Supreme Court

Advise States To Implement Digital DIN System : Supreme Court To Centre & GST Council

Pradeep Goyal vs Union of India

Citation: 2022 LiveLaw (SC) 654

The Supreme Court has directed the GST Council to issue advisory / instructions / recommendations to the respective States regarding implementation of the system of electronic (digital) generation of a Document Identification Number (DIN) in the indirect tax administration.

The bench comprising Justices MR Shah and BV Nagarathna observed that the system, which is already being implemented by the States of Karnataka and Kerala, would be in the larger public interest and enhance good governance. It will bring in transparency and accountability in the indirect tax administration, which are so vital to efficient governance, the bench said.

Service Tax On Composite Works Contracts Not Leviable Prior To2007 Amendment To Finance Act 1994 : Supreme Court

Case Name: M/s. Total Environment Building Systems Pvt. Ltd. v. Deputy Commissioner of Commercial Taxes And Ors.

Citation: 2022 LiveLaw (SC) 656

The Supreme Court, on Tuesday, held that service tax could not be levied on composite works contracts prior to the introduction of the Finance Act, 2007, which by amending the Finance Act, 1994 had introduced Section 65(105)(zzzza) defining works contracts. The Apex Court noted that in the absence of a charging section and the modalities to levy and assess, service tax cannot be levied on the service element of works contract.

Delhi High Court

Assessee Entitled To Refund Of Unutilized CENVAT Credit OnAccount Of Export Of Legal Services: Delhi High Court

Case Title: Commissioner of CGST Delhi East Versus Anand and Anand

The Delhi High Court has held that the assessee is entitled to a refund of unutilized CENVAT credit under the CENVAT Credit Rules, 2004 on account of the export of legal services under rule 5 of the CENVAT Credit Rules, 2004.

The division bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju observed that, as per Rule 5, as long as the service provider provides an output service which is exported without payment of service tax, such a service provider will be eligible for a refund of CENVAT credit.

Bombay High Court

Exporter Not Required To Hold IEC Number To Avail Benefits Under'Service Exports From India' Scheme: Bombay High Court

Case Title: Smarte Solutions Pvt. Ltd. versus Union of India and Ors.

The Bombay High Court has ruled that the requirement of holding an Import Export Code (IEC) number at the time of rendering services in order to avail the benefits under the Services Export from India Scheme (SEIS), as imposed by the Foreign Trade Policy 2015-2020 (FTP), is against the intent and purpose of the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act).

The Division Bench of Justices S.V. Gangapurwala and Vinay Joshi held that the said condition cannot be termed as mandatory in nature for availing the benefits under the SEIS since it is against the principal legislation, i.e., the FTDR Act.

Assessee Eligible For SVLDRS Declaration Since The Demand Of Duty Quantified On Or Before June 30, 2019: Bombay High Court

Case Title: B. Chopda Construction Private Limited V/s. Union of India and Ors.

The Bombay High Court has allowed the declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 on the grounds that although there was an audit, the amount of duty quantified has also been quantified before 30th June 2019.

The division bench of Justice K.R. Shriram and Justice Milind N. Jadhav has observed that the rejection of the petitioner's declaration on the ground that the final audit report was issued after June 30, 2019 was incorrect.

Customs Authorities Cannot Encash Bank Guarantee Before Expiry Of The Limitation Period For Filing An Appeal: Bombay High Court

Case Title: S. J. Enterprises & Anr. versus Union of India

The Bombay High Court has reiterated that Customs Authorities cannot encash the Bank Guarantee furnished by the assessee before the expiry of the statutory period available for filing an appeal.

The Division Bench consisting of Chief Justice Dipankar Datta and Justice M. S. Sonak ruled that despite the assurances given to the Bombay High Court in the case of Legrand (India) Pvt. Ltd. versus Union of India (2007), the Customs Authorities had breached the law by adopting coercive measures and encashing the Bank Guarantees before the expiry of the limitation period available for filing a statutory appeal.

Bombay High Court Directs CBIC To Issue Clarification RegardingDistribution/ Reporting Of ISD Credit

Case Title: Unichem Laboratories Limited versus Union of India and Ors.

The Bombay High Court has directed the Central Board of Indirect Taxes and Customs (CBIC) to issue a clarification in relation to the distribution/ reporting of the ISD credit.

The Bench of Justices K.R. Shriram and Gauri Godse was dealing with a batch of writ petitions, highlighting the difficulties faced by the petitioners in the distribution/ reporting of the ISD credit.

Madras High Court

Service Of Preparation Of Scalp, Fitment And Maintenance Of Wig-Indivisible Contact: Madras High Court

Case Title: White Cliffs Hair Studio Private Ltd. Versus Additional Commissioner

Citation: 2022 LiveLaw (Mad) 338

The Madras High Court has held that the primary activity is the manufacture of the wig, for which the central excise duty is remitted. The fitment of the wig, including the preparation of the scalp and optional maintenance of the wig itself, is incidental to the manufacturing and supply of the wig.

The single bench of Justice Anitha Sumanth has relied on the decision of the Supreme Court in the case of Imagic Creative Pvt. Ltd. Vs. Commissioner of Commercial Taxes. The Supreme Court has specifically noted the difference between a composite contract and an indivisible one. A composite contract is one that would involve components of sale and service, whereas an indivisible contract, also involving components of sale and service, is one where the distinction between the two is very fine and difficult to determine.

Cut/Sized Shade Trees Constitutes "Agricultural Produce", No Sales Tax Applicable: Madras High Court

Case Title: M/s. United Nilgiri Tea Estates Company Ltd. Versus The Tamil Nadu Sales Tax Appellate Tribunal

Citation: 2022 LiveLaw (Mad) 362

The Madras High Court bench of Justice R. Mahadevan and Justice Mohammed Shaffiq has held that the cut and sized shade trees would constitute "agricultural produce" and, therefore, fall outside the purview of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act, 1959).

Timelines For UploadingTRAN-1 For Seeking Credit And Revision Of Credit Cannot Be One: Madras HighCourt

Case Title: M/s.Interplex Electronics India Pvt. Ltd. Versus The Assistant Commissioner of State Tax

Citation: 2022 LiveLaw (Mad) 367

The Madras High Court has held that the timelines for uploading of TRAN 1 for seeking credit as well as seeking revision of the credit cannot be one and the same as it leads to an unworkable position.

The single bench of Justice Anitha Sumanth has observed that the time limit for revision of a TRAN-1 return be identical to the timeline for filing of a return seeking transition. The purpose of revision is to enable correction or modification of a return of transition. It would stand to reason that some additional time, over and above the timeline granted for a TRAN-1 return, be provided by the respondent in the latter instance.

​​Exporter Can't Be Deprived Of MEIS Benefits Due To Technical Error In Electronic System: Madras High Court

Case Title: M/s Gupta Hair Products (P) Ltd. Versus The Deputy Director General of Foreign Trade

The Madras High Court has held that due to technical error or lacunae in the electronic system, the petitioner/exporter cannot be deprived of its benefit/incentive under the Merchandise Export from India Scheme (MEIS).

The single bench of Justice Abdul Quddhose has directed the department to consider the petitioner's representation seeking to get the benefit under the MEIS for the subject shipping bill and pass orders within a period of six weeks.

Kerala High Court

Assessee Has Statutory Right To File An Appeal Even After Voluntary Payment Of GST/Penalty: Kerala High Court

Case Title: Hindustan Steel and Cement Versus Assistant State Tax Officer

The Kerala High Court has held that assessees have a statutory right to file an appeal even after the voluntary payment of GST or penalty.

The single bench of Justice Gopinath has observed that the culmination of proceedings in respect of a person who seeks to make payment of tax and penalty under Section 129(1)(a) does not result in the generation of a summary of an order under Form DRC-07 and cannot result in the right of the person to file an appeal under Section 107 being deprived.

Officer Is Duty Bound To Consider Explanation Offered For Expiry Of The E-Way Bill: Kerala High Court

Case Title: Sanskruthi Motors Versus The Joint Commissioner (Appeals) II

Citation: 2022 LiveLaw(Ker) 458

The Kerala High Court has held that the officer is duty bound to consider the explanation offered by the petitioner for the expiry of the e-way bill.

The single bench of Justice Gopinath P has observed that the officer rejected the explanation offered by the petitioner by stating that no evidence of repair being carried out has been produced. The officer imposed a penalty/tax on the grounds that the petitioner had ample time to revalidate the E-way bill.

Allahabad High Court

Land Transferred After Cut-Off Date, Applicant Not Entitled ToTrade Tax Exemption Under U.P. Trade Tax Act: Allahabad High Court

Case Title: M/s Bindal Smelting Pvt. Ltd. versus Commissioner of Trade Tax, Lucknow

The Allahabad High Court has ruled that the conditions enumerated in the Exemption Notification No. KA-NI-2-3867, dated 22.12.2001, for availing exemption from Trade Tax under Section 4-A of the U.P. Trade Tax Act, 1948, are mandatory in nature and have to be strictly complied with.

The Single Bench of Justice Alok Mathur held that since the land was not transferred to the applicant before the cut-off date as prescribed under the said Exemption Notification, the applicant could not be considered as a "new unit" and hence, it was not eligible for trade tax exemption under Section 4-A.

10% VAT Payable On Insulated Glass: Allahabad High Court

Case Title: The Commissioner Commercial Tax U.P. Lucknow Versus S/S G.S.C. Toughened Glass

The Allahabad High Court has held that 10% Value Added Tax (VAT) is payable on insulated glass.

The single judge bench of Justice Saumitra Dayal Singh has observed that insulated glass is nothing but double glazed dual sheet (DGDS).

Allahabad High Court Imposes Cost Of Rs. 50000 For Arbitrary Cancellation of GST Registration

Case Title: Drs Wood Products Lucknow Versus State Of U.P.

Citation: 2022 LiveLaw (AB) 383

The Allahabad High Court has imposed a cost of Rs. 50,000 for the arbitrary cancellation of GST registration.

The single bench of Justice Pankaj Bhatia observed that the arbitrary exercise of power to cancel the registration in the manner in which it has been done has adversely affected the petitioner. It has also had a negative impact on the revenues that could have flowed into the coffers of GST had the petitioner been allowed to conduct commercial activities. The actions were clearly not in consonance with the ease of doing business, which is being promoted at all levels.

Rajasthan High Court

Rajasthan Stamp Act | Duty Can't Be Levied On Transaction Not Having 'Territorial Nexus' With State: High Court

Case Title: Himachal Futuristic Communications Limited v. State of Rajasthan & Ors.

Citation: 2022 LiveLaw (Raj) 211

The Rajasthan High Court recently set aside a single bench decision which permitted levy of duty under the Rajasthan Stamp Act, 1998 on an amalgamation instrument executed outside the State pursuant to sanction of Himachal Pradesh High Court, not only in relation to properties situated in Rajasthan, but also on the transfer of shares.

Description Of New Aluminium Section As Aluminium Scrap,Rajasthan High Court Upholds Detention Order

Case Title: M/s. Shrimali Industries Pvt. Ltd. Versus State Of Rajasthan

The Rajasthan High Court has held that, by no stretch of imagination, can brand new aluminium sections be placed on equivalence with aluminium scrap. The goods were fraudulently described as aluminium scrap.

The division bench of Justice Sandeep Mehta and Justice Kuldeep Mathur has observed that the department was justified in detaining the petitioner's vehicle and the goods after noticing the blatant mis-description during interception.

Gujarat High Court

Gujarat High Court Directs CBIC To Refund IGST On Ocean Freight

Case Title: M/s Louis Dreyfus Company India Private Limited Versus Union Of India

The Gujarat High Court has directed the Central Board of Indirect Taxes and Customs (CBIC) to refund the Integrated Goods and Service Tax (IGST) on ocean freight within six weeks along with the statutory rate of interest.

The division bench of Justice N.V. Anjaria and Justice Bhargav D. Karia has relied on the decision of the Supreme Court in the case of Mohit Minerals Pvt. Ltd. vs. Union of India in which GST on ocean freight was struck down.

Gujarat High Court Grants Bail To Person Alleged Of CreatingFictitious Entity To Pass Ineligible ITC

Case Title: Mohmed Hasan Aslam Kaliwala Versus State Of Gujarat

Citation: 2022 LiveLaw (Guj) 338

The Gujarat High Court has granted bail to a person alleged to have created a fictitious entity to pass an ineligible Input Tax Credit (ITC).

The single bench of Justice Ilesh J. Vora has directed the release of the applicant on bail, subjected to a deposition of Rs. 2 crore before the office of the Deputy Commissioner of State Tax, Division 8, Enforcement, Surat within a period of 2 months from the applicant's release.

Orissa High Court

Tax Exemptions Given WithBenevolent Object, Approach For 'Exempting' & 'Including' Subject MattersUnder Tax Purview Can't Be Same: Orissa HC

Case Title: State of Odisha represented by Commissioner of Sales Tax, Cuttack v. M/s. Geetashree Industries & Ors.

Citation: 2022 LiveLaw (Ori) 119

The Orissa High Court has held that the approach which is employed to exempt a commodity from the purview of taxation is not the same which is used to bring a good under the umbrella of taxation.

While applying this principle, a Division Bench of Chief Justice Dr. S. Muralidhar and Dr. Justice Sanjeeb Kumar Panigrahi held that 'Chuni' is different from 'Cattle feed' under entry 66 of para-I of the Schedule attached to the Odisha Entry Tax Act, 1999 ('OET Act') and thus, the former is not amenable to entry tax under the statute.

12% Sales Tax Applicable On Robinson Barley And Purity Barley: Orissa High Court

Case Title: Reckitt Benckiser (India) Ltd. versus State of Odisha and Others

Citation : 2022 LiveLaw (Ori) 124

The Orissa High Court has held that a 12% sales tax is applicable on Robinson Barley and Purity Barley.

The division bench of Chief Justice S. Muralidhar and Justice R.K. Pattanaik has observed that if a customer went to a shop and asked for barley, such a customer would not be supplied with Robinson Barley or Purity Barley. Conversely, if the customer was to ask for Robinson Barley or Purity Barley, he would not be supplied with plain barley. The distinct commercial product "Robinson Barley" cannot be classified as "cereal".

Jharkhand High Court

Summary Of SCN In Form GST DRC-01 Cannot Substitute RequirementOf Proper SCN: Jharkhand High Court

Case Title: Roushan Kumar Chouhan Versus Commissioner of State Tax

The Jharkhand High Court has held that the summary of show cause notice in Form GST DRC-01 cannot substitute the requirement of a proper show cause notice under section 73(1) of the CGST Act, 2017.

The division bench of Justice Aparesh Kumar Singh and Justice Deepak Roshan has observed that the levy of a penalty of 100% of tax dues reflected in the Summary of the Order contained in Form GST DRC-07 is in the teeth of the provisions of Section 73(9) of the CGST Act. As per Section 73(9), the Proper Officer while passing an adjudication order can levy a penalty up to 10% of the tax dues only.

Goods Or Conveyance Can't be Detained Without Service Of Detention Order: Jharkhand High Court

Case Title: M/s. AMI Enterprises Pvt. Ltd. Versus Union of India

Citation: 2022 LiveLaw (Jha) 81

The Jharkhand High Court has held that no goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.

The division bench of Justice Aparesh Kumar Singh and Justice Deepak Roshan has observed that the adjudication order and the appellate order both suffered from procedural infirmities and lacked proper opportunity for the person transporting to defend himself.

If Assessee Disputes Interest Liability Then Dept. Has To Follow Procedure Laid Down u/s 73 or 74 of the CGST Act: Jharkhand High Court

Case Title: Bluestar Malleable Pvt. Ltd. Versus The State of Jharkhand

The Jharkhand High Court has held that if any assessee disputes the liability of interest under Section 50 of the CGST Act, then the department has to follow the specific procedure as stipulated under Section 73 or 74 of the CGST Act.

The division bench of Justice Aparesh Kumar Singh and Justice Deepak Roshan has observed that the department failed to follow the procedure as enshrined in Section 73 or 74 of the JGST Act.

Telangana High Court

Investigation Post Filing Application Would Not Debar Applicant From Seeking Advance Ruling: Telangana High Court

Case Title: M/s. Srico Projects Pvt. Ltd. Versus Telangana State Authority for Advance Ruling

The Telangana High Court has held that the investigation post-filing of the application would not debar the applicant from seeking an advance ruling.

The division bench of Chief Justice Ujjal Bhuyana and Justice C.V.Bhaskar Reddy has observed that the word "proceedings" has neither been defined in Chapter XVII nor in the definition clause, i.e., in Section 2 of the CGST Act. The inquiry or investigation would not come within the ambit of the word "proceedings".

Madhya Pradesh High Court

Dept. Failed To Establish Element Of Tax Evasion: Madhya PradeshHigh Court Quashes Penalty

Case Title: M/s Daya Shanker Singh Versus State Of Madhya Pradesh

The Madhya Pradesh High Court quashed the penalty for the expiry of e-way bill as the department failed to establish that there existed any element of evasion of tax, fraudulent intent or negligence on the part of the petitioner.

The division bench of Justice Sujoy Paul and Justice Prakash Chandra Gupta has observed that the delay of almost 4:30 hours before which the E-way Bill expired appears to be bona-fide and without establishing fraudulent intent and negligence on the part of the assessee, the notice/order imposing penalty could not have been passed.

CESTAT

Extra Duty Deposit Should Be Refunded Without Filing Refund Claim: CESTAT

Case Title: China Steel Corporation India Pvt Ltd Versus C.C.-Ahmedabad

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the Extra Duty Deposit (EDD) should be refunded without filing a refund claim.

The two-member bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that if and when the refund claim of EDD is filed by the appellant, it cannot be barred by limitation.

"Pandal and Shamiana" Services Can't Be Charged WithService Tax Before 01.06.2007: CESTAT

Case Title: M/s Sconce Global Private Limited Versus Commissioner of Service Tax

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has observed that the "Pandal and Shamiana" services could not have been charged with service tax before 01.06.2007.

The two-member bench headed by Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that the appellant's contract involved provisions of services as well as supply/deemed supply of goods and they can only be classified under the head "works contract services".

No Deliberate Non-Compliance In Depositing Service Tax Under RCM: CESTAT Deletes Penalty

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) bench of Anil Choudhary (Judicial Member) has deleted the penalty on the grounds that there was no deliberate non-compliance in depositing service tax under the Reverse Charge Mechanism (RCM).

Services Tax Demand Not Sustainable On The Basis Of TDS/26AS Statements: CESTAT

Case Title: Forward Resource Pvt. Ltd. Versus C.C.E. & S.T.

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax demand is not sustainable on the basis of TDS/26AS statements.

The two-member bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that the value of taxable services cannot be determined only based on TDS statements produced by clients. The expenditures are booked based on when the form 26AS is filed, which cannot be considered as the value of taxable services for the purpose of demand of service tax.

Charges For Transportation Of Goods From Factory To Buyer's Premises, can't be Assessed: CESTAT

Case Title: M/s Jindal Tubular (India) Limited Versus The Principal Commissioner, Central Goods & Service Tax & Central Excise, Ujjain

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed the service tax demand and penalty and held that the freight charges incurred for transportation of goods from the place of removal to the buyer's premises cannot be included in the assessable value.

The two-member bench headed by Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that the "place of removal" continues to be the seller's premises, whether it be the factory gate or depot or any other place relatable to the seller. In terms of Section 4 of the Central Excise Act, the value of the goods is the transaction value of the goods for delivery at the time and place of removal.

CESTAT Allows CENVAT Credit On Service Tax Paid On Input Services Received By The SEZ Unit

Case Title: M/s Global Logic India Limited Versus Commissioner of Central Goods & Service Tax

The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the CENVAT credit on service tax paid on input services received by the SEZ unit.

The two-member bench headed by Justice Dilip Gupta (President) and Raju (Technical Member) has observed that the assessee could forego exemption and claim the benefit of the CENVAT credit on the amount of service tax paid on input services as would have been available as a refund to an SEZ Unit.

SFPs Classifiable As Parts Of Telecom Equipment: CESTAT AllowsCustoms Duty Exemption To Reliance Jio Infocomm

Case Title: Commissioner of Customs-Mumbai (Air Cargo Import) Versus Reliance Jio Infocomm Ltd.

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has granted the customs duty exemption to Reliance Jio Infocomm and held that the Customs Excise and Service Tax Appellate Tribunal (CESTAT) is classifiable as part of telecom equipment.

The two-member bench of S.K. Mohanty (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that the SFP is part of the I/O card module of the Ethernet switch apparatus, which can function only when connected with an Ethernet switch providing an interface between two domains, i.e., electrical and optical. As such, they are considered parts and are correctly classifiable under CTH 8517 7090 of the Customs Tariff.

Activity Of Mediator Cannot Fall Under Business ConsultantServices, No Service Tax Under RCM Applicable: CESTAT

Case Title: M/s Paradeep Phosphates Ltd. Versus Commissioner of Central Excise, Customs & Service Tax, Bhubaneswar

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the activity of a mediator cannot fall under business consultant services.

The two-member bench of P. K. Choudhary (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that the appellants/assessee are not liable to pay any service tax on the reverse mechanism on the services rendered by the mediator.

Retracted Statement Cannot Simply Be Brushed Aside : CESTAT

Case Title: Jeen Bhavani International Versus Commissioner of Customs-Nhava Sheva-III

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the contents of the retracted statement cannot simply be brushed aside to conclude that the assessee/appellant has indulged in the activity of undervaluation of goods.

The two-member bench of S.K. Mohanty (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that merely because an assessee has, under the stress of investigation, signed a statement admitting tax liability and having also made a few payments as per the statement, it cannot lead to self-assessment or self-ascertainment.

No Customs Duty On Spare Parts Supplied For Warship: CESTAT

Case Title: Larsen Tourbro Limited Versus C.C.-AHMEDABAD

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the spare parts supplied for warships are exempt from customs duty.

The two-member bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that the interceptor boat supplied by the appellant was a warship. The intercepted boats used by the Coast Guard Ministry of Defence Government of India are only for the security of the coastal border of the country and the boats are not used for any other purpose. The interceptor boats are equipped with arms and ammunition. Therefore, it is absolutely without any doubt that the interceptor boat is a warship.

Refractories Meant For Re-lining Of Furnaces Is Covered Under"Capital Goods": CESTAT Allows Customs Duty Exemption Under EPCGScheme

Case Title: M/s. Jai Balaji Industries Limited Versus Commissioner of Customs (Port), Kolkata

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the customs duty exemption on refractories meant for re-lining of furnaces.

The two-member bench of P.K. Chaudhary (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that refractories meant for re-lining of furnaces, i.e., for replacement, are covered by the "means" part of the definition of "capital goods". It is in any way restricted or controlled by the use of the expression "refractories for initial lining'' used in the inclusive part of the definition of "capital goods".

Job Worker Liable To Pay Excise Duty For Unloading Chemicals From Tankers, Repacking and Labelling In Small Drums: CESTAT

Case Title: Dow Chemical International Pvt Ltd Versus C.C.E.-Kutch (gandhidham)

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the job worker has carried out all the activities which, as per the department, amount to manufacturing. The job worker is alone to pay the excise duty.

The two-member bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that irrespective of the ownership of goods, whoever undertakes the manufacturing activity has to pay the duty.

Cenvat Credit Of Service Tax Can Be Availed On Debit Notes:CESTAT

Case Title: M/s. Visa Resources India Limited Versus Commissioner of CGST & CX

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has observed that the Cenvat credit of Service Tax can be availed on debit notes under the scheme of the Cenvat Credit Rules, 2004.

The bench of P.K. Chaudhary (Judicial Member) has observed that an invoice issued by a provider of input service is a valid document for availment of Cenvat credit. The heading of the document, as seen from sample copies attached with the appeal paper book, though they are nomenclature as debit notes, contains all the disclosures as required in a tax invoice as per Rule 4A of the Service Tax Rules, 1994.

Interface Development Services By Black Rock India - Not An'Intermediary Service': CESTAT

Case Title: M/s. BlackRock Services India Private Limited versus Commissioner of CGST

The Chandigarh Bench of CESTAT has ruled that the services provided by BlackRock India, relating to development of interface for an operating system for investment managers, is not an intermediary service.

The Bench of Ajay Sharma (Judicial Member) and P.V. Subba Rao (Technical Member) held that the 'Business Support Services' rendered by BlackRock to its US based clients would qualify as an export of service in terms of Rule 6A of Service Tax Rules, 1994, and thus, BlackRock was eligible for refund of un-utilised CENVAT credit availed on the input services used in providing the said business support services.

Mandatory Deposit U/S 35F Of Excise Act Cannot Be Made By Way OfDebit In Electronic Credit Ledger Maintained Under CGST Act: CESTAT

Case Title: M/s. Johnson Matthey Chemical India Pvt. Ltd. Versus Assistant Commissioner CGST

The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that a mandatory deposit under section 35F of the Excise Act cannot be made by way of debit in the Electronic Credit Ledger maintained under the CGST Act.

The two-member bench headed by Dilip Gupta (President) and P. Anjani Kumar (Technical Member) has observed that as per the provisions of section 41 of the CGST Act, credit lying in the electronic credit ledger can be utilised only for self-assessed output tax.

No Penalty Can Be Imposed For Introducing The Importer To IECHolder: CESTAT

Case Title: Girish Kumar Singh Versus Commissioner Of Customs

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that a penalty cannot be imposed for introducing the importer to the Importer-Exporter Code (IEC) holder.

The bench of Anil Chaudhary (Judicial Member) has observed that no penalty can be imposed without proving the role of the person being charged.

AAR

Product Marketed Under Brand Name "Ber Berry" Is Classifiable Under GST Tariff Heading 2008: AAR

The Madhya Pradesh Authority of Advance Ruling (AAR) has ruled that the product marketed under the brand name "Ber Berry" manufactured and supplied is covered and classifiable under the GST Tariff heading 2008.

The two-member panel of Virendra Kumar Jain and Manoj Kumar Choubey observed that chapter 8 exclusively covers fresh fruit or fruit cooked by steaming or boiling in water. However, the applicant's procedure exceeds the process covered by chapter 0811. In the applicant's case, the product is soaked in boiling water before being transported to a steamed jacketed tank where it is cooked with steam and additional components such as sugar, salt, preservatives, and spices are added. The process of manufacture of the product of the applicant is not simple to cover in chapter 0811. The applicant's procedure involves the production of fruit that incorporates preservatives as well as additional additives such as sugar, salt, and spices. The tariff classifies it as chapter heading number 2008.

Supply Of Telecommunication Services To Local Authority Is ATaxable Service: AAR

Applicant's Name: M/s. Vodafone Idea Limited

The Telangana Authority of Advance Ruling (AAR) has ruled that the supply of telecommunication services to local authorities is a taxable service.

The two-member bench of B. Raghu Kiran and S.V. Kasi Visweswara Rao has observed that Vodafone Idea Limited is providing data and voice services to the Greater Hyderabad Municipal Corporation (GHMC) and to the employees of the municipalities. There is no direct relation between the services provided by Vodafone Idea Limited and the functions discharged by the GHMC under Article 243W read with Schedule 12 of the Constitution of India. Therefore, the telecommunication services do not qualify for exemption under Notification No. 12/2017.

Manpower and Labour Supply Services Attract 18% GST: AAR

Applicant's Name: M/s. Sri Bhavani Developers

The Telangana Authority of Advance Ruling (AAR) has ruled that the manpower supply or labour supply services by the manpower supply agency fall under SAC 98519 and are taxable at the rate of 18%. The tax has to be paid by the manpower supply agency.

The two-member bench of B. Raghu Kiran and S.V. Kasi Visweswara Rao has observed that GST will not be attracted for labour engaged on a daily basis or for employees, etc., if the service is rendered in the course of employment.

Applicant's Name: Indian Security And Personnel Arrangement

GST Not Payable on Services Provided To Horticulture Dept. forCleaning Transportation of Garbage: AAR

The Karnataka Authority of Advance Ruling (AAR) has held that the GST is not payable on services provided to the horticulture department for cleaning and sweeping of lawns, garden path areas, segregation and transportation of garbage.

The two-member bench of M.P. Ravi Prasad and T. Kiran Reddy has observed that GST is not payable on the services proposed to be provided to the Horticulture Department for the supply of manpower for garden maintenance on an outsourced basis to the Department of Horticulture.

Society Supplying Free Textbooks To Students Is Not "State Government": Karnataka AAR

Applicant's Name: Bhagyam Binding Works

The Karnataka Authority of Advance Ruling (AAR) has ruled that a society registered under the Karnataka Societies Act, 1960 and receiving grants from the Government of Karnataka for the supply of free textbooks to students cannot be considered as "State Government".

The two-member bench of M.P. Ravi Prasad and T. Kiran Reddy has observed that the rate of tax being charged by the printers on the printing of textbooks supplied to the society is taxable at the rate of 18% GST.

GST Exemption On Service Of Educating And Training Farmers Related To Agroforestry: Karnataka AAR

Applicant's Name: Avani infosoft Private Limited

The Karnataka Authority of Advance Ruling (AAR) has ruled that the services of educating and training farmers with regard to agroforestry through scientific research and knowledge do not attract GST.

The two-member bench of M.P. Ravi Prasad and T.Kiran Reddy has observed that the applicants, through their mara mitras, not only educate and train farmers with regard to agroforestry through scientific research and knowledge, but are also involved in hand holding the farmers from recording demand for saplings, picking up the samplings from nurseries to their plantation, and also monitoring post-plantation survival.

'Go-karts' Are Not Roadworthy, Can't Be Registered As MotorVehicles With RTO: Karnataka AAR

Applicant's Name: Knk Karts (p) Limited

The Karnataka Authority of Advance Ruling (AAR) has ruled that the "Go-karts" are not roadworthy and cannot be registered as motor vehicles with the Regional Transport Authority (RTO). Go-Karts are not classifiable as "motor vehicles meant for carrying passengers or persons" under Chapter Tariff Heading 8703 of the First Schedule to the Customs Tariff Act, 1975.

The two–member bench of M.P. Ravi Prasad and T.Kiran Reddy has observed that the 'amusement park ride karts', commonly known as' Go-karts', manufactured and supplied by the applicant attract GST at the rate of 18%.

Printing Of Question Papers Constitutes Supply Of Service And Printing Answer Booklets Constitutes Supply Of Goods: Karnataka AAR

Applicant's Name: P.K.S Centre for Learning

The Karnataka Authority of Advance Ruling (AAR) has held that the printing of question papers constitutes a supply of service and the printing of answer booklets constitutes a supply of goods.

The two-member bench of M.P.Ravi Prasad and T.Kiran Reddy has observed that the GST exemption is available on the question papers. However, GST is payable on the answer booklets.

Direct Taxes

Delhi High Court

Delhi High Court Directs Income Tax Dept. To Decide The Rectification Applications Filed By Jones LNG Lasalle

Case Title: Jones LNG Lasalle Property Consultants Versus DCIT

The Delhi High Court directed the income tax department to decide the rectification applications filed by Jones LNG Lasalle Property Consultants.

The division bench of Justice Manmohan and Justice Preetam Singh Arora has directed that if any refund is due and payable to the petitioner, it shall be refunded within eight weeks.

No Material Found On Search, Income Tax Additions Can't Be Made On Presumption: Delhi High Court

Case Title: PCIT Versus Mamta Agarwal

Citation: 2022 LiveLaw (Del) 740

The Delhi High Court bench of Justice Manmohan and Justice Manmeet Preetam Singh Arora held that if no incriminating material is found during the course of the search, then no addition can be made in the assessment under Sections 153A and 153C of the Income Tax Act.

Show Cause Notice AndReassessment Order Based On Distinct And Separate Grounds, No Details Of BogusPurchases Were Given: Delhi High Court Quashes The Order

Case Title: M/s Best Buildwell Private Limited Versus ITO

Citation: 2022 LiveLaw (Del) 755

The Delhi High Court has held that the show cause notice as well as the reassessment order under Section 148A(d) of the Income Tax Act were based on distinct and separate grounds. The department failed to provide the details of the transaction and the vendors from whom the bogus purchases were made.

The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has observed that "the show cause notice primarily states that "it is seen that the petitioner has made purchases from certain non-filers." However, no details or any information about these entities were provided to the petitioner. It is not understood as to how the petitioner was to know which of the entities it dealt with were filers or non-filers!"

Recovery Of Demand Against Issues Decided In Favour Of Assessee Is Unwarranted: Delhi High Court

Case Title: M/s Expeditors International Of Washingtion, Inc. Versus ACIT

Citation: 2022 LiveLaw (Del) 759

The Delhi High Court has held that the recovery of demand against issues decided in favour of the assessee is unwarranted.

The division bench of Justice Manmohan and Justice Manmeet Singh Arora has found that the Central Board of Direct Taxes (CBDT) has itself issued an Instruction dated February 2, 1993, giving guidelines for Stay of Demand. One of the guidelines for the grant of complete stay was "if the demand in dispute relates to issues that have been decided in assessee's favour by an appellate authority or court earlier...."

Definition Of Relative Under Senior Citizens Act Can't Be Treated At Par With Income Tax Act, 1961: Delhi High Court

Case Title: Miss Indira Uppal Versus UOI

Citation: 2022 LiveLaw (Del) 764

The Delhi High Court has held that the petitioner's real intent was to ensure that gift tax is not levied on donee. The petition does not promote the maintenance and welfare of senior citizens.

The division bench of Justice Manmohan and Justice Manmeet Preetam Singh Arora has observed that as per the object of the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 and the Income Tax Act, 1961, the expression "relative" is not used in a similar context. The term "relative" being wholly context-specific, there is no reason to assume that the criteria used in defining it in one context will provide even a useful starting point in another context.

Income Tax Dept. Can't Withhold Refunds In Mechanical And Routine Manner: Delhi High Court

Case Title: Trueblue India LLP Vs Deputy/Assistant Commissioner of Income Tax Circle

The Delhi High Court has held that an order under Section 241A of the Income Tax Act cannot be passed in a mechanical and routine manner. The refunds cannot be withheld just because the notice under Section 143(2) has been issued and the department wants to verify the claim for deduction under Section 10AA of the Income Tax Act.

The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has observed that the order under Section 241A was generic and no attempt was made by the department to substantiate how the grant of the refund is likely to adversely affect the revenue.

Amendment To Section 36(1)(va) Of Income Tax Act Is ProspectiveIn Nature: Delhi High Court

Case Title: Pr. Commissioner of Income Tax -7 versus TV Today Network Ltd.

The Delhi High Court has allowed the assessee- TV Today Network Ltd.'s claims for deduction of expenses in nature of 'consumption incentive' offered to the advertisers for booking more advertisement space.

The Bench, consisting of Justices Manmohan and Manmeet Pritam Singh Arora, reiterated that the 'due date', in case of delay by the assessee in depositing the employees' contribution to Provident Fund under Section 36(1) (va) of the Income Tax Act, 1961, is to be reckoned as the date for filing the return under Section 139 (1) and not the due date as prescribed under the relevant Labour statute. The Court added that the amendment to Section 36(1)(va), vide the Finance Act, 2021, is 'for removal of doubts' and hence, it cannot be presumed to be retrospective since it alters the law as it earlier stood.

Sum Directed To Be Refunded To Assessee Is A debt In The Hands Of Dept.: Delhi High Court Allows Interest On Refund U/S 244A

Case Title: PCIT Versus Punjab & Sind Bank

Citation: 2022 LiveLaw (Del) 776

The Delhi High Court held that the Punjab & Sind Bank is entitled to a refund of money deposited by it upon re-computation by the department and interest is liable to be paid under Section 244A(1)(b) of the Income Tax Act.

The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has observed that a sum has been found refundable to the assessee as a consequence of a reduction in the taxable income. The sum directed to be refunded to the assessee is a debt in the hands of the department, and for the department to term "payment of this debt" as "interest" is fallacious. In fact, it is on the payment of this debt that the assessee is demanding that the department be liable to pay interest for the period that the department retained the money.

Application Under Companies Act Against Order Rejecting Waiver Of Interest; Dispute Falls Within Scope Of VSV Act: Delhi High Court

Case Title: Kapri International Pvt. Ltd. versus Commissioner of Income Tax

Citation: 2022 LiveLaw (Del) 796

The Delhi High Court has ruled that where an application under the Companies Act has been filed by a company in liquidation against the order of the revenue authorities rejecting the application for waiver of interest for delay in payment of tax dues, the said dispute would fall within the scope of Direct Tax Vivad Se Vishwas Act, 2020 (VSV Act).

The Bench consisting of Justices Mukta Gupta and Anish Dayal ruled that the VSV Act is not a taxing statute but one which provides a dispute resolution scheme for tax disputes and hence, it would be amenable to a purposive construction. The Court held that it was the intent of the legislature to include all sorts of disputes under the VSV Act, even if they were pending before the Commissioner of Income Tax or the courts.

Order Passed Under Section 143(1) Is Not An Assessment; Delhi High Court Dismisses Ernst And Young's Writ Petition

Case Title: Ernst and Young U.S. LLP versus Assistant Commissioner of Income Tax

Citation: 2022 LiveLaw (Del) 798

The Delhi High Court has ruled that the order passed under Section 143(1) of the Income Tax Act, 1961 is not an assessment for the purposes of Section 147 and hence, it is not necessary for the Assessing Officer to come across some fresh tangible material to form a belief that the income of the assessee has escaped assessment in order to reopen assessment.

The Bench of Justices Manmohan and Manmeet Pritam Singh Arora held that no opinion is formed by way of the order passed under Section 143(1), and that only an intimation is issued to the assessee when the return initially filed by it is processed; thus, the doctrine of change of opinion is not attracted.

Delhi High Court

Re-assessment Order Passed Without Considering Detailed Reply Of The Assessee: Delhi High Court

Case Title: Rithala Education Society Versus Union Of India

Citation: 2022 LiveLaw (Del) 816

The Delhi High Court held that the significance of issuing a show cause notice prior to issuing a re-assessment notice has been lost because the order under Section 148A(d) of the Income Tax Act was made without taking into account the detailed reply filed by the assessee.

The division bench of Justice Manmohan and Justice Manmeet Pritam Singh has observed that the department has not examined the petitioner's plea that the petitioner-society has included all the transactions carried out by the Citizen Model School in its books of accounts.

Delhi High Court Allows Deduction To PVR On Difference Between Market Price & Issue Price Of ESOP

Case Title: PVR Ltd. Versus Commissioner Of Income Tax

Citation: 2022 LiveLaw (Del) 817

The Delhi High Court has allowed the appeal of PVR Ltd. and allowed the deduction on the difference between the price at which stock options were offered to employees of the appellant company under ESOP and ESPS and the prevailing market price of the stock.

The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has relied on the decision of the Karnataka High Court in the case of Commissioner of Income Tax vs. Biocon Ltd. and has observed that an assessee is entitled to claim a deduction under Section 37(1) if the expenditure has been incurred. The expression "expenditure" will also include a loss, and therefore, the issuance of shares at a discount where the assessee absorbs the difference between the price at which they are issued and the market value of the shares would also be expenditure incurred for the purposes of Section 37(1). The primary object is not to waste capital but to earn profits by securing the consistent services of the employees. Therefore, it cannot be construed as a short receipt of capital.

Bombay High Court

Recovery Of Tax Dues Of A Company From Its Directors Under Section 179 Of Income Tax Act, Cannot Be Invoked Casually: Bombay High Court

Case Title: Rajendra R. Singh versus Assistant Commissioner of Income Tax and Ors.

The Bombay High Court has ruled that exercise of jurisdiction under Section 179 of the Income Tax Act, 1961 against the director of a public company, to recover the tax dues of the said company, is violative of the principles of natural justice, where the Income Tax Authority has failed to give any opportunity of hearing to the director before applying the principle of 'lifting the corporate veil'.

The Bench, consisting of Justices Dhiraj Singh Thakur and Abhay Ahuja, held that the recovery procedure under Section 179 against the directors of the assessee company cannot be resorted to casually.

Madras High Court

Madras High Court Stays IT Dept's Order Imposing ₹1.5 CrorePenalty On Actor Vijay For Undisclosed Income

Case Title: C Joseph Vijay v. The Deputy Commissioner of Income Tax and others

Case No: WP No. 21006 of 2022

The Madras High Court on Tuesday granted an interim stay on the proceedings initiated by the Income Tax Department against Actor Vijay for "admitted" undisclosed income of Rs. 15 crore in the financial year 2015-16.

The bench of Justice Anita Sumanth passed the interim order on an application filed by the actor and directed the Department to file its counter by September 16.

Allahabad High Court

Non Refund Of Licence Fee For Model Shop, Unused Due To Covid Prohibitions: Allahabad High Court Asks Dept To Explain

Case Title: Nidhi Agarhari Versus State Of U.P. And 3 Others

The Allahabad High Court has held that the department has practically refused to comply with the directions of the Court and has shown misconduct and a flagrant breach of the principles of judicial discipline and propriety.

The division bench of Justice Surya Prakash Kesarwani and Justice Jayant Banerji has observed that the conduct of the department may require the imposition of an exemplary cost and the initiation of appropriate proceedings. However, one opportunity is afforded to the department to file the personal affidavit within one week and show cause as to why an exemplary cost may not be imposed upon them for showing misconduct.

Income Tax Officers Are Frequently Violating Principles OfNatural Justice: Allahabad High Court

Case Title: Nabco Products Private Limited versus Union of India and Ors.

The Allahabad High Court has criticized the Income Tax Authorities for frequently violating the principles of natural justice. The Court ruled that the harassment caused to the assessees and the breach of principles of natural justice by the Income Tax Officers has become uncontrolled due to the absence of an effective system of accountability of the erring officers.

The Bench of Justices Surya Prakash Kesarwani and Jayant Banerji directed the Central Board of Direct Taxes (CBDT) to take steps to remove the shortcomings in the computerisation system controlled by it and to develop a system of accountability among the erring officers and employees of the revenue department.

Illegal Demand Of IncomeTax Mechanically- Allahabad High Court Imposes Cost Of 50 Lakhs On Income TaxAuthorities

Case Title: SR Cold Storage versus Union of India and Ors.

Case Citation: 2022 LiveLaw (AB) 374

The Allahabad High Court has directed that the Union of India or other authorities under the Income Tax Act, 1961 shall not interfere with the quasi-judicial functions and discharge of statutory duties by the Assessing Officers unless permitted by the Income Tax Act.

Further, the High Court directed the Union of India to put in place a mechanism to ensure that the information fed on data-base/ portal of the revenue department is verified in reality, and not as an empty formality, before initiating proceedings under the Income Tax Act, 1961.

Rajasthan High Court

Collection Of Relevant Or Tangible Material Required For Opening Section 148A Proceedings: Rajasthan High Court

Case Title: Abdul Majeed Versus Income Tax Officer

The Rajasthan High Court has held that the authority is required to reach satisfaction that income chargeable to tax has escaped assessment but in cases where three years have elapsed from the end of the relevant assessment year, the order under Section 148A for issuance of notice could be passed if there were no statutory impediment as contained in Section 149(1)(b) of the Income Tax Act.

The division bench of Justice Manindra Mohan Shrivastav and Justice Shubha Mehta has observed that the department failed to place before the Court any material to suggest that the income exceeding Rs. 50,00,000 chargeable to tax has escaped assessment, which would warrant issuance of an order under Section 148A(d) followed by issuance of a notice under Section 148 of the Income Tax Act.

Punjab & Haryana High Court

Insurance Company Not ToDeduct TDS On Interest On Compensation Awarded To The Claimant Till 01.06.2015: Punjab & Haryana High Court

Case Title: New India Assurance Company Limited versus Ravinder Kumar @ Vickey and others

Citation: 2022 LiveLaw (PH) 227

The Punjab and Haryana High Court has ruled that the Insurance Company is not required to deduct TDS on the interest on the compensation awarded to the claimant uptil 01.06.2015, even if the interest amount exceeds Rs. 50,000 per claimant in the financial year.

The Single Bench of Justice Arvind Singh Sangwan reiterated that 194A of Income Tax Act, 1961 is not a charging provision and hence, the provisions of Section 194A that deal with tax deducted at source, do not make the interest income chargeable to tax if it is otherwise not taxable.

Calcutta High Court

Issuance Of Notice And Initiation Of Reassessment Proceeding Beyond 6 Years: Calcutta High Court Stays Proceedings

Case Title: SS Commotrade Private Limited Vs. Income Tax Officer

The Calcutta High Court has held that the issuance of notice and initiation of reassessment proceedings were beyond 6 years. Prima facie, it is barred by limitation both under the old Act as well as under the newly amended provision relating to Section 147 of the Income Tax Act, 1961.

The single bench of Justice Md. Nizamuddin has observed that the petitioner has been able to make out a prima facie case for an interim order by raising the issue of the jurisdiction of the assessing officer in initiating the reassessment proceeding.

ITAT

Loss On Trading In Shares Done By Directors In Individual Capacity, Cannot Be Attributed To Company: ITAT

Case Title: Nekkanti Systems Private Limited versus Income Tax Officer, Ward – 16(2), Hyderabad

The Hyderabad Bench of theIncome Tax Appellate Tribunal (ITAT) has ruled that trading losses sustained by the directors of the assessee company in their individual accounts, cannot be allowed as deduction in the hands of the assessee company.

The Bench, consisting of members Laliet Kumar (Judicial Member) and Rama Kanta Panda (Accountant Member), held that as per the Companies Act, 2013 and the Income Tax Act, 1961, the company and its directors are two distinct juristic entities, and the act done by the directors in their individual capacity cannot be said to be an act on behalf of the company.

Purchase Of New House Without NOC From AO Within 2 years: ITAT Allows Capital Gain Exemption

Case Title: Ramesh Chander Nijhawan Versus ACIT

The Income Tax Appellate Tribunal (ITAT), Delhi Bench has held that the capital gain exemption is allowable even when the amount invested in a capital gain account is utilised for the purchase of a new house without a NOC from AO within 2 years.

The two-member bench of Saktijit Dey (Judicial Member) and Dr. B. R. R. Kumar (Accountant Member) has allowed the expenditure incurred of Rs. 1,65,000, being the commission incurred for the purchase of a residential house and payment made for the deed writer.

Lands Re-Purchased Not To Be Mandatorily Agricultural On The DateOf Re-Investment: ITAT Allows Capital Gain Exemption

Case Title: Shri Adit Rathi Versus I.T.O.

The Pune Bench of theIncome Tax Appellate Tribunal (ITAT), consisting of Satbeer Singh Godara (Judicial Member) and Dipak P. Ripote (Accountant Member), has ruled that the legislature has nowhere incorporated that for claiming the deduction under section 54B of the Income Tax Act, the lands re-purchased have to be agricultural on the date of re-investment.

Cash Gifts Received FromClose Relatives To Treat Cancer Can't Be Termed As "Unexplained":ITAT

Case Title: Ms. Ritu Jain Versus Income Tax Officer

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the addition and held that the cash gifts received by the assessee from her close relatives to treat her husband suffering from cancer cannot be treated as "unexplained".

The bench of Anil Chaturvedi (Accountant Member) has observed that the assessee discharged her initial onus by proving the identity, creditworthiness, and genuineness of the transactions. Therefore, the AO cannot insist on the assessee proving the source of the source.

Income Tax Authorities Cannot Impose Conditions Beyond The Scheme Of Law While Granting RegistrationTo Charitable Institutions: ITAT

Case Title: Bai Navajbai Tata Zoroastrian Girls School versus Commissioner of Income Tax (Exemptions), Mumbai

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the Income Tax Authorities cannot impose additional conditions beyond the scheme of law while granting registration to charitable institutions and trusts under Section 12A of the Income Tax Act, 1961.

The Bench, consisting of Pramod Kumar (Vice President) and Aby T Varkey (Judicial Member), held that the Commissioner of Income Tax (CIT) plays a limited role under Section 12AB (1), while granting registration to the trust/institution under Section 12A, and the CIT cannot supplement the law by laying down the conditions which are not a part of the scheme of registration visualized by law.

Revisionary Order Invalid Due to Lack of DIN: ITAT

The Kolkata Income Tax Appellate Tribunal (ITAT) has declared the revisionary order passed by the CIT(E) and deemed to have never been issued as it fails to mention Document Identification Number (DIN) in its body by adhering to the CBDT circular.

The two-member bench of Sanjay Garg (Judicial Member) and Girish Aggarwal (Accountant Member) observed that there was no reference to the fact that the order was issued manually without a DIN for which the written approval of the Chief Commissioner/Director General of Income-tax was required to be obtained in the prescribed format in terms of the CBDT circular. In terms of the CBDT circular, the lapse renders the order invalid and deemed to have never been issued.

Deposit Received FromNominal Members Of Society, Non-Deduction Of TDS On Interest Paid By Them: ITAT Deletes Addition Of Income

Case Title: Mandheshwari Urban Development Bank Ltd. Versus ACIT

The Income Tax Appellate Tribunal (ITAT) of the Pune Bench struck down the addition made under section 40(a)(ia) of the Income Tax Act for the non-deduction of TDS on interest paid on deposits received from nominal members of the society.

The two-member bench of S. S. Viswanethra Ravi (Judicial Member) and Inturi Rama Rao have observed that the cooperative bank is also a species of cooperative society, and is entitled to the benefit of the general exemption provided to all cooperative societies from the deduction of tax on payment of interest to its members.

Compensation With Interest Received Up To The Date Of Land Acquisition Is Taxable Under The Head "Capital Gains": ITAT

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the compensation with interest received by the assessee up to the date of land acquisition should be taxed under the head "Capital Gains".

The two-member bench of Amit Shukla (Judicial Member) and Gagan Goyal (Accountant Member) has observed that the interest paid to the assessee for any delay in payment of the compensation from the date of acquisition of the property should be taxed under the head "Income from other sources".

Loss Arising From Investment In Equity Shares, Non-Convertible Debentures, Zero Coupon Redeemable Preference Shares Covered Under"Business Loss": ITAT

Case Title: Seshasayee Paper and Boards Ltd. Versus The JCIT

The Income Tax Appellate Tribunal (ITAT) has held that the claim of loss arising from investment in equity shares, non-convertible debentures and zero coupon redeemable preference shares is not a capital loss. The loss is eligible for deduction in the computation of business income as a business loss.

The two-member bench of Mahavir Singh (Vice-President) and Manoj Kumar Aggarwal (Accountant Member) has observed that for the sale of shares and the amount advanced by the assessee to various industries towards working capital, the real character of the transaction was those akin to loans and not equity investment.

ITAT Deletes Addition Made On Streedhan Based On Social Status

Case Title: Gyanendra Singh Shekhawat Versus The ACIT

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the addition made on "Streedhan" based on social status.

The two-member bench of Sandeep Gosain (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) has observed that the AO failed to verify that the assessee was living with his parents and belonged to a Rajput family where the fact of having jewellery as Streedhan by the assessee's mother and wife cannot be ignored. Keeping in view of high status, family tradition, deduction on account of purity and the deduction towards Streedhan, the excess jewellery found was nominal.

ITAT Deletes Addition On Excess Gold Belonging To Assessee'sMother

Case Title: Muppavarapu Kavitha, Vijayawada Versus Asst. Commissioner of Income Tax

The Visakhapatnam bench of theIncome Tax Appellate Tribunal (ITAT)has deleted the addition of excess gold belonging to the mother of the assessee, who is staying with the assessee as the only daughter, and considered it to belong to the family members of the assessee.

The two-member bench of Duvvuru R.L. Reddy (Judicial Member) and S.Balakrishnan (Accountant Member) has held that in the case of a person who is not assessed for wealth tax, gold jewellery and ornaments to the extent of 500 gramsper a married lady, 250 grams per an unmarried lady, and 100 grams per male member of the family should not be seized.

ITAT Allows Deduction On Penalty Levied By SEBI For Shortfall InMargin Money

Case Title: DJS Stock and Shares Ltd. Versus DCIT

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT)has allowed the deduction of the penalty levied by the Securities and Exchange Board of India (SEBI) for a shortfall in margin money.

The bench of B.R. Baskaran (Accountant Member) has observed that the penalty levied by SEBI for shortfall in margin money cannot be considered as a penalty for violation of any law falling within the ambit of section 37(1) of the Income Tax Act.

Interest Payment On Late Payment Of TDS Not Eligible For Deduction Under Business Expenditure: ITAT

Case Title: Universal Energies Ltd. Versus DCIT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that interest payment on late payment of TDS is not an eligible business expenditure for deduction and it is not compensatory in nature.

The two-member bench of A. D. Jain (Vice President) and Dr. B. R. R. Kumar (Accountant Member) has observed that the payment of interest on late deposit of TDS levied u/s 201(1A) is neither an expenditure only and exclusively incurred for the purpose of the business nor a deduction under section 37(1) of the Income Tax Act.

Gain Or Loss Arising Out Of Change In Foreign Exchange Rate Can Be Treated As An Income Or Loss After Computation: ITAT

Case Title: M/s. Altisource Business Solutions Private Limited Versus The Deputy Commissioner of Income Tax, NFAC, Delhi

The Banglore Bench of the Income Tax Appellate Tribunal (ITAT) has held that the gain or loss arising out of a change in the foreign exchange rate can be treated as an income or loss provided that it is computed in accordance with the Income Computation and Disclosure Standards (ICDS) notified under section 145(2) of the Income Tax Act, 1961.

The two-member bench of George George K. (Judicial Member) and Padmavathi S. (Accountant Member) observed that the amount claimed is a net loss after considering the foreign exchange gains arising in certain transactions and that the assessee has also submitted the invoice-wise details of foreign exchange loss and gain. The foreign exchange loss claimed by the assessee is an allowable expenditure.

Expenditure In Carrying Out Foreign Travel Directly Relating To Securing Capital Investment In The Business Is Capital In Nature: ITAT

Case Title: M/s. Balkrishna Live Stock Breeders Pvt. Ltd. Versus ACIT

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the expense of carrying out foreign travel directly relating to securing capital investment in the assessee's business cannot be in the revenue nature. On the other hand, it is capitalist in nature.

The two-member bench of Beena Pillai (Judicial Member) and Chandra Poojari (Accountant Member) has observed that the assessee furnished only the supplementary agreement with the above party and did not furnish the main agreement also. It can be inferred that the assessee wanted to hide the real intention of going abroad to go to foreign countries and incur expenditure.

Non-Existence Of Parties Who Gave Loan To Assessee Is Indication Of Its Prima Facie Bogus Nature: ITAT

Case Title: ACIT Versus M/s Hare Krishna Orchid

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that the non-existence of the parties who have given loans to the assessee is a clear indication of their nature being prima facie bogus.

The two-member bench of Yogesh Kumar US (Judicial Member) and Shamim Yahya (Accountant Member) has observed that in the entire proceeding, there is no discussion about the loan documentation and terms of condition of the loan, the issue of TDS, and nothing has been examined.

Non- Deliberate Delay In Late Filing SFT Return : ITAT Quashes Penalty

Case Title: The Rewari Central Co- operative Bank Ltd. Versus Directorate of Income Tax, (I & CI)

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed the penalty on the grounds that the delay in the late filing of the Statement of Financial Transaction (SFT) return was not deliberate.

The two-member bench of Yogesh Kumar (Judicial Member) and Shamim Yahya (Accountant Member) observed that an order imposing a penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding. The penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of the law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation.

Activity Of Chemist/Pharmacy Is Incidental To Dominant Object For Running A Hospital: ITAT

Case Title: Dy. Commissioner Income Tax (E)-1(1) Versus M/s. Karuna Medical Society

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) consisting of Rahul Choudhary (Judicial Member) and M. Balaganesh (Accountant Member) has held that the activity of a chemist or pharmacy is incidental or ancillary to the dominant object of running a hospital.

Assessee Required To Substantiate Claim Of TDS, In Absence Of TDS Certificate: ITAT

Case Title: DZ Bank versus DCIT (International Taxation)

The Mumbai Bench of ITAT has ruled that where the assessee has no TDS certificate available with it, it is required to discharge its responsibility of proving whether TDS was deducted by the payer of income or not in order to avail credit of TDS. The Tribunal ruled that the onus is on the assessee to substantiate its claim of tax deducted at source on the payments received by it.

The Bench, consisting of Rahul Chaudhary (Judicial Member) and Om Prakash Kant (Accountant Member), reiterated that the assessee should be provided credit of TDS deducted by the payer of income, irrespective of whether the TDS was deposited by the deductor into the government account or not.

Interest Levied On Arrears Or Late Payment Of Customs Duty Allowable On Actual Payment Basis: ITAT

Case Title: M/s.HP India Sales Private Versus The Joint Commissioner of Income-tax

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has held that customs duty is allowable only on a payment basis under section 43B of the Income Tax Act. The interest levied on arrears or late payment of customs duty is also allowable on an actual payment basis under section 43B.

The two-member bench of George George K (Judicial Member) and Laxmi Prasad Sahu (Accountant Member) has directed the AO to verify the nature of the levy of interest on customs duty and decide the allowability of deduction.

Failure Of Assessee To Explain Identity And Credit worthiness Of Creditors And Genuineness Of Transaction: ITAT Sustains Addition

Case Title: Ghaus Memorial Sahkari Awas Samiti Ltd. Versus ACIT

The Allahabad Bench of the Income Tax Appellate Tribunal (ITAT) has sustained the addition as the assessee failed to explain the identity and creditworthiness of the creditors and the genuineness of the transaction.

The two-member bench of Vijay Pal Rao (Judicial Member) and Ramit Kochar (Accountant Member) has observed that fresh deposits being advanced for land from members raised by the assessee were in the form of cash credits, which are recorded in the assessee's books of accounts. The onus is on the assessee to explain the identity and creditworthiness of the creditor and the genuineness of the transaction .

Compensation For Compulsory Acquisition Of Commercial Land Exempted From Income Tax: ITAT

Case Title: ITO Versus Shri Suresh Prasad

The Patna Income Tax Appellate Tribunal (ITAT) has held that the compensation received in respect of an award or agreement has been exempt from the levy of income tax as per section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act, 2013 (RFCTLARR Act).

The two-member bench of Sonjoy Sarma (Judicial Member) and Manish Borad (Accountant Member) has observed that no distinction was made between compensation received for compulsory acquisition of agricultural land and non-agricultural land in the matter of providing exemption from income tax under the RFCTLARR Act.