Supreme Court

Industrial Townships Are "Local Areas" For Entry Tax Levy By States Though They Are Excluded From Municipalities : Supreme Court

Case Title: OCL India Limited vs State of Orissa

Citation: 2022 LiveLaw (SC) 911

The Supreme Court upheld States' power to impose entry tax from Industrial Township/Areas.

The bench of CJI UU Lalit, Justices S. Ravindra Bhat and J B Pardiwala held that industrial townships are 'local area' for the purposes of entry tax.

Supreme Court Declines To Grant Relief In Department's SLP Against Judgement On Countervailing Duty

Case Title: Union of India versus Real Strips Ltd.

The Supreme Court adjourned without issuing notice, the department's appeal against the Gujarat High Court's judgement in the case of countervailing duty (CVD).

The bench of Justice Sanjeev Khanna, and Justice J K Maheshwari, while observing in favor of the domestic industry, repeatedly directed the government to follow the judgment of the Gujarat High Court to avoid unnecessary litigation.

Delhi High Court

Physical verification of business premises; GST dept failed to issue notice : Delhi High Court

Case Title: Bimal Kothari Versus Assistant Commissioner

The Delhi High Court has held that the GST department failed to issue the notice to the person who must be present at the time of physical verification of business premises.

The division bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju has observed that the verification report, though generated, has not been uploaded, as required, in Form GST REG-30 on the common portal.

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.

Notification Granting IGST Exemption To Capital Goods Imported Under EPCG scheme Is Clarificatory, Curative: Bombay High Court

Case Title: M/s. Sanathan Textile Pvt. Ltd. Versus Union of India

The Bombay High Court has held that notification no. 79/2017-Customs dated October 13, 2017, amending notification no. 16/2015-Customs and granting exemption from the IGST to the capital goods imported under the Export Promotion Capital Goods Scheme (EPCG Scheme) is clarifying and curative.

The division bench of Justice K.R. Sriram and Justice Arif S. Doctor has directed the department to refund in cash the IGST paid on imports of capital goods made during the period 01.07.2017 to 12.10.2017.

Import Of New/Unused Jewellery For Remaking After Melting In An SEZ, Is Permissible; Bombay High Court Sets Aside Levy Of Customs Duty

Case Title: M/s. Renaissance Global Limited versus Union of India & Ors. (Writ Petition No.2003 of 2009)

The Bombay High Court has ruled that import of finished jewellery for the purpose of melting and remaking of fresh pieces of jewellery in a Special Economic Zone (SEZ), is an authorised operation. Therefore, the Court held that there is no prohibition on import of finished jewellery for remaking, without payment of Customs Duty, in terms of Rule 27(1) of the Special Economic Zones Rules, 2006 (SEZ Rules).

Bombay High Court Allows Nuvoco Vistas To File GST TRAN-1 For Availing Transitional ISD Credit

Case Title: Nuvoco Vistas Corporation Ltd. Vs. The Union of India and Ors.

The Bombay High Court has allowed the assessee, Nuvoco Vistas, to file GST TRAN-1 to avail of the transitional Input Service Distributor (ISD) credit of service tax.

The division bench of Justice K.R. Shriram and Justice A.S. Doctor has observed that the GST TRAN-1 or revised GST TRAN-1 filed by the units or offices will be based on the manual ISD invoices to be issued by the petitioner's ISD, subject to aggregate credit not exceeding the ISD credit available to the petitioner.

Madras High Court

Assessment Made To Best Of Judgment Of Authority Would Not Be Sufficient For Imposition Of Penalty: Madras High Court

Case Title: N/s.Sayar Cars Versus The Appellate Deputy Commissioner (CT)

The Madras High Court has held that the assessment made to the best of the authority's judgement would not be sufficient for the imposition of penalty, as the degree of proof required for the imposition of penalty is much higher than that required for the purpose of framing a best judgement assessment.

Show Cause Notice Issued To The Driver Of Consignment Is Not Adequate: Madras High Court

Case Title: Ramki Cements Private Limited Versus The State Tax Officer

The Madras High Court has held that the show-cause notice issued to the driver of the consignment is not adequate.

The single bench of Justice S. Srimathy has quashed the demand for tax and penalty in Form GST MOV-09 and directed the department to issue a fresh notice.

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.

Allahabad High Court

Demand Of Tax and penalty can't be imposed on the basis of conjecture : Allahabad High Court

Case Title: State Of U.P. Versus M/S Maa Vindhyavasini Tobacco Pvt Ltd

Citation: 2022 LiveLaw (AB) 480

The Allahabad High Court has held that the demand for tax and penalty cannot be imposed on the basis of conjecture and surmise, especially in cases where the goods were accompanied by a tax invoice and E-way bill.

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

Parking Services Of Cycle, Scooters Doesn't Attract Service Tax: Punjab & Haryana High Court

Case Title: Sham Lal Versus State of Haryana and others

The Punjab and Haryana High Court has held that the service tax is not payable on the parking services for cycles and scooters.

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.

Jharkhand High Court

Deposit in Electronic Cash Ledger prior to due date of filing of GSTR-3B return does not discharge tax liability: Jharkhand High Court

Case Title: M/s RSB Transmissions (India) Limited Versus Union of India

Citation: 2022 LiveLaw (Jha) 92

The Jharkhand High Court has ruled that any deposit in the electronic cash ledger prior to the due date for filing the GSTR 3B return does not amount to a discharge of the registered person's tax liability.

The division bench of Justice Aparesh Kumar Singh and Justice Deepak Roshan observed that an electronic cash ledger is just an e-wallet where cash can be deposited at any time by creating the requisite challans. Since the amount is deposited in the electronic cash ledger, a registered assessor can claim its refund at any time.

Calcutta High Court

Tata Steel Limited, Is Entitled To A Refund Of Excess CST Collected By IOCL And Remitted To State - Calcutta High court

Case Title: Commissioner of Commercial Tax Versus Tata Steel Limited

The Calcutta High Court has held that Tata Steel is entitled to the concessional rate of tax as they have fulfilled the conditions in Section 8 of the Central Sales Tax Act.

The division bench of Justice T.S. Sivagnanam and Justice Supratim Bhattacharya has observed that Tata Steel, as a purchasing dealer, has the capacity to maintain the claim for refund of the excess tax collected directly from them, and the writ petition is maintainable.

Jharkhand High Court

Dispute Arising Out Of Erstwhile Central Excise Act Has To Be Dealt With Under Its Provisions And Not Under GST: Jharkhand High Court

Case Title: M/s Usha Martin Limited Versus Additional Commissioner

The Jharkhand High Court has held that the initiation of proceedings by the department under section 73 (1) of the CGST Act, 2017 for alleged contravention of the Central Excise Act (C.E.A.) and Finance Act against the petitioner in terms of Section 140 of the CGST Act for the transition of CENVAT Credit as being inadmissible under GST was beyond his jurisdiction.

CESTAT

Currency can't be confiscated if it is not Proceeds Of Goods Cleared Clandestinely: CESTAT

Case Title: Patidar Products Versus C.C.E. & S.T.-Bhavnagar

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the seized currency during the course of an investigation cannot be confiscated without proving that the said seized currency is the sale proceeds of excisable goods cleared clandestinely.

Parking Services Of Cycle, Scooters Doesn't Attract Service Tax: Punjab & Haryana High Court

Case Title: Sham Lal Versus State of Haryana and others

The Punjab and Haryana High Court has held that the service tax is not payable on the parking services for cycles and scooters.

No Mala Fide Intent To Evade Service Tax: CESTAT Quashes Penalty

Case Title: Dinesh Chandra Dubey Versus & Service Tax, Excise and Customs

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has deleted the penalty and held that the service provider receiving a commission in lieu of providing "business auxiliary services" from Adarsh Credit Cooperative Society did not have a mala fide intention to evade service tax.

No Service Tax Payable On Facility Charges Attributable To Electricity Expenses: CESTAT

Case Title: Nai Dunia Media Pvt. Ltd. Versus Commissioner of Central Goods & Service Tax and Central Excise

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not payable on the amount received as facility charges as it was wholly attributable to electricity expenses, which have been shared proportionately by the assessee and its sister concerns.

Intentional Short Payment Of Excise Duty: CESTAT Upholds Penalty

Case Title: Meghmani Organics Ltd. Versus C.C.E. & S.T.-Surat-ii

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has upheld the penalty under Section 11AC of the Central Excise Act, 1944, on the ground of intentional short payment of excise duty.

Finished Goods Destroyed In Fire; Bajaj Herbals Eligible For Remission Of Excise Duty: CESTAT

Case Title: Bajaj Herbals Private Ltd Versus C.C.E. Ahmedabad-II

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Bajaj Herbals was eligible for remission of duty on the finished goods destroyed in the fire incident.

No Excise Duty Can Be Demanded On Semi-Finished Goods Lying At The Time Of Debonding Of 100% EOU: CESTAT

Case Title: IPCA Laboratories Ltd. Versus C.C.E

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that excise duty cannot be demanded on semi-finished goods or work in process lying at the time of debonding of 100% Export Oriented Units (EOU).

Cenvat Credit Can't Be Denied Merely For Non-Registration Of Input Service Distributor : CESTAT

Case Title: M/s. Arkkays National Engineering & Foundry Co. Versus The Commissioner of GST & Central Excise

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that cenvat credit cannot be denied on the grounds of non-registration of input service distributor registration in respect of bank charges and chartered accountant services.

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.

Service Tax Under RCM For Works Contract Service Not Applicable on Corporate Assesses: CESTAT

Case Title: M/s TDK India Private Limited Versus Commissioner of CGST & Excise, Kolkata North

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), consisting of P.K. Chaudhary (Judicial Member), has held that the notification levying service tax under the reverse charge mechanism (RCM) for works contract service shall be applicable only to individuals, partnership firms, and Hindu Undivided Families (HUF), and not to corporate assessees.

No Service Tax Payable On Sale Of Ready-Mix-Concrete: CESTAT

Case Title: Perfect Ready Mix Concrete Versus Commissioner of Central Excise & ST, Vadodara

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the entire exercise is the sale of ready-mixed concrete (RMC) and there is no service element involved so as to create service tax liability against the assessee.

The two-member bench of Ramesh Nair (judicial member) and Raju (technical member) has observed that the department has very much accepted the activity of the appellant as manufacturing and collected the excise duty on the entire value of RMC, which includes the pumping and laying of RMC at the site. As a result, the department cannot take two positions: one supporting the manufacturer's demand for excise duty while also demanding service tax under the Works Contract Act.

No Service Tax Payable On Security Deposit Taken From Customers Towards Trading Of Shares: CESTAT

Case Title: Marwadi Shares & Finance Ltd. Versus C.C.E. & S.T.-Rajkot

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not payable on security deposits taken from customers towards the trading of shares.

Payment On One-Time Premium/Aalami Can't Be Charged To Service Tax Under Renting Of Immovable Property: CESTAT

Case Title: Gujarat Power Corporation Ltd. Versus C.C.E. & ST

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the payment of a one-time premium or salami cannot be charged to service tax under the heading "renting of immovable property service."

The two-member bench of Ramesh Nair (judicial member) and Raju (technical member) has observed that service tax under Section 65(105)(zzzz) read with Section 65(90a) cannot be charged on the "premium" or "salami" paid by the lessee to the lessor for transfer of an interest in the property from the lessor to the lessee as the amount is not for the continued enjoyment of the property leased.

External Hard Disk Drives Eligible For Concessional Rate Of Additional Customs Duty: CESTAT

Case Title: Lenovo India Pvt. Ltd. versus Principal Commissioner of Customs (Import)

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has reiterated that import of external/portable hard disk drives are eligible for concessional rate of additional customs duty, as provided under Notification No. 6/2006-CE, dated 1^st March 2006, and Notification No. 12/2012-CE, dated 17^th March 2012.

CBEC Not Empowered To Modify the Scope of Exemption Notification issued by the Central Government: CESTAT

Case Title: M/s Lakshya Education Solutions Pvt. Ltd. Versus The Commissioner (Appeals), Customs, Central Excise & Service Tax

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the Central Board of Excise and Customs (CBEC) is not empowered to modify the scope of an exemption notification that the Central Government has issued.

AAAR

Setting up of Electric Loco Shed For Railway Constitutes Composite Supply Of Works Contract Service: AAAR

Appellant's Name: M/s HYT Engineering Company Private Limited

The Uttar Pradesh Appellate Authority of Advance Ruling (AAAR) has held that the setting up of an Electric Loco Shed for the Railway constitutes a composite supply of work contract service.

The two-member bench of S. Kannan and Ministhy S. has observed that the project of setting up an electric loco shed at Saiyedpur Bhitri, Uttar Pradesh, fulfils the conditions of it being an immovable property.

Applicant Withheld Information Regarding Commencement Of Investigation: AAAR Declares AAR's Ruling Void

Appellant's Name: M/s. Shalby Limited

The Gujarat Appellate Authority of Advance Ruling (AAAR) declared the AAR ruling void as the appellant had withheld information regarding the commencement of an investigation against them on the issue raised by them in the application for an advance ruling.

Liquidated Damages Recoverable From Bi-electric India For Delay In Commissioning, Doesn't Qualifies As Supply, No GST Payable: AAAR

Applicant's Name: M/s. Achampet Solar Private Limited

The Telangana Appellate Authority of Advance Ruling (AAAR) has held that liquidated damages recoverable by the applicant from Bi-electric India on account of delay in commissioning do not qualify as a "supply" and no GST is payable.

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.

GST Payable On Medical insurance premium for employees and pensioners: Telangana AAAR

Appellant: M/s. Hyderabad Metropolitan Water Supply And Sewerage Board

The Telangana Appellate Authority of Advance Ruling (AAAR) has ruled that no GST exemption is available on medical insurance premiums taken to provide health insurance to employees, pensioners, and their family members.

The two-member bench of Neetu Prasad and B.V. Siva Naga Kumari has observed that the insurance services for employees and employees' family members received by the appellant are not in direct and proximate relation to the water supply and sewerage-related functions entrusted under Article 243W of the Constitution of India, hence the supplies received by the appellant are not exempted from GST.

No GST Exemption On Sub-Contract Services To Educational Boards: Telangana AAAR

Applicant's Name: M/s. Magnetic Infotech Pvt Ltd

The Telangana Appellate Authority of Advance Ruling (AAAR) has ruled that there is no GST exemption on sub-contract services to educational boards.

The two-member bench of B.V. Sivanaga and Neetu Prasad has observed that the exemption would be available when the services are provided "to" an educational institution for services relating to admission to or the conduct of examination by the institution.

AAR

ITC Can Be Claimed Under Marginal Scheme On Rent, Advertisement expenses, commission, Professional expenses: AAR

Applicant's Name: Attica Gold Private Limited

The Karnataka Authority of Advance Ruling (AAR) has held that the input tax credit (ITC) under the marginal scheme on expenses like rent, advertisement expenses, commission, professional expenses, and other like expenses is subject to sections 16 to 21 and rules 36-45 of the CGST Act and Rules 2017.

The two-member bench of M.P. Ravi Prasad and Kiran Reddy T. has observed that ITC can be claimed on capital goods under the marginal scheme, subject to sections 16 to 21 and rules 36-45 of the CGST Act and Rules 2017.

Activities Carried Out by Sub-Contractor For Shifting Electrical Utilities Can't be Regarded as Composite Supply of Works Contract: AAR

Applicant's Name: Shree Powertech

The West Bengal Authority for Advance Ruling (AAR) has held that activities carried out by subcontractors for the shifting of electrical utilities for the construction of roads cannot be regarded as a composite supply of works contracts.

GST Not Payable On Notice Pay Recovery From Outgoing Employee: Punjab AAR

Applicant's Name: Rites Limited

The Punjab Authority of Advance Ruling (AAR) has held that the GST is not payable on notice pay recovered from outgoing employees.

The member bench of Sunder Lal and Kumud Singh has observed that the amount received as notice pay recovery by the applicant from the employees who leave the applicant company without serving the mandatory notice period mentioned in the employment contract is not a consideration for any supply or service.

Tax Paid On Purchases To Meet The CSR Obligations Is Eligible For ITC: Telangana AAR

Applicant's Name: Bambino Pasta Food Industries Private Limited

The Telangana Authority of Advance Ruling (AAR) has ruled that the tax paid on purchases made to meet the obligations under corporate social responsibility (CSR) will be eligible for input tax credit (ITC) under the CGST and SGST Acts.

Cost Of The Diesel For Providing DG Set Rental Service Attracts 18% GST: Uttarakhand AAR

Applicant's Name: Tara Genset Engineers Regd

The Uttarakhand Authority of Advance Ruling (AAR) has ruled that 18% GST is applicable on the cost of the diesel incurred for running diesel generators (DG) in the course of providing DG rental service.

The two-member bench of Anurag Mishra and Rameshwar Meena has observed that consideration for reimbursement of expenses, such as the cost of the diesel for running the DG set, is nothing but an additional consideration for the renting of the DG set.

Direct Taxes

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.

Supreme Court Dismisses Department's SLP Against HC Decision Holding That Entrance Fees Received By Club From Its Member Is Capital Receipts

Case Title: PCIT Versus Royal Western India Turf Club

The Supreme Court bench of Chief Justice of India, Justice D.Y. Chandrachud, and Justice Hima Kohli has dismissed the special leave petition of the department challenging the decision of the Bombay High Court. The Bombay High Court has held that any sum paid by a member of a club to acquire the rights of a club is a capital receipt and not a revenue receipt.

Section 45(4) Of Income Tax Act Applicable To Cases Of Subsisting Partners Of A Partnership Transferring The Assets In Favour Of A Retiring Partner: Supreme Court

CASE TITLE: The Commissioner of Income Tax v. M/s. Mansukh Dyeing and Printing Mills

Citation : 2022 LiveLaw (SC) 991

A Supreme Court bench comprising Justices M.R. Shah and M.M. Sundresh held that Section 45(4) of the Income Tax Act was applicable to not only the cases of dissolution but also cases of subsisting partners of a partnership, transferring the assets in favour of a retiring partner.

Delhi High Court

Delhi High Court Quashes Reassessment Order In The Name Of A Non-Existing Entity

Case Title: Rajasthan Global Securities Private Limited Versus ACIT

The Delhi High Court has quashed the reassessment order in the name of a non-existing entity.

The division bench of Justice Vibhu Bakhru and Justice Amit Mahajan has observed that not only was the notice issued in the name of the transferor company but the order under Section 148A(d) of the Income Tax Act, as well as the notice under Section 148, have been issued on the PAN of the transferor company.

Delhi High Court Allows Depreciation Claim To Daikin For Goodwill On Exclusive Business Rights

Case Title: Commissioner Of Income Tax Versus Daikin Shri Ram Aircon Pvt Ltd.

Citation: 2022 LiveLaw (Del) 1026

The Delhi High Court while ruling in favour of the Daikin Shri Ram Aircon Pvt. Ltd. has held that the business rights acquired for valuable consideration constitute an intangible asset within the meaning of Section 32(1)(ii) of the Income Tax Act and depreciation is allowable.

Admission of Appeals As A Condition Precedent To Be Eligible For Settlement Under Vivad Se Vishwas Scheme Is Contrary To Law: Delhi High Court

Case Title: Medeor Hospital Ltd. Versus PCIT

The Delhi High Court has ruled that the Central Board of Direct Taxes (CBDT) FAQ No. 59 of Circular No.21/2020 dated December 4, 2020, which contemplates admission of appeal before the filing of declaration as a condition precedent for the appeal to be treated as pending and eligible for settlement under the Vivad Se Vishwas Scheme (VSV Act) is contrary to law.

Delhi High Court Condones Delay In Payments Under VSV Due To Covid and Death Of Managing Director

Case Title: Srishtii Infra Housing Pvt. Ltd. Versus PCIT

The Delhi High Court, while exercising its extraordinary writ jurisdiction under Article 226 of the Constitution of India, has condoned the delay in payments under Direct Tax Vivad Se Vishwas (VSV) due to COVID and the death of the managing director of the company.

Expenses Towards Advertisement, Brokerage And Commission, Incurred By A Real Estate Developer; Deductible As Revenue Expenditure: Delhi High Court

Case Title: Commissioner of Income Tax versus Somnath Buildtech Pvt. Ltd.

Citation: 2022 LiveLaw (Del) 1048

The Delhi High Court has ruled that advertisement expenses, Software Developing Charges, and expenses towards brokerage and commission, incurred by a real estate developer, are in the nature of general administration cost and selling cost, as classified by the Guidance Note issued by the ICAI. Thus, they qualify for deduction as revenue expenditure.

Reassessment Notice Based On Error Resulting From Oversight Of AO Is Not Valid: Delhi High Court

Case Title: Deepak Kapoor Versus PCIT

Citation: 2022 LiveLaw (Del) 1065

The Delhi High Court has held that the reassessment notice based on an error resulting from the oversight of the assessing officer is not valid.

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.

Assessment order passed against the dead person without bringing on record legal heirs is Void: Delhi High Court

Case Title: Vikram Bhatnagar Versus ACIT

Citation: 2022 LiveLaw (Del) 1093

The Delhi High Court has quashed the assessment order passed against the dead person without bringing on record all his legal representatives is void.

The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has observed that the death of the assessee was duly communicated by his legal heirs. The ITR also duly disclosed that it was filed by the legal representative. However, due to a lack of knowledge of the facts on the record, the scrutiny proceedings were wrongfully conducted in the name of the deceased assessee without bringing all of his legal heirs to the record as required by law.

Delhi High Court Quashes Assessment Order Passed Without Issuing Draft Assessment Order

Case Title: RMSI Private Limited Versus NaFAC

The Delhi High Court has quashed the assessment order passed without issuing a show cause notice or a draft assessment order which has been mandated under Section 144B(1)(xvi)(b) of the Income Tax Act.

The division bench of Justice Manmohan and Justice Navin Chawla has directed the department to issue a show-cause notice within four weeks.

The Office Of NaFAC In Delhi Confer Jurisdiction When JAO Is Outside Delhi? Delhi High Court Refers The Issue To Larger Bench

Case Title: GPL-RKTCPL JV Versus NaFAC

The Delhi High Court has referred to the larger bench the question of whether the presence of National Faceless Assessment Centre (NaFAC) in Delhi is sufficient to hear a writ petition when the Jurisdictional Assessing Officer (JAO) is located outside of Delhi.

The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has directed that the matter be placed before the Chief Justice for the constitution of a larger bench.

DTVSV Act Is A Remedial Statute; Neither A Taxing Statute Nor Amnesty Act: Delhi High Court

Case Title: MUFG Bank Versus CIT

Citation: 2022 LiveLaw (Del) 1122

The Delhi High Court has held that the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act) is neither a taxing statute nor an amnesty act. It is a remedial or beneficial statute.

The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has observed that any ambiguity in a taxing statute ensures the benefit of the assessee, but any ambiguity in the amnesty act or exemption clause in an exemption notification has to be construed in favor of the revenue. The amnesty or exemption has to be given only to those assesses who demonstrate that they satisfy all the conditions precedent for availing of the amnesty or exemption.

Notice Under Section 148 Of Income Tax Act Against A Struck-Off Company Valid, In View Of Subsequent Order Of NCLT Restoring The Company: Delhi High Court

Case Title: Ravinder Kumar Aggarwal versus Income Tax Officer

The Delhi High Court has ruled that the order passed by NCLT under Section 252(3) of the Companies Act, 2013, directing restoration of a struck off company, will have the effect of placing the company in the same position as if the name of the company had not been struck off from the register of companies. Thus, the Court held that the notice under Section 148 of the Income Tax Act, 1961 issued against a Company on the date it stood dissolved as a consequence of being struck off, was valid in view of the subsequent order passed by the NCLT.

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.

Income Tax Act does not impose any limitation for filing an application for condonation of delay: Kerala High Court

Case Title: K C Antony Versus Principal Commissioner

Citation: 2022 LiveLaw(Ker) 598

The Kerala High Court has held that Section 119(2)(b) of the Income Tax Act does not impose any limitation for the purposes of filing an application for condonation of delay.

The single bench of Justice Gopinath P. has observed that it was completely wrong on the part of the department to treat the date of filing of the application for condonation of delay as the relevant date for the purpose of considering whether it was filed within 6 years or not.

Madras High Court

Capitation Fee collected indirectly by educational institutions, no tax exemption: Madras High Court

Case Title: Commissioner of Income Tax vs MAC Public Charitable Trust & Others

The Madras High Court has lifted the corporate veil of the educational institution for collecting involuntary capitation fees.

Rajasthan High Court

ITAT Is Last Fact Finding Authority And Bound To Follow Directions Issued By High Court in Pith and Substance: Rajasthan High Court

Case Title: Pooja Agarwal Versus Commissioner of Income Tax-1

The Rajasthan High Court has held that the Income Tax Appellate Tribunal (ITAT) is the last fact-finding authority and is bound to follow the directions issued by the High Court in pith and substance.

Gujarat High Court

Reassessment Powers Could Not Be used For Reverification Or For A Rowing Inquiry: Gujarat High Court

Case Title: Piyush Ambalal Gandhi Versus DCIT

The Gujarat High Court has held that the reassessment powers could not be exercised either for the purpose of reverification or to have a merry sailing for a rowing inquiry.

The division bench of Justice N.V. Anjaria and Justice Bhargav D. Karia has observed that the assessing officer wanted to undertake a fishing inquiry in relation to an issue about which he had already solicited information and examined it.

ITAT

Sale Of Scrap By Trader, Not Engaged In Any Manufacturing Activity, Will Also Attract TCS: ITAT

Case Title: Umeshkumar Harilal Shah versus ITO (TDS)-3, Ahmedabad

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that sale of scrap by a trader, who is not engaged in any manufacturing activity from which the scrap arose, will also attract TCS.

ITAT Suggests Government To Work-Out Mechanism To Ensure Tax Recovery From ARCs/Banks On sale Of Security Assets

Case Title: Abbasbhai A. Upletawala Versus Income Tax Officer

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has suggested the government work out a mechanism to ensure tax recovery from Asset Reconstruction Companies (ARCs)/banks on the sale of security assets.

Existence Of Dependent Agent Permanent Establishment (DAPE) Is Of No Tax Consequence, If Agent Is Paid Arm's Length Remuneration: ITAT

Case Title: RGA International Reinsurance Company Ltd. versus Assistant Commissioner of Income Tax International Taxation

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT)has ruled that the business profits embedded in the reinsurance premium received by a non-resident reinsurance company, is not taxable in India if the company has no permanent establishment (PE) in India which is at its disposal.

No Tax Implications On Business Profits Earned On Reinsurance Business In Absence Of Fixed Place PE in India: ITAT

Case Title: RGA International Reinsurance Company Ltd Versus Assistant Commissioner of Income Tax International Taxation

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that there are no tax implications on business profits earned on account of the reinsurance business in the absence of a fixed place permanent establishment (PE) in India.

ITAT Restricts Addition To Estimated Profit Of 30% Of Cash Deposits Made During Demonetisation Period

Case Title: Ms.Asokan Meena Versus ITO

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has directed the AO to estimate a 30% net profit on total cash deposits made during the demonetization period and deleted the balance additions made under Section 69A of the Income Tax Act.

Payment Made To Non-Resident Marketing Partners for Sale Services is FTS: ITAT

Case Title: M/s.Sunsmart Technologies Pvt. Ltd. Versus The Asst. Commissioner of Income Tax

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has held that payment made by the assessee to non-resident marketing partners for providing pre and post-sale services related to software solutions is in the nature of fees for technical services (FTS).

Software Development Expenses For Rendering Services To Clients Is Revenue Expense: ITAT

Case Title: Dy. Commissioner of Income Tax- 3(3)1) Versus M/s. Sikraft Infotech Private Limited

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the software development expenses for rendering services to clients are revenue expenses.

Assessee Proved Creditworthiness Of Loan Transactions: ITAT Deletes Addition

Case Title: ITO Versus M/s KDG Projects Pvt. Ltd.

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the addition as the assessee proved the creditworthiness of loan transactions.

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.

ITAT Fastens Capital Gain Liability On Owner selling property through GPA Holder

Case Title: Dr. Sabesan Parameswaran Versus ACIT

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has fastened capital gain liability on owners executing General Power of Attorney (GPA) and selling property through GPA holders.

The two-member bench headed by Mahavir Singh (Vice President) and G. Manjunatha (Accountant Member) has observed that the GPA has nowhere given possession to the GPA holder, and he has only executed the sale deed. As per the clear terms of the Power of Attorney (PoA), the principal has to receive monetary consideration from the agent after the execution of the sale deed.

VAT Not Fee/Charge; Cannot Be Disallowed As Deduction Under Section 40(a)(iib) of Income Tax Act: ITAT

Case Title: M/s. Tamil Nadu State Marketing Corporation Ltd. versus ACIT

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that payment of Value Added Tax (VAT) by Tamil Nadu State Marketing Corporation, a State Government undertaking, is not a fee or charge, or an appropriation made by the State Government, and thus, it cannot be disallowed as deduction under the provisions of Section 40(a)(iib) of the Income Tax Act, 1961.

The bench of Mahavir Singh (Vice President) and Dr. Dipak P. Ripote (Accountant Member) held that since the power of the State Government to levy tax on sale and purchase of liquor and the power to levy fees are two different powers, which are derived from two different entries in the State list, the fees levied by the State under Entry 66, cannot encompass tax levied by virtue of Entry 54.

Income Tax Assessment made by a non-jurisdictional officer is void: Kolkata ITAT

Case Title: Amiya Gopal Dutta Versus DCIT

The Kolkata Income Tax Appellate Tribunal (ITAT) has held that the income tax assessment made by a non-jurisdictional officer is null and void.

The two-member bench of Sonjoy Sarma (Judicial Member) and Rajesh Kumar (Accountant Member) has observed that in the case of a non-corporate assessee in non-metro cities, the ITR filed up to Rs. 15 lacs has to be assessed by ITO. Therefore, the assessment was made in violation of Instruction No. 1 of 2011 by the CBDT.

Filing Of Form 10–IC Is Mandatory Condition To Claim The Benefit Of Reduced Corporate Tax Rate For The Domestic Companies: ITAT

Case Title: Bholanath Precision Engineering Pvt. Ltd. Versus Commissioner of Income Tax (Appeals)

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that in order to claim the benefit of a reduced corporate tax rate, domestic companies have to mandatorily file Form 10–IC.

The two-member bench of Sandeep Singh Karhail (Judicial Member) and Om Prakash Kant (Accountant Member) has observed that the assessee did not file Form 10–IC before the due date of filing the return of income, which is a mandatory condition for claiming the option available under Section 115BAA of the Income Tax Act.

ITAT Deletes Addition On Cash Deposits Before Demonetisation

Case Title: Mrs. Umamaheswari Versus The Income Tax Officer

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has directed the Assessing Officer (AO) to delete the addition made on account of cash deposits made before demonetization.

The bench of G. Manjunatha (an accountant member) has observed that as per Section 5 of the Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016, from December 31, 2016, no person shall, knowingly or voluntarily, hold, transfer, or receive any Specified Bank Notes. There was no prohibition on dealing with specified bank notes prior to December 31, 2016.