TMI Tax Updates - e-Newsletter
May 4, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Highlights / Catch Notes

• GST:

  Levy of maximum penalty - penalty imposed on the basis of technical error - non downloading of E-way Bill-01 - The Allahabad High Court reviewed the matter and set aside the penalty. - The technical error in not downloading the E-way Bill-01 was deemed unintentional. The court relied on Division Bench judgments, particularly citing the case of Harley Foods Products Ltd. This precedent emphasized that penalties should not be imposed when there is no deliberate evasion of tax.
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• GST:

  Benefit of exemption from GST - educational institution or not - The court scrutinized the applicability of GST on four categories of services: (a) Conduct of entrance exams like NEET. (b) Awarding of qualifications like Diplomate of National Board (DNB) and Fellow of National Board (FNB). (c) Conducting screening tests for foreign medical graduates. (d) Accreditation services to institutions. - The court found that for conducting NEET and other entrance exams, as well as for awarding DNB and FNB qualifications, the petitioner qualifies for GST exemption. However, for screening tests and accreditation services, the court held that these do not fall under the exempt categories as they are not direct educational activities or services provided directly to students.
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• GST:

  Validity of assessment order - non-speaking assessment order - non-application of mind - violation of principles of natural justice - reversal of ITC - The petitioner contended that the order failed to consider their submissions adequately. The High Court found merit in the petitioner's arguments, noting instances where the assessing officer failed to provide proper reasoning and overlooked relevant material. As a result, the Court quashed the order and directed a fresh assessment
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• GST:

  Maintainability of appeal - appeal dismissed at the admission stage on the ground that it was barred by limitation and beyond the condonable statutory period - The court found merit in the petitioner's submissions regarding health issues causing the delay in filing the appeal, as supported by affidavits and documentary evidence. Despite the absence of illegality in the impugned order, the court invoked its writ jurisdiction to ensure justice by condoning the delay and allowing the appeal to proceed.
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• Income Tax:

  Validity of reopening of assessment u/s 147 - The High Court analyzed the Supreme Court's decision in Ashish Agarwal and concluded that it did not mandate the reopening of concluded assessments. The procedure outlined in Ashish Agarwal primarily concerned notices that were challenged before various High Courts but had not yet attained finality. The High Court clarified that Ashish Agarwal did not authorize completed assessments to be reopened, especially in cases where no objection had been raised to the initiation of proceedings.
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• Income Tax:

  Reopening of assessment - reason to believe - The Court evaluates the concept of "true and full disclosure" as mandated by Section 147, considering relevant legal precedents. It emphasizes that the duty lies on the assessee to disclose fully and truly all material facts necessary for assessment. The Court finds that the petitioner's submission regarding loan transactions does not negate the necessity for disclosure of material facts, particularly regarding cash transactions. Thus, the Court upholds the respondent's contention regarding lack of full disclosure.
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• Income Tax:

  Reopening of assessment - reasons for re-opening within or beyond 4 years - reasons to believe - The court specifically pointed out that the information used from the DRI and the Shah Commission reports was not adequately scrutinized independently by the assessing officers to form a reasonable belief of tax evasion. The court noted that the decision of the Supreme Court, which found mining leases post-2007 to be illegal, could not retroactively make previous business activities illegal for tax purposes. The court emphasized that such interpretations were not known or could not have been known by the taxpayers at the time of filing their returns.
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• Income Tax:

  Validity of Re-assessment proceedings u/s 147 - Earlier the notice for Assessment u/s 153A/C was issued - denying deduction u/s 80IB - The High Court observed that the impugned reopening notice was based on the same issue that was subject to appeal, which led to the order dated 30th March 2015 by the CIT(A). The Court cited the third proviso to Section 147 of the Act, which prohibits reassessment of income involving matters that are the subject of any appeal, reference, or revision.
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• Income Tax:

  Rectification of mistake u/s 154 - tax paid on more than one occasion, and claims its refund u/s 154 - The High Court referred to Article 265 of the Constitution of India, which states that taxes cannot be levied or collected except by authority of law. They analyzed previous court judgments and concluded that both errors of fact and errors of law can constitute 'error apparent on the face of record'. The key criterion is that the error should be clear, obvious, and not require elaborate arguments to establish. Since this error was apparent from the records, the Court concluded that it fell within the scope of Section 154.
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• Income Tax:

  Validity of Assessment Order u/s 143(3) once the Resolution Plan is approved under the Code - CIRP proceedings under IBC - The resolution plan approved by the NCLT is binding on all stakeholders, including the central government and any state or local authority. This includes the extinguishment of all claims not part of the resolution plan. The High court found that the tax notices issued for the periods covered by the resolution plan were invalid as they contravened the provisions of the IBC. The resolution plan clearly stated that no proceedings or claims could be initiated for periods prior to its effective date.
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• Income Tax:

  TDS u/s 194I - Transit Rent payable by the developer/ builder as Hardship Allowance / Rehabilitation Allowance / Displacement Allowance - Hardship due to dispossession - After considering Section 194(I) of the Income Tax Act and the arguments presented along with relevant ITAT decisions, the court ruled that "transit rent" should not be considered as a revenue receipt and is not liable to be taxed. Therefore, there is no requirement for TDS deduction from the amount payable by the developer to the tenant.
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• Income Tax:

  Validity of assessment made u/s 147 instead of u/s. 153C - Addition as unexplained cash credit u/s. 68 - Upon examination, the ITAT Delhi found that the seized material, along with statements by involved parties, constituted incriminating evidence, warranting proceedings under section 153C. Citing precedent from various judicial decisions, the ITAT Delhi concluded that the failure to follow the procedure under section 153C invalidated the reassessment under section 147/148. Consequently, the ITAT Delhi upheld the decision of the CIT(A) to quash the reassessment.
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• Income Tax:

  Income deemed to accrue or arise in India - FTS/FIS - receipts pertaining to supply of software (including AMC services) - The tribunal confirmed that software licensing fees received by a U.S.-based company from an Indian entity do not constitute royalty but are instead business income, non-taxable in India due to the absence of a permanent establishment. Similarly, the AMC charges, closely tied to the software licensing, also do not meet the DTAA criteria for FTS as they do not make available any substantive technical knowledge or skills.
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• Income Tax:

  Disallowance of raw material consumption - rejection of the books of account - The Appellate Tribunal finds that the AO's ad hoc disallowance without specific reasons for rejecting the books of accounts is unjustified. Mere deviation in the percentage of raw material consumption does not warrant such action. The Tribunal refers to precedent to support its decision, emphasizing that when books of accounts are regularly maintained and audited without adverse opinion, they should be considered correct unless proven otherwise by the revenue.
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• Income Tax:

  Disallowance u/s 14A r.w.r. 8D - no proper recording of satisfaction by the AO for rejecting the suomoto disallowance made by the Assessee - The Tribunal found that in the current case, similar to the preceding assessment year, there was no proper recording of satisfaction by the AO for rejecting the suo moto disallowance made by the Assessee. As a result, the Tribunal allowed the Assessee's appeal and directed the AO to delete the impugned addition.
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• Income Tax:

  Validity of reopening of assessment - Approval of PCIT u/s 151 - The Tribunal acknowledged the Assessee's argument regarding the mechanical approval granted by the PCIT. They referred to precedents where similar approvals were deemed invalid due to lack of meaningful application of mind. Citing relevant case law, the Tribunal concluded that the approval in this case, given with a simple "Yes, I am satisfied," lacked due application of mind by the approving authority. Therefore, the Tribunal allowed the ground raised by the Assessee regarding the validity of the reassessment proceedings.
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• Income Tax:

  Addition u/s 69 - Payment to farmers and purchase of agriland - The Tribunal noted discrepancies in the AO's reasoning, particularly regarding the Assessee's capacity to earn income and make investments. The Tribunal directed the AO to adjust payments made from withdrawals from the Assessee's bank account and sustained the remaining additions.
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• Income Tax:

  Denial of TDS credit - employer of the assessee has not deposited TDS after deducting the same from the salary paid to the assessee - Based on this precedent, the Tribunal concluded that the appellant, having accepted salary after TDS deduction, should not be penalized for the employer's failure to remit TDS. The Tribunal allowed the appellant's appeal, directing the Revenue to credit the TDS deducted by the employer.
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• Income Tax:

  Levy of penalty u/s. 271(1)(c) - disallowance made u/s. 35(2AB) - The Tribunal referred to the decision of the Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd., where it was held that the term 'particulars' under section 271(1)(c) includes the details of the claim made. In the absence of any incorrect or inaccurate information provided in the return, penalty cannot be imposed for furnishing inaccurate particulars. - Since the DSIR approval was not available to the assessee at the time of filing the return, any subsequent restriction on the deduction claimed cannot be considered as furnishing inaccurate particulars of income.
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• Income Tax:

  Computation of deduction u/s 10AA - The Tribunal examined the details provided by the assessee regarding expenses incurred in foreign currency. It noted that the Assessing Officer had excluded these expenses without thorough examination. The Tribunal referred to a previous decision by the Madras High Court in a similar case and held that the order of the Commissioner of Income Tax (Appeals) was not justified in confirming the exclusion. It allowed the appeal on this ground.
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• Income Tax:

  Time limit to pass assessment u/s. 92CA(3) - Transfer pricing adjustments - After thorough consideration of the statutory provisions and legal arguments presented by both parties, the Tribunal found merit in the assessee's contention. It observed that the TPO's order, along with the subsequent draft and final assessment orders, were passed beyond the prescribed time limit. Despite the Revenue's assertion that the time limit was discretionary, the Tribunal upheld the assessee's argument, emphasizing the mandatory nature of the prescribed time frame.
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• Income Tax:

  Addition u/s. 56(2)(viib) - transaction of sale of agricultural land - consideration as per the stamp value - The Tribunal admitted additional evidence provided by the appellant, consisting of certificates from Municipal Authorities and Gram Panchayat, supporting the agricultural nature of the land. After considering the evidence and legal arguments, the Tribunal concluded that the land in question did not qualify as a capital asset u/s 2(14). Since the agricultural land was not categorized as a capital asset, the provisions of section 56(2)(viib) were deemed inapplicable. Consequently, the addition made by the AO under section 56(2)(viib) was deleted.
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• Income Tax:

  Addition u/s 68 OR 41(1) - unexplained cash credit - Cessation of liability - The appellant contested additions to their income, alleging bogus sundry creditors. Despite the assessing officer invoking section 68 of the Income Tax Act, the Commissioner of Income Tax (Appeals) upheld the addition under section 41(1), citing long-standing outstanding credits. However, the Appellate Tribunal ruled in favor of the appellant, finding insufficient evidence of cessation of liabilities. Specific cases were examined, and additions were deleted due to lack of evidence or the appellant's satisfactory explanations.
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• Income Tax:

  Condonation of delay in filling appeal before CIT(A) - CIT(A) dismissing the appeal of the assessee in-limine - The Appellate Tribunal recognized the appellant's explanation for the delay, noting that notices were sent to an outdated address, and the appellant became aware of the assessment order only when a lien was placed on their bank account. Considering the extraordinary circumstances, including the COVID-19 pandemic, the Tribunal condoned the delay and allowed the appeal. Recognizing the appellant's right to proper representation, the Tribunal ordered the restoration of all issues to the AO's file for re-examination, emphasizing the need for adequate opportunity and cooperation from the appellant.
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• Customs:

  Demand of custom duty and imposition of penalty - non payment of duty on slop/waste Oil of foreign origin - The Tribunal noted that the waste oil collected during cleaning was predominantly mixed with water, making it unsuitable for classification as crude oil under the Customs Tariff. Therefore, demanding duty on this waste oil as if it were crude oil was deemed incorrect. - Further, the Tribunal observed that customs duty had already been paid on the entire quantity of foreign-origin oil during the vessels' conversion from foreign-going to coastal status. Therefore, demanding duty again on the waste oil collected during cleaning would result in double taxation, which was not permissible.
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• Customs:

  Import of Alkalised Cocoa Powder from Malaysia - Denied FTA benefit - The Tribunal observed that the benefit was denied solely based on the department's suspicion that the value addition condition was not met. However, no independent verification was conducted to support this allegation. - The Tribunal highlighted that according to Annexure-III of the Customs Tariff, a retroactive check by the customs authorities of India or reference to issuing authorities for verification is required to dispute the certificate of origin. In this case, no such verification was carried out, failing to comply with the requirements of the Free Trade Agreement. Further the CESTAT concluded that no mala fide could be attributed to the appellant. Therefore, the demand was considered time-barred.
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• Customs:

  Levy of Penalty u/s 112 (a) and (b) and 114AA of the Customs Act, 1962 - Abetment in mis-declaration of goods and evasion of duty - The appellants were accused of being involved in a scheme using dummy Import Export Codes (IECs) - The tribunal confirmed that three shipments declared as sunglasses or packing materials were actually high-value branded garments. This misdeclaration led to significant undervaluation, affecting the customs duty applicable. - One appellant was documented to have coordinated the logistics of the misdeclared imports, including providing details to customs agents. This was established through corroborated statements and WhatsApp messages, which showed coordination with a known associate and various import/export details being shared for clearing the misdeclared goods. - The tribunal upheld the penalties based on the appellants’ involvement in the misdeclaration and undervaluation of imported goods, which resulted in substantial customs duty evasion.
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• Customs:

  Misdeclaration in the quantity of goods imported - enhancement of the value - Transaction value - demand of duty - The tribunal noted the discrepancy in quantity but deemed it insignificant to constitute intentional misdeclaration. Held that variation in quantity during transportation is normal, thus dismissing the allegation of misdeclaration. - Regarding the issue of Valuation: the tribunal concluded that the adjudicating authority failed to provide sufficient grounds for rejecting the transaction value and enhancing the value of the goods. Set aside the enhancement of value due to insufficient discussion and lack of evidence provided.
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• Customs:

  Maintainability of appeal - non-prosecution of the case - matter adjourned beyond three times - Refund claim - The Tribunal observed that the appellant's repeated failure to appear indicated a lack of seriousness towards the appeal process. Despite the availability of the case schedule on the Tribunal's website, the appellant failed to follow up or make themselves available, thereby delaying the proceedings. - The Tribunal dismissed the appeal for default.
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• Corporate Law:

  Professional Misconduct by CA - Liability of the Engagement Partner (EP) with Audit Firm - The NFRA found that the auditors did not adequately report the non-recognition of liabilities classified as NPAs, which led to an understatement of liabilities and losses. This was a serious lapse as it misrepresented the financial position of the company. The auditors failed to perform adequate tests and provide sufficient evidence regarding their evaluation of the company's ability to continue as a going concern despite several negative financial indicators. - Based on the findings, the NFRA imposed substantial penalties on the audit firm and the individual auditor involved. - The individual auditor was also barred from auditing financial statements or conducting internal audits for any company for two years.
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• Indian Laws:

  Dishonour of Cheque - Vicarious liability of the Company Secretary - The CS was never a Director of the Accused Company - In-charge of the day-to-day affairs of the company or not - The petitioner, identified as a Company Secretary, refutes her vicarious liability, asserting her limited role in the company's affairs. The court scrutinizes the petitioner's position and the allegations against her, concluding that the complaints inadequately substantiate her involvement in the offense. As a Company Secretary, her duties primarily pertain to legal compliance rather than active management, thereby absolving her of vicarious liability under Section 141. Consequently, the court quashes the complaints against the petitioner and sets aside the summoning orders.
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• IBC:

  Jurisdiction of NCLT - Constitution of its Benches - Competency of Member of the Tribunal to function as a Bench - The Court interprets Section 419(3) of the Companies Act, 2013, and concludes that the proviso allows a single Judicial Member to exercise the powers of the Tribunal if authorized by the President. In this case, the President did authorize a Special Bench comprising of a single Member (Judicial) for specific dates, including the date of the judgment. - The Supreme Court finds that the NCLT did have jurisdiction to admit the application under Section 9 IBC 2016. - Therefore, the appeal was allowed, and the CIRP proceedings were directed to continue as per the Code.
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• IBC:

  Admission of Section 7 application - Assignment Agreement - Proper stamping of the agreement - Existence of Debt and Default - Corporate Guarantee - The Appellate Tribunal (NCLAT) dismissed the challenges against the validity of the debt assignment and confirmed the procedural correctness of the creditor's actions under the insolvency code. The repeated failures of the corporate debtor to fulfill settlement promises reinforced the decision to proceed with CIRP, highlighting the debtor's inability to manage its financial obligations effectively.
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• IBC:

  Liquidation of corporate Debtor - Eligibility of the Appellant to submit the Resolution Plan under section 29 A of IBC - The tribunal upheld the declaration that the appellant was a wilful defaulter, making him ineligible under Section 29A of the IBC to submit a resolution plan. This was a significant factor in the rejection of his resolution plan and the subsequent decision to liquidate. - The tribunal highlighted the autonomy of the CoC's commercial wisdom in deciding not to approve the resolution plan submitted by the appellant. It noted that such decisions are beyond the scope of judicial review. - The tribunal noted that any ad-interim relief obtained by the appellant against his wilful defaulter status did not override the CoC's decision-making power, as the stay was conditional and temporary.
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• Central Excise:

  Short payment of Central Excise Duty - The Appellate Tribunal concluded that central excise duty is leviable only on excisable goods manufactured or produced in India, as per the Central Excise Act. Duty is not contingent on receipt of payment but on the removal of goods, to be paid by the sixth day of the following month. The Tribunal found that the department's demand based on amounts received was erroneous, as duty can only be charged on the manufactured goods.
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• VAT:

  Recovery of dues by adjusting them against the refund amount - Delay in processing refund - In this case, the default notices were issued after the period within which the refund should have been processed. According to Sub-section (2) of section 38 of the Act, adjustment of amounts is permitted only towards recovery that is "due under the Act." - However, by the time the refund should have been processed, the dues under the default notices had not crystallized, and the respondent was not liable to pay them at that time. Therefore, the appellant-department's action of retaining the refund amount beyond the stipulated period and adjusting it against amounts due under subsequent default notices was deemed unjustified by the Supreme Court. - Therefore, the Court affirmed the judgment of High Court directing the refund of amounts along with interest as provided under Section 42 of the Act.
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Articles

• Roving Judgements!
• Assessee would be considered as electronic commerce operator when digital gold is sold through the platform and sale amount is directly paid through escrow account for which commission is charged

Notifications

• Customs

• 34/2024 - dated 2-5-2024 - Cus (NT)
  Rate of exchange of one unit of foreign currency equivalent to Indian rupees–Supersession Notification No. 30/2024-Customs(N.T.), dated 18th April, 2024

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Circulars / Instructions / Orders

• SEBI - SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/32 - dated 2-5-2024
  Facilitating collective oversight of distributors for Portfolio Management Services (PMS) through APMI
• SEBI - SEBI/HO/MIRSD/MIRSD-SEC-3/P/CIR/2024/34 - dated 2-5-2024
  Framework for administration and supervision of Research Analysts and Investment Advisers
• SEBI - SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/35 - dated 2-5-2024
  Portfolio Managers - Facilitating ease in digital on-boarding process for clients and enhancing transparency through disclosures
• FEMA - 04 - dated 3-5-2024
  Master Direction – Risk Management and Inter-Bank Dealings: Amendments

News

• RBI releases draft guidelines on ‘Prudential Framework for Income Recognition, Asset Classification and Provisioning pertaining to Advances - Projects Under Implementation’

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• 2nd Session of India-Nigeria Joint Trade Committee held in Abuja

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Case Laws:

• GST

• 2024 (5) TMI 183
  Violation of principles of natural justice - Officer merely rejected the submissions of the petitioner without any reasoning - tax confirmed on the petitioner in terms of the proposals contained in DRC-01 issued to the petitioner, which preceded a notice in DRC-01A for the respective Assessment Years - HELD THAT:- The impugned orders set aside by giving the petitioner a fresh opportunity to substantiate the case afresh by filing a detailed reply to the respective notices issued to him in DRC-01. The impugned order, which stands quashed shall be treated as Corrigendum to the notice issued to the petitioner for the respective Assessment Years under DRC-01. The petitioner shall file reply within a period of 30 days from the date of receipt of a copy of this order. The petitioner shall also pay 10% of the disputed tax for the respective Assessment Years. For the Assessment Year 2017-2018, while arriving at 10% of the disputed tax, the amount paid by the petitioner as tax for the Assessment Year 2017-2018, shall be excluded and on the balance amount, the petitioner shall pay 10% of the disputed tax within a period of 30 days. Petition allowed.

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• 2024 (5) TMI 182
  Failure to reply to SCN - alleged non reversal of Input Tax Credit (ITC) in respect of credit notes issued by the supplier - case of petitioner is that reply in Form ASMT 11 should have been taken into account - HELD THAT:- On perusal of the impugned order, it is noticeable that the notice in Form ASMT 10 is recorded therein. However, the reply of the petitioner thereto was not taken into account. Consequently, as is evident from paragraph 12 of the impugned order, the tax proposal was confirmed on the ground that the petitioner did not respond to the notices or attend personal hearing. Since the petitioner's reply to the notice in Form ASMT 10 was not taken into consideration in the impugned order, such order is unsustainable. The impugned order dated 20.11.2023 is set aside and the matter is remanded for reconsideration. The petitioner is permitted to submit a reply to the show cause notice within 15 days from the date of receipt of a copy of this order. Petition disposed off by way of remand.

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• 2024 (5) TMI 181
  Violation of principles of natural justice (audi alterem partem) - non-grant of opportunity of hearing to the petitioner as per provisions of Section 75(4) of the Central Goods and Service Tax Act, 2017 - rejection of refund without assigning any reason - HELD THAT:- It appears that impugned order of rejection of refund is passed without assigning any reason also. In such circumstances, the impugned order dated 01.12.2023 passed in Form-GST-RFD-06 under Rule 92(1), 92(3), 92(4), 92(5), 92(7), 92(5), 92(6) read with Sections 73 and 74 of the Gujarat Goods and Service Tax Act, 2017 ( GST Act , for short) is hereby quashed and set aside and the matter is remanded back to the Respondent No.2 for passing fresh order after de novo adjudication after giving opportunity of hearing and after assigning reasons for passing the order in accordance with law. The present petition is disposed off.

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• 2024 (5) TMI 180
  Levy of maximum penalty - penalty imposed on the basis of technical error - non downloading of E-way Bill-01 was not done with intention to evade tax - HELD THAT:- Upon perusal of the record, it appears that the invoice contained the address, the goods matched the description in the invoice and all other materials were intact. The imposition of tax is only on the basis of a technical error. Furthermore, neither in the show cause notice nor in the order under Section 129(3) there was any allegation that non downloading of E-way Bill-01 was done with intention to evade tax. In spite of the same, the respondent authorities have chosen to impose maximum penalty whereas the law provides for lesser penalty under Section 122 of the Act. The issue in the present petition is covered by Division Bench judgment of this Court in Harley Foods Products Ltd. vs. State of U.P. [ 2018 (11) TMI 704 - ALLAHABAD HIGH COURT ], where it was held that 'Goods were accompanied with all the requisite documents including Gujarat e-way bill dated 21.03.2018, therefore, there was no ground to hold that the goods were coming in contravention of the provision of GST Act/Rule and the intention of the petitioner was to evade the payment of Tax' and thus no case made out with regard to evasion of tax. The impugned order is set aside - petition allowed.

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• 2024 (5) TMI 179
  Reopening of completed assessment - Difference in output tax liability between GSTR-1 and GSTR-3B returns - the tax proposal in respect of the said discrepancy was confirmed by an earlier order and that the petitioner intends to challenge such order by separate proceedings - under declaration of ineligible ITC and invalid ITC under Section 16(4) - HELD THAT:- On examining earlier order and the impugned show cause notice, it is clear that they pertain to assessment period 2018-19. The first issue in the impugned show cause notice is the same issue determined under order dated 23.12.2023. Undoubtedly, it is not open to the respondent to reopen the same issue after issuing the earlier order. Petition is disposed of by directing the petitioner to respond to the show cause notice only insofar as it pertains to the issues of under declaration of ineligible ITC and invalid ITC under Section 16(4) - As regards the issue relating to reconciliation of GSTR-1 and GSTR-3B, the impugned show cause notice is set aside to that extent. Petition disposed off.

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• 2024 (5) TMI 178
  Violation of principles of natural justice - non-service of SCN - petitioner unable to reply to the show cause notice or participate in proceedings because such notice and order were only uploaded on the view additional notices and order tab of the GST portal, and not communicated to the petitioner through any other mode - HELD THAT:- The documents on record disclose that the petitioner replied to the notice in Form GST ASMT 10, but failed to respond to the intimation and show cause notice that followed. As is evident from the impugned order, tax liability was confirmed because the petitioner did not reply to the show cause notice. It is also noticeable that the petitioner's reply to the notice in Form GST ASMT 10 was not taken into consideration. In these circumstances, albeit by putting the petitioner on terms, it is just and appropriate that the petitioner be provided an opportunity. The impugned order dated 08.12.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order - petition allowed.

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• 2024 (5) TMI 177
  Benefit of exemption from GST - educational institution or not - Rejection of refund of the Goods and Services Tax (GST) in respect of the part of the Financial Year 2020-21 April, 2020 to August, 2020 - tax paid under a mistaken understanding of the law - contradiction between Circular No. 151/07/2021-GST dated 17.06.2021 and N/N. 12/2017 Central Tax (Rate) dated 28.06.2017 - scope of examination of services in terms of the 2017 Notification. Scope of examination of services in terms of the 2017 Notification - whether the provision of any services is exempted (chargeable at Nil rate) from payment of GST? - National Eligibility-cum-Entrance Test (NEET) for admission to any medical institution in India - Degrees of Diploma of National Board (DNB) and Fellow of National Board (FNB) after conducting the examination - Conducts Screening Tests - Accreditation of Medical Institutions. NEET EXAMINATION - HELD THAT:- The question whether the petitioner is an educational institution for the purposes of Clause (aa) of Serial No. 66 of 2017 Notification was expressly clarified by introduction of Clause (iv) in Paragraph 3 of the 2017 Notification. The said explanation clarified that the Central and the State Educational Boards would be treated as educational institutions for the limited purposes of providing services by way of conduct of examination to the students. The opening words of Paragraph 3(iv) of the 2017 Notification are for removal of doubts . The said Explanation is clearly clarificatory. The question whether educational boards are to be exempted from services provided in conduct of examination was considered by the GST Council at its 28th Meeting held on 21.07.2018. The Fitment Committee had noted that the definition of educational institutions as contained in Paragraph 2(y) of the 2017 Notification did not cover State Educational Boards, Central Government Boards and autonomous organizations responsible for administration of education in India - Most of the State Boards and Central Boards were either boards set up by the Act of Parliament or State Legislatures or registered under the Societies Registration Act, 1860. Therefore, all examination boards except a few were Government entities. Any grant received by educational boards for providing services to government or any other person was also exempt. Undisputedly, the question whether a provision is clarificatory or declaratory would not be dispositive of the question whether the same is applicable retrospectively. However, the fact that the language of the statute clearly reflects that it is for removal of doubts and to clarify doubts is a relevant indicator to determine whether the provision in fact intended to clarify and not intended to bring a prospective change. It is also relevant to determine whether the pre-amended law would admit such a clarification. The service of holding an examination for aspirants to medical colleges, to provide a standard basis for entrance in medical institutions, the same would not fall within the ambit of Serial No. 66(a) of the 2017 Notification, as the same covers services provided by an educational institution to its students, faculty and staff. The candidates appearing for NEET examination are not students of the petitioner - More importantly, the Central Government has introduced a separate entry for exempting the services provided by an entrance examination at Serial No. 66(a) of the 2017 Notification. Since, NEET examinations are in the nature of an entrance examination, the petitioner would be entitled to the benefit of an exemption by virtue of Serial No. 66(aa) of the 2017 Notification, which came into effect on 25.01.2018. DEGREES OF DIPLOMATE OF NATIONAL BOARD (DNB) AND FELLOW OF NATIONAL BOARD (FNB) - HELD THAT:- Undeniably, the State Boards and educational boards are educational institutions. In the case of Secondary Board of Education, Orissa v. Income Tax Officer, Ward E , Cuttack [ 1972 (1) TMI 16 - ORISSA HIGH COURT] , the Orissa High Court had observed that the Board of Secondary Education is not a university but it is indisputably an educational institution. Education is included within the definition of charitable purpose under Section 2(15) of the Income Tax Act, 1961 and the said expression has been read in an expansive manner. The course of DNB and FNB is a structured course. Although the students conduct their training with accredited medical institutions, the course is structured and managed by the petitioner. There is also no doubt that the students undergoing the said course are enrolled with the petitioner. Thus, although there is no classroom teaching by the petitioner; it is, undoubtedly, involved in imparting education to the students enrolled with it as a part of a curriculum. The course fee collected by the petitioner is forwarded to various accredited hospitals - for the purposes of DNB and FNB courses and conduct of Fellow Entrance Examinations, DNB-PDCET exam, FAT, DNB and FNB final examination (theory and practical) and the Fellowship Exit Exam, the petitioner clearly falls within the scope of an educational institution imparting education to students enrolled with, it as a part of a curriculum. There can be no dispute that no GST is chargeable in respect of the services rendered by the petitioner in connection with DNB and FNB courses. The petitioner is indisputably involved in conduct of DNB and FNB courses and therefore, squarely falls within the definition of an educational institution in respect of the services rendered to its students in connection with and as a part the said courses. SCREENING TEST AND ACCREDITATION OF MEDICAL INSTITUTIONS - HELD THAT:- The services provided by the petitioner for conducting screening test and the fees charged for accrediting medical institutions does not fall within the scope of Serial No. 66(a) and Serial No. 66(aa) of the 2017 Notification - The screening tests are not conducted as a part of the curriculum. The said tests are also not in the nature of entrance examinations but are for the purposes of recognising primary medical qualifications secured by candidates from institutions abroad. The accreditation fee is charged from medical institutions for accrediting them. These services are also not covered under the relevant entries of the 2017 Notification. The candidates appearing for the screening tests are not students of the petitioner. Thus, the petitioner s contention that it is exempt from payment of GST in respect of such services, is unmerited. The orders rejecting the petitioner s application for refund, which are impugned in this petition, are set aside. The matter is remanded to the appropriate authority for considering afresh - Petition disposed off by way of remand.

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• 2024 (5) TMI 176
  Validity of assessment order - failure to provide a reasonable opportunity to the petitioner - violation of principles of natural justice (audi alterem partem) - HELD THAT:- On perusal of the orders impugned herein, it is evident that the tax demand pertains entirely to the discrepancy between the petitioner's GSTR 3B returns and the auto populated GSTR 2A. Learned counsel for the petitioner asserts that the petitioner is in a position to produce necessary documents in compliance with Circular No.183. In these circumstances, albeit by putting the petitioner on terms, it is just and necessary to provide another opportunity to the petitioner. The orders impugned herein are set aside subject to the condition that the petitioner remits 10% of the disputed tax demand in respect of each assessment period as agreed to within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (5) TMI 175
  Breach of principles of natural justice - Petition was unaware of proceedings culminating in the impugned assessment order on account of the fact that GST compliances had been entrusted to a consultant, who had not informed the petitioner of such proceeding - discrepancy between the petitioner's GSTR-3B and auto-populated GSTR-2A - HELD THAT:- On perusal of the impugned order, it is evident that such order relates to the discrepancy between the GSTR 3B and GSTR 2A returns. The petitioner has placed on record several documents to establish that the petitioner was entitled to avail of ITC. Since the petitioner was not heard before the impugned order was issued, principles of natural justice warrant interference so as to provide an opportunity to the petitioner. It should be noticed that the petitioner remitted 10% of the disputed tax demand, before filing this writ petition. Therefore, the impugned order dated 03.03.2023 is set aside and the matter is remanded for reconsideration. The petitioner is also permitted to file a reply to the show cause notice within 15 days from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (5) TMI 174
  Levy of GST on the value of the by-products i.e., broken rice, bran and husk - HELD THAT:- When the matter is listed, both the learned counsel for petitioner as well as learned Government Pleader for Commercial Taxes would admit that the subject matter of this Writ Petition iin SHIRIDI SAINATH INDUSTRIES VERSUS DEPUTY COMMISSIONER OF SERVICES TAX (INTERNATIONAL TAXATION) [ 2021 (1) TMI 175 - ANDHRA PRADESH HIGH COURT] , where it was held that ' the impugned Assessment Order passed by the 1st respondent in so far as it relates to the levy of GST on the value of by-products i.e., broken rice, bran and husk treating them as part of the consideration paid to the petitioner for milling of the paddy, is set aside'. This Writ Petition is allowed and the impugned Assessment Order dated 24.09.2019 passed by the 1st respondent in so far its relates to levy of GST on the value of the by-products i.e., broken rice, bran and husk treating them as part of the consideration paid to the petitioner for milling of the paddy is set aside.

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• 2024 (5) TMI 173
  Validity of assessment order - non-speaking assessment order - non-application of mind - violation of principles of natural justice - reversal of ITC - HELD THAT:- On examining the impugned order, it is evident that the tax liability of the petitioner under about '7' heads was determined therein. As regards turnover mismatch, the assessing officer set out the particulars provided by the petitioner, recorded that the petitioner had produced the balance sheet and profit and loss account for the year 2017-2018 and thereafter recorded the following conclusion: The reply of the dealer is not acceptable . Thus, the assessing officer has merely recorded a conclusion in the nature of ipse dixit without any reasoning to support such conclusion. Reversal of ITC - HELD THAT:- The assessing officer has recorded the conclusion that ITC was used partly for effecting taxable supplies and partly for effecting exempt supplies. The latter conclusion appears to be clearly contrary to the submissions made by the assessee. As regards tax liability under the head 'sundry creditors', the petitioner/assessee stated that the payments to creditors are below 180 days and Rule 37 was not contravened. It was further stated that no ITC was involved. The reply of the assessee dated 09.10.2023 clearly discloses that the sundry creditors' list, payment date, bank date and bank statement were enclosed. Without considering these documents, a finding that bank statement was not provided is recorded in the impugned order. It appears that the impugned order was issued without taking into account the relevant material placed on record by the assessee. Consequently, the said order calls for interference and is hereby quashed. The matter is remanded for reconsideration by the assessing officer. After providing a reasonable opportunity, including a personal hearing, to the assessee, the assessing officer is directed to issue a fresh assessment order within a maximum period of two months from the date of receipt of a copy of this order - petition disposed off by way of remand.

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• 2024 (5) TMI 172
  Levy of GST on royalty paid to the respondent-Mining Department towards mining lease - challenge to SCN/assessment orders - HELD THAT:- In SUDERSHAN LAL GUPTA CONTRACTOR VERSUS UNION OF INDIA, STATE OF RAJASTHAN, CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, DEPUTY COMMISSIONER OF STATE TAX, CIRCLE KARAULI, RAJASTHAN [ 2022 (10) TMI 43 - RAJASTHAN HIGH COURT] the Division Bench of this Court has held that the action of respondents with regard to imposition of GST on royalty is not liable to be interfered with. This writ petition is dismissed in terms of the orders passed by this Court in Sudershan Lal Gupta s case.

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• 2024 (5) TMI 171
  Maintainability of appeal - appeal dismissed at the admission stage on the ground that it was barred by limitation and beyond the condonable statutory period - sufficient cause for delay or not - cancellation of GST registration - HELD THAT:- Though the impugned order in view of Section 107 of APGST Act does not suffer from any illegality, as the appellate authority cannot condone the delay beyond statutory condonable period but considering that there was sufficient cause for not preferring appeal in time, the interest of justice requires condonation of the delay. The appeal is a valuable statutory right. In exercise of writ jurisdiction to do complete justice and provide opportunity of hearing on merits of the appeal, the delay is condoned by imposing costs of Rs. 20,000/-. The appellate authority shall consider and decide the appeal on merits in accordance with law, expeditiously. The Costs shall be deposited in two (02) weeks from the date of receipt of copy of this order before the appellate authority. Petition allowed.

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• Income Tax

• 2024 (5) TMI 186
  Addition of agriculture income treated as income from other sources u/s 56 - assessee had not maintained any Books of Account, bills/vouchers for incurring expenditure on agricultural production during the year - HELD THAT:- We note that it is not expected from a small and poor farmer to maintain full accounts department and to maintain books of accounts. In India, by and large, most of the farmers are illiterate and poor and in some cases their land holding is also small, hence it is not feasible to maintain books of accounts. However, this situation will not be applicable in case of a big farmer where the farmer is holding large land and earning a good sizable agricultural income, for such farmers it is feasible and easy to maintain books of accounts as they have necessary infrastructure to maintain the accounts department and books of accounts. The assessee under consideration is a small farmer, and he submitted before the assessing officer the statement of Bardoli Sugar, submitted bill of Shree Khedut Sahkari khand Udyog Mandli and bank statement showing withdrawal and deposit of cash in the bank account. We note that assessee has deposited cash in the bank account out of agricultural income and out of earlier cash withdrawn from the bank, (that is, unused cash out of the cash withdrawn from bank). Therefore, assessee has proved the source of the cash deposit in the bank account and hence the addition should not have been made in the hands of the assessee. Decided in favour of assessee.

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• 2024 (5) TMI 185
  Approval Application made u/s 80G (5) - rejection of application as belatedly filled - HELD THAT:- As decided in M/S. CIT-1982 CHARITABLE TRUST [ 2024 (3) TMI 1201 - ITAT CHENNAI] ITAT correctly observed that there is no reason to provide for a distinction within the same provision, so as to have a different timeline for accepting application for grant of final approval in respect for grant of registration in Form No. 10AB for registration u/s 12A of the Act and for grant of final registration u/s 80G(5). ITAT, in our view has correctly observed that there cannot be a distinction within the same provision for having different time-lines, without bringing out any exception and further, even the provisions of Section 80G are for the benefit of the donors, who are donating money to the charitable trust for claiming exemption in their returns of income. We observe that the assessee had filed Form 10AB for grant of final registration u/s 80G of the Act on 04.02.2023 i.e. within the extended time-line provide vide CBDT Circular with respect for final registration of Trust u/s 12A of the Act in Form 10AB i.e. 30.09.2023. Accordingly, in light of the aforesaid Ruling, the order of CIT(Exemptions) on this issue is set aside, and matter is remanded to the file of CIT(Exemption) for re-deciding the issue of grant of final registration u/s 80G(5), on merits, as per law. Appeal of the assessee is allowed for statistical purposes.

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• 2024 (5) TMI 184
  Application for approval u/s. 80G(5)(iii) - application filed in Form No. 10AB rejected - time limit to convert provisional approval to regular registration - HELD THAT:- The assessee has commenced its activities on 27.05.2021 and applied for provisional approval u/s. 80G on 30.08.2021 and this provisional approval needs to be regularized within six months of commencement of activities u/s. 80G(5)(iii) of the Act. Considering genuine hardship, the CBDT extended this date further by 30.09.2022 and assessee trust was having sufficient time to convert provisional approval to regular registration and there was no necessity for this trust to apply both provisional and regular approval simultaneously. Even this amendment of 2023 by the Finance Act, 2023 is not retrospective, it is prospective. This issue is fully covered now, as the Tribunal in the case of M/s. Shri Ramajayam Charitable Trust [ 2024 (3) TMI 1201 - ITAT CHENNAI ] timeline prescribed under clause (iii) of first proviso to section 80G(5) of the Act should be treated as directory and not mandatory especially considering the transitional nature of the amendment as brought out by the taxation of other laws (relaxation and amendment of certain provisions) act 2020 for bringing new regime. Hence, in our view, the CIT(Exemptions) should not have rejected the assessee s application in Form No. 10AB only for this technical reason. We are of the view that the intention of CBDT in its circular clearly reflects their mind that once the timeline prescribed for filing Form No. 10AB for recognition u/s. 12A of the Act has been extended up to 30.09.2023, the same may be treated as extended for forms namely Form No. 10AB for renewal of approval/recognition/registration under clause (iii) of first proviso to section 80G of the Act also. Hence, we accept the plea of assessee and agree with the arguments of assessee and remand the matter back to the file of the CIT(Exemption) to decide the issue on merits. The order of CIT(Exemption) on this issue is set aside and matter is remanded back to the file of the CIT(Exemption) for re-deciding the issue on merits as per law. Appeal of the assessee is allowed for statistical purposes. We set aside the order of CIT(Exemption) dated 30.08.2023 and direct him to re-consider the assessee s application for approval u/s. 80G(5)(iii) of the Act, on merits. Hence, this appeal of the assessee is allowed for statistical purposes

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• 2024 (5) TMI 170
  Validity of reopening of assessment u/s 147 - scope of new regime of reopening of assessment after introduction of provisions of section 148/148A - whether the respondents, under the facts of the present case, are legally justified in reinitiating assessment proceedings for the same AY, which had already been subjected to reassessment? - HELD THAT:- Undisputedly, the respondents have proceeded to pass an order under Section 148(A)(d) of the Act premised on an identical ground of escapement of income as alleged in the original notice for reassessment issued on 31 March 2021. It is also not the case of the respondents that they had sought to recommence the concluded reassessment proceedings based on certain new information or additional grounds of escapement of income. Rather, they have only relied upon the decision of Ashish Agarwal ( 2022 (5) TMI 240 - SUPREME COURT] to wield power to proceed with the reassessment. Thus, the only question which needs to be examined is whether the decision in Ashish Agarwal (supra) commands an authority to reopen even concluded assessment proceedings. Recently, we had an occasion to extensively deal with a similar challenge as has been laid in the instant writ petition in the case titled as Anindita Sengupta [ 2024 (4) TMI 96 - DELHI HIGH COURT] whereby, it was held that the procedure envisaged in Ashish Agarwal (supra) unambiguously stood confined to matters where although notices may have been issued, proceedings were yet to have attained finality. The facts that assessment under Section 147 of the Act was already concluded, said proceedings were completely ignored and no new material was unearthed, closely resemble the factual scenario in the case of Anindita Sengupta (supra). Thus, the controversy in hand is squarely covered by our decision in Anindita Sengupta (supra). We, therefore, find it appropriate to allow the instant writ petition. Accordingly, the impugned notices issued under Section 148(A)(b) and Section 148, respectively and the impugned order passed under Section 148(A)(d) of the Act are, hereby, quashed. Decided in favour of assessee.

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• 2024 (5) TMI 169
  Reopening of assessment - reason to believe - meaning of the phrase true and full disclosure - cash transactions unexplained - petitioner contends that the said transactions are a part of the loan transactions between the petitioner including amalgamated companies and Mr. Manoj Sethi, which have been done via cheque/RTGS method of banking - whether the AO has correctly assumed jurisdiction under Section 147 of the Act on the ground of lack of full and true disclosure on the part of the assessee during the original proceedings? - HELD THAT:- In the instant case, the petitioner has not been able to allude to any enquiry either expressly or indirectly conducted by the respondent in the earlier assessment proceedings qua the issue under consideration, which could suggest that the present proceedings are merely based upon a change of opinion. Thus, the AO cannot be said to have traversed beyond its mandate to assume jurisdiction under Section 147 of the Act. Thus we do not find any merit in the arguments put forth by the petitioner and consequently, the petition stands dismissed. These observations have been made only for the purpose of deciding the challenge which stands raised before us; they should not be construed to be an expression on the merits of the case or otherwise.

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• 2024 (5) TMI 168
  Addition u/s 14A - disallowance in cases where no exempt income has been claimed by the assessee during the year under consideration - ITAT deleted addition - as submitted ITAT ignoring the CBDT Circular No. 05 of 2014 dated 11.02.2014 and amendment to Section 14 of the Act inserted by the Finance Act, 2022 HELD THAT:- From the perusal of the order of the assessing authority, it appears that the assessing authority did not consider the documents submitted by the assessee during the course of the assessment proceeding and this fact came to light from the observation made by the appellate authority that despite availability of documents, additions were made by the assessing authority. Amendment brought in Section 14 (A) of the Act inserted by the Finance Act, 2022, inserting explanation which is clarificatory in nature hence have retrospective effect - It is clear that the contention of appellant in respect of question no.3 (a) is not relevant in this case as the assessment is for the year 2013-14, therefore, the amendment proposed in Section 14 (A) of the Act as discussed hereinabove would not be applicable in the present case and the submission of the appellant in respect of Section 14 (A) of the Act is not relevant in light of the amendment, therefore, the contention of the appellant to this effect that order of CIT appeal as well as an order of ITAT may be quashed is hereby rejected. The judgment rendered in the case of Chivenwest [ 2015 (9) TMI 238 - DELHI HIGH COURT] is worthy of reference, where it has been categorically held that Section 14 (A) of the Act will not apply, if no exempt income is received or receivable during the relevant previous year by the assessee and this finding is just and proper and further contention of the appellant in respect of the pendency of the case in the Apex Court i.e. PCIT vs. Adani Wilmart Ltd. [ 2021 (8) TMI 1390 - SC ORDER] against the order of the [ 2021 (1) TMI 1260 - GUJARAT HIGH COURT] and in the PCIT Vs. Karnataka State Financial Corporation [ 2021 (4) TMI 652 - KARNATAKA HIGH COURT] against the judgment of the Karnataka High Court are concerned, in the cases of the High Court, relief has been granted to the assessee by holding that no disallowance of the expenditure under Section 14 (A) of the Act can be made more than exact annual income earned by the assessee and it is the view of this Court that until and unless the issue travelled uptil Apex Court modifying or setting aside judgment of the High Court. Disallowance of operating expenses, cost of material consumed, employee benefits and other expenses debited in P L account of the company - assessee failed to produce any details, documents and evidences to substantiate these expenses - ITAT upholding CIT(A) order of deleting addition - So far as other questions are concerned, since the same are based upon fact finding and we have already discussed the order of the CIT(A) and ITAT and find that the order of the CIT (A) is well reasoned order and disallowance made by the AO is contrary to the settled norms and in this case we approve the findings that according to the demand of the AO, assessee submitted all the relevant documents but before disallowing, no findings have been recorded by the AO and the order of the CIT (A) has been upheld by the ITAT and the addition made by the AO in the case of assessee for an amount has rightly been deleted. This Court is of the considered opinion that to maintain the parity in light of the view taken by the different High Courts, we are inclined to hold that deletion has rightly been made by the CIT (A) which was further affirmed by the ITAT and, therefore, no interference is warranted in the facts and circumstances of the case. Revenue appeal dismissed.

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• 2024 (5) TMI 167
  Reopening of assessment - reasons for re-opening within or beyond 4 years - reasons to believe - basic contentions of the revenue for re-opening the assessment is that firstly under-invoicing of export and failure on the part of assessee to disclose fully and truly all material and commission paid to the foreign agents - HELD THAT:- As already dealt with the reasons for re-opening of the assessment on the basis of material borrowed from DRI authorities and how it cannot be considered as tangible material having a live link for the purpose of forming independent opinion of the AO, which is infact not formed in all the matters. Thus, as far as the re-opening on the basis of borrowed material from DRI is concerned, we are firm on our opinion that such material without application of mind of the Assessing Officer could not have been directly borrowed and used. As far as the report of Justice M.B. Shah Commission is concerned, the Co-ordinate Bench of this Court [ 2019 (8) TMI 16 - BOMBAY HIGH COURT] (S.C. Gupte N.D. Sardessai, JJ.) clearly observed that the third report of Justice M.B. Shah Commission contains merely the expression of its opinion and it lacks finality as well as authoritativeness. Only on the basis of expression of such opinion by the commission, there cannot be any prima facie belief which could be recorded by the Assessing Officer, without any independent material for the purpose of re-opening. In the present matters, the reasons for re-opening clearly goes to show that Assessing Officer, except borrowing the information from the third report of Justice M.B. Shah Commission, failed to record independently to his own satisfaction any reason so as to direct re-opening of assessment. We do not see any reason independently forming opinion by the Assessing Officer, apart from what was borrowed from the Justice M.B. Shah Commission report. Thus, such reasons which are not having any application of mind as well as any independent material and reason to believe, cannot be construed as legal reasons for re-opening of the assessment. Finally, in some matters it is claimed that the assessee failed to disclose fully and truly the material findings that beyond 22.11.2007, the mining activities were illegally continued. In all these matters, the returns were filed somewhere in the year 2009-10, even though, there was no such decision passed by the Apex Court holding that mining leases beyond 2007 were illegal. It is a fact that for making disclosure truly and fully the assessee must have the knowledge of it. It is necessary to note here that the case of Goa Foundation Vs. Union of India [ 2015 (8) TMI 723 - SUPREME COURT] . While deciding the said petition, the Supreme Court observed that the mining leases in Goa expired in the year 1997 and thereafter, renewal could have been granted only for 20 years upto 2007. Thus, the Apex Court observed that from November 2007 all mining leases in Goa are required to be considered as illegal for the simple reason that there was no power to renew such leases beyond 20 years. The fact remains that these observations of the Apex Court are in connection with mining leases, however, the Apex Court no where expressed that till the date of such decision i.e. 21.04.2014, the mining activities carried on by the lease-holders were considered to be illegal. The illegality of the lease is one thing and carrying out business activities on assuming that such leases exists is another thing. Similarly, business activities were carried out and Iron Ore was extracted, sold, exported till all the activities came to a grinding hold. The lease-holders paid royalty, customs duty, other charges to the Government till such activities were stopped. Extraction of Iron Ore including export and payment of remaining charges to the concerned department till 2014 were not declared as illegal. Even this fact, that the mining leases beyond 2007 were not legal, was even not known to the Assessing Officer himself, till such declaration came from the Apex Court in the year 2014. Thus, claiming that the assessee failed to disclose truly and fully that such activities were illegally carried out and that too while filing returns for the assessment year 2009-10 would not arise. In this regard the observation in the case of Calcutta Credit Corporation [ 1969 (12) TMI 30 - CALCUTTA HIGH COURT] would clearly attract. Thus, we are of the considered opinion that notices issued for re-opening and assessment in all these matters failed to satisfy twin conditions. The Assessing Officer, therefore, could not have exercised jurisdiction for re-opening of assessment which were concluded way back. The additional affidavit filed in two petitions cannot be looked into for the above reason as Revenue or the AO is not entitled to supplement material beyond the reasons recorded at the time of issuance of notice under section 147/148 of Income Tax Act. We hold that the impugned re-opening notices and the orders passed rejecting the objection needs interference and are required to be quashed and set aside. Decided in favour of assessee.

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• 2024 (5) TMI 166
  Validity of Re-assessment proceedings u/s 147 - Earlier the notice for Assessment u/s 153A/C was issued - denying deduction u/s 80IB - petitioner s case that it was not subjected to search and seizure action - HELD THAT:- Section 147 provides for a clear bar that where an income, which is subject matter of any appeal, reassessment of such income is not permissible. The reason to believe escapement of income provides Notice u/s. 153A/C of the IT Act, 1961 was issued. During the year under consideration the assessee has shown that the project is completed and in its P L A/c. credited to the total sale consideration and entire profit was claimed as deduction u/s. 80IB (10). AO has made addition on account of deduction in WIP and denied the deduction u/s. 80IB (10) as project is not as approved project in the hands of the assessee because the commencement certificate is not issued to Mr. Harshad Doshi nor his AOP Poonam Builders. Secondly the first approved plan is dated 27.11.1997 which is before 1.10.1998. Thus by no means, the assessee is eligible to claim the benefit of deduction u/s. 80IB (10) Thus Escapement of income due to claim of deduction under Section 80IB (10) was certainly a subject matter of appeal and admittedly so and, therefore, in our view, on this income reassessment is not permissible. As held by the Hon ble Apex Court in Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT ] Revenue could initiate reassessment proceedings subject to fulfilment of the conditions mentioned in Sections 147/148 of the Act, i.e., so long as it is not hit by the third proviso to Section 147 of the Act. Reopening notice set aside - Decided in favour of assessee.

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• 2024 (5) TMI 165
  Rectification of mistake u/s 154 - tax relating to retention money - tax paid on more than one occasion, and claims its refund under Section 154 - HELD THAT:- As the authority has perused the record and on the basis of record, he gave a finding that assessee has offered tax on excess retention money. Thus, no elaborate arguments are needed to establish the error as respondent No.2 himself found the same from the record about the payment of tax in excess on the retention money . As decided in Nirmala L. Mehta vs. A. Balasubramaniam, CIT [ 2004 (4) TMI 43 - BOMBAY HIGH COURT] Bombay High Court emphasized that no estoppel can arise against the statute. Article 265 of the Constitution of India expressly lays down that taxes can only be levied or collected through the authority of law. Hence, acquiescence cannot deprive a party of rightful relief when taxes are levied or collected without legal authority. Also in Smt. Sneh Lata Jain [ 2004 (4) TMI 579 - JAMMU KASHMIR HIGH COURT] once it is found that the petitioner has no tax liability, the respondents cannot be permitted to levy the tax and collect the same in contravention to Article 265 of the Constitution of India, which provides a constitutional safeguard on levy and collection of tax. It is true that this Court is not to act as Court of appeal while exercising the writ jurisdiction, but at the same time where the admitted facts disclosed non- exercise of jurisdiction by an adjudicatory authority and a citizen is subjected to tax not payable by him, interference by this Court is warranted. As in our judgment, respondent No.2 has erred in holding that the error shown above does not fall within the ambit of error apparent on the face of record and consequently, cannot be corrected under Section 154 of the Act. The view taken by the learned respondent No.2 is hyper technical in nature and runs contrary to the scheme flowing from Article 265 of the Constitution of India. So far the judgment of Division Bench of this Court in the case of MS Educational and Welfare Trust [ 2022 (3) TMI 901 - TELANGANA HIGH COURT] is concerned, it is noteworthy that this Court opined that the power of rectification of an order of assessment under Section 154 of the Act lies within a very narrow compass. As clearly held that the order to be rectified must be an order which reflects error apparent on the face of record . Since we have held that the error in the instant case is indeed of that character, the said judgment will not improve the case of the respondents. Consequently, the Writ Petition stands allowed and the impugned order is set aside. Respondent No.2 is directed to undertake exercise of return of excess tax on retention money and pass appropriate order and return the requisite tax money to the petitioner within a period of 60 days from the date of production of copy of this order.

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• 2024 (5) TMI 164
  Validity of Assessment Order u/s 143(3) once the Resolution Plan is approved under the Code - CIRP proceedings under IBC - Effect of Resolution Plan approved by the NCLT - HELD THAT:- Since the Resolution Plan expressively provides that no person shall be entitled to initiate any proceedings or inquiry, assessment, enforce any claim or continue any proceedings in relation to claims so long such result to a period prior to the Effective Date of the Resolution Plan, i.e., 10th November 2022 impugned notices are bad in law. Further, the impugned notices are bad in law also because respondents failed to take into account that after approval of the Resolution Plan by the NCLT, a creditor including the Central Government, State Government or local authority is not entitled to initiate proceedings on the Resolution Applicant, in relation to claims which are not part of the Resolution Plan approved by the NCLT. Pertinently, respondents had not submitted any claims to the IRP, as required under the Code, despite the public announcement being issued by the IRP, as prescribed under the Code. The impugned notice issued u/s 143(2) of the Act by Respondent No. 1 and the consequential impugned notices issued u/s 142(1) of the Act by Respondent No. 2 and all subsequent communications issued by Respondent No. 2 pursuant to the aforementioned impugned notices are bad in law since assessment and inquiry under the Act is sought to be initiated in gross violation of provisions of the Code in as much as it relates to a period prior to the Effective Date. The impugned notice issued under Section 143(2) of the Act and the impugned notices issued under Section 142(1) of the Act and all subsequent actions undertaken pursuant to the impugned notices issued under Section 142(1) of the Act are bad in law as no proceedings can be initiated against petitioner for a period prior to the Effective Date. Pertinently, the Resolution Plan provides that new claims, disputes, litigations or other judicial or administrative proceedings (including assessments) etc., will be deemed to be barred and shall not be initiated or admitted against Petitioner in relation to any period prior to the Effective Date. The approved Resolution Plan clearly provides that any claim and/or liability pertaining to the period prior to the Effective Date (i.e., 10th November 2022) stood extinguished and/or settled in terms of the Resolution Plan. The NCLT approved the Resolution Plan on 14th October 2022, which is binding on all stakeholders of petitioner including respondents. Reassessment proceedings set aside.

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• 2024 (5) TMI 163
  TDS u/s 194I - deduction of TDS on the amount payable as Transit Rent , by the developer/builder - HELD THAT:- The ordinary meaning of Rent would be an amount which the Tenant / Licensee pays to the Landlord / Licensor. In the present proceedings the term used is Transit Rent , which is commonly referred as Hardship Allowance / Rehabilitation Allowance / Displacement Allowance, which is paid by the Developer / Landlord to the tenant who suffers hardship due to dispossession. Hence, Transit Rent is not to be considered as revenue receipt and is not liable to be tax, as a result there will be no question of deduction of T.D.S. from the amount payable by the Developer to the tenant. Assessee appeal allowed.

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• 2024 (5) TMI 162
  TP Adjustment - adjustment made by the AO u/s 92BA r.w. Section 92CA r.w. Section 80IA(10) is in question which has the effect of reduction of quantum of deduction u/s 80IC/80IE - existence of arrangement between the eligible units and AEs merely on the basis of higher operating profits of the eligible units - HELD THAT:- The assessee in the instant case has attempted to demonstrate that the transaction between eligible unit and AEs were carried out on market price by producing the bills and tabulations in the shape of additional evidences. As noted in the preceding paragraphs, the primary onus was on the AO to call for such documents as may be considered necessary to scrutinize whether higher profits in eligible units are on account of any arrangement per se. AO has not discharged such onus but has made bald allegation on the grounds of relatively higher profits earned by the eligible units vis- -vis non eligible units. As greatly assisted on behalf of the assessee to gather understanding that the transaction with connected entities are at market price. When seen in totality, we are inclined to agree with the plea of the assessee on first principles that rigours of Section 80IA(10) are not applicable in a case where neither the AO has discharged its onus to establish existence of arrangement nor such arrangement is demonstrable on factual analysis. The findings of the TPO/AO holding existence of arrangement between the eligible units and AEs merely on the basis of higher operating profits of the eligible units cannot be upheld on first principles in the instant case. The assessee has placed additional evidences to rebut the unsupported finding of the TPO/AO to dislodge existence of arrangement and transactions between the eligible units and AEs to be at market price. Hence, to the limited extent of verification of additional evidences, we deem it appropriate to remit the matter back to the file of the AO. AO shall be at liberty to verify the correctness of the claim of the assessee that transactions of purchase undertaken by the eligible units with its AEs are at ordinary and comparable market price to justify ALP. The assessee shall also be entitled to benchmark transaction of the eligible unit by applying CUP method as most appropriate method to justify lack of any arrangement contemplated under Section 80IA(10) of the Act. To this limited extent, the matter is set aside to the file of the AO. The assessee shall be entitled to adduce such evidences as may be considered expedient to support its plea on comparability of purchase transactions carried out by eligible units with its AE viz. uncontrolled transactions. As regards sale transactions by eligible units with its AEs, we do not consider it necessary to beset with further burden of proof on assessee towards aspects of ALP having regard to nominal percentage of sale transactions carried out with AEs owing to miniscule effect, if any, on the overall profitability when seen in the context. AO shall pass a reasoned order towards presence of arrangement contemplated u/s 80IA(10), if any while determining the issue. AO may make reference to TPO for determination of ALP of the controlled transactions as per CUP method in the event the prima facie existence of arrangement is discovered by him in the factual matrix. Disallowance of deduction u/s 80G - deduction on CSR expenses - deductibility of donations and contributions to Funds/bodies registered u/s 12A of the Act on the counters of s. 80G where CSR contributions are not eligible for deduction under s. 37 of the Act - HELD THAT:- The exclusions provided in 80G (2)(a)(iiihk) (iiihl) qua certain specific contributions such as Swachh Bharat Kosh and Clean Ganga Fund rather exhibits the legislative intent loud and clear. Thus on a plain reading, it is evident that the assessee would be ordinarily entitled to deduction on contributions made to funds and bodies registered u/s 12A of the Act regardless of stipulations made in s. 37(1) of the Act barring the exclusion codified in s. 80G(2)(a)(iiihk) (iiihl). As a corollary to delineations made in the preceeding paragraphs, s. 37 and S. 80G, appear mutually exclusive subject to exceptions provided in sub-clause (2)(a)(iiihk) (iiihl) of S. 80G of the Act. Hence, the exception carved out by way of Explanation 2 to s. 37 (1) prohibiting claim of CSR expenses as business expenditure, by itself, will not serve as any kind of impediment for the purposes of claim of deduction under s. 80G of the Act. The contribution made in question are not shown to be falling in exclusions provided in (iiihk) or (iiihl) of sub-section 2 clause (a) of S. S. 80G of the Act. The action of the Revenue Authorities is thus not sustainable in law. The claim of deduction on CSR expenses on the touchstone of Section 80G is thus allowed. Eligibility towards weighted deductions u/s 35(2AB) - amount of weighted deduction to the extent of approval by prescribed authority - HELD THAT:- The quantification of eligible expense for weighted deduction is procedural or a machinery exercise. Hence, there is no warrant to negate the effect of the substituted Rule which seeks to limit the amount of weighted deduction to the extent of approval by prescribed authority supposedly carrying domain expertise in the field. The observations made by the Co-ordinate Bench in Natural Remedies [ 2020 (1) TMI 1361 - ITAT BANGALORE] are merely in the nature of obiter while adjudication of the case relating to A.Y. 2016-17 where the substituted Rule had not come into force. The observations made thus do not carry any precedent value per se. Similarly, the coordinate bench in USV P. Ltd.[ 2023 (10) TMI 1128 - ITAT MUMBAI] has applied the decision rendered in assessee s own case in earlier year without any discussion on effect of amendment in Rule 6(7A) of I.T. Rules. Hence, the view expressed in USV P. Ltd. is not entitled to great weight. We thus see little merit in the plea raised on behalf of the assessee to ignore the substituted law expressly provided in Rule 6(7A) of the Act and to ignore the quantification carried out by the prescribed authority for the purposes of deduction under Section 35(2AB) of the Act. The contention of the assessee to avail weighted deduction on unapproved amount is thus devoid of any merit. The aspect is thus adjudicated against the assessee and in favour of the Revenue.

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• 2024 (5) TMI 161
  Validity of assessment made u/s 147 instead of u/s. 153C - Addition as unexplained cash credit u/s. 68 - assessee has received accommodation entry in the form of bogus LTCG/STCG from one entry operator - HELD THAT:- Upon careful consideration, we find that assessment in this case was framed pursuant to the reopening of the case u/s. 147 of the I.T Act, 1961. CIT(A) has given findings which has been duly elaborated as above, ld. CIT(A) has held that the provision 153C of the Act, were applicable in the present case for framing the assessment, which excludes the application of section 147 of the Act. Hence, notice issued u/s. 148 of the Act and the assessment framed further thereto u/s. 147 r.w.s 143(3) of the Act are void ab initio. Therefore the ld. CIT(A) held that the reassessment u/s. 147/148 of the Act for AY 2017-18 is quashed and this ground of appeal is allowed. Appeal of the Revenue is dismissed.

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• 2024 (5) TMI 160
  Income deemed to accrue or arise in India - FTS/FIS - receipts pertaining to supply of software (including AMC services) - DR held software licence fee will not constitute royalty income but business income under Article 7 of India- USA DTAA which is not taxable in India in the absence of PE of the assessee. HELD THAT:- Assessee is a tax resident of USA and has opted to be governed by the provisions of India-USA DTAA. Also, the assessee does not have a PE in India. The assessee had entered into a Software Licensing Agreement for supply and license certain Software and Service Level Agreement (forming part of Software Licence Agreement) to provide AMC services to Reliance/Jio/ RJIL. What the assessee has supplied in the form of a Software to Reliance/ Jio is a copyrighted article not a copyright in the Software. Fact on record demonstrates that the Software is supplied by the assessee on a non-transferable, non-exclusive basis to various customers all over India. The assessee has only granted a right to use its Software to Jio in connection with its telecommunication business. The consideration received towards licensing of software is for use of a copyrighted article and therefore not taxable as royalty income under the provisions of Article 12 of the India-USA DTAA. In our considered view, the case of the assessee is squarely covered by the decision of the Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence P. Ltd. ( 2021 (3) TMI 138 - SUPREME COURT] ) which has already been upheld by the DRP and the Hon ble Delhi High Court in light of the factual matrix of the present case. We, therefore have no reason to interfere with the findings of the Ld. DRP on the impugned issue. Consequently, consideration received by the assessee from supply of software licence is not taxable in India in terms of Article 7 of the India-USA DTAA. Accordingly, ground Nos. 1 to 4 is allowed with a direction to the Ld. AO to give effect to the Ld. DRP s findings in its directions/ order. Remaining receipts on account of support and maintenance services rendered by the assessee - Nothing has been brought on record by the Revenue to establish that any technical knowledge has been provided to the employees of Reliance / JIO and / or human intervention is required in provision of AMC services. The observations and findings of the AO/ DRP on these aspects are based on surmises and conjectures. Imparting training or educating a person with respect to functionality and attributes of a software or application would clearly not amount to the rendering of technical service under the DTAA which view has been upheld by the Hon ble Delhi High Court s decision in the case SFDC Ireland vs. CIT [ 2024 (3) TMI 620 - DELHI HIGH COURT ]. We hold that the receipts are not taxable in India as FTS/ FIS under Article 12(4) of the India-USA DTAA. It is business profits of the assessee not taxable in India in the absence of a PE of the assessee in India in terms of Article 7 of the India-USA DTAA. Accordingly, ground decided in favour of the assessee. In the nutshell, the entire receipts from the supply of software licence and maintenance and support services (AMC services) rendered by the assessee are held to be non-taxable in India. Appeal of the assessee is allowed.

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• 2024 (5) TMI 159
  Deduction u/s 80P(2)(a)(i) - interest derived from deposits of SLR funds [Statutory Liquidity Ratio] - DR argued that this amount has been found as the excessive component in assessee s deduction claim which hardly deserves to be accepted for the purpose of computing the impugned deduction - HELD THAT:- Assessee has all along been claiming the impugned sum to be representing it s SLR i.e., Statutory Liquidity Ratio as mandatory compliance of the various banking norms applicable in case of a co-operative society. It is in this factual backdrop that hon ble apex court s landmark decision CIT vs., Karnataka State Cooperative Apex Bank [ 2001 (8) TMI 9 - SUPREME COURT] and CIT vs. Nawanshahar Central Cooperative Bank Ltd.[ 2005 (8) TMI 28 - SC ORDER] have already settled the issue in assessee s favour and against the department that such an interest derived from deposits of SLR funds duly qualifying for sec. 80P(2)(a)(i) deduction. Decided in favour of assessee.

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• 2024 (5) TMI 158
  Disallowance of raw material consumption - scope of rejecting the books of account - adopting method of estimation to make an addition due to increase in raw material consumption - as per DR there is corelated increase in sales as compared to increase in raw material consumption and the onus to give reason was on assessee - HELD THAT:- When the AO is resorting to any ad hoc disallowance on the basis of some estimation, he is rejecting the books of accounts without recording the specific reasons. Mere deviation in percentage of consumption of raw materials cannot be a ground for rejecting the books of account and entering in the realm and guesswork of estimation without inquiring into the genuineness of the purchases. The Hon'ble Gujarat High Court in the case of CIT Vs. Dhiraj R. Rungta [ 2014 (4) TMI 711 - GUJARAT HIGH COURT] held that once rejection of books of account is justified under section 145 of the Act, no other addition can be made referring the same set of books to the income of the assessee. In the present case, the AO used the same set of books of accounts to estimate the disallowance which is not justifiable. CIT (A) also adopted the same method of AO accepting the books of accounts on one hand and making ad hoc addition on other hand but at lower percentage of disallowance. When the books of accounts are regularly maintained and are duly audited without any adverse opinion or comments of an auditor, they are to be taken as correct unless there are adequate reasons to indicate that they are incorrect or unreliable. Thus, the onus is upon Revenue to show that either the books of accounts maintained by assessee are incorrect or incomplete or that the method of accounting adopted by him was such that true profits of the assessee cannot be deduced therefrom. Neither AO nor Ld. CIT(A) has demonstrated specific defects in the books of accounts, therefore adopting method of estimation to make an addition due to increase in raw material consumption is not justifiable. Accordingly we delete the addition made by Ld. CIT(A) restricting the disallowance to 15% only. This ground of the assessee is allowed.

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• 2024 (5) TMI 157
  Disallowance u/s 14A r.w.r. 8D - no proper recording of satisfaction by the AO for rejecting the suomoto disallowance - HELD THAT:- We find that the Tribunal in assessee s own case [ 2024 (2) TMI 1043 - ITAT DELHI] held that there is no proper satisfaction recorded on the suo moto disallowance made by the assessee and, therefore, there cannot be any disallowance under Rule 8D r.w.s. 14A of the Act. There is no proper recording of satisfaction by the AO for rejecting the suomoto disallowance made by the AO. Thus, respectfully following the order of the Tribunal, we allow the grounds raised by the assessee. Disallowance under 14A of the Act while computing the provisions u/s 115JB - The issue is covered by the decision of Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] as held that there cannot be any disallowance under Rule 8D read with 14A of the Act in terms of clause (f) of Explanation 1 to section 115JB of the Act. Thus, respectfully following the said decision, we hold that the disallowance made under Rule 8D read with section 14A of the Act while computing book profits cannot be sustained. In any case since the assessee itself made suo moto disallowance there cannot be any further disallowance u/s 14A read with Rule 8D of IT Rules while computing the book profits u/s 115JB of the Act. Ground raised by the Revenue is rejected.

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• 2024 (5) TMI 156
  Validity of reopening of assessment - Valid approval granted by PCIT u/s 151 or not? - HELD THAT:- We observed from the record that AO has received the approval from the PCIT-7 for reopening of the assessment and Ld. PCIT in point No.13 mentioned that it is a fit case for issue of notice u/s 148 by observing that Yes I am satisfied . As in the case of Safonia Tradelinks (P.) Ltd. 2021 (3) TMI 1177 - DELHI HIGH COURT wherein the approval u/s 151 was granted simply and endorsing as approved. Even in this case the issue was decided in favour of the assessee. Further, it is brought to our notice in the case of VCR Township Pvt. Ltd. 2020 (10) TMI 1223 - ITAT DELHI wherein similar approval was granted for reopening of the assessment by approving authority as Yes, I am satisfied and the Co-ordinate Bench has decided the similar issue in favor of the assessee. Respectfully following the above decision, the facts in the present case are also exactly similar to the above facts on record. Accordingly, ground No.3 raised by the assessee is allowed.

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• 2024 (5) TMI 155
  Validity of assessment proceedings initiated u/s 153A - unabated assessment - purchase of agri-land by the assessee - Addition u/s 69 - HELD THAT:- As held in the case of Abhisar Buildwell P Ltd ( 2023 (4) TMI 1056 - SUPREME COURT] no addition can be made in the case of unabated assessment which are not part of incriminating materials found during the search. In the present case, it is clearly established that assessee has made several payments to the farmers which lead to the finding that the assessee has purchased several immovable properties. Therefore, we are not inclined to accept the submissions of the assessee on the issue of purchase of agri-land by the assessee that there is no incriminating material found during the search. Accordingly, the ground nos.1 and 2 are are partly allowed because in the other additions, there are no incriminating material, the same was discussed somewhere in this order. Addition u/s 69 - Payment to farmers and purchase of agriland - We observed from the record that AO acknowledged that assessee has paid cash payment to the farmers to the extent of money withdrawn from the bank. These findings clearly shows that there is a direct link with the information collected from the assessee and substantiates that the assessee has capacity to make payments to farmers. We also observed from the record that the AO has made addition based on the presumption that the assessee has no source and also the difference between the investment made as per registered documents and circle rates as per the respective lands. The assessee has demonstrated that she has sources to make the investment and she is eligible to get the investment made in the agricultural land to the extent of declared sources. It is fact on record that the assessee has withdrawn the cash and made the payment to the farmers, to the extent of cash withdrawn by her from the bank for which she has sufficient fund available in the bank. Therefore, we are directing the AO to adjust the payments made from withdrawing from the bank account. The other part of the addition after making the addition may be sustained. In this regard, we are inclined to partly allow the ground no 3 raised by the assessee. Coming to the other additions made by the Assessing Officer, we observed that all these information collected in post search proceedings and there is no evidence to show that the additions made by the assessing officer has bearing from the material found during the search - we are inclined to direct the Assessing Officer to delete above mentioned additions made by him in the assessment order. Accordingly, ground Nos 4 to 7 raised by the assessee are allowed.

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• 2024 (5) TMI 154
  Denial of TDS credit - employer of the assessee has not deposited TDS after deducting the same from the salary paid to the assessee - Liability to deduct TDS - in the absence of TDS getting reflected in form 26AS, the CPC denied granting TDS credit - HELD THAT:- We find that the issue in this appeal is similar to the issue decided by the Hon'ble Delhi High Court in the case of Harshdip Singh Dhillon vs. Union of India [ 2024 (1) TMI 275 - DELHI HIGH COURT ] since the petitioner accepted the salary after deduction of Income-tax at source, it is his employer who is liable to deposit the same with the Revenue authorities and on this count, the petitioner cannot be burdened. We find no substantial question of law to be considered by us in this appeal. Therefore, the petition is allowed and consequently the impugned demand notice is set aside and the respondent-Revenue is directed to allow credit of tax at source deducted by his employer - Appeal of the assessee is allowed.

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• 2024 (5) TMI 153
  Levy of penalty u/s. 271(1)(c) - disallowance made u/s. 35(2AB) - assessee argued that claim was made by the assessee as per DSIR guidelines and duly certified by a Chartered Accountant and DSIR does not communicate the grounds or items on which, it has restricted the claim of weighted deduction towards capital expenditure and revenue expenditure - Whether the DSIR approval or certificate restricting the claim of deduction u/s. 35(2AB) and particularly, when certificate comes after filing of return of income, restricting the deduction by the AO based on DSIR approval can amount to concealment of particulars of income or not ? HELD THAT:- The issue answered in the case of CIT vs. Balaji Distilleries Ltd. [ 2012 (10) TMI 514 - MADRAS HIGH COURT ], wherein it is held that in the absence of due care, it did not mean that the assessee was guilty of either furnishing inaccurate particulars or attempting to conceal its income and hence, the imposition of penalty for furnishing of inaccurate particulars of income on assessee s held not justified. The Hon ble Madras High Court applied the decision of Price Waterhouse Coopers Pvt. Ltd. [ 2012 (9) TMI 775 - SUPREME COURT ] Also decided in Reliance Petroproducts Ltd. [ 2010 (3) TMI 80 - SUPREME COURT ] wherein as propounded the meaning of the term particulars used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars . In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars Thus at the time of filing of return of income, the DSIR approval was not available with the assessee restricting the claim of deduction will not tantamount to furnishing of inaccurate particulars of income in the return of income filed by the assessee. Hence, we delete the penalty and allow the appeal of assessee.

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• 2024 (5) TMI 152
  Computation of deduction u/s 10AA - excluding expenses incurred in foreign currency from export turnover for the purpose of computation - HELD THAT:- As referring to High Court of Madras [ 2020 (8) TMI 19 - MADRAS HIGH COURT] against [ 2016 (11) TMI 1670 - ITAT CHENNAI] order dated 16.11.2016 in ITA No. 1009/Mds/2014 hold that the order of the ld. CIT(A) is not justified in confirming the order of the Assessing Officer in excluding foreign currency expenditure from the export turnover for the computation of deduction under section 10AA of the Act. Double addition of interest from fixed deposits in the computation of income - HELD THAT:- On perusal of the computation of total income in giving effect proceedings in pursuance to the directions of the ITAT, AO again added sum which is clear from appeal memo. In this regard, we find that the assessee filed rectification application under section 154 and it was submitted by the ld. AR that no decision whatsoever passed by the Assessing Officer as on today. CIT did not dispute the same, but, however, prayed to give direction to the Assessing Officer to pass orders in this regard. Accordingly, ground No. 4 raised by the assessee is allowed for statistical purposes. Short grant of TDS credit - HELD THAT:- DR prayed to give a direction to the Assessing Officer to give full TDS credit as was given in the original assessment proceedings order dated 20.03.2015. We order accordingly. Thus, the ground No. 5 raised by the assessee is allowed for statistical purposes.

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• 2024 (5) TMI 151
  Time limit to pass assessment u/s. 92CA(3) - time line for passing of the order u/s. 92CA(3) of the Act for the purpose of reckoning the time period for completion of the assessment - HELD THAT:- The assessee has relied on the said decision of the Hon'ble High Court of Madras which has held that the time period prescribed under the said provision is mandatory and not discretionary though the word used in the statute is may . The assessee has also placed reliance on the decision of Saint Gobain India (P) Ltd. [ 2022 (4) TMI 808 - MADRAS HIGH COURT] which has again reiterated that on identical facts, TPO should have passed the order on or before 31.10.2019 and any order passed beyond this would be barred by limitation, holding the ld.TPO's order to be nonest in the eyes of law, consequently the draft assessment order is also held to be invalid. In the case of an invalid transfer pricing order and the draft assessment order, the ld. A.O. has no jurisdiction to assess u/s. 144C of the Act holding the assessee to be not an eligible assessee as per section 144C(15)(b)(i) of the Act. On the above observation, where this issue has been dealt with extensively by the Hon'ble High Court, we are inclined to hold the ld. TPO's order dated 01.11.2019, draft assessment order and the final assessment order dated 27.03.2021 is barred by limitation as per the provision of section 92CA(3) and, hence, the subsequent draft assessment order and the final assessment order is, therefore, liable to be quashed on this ground. Hence, the additional ground raised by the assessee are hereby allowed.

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• 2024 (5) TMI 150
  Validity of reopening of assessment - reason to believe - HELD THAT:- Though the assessee has raised the legal ground challenging the validity of reopening proceeding but in the course of hearing failed to bring any substantial information to rebut the legality of reassessment proceeding. Therefore, considering that Ld. AO having relevant information indicating escapement of income, was well within his jurisdiction to issue notice u/s. 148 of the Act and carry out the reassessment proceedings. Addition u/s. 56(2)(viib) - transaction of sale of agricultural land - difference between the consideration as per the stamp value authority and the sale consideration disclosed by the assessee - HELD THAT:- Examining the definition of agricultural land mentioned in the above section 2(14) of the Act in light of the certificates of the Municipal Board, certificate of distance from land to Municipal Board and certificate of population by Gram Panchayat office, we find that agricultural land in question do not fall in the category of capital asset. These additional evidence were also made available to the Ld. DR and she also failed to point out any specific discrepancies in the said documents which have been filed under the certificate of assessee. We are, thus, of the considered view that agricultural land in question is not a capital asset and is not falling under the provisions of section 2(14) of the Act. Whether if an asset is not falling in the category of capital asset then the provisions of section 56(2)(viib) of the Act are not attracted because the property defined in clause (d) to explanation refers to only capital asset ? - As relying on SHRI TRILOK CHAND SAIN [ 2019 (2) TMI 277 - ITAT JAIPUR] the asset in question is an agricultural land not falling in the category of capital asset defined in clause (d) to Explanation to sec. 56(2)(viib) of the Act and, therefore, section 56(2)(viib) of the Act cannot be invoked. Assessee appeal is partly allowed.

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• 2024 (5) TMI 149
  Addition u/s 68 OR 41(1) - unexplained cash credit - assessee has not given satisfactory explanation with regard to identity of parties, genuineness of transaction and capacity of creditors - Contrary to this, CIT(A) sustained the addition by invoking the provisions of section 41(1) of the Act holding that these credits have been outstanding since long time - HELD THAT:- As rightly pointed out by the ld. A.R., the authorities have not brought anything on record to prove that the liability is ceased to exist and neither of the parties has written off the same in their books of accounts. Further, balance sheet of this assessment year has been duly signed by the assessee itself thereby acknowledged the debt and in such circumstances, the lower authority is precluded in applying the provisions of section 41(1) - More so, lower authority was not sure whether section 68 of the Act to be applied or section 41(1) - In such dichotomy neither provisions of section 68 nor 41(1) of the Act could be applied by the Revenue Authorities. Accordingly, we delete this addition made in respect of S.K. Enterprises. With regard to Amitabh Enterprises when the inspector has visited the premises, it was reported that the firm was not operative from that address in the year 2015. Transaction took place prior to 01.04.2009 and the non-existence of this firm in 2015 cannot be reason to sustain addition and the report of the inspector cannot be relied in its entirety since there was no basis for such information so recorded by him by following the due procedure as stipulated in Code of Civil Procedure. Hence, unless and until there is an evidence to show that these credits are ceased to exist, there cannot be any addition u/s 41(1) of the Act, accordingly we delete the addition. With regard to Shiv Shakti Card there was no cessation of credits in the assessment year under consideration. Full payment has been made in the assessment year 2013-14 and the purchase has been accepted in assessment year 2012-13. Being so, it cannot be added u/s 143(3) of the Act as discussed in earlier para 7 above and for the reasons mentioned thereon, we delete the addition. With regard to Renuka Enterprises the said outstanding was of prior to 01.04.2009. Complete payment has been made in assessment year 2013-14 and no assessment was made u/s 143(3) on the same in the assessment year 2013-14. Only intimation u/s 143(1) of the Act was made. Hence, as discussed in earlier para 7 above and for the reasons mentioned thereon, we delete the addition. With regard to Sikka Paper Pvt. Ltd. it is not possible to hold that debt ceased to exist. Accordingly, by placing reliance on the Judgment of Hon ble Supreme Court in the case of CIT Vs. Balkrishna Industries Ltd reported in 300 CTR 29, wherein held that if there is no remission or cessation of liability, amount in question cannot be treated as income u/s 41(1) of the Act . In the case of CIT Vs. SI Group India Ltd. [ 2014 (12) TMI 267 - BOMBAY HIGH COURT] held that since record before authorities did not disclose that, there was no remission or cessation of liability, one of the requirements spelt out for applicability of section 41(1) of the Act had not been fulfilled in facts of present case. Addition is deleted . Accordingly, in our opinion, in all these cases mentioned above, it cannot be held that there is cessation of liability. Addition for Cardline Products - Cessation of liability - The complete payment has been made in the assessment year 2013-14 to the tune of Rs. 33,41,957/- and the return has been filed by the assessee and accepted for the assessment year 2013-14 while processing the return u/s 143(1) of the Act and there is no evidence brought on record by ld. AO to show that this credit has ceased to exist in assessment year 2012-13.

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• 2024 (5) TMI 148
  Addition of employees contribution towards PF - delayed contribution - HELD THAT:- This issue is no longer res integra and the issue has been decided in the case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] wherein it has been held that deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act,1961. Decided against assessee. Disallowance of interest paid on TDS u/s. 201(1A) - assessee reiterated as had paid interest u/s 201(1A) for delayed payment of TDS before filing of the income tax return - as urged that the said payment is not in the nature of penalty but it is the amount of interest which is not penal in nature, therefore, it should be allowed u/s. 37(1) - HELD THAT:- As relying on M/S PREMIER IRRIGATION ADRITEC (P) LTD case [ 2023 (1) TMI 1124 - ITAT KOLKATA] interest on late deposit of TDS is not an allowable expenditure and this ground of appeal is dismissed.

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• 2024 (5) TMI 147
  Estimation of income - bogus purchases - GP estimation - HELD THAT:- The assessee submitted books of account, purchase bills, sale bills, transaction through banking channels and the sale was totally declared in MVAT returns which were filed before the ld. Assessing Officer and the ld. CIT(A). The GP of the genuine purchase is @5.66% and GP of bogus purchase is @3.10%. So, the balance@ 2.56% of bogus purchases is only to be added and is restricted for addition. In our considered view, we set aside the appeal order and the addition is restricted to gross profit @2.56% on the bogus purchase.

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• 2024 (5) TMI 146
  Condonation of delay in filling appeal before CIT(A) - CIT(A) dismissing the appeal of the assessee in-limine - non condoning the delay in filing the appeal - AO has served all the notices to the old address of the assessee - HELD THAT:- It is stated that the assessee came to know of the assessment order, only when he came to know about the lien marked in his bank account. Thereafter, the assessee could file before CIT(A), even though the covid pandemic was continuing. In view of the above explanations given by the assessee, we are of the view that there was reasonable cause for the assessee in filing the appeal belatedly before CIT(A). Accordingly, we are of the view that the Ld CIT(A) was not justified in not condoning the delay. Considering the explanations given by the assessee, we condone the delay in filing the appeal before Ld CIT(A). Assessment of property purchased - percentage of assessee share - Since the ld CIT(A) has not adjudicated the appeal of the assessee on merits, normally, all the issues need to be restored to his file for adjudicating them on merits. However, it is submitted that the share of the assessee in the property purchased was only 20%, while the entire value of property has been assessed in his hands by the AO. Further, it is the submission of the assessee that he has paid only a sum of Rs. 40.00 lakhs during the year under consideration. Thus, we notice the facts relating the addition also require detailed examination. Hence, we find merit in the prayer of Ld A.R. Accordingly, we restore all the issues to the file of the AO for examining them afresh, after affording adequate opportunity of being heard.Appeal of the assessee is allowed.

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• Customs

• 2024 (5) TMI 145
  Demand of custom duty and imposition of penalty - non payment of duty on slop/waste Oil of foreign origin - cleaning the inner walls of the tanker by applying water with the help of a pressure jet - HELD THAT:- The oil obtained by cleaning the tanker is pre- dominantly mixed with water. Only approximately 10% is oil and 90% is water. In this position, the waste oil/slop oil cannot be classified as crude oil under heading 2710 in terms of chapter note 3 of chapter 27 which prescribes that the petroleum product should contain more than 50% by weight of benzene, toluene, xylene or naphthalene whereas in the present case the oil content is only 10% and 90 is water, therefore demanding duty considering that product as crude oil is not correct. Without prejudice to above, we further find that it is admitted fact that while converting the vessel from foreign going to coastal run, the custom duty of Rs. 6,95,546/- was paid in regard of the entire quantity of foreign origin oil irrespective whether the subsequently same would be cleaned from the inner walls of the tank by applying water through pressure jet or collected in form of waste/ slop oil from the vessels for clearance , therefore, no custom duty can be demanded for the second time. On this fact, on the waste oil/slop oil duty cannot be demanded twice as the same goods have already suffered the custom duty while converting from foreign going vessels to coastal vessels. Accordingly, we are of the view that in the present case the demand of custom duty, interest and penalty are not sustainable. Hence, the impugned order is set aside. Appeal is allowed.

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• 2024 (5) TMI 144
  Import of Alkalised Cocoa Powder from Malaysia - Denied FTA benefit of Notification No. 46/2011-Cus - Certificate of origin - wrongly availing custom duty benefit - differential duty - Penalty - HELD THAT:- We find that the benefit of Notification issued under FTA was denied by the Custom only on the ground that there was an intelligence that the condition of value addition of 35% in respect of cocoa powder supplied from Malaysia is not fulfilled however to support this allegation no verification was carried out by the department. Since the facts and charges levelled in those cases and in the present case are identical, the ratio in the Shriazee Traders [ 2024 (1) TMI 781 - CESTAT AHMEDABAD] and M/s. BDB Exports Pvt. Ltd Vs. CC [ 2016 (9) TMI 1087 - CESTAT KOLKATA] are directly applicable in the present case. Therefore, following the same in the present case also, the impugned orders are not sustainable. Accordingly, the same is set aside. Appeal is allowed.

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• 2024 (5) TMI 143
  Levy of Penalty u/s 112 (a) and (b) and 114AA of the Customs Act, 1962 - Abetment in mis-declaration of goods and evasion of duty - imported items declaring them as sunglasses but on investigation, it was found to be readymade garments - Dummy IECS - The appellants were accused of being involved in a scheme using dummy Import Export Codes (IECs) - Stolen identity - Documents of H-cardholder working for the Customs House Agent (CHA) used for carrying out illegal importation of goods - Denial of cross-examination of witnesses - violation of natural justice - Difference Of Opinion between learned members - Third Member Order - Whether the evidence relied by the adjudicating authority regarding the WhatsApp messages retrieved during investigation can be considered as admissible evidence in view of the provisions u/s 138(c) of the Customs Act, 1962 read with Section 65(B) of the Evidence Act, 1872. Whether the confession statement of first appellant u/s 108 of the Customs Act, 1962 which stood retracted is substantially corroborated by other independent and cogent evidences to sustain the allegation against first appellant. Whether the findings of the adjudicating authority regarding role of second appellant in illegal import is sustainable considering the fact that during investigation, in spite of appearing before the investigating officer, no statement is recorded from the second appellant u/s 108 of the Customs Ac, 1962. ORDER [Per : Ms. Sulekha Beevi. C.S] - HELD THAT:- Undisputedly, the WhatsApp messages have not been retrieved by complying the provisions of Section 138C of the Customs Act, 1962. The Tribunal in the case of Commissioner of Customs, Lucknow Vs Sanjay Soni [ 2022 (3) TMI 367 - CESTAT ALLAHABAD] had occasion to consider the admissibility of evidence in the nature of WhatsApp messages. It was held that messages retrieved from phone is not reliable or admissible in evidence if provisions of Section 138C of Customs Act, 1962 are not complied. Section 138C is pari materia to Section 36B of Central Excise Act, 1944. While analysing the issue of admissibility of evidence retrieved from electronic items, the Hon ble Supreme Court in the case of Anwar PV Vs P.K. Basheer Others [ 2014 (9) TMI 1007 - SUPREME COURT] had held that the compliance of conditions in Section 138C is mandatory. Similar view was taken in the case of S.N. Agrotech Vs Commissioner of Customs, [ 2018 (4) TMI 856 - CESTAT NEW DELHI] . In a recent decision, the Mumbai Bench of the Tribunal in the case of M/s. Jeen Bhavani International Vs CC,[ 2022 (8) TMI 237 - CESTAT MUMBAI] had occasion to analyse similar issue and held that without complying with conditions of Section 138C of Customs Act, 1962, the contents retrieved from electronic items are not admissible in evidence. The evidence in the nature WhatsApp retrieved from phones cannot be considered in evidence without complying the provisions u/s 138C. The law contained in Section 36B of Central Excise Act, 1944, as well as Section 138C of Customs Act, 1962 are safeguards against arbitrary actions for the reason that it is very easy to fabricate or tamper with material contained in electronic items. Though the statement recorded before the Customs Officer may be admissible in evidence, it has to be noted that in the present case all the noticees have retracted their statements at the earliest. Further, the statement of Sahil Moiz Zafar was not recorded at all. Even though he is a co-noticee the said appellant has been implicated on the basis of call records and the statement of other noticees. When the noticees have retracted their statement it was incumbent upon the adjudicating authority to allow cross examination when requested for by the appellants. The rejection of the request for cross examination has caused prejudice to the appellants as they were not able to bring out the credibility of the witnesses and statements recorded before Customs Officers. The evidence in the nature of WhatsApp messages, call records cannot be relied in evidence unless the conditions u/s 138C of Customs Act, 1962 are followed. So also, the denial of cross examination has taken away the right from the appellant to establish their defence. Therefore, there is no independent corroborative evidence. In absence of independent corroborative evidence, the statement which has been retracted cannot be the sole basis to sustain the penalties against either of the appellants. It has to be noted that in spite of appearing before the investigating officer no statement was recorded from him. The statement of the co-noticees having been retracted and cross examination of all other witnesses been denied, there is absolutely no evidence to uphold the confirmation of penalty on second appellant. Thus, I agree with all the four points of difference as recorded by Member (Judicial). Per R. BHAGYA DEVI : - Penalties imposed on Shri Dharaneesh Raju Shetty and Shri Shail Moiz Zafar is upheld. Accordingly, the impugned order is upheld and the appeals are dismissed. Per: P. A. AUGUSTIAN - No presumption can be drawn that evidences brought on record by way of confession which stood retracted is substantially corroborated by other independent and cogent evidences. Thus, appeals are allowed. Penalty imposed on appellants are set aside. MAJORITY ORDER - In view of the majority opinion, the penalties imposed on the appellants are set aside. Consequently, the impugned order is set aside and the appeals are allowed.

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• 2024 (5) TMI 142
  Misdeclaration in the quantity of goods imported - enhancement of the value - Transaction value - demand of duty - confiscation - Penalty - value enhanced by merely relying on NIDB data without supplying details to the appellant - No reasons stated in the order for rejection of the transaction value - whether there are sufficient grounds for rejection of transaction value, enhancement of value of goods - HELD THAT:- There is no discussion as to the details of the Bills of Entry which have been relied by the adjudicating authority. The place of import, the foreign supplier, quantity of the goods, the nature of the goods imported etc., would affect the value of the goods imported. These details are to be discussed by the adjudicating authority as well as the Commissioner (Appeals) to hold that there are sufficient grounds to reject the transaction value and for enhancing the value of the goods. We do not see such discussions either in the order passed by the adjudicating authority or the Commissioner (Appeals). Thus, we find that the enhancement of the value of goods cannot be sustained and requires to be set aside. Order accordingly. On perusal of the records it is seen that in the bill of entry, packing list as well as other documents the quantity is declared in kilograms. However, payment of duty is on the basis of measurement in meters. On examination it was found that instead of 11,815 kilograms as declared by appellant, the total quantity imported is 11,900 kilograms. We note that the said difference in quantity is too low so as to allege intentional misdeclaration of the goods. There will be some variation in the quantity during the voyage of the goods. Taking into consideration these aspects as put forth by the Ld. Counsel for appellant, we hold that the allegation of mis-declaration of the goods cannot sustain. Consequently, the Redemption fine and penalty imposed are set aside. In the result, the impugned order is set aside. The appeal is allowed with consequential relief if any.

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• 2024 (5) TMI 141
  Maintainability of appeal - non-prosecution of the case - matter adjourned beyond three times - Refund claim - rejection of appeal for non-compliance and non-replying to the Deficiency Memo - HELD THAT:- Now before us the Appellant has not shown any urgency in having the matter heard and disposed of. Adjournments can t be given for the mere asking without any serious reason backed with proof for non-appearance of the Appellant or his authorised representative. Considering the statutory position and the views expressed by the Hon ble Apex Court in the various judgments cited above, we find that no purpose would be served in continuing with this appeal and hence reject the same for default as per Rule 20 of CESTAT (Procedure) Rules, 1982. The appeal is disposed of accordingly.

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• Corporate Laws

• 2024 (5) TMI 140
  Professional Misconduct by CA - Liability of the Engagement Partner (EP) with Audit Firm - Failure related to non-recognition of liabilities classified as Non-Performing Assets (NPAs) by the Lender Banks - Failure to evaluate the management's assessment of the entity's ability to continue as a Going Concern - Failure relating to Revenue Recognition - Failures relating to Audit Documentation - Failures relating to audit evidence for Inventory - Failure relating to forming opinion on Financial Statements without obtaining Sufficient Appropriate Audit Evidence - Lapses in fulfilling duties related to Engagement Quality Control (EQC) Reviewer - Failure to determine Materiality - Failures related to audit of Trade Receivables - Failures relating to communication with Those Charged With Governance - Failure to report non-compliances with provisions of the Companies Act 2013 - Penalty and Sanctions - Section 132 (4) of the Companies Act, 2013. HELD THAT:- The Auditors have made a series of serious departures from the Standards and the Law, in their conduct of the audit of CMIL for FY 2019-2020, 2020-21 and 2021-22. Based on the above discussion, it is proved that the auditors failed to report in their audit report, the misstatement in the financial statements of CMIL. The poor quality of audit as reflected in failures related to fundamental aspects of audit like setting materiality, evaluation of going concern, carrying out external confirmation together with the incomplete documentation, further compound the professional misconduct of the auditors. It is concluded that the Auditors have committed Professional Misconduct as defined under Section 132 (4) of the Companies Act, 2013 in terms of Section 22 of the Chartered Accountant Act 1949 (CA Act) as amended from time to time as follows: i. The auditors committed professional misconduct in terms of by Section 132 (4) of the Companies Act, read with Section 22 and clause 5 of Part I of the Second Schedule of the Chartered Accountants Act 1949 (as amended from time to time), which states that an auditor is guilty of professional misconduct when he ':fails to disclose a material fact known to him which is not disclosed in a financial statement, but disclosure of which is necessary in making such financial statement where he is concerned with that financial statement in a professional capacity . This charge is proved as the auditors failed to disclose in their audit report the material non-compliances by the Company in the area of recognition of the liabilities towards banks/financial institutions beyond the NPA dates. ii. The auditors committed professional misconduct as defined by Section 132 (4) of the Companies Act, read with Section 22 and clause 6 of Part I of the Second Schedule of the Chartered Accountants Act 1949 (as amended from time to time), which states that an auditor is guilty of professional misconduct when he 'Jails to report a material misstatement known to him to appear in a financial statement with which he is concerned in a professional capacity . This charge is proved as the auditors failed to disclose in their audit report the material non-compliances by the Company in the area of recognition of the liabilities towards banks/financial institutions beyond the NP A dates. iii. The auditors committed professional misconduct as defined by Section 132 (4) of the Companies Act, read with Section 22 and clause 7 of Part I of the Second Schedule of the Chartered Accountants Act 1949 (as amended from time to time), which states that an auditor is guilty of professional misconduct when he does not exercise due diligence and is grossly negligent in the conduct of his professional duties . This charge is proved as the auditors failed to conduct the audit in accordance with the SAs and applicable regulations as well as due to their failure to report the material misstatements and non-compliances of the Company in its financial statements. iv. The auditors committed professional misconduct in terms of by Section 132 (4) of the Companies Act, read with Section 22 and clause 8 of Part I of the Second Schedule of the Chartered Accountants Act 1949 ( as amended from time to time), which states that an auditor is guilty of professional misconduct when he ''fails to obtain sufficient information which is necessary for expression of an opinion or its exceptions are sufficiently material to negate the expression of an opinion . This charge is proved as the auditors failed to conduct the audit in accordance with the SAs and applicable regulations as well as due to their failure to report the material misstatements and non-compliances of the Company in the financial statements. v. The auditors committed professional misconduct as defined by Section 132 (4) of the Companies Act, read with Section 22 and clause 9 of Part I of the Second Schedule of the Chartered Accountants Act 1949 (as amended from time to time), which states that an auditor is guilty of professional misconduct when he ''fails to invite attention to any material departure from the generally accepted procedure of audit applicable to the circumstances . This charge is proved since the auditors failed to conduct the audit in accordance with the SAs but falsely reported in their audit report that the audit was conducted as per SAs. The charges of professional misconduct enumerated in the SCN dated 04.12.2023 stand proved. Penalty and sanctions - HELD THAT:- Section 132(4) of the Companies Act, 2013 provides for penalties where professional misconduct is proved. The seriousness with which proved cases of professional misconduct are viewed, is evident from the fact that a minimum punishment is laid down by the law. Considering the proved professional misconduct and keeping in mind the nature of violations, principles of proportionality and deterrence against future professional misconduct, in exercise of powers under Section 132(4)(c) of the Companies Act, 2013, it is hereby ordered: i. Monetary penalty of Rs 50,00,000/- (Rupees Fifty Lakhs) upon the Audit firm, M/s Krishna Neeraj Associates. ii. Monetary penalty of Rs 10,00,000/- (Rupees Ten Lakhs) upon CA Krishna Kr Neeraj. iii. CA Krishna Kr Neeraj is also debarred for 2 (Two) years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate.

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• Insolvency & Bankruptcy

• 2024 (5) TMI 139
  Jurisdiction of NCLT - Constitution of its Benches - Competency of Member of the Tribunal to function as a Bench - Admitting an application under Section 9 IBC 2016 - NCLAT observed that the Member (Judicial) has not been authorized by the President under Proviso Section 419(3) to exercise the powers of the Tribunal - Admission of application for initiation of CIRP - HELD THAT:- In exercise of power under proviso to Section 419(3) of the Act, the President has constituted a Special Bench at New Delhi for 13.02.2020 and 14.02.2020 comprising of Single Member (Judicial). The Member (Judicial) heard the application under Section 9 on 04.02.2020 and delivered the judgment on 17.08.2020. It is apparent that the Appellate Tribunal did not have the benefit of the above referred notification dated 12.02.2020 before it arrived at its decision. The order impugned clearly notes that, nothing has been brought to our notice during the course of hearing that the President of the Tribunal had issued any general or special order to give power to the single member (Judicial Member) to function as a bench . The civil appeal is allowed.

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• 2024 (5) TMI 138
  Admission of Section 7 application - Assignment Agreement - Proper stamping of the agreement - Existence of Debt and Default - Corporate Guarantee - Whether registered Assignment Deed could have been looked into by the Adjudicating Authority while admitting Section 7 application? - Failure to comply with the conditions of settlement agreement - HELD THAT:- Present is a case where the Assignment Agreement which is challenged by the Appellant is a registered document duly stamped for Rs.1,01,500 and it is submitted by the Respondent that the said stamp was paid as per the Maharashtra Stamp Act, 1958. Thus, present is not a case where document which is sought to be challenged is unstamped document. According to the own case of the Appellant, his complaint regarding insufficiency of stamp is pending adjudication before the Stamp Authority. Thus, as on date, there is no determination by any competent authority that the registered Assignment Deed is insufficiently stamped, therefore, the submission of the Appellant that the registered Assignment Deed could not have been looked into by the Adjudicating Authority while admitting Section 7 application, cannot be accepted. No error has been committed by the Adjudicating Authority in relying on the Assignment Deed dated 07.08.2020 on basis of which the Respondent No.1 has filed Section 7 application. The present is a case where the Corporate Debtor has given a guarantee. The Corporate Debtor having given Corporate Guarantee, both the Cooperative Bank (the original lender) and Respondent No.1 (the Assignee) were fully entitled to file Section 7 application against the Corporate Debtor. The judgment of Hon ble Supreme Court in ANUJ JAIN VERSUS AXIS BANK LIMITED AND ORS. [ 2020 (2) TMI 1700 - SUPREME COURT] was on its own facts and there are distinguishing features in the present case with those of the Anuj Jain s Case. There are no reason to enter into issues raised by the Intervener in Company Petition filed under Section 241-244 of the Companies Act, 2013 nor at the instance of Intervener, the impugned order passed by the Adjudicating Authority admitting Section 7 application can be interfered with. More so, Appellant who is Suspended Director of the Corporate Debtor filed the appeal and raised all possible grounds to challenge the admission order. There are no ground to interfere with the order passed by the Adjudicating Authority admitting Section 7 application against the Corporate Debtor - appeal dismissed.

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• 2024 (5) TMI 137
  Liquidation of corporate Debtor - Eligibility of the Appellant to submit the Resolution Plan under section 29 A of IBC - relevant time - commercial wisdom of the CoC regarding non consideration of the Resolution Plan submitted by the Appellant - resultant recommendation of the CoC for liquidation of the Corporate Debtor which was accepted by the Adjudicating Authority in the Impugned Order - HELD THAT:- The relevant date is the date of submission of the Resolution Plan and the Appellant was not eligible to submit the Resolution Plan on 12.05.2022, since he had already been declared as wilful defaulters by the Respondent No. 2 on 17.07.2021 and 04.10.2021. i.e., much prior to his submission of Respondent Plan. It is also fact that no judicial stay existed in favour of the Appellant on 12.05.2022 regarding his status as wilful defaulter. Hence, the Appellant was not eligible to submit the Resolution Plan and this was rightly adjudicated by the Adjudicating Authority. There are no error in the Impugned Order dated 19.04.2023. The appeal devoid of any merit stand dismissed.

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• Service Tax

• 2024 (5) TMI 136
  Levy of service tax - Business Auxiliary Services - incentive received from M/s Pepsi to allegedly promote the sales of goods of Pepsi brand - HELD THAT:- The issue in the present appeal is no more res integra and this Bench of the Tribunal vide Final Order No.70040 of 2024 dated 30.01.2024 has allowed the appeal of the Appellant holding that 'From the activities undertaken by the appellant, it is evident that they have not acted towards marketing and promotion or sale of goods produced by their client. At best it can be said that they have participated in promotion of the brand name of 'Coca Cola', 'Pepsi' etc. Such activities cannot be brought under 'Promotion or Marketing or Sale of Goods Produced or Service Provided by the Client', appearing under 'Business Auxiliary Service'.' The impugned order is set aside to the extent of confirmation of demand and penalties by the learned Commissioner (Appeals). The appeal filed by the Appellant is allowed.

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• 2024 (5) TMI 135
  Classification of services - Manpower Recruitment or Supply Agency service or not - executing works assigned as per the works order - appellant are job workers as well as principal manufactures. SCN issued to M/s. Senor Metals Pvt Ltd and M/s. Rajhansh Metals, Pertains to period effective from 01.07.2012 under Serial No. 8 of the Notification No. 13/2012-ST dates 20.06.2012 which provides that in case of supply of the Manpower or supply Agency service, 25% of the Service Tax is payable by the person supplying the service where as 75% of the Service Tax was payable by the person receiving the service. HELD THAT:- The issue is no longer res integra as this Tribunal in a case of SHRI DAYANAND MISHRA VERSUS COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT [ 2024 (4) TMI 233 - CESTAT AHMEDABAD] has already decided matter where it was held that ' the matter is no longer res-integra as this Tribunal in a similar case has held that the agreement is for execution of a particular work and not for providing any manpower. As per work contract the payment is paid for the work performed on the basis of per Kg of goods manufactured and therefore such an activity cannot be classifiable under the service category of Manpower Recruitment or Supply Agency Service. ' Thus, the service provided by the appellants does not fall under the category of Manpower Recruitment or Supply Agency service and therefore, the impugned Orders-In-Appeal are legally not sustainable and therefore set aside - appeal allowed.

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• 2024 (5) TMI 134
  Classification of service - Manpower Recruitment and Supply Agency Service or not - services received from the contractor M/s. A.M Enterprise who was engaged in undertaking various odd jobs including packing of loose Cement at the appellant plant - payment made to contractor - HELD THAT:- Reliance placed upon CBEC Circular No. 190/9/2015-ST dated 15.12.2015 and various case law most specifically on 2024 (4) TIM 233-CESTAT-AHMEDABAD in the matter of SHRI DAYANAND MISHRA VERSUS COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT [ 2024 (4) TMI 233 - CESTAT AHMEDABAD] , which in turn relied upon the decision of ROOPSINH JODHSINH CHAUHAN AND NAVALSINH JADEJA VERSUS COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT [ 2023 (11) TMI 102 - CESTAT AHMEDABAD] which has held that when the contract between the service provider is admittedly a contract of manufacturing or any process thereof, then engagement of labour will not make it as manpower supply. The matter is no more res integra and the impugned service cannot be held as Manpower Recruitment and Supply Agency Service simply because of the basis of making payment to the contractor. Appeal allowed.

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• 2024 (5) TMI 133
  Levy of service tax - Construction of Residential Complex Service and Commercial / Industrial Construction Service - providing construction service of composite nature - HELD THAT:- The documents produced sufficiently established that the contracts are composite in nature. The decision laid down by the Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] would be squarely applicable. The said decision has been followed by the Tribunal in the case of M/S. JAIN HOUSING CONSTRUCTION LIMITED VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [ 2023 (2) TMI 1044 - CESTAT CHENNAI] and was upheld by the Hon ble Apex Court in THE COMMISSIONER OF SERVICE TAX VERSUS M/S. JAIN HOUSING AND CONSTRUCTION LTD. [ 2023 (9) TMI 816 - SC ORDER] , by dismissing the Department appeal. The demand cannot sustain and requires to be set aside - appeal allowed.

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• 2024 (5) TMI 132
  Levy of service tax - subscription fees and entrance fees collected by the appellant from existing members and new members - Supply of Tangible Goods Services - appellant has received freight charges from M/s. BPCL for supply of Lorries for transport of petrol - Business Auxiliary Service - discount and commission accounted by the appellant - receiving reimbursement of Bank charges as well as commission of Demand Drafts from M/s. BPCL in respect of transactions with M/s. BPCL - amount received by the appellant for sale of fleet cards - Extended period of limitation - suppression of facts or not - Penalty imposed under Renting of Immovable Property Services and Mandap Keeper Services - service tax paid already. Levy of service tax - subscription fees and entrance fees collected by the appellant from existing members and new members - HELD THAT:- The said issue as to whether subscription fee collected from members can be subject to levy of service tax prior to 01.07.2012 has been settled in the case of STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT] . Following the same, it is opined that the demand of service tax under this category cannot sustain and requires to be set aside. Levy of service tax - Supply of Tangible Goods Services - appellant has received freight charges from M/s. BPCL for supply of Lorries for transport of petrol - HELD THAT:- As per the Show Cause Notice, it is seen that the appellant has collected only freight charges. The appellant has not collected any amount as hire charges in addition to the freight charges. Further, the service tax on the freight charges has been paid by M/s. BPCL who is the service recipient - The Tribunal in the case of M/S. ERODE LORRY OWNERS ASSOCIATION VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, SALEM COMMISSIONERATE [ 2019 (3) TMI 43 - CESTAT CHENNAI] had considered the issue on very similar set of facts and held that the demand of service tax under Supply of Tangible Goods Services cannot sustain. Following the said decision, the demand cannot sustain and requires to be set aside. Levy of service tax - Business Auxiliary Service - discount and commission accounted by the appellant - HELD THAT:- The amount received is only the difference in the price rate of fuel sold by the appellant. It is found that the demand cannot sustain and requires to be set aside. Levy of service tax - receiving reimbursement of Bank charges as well as commission of Demand Drafts from M/s. BPCL in respect of transactions with M/s. BPCL - HELD THAT:- These are nothing but reimbursable expenses and cannot be subject to levy of service tax prior to 2015. The issue stands decided by the decision in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] , where it was held that 'only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax' - demand set aside. Levy of service tax - amount received by the appellant for sale of fleet cards - HELD THAT:- The appellant has sold the fleet cards to customers on behalf of M/s. BPCL. However, they have not received any mark-up or profit on the fleet cards. The fleet carts were sold on the amount as reimbursed by M/s. BPCL. The appellant has not been given any consideration for sale of fleet cards, it is found that the actual amount received from M/s. BPCL for sale of fleet cards cannot be subject to levy of service tax. The demand under this head is set aside. Extended period of limitation - suppression of facts or not - HELD THAT:- The Department has not established any positive act of suppression on the part of the appellant. The entire figures have been obtained from the accounts maintained by the appellant. This apart, most of the amounts do not fall under the category of taxable service. For this reason, the invocation of extended period cannot sustain. Penalty imposed under Renting of Immovable Property Services and Mandap Keeper Services - service tax paid already - HELD THAT:- The appellant has already discharged service tax on these amounts. They are also registered for these services. For these reasons, the penalty imposed under Renting of Immovable Property Services and Mandap Keeper Services required to be set aside - However, the demand of service tax or the interest thereon on Renting of Immovable Property as well as Mandap Keeper Services is not interfered and only the penalty in this regard is set aside. The impugned order is modified to the extent of upholding the demand and interest in regard to Renting of Immovable Property Services and Mandap Keeper Services and setting aside the demand, interest and penalty in respect of all other services - Appeal allowed in part.

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• 2024 (5) TMI 131
  Demand of interest on irregular CENVAT Credit merely taken in the books but have not been utilized - entire CENVAT credit of capital goods was availed instead of 50% as stipulated under Rule 4(2)(a) of CCR, 2004 - availment of credit on Customs Cess - availment of CENVAT Credit by the appellant on the basis of various invoices / documents is in order or not in terms of Rule 9 of CENVAT Credit Rules, 2004 - invocation of extended period of limitation - penalty. Demand of interest on ireegular availed credit - 100% availment of CENVAT Credit on capital goods in the first year itself and the availment of credit on Customs Cess - HELD THAT:- The appellant though has taken the credit in their books has not utilized the credit taken towards payment of any duty / tax. Whether interest is demandable or not on irregular CENVAT Credit availed but not utilized, the issue is no more res integra as it has been held by various higher judicial fora that when CENVAT Credit was merely taken in the books but not utilized would not involve any payment of interest or penalty. The issue of unutilized CENVAT Credit was a subject matter before the Hon ble Supreme Court in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [ 2011 (2) TMI 6 - SUPREME COURT] and the decision was considered by the Hon ble High Courts and co--ordinate Benches of the Tribunal in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] where it was held that 'it is only when the assessee had taken the credit, in other words by taking such credit, if he had not paid the duty which is legally due to the Government, the Government would have sustained loss to that extent. Then the liability to pay interest from the date the amount became due arises under Section 11AB, in order to compensate the Government which was deprived of the duty on the date it became due. Without the liability to pay duty, the liability to pay interest would not arise. The liability to pay interest would arise only when the duty is not paid on the due date. If duty is not payable, the liability to pay interest would not arise.' In the case of J.K. TYRE INDUSTRIES LTD. VERSUS ASST. COMMR. OF C. EX., MYSORE [ 2016 (11) TMI 911 - CESTAT BANGALORE - LB] , Tribunal Large Bench has come to the conclusion that interest liability would not arise when the assessee had merely availed credit and had reversed the same before utilizing the availed credit for remittance of duty. Thus, the recovery of interest is not legally justified and not maintainable. Availing CENVAT Credit on ineligible documents, contravening the provisions of Rule 9 of the CENVAT Credit Rules, 2004 - HELD THAT:- The appellant is a Government owned company and it has got different circles, operational areas and divisions, as such discrediting these documents for the purpose of availment of CENVAT Credit is not legal and proper. Unless there is an allegation that the capital goods are diverted or not installed in the appellant s premises, it has to be held that the appellant is eligible for the CENVAT Credit availed. Extended period of limitation - HELD THAT:- It is informed that the Show Cause Notice was issued on 30.09.2013 which is well beyond the actual cutoff date for the issue of the Show Cause Notice i.e., 25.04.2011 / 25.10.2011, as the case may be and contended that extended period could not be invokable - reliance placed upon the decision rendered in the case of INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF C. EX., AHMEDABAD [ 2013 (9) TMI 310 - CESTAT AHMEDABAD] wherein it was held that Public Sector Undertaking, cannot have mala fide for non-discharge of duty and there cannot be an allegation of intention to evade duty - the demand notice issued is time barred and there is no justification for invoking the extended period of limitation in the facts of this case. Thus, the appellant succeeds on limitation also. The demand notice issued is time barred and there is no justification for invoking the extended period of limitation in the facts of this case. Thus, the appellant succeeds on limitation also. The impugned order passed by Commissioner of Central Excise and Service Tax cannot sustain and so, ordered to be set aside - appeal allowed.

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• 2024 (5) TMI 130
  CENVAT Credit - Availment of CENVAT credit on input services - availment of CENVAT credit on inadmissible documents - non-payment of amount under rule 6(3)(i) of CENVAT credit rules - non-payment of service tax on manpower recruitment or supply agency services. Availment of credit on certain input services - HELD THAT:- The term input services is very wide and cannot be restricted to any specific type and nature of input services. However, with the introduction of exclusion clauses A to C, it is clear in no uncertain terms that CENVAT credit can be availed on all the input services which are used by the service provider for providing output services as well as services that are covered and defined in the inclusive part of the definition with the specific exclusions - the meal vouchers being provided to the employees, prior to 1.4. 2011, the same is a welfare activity - Tribunal in the case of ANDRITZ TECHNOLOGIES PVT. LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE [ 2019 (12) TMI 122 - CESTAT BANGALORE ] has held that 'As far as Food coupons/sodexo coupons are concerned, I find that these services are in the nature of welfare service and purely for personal consumption of employees as these are perquisites allowed to the employees. Further, I find that Commissioner (Appeals) has given reasons for denying the Cenvat credit on sodexo coupon and I do not find any fault in that and uphold the same.' For the period post 1.4.2011, there is a specific exclusion provided under clause C to Rule 2(I) that outdoor catering service, if used for personal use or consumption of any employee is not considered to be input service. Therefore, there are no infirmity in the impugned order in this regard. Credit availed on the accommodation provided to staff - HELD THAT:- The service of accommodation was necessary for the purposes of providing the service of consulting engineering services and is integrally connected with the same. Perquisites are generally meant for the comfort, convenience and welfare of the employees. Even though it has been argued that perquisites do fall within the scope of input service, the benefit of Cenvat credit still cannot be allowed, as any activity for the comfort, convenience and welfare of its employees cannot be treated as having been done in course of furtherance of business - Bombay High Court in the case of CCE VERSUS MANIKGARH CEMENT [ 2010 (10) TMI 10 - BOMBAY HIGH COURT ] held that ' in the present case, in our opinion, rendering taxable services at the residential colony established by the assessee for the benefit of the employees, is not an activity integrally connected with the business of the assessee and therefore, the tribunal was not justified in holding that the services such as repairs, maintenance and civil construction rendered at the residential colony constitutes 'input service' so as to claim credit of service tax paid on such services under Rule 2(1 ) of the CENVAT Credit Rules, 2004.' - there is no infirmity the findings of the adjudicating authority in the impugned order in this regard. Availment of credit on inadmissible documents - HELD THAT:- All the services for which input credit was taken had actually been received by the appellant and the incidence of Service Tax had been borne by the appellant. Not mentioning certain particulars in the invoice is only a procedural error, and the availment of CENVAT credit is a substantive benefit which cannot be denied on procedural grounds - as per the proviso to Rule 9(2) of the Credit Rules, as long as all the critical details mentioned therein are available on the invoice, the same would be a valid document for taking credit. No evidence has been brought forward by the Department to state that the inputs were not duty paid. Merely for the said discrepancies, Cenvat credit cannot be denied as held in catena of judgments, some of which have been cited by the Learned Counsel, so long as it is not in dispute that the service tax was paid by the service provider. In fact the appellant has produced an affidavit from the seller of the goods that the duty tax had been paid. Accordingly, the Commissioner had erred in disallowing the credit on such invoices. Non-payment of an amount under Rule 6(3)(i) of the credit rules for providing consulting engineer service in Jammu and Kashmir for the period 2009 10 to 2012 13 - HELD THAT:- The impugned order has held that the credit reversed by the appellant for the period October 2013 to March 2014 does not pertain to the period in dispute. It has been argued that the detailed calculation was for the Cenvat credit reversal for the period 2008-09 to 2012-13. It is noted that in several decisions, it has been consistently held that when proportionate credit has been reversed the department cannot fasten liability under Rule 6(3)(i) of the Credit rules - The Tribunal in the case of RESPONSIVE INDUSTRIES LTD. AND AXIOM CORDAGES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE-II [ 2022 (8) TMI 639 - CESTAT MUMBAI] had examined the above issue in respect of the appellant who had reversed the Cenvat credit in respect of exempt services, by holding that inasmuch as the quantum or method adopted by the appellant was not questioned by the department, the demand of Cenvat credit cannot be sustained - the appellants have reversed the credit attributable to the inputs/inputs services alleged to have been used in the provision of exempted service - the demand on account of the said issue is liable to be set aside. Taxability of services under manpower recruitment of supply agency services - H ELD THAT:- In view of the decision of the Supreme Court in C.C.,C.E. S.T. BANGALORE (ADJUDICATION) ETC. VERSUS M/S NORTHERN OPERATING SYSTEMS PVT LTD. [ 2022 (5) TMI 967 - SUPREME COURT] , it has to be held that the demand can be confirmed for the normal period only and the demand for the extended period cannot be sustained. Interest and penalty - HELD THAT:- The demand for interest upheld by relying on Supreme Court judgment, in the case of PRATIBHA PROCESSORS VERSUS UNION OF INDIA [ 1996 (10) TMI 88 - SUPREME COURT] , wherein the Hon ble Supreme Court held that the levy of interest is compensatory and automatic. Penalties imposed under Sections 76, 77, 78 - HELD THAT:- The department has not been able to establish the ingredients of malafide intention of the appellant to evade payment of service tax. Hence, the penalties imposed on the appellant is set aside. Appeal allowed in part.

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• 2024 (5) TMI 129
  Levy of Service tax - commission accounted by the appellant in their books account - amount collected for installation and activation of TV connection is inclusive of service tax or not - HELD THAT:- The appellant provides installation and activation of Sun DTH TV connection. The activation charges collected from customer by M/s. Sun DTH TV is inclusive of service tax. The appellant does not collect any further amount from customer. The commission for providing the service to the customer thereafter is paid to the appellant by M/s. Sun Direct TV. It is clear that the amount collected from the customer includes the service tax as well as the commission charges paid to the appellant. The very same issue was considered by the Tribunal in the case of M/S. KUMAR S ELECTRONICS VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2019 (6) TMI 852 - CESTAT CHENNAI] where it was held that ' It is true that the appellant is providing services to the DTH operators and is getting commission for such services. If the appellant had paid service tax on such commission, the main DTH operator could have availed Cenvat credit of the same thereby proportionately reducing the amount paid in cash by the DTH operator. Therefore the entire exercise is also revenue-neutral.' The facts in the case are identical to the facts in the case of Kumar s Electronics - The facts being identical, the decision squarely applies. The impugned order is set aside. The appeal is allowed.

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• 2024 (5) TMI 128
  Levy of service tax - Construction of Residential Complex service - payments received where number of units are 12 or less than that - land owner shares - composite contracts or not - HELD THAT:- The definition of Construction of Residential Complex does not apply to constructions in the nature of composite contracts which involve both providing services as well as use of goods and materials. The services which involve composite contracts fall under the definition of Works Contract Services which was brought forth from 01.06.2007. Therefore in cases where there is provision of services of composite nature, the demand can be raised only under WCS. The demand under Construction of Residential Complex would not apply as this definition deals with service simplicitor. The Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] had considered this issue and held that the demand under Residential Complex Services / CICS / CCS cannot sustain prior to 01.07.2012 for the reason that these services do not apply to composite construction services. The decision in the case of Real Value Promoters Pvt. Ltd. was followed by the Tribunal in the case of Jain Housing Construction Limited which has been sustained by the Hon'ble Apex Court. Further, this Tribunal in the case of M/S. SRINIVASA SHIPPING PROPERTY DEVELOPERS LTD. VERSUS THE COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2023 (12) TMI 1003 - CESTAT CHENNAI] on similar set of facts and issue had held that the demand under Residential Complex Services cannot sustain. The demand raised under Construction of Residential Complex Services cannot sustain - the impugned order is set aside - Appeal allowed.

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• 2024 (5) TMI 127
  Non-payment of service tax - Renting of Immovable Property services - Management, Maintenance and Repair services - Business Auxiliary Services. Levy of service tax - Renting of Immovable Property services - whether the demand of service tax cannot be sustained for the reason that the premises has been let out by appellant for conduct of guest rooms/accommodation? - HELD THAT:- The lease deed clearly shows that the premises is to be exclusively used for guest rooms and connected facilities like kitchen, dining room, parking spaces only. The demand of service tax cannot sustain when the premises is rented out for the purpose of accommodation and related activities. It is therefore held that the demand cannot sustain and requires to be set aside - demand set aside. Levy of service tax - Business Auxiliary Services - nature of activity - sale or service - transfer of percentage of holding to joint venture partner - HELD THAT:- The transaction is nothing but sale of shares and there is no situation of providing services to M/s. Ascott (Mauritius) .The Tribunal in the appellant's own case M/S. RATTHA HOLDING CO. PVT. LTD. VERSUS COMMISSIONER OF CENTRAL SERVICE TAX, CHENNAI [ 2018 (9) TMI 1722 - CESTAT CHENNAI] had considered the very same issue and held that the demand cannot sustain as there is no provision of services - the demand under Business Auxiliary Services requires to be set aside. Levy of penalty - appellant has paid the service tax along with interest before passing the adjudication order - Management, Maintenance and Repair services - HELD THAT:- Taking note of the submission made by the Ld. Counsel for the appellant that the amount of service tax under this category along with interest has been paid before passing of the adjudication order, the penalty imposed in this regard is set aside. The impugned order is modified to the extent of setting aside the demand, interest and penalties imposed under Renting of Immovable Property and Business Auxiliary Services as discussed above. The demand and interest under Management, Maintenance and Repair Service is upheld. The penalty on this count is set aside. The appeal is partly allowed.

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• Central Excise

• 2024 (5) TMI 126
  Benefit of nil rate of duty in terms of Notification No. 23/1998-CE dated 01.08.1998 as amended - clearance of newsprint - Non-compliance with the conditions of Notification No. 23/1998-CE dated 01.08.1998 - clearance of goods to the unregistered depots which cannot be defined as place of removal - finished goods have not been cleared against purchase order as required under the Notification - HELD THAT:- The first requirement is that the subject goods must be intended for newspapers. It is not the case of the department in the show cause notice that the goods are not intended for printing of newspapers - all the conditions of chapter heading 4801 of note 4 to chapter 48 and notification issued thereunder i.e. 23/1998-CE dated 01.08.1998 stands complied with. Therefore, merely because first the goods were cleared from factory to godown and then to newspaper, the conditions of the notification does not stand contravened. Similar issue has been considered by this Tribunal in the case of SRI VENKATESA PAPER BOARDS LTD. VERSUS COMMISSIONER OF C. EX., MADURAI [ 2008 (7) TMI 169 - CESTAT, CHENNAI] where it was held that ' The expression supplied against a purchase order placed upon such manufacturer by a newspaper does not necessarily mean that the manufacturer should supply newsprint directly to a newspaper. What was intended by the amendment was that the supply of newsprint to a newspaper must be against a purchase order placed by the latter. It could either be direct or through a depot.' It is also observed that the factory is the place of removal as per Section 4 of Central Excise Act, 1944, however, at the same time any other place from where the goods is sold after removal from the factory, the said place is also a place of removal. Therefore, whether the goods are sold from the factory or from any other place from where the goods were sold, both are statutorily considered as place of removal. Therefore, the goods sold from godown to newspaper after clearance from the factory will not take a different colour as far as the classification of goods under 4801 read with Notification No. 23/1998-CE. Thus, nil rate of duty is rightly and legally available to the appellant - the impugned order is set aside - appeal allowed.

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• 2024 (5) TMI 125
  Short payment of Central Excise Duty - mis-declaration of value of the goods cleared to BSE - clearance of some used capital goods on commercial invoices without paying the central excise duty - confirmation of demand on the wrong presumption that central excise duty is to be levied on the amounts received - HELD THAT:- The constitutional mandate of the Union to levy excise duty and also the charging section under the Central Excise Act clearly provide for levy of excise duty only on goods manufactured or produced in India. The measure of tax could be based on the quantity or value and in most cases, it is based on the value. Duties of excise become payable on removal of goods (Rule 2 of the Central Excise Rules, 2002) and have to be paid by the sixth day of the following month (Rule 8). This payment is not contingent on the receipts for the goods removed and sold. The amounts may be paid in that month, in advance or much later. Regardless of when the payment is received or not received, duty becomes payable on removal and has to be paid by the sixth day of the following month - Form 26AS is system generated by the Income tax portal as a compilation of all the amounts paid by various persons and the TDS deducted from the assessee during the financial year. There is no contrary overriding provision in the Central Excise Act. Therefore, section 102 of the Evidence Act applies and in case of Show Cause Notices issued under Central Excise Act, the burden of proof lies on the Revenue because if no evidence is provided by either side, the SCN fails. Therefore, it was not for the appellant to reconcile the documents and produce evidence but it was for the Revenue to establish that some excise duty escaped assessment and has to be paid. This demand of central excise duty on the capital goods sold by the appellant (which were not manufactured by it at all) is beyond the scope of the charging section 3 of the Central Excise Act and also beyond the legislative powers of the Union as per entry 83 of List 1 of the Seventh Schedule of the Constitution - the SCN, the OIO and the impugned order were issued under the incorrect understanding of law that central excise duty could be levied on payments received (whether or not they were related to the excisable goods manufactured or produced and sold) and on goods sold through commercial invoices (even if they were not manufactured or produced). The impugned order, therefore, cannot be sustained and needs to be set aside - Appeal allowed.

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• 2024 (5) TMI 124
  Refund of unutilized input credit - inputs and/or input services used in the export of goods or services as provided under Rule 5 of CENVAT Credit Rules, 2004 read that Notification No. 5/2006-C.E. (N.T) dated 14.03.2006 - period January, 2009 to March, 2009 - HELD THAT:- In view of the detailed examination of the all five conditions of Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 5/2006-C.E. (N.T) dated 14.03.2006, in the context of factual matrix of the case, it is found that the appellant is eligible for refund of Cenvat credit of inputs availed during the quarter January, 2009 to March, 2009 after adjusting/deducting for the Cenvat credit utilized, thereby arriving at the correct amount of Cenvat credit on inputs which could not be utilized for payment of tax or duty as Rs.3,44,804/- (Rs.23,32,780/- minus Rs.49,87,976/-). Further, the amount of Cenvat credit of input services which could not be utilized and by restricting the same to the extent of ratio of export turnover to the total turnover as per the prescribed formula, the eligible Cenvat credit for refund is arrived at Rs.77,754/-. Thus, the total eligible amount of Cenvat credit refundable to the appellants is worked out as Rs.4,22,558/-, out of the total refund claim filed for an amount of Rs.13,37,072/-. There are no merits in the impugned order dated 21.08.2018, insofar as the adjudged demands were confirmed on the appellant by the learned Commissioner (Appeals), upholding the order of the original authority and by rejecting the appeal filed by the appellant. The adjudged demands confirmed on the appellants being ineligible refund of Cenvat credit and rejection of eligible refunds, in the impugned order dated 21.08.2018 is liable to be set aside. The eligible refund of Cenvat Credit in terms of Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 5/2006-C.E. (N.T) dated 14.03.2006 is re-determined as Rs.4,22,558/- - the impugned order is set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2024 (5) TMI 123
  Recovery of dues by adjusting them against the refund amount - Delay in processing refund - The default notices were issued after the period within which the refund should have been processed - requirement to follow timeline for refund under Section 38(3) of the Delhi Value Added Tax Act, 2004 - HELD THAT:- The language of Section 38(3) is mandatory and the department must adhere to the timeline stipulated therein to fulfil the object of the provision, which is to ensure that refunds are processed and issued in a timely manner. In the present case, Section 38(3)(a)(ii) is relevant as both the refunds in the present case pertain to quarter tax periods. Therefore, as per Section 38(3)(a)(ii), the refund should have been processed within two months from when the returns were filed (31.03.2017 and 29.03.2019), which comes up to 31.05.2017 and 29.05.2019. The default notices are dated 30.03.2020, 23.03.2021, 30.03.2021, and 26.03.2022. It is therefore evident that the default notices were issued after the period within which the refund should have been processed. Sub-section (2) only permits adjusting amounts towards recovery that are due under the Act . By the time when the refund should have been processed as per the provisions of the Act, the dues under the default notices had not crystallised and the respondent was not liable to pay the same at the time. The appellant-department is therefore not justified in retaining the refund amount beyond the stipulated period and then adjusting the refund amount against the amounts due under default notices that were issued subsequent to the refund period. The impugned judgment directing the refund of amounts along with interest as provided under Section 42 of the Act affirmed - appeal dismissed.

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• 2024 (5) TMI 122
  Condonation of delay in filing petition - Belated writ petition - by oversight Vakalat was not filed - appellate Tribunal by two separate cryptic orders has allowed the appeals filed by the Commercial Tax Department - HELD THAT:- Although there is a delay in approaching this Court, the substantive right of an assessee cannot be denied, particularly in a peremptory manner by passing a cryptic order. The dismissal of the application for restoring the appeal and allowing the appeal of the Commercial Tax Department without any reasonings especially when the order of the Appellate Commissioner is detailed has to be construed as an arbitrary order and therefore, it is liable to be set aside. It could have been different, if the order is passed on merits. The impugned orders can be set aside and the appeals be restored back to the file of the Sales Tax Appellate Tribunal for disposal of all the four appeals together on merits and in accordance with law. The petitioner is directed to file Vakalat and file the notes and submissions, if any, as per the procedure followed by the Appellate Tribunal. Petition allowed.

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• Indian Laws

• 2024 (5) TMI 121
  Dishonour of Cheque - vicarious liability of the petitioner in terms of Section 141 NI Act - Company Secretary of the company - The CS was never a Director of the Accused Company - In-charge of the day-to-day affairs of the company or not - exact role of the petitioner in the accused company and her consequent liability for the offence under Section 138 NI Act - HELD THAT:- The petitioner was employed in the company as a Company Secretary. Once the same is established, the question that arises for consideration is whether the petitioner can be made vicariously liable in terms of Section 141 NI Act. A perusal of the subject complaints would show that nowhere in the said complaints has the respondent averred that the petitioner was in-charge of, and responsible for the conduct of the business of the company. The word in-charge of a business has been interpreted to mean a person having overall control of the day-to-day business of the company. In the ordinary course of business, it cannot be said that the petitioner, who was acting as a Company Secretary, would be in-charge of the day-to-day affairs of the company, as required in terms of Section 141(1). Thus, the petitioner cannot be vicariously liable in terms of Section 141(1). In view of the facts of the present case including the fact that the petitioner was employed as a Company Secretary in the accused company as well as the position of law w.r.t Section 141 NI Act and the application of the same to the subject complaints, it can be observed that the subject complaints are bereft of the adequate averments against the petitioner alleging the Petitioner s involvement in the conduct of the business of the Company beyond her statutory role as a Company Secretary, more particularly, in relation to the transaction pursuant to which cheque in question was issued. Neither, is there any averment that the offence has been committed with the consent or connivance of is attributable to any neglect on the part of the Petitioner, so as to potentially make her liable under Sub-section (2) of Section 141. There is no cavil with the proposition of law stated in the decisions cited by the respondent but in the absence of appropriate and adequate averments against the petitioner, and the fact that Petitioner s impleadment can only be in her capacity as a Company Secretary, the continuation of proceedings against the petitioners would be nothing but an abuse of the process of law. The present petitions are allowed and the criminal complaints filed under Section 138 read with Section 141 NI Act are quashed qua the petitioner.

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• 2024 (5) TMI 120
  Maintainability of writ petition - time limitation - time limitation ought to have been dismissed on the ground of delay and latches itself or not - Whether the writ court was justified in entertaining the writ petition filed by the Respondent No. 1 herein challenging the approval dated 03.06.2014 granted in favour of the Appellant herein for starting LPG distributorship at Jamalpur, District Burdwan? - HELD THAT:- An applicant who approaches the court belatedly or in other words sleeps over his rights for a considerable period of time, wakes up from his deep slumber ought not to be granted the extraordinary relief by the writ courts. This Court time and again has held that delay defeats equity. Delay or latches is one of the factors which should be born in mind by the High Court while exercising discretionary powers Under Article 226 of the Constitution of India. In a given case, the High Court may refuse to invoke its extraordinary powers if laxity on the part of the applicant to assert his right has allowed the cause of action to drift away and attempts are made subsequently to rekindle the lapsed cause of action. There being no stiff opposition or strong resistance to the alternate land offered by the Appellant herein not being as per the specifications indicated in the advertisement, there are no reason to substitute the court's view to that of the experts namely, the Corporation which has in its wisdom has exercised its discretion as is evident from the report filed in the form of affidavit by the territory manager (LPG)/ BPCL. The order of the Learned Division Bench is liable to be set aside and accordingly, it is set aside - Appeal allowed.

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