TMI Tax Updates - e-Newsletter
September 8, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Highlights / Catch Notes
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GST:
Detention of goods alongwith vehicle - goods carrying valid E-way bill or not - evasion of tax or not - Non-generation of E-way bill for earlier Invoices - There was no reason as to why the said invoices were also not included in the e-way bill generated, especially when the invoices were generated before the e-way bill was generated, the goods were consigned to the very same party and it was intended to be transported in one vehicle. - Petition dismissed - HC
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GST:
Refund of the amounts recovered and stay of the assessment order - Appellate Tribunal is not constituted - The Assessing Authority in the scheme of the enactment could not have made recovery of the entire amount. Section 112 provides for twenty per cent of the tax amount due, in addition to the ten per cent amount paid at the first appellate stage, for maintaining a second appeal before the Appellate Tribunal. - HC
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GST:
Jurisdiction - power under IGST to issue such notice - So far as respondent No.1 is concerned, they are not pursuing anything against the petitioner. As per reply filed on behalf of respondents No.1 to 3, the Excise and Taxation Officer has already passed the order dated 22.07.2019 (Annexure P-14), and the same is appealable. - Petition dismissed - HC
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GST:
Levy of tax and penalty - it is alleged that the e-way bill was being reused - it is for the seizing authority to establish by evidence that e-way bill was being reused. In the present case, there is no evidence produced by the seizing authority that there is a reuse of the e-way bill by the petitioner - Order set aside - HC
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Income Tax:
Exemption u/s 11 - investment in violation of Section 11(5) - investment of Rs. 1.5 crore and transfer of 100 acres of land by the Appellant to HITEX squarely covered under Section 13(1)(d) of the Act, 1961 and, therefore, the appellant society made themselves disentitle to the benefit under Section 11 of the Act, 1961 in view of violation of section 11(5) of the Act, 1961. - No exemption - HC
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Income Tax:
Penalty u/s 271(1)(c) - Error in computing LTCG - Based on the facts, AI ought to have accepted the claim of the assessee that the claim of loss was not intentional. - Moreover, as observed by the CIT(A) reduction in capital loss cannot be considered for imposition of penalty. - Revenue appeal dismissed - HC
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Income Tax:
Addition u/s 68 - allegation that assessee had taken bogus loans from individuals who were engaged in cheque discounting activities - if the transaction is through regular banking channels and creditor has confirmed the transactions, such transactions are genuine and therefore, addition made by the assessing officer are not sustainable. - HC
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Income Tax:
Deduction u/s 80JJAA - computation of number of days [300 days or more] for new regular workman is to be employed - period of 300 days could be taken into consideration both in the previous and succeeding years for the purpose of availing the benefit u/s 80JJAA of the Act and it is not required that workmen works for 300 days in the previous year relevant to assessment year. - HC
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Income Tax:
Income deemed to accrue or arise in India - Royalty - provision of bandwidth capacity and for provision for interconnect services - The term "process" used under Explanation 2 to section 9(1)(vi) in the definition of 'royalty' does not imply any 'process' which is publicly available. The term "process" occurring under clauses (i), (ii) and (iii) of Explanation 2 to section 9(1)(vi) means a "process" which is an item of intellectual property. - AT
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Income Tax:
Exemption u/s. 11 - nature of microfinance activity carried on by the appellant - relief to poor - business activists or not? - charging 50% higher rate of interest - the argument advanced by the Ld. DR that micro financing activity is merely a money lending activity without any charitable object cannot be accepted. - Benefit of exemption u/s 11 allowed - AT
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Income Tax:
Revision u/s 263 - Assessee has failed to establish that the AO has made necessary enquiries - there is no doubt about applicability of Explanation (2) to section 263(1) of the IT Act, assessment year being 2017-18 the assessment order as well as the impugned revisionary order having been passed after aforesaid date of 01/06/2015. - Revision order sustained - AT
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Income Tax:
Income taxable in India - subscription revenue for allowed ‘access’ to the database to view the videos - taxability of foreign income in India - the subscription revenue received by the assessee is not taxable as ‘Royalty’ in the hands of the assessee under Article 12 of the India-USA DTAA - AT
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Income Tax:
Disallowance u/s 40A(3) - transactions and payments made in cash - assessee filed affidavits from sub-contractors of assessee firm and they insisted for cash payments to make payment to workers and confirmed the above payments - cash payments are made due to business expediency and being genuine transaction and the parties are identifiable, provisions of section 40A(3) cannot be applied - AT
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Income Tax:
Levy of penalty u/s. 271F - assessee has filed the Return of Income after issuance of notice u/s. 148 of the Act, even though the taxable income of the assessee is higher, who is liable to file regular Return of Income u/s. 139(1) - The assessee offered no explanation - Levy of penalty confirmed - AT
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Income Tax:
Bogus purchase - AO added the entire amount of bogus purpose instead of GP ratio - CIT(A) deleted the additions - there is nothing on record which demonstrates the quantitative movement of the stock against the alleged purchases, except for existence of bills, their accounting entries and payment through banking channel, we are inclined to set aside the order of Ld. CIT(A) and uphold the addition made by the AO. - AT
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Customs:
Return of goods seized - Admittedly, the six months’ period has already lapsed - Indisputably, the Principal Commissioner of Customs has not extended the time period as postulated u/s 110(2) - The continued detention of the mobile phones by the respondents is illegal and untenable. - HC
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Customs:
Adjudication proceedings / Tax Administration - internal process of the customs administration - Valuation - Loading of value - The first appellate authority, in exercise of powers under section 128 of Customs Act, 1962, should have restricted itself to orders that cause grievance - there is an implied lack of jurisdiction for the Tribunal too to consider the merit of either side. It would, therefore, be appropriate for the first appellate authority to consider remedies appropriate to the grievance, if any and to the extent permitted by statutory conferment. - AT
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Customs:
Wavier of detention and demurrage charges - The adjudged demands confirmed on the appellant cannot be sustained for judicial scrutiny - Since the goods are lying under seizure and in the custody of the Department for over three years, the concerned authorities are directed to issue proper certificate for waiving the detention and demurrage charges within a period of four weeks from the date of receipt of this order. - AT
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IBC:
Initiation of CIRP - Threshold limit of default for admission of application - inclusion of interest for arriving at a claim - the quantum of interest comes into play as per the clauses of the Agreement of Sale entered into between the Parties. - Interest amount rightly added to meet the threshold limit. - AT
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IBC:
Maintainability of section 9 application - Operational credit or not? - In the CIRP what amount Operational Creditor i.e. Appellant is entitled or receives are different issues, any amount received by the Appellant in CIRP of ‘VentaRealtech Pvt. Ltd.’ may be adjusted but that itself cannot be a ground to not proceed with Section 9 Application filed by the Operational Creditor - the Adjudicating Authority committed error in rejecting the Application of the Appellant on the ground that there is no operational debt. - AT
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Service Tax:
Demand of interest - advance received earlier, returned by the appellant later - The demand of interest on the advance (of Rs.85 crores) received by the appellant and returned thereafter, as confirmed in paragraph 14.1 of the impugned order, cannot sustain and requires to be set aside - AT
Articles
Notifications
Circulars / Instructions / Orders
News
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FinTech and the Changing Financial Landscape (Keynote Address by Shri Shaktikanta Das, Governor, RBI - September 6, 2023 - at the Global Fintech Festival, Mumbai)
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Cabinet approves additional fund requirement under Industrial Development Scheme, 2017 for Himachal Pradesh and Uttarakhand
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Art of Monetary Policy Making: The Indian Context (Speech by Shri Shaktikanta Das, Governor, Reserve Bank of India - September 5, 2023 - Delhi School of Economics (DSE) Diamond Jubilee Distinguished Lecture)
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FinTech Innovation and approach to regulation (Keynote address delivered by Deputy Governor T Rabi Sankar, Reserve Bank of India - September 5, 2023 - at the Global Fintech Festival in Mumbai)
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IEPFA celebrates 7th Foundation Day in New Delhi
Case Laws:
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GST
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2023 (9) TMI 279
Rejection of pre-arrest bail - avaiLing and passing fake ITC - It was held by High Court that Considering the consequences of such economic offences that would befall the society, the offences have been held to be of distinct class and under the category of grave offences - HELD THAT:- There are no error in the High Court order rejecting pre-arrest bail for the petitioner. The Special Leave Petition accordingly stands dismissed.
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2023 (9) TMI 278
Seeking grant of anticipatory bail - default of tax evasion under the SGST Act alleged against the petitioner - HELD THAT:- The custodial interrogation of the appellant is not necessary - the impugned order set aside and it is directed that in case of arrest of the appellant in connection with Crime No. 01 of 2019 registered with Police Station Commercial Tax Anti Evasion Bureau, State Goods and Services Tax (SGST), Jabalpur, he shall be released on bail on such terms the Trial Court may consider fit and proper. Appeal allowed.
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2023 (9) TMI 277
Refund claim - refund directed by the impugned order was granted but by later subsequent proceedings appropriated by the Revenue through the adjudicatory process - HELD THAT:- It is not disputed that the respondent s appeal is pending before the Customs, Excise, Service Tax Appellate Tribunal; it has even made the requisite pre-deposit. It is also not in dispute that the respondent s show cause notice dated 16-01-2018 is pending adjudication before the concerned authority. Needless to say the question of law ultimately decided by this Court in the other connected matters would bind by the parties - Application disposed off.
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2023 (9) TMI 276
Detention of goods - Arecanut/Betul Nut - genuine documents or not - goods detained on the ground that the goods were not on the regular route but on a different route and the truck driver had given a statement that instead of Robertsganj the goods were to be unloaded at Ghaziabad as well as no document was produced for unloading the goods at Ghaziabad - HELD THAT:- In the case in hand during the validity of the first e-way bill the subsequent e-way bill was generated and submitted before the detention authority, i.e. before the expiry of earlier e-way bill, therefore the seizure cannot be justified - Once the authority have recorded the statement given by the truck driver on 30.9.2020 in MOV 01 (annexure 2) that the goods were to be unloaded at Robersganj and then the subsequent statement of the truck driver alleging to unload the goods at Ghaziabad instead of Robersganj cannot be recorded by any stretch of imagination and not permissible in the eye of law without any cojent matrial on record, which shows that perverse action has been taken against the petitioner. Once the owner of the goods has come forward the levy of penalty under section 129(1)(b) of the GST Act cannot be justified as section 129(1)(a) of the GST Act provides that where the owner of the goods come forward for payment of penalty the amount of tax payable should be 200%, whereas in the case in hand the penalty has been levied to the tune of 200% of the value of the goods. In M/S RIYA TRADERS VERSUS STATE OF U.P. AND ANOTHER [ 2023 (1) TMI 1238 - ALLAHABAD HIGH COURT] and in M/S MARGO BRUSH INDIA AND OTHERS VERSUS STATE OF U.P. AND ANOTHER [ 2023 (1) TMI 1237 - ALLAHABAD HIGH COURT] the Division Bench of this Court has held that proceedings under section 129(1)(b) is bad when the owner of the goods comes forward to pay the penalty. The impugned order passed by the respondent no.1 under the provisions of Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 affirming the order dated 21.10.2020 passed by the respondent no.2 cannot be sustained and are hereby set aside - petition allowed.
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2023 (9) TMI 275
Levy of IGST on Ocean Freight - reverse charge mechanism - transportation of goods by a vessel from outside India upto an Indian port where both the service provider and the service recipient are outside India - whether the person who files the import manifest, are liable in the present circumstance? HELD THAT:- Perusal of the show- cause notice would indicate that reliance has been placed on the Notifications No. 8/2017 and 10/2017 dated 28.06.2017 indicating that a person liable to pay IGST on ocean freight appears to be the person who has been the importer of the impugned goods in terms of entry made at Sr. No. 10 appended to the notification no. 10/2017. Essentially therefore the show-cause notice draws power from the Notifications No. 8/2017 and 10/2017. Perusal of the judgement of the Apex Court in the case of Mohit Minerals Pvt. Ltd. [ 2022 (5) TMI 968 - SUPREME COURT] would indicate that the Division Bench of this court held that the impugned notifications are unconstitutional for exceeding the powers conferred by the IGST Act and the CGST Act - The Hon ble Apex Court in agreement with the decision of this Court held that to the extent that a tax on the supply of a service which has already been included by the legislation as a tax on the composite supply of goods cannot be allowed. The show-cause notice impugned in the petition dated 16.02.2023 is without jurisdiction and the same is therefore quashed and set aside - Petition allowed.
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2023 (9) TMI 274
Maintainability of petition - statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act not available - non-constitution of the Tribunal - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed - Petition disposed off.
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2023 (9) TMI 273
Detention of goods alongwith vehicle - goods carrying valid E-way bill or not - evasion of tax or not - HELD THAT:-The contention of the petitioner has to be rejected that merely because of the reputation of the Company; the Court and the Department should assume that there would be no evasion carried out. As far as the possibility of evasion, when e-way bills were not generated, there could be multiple transport on the very same invoice which could lead to evasion. The third invoice is with respect to consignment of goods to Tamil Nadu, an inter State transport. The date of billing is far earlier to the other bills. In fact, even with respect to the first and second invoices, the billing was done before the e-way bill for three invoices was generated. There was no reason as to why the said invoices were also not included in the e-way bill generated, especially when the invoices were generated before the e-way bill was generated, the goods were consigned to the very same party and it was intended to be transported in one vehicle. There are absolutely no reason to interfere with the order passed - petition dismissed.
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2023 (9) TMI 272
Refund of the amounts recovered and stay of the assessment order confirmed in appeal till the Appellate Tribunal is constituted under Section 109 of the BGST Act - whether the services provided to Government Polytechnic Institutes would fall under the exemption stipulated in Entry No. 66(b)(iii) of Notification No. 12/2017 dated 28.06.2017 clarifying it to be services provided by or to Educational Institutions up to Higher Secondary School or equivalent? - HELD THAT:- The actions of the Tax Authorities, under the taxing statute should be tempered with good conscience and judicious reasoning, which in the instant case was in complete derogation of the established principles of rule of law; reigning supreme even when there is a compulsory extraction of money for the larger good and welfare, which a levy of tax always is. The tax authority should also act as a facilitator of business and economy and not merely as an extortionist, always looking to have the pound of flesh, to satisfy his hierarchical superiors to push his/her personal agendas - there are no doubt that the action complained of, was high handed and arbitrary. The Assessing Authority in the scheme of the enactment could not have made recovery of the entire amount. Section 112 provides for twenty per cent of the tax amount due, in addition to the ten per cent amount paid at the first appellate stage, for maintaining a second appeal before the Appellate Tribunal. On such payment being made under Section 112(8), there is also a requirement that the further recovery proceedings would be stayed. Hence, what was required to be paid by the assessee, for maintaining an appeal before the Appellate Tribunal, if constituted, was Rs. 7,56,644.00 being the twenty per cent of the tax dues under the BGST and CGST Act. Hence, the balance amounts from the total sums forfeited of Rs. 69,88,322.00 recovered shall be paid over to the assessee within a period of two weeks from today, failing which interest shall run at the rate of 12 per cent per annum - If the liability is set aside then for the periods the assessee was deprived of the amounts recovered, she shall be entitled to claim interest from the department. The officer who issued Annexure-3 order, who acted in complete derogation of the statutory provisions and established principles of law, should pay an amount of Rs. 5,000/- (five thousand) as cost to the assessee; a receipt of which shall be filed within two weeks in the instant writ petition - The writ petition is allowed.
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2023 (9) TMI 271
Direction to first respondent to number the appeal filed by the petitioner against the order passed by the second respondent - HELD THAT:- The first respondent shall number the appeal by permitting the petitioner to debit the amounts that are lying unutilized in the petitioner's Electronic Credit Ledger towards pre-deposit under Section 107(6) of the Tamil Nadu Goods and Services Tax Act, 2017 and dispose the same on merits and in accordance with law in its turn.
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2023 (9) TMI 270
Jurisdiction - power under IGST to issue such notice - contradiction of Section 75(7) of Central Goods and Service Tax Act, 2017 - HELD THAT:- After notice of this petition, replies on respondents No.1 to 3 and respondent No.4 have been filed separately. As per reply filed on behalf of respondent No.4, proper officer of the State under Section 70 of the CGST Act, 2017 has already issued notice on 06.12.2018 (Annexure P-2). Respondent No.4 has not summoned the petitioner again with respect to the above fact, the proper officer of the Sale Tax was informed vide letter dated 02.02.2019. So far as respondent No.1 is concerned, they are not pursuing anything against the petitioner. As per reply filed on behalf of respondents No.1 to 3, the Excise and Taxation Officer has already passed the order dated 22.07.2019 (Annexure P-14), and the same is appealable. This writ petition is being disposed of at this stage as the grievance of the petitioner that respondent No.4 had also initiated similar proceedings, does not survive as per reply filed by respondent No.4 and order dated 22.07.2019 (Annexure P-14) is appealable. However, the petitioner is at liberty to avail the remedy in accordance with law.
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2023 (9) TMI 269
Seeking direction to consider and dispose representations - Representations made before the authorities seek settlement of various dues that the petitioners claim as against the respondents pursuant to being successful bidders in the tenders awarded to them and completion of works - HELD THAT:- Since Mr. Sajeev (respondents) would accede to the position that the representations dated 27.12.2022 have, indeed, been received by the respondents, a time limit of six (6) weeks from date of receipt of a copy of this order is fixed, during which time, the petitioners shall be called upon by issuance of notice, heard and their representations disposed in accordance with law taking into account the mentioned Notifications as well as any other applicable Notifications, orders/Circulars in this regard. Petition disposed off.
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2023 (9) TMI 268
Maintainability of petition - statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act not available - non-constitution of the Tribunal - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed - Petition disposed off.
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2023 (9) TMI 267
Levy of tax and penalty - it is alleged that the e-way bill was being reused - HELD THAT:- This Court in M/s Anandeshwar Traders Vs. State of U.P. and Others [ 2021 (1) TMI 1091 - ALLAHABAD HIGH COURT] has categorically held that it is for the seizing authority to establish by evidence that e-way bill was being reused. In the present case, there is no evidence produced by the seizing authority that there is a reuse of the e-way bill by the petitioner - the case of the petitioner squarely covered by the aforesaid judgment. The impugned order dated 31.10.2017 and 23.08.2019 cannot stand and the same are set aside - Petition allowed.
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2023 (9) TMI 266
Additional tax liability - execution of subsisting Government contracts either awarded in the pre-GST regime or in the post GST regime without updating the Schedule of Rates (SOR) incorporating the applicable GST - to neutralize the impact of unforeseen additional tax burden on Government contracts since the introduction of GST w.e.f. 1st July, 2017 for ongoing contract - HELD THAT:- The impugned order of the appellate authority dismissing the appeal of the petitioner purely on technical ground of delay of four days without going into the merit of the appeal in question, the same is set aside and the matter is remanded back to the appellate authority concerned to consider and dispose of the aforesaid appeal in question on merit and in accordance with law by passing a reasoned and speaking order after giving an opportunity of hearing to the petitioner or its authorities representatives within a period of twelve weeks from the date of communication of this order. Petition disposed off.
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Income Tax
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2023 (9) TMI 265
Capital gain - Nature of land sold - capital asset or agricultural land - HC decided issue in favour of assessee - HELD THAT:- We are informed that the present special leave petitions are against the same order relating to the different assessment years have been dismissed. Recording the aforesaid, the special leave petitions are dismissed.
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2023 (9) TMI 264
Exemption u/s 11 - appellant company had made an investment into the joint stock company towards equity, the assessing officer found the same to be in violation of Section 11 (5) of the Act - Whether the word fund in Section 13(1)(f) can apply only to service income and not to corpus of the trust? - HELD THAT:- The appellant is a society, registered under Andhra Pradesh (Telangana Area) Public Societies Registration Act and is registered u/s 12A and exempted u/s 80G of Income Tax Act, 1961. The principal object of the society was, used to impart training, promotion of education, research etc, in the field of construction and allied industries. However, contrary to the objects of the society, an amount of Rs. 1.5 crore was invested in HITEX, the objects of which are not similar to that off the appellant society and in fact, it is also involved in using the land for commercial purpose. Apart from investment of Rs. 1.5 crore in HITEX, the appellant society had also transferred 100 acres of land on lease out of 167.30 Acres of land which was allotted by the Government to the Appellant. The Assessing Officer had taken note of transfer of 100 acres by the appellant society to HITEX, however, in his wisdom, he did not further enquire into the terms and conditions of such transfer and as to whether lease rental or any amounts are being received by the appellant society. Thus, investment of Rs. 1.5 crore and transfer of 100 acres of land by the Appellant to HITEX squarely covered under Section 13(1)(d) of the Act, 1961 and, therefore, the appellant society made themselves disentitle to the benefit under Section 11 of the Act, 1961 in view of violation of section 11(5) of the Act, 1961. The High Court of Kerala in Agappa Child Centre [ 1996 (8) TMI 52 - KERALA HIGH COURT] dealt with a similar issue wherein Assessee a public charitable trust, purchased a refrigerator and kept it at the residence of its managing trustee. The Court held that the Managing Trustee was one of the prohibited persons as per Section 13(3). Therefore, the Court held that the entire exemption of the trust is to be denied. Decided against assessee trust.
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2023 (9) TMI 263
Addition u/s 68 - assessee has introduced unaccounted money in form of bogus share capital and share premium raised from paper companies / accommodation entries - HELD THAT:- No question of law, much less any substantial question of law arises so far as question No. 1 is concerned, in view of the fact that the Tribunal has rightly held that the provisions of Sec. 68 of the Act cannot be invoked, more particularly when the addition is made on account of the share premium and the share application money by the investors whose identity, creditworthiness and genuineness is proved by the assessee before the authority. GP estimation - Tribunal justification in restricting the gross profit on URD purchases @0.24% holding that the estimation by the AO @6% on URD purchases was over and above the profit of 5.76% disclosed by the assessee - HELD THAT:- In view of the finding of facts arrived at by the Tribunal confirming the order passed by the CIT(A) that the assessee has already declared gross profit as a whole including the purchases from registered parties @ 5.76%, and therefore, if any addition is to be made, it should be the difference between the profit determined by the AO on the URD purchases vis-a-vis the gross profit already declared by the assessee. No substantial question of law arises in appeal.
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2023 (9) TMI 262
Reopening of assessment u/s 147 - LTCG on sale of shares - Borrowed satisfaction of independent application of mind by AO - HELD THAT:- As petitioner has disclosed fully and truly all relevant materials during the course of regular assessment in response to the notice under Section 142(1) of the Act and based upon such information the AO passed the assessment order u/s 143(3). On perusal of the material available on record, it also reveals that the assessee has disclosed the sale consideration at Rs. 39,000/- per share which is evident from the computation of the long term capital gains provided along with the return of the income. Thus the assessee has disclosed all facts truly and fully during the course of the regular assessment and therefore, there is a mere change of opinion on the part of the respondent to issue the impugned notice based upon the information received from the CIT Appeals. The respondent has issued the impugned notice on the borrowed satisfaction without application of mind contrary to the material and facts available on record and therefore such notice cannot be sustained in view of the dictum of Kelvinator of India Ltd [ 2010 (1) TMI 11 - SUPREME COURT] - Decided in favour of assessee.
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2023 (9) TMI 261
Penalty u/s 271(1)(c) - Error in computing LTCG - CIT(A) while deleting the penalty, found that on perusal of the original working of long-term capital gain, the entire sale consideration of five properties was considered and from that 95% was treated as cost of acquisition resulting into loss - as share of the assessee was only 5% but by mistake in the absence of purchase and sale deeds, the entire sale consideration was taken into computation of long term capital gains - ITAT confirmed the order of CIT(A) - HELD THAT:- Perusal of the orders indicate that the CIT(A) and the Tribunal concurrently held that apparently there was a bona fide mistake made by the assessee owing to lack of documents at the time of filing of return of income. We find that the AO as rightly held by the CIT(A) and ITAT ought to have accepted the claim of the assessee that the claim of loss was not intentional. Moreover, as observed by the CIT(A) reduction in capital loss cannot be considered for imposition of penalty. What was also noted by the CIT(A) that the return of income was filed belatedly and hence capital loss could not be allowed to be carried forward and set off against income of subsequent year under this head. There was no incentive for returning capital loss and therefore deserved to be ignored while imposing penalty. No substantial question of law arises.
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2023 (9) TMI 260
Reopening of assessment u/s 147 - Reasons to believe - reassessment beyond a period of four years - mistake in calculation of long term capital gain - HELD THAT:- When the reasons supplied by the respondent are seen, there is no allegation of failure on part of the assessee to disclose fully and truly of material facts which particularly was the onus of the revenue since the reopening is undertaken beyond a period of four years from the end of the assessment year. The reasons, further would indicate that it was based on the very case records and as per the author of the reasons, they were self-explanatory, and therefore, no further inquiry was required in this case. Obviously therefore, there was no new tangible material based on which reasons for reassessment were taken. The order disposing of objections, therefore, would also fail again. From the notice and on the response that the petitioner filed it is evident that the same material which was accepted by the respondent, has been made a part of the revised reassessment regime by the impugned notice and the order disposing the objections. Decided in favour of assessee.
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2023 (9) TMI 259
Addition u/s 68 - AO observed that, assessee had taken bogus loans from individuals who were engaged in cheque discounting activities facilitating many entries of loans/purchases/advances to various persons - ITAT deleted the addition - HELD THAT:- Having perused the reasons of the ITAT, it is apparent that both the authorities i.e. CIT (Appeals) and the Tribunal have on the basis of evidence found that the identity, genuineness and creditworthiness of the loan of the assessee were confirmed by way of the evidence produced. These documents were filed by the Director Shri Tamal Roy. Even, during the course of survey of GCSL, there was no other evidence found which would support the statement of the Director. ITAT correctly held we do not agree with the sweeping allegation of the Hon ble Assessing Officer that Transactions were accommodation entries We note that there is no written evidence, against the assessee except statement of Shri Tammal Roy. The statement of third party cannot be used against the assessee without giving opportunities of cross examination - inspite of specific request made by the assessee, opportunity of cross examination was not provided to the assessee, hence addition made by the assessing officer relying upon such statement is clearly in violation of the principle of natural justice As confirmation from the creditor was filed before the assessing officer, along with copy of ITR, copy of bank account and audit report of the auditor. Survey ws 133A of the Act was conducted by the Department on the creditor, which prove identity beyond doubt as statement of the director was recorded twice. As loan was received through regular banking channels, interest was regularly paid and TDS was deducted and deposited in government account as per the provision of the I.T. Act. We note that that if the transaction is through regular banking channels and creditor has confirmed the transactions, such transactions are genuine and therefore, addition made by the assessing officer are not sustainable. Decided in favour of assessee.
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2023 (9) TMI 258
Deduction u/s 80JJAA - computation of number of days [300 days or more] for new regular workman is to be employed - Period of 300 days should fall within the same Finacial Year or May fall within two FYs for consecutive period? - HELD THAT:- Section 80JJ-AA is an incentive extended to the industries. Parliament has subsequently amended the period of 300 days to 240 days in case of other industries and 150 days in the case of apparel industries, by inserting a proviso with effect from 01.04.2017 In Texas Instruments [ 2021 (4) TMI 1049 - KARNATAKA HIGH COURT] this court has held that if an employer were to have the workmen on or after 5th June, he would not be entitled for claiming the benefit. It is also noted that in another similar case, Bosch Ltd, [ 2016 (11) TMI 375 - ITAT BANGALORE] ITAT has held that the assessee therein was entitled to the benefit of the said provision so long as employee had worked for 300 days, even if the said period was split into two blocks namely, assessment year or financial year. After considering the aspect of working for 300 days in the previous year, this Court in Texas Instruments has held that period of 300 days could be taken into consideration both in the previous and succeeding years for the purpose of availing the benefit u/s 80JJAA of the Act and it is not required that workmen works for 300 days in the previous year relevant to assessment year. Thus the order passed by the A.O. and confirmed by the appellate authorities is unsustainable in law - Decided in favour of assessee.
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2023 (9) TMI 257
Income deemed to accrue or arise in India - Foreign income taxable in India - taxability of payments received by assessee for provision of bandwidth capacity and for provision for interconnect services as royalty u/s. 9(1)(vi) - network / international long distance gateway - payments received by assessee from the Indian telecom operators - Assessee is a non-resident company having headquarters at Singapore providing services in the field of telecommunication outside India and provides ci2ci, sea-bone and wholesale voice interconnect for voice carriers to various companies - HELD THAT:- We note that the revenue characterised the payments received by assessee towards interconnectivity utility charges as Royalty since the payment is made to use the process or an equipment . It is an admitted fact that various service providers in India entered into agreement with assessee for international carriage and connectivity services against which an interconnectivity charges are received by the assessee. The term process used under Explanation 2 to section 9(1)(vi) in the definition of 'royalty' does not imply any 'process' which is publicly available. The term process occurring under clauses (i), (ii) and (iii) of Explanation 2 to section 9(1)(vi) means a process which is an item of intellectual property. The word process thus must also refer to specie of intellectual property, applying the rule of, ejusdem generis or noscitur a sociis, as held by Hon ble Supreme Court in case of CIT vs. Bharti Cellular [ 2010 (8) TMI 332 - SUPREME COURT] It is an admitted fact that there is no transfer of any intellectual property rights or any exclusive rights that has been granted by the assessee to the service recipients for using such intellectual property. Therefore Explanation 2 to section 9(1)(vi) cannot be invoked. Payments made by the assessee in lieu of services provides by the assessee cannot fall within the ambit of Royalty under section 9(1)(vi) Explanation 5 6. 9.2.15 We also note that the Explanations 5 and 6 to section 9(1)(vi) are not found in the definition of Royalty under India Singapore DTAA. The definition of Royalty under the DTAA is much more narrower in its scope and coverage, than the definition of Royalty contained in section 9(1)(vi) r.w. Explanations 2,5 and 6 of the act. As in the present facts of the case, at no point of time, any possession or physical custody, control or management over any equipment is received by the end users / customers. It is also noted that the process involved in providing the services to the end users / customers is not secret but a standard commercial process followed by the industry players. Therefore the said process also cannot be classified as a secret process , as is required by the definition of royalty mentioned in clause 3 of Article 12 of India-Singapore DTAA. We are therefore of the opinion that the receipt of IUC charges cannot be taxed as Royalty under Article 12 in India of India- Singapore DTAA. The above observations are supported by the view expressed by Hon ble Karnataka High Court in case of Vodafone Idea Ltd. [ 2023 (7) TMI 1164 - KARNATAKA HIGH COURT] observed that the equipments and submarine cables are situated overseas and that Vodafone Idea Ltd. had availed certain services from the non-resident telecom operators and that such agreements would not create a permanent establishment of such non-resident telecom operators in India. Thus hold that payments received by assessee towards interconnectivity utility charges from Indian customers / end users cannot be considered as Royalty to be brought to tax in India u/s 9(1)(vi) of the Act and also as per DTAA. The payment received by the non-resident assessee amounts to be the business profits of the assessee which is taxable in the resident country and is not taxable in India under Article 5 of the DTAA as there is no case of permanent establishment of the assessee that has been made out by the revenue in India. Even Hon ble High Court has in para 25, held that the non-resident service providers do not have any presence in India. Decided in favour of assessee.
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2023 (9) TMI 256
Exemption u/s. 11 - nature of microfinance activity carried on by the appellant - relief to poor - business activists or not? - commercial gins with predominant objective to make profit - the appellant is charging 50% higher rate of interest for the loans provided to SHG when compared to the borrowing cost - AR contended that registration u/s. 12AA granted to the assessee has not been rejected for the year under consideration HELD THAT:- We note that Microfinance is lending carried out with small borrowers. The targets of microfinance are low-income individuals/families who require small quantities of short term finance for purposes such as agriculture, marriage, debt redemption, medical emergencies, etc. These loans are extended without collateral security Microfinancing penetrates into the rural sectors to serve the poor. We also note that the strict lending criteria, terms, and conditions that banks insist, cannot always be met by borrowers belonging to the weaker economic sector. And therefore microfinancing activity is considered to be a practical and workable source of funds. We note that there is a broad line of distinction between the micro financing activities being carried out on commercial basis and for charitable purpose. If the micro financing facility is extended by charging exorbitant rate of interest and for a particular group of society which may be affluent and is using micro financing mode to fund their working capital, undoubtedly, the micro financing activity would be commercial in nature. In the present facts of the case, it seen that the assessee procures loans from SCDCC Bank and lend it to needy members of the SHG s. These loans are being procured on interest by the assessee and, the assessee was charging interest on these amounts lent to the beneficiaries. The assessee trust has been borrowing money from SCDCC Bank on interest and thereafter lends the same to various SHG s by charging interest on the amounts lent. These SHG S further utilises the money advanced by the assessee for its members or to any others who are in need of such funds. Hence, in our view, this activity of the assessee clearly gets covered under Advancement of General Public Utility and not under relief of poor as defined in Sec.2(15) of the Act. We find that the main focus of the objects of the assessee before us is alleviation of poverty by extending micro credits to poor rural women. The brief description regarding the services rendered to SHG s by the assessee has been reproduced. In addition, several other objects which are of Public charitable in nature such as providing training and support programmes for poverty alleviation, education are also listed as its other aims and objects. The For all these activities of the assessee small SHG s are formed who are provided with finance assistance by the assessee to carry out the objects of the trust. The assessee has been accumulating the income year by year by providing financial assistance to the beneficiaries of the self help group. Further from the balance sheet it is noted that assessee has obtained loans and advances from SDCC bank amounting to Rs. 15.51 crores approximately and the loans advanced to SHG is Rs. 38.60 crores approximately. This itself reveals that the entire money is sourced from corpus fund, general fund and loans and advances received by assessee during the year. Coming to the objection of the Ld.DR that assessee has been charging interest at 15% as against 10% at which assessee itself pays interest, it is noted that the assessee does not demand any security towards the loans advanced by it to the SHG members considering the social and economic conditions of the SHG members. The ratio expressed in case PANDANA RURAL AND URBAN DEVELOPMENT ORGANISATION [ 2013 (7) TMI 1216 - ANDHRA PRADESH HIGH COURT] objection of the Ld.DR that the main purpose of the public charitable activity undertaken by assessee has to be looked into as a dominant purpose test and that collection of money for micro financing in the form of interest on the loans advanced to the self help group members will not defeat the real object in order to deprive of the exemption. The assessee is running various activities like Animator activities, Donations, Health Insurance premiums, Santhwana, Training, Uniform, SHG Formation, Sahayadhana, Insurance Premium Scholarship for students in rural area to make the poor ladies aware of the scheme and to encourage their participation as the principle objects of the trust. All these things need some expenditure. The facts and circumstances show that the assessee is carrying out its charitable activities and the surplus funds are used for charitable purposes. Therefore the argument advanced by the Ld. DR that micro financing activity is merely a money lending activity without any charitable object cannot be accepted. There is nothing on record brought by the Ld. DR or the authorities below that the objects of the assessee is not towards advancement of any other object of general public utility. Lower authorities are not justified in holding that the assessee is not engaged in charitable activities and denying exemption under section 11 - Decided in favour of assessee.
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2023 (9) TMI 255
Revision u/s 263 - cash deposit in Bank account during demonetization period - HELD THAT:- Assessee has failed to establish that the Assessing Officer has made necessary enquiries and that the assessee has filed necessary materials on this point. Moreover, we have already observed that there is no doubt about applicability of Explanation (2) to section 263(1) of the IT Act, assessment year being 2017-18 the assessment order as well as the impugned revisionary order having been passed after aforesaid date of 01/06/2015. we take guidance from the well settled position, as enunciated in the case of CIT vs. Amitabh Bachhan [ 2016 (5) TMI 493 - SUPREME COURT] held that there is nothing in section 263 to make the Commissioner confine himself to the terms of show cause notice, and further that power of revision u/s 263 of the IT Act is not contingent on giving of a show cause notice. In view of foregoing, we come to the conclusion that the case laws, on which the assessee has placed reliance, fail to advance the case of the assessee either because of amendment to section 263 of the IT Act with effect from 01/06/2015 through insertion of Explanation (2) to section 263(1) of the ITAT; or because of clearly distinguishable facts, or because of well settled position of law as established by decision of Hon'ble Supreme Court in the case of CIT vs. Amitabh Bachhan [supra] We take guidance from order of Pr. CIT vs. Venus Woollen Mills [ 2019 (2) TMI 292 - PUNJAB AND HARYANA HIGH COURT] in which it was held by Hon'ble High Court that where Assessing Officer did not apply mind to correctness of books of account, except to note that books of account were produced and test checked, impugned revisionary order passed u/s 263 was to be upheld. Decided against assessee.
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2023 (9) TMI 254
Validity of Adjustment u/s 143(1) - returns of income already taken up for scrutiny by the AO - whether adjustment is beyond the scope of section 143(1)? - HELD THAT:- As decided in GUJARAT POLY-AVX ELECTRONICS LIMITED [ 1996 (7) TMI 128 - GUJARAT HIGH COURT] after issuing notice u/s 143(2) of the Act it is not open for the AO to make adjustment or to pass the order u/s 143(1) of the Act but has to make the assessment in accordance with provisions of section 143(3) - Therefore, once the proceedings u/s 143(3) are initiated by the AO by issuing notice u/s 143(2) then the AO has no jurisdictional to initiate parallel proceedings of processing the return u/s 143(1) of the Act. As decided in VODAFONE IDEA LTD [ 2020 (5) TMI 27 - SUPREME COURT] once the scrutiny is undertaken and proceedings are initiated by issuance of notice u/s 143(2) it would be anomalous and incongruent that while such proceedings so initiated are pending, the return be processed u/s 143(1). As decided in CESC. LTD [ 2003 (4) TMI 83 - CALCUTTA HIGH COURT] once the assessment u/s 143(3) has been completed then the order passed u/s 143(1)(a) merges with the order passed u/s 143(3) of the Act. Therefore, the order passed u/s 143(1) ceased to be operative. Accordingly we hold that the order passed u/s 143(1) by CPC after the scrutiny assessment proceedings were initiated by the AO for A.Ys. 2016-17 2016-18 are not valid and liable to be set aside. Appeal of assessee allowed.
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2023 (9) TMI 253
Revision u/s 263 - claim of depreciation after the receipt on account of affording charges and electrification charges is declared as revenue receipt - CIT observed that the AO passed the assessment order without making any inquiry on the issues of claim of depreciation and consequential carry forward loss - HELD THAT:- It is pertinent to note that for the preceding assessment years i.e. 2011-12 to 2013-14 the receipt on account of supply affordable and electrification charges capitalized by the assessee were treated as revenue by the department and therefore, the assessee being a consistent loss making company decided to suo moto declared these charges as revenue receipt from A.Y. 2014-15 onwards and thereby work out the depreciation on the enhanced written down value to the extent of the amount which was declared as revenue receipt. Once the assessee has explained the difference of increase in the claim of depreciation and the Pr. CIT did not find any fault or error in the said explanation then allowing the said claim by the AO as otherwise a correct and allowable claim cannot be held as prejudicial to the interest of the revenue. When the assessee has given correct calculation of the increase in the claim of depreciation as a consequence of declaration of supply affording charges and electrification charges as revenue receipt instead of capital receipt then allowing the said claim of the assessee by the AO without even conducting inquiry would not render the order of the AO as prejudicial to the interest of the revenue. Therefore, when the claim of the assessee is a correct and valid allowable claim then the not conducting an inquiry on the part of the AO is not epso facto permit the commissioner to invoke the provisions of section 263 of the Act. Accordingly we hold that twine conditions i.e. the order passed by the AO is erroneous so far as prejudicial to the interest of revenue are not satisfied and consequently the Pr. CIT is not permitted to invoke the provisions of section 263 of the Act. Hence the impugned order of the Pr. CIT is quashed. Decided in favour of assessee.
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2023 (9) TMI 252
Income taxable in India - taxability of foreign income in India - receipts from the Indian customers as subscription revenue - Royalty u/s 9(1)(vi) of IT Act and also u/A 12(3) of the tax treaty between India and USA (India US DTAA) - Assessee is a foreign company incorporated in USA - bringing to tax subscription revenue as royalty - Whether the subscription revenue is towards use of, or right to use any copyright? - HELD THAT:- As by subscribing to the assessee s database, the subscribers merely get access to the database to view the videos - which are akin to copyrighted articles . The subscribers do not receive any right to use the copyright in the videos/database at any point in time. Thus, in view of the principle laid down by the Hon ble Supreme Court in the case of Engineering Analysis ( 2021 (3) TMI 138 - SUPREME COURT ) the subscription fees received by the assessee does not amount to payment for the use of or right to use copyright but rather payments for access to copyrighted products, i.e., the videos on the assessee s database. In view of the above, we hold that the subscription fees received by the assessee does not amount to royalty for use of or right to use of any copyright . The subscription revenue received by the assessee whether it is for any information concerning industrial, commercial or scientific experience - Since the assessee receives subscription fees merely to grant access to the database of videos and not for imparting any information concerning the assessee s own knowledge or experience of creating/maintaining the database, the said subscription fees cannot be said to be for imparting of any information concerning industrial, commercial or scientific experience of the Appellant . The subscription revenue received by the assessee whether it is for granting any right to use of equipment - The consideration received by the assessee is merely for granting access to the database of videos and not for the use or right to use any equipment whatsoever. The subscribers have no access, right or control of any manner whatsoever over the server on which the assessee maintains the database. Therefore, the subscription fee received by the assessee cannot, in any manner, be termed as consideration for use or right to use any industrial, commercial or scientific equipment. In the case of Factset Research Systems Inc. [ 2009 (6) TMI 28 - AUTHORITY FOR ADVANCE RULINGS] Revenue raised an identical contention that the server is used by the customers as a point of interface . However, the said contention of Revenue was rejected by the Hon ble AAR - we hold that the payment made for viewing the videos on the database cannot be termed as consideration for use or right to use any industrial, commercial or scientific equipment. We hold that the subscription revenue received by the assessee is not taxable as Royalty in the hands of the assessee under Article 12 of the India-USA DTAA read with the provisions of the Act. Accordingly, the impugned addition made by the AO in this regard, as upheld by the CIT(A) is hereby deleted. Appeal of assessee allowed.
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2023 (9) TMI 251
Validity of reopening of assessment - assessee contention that AO has not disposed of the objection filed during the course of reassessment proceedings by passing a speaking order as mandated - bogus loan transaction of the assessee - reasons to believe recorded by the Ld. AO are based on reproduction of the survey report submitted by DDIT (Inv.), Guwahati and the statements recorded of Shri Ram Lal Gulgulia and Bijoy Singh Lodha in the case of survey of Gulgulia Trade Pvt. Ltd., Silchar - HELD THAT:- CIT(A) had called for clarification from the AO in respect of disposal of objections to the reopening, raised by the assessee. To this effect, AO had replied vide letter, scanned copy of which is reproduced in the order of Ld. CIT(A). From its perusal it is noted that Ld. AO has admitted that objections to the reopening of the assessment as raised by the assessee were not disposed of by him by way of any written/speaking order. Thus non-disposal of the objections of the assessee by the Ld. AO without passing a written/speaking order renders the assessment order and the consequential additions as bad in law. AO has not provided the copy of statements of all the three persons which formed the basis of arriving at the reasons to believe - no opportunity has been given to the assessee to cross examine these three persons though specific request had been made in the course of assessment proceeding - From the perusal of the impugned order and the reasons to believe, it is seen that Ld. AO has not applied his mind to the purported information received from the Investigation Wing. The approach adopted is a mechanical approach and falls in the category of borrowed satisfaction. It is important to note that survey was conducted in the case of GTPL wherein assessee is not a director. Statements of directors of TSPL i.e. Shri Ramlal Gulgulia and Shri Bijoy Singh Lodha were recorded in the course of survey of GTPL on 06.01.2017 which were relied upon by the Ld. AO. These had also been retracted. Another important fact which is borne in mind is that statement of Shri Akash Agrawal, erstwhile director of TSPL was recorded in the course of survey of TSPL on 10.02.2015 which is much prior to the conduct of survey in the case of GTPL (Ram Lal Gulgulia Group). Material on the basis of which reasons to believe were recorded have not been confronted to the assessee, thus, the impugned order suffers from noncompliance with the principles of natural justice and thus, deserves to be quashed. Accordingly, grounds taken by the revenue in this respect are dismissed. Addition of opening balance in the creditors account is not permissible u/s. 68 since it does not represent a credit in the books of account during the year - To substantiate its claim, copy of loan confirmation, balance sheet, bank statement and affidavit of TSPL were placed on record. On perusal of the confirmation, statement and the other documents, it is evident that amount of Rs. 1.75 Cr. was received by the assessee during the preceding years and not in the year under consideration. AO has disregarded the submissions made by the assessee by observing that amount appearing as opening balance is also a credit and the explanation offered by the assessee for its nature of sources is not satisfactory in the opinion of the AO CIT(A) has dealt with this issue after corroborating the same with the documentary evidence placed on record. We do not find any reason to interfere with the finding given by the Ld. CIT(A) in this respect. It is trite law that in case the liabilities are old and no credit has been made in respect of those liabilities in the books of account in the year under consideration, no addition can be made u/s. 68 - Decided against revenue.
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2023 (9) TMI 250
Addition u/s 56(2)(vii) - income under the head Income from other sources - difference in sale consideration paid by assessee on purchase of plots of lands and the value determined by Stamp Valuation Authority - HELD THAT:- CIT(A) despite recording the contention of assessee has neither given his finding nor any liberty to assessee to file reply of such show cause notice nor have sought any comment of AO, and conveniently ignored such contention. Assessee also made prayer for referring the matter to DVO to ascertain fair market value as first proviso to clause-(vii) to sub-section 56(2). As find that despite sending the matter to DVO, CIT(A) has not waited for his report. Thus, we find that neither the AO has given opportunity to assessee before making addition u/s 56(2)(vii) of the Act nor the Ld. CIT(A) considered such objection raised by assessee during appellate stage nor waited for the report of DVO. Thus, find that the assessment order was passed in utter violation of principle of natural justice, which is not justifiable. Therefore, the addition made in the assessment order and confirmed by CIT(A) in the order impugned before me, is set aside. AO is directed to delete the addition u/s 56(2)(vii).Grounds of appeal raised by assessee are allowed.
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2023 (9) TMI 249
Disallowance u/s 40A(3) - transactions and payments made in cash - as per assessee payment was made in exceptional and unavoidable circumstances or the payment by cheque or bank draft was not practicable - assessee submitted that, when the genuineness of the payment is not in doubt and a case of business expediency made out, section 40A(3) cannot be invoked - D.R. submitted that assessee had made these cash payments in advance to Sub-contractors HELD THAT:- The important thing to be noted is that the payment must be by the assessee to his agent, who, in turn, pays to some third person on behalf of assessee for goods and services and the sub-contractors made daily payments to workers on a daily or weekly basis through cash. On account of business exigency, the subcontractors insisted upon cash payment and accordingly, the assessee paid through bearer cheques. Hence, business exigency of making cash payment on regular basis is also pleaded by the assessee in the instant case. To support this, assessee filed affidavits from sub-contractors of assessee firm and they insisted for cash payments to make payment to workers and confirmed the above payments. In such circumstances, it cannot be said that sub-contractors are not agents of the assessee for providing labours. Hence, on this count, the expenditure claimed on account of payment made to sub-contractors cannot be considered u/s 40A(3) of the Act as held in the case of Balaji Engineering Construction Works cited [ 2008 (1) TMI 564 - KARNATAKA HIGH COURT] as the Tribunal being subordinate to jurisdictional High Court what matters for the Tribunal is to follow the binding precedent and delete the disallowance in case of cash payments exceeding the stipulated limit coupled with the fact that cash payments are made due to business expediency and being genuine transaction and the parties are identifiable, provisions of section 40A(3) cannot be applied. Accordingly, we are inclined to delete the addition made on this count. One more payment to the labourers who are migrating labours earning wages and not permanently employed by the assessee, who have no bank accounts and these are payments made in exceptional circumstances as provided under Rule 6DD and these payments cannot fall under the purview of section 40A(3) of the Act and more so, the payments are genuine and parties are identifiable and the expenditure incurred is wholly and exclusively for the purpose of business on account of business exigency. Accordingly, provisions of section 40A(3) of the Act cannot be applied and this addition is also deleted. Thus, the ground relating to additions made u/s 40A(3) of the Act is deleted. This ground of the appeal of the assessee is allowed. Validity of framing assessment u/s 153C - In this case, there was survey u/s 133A of the Act and information of cash payments collected during the search and these documents were not unearthed during search u/s 132 of the Act. There is no question of initiating proceedings u/s 153C of the Act. Hence, the ground No.6 of the assessee s appeal is dismissed accordingly. Evidences unearthed were loose sheets and digital evidences, pen-drive, which has got no evidentiary value and legally inadmissible under Section 34 of the Indian Evidence Act - In our opinion, this ground of the assessee is totally misconceived. The documents mentioned herein are the evidences as per provisions of section 2(12A) which reads as books or books of account includes ledgers, daybooks, cash books, account-books and other books, whether kept [in the written form or in electronic form or in digital form or as printouts of data stored in such electronic form or in digital form or in] a floppy, disc, tape or any other form of electro-magnetic data storage device - Accordingly, this ground of assessee is also dismissed.
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2023 (9) TMI 248
Levy of penalty u/s. 271(1)(b) - non-compliance of notice issued u/s. 142(1) and not sought for any adjournment of the hearing - Assessee argued for pendency of the quantum appeal - HELD THAT:- It is undisputed fact for the AY 2011-12 assessment was completed ex-parte by passing Best Judgment Assessment u/s. 144 r.w.s. 147 by the AO - For non-compliance of notice u/s. 142(1), the A.O. has levied penalty u/s. 271(1)(b) of the Act. The assessee neither offered any explanation for non-compliance of the notice issued u/s. 142(1) nor sought for any adjournment of the hearing of the case. No reasons to interfere with the levy of penalty u/s. 271(1)(b) of the Act. Thus the grounds raised by the assessee are devoid of merits and the same is hereby dismissed. Levy of penalty u/s. 271F - assessee has filed the Return of Income after issuance of notice u/s. 148 of the Act, even though the taxable income of the assessee is higher, who is liable to file regular Return of Income u/s. 139(1) - HELD THAT:- The assessee offered no explanation before any of the lower authorities for non-filing of regular Return of Income. Therefore the assessee is liable to levy of penalty u/s. 271F of the Act. Thus the grounds raised by the assessee are devoid of merits and the same are rejected. Assessee appeals dismissed.
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2023 (9) TMI 247
Addition u/s 68 - bogus share capital and share premium - CIT(A) arrived at a conclusion that assessee could not establish the genuineness of the transaction of raising of share capital along with share premium as assessee has failed to satisfactorily discharge its onus in establishing the genuineness of the transaction since copies of bank statements were not produced during the assessment as well as first appellate proceeding despite specific requisition by AO. HELD THAT:- From the perusal of detailed proceedings undertaken before the Ld. CIT(A), we are not inclined to interfere with the finding given by the CIT(A) in this respect. Accordingly, grounds taken by the assessee in this respect are dismissed. Bogus purchase - AO added the entire amount of bogus purpose instead of GP ratio - CIT(A) deleted the additions - HELD THAT:- From the survey conducted u/s. 133A in the case of Shri Abhishek Sharma who is alleged to be a provider of bogus bills, it is observed that what is under dispute is the purchase from the parties from whom bills have been taken and cheques have been issued to them. There is nothing on record which substantiates that quantitative detail of stock with respect to purchase and sales have been furnished and analysed by the authorities below to demonstrate that there is actual dealing of the goods. There are no detailed investigations made by the authorities below on the stock records. In such a situation, where issue relating to purchase is under dispute, what is important is to take into consideration the movement of stock with their quantitative details to justify the claim. Another scenario relating to purchase is worth considering where purchase itself need not be in dispute but the parties from whom purchases are shown to be made are disputed and suspicious, in which case, only the profit element is taken as unexplained income for the purpose of addition. In the present case before us, there is nothing on record which demonstrates the quantitative movement of the stock against the alleged purchases, except for existence of bills, their accounting entries and payment through banking channel, we are inclined to set aside the order of Ld. CIT(A) and uphold the addition made by the AO. Accordingly, grounds taken by the revenue in this respect are allowed. Disallowance u/s. 14A - AO has noted that assessee has made considerable investment in equity but no expenditure is disallowed u/s. 14A in computing the total income, thus, made an addition by applying Rule 8D(2)(ii) and 8D(2)(iii) i.e. % of average investment - HELD THAT:- As decided in Era Infrastructure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] no disallowance is required to be made in the case of the assessee because it has not earned any tax-free income and allowed the appeal of the assessee by deleting the addition so made. Considering this, the disallowance made in this respect is deleted and finding given by the Ld. CIT(A) is upheld. Accordingly, grounds taken by the revenue in this respect are dismissed.
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Customs
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2023 (9) TMI 246
Seeking release of imported consignment - payment of demurrage detention and any other charges - High Court held that it cannot be said on the basis of the record available in the present proceedings that the respondents were solely responsible for the delay caused. Therefore, no orders can be passed directing the concerned respondent to pay the demurrage charges, as prayed. HELD THAT:- There are no reason to interfere with the judgment and order impugned in this petition - SLP dismissed.
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2023 (9) TMI 245
Smuggling - 23 gold bullions of foreign origin - tampering of witnesses - HELD THAT:- It is an admitted fact that the said gold has not been recovered from the conscious physical possession of the petitioner, who is the brother of the apprehended co-accused. He is working in the shop of Kailash Chandra Maheshwari (owner of K.P. Bullions) and therefore, he was made accused in the present case on the allegation that he assisted the apprehended co-accused person. Apart from that, there is no specific allegation against the petitioner to tamper the witnesses. Considering that the recovered gold bullions have already been confiscated by the Customs Department and punishment for the said offence is seven years imprisonment and considering the the judgment of the Apex Court in the case of SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION ANR. [ 2022 (8) TMI 152 - SUPREME COURT ] anticipatory bail granted to the petitioner. Let the petitioner be released on bail, in the event of his arrest or surrender before the learned Court below within a period of six weeks from today, on furnishing bail bond of Rs. 25,000/- (Rupees Twenty Five Thousand) with two sureties of the like amount each to the satisfaction of the learned court below where the case is pending/Successor Court in connection with DRI, Patna Unit Case No.23 of 2022-2023, arising out of Complaint Case No.376(O)/2022, subject to the conditions as laid down under Section 438(2) of the Cr.P.C. - Application allowed.
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2023 (9) TMI 244
Return of goods seized - Prescribed / stipulated period has already over - Seeking direction to respondents 1 2 to return the petitioner s mobile phones within a time period fixed by this Court - HELD THAT:- A reading of provisions of Section 110 of CA, undoubtedly establishes that the seized goods have to be returned to the person from whose possession they were seized within six months from the date of seizure. True, the proviso confers power on the Principal Commissioner, to extend the period of six months by a further period of six months. Admittedly, the mobile phones were seized from the petitioner on 19.10.2022. The six months period has lapsed on 19.04.2023 - Indisputably, the Principal Commissioner of Customs has not extended the time period as postulated under the proviso to Section 110(2) of the Act. The continued detention of the mobile phones by the respondents is illegal and untenable. Therefore, the respondents are to be directed to forthwith return the mobile phones to the petitioner - Petition allowed.
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2023 (9) TMI 243
Revocation of Customs Broker License - 42,00,000 number of Gutkha pouches - prohibited item - whether appellant knew that there was Gutkha in the consignment which was being cleared from customs by his firm? - statement given by appellant under pressure - retraction of statements - HELD THAT:- The obligation of obtaining the authorisation from the actual exporter was not discharged by the appellant. This is corroborated by the statements of others involved in this smuggling endeavour. Thus there is sufficient corroboration to the confessional statement of the appellant. Therefore mere retraction of his statement cannot negate the action of the appellant. Otherwise also, the confessional statement was recorded by the Custom officer which is different from the police officer. The retraction by the appellant cannot negate the evidentiary value of his confessional statements. Further, the denial of request for cross examination, in the face of the said statement of the appellant, cannot be a violation. It is also interesting to note that other than the appellant, none of the others investigated in this offence have retracted their statements. The Delhi High Court in the case of Jasjeet Singh Marwaha [ 2009 (2) TMI 57 - DELHI HIGH COURT] has held that the CHA can be held responsible for the violation of the Customs Act, and not only the violation of CHALR (now referred to as CBLR). The appellant was aware that the IEC of Shubham Garg of M/s Navrang Jewel and Export was being used by Salim Dola for export of Gutka, which is a prohibited item. It has to be concluded that the appellant was very much aware of the nature of the consignment and aware of the fact that the IEC did not belong to the actual exporter of the consignment. He had indulged in this offence for monetary gains. There are no reason to interfere with the findings in the impugned order. The appeal is accordingly dismissed.
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2023 (9) TMI 242
Adjudication proceedings / Tax Administration - internal process of the customs administration - Valuation - Loading of value - Enhancement of duty liability, under Customs Act, 1962 - commercial transactions with suppliers who are related - HELD THAT:- It is settled law that a valid order of assessment or adjudication must, if detrimental to assessee, be decided within the confines of a show cause notice. The present proceedings are bereft of such preliminaries and, thus, is not an order; it may, at best, be a recommendation to proper officer that does not substitute for exercise of that original authority under the statute. The internal procedures for providing expert consultation to the statutorily empowered assessing officers, even if of long standing existence, do not vest the institution established for such purpose with statutory acknowledgement; in keeping with the tentativeness of the findings of this internal advisory mechanism, assessments, guided by the findings, are retained as provisional, under section 18 of Customs Act, 1962, till finalization on a future date - the proceedings under section 18 of Customs Act, 1962 not interfered except if terms of such assessment is a cause of grievance. Even so, no incidence of provisional assessment is now impugned here. The internal process of the customs administration that enables the proper officer, under section 17 or section 18 of the Customs Act, 1962, to be assisted in the discharge of the statutory obligation and, which, legally, may not even bind the proper officer does not merit our attention. To the extent that we accord approval or disapproval at this stage, we would be appropriating the exercise of powers under section 18 of Customs Act 1962 for finalization of the assessment to ourselves and, thereby, would also erase one level of remedial jurisdiction that would, otherwise, be available to either side. This, in our view, is not the intent of section 128 of Customs Act, 1962. The first appellate authority, in exercise of powers under section 128 of Customs Act, 1962, should have restricted itself to orders that cause grievance - there is an implied lack of jurisdiction for the Tribunal too to consider the merit of either side. It would, therefore, be appropriate for the first appellate authority to consider remedies appropriate to the grievance, if any and to the extent permitted by statutory conferment. The appeal restored to first appellate authority to dispose off in accordance with the law.
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2023 (9) TMI 241
Wavier of detention and demurrage charges - Classification of imported goods - Mineral Hydrocarbon Oil - to be classified under CTH 27101990 as Mineral Hydrocarbon Oil or under CTH 27101910 as Kerosene - rejection of declared value - redetermination of value - HELD THAT:- The Department has proceeded against the appellant mainly based on the test report dated 15.01.2020 furnished by the CRCL, certifying the imported goods to be of Kerosene (SKO). However, it is found that while testing the imported goods, the said agency has not confirmed to the IS 1459:2018 by testing all the ten parameters specified therein; instead they tested only few of such specified parameters for giving the technical opinion that the sample is Kerosene - further, by relying upon the test report in respect of product in question, this Tribunal in the case of SHRI JETHANAND ROHRA AND M/S JAYMCO POLYMERS PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) RAIGAD [ 2022 (5) TMI 588 - CESTAT MUMBAI] has set aside the adjudication order. In view of the fact that the investigation has not been properly conducted to ascertain the nature of goods imported by the appellant and in absence of proper substantiation of test report by CRCL, we are of the view that the adjudged demands confirmed on the appellant cannot be sustained for judicial scrutiny - Since the goods are lying under seizure and in the custody of the Department for over three years, the concerned authorities are directed to issue proper certificate for waiving the detention and demurrage charges within a period of four weeks from the date of receipt of this order. Appeal disposed off.
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Insolvency & Bankruptcy
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2023 (9) TMI 240
Initiation of CIRP - Threshold limit of default for admission of application - inclusion of interest for arriving at a claim - Financial debt or not - interest for the delay in registering the Sale Deed for the Mortgaged Plots - sale agreements do not provide for any interest - HELD THAT:- This Tribunal is of the considered view that the 1st Respondent is a Financial Creditor and the amount paid by the Allottee is a Financial Debt as defined under Section 5(8) of the Code and held by the Hon ble Apex Court in the matter of Pioneer Urban Land and Infrastructure Limited and Ors. Vs. Union of India (UOI) and Ors. [ 2019 (8) TMI 532 - SUPREME COURT ] where it was held that The Amendment Act to the Code does not infringe Articles 14, 19(1)(g) read with Article 19(6), or 300-A of the Constitution of India. Further, interpreting the Explanation added to Section 5(8)(f) of the Code, the Court further held that allottees/homebuyers were included in the main provision, i.e. Section 5(8)(f) with effect from the inception of the Code. The advances given by Property buyers to real estate developer will be considered as a borrowing and such amounts raised from allottees falls within the scope of Section 5(8)(f) of the Code - Contention of the Learned Senior Counsel that the allottee is a speculative investor is unsustainable keeping in view that the interest payable as per Clause 3 of the Agreement of Sale is conditional to not obtaining the approval of HMDA. Whether the interest was rightly added to the 1st Respondent to the Claim amount to fall within the threshold amount of Rs. 1,00,00,000/-? - HELD THAT:- The amount mentioned in CMA 296/2021 cannot be equated to the Claim amount in the Section 7 Petition as the prayer in the Civil Suit was for specific performance, whereas, the amount claimed in the instant Petition is for the amounts due and payable to the 1st Respondent, as the amounts fall within the definition of Financial Debt , as defined under Section 5 (8) (f) of the Code. It is an admitted fact that the Final HMDA Approval was obtained only in January 2019 and till April 2019, neither were the plots registered nor the amounts refunded - the quantum of interest comes into play as per the clauses of the Agreement of Sale entered into between the Parties. Therefore, this Tribunal do not see any merit in the argument of the Learned Counsel for the Appellant that interest should not be added and that the amount does not meet the threshold limit. This Tribunal is conscious of the fact that Liquidation proceedings have been initiated against the Corporate Debtor. Further, this Tribunal does not find any substantial grounds to challenge to the admission of the Section 7 Petition of the Code. Appeal dismissed.
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2023 (9) TMI 239
Maintainability of section 9 application - NCLT rejected the application - Operational debit / creditor or not? - debt claimed is the debt owed for the supply of goods or rendering of services - breach of the Settlement Agreement - HELD THAT:- In AHLUWALIA CONTRACTS (INDIA) LTD. VERSUS LOGIX INFRATECH PVT. LTD. [ 2022 (9) TMI 1500 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] , it was clearly held that Memorandum of Understanding entered between the parties was only with regard to mode and manner of payment and that too after final bill certificate which was duly signed by both the parties. It was held that Application under Section 9 ought not to have been rejected. Present is also a case where the operational debt arose out of contract awarded by the Corporate Debtor to the Operational Creditor, with regard to which RA Bill Nos.49 and 50 final bills were issued. Present is not a case that Corporate Debtor denied his liability to pay the bills rather during pendency of earlier Section 9 Application entered into settlement dated 16.12.2017 for payment of the amount. The above Judgment fully support the submissions of Appellant. The judgment of this Tribunal in AMRIT KUMAR AGRAWAL VERSUS TEMPO APPLIANCES PVT. LTD. [ 2020 (11) TMI 993 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] was a case where this Tribunal was examining the Application on the issue whether it is financial debt. In the said background, it was held that Settlement Agreement subsequently entered between the Financial Creditor and the Corporate Guarantor does not contain any element of financial debt, hence, its breach was not financial debt. The judgment of this Tribunal in Amrit Kumar Agrawal was entirely on different facts and circumstances and has no application in the present case - In the present case the nature of the operational debt was payment of RA Bills submitted by Operational Creditor and Settlement Agreement was entered for payment but payment having not been made in pursuance of the Settlement Agreement, liability of the Corporate Debtor to make the payment continues and Operational Creditor was well within its right to file Section 9 Application. The filing of claim in the CIRP of VentaRealtech Pvt. Ltd. has no effect on maintainability of Section 9 Application. In the CIRP what amount Operational Creditor i.e. Appellant is entitled or receives are different issues, any amount received by the Appellant in CIRP of VentaRealtech Pvt. Ltd. may be adjusted but that itself cannot be a ground to not proceed with Section 9 Application filed by the Operational Creditor - the Adjudicating Authority committed error in rejecting the Application of the Appellant on the ground that there is no operational debt. The issue is fully covered by judgment of this Tribunal in Ahluwalia Contracts (India) Limited vs. Logix Infratech Pvt. Ltd. . The impugned order of the Adjudicating Authority is unsustainable - appeal allowed.
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PMLA
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2023 (9) TMI 238
Territorial Jurisdiction to hear the case - transfer of case to special court - Prayer to set aside the return Docket Order - bail application - HELD THAT:- Whatever the offence that has been alleged against anyone, which is punishable under Section 4 of the PMLA Act, that has to be tried only by Special Courts designated under Section 43(1) of the PMLA Act by virtue of the notification of the Central Government issued in consultation with the Chief Justice of the High Court concerned, where the proposed Court is located - by virtue of the notification dated 05.02.2016, the Central Government already exercised such powers in consultation with the Chief Justice of the High Court and Courts have been designated as Special Courts. When that being the position, since the territorial jurisdiction of the case in hand is in Chennai District only, therefore Chennai being one of the jurisdictional area under the notification issued by the Central Government, which comes under the jurisdiction of the Principal District Judge, Chennai, naturally the said case has to be tried in the said Court, since the alleged offence is to be punished only under Section 4 of the PMLA Act. The very transfer of the case or made over made by the learned Principal Judge, Chennai by transferring the case papers to the Special Court No.I for Trial of Cases exclusively against MLAs and MPs, is not in consonance with Section 43(1) of the PMLA Act vis-avis the notification issued by the Central Government dated 05.02.2016 under notification No.SO.370(E). Therefore, the bail application filed by the petitioner in the said C.C., also has to be heard and disposed only by the Principal Judge, Chennai. There shall be a direction to the Principal Judge, Chennai to withdraw the made over on C.C.No.9 of 2023 on the file of the said Court and accordingly entertain the bail application in Criminal M.P.SR.No.21974 of 2023 by numbering the same, if it is otherwise in order, and decide the said application after hearing both sides, at the earliest - Petition disposed off.
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Service Tax
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2023 (9) TMI 237
Enhancement of rate of Service Tax - works contract service for the period ending in March 2008 - Department was of the view that the assessee having received the amount after 01.03.2008, was liable to pay Service Tax at the enhanced rate of 4.12% - applicability of Circular issued by the Board in F. No. 345/6/2007-TRU dated 28.04.2008 - HELD THAT:- The Hon ble High Court of Delhi in the case of VISTAR CONSTRUCTION (P) LTD/PIYARE LAL HARI SINGH BUILDERS PVT LTD VERSUS UNION OF INDIA AND ORS [ 2013 (2) TMI 52 - DELHI HIGH COURT] has considered the very same Circular and on the issue as to whether differential amount of Service Tax at the enhanced rate is applicable when services have been completed prior to 01.03.2008. The Hon ble High Court observed that as per the decision of the Hon ble Supreme Court in the case of ASSOCIATION OF LEASING FINANCIAL SERVICE COMPANIES VERSUS UNION OF INDIA AND OTHERS [ 2010 (10) TMI 4 - SUPREME COURT] , the demand cannot sustain. The Commissioner (Appeals) has relied on the decision in the case of Association of Leasing and Financial Service Companies (supra) to hold that the demand at the enhanced rate cannot sustain - the view taken by the Commissioner (Appeals) agreed upon - the appeal filed by the Department is without merits. Appeal dismissed.
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2023 (9) TMI 236
Demand of interest on the advance returned by the appellant in respect of Metro Zone Project - HELD THAT:- The adjudicating authority has categorically held that there is no tax liability on the advance amount of Rs.85 crores received by the appellant and returned thereafter. However, the adjudicating authority has proceeded to confirm the demand of interest on such Service Tax - It cannot be understood how the liability of interest would arise when there is no liability to Service Tax. Hence, the same is required to be set aside, which we hereby do. Demand on reimbursable expenses - HELD THAT:- The issue as to whether demand of Service Tax can be made on reimbursable expenditure has been settled by the Hon ble Apex Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] . Following the same, the demand cannot sustain and requires to be set aside. The demand of interest on the advance (of Rs.85 crores) received by the appellant and returned thereafter, as confirmed in paragraph 14.1 of the impugned order, cannot sustain and requires to be set aside - the demand of Service Tax on the reimbursable expenses, as discussed in paragraph 17 of the impugned order requires to be set aside - penalties imposed in respect of these two demands are set aside. Appeal allowed in part.
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2023 (9) TMI 235
Levy of service tax - Payment of actual consideration including service charges in the form of Agency fees/Arrangement fees/Legal charges/Upfront charges/Commitment charges etc. in Foreign Currency, for availing External Commercial Borrowing (ECB) - legal charges - penalties - reverse charge mechanism. Payment of actual consideration including service charges in the form of Agency fees/Arrangement fees/Legal charges/Upfront charges/Commitment charges etc. in Foreign Currency, for availing External Commercial Borrowing (ECB) - HELD THAT:- It is a fact on record that prior to 18.04.2006 the service tax was not payable by the appellant for the loan obtained by them from foreign bankers, who are not having their registered office in India under Reverse Charge Mechanism as held by the Hon ble Bombay High Court in the case of Indian National Shipowners Association [ 2008 (12) TMI 41 - BOMBAY HIGH COURT ], therefore, the tax liability of Rs.19,09,550/- was not sustainable against the appellant. Accordingly, the same is set aside. Legal charges - HELD THAT:- The taxability on legal charges came into effect form 01.09.2009 and the said legal charges has been paid by the appellant prior to that. In that circumstances, no service tax is payable by the appellant for legal services received under Reverse Charge Mechanism. With regard to rest of the demand, the appellant has admitted their liable and paid immediately when it is pointed out to the appellant during the course of investigation. Penalties - HELD THAT:- As appellant has paid the disputed amount of service tax immediately on pointing out by the authorities, therefore, giving them the benefit of section 80 of the Finance Act, 1994, no penalty is imposable on the appellant. Therefore, penalties imposed on the appellant are also set aside. Appeal allowed.
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2023 (9) TMI 233
Liability of service tax - liability on sub-contractor for providing works contract service to the main contractor, at whose end Service Tax liability was discharged - HELD THAT:- After the decision of the Larger Bench in Commissioner of Service Tax, New Delhi Vs. Melang Developers Private Limited [. 2019 (6) TMI 518 - CESTAT NEW DELHI ] rendered on the issue there can be no second opinion that Appellant is liable to discharge the Service Tax liability but in view of the clear provision made under Section 67 Clause 2 that states that where gross amount is charged by the service provider which is inclusive of Service Tax payable, the value of taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged, the Appellant is liable to pay Service Tax after deducting the Service Tax due amount from the gross amount. In other words, Appellant is entitled to com-tax benefit as provided under Section 67(2) of the Finance Act, 1994. The appeal is allowed in part and the order of the Commissioner is modified to the extent that the Service Tax liability of the Appellant would be confined to the normal period with cum-tax benefit as provided in Section 67(2) of the Finance Act, 1994. Imposition of penalty of Rs.10,000/- under Section 77 and order for recovery of interest at appropriate rate under Section 75 on the reassessed value are hereby confirmed.
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Central Excise
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2023 (9) TMI 234
Jurisdiction to pass the original order of adjudication - Matter referred to Larger Bench, still pending - HELD THAT:- A plain reading of the judgment of the learned Tribunal in PERFECT TECHNOLOGIES VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS, S. TAX, SILIGURI [ 2023 (9) TMI 167 - CESTAT KOLKATA] , reveals that the learned Tribunal has directed its Registrar to place the matter along with case records before the Hon'ble President of the learned Tribunal for his kind consideration and for constitution of a larger Bench to decide question of law, as framed by the learned Tribunal in paragraph 76 of its judgment. Since it is evident that the learned Tribunal has not been able to come to a clear decision in terms of our order dated 25th August, 2022, we are left with no option but to adjourn the main matter, being Tax App. No. 01/2019, sine die, till a larger Bench of the learned Tribunal is constituted and is able to hear out the matter and pronounce a judgment in respect of the question of law as framed in paragraph 76 of the judgment and order of the learned Tribunal. Application disposed off.
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2023 (9) TMI 232
Recovery of (6% of the value of the clearance of finished goods under Rule 6(3) of CCR, 2004) CENVAT Credit - electricity generated out of waste heat emerges during the course of manufacture of sponge iron - inputs and input services were used for manufacture of both dutiable as well as exempted products - HELD THAT:- The said issue was examined by the Tribunal in the case of M/S TRIMULA INDUSTRIES LIMITED VERSUS THE COMMISSIONER CENTRAL GOODS, SERVICE TAX CENTRAL EXCISE AND CUSTOMS, BHOPAL [ 2019 (4) TMI 2119 - CESTAT NEW DELHI] where it was held that We fail to accept that the heat entrapped in flue gases which emerge during the process as waste or by-product can be regarded as a final product which is beneficially used by the appellant for manufacture of electricity. It is not the case where the appellant has deliberately used some inputs by adopting a process to manufacture electricity. The demand confirmed in the impugned orders cannot be sustained. Consequently, the impugned orders are set aside - Appeal allowed.
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