Concessional Rate Of Sales Tax Not Applicable On Oxygen As It Is Not A Raw Material For Manufacture Of Steel: Supreme Court

Case Title: State of Jharkhand and others Versus Linde India Limited and Another

The Supreme Court has held that the main function of oxygen in manufacturing steel is to reduce the carbon content; therefore, it can be considered a refining agent but not a raw material, so the concessional rate of sales tax is not available on oxygen.

The division bench of Justice M.R. Shah and Justice M.M. Sundresh has set aside the order passed by the Jharkhand High Court and restored the orders passed by assessing officers to revisional authority—the Joint Commissioner.

Delhi High Court

Delhi High Court Allows Income Tax Deduction On Loss On Forward Cover Purchase Contracts For Foreign Exchange

Case Title: PCIT Versus Simon India Ltd.

The Delhi High Court has held that reinstatement of year-end losses on forward cover purchase contracts is allowable in spite of the fact that the forward contracts have not been closed.

The division bench of Justice Vibhu Bakharu and Justice Purushaindra Kumar Kaurav, while upholding the findings of the tribunal, held that the loss on account of forward contracts cannot be considered speculative.

Bombay High Court

Expenditure On Development Of New Product, Shown As 'Capital Work In Progress'; Deductible As Revenue Expenditure, If Project Is Subsequently Abandoned: Bombay High Court

Case Title: Pr. Commissioner of Income Tax versus Trigent Software Limited

The Bombay High Court has ruled that the expenditure incurred on development of a new product, in respect of the same business already carried on by the assessee, which subsequently failed to come into existence and was abandoned, is eligible for deduction as revenue expenditure.

The bench of Justices Dhiraj Singh Thakur and Abhay Ahuja observed that though the assessee had treated the expenditure incurred on development of a new product as 'Capital work in progress' in its books of accounts, however, since no new asset came into existence which would be of an enduring benefit to the assessee, the expenditure incurred was revenue and not capital in nature.

Madras High Court

Ingenuine Documents Submitted By Clients For Form 15CB, CA Cannot Be Prosecuted Under PMLA: Madras High Court

Case Title: Murali Krishna Chakrala Versus Deputy Director,

Citation: 2022 LiveLaw (Mad) 495

The Madras High Court has held that the chartered accountant (CA) is not required to go into the genuineness or otherwise of the documents submitted by his clients.

"A Panel Advocate, who has no means to go into the genuinity of title deeds and who gives an opinion based on such title deeds, cannot be prosecuted along with the principal offender. Applying the same anomaly, we find that the prosecution of Murali Krishna Chakrala, in the facts and circumstances of the case at hand, cannot be sustained," the division bench of Justice P. N. Prakash and Justice G. Chandrasekharan observed.

TDS Exemption Not Applicable On Cash Withdrawal By Primary Agricultural Credit Co-Operative Societies: Madras High Court

Case Title: Molasi Primary Agricultural Versus ITO

The Madras High Court has held that the TDS exemption under Section 194N of the Income Tax Act is not applicable to cash withdrawal by primary agricultural credit co-operative societies.

The bench of Justice Anitha Sumanth has noted that the provisions of Section 194 N provide for a mandatory deduction of 2% of cash withdrawals and the object is to discourage and drive the move toward a cashless or cash-free economy.

Attachment By Tax Dept. Subsequent To A Mortgage Favouring Secured Creditors Has No Legs: Madras High Court

Case Title: Tax Recovery Officer Versus Union Bank of India

The Madras High Court has held that the orders of attachment passed by the Tax Recovery Officer or Income Tax Department were subsequent to the mortgage created in favour of the secured creditors and have no legs.

The division bench of Justice R. Mahadevan and Justice Mohammed Shaffiq has observed that even if recovery proceedings are quashed for any reason, the bankers' and financial institutions' rights to claim priority in terms of Section 31 B of the Recovery of Debts and Bankruptcy Act and Section 26 E of the SARFAESI Act would still be available. The right to recover under the Income Tax Act, of 1961, must yield to the provisions under the SARFAESI Act and the Recovery of Debts and Bankruptcy Act, and thus, the exercise of attachment may not serve any useful purpose.

Gujarat High Court

GST Tribunal Not Constituted After Lapse Of 5 Years Of Introduction Of GST: Gujarat High Court Issues Notice

Case Title: M/S Firmenich Aromatics Production (India) Pvt. Ltd. Versus Union Of India

The Gujarat High Court has issued a notice to the central and state government seeking to know the steps taken for constituting the GST Tribunal.

The bench of Justice Sonia Gokani and Justice Mauna M. Bhatt was presiding over the petition, which involved the issue of the non-formation of the GST Tribunal, which has not been formulated though nearly five years have passed.

Mere E-Way Bill Expiry Does Not Establishes Intention To Evade Taxes: Gujarat High Court

Case Title: Shree Govind Alloys Versus State of Gujarat

The Gujarat High Court has held that mere e-way bill expiry does not establish an intention to evade taxes.

The division bench of Justice Sonia Gokani and Justice Mauna M. Bhatt has observed that the detention was on the ground that the goods were subject to the expiration of the e-way bill number, which had expired during the transit, and this cannot be the ground for detaining and seizing M.S. Billet along with the truck.

Punjab and Haryana High Court

VAT Act Do Not Provide For The Registration Of FIR: Punjab And Haryana High Court Quashes FIR For Alleged Tax Evasion

Case Title: Deepak Kumar Versus State of Punjab

The Punjab and Haryana High Court has held that the provisions of the VAT Act do not provide for the registration of the FIR, and since the VAT Act is a code in itself, the provisions of the IPC also cannot be invoked. Therefore, an FIR could not have been registered against a person who has allegedly evaded tax.

The single bench of Justice Jasjit Singh Bedi has observed that there is no provision for the registration of an FIR in matters such as those of alleged tax evasion. The provisions of the act only provide for a mandatory penalty.

Himachal Pradesh High Court

Non-Scheduled Bank Required To Tax The Interest On Sticky Loans Or NPAs On Receipt Basis: Himachal Pradesh High Court

Case Title: Pr. Commissioner of Income Tax Versus The Kangra Central Co-op Bank Ltd.

The Himachal Pradesh High Court has held that the non-scheduled bank was required to tax the interest on the sticky loans and non-performing assets (NPAs) on a receipt basis.

The division bench of Justice Sabina and Justice Sushil Kukreja has observed that an amendment to Section 43D by Finance Act, 2017 was made by which the scope of section 43D to Co-operative Banks was extended. Although the amendment was sought to take effect on April 1, 2018, it was likely to be treated as retrospective in nature.

ITAT

Revenue Earned By BBC For Distribution Of BBC News In India, Not Taxable As Royalty: ITAT

Case Title: BBC World Distribution Ltd. versus ADIT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the distribution revenue earned by the assessee- BBC World Distribution Ltd., from distribution of BBC World News Channel in India, is not in the nature of royalty and thus, it is not taxable in India in the absence of a Permanent Establishment.

The bench of G.S. Pannu (President) and Saktijit Dey (Judicial Member) held that distribution rights transferred by the assessee to BBC World India, to distribute BBC News Channel in India, did not fall under the definition of copyright under Section 14 of the Copyright Act, 1957. Thus, the ITAT concluded that the distribution revenue was not taxable as royalty.

Additional Evidence Cannot Be Admitted Without Calling For AO's Remand Report: ITAT

Case Title: ACIT Versus Ascend Telcom Infrastructure (P) Ltd.

The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that the additional evidence cannot be admitted without calling for a remand report or comments from the AO.

The two-member bench of Laliet Kumar (Judicial Member) and R.K. Panda (Accountant Member) observed that if the CIT(A) chooses to admit any additional evidence, in that case, he/she is required to provide the Assessing Officer with a reasonable opportunity to examine the evidence or document or permit cross-examination of the evidence produced by the assessee.

Deduction For Telecommunication Services of ' Vodafone' Is Available For "Profits Of Eligible Business": ITAT

Case Title: Dy. Commissioner of Income Tax Versus M/s. Vodafone India Ltd.

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), while allowing deduction to Vodafone, held that deduction for telecommunication services is available in respect of "profits of eligible businesses" and is not restricted to "profits derived from eligible businesses."

The two-member bench of Vikas Awasthy (Judicial Member) and M. Balaganesh (Accountant Member) has directed the Assessing Officer to allow the benefit of deduction under section 80IA of the Income Tax Act in respect of interest income as well as miscellaneous income.

Mistake In The Personal Information Of The Trust Is A Rectifiable Mistake At Any Stage: ITAT

Case Title: Grih Kalyan Kendra Board Versus ITO

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that a mistake in the personal information of the assessee is always rectifiable at any stage.

Advance Given For Hospital Project, Later Abandoned, Allowable As Revenue expenditure: ITAT

Case Title: DCIT Versus AMRI Hospitals Ltd.

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has held that the advance was given for setting up a hospital project, and since the project was abandoned and the advance given could not be recovered, the sum is allowable as a revenue expenditure.

The two-member bench of Sonjoy Sarma (Judicial Member) and Manish Borad (Accountant Member) has observed that the advance was given for setting up a hospital project that was abandoned as a business loss under Section 28(1) of the Income Tax Act.

Tata Industries Entitled To Set-Off Business Loss Against Dividend Received From Its Foreign Subsidiary: ITAT

Case Title: M/s. Tata Industries Limited versus Dy. Commissioner of Income Tax

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled that investments made by an assessee company to exercise control over other investee companies constitutes a business activity.

The bench of Rahul Chaudhary (Judicial Member) and M. Balaganesh (Accountant Member) held that though the dividend income is taxable under the head 'income from other sources' in view of the specific provision contained in Section 56(2)(i) of the Income Tax Act, 1961, however, since the assessee Tata Industries is an investment company, income in the form of dividend received by it is in the nature of business receipts.

Hospital Charging Commercial Rates Not Entitled For Registration As Charitable Organisation: ITAT

Case Title: Fernandez Foundation Versus Commissioner of Income Tax (Exemption)

The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) has held that the assessee hospital is charging on the basis of commercial rates from the patients and is not entitled to registration as a charitable organization under Section 12A of the Income Tax Act.

The two-member bench of Laliet Kumar (Judicial Member) and R.K. Panda (Accountant Member) has observed that the assessee is charging on the basis of commercial rates from the patients, either outdoor or indoor, and the assessee has failed to demonstrate that the charges or fee charged by it were based on a reasonable markup on the cost.

CESTAT

Customs Broker Is Not Required To Obtain Any "Recommendation" From Officer That The Exporter Is "Bonafide": CESTAT

Case Title: M/s Surya Jyoti Global Logistics, Customs Broker Versus Commissioner of Customs

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the customs broker is not required to obtain any "recommendation" or a certificate from any officer that the exporter is "bonafide."

AAR

Rejected Paddy Seeds Not Fit For Human Consumption, 5% GST Leviable: Chhattisgarh AAR

Applicant's Name: M/s Shraddha Traders

The Chhattisgarh Authority for Advance Ruling (AAR) has held that 5% GST is payable on rejected or damaged paddy seeds.

The two-member bench of Sonal K. Mishra and Abhinav Aggarwal has observed that rejected paddy seed that is not fit for human consumption would merit classification under chapter heading 100610.

Satin & Taffeta Rolls Used For Printing Purpose Attract 12% GST: AAR

Applicant's Name: Mean Light Co.

The Karnataka Authority of Advance Ruling (AAR) has held that the products "satin rolls" and "taffeta rolls" with sizes between 19 mm and 40 mm are classifiable under tariff heading 5807 10 20 and attract 12% GST.

The two-member bench of Kiran Reddy T. and M.P. Ravi Prasad has observed that taffeta rolls are made up of polyester yarn with an acrylic coating to protect from raveling or fraying and also to have better printing quality. Satin rolls are made up of polyester yarn with an optical or non-optical coating for brightening and removing impurities. They have plain selvedges on both sides of the fabric and are cut with hot blades to arrest fabric fraying. Thus, the products qualify to be covered under "narrow woven fabrics."

GST Concessional Rate Is Not Applicable On Maintenance And Repair Services Of Test-Bench Equipment For Aeronautics: AAR

Applicant's Name: Testmesures Spherea Solutions Private Limited

The Karnataka Authority of Advance Ruling (AAR) has held that a concessional rate under GST is not applicable to maintenance and repair services of test-bench equipment for aeronautics.

The two-member bench of M.P. Ravi Prasad and Kiran Reddy T. have observed that the concessional rate of GST of 5% is applicable to only Maintenance, repair or overhaul services in respect of aircraft, aircraft engines, and other aircraft components or parts. The applicant is providing maintenance and repair services of test bench equipment (Mermoz system) which are used for testing the airworthiness of an aircraft. The equipment does not qualify to be an aircraft or an aircraft engine.

RCM Not Applicable On Reimbursement Of Expenses Paid On Behalf Of Company At Actuals Incurred By The Employee Staff Who Is Also A Whole-Time Director: AAR

Applicant's Name: Yaadvi Scientific Solutions Private Limited

The Karnataka Authority for Advance Ruling (AAR) has held that the reverse charge mechanism (RCM) is not applicable to reimbursement of expenses paid on behalf of the company at actuals that are incurred by the employee staff, who is also a whole-time director of the company.

The two-member bench of M.P. Ravi Prasad and Kiran Reddy T. has observed that reimbursement of expenses at an actual cost that is incurred by the employee staff on behalf of the company is not subject to tax.