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Tax Cases Weekly Round-Up: 13 November To 19 November 2022

Mariya Paliwala
20 Nov 2022 3:00 PM GMT
Tax Cases Weekly Round-Up: 13 November To 19 November 2022
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Supreme CourtSec.194H Income Tax Act Attracted For 'Supplementary Commission' Earned By Travel Agents ; Airlines Liable To Deduct TDS : Supreme CourtCase Title: Singapore Airlines Ltd. vs C.I.T., Delhi Citation: 2022 LiveLaw (SC) 959 The Supreme Court held that Section 194H of the Income Tax Act is attracted in the case of Supplementary Commission amounts earned by the travel agent...

Supreme Court

Sec.194H Income Tax Act Attracted For 'Supplementary Commission' Earned By Travel Agents ; Airlines Liable To Deduct TDS : Supreme Court

Case Title: Singapore Airlines Ltd. vs C.I.T., Delhi

Citation: 2022 LiveLaw (SC) 959

The Supreme Court held that Section 194H of the Income Tax Act is attracted in the case of Supplementary Commission amounts earned by the travel agent and therefore Airlines are liable to deduct TDS in this regard.

The bench comprising Justices Surya Kant and MM Sundresh upheld the Delhi High Court judgement and overruled the Bombay High Court judgement in CIT v. Qatar Airways [2009 SCC OnLine Bom 2179] that had held otherwise.

Delhi High Court

Delhi High Court Stays Reassessment Order Against IBIBO Group

Case Title: IBIBO Group Pvt. Ltd. Versus DCIT

The Delhi High Court has stayed the reassessment order against an online travel agent, IBIBO Group, and issued a notice to the income tax department.

"The Assessing Officer is permitted to pass the reassessment order, yet the same shall not be given effect to and shall be subject to further orders to be passed by this Court," the division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora ordered.

Addition/Disallowance Can't Be Made Merely On Assessee's Admission During Search: Delhi High Court

Case Title: PCIT Versus PGF Ltd.

The Delhi High Court has held that the statement recorded during the course of the search, on a standalone basis, without any reference to material found during the search, would not empower the AO to make additions/disallowance merely on the assessee's admission.

Bombay High Court

Time Limit To Refer Statement Of Case By CESTAT To High Court, Under Section 130A (4) Of The Customs Act, Is Directory: Bombay High Court

Case Title: Asit C. Mehta Financial Services Limited versus The Customs Excise and Service Tax Appellate Tribunal (CESTAT)

The Bombay High Court has ruled that the time limit within which the Customs Excise and Service Tax Appellate Tribunal (CESTAT) is required to refer the statement of the case to the High Court, as prescribed in Section 130A (4) of the Customs Act, 1962, is only directory and not imperative in nature.

The Division Bench of Justices K.R. Shriram and A.S. Doctor held that the CESTAT is a judicial body, over whose actions the revenue authorities have no control. It added that if the time limit within which the CESTAT is required to make a reference, as provided in Section 130A (4), is construed as mandatory, it might deprive the revenue authorities of their right to have a question of law considered by the High Court.

Assessee Can't forgo the deemed excise credit: Bombay High Court Orders Tran 1 Or Tran 2 to be filed on GST portal

Case Title: Euro Pratik Sales Corporation Vs. Union of India and Ors

The Bombay High Court has held that it will be wholly unfair if the assessee ends up having to forgo the deemed excise credit, particularly when under Section 29(3) his liability will continue even after cancellation of registration.

Karnataka High Court

Open Purchase Orders Are Standing Offers, Movement of goods are mere stock transfers, No Sales Tax Payable: Karnataka High Court

Case Title: M/s. BASF India Ltd. Versus State of Karnataka

Citation: 2022 LiveLaw (Kar) 461

The Karnataka High Court has held that open purchase orders are only standing offers that do not constitute a confirmed "agreement to sell" and that movements of goods are mere stock transfers.

Kerala High Court

Interest Not Leviable For Belatedly Deducting TDS If There Is No Liability: Kerala High Court

Case Title: Special Tahsildar Versus Union Of India

The Kerala High Court has held that where there is no liability to deduct TDS, the mere fact that TDS was so deducted and paid to the Income Tax Department belatedly, cannot give rise to a claim for interest under Section 201(1A) of the Income Tax Act.

Madras High Court

DGFT Cannot Amend Foreign Trade Policy; Can't Restrict The Benefit Of SHIS Scheme: Madras High Court

Case Title: M/s. Polyhose India Private Limited versus The Additional Director General of Foreign Trade

Citation: 2022 LiveLaw (Mad) 464

The Madras High Court has ruled that the Director General of Foreign Trade (DGFT), in exercise of its power to clarify the doubts regarding the interpretation of the Foreign Trade Policy (FTP), as formulated by the Central Government, cannot amend the very policy itself.

Andhra Pradesh High Court

18% GST Payable On Manufacturing Of Alcohol For Human Consumption By Way Of Job Work: Andhra Pradesh High Court

Case Title: M/s.Esveeaar Distilleries Private Limited Versus Assistant Commissioner (State Tax)

The Andhra Pradesh High Court has held that 18% GST is payable on the manufacturing of alcohol for human consumption by way of job work.

The division bench of Justice C. Praveen Kumar and Justice A.V. Ravindra Babu has observed that alcoholic liquor is not considered a food. Services by way of job work in relation to the manufacture of alcoholic liquor for human consumption are not eligible for 5% GST.

Punjab and Haryana High Court

Subcontracting For A Service Is Not An "Intermediary" Service: Punjab and Haryana High Court orders Refund

Case Title: Genpact India Pvt. Ltd. Versus Union of India and others

The Punjab and Haryana High Court has quashed a demand by the GST Department against Genpact India and held that subcontracting for a service is not an "intermediary" service.

ITAT

Liability To Deduct TDS Under Section 201 of Income Tax Act Is A Vicarious Liability, Which Ends With Discharge Of Principal Liability Of Recipient Of Income: ITAT

Case Title: ICICI Securities Limited versus Income Tax Officer, International Taxation

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the liability to deduct tax at source (TDS) under Section 201 read with Section 195 of the Income Tax Act, 1961, is a vicarious liability of the payer of an income and thus, the liability to deduct TDS ceases to exist when the primary liability of the recipient of income is already discharged.

Reliance Industrial Holdings and Biomatrix Not Associated Enterprises, No income Escaped : ITAT

Case Title: Deputy Commissioner of Income Circle 3 (3)(1), Mumbai Versus Reliance Industrial Holdings Pvt Ltd

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that Reliance Industrial Holdings and Biomatrix were associated enterprises, and, therefore, it could not be said that any income on account of Arm's Length Pricing (ALP) has escaped assessment.

ITAT Allows Deduction To SBI On Total Outstanding Advances At The End Of Each Month Considering The Opening Balances

Case Title: The State Bank of India Versus Asstt. Commissioner of Income Tax Circle–Patiala

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has allowed the deduction to the State Bank of India (SBI) on the total outstanding advances at the end of each month, considering the opening balances.

Interest Earned On FDs Kept As Security For PG Is Taxable As Business Income: ITAT

Case Title: NCML Varanasi Private Limited Versus ITO

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that the interest income earned on fixed deposits kept as security for performance guarantees is taxable as business income and can be set off against project expenses.

The single bench of Saktijit Dey (Judicial Member) has directed the Assessing Officer to refund the TDS amount to the assessees.

Source of cash deposits can't be discarded if shown On Cashbook Entries: ITAT

Case Title: Smt. Perminder Kaur Matharoo Versus The I.T.O

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that a cash flow statement based on the entries made in the cash book reveals the source of cash deposited in the bank account and cannot be discarded by the authorities below.

The two-member bench of Kul Bharat (Judicial Member) and N.K. Billaiya (Accountant Member) has directed the Assessing Officer to delete the addition of Rs. 7,65,000.

Appeal By Assessee Prior To Declaration Under VSVS Act, Shall Revive On Failure To Pay the Tax Determined: ITAT

Case Title: ACIT versus M/s. Lifecell International Private Limited

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has ruled that if the assessee violates the conditions prescribed under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSVS Act) by not paying the tax determined by the designated authority, the appeal filed by it prior to filing a declaration under the DTVSVS Act, disputing the tax liability raised against it, shall revive under Section 4(6) of the DTVSVS Act.

Employees' Contribution To PF And ESI Should Be Remitted Before The Due Date To Allow Income Tax Deduction: ITAT

Case Title: M/s.Technocon Constructions & Infrastructure Private Limited Versus DCIT

The Banglore Bench of the Income Tax Appellate Tribunal (ITAT) has held that the employees' contribution to PF and ESI should be remitted before the due date for it to be allowable under Section 43B of the Income Tax Act.

Unrealized sale proceeds have to be excluded from export turnover as well as total turnover: ITAT

Case Title: M/s.Pentasoft Technologies Ltd. Versus The ITO

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that unrealized sale proceeds have to be excluded from an export turnover as well as total turnover.

CESTAT

Not a bonfide importer, Paid For Making Forged Licences To Clear Bills of Entry: CESTAT

Case Title: M/s Nidhi Enterprises Versus Commissioner of Customs, (Export), New Delhi

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has found that the appellant has not paid duty to the government exchequer but instead paid a percentage of the amount equivalent to the duty to the firms for making forged licences to clear the bills of entry.

Service Tax Leviable On Policy Administration Charges From 1 May, 2011: CESTAT

Case Title: M/s. Max Life Insurance Company India Ltd. Versus Commissioner of Central Excise & Service Tax

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax is leviable on policy administration charges with effect from 01.05.2011.

The two-member bench of Anil Choudhary (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that in view of the clarification by the Board in TRU Circular dated 26.02.2010, 2010, policy administration charges are chargeable to tax under Section 65 (105) (zx). Thus, the department cannot be permitted to take a U-turn in light of the board's circular. Board circulars are binding on the officers of the department.

CESTAT Allows Interest On Delay In Refund Of Excess Reversal Of CENVAT Credit

Case Title: Reliance Industries Ltd. versus C.C.E. & S.T.-Vadodara-ii

The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has ruled that Reliance Industries is entitled to interest on delay in refund of excess reversal of CENVAT credit.

The bench of Judicial Member Ramesh Nair dismissed the contention of the revenue department that since the assessee- Reliance Industries, was entitled to adjust the excess amount by taking credit suo moto under the CENVAT Credit Rules, 2004, which it had failed to do so, it was not entitled to interest.

AAAR

ITC Can't Be Availed By Housing Society On Works Contract Services Of Repairs, Renovations, Rehabilitation: AAAR

Appellant's Name: M/s. Mahavir Nagar Shiv Shrushti Co-op. Housing

The Maharashtra Appellate Authority of Advance Ruling (AAAR) has ruled that the housing society is ineligible to claim input tax credit (ITC) on contract services received from their appointed contractor due to the housing society's ineligibility to claim ITC on repairs, renovations, and rehabilitation works.

The two-member bench of Ashok Kumar Mehta and Rajeev Kumar Mital has observed that the society itself is not a work contract service provider, nor is it in the business of providing work contract services. The contract services received by society from appointed contractors are for the common benefit of the members.

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