TMI Tax Updates - e-Newsletter
December 16, 2020

Case Laws in this Newsletter:

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

Highlights / Catch Notes

GST

• Confiscation of goods alongwith the vehicle - Extension of validity of E-way bill - the conveyance carrying the vehicles reached the place of destination on 1.1.2019 before the expiry of the validity of the e-way bills but the vehicles could not be unloaded on the same day and were being unloaded on 2.1.2019 - he failure to consider the petitioner’s case in the light of the provisions of Rule 138[10] of the Central Goods and Services Tax Rules, 2017 has resulted in an improper and untenable order. - HC
  Visit to Get Source

  ---

Income Tax

• Disallowance of Forex loss pertaining to reinstatement of outstanding balance of External Commercial Borrowing (ECB) loan - the necessary adjustments should be made to the actual cost of assets on account of loss consequent to foreign currency fluctuation rate as there is no dispute that ECB loans are utilized for the purpose of acquisition of asset in India. - AT
  Visit to Get Source

  ---

• Validity of reopening of assessment - time limit for issue of notice u/s. 143(2) has not expired and regular assessment could have been made - the assessing officer jumped the queue and issued notice under section 148 of the Act within the time limit available to issue notice under section 143(2) of the Act and such action of the assessing officer is not acceptable - AT
  Visit to Get Source

  ---

• Addition on the account of errors and omissions - assessee declared additional income on the basis of notings made on loose papers during the survey action - there was evidence against the assessee in earning the said additional income and the arguments of that without there being any adverse material the addition made by the AO is invalid, in our view is not acceptable. - AT
  Visit to Get Source

  ---

• Hawala purchases - Addition on the basis of alleged statement given to sales tax department - assessee has done purchases from grey market. In our considered opinion 12.5% disallowance in this case would meet the end of justice. We direct accordingly. - On similar reasoning we disallow 12.5% of the labour expenditure in this regard. - AT
  Visit to Get Source

  ---

• Penalty u/s. 271F - assessee failed to file his return of income within the time prescribed u/s. 139(1) - The reasons referred to the assessee being an agriculturist and illiterate; facing financial and family problems; under the impression that gain arising from sale of any agricultural land not chargeable to tax. - the case gets covered u/s. 273B of the Act. As such, we order to delete the penalty - AT
  Visit to Get Source

  ---

• Penalty u/s 271(1)(c) - when the assessee has not brought on record any evidence to prove the genuineness of the share premium and has also miserably failed to establish on record that there is neither any concealment or furnishing of inaccurate particulars of income, imposition of penalty under section 271(1)(c) of the Act, in our view, is justified - AT
  Visit to Get Source

  ---

• TP Adjustments - TPO held that the value of shares of RC determined at the time of investment by IVC represents the best possible estimate of the market value of the share of RC and this represents the value of shares held by the assessee in RC at the time of transfer - Reasoning given by the TPO is legally sustainable, reflects not only the factual position, but also the manner in which the PE funds are managed worldwide as to how they conduct detailed due diligence before making the investment, because the investment is with a sole intention of making a profit. Therefore, we find that the decision of the DRP in granting 10% risk adjustment allowance is perverse and without any analysis of the factual position which has been rightly brought out by the TPO in his order. - HC
  Visit to Get Source

  ---

• Capital gain tax - Transfer of shares by assessee to its wholly owned subsidiary - transfer of shares by way of alleged gift - the transaction is a circular transaction and is a measure adopted to avoid tax. The TPO in his order has done an analysis as to how there is a loss in real income and loss of revenue by shifting profits outside the country - The authorities below have dealt with the same elaborately, but unfortunately, the Tribunal did not venture to examine the correctness of such finding and in our considered view, the Tribunal failed to examine the factual matrix despite being the last authority to render findings of fact - HC
  Visit to Get Source

  ---

Customs

• Applicability of the time period (limitation) to claim refund of Special Additional Duty (SAD) - Merely because Section 27 of the Customs Act provides for a period of limitation for filing refund claim, it cannot be held that even for the purposes of claiming refund in terms of the Notification, the same limitation has to be applied. The Hon’ble Delhi High Court has also held that in the maters which deal with substantive rights, such as imposition of penalties and other provisions that adversely affect statutory rights, the parent enactment must clearly impose such obligations; subordinate legislation or rules cannot prevail or be made, in such case - AT
  Visit to Get Source

  ---

Service Tax

• Classification of services - employee of the parent company, Nektar USA, was sent to India on a secondment to work as a full time Managing Director of the Indian company - reimbursement of salary paid to the ‘secondee’, to the parent company, Nektar USA - manpower recruitment and supply agency services or not - Held No - Demand of service tax set aside - AT
  Visit to Get Source

  ---

Central Excise

• Interest on delayed refund of pre-deposit - Relevant date for calculation of refund - The adjudicating authority is directed to grant interest from the date of deposit till the date of grant of refund @12% per annum. Such interest on refund should be granted within a period of sixty (60) days from the date of receipt of service or a copy of this order. - AT
  Visit to Get Source

  ---

• Method of Valuation - wall putty in packages of 40kg - MRP based value to transaction value - As the appellant had cleared wall putty in packages of 40 kg, the provisions of rule 6 contained in Chapter II of the Rules will not apply and if this be so, the provisions of section 4A of the Excise Act under which the value of goods is deemed to be the retail sale price declared on such goods, would not be applicable. - AT
  Visit to Get Source

  ---

• Reward to the informer - Duty evasion - Directions to the respondents to constitute a committee so as to consider the case of the petitioner in a time-bound period - The representation will be decided by the concerned respondent authorities in accordance with law, rules, regulations and Government policies applicable to the facts of the case and on the basis of materials on record, as expeditiously as possible and practicable.- HC
  Visit to Get Source

  ---

Articles

• DIRECT TAX VIVAD SE VISWAS (VSV) - NEED TO (a)_EXTEND LAST DATE TO FILE DECLARATION ( b) ALLOW IN ALL CASES ON ISSUES LOST BY DEPARTMENT IRRESPECTIVE OF APPEAL OR NOT BY DEPARTMETN (C) MADE EASY DOCUMENTATION (D) CONCESSION FOR EARLY PAYMENT
• BOGUS TRANSACTIONS UNDER INCOME TAX ACT, 1961

Notifications

• Customs

• 112/2020 - dated 15-12-2020 - Cus (NT)
  Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver

  ---

• GST

• 91/2020 - dated 14-12-2020 - CGST
  Seeks to make amendment to Notification no. 35/2020-Central Tax, dated the 3rd April, 2020 - Extension of validity of e-way bills

  ---

• GST - States

• S.O. 192 - dated 11-12-2020 - Bihar SGST
  Appoints the 10th day of November, 2020, as the date on which the provisions of section 7 of the Bihar Goods and Services Tax (Amendment) Act, 2019 shall come into force

  ---

• 97/GST-2 - dated 8-12-2020 - Haryana SGST
  Haryana Goods and Services Tax (Fourteenth Amendment) Rules, 2020.

  ---

• ERTS(T)65/2017/Pt.II/206 - dated 10-11-2020 - Meghalaya SGST
  Seeks to extend the due date for furnishing of FORM ITC-04 for the period July- September 2020 till 30th November, 2020

  ---

• ERTS(T)65/2017/Pt.II/205 - dated 10-11-2020 - Meghalaya SGST
  Rescinds the notification No. 76/2020-State Tax, dated the 15th October, 2020

  ---

• ERTS (T) 65/2017/Pt.II/207 - dated 10-11-2020 - Meghalaya SGST
  Seeks to amend Notification No. 13/2020 -State Tax, dated the 21st March, 2020

  ---

• ERTS (T) 65/2017/Pt.II/203 - dated 10-11-2020 - Meghalaya SGST
  Seeks to notify class of persons under proviso to section 39(1)

  ---

• ERTS (T) 65/2017/Pt.II/202 - dated 10-11-2020 - Meghalaya SGST
  Seeks to extend the due date for FORM GSTR-1

  ---

• ERTS (T) 65/2017/Pt.II/200 - dated 10-11-2020 - Meghalaya SGST
  Government of Meghalaya appoints the 10th day of November, 2020, as the date on which the provisions of section 7 of the Meghalaya Goods and Services Tax (Amendment) Act, 2020 shall come into force

  ---

• ERTS (T) 65/2017/Pt. II/204 - dated 10-11-2020 - Meghalaya SGST
  Seeks to notify special procedure for making payment of 35% as tax liability in first two month

  ---

• 3240/CTD/GST/2020/14 - dated 30-11-2020 - Puducherry SGST
  Seeks to extend the due date for furnishing of FORM ITC-04 for the period July- September 2020 till 30th November, 2020

  ---

• 3240/CTD/GST/2020/13 - dated 30-11-2020 - Puducherry SGST
  Rescinds the notification No. 3240/CTD/GST/2020/10, dated the 28th October, 2020

  ---

• 3240/CTD/GST/2020/12 - dated 30-11-2020 - Puducherry SGST
  Extends the time-limit for furnishing the details of outward supplies in FORM GSTR-1 of the Puducherry Goods and Services Tax Rules, 2017

  ---

Circulars / Instructions / Orders

• GST - 144/14/2020 - dated 15-12-2020
  Waiver from recording of UIN on the invoices for the months of April 2020 to March 2021

News

• Finance Minister Smt. Nirmala Sitharaman chairs 23rd Meeting of the Financial Stability and Development Council

  ---

• Income Tax Department conducts searches in Pune Region

  ---

• QCI Launches Recognition Scheme for Hygiene Rating Audit Agencies

  ---

• Shri Piyush Goyal invites Foreign Investors to be a part of India’s growth story;

  ---

Case Laws:

• GST

• 2020 (12) TMI 528
  Confiscation of goods alongwith the vehicle - Extension of validity of E-way bill - petitioner contends that the conveyance carrying the vehicles reached the place of destination on 1.1.2019 before the expiry of the validity of the e-way bills but the vehicles could not be unloaded on the same day and were being unloaded on 2.1.2019 - HELD THAT:- Where there is no dispute that the conveyance had reached the place of destination well within the expiry of e-way bills, and the conveyance was being unloaded without any further transit, this Court is of the considered view that the appellate authority should have considered the merits of the proceedings against the petitioners in the light of the provisions of Rule 138[10] of the Central Goods and Services Tax Rules, 2017 which prescribes the validity of an e-way bill with the extension of further period by eight hours after the expiry. The failure to consider the petitioner s case in the light of the provisions of Rule 138[10] of the Central Goods and Services Tax Rules, 2017 has resulted in an improper and untenable order. Petition allowed.

  ---

• Income Tax

• 2020 (12) TMI 527
  Non deduction of tds u/s 195 - Levy of interest u/s 201(1A) - withholding tax on purchase of software - AO held that the payment made for purchase of license to use a software was royalty income in the hands of non-resident accordingly, assessee should have deducted tax at source under section 195 - HELD THAT:- In the instant case, assessee was under bonafide belief that it was not required to deduct tax at source from the payments made for purchase of software as relying on Teekays Interior Solutions P Ltd [ 2019 (4) TMI 193 - ITAT BANGALORE ] and Infineon Technologies India P Ltd [ 2020 (8) TMI 808 - ITAT BANGALORE ]. Subsequently, Hon ble Karnataka High Court in CIT vs. Samsung Electronics Co. Ltd [ 2011 (10) TMI 195 - KARNATAKA HIGH COURT ] held that the payments made for purchase of software was in the nature of royalty and the said decision came to be pronounced on 15.10.2011. Accordingly, the present facts of case assessee could not be treated as an assessee in default in respect of payments made for purchase of licensed software prior to 15.10.2011, being the date of pronouncement of the decision in the case of Samsung Electronics Co. Ltd (supra). Accordingly, demand raised in the hands of the assessee u/s 201(1) and 201(1A) cannot not be sustained and the demands raised in respect of payments made prior to 15.10.2011 in assessment year 2012-13 deserves to be quashed. We delete penalty levied under section 201 (1) and (1A) Penalty under section 271C for non-deduction of TDS - HELD THAT:- As expressed in the present facts of the case, assessee cannot be held to be in default for non-deduction of TDS.Under such circumstances the penalty levied under section 271C deserves to be quashed and set-aside.

  ---

• 2020 (12) TMI 526
  Disallowance of Forex loss pertaining to reinstatement of outstanding balance of External Commercial Borrowing (ECB) loan - whether the loss arising out of reinstatement of the ECB loan as on date of balance sheet can be added to the actual cost of asset for the purpose of determining the actual cost u/s. 43A? - CIT-A dismissed the appeal of the assessee by holding that in the absence of specific provisions in Income Tax Act, 1961, the same cannot be allowed either as revenue expenditure or cannot be added to the actual cost for the purpose of depreciation - whether such loss can be capitalized to the actual cost of the assets for the purpose of depreciation? - HELD THAT:- The principal objection for allowance of claim is that it is only notional loss and therefore the same cannot be recognised either for the purpose of allowance of revenue expenditure or capitalization. This objection is no longer tenable in law in the light of the dictum of the Hon'ble Supreme Court in the case of Woodward Governor India Pvt. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT] wherein the Hon'ble Apex Court had quoted with approval of the decision of M.P. Financial Corporation [ 1985 (12) TMI 36 - MADHYA PRADESH HIGH COURT] as approved by MADRAS INDUSTRIAL INVESTMENT CORPORATION LIMITED [ 1997 (4) TMI 5 - SUPREME COURT] wherein it was held that the term expenditure covers even a case of loss even though the said amount has not gone out from the pocket of the assessee. Whether or not the increase or decrease in liability in the repayment of foreign loan should be taken into account to modify the figure of actual costs in the year in which the increase or decrease in liability arises on account of the fluctuation in the rate of exchange? - Provisions of section 43A have application only in the case of imported assets. In the present case, the assets were acquired in India, therefore, the conditions of making actual repayment foreign currency loan is not a condition for making necessary adjustment in the actual cost of the asset. Therefore, the general principles of law would be applicable. As relying on ARVIND MILLS LIMITED [ 1991 (12) TMI 1 - SUPREME COURT] we hold that the necessary adjustments should be made to the actual cost of assets on account of loss consequent to foreign currency fluctuation rate as there is no dispute that ECB loans are utilized for the purpose of acquisition of asset in India. Accordingly, we direct the Assessing Officer to allow necessary adjustment to the actual cost of the asset.

  ---

• 2020 (12) TMI 525
  Validity of reopening of assessment - time limit for issue of notice u/s. 143(2) has not expired and regular assessment could have been made - Assessee had filed the return of income belatedly - HELD THAT:- In the light of the above judgment in the case of Smt. Suman vs. ITO [ 2017 (8) TMI 567 - BOMBAY HIGH COURT ] it is abundantly clear that no reassessment proceedings can be initiated so long assessment proceedings on the basis of return of income filed by the assessee is pending. The assessment proceedings would seize to be pending either by passing an order u/s. 143(3) of the Act or by expiry of time to issue a notice u/s. 143(2) to complete the assessment proceedings u/s. 143(3) of the Act. So long as the above event, has not passed, the Assessing Officer cannot render the provision of section 143(2) of the Act redundant/otiose by issuing a notice for reopening u/s. 147/148 of the Act. Therefore, in our view, the reassessment proceedings initiated in the case of assessee under consideration is bad in law. In assessee's case under consideration the time limit to issue notice under section 143(2) was not expired therefore assessing officer cannot issue the notice under section 148 to make the reassessment under section 147 - we do not agree with the argument of ld DR to the effect that the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings under section 147 of the Act. In assessee's case the time available for issue of notice under section 143(2) of the Act is on or before 30.09.2014 and after 30.09.2014, the assessing officer cannot issue notice under section 143(2) of the Act to frame the assessment under section 143(3) - up to 30.09.2014, the assessing officer could have issued notice under section 143(2) of the Act to frame the assessment under section 143(3) of the Act and the assessing officer could have assessed all the income of the assessee including escaped income, thus there is no need to jump the queue and to issue notice under section 148 of the Act on 21.06.2014, [before the expiry of time limit under section 143(2)], that is, assessing officer should not have jumped the queue, as the time limit to issue notice under section 143(2) is available before the assessing officer, up to 30.09.2014. In the assessee's case under consideration, the assessing officer jumped the queue and issued notice under section 148 of the Act within the time limit available to issue notice under section 143(2) of the Act and such action of the assessing officer is not acceptable - Decided in favour of assessee.

  ---

• 2020 (12) TMI 524
  Addition u/s. 14A r.w.r. 8D - Addition on account of interest made by AO - HELD THAT:- The assessee thus had sufficient own funds available at the relevant time to make the said investment and there was a presumption that the said investment was made by the assessee company out of its own free funds as held in the case of CIT vs. Reliance Utilities and Power Ltd.[ 2009 (1) TMI 4 - BOMBAY HIGH COURT ] The investment capable of earning exempt income thus was entirely made by the assessee-company out of its own free funds and there being no utilization of interest bearing borrowed funds for making the said investment, we find merit in the contention of the ld. Counsel for the assessee that disallowance on account of interest made by the Assessing Officer u/s. 14A and sustained by the ld. CIT(A) is liable to be deleted. Disallowance made by the Assessing Officer and confirmed by the ld. CIT(A) on account of other common expenses by applying Rule 8D(2)(iii) - We direct the Assessing Officer to re-compute the disallowance to be made u/s. 14A of the Act by applying Rule 8D(2)(iii) of the Rules on account of other common expenses by taking into consideration only those investments on which exempt income was actually earned by the assessee during the year under consideration. Ground no. 1 and 2 of the assessee's appeal are thus partly allowed. Disallowance of interest - business expediency of the investment made by the assessee in the debentures of M/s. Kunal Spaces Pvt. Ltd. was not established - HELD THAT:- As sufficient own funds in the form of share capital and free reserves to the tune of ₹ 30.73 crores were available with the assessee-company at the relevant time and the same being sufficient to make the entire investments including the investment made by the assessee-company in the debentures of M/s. Kunal Spaces Pvt. Ltd., we are of the view that no disallowance on account of interest as made by the Assessing Officer and sustained by the ld. CIT(A) was called for as there was no case of utilization or diversion of the interest bearing loan borrowed by the assessee-company for non-business purpose. In that view of the matter, we delete the disallowance made by the Assessing Officer and sustained by the ld. CIT(A) on account of interest and allow ground no. 2 of the assessee's appeal. Addition on account of director's remuneration - as noticed by AO that there was increase of director's remuneration by ₹ 3 lakhs during the year under consideration as compared to the immediately preceding assessment year - HELD THAT:- Remuneration paid by the assessee-company to its directors during the year under consideration was duly justified by the assessee-company with reference to their qualification and experience as well as the services rendered to the assessee-company and without bringing on record anything to show that the remuneration so paid by the assessee-company to its directors was excessive or unreasonable, the authorities below were not justified to make a disallowance of ₹ 3 lakhs on account of director's remuneration simply because there was an increase of 20% while the other expenditure incurred by the assessee-company had declined. We also find that there is nothing brought on record by the authorities below to show that the increase of 20% in the director's remuneration was excessive or unreasonable so as to disallow the same. We, therefore, find no justification in the disallowance made - Decided in favour of assessee. Disallowance of rental expenses - DR has contended that this claim now being made on behalf of the assessee regarding the total area of 7500 sq.ft. taken on rent requires verification since the same is contrary to the finding recorded by the authorities below in this regard - HELD THAT:- We find merit in the contention of the ld. DR and since the ld. Counsel for the assessee has not raised any objection for sending the matter back to the Assessing Officer for proper verification, we restore this issue to the file of the Assessing Officer for deciding the same afresh after verifying the claim of the assessee regarding the actual area taken on the rent for its office premises. Appeal of the assessee is partly allowed.

  ---

• 2020 (12) TMI 523
  Addition on the account of errors and omissions - assessee declared additional income on the basis of notings made on loose papers during the survey action - AO was of the opinion that the assessee is not justified in offering an amount towards errors and omissions - HELD THAT:- In the certain proceedings the survey team impounded evidence against the assessee and on such confrontation the assessee himself on oath conceded that the above said amounts are not recorded in the regular books of account and not declared by the Income Tax Department which in our opinion constitutes on additional income. The only contention raised before the lower authorities below by the assessee that the said amount was declared on ad-hoc basis, in our opinion it is away from truth because there was no retraction by the assessee from the date of survey to the filing of return of income to that effect - AO has not merely relied upon declaration made by the assessee in his statement recorded in the course of survey action whereas the assessee himself clarified the reasons due to which the additional income earned in the answer to Q. No. 11 which is reflecting in page 2 of the AO. Assessee placed reliance in the instructions dated 10-03-2003 issued by the CBDT wherein we note that in the said instructions the CBDT has advised CCIT and DGIT that no addition should be made solely on the basis of declaration made by the assessee in the statements recorded during the course of survey - assessee himself explained how he earned the additional income of ₹ 1,07,67,799/- and to cover up such errors and omissions the assessee himself offered ₹ 72,32,201/-. It is noted there was evidence against the assessee in earning the said additional income and the arguments of that without there being any adverse material the addition made by the AO is invalid, in our view is not acceptable. Thus, the instructions of CBDT as placed reliance by the assessee is not applicable to the facts and circumstances of the present case. - Decided against assessee.

  ---

• 2020 (12) TMI 522
  Hawala purchases - Addition on the basis of alleged statement given to sales tax department - non-response by the concerned suppliers to the notice of the AO - HELD THAT:- The assessee has duly submitted the purchase invoices and payments were also done through banking channel. It also noted that the assessee has done contract work and as per the contract specification assessee was required to provide materials and labour. No discussion whatsoever is there in the orders of the authorities below regarding the disallowance of the contact work executed by the assessee. In this view of the matter ratio from Hon'ble Bombay High Court in the case of Nikunj Eximp Enterprises P. Ltd. [ 2013 (1) TMI 88 - BOMBAY HIGH COURT] and several other case laws are applicable, that 100% disallowance in such cases is not permissible. Accordingly, assessee has done purchases from grey market. In our considered opinion 12.5% disallowance in this case would meet the end of justice. We direct accordingly. On similar reasoning we disallow 12.5% of the labour expenditure in this regard. Disallowance under section 40(a)(ia) - HELD THAT:- We note that this issue was also remanded by the learned CIT(A) to the AO, but we note that the Assessing Officer has not properly examined the issue. Accordingly, we remit this issue to the file of the Assessing Officer. The Assessing Officer is directed to consider the issue afresh after giving the assessee proper opportunity of being heard.

  ---

• 2020 (12) TMI 521
  Penalty u/s. 271(1)(c) - assessee sold certain land and declared long term capital gain on sale thereof which as per AO should have been offered as Business income instead of long term capital gain - HELD THAT:- It is a case of difference of opinion between the assessee and the AO on the facts already disclosed by the assessee. Merely because the AO treated the amount of income already offered differently from the one portrayed by the assessee, cannot in our considered opinion be a cause for imposing penalty u/s. 271(1)(c) - The Hon'ble Supreme Court in CIT Vs. Reliance Petro products [ 2010 (3) TMI 80 - SUPREME COURT] has held that no penalty should be imposed when the assessee adopts a bona fide view and has declared all the necessary particulars concerning the income in dispute. Disallowance of Foreign tour and travelling expenses - relatives of the directors also joined in the foreign tours. This was followed by the penalty - HELD THAT:- As assessee incurred foreign tour expenses for conducting meetings with cement dealers of India Cement Ltd. and Visaka Industries Ltd., for which it was acting as C F agent. These expenses included some amount spent on minor sons and daughters of the directors. CIT(A) has rightly relied on ACIT Vs. TRB Exports P. Ltd. [ 2010 (2) TMI 881 - ITAT, CHANDIGARH] of the impugned order, in which the Tribunal deleted the penalty under similar circumstances. No contrary precedent has been brought on record by the ld. DR. We, therefore, uphold the deletion of penalty. - Decided against revenue.

  ---

• 2020 (12) TMI 520
  Disallowance of lease rent - nature of expenditure - assessee was engaged in the business of manufacturing and sale of Katha and Cutch as taken factory on lease from Mehta Charitable Prajnalaya Trust - assessee treated entire lease rental per month as revenue expenditure whereas the Revenue treated part of the enhanced lease rental as capital expenditure - HELD THAT:- As decided in own case [2005 (6) TMI 549 - ITAT DELHI ] direct the Assessing Officer to treat part of the lease rent fee for surrendering the right to purchase @15% of average purchases of khair wood. Both the parties have been unable to give annual rate prevailing in the market, however, on the facts and circumstances of the case and looking to the fact that assessee is paying percentage - wise more rent to the government undertaking on a similar lease of commercial property, therefore, we hold that 10% of annual escalation would be reasonable from Assessment Year 1992-93 onwards. The dispute in the year under consideration of whether the sum of ₹ 55,41, 611/-out of total lease expenditure of ₹ 1,14,86,544/- is capital expenditure or not is squarely covered by the above decision of the Tribunal. Thus, respectfully following the same, we direct the learned Assessing Officer to work out the net disallowable expenditure in view of the direction of the Tribunal (supra) in assessment year 1992-93 to 2010-11.

  ---

• 2020 (12) TMI 519
  Penalty u/s. 271F - assessee failed to file his return of income within the time prescribed u/s. 139(1) - assessee made certain written submissions before the ld. CIT(A) seeking deletion of penalty, which did not find favour with the ld. first appellate authority, who affirmed the penalty - HELD THAT:- The reasons referred to the assessee being an agriculturist and illiterate; facing financial and family problems; under the impression that gain arising from sale of any agricultural land not chargeable to tax. When we consider the entirety of the facts and circumstances obtaining in this case, it becomes apparent that there was reasonable cause on the part of the assessee in not filing return u/s. 139(1) against which the penalty has been imposed and confirmed u/s. 271F - Section 273B provides that no penalty shall be imposed, inter alia, u/s. 271F where the assessee establishes a reasonable cause for failure referred to in said section. There was a reasonable cause with the assessee in the terms given in para 5 of the impugned order. This being the position, the case gets covered u/s. 273B of the Act. As such, we order to delete the penalty. - Decided in favour of assessee.

  ---

• 2020 (12) TMI 517
  TP Adjustment - ITAT has remanded the matter back to TPO and directed it to consider the combined effect of 14 factors for determining the cost/ value of international transactions in accordance with order passed immediately preceding year of the respondent-assessee in LG Electronics India Pvt. Ltd. [ 2013 (6) TMI 217 - ITAT DELHI] - HELD THAT:- The said judgment of the Special Bench has already been set aside [ 2016 (1) TMI 582 - DELHI HIGH COURT] TPO is directed to determine the cost/ value of international transactions. Accordingly, the impugned order of the ITAT is set aside to a limited extent and the TPO is directed to decide the matter in accordance with the directions contained above.

  ---

• 2020 (12) TMI 516
  Capital gain tax - Transfer of shares by assessee to its wholly owned subsidiary - transfer of shares by way of alleged gift - applicability of specific provisions of sub Section 47(iv) - HELD THAT:- Section 47(iii) will not apply, as we have held that the transfer was not a valid gift. Therefore, the said argument does not merit consideration. The assessee by placing reliance on the decision in Sunil Siddharthbhai [ 1985 (9) TMI 7 - SUPREME COURT] , Dheer Co. [ 2011 (5) TMI 239 - AUTHORITY FOR ADVANCE RULINGS] , Dana Corporation [ 2009 (11) TMI 32 - AUTHORITY FOR ADVANCE RULINGS] and Goodyear Tire Rubber Co.[ 2013 (3) TMI 413 - DELHI HIGH COURT] by way of alternate submission contended that assuming that there is a transfer, there is no gain that is chargeable to tax in terms of Section 45, as there is no consideration that accrues or arises or is received by the assessee. Firstly, we need to point out that the transaction is a circular transaction and is a measure adopted to avoid tax. The TPO in his order has done an analysis as to how there is a loss in real income and loss of revenue by shifting profits outside the country Finding rendered by the TOP which ultimately stood crystallised in an assessment order after the directions issued by the DRP has not been touched upon for its correctness by the Tribunal. We find that the above factual conclusion would go a long way to demolish the case of the assessee which they now project before us. Consequently, the contention that there is no capital gain chargeable under Section 45, there can be no income in terms of Section 2(24) is also not acceptable. The issue as to whether there is any income or business income etc., is a question of fact. The authorities below have dealt with the same elaborately, but unfortunately, the Tribunal did not venture to examine the correctness of such finding and in our considered view, the Tribunal failed to examine the factual matrix despite being the last authority to render findings of fact. Thus, in the absence of any such finding, we are to hold that factual findings remain unassailed which we are inclined to confirm. TP Adjustment - Claim of trade mark fee and deleting the addition on account of Corporate and Bank Guarantee - In terms of sub- section 3 of Section 92C, then the TPO is bound to determine the ALP in terms of sub-sections 1 and 2 of Section 92C. The finding of the TPO is that there is absolutely no rationale for effecting such a payment to wholly owned subsidiary by the Parent company, the case as projected by the assessee is illogical and in other words, the claim was baseless and therefore, the ALP was determined at 'NIL'. No error in the decision making process, considering the factual situation whole of which has been admitted and the assessee miserably failed in dislodging the factual finding rendered by the TPO by producing any document before the DRP. We find absolutely no justification on the part of the assessee to seek for a remand to the Assessing Officer to redo the assessment on the said issue. We hold that the finding rendered by the Tribunal is wholly erroneous and the same is set aside. Corporate Guarantee and Bank Guarantee - Tribunal held that in case of default, Guarantor has to fulfill the liability and therefore, there is always an inherent risk in providing guarantees and that may be a reason that Finance provider insist on non-charging any commission from Associated Enterprise as a commercial principle. Further, it has been observed that this position indicates that provision of guarantee always involves risk and there is a service provided to the Associate Enterprise in increasing its creditworthiness in obtaining loans in the market, be from Financial institutions or from others.There may not be immediate charge on P L account, but inherent risk cannot be ruled out in providing guarantees. Ultimately, the Tribunal upheld the adjustments made on guarantee commissions both on the guarantees provided by the Bank directly and also on the guarantee provided to the erstwhile shareholders for assuring the payment of Associate Enterprise. We hold that the Tribunal committed an error in deleting the additions made against Corporate and Bank Guarantee and restore the order passed by the DRP. Challenging the order passed by the DRP, regarding a finding that the PE Fund was relatively risk free investment - TPO held that the value of shares of RC determined at the time of investment by IVC represents the best possible estimate of the market value of the share of RC and this represents the value of shares held by the assessee in RC at the time of transfer. TPO referred to the Organisation for Economic Co- operation and Development Guidelines ['OECD' for brevity] the decisions of the Tribunal about the Moore Stephensons Valuation Report, discussed about the Discounted Cash Flow Method ['DCF' for brevity], took note of the historical performance and future profitability of the company, what are the parameters which have to be taken into consideration for applying DCF method and concluded that the ALP should be determined by CUP Method. TPO proposed that a sum of ₹ 885,13,80,000/- may be added as the value of the shares that has been transferred to RC, which is also the ALP of the shares that have been transferred and the AO may also calculate the Capital gains accruing as a result of such share transfer after giving necessary opportunity. As was seen from the order passed by the DRP, it was in substantial agreement with regard to the finding rendered by the TPO that the value of the shares of RC determined at the time of investment by IVC represents the best possible estimate of the market value of the shares of RC. Though such finding was rendered, the DRP agreed with the assessee that because there was a buy back arrangement, the PE fund was making a relatively risk free investment. However, such finding has been rendered by the DRP without setting aside what has been factually found and recorded by the TPO. Reasoning given by the TPO is legally sustainable, reflects not only the factual position, but also the manner in which the PE funds are managed worldwide as to how they conduct detailed due diligence before making the investment, because the investment is with a sole intention of making a profit. Therefore, we find that the decision of the DRP in granting 10% risk adjustment allowance is perverse and without any analysis of the factual position which has been rightly brought out by the TPO in his order. Therefore, the order of the DRP, as confirmed by the Tribunal is set aside and the order of the TPO is restored and the Assessing Officer is directed to give effect to the said order.

  ---

• 2020 (12) TMI 501
  Bogus purchases - assessee could not produce primary evidences like Octroi Receipts, Delivery challan etc. evidence to prove the genuineness of the purchases before the AO and before CIT(A) - HELD THAT:- In the instant case, the assessee failed to file before the AO/CIT(A) confirmed copy of the ledger account, present mailing address of the said parties. In such a situation, in absence of current mailing address, it was not possible for the Revenue to summon those parties for examination/verification/cross-examination. Therefore, the reliance placed by the Ld. counsel on the decision in Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] is misplaced. In the instant case, the issue is genuineness of purchases, which arose because of the investigation done by the Sales Tax Department, Government of Maharashtra which resulted in the affidavits filed by the entry providers that they had merely provided entries and no goods were supplied. In the overall facts and circumstances of the case, the contentious issue would be resolved through cross-examination of the parties. A proper hearing must always include a fair opportunity to those who are parties in the controversy for correcting or contradicting anything prejudicial to their view. Cross-examination is allowed by procedural rules and evidently also by the rules of natural justice. Any witness who has been sworn on behalf of any party is liable to be cross-examined on behalf of the other party to the proceedings. The Hon'ble Supreme Court in State of Kerala vs. K.T. Shaduli Grocery Dealer [ 1977 (3) TMI 160 - SUPREME COURT] recognised the importance of oral evidence by holding that the opportunity to prove the correctness or completeness of the return necessarily carry with it the right to examine witnesses and that includes equally the right to cross-examine witnesses. Thus considering the above factual scenario and position of law, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make a de novo order, after allowing the opportunity of cross-examination to the assessee. We direct the assessee to file the relevant accounts/documents/evidence before the AO. Needless to say, the AO would give reasonable opportunity of being heard to the assessee before passing the order. Appeals are allowed for statistical purpose

  ---

• 2020 (12) TMI 499
  Disallowing claim of donation made u/s 35AC - addition on survey by a assessee company director for having received back in cash the donation given by the assessee company to Navjeevan Charitable Trust - HELD THAT:- Upon careful consideration we find that in identical situations donation to the identical trust based upon same search has been held to be allowable by the ITAT in the assessee s associate concern in the case of Jadstone Trading Pvt. Ltd [ 2019 (6) TMI 1574 - ITAT MUMBAI] - We set aside the orders of authorities below and direct that the impugned payment should not be disallowed.

  ---

• 2020 (12) TMI 498
  Addition u/s 68 - sundry creditors whose balance were outstanding as of the end of the previous year - HELD THAT:- The quantity and value of purchases formed part of the audited accounts, quantitative details, gross profit margin and also various accounting ratios of the appellant. In the report furnished by the tax auditor in Form 3CA, no adverse comments or qualifications have been given in this regard. Further no specific infirmity or defect has been pointed out by the AO in respect of the books of accounts of the appellant. In the confirmation letter placed clarified by Shri Saugata Bhowal, proprietor of M/s. Bajrang Traders that his proprietorship concern had been closed down due to financial problems so it can be presumed that it was the reason why the AO's notice u/s. 133(6) could not be served upon it, so no adverse view was warranted against this sundry creditor. Other two sundry creditors M/s. Lhaki Steels and Rolling Pvt. Ltd. and M/s. Bhutan Rolling Mills were non-residents and had been duly served the notice issued by AO u/s. 133(6) of the Act, and they both have already furnished their confirmation to have received the balance amount from assessee by RTGS/NEFT. - no addition was warranted u/s. 68 of the Act and therefore direct the deletion of addition - Decided in favour of assessee.

  ---

• 2020 (12) TMI 497
  Penalty u/s 271(1)(c) - AO proceeded to complete the assessment u/s 144 - addition u/s 68 - absence of any explanation or supporting evidence produced by the assessee - HELD THAT:- Assessee neither furnished any explanation in response to the show cause notice issued under section 271(1)(c) r/w section 274 of the Act nor appeared before the Assessing Officer to show that no penalty is imposable. Before learned Commissioner (Appeals) when the appeal challenging the levy of penalty was fixed no one appeared on behalf of the assessee despite several opportunities. Even before us also, no one appeared on behalf of the assessee to represent the case. Neither in the quantum proceedings nor in the penalty proceedings, right from the stage of Assessing Officer till the Tribunal, the assessee has not furnished any explanation or supporting evidence either to contest the addition made under section 68 on merits or to prove the fact that there is neither any concealment of income nor furnishing particulars of inaccurate income - facts on record clearly reveal the casual and non cooperative attitude of the assessee towards the tax proceedings. Thus, when the assessee has not brought on record any evidence to prove the genuineness of the share premium and has also miserably failed to establish on record that there is neither any concealment or furnishing of inaccurate particulars of income, imposition of penalty under section 271(1)(c) of the Act, in our view, is justified. - Decided against assessee.

  ---

• 2020 (12) TMI 496
  Exemption u/s 10A - claim not made by assessee in its return f income filed in the Income Tax Department - assessee-company has not furnished the prescribed report in Form No.56 along with return of income - AO denied the part of carry forward losses to be set off in the current year - HELD THAT:- Assessee as otherwise eligible for claim of deduction u/s.10A, which assessee had not claimed at the time of filing of return, because same was filed at NIL income after setting of carried forward losses - Even though the Tribunal in the Assessment Years 2004-05 and 2005-06, has decided the issue in favour of the assessee, it will only go to enhance the losses to be carried forward and consequently the income of the assessee will reduce to nil. Once assessee s income is liable for deduction u/s.10A for which assessee is otherwise eligible and also has made due compliance by filing Form No.56F and relevant audit report. If that is so, then claim of deduction u/s.10A is to be allowed and we do not find any legal infirmity in the order of the Ld. CIT (A) in allowing the deduction u/s.10A in the light of Form No.56F. In that case, the assessment made by the Assessing Officer will be subjected to 100% deduction u/s.10A and the assessed income would be Nil - Decided against revenue.

  ---

• 2020 (12) TMI 495
  Dismissal of appeal by CIT-A - As argued as no proper opportunity of hearing give to assessee - non-prosecution of appeal - HELD THAT:- CIT(A) has not given any categorical finding on merit of the case and dismissed the appeal on the ground of non-prosecution of appeal. As observed that the CIT(A) did not give sufficient opportunity of hearing to the assessee. CIT(A) was not right in dismissing the appeal of the assessee without giving proper opportunity of hearing. Hence, we are remanding back the entire issue to the file of the CIT(A) to be decided on merit. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. The appeal of the assessee is partly allowed for statistical purpose.

  ---

• 2020 (12) TMI 494
  Penalty u/s.271(1)(c) - Defective notice - AO not mentioned in which limb the penalty - HELD THAT:- Assessment order was passed ex-parte and the CIT(A) and the AO have not mentioned any reason for initiating the penalty u/s.271(1)(c) - as seen from the copy of the notice issued u/s.274 r.w.s.271(1)(c) of the Act, the AO has not struck-off the irrelevant portion in the notice i.e., whether the penalty is being levied for concealment of income or for furnishing of inaccurate particulars or for both. In view of the same, respectfully following the decision of the Hon'ble Supreme Court in the case of CIT Vs. SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER ] and case of Pr.CIT Vs. Baisetty Revathi [ 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT] the penalty order passed by the AO is set aside. Accordingly, the appeal of assessee is allowed.

  ---

• 2020 (12) TMI 493
  Penalty u/s 271(1)(c) - Defective notice - in the show cause notice issued u/s 274 read with section 271(1)(c) has not struck off any of the twin charges - HELD THAT:- AR has relied upon the decision of the Hon ble Delhi High Court in Pr. CIT Vs. Sahara India Life insurance Company Ltd [ 2019 (8) TMI 409 - DELHI HIGH COURT] relying upon the decision of CIT Vs. Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] and CIT Vs. SSA s Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] that the notice issued by the ld AO for levy of the penalty would be bad in law if it did not specify which limb of section 271(1)(c) the penalty proceedings have been initiated. In the present case the notice issued by the ld AO section 271(1)(c) is silent. Even otherwise in the assessment order passed the ld AO was not clear whether the penalty was leviable for concealment of income or for furnishing inaccurate particulars of income. Thus, it was not discernable clearly in which limb the assessee was to be penalized. As in Virgo Marketing Pvt. Ltd [ 2008 (1) TMI 885 - DELHI HIGH COURT] has held that if one is unable to discern from the reading of the assessment order why the ld AO choose to initiate penalty proceedings against the assessee and under which limb the penalty proceedings cannot be upheld. In view of the above facts and the binding judicial precedents of the Hon ble High Court we set aside the orders of the lower authorities and direct the ld AO to delete the penalty u/s 271(1)(c) - Decided in favour of assessee.

  ---

• 2020 (12) TMI 490
  Approval u/s 80G(5) denied - CIT- A rejecting renewal of recognition in the absence of income and expenditure account for the financial year 2017-18 not having been satisfied about the charitable nature of activities of the trust or genuineness of its activities - trust was granted registration u/s. 12AA on 16.03.1984 - HELD THAT:- It is a matter of record that the due date for filing of the return of income for the assessment year 2018-19 had not expired as on the date when the notice calling for the information was issued. In any event, it is the case of the appellant that he had filed the financial statement for the financial year 2017-18 also during the course of proceedings before the ld. Commissioner of Income Tax (Exemption). Moreover, it is undisputed fact that the appellant society continues to enjoy the registration u/s. 12AA of the Act, therefore, it cannot be said that the objects of the appellant society are not charitable in nature. In any event, since the order of the ld. Commissioner of Income Tax (Exemption) is premised on the wrong assumption that the financial statements for the financial year 2017-18 were not filed. We direct the ld. Commissioner of Income Tax (Exemption) to examine the financial statements afresh and then come to conclusion as to the genuineness or otherwise of the activities of the appellant society and decide the application afresh after affording reasonable opportunity of being heard to the appellant society.

  ---

• Customs

• 2020 (12) TMI 515
  Rectification of Mistake - modification of order directing the respondents to release the imported goods on payment of redemption fine and penalty - HELD THAT:- The judgment and order dated 15th October, 2020 by insertion/addition of the following sentence in paragraph 4.1 as well as in paragraph 38 thereof. The last line in paragraph 38 would thus read as under:- In addition, respondent Nos.4 to 7 are also directed to forthwith release the goods of the petitioner covered by seven Bills of Entry bearing Nos. 5520537, 5520538, 5520539, 5520540, 5520541, 5520872 and 5521191 on payment of redemption fine, penalty, customs duty and any other dues that may be payable as per law. Application disposed off.

  ---

• 2020 (12) TMI 503
  Applicability of the time period (limitation) to claim refund of Special Additional Duty (SAD) - N/N. 102/2007-Cus dated 14.09.2007 as amended by N/N. 93/2008-Cus dated 1.8.2008 - refund rejected on the ground the refund claim has not been filed within one year from the date of payment of duty, under Section 27 of the Customs Act, 1962 - HELD THAT:- The facts are not in dispute and admittedly, the respondent importer has filed refund claim after more than one year or may be by few days more from the date of payment of SAD. Hon ble Delhi High Court judgement in SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2014 (4) TMI 870 - DELHI HIGH COURT] has held that In the absence of specific provision of Section 27 being made applicable in the said notification, the time-limit prescribed in this section would not be automatically applicable to refunds under the notification. With the introduction of the circular and then amended notification (No. 93), the Customs authorities started insisting that such limitation period which was prescribed w.e.f. 01.08.2008 by notification became applicable. The findings of the Hon ble high Court clearly show understanding of the department with regard to clause of limitation provided in the Notification. The condition of limitation was not the part of the original notification. It was only with the introduction of Circular No. 6/2008-Cus. and Notification No.93/2008, the department started insisting on the limitation period (of one year) prescribed with effect from 1.8.2008, became applicable. The Hon ble High Court has clearly held that the expression so far as may be used in the sub-section (6) of Section 3 of CTA has to be followed to the extent possible. Merely because Section 27 of the Customs Act provides for a period of limitation for filing refund claim, it cannot be held that even for the purposes of claiming refund in terms of the Notification, the same limitation has to be applied. The Hon ble Delhi High Court has also held that in the maters which deal with substantive rights, such as imposition of penalties and other provisions that adversely affect statutory rights, the parent enactment must clearly impose such obligations; subordinate legislation or rules cannot prevail or be made, in such case. Appeal dismissed - decided against Revenue.

  ---

• Corporate Laws

• 2020 (12) TMI 500
  Approval of Scheme of Arrangement - Sections 230 to 232 of the Companies Act, 2013, and other applicable Provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- From a perusal of the material brought on record, it appears that the Scheme of Arrangement is fair, reasonable and is not detrimental to the Members or Creditors. The Scheme has not been opposed by the RD. As per the ROC, there are no prosecutions, complaints, technical scrutiny/ inspections pending against the Petitioner Companies. Further, as per the Petition, the Scheme in question will enable a focussed and concentrated approach; maximize opportunities for strategic partnership; help in fundraising and future growth; help in expansion and take advantage of market opportunities; induct new investors and reorganise its capital structure etc. Hence, the Scheme appears to have been framed for commercial expediency and in the interest of the Petitioner Companies and all stakeholders. A Scheme of Arrangement proposed by a Company for commercial expediency and in its commercial wisdom cannot ordinarily be interfered with and has to be sanctioned if the relevant provisions of the Companies Act, 2013 are met and no prejudice is caused to any of the stakeholders. The Board of Directors of the both Demerged as well as the Transferee Company have in their respective meeting held on 16.09.2020 approved and adopted the Scheme of Arrangement. The other requisite stakeholders have given their consent. However, it is a settled position of law that any sanction to a Scheme of Arrangement under the extant provisions of Companies Act, does not imply waiver of any liability or legal action for violation of the provisions of any Statute or the Rules made thereunder, or to prevent any statutory authority from initiating action for any such violation. The procedure specified in sub-sections (1) and (2) of Section 232 of the Companies Act, 2013 has been complied with, and hence the Scheme of Arrangement, as approved by the Boards of the Petitioner Companies, can be sanctioned - Application allowed.

  ---

• Insolvency & Bankruptcy

• 2020 (12) TMI 518
  Direction to declare the attachment of the only property of the corporate debtor as Null and Void - petitioner would contend the present Application is not maintainable at the instance of Resolution Professional because PAO was passed on 17.10.2018 which was prior to commencement of CIRP against Corporate Debtor - PAO was also confirmed by the Adjudicating Authority under PMLA - resolution plan not approved - whether this Adjudicating Authority can set aside the order of attachment passed under the provisions of PMLA on the ground that attachment is in contravention of moratorium order passed under Section 14 of IBC? HELD THAT:- The attachment was effected prior to the commencement of CIRP - The Hon'ble Appellate Authority NCLAT in the matter of Rotomac Global v. Deputy Director [ 2019 (9) TMI 797 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] has held that Section 14 of IBC is not applicable. Section 32(A) is also not applicable to the facts of the present case since CoC has not yet approved any Resolution Plan as on the date of issue of PAO. Application dismissed.

  ---

• 2020 (12) TMI 492
  Liquidation of the corporate debtor - Section 33 (1) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Applicant sought exclusion of approximately 424 days from the CIRP as the said days were lost in the legal proceedings - the Adjudicating Authority vide its order dated 15.01.2020 did not consider exclusion but granted extension of 90 days to complete the CIRP and find a successful Resolution Applicant. However in the 5thCoC meeting held on 29.01.2020 it was resolved that in the light of present situation of the Corporate Debtor where there is no registered office, no operations going on in the Company/factory premise of the Corporate Debtor, no employees, workers, Directors working, the Corporate Debtor is completely shut down and it would be feasible and viable to liquidate the Corporate Debtor under Section 33(2) of the IBC, 2016 in the interest of various stakeholders of the Corporate Debtor. The Resolution Professional represents that valuation report as required to be obtained under the provisions of IBC, 2016 in relation to the fair value of the assets of the corporate debtor as well as its liquidation value has been duly done by 2 registered valuers and 2 reports dated 22.10.2019 and 15.11.2019 have been submitted before the Adjudicating Authority. The average of the fair value of assets and liquidation value as per the reportsis ₹ 1,65,00,000/- and ₹ 1,15,50,000/- respectively. This Tribunal in the circumstances taking into consideration the provisions of law as well as on facts is constrained to order for liquidation of the corporate debtor and in the circumstances the corporate debtor stands liquidated and the incidence of liquidation to follow, on and from the date of this order in terms of the provisions of IBC, 2016 and more particularly as given in Chapter III of IBC, 2016 and also in terms of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 - Application allowed.

  ---

• 2020 (12) TMI 491
  Liquidation of the corporate debtor - CIRP of 270 days in the present matter has been expired and due to non-receipt of any Resolution Plan within the period of CIRP of 270 days, hence this application has been filed under the provisions of section 33 of IBC, 2016 - HELD THAT:- The Resolution Professional represents that valuation report as required to be obtained under the provisions of IBC, 2016 from the registered valuer in relation to the fair value of the assets of the corporate debtor as well as its liquidation value has been duly done. The fair value of assets and liquidation value as per date 20.07.2020 is ₹ 384.88 (in lakhs) and ₹ 105.40 (in lakhs) respectively. This Tribunal in the circumstances taking into consideration the provisions of law as well as on facts hereby orders for liquidation of the corporate debtor and in the circumstances the corporate debtor stands liquidated and the incidence of liquidation to follow, on and from the date of this order in terms of the provisions of IBC, 2016 and more particularly as given in Chapter III of IBC, 2016 and also in terms of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 - application allowed.

  ---

• Service Tax

• 2020 (12) TMI 513
  Condonation of delay in filing appeal - Petitioner had presented the appeal before the Second Respondent which was beyond the maximum limitation period of three months from the date of receipt of the copy of the order passed by the First Respondent - HELD THAT:- The Hon'ble Supreme Court of India in Assistant Commissioner (CT) LTU, Kakinada -vs- Glaxo Smith Kline Consumer Health Care Limited [ 2020 (5) TMI 149 - SUPREME COURT ] has emphatically laid down that the High Court in the exercise of powers under Article 226 of the Constitution of India ought not to entertain Writ Petition assailing the order passed by a Statutory Authority which was not appealed against within the maximum period of limitation before the concerned Appellate Authority. It would also not be possible to entertain this Writ Petition challenging the order of the Second Respondent, who has rightly refused to take that time barred appeal to file - Petition dismissed.

  ---

• 2020 (12) TMI 505
  100% EOU - Classification of services - employee of the parent company, Nektar USA, was sent to India on a secondment to work as a full time Managing Director of the Indian company - reimbursement of salary paid to the secondee , to the parent company, Nektar USA - manpower recruitment and supply agency services or not - HELD THAT:- The issue is no longer res integra as the Hon ble Supreme Court has, in the case of M/s Nissin Brake India Pvt Ltd [M/S NISSIN BRAKE INDIA PVT. LTD. VERSUS CCE, JAIPUR I], dealt with similar issue - This view has been reiterated by the Chennai Bench of the Tribunal in the case of M/s Komatsu India Pvt. Ltd. Vs Commissioner of Service Tax, [ 2019 (9) TMI 1408 - CESTAT CHENNAI ] and Bangalore Bench of the Tribunal in the case of M/s Goldman Sachs Services Pvt. Ltd. Vs Commissioner of Service Tax, Bangalore[ 2020 (10) TMI 292 - CESTAT BANGALORE ]. Going by the above ratio decidendi of the Hon ble Apex Court, there are no merit in the demand raised by the revenue - the revenue is not disputing that the secondee is always under the control and supervision of the appellant and that the appellant s parent company had absolutely no obligation to pay the salary and other charges to the secondee but for remitting secondee s salary in foreign exchange based on the salary reimbursement agreement. Appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2020 (12) TMI 514
  Reward to the informer - Duty evasion - Directions to the respondents to constitute a committee so as to consider the case of the petitioner in a time-bound period - grievance of the petitioner is that as per the reward policy floated by the respondents, the reward as stipulated has not been paid to him - HELD THAT:- The petitioner are directed to furnish the details of the petitioner along with the representation filed by the petitioner to the learned counsel who is appearing for respondent No.1, in a sealed cover. The learned counsel for respondent No.1, in turn, shall supply the said details to the concerned respondent authorities in a sealed cover - The representation will be decided by the concerned respondent authorities in accordance with law, rules, regulations and Government policies applicable to the facts of the case and on the basis of materials on record, as expeditiously as possible and practicable. Petition disposed off.

  ---

• 2020 (12) TMI 504
  Interpretation of statute - rule 3 of Central Excise Rules - Provisions Applicable to Packages Intended for Retail Sale - Method of Valuation - wall putty in packages of 40kg - to be valued under section 4 of the Central Excise Act, 1944 or under section 4A of the Excise Act? - Extended period of limitation - Legal Metrology Department clarified to the Appellant that if wall putty is packed in packages above 25 kgs, as per Rule 3(a) of the said Rules, the provisions of Chapter II including Rule 6(1)(e), (requiring printing of MRP) do not apply to such packages and further that packages of 40 kg and 50 kg of all the goods other than cement fertilizer, are exempted from affixing of MRP declaration. HELD THAT:- Merely because MRP was declared on the package will not mean that the valuation of the excisable goods for the purposes of charging of duty of excise should be carried out under section 4A of the Excise Act, if otherwise in law, the valuation is required to be undertaken under section 4 of the Excise Act. The Board by a Circular dated February 28, 2002, has also clarified that section 4A of the Excise Act will not be attracted when there is no statutory requirement of affixing MRP on the goods in question, even though an assessee may have voluntarily affixed the MRP on such goods. As the appellant had cleared wall putty in packages of 40 kg, the provisions of rule 6 contained in Chapter II of the Rules will not apply and if this be so, the provisions of section 4A of the Excise Act under which the value of goods is deemed to be the retail sale price declared on such goods, would not be applicable. The appellant was, therefore, justified in determining the value of the goods under section 4 of the Excise Act. In H R JOHNSON (INDIA) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD [ 2014 (6) TMI 453 - CESTAT MUMBAI] the assessee cleared tiles in retail packages to real estate developers after affixing MRP and paid duty on MRP basis under section 4A of the Excise Act. The Department contended that since the sales were made to institutional/industrial consumers, the Rules would have no application and duty must be paid under section 4. The Tribunal held that there is no difference in respect of packages sold to retail customers and sold to the alleged industrial consumers. The Tribunal also held that the clarifications issued by the Legal Metrology Department, cannot be disregarded. The decision would have no application in the present case since there is no requirement to examine whether the 40 kg packages are capable of being sold in retail since such packages are outrightly excluded from the purview of the Rules. The Principal Commissioner was not justified in concluding that the valuation of wall putty in packages of 40 kg was required to be determined under section 4A of the Excise Act - Appeal allowed - decided in favor of appellant.

  ---

• 2020 (12) TMI 502
  Interest on delayed refund - Relevant date for calculation of refund - amount deposited during investigation being form part of pre-deposit - from the date of deposit till the refund of the pre-deposit of principal amount or otherwise? - Section 11BB of Central Excise Act - HELD THAT:- The issue decided in the case of M/S. FUJIKAWA POWER AND M/S. KENZO INTERNATIONAL VERSUS CCE ST, CHANDIGARH-I [ 2019 (11) TMI 1197 - CESTAT CHANDIGARH] where it was held that the appellants are entitled to claim interest from the date of payment of initial amount till the date its refund @ 12% per annum. The adjudicating authority is directed to grant interest from the date of deposit till the date of grant of refund @12% per annum - Appeal allowed - decided in favor of appellant.

  ---

• CST, VAT & Sales Tax

• 2020 (12) TMI 512
  Permission to place the C-Forms which have now been located - order challenged on the short ground that after the appellate order was passed, in the residential house of the Proprietor of the respective petitioners, certain C-Forms had been located on 12.10.2020 which were earlier misplaced; and the details of the traced-out C-Forms are mentioned in para 6 of the affidavit filed in support of the respective Writ Petitions - HELD THAT:- In GODREJ AGROVET LTD. VERSUS COMMERCIAL TAX OFFICER, ELURU, WEST GODAVARI DISTRICT NOVARTIS HEALTH CARE PVT. LTD. (FORMERLY NOVARTIS NUTRITION INDIA PVT. LTD.) VERSUS COMMERCIAL TAX OFFICER, BENZ CIRCLE, VIJAYAWADA [ 2005 (10) TMI 516 - ANDHRA PRADESH HIGH COURT ] , a Division Bench of the Andhra Pradesh High Court considered the question whether the proviso to sub-rule (7) of Rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 enables a dealer to file C-Forms after making of the assessment by the competent authority and answered the question in the affirmative by holding that It shall be open to the dealer to produce the C forms even now before the assessing authority and the same shall be received, provided sufficient cause is shown by the petitioner for the belated filing of the C forms. The impugned orders passed by respondents 1 and 2 in respect of each of the petitioners herein are set aside and the matters are remitted back to the 2nd respondent for fresh consideration - Petition allowed by way of remand.

  ---

• Indian Laws

• 2020 (12) TMI 511
  Dishonor of Cheque - presumption in favour of the complainant under Section 139 of the Negotiable Instrument Act - acquittal of the accused - whether the accused committed the offence under Section 138 of N.I Act? - HELD THAT:- The admitted case of the complainant is that to discharge the liability, Ext.P1 cheque was issued by the accused and when the cheque was presented, it was dishonoured. The complainant also says that based on Ext.P7 hire purchase agreement, the company seized the vehicle and sold the same. The sale proceeds were already taken by the complainant company. Based on these admitted facts, the trial court found that when the complainant proceeded based on Ext.P7 agreement and re-possessed the vehicle from the accused and sold the vehicle, whether the amount of ₹ 87,600/- will be there as amount due can be decided only by a civil court or through the method mentioned in Ext.P7 hire purchase agreement. The trial court considered the entire aspect. After considering the oral and documentary evidence and based on Ext.P7 hire purchase agreement, the trial court came to such a conclusion. This is an appeal against acquittal - there are no reason to interfere with the finding of fact by the trial court - appeal dismissed.

  ---

• 2020 (12) TMI 510
  Dishonor of Cheque - acquittal of accused - drawer of the cheque - trial court acquitted the accused mainly for the reason that the cheque is issued by one Kochumol - HELD THAT:- The name of the accused is Kunjumol Renjith. The trial court considered this point in detail and found that the prosecution is not maintainable against Kunjumol Renjith because the drawer of the cheque is Kochumol. There is no reason to interfere with the well considered judgment of the trial court. The trial court found that the cheque was issued by one Kochumol and the prosecution is initiated against one Kunjumol Renjith. The statutory notice is also issued against Kunjumol Renjith. In such circumstances, the trial court is perfectly justified in acquitting the accused, who is Kunjumol Renjith. There is no reason to interfere with the acquittal order passed by the trial court. Appeal dismissed.

  ---

• 2020 (12) TMI 509
  Dishonor of Cheque - rebuttal of presumption or not - allegation that the complainant has proved beyond reasonable doubt that the accused have committed an offence punishable under Section 138 of N.I.Act as alleged in the complaint - HELD THAT:- The evidence of DW-2, DW-3 and DW-4 are on line with the evidence of DW-1 and they have fully supported the evidence of DW-1. All these four witnesses though were subjected to a detailed cross- examination from the complainant side, but, nothing could be elicited in their cross-examination favouring the complainant. On the other hand, even in their cross- examination, they have given some more details of the alleged transaction and how they were cheated by Mr.Mohammed Fayaz and Mr.Haji Pyare Jan Sab and the complainant. In the cross-examination of PW-1-the complainant, he has clearly stated that accused were not known to him earlier and he had not seen them on any day prior to the date of registration of the Sale Deed. Though it was suggested to him that even on the date of alleged Sale Deed also, he has not seen the accused, but, the witness has denied the said statement. However, the fact remains that, even according to the complainant, the accused were strangers to him till the date of the Sale Deed. That being the case, even without knowing the accused, how could he came to enter into an agreement of sale with the said accused and with Smt.Lokamatha Seshadri, is not understandable. The complainant, as PW-1, rather than placing his case more effectively and rather than standing by in support of his contention, has in his cross-examination, admitted several of the suggestions favouring the accused and also has made several statements which not only has weakened his case, but, also strengthened the contentions of the accused. To the height of it, the very same PW-1 in his cross- examination has also stated that, in the dishonoured cheques at Exs.P-2 to P-4, it is himself who has filled the name of the `payee' in it. This also supports the contention of the accused that they had never issued the cheques in favour of the complainant, rather, they had issued the cheques in favor of vendors Mr.Mohammed Fayaz and Mr.Haji Pyare Jan Sab until their agreement with them stood rescinded. The evidence since clearly go to show that to claim any benefit under those instruments, neither the complainant nor the said Mr.Mohammed Fayaz and Mr.Haji Pyare Jan Sab have not passed any consideration to the accused and there being no legally enforceable debt as on the date of presentation of the cheques, none of them were entitled for the cheque amount. Thus, the presumption under Section 139 of N.I.Act has been successfully rebutted from the accused side. Since the complainant could not able to prove the legally enforceable debt in his favour, he fails in his action against the accused for the offence punishable under Section 138 of N.I.Act - Since the trial Court has rightly come to the said finding and acquitted the accused from the alleged offence, there are no reason to interfere in the said finding. The order acquitting the respondents/accused for the offence punishable under Section 138 of N.I.Act, is confirmed - appeal dismissed.

  ---

• 2020 (12) TMI 508
  Dishonor of Cheque - accused failed to pay the dishonoured cheque amount - rebuttal of presumption or not - allegation that the complainant has proved beyond reasonable doubt that the accused has committed the alleged offence punishable under Section 138 of the N.I. Act - HELD THAT:- In the cross-examination of PW-1 throughout, the accused at various places has elicited several replies of ignorance from the witness about the alleged liability of the accused towards the complainant. Certain discrepancies in the loan agreement itself at Exs.P9 and P10 were elicited in the cross-examination of PW-1 including that Ex.P10 is silent about who has paid the loan amount to whom and what was the alleged agreed rate of interest? It was also elicited in the cross-examination of PW-1 that the alleged premiums towards the insurance of the vehicle which was the subject matter of the loan transaction was paid by the accused. However from the accused side, it was also elicited from the very same witness in the cross-examination that the alleged statement of the loan account at Ex.P11 still shows a liability of ₹ 40,000/- as towards insurance deposit. No doubt, PW-1 attempted to patch up the said discrepancy by stating that a rebate has been given towards the said loan. However, the very same witness in the subsequent sentence has also stated the alleged rebate does not give the details as to towards which all acts and to what amount the rebate was given. It goes to show that since the accused in Ex.P11 has shown a sum of ₹ 40,000/- as a liability towards the insurance amount in spite of the admitted fact that the said amount was paid by the accused, the very correctness and trustworthiness of the statement of accounts at Ex.P11 becomes doubtful - Similarly the very same statement of accounts though gives a deduction of ₹ 1,57,434/- towards the receipt of monthly hire rentals but as was told by PW-1 in his cross-examination to a specific query by the accused, that the said statement does not give the complete details of how many instalments of what amount was received by the complainant from the accused. Therefore as rightly submitted by the learned counsel for the respondent, the correctness of the statement of accounts at Ex.P11 becomes more doubtful. The defence of the accused that there existed no legally enforceable debt equivalent to the cheque amount as on the date of presentation of the cheque gains more reasons to believe and accept, than believing the version of the complainant that the cheque amount was the outstanding liability from the accused - Once the accused has successfully rebutted the presumption under S.139 of the N.I. Act, the onus shifts back to the complainant. However, the complainant failed to discharge its burden of proving the alleged liability from the accused, equivalent to the cheque amount. Considering the said fact, the Trial Court has rightly held that the complainant has failed to prove beyond reasonable doubt that the accused has committed the offence punishable under Section 138 of the N.I. Act - the order acquitting the accused of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 stands confirmed - appeal dismissed.

  ---

• 2020 (12) TMI 507
  Direction to petitioner to deposit 20% of the cheque amount in terms of Sec. 143-A of the Negotiable Instruments Act - non-application of mind - HELD THAT:- It is now well settled that this Court is entitled to exercise its jurisdiction/ inherent powers under Section 482 Cr.P.C., especially when it relates to interfering with interlocutory orders/ proceedings only if such exercise of power is required to prevent abuse of the process of the court arising out of such impugned order/proceedings or to secure the ends of justice Thus, in the facts of the instant case, the impugned order passed by the trial court invoking Section 143-A of the N.I Act and thereby directing the accused to deposit 20% of the cheque amount does not warrant interference by this Court in the exercise of its powers under Section 482 Cr.P.C - petition dismissed.

  ---

• 2020 (12) TMI 506
  Dishonor of Cheque - argument has been raised by the petitioner's counsel that the complainant has not placed any material to show his solvency to pay a sum of ₹ 12,00,000/- to the revision petitioner - Section 138 of the Negotiable Instrument Act - HELD THAT:- The cheque issued by the revision petitioner/accused marked as Ex.P1 and the return of the cheque by the concerned bank on presentation and the reason adduced therein and the issuance of the legal notice and the receipt of the same by the revision petitioner/accused, it is found that the revision petitioner/accused has not chosen to send any reply to the legal notice sent by the complainant calling upon her to pay the amount involved in the matter. From the materials placed on record, it is found that the revision petitioner/accused has taken a defence that she was having business dealings with the wife of the complainant and in connection with the said business, she had given the cheque in question as a security. However, pointing to the abovesaid version taken by the revision petitioner/accused in support of her defence, no acceptable and reliable material has been placed on record. It is found that the revision petitioner/accused has also lodged a complaint against the complainant's wife marked as Ex.P8 and to establish the same, the complainant has examined P.W.2, the police constable. However, from the evidence adduced in the matter, it is found that the revision petitioner/accused has disowned the lodgment of the compliant said to have been preferred by her - When the factum of the revision petitioner/accused having business transaction with the complainant's wife has not been established by adducing acceptable and reliable material and furthermore when the revision petitioner/accused has not placed any material to sustain that she had given the cheque in question as a security in connection with the silk business and as above pointed out the revision petitioner having not chosen to challenge the legal notice sent by the complainant, all put together, would only lead to the conclusion, as held by the courts below, that inasmuch as the revision petitioner/accused had received the amount from the complainant in connection with her daughter's education accordingly she is unable to place any material to rebut the presumption which had been rightly raised in favour of the complainant by the courts below. The courts below are found to have rightly assessed the materials placed on record both oral and documentary in the correct perspective and also considering the principles of law governing the case involved in the matter, are found to be justified in convicting and sentencing the revision petitioner/accused under Section 138 of the Negotiable Instrument Act and the sentence imposed on the revision petitioner is also found to be not on the higher side - there are no infirmity or error in the conviction and sentence imposed on the revision petitioner / accused by the courts below. Revision petition dismissed.

  ---