TMI Tax Updates - e-Newsletter
August 21, 2021
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Classification of goods - rate of tax - Composite supply or mixed supply - The mixed supply of Instant mix flour of Gota/Methi Gota with Chutney powder/Kadi Chutney powder shall be treated as supply of Instant Gota Mix Flour/Instant Methi Gota Mix Flour respectively (falling under HSN 2106 90) on which the GST liability will be 18%(9% CGST + 9% SGST). - AAR
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GST:
Validity of Advance ruling - Obtaining ruling by suppression of facts - Investigation proceedings were pending - the Advance Ruling cannot be used as a mechanism to nullify and frustrate the inquiry proceedings already initiated vide section 70(1) of CGST Act. - The said, Advance Ruling declared as void ab-initio in terms of Section 104 of CGST Act. - AAR
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GST:
Levy of GST - amount collected from the employees towards canteen charges - 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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Income Tax:
Revision u/s 263 by CIT - AO has not brought to tax the waived principle amounts of loans / borrowings - Unclaimed balances out of deposits received from customers which were transferred to profit and loss account were assessable as income. Thus, the order of the Assessing Officer on account of incorrect application of the law, can be said to be erroneous - HC
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Income Tax:
Gain on sale of land - Addition u/s 28(iv) - excess area of land received in partition - co-ownership in land - asset was shown in the balance sheet as capital asset but not stock in trade - the excess area of land received was not taxable u/s 28(iv) of the Act and there is no loss of revenue- AT
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Income Tax:
Revision u/s 263 - receipt of on-money - incriminating material found in search or not? - PCIT should himself have conducted the enquiry or causing to make such enquiries have passed the order under Section 263. In the present case, despite the material available on record, no further enquiry were made by the PCIT and had simply relied upon the finding recorded by the CIT Appeal in the hands of co-owners. - the order passed by the PCIT under Section 263 was without any jurisdiction - AT
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Income Tax:
Addition applying the provisions of section 50C - Once the assessee has raised the objection against the adoption of deemed full value consideration in terms of section 50C of the Income Tax Act, the Assessing Officer is duty bound to refer the matter to the DDO for determination of the fair market value of the property in terms of section 50C(2) of the Income Tax Act. Since, the Assessing Officer has not taken any step to determine the fair market value, matter restored back - AT
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Income Tax:
Validity of the reopening of proceedings under section 147 - Assessee contended that, assessment was framed on the basis of mere internal office note, without recording reasons as envisaged u/s 148 of the Act and according to the assessee there is no nexus between the alleged reasons and the assessment framed - non adherence to the principles of natural justice - the reasons supplied to the assessee are not the same and verbatim. - AT
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Income Tax:
Addition u/s 56(2)(vii)(b) - valuation of land purchased by assessee - deemed gift under section 56(2)(vii)(b)(ii) - Assessee submitted that, actual deed could not be materialised and no transaction of land taken place - actually no transaction has been materialised for which it could be assumed that deemed gift is assessable in the hands of the assessee. In view of the above discussion, we allow this appeal and delete the addition done by the Assessing Officer with the aid of section 56(2)(vii)(b) (ii) - AT
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Income Tax:
Revision u/s 263 - belated employee’s contribution to PF and ESIC funds - AO did not follow the CBDT circular but followed the HC decision - The CIT in exercise the powers vested u/s 263 of the Act cannot do something, what the Assessing Officer himself cannot do. Thus, the very premises on which revision was sought to be made by ld. PCIT had failed, and resultant order has no legs to stand. - AT
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Income Tax:
Addition u/s 40A(3) - assessee had made cash payments exceeding ₹ 20,000/- - CIT-A deleted the addition - AO is right in his rem to reopen the assessment based on the Revenue’s audit report. - CIT(A) has simply brushed aside the issue by stating that all those payments were made during bank holidays which falls under exceptions mentioned in Rule 6DD of the IT Rules, 1962 without giving a clear cut finding on that regard - Additions confirmed - AT
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Income Tax:
Disallowance of payment of professional fee to the directors - allegation of paying excessive remuneration to the directors - services provided by the directors towards professional physical fitness programme - Assessee has pointed that in the subsequent assessment year the professional fee paid to the directors has been allowed by the Assessing Officer in scrutiny assessment proceedings on same set of documents. It is not the case of Revenue that the professional fees paid to the directors is in excess of the market rate - Claim allowed - AT
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Customs:
Smuggling - gold bars of foreign origin - Though a prayer for condonation of delay could have been made before the Tribunal. In any event, if it appears that the respondent having lost out on time to avail the statutory remedy, seeks to bypass the same and file a writ petition, the Courts would not entertain such a petition and will come to the conclusion that the reason for bypassing the statutory appellate remedy is because the appeal cannot be maintained at that point of time. - HC
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Customs:
Refund of terminal excise duty - deemed export or not - supplies of goods by DTA unit to EOU unit - once the supply of goods fall within the category of deemed export, the unit would be entitled to refund of TED - HC
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Indian Laws:
Dishonor of Cheque - permission to deposit interim compensation - the trial Court committed an error without passing any order directing the respondent/accused to deposit the amount in the Court or rejecting the application. - It may be by oversight or an error, but once the order was passed by allowing or rejecting the application, the same Magistrate has no power to recall any order passed on the same application as per the provisions of Section 362 of Cr.P.C - HC
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Indian Laws:
Dishonor of Cheque - The fact is that the bank account as well as cheque book belongs to the father of the applicant and the applicant had access to the same. In absence of any challenge to signatures of the applicant on the disputed cheque, this Court is of the considered opinion that at present it cannot be said that the applicant is not liable to be prosecuted under Section 138 of the N.I.Act. In the light of misleading stand taken by the applicant as well as in the light of the fact that prima facie, the applicant has issued the cheque of his father under own signatures, it is clear that he has also tried to cheat the respondent. - HC
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IBC:
Initiation of CIRP - Personal Guarantors to Corporate Debtors failed to make repayment of guarantee undertaken - existence of debt and dispute or not - an application for insolvency for resolution against the personal guarantor is not maintainable unless that CIRP/liquidation is ongoing against the Corporate Debtor. - Tri
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Service Tax:
Refund of CENVAT Credit - input services - nexus with the out put service - the department is not permitted to question the eligibility of CENVAT credit at the time of claiming refund. Further, in view of the clarification given by the tax research unit of CBEC vide their letter dated 16.3.2012, the amended Rule 5 of CENVAT Credit Rules, does not require correlation between the output service exported and the input service used in such output service exported. - AT
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Service Tax:
CENVAT Credit - passenger lift - The lift is essential for providing the output service and therefore, the appellant has fulfilled both the conditions to avail the credit, hence the denial of credit is not sustainable, simply because the lifts are fitted into the building does not have an impact on treatment of lifts as capital goods because even after fitting into the building, lift is a lift and covered under Chapter 84 and cannot be considered as input just to deny the benefit of CENVAT credit. - AT
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Service Tax:
Refund of Service Tax - input service - The reasons attributed by the Adjudicating Authority cannot be sustained since there is no doubt that these services were not used in the factory of production but in any other place or premises of production or manufacture of the said goods, for their export. - the appellant satisfies the conditions of N/N. 41/2012 - AT
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Service Tax:
Refund of CENVAT credit - nexus of input services with the output services - In view of the clarification given by the tax research unit of CBEC vide their letter, the amended Rule 5 of CENVAT Credit Rules, does not require correlation between the output service exported and the input service used in such output service exported. - AT
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Service Tax:
Commercial or industrial construction service - services rendered to Government bodies and other entities - benefit exemption has been denied for the reason that the services have been rendered in the factory area - Scope of 'Factory' - the premises where the post-production processes take place towards making the produce commercially viable would qualify as a factory - the oil fields of ONGC, where only extraction of crude oil takes places, would not qualify as a ‘factory’. - The Commissioner committed an illegality in denying the benefit of the Notification dated 20.06.2012 at Serial No. 13(d) to the appellant for ETPs constructed for ONGC and the STPs constructed for NBCC - AT
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Central Excise:
Refund of accumulated balance of unutilized credit of Education Cess and Secondary and Higher Education Cess - In view of the decision of the Tribunal, refund can be granted of the cesses viz. Education Cess and Higher Education Cess which could not be transitioned into GST. - The findings in the impugned order regarding time-bar is beyond the show-cause notice as well as Order-in- Original and the same is not sustainable in law - AT
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Central Excise:
Since Appellant were paying the duty utilizing the CENVAT Credit they cannot be charged for contravention of the provisions of Rule 4, 8(1), 8(3) & 8(3A) of the Central Excise Rules, 2002 for which the penalty has been imposed under Rule 25 of Central Excise Rules, 2002, equivalent to the demand of duty. In view of Hon’ble High Court order since we conclude that payment of duty by utilizing the CENVAT Credit was proper mode of payment of duty during the period of default, the penalty imposed on the Appellant needs to be set aside. - AT
Articles
Notifications
News
Case Laws:
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GST
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2021 (8) TMI 839
Classification of goods - rate of tax - Gota Mix Flour - Dakor Gota Mix Flour - Methi Gota Mix Flour - Khaman Mix Flour - Dhokla Mix Flour - Idli Mix Flour - Rava Idli Mix Flour - Dosa Mix Flour - Upma Mix Flour - Dahiwada Mix Flour - Dalwada Mix Flour - Menduvada Mix Flour - Handvo Mix Flour - Khichu Mix Flour - HELD THAT:- The subject 14 products of Mix Flour/ Instant Mix Flour are preparations for use, after processing, such as cooking, carrying out the detailed procedure for cooking as mentioned on the packets of all the said products, then ready for human consumption. The applicant submitted that the products are not in ready to consume form but needs to be subjected to further processing and cooking for conversion into ready to eat food . Chapter Heading 2106 is 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. On the packets of all the above products-Category : Mix Flour has been printed on the packets and the detailed procedure recipe is printed on back side of the packets. The stand is in compliance and consonance with the case law COMMISSIONER OF C. EX., AHMEDABAD VERSUS RM FOODS [ 2009 (8) TMI 463 - CESTAT, AHMEDABAD] wherein Hon ble CESTAT held that the products (Gota Mix, Khaman Mix, Dal Wada Mix etc.) were entitled to benefit of Sl. No. 28 of Notification No. 3/2006-Central Excise. Admissibility of Sl. No. 28 of Notification No. 3/2006-Central Excise to the Instant Food Mixes (Gota Mix, Khaman Mix, Dal Wada Mix etc.), the fact that in the said Sl. No. 28, the description of goods mentioned against Chapter Heading 2106 included Instant Food Mixes such as Pongal mix, Vadai mix, Pacoda mix, Payasam mix, Gulab Jamun mix, Rava Dosa mix, Idli mix, Dosa mix, Murruku mix, and Kesari mix, supports our view that various Instant Food Mixes (Instant Mix / Ready Mix Flour) being supplied by the applicant are classifiable under HSN 2106. The Central excise Tariff Heading 2106 was based on HSN and applies to subject matter. 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 14 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(Rate), as amended or in any of the entries of Notification No. 2/2017-Central Tax(Rate). The Instant Mix Flours/Mix Flours of Gota, Dakor Gota, Methi Gota, Khaman, Dhokla, Idli, RavaIdli, Dosa, Upma, Dahiwada, Dalwada, Menduvada, Handvo and Khichu are classifiable under HSN. 2106 90(Others) attracting 18% GST.
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2021 (8) TMI 838
Classification of goods - rate of tax - HSN Code - Supply of various instant flour mixes - Composite supply or mixed supply - Gota Instant mix flour - Khaman Instant mix flour - Dalwada Instant Mix Flour - Dahiwada Instant Mix Flour - Idli Instant Mix Flour - Dhokla Instant Mix Flour - Dhosa Instant Mix Flour - Pizza Instant Mix Flour - Methi Gota Instant Mix Flour - Handvo Instant Mix Flour - instant mix flour for gota/methi gota along with chutney powder/kadhi chutney powder - khaman along with masala pack - HELD THAT:- The Classification of goods under GST is based on HSN. The customs Tariff is based on HSN. The general Interpretative Rules are to be sequentially followed as the way to classify the goods. We are to classify within the confines of law and procedure as laid down in GST regime. The Section notes and chapter notes of Custom Tariff are part and parcel of the Custom Tariff Act, 1975 which is to say, part and parcel of law enacted by the Parliament and therefore, we are obliged in GST regime to follow the classification based on HSN as per law. The Explanatory notes to HSN have guidance value to classify goods. As per Rule 1 of the General Rules for the Interpretation of CTA, 1975, for legal purposes, classification shall be determined according to the terms of the headings and any relative Section of Chapter Notes. Thus, the classification of the product is required to be determined in accordance with the terms of the headings. As per Chapter Heading11.06, it covers Flour, Meal and Powder of the dried leguminous vegetables of Chapter Heading 07.13 and other specified products. On inspection of the Packets of each product, we find that each of the packet is marked Instant Mix - As the products of the applicant contain Spices and additives in different proportions, which are not mentioned in the Chapter Heading 11.06 or the relevant Explanatory Notes of HSN. The applicant has referred to CBIC Circular No. 80/54/2018-GST dated 31.12.2018, which has inter-alia clarified the applicability of GST on Chhatua or Sattu . The CBIC has clarified in the Circular that the flour of ground pulses and cereals, improved by the addition of very small amounts of additives continues to be classified under HSN Code 1106. On examination of the percentage breakup of the subject products and the composition of the products, we find that this is not the case of addition of very small amounts of additives in subject products - the subject Circular is not applicable in present case as the said products are different from Sattu and have spices and additives in varying proportions as cited by the applicant and are in the nature of instant mix. The various products being supplied by the applicant contain Spices and additives apart from flour of dried leguminous vegetables, rice and wheat, in different proportions. The Spices and additives contained in these products include Sugar, Iodised Salt, Chili Powder, Turmeric powder, Sodium Bicarbonate, Citric Acid, Hydrogenated Vegetable Oil, Citric Acid etc. These Spices and additives are other than those substances mentioned in the Explanatory Notes of HSN for Chapter Heading 11.01 and 11.02 which could be added in very small quantities to improve or enrich the flours and the resultant product still remain classified in those Chapter Headings - It is also evident from the recipe submitted by the applicant that the Spices and additives have been added to the flours with a view to their use as food preparations. As such, in view of the Explanatory Notes of the HSN, these products are excluded from the Chapter Heading 1101 and 1102. The idli mix or dhosa mix are completely different from idli/dhosa batters. Idli/Dhosa batters are in semi- liquid form which can be directly poured on to the frying pans for preparation of idlis and dhosas - Instant mix of idli/dhosa are not idli/dhosa batters and therefore does not get covered under Sl. no. 100A, Chapter/Heading/ Subheading / Tariff item 2106 as Roasted gram, idli/dosa batter, chutney powder. The subject 10 products of Mix Flour/ Instant Mix Flour are preparations for use, after processing, such as cooking, carrying out the detailed procedure for cooking as mentioned on the packets of all the said products, then ready for human consumption - Chapter Heading 2106 is not confined to processed or semi processed food, cooked or semi cooked food, preserved food and ready to eat food. In fact, a food preparation which is not elsewhere specified in the HSN, gets covered under HSN 2106. On the packets of all the above products-Category: Instant Mix has been printed on the packets and the detailed procedure recipe is printed on back side of the packets - there are no merit to treat the subject goods as flour. As these products are not specifically mentioned under any specific Tariff item, the products merit classification under the residual entry other at HSN 210690. Though the issue involved in that case was regarding admissibility of Sl. No. 28 of Notification No. 3/2006-Central Excise to the Instant Food Mixes (Gota Mix, Khaman Mix, Dal Wada Mix etc.), the fact that in the said Sl. No. 28, the description of goods mentioned against Chapter Heading 2106 included Instant Food Mixes such as Pongal mix, Vadai mix, Pacoda mix, Payasam mix, Gulab Jamun mix, Rava Dosa mix, Idli mix, Dosa mix, Murruku mix, and Kesari mix, supports our view that various Instant Food Mixes (Instant Mix / Ready Mix Flour) being supplied by the applicant are classifiable under HSN 2106. Applicable rate of GST - HELD THAT:- 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 10 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. The gotas/methi gotas and chutney powder/kadhi chutney powder supply is not naturally bundled and the supply is for a single price. Also the supply of Khaman instant mix flour with masala pack is not naturally bundled and the supply is for a single price. These supplies fall under mixed supply. As per law, a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. Thus, these mixed supply shall be treated as a supply of Instant Gota Mix OR Instant Methi Gota Mix or instant Khaman mix flour in said matter.
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2021 (8) TMI 837
Validity of Advance ruling - Obtaining ruling by suppression of facts - Investigation proceedings were pending - Ruling in IN RE: M/S. SHALBY LIMITED, [ 2021 (4) TMI 557 - AUTHORITY FOR ADVANCE RULING, GUJARAT] - Validity of Sr. No 17 of subject Application FORM GST ARA-01 filed on 2.12.2020 for obtaining the Advance Ruling - whether the stated Advance Ruling may be declared Void Abinitio under Section 104, CGST Act or otherwise? - HELD THAT:- The Questions raised in Advance Ruling Application dated 2-12-20 and the issue pending vide Investigation initiated vide Section 70(1) and three GST DRC-01A Part A all dated 11-2-20 are the same - the applicant was aware of the investigation initiated and the proceedings initiated vide three GST DRC-01A Part A all dated 11-2-20. Yet it chose not to declare the same in the Advance Ruling Application dated 2-12-20 and mis-declared at said Sr. No. 17 Form GST ARA-01 dated 2-12-2020 of the said application. We notice that even the Revenue did not bring this misdeclaration by the applicant before the Authority prior to issuance of Ruling dated 20-1-21. However this does not shirk away the responsibility cast on the applicant. The matter at present is not appeal issue as prescribed at section 100 of CGST Act, but the matter at hand to decide whether the Ruling may be declared void abinitio as prescribed at section 104 of the CGST Act. The Authority has been empowered vide Section 104 of CGST Act to declare a Ruling void abinitio . We hold that the Advance Ruling cannot be used as a mechanism to nullify and frustrate the inquiry proceedings already initiated vide section 70(1) of CGST Act. The applicant should bear in mind that the CGST Act has deemed this Authority to be a civil court for the purposes of section 195, but not for the purposes of Chapter XXVI of the Code of Criminal Procedure, 1973, and every proceeding before the Authority shall be deemed to be judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196 of the Indian Penal Code. The applicant has obtained said Advance Ruling dated 20-1-21 by suppressing the material facts. It is declared that Advance Ruling in IN RE: M/S. SHALBY LIMITED, [ 2021 (4) TMI 557 - AUTHORITY FOR ADVANCE RULING, GUJARAT] is void ab-initio in terms of Section 104 of CGST Act.
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2021 (8) TMI 836
Levy of GST - amount collected from the employees towards canteen charges - HELD THAT:- The applicant has arranged a canteen for its employees, which is run by a third party Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by the applicant whereas the remaining part is borne by its employees. The said employees portion canteen charges is collected by the applicant and paid to the Canteen Service Provider. The applicant submitted that it does not retain with itself any profit margin in this activity of collecting employees portion of canteen charges. This activity carried out by applicant is without consideration. 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 832
Liability to pay interest under Section 50 of the GST - submission is that the liability to pay interest under Section 50 of the GST Act automatically arises in respect of the delayed payment of the tax, and no notice for adjudication under Section 73 is necessary - HELD THAT:- Issue notice, returnable in eight weeks.
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Income Tax
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2021 (8) TMI 835
Reopening of assessment u/s 147 - deemed dividend addition u/s 2(22)(e) - gap of more than four years - failure on the part of the petitioner to disclose fully and truly all material facts necessary for his assessment - second mode of payment envisaged under clause (e) of section 2(22) viz. to any concern in which such shareholder is a member or a partner and in which he has substantial interest - HC held in the absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for his assessment, the reopening of assessment beyond a period of four years from the relevant assessment is without authority of law - HELD THAT:- SLP dismissed.
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2021 (8) TMI 834
Bogus LTCG - addition on account of LTCG claimed as exempt u/s. 10(38) - transaction was pre-arranged as well as sham and was carried out through penny scripts companies / paper companies - whether the assessee earned long term capital gain through transactions with bogus companies? - ITAT deleted the addition - HELD THAT:- SLP dismissed.
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2021 (8) TMI 833
Special audit u/s 142(2A) - non-compliance to the principles of natural justice at the stage of making the proposal - whether the AO before sending a proposal for conducting special audit under Section 142(2A) of the Act, was required to provide an opportunity of hearing to the assessee and in absence of the same, can the proceedings conducted thereafter be held to be vitiated in law ? - as per HC in the absence of pre-decisional hearing, the decision to have special audit was invalid and consequentially, all the proceedings conducted thereafter stood vitiated - HELD THAT:- We are not inclined to exercise jurisdiction under Article 136 of the Constitution of India.The special leave petition is, accordingly, dismissed. Pending application stands disposed of.
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2021 (8) TMI 829
Reopening of assessment u/s 147 - reason to believe - change of opinion - computation of net interest received from government securities - HELD THAT:- The annexure clearly indicated the interest received from investment in government securities and premium written off during financial year 2004-05 - The aforesaid return was processed under Section 143(1) of the Act on 31.03.2006. The return thereafter was selected for scrutiny and the Assessing Officer passed an original order of assessment dated 27.07.2007. Thus, the details were placed before the Assessing Officer, at the time of original assessment and therefore, it is not possible to infer that the AO had not at all applied his mind. The Supreme Court in TECHSPANINDIAS PVT LTD [ 2018 (4) TMI 1376 - SUPREME COURT] has held that the use of the words reason to believe in Section 147 has to be interpreted schematically as the liberal interpretation of the word would have the consequence of conferring arbitrary powers on the assessing officer who may even initiate such re-assessment proceedings merely on his change of opinion on the basis of same facts and circumstances which has already been considered by him during the original assessment proceedings. As evident that the Assessing Officer, on perusal of the record available with him, came to a different conclusion and therefore, he cannot be permitted to change his opinion. It is settled in law that the concept of 'change of opinion' is in-built test to check the abuse of power by the Assessing Officer. Thus, the initiation of the re-assessment proceedings on account of 'change of opinion' is not permissible in law as the Assessing Officer had examined all the relevant material furnished by the assessee and had accepted the claim of the assessee. The Tribunal has therefore, rightly held that the re-opening of the assessment is based on mere change of opinion by the Assessing Officer. - Decided against revenue.
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2021 (8) TMI 824
Revision u/s 263 by CIT - AO has not brought to tax the waived principle amounts of loans / borrowings - HELD THAT:- Assessing Officer's failure to consider the ratio of the decision of the Hon'ble Supreme Court in the case of T.V. Sundaram Iyengar and Sons Ltd. [ 1996 (9) TMI 1 - SUPREME COURT] with reference to the facts of the assessee's case, makes the relevant assessment order erroneous and prejudicial to the interest of the revenue. Commissioner of Income Tax has held that the Assessing Officer has failed to apply the decision of Supreme Court in T.V. SUNDARAM IYENGAR AND SONS, supra, to the case of the assessee wherein it was held that unclaimed balances out of deposits received from customers which were transferred to profit and loss account were assessable as income. Thus, the order of the Assessing Officer on account of incorrect application of the law, can be said to be erroneous in view of the law laid down by the Supreme Court in MALABAR INDUSTRIAL COMPANY, [ 2000 (2) TMI 10 - SUPREME COURT] Therefore, one of the conditions for invocation of Section 263 of the Act namely the order being erroneous is fulfilled in the fact situation of the case. For the aforementioned reasons, the substantial questions of law are answered against the assessee and in favour of the revenue.
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2021 (8) TMI 817
Addition u/s 40(a)(ia) - TDS amount paid before the due date or not? - HELD THAT:- CIT(A) is admitting that TDS has been deducted by the concerned party while crediting the account of the assessee and deposited into government account as per 26AS of the assessee. The assessee has made TDS payment before the due date of filing of the return under Section 139(1). The decision of the Hon ble Delhi High Court in case of Rajnder Kumar [ 2013 (7) TMI 454 - DELHI HIGH COURT] and the decision of the Tribunal [ 2020 (2) TMI 457 - ITAT DELHI] relied by the Ld. AR are applicable in the present case as the assessee has paid the TDS amount before the due date i.e. before the date on which return of Income u/s 139(1) of the Act has to be filed. Thus, Section 40(a)(ia) will not be applicable in the present case. Therefore, Ground Nos. 4, 7(c) and (d) are allowed. Disallowance of expenses to the extent of 1/10th - AR submitted that all the staff welfare, convenience expenses, general expenses as well as telephone expenses are either below ₹ 20,000 or ₹ 40,000/- and, therefore, some payments were made in cash or through vouchers.- HELD THAT:- It is pertinent to note that the Assessing Officer has simply rejected all these expenses stating in the Assessment order that the assessee could not produce proper vouchers. But from the perusal of the records which was before the Assessing Officer, it can be seen that the assessee has given all the vouchers and the relevant details of these expenses which was not at all taken into consideration by the Assessing Officer. Thus, merely on assumption basis the Assessing Officer disallowed 1/10th of these expenses which are not just and proper.
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2021 (8) TMI 816
Gain on sale of land - Addition u/s 28(iv) - excess area of land received in partition - co-ownership in land - land was retained for 34 months and later, both the co-owners have entered into partition deed in Financial Year 2013-14 - assessee got 8105sq.yds and M/s Sai Infra got 2877 sq.yards towards their share - as in partition, the assessee got excess land of 2613 sq.yds than the other coowner AO viewed the excess land of 2613 sq.yds as the benefit received and chargeable to tax u/s 28(iv) - HELD THAT:- Land in question was purchased as capital asset and remained as capital asset till the partition. No business activity was carried on by the co-owners and the assessee has received the land on partition. The share of land received on partition cannot be treated as income arising from the business. As discussed earlier the asset was shown in the balance sheet as capital asset but not stock in trade. Thus the contention of the assessee that the excess land received in partition was not taxable u/s 28(iv) is also supported by the decisions referred supra.6.4. Subsequent to taking the land on partition, the assessee has sold the property after the development and declared the average sale value of ₹ 24488/- per sq.yard which is more than the value adopted by the AO in the assessment. The reason for postponement of taxation was explained by the assessee as disadvantageous location for marketing. The Ld.CIT(A) followed the decision of Hon ble Supreme Court in the case of CIT Vs. Excel Industries . [ 2013 (10) TMI 324 - SUPREME COURT] and viewed that there was no loss of revenue. Therefore, we agree with the finding of the Ld.CIT(A) that the excess area of land received was not taxable u/s 28(iv) of the Act and there is no loss of revenue. Hence, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. Appeal of the revenue is dismissed.
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2021 (8) TMI 815
Rectification of mistake u/s 254 - estimation of income @12.5% - rejection of books of accounts - HELD THAT:- The rate of estimation of income depends on the facts and circumstances of each case and the same cannot be applied uniformly in all the case. In the instant case, after considering the various issues, ITAT viewed that estimation of income @12.5% is reasonable. ITAT Hyderabad Bench in KNR Constructions [ 2012 (10) TMI 1046 - ITAT HYDERABAD] and confirmed the estimation of income @12.5%. Tribunal has taken consistent view for estimation of income ranging from 9% to 12.5% depending on the facts and merits of each case. After having considered the facts and merits of the case of the assessee, the Tribunal has decided the appeal of the assessee estimating the income @12.5% before depreciation and interest on remuneration paid to the partners. The assessee did not specifically mention any defect or mistake in the Tribunal order and what the assessee is requesting through the M.A. is revision of the order passed by the ITAT which is not permissible u/s 254(2). Since, we have decided the appeal taking into consideration of all the issues, we, find no mistake in the order of the ITAT and there is no reason to interfere with the order already passed. Hence, the M.As. filed by the assessee are dismissed.
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2021 (8) TMI 808
Assessment u/s 153A - search Conducted under section 132(A) - Addition u/s 68 - CIT-A holding that there cannot be any addition on the reasoning that there was no document of incriminating nature found during the search - HELD THAT:- We find that an excel sheet was found as a result of search containing the details of cash receipt and payment for the period from 2 April 2010 to 26 August 2010. The dates mention in the excel sheet in itself suggest pertaining to the financial 2010-11 corresponding to assessment year 2011-12. In other words, these documents, without going into the fact whether these represent incriminating materials or not, do not pertain to the year under consideration. Therefore, no inference can be drawn that the assessee has deposited unaccounted cash in its bank accounts without their being any adverse material on record pertaining to the year under consideration. There was no document found of incriminating nature with respect to the unsecured loan received by the assessee in the year under consideration indicating that the same represents as unexplained cash credit under section 68 of the Act. Accordingly in the absence of, any adverse material on record pertaining to the year under consideration, there cannot be any addition under section 68. We do not find any reason to interfere in the order of the CIT (A). Hence the ground of appeal of the Revenue is dismissed. As we have decided the issue in favour of the assessee on technical count, we do not find any reason to go into the merit of the case.
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2021 (8) TMI 807
Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - HELD THAT:- A bare perusal of the aforementioned notice shows that the Assessing Officer himself was not aware/certain as to whether he is issuing notice to initiate penalty proceedings either for concealment of income or for furnishing inaccurate particulars of income. In our considered opinion, the extracted notice is vague and ambiguous, as the charge framed by the Assessing Officer is not clear and it is not possible for the person to explain the charge whether it is for concealment of particulars of income or for filing inaccurate particulars of income. Following the decisions rendered in the cases of CIT vs. Manjunatha Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT ] CIT vs. SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER ] and Pr. CIT Vs Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT ] we are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. We are of the considered view that when the very initiation of the penalty by way of issuance of vague and ambiguous notice u/s 271(1)(c) read with section 274 of the Act without specifically charging the assessee if he has concealed the particulars of income or has furnished inaccurate particulars of such income, subsequent penalty proceedings are not sustainable, hence penalty levied by the AO and confirmed by the Id. CIT (A) is not sustainable and as such, the appeal filed by the assessee is allowed.
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2021 (8) TMI 805
Revision u/s 263 - receipt of on-money - incriminating material found in search or not? - HELD THAT:- In the present case, the enquiries and verification were made by the Assessing Officer Assesse mentioned hereinabove, despite that the PCIT had mentioned that the enquiry should have been made from Shri Amarjeet Singh Randhawa as well as from the purchaser of the property regarding the monitoring consideration involved in the sale purchase of the property. In our view, the conclusion of the PCIT was erroneous as no addition can be made on the basis of dumb document namely the photocopy of the Agreement to Sell which did not bear the signature of the Assessee. As mentioned that the two cases were assessed at Chandigarh and the amount was added back which was also confirmed by CIT Appeal. In our view this finding of the PCIT is again required to be rejected as in the Appeal filed by Shri Amarjeet Singh Randhawa and Smt. Amandeep Kaur, 2020 (12) TMI 255 - ITAT CHANDIGARH] were allowed by the Tribunal and thereby the addition made of the said amounts have been deleted by the Tribunal . Once the order passed by the CIT Appeal in the hands of the co-seller namely Shri Amarjeet Singh Randhawa and Smt. Amandeep Kaur was passed by the Tribunal and the additions were deleted, then no addition can be made in the hands of the Assesse who were neither the signatory of the Agreement nor any GPA was granted in favour of Shri Amarjeet Singh Randhawa. In our view, the order passed under Section 263 would unsettle the order passed by the Tribunal in the case of Shri Amarjeet Singh Randhawa. PCIT should himself have conducted the enquiry or causing to make such enquiries have passed the order under Section 263. In the present case, despite the material available on record, no further enquiry were made by the PCIT and had simply relied upon the finding recorded by the CIT Appeal in the hands of co-owners. In the present case, sufficient enquiries were made and in the absence of the original document , which was not signed by the Assesse, in the absence of the GPA in favour of Shri Amarjeet Singh Randhawa and any other evidence proving the receipt of onmoney at the time of registration of sale deed, it will not be possible for the Assessing Officer to make additions in the hands of the Assessee before us. PCIT has failed to prove how the order passed by the Assessing Officer was erroneous in the absence of any incriminating to prove the receipt of on-money. - The order passed by the PCIT under Section 263 was without any jurisdiction and accordingly we quashed the same - Decided in favour of assessee.
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2021 (8) TMI 804
Reopening of assessment u/s 147 - non issue of notice under section 143(2) - HELD THAT:- There is no dispute that the Assessing Officer issued notice under section 148 on 7.1.2010 and assessee has not filed any return of income in response to the said notice under section 148. There is no requirement of issuing any notice under section 143(2) by the Assessing Officer and thus the notice issued by the AO under section 143(2) on 29.06.2010 cannot be challenged on the ground of limitation. The issuance of notice under section 143(2) in the absence of any return filed by the assessee shall have no consequence. Hence, the assessment framed by the Assessing Officer under section 143(3) read with section 147 cannot be challenged on the ground of limitation for notice under section 143(2) of the Act. Accordingly, the ground no. 1 of assessee s appeal is de void of any merit and substance and the same is dismissed. Validity of initiation of proceedings u/s 148 - as argued while recording the reasons AO has not quantified the income chargeable to tax which has escaped assessment - HELD THAT:- The case of the assessee does not fall in any of the clauses of section 149(1) of the Income Tax Act then the decisions relied upon the learned AR of the assessee are not applicable. Accordingly, when all the primary facts are available with the Assessing Officer, the objection raised by the assessee against the validity of notice under section 148 is without any merit or substance, the same is rejected. Addition applying the provisions of section 50C - Assessee claimed that the sale consideration received by the assessee as stated in the sale deed is the actual fair market price of the property in question - HELD THAT:- Despite objection raised by the assessee, the Assessing Officer did not proceed to determine the fair market value of the property in question as provided under section 50C(2) - Once the assessee has raised the objection against the adoption of deemed full value consideration in terms of section 50C of the Income Tax Act, the Assessing Officer is duty bound to refer the matter to the DDO for determination of the fair market value of the property in terms of section 50C(2) of the Income Tax Act. Since, the Assessing Officer has not taken any step to determine the fair market value therefore, in the facts and circumstances of the case, this issue of fair market value of the property in question is set aside to the record of the Assessing Officer to refer the same to the DVO, and then be decided as per law, after giving an opportunity of hearing to the assessee.
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2021 (8) TMI 802
Validity of the reopening of proceedings under section 147 - non adherence to the principles of natural justice - Assessee contended that, assessment was framed on the basis of mere internal office note, without recording reasons as envisaged u/s 148 of the Act and according to the assessee there is no nexus between the alleged reasons and the assessment framed - HELD THAT:- As held in the case of Haryana Acrylic Manufacturing Co. v. Commissioner of Income Tax [ 2008 (11) TMI 2 - DELHI HIGH COURT] is that the requirement of recording the reasons, communicating the same to the assessee, enabling the assessee to file objections and the requirement of passing a speaking order are all designed to ensure that the AO does not reopen assessments which have been finalized on his mere whim or fancy and that he does so only on the basis of lawful reasons, and since these steps are also designed to ensure complete transparency and adherence to the principles of natural justice, any deviation from these directions would entail the nullifying of the proceedings. Admittedly in the case on hand, the reasons supplied to the assessee are not the same and verbatim. In view of this settled position of law and respectfully following the line of decision in Haryana Acrylic Manufacturing Co. v. Commissioner of Income tax [ 2008 (11) TMI 2 - DELHI HIGH COURT] by the higher forum referred to in the decision of the coordinate Bench of this Tribunal in the case of Wimco Seedlings [ 2020 (6) TMI 586 - ITAT DELHI] we find it difficult to sustain the validity of the reopening of proceedings under section 147 of the Act and consequently quash the same. - Decided in favour of assessee.
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2021 (8) TMI 800
Addition u/s 56(2)(vii)(b) - valuation of land purchased by assessee - deemed gift under section 56(2)(vii)(b)(ii) - difference between the sale consideration shown by the assessee vis-a-vis the value determined by the stamp duty valuation authority - contention of the assessee is though initially it could be said that the land was purchased by the assessee but ultimately in reality this transaction never materialised rather to some extent it was a fraud upon the assessee - HELD THAT:- As it is ascertainable whether any capital gain tax was levied in the hands of the vendor on the strength of section 50C,First Appellate Authority did not appreciate these facts rather swept away with the facts that the assessee continued to make payment inspite of this dispute. On the strength of this point, it appears that the ld. First Appellate Authority has construed that sale transaction has taken place at a lower rate and, therefore, a deemed gift is to be assumed in the hands of the assessee. However, after going through the material on record including copies of revenue record entries we are satisfied that actually no transaction has been materialised for which it could be assumed that deemed gift is assessable in the hands of the assessee. In view of the above discussion, we allow this appeal and delete the addition done by the Assessing Officer with the aid of section 56(2)(vii)(b) (ii) - Decided in favour of assessee.
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2021 (8) TMI 794
Rejection of books of accounts - Estimation of income - Addition by adopting net profit rate of 4.5% before depreciation on the gross receipts of transportation business - HELD THAT:- Since the entire activity has resulted in negligible income and even the amount received for transport work has also not generated any profit then this explanation of the assessee cannot be accepted for doing the trading activity of bricks and sand without any income. It is pertinent to note that after rejection of books of accounts the income of the assessee was required to be estimated on some reasonable basis. The assessee has also not brought on record any past history of net profit declared by the assessee as well as any comparable rate to contradict the net profit rate applied by the Assessing Officer at 1%. Accordingly, in the facts and circumstances of the case, when the assessee has not produced any material or facts to dispute the reasonableness of the net profit applied by the Assessing Officer @ 1% after rejection of books of accounts then this ground of the assessee's appeal is de void of any merit. appeal of the assessee is partly allowed.
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2021 (8) TMI 793
Disallowance of claim for deduction of the interest expenditure - As observed by the A.O that the assessee had given certain interest free loan and advance towards certain policy, besides making investments in certain fixed assets, viz. residential premises, banquet hall and other properties - HELD THAT:- As the aforesaid documents, viz. letters of the scripts writers; photographs showing photo shoots of models; rehearsals; auditions; look tests etc. to which our attention was drawn by the ld. A.R in order to fortify his claim that the aforementioned properties in question were being used by the assessee for the purpose of his business had though been admitted by us as additional evidence , however, the same were not there before the A.O in the course of the assessment proceedings. In the backdrop of the aforesaid facts, we are of the considered view that the matter in all fairness qua the assessee s claim for deduction of interest expenditure equires to be revisited by the A.O. We, thus, set-aside the matter to the file of the A.O with a direction that he shall re-adjudicate the matter - Decided in favour of assessee for statistical purposes. Income from house property - Annual Lettable Value (ALV) - notional lettable value of the 3 house properties of which one was sold during the year, while for the others were being used by the assessee for the purpose of his business and profession - HELD THAT:- it is the claim of the assessee that the aforementioned three properties in question were being used by him for business purposes. As we have while adjudicating the assessee s claim for deduction of interest expenditure qua the loans raised by him for acquiring the aforementioned properties, therein, restored the matter to the file of the A.O for re-adjudicating the issue after making necessary verifications after considering the additional evidence filed by the assessee before us, therefore, as a corollary thereto the present issue i.e saddling the asssessee with tax qua the ALV of the said properties which as claimed by him had been acquired and were being used by him during the year under consideration for his business purposes, in all fairness, also requires to be restored to the file of the A.O. Accordingly, the A.O is directed to verify as to whether or not the aforementioned properties in question were being used by the assessee during the year under consideration for the purpose of his business - Decided in favour of assessee for statistical purposes. Computation of LTCG - Addition invoking section 50C - grievance of the assessee that the lower authorities had erred by failing to appreciate that as the property sold by him during the year, viz. Midas Banquet Hall was a depreciable asset that formed part of the block of assets , therefore, the sale of the same ought to have been considered under Sec. 50 - HELD THAT:- As the assessee had rebutted the very basis for assessing the gain on the transfer of the property in question as LTCG in his hands. It is the claim of the assessee that as the property in question formed part of the block of assets , therefore, the profit arising on the sale of the same could only be be considered as per the provisions of Sec. 50 of the Act. In our considered view, the aforesaid claim of the assessee, though, principally correct, cannot however be summarily accepted on the very face of it specifically in the backdrop of the aforesaid inconsistencies emerging there from, and would require to be verified. Accordingly, to facilitate such verification, we herein restore the matter to the file of the A.O with a direction to re-adjudicate the issue after considering the documents filed by the assessee before us as additional evidence - Decided in favour of assessee for statistical purposes.
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2021 (8) TMI 792
Depreciation on wind power generation plant - DR said that the wind mill plant was not commissioned during the year under consideration therefore, the assessee is not eligible for the claim of depreciation - HELD THAT:- The wind power generation plant was commissioned during the financial year under consideration and, therefore, the assessee is very much eligible for claim of depreciation which has been rightly allowed by the CIT(A). We, therefore, do not find any error in the findings of the CIT(A). The appeal filed by the revenue is accordingly dismissed.
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2021 (8) TMI 791
Revision u/s 263 - belated employee s contribution to PF and ESIC funds - whether the disallowance is called in the case of delay in remittance of employee s contribution to PF and ESIC but paid within the due date for filing of the return of income is covered in favour of the appellant by the decision of Hon ble Jurisdictional High Court in the case of GhatgePatil Transports Ltd. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT ]? - HELD THAT:- AO had not followed the CBDT Circular No.22/2015 dated 17.12.2015 which mandates the Assessing Officer to disallow the belated employee s contribution to PF and ESIC funds beyond the due dates under relevant statute. The reasoning of the ld. PCIT is against the settled position of law that the decision of the Hon ble Jurisdictional High Court or the Hon ble Supreme Court always overrides the Circular issued by the CBDT (supra). The CBDT is not competent to pronounce upon any point of law. Therefore, the Assessing Officer is bound to follow the law declared by the Hon ble Supreme Court of India and the Jurisdictional High Courts. The law declared by the Hon ble Supreme Court is binding on the all the authorities u/s 141 of the Constitution of India. The Commissioner of Income Tax in exercise the powers vested u/s 263 of the Act cannot do something, what the Assessing Officer himself cannot do. Thus, the very premises on which revision was sought to be made by ld. PCIT had failed, and resultant order has no legs to stand. It is salutary principle of law that once the foundation is removed, the superstructure falls, which is based maxim sublato fundamento cadit opus. Accordingly, the impugned order of the ld. PCIT passed u/s 263 of the Act cannot be sustained under the law and is hereby quashed - Appeal filed by the assessee is allowed.
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2021 (8) TMI 790
Addition u/s 40A(3) - assessee had made cash payments exceeding ₹ 20,000/- - CIT-A deleted the addition - HELD THAT:- AO is right in his rem to reopen the assessment based on the Revenue s audit report. - Order of the Ld. CIT (A) to be de void of merit because he has not given a categorical finding as to why the provisions of section 40A(3) of the Act would not be attracted in the case of the assessee even though assessee had made cash payments exceeding ₹ 20,000/- aggregating to ₹ 21,94,715/-.- he has simply brushed aside the issue by stating that all those payments were made during bank holidays which falls under exceptions mentioned in Rule 6DD of the IT Rules, 1962 without giving a clear cut finding on that regard - Decided in favour of revenue.
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2021 (8) TMI 789
Disallowance of payment of professional fee to the directors - allegation of paying excessive remuneration to the directors - services provided by the directors towards professional physical fitness programme of Crossfit Inc., a global brand for fitness services - HELD THAT:- The documents on record clearly indicate that the assessee was to provide fitness services at Khar Gymkhana, the payments were made to the directors in accordance with the Board Resolution for professional services rendered at Khar Gymkhana. The assessee has filed sufficient evidence in the form of educational/professional qualification certificates of the directors to show that the directors were professionally qualified to provide the services. Assessee has pointed that in the subsequent assessment year the professional fee paid to the directors has been allowed by the Assessing Officer in scrutiny assessment proceedings on same set of documents. It is not the case of Revenue that the professional fees paid to the directors is in excess of the market rate. I find merit in the contentions raised by the assessee. The disallowance of payment of professional fee to the directors is unjustified, hence, the same is directed to be deleted. It would be relevant to mention here that both the directors in their respective return of income has offered professional fee received from the assessee to tax. Consequently, ground No.1 of the appeal is allowed. Disallowance of donation - AO made disallowance as no documentary evidence was filed by the assessee in the form of receipt, etc. to substantiate the donation made - HELD THAT:- Even before the Tribunal no evidence is produced by the assessee. In the absence of any evidence ground No.2 of the appeal is dismissed.
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2021 (8) TMI 788
Reopening of assessment u/s 147 - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia in Section 149 - as argued before issuing notice under Section 148 of the Act, mandatory provisions of Section 148A of the Act which cast statutory obligation on the AO to comply the provisions of the same before issuing any notice under Section 148 of the Act has not been complied with by the AO - constitutional validity of the provisions of The Taxation And Other Laws (Relaxation And Amendment of Certain Provisions) Act, 2020 - Constitutionality of certain provisions of CBDT Notification No.20/2021 dated 31.03.2021 and Notification No.38/2021 dated 27.04.2021 - HELD THAT:- As decided in one reported decision of Sahil International Vs. Assistant Commissioner of Income Tax, Circle-19(3) Ors. [ 2021 (8) TMI 198 - BOMBAY HIGH COURT ] and one unreported decision of Mon Mohan Kohli Vs. Assistant Commissioner of Income Tax Anr. [ 2021 (8) TMI 196 - DELHI HIGH COURT ] wherein have stayed the impugned notices under Section 148 of the Income Tax Act, 1961 for non compliance of the provisions of Section 148A of the Act. We had given an opportunity to Mr. Asok Bhowmik, learned Advocate appearing for the respondents to take instruction in the matter by my order dated 13th July, 2021. Today, when he was asked about the instruction pursuant to my aforesaid direction in this matter he simply made prayer for adjournment on the ground of learned Additional Solicitor General and could not submit anything about the aforesaid judgements relied on by the petitioners or on the facts of this case as to whether in this case before issuing notice under Section 148 of the Act, provisions under Section 148A was complied with or not. Mr. Bhowmik says that officer concerned has asked for further time and was not able to deny the allegations of the petitioners that Section 148A provisions of the Income Tax Act, 1961 was not complied with in this case before issuing notice under Section 148 of the said Act and was not able to distinguish the aforesaid unreported decisions. We direct the respondents to file affidavit-in-opeposition within six weeks from date. Petitioners to file reply thereto, if any, within two weeks thereafter. List the matter after eight weeks ( i.e. 09.09.2021) for Final Hearing. In the meanwhile, respondents are restrained from proceeding any further.
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2021 (8) TMI 787
Addition of sundry creditors - outstanding creditors - HELD THAT:- The sundry creditors represent the expenditure incurred for purchases and to make the disallowance of expenditure the issue is be dealt with u/s 37(1) in the year in which it was incurred, but not to be added in the subsequent year. AO did not make any enquiries to disprove the genuineness of outstanding creditors to invoke the section 41(1) of the act. It was also accepted fact that in the earlier year, assessment was completed u/s 143(3) and accepted the genuineness of purchases or as well as the outstanding creditors. As having accepted the genuineness of the sundry creditors in the earlier year merely because the assessee could not furnish some details, the AO cannot make addition of opening sundry creditors. It was also stated in the assessment order that due to HudHud cyclone, the business was badly effected. Merely because, the assessee had entered into agreement for sale, the AO cannot presume that the sundry creditors should not continue unless tangible evidence is brought on record to disprove the genuineness of the outstanding sundry creditors. In this regard, the assessee had already submitted the balance sheet. The assessee explained that it did not receive the sale consideration by the time the survey was conducted and the sundry creditors were not paid by that time, thus the transaction stands explained. Similar issue was considered by the coordinate bench in Tum Nath Shaw. v.Assistant Commissioner of Income Tax, Circle- 2, Burdwan, .[ 2019 (2) TMI 783 - ITAT KOLKATA] and decided the issue against the revenue and in favour of the assessee. AO did not make any enquiries or bring any evidence to prove that the outstanding creditors are bogus or the assessee has made the payments outside the books of accounts in the assessment year under consideration. The assessee has shown the liability in the balance sheet and stated to have paid the creditors subsequently. Therefore, in the absence of any evidence to disprove the genuineness of the outstanding creditors or to controvert the submission of the assessee, there is no reason to make the addition, hence, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue.
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Benami Property
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2021 (8) TMI 820
Benami transaction - real owner of bus and route permit - plaintiff purchased the bus and route permit in the name of the first defendant out of love and affection - bar of the suit under Section 4 of Benami Transactions (Prohibition) Act, 1988 - Plaintiffs have claimed the relief of declaration that the suit bus and route permit are belonging to them and for permanent injunction originally claimed against the first defendant restraining her from alienating or encumbering the bus and route permit and also restraining her from interfering with peaceful possession and enjoyment of the bus by the plaintiffs - Availiability of bar under Section 94 of the Motor Vehicles Act - HELD THAT:- Plaintiffs have claimed the relief of permanent injunction restraining the defendants 2 to 4 from transferring the suit schedule route permit to any third party without the consent of the plaintiffs, by impleading the transport authorities as defendants 2 to 4. During the pendency of the suit, the first defendant has filed a petition for withdrawal of her counter claim and the same was allowed and that thereby, the counter claim was permitted to be withdrawn without liberty and consequently, the counter claim of the first defendant was ordered to be dismissed as withdrawn. The plaintiffs also filed a memo stating that they had impleaded the defendants 2 to 4 as formal parties and as such, the relief claimed against them is given up. It is further evident that since the defendants have not raised any objection, the said memo was ordered to be recorded. As rightly contended by the learned counsel for the plaintiffs and as rightly observed by the learned Trial Judge, since the relief claimed as against the transport authorities were already given up and the reliefs claimed against the first defendant alone are pending, the question of bar under Section 94 of the Motor Vehicles Act does not arise at all. Benami transaction - Available evidence clearly indicates that the case of the plaintiff that the property was purchased by her from and out of the income from the 'B' schedule property is more probable and acceptable and the fact that the mother had contributed funds for the purchase of the property in the name of her son having been proved, the claim of the first plaintiff with reference to 'A' property could not be said to be barred by the provision of Benami Transactions (Prohibition) Act, 1988. Transaction was between the mother and the son and the mother has claimed that she has purchased the property in the name of her son. In the case on hand, the transaction is also between the mother and the sons but here, the sons are claiming that they have purchased the property in the name of their mother - the plaintiffs had taken a stand that the first defendant/mother is depending on them and she has no other income - as rightly pointed out by the plaintiffs' side, they have been alleging that the transactions were of the year 1997 and 2011 and the suit was laid in the 2013 and as such the Benami Transactions (Prohibition) Act, has no application. As rightly observed by the Trial Court, the issue is not a pure question of law but mixed question of fact and law and the same can be gone into only at the main trail. As not in dispute that the plaintiffs' side witnesses were already examined and when the first defendant's side evidence was in progress, the first defendant has come forward with the above petition. As already pointed out, the suit was filed in the year 2013 and when the trial was at the fag end, she has filed the above petition in the year 2018 for rejecting the plaint. Considering the facts and circumstances, as already observed by the learned Trial Judge, the above petition came to be filed only to drag on the proceedings. The decision of the Trial Court in dismissing the petition for rejection of the plaint cannot be found fault with and this Court is entirely in agreement with the same.
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Customs
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2021 (8) TMI 831
Smuggling - gold bars of foreign origin - The learned Single Bench, by order dated 11.06.2019, disposed of the writ petition with an observation that the respondent-writ petitioner can be granted an opportunity to cross examine three witnesses - HELD THAT:- The process of adjudication is over and the order dated 29.04.2016 has been passed by the second appellant and it has become final as against nine others, as it is the respondent alone, who had filed an appeal under Section 129(A) of the 1962 Act before the first appellant. The said appeal has also been dismissed on merits and on doing so, the first appellant has also confirmed the order passed by the second appellant upholding the decision to deny cross examination. The question of maintainability of the writ petition, though specifically raised by the appellant-Revenue before the learned Writ Court, has not been considered. Had the appellant filed the appeal before the Tribunal on the date when he filed the writ petition, i.e., on 27th February, 2017, it would have been time barred. Though a prayer for condonation of delay could have been made before the Tribunal. In any event, if it appears that the respondent having lost out on time to avail the statutory remedy, seeks to bypass the same and file a writ petition, the Courts would not entertain such a petition and will come to the conclusion that the reason for bypassing the statutory appellate remedy is because the appeal cannot be maintained at that point of time. Decided in favor of revenue - Appeal allowed.
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2021 (8) TMI 822
Refund of terminal excise duty - deemed export or not - supplies of goods by DTA unit to EOU unit - HELD THAT:- The judgment delivered in the case of ACER INDIA PVT. LTD. VERSUS UNION OF INDIA [ 2018 (9) TMI 398 - KARNATAKA HIGH COURT] shall be applicable in the case mutatis mutandis where Delhi High Court in Kandoi Metal Powders Mfg. Co. Pvt. Ltd s case [2014 (2) TMI 773 - DELHI HIGH COURT], has held that once the supply of goods fall within the category of deemed export, the unit would be entitled to refund of TED. As the issue has already been decided by Division Bench of this Court, no further orders are required to be passed in the present case - Appeal dismissed.
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Insolvency & Bankruptcy
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2021 (8) TMI 812
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - non-performing asset - existence of debt and dispute or not - One time settlement - time limitation - HELD THAT:- The offer of OTS can be relied on for the purpose of considering acknowledgement under Section 18 of Limitation Act. Issue of Recovery Certificate by DRT also is relevant for the purpose of calculating limitation. Respondent Bank claims Corporate Debtor made various repayments in 2018 while making OTS offers. Repayments were made is not disputed by Appellant but argued that payments were made so that OTS proposals should be accepted. This does nomakes any difference for applicability of Section 19 of the Limitation Act. There are no merit in the appeal - appeal dismissed.
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2021 (8) TMI 798
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - assignment of debt - time limitation - HELD THAT:- The Original Lender, i.e., SBI had granted a loan to the Corporate Debtor to the tune of ₹ 62.73 crores as on 31.03.2011. The Petitioner was assigned this debt as per the deed of assignment dated 19.03.2014 and the original lender had commenced the proceeding under SARFAESI and Debt Recovery Tribunal (DRT). The Debt Recovery Tribunal (DRT) had issued the Recovery Certificate of ₹ 80,67,60,995.92 along with future interest on 22.11.2016. The date of default as mentioned in Part IV of the Petition is 31.03.2009 and the NPA is 30.06.2009. However, the Petitioner also relied upon the Debt of Default as on 28.06.2012 as per NESL filing and SARFAESI Notice. The present Petition is filed on 06.08.2020, however the date of default relied upon the Petition is on the 31.03.2009 and 28.06.2012, therefore, even if we assume that cause of action arose on 28.06.2012, even then the Petition, if filed beyond three years, is time barred - Evidently, there has been restructuring of loan on 07.11.2014 and 30.06.2017, contrary to the terms and conditions of the restructuring package, the Petitioner has revoked the restructuring package on 01.06.2018. The said letter of revocation of restructuring immediately objected/rebutted by the Corporate Debtor. In strict interpretation of law of Contracts, it seems that there was no consensus ad idem and the unilateral revocation was strongly objected by the Corporate Debtor who pointed out that there is no default and payments will have to be made only from operational cash flows. This Bench is of the considered view that the cause of action arose as on 31.03.2009/ 28.06.2012. However, the Petitioner was filed on 08.08.2020 which is beyond three years as contemplated in judgment of Hon ble Supreme Court in B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES [ 2018 (10) TMI 777 - SUPREME COURT] wherein it is categorically held that the Article 137 of the Limitation Act, 1963 mentioned that the right to sue accrues by the Default occurs, the default has occurred over three year prior to the filing of Petition and the Petition is barred by the Limitation under Limitation Act, 1963 - In the instant case, it can be seen from the facts of the given case the default occurred as on 31.03.2009 or on 28.06.2012, a recovery certificate issued by the Debt Recovery Tribunal (DRT) on 22.11.2016, the restructuring package as on 07.11.2014, 30.06.2017. The Petitioner has not been able to demonstrate default of non-payment of monies under the restructuring package and the petition is barred by limitation as the date of default as shown in the petition is of 31.03.2009 as per the original agreement with the Lender SBI - petition dismissed.
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2021 (8) TMI 797
Maintainability of application - Initiation of CIRP - Personal Guarantors to Corporate Debtors failed to make repayment of guarantee undertaken - existence of debt and dispute or not - whether a Financial Creditor can initiate CIRP against the personal guarantor in the absence of any resolution process/liquidation process against the corporate debtor? - HELD THAT:- Though it is settled law that the liability of principal borrower and guarantor is coextensive as enunciated u/s 128 of the Contract Act, 1872, and the Creditor may proceed against the principal borrower or the guarantor simultaneously, however, the judgement of Hon ble NCLAT in the case of Dr. Vishnu Kumar Agarwal Vs. Piramal Enterprises Limited, [ 2019 (2) TMI 316 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] it was laid down that there cannot be two CIRP proceedings, one against the borrower and one against the guarantor. Upon conjoined reading of section 60 r/w section 128 of the Contract Act, 1872, it is clear that the CIRP can be initiated against the Corporate Debtor as well as corporate guarantor. But however, in the instant case, section 60(2) contains a non-obstante clause which specifies that only where a CIRP process or liquidation process of a Corporate Debtor is pending before NCLT, an application initiating Insolvency Resolution Process against the Personal Guarantor, of such Corporate Debtor shall be filed before such NCLT - While Section 7 petition can be filed by the Financial Creditor against the Corporate Debtor and Corporate Guarantor, but under Section 95 of the Code can be filed by Financial Creditor only against personal guarantor of Corporate Debtor, which is already been undergoing CIRP or is in Liquidation. In view of the judgement of Hon ble NCLAT in State Bank of India Vs. Atheena Energy Ventures Limited [ 2020 (11) TMI 800 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI ] and the law as entailed in section 60(2), this bench is of the considered view that an application for insolvency for resolution against the personal guarantor is not maintainable unless that CIRP/liquidation is ongoing against the Corporate Debtor. The petition is dismissed.
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Service Tax
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2021 (8) TMI 830
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - remission of amount as a pre-condition for issuance of a Discharge Certificate under the Scheme - HELD THAT:- The order of rejection suffers from a lack of reasoning as it ought to have set out the reasons cogently for the variation in estimate arrived at between the Declarant/Petitioner and the Designated Authority. The Supreme Court, in the celebrated case of MOHINDER SINGH GILL ANR. VERSUS THE CHIIEF ELECTION COMMISSIONER, NEW DELHI ORS. [ 1977 (12) TMI 138 - SUPREME COURT] has stated that orders are not like old wine becoming better over time. Thus, an order, to be valid, must speak for itself and contain reasoning for the conclusions arrived at. Seen in this light, the impugned order is clearly deficient. Circular No.1073/06/2019.CX in F.No.276/78/2019/CX-8.Pt.III dated 29.10.2019, issued by the Central Board of Indirect Taxes and Customs provides clarifications for several issues arising from the application of the Scheme - the Circular refers to the Supreme Court having permitted the lessees to agitate the service tax demands made upon the landlord and the question that then arises is as to whether the reference to 'such persons' , is to the lessee mentioned in the previous sentence or the lessor mentioned earlier. This aspect may not be very material in this case as it is the lessor/landlord who has filed the application and it is hence for it to satisfy all applicable parameters under the Scheme. The impugned order suffers from lack of reasoning, and to set right this flaw, the petitioner will appear before the respondent on Thursday, the 19th of August, 2021 to putforth its case and also to provide proof of payment of tax by the lessees - Petition disposed off.
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2021 (8) TMI 814
Refund of CENVAT Credit - input services - nexus with the out put service - Garden maintenance service - Business Auxiliary services - Cable Operator Services - Commercial training or coaching services - design services - convention/event management/mandap keeper services - Health and fitness service - renting of immovable property/car parking area - sponsorship services - Tour Operator services - works contract services - HELD THAT:- The appellant has given detailed justification in their ground of appeals for each of the impugned services involved in these sixteen appeals with judicial precedents and the impugned services have been used by the appellant for rendering the output services. Further, it is found that the reasoning given by the Commissioner(A) in the impugned orders is not correct in law and the correct position in law is that to test for eligibility is whether input services is used by the provider of taxable service for providing output service and the input services should not be covered by the exclusion clause. All these services on which refund has been rejected consistently held to be input services in various decision relied upon by the appellant. Moreover, the Department has not questioned the input service at the time when the CENVAT credit was taken and as per the decision of this Tribunal in the case of K Line Ship Management Pvt. Ltd. vs. CGST [ 2017 (7) TMI 412 - CESTAT MUMBAI] wherein it has been held that the department is not permitted to question the eligibility of CENVAT credit at the time of claiming refund. Further, in view of the clarification given by the tax research unit of CBEC vide their letter dated 16.3.2012, the amended Rule 5 of CENVAT Credit Rules, does not require correlation between the output service exported and the input service used in such output service exported. The appellant is entitled to refund of CENVAT credit along with interest - original authority will re- quantify the amount of refund after deducting the amount not pressed for - Appeal disposed off.
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2021 (8) TMI 811
CENVAT Credit - input service/capital goods - import of passenger lift - construction of a complex, building, civil structure etc. - declared service or not - Rule 2A of Service Tax Determination of Value Rules, 2006 - demand of interest and penalty - HELD THAT:- When the passenger lift was imported, it was classified under Chapter 84 and the Classification was accepted by the Department and once the classification is accepted by the Department, it cannot be changed at the receiver s end by the Department in view of various decisions relied upon by the appellant. Further, as per the impugned order, two conditions have to be fulfilled for capital goods to claim CENVAT credit as mentioned in Rule 2(a) (A) of CCR, 2004 for eligibility of credit (a) They should fall under the category mentioned in Rule 2(a)(A), (b) They should be used as mentioned in Rule 2(a)(A) whereas as per the Commissioner, only first condition is satisfied and as per the learned Commissioner, the entire works contract is not service, only service portion in works contract is service which is evident by section 66E(h) of the Finance Act, 1994. The lift is essential for providing the output service and therefore, the appellant has fulfilled both the conditions to avail the credit, hence the denial of credit is not sustainable, simply because the lifts are fitted into the building does not have an impact on treatment of lifts as capital goods because even after fitting into the building, lift is a lift and covered under Chapter 84 and cannot be considered as input just to deny the benefit of CENVAT credit. As per the Construction Agreements also, lift is one of the common facility provided in the project and lift is a capital goods being used for providing taxable services on which service tax is being paid by the appellant, therefore denying benefit of credit on capital goods is not proper - the basis to deny the credit is not legally sustainable. The appellant is entitled to CENVAT credit on lift which is capital goods and the denial of the same is not sustainable - Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 810
Wrong utilization of CENVAT credit - wrongly availed CENVAT Credit on ineligible input services - Short payment of service tax - short paid interest - HELD THAT:- The Department has confirmed the demand of ₹ 11,38,618/- in respect of the unsold flats whereas as per the appellant, they are required to reverse only ₹ 1,79,776/- in terms of the formula under Rule 6 (3A) and both the authorities have wrongly quantified the amount. Further, it is found that as per the submissions of the appellant, they have reversed the credit of ₹ 27,08,994/- in their books of accounts and submitted the complete details to the Department for verification but the same reversal was not considered for not having disclosed full credit in Returns. The amended Rules has not been invoked in the SCN and as per the formula prescribed under Rule 6(3A) of the CCR inserted vide Notification No.13/2016 with effect from 01.04.2016, the amounts so computed works out to be ₹ 1,79,776/- as per the appellant - the matter needs to be remanded back to the Original Authority with a direction to verify the quantum of credit available in the books and reversal made by the appellant to determine the exact demand of tax from the appellant, if any. Short payment of service tax - HELD THAT:- This demand has been accepted by the appellant but as per the submission of the appellant that this can be adjusted out of closing balance of ₹ 9,19,950/- remaining unutilized as on 30.06.2017 or as against the amount already excess reversed by him and the same is permissible as per Circular dated 28.03.2012. Further, this adjustment of short paid tax will also be considered by the Original Authority after verification of the quantum of credit in the books of the appellant and the reversal made by them as submitted by the learned Consultant. Demand of interest - HELD THAT:- There was a sufficient balance in the CENVAT credit account of the appellant during the relevant period and therefore by applying the ratio of the Hon ble Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] and M/S. OIL NATURAL GAS CORPORATION LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST., SURAT [ 2015 (1) TMI 41 - CESTAT AHMEDABAD] decided by the Tribunal of Ahmedabad Bench, the appellant is not liable to pay interest on the delayed payment. The case remanded back to the Original Authority with a direction to pass a fresh order after verification of the quantum of credit as per the records and the reversal made by the appellant and if the Original Authority comes to the conclusion that the appellant has excess reversed CENVAT credit then the same may be considered for setting off the demand determined in terms the formula under Rule 6(3A) which according to the appellant works out to ₹ 1,79,776/- - appeal allowed by way of remand.
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2021 (8) TMI 809
Refund of Service Tax - input service - Courier Bills - Swachh Bharat Cess and Krishi Kalyan Cess - partial rejection is made by holding that most of the services were not used beyond the factory of production - N/N. 41/2012, was substituted vide N/N. 01/2016-ST dated 03.02.2016 - HELD THAT:- Admittedly, the appellant is an exporter with no local sales and it is not even suspected by the Revenue about the appellant having any local sales - Most of the services which are held to be not eligible for refund for the reason of them being not used after the production stage were such that, as explained by the Learned Consultant for the appellant, used in the places located beyond the factory or the place of manufacture, like tailoring units, corporate office, clearing and forwarding services, advertisement, legal and accounting services, etc., which were obviously not located within the factory premises. The reasons attributed by the Adjudicating Authority cannot be sustained since there is no doubt that these services were not used in the factory of production but in any other place or premises of production or manufacture of the said goods, for their export. In view of this alone, it is seen that the appellant satisfies the conditions of N/N. 41/2012 ibid., as substituted vide N/N. 01/2016 ibid., and therefore, the denial cannot be sustained. Revenue has not doubted about the nature of service at the tailoring units, corporate office, clearing and forwarding services, advertisement, legal and accounting services, etc. Refund of service tax - courier bills - want of correlation of such bills with the exports/shipping bills - HELD THAT:- This issue requires re-adjudication in the light of the submission made by the Learned Consultant for the appellant. The impugned order on this issue is therefore set aside and the matter is restored to the file of the Adjudicating Authority, who shall cross-verify with the help of the appellant/appellant s representative as regards correlation is concerned and then pass an appropriate order in accordance with law. Refund of Swachh Bharat Cess and Krishi Kalyan Cess - HELD THAT:- It is the settled position of law that these cesses form part of the Service Tax paid on various input services used in or in relation to the export of goods. This is a direct consequence of the issue of refund for want of correlation, which has been remanded by this forum. The appeals stand partly allowed and partly remanded.
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2021 (8) TMI 806
Refund of CENVAT credit - nexus of input services with the output services - Sponsorship Service - Event Management Services - Outdoor Catering Services - Rent-a-cab services - Pandal and Shamiana/ Mandap Keeper Services - Life Insurance Services - Insurance Auxiliary Services - HELD THAT:- The appellant has given detailed justification for each of the impugned services involved in these two appeals with judicial precedents and the impugned services have been used by the appellant for rendering the output services. Further, the reasoning given by the Commissioner(A) in the impugned orders is not correct in law and the correct position in law is that to test for eligibility is whether input services is used by the provider of taxable service for providing output service and the input services should not be covered by the exclusion clause. All the services on which refund has been rejected consistently held to be input services in various decision relied upon by the appellant. Moreover, the Department has not questioned the input service at the time when the CENVAT credit was taken and as per the decision of this Tribunal in the case of K LINE SHIP MANAGEMENT INDIA PVT. LTD. VERSUS C.C.G.S.T., MUMBAI WEST [ 2018 (12) TMI 1481 - CESTAT MUMBAI] wherein it has been held that the department is not permitted to question the eligibility of CENVAT credit at the time of claiming refund. In view of the clarification given by the tax research unit of CBEC vide their letter dated 16.3.2012, the amended Rule 5 of CENVAT Credit Rules, does not require correlation between the output service exported and the input service used in such output service exported. The appellant is entitled to refund of CENVAT credit along with interest - Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 803
Delay in filing of claim of refund of Service Tax - time limit of six months from the date of enactment of the Finance Act, 2016, i.e. 14.05.2016 - non-compliance of conditions and non-observance of procedures - N/N. 9/2016-ST dated 01.03.2016 - HELD THAT:- It is not in dispute that the appellant had paid tax, which by virtue of the Notification was refundable to the appellant. Further, in the present case, the incidence of tax has been passed on to the buyer, i.e. Ministry of Defence. Therefore on account of the delayed filing of the refund claim by the appellant, the ultimate sufferer is going to be the Ministry of Defence, Govt. of India. The Notification as notified by the Finance Act, 2016 was brought into force to restore the benefit of exemption and to refund the tax paid by the assesses. Therefore, the intention of the legislature was not to deprive the bona fide assessee, who has discharged tax diligently. Further, in the present facts and circumstances, it would not be just to penalize the Ministry of Defence for want of due care on the part of the Appellant. The delay of 1(one) day in filing the refund claim be condoned and the refund claim of the appellant be considered on merits. The appellant is directed to remit forthwith the refund amount to the Ministry of Defence, in the event that such refund is found to be eligible on merits and is granted to the appellant - Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 801
Commercial or industrial construction service - services rendered to Government bodies and other entities - benefit of exemption has been denied for the reason that the services have been rendered in the factory area - Scope of 'Factory' - ETPs constructed for ONGC - STPs Constructed for NBCC - Order is beyond the show cause notice or not - HELD THAT:- The contention regarding scope of SCN would be examined, if considered necessary, after the second and the third submissions relating to ETPs constructed for ONGC and STPs constructed for NBCC are decided, because in case these two matters are decided in favour of the appellant it may not be necessary to examine whether the order went beyond the show cause notice. ETPs constructed for ONGC - HELD THAT:- A factory is a premise where excisable goods are either manufactured or a process in relation to their manufacturing is undertaken . Extraction of crude oil would not qualify as manufacture as the activity involving extraction of natural resources would qualify as production , which is independent and different from manufacture - Undertaking of an activity which results in emergence of a new commodity may amount to manufacture , such as in the case of manufacturing of medicines or cosmetics or textile. However, extracting of natural resources, including crude oil would amount to production and not manufacture . In COMMISSIONER OF INCOME-TAX VERSUS SINGARENI COLLIERIES COMPANY LIMITED [ 1995 (11) TMI 36 - ANDHRA PRADESH HIGH COURT] , the Andhra Pradesh High Court examined whether winning or excavation of coal from the mines amounted to production or manufacture. The High Court, after placing reliance on the decision of the Supreme Court in N.C. Budharaja, held that the mining or excavation of coal would qualify as production - In COMMISSIONER OF INCOME-TAX VERSUS SESA GOA LTD. [ 2004 (11) TMI 14 - SUPREME COURT] , the Supreme Court held that extraction of iron ore would amount to production . However, the Supreme Court had not addressed the question as to whether extraction of iron ore would amount to manufacture . It has to be determined whether a premise where only production takes place, would qualify as a factory. A factory would include a premise where excisable goods are manufactured or where a manufacturing process in connection with production of goods is carried out. Thus, when the activity in relation to extraction of natural resources does not amount to manufacture the first part of the definition of factory would not be applicable. The scope of the second part which includes a manufacturing process in connection with production of goods caters to post-production processes which are in relation to manufacture . This would include activities such as washing of coal; or withering of tea leaves; or refining of crude oil. This would be a manufacturing process, which is in connection with production. The definition of factory caters to manufacturing processes in respect of both, manufactured and non-manufactured goods . In case of manufactured goods, the premise where the manufacturing activity is undertaken would qualify as a factory. In case of non-manufactured goods such as natural resources, the premises where the post-production processes take place towards making the produce commercially viable would qualify as a factory - the oil fields of ONGC, where only extraction of crude oil takes places, would not qualify as a factory . The Commissioner committed an error in denying the benefit under Serial No. 13(d) of the Notification dated 20.06.2012. STPs Constructed for NBCC - HELD THAT:- The STP is set up for the purpose of removing pollutants and contaminants from wastewater, primarily from household sewage. It includes various processes so as to obtain clean and environment safe treated waste water. Hence, STP may be understood as a Wastewater Treatment Plant - the effluent means any waste material which is discharged into the environment (lake or river), including sewage. A treatment plant for management of effluent would, therefore, also include a sewage treatment plant. The Commissioner failed to appreciate the purpose of both the treatment processes. The exemption benefit provided by Notification dated 20.06.2012 at Serial No. 13(d) would, therefore, be available to the appellant. The Commissioner committed an illegality in denying the benefit of the Notification dated 20.06.2012 at Serial No. 13(d) to the appellant for ETPs constructed for ONGC and the STPs constructed for NBCC - Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 796
Levy of Service Tax - construction of complex and work contract service - period April, 2005 to February, 2008 - HELD THAT:- It is fact on record that for the period April, 2005 to February, 2008 the model of work by the appellant is that they executed sale deed to the allottees/customer after completion of flats. They were not providing any service to the allottees/customers prior to execution of sale deed by the appellant. Any service rendered by the appellant prior to the sale of the flats is self-service in terms of CBEC‟s Circular No.108/2 of 2009-ST dated 29.1.2009 and hence is not chargeable to service tax. This issue has been examined in detail by this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH VERSUS SKYNET BUILDERS, DEVELOPERS, COLONIZER OTHERS [ 2012 (4) TMI 427 - CESTAT, NEW DELHI] wherein this Tribunal clarified. Further, the same view was taken by this Tribunal in the case of M/ BAIRATHI DEVELOPERS PVT. LTD. VERSUS CCE, JAIPUR [ 2016 (3) TMI 715 - CESTAT NEW DELHI] . Further, in the case of INDO GLOBAL ESTATES VERSUS COMMISSIONER OF C. EX., CHANDIGARH [ 2014 (1) TMI 407 - CESTAT NEW DELHI] , this Tribunal held that when construction of residential complex is for sale of flats and same is ultimately sold to customer under agreement, it cannot be held that there were any service being provided by builders to their customer, even if, a part amount of cost of flats is being received in advance. The impugned order confirming a demand of service tax under construction of complex services is not sustainable - Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (8) TMI 828
Appropriate Forum - appeal to be filed before High Court or Supreme Court - Levy of Excise Duty - Superior Kerosene Oil - whether the duty was liable to be paid only as SKO and not payable as on MS or HSD? - HELD THAT:- Sub-Section (1) of Section 35G states that an appeal will not lie before the High Court but before the Supreme Court if among other things the matter relates to rate of duty of excise. Therefore, even if one of the many issues relate to the rate of duty, the appeal would still lie before the Hon ble Apex Court and not before the High Court. The dispute here in any case falls in a very limited area as to the determination of the rate of duty to be paid by the assessee. That being so, this matter lies within the exclusive jurisdiction of the Hon ble Apex Court under Section 35L of the Act and it is an appeal which cannot be heard by this Court under Section 35G of the Act. Appeal dismissed as not maintainable.
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2021 (8) TMI 819
Refund of Excise duty - invocation of provisions of Clause 3(1) of the Notification No.20/2008-Central Excise dated 27.03.2008 - HELD THAT:- As the Notification dated 27.03.2008 provides for a legal right to the assessee to claim for a special rate to be fixed in the event of there being any add-ons to the goods manufactured, without an appropriate decision being taken on such claim for special rate, it would be inappropriate for the department to proceed against the petitioners as per the rates provided in the Notification dated 27.03.2008. This petition stands disposed of by directing the Principal Commissioner of GST Guwahati to consider the aforesaid application of the petitioner dated 01.04.2021 claiming for a special rate to be fixed on the basis of the add-ons made to the goods manufactured. After arriving at the special rate, if any as per the order to be passed by the Principal Commissioner, GST further process against the petitioner as per law may be initiated - petition allowed.
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2021 (8) TMI 818
Refund of accumulated balance of unutilized credit of Education Cess and Secondary and Higher Education Cess - time limitation - applicability of Section 11B of the Central Excise Act - HELD THAT:- In the present case the appellant has filed the refund claim of accumulated balance of unutilized credit of Education Cess and Secondary and Higher Education Cess available in their books under Section 11B of the Central Excise Act within a period of one year i.e. on 29/06/2018 from the introduction of GST law. It is also found that with the introduction of GST there is a restriction for these cesses to be transitioned into GST by virtue of Section 140(1) of the Act and therefore the appellant did not transfer the said credit of cesses into GST and preferred to file the refund claim under Section 11B of the Central Excise Act. In view of the contradictory decisions of various High Courts, this Tribunal is bound to follow the decision of the jurisdictional High Court and the jurisdictional High Court has held in the case of UNION OF INDIA VERSUS SLOVAK INDIA TRADING CO. PVT. LTD. [ 2006 (7) TMI 9 - KARNATAKA HIGH COURT] which has been relied upon by the Division Bench of the Delhi Tribunal in the case of BHARAT HEAVY ELECTRICALS LTD VERSUS COMMISSIONER OF CENTRAL TAX SECUNDERABAD - GST [ 2020 (1) TMI 188 - CESTAT HYDERABAD] has categorically held that refund can be granted of the cesses viz. Education Cess and Higher Education Cess which could not be transitioned into GST. The findings in the impugned order regarding time-bar is beyond the show-cause notice as well as Order-in- Original and the same is not sustainable in law - Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 813
Irregular transition of CENVAT Credit - transition of education cess and secondary and higher education cess to GST - HELD THAT:- As far as transition of cenvat credit relating to education cess and higher education cess is concerned, the matter has been finally decided by the Hon ble Division Bench of the Madras High Court in the case of Sutherland Global Services Pvt. Ltd. [ 2020 (10) TMI 804 - MADRAS HIGH COURT] , wherein the Hon ble Division has held that the appellant has wrongly transferred the cenvat credit of education cess and higher education cess into TRAN1 under GST which is liable to be recovered from the appellant along with interest and penalty. For verification of these facts, the case needs to be remanded back to the original authority and the original authority will examine the evidences which may be submitted by the appellant relating to these two amounts and thereafter will pass a fresh decision relating to the demand of cenvat credit irregularly transferred to TRAN1 and accordingly interest and penalty will be imposed by the original authority - Appeal allowed by way of remand.
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2021 (8) TMI 799
CENVAT Credit - capital goods - denial on the ground that the final product is exempted from payment of duty and as per Rule 6(4) of the Cenvat Credit Rules, 2004 - HELD THAT:- The appellant is a manufacturer of cotton yarn and woven fabrics of cotton. It is also fact that the appellant is entitled for benefit of N/N. 29/2004-CE dated 09.07.2004 for their clearances at concessional rate of duty and N/N. 30/2004-CE dated 09.07.2004 without payment of duty if they do not avail cenvat credit on inputs. The N/N. 29/2004-CE dated 09.07.2004 was amended by Notification No. 58/2008-CE dated 09.07.2008 wherein the goods were exempted from payment of duty. The N/N. 59/2008-CE dated 07.12.2008 was also issued along with the N/N. 58/2008-CE dated 07.12.2008 which prescribed concessional rate of duty at the rate of 4% for clearance of the goods manufactured by the appellant, therefore, it cannot be said that during the period 07.12.2008 till 07.07.2009, the goods manufactured by the appellant were totally exempt from payment of duty. The said notification was also not brought on record by the Learned AR. Therefore, the version of Learned AR is totally mis-conceived and not according to the facts on record. The cenvat credit on capital goods during the impugned period cannot be denied to the appellant. Further, even if it is agreed that N/N. 29/2004-CE read with N/N. 58/2004-CE was considered which provided full, unconditional exemption notification up to 6.7.2009, capital goods credit would not have been available during that period. Once the duty became payable from 7.7.2009, the appellant was entitled to take credit on the capital goods used in the manufacture of the goods. No time limit has been prescribed for availing CENVAT credit on capital goods. As long as the capital goods in question were used in the manufacture of dutiable goods (post 7.7.2009), nothing stops the appellant from taking CENVAT credit even on the capital goods received earlier (up to 6.6.2009) but also used post 7.7.2009. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 795
Levy of penalty - default in payment of excise duty - Constitutional validity of the Rule 8 (3A) of Central Excise Rules, 2002 - HELD THAT:- Since the Rule 8 (3A) which restricted the payment of Central Excise duty from the CENVAT Credit Account during the period of default, has been held unconstitutional by the Hon ble High Court in INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT] to that extent, the very basis of Show Cause notice do not survive. In absence of the restriction imposed by the Rule 8 (3A) towards utilization of CENVAT Credit for payment of Central Excise duty the appellant cannot be defaulted for payment of duty by utilization of CENVAT Credit. Commissioner has category held in favour of the Appellant and have agreed that the appellant were making the payment of duty as due by utilizing the CENVAT Credit. Since Appellant were paying the duty utilizing the CENVAT Credit they cannot be charged for contravention of the provisions of Rule 4, 8(1), 8(3) 8(3A) of the Central Excise Rules, 2002 for which the penalty has been imposed under Rule 25 of Central Excise Rules, 2002, equivalent to the demand of duty. In view of Hon ble High Court order since we conclude that payment of duty by utilizing the CENVAT Credit was proper mode of payment of duty during the period of default, the penalty imposed on the Appellant needs to be set aside. Since the appeal filed by the revenue do not take into account the decision of Gujarat High Court, subsequently in case of Indsur Global Ltd., holding the Rule 8 (3A) unconstitutional to the extent of the restricting the payment of Central Excise Duty by utilizing CENVAT Credit, there are no merits in the appeal filed by the Revenue. Appeal allowed.
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Indian Laws
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2021 (8) TMI 827
Dishonor of Cheque - inspite of opportunity granted, cross-examination of complainant was not done - HELD THAT:- It is true that matter was adjourned on the count of ill health of the advocate of accused as well as due to pandemic situation. It is also a matter of record that accused was directed to deposit ₹ 1,80,000/- which he failed to deposit. However, in the present petition the said amount was deposited by Demand Draft in the name of complainant. If roznama dated 16.08.2019 is perused the accused was absent. His advocate Noronha was represented through Shri V. Naik. Thus order was passed in the absence of accused as well as his advocate. Exemption was granted to the accused. However application for grant of adjournment was rejected and cross of PW1 was closed. Roznama of previous date shows that there was application filed by Counsel for accused alongwith medical certificate. On all these dates where adjournment is granted the advocate for accused sought exemption of his appearance. Thus, accused may not be having any idea whether the evidence of PW1 will be closed or even if he is having idea the advocate for accused appears to be not well and was seeking adjournments - It also reveals from the roznama that the cross of PW1 had commenced but ultimately it could not be concluded for one or the other reason. Though amount of ₹ 1,80,000/- has been deposited in this Court the accused avoided to pay the same since long. The hardship and inconvenience caused to the complainant also cannot be overlooked. He can be compensated by way of costs. In view of this background also it is necessary to expedite the matter - petition allowed.
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2021 (8) TMI 826
Dishonor of Cheque - sufficient material to proceed against the accused, present or not - failure to prove the cheque - legally enforceable debt or not - acquittal of the accused - rebuttal of presumption - preponderance of probabilities - HELD THAT:- The complainant has not denied the fact that accused is financially sound person. He has also not denied that accused entrusted him the furniture work and it is the specific contention of the accused that, initially the cheque was issued for ₹ 2,50,000/- towards furniture work executed by the complainant and subsequently, as the work was only worth of ₹ 1,50,000/-, separate cheque was issued with a request to return other cheque for ₹ 2,50,000/-. Admittedly, the cheque for ₹ 1,50,000/- was encashed by the complainant. The complainant initially denied that payment of ₹ 1,50,000/- towards furniture work, but later tried to improve his version by claiming that it was pertaining to repayment of earlier loan. When there was earlier loan of ₹ 1,50,000/- due as on April 2009, it is hard to accept that he has again advanced hand loan of ₹ 2,50,000/- to the accused. He has not given any explanation as to when this amount of ₹ 1,50,000/- was advanced. Admittedly, if the version of the complainant is taken that repayment of ₹ 1,50,000/- pertaining to earlier hand loan, he would have referred it in the complaint and in April 2009, when there was due of ₹ 1,50,000/- in respect of earlier hand loan, he would not have ventured to advance further hand loan of ₹ 2,50,000/-. The accused need not rebut the presumption on the principles of beyond all reasonable doubt, but he can rebut the presumption only on the basis of preponderance of probabilities. Looking into the rival contentions and considering the evidence of P.Ws.1 and 2, it is evident that their evidence is not trustworthy and the defence of the accused is more probable rather than the claim made by the complainant. Hence, the presumption under Section 139 of N.I.Act is rebutted by the accused. Then again burden shifts on the complainant to establish the existence of legally enforceable debt, but that is not forthcoming. There is no doubt that initially there is a statutory presumption and reverse onus is on the accused - The accused by leading cogent evidence and by cross-examining P.Ws.1 and 2 has rebutted the presumption available in favour of the complainant/prosecution under Section 139 of N.I.Act. Hence, again onus shifts on the complainant to establish the existence of legally enforceable debt, but he has not placed any material in this regard. The complainant has failed to establish the existence of legally enforceable debt and accused rebutted the initial statutory presumption available in favour of the complainant. The trial court after marshalling oral and documentary evidence has come to a proper conclusion regarding complainant having failed to discharge regarding advancing hand loan and existence of legally enforceable debt. Hence, the trial court has rightly acquitted the accused and the judgment of acquittal passed by the trial court is neither capricious, erroneous nor suffers from any illegality. Appeal dismissed.
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2021 (8) TMI 825
Validity of detention order passed - Jurisdiction - power of Commissioner of Police to pass detention order - validity of delegation of power to the Commissioner of Police - Section 3(1) of the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 - HELD THAT:- As per the mandate of clause (b) of Section 9, reference by the appropriate Government to the Advisory Board is required to be made within five weeks from the date of detention of a person. When five (5) weeks period is reckoned from date of detention order i.e., 01.10.2020, it would expire on 05.11.2020 - In the instant case, the detenue was detained on 01.10.2020 and reference has been made by appropriate Government within five weeks and reference so made by State Government has been received by the Advisory Board on 27.10.2020 which is well within the period of five weeks prescribed under clause (b) of Section 9 of PITNDPS Act. Clause (c) of Section 9 of PITNDPS Act mandates that report of the Advisory Board has to be submitted to the appropriate Government within 11 weeks from the date of detention of the person concerned. Thus, if the period of 11 weeks is reckoned from 01.10.2020, it would expire on 17.12.2020. In the instant case, report of the Advisory Board has been forwarded and received by the appropriate Government on 11.12.2020 which is well within the period of 11 weeks prescribed under clause (c) of Section 9 of PITNDPS Act. Hence, contention of the petitioner raised in this regard stands rejected. Petition dismissed.
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2021 (8) TMI 823
Dishonor of Cheque - application under Section 143(A) of N.I. Act seeking permission to deposit interim compensation amount - HELD THAT:- Initially an order has been passed by the trial Court on 11.12.2019 by allowing the application filed by the petitioner/complainant directing the respondent/accused to pay 10% of the Cheque amount as interim compensation as per Section 143(A) of N.I. Act. Thereafter on 29.01.2020 the respondent/accused filed an application under Section 143(A) of N.I. Act seeking permission to deposit interim compensation amount in the Court and to keep the said amount in the Court account till disposal of the case. But the trial Court committed an error without passing any order directing the respondent/accused to deposit the amount in the Court or rejecting the application. It may be by oversight or an error, but once the order was passed by allowing or rejecting the application, the same Magistrate has no power to recall any order passed on the same application as per the provisions of Section 362 of Cr.P.C. - though the learned counsel for the respondent/accused had already filed an application for depositing the interim compensation in the Court till disposal of the case, the trial Court has not passed any order on that application. Even if it is considered, the trial Court cannot change the order as there is a bar under Section 362 of Cr.P.C. Therefore with the consent of learned counsel for both the parties, the said application is to be considered before this Court. The order passed by the trial Court on 01.03.2021 dismissing the application under Section 143(A) of N.I. Act is hereby set aside. The earlier order dated 11.12.2019 allowing the application filed under Section 143(A) of N.I. Act is restored - Petition allowed.
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2021 (8) TMI 821
Dishonor of Cheque - the applicant has issued the cheque of his father under own signatures - only defence of the applicant is that the cheque does not belong to him - Section 138 of Negotiable Instrument Act - HELD THAT:- The bank account is of the father of the applicant. Therefore, it is clear that the applicant had an access to the cheque book, which was issued by the bank in favour of his father. The case of the respondent is that there was a transaction of ₹ 7,00,000/- between the respondent and the applicant and in lieu of that, disputed cheque was issued. For the purposes adjudicating this application filed under Section 482 of Cr.P.C. this Court is of prima facie opinion that the applicant tried to cheat the respondent by issuing a cheque of his father. The fact is that the bank account as well as cheque book belongs to the father of the applicant and the applicant had access to the same. In absence of any challenge to signatures of the applicant on the disputed cheque, this Court is of the considered opinion that at present it cannot be said that the applicant is not liable to be prosecuted under Section 138 of the N.I.Act. In the light of misleading stand taken by the applicant as well as in the light of the fact that prima facie, the applicant has issued the cheque of his father under own signatures, it is clear that he has also tried to cheat the respondent. By allowing the revision and remanding the matter back, the Revisional Court had committed a mistake by directing the Trial Court to consider the question of issuance of summons after taking note of the defence of the applicant - Application dismissed.
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