TMI Tax Updates - e-Newsletter
September 10, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Detention of goods alongwith the vehicle - detention on the ground that in the e-way bill the petitioner had deliberately misdeclared the vehicle as ODC (Open Dimension Cargo) - ODC categorization apply to extremely slow moving vehicles - Validity period of E-Way bill - The goods and vehicle must be released subject to certain conditions as may be imposed - HC
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GST:
Confiscation of goods - wet tamarind - it is pleaded that the alleged show cause notice filed by the 1st respondent was prepared later after obtaining the signature and stamp of the petitioner on blank paper. - In the writ averments, the petitioner at the first instance did not take any plea that his signatures were obtained on blank papers. It is only after the respondents filed their counter and enclosed the show cause notice and other documents, then in the reply affidavit the petitioner for the first time took such plea. Hence, the contention of the petitioner does not merit consideration. So at the outset the confiscation proceedings and imposition of fine in lieu of confiscation etc., undertaken by the 1st respondent cannot be said to be in violation of law and rules. - HC
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GST:
Demand of GST - Difference in GSTR 3B return - Violation of principles of natural justice - the petitioner applied for necessary information relating to the bills raised by him and TDS deducted thereon by the 3rd respondent, but the 3rd respondent has not furnished the said information in time and in the meanwhile, the impugned summary order was passed by the 2nd respondent - matter remanded back - HC
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Income Tax:
Penalty u/s 271D - taking and repaying back of loan in cash - Relief granted by the CIT(A) based on under Negotiable Instrument act, for guilty for dishonouring of cheque given for repayment of loan - Merely because the Magistrate on a complaint filed had convicted the assessee on the ground of dishonoring of cheque U/s 138 of the N.I. Act it cannot automatically lead to presume that the assessee had in fact taken or accepted cash amount of ₹ 2.5 lacs as loan in contravention of provisions of Section 269SS - AT
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Income Tax:
Revision u/s 263 - the issue was duly considered by Ld. AO after considering assessee’s detailed submissions. The view could not be said to be unsustainable view and it was one of the possible view - we find that the subject matter of proposed revision was already deliberated upon by Ld. AO and a possible was taken in the matter - assessment order could not be subjected to revision u/s 263 - AT
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Income Tax:
Penalty levied u/s 271AAB - conversion of survey action into search - detection of undisclosed income u/s 133A or u/s 132 - The objection of ld. CIT-DR for the revenue is concern that the Ld. CIT(A) when survey proceedings at one premise has been converted into search, it became a search case and the entire disclosure made by assessee-firm on the basis of excess stock not recorded in their books of account to be considered at undisclosed income for the purpose of section 271AAB - The objection of the revenue does not have any merit - AT
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Customs:
Valuation for levy of CVD - re-labelling of the specified goods after import - As re-labelling of the specified goods would amount to manufacture after import, it is not that recourse was unavailable to remedy any breach of parity. The adoption of ‘retail selling price’ of other re-sellers and, that too, while the impugned goods were yet to be cleared for home consumption on the presumption that the importer intended to enhance the ‘retail selling price’ at the point of sale appears to be a mis-direction on the part of the original authority and the confirmation thereof, by the first appellate authority, bears the same taint as to warrant the setting aside of the impugned order. - AT
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Customs:
Levy of penalty on Customs Broker License - allegation is that appellant has not acted with due diligence and in turn, has violated Regulations 10(d) and 10(n) of the CBLR, 2018 - the Inquiry Officer has, after going through the relevant documents, concluded that the appellant had no role to justify invoking irregularity under the provisions of the CBLR, 2018. - The penalty is imposed without any justifiable reasons - AT
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Service Tax:
Scope of SVLDRS scheme - Arrears category - when there is a specific exclusion provided under Section 125, all other categories are eligible to seek such declaration in view of the language used in Section 125(1) ie., “all persons shall be eligible to make a declaration under this scheme except the following, namely;”. - The petitioner is eligible to claim the benefit under the scheme by treating him under the category of “litigation”. - HC
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Service Tax:
Scope of taxability - Manpower recruitment or supply agency service - Having identified some of the ‘work orders’ to contain compensation on ‘man day’ basis, it was incumbent upon the adjudicating authority, in the light of such finding, to segregate those to which, in accordance with the precedent arising from decisions of the Tribunal, coverage under that taxable service would not extend. This, the adjudicating authority has failed to do. - AT
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Service Tax:
Power of commissioner (appeals) to remand back the case - The order under challenge is not either of the one as is mentioned in sub clause (3) of Section 35A. It is precisely an order of remand which power stand withdrawn from Commissioner (Appeals). This order from no sense of interpretation can be held to have been passed either under the power of annulling or the power of confirming or the power of modifying - Commissioner (Appeals) is directed to adjudicate the same on merits - AT
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Central Excise:
CENVAT Credit - input service - event management service - In fact, Vishwakarma Puja is a big festival for the workers who work on machines and they pray to the God for good running of their machines by doing Vishwakarma Puja - these two pujas are also integral part of manufacturing activity. Therefore, for these services also, the appellant is entitled for cenvat credit. - AT
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VAT:
Validity of Curtailing and whittling down the benefits with retrospective benefit - Musical Instruments - Tax exemption is a concession. Thus, exemption from payment of tax can never be claimed as a matter of right. Exemptions are to be granted strictly in consonance with the provisions of the Act. Thus, purposive and contextual interpretation of exemption provisions are imminent for the purpose of extending the benefit of exemption. - the subsequent Notification is a clarificatory in nature and cannot be construed as cancellation of the exemption granted - HC
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VAT:
Classification of goods - rate of tax - sales of certain equipment treated as hospital equipment or hospital furniture instead of treating them as medical equipment - those equipments, devices and implants which partake in the process of diagnosis, treatment, cure and care of the patients either directly or indirectly, will alone come under Entry 111 of Schedule IV of the AP VAT Act, 2005. Whether a particular equipment, device or implant fulfils the aforesaid test is a question of fact to be determined on case-to-case basis. - HC
Articles
Notifications
News
Case Laws:
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GST
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2021 (9) TMI 429
Detention of goods alongwith the vehicle - detention on the ground that in the e-way bill the petitioner had deliberately misdeclared the vehicle as ODC (Open Dimension Cargo) - ODC categorization apply to extremely slow moving vehicles - Validity period of E-Way bill - HELD THAT:- The movement of the vehicle had started from Guwahati on 19.08.2021 and had already reached Churaibari check-post on 21.08.2021 when it was detained. Had the vehicle not been stopped, the delivery at Agartala would have taken place latest by 22.08.2021 which in any case is the normal validity period of e-way bills considering the distance between the point of origin and destination. The goods and vehicle must be released on certain conditions - Petition allowed.
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2021 (9) TMI 422
Confiscation of goods - wet tamarind - it is pleaded that the alleged show cause notice filed by the 1st respondent was prepared later after obtaining the signature and stamp of the petitioner on blank paper. - tax and penalty collected under other head as a condition for release of the commodity without conducting any assessment or penalty proceedings and instead, issuing impugned summary of order by treating the detention notice as assessment order - without giving opportunity of hearing and without passing assessment order or penalty order or confiscation order under the relevant provisions, the detention notice was treated as assessment order - violation of principles of natural justice - HELD THAT:- The show cause notice contains the stamp and signature of the petitioner. So also the confession letter dated 12.03.2018 is written in vernacular language i.e., Telugu and it also contains the signature of the petitioner. If issuance of the show cause notice and passing of the proceedings consequent upon the admission of the guilt of the petitioner are true, the respondents can be said to have followed the procedure contemplated under Section 130. The question is whether the show cause notice dated 11.03.2018 was issued to the petitioner and whether the petitioner executed the confession letter dated 12.03.2018. The petitioner s explanation in his reply is that he did not receive the show cause notice and did not execute the confession letter dated 12.03.2018. In the writ averments, the petitioner at the first instance did not take any plea that his signatures were obtained on blank papers. It is only after the respondents filed their counter and enclosed the show cause notice and other documents, then in the reply affidavit the petitioner for the first time took such plea. Hence, the contention of the petitioner does not merit consideration. So at the outset the confiscation proceedings and imposition of fine in lieu of confiscation etc., undertaken by the 1st respondent cannot be said to be in violation of law and rules. Petition dismissed.
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2021 (9) TMI 420
Demand of GST - Difference in turnover as per GSTR 3B return - Violation of principles of natural justice - reasonable opportunity of personal hearing not provided to the petitioner - works contractor executing civil contract works - allegation is that the payments received by the petitioner from the 3rd respondent were not tallying with the turnover reported through GST returns - period April, 2018 to March, 2019 - HELD THAT:- The main observation of the 2nd respondent in the impugned order dated 21.09.2020 is that the data projected in CFMS relating to payments received by the petitioner from various Departments for execution of the work contracts was not tallying with the turnover reported through GSTR 3B returns. Basing on such observation, he issued a notice in Form DRC-01A and called for the explanation of the petitioner which was submitted by the petitioner on 20.02.2020. In the explanation, his submission was that the variation between the payments received and the turnover mentioned in the returns was because of the fact that the payments made to him were only part payments and not complete bills. With reference to the aforesaid explanation of the petitioner, the 2nd respondent observed that the petitioner has not submitted the bills raised on the Department in support of his claim of amounts received in respect of VAT and GST Acts. Hence, the differential amounts arrived were to be treated as amounts received against the works executed in the GST period. The submission of learned counsel for the petitioner is that in fact, the petitioner applied for necessary information relating to the bills raised by him and TDS deducted thereon by the 3rd respondent, but the 3rd respondent has not furnished the said information in time and in the meanwhile, the impugned summary order was passed by the 2nd respondent - an opportunity should be accorded to the petitioner to present his case before the 2nd respondent. The impugned order passed by the 2nd respondent with a direction that the 2nd respondent shall issue notice to the petitioner and afford an opportunity to him to present the relevant information - Petition allowed by way of remand.
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Income Tax
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2021 (9) TMI 419
Deduction u/s 80P(2)(a)(i) - assessee did not claim deduction u/s 80IB(10) - violation of section 80A(5) - HELD THAT:- It is very much clear that even though the assessee might be fulfilling the conditions of the particular deduction provision; however, the mandatory conditions of section 80A(5) of the Act has to be fulfilled for claiming deduction. While laying down the aforesaid ratio, the Hon ble jurisdictional High Court took note of the ratio laid down in case of Goetze India Ltd vs CIT [ 2006 (3) TMI 75 - SUPREME COURT] - Thus, the ratio laid down in the aforesaid decision of the Hon ble jurisdictional High Court EBR ENTERPRISES ANR. VERSUS UNION OF INDIA AND ANR. [ 2019 (6) TMI 484 - BOMBAY HIGH COURT] squarely apply to the facts of the present appeal. It may be a fact that the assessee is otherwise eligible to claim deduction under section 80P(2)(a)(i) of the Act; however, the provision contained in section 80A(5) of the Act stands as a bar in allowing such deduction to the assessee. For the sake of completeness, we must observe, having carefully gone through the decisions cited by learned authorized representative of the assessee, we are of the view that in none of these decisions, the provision contained in section 80A(5) of the Act was taken note of. In case of ITO vs MSEB Employees Co-operative Credit Society Ltd [ 2014 (12) TMI 380 - ITAT PUNE] as held that even if the assessee has not claimed a deduction in the return of income, the appellate authorities have power to allow deduction which is allowable under the provisions of the Act - it appears form a reading of the said decision, provision contained in section 80A(5) was not brought to the notice of the Tribunal - Tribunal did not have the benefit of the decision of the Hon ble jurisdictional High Court in case of EBR Enterprises vs UOI [ 2019 (6) TMI 484 - BOMBAY HIGH COURT] which was subsequently rendered. Tribunal has allowed assessee s claim of deduction under section 80P(2)(a)(i) of the Act in assessment years 2010-11 and 2012-13. However, there is nothing on record to suggest that there was any violation of section 80A(5) of the Act. Therefore, the factual position based on which the decisions were rendered in assessment year 2010-11 and 2012-13 are different from the impugned assessment year - we hold that the assessee cannot be allowed deduction under section 80P(2)(a)(i) of the Act, insofar as, the impugned assessment year is concerned due to non fulfillment of conditions contained in section 80A(5) of the Act. Status of assessee - AOP or firm - assessee filed an application for rectification under section 154 of the Act seeking change of status from firm to AOP and to allow deduction under section 80P(2)(a)(i) - HELD THAT:- As regards the correction of status of the assessee from firm to AOP, the assessing officer is directed to rectify the same after verifying all relevant facts.
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2021 (9) TMI 428
Seizure of goods at airpor t - jewellery found in possession was seized in terms of Section 132 - assessee seeking Release to attached stock-in-hand - jewellery seized in stock-in-trade - HELD THAT:- As apparent that the seizure has to be conducted after due care and caution. Merely on account of reasons to suspect, seizure of goods ought not to be undertaken as held in Khem Chand Mukim [ 2020 (1) TMI 1114 - DELHI HIGH COURT ] In fact the investigation wing has to show reason to believe that a person is carrying undisclosed asset. If the concerned person has shown documents in order to explain the goods which he is carrying and also gives a statement like in the present case that the articles were belonging to a firm and were part of stock-in-trade. Before seizure is conducted explanation ought to be taken from the concerned firms and if they are able to produce the related books of account and necessary proof of articles which may include sale details, purchase details, stock register, audit reports, income tax returns etc, the Income Tax Authorities ought to take a decision at this stage and ought not to be allowed to seize the goods for years together to await for the assessment order to be passed in relation to concerned employee. As the claim of the goods in terms of Section 132(1)(iii) of the Act of 1961 has been made by the petitioner Nos.1 and 2 as the jewellery seized in stock-in-trade and required material has already been placed before the Income Tax Authorities. The same was required to be released as the seizure itself is found to be unjustified and illegal. Non mentioning of price of the goods in the challan would not construe that the goods are not part of stock-in-trade. This Court holds that the seizure itself was wholly illegal and all consequential actions based on such seizure are illegal and contrary to the provision of Section 132(1)(iii) - Hence, the petitioners were entitled to receive back the goods from the respondents as more than one year and six months have lapsed. The petitioners would also be entitled to interest of a sum of ₹ 1 lakh which was paid as a gross amount towards retention of the jewellery which is stock-in-trade and is marketable.
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2021 (9) TMI 413
Rectification of mistake - original order passed by this Tribunal contains certain mistake of facts and law - judicial precedents relied upon by the counsel for the petitioner as well as arguments advanced do not find place in the impugned order passed by this Tribunal - HELD THAT:- The petitioner had not filed the decisions relied upon by her at the time of hearing. Secondly, there is no material on record indicating that the counsel for the petitioner had relied upon these decisions and brought to specific the notice of the Bench. It is settled position of law that it is not mandatory to deal with each and every decision relied upon by either of the parties to the case unless otherwise they were specifically brought to the notice of the Bench. Further, this issue requires examination, arguments to establish as to how these decisions are identical to issue on hand. Therefore, the points which are considered to be mistake apparent from the record by the petitioner does not constitute a mistake apparent from the record. Thus, the present Miscellaneous Petition is totally misconceived and liable to be rejected. Accordingly, the Miscellaneous Petition is dismissed.
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2021 (9) TMI 410
Revision u/s 263 - cash deposits in the bank account - case of assessee was selected for limited scrutiny for verification of Cash Deposits - whether the AO has duly examined the details so furnished by the assessee as part of his return of income and where required, calling for further information/documentation and examination thereof during the course of assessment proceedings? - HELD THAT:- As during the course of assessment proceedings, the AO has issued notice u/s 142(1) dated 31.05.2017 asking for copy of return of income, computation of income, books of accounts, bank statements and to explain the nature and source of cash deposits in saving bank accounts maintained by the assessee - assessee has submitted copy of his return of income, computation of income, bank statements, personal cash book, ledger, copy of capital account and balance sheets for A.Y 2014-15, A.Y 2015- 16 and A.Y 2016-17 showing the opening and closing cash in hand and has also submitted the nature and source of cash deposits during the year under consideration. Infact, the ld PCIT has also acknowledged this fact that the details of transactions in respect of cash deposits and withdrawals have been duly submitted by the assessee during the assessment proceedings. The submissions so made have been examined by the AO as evident from clear affirmation thereof by the AO in the assessment order. The matter has been duly examined by the AO with focus on cash deposits and withdrawals transactions made by the assessee during the year for which the matter was selected for limited scrutiny - where the AO has examined the personal cash book maintained by the assessee showing cash in hand, deposits and withdrawals made during the year and the opening and closing balances of cash in hand are duly reflected in the respective balance sheets of previous and subsequent years, we find that the AO has taken all reasonable steps as are expected to be taken to verify the subject transactions in terms of nature and source of such deposits. Balance sheets not just reflect the cash in hand rather reflect the state of affairs in terms of assets and liabilities as on the close of the financial year including the net results of the activities undertaken by the assessee during the year - where the net results of the activities so undertaken has been accepted by the ld PCIT as reflected in the return of income in terms of net income and further, where no adverse finding has been recorded regarding the status of assets and liabilities, it would be incorrect to hold that the balance sheet is not authentic merely for the fact that the assessee has failed to report certain details in the return of income. Necessary enquiries and examination as reasonably expected have been carried out by the Assessing officer and he has taken a prudent, judicious and reasonable view after considering the entire material available on record and the order so passed u/s 143(3) cannot be held as erroneous in so far as prejudicial to the interest of Revenue - Decided in favour of assessee.
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2021 (9) TMI 408
Revision u/s 263 - excess stock found during the course of survey and taxability - difference in the physical stock and the stock recorded in the books of accounts - HELD THAT:- On perusal of statement of Shri Ram Kumar Soni recorded u/s 133A it is noted that in response to question no. 6, he has offered an amount of ₹ 70 lacs to tax towards difference in stock and other deficiencies and during the course of assessment proceedings, there is a clear affirmation by the AO that the assessee has offered additional income for stock and other discrepancies pointed out during the course of survey as income in his return of income and the same was brought to tax at the rate of 30% under section 115BBE - The matter relating to excess stock found during the course of survey and taxability thereof has been specifically discussed in the body of the assessment order. Thus, it cannot be said that there is failure on part of the AO to examine the same. Excess stock of Gold Jewellery and silver jewellery - Figures relates to the stock which was recorded in the books of accounts as on the date of the survey as apparent from the trading account for the pre survey period which is also reproduced by the ld PCIT in the impugned order and not the figure of excess stock found during the course of survey. The excess stock which was found during the course of survey and the stock of gold and silver in the trading account has been corresponding increased in the trading account by the assessee and the same has been duly examined by the Assessing Officer along with other discrepancies found during the course of survey and the discrepancies on account of excess stock and other discrepancies adding up has been offered to tax by the assessee as we have noted above and duly brought to tax by the Assessing officer by invoking provisions of section 115BBE. There is no basis to hold that the order passed by the AO is erroneous so far as prejudicial to the interest of the Revenue. The order of the ld PCIT is hereby set-aside and that of the AO is sustained. - Decided in favour of assessee.
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2021 (9) TMI 406
Disallowance u/s 14A r.w.r. 8D - whether investments were made out of interest free funds available with the assessee? - HELD THAT:- Interest free funds as available with the assessee were more than the investment made in the joint venture entities, remain uncontroverted before us. In such a situation, the ratio of binding judicial pronouncement was squarely applicable to the fact of the case. Therefore, no fault could be found in the impugned order, in this regard. The ground raised by the revenue stand dismissed. Estimation of income - Bogus purchases - HELD THAT:- As the assessee was engaged in civil construction which would require consumption of various material. The assessee could produce copies of invoices, delivery Challans as well as material inward register. The payment to the supplier was through banking channels. Therefore, it was a fit case for estimation of addition to plug the leakage of revenue. The estimation of 12.5% as made by Ld. CIT(A), in our considered opinion, was quite fair reasonable on the given factual matrix. Finding no reason to interfere in the same, we dismiss the ground raised by the revenue.
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2021 (9) TMI 404
Revision u/s 263 - case was selected for scrutiny under Cass and order u/s 143(3) - income from other sources u/s 56(2)(vii)(b) -assessee had purchased a property jointly with one person in which there was difference in the value as adopted for stamp duty purposes - contention of the assessee had been that since he is carrying on business as a dealer and investor in real estate, the amount paid represents actual consideration paid in normal course of trade and cannot be regarded as gift as contemplated in section 56(2)(vii) - Whether plots of land were in the nature of stock in trade? - HELD THAT:- As perused the material placed on record and we find that the assessment order cannot be said to be erroneous or prejudicial to the interest of revenue. The selection of the case was for limited scrutiny and the Ld. PCIT has not shown on what issue the order was erroneous on the issues on which the selection of the case was made. Other issues cannot be considered for setting aside the order. Coordinate Jaipur Bench in SHRI ASHOK AGARWAL HUF AND (VICE-VERSA) [ 2020 (8) TMI 94 - ITAT JAIPUR] on similar issue in the case of real estate dealer had taken a view that for the purpose of section 56(2)(vii)(b) the term capital asset would not include the stock in trade. This is one possible view which if taken cannot be said to be erroneous or prejudicial to the interest of revenue. In these circumstances we hold that the assessment order cannot be set aside, and accordingly the revision order made is quashed. - Decided in favour of assessee.
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2021 (9) TMI 403
Penalty u/s 271D - taking and repaying back of loan in cash - Relief granted by the CIT(A) based on under Negotiable Instrument act, for guilty for dishonouring of cheque given for repayment of loan - AO obligation to make necessary independent enquiry - HELD THAT:- The only conclusion drawn by the A.O. with regard to genuineness of the transaction was merely based on the ground that the Magistrate in a separate complaint filed U/s 138 of the N.I. Act had convicted the assessee but the said decision of the Magistrate cannot ipso facto leads to the conclusion that the assessee had taken or accepted any loan or deposit in contravention of provisions of Section 269SS of the Act, therefore, in our view, the A.O. was under an obligation to independently prove by carrying out necessary enquires or bringing on record evidence that the cash loan was taken by the assessee from Shri Aditya Kumar Sharma in contravention of provisions of Section 269SS. A.O. as well as the CIT(A) fell in error by merely relying upon the copies of the order of the Magistrate regarding conviction of the accused, more particularly when there was no independent evidence or material brought on record by the A.O. to the effect that the cash loan was taken or accepted by the assessee in contravention of Section 269SS of the Act. Merely because the Magistrate on a complaint filed had convicted the assessee on the ground of dishonoring of cheque U/s 138 of the N.I. Act it cannot automatically lead to presume that the assessee had in fact taken or accepted cash amount of ₹ 2.5 lacs as loan in contravention of provisions of Section 269SS The proceedings before Income tax authorities are independent proceedings and the A.O. being the adjudicator as well as investigator was under an obligation to carryout independent enquiries and to bring on record cogent and convincing independent evidence to specifically prove that the assessee had accepted loan or deposit in cash in contravention of provisions of Section 269SS of the Act but the said exercise has not been done by the A.O - merely relying on the decision of the Magistrate is not enough to presume that there was violation by the assessee of Section 269SS - Decided in favour of assessee.
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2021 (9) TMI 402
Revision u/s 263 - AO allowing the loss on account of differential interest under the head income from other sources in the absence of Balance Sheet/ bank statement of relevant period as erroneous and prejudicial to the interest of revenue - HELD THAT:- Absence of proper inquiring by the AO would render the assessment order erroneous as well as prejudicial to the interest of revenue. We also draw strength from the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs CIT [ 2000 (2) TMI 10 - SUPREME COURT] wherein it was held that an incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. A.O. has simply accepted the returned income filed by the assessee mentioning the fact that after discussion and examination, income of the assessee for the A.Y. 2016-17 in the status of individual is assessed read with Section 143(3) of the Income Tax Act - The order passed by the A.O. was not in accordance with law and it is prejudicial to the Revenue. The submissions of the ld. AR and the case laws relied by him is not found tenable at the facts of the present case. Therefore, we found no error or illegality in the order passed by the ld. Pr.CIT U/s 263 of the Act and we uphold the same. - Decided against assessee.
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2021 (9) TMI 401
Deduction u/s 80P(2)(a)(i) - interest income earned on deposits - HELD THAT:- The ratio laid down by the Hon ble Karnataka High Court in the case of Totgars Cooperative Sales Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] is that in the light of the principles enunciated by the Supreme Court in Totgars Co-operative Sale Society [ 2010 (2) TMI 3 - SUPREME COURT] in case of a society engaged in providing credit facilities to its members, income from investments made in banks does not fall within any of the categories mentioned in section 80P(2)(a) of the Act. However, section 80P(2)(d) of the Act specifically exempts interest earned from funds invested in cooperative societies. Therefore, to the extent of the interest earned from investments made by it with any co-operative society, a co-operative society is entitled to deduction of the whole of such income under section 80P(2)(d) of the Act - interest earned from investments made in any bank, not being a co-operative society, is not deductible under section 80P(2)(a)(i).
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2021 (9) TMI 400
Deduction u/s. 54F - proportionate deduction - Denial of deduction as assessee has not completed the construction within the period of 3 years and accordingly directed the AO to quantify and allow the expenditure incurred by the assessee on the construction of new house u/s. 54F - main grievance of the assessee was that he has invested the net sale consideration received on transfer of capital asset in construction of new residential house, however, the house was not completed in full respect, on this reason, deduction u/s. 54F cannot be denied - HELD THAT:- In the present case, the assessee is entitled for proportionate deduction u/s. 54F to the extent of investment made in construction of new residential house within the period allowed u/s. 54F of the Act, i.e., 09.10.2014 though construction was not fully completed. The assessee shall provide necessary evidence in support of the cost of construction incurred upto the date of time allowed u/s. 54F of the Act so as to claim the deduction. This issue is therefore remitted to the Assessing Officer for the limited purpose of computation of deduction u/s. 54F of the Act, after examining the cost of construction incurred in construction of new residential house upto 09.10.2014. We may clarify that the investment made by the assessee before one year of sale of original capital asset i.e., before 11.10.2010 cannot be considered for grant of deduction u/s. 54F of the Act.
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2021 (9) TMI 431
Notice u/s 153C against deceased person - liability of legal heir of late assessee - HELD THAT:- We are not inclined to interfere with the impugned order(s).The special leave petitions are, accordingly, dismissed.
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2021 (9) TMI 399
Penalty u/s 271(1)(c) - defective notice - non specification of charge - disallowance of interest which has been accepted by the assessee in quantum order - HELD THAT: - We find that the notice in this also is an omnibus show-cause notice as it does not strike off/delete the inappropriate/irrelevant/not applicable portion. Such a generic notice betrays a non-application of mind. Hence, the penalty levied pursuant to such a notice is not legally sustainable in law. Hence as per MR. MOHD. FARHAN A. SHAIKH [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] we hold that the AO was bereft of valid jurisdiction as the notice issued to assessee is unsustainable in law. Hence, the penalty levied under section 271(1)(c) of the Act is liable to be deleted. Since we have held that the penalty order is liable to be quashed for lack of a valid notice. - Decided in favour of assessee.
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2021 (9) TMI 398
Unaccounted sale of scrap - HELD THAT:- Addition made on account of sale of scrap is not based on any seized material. The seized material reflecting the scrap belongs to the financial year 1999-2000 and also doesn't belong to the assessee. CIT(A) has given a categorical finding that the addition is based on estimation. In the absence of any seized material produced before us proving contra, we decline to interfere with the order of the ld. CIT(A). Estimating speed money expensed - AO made addition of amount @ 0.5% on the sales Made to SEBs - HELD THAT:- CIT(A) gave a categorical finding that the amount has been added on estimate basis and no incriminating material is found or seized. CIT(A) has also held that the expenses have not been claimed in the books of accounts and hence no disallowance is attracted as per Section 37 of the Income Tax Act, 1961. In the absence of any seized material produced before us proving contra, we decline to interfere with the order of the ld. CIT(A). Disallowance of commission - HELD THAT:- Addition has been made based on the information received from the Addl. CIT, Range-3, Kolkata that the case of one of the recipients of commission has been reopened u/s. 148. This issue has been examined during the proceedings u/s. 143(3). Duly considering this fact on record, still the issue doesn't cross the threshold of being emanated from the seized material. Hence, in the absence of any seized material no addition is called for. The action of the ld. CIT(A) is not interfered with.Addition of unvouched expenses. Assessment u/s 153A - Unvouched expenses - HELD THAT:- AO made the addition on the grounds that the assessee has not produced bills vouchers. Such disallowance made do not fall under the purview of Section 153A. Hence, we decline to interfere with the order of the ld. CIT(A). Bogus purchases and wrong claim of CENVAT while the claim of the assessee was that the addition has been made merely based on the show cause notice issued by the Excise Authorities the finality of which was still pending - CIT(A) deleted the addition after obtaining the remand report from the AO - HELD THAT:- Since, the finding of the ld. CIT(A) could not be controverted on facts and as well as on jurisdictional issue, we hereby affirm the order of the ld. CIT(A)
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2021 (9) TMI 397
Penalty u/s 271(1)(c) - Notice u/s 274 - non specification of charge - whether the levy of penalty on account of wrong striking out of the inapplicable limb of section 271(1)(c) of the Act from the notice issued u/s. 274 is detrimental to the imposition of the penalty? - HELD THAT:- Where the charge is not properly set out in the notice u/s. 274, viz., both the limbs stand therein without striking off of the inapplicable limb, the penalty order gets vitiated. Turning to the facts of the extant case, we find from the notices u/s.274 of the Act that the AO did not strike out the irrelevant limb and further committed the same mistake in the penalty order as well. Respectfully following the case of MR. MOHD. FARHAN A. SHAIKH VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1 BELGAUM., THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, BELGAUM. [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] we overturn the impugned order on this legal issue and direct to delete the penalty. - Decided in favour of assessee.
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2021 (9) TMI 396
Addition u/s 69C - Unaccounted expenditure paid to M/s Advaita Interiors - HELD THAT:- The assessee had supplied goods to that entity and M/s Advaita Interior was sundry debtors for the assessee. This being so, there could be no occasion to presume that there was payment in cash by the assessee to the said party. AO could not appreciate the issue properly and went on to making addition of double amount while framing the assessment. Therefore, this addition is not sustainable. We delete the same. The ground stand allowed. Unaccounted investment in Shares - Addition u/s 69 - seized documents reflected details of shares held by the assessee - HELD THAT:- We find that the assessee has declared Short-Term Capital gain on sale of shares for ₹ 3.88 Lacs in the return of income. Upon perusal of computations, we find that all these shares were sold by the assessee during this year and the resultant gain / loss were taken into account while computing short-term capital gains and the same has already been offered to tax. This being so, the investments as mentioned on the seized document could not be termed as unexplained investment. The gains / loss on shares very much formed part of the computation of income and therefore, this addition is not sustainable. By deleting this addition, we allow this ground of appeal. Estimation of business income - material available during the search and seizure operation for making an assessment of the undisclosed income of the assessee - HELD THAT:- For the purpose of computing income under section 153A / 153C of the Act, Ld. AO is required to confine himself only to the material found during the course of search or not. In reply to this question, the Hon ble Court held that AO could take into consideration material other than what was available during the search and seizure operation for making an assessment of the undisclosed income of the assessee. Thus, this decision is distinguishable from assessee's case on facts - we find that the addition which could be made, was to be only with reference to incriminating material found during the course of search action. Since this addition is not with reference to any incriminating material, the same is not sustainable. By deleting the addition, we allow this ground of appeal. The appeal stand partly allowed in terms of our above order. Addition of estimation of business income in response to notice u/s 153A - HELD THAT:- The statutory time limit to issue notice u/s 143(2) had already expired and no proceedings were pending against the assessee on the date of search. Therefore, the additions which could be made was to be only with reference to incriminating material as found during the course of search action. We find that no such specific reference has been made by AO in the assessment order while making the addition - AO, at para-10, has simply alleged that the assessee has accepted accommodation entries for bogus loans and therefore, the loans could not be accepted as genuine - there is no specific reference to any seized material to show that the loans taken by the assessee from the lenders was its own unaccounted money. The unsecured loans very much formed part of the assessee s financial statements as placed on record. Therefore, respectfully following the binding judicial precedents of CIT Vs. Continental Warehousing Corporation [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] we delete both the additions. The appeal stands partly allowed. Assessment u/s 153A - Addition of unsecured loan addition of estimation of business income - HELD THAT:- We find that this year is also a case of non-abated assessment year and therefore, the addition which could be made was to be with reference to incriminating material only. We find that no incriminating material has been found so far as the estimation of business income is concerned. Therefore, the addition of ₹ 2.50 Lacs is not sustainable.
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2021 (9) TMI 395
Long Term Capital Gains on sale of property - to be taxed in hands of assesses OR HUF - Assessment after partition of a Hindu undivided family - HELD THAT:- As stated by the ld. A.R, and rightly so, the provisions of sub-section (1) and sub-section (9) of Sec. 171 of the Act would stand invoked only in a case of a HUF hitherto assessed as undivided. On being queried as to whether or not the HUF in question, viz. Sajal Kar, HUF was assessed under the Act, the ld. D.R answered in the negative. In the backdrop of the aforesaid factual matrix, we concur with the claim of the ld. A.R that as the HUF in question, viz. Sajal Kar, HUF was not hitherto assessed under the Act, therefore, the provisions of Sec. 171 of the Act would not stand triggered. As the assessee‟s HUF, viz. Sajal Kar, HUF had not been hitherto assessed under the Act, therefore, it could not have been brought within the realm of the provisions of Sec. 171 of the Act - See KANTILAL AMBALAL (HUF) [ 1991 (6) TMI 58 - GUJARAT HIGH COURT] - thus we vacate the order of the CIT(A) to the extent he had concluded that the transaction of transfer of the property in question was liable to be assessed in the hands of the Sajal Kar, HUF and not in the hands of the assessee before us. Deduction u/s 54 - Partial deduction - effect of Joint ownership - CIT(A) restricted the assessee‟s claim for deduction to 50% of the investment made by him towards purchase of the new property - claim of the ld. A.R that as the source of the investment in the new property was made to the last of paisa by the assessee, therefore, the CIT(A) had wrongly restricted the assessee‟s claim for deduction u/s 54 to 50% of the investment that was made by him towards purchase of the new residential house - HELD THAT:- No infirmity arises from the order of the CIT(A) who taking cognizance of the aforesaid fact of joint ownership of the new residential property had restricted the assessee‟s claim for deduction u/s 54 of the Act to 50% of the total investment therein made. On a perusal of Sec. 54 of the Act, we find that the same specifically contemplates the purchase/construction of the new residential house within a stipulated time period by the assessee - we concur with the view taken by the CIT(A) that though the investment in the new residential property was made by the assessee, however, as the same was jointly purchased in the name of the assessee and his wife, therefore, the assessee‟s claim for deduction u/s 54 was liable to be restricted to the extent of his ownership in the property in question i.e 50% of the investment therein involved. Our aforesaid conviction is supported by the judgment of the Hon‟ble High Court of Bombay in the case of Prakash Vs. Income Tax Officer Ors. [ 2008 (9) TMI 234 - BOMB.AY HIGH COURT] . Capital gain computation - Denial of additional cost with respect to the aforesaid property - solitary basis to support the claim that the assessee had incurred an amount towards providing of various amenities as regards the property in question is a letter dated 5th December, 1985 - HELD THAT:- We are unable to comprehend as to how a letter dated 5th, December, 1985 would have an embossing dated 29th JUNE, 1982 . Apart from that, we find that Page 25 (backside of the letter) dated 5th December, 1985 clearly states that the same had been confirmed by the assessee, viz. Shri Sajal Kar at Bombay on 5th Day of June, 1985 . On a careful perusal of the aforesaid letter, we find that the date 5th Day of June, 1988 appears not only in the typed version but also is found to have been hand written. Although, the document is illegible, however, the same is claimed to have been notarised on 5th June, 1988. In the backdrop of the aforesaid serious doubts which are apparently glaring on the very face of the aforesaid document, we are of the considered view that the same would require verification on the part of the A.O. Accordingly, we herein direct the assessing officer to call for the original document and make necessary verifications. Quantifying the assessee's claim for deduction u/s 54 - declining claim for considering the brokerage expenses as a part of the cost of acquisition‟ of the new residential property that was purchased by him - HELD THAT:- Assessee of having incurred the aforementioned expenses in respect of purchase of the new residential property stands proved to the hilt, therefore, there was no justification on the part of the CIT(A) to have not considered the same as a part of the cost of acquisition‟ of the new residential property that was purchased by the assessee while quantifying his claim for deduction u/s 54 of the Act. Accordingly, not finding favor with the view taken by the CIT(A), we herein set-aside the same and direct the A.O to consider the brokerage expenses while computing the assessee‟s claim for deduction u/s 54. As the assessee‟s claim for deduction u/s 54 of the Act is to be restricted to the extent of 50% of the total investment, therefore, as a consequence thereto the entitlement of the assessee towards claim for deduction of the aforesaid amount of brokerage expense would also stand restricted to the said extent i.e 50%. Disallowing the cost as incurred by the assessee towards purchase of property, viz. VAT, Service tax and Extra work done - HELD THAT:- Aforesaid claim of the assessee cannot be safely gathered on a perusal of the aforementioned documents. Although, we are principally in agreement with the ld. A.R, and are of the considered view, that if the aforementioned amounts had been borne by the assessee qua the purchase of the new residential house, then, the same ought to have been considered as a part of the investment made by the assessee. Accordingly, in all fairness, we deem it fit to restore the issue to the file of the A.O who shall after making necessary verifications readjudicate the aforesaid claim of the assessee. Disallowing claim towards cost of improvement‟ of the property that was incurred by him in the financial year 2003-04 for rendering it habitable - HELD THAT:- No justification as to why the assessee‟s claim for expenditure qua such items which form part of the property itself was not to be considered as an expenditure incurred by the assessee towards improvement of the property in question. At the same time, we are unable to accept the claim of the assessee that expenditure incurred by him towards double bed repair, shoe cabinet, box grills, sofa repairs, upholstery repair, split air conditioner, dining chairs, wall painting etc. were also to be allowed as a part of the expenditure incurred for improvement of the property. As the very nature of the aforesaid expenses so reveals, the same are clearly in the nature of items which can by no means be held as a part of the property but are in the nature of independent items which had been put to use by the assessee for a better enjoyment of the property under consideration. Insofar the aforesaid expenses are concerned, we concur with the view taken by the CIT(A) that the assessee could not have claimed the same as part of the expenditure incurred by him towards improvement of the property in question - modify the order passed by the CIT(A) and direct the A.O to give consequential effect to the same.
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2021 (9) TMI 394
Revision u/s 263 - Reopening of assessment u/s 147 - income from assets given on lease, though offered to tax under normal provisions, was not routed through Profit Loss Account which has led to short-computation of Book Profits under MAT provisions - HELD THAT:- Upon perusal of assessment order, it could be seen that the case was reopened for various specific reasons, one of which was the fact that income from lease assets was not added in Book Profits. However, no such adjustment has finally been made in the assessment order. AO, observed that on the remaining issues, the submissions made by the assessee are considered and accepted on the basis of merit of the issues and stand taken by the department in earlier years. Therefore, it could very well be said that Ld.AO duly applied his mind to the issue under consideration and took a possible view in the matter which is not contrary to law. Therefore, the observation of Ld. Pr. CIT that Ld. AO did not applied his mind to the issue, is without much substance. Merely because similar adjustment was made in subsequent years, the same would not lead to a conclusion that the orders passed in earlier years would require revision unless it was shown that the order was erroneous as well as prejudicial to the interest of the revenue. In the present case, we find that the issue was duly considered by Ld. AO after considering assessee s detailed submissions. The view could not be said to be unsustainable view and it was one of the possible view - we find that the subject matter of proposed revision was already deliberated upon by Ld. AO and a possible was taken in the matter - assessment order could not be subjected to revision u/s 263 and the action of Ld. Pr.CIT in invoking jurisdiction u/s 263 could not be sustained - Decided in favour of assessee.
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2021 (9) TMI 393
Revision u/s 263 - claim of depreciation u/s 32(1)(ii) @ 25% with reference to the expenditure that was incurred by it for development of roads as per BOT agreement - HELD THAT:- No infirmity in the view taken by the CIT(A) that now when the order passed by the Pr. CIT-4, Mumbai u/s 263 of the Act, dated 22.03.2017 had been quashed by the Tribunal 2019 (4) TMI 2011 - ITAT MUMBAI] therefore, as a consequence thereto the assessment order passed by the A.O u/s 143(3) r.w.s 263, dated 31.03.2017 cannot survive on a standalone basis and had to meet the same fate. Our aforesaid view that when the very order passed u/s 263 of the Act by the CIT/Pr. CIT is set-aside, then, the assessment framed pursuant to the said order cannot survive on a standalone basis is supported by the order of the ITAT, Delhi in the case of DCIT Vs. M/s Eastern India Power Tech Ltd. [ 2012 (4) TMI 790 - ITAT DELHI] , and in the case of DCIT Vs. M/s The Grand Bhagwati Banquets and Hotels Ltd. [ 2018 (5) TMI 2083 - ITAT AHMEDABAD] - Accordingly, in the backdrop of our aforesaid deliberations, we concur with the view taken by the CIT(A) that now when the order passed by the Pr. CIT-4, Mumbai u/s 263 itself had been quashed by the Tribunal, therefore, as observed by him, and rightly so, the assessment order passed by the A.O in consequence thereto u/s 143(3) r.w.s 263, could not be sustained and was liable to be vacated. - Decided against revenue.
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2021 (9) TMI 430
Characterization of income - subsidy received - revenue or capital receipt - Focus Marketing Scheme - electricity subsidy under the Rajasthan Investment Promotion Scheme was held to be a capital receipt - HELD THAT:- SLP dismissed.
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2021 (9) TMI 392
Addition u/s 271(1)(c) - addition of RoC charges and interest expenditure - AO disallowed the same with the observation that the assessee has not explained and not brought on record any material to his satisfaction - HELD THAT:- On appeal before the Ld. CIT(A), the Ld. CIT(A) sustained the additions made by the Assessing Officer and the assessee did not prefer any further appeal. Subsequently, the Assessing Officer initiated the proceedings u/s 271(1)(c) of the Act and levied the penalty. As the expenditure claimed by the assessee are debatable and merely because these expenditures were disallowed and as well as assessee preferred not to appeal before second appellate authority. As relying on RELIANCE PETROPRODUCTS PVT. LTD. [ 2010 (3) TMI 80 - SUPREME COURT] merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that, by itself, would not attract the penalty under section 271(1)(c). If the contention of the revenue was accepted, then in case of every return where the claim made was not accepted by the Assessing Officer for any reason, the assessee would invite penalty under section 271(1)(c). - Decided in favour of assessee.
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2021 (9) TMI 391
Disallowance of interest paid on loan - interest expenditure nexus to the interest income earned - HELD THAT:- Major amount of loans were taken in the preceding years and amount advanced to M/s Sneha Medicare Pvt. Ltd. The assessee is consistently claiming interest expenditure against the interest income. There is a positive interest income at the end of the year. Nexus of amount received during the year to the amount advanced to Sneha Medicare Pvt. Ltd. is also appearing from record. The details filed before us including the ledger account of Sneha Medicare Pvt. Ltd. complete details of unsecured loans taken by the assessee including the details of opening balance, addition, repayment, interest and rate of interest and also the date-wise details of interest received during the year and also considering the fact that no abnormal rate of interest has been paid on the loans taken during the year and thus are inclined to hold that the alleged claim of interest expenditure has nexus to the interest income earned from Sneha Medicare Pvt. Ltd. and thus deserves to be allowed u/s 57(iii). Unexplained cash credit u/s 68 - Disallowing unsecured loan - HELD THAT:- The confirmation of accounts has also been filed which contains the complete address and PAN No. of the cash creditor. Non-filing of return in a particular year cannot be held to be a sole basis to treat the cash credit as unexplained. All these documents filed by the assessee stand un-rebutted by the Departmental Representative as no contrary material is placed before us. Also no independent inquiry has been conducted by both the lower authorities to controvert the submissions made by the assessee at the time of assessment proceedings and appellate proceedings. Considering the documents filed before us including copy of ledger account, bank statements, confirmation of account, copy of the PAN and Address, are of the considered view that the assessee has been successful to prove the identity and credit worthiness of Vanleela P. Mehta and genuineness of the alleged transaction. We thus delete the addition made u/s 68. Disallowance of business expenditure claimed to have been incurred wholly and exclusively for the purpose of business - HELD THAT:- As alleged disallowance made by the AO has not been made on the basis of any irregularity found in the documents and books maintained. The expenditure claimed by the assessee are normal business expenditure. Though they have been incurred in cash but they are incidental for earning commission income. The total expenditures of ₹ 1,08,105/- has been claimed against the commission income of ₹ 1,65,000/- leaving behind the positive income of ₹ 68,895/- - The alleged disallowance prima facie seems to be an ad-hoc disallowance which in our considered view was not called for. - Decided in favour of assessee.
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2021 (9) TMI 390
Unsecured loan in the books of investors - Addition in the absence of proper explanation offered by the assessee regarding forfeited - assessee used colourable device to introduce money in its business under the garb of share application money by making private placement and later on forfeiting the money for non-payment of call money - HELD THAT:- On payment of allotment money or call money, the amount already paid will be forfeited and therefore, the assessee company having powers under Article 23 had forfeited the above said money. Now the above said forfeited money is a capital receipt which is not liable to tax as per the provisions of I.T. Act and therefore, was not rightly offered to tax by the assessee company and was rightly credited to reserve and surplus. AO during the assessment proceedings, did not doubt the creditworthiness of investor and his only objection in disallowing the same is that the investors in their books of account had classified investment in the assessee company as unsecured loans. In our opinion, such classification made by the investor company, in their books of account, does not alter the nature of transactions which clearly is share application money as is evident from the copy of share application forms.The explanation of the investor company that since they had not yet received the allotment of shares and therefore, had classified the same as unsecured loans is plausible. - Decided against revenue.
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2021 (9) TMI 387
Penalty levied u/s 271AAB - conversion of survey action into search - detection of undisclosed income u/s 133A or u/s 132 - disclosure of additional income - excess stock of diamond and its incomplete record in the books of account and other documents maintained in the normal course of assessee s business - HELD THAT:- CIT(A) was of the view that there was excess stock of finished diamond of 137.01 carat only, which was not recorded in regulars books of account maintained nor in the document maintained at regular course of business CIT(A) held that income which is detected during the survey under section 133A is neither covered in the section 271AAB nor in Explanation5A filed to section 271(1)(c) of the Act. The penalty has not been imposed under section 271(1)(c) and therefore whether penalty was imposable on income detected during the survey but disclosed in return of income filed under section 139(1) of the Act (as time for filing return was available) itself is academic. CIT(A) also held that the penalty under section 271(1)(c) imposing only in the furnishing inaccurate particulars of concealment of particulars in the return of income filed. CIT(A) finally held that the total undisclosed income found as per the definition for the purpose of penalty under section 271AAB of the Act is only ₹ 3,33,27,250/- and not ₹ 34,99,87,344/- as considered by Assessing Officer. The penalty imposable under the said section on the facts of this case is 10% of ₹ 3,33,27,250/-. CIT(A) worked out the penalty of ₹ 3,33,275/- and deleted remaining penalty. The Ld. CIT(A) took absolutely correct view, which we affirm. No contrary fact or law is brought to our notice to take other view. We have affirm the order of Ld. CIT(A) on the primary submissions of the learned Senior Counsel for the assessee, therefore, adjudication on other submissions of the assessee have become academic. So far as objection of ld. CIT-DR for the revenue is concern that the Ld. CIT(A) when survey proceedings at one premise has been converted into search, it became a search case and the entire disclosure made by assessee-firm on the basis of excess stock not recorded in their books of account to be considered at undisclosed income for the purpose of section 271AAB. The objection of the ld CIT-DR is not convincing to us as survey action at Delhi office only has been converted in to search action. No case law to support such view, is brought to our notice. The ld. CIT(A) while partly confirming the penalty has considered the undisclosed income found at Delhi office for the purpose of penalty under section 271AAB. Appeal of the Revenue is dismissed.
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2021 (9) TMI 424
Revision u/s 263 - Unaccounted and excess stock found during the course of search - whether be assessed as business income at the rate of 30% - show-cause notices calling for explanations from the assessees whether excess stock be not treated as undisclosed investment under Section 69 - whether Tribunal is correct in law in endorsing the erroneous order of the A.O as an order after taking one of the possible views? - HELD THAT:- In response to the notices, elaborate explanations were offered by the assessees, which were fortifiable by consistent views by various Benches of the Tribunal as well as the High Courts - Assessing Officer, upon consideration, accepted the explanation and taxed the additional income as business income @ 30% instead of 60% as per Section 115BBE of the Act. No contrary view either of any High Court or the Apex Court has been placed before us to demonstrate that the explanations offered by the assessees in the course of assessment were either perverse or contrary to law - we are constrained to hold no case of perversity or lack of enquiry on the part of the Assessing Officer is made out so as to render his decision erroneous under Explanation 2 of Section 263 of the Act. The revisional powers under the said provision were illegally invoked by the Principal Commissioner and his order was rightly set aside by the Tribunal. Appeal dismissed.
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Customs
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2021 (9) TMI 417
Valuation for levy of CVD - Re-determination of value under Central Excise - Levy of additional duties of customs - assessment of duties of central excise on the basis of retail selling price - re-labelling of the specified goods would amount to manufacture after import - HELD THAT:- The assessment of duties of central excise on the basis of retail selling price was intended to dovetail enforcement of the levy with the statutory oversight contemplated by the Standards of Weights and Measures Act, 1976 and Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (and the substituting Legal Metrology Act, 2009 and Legal Metrology (Packaged Commodities) Rules, 2011) and its adoption, for parity, in assessment of additional duties of customs was ineluctable - Though Central Excise Act, 1944 did empower re-valuation with effect from 1st March 2008 in the specifically enumerated circumstances, there has been no corresponding empowerment under either Customs Act, 1962 or Customs Tariff Act, 1975. The exercise of such power in the proceedings leading to the impugned order is, thus, without authority of law. The mandate by which an assessing authority was enabled, under Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, to revisit the value declared in the entry under section 46 of Customs Act, 1962 is limited to assessment of basic customs duty under section 12 of Customs Act, 1962. Any revision in the assessable value for determination of basic customs duty would correspondingly impact additional duties of customs too - Recourse to rules of valuation framed under the authority of section 14 of Customs Act, 1962 was, thus, precluded and the sanctity of declared retail selling price protected from being re-determined. As re-labelling of the specified goods would amount to manufacture after import, it is not that recourse was unavailable to remedy any breach of parity. The adoption of retail selling price of other re-sellers and, that too, while the impugned goods were yet to be cleared for home consumption on the presumption that the importer intended to enhance the retail selling price at the point of sale appears to be a mis-direction on the part of the original authority and the confirmation thereof, by the first appellate authority, bears the same taint as to warrant the setting aside of the impugned order. The demand for differential duty liability, confiscation and penalty set aside - Appeal allowed.
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2021 (9) TMI 409
Levy of penalty on Customs Broker License - penalty under Regulation 18 of the CBLR, 2018 - failure to comply with the provisions of CBLR, 2018 - allegation is that appellant has not acted with due diligence and in turn, has violated Regulations 10(d) and 10(n) of the CBLR, 2018 - HELD THAT:- The role and responsibilities of the Customs Broker are limited, more so when the IE code has already been issued by the concerned authority and hence, the Customs Broker cannot be found fault with - the Inquiry Officer has, after going through the relevant documents, concluded that the appellant had no role to justify invoking irregularity under the provisions of the CBLR, 2018. The penalty is imposed without any justifiable reasons by the Commissioner - the appeal is allowed and the penalty levied is deleted.
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2021 (9) TMI 405
Smuggling - Gold bars - goods of foreign origin or not - burden of proof u/s 123 of the Customs Act, 1962 - sanctity of the statement recorded under section 108 - Confiscation - penalty - HELD THAT:- Admittedly this is a case of town seizure wherein, the impugned gold was intercepted, initially taken possession of by the officer of GRP and then handed over to the Customs. Admittedly, the gold did not have any tell-tale foreign markings and it was merely accused that the markings were removed to hoodwink investigation. The place where seizure took place is not Customs Area - Hon ble Supreme Court in the case of GIAN CHAND AND OTHERS VERSUS STATE OF PUNJAB [ 1961 (11) TMI 1 - SUPREME COURT] , wherein in case of seizure by the Police and thereafter the possession was shifted to the Customs Officer held that the pre-requisite of seizure is not satisfied. Accordingly, it is held that the circumstances as required under the Customs Act are not satisfied and consequentially the whole burden or onus to establish the smuggled nature of gold is on the Revenue. As admittedly, the gold having no foreign markings, the onus would be on department to prove the smuggled nature of the same. This onus was not discharged. Moreover, the provisions of Section 138B of the Customs Act have not been complied with and therefore, the sanctity of the statement recorded under section 108 has been lost and consequently, it cannot be conclusively relied upon - Valuer is expected to arrive at the purity and value of the Gold in a scientifically established manner. If his services were required only to value the Gold, the same can be arrived on the basis of day to day Bullion rates announced by various exchanges. In addition, fact remains that the Gold did not have any foreign markings; it has not been established that the same has been smuggled. The circumstances would certainly create reasons to believe that the impugned gold could be a smuggled one necessitating further probe. It does not constitute reasonable belief to seize the goods under Section 123 of the Customs Act, 1962. Confiscation - HELD THAT:- Neither foreign origin of the gold nor the nature of the same being smuggled is conclusively established other than merely relying on the conclusions drawn from the statement of Shri Dhuria. In the absence of action under Section 138B of Customs Act, 1962 by Revenue, statement of Shri Dhuria alone cannot be relied upon for sustaining the allegation of smuggling of gold, under the provisions of the Customs Act. Further, no reasonable belief has been established that the impugned Gold is liable for confiscation. Penalty - HELD THAT:- When goods are not held to be liable for confiscation, no penalty can be imposed under Section 112 of Customs Act, 1962. The respondent Commissioner are directed to return the gold seized forthwith and/or if the gold has been disposed, to return the sale proceeds along with interest as per rules, within six weeks of the date of receipt or service of the copy of this order - appeal allowed.
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Corporate Laws
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2021 (9) TMI 411
Business transfer agreement by way of Slump Exchange - Section 421 of the Companies Act, 2013 - HELD THAT:- Chapter XV of the Act Compromises, Arrangements and Amalgamations are covered by Section 230 -240 of the Act. The related regulation is the Companies (Compromises, Arrangements and Amalgamations) Rules 2016 as amended from time to time. The direction that the part III IV of the creditors of the Company shall maintain status quo about their debt, not to classify loan amount as NPA, till further orders with respect to their contractual terms, dues, claims and rights and stopping from taking coercive steps including reporting in any form under Section 230 of the Act R/w 11 of the NCLT Rules, 2016 is not in order. It is because the creditors themselves have to get it approved from 75% of the value of creditors and naturally, if they are not in favour of the scheme of arrangement, it will be disapproved - Even if the Company debt is under NPA and even if the Company is under Liquidation, it can always invoke Chapter-XV of the Act through Scheme of Arrangement to come out of the situation. There is no bar in merging unhealthy company with healthy company to come over the crisis. There was no need perhaps to pass this specific directions. Appeal disposed off.
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2021 (9) TMI 385
Seeking restoration of name of appellant company in the register of members - section 252(3) of the Companies Act, 2013 - HELD THAT:- When the present case in hand is considered, then it is noticed that the appellant has failed to establish this fact that at the time of striking off the name of the company, the company was carrying on business or the company was in operation. That as per the audited balance sheet submitted by the appellant, there was no Revenue from Operation for a period of Two immediately preceding financial years. This tribunal is not inclined to interfere with the striking off action taken by the ROC against the appellant's company under section 248 of the Companies Act, 2013 - Appeal dismissed.
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Insolvency & Bankruptcy
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2021 (9) TMI 418
Admissibility of application - application was for initiation of CIRP - grievance of the Appellant is that till date the matter was never listed for pronouncement of an order - principles of natural justice - HELD THAT:- This Tribunal pertinently points out that when the main C.P.(IB) No.116/BB/2020 was listed before the Adjudicating Authority under the caption For Hearing/Clarification on 11.12.2020 and when the matter was reserved For Orders on that date, however, the same being not uploaded in the NCLT Online Website Portal, certainly, the order in the main CP(IB)/116/BB/2020 could not have been pronounced on 07.12.2020 (vide Annexure E of the Appeal Paper Book Diary No.137 dated 08.03.2011). Apart from that, there was no communication that was received by the Appellant in regard to the pronouncement of the order which was received by the Adjudicating Authority in the aforesaid Company Petition. It cannot be gainsaid that if an order/judgment of a Tribunal is not pronounced at all, the same is a nullity in the eye of law , considering the fact that the pronouncement is primarily a judicial act, which is the Sanctum Sanctorum of any judicial proceedings in our justice delivery system , as opined by this Tribunal - If an order/judgment is delivered by a Tribunal ignoramus of rules, then, it will result in untold hardship, misery and unerringly leading to a miscarriage of justice. Moreover, expediency in pronouncement of an Order / Judgment by a Tribunal is not desirable/palatable, in the earnest opinion of this Tribunal . This Tribunal taking note of the totality of the attendant facts and circumstances of the instant case, comes to a resultant conclusion that when the main CP(IB) No.116/NCLT/BB/2020 was heard on 11.12.2020 by the Adjudicating Authority and considering the prime fact that when the matter was listed on 07.12.2020 an interim order was passed adjourning the main case to 11.12.2020, by no stretch of imagination the Impugned Order of the Adjudicating Authority in main CP(IB)No.116/NCLT/ BB/2020 would have been pronounced on earlier date on 07.12.2020. This Tribunal without delving deep into the matter and not expressing any opinion on the merits of the matter, any further, at this stage, simpliciter sets aside the said Impugned Order of the Adjudicating Authority to prevent an aberration of justice and to promote substantial cause of justice. Appeal allowed.
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2021 (9) TMI 415
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute or not - service of demand notice - HELD THAT:- The Adjudicating Authority ought not to have directed the Respondent to settle the claim of the Petitioner within a period of 3 months from the date of receipt of the copy of the Order. Further, the Learned Adjudicating Authority observed that the Application filed by the Appellant/Applicant is with an intention to recover an alleged balance amount, which is against the object of Code, and the settled position of the law. This Tribunal is of the view that the said finding is patently illegal and unreasonable. Further, the Learned Adjudicating Authority in the Impugned Order observed that the Respondent has paid part payments with an assurance to clear the balance in short time. The said observation is also illegal without application of mind. It is a settled Law that when a debt and default is proved, the Adjudicating Authority has to admit the Application and initiate Corporate Insolvency Resolution Process against the Corporate Debtor otherwise it is complete. The Learned Adjudicating Authority having noticed that there is a debt and default, passed the Impugned Order which is non-application of mind and accordingly this Tribunal is of the view that it is patently illegal and cannot with-stand to the scrutiny of law - Respondent failed to establish the existence of dispute prior to issuance of Demand Notice . This Tribunal comes to a conclusion that it is a fit case to be admitted by the Adjudicating Authority - Application admitted - moratorium declared.
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2021 (9) TMI 412
Direction to give a chance to submit Resolution Plan - time limitation - major part of the CIRP Proceedings and the approval of the present Resolution Plan had taken place during Covid Pandemic Period - Corporate Debtor is an MSME Unit a Corporate Guarantor to the Principal Borrower - HELD THAT:- This is the case of the CD which is an MSME Unit, a corporate guarantor to the principal borrower National Board Limited. The CD was established on 11.12.1973 - Section 29-A R/w Section 240-A of the Code refers to the Resolution Applicant in respect of CIRP of any MSME and these two sections provide for certain reliefs to the promoter of the MSME as a prospective Resolution Applicant and is entitled to have opportunity to place Resolution Plan. Keeping in mind the intention of the legislature, there is no harm in giving an opportunity to the MSME in accordance with the provisions of the Code for keeping the promotion of entrepreneurship alive. The Adjudicating Authority has only provided an opportunity to the MSME and has given the liberty to the CoC to negotiate with existing Resolution Applicant and MSME unit also and accept the one which is commercially viable and technically feasible. There are no infirmity in the order - appeal dismissed.
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2021 (9) TMI 389
Preferential Transactions or not - sale deed executed by the Corporate Debtor - transaction between the Appellant and the Corporate Debtor - Section 43(1) of the I B Code 2016 - HELD THAT:- In due compliance of the Provisions of Law, if the Adjudicating Authority is of the opinion that the said transaction is preferential in nature and is within the period of one year preceding the Insolvency commencement date, the said transaction can be declared as void and reverse the effect of such transaction in accordance with Section 45 sub-section (1) of the I B Code and in accordance with the Chapter III of the I B Code, 2016. In the present case, from the documents it is crystal clear that the Appellant is not a related party and the transaction is preceding one year from the date of admission of the application by the Adjudicating Authority on 04.02.2019. The sale deed dated 04.07.2018 and the Application was admitted on 04.02.2019, is well within one year preceding the admission of Application. The criteria as enunciated under the Code and the Law laid down by the Hon ble Supreme Court in Anuj Jain, Interim Resolution Professional [2020 (2) TMI 1259 - SUPREME COURT], squarely applicable to the facts of the present case. Further, the Resolution Professional need to see whether the property belongs to the Corporate Debtor or not? In the present case, admittedly the property belongs to the Corporate Debtor as evident from the sale deed and there is no dispute with regard to the same. Therefore, the criteria as prescribed by the Hon ble Supreme Court in the Judgment is fulfilled and the Adjudicating Authority rightly allowed the Application of the Resolution Professional. This Tribunal is of the view that the said transaction is a preferential transaction and not in the ordinary course of business. Further, this Tribunal is of the considered opinion that the said transaction entered between the Appellant and the Corporate Debtor by executing sale deed dated 04.07.2018 certainly prejudice the interest of other Creditors who have precedence in relation to the claim being settled ahead of the Appellant or even in relation to other Operational Creditors who are similarly placed like the Appellant . Appeal dismissed.
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2021 (9) TMI 388
Rejection of claim of the Appellant to be a Financial Creditor rejected by Resolution Professional - whether or not the Appellant could be treated as the Financial Creditor looking to the Agreements which are more of Development Agreements? - HELD THAT:- It is stated that the Corporate Debtor had about 70 projects in hand and thus there were applicants who wanted to give offers of Resolution Plans project-wise, which CoC did not find practicable - When the application of Appellant was pending before the Adjudicating Authority, the Adjudicating Authority had only orally asked the CoC to delay taking decision on the question of liquidation. Now, the Adjudicating Authority has applied its mind and taken a conscious decision not accepting the Appellant as the Financial Creditor and observed in Para 16 of the impugned order that CIRP is at an advance stage and reason why it had earlier given oral direction. If for an individual person claiming to be Financial Creditor the progress of CIRP is to be stayed, it would be counter-productive according to us considering the objects of the IBC. Now, when we already have decision not in the favour of the Appellant, it is all the more reason for us to not to grant any interim orders to stay the proceedings which are taking place before the CoC. It is stated that although extension has been granted by the Adjudicating Authority vide order dated 16th August, 2021, that order also has not been uploaded. Such order has been passed is not disputed by the Resolution Professional. Fact remains that there is time available in the CIRP till 30th September, 2021. The present Appeal will not come in the way of the CoC for either rejecting or accepting any Resolution Plan or from taking any other decisions including decision with regard to liquidation, as per law, when period prescribed under Section 12 of IBC is coming to an end, if Resolution Plan is not there. List the Appeal For Admission (After Notice) Hearing on 25th October, 2021.
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2021 (9) TMI 384
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Corporate Debtor made cash payments through NEFT into almost all the accounts in July 2017. The Company Petition being filed on 18.12.2019 is less than the 3 years from the date last payment and is within limitation. The counsel appearing for the Financial Debtor submitted that the debt and default are clearly established, and debt is also within limitation in the Company Petition. The learned counsel appearing for the Corporate Debtor was present at the time of final arguments on 06.08.2021, he did not raise any legal issues opposing the company petition except making statement that the Corporate Debtor has submitted One Time Settlement to the Financial Creditor. Thus, the present Company Petition satisfies all the necessary requirement for admission and the claim of Financial Creditor remained unchallenged. This tribunal is of the considered opinion that the company petition is liable to be admitted - petition admitted - moratorium declared.
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Service Tax
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2021 (9) TMI 416
Scope of taxability - Manpower recruitment or supply agency service - remuneration offered in work-orders were on piece rate - exemption initially taken registration as provider of business auxiliary service which, however, was surrendered upon coverage by the exclusion in N/N. 8/2005-ST dated 1st March 2005 - HELD THAT:- Two aspects are starkly prominent insofar as the present dispute is concerned: the recipient of the service had been discharging a portion of the tax liability that devolved on them in accordance with the specific prescription for manpower recruitment or supply agency service after 1st July 2012 and it has been held by the Tribunal in several decisions, that coverage under manpower recruitment or supply agency service for tax may be determined by the manner in which consideration is packaged. The Contract Labour (Regulation and Abolition) Act, 1970, intended for the specific purpose of ensuring proper working conditions of those not in regular employment, does not, in the light of the specific definitions in Finance Act, 1994, provide adequate support to fasten tax liability. That is not relevant to the dispute and may be ignored. It is seen from the findings of the adjudicating authority that the claim of the appellant of having engaged in contract on piece rate basis , though undeniable in some of the work orders , has been disregarded in the impugned order. Having identified some of the work orders to contain compensation on man day basis, it was incumbent upon the adjudicating authority, in the light of such finding, to segregate those to which, in accordance with the precedent arising from decisions of the Tribunal, coverage under that taxable service would not extend. This, the adjudicating authority has failed to do. The tax liability of the appellant for the period after 1st July 2012 also needs ascertainment by segregation of the work-orders on which tax liability may arise and re-examining those in the light of statutory provision and judicial precedent - the dispute remnaded back to the original authority for a fresh decision - appeal allowed by way of remand.
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2021 (9) TMI 407
Levy of Service Tax - Support Services of Business or Commerce - ocean freight charges collected in the taxable value for the purpose of payment of Service Tax - demand with interest and penalty - extended period of limitation - HELD THAT:- The Learned Hyderabad Bench of the CESTAT has decided an almost identical case, in the case of MARINETRANS INDIA PVT. LTD. VERSUS CST, HYDERABAD - ST [ 2019 (4) TMI 534 - CESTAT HYDERABAD] , which is relied upon by the Learned Advocate for the appellant, where it was held that buying and selling space on ships does not amount to rendering a service and any profit or income earned through such transactions is not leviable to service tax. The lis appears to be no more res integra and therefore, the impugned orders cannot be sustained - Appeal allowed - decided in favor of appellant.
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2021 (9) TMI 386
Power of commissioner (appeals) to remand back the case - Non payment of service tax - tour operator service - matter was remanded to the original Adjudicating Authority directing the detailed examination in terms of Circular No. 117/11/2009-ST dated 30.10.2009 and Place of Provisions Rules, 2012 and also in the light of the concept of negative list of services - power of Commissioner (Appeals) to remand the matter - Section 35A(3) of Central Excise Act, 1944 amended with effect from 11.05.2001 - HELD THAT:- As apparent from the impugned order under challenge, Commissioner (Appeals) has not reflected the opinion as to whether he has accepted the reasoning of the Original Adjudicating Authority or is rejecting the same. The order is silent about any proposed modification. It simply has directed the Original Adjudicating Authority to reconsider directing the detailed examination in terms of Circular No. 117/11/2009-ST dated 30.10.2009 and Place of Provisions Rules, 2012 and also in the light of the concept of negative list of services as prevalent from 01.07.2012 onwards. In Section 35A(3) as exists on date, sending back the matter to Original Adjudicating Authority with such directions is no more in competence of Commissioner (Appeals) since Section 35A (3) stands amended with effect from 11.5.2001. The order under challenge is not either of the one as is mentioned in sub clause (3) of Section 35A. It is precisely an order of remand which power stand withdrawn from Commissioner (Appeals). This order from no sense of interpretation can be held to have been passed either under the power of annulling or the power of confirming or the power of modifying - In the present case, the order of Commissioner (Appeals) is not in terms of directions which may amount to modification neither of annulling nor of confirming. It is clear cut order of remand directing Original Authority to reconsider the facts and pass the fresh order. It is clear that the order under challenge is beyond the competent jurisdiction of Commissioner (Appeals) - it is deemed to be a fit case to set aside the same - Commissioner (Appeals) is directed to adjudicate the same on merits in any of the three forms as are mentioned in amended section 35A(3) of Central Excise Act - appeal allowed by way of remand.
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2021 (9) TMI 425
Scope of SVLDRS scheme - Arrears or litigation category - Determination of amount payable afresh under Section 124(1)(a) of the Finance (No.2) Act, 2019 under SABKA VISHWAS (Legacy Dispute Resolution) Scheme 2019 as pending litigation category after verification of the records - recovery of arrears - violation of principles of natural justice - HELD THAT:- It is no doubt clear that the scheme was in force. At the time when the Scheme was in force, the petitioner made application to avail the benefit as per Sections 124 125, as referred to above, wherein it has been mentioned that, who are all the eligible persons who can claim the benefit or to get a declaration for availing the benefit of the scheme - in the case in hand, admittedly, the petitioner filed an appeal on 20.06.2019 ie., 10 days prior to the cut off date before the CESTAT, therefore, on 30.06.2019, in the eye of law, there has been a litigation by way of appeal which has been filed and pending before the appellate forum. Whether the appeal filed on 20.06.2019 would be subsequently numbered or not is not the criteria, as the same has not been mentioned either under Section 124 or 125. Moreover, when there is a specific exclusion provided under Section 125, all other categories are eligible to seek such declaration in view of the language used in Section 125(1) ie., all persons shall be eligible to make a declaration under this scheme except the following, namely; . The petitioner, in the considered opinion of this Court, is eligible to claim the benefit under the scheme by treating him under the category of litigation . Therefore, what has been recorded in the order dated 22.01.2020 shall prevail and the subsequent order dated 27.01.2020, which is impugned herein cannot be sustained - Petition disposed off.
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Central Excise
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2021 (9) TMI 414
CENVAT Credit - input service - event management service - Skill Competition between dealers and employees - other business events services. - denial on the ground that the same does not cover under Rule 2(l) of the Cenvat Credit Rules, 2004 as input service - period June 2012 to June 2017. Skill Competition between dealers and employees - HELD THAT:- The said competition is an event which shows the sale skill of the employees as well as the dealers. The skills of the employees shows that how they participate in bringing more production of the product and the skills of the dealers shows that how they increased the sale of the product - the said service is an integral part of manufacturing as well as sale activity, which is conducted by the appellant - the said service do qualify as input service in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 - the appellant is entitled to cenvat credit for the said service. Other business events services - HELD THAT:- Vishwakarma Puja and inauguration of new pipe line are basically two others business events services for which cenvat credit was sought to be denied. In fact, Vishwakarma Puja is a big festival for the workers who work on machines and they pray to the God for good running of their machines by doing Vishwakarma Puja - these two pujas are also integral part of manufacturing activity. Therefore, for these services also, the appellant is entitled for cenvat credit. The appellant has rightly taken the cenvat credit - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (9) TMI 427
Application for restoration of the revision petition - revisional authority recorded that the petitioner is not appearing consistently since long time and dodging the proceedings - HELD THAT:- In absence of any reliable evidence of the petitioner filing restoration application on 01.01.2014 as stated, in the present case we are unable to accept the stand of the petitioner in this respect. It is true that the petitioner relies on some stamping purported to be by the departmental authorities of having received the application for restoration on 01.01.2014, however, the respondents have denied any such application being on record. More importantly, if such application was filed on 01.01.2014 as is stated by the petitioner, there was no further requirement of filing a fresh application on 24.03.2021. This application is premised on the ground that he had never received the order of dismissal of revision petition and, therefore, he was filing a restoration application several years later. This is in conflict with his stand that he had filed the restoration application way back on 01.01.2014. Even his assertion that he had never received the order of dismissal of revision petition is disputed by the Commissioner while dismissing the application for restoration in which he has recorded that the said order was served on the petitioner on 23.11.2013. Even the assessment order records that despite issuance of several notices and adjournment of the proceedings on various occasions the petitioner did not remain present. Even while dismissing the revision petition of the petitioner, the Commissioner has recorded that he was given sufficient opportunities and all that the petitioner was interested was in prolonging the litigation. The petitioner has not showed any serious inclination to pursue his cause on merits - Revision petition is dismissed.
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2021 (9) TMI 426
Validity of Curtailing and whittling down the benefits with retrospective benefit - Musical Instruments - scope of the power conferred under Section 17 of the TNGST Act from 12.02.2004 - Validity of Notification G.O.MS No.193 (CT R (B2) dated 30.12.2006 - ultravires Section 17 of the TNGST Act, Articles 14, 19 (1) (g) and 265 of the Constitution of India or not - petitioner-Company have challenged the Notification issued in G.O.Ms.No.193, dated 30.12.2006 on the ground that once exemption granted under sub-section (1) of Section 17 cannot be cancelled or varied under sub-section (3) of Section 17 with retrospective effect - HELD THAT:- This Court is of an opinion that the exemption was granted initially in Notification G.O.Ms.No.45, dated 12.02.2004. In the said Notification, it is generally stated that the exemption in respect of tax payable by any dealer in sale of Indian Musical Instruments. In view of the fact that the Commercial Taxes Department found certain difficulties, inconsistency and discrepancy, though not to describe further in respect of classification of Indian Musical Instruments. Situation warranted for issuing the subsequent order in G.O.Ms.No.193, dated 30.12.2006. Perusal of these two Notifications would reveal that both relatable to Indian Musical Instruments. However, in the first Notification, the details/classification of Indian Musical Instruments have not been provided and in the subsequent Notification, it is clearly stated that the exemption in respect of the tax payable by any dealer under the said Act on the sale of Indian Musical Instruments namely, Veena, Violin etc. Thus, the subsequent Notification dated 30.12.2006 is only in the nature of clarification to understand what are all the instruments falling under the head of 'Indian Musical Instruments'. The benefit of exemption is not taken away and the benefit of exemptions conferred in Notification G.O.Ms.No.45 remains in tact. The subsequent Notification was issued on 30.12.2006 enumerating the list of instruments which all are falling under the category of Indian Musical Instruments. Thus, the impugned notice dated 30.12.2006 cannot be construed as if an alteration made in respect of the exemption granted in Notification G.O.Ms.No.45. Tax exemption is a concession. Thus, exemption from payment of tax can never be claimed as a matter of right. Exemptions are to be granted strictly in consonance with the provisions of the Act. Thus, purposive and contextual interpretation of exemption provisions are imminent for the purpose of extending the benefit of exemption. The Government is vested with the power to grant exemption and such exemptions are to be granted in judicious manner. Power of exemption is conferred in order to minimise the inequality and to mitigate the unjust circumstances and to ensure that the Constitutional principles are achieved to the extent possible. Thus, exemptions granted under any Statute is to be measured with reference to the Constitutional principles and its perspectives - The power of exemption is to be utilised for the upliftment of the depressed, oppressed and the poor class of people and not for the purpose of granting benefit to the large profit making organisations. Thus, any abuse or excessive grant of exemption is to be construed as opposed to public policy under the Constitutional philosophy. The exemptions granted by invoking Section 17 of the TNGST Act, remains as it is in respect of Indian Musical Instruments and the impugned Notification dated 30.12.2006 in G.O.Ms.No.193 was issued to clarify the Indian Musical Instruments, which all are falling under the exemption clause notified in G.O.Ms.No.45, dated 12.02.2004 and therefore, the subsequent Notification is a clarificatory in nature and cannot be construed as cancellation of the exemption granted in G.O.Ms.No.45, dated 12.02.2004 - the very Government Notification dated 30.12.2006 in G.O.Ms.No.193 would reveal that it is also relatable to Indian Musical Instruments and what are all the instruments, which all are falling under the category are enumerated for the purpose of removing the doubts for levying tax. This Court do not find any merit on the contentions raised on behalf of the petitioner - Petition dismissed.
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2021 (9) TMI 423
Seeking direction to respondent to consider the representation within stipulated period - availability of appeal remedy, which was not exhausted - existence of error, apparently on the face of the record or not - Section 84 of the TNVAT Act - HELD THAT:- Since Sub-Section (4) of Section 84 of the TNVAT Act has made it clear that even if the appeal / revision has been filed or pending, that will not preclude the power vested in the assessing authority to decide any such application be moved by the assessee to be considered under Section 84 of the TNVAT Act. The objection raised by the learned Government Advocate appearing for the respondent that without exhausting appeal remedy as against the original order / assessment order passed by the assessing authority, since the petitioner has invoked the provision under Section 84 of the TNVAT Act, the same cannot be entertained, in the considered view of this Court, will not be sustainable and cannot be countenanced - this Court feels that the plea raised by the petitioner for the simple prayer of mandamus to consider his request dated 06.01.2020 under Section 84 of the TNVAT Act, on merits by the assessing authority can very well be considered. It is made clear that before passing final order as indicated above under Section 84(1) of the TNVAT Act, the respondent shall give an opportunity of being heard to the petitioner and after assessing and evaluating the details to be supplied in this regard by the petitioner/assessee, needful as indicated shall be undertaken by the respondent - Petition disposed off.
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2021 (9) TMI 421
Classification of goods - rate of tax - sales of certain equipment treated as hospital equipment or hospital furniture instead of treating them as medical equipment - taxable at @ 14.5% or 5% under Entry 111 of IV schedule to the A.P. Value Added Tax, 2005? - HELD THAT:- The tax or fiscal statutes shall be interpreted with reference to strict letter of law but not merely to the spirit or the substance of the law. In case when two constructions are possible, that one favourable to the tax payer has to be adopted. With this principle, it has now to be seen whether the different varieties of hospital equipments sold by the petitioner fall within the groove of medical equipment/device/implants as mentioned in Entry 111 of Schedule IV or fall under the term furniture so as to be charged under the residuary entry of Schedule V of the AP VAT Act, 2005. The term medical equipment/device/implants is not defined under the Act. The simple words equipment/device/implant may refer to any type and any purpose if they are not qualified by the important prefix medical . Therefore, it is important and germane at this juncture to derive the meaning of the word medical which governs the rest of the words. Testing on the anvil of medical purpose, there can be no demur to emphasise that hospital beds are customized or tailor-made to suit the diagnostic tests, treatment process and also for post-operative care and comfort of a patient. Though for argument sake one may say that a hospital bed can also be used as furniture at home, still it is a misfit to be called as furniture, for, home furniture is meant for elegant and decorative purposes. The same is the case with OT lights. These OT lights are also customized to provide LED (Light Emitting Diode) technology, Shadow less illumination, free rotation etc. to be used in diagnostic and treatment process. By no stretch of imagination the OT lights can be said to be part of home furniture - in substance, while hospital beds and OT lights satisfy the term medical equipment , bedside cabinets and lockers do not. Thus, it is concluded that those equipments, devices and implants which partake in the process of diagnosis, treatment, cure and care of the patients either directly or indirectly, will alone come under Entry 111 of Schedule IV of the AP VAT Act, 2005. Whether a particular equipment, device or implant fulfils the aforesaid test is a question of fact to be determined on case-to-case basis. The batch of writ petitions are partly allowed by setting aside the impugned assessment orders with a direction to the concerned Assessing Authorities to pass the fresh assessment orders by including the hospital beds and OT lights in Entry No.111 of Schedule IV and bedsides lockers/cabinets in residuary entry of Schedule V of the AP VAT Act, 2005.
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