TMI Tax Updates - e-Newsletter
September 11, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Cancellation of GST registration of petitioner - registration obtained by means of fraud, wilful misstatement or suppression of facts - The impugned SCN is incapable of eliciting any meaningful response as it does not indicate as to what is the fraud allegedly perpetuated by the petitioner or the wilful misstatement allegedly made by the petitioner. - Order of cancellation set aside - HC
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GST:
Cancellation of GST registration - Insofar as the discrepancies in the tax returns and tax liability is are concerned, that too cannot be a ground for cancellation of the petitioner’s GST registration. The authorities have to proceed in accordance with law in assessing the correct liability, in the event there is any ground to believe that the taxpayer has not truly disclosed the same. - HC
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GST:
Migration from Composition Scheme to regular scheme of GST payment - Permission to petitioner to file ITC-01 FORM to avail its eligible ITC or input lying on the stock as on date - petitioner was unable to file the ITC-01 FORM to avail the eligible ITC u/s 18(1) - petitioner is permitted to upload the Form ITC-01 so as to enable him to claim the Input Tax Credit - HC
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GST:
Refund of Input Tax Credit (ITC) - zero-rated supplies - input supplies for exporting rice and sugar - None of the said orders indicate any reason as to why the authorities have not considered the said material to be relevant for establishing that the input supplies in respect of which refund was claimed, were directly corelated to export of sugar. - Matter restored back - HC
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GST:
Validity of ex-parte order raising demand of GST - No sufficient time was afforded to the petitioner to represent his case - The order passed exparte in nature, does not assign any reasons sufficient even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. - The assessment order and demand set aside - Matter restored back - HC
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Income Tax:
Best judgment assessment - the notice dated 12.07.2022 under Section 142(1) of the Act was clearly vitiated on account of granting hardly three days to the petitioner to respond. Denial of sufficient time to respond was not just an abrogation of jus naturale but the same also infringed clause B(1) of the Standard Operating Procedure of the CBDT - Draft assessment orders and demand set aside - HC
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Income Tax:
Reopening of assessment u/s 147 - Service of the Notice u/s 148 - Over enthusiastically and by way of abundant caution, the notice u/s148 has been sent yet again on 31.07.2019 and this has been received by one 'A.Lakshmi' on 31.07.2019. According to petitioner, there is nobody by that name in that address. However, this is really irrelevant, since service of notice u/s 148 on the petitioner is already been complete even at first instance. - HC
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Income Tax:
Validity of assessment order u/s 143(3) r.w.s 263 - no intimation of DIN for the impugned order - The case of the assessee is that the communication, namely the assessment order is not only without mention of DIN in the body of the order, there is no material on the record mentioning the reason for non-issuance of DIN. Furthermore, the letter of intimation of DIN is also not within fifteen (15) working days of the issuance of the impugned assessment order - AT
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Income Tax:
Penalty u/s 271(1)(c) - Penalty order did not specify the particular limb under which penalty u/s 271(1)(c) is levied. AO has not specified that penalty is either levied for furnishing inaccurate particulars of income or for concealing the income. The AO himself is not clear that penalty is either levied for concealment of income or for furnishing inaccurate particulars - No penalty - AT
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Income Tax:
Addition of cash deposit made during demonetization period u/s 68 - Mere statistics of preparation of number of bills, transactions cannot be used to invoke the provisions of section 68 of the income tax act when no independent enquiry by the AO is made. The necessary ingredient of section 68 of the act such as nature and source of the credit is explained by assessee. - AT
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Income Tax:
Disallowance of deduction claimed u/s. 80P - the funds available are for the business purpose of providing credit facilities - It is only because in a given point of time, there is no demand for loan that they have been parked with the banks as fixed deposit - Assessee is entitled for deduction of interest income earned from deposits made by it with banks which has arisen out of deposits received from its members pursuant to conduct of business of providing credit facilities to its members. - AT
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Income Tax:
Disallowance of interest u/s. 36(1)(iii) - Advance given by the assessee to Group Company - As the advance given by the assessee to SIL which was for business purpose and the assessee holding substantial amount of the share holding in that company the disallowance of interest considering the direction of the bench that the assessee is having sufficient fund which are interest free and therefore, we vacate the disallowance - AT
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Income Tax:
Scope of the Adjustment made by the CPC u/s 143(1) when scrutiny assessment made u/s 143(3) - Considering the facts that the case of the assessee was subsequently taken up for scrutiny assessment and subsequent assessment order u/s 143(3) has been passed on 24.02.2021, we find that the order of processing u/s 143(1) stands merged with the scrutiny assessment order passed u/s 143(3) and therefore, the appeal proceedings against the processing and adjustment made by the CPC, becomes infructuous - AT
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Customs:
Permission for provisional release of the goods - ball-bearings - The goods in question are subject matter of one bill of entry. Show cause notice itself, although is issued on 22nd April 2022 for almost one year has not been adjudicated and in fact, appears to have not progressed at all - a situation cannot be permitted where the Petitioner would suffer on both the counts at the hands of Commissioner of Customs - There is no acceptable reason that the petitioner in law should be denied provisional release on conditions. - HC
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Corporate Law:
Deed of pledge of shares - voting right - The express terms of the Deed of Pledge will prevail - In the present case the use of the pledged goods will include exercise of voting rights since the pledged goods are shares. Thus, the Pledge Deeds by including in its terms the exercise of voting rights of the Pledgee will neither be contrary to law nor lead to conversion nor would amount to mortgage of movables. - HC
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Corporate Law:
Striking off of the name of the company - considering that the Appellant Company is having substantial movable as well as immovable assets, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, the order passed by the National Company Law Tribunal (New Delhi Bench-II) as well as Registrar of Companies, NCT of Delhi & Haryana is not sustainable in law. - Name directed to be restored - AT
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Indian Laws:
Dishonour of Cheque - insufficient funds - compounding of offence - Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has already paid the entire amount of compensation to the complainant-respondent, prayer for compounding the offence can be accepted - HC
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Central Excise:
CENVAT Credit - inputs - manufacture took place or not - payment of duty of excise - In effect, therefore, the utilization of credit for cleared products is tantamount to reversal and, hence, recovery of such credit is an exercise in superfluity. - AT
Articles
Notifications
News
Case Laws:
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GST
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2023 (9) TMI 402
Classification of services - offline/online games such as Rummy - to be classified under SAC 998439 or not - games of chance or skill? - Concept of res extra commercium - Concept of GST and Definition of Business under GST - concept of supply - HELD THAT:- Issue Notice. List the Special Leave Petition on 10 October 2023.
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2023 (9) TMI 401
Freezing of Bank Accounts of petitioner - period of one year has elapsed since the issuance of orders of provisional attachment - HELD THAT:- The petitioner s challenge to the impugned communications, issued under Section 83 of the CGST Act are academic. The said orders are no longer operative. The concerned Banks (Respondent Nos. 2 to 5), shall not interdict the operation of the bank accounts, on account of the impugned communications. The concerned Officer is also directed to follow the procedure as prescribed in the advisory dated 02.09.2023 - petition disposed off.
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2023 (9) TMI 400
Cancellation of GST registration of petitioner - non-functioning at the principal place of business - failure to produce the necessary documents or appear at the personal hearing - HELD THAT:- Mr. Rajeev Aggarwal, learned counsel appearing for the respondents does not seriously dispute that the petitioner s son had visited the office of the Proper Officer on the appointed date and time. In the given circumstances, it is considered apposite to set aside the impugned order and the matter remanded to the Proper Officer to consider it afresh, after affording the petitioner an opportunity to be heard - petition disposed off.
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2023 (9) TMI 399
Cancellation of GST registration of petitioner on the ground of closure of business - non-filing of returns for a period of six months - HELD THAT:- There was no indication that the petitioner s GST Registration would be cancelled with retrospective effect - the impugned order dated 15.03.2021 provides no reasons for cancellation of petitioner s GST registration with retrospective effect. The only allegation against the petitioner was not filing returns for a period of six months is no plausible reason to cancel its GST registration with retrospective effect, that is, from 01.07.2017. It is the petitioner s case that it had discontinued its business w.e.f. 31.12.2019, we consider it apposite to direct that the petitioner s cancellation of GST registration shall take effect from 31.12.2019 - impugned order set aside - petition allowed.
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2023 (9) TMI 398
Cancellation of registration of petitioner - TP was non-existence at the premises and no response received - HELD THAT:- It is directed that if the petitioner withdraws the appeal which is pending before the Appellate Authority and files an application seeking revocation of the cancellation of its GST registration, the same be considered by the proper officer on merits - it is considered apposite to direct that if the petitioner files such an application within a period of one week from today, the proper officer shall consider and decide the same on merits within a period of four weeks thereafter uninfluenced by the question of delay. This is so, the petitioner has sufficiently explained his failure to act within the stipulated period. The petition is disposed of.
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2023 (9) TMI 397
Cancellation of GST registration of petitioner - registration obtained by means of fraud, wilful misstatement or suppression of facts - HELD THAT:- It is apparent from the impugned SCN that apart from alleging that the registration was obtain by fraud, wilful misstatement or suppression of facts which was also the ground on which the petitioners GST registration was cancelled in the earlier round it does not indicate any specific reason(s) for proposing cancellation of the petitioner s GST registration. The impugned SCN is incapable of eliciting any meaningful response as it does not indicate as to what is the fraud allegedly perpetuated by the petitioner or the wilful misstatement allegedly made by the petitioner. The impugned order is set aside as it is not informed by reason. The impugned SCN is also set aside - Petition allowed.
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2023 (9) TMI 396
Rejection of petitioner s application for revocation of cancellation of his GST registration - Discrepancies noticed while conduct of Physical Verification - HELD THAT:- The petitioner s application seeking revocation of cancellation of its GST registration was rejected as the Proper Officer found that the petitioner s explanation for delay of one day was not acceptable because the petitioner had not quoted any Section of the Limitation Act, 1963 in support of its claim. The HSN of goods and services was not reflected on the CBIC portal. The Proper Officer also highlighted that the principal reason for rejection of his was that the petitioner had shifted its place of business to a new place but the same was not reflected as additional place of business in the requisite form; thus, GSTIN could not be restored as it pertained to an earlier address. The petitioner had explained that the order cancelling its GST registration was passed on 22.07.2022, and it had filed its application for revocation of cancellation of its GST registration on 21.08.2022 and the day of filing the application was not required to be considered. The petitioner had filed its application for revocation on the 30th day following the date of its cancellation and, thus, it was within the period of limitation. Insofar as the discrepancies in the tax returns and tax liability is are concerned, that too cannot be a ground for cancellation of the petitioner s GST registration. The authorities have to proceed in accordance with law in assessing the correct liability, in the event there is any ground to believe that the taxpayer has not truly disclosed the same. Lastly, the petitioner had claimed that he had disclosed the bank details and the HSN of the goods because he had migrated from a VAT regime. However, the same was not accepted. The Appellate Authority had proceeded on the basis that the petitioner had not declared the classification of the goods dealt with by him - the petitioner was disabled from taking any corrective measures, even if it desired to do so. The impugned orders are set aside - Petition allowed.
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2023 (9) TMI 395
Migration from Composition Scheme to regular scheme of GST payment - Permission to petitioner to file ITC-01 FORM to avail its eligible ITC or input lying on the stock as on date - direction to condone the delay - HELD THAT:- Reliance placed upon two decisions of the Gujarat High Court in M/s Pradip Chemanlal Mevada vs. Union of India [ 2020 (1) TMI 1169 - GUJARAT HIGH COURT ] and Ezzy Electricals Vs. State of Gujarat [ 2022 (2) TMI 946 - GUJARAT HIGH COURT ] wherein the petitions were disposed of by directing the respondents to do the needful and see to it that the petitioner is able to claim the Input Tax Credit by uploading the Form ITC-01. The case of the petitioner is on the same footing as the petitioners before the Gujarat High Court - the petitioner is equally circumstanced and is entitled to the relief as has been granted by the Gujarat High Court to the petitioners before it particularly in view of the fact that no contrary case law has been cited by the counsel for the respondents. The writ petition is disposed of by directing the respondents to do the needful and ensure that the writ petitioner is permitted to upload the Form ITC-01 so as to enable him to claim the Input Tax Credit worth Rs. 31,18,718/- as stated in para 13 of the writ petition) under Section 18 (1) (c) of the Act.
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2023 (9) TMI 394
Maintainability of petition - availability of alternative remedy - Refund of Input Tax Credit (ITC) - zero-rated supplies - input supplies for exporting rice and sugar - HELD THAT:- The petitioner had produced the relevant material to establish that input supplies in respect of which ITC was claimed were in respect of export of sugar. Neither the Order-in-Original dated 27.10.2022 passed by the Adjudicating Authority nor the impugned order passed by the Appellate Authority discusses the aforesaid invoices and the material produced by the petitioner. None of the said orders indicate any reason as to why the authorities have not considered the said material to be relevant for establishing that the input supplies in respect of which refund was claimed, were directly corelated to export of sugar. The petitioner s appeal before the learned Appellate Authority for reconsideration on merits restored - impugned order set aside - petition disposed off.
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2023 (9) TMI 393
Maintainability of petition - availability of alternative remedy - ex-parte order - opportunity of hearing not provided - Condonation of delay in filing appeal - violation of principles of natural justice - HELD THAT:- The delay stands sufficiently explained on account of COVID-19 restrictions. This court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This we say so, for two reasons (a) violation of principles of natural justice, i.e., Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case ; (b) order passed exparte in nature, does not assign any reasons sufficient even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, exparte in nature, passed in violation of the principles of natural justice, entails civil consequences. The impugned order set aside - petition disposed off.
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Income Tax
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2023 (9) TMI 404
Assessment of trust - contravention of provisions of section 13(1)(c) - certain amounts paid by the assessee trust to other trusts where the trustees were also interested - HELD THAT:- AO, even though discussed the issue in the body of the assessment order about the alleged contravention of section 13(1)(c) but ended up without making any specific addition in this regard. Consequently, there was no reason either for the assessee to raise this issue before the CIT(A) or the ld. first appellate authority to pass an order thereon. In view of the fact that the AO did not make any addition on this score, we are satisfied that the ground taken by the assessee before the CIT(A) and consequently by the Revenue before the Tribunal did not require any adjudication. Consequently, the ground of the Revenue is dismissed as infructuous. The order passed u/s. 254(1) should be read in the light of the above observations.
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2023 (9) TMI 392
Deduction on account of payments made to the legal heir of the deceased partner - whether admissible expenditure under the provisions of the partnership deed? - as decide by HC [ 2019 (4) TMI 979 - BOMBAY HIGH COURT] partnership firm envisaged payment to a outgoing partner on the basis that the partner would have rendered service during his tenure as a partner of the firm but could not enjoy the fruits thereof on account of the fact that the work having remained incomplete, the concerned client had not been billed for the work already done - HELD THAT:- As respondent has availed of the benefit under the Direct Tax Vivad Se Vishwas Act, 2020 as well as the Rules made thereunder and consequently, the issues which arise in this special leave petition have now been rendered infructuous. A copy of the Order for Full and Final Settlement of Tax Arrear u/s 5(2) read with Section 6 of the aforesaid Act is also submitted by learned counsel for the respondent dated 02.02.2022. In view of the said development, the special leave petition has been rendered infructuous and accordingly, stands disposed of in the aforesaid terms.
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2023 (9) TMI 391
Addition u/s 68 - undisclosed income of Priya Gold Group of Companies was routed in the form of share capital of the respondents/assessee companies by way of accommodation entries from Kolkata based entry provider companies and such share capital is liable to be taxed as income in the hands of the respondents/assessee companies - HELD THAT:- Since the undisclosed income which is subject matter of the present dispute had already been taxed in the hands of the flagship company Surya Food Agro Ltd., it cannot be again subjected to tax in the hands of the respondents/assessee companies in the form of application of the said income as their share capital. Accordingly, the question as framed above is answered against the revenue and in favour of the assessee.
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2023 (9) TMI 390
Best judgment assessment - draft assessment orders and final Assessment Orders AO recorded that no reply to the notice u/s 142(1) was submitted by the petitioner/assessee - HELD THAT:- Firstly, it seems that the Assessing Officer inadvertently overlooked the email reply dated 20.07.2022 of the petitioner, wherein the petitioner not just sought extension of time till 05.08.2022 to respond but also disclosed vital facts pertaining to its case. However, in the impugned draft assessment orders and the final Assessment Orders, the Assessing Officer recorded that no reply to the notice u/s 142(1) of the Act was submitted by the petitioner/assessee. On account of this clear non-application of mind, the impugned draft assessment orders, the final Assessment Orders and the consequential demand notices cannot be sustained. Secondly, the notice dated 12.07.2022 under Section 142(1) of the Act was clearly vitiated on account of granting hardly three days to the petitioner to respond. Denial of sufficient time to respond was not just an abrogation of jus naturale but the same also infringed clause B(1) of the Standard Operating Procedure dated 19.11.2020 of the CBDT, according to which normally a response time of 15 days has to be given to the assessee in order to respond to the notice under Section 142 of the Act. That being so, the impugned draft assessment orders, the final Assessment Orders and demand notice are liable to be set aside.
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2023 (9) TMI 389
TP Adjustment - comparable selection - whether the services offered by the three (3) entities were comparable to those of the respondent/assessee? - HELD THAT:- TPO has accepted the fact that the assessee is into providing ITES and so-called BPO services, which are related to phone activation and local number portability, both to its clients and its parent company. The extract from the impugned order would demonstrate that, insofar as the three (3) comparables are concerned, they were providing services which were different from the respondent/assessee. Acropetal was rendering Knowledge Process Outsourcing (KPO) services. The Tribunal has said that it was engaged in medical transcription services, which compendiously has been given the name Electronic Medical Record.Likewise, insofar as the BNR was concerned, the Tribunal once again returned the finding of fact that it was engaged in providing medical transcription services. Similarly, insofar as Informed Technologies was concerned, the Tribunal notes that it provides financial research and data management services. More particularly, insofar as Informed Technologies is concerned, the Tribunal notes that it is a leading player in KPO services, which extend from financial content to financial industry. We are in agreement with the submissions of the counsel for the respondent/assessee that Rule 10(B)(2)(a) required that, when carrying out a comparability analysis of international transactions, with an uncontrolled transaction, the reference point should be, inter alia, the services provided by the entities which are being compared. Tribunal has, in our view, carried out that exercise. We may note that Mr Sharma, is perhaps, right to the extent that the Tribunal did not consider the analysis of operating margin vis-a-vis BNR, which the TPO had carried out. The difference in operating margins clearly arose because the respondent/assessee has included revenue and expenses from medical transcription services, which the TPO excluded, and thereby caused the difference between the operating margins in the period in issue and the average margin which BNR had registered. In our view, fluctuation in margin was not the only reason that the Tribunal provided in excluding BNR as a comparable. The fact that BNR offered a service which was different from that the respondent/assessee offered was the principal reason why the Tribunal concluded that BNR had been wrongly included in the comparables.
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2023 (9) TMI 388
Reopening of assessment u/s 147 - Service of the Notice u/s 148 - Prescribed manner of service of notice - HELD THAT:- Notice u/s 148 dated 29.03.2019 has been issued on 30.03.2019. There is an entry in the postal register in support of this. The unserved cover was returned by the postal authorities on 13.04.2019 and there is an endorsement to that effect by the authority which is placed on record. The postal authority has written the new address i.e., address 2, on the returned cover. With this, service is complete. Over enthusiastically and by way of abundant caution, the notice u/s148 has been sent yet again on 31.07.2019 and this has been received by one 'A.Lakshmi' on 31.07.2019. According to petitioner, there is nobody by that name in that address. However, this is really irrelevant, since service of notice u/s 148 on the petitioner is already been complete even at first instance. That apart, notices had been repeatedly issued even thereafter and admittedly served on the petitioner to which the petitioner has not bothered to respond. Thus, find no infirmity in the impugned order of assessment both in regard to the procedure followed by the officer or as far as service of notice is concerned. This writ petition is thus dismissed, though with liberty. The petitioner seeks time to file statutory appeal and is granted two weeks from today for such purpose.
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2023 (9) TMI 387
Long Term Capital Gain (LTCG) - Addition u/s 50C - CIT(Appeals) was of the view that the 1st proviso to Section 50C(1) of the Act would get triggered for computing the amount of LTCG in the hands of the assessee - HELD THAT:- AO had, inter alia, stated that though the copy of sale deed was available on record but the agreement to sell was not lying in the record. At this stage, we may herein observe that the A.O had in the course of remand proceedings not raised any doubt as regards the genuineness of the agreement to sell dated 06.03.2014. Considering all we may herein observe that as per the 1st proviso to Section 50C(1) of the Act as had been made available vide the Finance Act, 2016 w.e.f. 01.04.2017, where the date of agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same then the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purpose of computing full value of consideration for such transfer. Ostensibly, as neither the agreement to sell dated 06.03.2014; nor the contents thereof had been doubted by the A.O in the course of the remand proceedings, therefore, as observed by the CIT(Appeals), and rightly so, the value assessable by the stamp valuation authority on the date of the agreement to sell i.e. 06.03.2014 was to be taken for computing full value of consideration for such transfer u/s. 50C - Accordingly, finding no infirmity in the view taken by the CIT(Appeals) who in our considered view had rightly triggered the 1st proviso to Section 50C(1) of the Act, we uphold the same. Appeal of revenue of dismissed.
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2023 (9) TMI 386
Validity of assessment order u/s 143(3) r.w.s 263 - no intimation of DIN for the impugned order - HELD THAT:- Intimation produced by the Revenue only informs the assessee that the impugned order is sent by speed post/mail. It is not the intimation of DIN for the impugned order. The Ld. Dy. CIT has erred in treating the DIN for intimation letter dated 31.12.2019 placed on record by the Ld. CIT-DR as DIN for the impugned order. As gone through the CBDT Circular No. 19/2019 (F No. 225/95/2019-ITA II) o maintain audit trail of all communication, no communication shall be issued by any Income Tax Authority to the assessee or any other person on or after the 1st day of October, 2019 unless a computer generated DIN has been allotted and is duly quoted in the body of such communication. Undoubtedly the impugned assessment order is one such communication which has been issued by the Ld. AO without allotting a computer generated DIN and duly quoting in the body of the impugned assessment order. There is thus clear violation of the specific requirement under the CBDT Circular No. 19/2019 to quote the DIN in the body of the impugned assessment order. The case of the assessee is that the communication, namely the assessment order dated 30.12.2019 is not only without mention of DIN in the body of the order, there is no material on the record mentioning the reason for non-issuance of DIN. Furthermore, the letter of intimation of DIN dated 24.01.2020 is also not within fifteen (15) working days of the issuance of the impugned assessment order dated 30.12.2019. There is thus violation of the mandate enshrined of the CBDT Circular No. 19/2019 dated 14.08.2019. Therefore, the consequence mentioned in para 4 of the said Circular, namely that the impugned assessment order dated 30.12.2019 be treated as invalid and non-est in the eye of law should follow. We are in agreement with the above contentions of the assessee. Case followed BRANDIX MAURITIUS HOLDINGS LTD. [ 2023 (4) TMI 579 - DELHI ] Assessee appeal allowed.
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2023 (9) TMI 385
Penalty levied u/s 271(1)(c) - denying exemption u/s. 10(23C) (iii ad) claimed by the appellant as per the return of income - HELD THAT:- Admittedly, in the present case, since the quantum appeal of the assessee in [ 2023 (8) TMI 327 - ITAT RAIPUR] was set aside by the ITAT, Raipur, therefore, respectfully following the ratio of law laid down in the case of K.C. Builders vs. ACIT ( 2004 (1) TMI 7 - SUPREME COURT ), we are of the considered opinion that the penalty order passed by the Ld. Assessing Officer u/s 271(1)(c) and sustained by the Ld. CIT(A) cannot stand by itself and the same is liable to be cancelled. Appeal of the assessee is allowed.
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2023 (9) TMI 384
Validity of assessment - non-service of notice u/s 143(2) - HELD THAT:- We find that the AO has categorically stated that in the assessment order, a notice u/s 143(2) of the Act was issued and duly served upon the assessee. Thereafter, Statutory notices u/s 142(1) were issued and served upon the assessee. In response thereto, assessee attended the proceedings. This finding on fact is not rebutted by the assessee by placing any contrary material on record. We therefore, do not find any infirmity into the order of the authorities below, the same is hereby affirmed. Ground No.1 raised by the assessee is thus, dismissed. Disallowance of depreciation on electricity installations - as per DR Electricity installations are of different rate of depreciation - Assessee submitted electricity installations are being integral part of the plant machinery. Therefore, the depreciation should be allowed as a plant machinery - HELD THAT:- In the case in hand, the assessee failed to bring on record, any evidences in support of its contention that the electricity installations were integral part of the plant machinery. On the contrary, it is brought on record that the electricity installations were separate from the plant machinery. No reason to interfere in the findings of authorities below, the same is hereby affirmed. Thus, Ground No.2 raised by the assessee is dismissed. Unexplained creditors - HELD THAT:- AO did not make verification of claim of the assessee that the assessee had made payment in subsequent years so far the credit related to M/s. Lalit Wafers and Namkeens and M/s. Dutt Constructions. In our considered view, Ld.CIT(A) also failed to get these credit entries verified from the aforementioned creditors. Therefore two creditors deserves to be allowed and impugned addition is hereby, deleted. Rest of the addition is sustained as the assessee failed to rebut the finding on fact qua M/s. Accurate Tools (P) Ltd. This ground raised by the assessee is partly allowed.
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2023 (9) TMI 383
Reopening of assessment u/s 147 - As assessee argued that the notice u/s 148 was issued at a wrong address and there was no application of mind by the assessing authority, as the reason for reopening of the assessment as per the AO was that the assessee had purchased immovable property - HELD THAT:- Validity of initiation of proceedings for reopening of assessment is concerned, AO was having some information regarding purchase of immovable property. The assessee had not filed his return of income. Therefore, the AO was justified in initiating the proceedings u/s 147 of the Act. The assessee stated that the notice was issued on a wrong address. However, it is on record that the assessee has participated in the proceedings. Therefore, this ground also lacks merit. Addition u/s 69A - As stated by the assessee that assessee was having only source of income being the agriculture income. AO has not brought any other material on record suggesting that the assessee was having any other income. Assessee had clearly stated that the amount was also received from his father. AO picked up the statement partly and did not consider the fact that the father of the assessee was having a bigger piece of land. The authorities below have not made any verification of the statement made in the affidavit of father of the assessee that he had also sold trees out of which he gifted money to his son. Therefore, considering the totality of facts and in the absence of any material rebutting the averments made in the affidavit of father of the assessee, AO was not justified in making the impugned addition and rejecting the plea of the assessee that he had also received money from his father apart from the agricultural income. Appeal of the assessee is partly allowed.
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2023 (9) TMI 382
Estimation of income - Bogus purchases - CIT(A) restricted the addition on bogus purchases at the rate of 25% of total purchase - HELD THAT:- As the issue is squarely covered by the decision of Pankaj K. Chaudhary [ 2021 (10) TMI 653 - ITAT SURAT] wherein Tribunal held that in respect of bogus purchases, the addition @ 6% of bogus purchases is fair and reasonable. There is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench (supra), find no reason to interfere in the said order of the Coordinate Bench, therefore, direct the AO to make addition @ 6% of bogus purchases. Appeal filed by the assessee is partly allowed.
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2023 (9) TMI 381
Deduction u/s 80IA(4) - claim made for the first time - Choice of initial assessment year - as per AO assessee is engaged in the business of manufacturing of energy-saving devices being briquettes which cannot be considered as infrastructure facilities - Also period of 10 years for claiming the benefit of deduction under section 80-IA(4) of the Act has already expired from the initial assessment year - assessee contended that it has started new infrastructure facilities by upgrading its business with new plants and machinery, thus, the assessee should be eligible for deduction u/s 80 IA(4) - whether the assessment year in dispute in which the assessee has claimed deduction u/s 80IA in the year under consideration is the 2nd assessment year - HELD THAT:- It is the settled position of law that the conditions attached for claiming the deduction u/s 80-IA has to be verified by the revenue in the 1st year itself i.e. in the initial assessment year. The revenue is debarred from denying the benefit of the deduction to the assessee claimed by it under section 80-IA of the Act after the initial assessment year on account of examination of preconditions. In holding so, we draw support and guidance from the judgement of Saurashtra Cement Chemical Industries Ltd. [ 1979 (2) TMI 21 - GUJARAT HIGH COURT] We also draw support and guidance from the judgment of ACE Multi Axes System Ltd [ 2017 (12) TMI 372 - SUPREME COURT] where it was observed, the issue regarding allowances of deduction under section 80IB of Act to small scale industrial undertaking, that certain precondition to allow tax holiday under impugned section can be only examined in the initial assessment year only. It is the choice of the assessee to select the initial assessment year and therefore the same cannot be questioned. Furthermore, there is a possibility that the AO during the assessment proceedings might disallow the expenses which may turn the loss of the assessee into positive income, then in that eventuality the assessee can claim the benefit of deduction under section 80 IA of the Act. Thus we are inclined to hold that the deduction u/s 80IA of the Act was first-time claimed by the assessee in the immediately preceding assessment year. Therefore, the deduction u/s 80IA claimed by the assessee in the subsequent year cannot be questioned until and unless the deduction claimed by the assessee in the initial assessment year is disturbed. Thus, we are inclined to set aside the order of the CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is hereby allowed. Non-deduction of TDS u/s 40(a)(ia) - AO during the assessment proceedings based on the audit report found that the assessee has given an advance to the party namely Garima Communication towards the advertisement expenses without deducting the TDS - HELD THAT:- Assessee has not claimed the deduction of ₹5 lakhs shown as an advance to the party namely Garima Communication. Thus, in such a situation we are of the view that there is no question of making the disallowance by adding to the total income of the assessee. Accordingly, we set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee are allowed.
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2023 (9) TMI 380
Penalty u/s 271(1)(c) - addition on account of TDS credit deposited by employer-State bank of India on payment of leave travel concession - non specification of charge - HELD THAT:- As penalty levied u/s 271C on the employer bank has been deleted, therefore, the penalty imposed on the employee should also be deleted. We note that since assessee is an employee and he has received Form No.16 from the employer (State Bank of India) and the details mentioned in Form No.16 has been disclosed by the assessee in the return of income, therefore, there should not be any concealment on the part of the assessee, and there should not be any inaccurate furnishing particulars of income, on the part of the assessee. Penalty order did not specify the particular limb under which penalty u/s 271(1)(c) is levied. AO has not specified that penalty is either levied for furnishing inaccurate particulars of income or for concealing the income. The assessing officer himself is not clear that penalty is either levied for concealment of income or for furnishing inaccurate particulars then in such scenario, the assessing officer himself is not clear that for which limb he is levying a penalty and so such penalty need to be quashed - Decided in favour of assessee.
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2023 (9) TMI 379
TP Adjustment - comparable selection - Functional similarity - HELD THAT:- Acropetal Technologies Ltd. is not a good comparable to the assessee as it is into different business model being engaged in onsite development of software and it does not pass the filter applied by TPO of 75% export turnover and that ratio of onsite to total employee related expenses comes to 86.2%. E-Zest Solutions Ltd. company is engaged in product engineering services which is in nature of high end knowledge process outsourcing having expertise in emerging technologies such as Saas, mobility and business intelligence. For this reason it was found that this company, was found not a suitable comparable - See Symantec Software Services India Pvt. Ltd. [ 2017 (1) TMI 1388 - ITAT CHENNAI ] ICRA Techno Analytics Ltd., is engaged in diversified business activities and therefore functionally not comparable with that of pure software development services. in view of this specific finding we hold that this company is functionally not comparable with that of pure software development services provider like assessee. Igate Global Solutions Ltd. -TPO clearly found that though the terms used are generic in nature giving an impression that the company is engaged in diversified activities, the core activity of the assessee is only SWD services. In the absence of any information to show that such diversified activities constitute a sizeable portion of its business so as to render it not comparable to the assessee, we are not inclined to accept the findings of the learned DRP that in the absence of any segmental information, this company cannot be retained in the list of comparables. Such a logic will not hold good if the other activities constitute a miniscule proportion to the core activity. We, therefore, direct that the Igate Global Solutions Ltd., shall be retained in the list of comparables. Infosys Ltd. and L T Infotech Ltd. - As in assessee's own case for assessment year 2013-14 [ 2018 (11) TMI 1710 - ITAT HYDERABAD ] it was found that on the grounds of huge intangibles and no availability of segmental information between software service and products, L T Infotech Ltd. was found not suitable to be compared with assessee. It is not the case of the revenue that there is any change in the functional profile of assessee or Infosys Ltd. and L T Infotech Ltd. We, therefore, in tune with the findings of the Tribunal for the earlier assessment years, hold that Infosys Ltd. and L T Infotech Ltd., are not good comparables. Sankhya Infotech Ltd. - As the purpose and the target users of Sankhya Infotech Ltd. are different from other receivers of SWD services, but it does not alter the core activity of Sankhya Infotech Ltd. being a software developing company. Even the products referred to in the annual report are software products and developing the same is within the realm of SWD services. This is not a ground to exclude Sankhya Infotech Ltd. from the list of comparables and we, therefore, do not agree with the learned DRP and direct the inclusion of this company in the list of comparables. Zylog Ltd - There is no reference to any closing stock, inventories or work in progress so as to infer that other than software development, this company is involved into some manufacturing products. Software product is also the result of software development only. Merely because the use of generic terms, a software development entity cannot be held as a non-comparable. Unless it is established that substantial portion of its work is outsourced, the off-site or in-house development of software will not impact the margins. We, therefore, direct the retention of this entity in the list of comparables. Persistent Systems Ltd., and Sasken Communication Technologies Ltd. - As in assessee s own case for the assessment year 2013-14 [ 2018 (11) TMI 1710 - ITAT HYDERABAD ] Persistent Systems Ltd., was directed to be excluded on the ground of its engagement in both software product, services and technology innovation, but without disclosing the segmental details. Since no change of circumstances is brought to our notice, we deem it necessary to follow the view taken and accordingly, direct the learned TPO to exclude this company. Sasken Communication Technologies Ltd. - As except stating that this company is involved in products also, as in the case of Zylog Ltd., no reference to any closing stock, inventories or work in progress is brought to our notice suggesting that other than software development, this company is involved into some manufacturing products. As held already, software product is also the result of software development only, and merely because the use of generic terms, a software development entity cannot be held as a non-comparable. We, therefore, direct the retention of this entity in the list of comparables. Computing notional interest on the outstanding receivables - Assessee contented that no transfer pricing adjustment need be made in respect of the notional interest on delay in collection of dues from the associated enterprise, because it is not an international transaction and secondly contending that if at all such an adjustment has to be made only such dues which are outstanding for more than 180 days shall be considered and the rate of interest shall be restricted to LIBOR +1.5% - HELD THAT:- The coordinate benches of this Tribunal followed the above view, and in the cases of Zeta Interactive Systems (India) (P) Ltd. [ 2022 (6) TMI 1383 - ITAT HYDERABAD ], Satyam ventures [ 2022 (6) TMI 1386 - ITAT HYDERABAD ] and Apache Footwear India Pvt. Ltd [ 2023 (4) TMI 521 - ITAT HYDERABAD ] held that outstanding receivables is an international transaction, any extra credit in excess of 30 days requires a separate benchmarking and notional interest at 6% is a fair and reasonable one As interest at 6% is reasonable and accordingly direct AO to compute the interest on the outstanding receivables for more than 30 days at 6% per annum. Ground No 2 of Revenue s appeal and the appeal of the assessee accordingly allowed in part.
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2023 (9) TMI 378
Addition of cash deposit made during demonetization period u/s 68 - HELD THAT:- It is not the case of the AO that assessee was asked to produced the buyers. AO also did not show that assessee was further statutory required to give more information than what has been already submitted. Even AO has not recorded the statement of the assessee to examine the situation prevalent on that date. The close circuit camera recording would also have substantiated or proved the claim of the assessee otherwise. It is also important that in response to someone by the investigation wing, the stand of the assessee is same. Therefore, no fault can be found with the claim of the assessee, unless the assessing officer further makes an investigation on that issue. In absence of any evidence of bogus sales, when identical information is available for sales recorded by the assessee prior to demonetization as well as post demonetization is accepted by AO, there is no reason that details produced by the assessee for demonetization sale is rejected. Mere statistics of preparation of number of bills, transactions cannot be used to invoke the provisions of section 68 of the income tax act when no independent enquiry by the AO is made. The necessary ingredient of section 68 of the act such as nature and source of the credit is explained by assessee. To make the addition, the learned assessing officer should have thrown back onus on the assessee by making an independent enquiry. The simplest thing that could have been done was whether the assessee was having the adequate stock prior to the demonetization or not. AO failed to do that also. The learned CIT A also did not make any enquiry by himself or through AO. In view of above facts and circumstances, the addition in the hence of the assessee cannot be sustained. Decided in favour of assessee.
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2023 (9) TMI 377
Disallowance of deduction claimed u/s. 80P - towards interest income treated as income from other sources - HELD THAT:- We note that assessee is engaged in the business of providing credit facilities to its members for which it accepts deposits from and lend the same to its members. While accepting deposits, assessee promises to pay interest at a specified rate. When money is lent to the members, interest is recovered which is also at a specified rate. Difference between the two rates is the income of the assessee. However, there are periods when entire deposit received from the members cannot be lent owing to demand for loan not there from the members. In such a situation, whether the money is lent or not, assessee continues to be liable for payment of interest to its members who have made deposit with it. To cover up this liability for payment of interest, these funds are invested with banks in fixed deposit/term deposit which earned certain interest income to be set off against the interest payable to the member/depositors. Parking of funds by the assessee with banks in the form of fixed deposits to earn interest income is part and parcel of the business of providing credit facilities to its members. Assessee has received the deposits from its members only which are subjected to interest charge. In the case of Totgars Co-operative Sale Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] an important fact which has been noted is that assessee had invested the fund on short term basis since they were not required immediately for business purposes. In the present case, the funds available are for the business purpose of providing credit facilities to its members. It is only because in a given point of time, there is no demand for loan that they have been parked with the banks as fixed deposit. The only fund available with the assesses are out of deposits from its members and there is no surplus funds as such. This fund of the assessee is the operational fund. By taking into consideration the revisionary proceedings in the assessee s own case for the immediately preceding assessment year on identical set of facts whereby Ld. PCIT has accepted the distinguishing features pointed out by the assessee vis-a-vis decision of Hon ble Supreme Court in Totgars Co-operative Sale Society Ltd. (supra) and the same being dropped which suggests the acceptance of the submissions made by the assessee as to non-applicability of the decision of Totgars Co-operative Sale Society Ltd. (supra) by the department. While dropping the revisionary proceeding, ld. PCIT has given a categorical finding as extracted above that decision of Hon ble Apex Court in the case of Totgars Co-operative Sale Society Ltd. (supra) is not applicable in the facts of the case of assessee. Assessee is entitled for deduction of interest income earned from deposits made by it with banks which has arisen out of deposits received from its members pursuant to conduct of business of providing credit facilities to its members. Appeal of the assessee is allowed.
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2023 (9) TMI 376
Addition of protective basis - on-money consideration received in cash - HELD THAT:- In the appeal filed by the assessee for the assessment year 2014-15, we had confirmed the addition on substantive basis, therefore, the question of prorata addition on protective basis does not arise. Thus, the ld. CIT(A) had rightly deleted the addition. Hence, this ground of appeal no. 2 stands dismissed. Addition of unsecured loans - assessee company had failed to discharge the onus of proving the identity, creditworthiness and genuineness of unsecured loans as well as no details of the lenders were filed before the Assessing Officer - HELD THAT:- It is only during the course of proceedings before the ld. CIT(A), the assessee company had provided the details of lenders. Based on which, the ld. CIT(A) granted relief. Thus, it is clear that the order of the ld. CIT(A) is based on the additional evidence filed before him for the first time. It is requirement of law as provided under Rule 46A of the Rules, if the additional evidence is produced for the first time before the ld. CIT(A), the ld. CIT(A) should give an opportunity of examining this additional evidence to the Assessing Officer, which the ld. CIT(A) had failed to do so. Accordingly, this ground of appeal nos. 3 and 4 is remitted to the file of the ld. CIT(A) for de novo consideration in accordance with law.
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2023 (9) TMI 375
Disallowance of interest u/s. 36(1)(iii) - advance given by the assessee to SIL and the assessee holding substantial amount of the shareholding in that company - company to whom the money is advance in BIFR - HELD THAT:- There is no discussion in the order of the lower authority that the assessee till 31.03.2000 regular in charging the interest and has stopped because of the fact that the recovery of further interest becomes doubtful from 01.04.2000 on account of the fact that the company SIL become sick and therefore, we see no reason not to consider the plea of the assessee that when the interest is not received no disallowance can be made. Even the ld. AO through ld. DR at the time of hearing also did not controvert the fact the assessee is having sufficient balance which is interest free as on 31.03.2044 at Rs. 3,25,70,408/- as against the SIL debit balance of Rs. 1,22,45,671.90 and in fact that the assessee earlier charging interest and has stopped on account of the reason that the company becomes Sick and even the recovery of the principle amount in doubt how revenue can tax disallow the claim of interest to the extent of the advance of SIL as notional interest and that too on historic advance given in earlier years. As the advance given by the assessee to SIL which was for business purpose and the assessee holding substantial amount of the share holding in that company the disallowance of interest considering the direction of the bench that the assessee is having sufficient fund which are interest free and therefore, we vacate the disallowance - Ground raised by the assessee is allowed.
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2023 (9) TMI 374
Deduction u/s 80IAB - income from sale of food and beverages - income for developing and operating SEZ - assessee is a SEZ developer and is primarily engaged in the business of developing and leasing of property in IT/ ITES Sector, Noida - HELD THAT:- In so far as Instruction No. 50 [ issued by GOI, Ministry of Commerce and Industry, Department of Commerce, SEZ Sector] it has authorized activities which can be undertaken by the developer, approved company developer by default, and one of the items is cafeteria/canteen for staff in the processing area. Since the income of the assessee is not derived from cafeteria/canteen for staff, therefore, the said Instruction is not applicable to the facts of the case. In so far as claim of interest expense is concerned, we find that while computing the income, the assessee has added back interest expense considered under the head Income from other sources Rs. 57,19,934 and under the head income from other sources, the assessee has deducted interest expense of Rs. 88,767/- only, which means that the assessee has increased its eligible profit by Rs. 56,31,167/-. Considering the facts of the case in hand, the assessee ought to have reduced this amount from eligible profit. We, accordingly, direct AO to reduce Rs. 56,31,167/- from the eligible profit and recompute deduction u/s 80IAB - Under no circumstances sum can be considered as income under section 68 of the Act. With the above, the ground of the assessee is partly allowed.
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2023 (9) TMI 373
Assessment u/s 153A - Addition u/s 68 - unexplained cash credits in the books of the assessee - retracted statement - AO had primarily relied on the statement of Shri Rajesh Bhagat who was the Director in of the predecessor entity of the assessee - CIT(A) deleted the addition as nothing has been found during search to substantiate that the appellant has taken bogus entries and routed its fund - HELD THAT:- The Bench is of the considered opinion that Ld. AO had fallen in error in relying the retracted statement of Shri Brijesh Bhagat. If at all the statement of Shri Brijesh Bhagat was relevant the same should have been corroborated by some material evidences from the enquiry the Ld. AO had conducted with regard to creditworthiness of the parties. Shri Bhagat had denied all the facts of statement dated 16.03.2016 given by him before DDIT(Inv.), Kolkata and an affidavit dated 29.03.2016 of retraction was also filed before Ld. AO. Ld. AO had sought the comments of DDIT(Inv.), Kolkata on the retraction which made the submission that it was an afterthought effort. Thus, the Bench has no hesitation but to accept the observation of the coordinate bench in regard to the assessments completed u/s 153A of the Act that the retracted statement of Shri Bhagat was not reliable piece of evidence and like making addition u/s 153A the same could not have been the sole basis of reopening also. There is no error in finding of CIT(A). The grounds raised have no substance. Non-disposal of the objections of assessee against the validity of jurisdiction exercised by Ld. AO in passing the re-assessment order u/s 148 - CIT(A) seems to have not taken cognizance of the fact that specific ground was raised before him that AO had not followed the procedure for issuing notice u/s 148 of the Act as Ld. CIT(A) considered to be a superfluous in the light of earlier proceedings u/s 264 of the Act. CIT(A) has appreciated the matter before him only on the merits. A discussion hereinabove has established that Ld. AO had fallen in error in exercise of jurisdiction beyond the scope of Section 147/148 of the Act as there was absence of independent opinion as basis in his reasons to re-open and there was no tangible material except retracted statement of a witness Mr. Bhagat. Thus, the cross objection deserved to be sustained. Consequently, the appeal of Revenue is dismissed and Cross objection stand allowed.
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2023 (9) TMI 372
Profits estimation on sale of expired stock - difference in opening stock by applying GP rate of 17.63% - HELD THAT:- The factum of the stock having expired has been accepted by the AO as well as by the ld CIT(A) which in turn means that such stock has crossed its expiry date and therefore, the same cannot be sold to the customers. There is nothing on record that such expired stock has been sold by the assessee. We therefore find that mere non-accounting of the expired stock as part of the opening stock wouldn t have any impact on the profitability so declared by the assessee for the reason that such expired stock would again form part of the closing stock at the end of the financial year. Similarly, whether such stock has been destroyed or returned will not have any impact on the profitability so declared and what efforts have been taken by the assessee or should have been taken by the assessee are not relevant consideration for the reason that the same doesn t affect the profitability so declared by the assessee as the assessee has not claimed any loss on account of writing off of such expired stock which otherwise it is entitled to. In light of aforesaid discussions and in the entirety of facts and circumstances of the case, there is no basis to impute profits on the alleged sale of expired stock and the addition so made is directed to be deleted.Appeal of the assessee is allowed.
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2023 (9) TMI 371
Capitalization of interest on FDRs earned during the period of construction - as argued funds (ECB) were completely free from any encumbrances as there was neither any legal requirement nor any compulsion on the part of the assessee company to make the FDR - assessee acquired an existing hotel from State Bank of India under SARFEASI Act and was in the process of renovating this hotel in the year under consideration - HELD THAT:- Since, the foreign currency loan was disbursed in single tranche, the assessee invested some part of the foreign currency loan, not immediately required for business activities, in fixed deposits and earned interest income - After netting of the interest income against the interest cost, the assessee declared finance cost - While examining the issue in course of assessment proceedings, the AO was of the view that the interest income earned on the FDRs has to be treated as income from other sources, as it is not related to assessee s business activities. Following the decision taken by him in assessee s case in assessment years 2012-13 and 2013-14, the Assessing Officer added the interest income as income from other sources. The assessee contested the aforesaid addition before Commissioner (appeals). Having taken note of the fact that the Tribunal and the Hon ble High court has decided identical issue in favour of the assessee in assessment years 2012-13 and 2013-14, learned Commissioner (appeals) deleted the addition. Addition u/s 56(viia)(ii) - assessee has received an amount as share premium - HELD THAT:- The value of shares, for which the money was received from the holding company was substantiated by a valuation report obtained from a registered valuer, wherein the value was determined by applying DCF method, an approved method under rule 11UA. As rightly observed by learned first appellate authority, the transaction relating to purchase and sale of shares is between a holding company and its subsidiary and no third party is involved. Therefore, no undue benefit has been derived by a third party. Even otherwise also, the valuation of share as per DCF method has been determined by a registered valuer, which is in terms of section 56(2)(viib) of the Act read with Rule 11UA. Even, the alternative method adopted by the assessee for valuation of share was found as per FMV. The aforesaid factual findings of the first appellate authority remain uncontroverted before us, as the Revenue has failed to bring on record any contrary material. Another pertinent fact, which the learned Commissioner (Appeals) has rightly observed, is, the share application money was received in financial year 2012-13 and the terms and conditions of allotment were also decided in the said year. No addition can be made in the impugned assessment year. Accordingly, we uphold the decision of learned Commissioner (Appeals). Appeal of revenue dismissed.
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2023 (9) TMI 370
Estimation of income - Disallowance of purchases - Assessee failed to establish the genuineness of the transaction - assessment passed u/s 143(3) r.w.s. 153C came to the conclusion that the assessee in collaboration with Shri Shirish C Shah brought the share capital through preferential allotment and invested the amount with ultimate beneficiaries in the share capital with huge share premium - assessee has failed to establish the genuineness of the transaction reflected in the profit and loss account and the assessee was engaged in the business of providing accommodation entries to various parties HELD THAT:- In the present case, the assessee apart from placing reliance upon the invoices, Ledger account of the vendors, and stock register neither could produce confirmation from the parties from whom the purchase was made nor could produce the confirmation from parties to whom the sale has been made. We find that in the case of one of the companies, i.e. M/s Empower India Ltd., which is controlled by Shri Shirish C Shah, the AO vide order dated 22/03/2016 passed under section 143(3) r.w.s. 153C of the Act, forming part of the paper book, treated 1% of the total sales as the commission earned from the provision of accommodation entry in the similar facts and circumstances. Since the assessee is also found to be involved in the process of providing accommodation entries at the behest of Shri Shirish C Shah, we direct the AO to consider 1% of the total sales declared during the year as net commission in the hands of the assessee for providing accommodation entry. Accordingly, ground no. 3 raised in assessee s appeal is partly allowed.
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2023 (9) TMI 369
Scope of the Adjustment made by the CPC u/s 143(1) when scrutiny assessment made u/s 143(3) - non-deduction of tax or non-depositing of TDS deducted by the assessee - case of the assessee was subsequently selected for scrutiny - CIT(A) dismissed the appeal of the assessee and confirmed the adjustment made by the CPC as the payment made on 31.102018 is not within the statutory time limit - HELD THAT:- CIT(A) has taken statutory time limit for depositing the TDS as per the provision of chapter XVII instead of considering the disallowance u/s 43B and u/s 40(a)(ia) which provides the payment on or before due date of filing u/s 139(1) of Income Tax Act. As brought to the notice of the bench that the case of the assessee was subsequently, selected for scrutiny and Ld. AO has already passed scrutiny assessment order u/s 143(3) on 24.02.2021 by National Faceless Assessment Centre Considering the facts that the case of the assessee was subsequently taken up for scrutiny assessment and subsequent assessment order u/s 143(3) has been passed on 24.02.2021, we find that the order of processing u/s 143(1) stands merged with the scrutiny assessment order passed u/s 143(3) and therefore, the appeal proceedings against the processing and adjustment made by the CPC, becomes infructuous. Accordingly, we set aside the impugned order passed by the Ld. CIT(A) - Appeal of assessee is allowed.
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Customs
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2023 (9) TMI 368
Classification of the goods proposed to be imported - preparation of Betel Nuts known as Boiled Supari packed in consumer packing and bulk packing - to be classified under sub-heading 2106 90 30 in Chapter 21 of the First Schedule to the Customs Tariff Act or not - It was held by Delhi High Court that Given the definition of the sub-heading Betel nut product known as Supari , read in the context of the main title of Chapter 21 and sub-heading 0802 read in the context with the title of Chapter 8 of the Customs Tariff ( Edible fruits and nuts; peel of citrus fruit or melons ); it would not be apposite to classify the products in question as those covered under Chapter 21 of the Customs Tariff. HELD THAT:- This Court is of the opinion that the impugned order does not call for interference - SLP dismissed.
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2023 (9) TMI 367
Misdeclaration of value as well as description of goods - confiscation - HELD THAT:- This Court is of the opinion that no useful purpose will be served in entertaining the appeal. It is, however, made clear that question of law sought to be urged is kept open. Appeal dismissed.
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2023 (9) TMI 366
Permission for provisional release of the goods - ball-bearings - Section 110A of the Customs Act, 1962 - SCN not adjudicated for almost one year - HELD THAT:- It is clear that in the present case, Respondent No. 2 has not only failed to take cognizance of the repeated applications of the Petitioner, when powers were conferred on him to exercise discretion either to release the goods provisionally or impose conditions and grant provisional release or reject the provisional release of the goods. However, he appears to have acted in complete disregard of his powers and duties - such approach of Respondent No. 2 is certainly not conducive either to the position he wields under the legislation or the public trust he would repose in discharging his statutory duties. This could not have been the approach of Respondent No. 2 even acting under the Circular, as pointed out by Mr. Adik, in requiring Respondent No. 2 to consider any application for release of goods provisionally. The goods in question are subject matter of one bill of entry. Show cause notice itself, although is issued on 22nd April 2022 for almost one year has not been adjudicated and in fact, appears to have not progressed at all - a situation cannot be permitted where the Petitioner would suffer on both the counts at the hands of Respondent No. 2 - There is no acceptable reason that the petitioner in law should be denied provisional release on conditions. This is a fit case where the prayers as made by the Petitioner for provisional release of the goods need to be granted - Petition allowed.
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2023 (9) TMI 365
Valuation of imported goods - water based printing ink or solvent based printing ink - rejection of declared value - enhancement of value based in NIDB data - Rule 12 of Customs Valuation Rules, 2007 has been applied or not - HELD THAT:- This is case of repeated remands therefore it seems that the original authority has not purposely followed the directions of the appellate authority leading to unnecessary litigation to the party - there are no order of the proper officer has been passed within 15 days of assessing the Bills of Entry as the same was not accepted by the party and the release of goods procured under protest. Also, there is no order on record indicating the Rule 12 of Customs Valuation Rules, 2007 has been applied after rejecting the transaction value on the basis of enquiry and a reasoned order indicating that the materials were rejectable and on what ground alone the appeal is liable to succeed. In identical facts, various benches of this Tribunal have ordered the same proposition in the case ITALIK METALWARE PVT LTD VERSUS C.C. -MUNDRA [ 2023 (8) TMI 1157 - CESTAT AHMEDABAD] and in the case of M/S. SARDA ENERGY AND MINERALS LTD. VERSUS CCE, RAIPUR [ 2017 (9) TMI 1142 - CESTAT NEW DELHI] of firstly there being requirement of rejecting transaction value after inquiry and order. Therefore, in the absence of following such statutory requirement the show cause notice becomes unsustainable. The appellant therefore becomes eligible to relief - the remand order passed second time by the learned Commissioner (Appeals) set aside - appeal allowed.
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2023 (9) TMI 364
Valuation of imported goods - imported old and used worn clothing, completely fumigated - restricted item or not - classified under Tariff Item No.63090000 or not - enhancement of value - confiscation - redemption fine - penalty - HELD THAT:- This issue came up before this Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [ 2018 (11) TMI 625 - CESTAT MUMBAI ], wherein this Tribunal has observed the paucity of evidence and the negligible scope for ascertainment at this stage deters us from doing so. In the light of the admitted failure to comply with the licensing requirements, we uphold the confiscation of the goods under Section 111(d) of Customs Act, 1962. However, it is our opinion that the ends of justice would be served by reducing the redemption fine to 10% of the ascertained value and penalty to 5%. The redemption fine and penalty as reduced by the Ld.Commissioner(Appeals) is sufficient to meet the end of justice - there are no infirmity in the impugned order and the same is sustained - appeal of Revenue dismissed.
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Corporate Laws
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2023 (9) TMI 363
Deed of pledge of shares - voting right - whether the rights of a Pledgee limited to those prescribed in Section 176 of the Contract Act? - whether the Deed of Pledge can include terms governing the pledge over and above those contained in Sections 172 to 179 of the Contract Act? Seeking injunction restraining the defendant from exercising rights including voting rights in respect of the suit shares - restraint from transferring, alienating, creating any third party rights in respect of the suit shares - injunction restraining from interfering and/or seeking to participate in the management and affairs of the Defendant/Respondent No. 3 by claiming rights under the suit shares. HELD THAT:- It is the Plaintiff s contention that the conferring of voting rights upon the Pledgee by the contract i.e. the Pledge Deeds would constitute contracting out of Section 176 which is prohibited - this contention is misplaced. This Court in Madhaolal Sindhu [ 1946 (8) TMI 19 - BOMBAY HIGH COURT ] was not concerned with the issue which arises herein namely whether the conferring of voting rights upon the Pledgee constitutes contracting out of Section 176. It is a settled position that the Contract Act, including law of pledge is not exhaustive. In the present case, the mandatory provision of Section 176 of the Contract Act which provides for giving a reasonable notice prior to sale has infact been complied with. The Pledge Deeds mandate reasonable notice to be given before the sale i.e. Clause 7.3 and 8 of the Pledge Deed. The Pledgee has in compliance with the clauses of the Pledge Deeds which are in terms of the mandatory provision of Section 176 of the Contract Act issued notice of sale to the Plaintiff and the Plaintiff s right to redeem the Suit shares from JCF remains intact - the Pledge Deeds in the present case which confer voting rights on the Pledgee beyond what is specified and expressly provided for under Section 176 of the Contract Act cannot be voided as it is permissible for the parties to incorporate into the Pledge Deeds any incident which is not contrary to or inconsistent with the said provisions governing Pledges in the Contract Act. In the present case the use of the pledged goods will include exercise of voting rights since the pledged goods are shares. Thus, the Pledge Deeds by including in its terms the exercise of voting rights of the Pledgee will neither be contrary to law nor lead to conversion nor would amount to mortgage of movables. The express terms of the Deed of Pledge will prevail and where there are no express terms, the Pledgee may hold or assign the pledged goods, until the debt is discharged. This has also been held in the English case of Donald Vs. Suckling. The Pledgee has a right to protect the pledged goods and its interest therein during the subsistence of the pledge. Having perused the relevant provisions of the Depositories Act, it is clear that the Depositories Act does not contemplate different kinds of beneficiary owners. There is no limitation on the Pledgee s rights as beneficial owner and / or limitation as to the Pledgee having right to sell but having no other right. Thus, the contention on behalf of the Plaintiff and / or Dish TV to the effect that the only rights which the Pledgee has upon being transposed as beneficial owner, under the Depositories Act and the Depository Regulations is only for effecting the sale and does not contemplate the exercise of voting rights by the Pledgee upon invocation of the pledge does not merit acceptance - the contention of the Plaintiff, namely Section 5(3) of the SARFAESI Act is caveated by the words unless otherwise expressly provided by this Act and since Section 31(b) of the SARFAESI Act excludes the application of the Act to a contract for pledge, Section 5(3) of the SARFAESI Act is not applicable to Pledge Deeds cannot be accepted. Having held that the transfer to JCF is lawful and the Pledgee can contractually exercise voting rights, the allegations of fraud are now dealt with. The Plaintiff has in the amended Plaint alleged that the Deeds of Pledge are vitiated by fraud - the Plaintiff had prior knowledge of the alleged fraud i.e. prior to the filing of the present Suit but despite which the Plaintiff did not avoid the Pledge Deeds. The alleged fraud does not in my prima facie view render the loan transaction void but at the highest would render the transaction voidable at the instance of the defrauded party. The parties to the Pledge Deeds including the Plaintiff were fully aware of the character and nature of the documents namely the Deeds of Pledge that were executed. By the Deeds of Pledge, the Plaintiff was pledging certain shares held by it in favour of Catalyst for the benefit of Yes Bank as security for the Loans advanced by Yes Bank. Thus, no case has been made out of there being a fraud as to the character of the contract which would render the document void ab-initio - The Plaintiff has alleged illegality in respect of the use of the loans amount, which does not render the loans themselves illegal and / or unlawful. Prima facie, it is not found that a case of fraud as contemplated under Section 23 is made out. The Pledge Deeds itself provide that the consideration for the Pledgor under the Pledge Deeds is the advancement of the loan to the Borrowers. The Borrowers having received and utilized the loans, it cannot be said that the Plaintiff has not received any benefit from the loan transaction and Pledge Deed. Further, the Plaintiff has not clarified why the Suit shares were Pledged by them in the first place if no consideration / benefit was received by the Plaintiff under the Pledge Deeds - there are no merit in the Plaintiff s claim to be an innocent party. Thus, JCF, presently registered as beneficial owner , is having all rights, benefits and liabilities attached to the securities held by the depository and including voting rights as well as the prima facie finding that no case of fraud having been established by the Plaintiff, the interim relief sought for in the present Interim Application cannot be granted. The Interim Application is disposed of.
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2023 (9) TMI 362
Legality of Look Out Circular issued by the Bank of Baroda - permission to travel abroad - HELD THAT:- In the instant case most of the transactions have taken place post the Petitioner s resignation and the Petitioner is being sought to be held as a hostage in the country only for the purpose of recovery of money which is payable by the Company-Lloyd Electric and Engineering Limited. The Petitioner s movement has been severely impeded from June, 2022 i.e., for more than one year when the Petitioner is not even an accused in any FIR - A mere probability/possibility that a person might ultimately be made an accused cannot be the sole basis for opening a Look Out Circular which has the effect of impeding the movement of a citizen and which takes away its right to travel abroad which has been elevated as a fundamental right under Article 21 of the Constitution of India - It is well settled that legality of a valid Look Out Circular has to be considered keeping in view the circumstances prevailing on the date on which the request for issuance of the Look Out Circular was made. In the present case, on the day when the Look Out Circular was issued, the Petitioner was not an accused in any case. In fact, material on record does not even show that the arrest of the Petitioner was even contemplated by the Enforcement Agencies and even today it is stated by learned Counsel for the CBI that the Petitioner is not an accused in the case. There is nothing in the present case which can justify that the Enforcement Agency has received any input that the departure of the Petitioner herein is detrimental to the economic interest of India or that his departure from the country should not be permitted in the larger interest. Phrases like detriment to the economic interest of India cannot be permitted to be used without there being any substantial material before the Look Out Circular is opened and definitely the Banks cannot use Look Out Circulars only as a measure of recovering money because the remedy as available under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and Insolvency and Bankruptcy Code, 2016 (IBC) is not sufficient and that opening of Look Out Circular will result in a faster remedy to recover money from the creditors. The Impugned Look Out Circular is, therefore, wholly unsustainable and deserves to be quashed and is hereby quashed - The writ petition is allowed.
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2023 (9) TMI 361
Striking off of the name of the company by the Respondent No. 1 from the Register of Companies - Section 248 of the Companies Act, 2013 - HELD THAT:- The Appellant Company is having property/land and due to change of circumstances the Appellant Company has failed to file its Financial Statements and Annual Returns - considering that the Appellant Company is having substantial movable as well as immovable assets, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, the order passed by the National Company Law Tribunal (New Delhi Bench-II) as well as Registrar of Companies, NCT of Delhi Haryana is not sustainable in law. The name of the Appellant Company be restored to the Register of Companies subject to the compliances imposed - appeal allowed.
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PMLA
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2023 (9) TMI 360
Seeking grant of bail - Money Laundering - proceeds of crime - illegal mining - transportation of 1844 trucks/vehicles carrying stone chips - HELD THAT:- In the instant facts, the nature of the allegation in the present proceedings has been taken note. In that circumstance, it is seen that the petitioner was arrested on 05.08.2022 and he has spent a little over one year of incarceration. The chargesheet is filed and the Trial Court having framed the charges, no doubt has started the trial and it is stated across the bar that five witnesses have been examined but it is also stated that in all 42 witnesses are cited to be examined. In that circumstance, taking into consideration all aspects of the matter and also making it subject to the condition that the petitioner shall diligently participate in the trial without interfering in the course of justice and also complying with the other appropriate conditions to be imposed by the trial court, the prayer is accepted. The petitioner to be enlarged on bail subject to appropriate conditions being imposed by the trial court and the petitioner diligently adhering to such conditions, as also not being required in any other case. For the purpose of imposition of such conditions and issue of release order the petitioner shall be produced forthwith before the trial court - petition disposed off.
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Service Tax
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2023 (9) TMI 359
Refund claim - rejection on the ground that the services like THC, BC charges, handling, LDD. TSC. documentation charges are not specified service under Notification No. 41/2007-ST dated 06.10.2007 - HELD THAT:- There is no dispute with regard to availing of the services for the purpose of export as well as payment of service tax thereon. This issue has been considered by the Hon ble High Court of Rajasthan in the case of UNION OF INDIA THROUGH THE COMMISSIONER, CENTRAL EXCISE AND SERVICE TAX, UDAIPUR VERSUS M/S. ARIHANT TILES AND MARBLES (P) LTD. [ 2019 (1) TMI 73 - RAJASTHAN HIGH COURT] wherein the Hon ble High Court has held it is an admitted fact of the record that the services towards terminal and other handling services were availed by the assessee within the port area, in connection with export of the goods. Thus, irrespective of classification of service, since the same are provided within the port for export of goods, the benefit of refund should be available under the head port services in terms of notification dated 6-10-2017. Thus, registration under a particular service is not necessary for the purpose of exemption under Notification No. 41/07 - the impugned order set aside - appeal allowed.
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2023 (9) TMI 358
Wrong availment of CENVAT Credit - input services - Pre-fabricated Building (telecom shelter) and Towers/Tower materials/Tower structures falling under CETH 94060091 730820190 by declaring these items as capital goods - HELD THAT:- This issue of Cenvat Credit on input/input services on the impugned items and capital goods has been decided in favour of the appellant by the Hon ble High Court of Delhi in the case of Vodafone Mobile Services Ltd. cited [ 2018 (11) TMI 713 - DELHI HIGH COURT] - By relying upon the decision of Hon ble Delhi High Court in appellant s own case, this Tribunal in the case of Bharti Infratel Ltd. and Indus Towers Limited cited have allowed the cenvat credit on tower, tower material and telecom shelter etc. The division bench of CESTAT Principle Bench at New Delhi in identical facts has examined the issues in the case of BHARTI HEXACOM LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, CENTRAL GOODS AND SERVICE TAX JAIPUR-I [ 2021 (5) TMI 834 - CESTAT NEW DELHI ] wherein the division bench has noted all the five questions framed by the Hon ble Delhi High Court and answered each questions with a detailed reasons and after following the decision of the Hon ble Delhi High Court has allowed the appeal of the assessee by holding that the appellant is eligible to claim cenvat credit on tower, tower material and telecom shelter etc. Thus, the impugned order denying the cenvat credit on input and input services, capital goods on tower, tower material and shelter etc. are not sustainable in law - appeal allowed.
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2023 (9) TMI 357
Seeking de-freezing of bank accounts of petitioner - outstanding payment on the part of the appellant - HELD THAT:- The amount as was confirmed to be recovered from the appellant vide the Order-in-Original No.20 dated 29.03.2022 has already been objected as the appeal has been filed against the said order and the same is pending consideration. The other Order- in-Original No. 02 dated 07.09.2022 is not in dispute here. The copy of challan as placed on record reveals that most of the part of the amount in question/under sub judication stands already deposited by the appellant. The bank statements reveal that sufficient balance is lying in both of his accounts to meet the situation in case the appeal against the Order-in-Original stands decided against the appellant. The business of the appellant needs money circulation. In these circumstances, there are no reason nor department could produce anything on record to justify the freezing of the appellant s accounts. It is also observed that both the accounts of the appellant have admittedly been frozen. The difficulty as impressed upon on behalf of the appellant in running his business for want of funds cannot be ruled out - Department has not brought on record any such fact which may reflect that appellant has other means to sustain his business. In the light of the discussion above there appears no justification for ordering freezing of the accounts. The order dated 25.05.2023 declining the request of the appellant to defreeze the accounts is hereby set aside. Appeal stands allowed.
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Central Excise
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2023 (9) TMI 403
Recovery of Excise duty alongwith interest - imposition of penalty of ₹. 5000 under rule 27 of Central Excise Rules, 2002 - clearance of dyed yarn without complying with condition in N/N. 6/2002-CE dated 1st March 2002 - HELD THAT:- The principle enshrined within the scheme of central excise, intended to tax all including intermediate goods manufacture but for convenience is excluded from levy at each of the stages subject to duty being paid at some stage by the manufacturer and subject to procedure as spelt out in rule 16A, rule 16B and rule 16C of Central Excise Act, 1944. In such circumstances, a separate notification by the Central Government, in concord with tax policy formulation, must be presumed to have a separate intent so as not to be superfluous. Hence, subject to condition that yarn emerging therefrom is exempted from duty, it is only required that the finished goods should have been manufactured either out of duty paid textured yarn or twisted yarn and that CENVAT Credit on such inputs had not been availed. It is not the case of Revenue that credit had been availed. In identical circumstances, it has been held by the Tribunal in re Shreekar Polyester Pvt Ltd [ 2017 (1) TMI 25 - CESTAT MUMBAI ] that there is no condition that if doubled yarn is subject to the process of dyeing, the dyed yarn is entitled for exemption only if at the doubling stage duty had been discharged. Moreover, the appellants contended that even if the duty is paid at the doubling stage, Cenvat credit can be availed for clearance of dyed yarn and in effect there would be revenue neutrality. In these circumstances, the appellant s interpretation of condition 19(ii) appears to be correct. Thus, nothing further remains to be decided in the dispute - the appeal allowed by setting aside the impugned order.
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2023 (9) TMI 356
Rate of abatement - Works Contract - Violation of principles of natural justice - ex-parte order - petitioner has not filed any reply and thereby has not responded to the notice - Inspite of three opportunities, the petitioner did not appear before the Authorities - HELD THAT:- Admittedly, the petitioner has engaged in works contract. The respondent has also recorded that the petitioner is engaging in works contract especially in relation to the construction of check dams, repairing of irrigation tanks, construction of Government schools and Government Polytechnic, etc. - As per Rule 2(ii)(A) of Service Tax (Determination of Value) Rules, 2006, if the petitioner is considered as individual, the respondent ought to impose only 40%. Hence the respondent has not granted the abatement of 60% provided for the work contract. If the said rule is applied then the respondent is not empowered to impose 100% tax. If the respondents have considered the petitioner as registered under the Company s Act then the petitioner is entitled to pay only 50% as per the S.No.9 of the Notification No. 30/2012-ST dated 20.06.2012. Under S.No.9 it states that in respect of service provided or agreed to be provided in service portion in execution of works contract , then 50% ought to be paid by the person providing service and 50% ought to be paid by the person receiving the service . Since the respondent has imposed 100% service without invoking the Rule and Notification, this Court is inclined to interfere with the impugned Assessment order, dated 22.03.2023. This Court is inclined to quash the assessment order. The petitioner is directed to submit his reply, within a period of two weeks, from the date of receipt of a copy of the order. Thereafter, the respondents shall grant personal hearing - Petition allowed.
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2023 (9) TMI 355
Less recovery of duties of central excise on clearances - Entitlement of concessional rate of duty - HELD THAT:- It is seen from the grounds of appeal that the statutory requirement of monthly removals mandated by the Maharashtra State Pollution Control Board (MSPCB) precluded any other option and any detriment arising from computation of entitlement to monthly computation of entitlement for domestic clearance would be inequitable. That certain classes of units are entitled to such periodicity of clearance rules out rigidity of approach in computing entitlements. There is no reason to deny such computation to the appellant herein. Demand relating to domestic clearance at full rate of duty - HELD THAT:- On the dispute limited to ₹. 7,82,337, it would appear that the justification offered by appellant for the appropriate value of clearances has not been appreciated by the lower authorities - there is a casual dismissal of the submission. The veracity of the entitlement for clearance at concessional rate of duty, as submitted by the appellant, needs to be carried out and the submissions of the appellant on the value of the clearances effected at full rate of duty need consideration. These are to be undertaken by the original authority. Impugned order set aside - matter on remand.
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2023 (9) TMI 354
CENVAT Credit - inputs - manufacture took place or not - HELD THAT:- Even if the goods cleared by the appellant have not undergone manufacture, the consequent non-excisability would render the credit as not having been availed. It would, therefore, appear that the issue in dispute is limited to taking of credit on goods that are not inputs as defined in rule 2 of CENVAT Credit Rules, 2004. In re Ajinkya Enterprises [ 2012 (7) TMI 141 - BOMBAY HIGH COURT ], the Hon ble High Court of Bombay has held that in the present case, the assessment on decoiled HR/CR coils cleared from the factory of the assessee on payment of duty has neither been reversed nor it is held that the assessee is entitled to refund of duty paid at the time of clearing the decoiled HR/CR coils. In effect, therefore, the utilization of credit for cleared products is tantamount to reversal and, hence, recovery of such credit is an exercise in superfluity. These decisions were not available with the adjudicating authority then and has settled the law on recovery thereupon. Learned Authorized Representative has suggested that actual availment and corresponding substantive reversal need to be verified. Matter remanded back to the original authority for such verification and to limit recovery, if any, only to such credit as is in excess of that availed on procurement of the three products.
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2023 (9) TMI 353
Time limitation - reversal of CENVAT credit while opting SSI exemption - appellant rectified their mistake by reversing CENVAT credit - HELD THAT:- The discrepancy regarding the reversal of CENVAT credit while opting SSI exemption came to the Department at the time of Audit and the appellant reversed the cenvat credit along with interest for intervening period. In that circumstances, there was no requirement to issue the show-cause notice to the appellant - the proceeding against the appellant is not sustainable - SCN is barred by limitation. The impugned order is set aside and the appeal is allowed by confirming reversal of cenvat credit by the appellant and the payment of interest thereof for the intervening period.
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2023 (9) TMI 352
Rebate claim - unjust enrichment - rejection on the ground that the export goods were manufactured using imported duty free inputs - adjudicating authority, though sanctioned the refund has ordered to credit the amount to the Consumer Welfare Fund observing that the incidence of duty has been passed on to the overseas buyer - violation of principles of natural justice - HELD THAT:- It is held by the authorities below that the incidence of duty has been passed on to the foreign buyer - the logic of such view taken by the adjudicating authority that the duty has been passed on to a buyer outside India; i.e., outside the jurisdiction of the Central Excise Act, cannot be understood. This apart it is brought out from records and also explained by the Ld. counsel that the Excise duty is paid on FOB value and the export invoice reflected in the shipping bill is on CIF value. The excise duty is paid only on FOB value and therefore the appellant has not collected excise duty from the foreign buyer. After verification of the records and appreciating the evidence, it is convincing that the incidence of duty has been borne by the appellant. In such circumstances, the order passed by the authorities below directing to credit the sanctioned refund to Consumer Welfare Fund is not just and proper. The impugned order is modified to the extent of sanctioning the refund of Rs.3,01,002/- and the appellant is eligible to receive refund of this amount - Appeal allowed in part.
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CST, VAT & Sales Tax
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2023 (9) TMI 351
Constructions raised by the assessee were by way of execution of works contract - HELD THAT:- There are no merit in the Special Leave Petition - The Special Leave Petition is dismissed.
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2023 (9) TMI 350
Imposition of freight charges at the rate of one per cent. of the purchased value on overall turnover on the basis of the market value - Non-examination of individual vouchers - mala fide or intention of evading taxes or not - levy of penalty - HELD THAT:- The court finds that this indeed is an audit assessment under section 9C of the OET Act and at the relevant point in time, the decision of this court in Chandrakanta Jayantilal [ 2022 (7) TMI 607 - ORISSA HIGH COURT ] was not available and, therefore, perhaps the issue was not raised by the assessee. That does not however mean that it cannot be raised a subsequent stage since it is a jurisdictional issue. Since the Tribunal also had no occasion to examine the issue, the court considers it appropriate to direct that the matter be restored to the file of the Tribunal for a fresh decision - impugned order set aside.
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Indian Laws
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2023 (9) TMI 349
Dishonour of Cheque - legally recoverable debt or not - rebuttal of presumption as incorporated under Section 139 of the NI Act - HELD THAT:- This Court keeping in perspective the nature of the proceedings arising under the NI Act and also keeping in view that the cheque itself is a promise to pay even if the debt is barred by time has in that circumstance kept in view the provision contained in Section 25(3) of the Contract Act and has indicated that if the question as to whether the debt or liability being barred by limitation was an issue to be considered in such proceedings, the same is to be decided based on the evidence to be adduced by the parties since the question of limitation is a mixed question of law and fact - this Court was of the view that entertaining a petition under Section 482 CrPC to quash the proceedings at the stage earlier to the evidence would not be justified. The provision would indicate that in respect of a promissory note payable at a fixed time, the period of limitation being three years would begin to run when the fixed time expires. Therefore, in the instant case, the time would begin to run from the month of December, 2016 and the period of limitation would expire at the end of three years thereto i.e. during December, 2019. In that light, the cheque issued for Rs.10,00,000/- which is the subject matter herein is dated 28.04.2017 which is well within the period of limitation. The complaint in CC No.681 of 2017 was filed in the Court of the Chief Metropolitan Magistrate on 11.07.2017. So is the case in the analogous complaints. Therefore, in the instant case not only the amount was a legally recoverable debt which is evident on the face of it, the complaint was also filed within time. Hence there was no occasion whatsoever in the instant case to exercise the power under Section 482 to quash the complaint. The order impugned is accordingly set aside - Appeal allowed.
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2023 (9) TMI 348
Dishonour of Cheque - insufficient funds - compounding of offence - HELD THAT:- Having taken note of the fact that the entire amount of compensation, i.e., Rs.45,000/-, as awarded by the learned Trial Court, has been received by the complainant-respondent and the complainant has no objection in compounding the offence, therefore, this Court sees no impediment in accepting the prayer made on behalf of the accused-petitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon ble Apex Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT ], wherein the Hon ble Apex Court has held that Any costs imposed in accordance with these guidelines should be deposited with the Legal Services Authority operating at the level of the Court before which compounding takes place. For instance, in case of compounding during the pendency of proceedings before a Magistrate s Court or a Court of Sessions, such costs should be deposited with the District Legal Services Authority. In K. SUBRAMANIAN VERSUS R. RAJATHI REP. BY P.O.A.P. KALIAPPAN [ 2009 (11) TMI 1013 - SUPREME COURT ], it has been held by the Hon ble Apex Court that in view of the provisions contained in Section 147 of the Act read with Section 320 of Cr.P.C., compromise arrived at can be accepted even after recording of the judgment of conviction. Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has already paid the entire amount of compensation to the complainant-respondent, prayer for compounding the offence can be accepted in terms of the aforesaid judgments passed by the Hon ble Apex Court - the parties are permitted to get the matter compounded in light of the compromise arrived inter se them. The compounding fee in the sum of Rs.2250/- has already been deposited by the petitioner before H.P. State Legal Services Authority, as per the directions of this Court. The present matter is ordered to be compounded and the impugned judgment of conviction and order of sentence dated 24.09.2018, passed by the learned Judicial Magistrate First Class, Court No. 2, Paonta Sahib, District Sirmaur, H.P. is quashed and set-aside and the petitioner-accused is acquitted of the charge framed against him under Section 138 of the Act. Bail bonds, if any, stand discharged - Petition disposed off.
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2023 (9) TMI 347
Dishonour of Cheque - insufficient funds - compounding of offence exercising power under Section 147 of NI Act - HELD THAT:- Having taken note of the fact that the entire amount of compensation, i.e., Rs.80,000/-, as awarded by the learned Trial Court, has been paid by the petitioner- accused to the complainant and the complainant has no objection in compounding the offence, therefore, this Court sees no impediment in accepting the prayer made on behalf of the accused-petitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon ble Apex Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT ], wherein the Hon ble Apex Court has held since Section 147 was inserted by way of an amendment to a special law, the same will override the effect of Section 320(9) of the CrPC, especially keeping in mind that Section 147 carries a non obstante clause. In K. SUBRAMANIAN VERSUS R. RAJATHI REP. BY P.O.A.P. KALIAPPAN [ 2009 (11) TMI 1013 - SUPREME COURT ], it has been held by the Hon ble Apex Court that in view of the provisions contained in Section 147 of the Act read with Section 320 of Cr.P.C., compromise arrived at can be accepted even after recording of the judgment of conviction. Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has paid the entire amount of compensation to the complainant, prayer for compounding the offence can be accepted in terms of the aforesaid judgments passed by the Hon ble Apex Court - the parties are permitted to get the matter compounded in light of the compromise arrived inter se them. The present matter is ordered to be compounded and the impugned judgment of conviction and order of sentence, dated 27.01.2017, passed by the learned Judicial Magistrate First Class, Baijnath, District Kangra, H.P., in Criminal Complaint No. 41-III/14, and affirmed by learned Additional Sessions Judge-III, Kangra at Dharamshala, camp at Baijnath, H.P., vide judgment dated 13.11.2018, are quashed and set-aside and the petitioneraccused is acquitted of the charge framed against him under Section 138 of the Act - Petition disposed off.
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2023 (9) TMI 346
Dishonour of Cheque - compounding of offences - petitioner-accused acquitted of the charge framed against her under Section 138 of the NI Act - HELD THAT:- Having taken note of the fact that out of Rs.4,00,000/-, which is the entire amount of compensation awarded by the learned Trial Court, the complainant- respondent has already received Rs.3,33,000/- and balance amount has been deposited by the petitioner-accused before the learned Trial Court and the complainant has no objection in compounding the offence, therefore, this Court sees no impediment in accepting the prayer made on behalf of the accused-petitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon'ble Apex Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT ], wherein the Hon'ble Apex Court has held since Section 147 was inserted by way of an amendment to a special law, the same will override the effect of Section 320(9) of the CrPC, especially keeping in mind that Section 147 carries a non obstante clause. In K. SUBRAMANIAN VERSUS R. RAJATHI REP. BY P.O.A.P. KALIAPPAN [ 2009 (11) TMI 1013 - SUPREME COURT ], it has been held by the Hon'ble Apex Court that in view of the provisions contained in Section 147 of the Act read with Section 320 of Cr.P.C., compromise arrived at can be accepted even after recording of the judgment of conviction. Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, out of awarded compensation amount of Rs.4,00,000/-, has already paid Rs.3,33,000/- to the complainant-respondent and deposited balance amount of Rs.67,000/- before the learned Trial Court, which the complainant-respondent may get released, prayer for compounding the offence can be accepted in terms of the aforesaid judgments passed by the Hon'ble Apex Court - in view of the detailed discussion made hereinabove as well as law laid down by the Hon'ble Apex Court, the parties are permitted to get the matter compounded in light of the compromise arrived inter se them. The present matter is ordered to be compounded and the impugned judgment of conviction and order of sentence passed by the learned Judicial Magistrate 1st Class, Court No. 7, Shimla, H.P., in Case No. 37-3 of 2014, and affirmed by learned Additional Sessions Judge-I, Shimla, H.P., vide judgment dated 30.04.2022, in Criminal Appeal No. 4-S/10 of 2019, are quashed and set-aside and the petitioner-accused is acquitted of the charge framed against her under Section 138 of the Act. Bail bonds, if any, stand discharged. Petition disposed off.
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2023 (9) TMI 345
Violation of principles of natural justice - whether a party without any adverse interest be permitted to cross-examine the witness? - suit for partition - HELD THAT:- The defendant may cross-examine the co-defendant or any other witness, who has given evidence against him and a reply on such evidence though there is no joint issue between them. In this case, the third defendant being the co-defendant of the fourth defendant has not given anything against the fourth defendant in her proof affidavit in examination-in-chief. No doubt when there is no clash of interest between the third and fourth defendants and nothing has been said as against the fourth defendant by the third defendant, there cannot be any statutory right of cross-examination of the third defendant by the fourth defendant. As per Section 138 of the Indian Evidence Act, 1872 only an 'adverse party' can cross-examine the other parties. Being co-defendants admittedly the fourth respondent husband is not an 'adverse party' to the third defendant wife. Hence, the impugned order passed by the learned I Additional District Judge (PCR), Thanjavur dated 04.09.2015 is in order and it is not necessary to interfere with the order passed by the learned I Additional District Judge (PCR), Thanjavur. The learned I Additional District Judge (PCR), Thanjavur is directed to dispose of O.S.No.172 of 2010 as expeditiously as possible within a period of three (3) months from the date of receipt of the copy of this order - this Civil Revision Petition stands dismissed.
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