TMI Tax Updates - e-Newsletter
September 1, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
e-invoicing - Taxpayers having aggregate turnover exceeding Rs. 10 Cr required to issue e-invoice w.e.f. 1.10.2022 - Notification
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Income Tax:
Exemption to income accrued or arisen to, or received by a non-resident as a result of transfer of non-deliverable forward contracts or offshore derivative instruments or over-the-counter derivatives - Conditions for the purpose of clause (4E) of section 10 - Rule 21AK of the Income-tax Rules, 1962
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Income Tax:
Correct head of income - Gain on sale of industrial site - capital gain v/s business income - the same being essentially a finding of fact that the sale of Industrial Site is one to be assessed under the head “capital gains” and not under "business income", the concurrent finding of fact by all the authorities below in the absence of any evidence to the contrary being let in by the appellant, does not warrant any interference by this court. - HC
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Income Tax:
Validity of Reopening of assessment u/s 147 - Explanation (2) would be of no avail to the Department. - Test the correctness or otherwise of a methodology adopted by the petitioner for a claim of expenditure, it would, in my view, be appropriate to test whether such claim, and the methodology adopted for making such a claim, had been placed before the Authority even at the first instance. The answer in this case is in the affirmative. The successor officer has not come into possession any other information to indicate escapement of income but merely relies upon the methodology adopted by the petitioner to apprehend escapement of tax. In such circumstances, resort to Section 147 is, in our view, impermissible. - HC
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Income Tax:
Validity of assessment u/s 153C - There is no prohibition in the Act that a combined satisfaction-note should not be recorded. Moreover, the satisfaction- note, is recorded by Assessing Officer after fifteen months and thirteen days, which is normal time the Department takes to issue satisfaction-note - Since the satisfaction note is recorded on 13.01.2015, which pertains to assessment year 2015-16. Therefore, six previous assessment years for the purpose of assessment under section 153C of the Act, would be assessment years: 2014-15, 2013-14, 2012-13, 2011-12, 2010-11 and 2009-10. Therefore, assessment year 2008-09 should be excluded from the ambit of section 153C of the Act. - AT
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Income Tax:
Reopening of assessment u/s 147 - Notice after the expiry of 4 years - reliance on self-same material - Respondent revenue could not establish in course of hearing that there was any omission or failure on the part of the assessee petitioner in disclosing truly and fully any material fact necessary for the assessment before the Assessing Officer in course of scrutiny assessment. - HC
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Income Tax:
Deemed dividend u/s 2(22)(e) - assessee is a major share holder in loan granting company - Advance given for purchase of property - The words “loans or advances” occurring in the provision can be applied to loans or advances simplicitor and not to those transactions carried out in the course of trade/business. By giving advance, if the business purpose of the company is served, such advance cannot be brought within the provision of deemed dividend under section 2(22)(e) of the Act. - AT
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Income Tax:
Addition u/s 68 - unexplained cash credit - Assessee failed to provide identity and creditworthiness of the persons giving cash to it towards alleged consultancy services and genuineness of the transaction could also not been proved by the assessee - Once Section 68 is invoked, then AO has rightly applied tax-rate provided within provisions of Section 115BBE of the 1961 Act. - AT
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Income Tax:
Addition in respect of closing construction work-in-progress (WIP) - Valuation - When there is no change in number of items of inventory of construction WIP as shown in the first set of financial statement as well as second set (MIS account) of financial statement, then only difference is that in MIS account construction WIP has been valued higher by the amount of Rs.32.29 crores only, for the purpose of consolidated account of the venture partner. - no addition could be made for higher valuation of the stock - AT
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Income Tax:
Interest on refund u/s. 244A - Short grant of interest u/s. 244A - Interest on interest as available to assessee under newly inserted sub-clause (1A) will have to be analysed in accordance with law. - The year under consideration is Assessment Year 2020-21 and therefore interest on interest has to be computed for the shortfall amount that assessee is liable to receive. - AT
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Income Tax:
Reopening of assessment u/s 147 - The reasons recorded for reopening the assessment contain ample proof in itself to show that there was no new material in the possession of the Ld. AO. He scrutinized the same documents which were already available on records for seeking to reopen the assessment which, in our view, amounts to re-appraisal of the same facts and change of opinion. - AT
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Income Tax:
Claim of Expenditure at the rate of 7.5% of the interest income - Admittedly, there is no specific expenditure incurred to earn the interest income. However, incurring of sum indirect expenditure cannot be ruled out. It is trite law that what can be taxed is only real income not hypothetical income, when the specific expenditure cannot be identified, it is appropriate to estimate certain amount of expenditure. - AT
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Customs:
Levy of penalty u/s 114(iii) and 114AA of the Customs Act - respondents categorically stated that only the corrigendum was served on them without the show cause notice - Penalty could not have been imposed upon the two respondents if opportunity was not provided to the two respondents to file a reply to the show cause notice. This apart, the show cause notice also does not contain any allegation against the two respondents. - AT
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Customs:
The appellant has not made the pre-deposit and even though time was given to the appellant to make the pre-deposit, the pre-deposit has not been made - In view of the decisions of the Supreme Court, the Delhi High Court and the Madhya Pradesh High Court, it is not possible to permit the appellant to maintain the appeal without making the required pre-deposit. - AT
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DGFT:
Import of Malonylurea (Barbituric Acid) and its salts - Policy condition removed - Now allowed to be imported Free - Amendment in import policy condition of HS Code 29335200 under Chapter 29 of ITC (HS) 2022, Schedule - I (Import Policy) - Notification
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FEMA:
Individual Limits of borrowing from outside India - Limit enhanced to USD 1500 million or equivalent till 31-12-2022- Borrowings from outside India by a person resident in India [See Regulations 4(A)(iv), 4(B)(i), 4(B)(iv), 6(A), 6(B)(i), 6(B)(vii)] - - SCHEDULE I of the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018
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Service Tax:
Valuation - cargo handling and port services - inclusion of facility charges in the assessable value - presumption of the Revenue is that the respondent have not recovered facility charges from M/s ESTIL whereas they recovered said charges in case of other customers - The charges were negotiated rates - there are no force in the department’s contention that respondent has not included the value of “facility charges” in the related taxable service charges. - AT
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Service Tax:
Levy of Service Tax - Business Auxiliary Service - incentives and discount support received by the appellant - It is noticed that the appellant purchases vehicles from TML and sells the same to the buyers. It is clear from the agreement that the appellant works on principal to principal basis, and not as an agent of TML - The service tax on the amount received as incentives could not have been levied to service tax - AT
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Central Excise:
CENVAT Credit - the tribunal had agreed with the submission made on behalf of the assessee that there is no allegation levelled against the assessee showing the excess procurement of inputs and there has been no investigation in this regard by the department. Further, with regard to invoking the extended period of limitation, the tribunal found there is absolutely no justification to do so and there is no explanation given by the department for the gross delay in initiating proceedings - Revenue appeal dismissed - HC
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Central Excise:
CENVAT Credit - availing credit without physically receiving and using the said goods in their factory - It is well settled law that statements recorded by the Central Excise officers during the course of investigation cannot be relied upon, unless procedure prescribed under Section 9D of the said Act is scrupulously followed. Such statement would have no evidentiary value if the person making it is not subjected to examination-in-chief before the adjudicating authority and also not produced for cross- examination as stipulated under Section 9D(1)(b) of Central Excise Act, 1944 - AT
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Central Excise:
Clandestine Removal - As per the provisions of section 9D it is clear that during adjudication, the adjudicating authority is required to first examine the witness in chief and also to form an opinion - It is a settled principle of law that if the authority wants to rely upon the statement of any witness, the opportunity of cross-examination ought to have been given to enable the party to prove its case. Non-providing of the opportunity of cross-examination amounts to violation of the natural justice and in absence of denial of natural justice, such documents/statements cannot be relied upon. - AT
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Central Excise:
Valuation of goods - related party transaction - The only case of the department rests on two counts: (i) the appellant has shown three of said companies as its ‘Associated and Joint ventures’ in their balance sheet; and (ii) The directors of appellants are the directors in either of the three undertakings - In the present case, it is observed that the Department has not produced any evidence of proving the mutuality of interest of three other companies with the appellant. - Demand set aside - AT
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Central Excise:
Extended period of limitation - bonafide belief - The appellants have not been able to show any ground by which they could claim that they entertained a bonafide belief that goods manufactured and cleared by them were not subject to excise duty or attracted nil rate of duty or were exempt from payment of duty. It is settled law that the bonafide belief is not the blind belief and need to be established before that plea can be taken. - AT
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VAT:
Constitutional validity of amendment to VAT act after amendment to Constitution to introduce GST laws - The legislative competence to amend KVAT Act through Finance Act 5/2018 is not established. It is found from the scope and scheme of powers enjoyed by the Centre and the State as regards the supply of goods and services, power to amend the KVAT Act is unavailable - The amendment to KVAT Act by Finance Act 5/2018 is without competence. - HC
Articles
Notifications
GST - States-
S.O. 175 - dated
29-8-2022
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Bihar SGST
Bihar Goods and Services Tax (Amendment) Rules, 2022
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S.O. 174 - dated
29-8-2022
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Bihar SGST
Notification under section 168A to extend dates of specified compliances under the BGST Act, 2017
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S.O. 173 - dated
29-8-2022
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Bihar SGST
Amendment in Notification No. S.O. 4, dated the 2nd January, 2018
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S.O. 172 - dated
29-8-2022
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Bihar SGST
Amendment in Notification No. S.O. 212, dated the 8th May, 2019
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S.O. 171 - dated
29-8-2022
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Bihar SGST
Notification under first proviso to section 44 to exempt taxpayers having AATO upto Rs. 2 Crores from the requirement of furnishing annual return for FY 2021-2022 under the BGST Act, 2017
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9/2022 – State Tax (Rate) - dated
23-8-2022
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Jharkhand SGST
Amendment in Notification No. 5/2017- State Tax (Rate), dated the 29th June, 2017
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8/2022 – State Tax (Rate) - dated
23-8-2022
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Jharkhand SGST
Amendment in Notification No. 3/2017- State Tax (Rate), dated the 29th June, 2017
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7/2022 – State Tax (Rate) - dated
23-8-2022
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Jharkhand SGST
Amendment in Notification No. 2/2017-State Tax (Rate), dated the 29th June, 2017
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10/2022–State Tax (Rate) - dated
23-8-2022
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Jharkhand SGST
Amendment in Notification No. 02/2022- State Tax (Rate), dated the 22nd April, 2022
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (8) TMI 1282
Transition and distribution of CENVAT Credit by Input Service Distributor (ISD) of the balance of Service Tax/Excise Duty as on 30 th June, 2017 - procedure for transition of the said CENVAT credit being balance of the ISD credit and its distribution to the other units of Petitioner - Section 140 of the CGST Act - HELD THAT:- It appears that most of the procedural issues have arisen due to the fact that the GST was at the nascent stage of its implementation and there was a prevalent ambiguity with regard to the transitional provisions. The Respondents are directed to open the common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months, i.e., with effect from 1st September, 2022 to 31st October, 2022 - Once, the credit taken by the respective units is regularized by filing revised electronic or manual declaration (as the case may be) in Form GST TRAN-1, the credit balance shown in Electronic Credit Ledger of Petitioner being the balance of ISD credit transitioned shall be deemed to have lapsed/deleted. Petition disposed off.
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2022 (8) TMI 1281
Validity and legality thereof to grant Tran-1 credit - opening of portal for filing of forms for availing transitional credit - Section 140 of CGST Act, 2017 and Section 140 of CGST Act, 2017 read with Rule 117 of CGST Rules, 2017 - HELD THAT:- The issue involved and required to be addressed in this petition, has been answered by the Apex Court in case of UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER] has held that Goods and Service Tax Network (GSTN) is directed to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months i.e. w.e.f. 01.09.2022 to 31.10.2022. Petition disposed off.
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2022 (8) TMI 1280
Seeking permission to allow filing of revision/rectification of the statutory form TRAN-1 either electronically or manually - opening of common portal for filing concerned forms for availing transitional credit through TRAN-1 TRAN-2 for two months - section 73 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The Apex Court in UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER] has issued certain directions to the Goods and Service Tax Network (GSTN) to open common portal for filing concerned forms for availing transitional credit through TRAN-1 TRAN-2 for two months i.e. w.e.f. 01.09.2022 to 31.10.2022, therefore, this petition is liable to be disposed of with liberty to the petitioner to avail said benefit. Petition disposed off.
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Income Tax
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2022 (8) TMI 1294
Correct head of income - Gain on sale of industrial site - capital gain v/s business income - rejecting the claim of the appellant with respect to the cost of acquisition of the land and deduction of commission payment to one T.P.Anand as share of profit - HELD THAT:- We are of the view that the concurrent finding of all the three authorities namely, Assessing Officer, First Appellate Authority and the Tribunal is based on evidence and the finding that the appellant had not let in evidence in support of his claim as business income is again concurrent and made on the basis and on consideration of the material on record. Hence, the same being essentially a finding of fact that the sale of Industrial Site is one to be assessed under the head capital gains and not under business income , the concurrent finding of fact by all the authorities below in the absence of any evidence to the contrary being let in by the appellant, does not warrant any interference by this court. Cost of purchase/ acquisition of Industrial Site - Tribunal found that the said fact having been proved by the Appellant before the Statutory Authority and the same having been accepted in the absence of any material other than mere assertion alleging that the appellant had entered into a subsequent agreement with one A.Mubaraq Ali, would show that the cost of acquisition was Rs.1.80 Crores, was rightly rejected by the Tribunal and other Lower Authorities, since weight must be given to a statement/ document approved by a Statutory Authority vis-a-vis a self serving document which has no sanctity. The same is a finding of fact based on consideration of the material on record and thus, does not warrant any interference by this court. Claim of deduction of amounts paid to Anand - As found by the Tribunal that the order of the Assessing Officer fixing the payment for the alleged services by the said Anand in the absence of any evidence let in, at Rs. 2 lakhs was in order and enhanced it to 7% by the First Appellate Authority, in the absence of any evidence, was unacceptable. Secondly, the Tribunal was prompted by the fact that the said claim of deduction was contrary to Section 48 In case of transfer of Capital Asset, deduction is allowable only under two circumstances, when the expenditure is made wholly and exclusively in connection with such transfer and if it represents the cost of improvement for the transfer. The plea of the appellant that the payments were made towards the improvement of the assessee s title and rights, was not supported by any evidence whatsoever and thus, cannot be allowed. In any view, the said claim of deduction does not fall within the two circumstances mentioned in Section 48 of the Income Tax Act, 1961. Thus, the Tribunal has rightly affirmed the order of the assessing officer in fixing the claim of deduction of payment to Anand restricted to Rs.2 lakhs, which does not warrant any interference. Powers of High Court - While exercising its power under Section 260 A of the Income Tax Act, 1961, this court would exercise restraint and normally, would not interfere with the finding of fact unless it is shown to be perverse, which is not the case here. - As the order of the Tribunal being one essentially finding of facts and based on evidence and on consideration of relevant materials on record, it does not warrant any interference.
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2022 (8) TMI 1293
Validity of Reopening of assessment u/s 147 - re-assessment has been initiated beyond a period of four years from the end of the relevant assessment year - Reasons to believe - HELD THAT:- Notification issued by the Board in Notification No.F.No.400/234/95-IT(B) dated 23.05.1996, at the time of amendment of Section 147 on 01.04.1989, taking a cue therefrom to state that even according to the Central Board of Direct Taxes a mere change of information cannot form the basis for reopening of a completed assessment. A note of caution that was sounded to state that if the reason to believe of the Assessing Officer is founded upon information which might have been received by the AO after completion of assessment, this may be a sound basis for initiation of re-assessment. Test the correctness or otherwise of a methodology adopted by the petitioner for a claim of expenditure, it would, in my view, be appropriate to test whether such claim, and the methodology adopted for making such a claim, had been placed before the Authority even at the first instance. The answer in this case is in the affirmative. The successor officer has not come into possession any other information to indicate escapement of income but merely relies upon the methodology adopted by the petitioner to apprehend escapement of tax. In such circumstances, resort to Section 147 is, in our view, impermissible. In dealing with re-assessments and challenge there to, Courts have formulated principles over time, one of which is that an assessment being a quasi-judicial proceeding, is expected to have been formulated by an officer after due application to all issues that arise from the ROI. Useful reference may be made to Section 114(e) of the Indian Evidence Act that raises a statutory presumption in this behalf. No doubt, there are situations where errors occur, either on fact or on law. It is for this reason that the Income Tax Act provides for multiple measures that may be resorted to by the revenue to address the situation appropriately. Section 148 must be resorted to only in those cases where the reasons disclose prima facie satisfaction that there is escapement of turnover. In a case where orders of assessment have been passed under scrutiny, the specific issues set out in the reasons have been identified at the time of original assessment and information in that regard has been solcited and furnished by the assessee, the legal assumption is that these orders have taken note of the ROI and accompanying statutory forms and all the material available on that account. All the more, in a case where the officer has been careful in his analysis of the issues that arise and has raised queries that relate to the issues in question, the only conclusion to be arrived at is that the proceedings constitute a review and not re-assessment. Hon ble Supreme Court in the case of Parashuram Pottery Works Ltd. [ 1976 (11) TMI 1 - SUPREME COURT] has reiterated the importance of finality in matters of revenue assessments. In fact, they say that finality is the hallmark of a civilised society. In the present situation, it is not the revenue s case, and the reasons do not so disclose, that there was anything available to the officer over and above what the assessee has clearly, categorically and conspicuously disclosed in the primary documents accompanying the ROI. Explanation (2) would be of no avail to the Department. Explanation (2) cannot be read in isolation, but has to be read harmoniously with other propositions that are equally applicable in determining the veracity of a re-assessment. The impugned proceedings for AYs 2014-15 and 2015-16 are found to constitute merely a review of the original assessment proceedings, impermissible in the context of Section 147, and the same are set aside
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2022 (8) TMI 1292
Long term capital gain computation - FMV Determination - Reference to DVO - lower authorities action adopting fair mark value of the capital asset in the issue as on 01.04.1981 after making reference to the DVO thereby rejecting his valuation report - HELD THAT:- We note in this factual background that section 55(A); as in assessment year 2012-13 before us contained, only the statutory expression is less than its fair market value before its subtutions by Finance Act 2012 w.e.f. 01.07.2012 as is at variance with its fair market value in an instance involving the registered valuer s report. Hon‟ble jurisdictional high court decision in CIT V/s Pooja Prints [ 2014 (1) TMI 764 - BOMBAY HIGH COURT] holds forgoing amendment to be having prospective effect only. That being the case, we conclude that learned lower authorities have erred in law and on facts in making the impugned long term capital gain addition after reference to the DVO u/s. 55A(a) of the Act. The assessee s corresponding grounds in the instant appeal are accepted.
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2022 (8) TMI 1291
Denial of deduction u/s.80P(2)(a)(i) on interest income from bank - HELD THAT: -The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit [ 2019 (4) TMI 682 - ITAT PUNE] decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [ 2015 (8) TMI 1085 - ITAT PUNE] has allowed similar deduction. Reliance of the CIT(A) and the ld. DR on the case of Pr. CIT and Another Vs. Totagars Cooperative Sales Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] is not relevant. Thus overturn the impugned order on this score and allow the deduction. Deduction on dividend received through investment in shares - HELD THAT:- Section 80P(2)(d) provides that deduction shall be allowed in respect of any income by way of dividend derived by the Cooperative Society from its investment with any other Cooperative Society . Thus, it can be seen that the only requirement for claiming deduction u/s. 80P(2)(d) in respect of dividend is that it should be derived by the assessee cooperative society from its investments made with any other cooperative society. The assessee received dividend income in the instant case from another cooperative society, namely, Pune District Central Coop. Bank Ltd. Thus, the condition of section 80P(2)(d) is satisfied - herefore, direct to allow deduction. Assessee appeal allowed.
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2022 (8) TMI 1290
Validity of assessment u/s 153C - six previous assessment years for the purpose of assessment u/s 153C - Assessee challenged assessment on defective satisfaction note, stating that satisfaction-note was recorded on 13.01.2015, therefore, assessment year 2008-09 does not fall in the definition of previous six years to make the assessment under section 153C - Whether notice u/s 153C can be issued for six years immediately preceding the assessment year in which the search was initiated? - HELD THAT:- As satisfaction note has not been recorded within normal period allowed by the Act and rather it has been recorded after Fifteen Months and Thirteen days, and moreover it is combined satisfaction note and in the Income Tax Act there is no concept of combined satisfaction note, therefore such satisfaction note contains several defects and hence assessment framed based on such satisfaction note should be quashed. Since the satisfaction note is recorded on 13.01.2015, which pertains to assessment year 2015-16. Therefore, six previous assessment years for the purpose of assessment under section 153C of the Act, would be assessment years: 2014-15, 2013-14, 2012-13, 2011-12, 2010-11 and 2009-10. Therefore, assessment year 2008-09 should be excluded from the ambit of section 153C of the Act. We find merit in the submission of ld Counsel that period of six years should be reckoned with respect to the date of recording of satisfaction note and not the date of search. Respectfully following the judgment of Hon`ble High Court of Delhi in the case of RRJ Securities Limited [ 2015 (11) TMI 19 - DELHI HIGH COURT] and in the case of Sarwar Agency (P) Limited [ 2017 (8) TMI 733 - DELHI HIGH COURT] we quash the assessment order framed by the Assessing Officer under section 144 r.w.s. 153C - Decided in favour of assessee. Allowability of expenditure - We note that assessee is not doing actual business and earned only commission income on sales, import and loan entry. Hence, the books of account maintained by the assessee is not reliable and rejected u/s 145(3) of the Act by the Assessing Officer and then after Assessing Officer passed order u/s 144 of Act, on best judged assessment basis. The assessee is doing import on behalf of client who is not identified by the assessee therefore it was held by the Assessing Officer that all expenses like exchange loss, VAT payment, octroi payment, custom duties and all statutory expenses are also met by such client on whose behalf the goods are imported. As per the given working, we note that Assessing Officer also allowed deduction of expenses at the rate of 25% for paper transactions and related costs, hence we note that assessing officer passed reasoned and speaking order therefore assessee does not deserve further relief, therefore, we dismiss all the appeals of these assessee on merit.
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2022 (8) TMI 1289
Bogus purchases of material - HELD THAT:- We are conscious of the fact that the additions made in the assessment of related party (Prajeshsinh I Parmar) are subject matter of appeal before ld CIT(A). Thus, we are restraining ourselves on making any observation on such transaction conducted through the impugned bank accounts. Estimation of income - assessee has shown gross profit @ 27.8% and net profit @ 3.98% on the turnover - We find that the assessing officer neither doubted the sale of the assessee nor rejected the books results. It is settled position under income tax proceedings that when the transaction of sale or purchases, if not fully verifiable or the mode of payment or physical delivery is doubted, only profit element of such transaction may be disallowed to avoid the possibility of revenue leakage of such transaction. As we have already taken a view that transaction through undisclosed bank accounts is the subject matter of appeal which is still to be adjudicated Facts remained the same that the time and manner of certain payment against the purchases of material is not far from doubt. Therefore, we deem it appropriate to disturb the book result of the assessee and to avoid the possibility of revenue leakage the net profit (NP) ratio of assessee is estimated @ 6 % of turnover in place of 3.98% as declared by assessee. In the result, the grounds of appeal raised by the assessee is partly allowed.
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2022 (8) TMI 1288
Nature of expenditure - advertisement and business promotion expenses - revenue or capital expenditure - HELD THAT:- Hon ble Supreme Court in the case of Empire Jute Company [ 1980 (5) TMI 1 - SUPREME COURT] deleted the disallowance holding that the expenses incurred by the assessee towards advertisement and business promotion are not in the nature of capita We almost identical issue came up for consideration before the co-ordinate bench of the Tribunal in the case of Addl. CIT Vs. M/s. Jasper Infotech Pvt. Ltd. [ 2021 (12) TMI 443 - ITAT DELHI] wherein the co-ordinate bench considered whether the CIT (Appeals) is right in deleting the disallowance of 50% of expenses incurred on advertisement, publicity and business promotion incurred on brand building of e-commerce portal Snapdeal considering the same as revenue expenditure and not capital expenditure We hold that the ld. CIT (Appeals) had rightly held that the expenditure incurred by the assessee on advertisement and business promotion are in the nature of revenue and not capital expenditure. Ground raised by the Revenue is rejected.
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2022 (8) TMI 1287
Deduction of research and development expenditure claimed by the appellant under section 35(2AB) - HELD THAT:- Scientific research expenses incurred at approved in-house R D facility are eligible for weighted deduction u/s 35(2AB) of the Act, whether incurred prior to or post the date of such approval by DSIR mentioned in Form 3CM - See Claris Lifesciences Ltd., Sandan Vikas India and Maruti Suzuki India Ltd. vs Union of India Anr. [ 2017 (8) TMI 248 - DELHI HIGH COURT ] Deduction under section 35(2AB) cannot be denied in respect of recognized in-house R D centre even though approval in Form 3CM for the relevant years was under consideration or awaited - See CIT vs TVS Electronics Ltd. [ 2019 (5) TMI 112 - MADRAS HIGH COURT ] and Minilec India (P.) Ltd. [ 2018 (4) TMI 1058 - ITAT PUNE ] Expenditure eligible for deduction under section 35(2AB) of the Act cannot be restricted to the amount of expenditure certified by Department of Scientific and Industrial Research ( DSIR ) in Form 3CL - See ACIT vs Torrent Pharmaceuticals [ 2009 (11) TMI 819 - ITAT AHMEDABAD ], Coromandel International Ltd. [ 2014 (9) TMI 510 - ITAT HYDERABAD ], Cummins India Ltd. vs DCIT [ 2018 (5) TMI 1314 - ITAT PUNE ] Deduction under section 35(2AB) cannot be denied merely on the ground that prescribed authority has not submitted report in Form 3CL - See Sun Pharmaceutical Industries Ltd. [ 2016 (12) TMI 1539 - ITAT AHMEDABAD ] Sri Biotech Laboratories India Ltd. and STP Ltd. [ 2014 (10) TMI 171 - ITAT HYDERABAD ] Amendment in Rule 6(7A) of IT Rules, 1962 regarding quantification of weighted deduction under section 35(2AB) in Form 3CL applies prospectively w.e.f. 01.07.2016 - See Provimi Animal Nutrition India Pvt. Ltd. [ 2020 (12) TMI 177 - ITAT BANGALORE ] Crompton Greaves Ltd. and Force Motors [ 2019 (10) TMI 134 - ITAT MUMBAI ] Learned Departmental Representative could not controvert that the issue stands covered in favour of the assessee by aforesaid decision of the Hon ble High Courts. It is settled law that decisions of High Court prevails over lower courts and Tribunals. Hence, we hold that as per extant provision, the claim is allowable. Accordingly, we set-aside the orders of authorities below and decide the issue in favour of the assessee. Allowability of ESOP expenses - Additional Ground of appeal - HELD THAT:- We admit this additional ground. In this, the Ld. Counsel for the assessee submitted that he shall be relying on ITAT Special Bench decisions in case of Biocon Limited [ 2013 (8) TMI 629 - ITAT BANGALORE ] which was affirmed by the Hon ble Karnataka High Court [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT ] However, he fairly agreed that these decisions were not there when the matter was considered by revenue authorities. Hence, he prayed that this issue may be remitted to the file of the AO to decide as per the ratio arising in these case laws.
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2022 (8) TMI 1286
Addition u/s 68 - unexplained cash credit - HELD THAT:- No addition is called for in the instant facts for the reasons that firstly, the assessee had furnished details of the lenders (name, address, PAN number, confirmation, proof that all transactions were carried through banking channels etc.) and the correctness of details so furnished have not been disputed by the Department. Secondly, the assessee has placed on record supporting documents to prove that the amount has been repaid back to the lender in the subsequent year through banking channels, which as observed earlier gives a strong support as to the genuineness of the transaction/ parties. Thirdly, the Department is solely relying upon the statement of Shri Praveen Kumar Jain without brining anything further on record to show that the details / information furnished by the assessee is incorrect/ inaccurate. Fourthly, we also observe that in similar set of facts, the Tribunal on various occasions has granted relief to the assessee in respect of loans taken from M/s Hema Trading Company (now M/s Nakshatra Business Private Limited) and deleted the additions on the ground that the assessee furnished all possible documents evidencing that the loans are not bogus and additions cannot be made by the Department by only placing reliance on the statement of Shri Pravin Kumar Jain without having brought anything to disbelieve and disprove various documents filed by the assessee. We are of the considered view that the CIT(Appeals) erred in facts and in law in confirming the additions of Rs. 50 lakhs in respect of loan taken from M/s Hema Trading Company. Appeal of the assessee is allowed.
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2022 (8) TMI 1285
TP adjustment in relation to software development services - comparable Companies selection - HELD THAT:- As we hold that companies having turnover in excess of Rs.200 crores should be excluded from the list of comparables. We direct the AO/TPO to recompute the ALP. Working capital adjustment - Respectfully following the above decision of the Tribunal in the case of Huawei Technologies India (P) Ltd.[ 2021 (8) TMI 1334 - ITAT BANGALORE] we direct the AO to allow the working capital adjustment and re-compute the ALP accordingly. Notional interest on outstanding receivables - AO computed the notional interest on delayed receivables at 4.98% on the ground that the assessee has failed to furnish the details of invoice-wise receipt and arrived at an adjustment - HELD THAT:- As it is clear that the assessee has realized payments against all the invoices within a period of 30 days as agreed between the assessee and the AE. We are therefore of the considered view that there is no delay in receipt of payment warranting levy of ay notional interest. We therefore delete the adjustment made in this regard. Partial denial of claim of depreciation on goodwill - Goodwill arising on slump sale - eligible for depreciation - difference between the purchase consideration and net assets taken over - HELD THAT:- As relying on M/S. I B SEEDS PRIVATE LIMITED [ 2022 (6) TMI 1295 - ITAT BANGALORE] hold that depreciation on goodwill is an allowable claim u/s. 32(1) of the Act. This ground is allowed in favour of the assessee.
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2022 (8) TMI 1284
Income accrued in India - additional profits on an ad hoc basis to the permanent establishment ( PE ) of the assessee in India - as submitted assessee had paid an arm s length commission to the said PE - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case in Hempel Singapore Pvt Ltd [ 2019 (2) TMI 2044 - ITAT MUMBAI] for the assessment year 2014 15, while holding that when the commission has been found to be at arm s length price in the hands of the recipient Indian subsidiary i.e. Hempel India, nothing more would be left to be taxable in India by attributing further income to the PE of the foreign enterprise. We further find that similar findings were also rendered by coordinate bench of the Tribunal in assessee s own case in Hempel Singapore Pte. Ltd. [ 2019 (4) TMI 2073 - ITAT MUMBAI] for the assessment year 2015 16. DR could not show us any reason to deviate from the aforesaid orders and no change in facts and law was alleged in the relevant assessment year. The issue arising in the present case is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of the Tribunal for preceding assessment years. Thus, we uphold the plea of the assessee and delete the impugned addition. - Decided in favour of assessee.
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2022 (8) TMI 1283
TP Adjustment - Comparable selection - Application of turnover filter - functional dissimilarity - HELD THAT:- The Bangalore Bench of the Tribunal in the case of BORQS Software Solutions Pvt. Ltd. [ 2021 (10) TMI 1351 - ITAT BANGALORE] has considered a host of rulings on this issue including that of the High Courts wherein divergent views were taken with respect to the application of different filters. It was held by the Tribunal that the application of the turnover filter is justified on the basis of the classification of companies as per the report of Dun and Bradstreet. Similarly, the Tribunal, in the case of ANSR Global Corporation Pvt. Ltd. [ 2022 (4) TMI 1441 - ITAT BANGALORE] directed the application of a higher turnover filter to exclude companies with a turnover of more than Rs.200 crore. Since the assessee in the present case has a turnover of Rs.20.06 crore, companies reporting turnover above a threshold are not considered comparable. Accordingly, by following the above orders of the Tribunal, we direct the AO / TPO to apply the appropriate upper turnover filter and consider exclusion of the above seven companies having turnover in excess of Rs.200 crore. Exclusion of Infobeans Technologies Limited on the ground of functional comparability - Tribunal held the finding of DRP has not been countered by the assessee in the said case. However, the company s response to the notice u/s 133(6) of the I.T.Act is contrary to the functions set out in the audited financial statements (enclosed as Annexure-A), and therefore, the same cannot be relied upon. Moreover, the website of the company shows tht the company is engaged in diverse service, which are not similar to functions of the assessee in the instant case. Since the learned AR has been able to clearly established that Infobean Technologies Limited is not functionally comparable to that of the assessee, we follow the orders of the ITAT referred and direct the AO / TPO to exclude Infobean Technologies Limited from comparable list. It is ordered accordingly. Working capital adjustment - In the view of the ruling in the case of M/s.Huawei Technologies India (P) Ltd. [ 2018 (10) TMI 1796 - ITAT BANGALORE] the basis of rejection of the relief by the DRP is no longer valid. We therefore, direct the AO/TPO to consider the workings in the light of the aforesaid ruling and allow appropriate adjustment in arriving at an arm s length price. We hold and direct accordingly. Correction of margin - In view of the principles of natural justice and pendency of the application for rectification of mistake apparent from the records, we deem it appropriate to remand the matter back to the file of the AO / TPO to examine the claims of the assessee with regard to erroneous computation of margin. Accordingly, groundraised by the assessee is allowed for statistical purposes.
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2022 (8) TMI 1279
Reopening of assessment u/s 147 - Notice after the expiry of 4 years - reliance on self-same material - subject income from sale of right to property in question is taxable under the head capital gains and is taxable in the year of its transfer - HELD THAT:- Learned Advocate appearing for the respondents could not deny the admitted factual and legal position that the impugned reassessment proceeding has been initiated and notice under Section 148 of the Act has been issued after the expiry of 4 years from the end of relevant Assessment Year to reopen scrutiny assessment under Section 143 (3) of the Income Tax Act, 1961. The assessment sought to be reopened by the Assessing Officer is against the scrutiny assessment on the issue which was already considered and accepted by the then Assessing Officer after being satisfied with the replies by the assessee petitioner on the quarries raised by the Assessing Officer from time to time in the course of scrutiny assessment. Materials on which Assessing Officer sought to reopen the assessment are not new and are the same which were already available before the then Assessing Officer at the time of scrutiny assessment and the predecessor of the present Assessing Officer had already formed an opinion on the said material and allowed relief to the assessee petitioner on the said issue in course of scrutiny assessment. Respondent revenue could not establish in course of hearing that there was any omission or failure on the part of the assessee petitioner in disclosing truly and fully any material fact necessary for the assessment before the Assessing Officer in course of scrutiny assessment. We are inclined to allow this Writ Petition by quashing the impugned notice under Section 148 relating to Assessment Year 2012-13 and all subsequent proceedings on the basis of the aforesaid impugned notice under Section 148 of the Act by holding that the initiation of impugned reassessment proceeding under Section 147 and issuance of notice under Section 148 of the Income Tax Act, 1961 are based on the self-same material which were already available before the Assessing Officer in course of regular assessment and upon which the predecessor of the present Assessing Officer had already formed an opinion and there is no new material which came to the notice and knowledge of the present Assessing Officer which could be called to have been not disclosed truly and fully in course of scrutiny assessment due to any omission or failure on the part of the assessee petitioner to disclose the same truly and fully in course of scrutiny assessment proceeding and further on perusal of materials available on record the impugned reassessment proceeding is on a mere change of opinion. - Decided in favour of assessee.
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2022 (8) TMI 1278
Assessment against legal heir of the deceased assessee - petitioner is the sister's son of the deceased assessee - cash deposit by the deceased assessee, is treated as unexplained investment under section 69 and brought to tax under section 115BBE - Penalty issued u/s 271AAC(1), section 274 r/w section 271F and section 156 - HELD THAT:- Respondent passed the assessment order inter alia , holding that the cash deposit by the deceased assessee, is treated as unexplained investment under section 69 and brought to tax under section 115BBE of the Income Tax Act. Pursuant to the same, the respondent also issued demand notices along with penalty against the appellant. Challenging the said orders and notices, the appellant invoked the jurisdiction under Article 226 of the Constitution of India by filing WP which was dismissed by the learned Judge, by the order impugned herein. Judge, upon considering the rival submissions, was of the view that whether the appellant has gained anything from the deceased assessee through his bank accounts and if so, whether the said amount belongs to the original assessee or somebody and within the said amount, the tax due would be covered or not, are the factual matrix, which cannot be gone into, in the writ jurisdiction. Further, the learned Judge categorically observed that there is no violation of the principles of natural justice, as the appellant has also been issued with show cause notice and after providing due opportunity to the appellant, the respondent passed the assessment order and notices impugned in the writ petition. Having held so, the learned Judge correctly dismissed the writ petition by relegating the appellant to go before the appellate authority by filing a quantum appeal, which in the opinion of this court, does not call for any interference. Appellant raised a plea that the time granted by the learned Judge for filing the statutory appeal has already expired and hence, the same may be extended. In view of the above submission made by the learned counsel for the appellant, which has not been seriously opposed on the side of the respondent, this court, considering the facts and circumstances of the case, permits the appellant to prefer an appeal before the Commissioner (Appeals), within a period of two weeks from the date of receipt of a copy of this order
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2022 (8) TMI 1277
Penalty u/s 271(1)(c) - allegation that assessee made false claim of depreciation and deliberately furnished wrong particulars of income before the AO - HELD THAT:- This court is of the opinion that when the assessee succeeded in their appeals filed against the orders of assessment relating to the assessment years in question, which formed the basis for imposing penalty under section 271(1)(c) Tribunal is justified in holding that the question of imposition of penalty does not arise, as the assessment orders itself were set aside. There is no doubt that the questions of law involved in these cases are necessarily to be held against the Revenue, since there is no quantum of tax available for the purpose of levying penalty. - Decided against revenue.
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2022 (8) TMI 1276
Deemed dividend u/s 2(22)(e) - assessee is a major share holder in loan granting company - HELD THAT:- We are of the view that an advance against agreement to sale of the property is trade advance which is in the nature of commercial transaction. Trade or commerce connotes the idea of buying and selling and there are judicial precedents which hold that even a single transaction may constitute business/trade. It is not in dispute that the company M/s. AMP gave the advance to the assessee towards sale of property under Agreement to Sale and the said amount was received as part payment by the buyer M/s. AMP to the seller of the property, namely the assessee as per the obligation in the Agreement to Sale which is clearly borne out from the recitals in the MOU. The Hon ble Delhi High Court has hold in CIT vs. Raj Kumar [ 2009 (5) TMI 17 - DELHI HIGH COURT] that trade advances cannot be treated as deemed dividend. In such a fact scenario as set out above, we are of the view that even though the assessee is substantial shareholder in the company M/s. AMP which had made the impugned advance to the assessee, it is not a fit case to invoke the provisions of section 2(22)(e) of the Act. The words loans or advances occurring in the provision can be applied to loans or advances simplicitor and not to those transactions carried out in the course of trade/business. By giving advance, if the business purpose of the company is served, such advance cannot be brought within the provision of deemed dividend under section 2(22)(e) of the Act. Trade advance given as a consideration for purchase of a capital asset (i.e. property) as in the case before us which indirectly would benefit the company giving advance, such advance would not fall within the ambit of provisions of section 2(22)(e) of the Act. CBDT circular No. 19/2017 dated 12.06.2017 squarely applies to the case of the assessee. We do not find any substance in the appeal of the Revenue and uphold the order of the Ld. CIT(A). - Decided in favour of assessee.
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2022 (8) TMI 1275
Non Deduction of TDS u/s 194A due to receipt of Form 15-H - Rectification application u/s 154 was rejected by the AO on the ground that CIT(A) has already dismissed the appeal - HELD THAT:- We have heard ld. DR for the Revenue. None appeared on behalf of the assessee despite several notices. Upon careful consideration, we find that CIT (A) has passed a correct and well reasoned order. CIT (A) that further the issues raised by assessee were not rectifiable u/s 154 of the Act is accordingly upheld. Hence, we uphold the order of ld. CIT(A).
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2022 (8) TMI 1274
Addition u/s 68 - Levy of tax u/s 115BBE - unexplained cash credit - unaccounted and undisclosed cash/money/income - depositing cash in bank during demonetization period - HELD THAT:- Assessee has failed to justify that consultancy income claimed by it to have earned during the year under consideration was genuine consultancy income earned by it, and rather the assessee has converted unaccounted and undisclosed cash under the garb of alleged consultancy income and we hold that no such consultancy services were rendered by the assessee. Assessee failed to provide identity and creditworthiness of the persons giving cash to it towards alleged consultancy services and genuineness of the transaction could also not been proved by the assessee, and we have no hesitation in holding that it is the unaccounted and undisclosed money/income which has been brought into the books of the assessee under the garb of consultancy income, and this entire transaction of consultancy income was coloring device adopted by assessee to give legitimacy to its unaccounted and undisclosed cash/money/income by depositing cash in bank during demonetization period, to avoid old demonetized bank notes held by it from becoming valueless as legal character of old bank notes of denomination of Rs. 500 and Rs. 1000 were withdrawn, owing to demonetization announced on 08th November, 2016. We have observed that both the authorities have passed well reasoned, detailed and speaking order, and we are not inclined to interfere with the orders passed by authorities below, and we confirm the appellate order passed by ld. CIT(A). CIT(A) rightly relied upon decision of Hon ble Supreme Court in the case of Sumati Dyal [ 1995 (3) TMI 3 - SUPREME COURT] and Durga Prasad More [ 1971 (8) TMI 17 - SUPREME COURT] as the claim of consultancy income set up by the assessee is a coloring device adopted by the assessee to convert its unaccounted and undisclosed money which was going to become valueless due to bank notes of Rs. 1000 and Rs. 500 ceased to be legal tender, due to demonetization announced on 08th November, 2016. The authorities below have rightly invoked provisions of Section 68 and made additions to the income of the assessee as the amount stood credited in books of accounts of the assessee, and the assessee failed to satisfy the mandate of Section 68, as identity and creditworthiness of the payer is not proved nor genuineness of the transaction of alleged consultancy income was proved. Once Section 68 is invoked, then AO has rightly applied tax-rate provided within provisions of Section 115BBE of the 1961 Act. So, far as expenses claimed by the assessee are concerned, we are of the considered view that the assessee could not show that it was engaged in any business or profession whatsoever, and in our considered view, the assessee is not entitled for claim of deduction of expenses claimed by it. We do not find any merit in the appeal filed by the assessee in which now stand dismissed.
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2022 (8) TMI 1273
Disallowance of payment of excess cane price and sale of sugar at concessional rate (both to members) - To be treated as distribution of profit or not - HELD THAT:- These twin issues of excess cane price payment as well as sugar at concessional rate are no more res integra as the tribunal s various co-ordinate benches, and more particularly in The Malegaon Sahakari Sakhar Karkhana Limited [ 2021 (10) TMI 1357 - ITAT PUNE] has set aside the concerned taxpayer s substantive grounds back to the assessing authority for its afresh appropriate adjudication as per law. We order accordingly in absence of any distinction on facts or law in all these cases. Assessee appeals are allowed for statistical purposes.
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2022 (8) TMI 1272
TP Adjustment - payment of royalty @ 1% - HELD THAT:- As in assessee s own case for assessment year 2012- 2013 [ 2022 (2) TMI 1279 - ITAT BANGALORE] we hold that payment of royalty at 4% on sale is to be treated at arm s length. It is ordered accordingly. TP Adjustment being payments made towards fees for technical services - HELD THAT:- There is no merit in the finding of the TPO that the payment of technical services fees is already covered by the royalty payment. Similarly, the TPO has not explained on what basis and under which method of computation of ALP (CUP, TNMM etc) 1 % is to be determined as the ALP for the payment of engineering and technical services fees. The aggregation of these transactions with other transactions on account of close linkage to the manufacturing operations, thereby warranting the application of TNMM has not been found fault or disputed by the TPO. Having found that payment for fees for technical service is not duplication of payment of Royalty and the factum of assessee having received the services from the AEs for which the payments were made, the AO / TPO is directed to revisit the TP analysis of the assessee and determine whether payments are at ALP. TPO shall follow one of the prescribed methods to arrive at ALP of payments towards fees for technical service. TP Adjustment on payments of interest on Compulsory Convertible Debentures (CCDS) - HELD THAT:- Tribunal, in assessee s own case [ 2022 (2) TMI 1279 - ITAT BANGALORE] the issue raised with regard to payment of interest on CCDs is decided in favour of the assessee. Disallowance u/s 14A in computation of total income under regular provisions and book profits - HELD THAT:- In the present case, the AO has recorded vague, stereotyped reasons de hors the accounts of the assessee for making the disallowance under section 14A. There is no satisfaction of the AO having regard to the accounts of the assessee - in the case of CIT v. Gokaldas Images P Ltd. [ 2020 (11) TMI 345 - KARNATAKA HIGH COURT] has held that disallowance u/s 14A cannot be added to book profits of assessee under section 115JB. We delete the disallowance made under section 14A in computing the total income under regular provisions and book profits under section 115JB. Disallowance u/s 37 - being foreign exchange fluctuation loss incurred in respect of loans availed - HELD THAT:- As in assessee s own case AY 2012- 2013[ 2022 (2) TMI 1279 - ITAT BANGALORE] the issue raised in ground with regard to disallowance of loss incurred on fluctuation of foreign currency is decided in favour of the assessee.
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2022 (8) TMI 1271
Revision u/s 263 - deduction u/s 80IC - reliance on audit objection which has led to the issuance of notice u/s 263 - as per CIT claim of deduction u/s 80IC of the Act had been allowed by the AO on a wrong appreciation of facts as the area in which the manufacturing unit was located did not fall in the area notified by the CBDT for the purpose of claiming deduction u/s 80IC - HELD THAT:- Undisputedly, the show cause notice u/s 263 has been prompted by the audit objection , which is evident from the show cause notice issued u/s 263, where there is a reference to the said Audit objection in Para 3 of show cause notice and, thus, this contention of the assessee deserves to be taken into consideration. This issue is covered by the order of the Chandigarh Bench of the ITAT in the case of Ganga Acrowools Limited [ 2022 (5) TMI 895 - ITAT CHANDIGARH] wherein held Principal Commissioner of Income-tax was not justified in exercising his power to invoke the provision of section 263 of the Act on the basis of audit objection raised by the Audit Wing of the Department. - Decided in favour of assessee.
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2022 (8) TMI 1270
Deduction u/s 80P(2)(i) - interest income of investment as interest not being earned by way of providing credit facilities to its members - case of the assessee-society was selected for scrutiny and notice under section 143(2) - as per AO the newly inserted provisions of Section 2(24) (viia) by the Finance Act, 2006 with effect from 01.04.2007, includes the profit and gains of any business of banking (including providing credit facilities) carried on by a co-op society with its members and held that deduction under section 80P shall not be available to a Co-operative Bank other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank, though it is available to Co-operative Societies engaged in the activity of providing credit facility to members HELD THAT:- From the First Appellate Order we have observed that the Ld. CIT(A) has confirmed the disallowance made by the A.O. observing that the income earned from persons other than its regular members would not be eligible for deduction under section 80P(2)(a)(i) and such income earned from business with persons other than the regular members would be taxable as income from business. Similar issue was placed for adjudication before ITAT, Chennai Bench, Chennai in the case of Varathappam Palayam Primary Agricultural Co-op. Credit Society [ 2022 (7) TMI 113 - ITAT CHENNAI] wherein held that irrespective of the fact that whether the assessee is having A class Members or B class Members, the assessee is entitled for claiming exemption under section 80P(2)(a)(i). Thus we are compelled to held that the assessee is eligible for exemption under section 80P(2)(a)(i) of the I.T. Act, 1961 from the income earned from its regular members as well as from Associate/Other members. Therefore, the A.O. was not right in making disallowance and the Ld. CIT(A) has also erred in confirming the baseless and unsustainable disallowance. Therefore, grounds of assessee are allowed and A.O. is directed to allow the deduction under section 80P(2)(a)(i) - Appeal of assessee allowed.
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2022 (8) TMI 1269
Continuation of appeal after the initiation of CIRP proceedings - Corporate Insolvency Resolution Proceedings (CIRP) are pending against the assessee and as of now, Hon'ble National Company Law Appellate Tribunal (NCLAT) is seized with the jurisdiction - HELD THAT:- A reading of the provisions under section 13 and 14 of the Code along with the decision in Ghanashyam Mishra And Sons [ 2021 (4) TMI 613 - SUPREME COURT] clearly shows that once the proceedings have commenced by institution of application under section 7 or 9 or 10 of the Code, the continuance of the pending proceedings is prohibited and when once they reach the logical conclusion with due approval of the resolution plan by the Adjudicating Authority under sub section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. At any rate, for the time being, this appeal cannot be proceeded with during the continuance of the proceedings under the Code. However, depending upon the result of such proceedings before the adjudicating authority in respect of the corporate debtor, appropriate steps if any, may be taken by the appellant/respondent. We, therefore, granting leave to the appellant/respondent in this appeal to seek the restoration of the appeal, if necessitated by the orders in the Corporate Insolvency Resolution Proceedings, dismiss the appeal in limine. For the above proposition, we derive support from the decision of the Mumbai Bench of the Tribunal in the case of Mahavir Roads Infrastructure Pvt. Ltd [ 2022 (6) TMI 1294 - ITAT MUMBAI]
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2022 (8) TMI 1268
Disallowance u/s 43B - delayed deposit of employees' contribution to PF ESIC - payments being made before due date of filing of return and proof submitted thereof - HELD THAT:- Issue relating to delayed deposit of EPF/ESI has already been dealt with by various Hon'ble High Courts including the jurisdictional Hon'ble Bombay High Court in CIT vs. Ghatge Patil Transport Ltd. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] wherein it was held that the decision of the Hon'ble Apex Court in CIT vs. Alom Extrusions Ltd. [ 2009 (11) TMI 27 - SUPREME COURT] that the amendment to section 43B was applicable to both employer's as well as employees' contribution. Furthermore, the amendment brought out in the Finance Act, 2021 was only prospective and not retrospective thereby was applicable only to assessment year 2021-22 onwards and to subsequent years. We are of the considered opinion that the contribution towards EPF/ESI paid after the specified due date under the relevant Acts, but nevertheless paid before the due date of filing of the return of income under section 139(1) of the Act, is allowable. The Assessing Officer is directed to allow the deduction as claimed. Appeal of the assessee succeeds.
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2022 (8) TMI 1267
Addition in respect of closing construction work-in-progress (WIP) - difference in valuation in two sets - According to assessee, it has valued the construction WIP for the purpose of MIS financial statement at a higher value for the purpose of consolidation with the financial statement of joint venture partner i.e. M/s HCC Ltd.- HELD THAT:- We find that the Revenue has not disputed the fact of examination of books of accounts by the Assessing Officer. In our opinion, if in books of account any expenditure corresponding to the additional amount of construction of WIP is not found debited, then the amount is only in the nature of notional valuation which has been carried out by the joint venture partner for the purpose of consolidating in its books of account and which cannot be made a basis for addition in the hands of the assessee. When there is no change in number of items of inventory of construction WIP as shown in the first set of financial statement as well as second set (MIS account) of financial statement, then only difference is that in MIS account construction WIP has been valued higher by the amount of Rs.32.29 crores only, for the purpose of consolidated account of the venture partner. As in the case of CIT v. Laxmi Engineer Industries [ 2008 (3) TMI 288 - RAJASTHAN HIGH COURT] held that no addition could be made for higher valuation of the stock hypothecated to Bank if the AO had not been able to point out any discrepancy in the quantity of stock hypothecated to the Bank and the quantity of stock as per books of account. In this case also there is no observation of the AO that quantity of construction work-in-progress is more than the quantity valued as per first set of financial statement. In view of the above, we set aside the order of the Ld. CIT(A) on the issue-in-dispute and delete the addition made by the Assessing Officer. Disallowance u/s 40(a)(ia) - non-deduction of tax at source on reimbursement of employee cost/salary by the assessee to related party - CIT(A) has sustained the disallowance in view of no evidence submitted by the assessee that same was taxed in the hands of the employees either on the payment made by it or by the related party - HELD THAT:- In view of submission of the assessee, the matter is restored back to the file of the Ld. Assessing Officer for verification, whether tax has been deducted by the employer M/s Alphine Samsung HCC JV in respect of salary amount reimbursed by the assessee in relation to employee Mr. Srivastav or tax has already been paid by the seconded employee on reimbursement amount. The ground raised by the assessee is accordingly allowed for statistical purpose.
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2022 (8) TMI 1266
Interest on refund u/s. 244A - Short grant of interest u/s. 244A - HELD THAT:- This issue stands settled by Hon ble Supreme Court in case of Sandvik Asia Ltd. [ 2006 (1) TMI 55 - SUPREME COURT] wherein Hon ble Court observed as under that in that case Sandvik Asia has refunded the principal, however interest was withheld for a long time. In the present facts of the case, assessee is no doubt eligible for interest on the refund that was withheld till the date of issue of the refund order. Further, in the present facts, the assessee had already received interest on refund u/s. 244A of the Act though it was computed with a shortfall. Interest on interest as available to assessee under newly inserted sub-clause (1A) will have to be analysed in accordance with law. The year under consideration is Assessment Year 2020-21 and therefore interest on interest has to be computed for the shortfall amount that assessee is liable to receive. We therefore remand this issue to the Ld.AO to compute the actual refund along with the interest u/s. 244A and on the shortfall amount that assessee did not receive over and above that was computed by the CPC vide intimation dated 30/03/2021, assessee has to be granted interest on interest under sub-clause (1A) of section 244A of the Act. Grounds raised by the assessee stands partly allowed for statistical purposes.
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2022 (8) TMI 1265
Computation of capital gain on transfer of property - Adoption of sales consideration as reflected in form No.26AS - HELD THAT:- Assessee made it clear in the written submission that the sale consideration to be considered at Rs.18,54,25,000/- as per amount reflected in form No.26AS relating to assessment year 2014-15. In our opinion, the argument of assessee s counsel is to be verified with reference to the form No.26AS filed before us. Accordingly, we direct the AO to consider sales consideration as reflected in form No.26AS relating to assessment year 2014-15 for the purpose of computation of capital gain on transfer of property at Pujanahalli, Devanahalli village, Bengaluru district. This ground of the appeal of the assessee is allowed. No claim by the assessee in the original return of income filed - Disallowance towards the development charges paid to Bengaluru Development Authority and brokerage charges paid while computing the capital gain in the hands of the assessee - AO disallowed this claim of the assessee on the reason that this has not been claimed in the original return of income filed by the assessee - CIT(A) confirmed the disallowance - HELD THAT:- As held by Hon ble Supreme Court in the case of Goetz (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] wherein the assessee filed the return of income for the relevant assessment year without claiming a particular deduction, later on, it sought to claim the deduction by way of a letter addressed to the AO the deduction disallowed by the AO on the ground that there was no provision under the Act to make amendment in the return of income by making an application at the assessment stage without revising the return of income. However, the same is allowed by the Hon ble Supreme Court. Being so, the Tribunal being the second appellate authority in this case and there is no restriction on the power of Tribunal to entertain such claim. Accordingly, we direct the AO to allow this claim as claimed by assessee. This ground of appeal of assessee is allowed. Non-granting of deduction u/s 54F in respect of investment in purchase of a residential building in Newton MA, USA - CIT-A observed that the assessee not claimed exemption for investment in house property located in USA in the return of income - HELD THAT:- Non-claiming of deduction in the return of income filed by the assessee, in our opinion, judgement of Hon ble Supreme Court in the case of Goetz (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] applied as the Tribunal is not precluded in entertaining the claim of the assessee before the appellate proceedings. Accordingly, we allow the claim of assessee u/s 54F of the Act in respect of investment made in property situated in Newton MA, USA. This ground of appeal of the assessee is allowed. Long-term capital gain arising out of the JDA - whether it is assessable in the year in which the development agreement entered into or in the relevant subsequent year in which the area duly developed and constructed giving the share of the assessee and land ownership has been handed over to the assessee - HELD THAT:- In the present case, there is no transfer of land per say vide JDA dated 31.1.2014 and developer only got right to construct and the ownership of property as such does not get transferred to him to the developer on execution of JDA. The assessee has to receive Rs.7.5 crores as refundable deposit, out of this assessee has received in this assessment year an amount of Rs.3.75 crores and balance Rs.3.25 crores to be received by assessee within 4 months from the date of execution of JDA dated 31.1.2014 and another balance Rs.50 lakhs shall be to the first party at the time of handing over the superbuilt up area of 10,337 sq.ft. to the owners. Being so, the capital gains as a result of this JDA can arise only at point of receipt of consideration by the assessee and not on the date of JDA. More so, in the absence of any act in furtherance of contract by the developer, it cannot be held that transfer did took place u/s 2(47)(v) of the Act in the assessment year under consideration. Being so, we are of the opinion that capital gain arising out of the impugned JDA dated 31.1.2014 to be taxed in the assessment year 2015-16 only and not in assessment year 2014-15. More so, it is already subject to tax in the assessment year 2015-16 and cannot be brought to tax in the assessment year 2014-15, which amounts to double taxation. Accordingly, this ground of appeal of assessee is allowed. Deduction u/s 54 for assessment year 2015-16 in respect of assessee s share of residential apartment under JDA dated 31.1.2014 - Since this ground is not related to assessment year 2014- 15, we are declined to entertain these grounds in the assessment year 2014-15. However, the assessee is at liberty to take appropriate remedy in the right assessment year, if so advised. These grounds are disposed of accordingly.
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2022 (8) TMI 1264
Reopening of assessment u/s 147 - whether assumption of jurisdiction for re-assessment by invoking the provisions of first proviso to section 147 of the Act by the Ld. AO is valid in the eye of law? - Addition of STCG - HELD THAT:- We have no hesitation in holding that the assessee had disclosed all primary facts to which the Ld. AO applied his mind and accepted the claim of the assessee that she had earned STCG which was brought to tax. The reasons recorded for reopening the assessment contain ample proof in itself to show that there was no new material in the possession of the Ld. AO. He scrutinized the same documents which were already available on records for seeking to reopen the assessment which, in our view, amounts to re-appraisal of the same facts and change of opinion. In ITO vs. Mir Barkat Ali Khan Bahadur [ 1974 (10) TMI 1 - SUPREME COURT] held that having second thoughts on the same material cannot be a ground for valid and proper initiation of reassessment proceedings. Much stress has been laid by the Revenue on the principle of res-judicata which does not apply to income-tax proceedings. Suffice is to say that when the facts are not different it is necessary to maintain consistency as held by the Hon ble Supreme Court in Union of India vs. Kumudini Narayan Dalal [ 2000 (12) TMI 101 - SC ORDER] and CIT vs. Narendra Doshi [ 2001 (7) TMI 10 - SUPREME COURT] The contention of the Revenue that Explanation I to section 147 has been overlooked is devoid of any merit. The provisions contained in the present Explanation I were contained earlier in the then Explanation 2 prior to substitution of section 147 w.e.f. 01.04.1989. While interpreting the Explanation 2 the Hon ble Calcutta High Court in Imperial Chemical Industries Ltd. [ 1974 (10) TMI 9 - CALCUTTA HIGH COURT] observed that what the Explanation II refers to are voluminous account books and similar other documents which requires very careful scrutiny and from which material evidence cannot be discovered inspite of due diligence being exercised. Such is not the case of the assessee before us. On the contrary, facts reveal that books of account and other necessary documents were submitted before the AO during assessment proceedings and after scrutinizing them with reference to his queries, he called for further documents for the purpose of finalizing assessment. In such a fact scenario, in our view, Explanation I relied upon by the Revenue, is not applicable. The case of the assessee is outside the scope of Explanation I to section 147. - Decided against revenue.
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2022 (8) TMI 1263
Income accrued in India - payment received for IT support services as Fee for Technical Services - India-Netherlands DTAA - whether the payment received by the assessee for Information Technology ( IT ) support services constitutes Fee for Technical Services / Royalty under the provisions of the Act as well as under Article 12 of the India Netherlands Double Taxation Avoidance Agreement (DTAA)? - HELD THAT:- Departmental Representative could not show us any reason to deviate from the aforesaid order and no change in facts and in law was alleged in the relevant assessment year. The issue arising in present appeal is recurring in nature and has been decided in favour of the assessee by decisions of Co-ordinate Bench of the Tribunal for preceding assessment years. Thus, respectfully following the order passed by Co ordinate Bench of the Tribunal in assessee s own case [ 2020 (3) TMI 1417 - ITAT MUMBAI] which has also followed the judicial precedents in assessee s own case, the impugned addition made by treating payment received for IT support services as Fee for Technical Services under the provisions of the Act and under Article 12 of the DTAA, is deleted. As a result, grounds raised in assessee s appeal are allowed. Royalty receipts - Payment towards IT support services could not fall under royalty in the instant case. Thus, the Assessing Officer is directed to follow the directions issued by the learned DRP under section 144C(5) of the Act. As a result, grounds raised in assessee s appeal are allowed.
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2022 (8) TMI 1262
Validity of reassessment proceedings - fresh tangible information - Change of opinion - HELD THAT:- It cannot be said that there is any tangible information which came into possession of the Assessing Officer enabling him to form an opinion that the income had escaped assessment. Thus very factual premises on which the reassessment proceedings were initiated is mistaken of acts. Therefore, in such circumstances, the reassessment proceedings cannot be said to be validly assumed as held in the recent judgement of the Hon ble Bombay High Court in the case of Raimaladitya Textile Pvt. Ltd. [ 2022 (3) TMI 1414 - BOMBAY HIGH COURT] held mistake certainly not to be reason to believe that income escaped assessment. Further, in the absence of any tangible material, it cannot be said that there exist the reasons to believe that the income chargeable to tax had escaped assessment. Thus, it is settled position of law that the Assessing Officer had no power to revise assessment which has been concluded and no assessment can be reopened on the mere change of opinion in the case of CIT vs. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] . Thus, we are of the considered opinion that the Assessing Officer had failed to satisfy necessary ingredients before invoking the jurisdiction u/s 147 of the Act and, therefore, the reassessment proceedings are not valid in law. Accordingly, we quash the reassessment proceedings. Expenditure at the rate of 7.5% of the interest income claimed - HELD THAT:- Admittedly, there is no specific expenditure incurred to earn the interest income. However, incurring of sum indirect expenditure cannot be ruled out. It is trite law that what can be taxed is only real income not hypothetical income, when the specific expenditure cannot be identified, it is appropriate to estimate certain amount of expenditure. We allow 7.5% of the interest income as allowable expenditure. The ratio of the decision of the Hon ble Supreme Court in the case of Bangalore Club [ 2013 (1) TMI 343 - SUPREME COURT] has no application in deciding the issue of allowability of expenditure. The issue in the said decision is in relation to the taxability of interest income received from corporate members invoking the principle of mutuality, whereas, in the present case, it is a question of allowability of expenditure against the interest income, therefore, the decision of Hon ble Supreme Court in the case of Bangalore Club (supra) has no application to the instant case. Accordingly, the ground of appeal no.3 raised by the assessee stands allowed. Certain percentage of expenditure against the receipts from the members guest on account of venue charges from members guest, dinner receipts from members guest, receipts from cricket ground books from members guest - HELD THAT:- Admittedly, this issue was squarely covered by the decision of the Hon ble ITAT in assessee s own case in earlier years and the decision of the Hon ble Supreme Court in the case of Bangalore club [ 2013 (1) TMI 343 - SUPREME COURT] have no application, inasmuch as, the issue before the Hon ble Supreme Court in the said case relates to the taxability of the interest earned on FDs from the corporate members on the principle of mutuality. Admittedly, in the present case, the assessee club has not sought exemption of income earned from the above activities but only sought the deduction of expenditure as certain percentage of the receipts. It was rightly allowed by the ld. CIT(A) following the decision of the Hon ble ITAT in assessee s own case in earlier years. Therefore, we do not find any merit in the grounds of appeal raised by the Revenue Nature of receipts - entrance fees received from the corporate members, NRI receipts - revenue or capital receipts - HELD THAT:- Whether the entrance fee is as revenue account or capital account is no more res-integra as the issue was decided by the Hon ble Bombay High Court in the case of CIT vs. W.I.A.A. Club Ltd. [ 1979 (1) TMI 5 - BOMBAY HIGH COURT] we hold that the entrance fee received from the corporate members is capital in nature and uphold the order of the ld. CIT(A). The decision relied upon by the Assessing Officer have no application to the issue. Hence, the ground of appeal no.5 and 6 raised by the Revenue stands dismissed.
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2022 (8) TMI 1245
Addition u/s 68 - Cash credit unexplained - HELD THAT:- Assessee has failed to justify that consultancy income claimed by it to have earned during the year under consideration was genuine consultancy income earned by it, and rather the assessee has converted unaccounted and undisclosed cash under the garb of alleged consultancy income and we hold that no such consultancy services were rendered by the assessee. The assessee failed to provide identity and creditworthiness of the persons giving cash to it towards alleged consultancy services and genuineness of the transaction could also not been proved by the assessee, and we have no hesitation in holding that it is the unaccounted and undisclosed money/income which has been brought into the books of the assessee under the garb of consultancy income, and this entire transaction of consultancy income was coloring device adopted by assessee to give legitimacy to its unaccounted and undisclosed cash/money/income by depositing cash in bank during demonetization period, to avoid bank notes held by it from becoming valueless as legal character of old bank notes of denomination of Rs. 500 and Rs. 1000 were withdrawn, owing to demonetization announced on 08th November, 2016. We have observed that both the authorities have passed well reasoned ,detailed and speaking order, and we are not inclined to interfere with the orders passed by authorities below, and we confirm the appellate order passed by ld. CIT(A). We also hold that learned CIT(A) rightly relied upon decision of Hon ble Supreme Court in the case of Sumati Dyal [ 1995 (3) TMI 3 - SUPREME COURT] and Durga Prasad More [ 1971 (8) TMI 17 - SUPREME COURT] as the claim of consultancy income set up by the assessee is a coloring device adopted by the assessee to convert its unaccounted and undisclosed money which was going to become valueless due to bank notes of Rs. 1000 and Rs. 500 ceased to be legal tender , due to demonetization announced on 08th November, 2016 . The authorities below have rightly invoked provisions of Section 68 and made additions to the income of the assessee as the amount stood credited in books of accounts of the assessee, and the assessee failed to satisfy the mandate of Section 68, as identity and creditworthiness of the payer is not proved nor genuineness of the transaction of alleged consultancy income was proved. Once Section 68 is invoked, then AO has rightly applied tax-rate provided within provisions of Section 115BBE of the 1961 Act. So, far as expenses claimed by the assessee are concerned, we are of the considered view that the assessee could not show that it was engaged in any business or profession whatsoever, and in our considered view, the assessee is not entitled for claim of deduction of expenses claimed by it. - Decided against assessee.
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Customs
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2022 (8) TMI 1261
Demand of differential duty - Execution of Bond for an amount equal to the assessable value of the seized goods - HELD THAT:- We are inclined to relax the conditions imposed by adjudicating authority in view of Petitioner s statement that Petitioner has deposited a sum of Rs.1.50 Crores with the Directorate of Revenue Intelligence. Mr. Priydarshi Manish states that Petitioner will not apply for the return of money until the Appeal is disposed by CESTAT. Statement accepted. Mr. Priydarshi Manish appearing for Petitioner prays that the goods being perishable, the same may be allowed to be cleared and also CESTAT be directed to hear Petitioner s Appeal expeditiously. Mr. Priydarshi Manish also submitted that a similar matter has been filed before the Delhi High Court by another importer/purchaser and the Delhi High Court had modified conditions fixed by the adjudicating authority. Petition disposed off.
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2022 (8) TMI 1260
Validity of SCN - absolute non-application of mind on the part of R1 while issuing show cause notices, which is a pre-requisite for the issuance thereof - Power of Assessing Officer to issue SCN - Principles of natural justice - HELD THAT:- Incidentally, the issue relates to proposed cancellation of scrips on a difference of opinion qua the petitioners and the Department on the nature of product exported, that is whether the wax candle manufactured by the petitioners satisfies the definition of handcrafted product. In this case, though such certification has been produced before the investigating authority, it is for the petitioners to place such a certificate before the Assessing Authority. Since this has not been done thus far, even on this score, it is stated that the present Writ Petitions are rendered pre-mature. The challenge to the show cause notices is rejected. The petitioners are permitted to file a reply to the same within a period of three (3) weeks from date of receipt of a copy of this order - petition dismissed.
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2022 (8) TMI 1259
Levy of penalty u/s 114(iii) and 114AA of the Customs Act - respondents categorically stated that only the corrigendum was served on them without the show cause notice - principles of natural justice - HELD THAT:- The Commissioner (Appeals) found as the fact that the corrigendum alone was served upon the two respondents and it was during the personal hearing that the show cause notice was served upon the two respondents, but it did not contain allegations against the respondents - Penalty could not have been imposed upon the two respondents if opportunity was not provided to the two respondents to file a reply to the show cause notice. This apart, the show cause notice also does not contain any allegation against the two respondents. There is no infirmity in the order dated 30.05.2019 passed by the Commissioner (Appeals) - Appeal of Revenue dismissed - decided against appellant.
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2022 (8) TMI 1258
Maintainability of appeal - fulfilment with the requirement of pre-deposit or not - applicability of time limitation - Section 129E of the Customs Act, 1962 - HELD THAT:-It would be seen from a bare perusal of section 129E of the Customs Act that after August 06, 2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 129E on August 06, 2014 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue. A Division Bench of Delhi High Court in M/S. VISH WIND INFRASTRUCTURE LLP, M/S. J.N. INVESTMENT TRADING CO. PVT. LTD. VERSUS ADDITIONAL DIRECTOR GENERAL (ADJUDICATION) , NEW DELHI [ 2019 (8) TMI 1809 - DELHI HIGH COURT] examined the provisions of section 35F of the Central Excise Act, 1944 and held that every appeal filed before the Tribunal after the amendment made in section 35F of the Excise Act and section 129E of the Customs Act on 06.08.2014 would be maintainable only if the mandatory pre-deposit was made. In coming to this conclusion, the Division Bench relied upon the judgment of the Delhi High Court in ANJANI TECHNOPLAST LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2015 (10) TMI 2446 - DELHI HIGH COURT] and also observed that in view of the peremptory words shall not , there is an absolute bar on the Tribunal to entertain any appeal unless the requirement of pre-deposit is satisfied. The appellant has not made the pre-deposit and even though time was given to the appellant to make the pre-deposit, the pre-deposit has not been made - In view of the decisions of the Supreme Court, the Delhi High Court and the Madhya Pradesh High Court, it is not possible to permit the appellant to maintain the appeal without making the required pre-deposit. As the statutory requirement has not been complied with, the appeal is dismissed.
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2022 (8) TMI 1257
Maintainability of appeal - fulfilment with the requirement of pre-deposit or not - applicability of time limitation - Section 129E of the Customs Act, 1962 - HELD THAT:- It would be seen from a bare perusal of section 129E of the Customs Act that after August 06, 2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 129E on August 06, 2014 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue. A Division Bench of Delhi High Court in M/S. VISH WIND INFRASTRUCTURE LLP, M/S. J.N. INVESTMENT TRADING CO. PVT. LTD. VERSUS ADDITIONAL DIRECTOR GENERAL (ADJUDICATION) , NEW DELHI [ 2019 (8) TMI 1809 - DELHI HIGH COURT] examined the provisions of section 35F of the Central Excise Act, 1944 and held that every appeal filed before the Tribunal after the amendment made in section 35F of the Excise Act and section 129E of the Customs Act on 06.08.2014 would be maintainable only if the mandatory pre-deposit was made. In coming to this conclusion, the Division Bench relied upon the judgment of the Delhi High Court in ANJANI TECHNOPLAST LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2015 (10) TMI 2446 - DELHI HIGH COURT] and also observed that in view of the peremptory words shall not , there is an absolute bar on the Tribunal to entertain any appeal unless the requirement of pre-deposit is satisfied. The appellant has not made the pre-deposit and even though time was given to the appellant to make the pre-deposit, the pre-deposit has not been made - In view of the decisions of the Supreme Court, the Delhi High Court and the Madhya Pradesh High Court, it is not possible to permit the appellant to maintain the appeal without making the required pre-deposit. As the statutory requirement has not been complied with, the appeal is dismissed.
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PMLA
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2022 (8) TMI 1256
Money Laundering - assets disproportionate to known source of income - proceeds of crime - acquittal of the accused - scheduled offences - HELD THAT:- The view as taken by the Trial Court in this matter had been a justified view of the matter and the High Court was not right in setting aside the discharge order despite the fact that the accused No. 1 had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence. The impugned judgment and order is set aside and the order dated 04.01.2019 as passed by the Trial Court, allowing discharge application of the appellants, is restored - Appeal allowed.
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Service Tax
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2022 (8) TMI 1255
Valuation - cargo handling and port services - inclusion of facility charges in the assessable value - presumption of the Revenue is that the respondent have not recovered facility charges from M/s ESTIL whereas they recovered said charges in case of other customers - when facility charges charged by the respondent from other customers but not from M/s ESTIL, the same is included in gross value of service provided by them to M/s ESTIL or not? - time limitation - suppression of facts or not - HELD THAT:- On the plain reading of Section 67 of the Finance Act, 1994, it is clear that only the actual consideration for the services provided by the service provider to the service recipient shall alone be chargeable to service tax unless there is any extra consideration flowing from service recipient to the service provider. In the present case, neither it is a case of extra consideration flowing from the service recipient to the service provider nor there is any proof of such extra consideration, therefore the gross amount charged by respondent to M/s ESTIL being sole consideration will alone be liable to Service tax and no any other notional amount will be added on assumption and presumption basis. It is found from the agreement entered into between Respondent and M/s ESTIL that it was evident that the charges for cargo handling and port services were negotiated rates, on the understanding that 25 million MT of cargo would be handled from 2012-13 onwards and that there would be a 3% escalation on the agreed base rate. The agreement inter alia envisaged that M/s EBTIL would maintain a minimum of 10-meter draft, in the channel leading to the bulk terminal and that if that draft was increased from 10 to 12 meters it would be entitled to a fee escalation of Rs. 21/per MT in respect of the raw materials handled by the respondent - there are no force in the department s contention that respondent has not included the value of facility charges in the related taxable service charges. Time Limitation - suppression of facts or not - HELD THAT:- The respondent have correctly made full and true disclosure of the value consideration of the service provided by them. There is no column in the ST-3 return form to declare any notional value which is not the part of the consideration. The contract was submitted to the department from time to time which contains all terms and condition of service provided by the respondent to the service recipient M/s ESTIL. Therefore there is absolutely no suppression of fact on the part of the respondent - the demand proposed in the show cause notice is not sustainable on limitation also. Appeal dismissed - decided against appellant.
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2022 (8) TMI 1254
Levy of Service Tax - Business Auxiliary Service - incentives and discount support received by the appellant - consideration for sales promotion activity for the manufacturer (TML) or not - period April, 2013 to June, 2017 - HELD THAT:- It is noticed that the appellant purchases vehicles from TML and sells the same to the buyers. It is clear from the agreement that the appellant works on principal to principal basis, and not as an agent of TML. This is for the reason that the agreement itself provides that the appellant has to undertake certain sales promotion activities as well. The carrying out of such activities by the appellant is for the mutual benefit of the business of the appellant, as well as the business of TML. The position in this regard is fairly settled as held by the Hon ble Supreme Court in the matter of case of MOPED INDIA LIMITED VERSUS ASSISTANT COLLECTOR OF C. EX., NELLORE AND OTHERS [ 1985 (2) TMI 42 - SUPREME COURT] .The amount of incentives and discount support received on such account cannot, therefore, be treated as consideration for any service. The incentives and discount support received by the appellant cannot, therefore, be leviable to service tax. The service tax on the amount received as incentives could not, therefore, have been levied to service tax - Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (8) TMI 1253
CENVAT Credit - substantial error of law or not - mismatch between the consumed quantity of inputs between respondent s stock account of raw materials i.e. RG 23A Pt. 1 and ER-6 return - period 2012-13 to 2015-16 - gross inconsistencies in the records maintained by the respondent - availment and utilization of irregular Cenvat Credit in fraudulent manner by showing higher quantity of consumption of inputs for production of finished goods in their stock account (RG-23A Pt. 1) as compared to ER-6 returns during the said period - extended period of limitation. HELD THAT:- The tribunal has pointed out that the department has not objected to the inter unit transfer of input which was the consistent case of the assessee. The tribunal also examined the sample stock account for pre-form submitted by the assessee and, in fact, a screen shot of the said stock account has been incorporated in the order passed by the tribunal. After examining the facts and figures in the said stock account, the tribunal pointed out that there is inter unit transfer from unit-3 to unit-1 which is included in the total issued quantity of unit-3; whereas the same is shown as inter unit receipt from unit-3 in unit-1 stock account and is also apart of total receipt of unit-1 and thereby the same will also be part of consumption of unit-1 in the column total issue . Further, the tribunal was satisfied with the inter unit transfer of raw material as captured by the appellant in the stock account is netted off while filing ER 6 returns as the same is for single excise registration number and all units are treated as one single assessee. Therefore, after being satisfied with the factual position, the tribunal held that the assessee shown excess consumption of inputs in its stock records cannot be sustained. Further, before the tribunal, the assessee had produced the chartered accountant s certificate showing the detailed reconciliation of each raw material type and the tribunal has found that the adjudicating authority has incorrectly understood the total matter and erroneously proceeded to confirm the demand on irrelevant ground. Furthermore, the tribunal had agreed with the submission made on behalf of the assessee that there is no allegation levelled against the assessee showing the excess procurement of inputs and there has been no investigation in this regard by the department. Further, with regard to invoking the extended period of limitation, the tribunal found there is absolutely no justification to do so and there is no explanation given by the department for the gross delay in initiating proceedings. The learned tribunal has examined the factual position and rightly noted that the show cause notice was issued by the adjudicating authority based on assumption and presumption without conducting any investigation and enquiry. The revenue has not made out any ground to interfere with the order passed by the tribunal - Appeal dismissed.
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2022 (8) TMI 1252
CENVAT Credit - allegation of availing the cenvat credit of the duty paid on inputs/ raw materials without physically receiving and using the said goods in their factory and to compensate the same they were showing excess generation of As - invoices issued by first state / second stage dealers - HELD THAT:- To avail Cenvat credit, the inputs or capital goods should have suffered the appropriate duty by the producer/manufacturer of such goods and the goods should be received by the manufacturer availing credit in his factory and the inputs or capital goods so received should be utilised in or in relation to the manufacture of final products. In respect of inputs received from a first or second stage dealer, an additional condition is stipulated to the effect that the inputs or capital goods were supplied from the stock on which duty was paid by the producer of such goods and only an amount of such duty on pro rata basis has been indicated in the invoices issued by him. CENVAT Credit - alleged non receipt and use of Aluminium wire Rod, Aluminium Ingot, Aluminium Scrap, Copper Ingot and Scrap, Nickel and Zinc Ingot and Scrap etc. - HELD THAT:- The department in the present case itself admitted that the Appellant shown the receipts and use of the goods in their factory, therefore we do not find any reason for disallowance of cenvat credit in this matter specifically when the supplier of the goods/ raw material, nowhere admitted that, they have not supplied the goods to appellant and any evidences in relation to diversion of disputed raw materials. When the inputs are used in the manufacture of dutiable final products, the benefit of cenvat credit in respect of such input cannot be denied. There is no provision in the Central Excise Law and Cenvat Credit Rules for determination of Cenvat amount on the basis of SION norms - There was specific provision in the Act and the Rules for determination of capacity of production on the basis of capacity of furnace and rolling mill. Since there was no similar provision in the law for determination of cenvat amount on the basis of SION norms, the entire proceeding in the impugned matter is void. Apart from the input-output ratio, which has been made the basis, there is no other evidences on record to show that the appellant either did not receive the raw materials, on which they have taken the credit or after receiving the same and availing the credit, the same stand removed by them in the open market. Further in the entire case there is no admission in the statements of Appellant s directors or employees to the effect that the raw materials were not actually received by them and they were showing excess consumption of the raw materials to accommodate such non-receipted raw materials. There is also no admission in the said statements to the effect that raw materials stand diverted in the open market - credit cannot be denied to Appellant merely by relying the SION norms and transporters statements. All these factors lead to show that the findings, arrived at by the adjudicating authority are on the basis of assumptions and presumptions and in the absence of any independent evidence, cannot be upheld. CENVAT Credit - non -receipts of raw materials from M/s Metal Plast Exim (India) Pvt. Ltd. and M/s Nico Extrusions Pvt. Ltd, Kalyan by relying the records of transporters and statements of transporters - HELD THAT:- M/s Metal Plast Exim (India) Pvt. Ltd. was a 100% EOU unit and M/s Nico Extrusions Pvt. Ltd. Kalyan was registered warehouse of Appellant. The goods were duly found to have recorded in the Appellant s factory and were consumed in the production. The payment was made through banking channels to supplier and transporters which is not denied. Both the suppliers nowhere stated that they have not supplied the alleged goods to the Appellant. In such case we do not find any reason to disallow the credit to the Appellant - it is well settled law that no cenvat demand is sustainable on the basis of third party documents and their statements. In the present matter the goods were found to be duly shown as received and entered in the factory of the Appellant. The statutory records of the Appellant concern show the receipt and consumption of the goods. Pertinently it is noted that there is no statement of the supplier that the goods were not supplied to the appellant. There are no reason to disallow credit to the Appellant. CENVAT Credit - credit denied on the ground that Appellant in collusion with the transporters and suppliers, High Sea Seller, have wrongly availed the credit on inputs without actual receipts of the goods in factory and without actually using the said goods in the manufacture of their finished goods on the strength of Bill of Entries issued by ICD - HELD THAT:- Department in the present matter nowhere produced any corroborative evidences related to the diversion of imported raw materials/ substitute of imported raw material in factory/ any buyer of imported raw material who admitted that the Appellant had delivered the said imported goods to them. Moreover in the said matter Transporters did not turne up for cross-examination, hence their statement cannot be relied upon. During the investigation the transporter admitted the payment from the appellant towards transportation, high seas sale supplier had also confirmed the sale to the appellant. The bills of entry filed by the Appellant and clearances of the goods from customs substantiate the purchase of goods by the Appellant and appellant also account for the said goods in their books of account - the case on merit is not sustainable due to lack of evidence to establish the allegations. CENVAT Credit - case of the Revenue is that the Appellant has availed the Cenvat Credit on inputs mainly copper/Nickle, supplied by M/s Metec Asia Pvt. Ltd. without actual receipts of the said goods in their factory and without using the said goods in manufacture of their finished goods - HELD THAT:- The facts are established that the appellant have received the inputs in their factory used in the manufacture of final product and same was cleared on payment of duty. Therefore, there are no substantial evidence which result the disallowance of credit. The evidences placed by department before us are not cogent to establish that appellant is guilty of fraudulent availment of Cenvat credit. Mere suspicion or assumptions and presumptions cannot be the basis for such serious allegation of fraudulent availment of credit - the impugned demand alleging fraudulent availment of credit is not sustainable. CENVAT Credit - demand of Rs. 81,76,443/- in respect of invoices issued by Supplier M/s Meal Links Alloys Ltd., M/s N.D. Metal Ind. Ltd., M/s Merchandiser Pvt. Ltd. and M/s Kothari Metals - HELD THAT:- The contention of the Ld. Commissioner is that investigation shown that the supplier of the material has not actually supplied the material as the transporter denied the transportation of the material not sustainable in the absence of any corroborative evidences. In this case the appellant's submission is that they had received the material in question from the suppliers, the suppliers in his statement admitted that supply of the material and payments made through banking channel the material was duly entered in the statutory records and issued for manufacture of finished goods - as the material in question is received by the appellant under the cover of duty paying invoices and payments were made through banking channel, there is merit in the contention of the appellant - the impugned orders are not sustainable in the eyes of law. It is well settled law that statements recorded by the Central Excise officers during the course of investigation cannot be relied upon, unless procedure prescribed under Section 9D of the said Act is scrupulously followed. Such statement would have no evidentiary value if the person making it is not subjected to examination-in-chief before the adjudicating authority and also not produced for cross- examination as stipulated under Section 9D(1)(b) of Central Excise Act, 1944 - Since the Revenue failed to prove alternative source of receipt of raw materials and also money flow back from manufacturer/supplier to the assessee, it can not be said that they had not received the inputs especially when statements relied upon by the Revenue are contrary to the documentary evidence on record produced by the Appellant - this contention cannot be accepted. The reliance of third party i.e transporters documents /statements was placed while confirming demand against present appellant is also observed to be unjustified and unreasonable - the demands of whatever nature cannot be confirmed solely on the basis of third party s evidence/record. The appellant have satisfied the requirement of receipt of inputs along with cenvatable invoices and use of such inputs in the manufacture of final product, accordingly, the Cenvat credit taken by them is in accordance with the scheme of the Act read with Cenvat Credit Rules - Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 1251
Clandestine Removal - Re-rolled products - no invoices or sales bills have been issued by the Appellant for the goods mentioned in the most of the entries of the said records and the good have been removed without payment of duty and without issue of invoice - reliability of third party evidences - cross-examination of witnesses - wrongful availment of benefit of N/N. 08/2003 C.E. dtd. 01.03.2003 - levy of penalty under Rule 26 of Central Excise Rules 2002 on partner of Appellant and broker. HELD THAT:- The entire case was made out on the basis of search conducted with the third party which is the broker and the records recovered from the broker. The Ld. Adjudicating authority for confirmation of demand also relied on the statement of broker and partner of appellant s firm. However it is on records that in the present matter partner of appellant firm filed affidavit and in his affidavit he had clearly negated the contents of his earlier statements and therefore no reliance can be placed upon his statement. Department had demanded excise duty on finished goods, alleging that the Appellant have clandestinely removed the goods by relying on the broker s records and oral statements and without any corroborative evidence either from the Appellant s premises or from the Customers documents etc. Despite the appellant requested for cross-examination of witnesses, the lower adjudicating authority has rejected the request of appellant. As per the provisions of section 9D it is clear that during adjudication, the adjudicating authority is required to first examine the witness in chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidence. Thereafter, the witness is offered to be cross-examined. It is a settled principle of law that if the authority wants to rely upon the statement of any witness, the opportunity of cross-examination ought to have been given to enable the party to prove its case. Non-providing of the opportunity of cross-examination amounts to violation of the natural justice and in absence of denial of natural justice, such documents/statements cannot be relied upon. It is well settled law that there has to be some concrete evidence in the form of receipt of raw materials, shortage of raw materials, clandestine manufacture including use of electricity, excess or shortage of inputs found in the stock, flow back of funds, purchase of final products by parties alleging receipt and removal of goods and any such evidence which would show clandestine manufacture of goods. It is also an admitted facts that the documents recovered from the premises of Broker are third party documents and same cannot be relied upon without any corroborating evidences. Therefore, the entire case is based on entries found recorded in the record of broker does not have reliability and credibility. There is no sufficient material on record to establish clandestine manufacture and clearance by Appellant. We, accordingly, set aside the confirmation of demand, interest and imposition of penalty. Penalty imposed upon Shri Nagjibhai Dodiya, Partner of Appellant firm is also set aside - As regards penalty imposed upon Shri Himanshu Nandlal Jagani, Broker, having held that there was no clandestine removal, clearance from the factory of Appellant, penalty upon said broker cannot be upheld. Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 1250
Valuation of goods - related party transaction - value of the goods cleared by the appellants to the related firm should have been determined in the manner specified in Rule 8 and in terms of Rule 9 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 or not - HELD THAT:- The mere fact that buying and selling undertakings / body corporate are interconnected will not affect the applicability of Section 4 as far as the valuation for the purpose of excise duty is concerned. It shall still be the transaction value. Value other than transaction value, in terms of Rule 9 and proviso thereof (Rule 8), shall be ascertained case where an interconnected undertakings are also related in the manner specified in either of the sub clauses (ii) (iii) or (iv) of Clause (b) of sub section (3) of section 4 of Central Excise Act, 1944, as already mentioned above. In the present case, the department has alleged the buyers of appellant to be the related persons of appellant to appreciate the said allegation but in the light of above discussion it is also observed that the word related is held to have same meaning as is assigned to it in clause 41 of Section 2 of Companies Act, 1956 - From the very definition of related , it becomes clear that the definition is applicable to persons as individuals and not to the companies or Undertakings or body corporates. Companies are the separate legal entity as defined from its owner / members / share holders of/ Directors of companies are simultaneously the body corporates. The only case of the department rests on two counts: (i) the appellant has shown three of said companies as its Associated and Joint ventures in their balance sheet; and (ii) The directors of appellants are the directors in either of the three undertakings - In the present case, it is observed that the Department has not produced any evidence of proving the mutuality of interest of three other companies with the appellant. There is no evidence that M/s. Mahendra Strips Pvt Ltd. Raipur, M/s. Super Ispat (Raipur) Pvt Ltd., and M/s. Animesh Iron, Raipur along with the appellant are so associated that they have interest directly /indirectly in the business of each other. There is no evidence to show any financial flow back as the sale of impugned companies appeared to be where, some business transaction on principal to principal basis. There is no evidence produced by the department to falsify the said fact. The department has failed to produce on record either by explaining or by production of material evidence as to how the appellant and three of companies could be termed s related or amongst them the buyer when related and distribution of the appellant or the sub distribution of distributor or that of the appellant and the buyer are so associated. They have interest directly or indirectly in the business of each other as provided in the statute for the applicability of the Rule 9 of Valuation Rules. The excise duty on the sale of M S ingots / sponge iron by the appellant to the three other companies is not to be arrived at by considering the transaction value, in terms of Rule 9 of the Central Excise Rules as mere mention in balance sheets about the buyer to be the Associated or Joint Ventures will not be sufficient to prove that the buyers fall in either of (ii)(iii) or (iv) sub clause of section 4 (3) (b) of Central Excise Act, 1944. The question of confirmation of demand as proposed by the impugned Show Cause notice does not arise. The order under challenge is held to have passed based upon wrong interpretation arrived at by the Adjudicating Authority. Appeal allowed - decided in favor of appellant.
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2022 (8) TMI 1249
SSI Exemption - use of brand name of others - classification of Soya Bari - grant of turnover upto the value of Rs 1 crore, the time when the appellant crossed this turnover limit of one crore needs to be ascertained - extended period of limitation as per proviso to Section 11A (1) of the Central Excise Act, 1944 - N/N. 32/1999-CE (as amended from time to time) - Revenue neutrality. Appellants contention is that they were under the bonafide belief that their goods manufactured by them were classifiable under 23.04, and attracted Nil rate of duty till the issuance of Notification No 3/2006 classifying the said goods under 21061000 and attracting the duty @ 8%. HELD THAT:- As per the Section 11 A (1) of Central Excise Act, 1944, the normal period for making the demand in respect of the duties short levied or short paid/ Not levied or not paid is one year. However in case where the short levy/ short payment or non levy/ non-payment is on account of fraud, collusion or any willful misstatement or suppression of facts or contravention of any of the provisions of Act or the rules made thereunder with intent to evade payment of duty, the demand as per proviso to this section can be made within five years. From the N/N. 32/1999-CE it is quite clear that the said exemption notification is conditional exemption notification and also provides for the manner in which it is to be given effect to. The appellants have made the claim to the said notification, to argue that the in terms of this notification they will be entitled to refund of the duty paid by them and hence the issue is completely revenue neutral and hence extended period of limitation cannot be invoked for making the demand from them. The appellants have not been able to show any ground by which they could claim that they entertained a bonafide belief that goods manufactured and cleared by them were not subject to excise duty or attracted nil rate of duty or were exempt from payment of duty. It is settled law that the bonafide belief is not the blind belief and need to be established before that plea can be taken. Without any evidence to show how the appellants claim bonafide belief in the matter to the effect the goods manufactured by them do not attract any excise duty, the argument made in this regard cannot be accepted. Appeal dismissed.
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2022 (8) TMI 1248
Refund claim - Compounded Levy Scheme - entitlement for pro-rata abatement/refund of duty for the period during which the machine admittedly was inoperative - rejection of refund on the ground of time limitation - applicability of N/N. 17/2007-CE dated 01.03.2007 - HELD THAT:- The issue herein is squarely covered in favour of the appellant-assessee by the ruling of Hon ble Rajasthan High Court in the case of COLLECTOR OF CENTRAL EXCISE, JAIPUR-II VERSUS JUPITER INDUSTRIES [ 2006 (4) TMI 164 - HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR] which have been followed by Division Bench of this Tribunal in the case of M/S PARADISE STEELS PVT. LTD. VERSUS CCE CGST, JAIPUR [ 2018 (9) TMI 1480 - CESTAT NEW DELHI] , where it was held that since this is the case of one machine being inoperative for part of the month after payment of Central Excise duty, has not produced any goods and therefore, duty cannot be charged under compounded levy for the whole month. The appellant is entitled to refund for the period, the machines remained un-operative for the part of the month of pro rata basis - revenue is directed to grant the refund of the amount of Rs. 55,483/- from the date of deposit till the date of refund, with interest as per Rules - Appeal allowed.
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2022 (8) TMI 1247
Levy of penalty u/r 26 of CER - manipulation of costing and the clandestine removal of the goods from the Job Worker s Factory premises - HELD THAT:- From the statement of the appellant with reference to the case against the company, there is a clear admission that the appellant have manipulated the cost of the product and the goods were clandestinely removed from the premises of the Job Worker. In these appeals, the appellant s plea is that he was working as Import/Export Manager and not dealt with the transaction made with the Job Worker. The appellant is the sole Authorised Signatory for the company and he has given statements with reference to the offence committed by the company. Therefore, his submission that he was not involved in the activity of Job Work has no support. The learned Commissioner (Appeals) has already taken a lenient view and substantially reduced the penalty from Rs.50000/- and Rs.20,000/- to Rs.20,000/- and Rs.8,000/- respectively. The role of the appellant is clearly established therefore, no further relief can be extended to the appellant. Appeal dismissed.
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CST, VAT & Sales Tax
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2022 (8) TMI 1246
Constitutional validity of retrospective amendment to VAT act after amendment to Constitution to introduce GST laws - Validity of assessment notices - notices are without jurisdiction and competence of the Assessing Officers or not - competence of the Assessing Officer under amended Section 25(1) of the KVAT Act through Kerala State Finance Act Nos.11/2017 and 5/2018 - time limitation - HELD THAT:- The liability to pay tax is incurred with the taxable event as per the charging section. The liability arising from the taxable event is independent of any consideration of time or period of limitation. The time limit for reassessment is for the convenience of the dealers. Therefore, the amendment to Section 25(1) made with effect from 01.04.2017 shall be read as enabling the officers to initiate proceedings within six years with the end of the Assessment Year. Hence, the time limit and the year and date on which the notice is issued, are relevant. What is the plain expression either for the commencement of the Act or for the operation of the Finance Act 11 of 2017? - HELD THAT:- The long and short of the conclusion is the substituted words six years , being operational in the Statute Book with effect from 01.04.2017, the Assessment Year 2010-11 is excluded from the reassessment enquiry by 31.03.2017. The fundamental rule in any interpretation is that if the legislative expression is unambiguous; the Courts employ the golden rule of interpretation and give the meaning applicable to the words employed by the State Legislature. It is clear to one's mind and interpretation that the amendment to Section 25(1) of KVAT Act substituting the words five years to six years is prospective. Competence of the State Legislature to amend the Kerala Value Added Tax Act through Finance Act 5/2018 - HELD THAT:- Since the legislative competence is traceable to Article 246A, which speaks about goods supply of goods or services, the argument canvassed is that under Article 246A, the State Legislature has broader power than what it had before 16.09.2016. The repeal of the KVAT Act shall not be understood as taking away the original power of the State Legislature to make amendments to the repealed Act. The amendments are not simultaneously operating along with Kerala Goods and Services Tax Act. Still, the amendments provide for the extension of the period of limitation for assessment attracting Section 25(1) of the KVAT Act, and the same is legal and constitutionally valid. The legislative competence to amend KVAT Act through Finance Act 5/2018 is not established. It is found from the scope and scheme of powers enjoyed by the Centre and the State as regards the supply of goods and services, power to amend the KVAT Act is unavailable - The amendment to KVAT Act by Finance Act 5/2018 is without competence. Appeal dismissed.
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