule 148(1) of the Companies (Court) Rules, 1959, while making the payment to advertisement agency from the fund of the company - Application disposed off. Seeking direction regarding typist-cum-clerk to do the work of typing etc. - HELD THAT:- The application is allowed. The Official Liquidator shall do the needful, as sought to be made, strictly in accordance with law. Seeking increase in professional fees - HELD THAT:- The application is allowed. The fee of the lawyer as proposed i.e. ₹ 25,000/- per month is allowed and the same shall be payable from the date of application. Seeking to release the claimed and settled amount to Shri Inder Kumar Agarwal of M/s Govindram Sanjaykumar by way of opening dividend account - HELD THAT:- The prayer is allowed and the Official Liquidator shall take necessary steps, strictly in accordance with law - Application allowed. Seeking to release the claimed and settled amount to Shri Gyan Chand Chhallani of M/s. Shankeshwar Spintex by way of opening dividend account - HELD THAT:- The prayer is allowed and the Official Liquidator shall take necessary steps, strictly in accordance with law - Application allowed. Seeking appropriate direction to pass the appropriate order for payment ₹ 20,39,993/- plus interest @ 6.75% P.A. current rate of fixed deposit prevalent as already have been paid to other workmen from 23.02.2010 to 10.07.2014 for 1599 days - HELD THAT:- The instant application is allowed. The Official Liquidator shall make the necessary payment, strictly in accordance with law. Seeking to pay second Dividend to contributories - HELD THAT:- The application is allowed. The Official Liquidator shall pay the second dividend to the contributories, strictly in accordance with report of the Panjab National Bank, Paota 'C' Road, Jodhpur, if the same is payable in law. Seeking to permit the Official Liquidator to file Income Tax Return in the matter of M/s. Mewar Textile Mills Limited (In Liquidation) so as to enable it to claim refund of Tax Deducted at Sources (TDS) - seeking to permit Official Liquidator to pay the audit fees - HELD THAT:- The application is allowed. The Official Liquidator shall do the needful, strictly in accordance with law. Seeking claim of settling subsequent claim to be winding up in accordance with law alongwith interest on the belated payment - HELD THAT:- This Court is of the opinion that at best the applicant being unsecured creditor is entitled for 4% interest per annum - the instant application is disposed of with a direction to the Official Liquidator to pay 4% interest to the applicant from the date of winding up i.e. 23.02.2010 till the date of declaration of dividend which is 08.04.2019 entitled to an unsecured creditor in accordance with Rule 179 of the Companies Court Rules. Seeking claim of settling subsequent claim to be winding up in accordance with law alongwith interest on the belated payment - HELD THAT:- This Court is of the opinion that at best the applicant being unsecured creditor is entitled for 4% interest per annum - the instant application is disposed of with a direction to the Official Liquidator to pay 4% interest to the applicant from the date of winding up i.e. 23.02.2010 till the date of declaration of dividend which is 08.04.2019 entitled to an unsecured creditor in accordance with Rule 179 of the Companies Court Rules. List these matters on 11.8.2021.
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2021 (8) TMI 691
Oppression and mismanagement - seeking permission to inspect the books of accounts of the Respondent No. 1 Company from 04.06.2015 till date - seeking permission to access all documents, being financial documents, documents in relation to the running of the Respondent No. 1 Company along with the Registers maintained in the usual course of business activities - direction to Respondent to ensure that the Petitioner is called for all meetings conducted by the Respondent No. 1 - seeking restraint from causing any impediment in the functioning of the Petitioner as a Director - HELD THAT:- The petitioner claiming to be a nominee Director of M/s. Buddy (Mumbai) Duty Free Services Pvt. Ltd. filed the instant CP and the CA therein. In RT CP No. 186/Chd/Hry/2017 (CP No. 150/ND/2016) by way of a separate order passed today, while holding that M/s. Buddy (Mumbai) Duty Free Services Pvt. Ltd. was not a shareholder of the respondent No. 1 company, we dismissed the CP filed by it under Section 241 and 242 of the Companies Act, 2013. The petitioner in the absence of any specific allegations of oppression and mismanagement in the instant CP or in the CA, failed to show any other valid reason in support of the instant CP and CA. Petition dismissed.
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2021 (8) TMI 682
Sanction of Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and does not violate of any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, Company Petition filed by the Petitioner Companies has been made absolute in terms of prayer made in the petition. The scheme is sanctioned hereby, and the Appointed Date of the scheme is 1st April 2019. The Transferor Companies shall stand dissolved without the process of winding up - Application allowed.
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2021 (8) TMI 681
Sanction of scheme of Amalgamation - sections 230-232 of the Companies Act, 2013 read with Companies (Compromise, Arrangement and Amalgamations) Rules, 2016 - HELD THAT:- On perusal of the Scheme and the documents produced on record, it appears that the requirements of the provisions of Sections 230 and 232 of the Companies Act, 2013 are satisfied. The Scheme appears to be genuine and bonafide and in the interest of the shareholders and creditors. The Scheme of Amalgamation, which is at Annexure H to the joint petition is hereby sanctioned and it is declared that the same shall be binding on the Petitioner Companies, namely, Bhadra Textiles and Trading Private Limited and Villa Trading Company Private Limited and Gujarat Sidhee Cement Limited and their shareholders, and all concerned under the Scheme - the petition is allowed.
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Insolvency & Bankruptcy
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2021 (8) TMI 719
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - whether the Appellant has made out any case invoking the jurisdiction of the Adjudicating Authority Under Section 9 of the IBC 2016? - HELD THAT:- The Respondent had admitted the debt on various occasions and no dispute raised prior to issuance of demand notice, the application of the Appellant is complete and fulfilled of the criteria as enumerated under Section 9 of the IBC. In view of the fulfilment of the requirements/qualifications for initiation of CIRP, the application has to be admitted. The Ld. Adjudicating Authority is directed to admit the application in accordance with Law, after affording opportunity to the respective parties - application admitted - appeal allowed.
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2021 (8) TMI 699
Cancellation of the sale effected by respondent i.e. State Bank of India in favour of auction purchaser - seeking appropriate directions to the respondent i.e. State Bank of India to give effect for reversing this sale transaction - HELD THAT:- In view of the admitted facts of this case and further in view of the Judgement of the Hon ble Supreme Court reported in the case of B. ARVIND KUMAR VERSUS GOVERNMENT OF INDIA AND ORS. [ 2007 (5) TMI 657 - SUPREME COURT] , wherein, the Hon ble Supreme Court has held when a property is sold by public auction in pursuance of an order of the court and the bid is accepted and the sale is confirmed by the court in favour of the purchaser, the sale become absolute and the title vests in the purchaser. A sale certificate is issued to the purchaser only when the sale becomes absolute. The sale certificate is merely an evidence of such title. It is well settled that when an auction purchaser derives title on confirmation of sale in his favour, and a sale certificate is issued evidencing such sale and title, no further deed of transfer from the court is contemplated or required. Further, it does not required registration under Section 17(2) (xii) of the Registration Act - Initiation of the proceedings for public auction under SARFAESI Act was completed on 30.12.2019. In the instant case also proceedings for sale of property was initiated under SARFAESI Act and also on 21.09.2019 Sale notice was published in the newspaper Business Standard (English) and Business Standard (Hindi) under Rule 8(6) of SARFAESI Rules - On 24.10.2019 e-auction for sale of the subject property was conducted by STATE bank of India and M/s Alucom Panels Pvt. Ltd. (Respondent No. 3) and was declared highest bidder. Sale confirmation issued to Respondent No. 3 under Rule 9(2), SARFAESI. There is no illegality in the Impugned Order passed by the Learned Adjudicating Authority and Impugned Order is hereby affirmed - Appeal dismissed.
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2021 (8) TMI 689
Liquidation of corporate debtors - Section 33(2) of IBC, 2016 - HELD THAT:- Since the CoC in its 6th and 7th meeting after discussing and deliberating about the current affairs of the Corporate Debtor by taking into consideration that there were no Eols received from any prospective Resolution Applicant and also keeping in view of the fact that the Corporate Debtor is not running its business and based on its commercial wisdom has decided to liquidate the Corporate Debtor. Thus, by taking into consideration the provisions of Section 33 of IBC, 2016 and in the absence of any opposition to the Application from the Promoters of the Corporate Debtor, this Tribunal orders for the liquidation of the Corporate Debtor. It is also seen from the records that the Applicant herein has accorded his written consent in Form AA to act as the Liquidator of the Corporate Debtor. The Applicant has also filed Authorization for Assignment (AFA) in Form - B issued by the Indian Institute of Insolvency Professionals of ICAI. The liquidation of Corporate Debtor is approved - application allowed.
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Service Tax
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2021 (8) TMI 717
Refund of service tax paid - second refund claim filed (refund claim filed again) for claiming the refund from original order - Security Services - Clearing and Forwarding Charges - HELD THAT:- Originally refund application was filed on 17.7.2007 which was partially allowed by the Deputy Commissioner to the extent of ₹ 3,85,681/- and thereafter, the Commissioner (A) has allowed refund claim on certain input services viz., Security Services and Clearing and Forwarding Charges . Thereafter, CESTAT vide Final Order No.21260/2016 dated 16.7.2014 received on 25.11.2016 has allowed the appeal and set aside the order rejecting the refund claim. Thereafter, this decision of the Tribunal was not challenged by the Department and it has attained finality. After the decision of the Tribunal, it was incumbent upon the department to refund the CENVAT credit as per the decision of the Tribunal. After three months of the decision of the Tribunal, the appellant filed a letter dated 21.2.2017 requesting the department to grant refund as per the order of CESTAT. The Tribunal s decision dated 16.7.2014 communicated on 25.11.2016 has attained finality, then there is no power or jurisdiction to the lower authority to re-adjudicate the matter again in view of the various decisions cited supra. Further, the department has erroneously relied upon the GST Circular to reject the refund of CENVAT credit and the said Circular is contrary to the provisions of erstwhile Service Tax Regime and are not binding on the Court. Demand of interest for delayed refund - HELD THAT:- Since the issue of interest on delayed refund has been settled by the apex court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] wherein Hon ble Supreme Court has held that interest on delayed refund under Section 11BB is payable on expiry of three months from the date of receipt of application under Section 11B(1) and not from the date of the order of refund or appellate order allowing such refund - the appellant is entitled for interest as per the apex court decision in the case of Ranbaxy Laboratories Ltd. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 716
CENVAT Credit - Works Contract Service - Quiz Competition - denial of credit on the ground that the CENVAT credit pertains to execution of Works Contract Service in respect of the building/civil structure occupied by the appellant, which is excludable from the purview of Rule 2(l) of the CENVAT Credit Rules, 2004 - HELD THAT:- The Works Contract Service involved in the present case falling under the definition of Input Service because services availed by the appellant pertains to only repair, renovation and maintenance of the office of the appellant which is on a leased premises and such renovation, repair is required for providing the output service of the appellant and they have not been specifically excluded under Rule 2(l) of the CENVAT Credit Rules, 2004 because they do not pertains to construction or execution of works contract of building or civil structure. It has been consistently held in various decisions that repair and maintenance of the office premises falling under the definition of Input Service and the assessee is entitle to avail credit of the same - Moreover, Circular No.943/4/2011 dated 29.04.2011 also clarified that the CENVAT credit of input service used for repair or maintenance of the factory is allowed, hence denial of CENVAT credit on works contract is not sustainable. CENVAT Credit - conducing quiz competition - HELD THAT:- The CENVAT credit on these re- creational activities cannot be allowed. CENVAT credit on Works Contract Service is allowed and CENVAT credit of service tax paid on conducting of quiz competition is denied - appeal allowed in part.
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2021 (8) TMI 694
Levy of Service Tax - Mark Up amount - difference between the amount paid by the Appellant to the Shipping Lines/Airlines and the amount recovered by the Appellant from the customers (exporter/importers) - HELD THAT:- The Division Bench accepted the contention advanced on behalf of the appellant in the earlier decision that the appellant was only trading in space and was not providing any service. The Division Bench also noted that the issue involved in the Appeal was covered by the decisions of the Tribunal in GREENWICH MERIDIAN LOGISTICS (INDIA) PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX MUMBAI [ 2016 (4) TMI 547 - CESTAT MUMBAI ] and COMMISSIONER OF SERVICE TAX, NEW DELHI VERSUS M/S. KARAM FREIGHT MOVERS [ 2017 (3) TMI 785 - CESTAT NEW DELHI ] - The post negative list w.e.f. 01.07.2012 was also involved in the Appeal that was decided. The orders dated December 31, 2015 and February 27, 2017 passed by the Commissioner with penalty and interest deserve to be set aside and are set aside - Appeal allowed.
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Central Excise
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2021 (8) TMI 726
Doctrine of promissory estoppels - Area Based exemption notification - application for request for fixation of a special rate for the value addition on the manufactured goods for the financial year 2011-2012 in terms of the notifications No.32-99-CE dated 18.07.1999, as amended and No. 31/2008-CE dated 10.06.2008 - HELD THAT:- In the instant case, it is the case of the petitioner that the requirement of requesting for fixation of a special rate in respect of the value addition to the manufactured goods had arisen only after the final judgment of the Supreme Court on 20.04.2020 [ 2020 (4) TMI 669 - SUPREME COURT ], inasmuch, as long as the matter was pending before the Supreme Court and the interim order dated 07.12.2015 [ 2015 (12) TMI 1605 - SC ORDER ] was in operation requiring a refund of 50% of the amount involved, no occasion had arisen for the assessee to claim for the fixation of a special rate in respect of the value addition to the manufactured goods. The dominant purpose of the two notifications i.e. amended notification No.32/99-CE dated 18.07.1999 and the notification No. 31/2008-CE dated 10.06.2008, is the bestowing of a legal right to the assessee to opt for the fixation of a special rate in respect of the value addition to a manufactured goods. The requirement that such applications are to be made not later than 30th day of September of the given financial year is a provision for streamlining the procedure for making such application and to avoid the situation where the process of making such applications would be a never ending matter. Where the necessity for making of a request for fixation of the special rate for the value addition to the manufactured goods may not have occasioned earlier, it is deeemed appropriate that the Principal Commissioner of GST, Guwahati decides the application of the petitioner on its own merit as regards the claim for fixation of a special rate to the value addition to the manufactured goods of the given financial year. The Principal Commissioner, GST, Guwahati is directed to consider the application of the petitioner dated 18.05.2020 seeking for fixation of a special rate to the value addition to the manufactured goods of the given financial year and decide the same as per law - Petition allowed.
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2021 (8) TMI 724
Refund of accumulated credit - Deemed export - supply under ICB - rejection on the ground that there was no Physical Export under Rule 5 of the said Rules for seeking refund - goods cleared under the notification dated 17.03.2012 against ICB at Nil rate of duty - HELD THAT:- The substantial question of law as framed has to be answered in favour of the appellant. It is undisputed that for the period from January2014 to December-2014 the present appellant had claimed similar refund of Cenvat credit under Rule 5 of the said Rules on the ground that said credit remained unutilized due to clearances of the final products under ICB - The Tribunal by its judgment dated 17.06.2016 considered the judgment in the case of COMMR. OF CENTRAL EXCISE VERSUS SHILPA COPPER WIRE INDUSTRIES [ 2010 (2) TMI 711 - GUJARAT HIGH COURT] and held that in view of that decision, the clearances made by the appellant herein to ICB had to be considered as exports for being entitled to claim refund of Cenvat credit. The Revenue proceeded to challenge that adjudication by filing the case as decided in PRINCIPAL COMMR. OF CUS., C.E. S.T., NAGPUR VERSUS FABRIMAX ENGG. PVT. LTD. [ 2017 (2) TMI 1316 - BOMBAY HIGH COURT] where they upheld the order of the Tribunal. It is thus clear that for the earlier period from January-2014 to December-2014 the claim for refund made by the appellant under Rule 5 of the said Rules was upheld by the Tribunal as well as by this Court. Notably this adjudication pertains to the appellant itself. Despite the fact that the aforesaid orders were placed before the Tribunal in the present proceedings it has not given due weightage to the same but has sought to distinguish the same on untenable grounds. The entitlement to refund under Rule 5 of the Rules stands established in view of the legal position referred to above as the claim as made has been disallowed in a manner contrary to law. In that view of the matter the substantial question of law as framed is answered by holding that the appellant is entitled for refund under Rule 5 of the said Rules read with notification dated 17.03.2012 and Section 11B of the said Act. Time limitation for calculation of interest on delayed refund - HELD THAT:- This issue stands concluded by the judgment of the Hon ble Supreme Court in RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] ). This very question as regards commencement of the period for the purposes of paying interest on delayed refund under Section 11BB of the said Act was considered alongwith the aspect as to the date from which the entitlement to interest arises. It has been held in clear terms that the liability of the Revenue to pay interest under Section 11BB of the said Act commences from the date of expiry of three months from the date of receipt of the application for refund under Section 11B(1) of the said Act and not on the expiry of the period from the date on which the order of refund is made. This decision has thereafter been consistently followed and hence it is now a settled position that the entitlement to interest on delayed refund would commence on the expiry of the period of three months from the date of receipt of the application for refund till the date of payment of refund. Appeal allowed.
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2021 (8) TMI 722
Jurisdiction - power of similar rank person to pass an order - impugned order has been passed by the Joint Secretary (Revision Application), Government of India, who was also in the same rank of Commissioner of Central Excise and Customs, who had passed the Order-In-Appeal - Section 35 EE of the Central Excise Act, 1944 - HELD THAT:- Reliance placed on the decision of this Court in S. MOINUDDIN VERSUS JOINT SECRETARY, THE COMMISSIONER OF CUSTOMS (APPEAL) , THE JOINT COMMISSIONER OF CUSTOMS, THE PRINCIPAL COMMISSIONER OF CUSTOMS, CHENNAI. [ 2017 (1) TMI 1757 - MADRAS HIGH COURT] , where this Court has interfered with the order that had been impugned therein in respect of similarly placed persons on that sole ground and had directed the matter to be heard by an authority after taking corrective measures in that regard. The matter is remitted to the present Revisional Authority under Section 129 DD of the Act for fresh consideration of the matter - petition allowed by way of remand.
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2021 (8) TMI 708
Clandestine Removal - demand is based on the comparison of the figures reported in the annexure of the tax audit report for the years 2012-13 and 2014-15 to 2015-16 and ER 6 for preforms - Absence of substantive corroborative allegation - 100% conversion of pre form to PET bottles - percentage of wastage of preforms - time limitation - HELD THAT:- In the instant case, it is seen that the Adjudicating Authority has confirmed the demand of excise duty only on the ground that there are differences in quantity of consumption of preform as per ER 6 and form 3CD as filed by the Appellant by taking into account 100% conversion of preform into PET bottles. It is the case of the department that the said Appellant has manufactured and cleared the said excess PET bottles without payment of excise duty on the same and resorting to clandestine removal. However, it is seen that such allegation is only on the basis of the figure work of the department without production of any other evidence for demand of excise duty for clandestine removal of manufactured goods. The figures in the reconciliation provided by the Appellant between 3CD and ER 6 clearly account for the wastage during the manufacturing process which ranges from 0.40% to 1.60% percentage in different years and the same is within the normal industry average of two percent as per the Appellant s submission - the lower authority has not at all taken into account the plea of the Appellant as regards wastage of the preform during the manufacturing process whereas the same has been clearly established by the Appellant in its reconciliation provided at all occasions. Hence the order of the adjudicating authority deserves to be set aside as the same is based on assumption and without any cogent evidence for 100% conversion of preform in to PET bottles. The considered view that the Appellant has been able to produce the relevant reconciliations to show that there is no difference in consumption figures as per ER 6 and form 3CD of pre form and the only difference is on account of wastage which has not been considered by the lower authority. Also, for considering 100% conversion of preform into PET bottles, the Ld. Adjudicating authority has not given any basis for the same and has ignored the submission of the Appellant in this regard. Hence, the finding of the Adjudicating authority is devoid of any merits. No investigation has been conducted by the department to prove the allegation of clandestine manufacture and removal of PET bottles in the case and thus the recovery of excise duty merely based on differences in figures of consumption cannot be made by the department. Time Limitation - HELD THAT:- The demand has been raised for the period 2012-13 onwards in July 2018 whereas the spot memo was issued by the Department in August 2014 itself. No explanation has been furthered by the Department in respect of such gross delay in proceeding with the matter. Therefore, the invocation of extended period of limitation is not justified. The demand of excise duty only on assumption and presumption without being substantiated by sufficient evidence, cannot be sustained on merits and is accordingly set aside. Since demand of excise duty is set aside, penalty and interest are also not sustainable - appeal allowed - decided in favor of appellant.
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2021 (8) TMI 702
Clandestine Removal - M.S. Ingots and TMT Bars - supply of unaccounted raw materials - reliance placed upon third party evidences - evidentiary value of the third party evidence - corroborative evidences or not - HELD THAT:- There is no other evidence or documents in the form of stock verification of the raw-materials of the appellant, and the materials supplied to M/s.PIL, nor any evidence about usage of any transportation by the appellants for transporting the alleged quantity of raw materials to M/s.PIL. In absence thereof the documents recovered from M/s.PIL cannot be held against the appellant - It is well settled law that there has to be some concrete evidence which would show clandestine manufacture of goods, as was reiterated by Tribunal, Delhi, in the case of C.C.E. S.T. -RAIPUR VERSUS P.D. INDUSTRIES PVT. LTD. [ 2015 (11) TMI 455 - CESTAT NEW DELHI] . The impugned order confirming the recovery has no legal basis to be sustained - Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 701
Refund of cenvat credit in proportion of export turnover - Additional Excise Duty (Textile Textile Articles) [AED (T TA)] - Rule 5 of CCR - HELD THAT:- There is no restrictions of amount of refund of unutilised credit under Rule 5 of CCR. In view of the clear mandate of law, providing for refund where for any reason, such adjustment is not possible - Further, CBEC has clarified vide their circulars and instructions dated 12.03.2003 and 22.03.2007, which has also been relied upon by this Tribunal in its earlier Final Order dated 2.6.2016, [ 2016 (6) TMI 353 - CESTAT NEW DELHI ] in the same very matter, in the earlier round, where it was held that The matter was remanded to the Adjudicating Authority for the only purpose of arithmetic calculation - Appeal allowed by way of remand.
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2021 (8) TMI 697
CENVAT Credit - seeking reversal of amount of cenvat credit availed under head AED (GSI) - recovery of interest u/s 11 AB of Central Excise Act, on the amount of AED (GSI) wrongly availed - levy of penalty - HELD THAT:- The issue involved in the matter is no longer res-integra. In their own case reported at COMMISSIONER OF C. EX., MUMBAI-III VERSUS CEAT LTD. [ 2010 (3) TMI 621 - CESTAT, MUMBAI ] same issue has been decided holding in their favour. This order of tribunal was upheld by the Hon ble Bombay High Court as reported at [ 2013 (7) TMI 568 - BOMBAY HIGH COURT ] where it was held that In terms of the provisions enacted in Finance Act, 2004, the debits were held not amounting to payment of duty and the assessee was required to meet the same obligation by payment from PLA. In the instant case, the debits were held to be of no consequence when the assessee was required to pay duty initially discharged using AED (GSI) credit. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 696
Job-Work - liability to pay service tax - job-worker or principal - activity of manufacture undertaken by the job-workers, availing exemption under Notification dated 09.07.2004 - HELD THAT:- Both the Commissioner and the Assistant Commissioner adjudicated upon the show cause notices that proposed a demand for the same reasons. If the Department was aggrieved by the order dated 31.05.2018 passed by the Assistant Commissioner, an appeal could have been preferred but that was not done. It is for this reason that the submission advanced by learned Authorized Representative of the Department that since the subsequent order passed by the Assistant Commissioner does not discuss the earlier order dated 18.05.2016 passed by the Commissioner, the present appeal should be heard on merits cannot also be accepted. It has been held by a Division Bench of the Tribunal in POPULAR CARBONIC PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI-I COMMISSIONERATE [ 2021 (8) TMI 240 - CESTAT CHENNAI] that if an order attains finality, the Department cannot take a contrary stand in the other pending appeals - In Popular Carbonic, a Division Bench of the Tribunal examined the contention raised on behalf of the appellant that since the order attained finality, the Department cannot be permitted to contend that the activity undertaken by the appellant would amount to manufacture. The submission made on behalf the appellant was accepted. The order passed by the Assistant Commissioner has attained finality, the Department cannot take a contrary view in this appeal. The confirmation of demand by the Commissioner cannot be sustained and is set aside - Appeal allowed.
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2021 (8) TMI 693
Refund claim of the amount reversed under protest - Rejection as the amount was paid by them voluntarily - the amount to be treated as deposit or not - HELD THAT:- It is admitted fact that although audit team raised objection and the respondent reversed the amount along with interest and protest letter was sent by the respondent to the Department but no show cause notice was issued to the respondent for appropriation of amount reversed by the respondent. The amount reversed by the respondent can only be treated as a deposit and as no assessment order has been passed, therefore, the decision of Hon ble Supreme Court in the case of PRIYA BLUE INDUSTRIES LTD. VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) [ 2004 (9) TMI 105 - SUPREME COURT] and ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] are not applicable to the facts of this case. These judgments held that the process of refund is only a mechanical process based on an assessment already made and the officer sanctioning refund cannot revise the assessment already made. He can sanction refund only if it flows from the assessment. Therefore, only when an assessment (including self assessment) is made and consequently an amount is paid, refund cannot be sanctioned unless the assessment is appealed against and modified in appeal. Unlike in refunds, the procedure for recovering short paid duty, does not require the original assessment to be challenged before the Appellate Authority. Therefore, if there is a short payment of duty, the only option for the Revenue is to follow the procedure prescribed under section 11A to recover such short paid duty. Even if the assessee pays the duty when pointed out by the Audit Party or Preventive team, such a payment of duty is only a deposit because any report or conversation with audit or preventive team is not a method of recovering short paid duty. Thereafter, a Show Cause Notice under Section 11A must be issued demanding the duty and proposing to appropriate the amount already deposited during audit or preventive checks towards this amount. This has not been done in this case. The respondent is entitled for refund claim of the amount already reversed during the course of audit - there are no infirmity in the impugned order and any merit in the appeal filed by the Revenue and accordingly the same is dismissed.
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2021 (8) TMI 687
Refund claim of pre-deposit - applicability of time limitation - duty paid is under protest or not - adjust of refund with duty at the instance of department - whether the refund claim as was filed on 24.11.2017 is hit by the time limit prescribed under Section 11 B of Central Excise Act? - HELD THAT:- The Section 11 B talks about the refund of duty and requires that application for refund of such duty has to be made within a period of one year from the relevant date. Relevant date has been defined in the Section itself under sub-clause 5 (B). Apparently and admittedly the refund claim has been filed post this dismissal of Revenue s appeal, on 24.11.2017. So seen from the angle of time bar issue as invoked by the Department, it is held that the period of one year as per section 11B (B) (ec) is the date of decision of Rajasthan High Court in COMMISSIONER, CENTRAL EXCISE SERVICE TAX-I, JAIPUR, RAJASTHAN VERSUS RAJDHANI CRAFTS [ 2017 (9) TMI 1942 - RAJASTHAN HIGH COURT] and not the date of decision of Final Order of CESTAT, the appeal before High Court of Rajasthan being the one filed by the Department. Hence, the findings of authority below are absolutely wrong. Otherwise also, the another apparent fact is that the order dated 30.06.2014 of adjusting the paid amount towards the sanctioned demand was passed during the pendency of the assessee s appeal challenging the said demand before CESTAT and the demand stands set aside by CESTAT. Such act of the Department cannot be denied to be the coercive manner and since the payment was made pursuant to the direction of Departmental Authorities the same cannot be considered as voluntary payment and has to be treated as payment under protest. Section 11B proviso is clear enough to say that the limitation of one year shall not apply where any duty/interest on such duty has been paid under protest - the invoking of limitation issue is held to be absolutely unjustified on the part of authorities below. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 685
Recovery under Rule 14 of CCR, 2004 read with Section 11A (10) of Central Excise Act, 1944 - electricity sold out to the electricity company - liablity to payment of 6% of amount received from MSEDCL towards sale of electricity - Rule 6 (3) (i) of Cenvat Credit Rules, 2004 - period January to March 2016 - demand of interest and penalty - applicability of amendments made in CENVAT Credit Rules, 2004 in 2015 - HELD THAT:- Though the Commissioner (Appeals) has decided appeals against two orders-in-original No. 05/CGST-Solapur/2017-18 dated 21.08.2017 and 14/CGST-Solapur/2017-18 dated 25.10.2017, this appeal has been filed only against upholding of order-in-original No. 14/CGST-Solapur/2017-18 dated 25.10.2017. It has been confirmed by the counsel for the appellant that no appeal has been filed against the upholding of second order-in-original i.e. 05/CGST-Solapur/2017-18 dated 21.08.2017. Therefore, this order is limited to the order appealed against. Appeal allowed - decided in favor of appellant.
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Indian Laws
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2021 (8) TMI 728
Dishonor of Cheque - Seeking compounding of offence at belated stage - compromise between the parties - insufficiency of funds - section 147 of 'N.I. Act' would have an overriding effect on section 320 Cr.P.C. or not? - conviction nullified by the High Court noticing subsequent compromise of the case by the contesting parties - HELD THAT:- It is well settled that inherent powers under section 482 Cr.P.C. can be exercised only when no other remedy is available to the litigant and not where a specific remedy is provided by the statute. It is also well settled that if an effective alternative remedy is available, the High Court will not exercise its inherent power under this section, specially when the applicant may not have availed of that remedy. Inherent powers under Section 482 of Cr.P.C. include powers to quash FIR, investigation or any criminal proceedings pending before the High Court or any Courts subordinate to it and are of wide magnitude and ramification. Such powers can be exercised to secure ends of justice, prevent abuse of the process of any court and to make such orders as may be necessary to give effect to any order under this Code, depending upon the facts of a given case. The court can always take note of any miscarriage of justice and prevent the same by exercising its powers u/s 482 of Cr.P.C. These powers are neither limited nor curtailed by any other provisions of the Code. However, such inherent powers are to be exercised sparingly and with caution - In the instant case, it is true that this Court had dismissed the criminal revision and upheld the conviction and sentence passed by the court below but it cannot be lost sight of the fact that this Court has the power to intervene in exercise of the powers vested under section 482 Cr.P.C. only with a view to do the substantial justice or to avoid miscarriage and the spirit of the compromise arrived at between the parties. This is perfectly justified and legal too. In the instant case, the petitioner is invoking the inherent power as vested under section 482 Cr.P.C. after the dismissal of the revision petition under section 397 Cr.P.C. read with section 401 Cr.P.C. - the petitioner has attempted to invoke the jurisdiction of this court vested under section 482 Cr.P.C. The embargo of sub section 6 of section 320 Cr.P.C. as pointed out by learned AGA would not come in the way so far as the relief prayed in this petition - In the instant case, the problem herein is with the tendency of litigants to belatedly choose compounding as a means to resolve their dispute, furthermore, the arguments on behalf of the opposite parties on the fact that unlike Section 320 Cr.P.C., Section 147 of the Negotiable Instruments Act provides no explicit guidance as to what stage compounding can or cannot be done and whether compounding can be done at the instance of the complainant or with the leave of the court. The court is inclined to hold accordingly only because there is no formal embargo in section 147 of the N.I. Act. This principle would not help any convict in any other law where other applicable independent provisions are existing as the offence punishable under section 138 of the N.I. Act is distinctly different from the normal offences made punishable under Chapter XVII of IPC (i.e. the offences qua property). The present petition under section 482 Cr.P.C. is allowed in terms of the compromise arrived at between the parties to this litigation out of court.
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2021 (8) TMI 720
Dishonor of Cheque - non-bailable warrants along with process under Sections 82 and 83 Cr.P.C. issued against applicants - whether proceedings under Section 138 of N.I. Act are compoundable at any stage? - applicant contends that proceedings under Section 138 of N.I. Act are compoundable at any stage and applicants are free to settle the dispute - HELD THAT:- Upon perusal of record, this Court does not find any good ground to entertain this application. The application lacks merit and is liable to be dismissed.
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