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TMI Tax Updates - e-Newsletter
September 17, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Consultation with the noticee before issue of SCN - Non-compliance with the requirements - the show cause notice need not be set aside, but directions will have to be issued to the respondents to once again act on the liberty granted by us to attempt a genuine consultation process before the respondents proceed to adjudicate the show cause notice dated 15.12.2020. - HC
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Seeking directions from the Court that the petitioner shall not be insisted for submitting the Bank guarantee - Admittedly, the petitioner himself applied under Section 67(6) of the Act seeking release of the seized goods vide Annex.10, based on which the order dated 11/5/2021 (Annex.15) was issued and as such passing of the order 11/5/2021 by the respondents also cannot be faulted. - besides the surety bond of the equivalent amount of value of goods by the petitioner, it would be required of the petitioner to furnish security in the form of bank guarantee in terms of Section 67 (6) of the Act and Rule 140 of the Rules for release of the seized goods. - HC
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Challenge to vires of several sections of the GST Act including Section 50 and order demanding interest under Section 50 for the period July, 2017 to March, 2018 - validity of garnishee notice under Section 79 - In view of the retrospective amendment of Section 50 with effect from July 1, 2017 the impugned order dated May 14, 2019 is not sustainable in law and is set aside. Consequentially, the garnishee notice dated May 27, 2019 is also set aside. - HC
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Jurisdiction of Summons issued by the respondent - search and seizure - The scope of Section 6(2)(b) and Section 70 is different and distinct, as the former deals with any “proceedings on a subject matter/same subject matter” whereas, Section 70 deals with power to summon in an inquiry and therefore, the words “proceedings” and “inquiry” cannot be mixed up to read as if there is a bar for the respondent to invoke the power under Section 70 of the CGST Act. - There is no ground made out by the appellant for quashing the summons issued by the respondent u/s 70 of the CGST Act - HC
Income Tax
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Depreciable asset forming part of the block of assets - restarting of business after a time gap - instead of selling the building, if the assessee started using the building after two years for business purposes the assessee can continue to claim depreciation based on the written down value available as on the date of ending of the previous year in which depreciation was allowed last. - Order of HC restoring the additions made in the assessment order sustained - SC
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Validity of order of Settlement Commission - acceptance of additional income disclosed by the assessee - Petitioner/Income Tax authority could not make out any exceptional case in this Writ Petition for exercising constitutional writ jurisdiction of this Court under Article 226 of the Constitution for scrutinizing or reappreciating the facts, evidence or findings of the learned Settlement Commission in reaching to its conclusion for allowing the claim of the assessee/respondent no. 2 made in settlement application and further Court in exercise of its constitutional jurisdiction under Article 226 of the Constitution of India cannot substitute the findings of the Income Tax Settlement Commission with its own findings and come to a different conclusion. - HC
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Withdrawal of benefit granted to Petitioner under the DTVSV Scheme - considering that Form 3 had already been issued, on the declarations and undertaking filed by Petitioner, any action on the same entailing adverse consequences, ought to have been afforded with a fair and reasonable opportunity to explain its case, which the Revenue has ex-facie failed to offer. - Order set aside - Designated Authority directed to pass the fresh order, after giving a proper opportunity of hearing to Petitioner - HC
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Addition u/s 56(2)(vii)(b) - difference in value in respect of the subject properties - there cannot be two different fair market value in respect of the very same property, i.e. one at the hands of the seller and the other at the hands of the buyer. Thus, in our view, if the difference in valuation between the value determined by the stamp duty authority and the declared sale consideration is less than 10%, no addition can be made under section 56(2)(vii)(b)(ii) - AT
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Revision u/s 263 - non reference to TPO - cases as selected for scrutiny on non transfer pricing risk parameters - The necessary enquiries and examination as reasonably expected have been carried out by the Assessing officer and he has taken a prudent, judicious and reasonable view after considering the entire material available on record as well as following the CBDT Instruction no. 3 of 2016 and the order so passed u/s. 143(3) cannot be held as erroneous in so far as prejudicial to the interest of Revenue. - AT
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Exemption u/s 11 denied - delay in filing Form no. 10 - Department's objection that the audit report in Form no. 10B was also delayed and such delay had neither been applied for condonation of delay nor been condoned, it was the submission of the assessee that the delay in filing Form no. 10B has been condoned, in general, by the CBDT, vide Circular No. 10/2019, dated 22.5.2019, it has been stated at the Bar by the ld. Counsel for the assessee that the Audit Report in Form no. 10B had been e-filed on 4.2.2017 by the Auditor within the time prescribed under the Act, i.e., before the time prescribed for filing the return of income. - A copy of such e-verification screen-shot, having acknowledgement No. 761769971200417, has been placed on record. - Objections of the department rejected - AT
Customs
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Classification of imported goods - Parts of seats of motor vehicle (parts of part) - There are no reason to interfere with the CESTAT wheerin it was held that, the captioned goods i.e. Child Parts imported by the appellant is correctly classifiable under CETH 9401 90 00 of Customs Tariff Act - SC
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Demand against violation of bond conditions - Warehousing of goods imported - The appellant has furnished E.P copy of the shipping bill as proof of export. The appellant therefore has complied with conditions of notification read along with Circular / Public Notice / Hand Book of Procedure. The department accepted the same as fulfilment of obligations as per the bond executed by them - Being satisfied of the same, the bond has been cancelled, after which no demand can be raised alleging violation of conditions of bond. - AT
FEMA
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Extension of tenure of Director of Enforcement - Though we have upheld the power of the Union of India to extend the tenure of Director of Enforcement beyond the period of two years, we should make it clear that extension of tenure granted to officers who have attained the age of superannuation should be done only in rare and exceptional cases. Reasonable period of extension can be granted to facilitate the completion of ongoing investigations only after reasons are recorded by the Committee constituted under Section 25 (a) of the CVC Act. - SC
Indian Laws
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Power of Court to entertain an application u/s 9(1) of the Arbitration and Conciliation Act, 1996 - On a combined reading of Section 9 with Section 17 of the Arbitration Act, once an Arbitral Tribunal is constituted, the Court would not entertain and/or in other words take up for consideration and apply its mind to an application for interim measure, unless the remedy under Section 17 is inefficacious, even though the application may have been filed before the constitution of the Arbitral Tribunal. The bar of Section 9(3) would not operate, once an application has been entertained and taken up for consideration - It could never have been the legislative intent that even after an application under Section 9 is finally heard relief would have to be declined and the parties be remitted to their remedy under Section 17. - SC
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Dishonor of Cheque - cheating versus breach of contract - This court is not unmindful to note that there remains fine line of distinction between breach of contract and cheating. In case of cheating, it is the duty of the complainant to make out a case that from the very inception of establishment of commercial contractual relation between the parties, the accused had an intention to deceive fraudulently or dishonestly the complainant to induce him to deliver property. - HC
Central Excise
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Demand of amount collected in the name of duty u/s 11D - CENVAT credit - inputs or capital goods - imported Box Strapping Machines - the appellant have cleared the imported Box Strapping Machine as such on payment of excise duty which is equivalent to the Cenvat credit availed thereon. For this reason also, no demand can be raised as the appellant is eligible for Cenvat on capital goods cleared as such, in terms of Rule 5(3) of Cenvat Credit Rules, 2004. - the disallowance of Cenvat credit as well as demand under Section 11D are set-aside - AT
Articles
Notifications
News
Case Laws:
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GST
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2021 (9) TMI 728
Consultation with the noticee before issue of SCN - Non-compliance with the requirements set out in Master Circular dated 10.03.2017 on the subject of show cause notice/adjudication and recovery-reg. - HELD THAT:- There is no need to quash the impugned show-cause notice. This is because in this case, a notice of pre-consultation was issued, but such notice was not adequate notice. Thereafter, we granted liberty to the respondents to actually go through the process of pre-consultation. In this, even the petitioner, participated. However, we agree with Mr. Vinoj Daniel, the learned Counsel for the petitioner that despite the opportunity, the respondents did not hold any genuine pre-consultation. Therefore, the show cause notice need not be set aside, but directions will have to be issued to the respondents to once again act on the liberty granted by us to attempt a genuine consultation process before the respondents proceed to adjudicate the show cause notice dated 15.12.2020. The respondents will once again hold the consultation process with the petitioner - Petition disposed off.
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2021 (9) TMI 727
Cancellation of registration of petitioner - not filing returns for a continuous period of six months - violation of section 29(2)(c) of GST Act - HELD THAT:- On consent, it is provided that petitioner would file an application under section 30 of the Act for revocation in terms of the notification before the third respondent. In the event, such an application is filed, the third respondent shall consider and decide the same on merits, by a reasoned and speaking order, without being influenced by the observation made/returned by the second respondent noted in the impugned order dated 26.07.2021. It is clarified that the appellate order shall abide by the order to be passed by the third respondent, Assistant Commissioner, Commercial Tax, Sector 4, Mathura. Petition disposed off.
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2021 (9) TMI 726
Seeking directions from the Court that the petitioner shall not be insisted for submitting the Bank guarantee - search warrant and search proceedings carried out without jurisdiction - bogus firm and supply of fake invoices without supplying the raw material physically - release of goods on provisional basis, upon execution of a bond and furnishing of a security - Section 67(6) of the Central Goods Services Tax Act, 2017 read with Rule 140 of the Central Goods Services Tax Rules, 2017 - HELD THAT:- Qua the nature of interim order passed by the High Court therein, the Court required that the assessee must take recourse to the mechanism provided under the Act and the Rules for release on provisional basis upon execution of bond and furnishing of a security in such manner and of such quantum as has been prescribed and it was ordered that the orders passed by the High Court which are contrary to the statutory provisions shall not be given effect to by the authorities. Admittedly, the petitioner himself applied under Section 67(6) of the Act seeking release of the seized goods vide Annex.10, based on which the order dated 11/5/2021 (Annex.15) was issued and as such passing of the order 11/5/2021 by the respondents also cannot be faulted. The order dated 21/5/2021 is modified to the extent that besides the surety bond of the equivalent amount of value of goods by the petitioner, it would be required of the petitioner to furnish security in the form of bank guarantee in terms of Section 67 (6) of the Act and Rule 140 of the Rules for release of the seized goods - the application filed by the respondents under Article 226(3) of the Constitution is allowed.
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2021 (9) TMI 724
Validity of seizure order - Section 129(3) of U.P. GST Act, 2017 - petitioner prays that the petitioner may be permitted to institute and/or pursue the statutory remedy of appeal against the order impugned in the present petition - HELD THAT:- In identical matter the issue travelled to the Supreme Court in THE STATE OF UTTAR PRADESH ORS. VERSUS M/S KAY PAN FRAGRANCE PVT. LTD. [ 2019 (12) TMI 95 - SUPREME COURT] where it was held that There are no hesitation in observing that the High Court in all such cases ought to have relegated the assessees before the appropriate Authority for complying with the procedure prescribed in Section 67 of the Act read with Rules as applicable for release (including provisional release) of seized goods. The present proceedings are found to have been terminated by the Supreme Court - petition dismissed.
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2021 (9) TMI 719
Challenge to vires of several sections of the GST Act including Section 50 and order demanding interest under Section 50 for the period July, 2017 to March, 2018 - validity of garnishee notice under Section 79 - validity of recovery notice - HELD THAT:- Interest under Section 50 is payable only on that portion of the tax which is paid by debiting the electronic cash ledger. It is the case of the petitioner that interest of ₹ 1,22,283/- only is payable by it under Section 50 and the rest of the demand is in respect of tax paid by debiting the electronic credit ledger - This interest amount of ₹ 1,22,283/- is mentioned in the petitioner s supplementary affidavit dated September 24, 2019 and has not been disputed in the affidavit in opposition dated December 17, 2019. In view of the retrospective amendment of Section 50 with effect from July 1, 2017 the impugned order dated May 14, 2019 is not sustainable in law and is set aside. Consequentially, the garnishee notice dated May 27, 2019 is also set aside. The respondent no.1 will recalculate the demand in accordance with law and after taking into consideration the aforesaid amendment of Section 50 of GST Act within a period of 4 weeks and the refund the excess amount collected. Respondent shall also consider the claim of the petitioner for interest on excess amount collected in accordance with law - Petition disposed off.
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2021 (9) TMI 718
Revocation of cancellation of registration of petitioner - seeking direction for the respondent no.2 to adjudicate the application filed for revocation in accordance with the Order-in-Appeal - application for revocation of cancellation of registration in Form GST REG-21 on 27.11.2020 before the respondent was filed, as petitioner had no chance to approach the officer and rectify the mistake - HELD THAT:- Noticing that for giving an effect to the Order-in-Appeal passed by the Additional Commissioner (Appeals) on 26.10.2020 in a time bound manner, many attempts are made on the part of the petitioner, however, it is clear that his request has not been attended nor redressed by the respondents. Since this petition is preferred seeking the direction for the order of respondent giving an effect to the order of Additional Commissioner (Appeals) by the respondents, without entering into the merits, it is deemed appropriate, on hearing the submissions of both the sides, to direct the respondents to comply with the directions of the Additional Commissioner (Appeals) in Order-in-Appeal dated 26.10.2020 - Let the same be done without being influenced by any other aspects strictly in accordance with law by addressing the merits of the matter and following the directions of Additional Commissioner (Appeals). Let the same be decided within six weeks without fail. Petition disposed off.
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2021 (9) TMI 716
Provisional attachment of bank accounts - misuse of power u/s 83 of the CGST Act, 2017 - Pendency of proceedings under Sections 62, 63, 64, 67, 73 and 74 of the CGST Act, 2017 was not available to the Department - HELD THAT:- In the present case no notice has been issued to the petitioner under Section 74 or any other Section. On advance notice, Mr. Anshuman Chopra, Senior Standing Counsel appears and accepts notice on behalf of the respondents and seeks time to file reply but accepts that the facts have been enumerated in the record. In our considered opinion, once the facts are not disputed and quasi judicial order has been passed there is no requirement of filing reply - the conclusion is inescapable that the facts are covered by the judgment in the case of M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH ORS. [ 2021 (4) TMI 837 - SUPREME COURT] where it was held that Given that there were no pending proceedings against the appellant, the mere fact that proceedings under Section 74 had concluded against GM Powertech, would not satisfy the requirements of Section 83. Thus, the order of provisional attachment was ultra vires Section 83 of the Act. The petition is allowed.
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2021 (9) TMI 713
Jurisdiction of Summons issued by the respondent - search and seizure - Section 70 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The ambiguity with regard to the initiation of enforcement action by the State and the Central authorities has been lingering for quite some time and the matter having been brought to the notice of the GST Council, in its meeting held during January 2017, it was decided that both the Central and State tax administrations have the power to take intelligence-based enforcement action in respect of the entire value chain. Based on such decision of the GST Council, the CBEC issued clarification dated 05.10.2018 - this puts an end to the ambiguity and it is clear from the said clarification that if an intelligence-based enforcement action is taken against a taxpayer, which is assigned to State tax authority, the Central tax authority is entitled to proceed with the matter and take it to the logical conclusions and the same principle is applicable vice versa. The scope of Section 6(2)(b) and Section 70 is different and distinct, as the former deals with any proceedings on a subject matter/same subject matter whereas, Section 70 deals with power to summon in an inquiry and therefore, the words proceedings and inquiry cannot be mixed up to read as if there is a bar for the respondent to invoke the power under Section 70 of the CGST Act. There is no ground made out by the appellant for quashing the summons issued by the respondent under Section 70 of the CGST Act - appeal dismissed.
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2021 (9) TMI 706
Time limitation - extension of period of limitation in filing petitions/ applications/ suits/ appeals/ all other proceedings - HELD THAT:- This court is not competent to entertain effectively a contempt petition at the behest of the petitioner purportedly to agitate the directions passed by the Hon ble Supreme Court in IN RE COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (5) TMI 564 - SC ORDER] . It is noted that since the petitioner has alleged that the respondents have not complied with the order of the Hon ble Supreme Court and on the contrary the respondents have submitted that they have complied with the order of the Hon ble Supreme Court by issuing necessary directions and the circular dated 20-7-2021. The present PIL petition not required to be entertained - PIL dismissed.
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2021 (9) TMI 676
Recovery of Input Tax Credit alongwith interest and penalty - Section 73(1) read with Section 140(3) of the CGST Act,2017 - credit denied on the ground that Ready Mix Concrete (RMC) has been-received by the taxpayer after availing concessional rate of duty - exempt goods - HELD THAT:- The appellant has taken ITC amounting to ₹ 7,53,571/- on inputs held in stock as on 30.06.2017 in Trans-1 under the provisions of Section 140(3) of the CGST Act, 2017. Inputs contained in semi finished and finished goods - HELD THAT:- As per Section 2(59) of the CGST Act,2017, Inputs means any goods other than capital goods used or intended to be used by a supplier in course of furtherance of business. Whereas as per Section 2(52) of the said Act Goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply - appellant's claim for ITC of ₹ 7,20,147/- on inputs contained in semi finished work, does not appear to be correct, as a building under construction being attached to the earth can- not be called goods in terms of definition as per Section 2(52) mentioned above and in terms of various case laws erstwhile Central Excise Act, 1944. Therefore, in the case of building construction, the transitional credit of inputs already used in construction and contained in WIP as on 30.06.2017 is not admissible. Therefore, wrongly transferred ITC of ₹ 7,20,147/- is recoverable from the appellant. - the appellant is not entitled to take entire ITC of ₹ 14,73,718/- (₹ 7,53,571/- on inputs held in stock + ₹ 7,20,147/- on inputs contained in semi finished finished goods) in TRAN-1. Jurisdiction of issuance of SCN and passing of Impugned Order under Section 73 read with Rule 142 of the CGST Act/Rules, 2017 - proceedings initiated under Section 73 of the CGST Act, leading to confirmation of demand and recovery of transitional credit under Section 73(9) read with Rule 142 - HELD THAT:- The appellant have irregularly carried forward the ITC of ₹ 14,73,718/- deliberately with intent to avail irregular ITC. Had the information not been disclosed during the audit of the records, the facts would not have come to knowledge of the department. Thus, the appellant appears to have suppressed the facts from the department with intent to avail irregular ITC. In this manner, they appear to have contravened the provisions of Section 140 of the CGST Act, 2017. Therefore, the provisions of Section 73 of the CGST Act, 2017 are invokable for recovery of the said credit of ₹ 14,73,718/- from them. The appellant also appears liable to pay interest in terms of Section 50 of the CGST Act, 2017 and penalty in terms of Section 122 of the CGST Act, 2017. The audit of records of the Appellant for the period from April. 2016 to June, 2017 was carried out by the audit team from office of the Assistant Commissioner, CGST, Circle-A Jaipur during June, July August, 2018 and the audit observations were conveyed vide lAR No. 08/2018-19 (new) / 506/2017-18 (old) dated 24.09.2018. However, even after pointed out by the audit team of the department, the appellant has not deposited such irregular/wrongly taken and utilized ITC of ₹ 14,73,718/- - there was no facility/module to serve GST DRC-01 electronically on the common portal at the time of issuance of show cause notice, therefore the same was issued manually by the jurisdictional authority. Appeal dismissed.
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2021 (9) TMI 675
Attachment of Cash Credit Account and all bank accounts on the same PAN of the petitioner - case of petitioner is that they had filed objections to this attachment as far back as on 07.08.2021 but in the absence of the decision thereon the industry of the petitioner has been shut down - HELD THAT:- It is deemed appropriate to direct the competent authority to decide the objections (Annexure P-4) immediately but not later than 23.08.2021 in accordance with law. The authorized representative/partner of the petitioner company shall appear before the competent authority on 20.08.2021 AT 10.30 AM for the purpose of representing his case and thereafter the competent authority shall decide the objections and pass a speaking order thereon immediately but not later than 23.08.2021. Petition disposed off.
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Income Tax
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2021 (9) TMI 736
Nature of expenditure - expenditure for purchasing equipments such as wheel balancer, wheel aligner, wheel changer and tyre changer for the use by dealers of assessee at Apollo Tyre World showroom - ownership of the equipment purchased - expenditure is in the nature of purchase of equipment or expenditure incurred by the assessee for refurbishing its showroom - revenue or capital expenditure -whether the Tribunal is correct in treating the expenditure as capital expenditure on the ground that ownership of these assets was retained by the assessee? - HELD THAT:- The findings of fact recorded by the Tribunal are based on record and warranted. The auditor s report is referred to by the Assessing Officer for coming to the conclusion that the expenditure made by the assessee towards purchase of equipment, such as wheel balancer/wheel aligner/wheel changer/tyre changer, is capital expenditure but not revenue expenditure. The spreadover utility or utilization of equipment over a period of a few years is not disputed. The location of equipment could be in the shops of respective dealers or the dealers were allowed to use the equipment, that cannot be understood as divesting the ownership of assessee on the equipment. The Commissioner, as rightly pointed out by the Tribunal, assumed something more than what is either available in the circumstances of the case or made out literally a new case in favour of the assessee. For the above reasons we are of the view that the question does not fall within the scope of Section 260A of the Act. - Decided against assessee. Expenditure incurred on account of payments towards club membership and service charges - HELD THAT:- The assessee is entitled to claim only the membership fee but not the amount spent by the assessee for availing the services of goods etc. in the club. In the case on hand, the finding is that it is not for membership. Having regard to the findings of fact recorded, the question is answered in favour of the Revenue, against the assessee. Disallowance of part depreciation claimed by the assessee of Gurgaon building in relation to the let out portion to Appolo International Ltd. - Rule of consistency - HELD THAT:- Tribunal has merely followed its earlier view and rejected the claim of petitioner under this head. No other ground is argued before us to contend that the view taken, at any rate, is impermissible in law. By taking note of the circumstances stated by the assessee in respect of this particular claim, and the consideration by the Tribunal, we are of the view that the Tribunal has rightly maintained consistency in this behalf for the Assessment Years 2002-03 [ 2019 (12) TMI 375 - KERALA HIGH COURT] and 2003-04 [ 2013 (9) TMI 74 - ITAT COCHIN] . The question raised is answered in favour of the Revenue. Claim of writing off bad debts - as per tribunal debts and advances relating to acquisition of capital assets written off in the books of accounts are not allowable as revenue expenditure on the ground these are of the nature of capital loss outside the purview of Section 37(1) or 36(1) (vii) read with Section 36(2) - HELD THAT:- The assessee claims that the advances made for acquisition of capital assets have been written off and they have to be treated as bad debt. The consideration of this issue by the Assessing Officer is independent and has completely explained the circumstances why the claim of assessee cannot be accepted in this behalf. The Tribunal has considered the scope of applicable section and also recorded that the expenditure does not satisfy the test laid down by the Supreme Court in CIT v. Mysore Sugar Company Ltd. [ 1962 (5) TMI 3 - SUPREME COURT] We are in full agreement with the reasoning of the Tribunal while considering the writing off bad debts from advances made towards capital asset acquisition of the assessee. The appeal filed by the Revenue, insofar as it related to revenue expenditure was dismissed and we do not see any other reason now while applying the same test to accept the claim of the assessee made towards bad debts written off on advances made. - Decided against assessee.
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2021 (9) TMI 735
Advance ruling u/s 245R - ruling sought in respect of taxability of transactions from the respective tax treaty perspective (India-Netherlands Tax Treaty and India-Switzerland Tax Treaty) - as per AR there was no question of valuation involved while determining taxability from tax treaty perspective and that ruling was sought only on legal principle as to the eligibility of benefit under the tax treaty AND the applicant had not raised any question regarding taxability or otherwise of the transactions under the provisions of Income-tax Act - HELD THAT:- The issue of valuation of any share or the issue of computation of capital gain on transfer of the shares is not found involved in the questions raised by the applicant. The exercise of valuation of shares (if at all necessary) and the computation of capital gains has to be undertaken by the Assessing Officer only when the issue of taxability of capital gain on transfer of shares is decided in favour of the Revenue. We do not find any involvement of determination of fair market value of any property (shares) in the questions raised in the application. In the case of Worldwide Wickets, In re.[ 2018 (2) TMI 1428 - AUTHORITY FOR ADVANCE RULINGS, MUMBAI ] as held that the computation of capital gains is embedded in the concept of valuation of shares and merely for this reason the question of capital gains arising in the application cannot be held to be barred by clause (ii) of the proviso to section 245R(2) of the Act. Considering the precise questions raised by the applicant on the taxability of capital gains and the obligation to deduct tax under section 195 as well as the decision of the Authority on this issue, the objection of the Revenue on the issue of involvement of determination of fair market value of the property is rejected. As regarding clause (iii) of the proviso to section 245R(2) of the Act, the Revenue has submitted that it is not in a position to make a comment at present as all the details are not available. Though the applicant has disputed the contention of the Department, in the interests of justice, it will be fair to leave this matter open. Accordingly, the Department is free to bring on record any adverse evidence in respect of transaction being designed prima facie for avoidance of tax in the course of merit hearing. The application is admitted under section 245R(2) of the Act.
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2021 (9) TMI 734
Depreciable asset forming part of the block of assets - restarting of business after a time gap - Depreciation based on the written down value available as on the date of ending of the previous year - HELD THAT:- As building which was acquired by the assessee in 1974 and in respect of which depreciation was allowed to it as a business asset for 21 years, that is up to the assessment year 1995-96, still continued to be part of the business asset and depreciable asset, no matter the non-user disentitles the assessee for depreciation for two years prior to the date of sale. How a depreciable asset forming part of the block of assets within the meaning of section 2(11) of the Income-tax Act, 1961 can cease to be part of block of assets. The description of the asset by the assessee in the balance-sheet as an investment asset in our view is meaningless and is only to avoid payment to tax on short-term capital gains on sale of the building. So long as the assessee continued business, the building forming part of the block of assets will retain its character as such, no matter one of two of the assets in one or two years not used for business purposes disentitles the assessee for depreciation for those years - instead of selling the building, if the assessee started using the building after two years for business purposes the assessee can continue to claim depreciation based on the written down value available as on the date of ending of the previous year in which depreciation was allowed last. The High Court has, therefore, rightly restored the findings and addition made in the assessment order. Hence, we find no merit in this appeal and it is dismissed.
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2021 (9) TMI 732
Benefit under the Direct Tax Vivad Se Vishwas Act, 2020 - Penalty u/s 271D - violation of the provisions of Section 269SS - HELD THAT:- When the present petitions are taken up for further hearing, Shri C.U. Singh, learned senior counsel appearing for the petitioner seeks permission to withdraw the Special Leave Petitions as the petitioner proposes to avail the benefit under the Direct Tax Vivad Se Vishwas Act, 2020. In that view of the matter, the Special Leave Petitions stand dismissed as withdrawn unconditionally with the above mentioned liberty. As and when any application is made, the same be considered in accordance with law and on its own merits for which we have not expressed anything in favour of any party.
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2021 (9) TMI 725
Validity of order of Settlement Commission - acceptance of additional income disclosed by the assessee - ambit and scope of interference by the High Court in its Constitutional writ jurisdiction under Article 226 of the Constitution of India - proof of any legal infirmity in decision making process in course of impugned income tax settlement proceeding - HELD THAT:- We am not inclined to interfere with the impugned order of the Settlement Commission in this Writ Petition and dismissing the same for the following reasons: i) Petitioner/Income Tax authorities have failed to make out any case in this Writ Petition that the learned Settlement Commission has acted in any manner contrary to or in violation of any provision of law in course of impugned settlement proceeding or in passing the impugned order or that the same is not legal and valid or without jurisdiction and in disregard to the materials available before the learned Income Tax Settlement Commission. ii) Petitioner/Income Tax authorities have failed to make out any case that any documents or materials which they had placed or filed by it before the learned Income Tax Settlement Commission/respondent no.1 was sufficient for rejection of the application of settlement filed by the petitioner. iii) On perusal of report under Rule 9 of Income Tax Settlement Commission (Procedure) Rules, 1997, which was filed by the petitioner before the learned Settlement commission in objection to the settlement application of the assessee/respondent no.2, I do not find any specific and cogent material for rejection of the settlement application in question rather petitioner itself has admitted that the respondent no. 2 has disclosed the undisclosed income though under compulsion and itself prayed for further enquiry to find out material against the assessee/respondent no.2 for contradicting the claim of the assessee/respondent no. 2 which shows that its Report under Rule 9 of the Income Tax Settlement Commission (Procedure) Rules, 1997, had no sufficient materials and had no substance for rejection of the claim made under settlement application in question filed by the assessee/respondent no. 2. iv) Petitioner/Income Tax authority could not make out any exceptional case in this Writ Petition for exercising constitutional writ jurisdiction of this Court under Article 226 of the Constitution for scrutinizing or reappreciating the facts, evidence or findings of the learned Settlement Commission in reaching to its conclusion for allowing the claim of the assessee/respondent no. 2 made in settlement application and further Court in exercise of its constitutional jurisdiction under Article 226 of the Constitution of India cannot substitute the findings of the Income Tax Settlement Commission with its own findings and come to a different conclusion. v) Petitioner could not demonstrate before this Court any legal infirmity in decision making process in course of impugned income tax settlement proceeding
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2021 (9) TMI 715
TDS u/s 195 - payments made to two companies non resident - Tribunal was right in deleting the disallowance made by the AO holding that the amendment to Section 9(1)(vi) introduced by Finance Act, 2012 with retrospective effect from 01.06.1976 is not applicable and therefore no TDS needs to be deducted? - HELD THAT:- Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited v. Commissioner of Income Tax and another [ 2021 (3) TMI 138 - SUPREME COURT] has held in favour of the assessee. Deduction u/s 10A - expenses incurred in relation to travel in foreign country and communication charges are to be allowed both from the Export turnover and Total turnover which is contrary to the Statute - unrealized foreign exchange was to be allowed both from the Export turnover without making corresponding deduction from the total turnover - HELD THAT:- Question answered against the Revenue in the case of Commissioner of Income-tax, Central-III v. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] As held that the definition of 'total turnover' given under Sections 80HHC and 80HHE cannot be adopted for the purpose of Section 10A as technical meaning of total turnover, which does not envisage reduction of any expenses from total amount, is to be taken into consideration for computing deduction under Section 10A; when meaning is clear, there is no necessity of importing meaning of 'total turnover' from other provisions. - Decided against the Revenue.
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2021 (9) TMI 714
Faceless Assessment Scheme u/s 144B - No prior show cause notice as well as draft assessment order have been issued - HELD THAT:- Since in the present case no prior show cause notice as well as draft assessment order have been issued, there is a violation of principles of natural justice as well as mandatory procedure prescribed under Faceless Assessment Scheme and as stipulated in Section 144B of the Act. When there is a violation of principles of natural justice, the availability of an appellate remedy does not operate as a bar to the maintainability of the writ petition. In the impugned Assessment Order, Demand Notice and Notice for Penalty dated 23rd April 2021 issued under Section 143(3), Section 156 and Section 274 read with Section 271AAC(1) of the Act are set aside and the matter is remanded back to the Assessing Officer, who shall issue a show cause notice as well as draft assessment order and thereafter pass a reasoned order in accordance with law.
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2021 (9) TMI 712
TDS u/s 194-O - Writ petitioner e-commerce operator on being aggrieved by newly inserted provision of Section 194-O - relief sought of declaration that under the said provision petitioner is not required to deduct tax and deposit under the provisions of Section 194-O where sale of goods or provision of services does not take place and/or through the petitioner company platform and/or purchaser of the goods or recipients of the services does not make payment to the petitioner company or the sale of goods or provision of services and in case of reverse action and when the petitioner s client uses the software sold/licenses by it to them or procuring their requirement of goods and services and alternatively to declare the aforesaid provision as ultra vires and unconstitutional - HELD THAT:- As respondents could not justify the inaction on the part of the respondent No.8/CBDT and the act of sitting over the aforesaid representations of the petitioner and not disposing of the same which is causing great difficulties to the petitioner in carrying on its business. Considering the submission of the parties, the respondent No.8 /CBDT is directed to consider and dispose of the aforesaid representations of the petitioners being Annexure P-10 and P-15 of the writ petition within a period of six weeks from the date of communication of this order by passing a reasoned and speaking order after dealing with the contentions raised by the petitioners in its aforesaid representations and after giving effective opportunity of hearing to the petitioner or its authorized representative and to communicate its decision to the petitioner within one week thereafter.
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2021 (9) TMI 709
Revision u/s 263 - final assessment order made pursuant to directions of DRP u/s 144C read with Section 143(3) - whether the draft assessment order communicated to assessee u/s 144C of the Act is an order amenable to revision u/s 263? - HELD THAT:- It is well established by a series of decisions that the fulcrum on which the power u/s 263 is exercised, rests on the orders made under the Act, being erroneous and the orders prejudicial to the interest of the Revenue. Let us juxtapose the scheme u/s 144C of the Act with an order being erroneous and prejudicial to the interest of Revenue, and deliberation of scheme in this behalf, we observe that, whether the draft assessment order is erroneous or not is examined by DRP and the element of prejudice insofar as the Revenue is concerned does not arise visa- vis the draft assessment inasmuch as no demand could be raised on the draft assessment order proposed by the AO and objected to by the assessee. As taken note of the requirement of prejudice considered by the Tribunal in the decisions referred to above. The circumstances in the said orders are slightly different. For the purpose of appreciating that the order is erroneous insofar as it is prejudicial to the interest of Revenue is sine qua non for taking recourse to the power under Section 263. The appellant had reasons to believe that a few matters required reconsideration by the Assessing Officer, the remedy is not by interdicting a draft assessment order proposed in Annexure-B, but a different mechanism is available as per the scheme of the Act. Tribunal noticed that from the scheme of the Act the draft assessment order is only a proposed assessment order and there is no demand notice attached to the draft assessment order. In cases covered by Section 144C of the Act, the assessment order comes into picture only after an assessment order is passed pursuant to draft assessment order or in compliance with the directions of the DRP. Draft assessment order by itself cannot levy tax on the assessee. There is no question of loss of revenue in the draft assessment order. It is further held that Section 263 has no application for revising the draft assessment order proposed by the AO. Also the scheme of the Act and the view of the Tribunal are similar, namely that invocation of power under Section 263 of the Act to interdict a draft assessment order proposed by the Assessing Officer is unavailable to Principal Commissioner of Income Tax. We hasten to add, for, at that stage, the condition required for invoking Section 263, namely the order being erroneous insofar as it is prejudicial to the interest of Revenue, does not arise. Hence the reasons are in accordance with the scheme of the Act envisaged on one hand by Section 144C and on another by Section 263. Decided in favour of the assessee.
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2021 (9) TMI 708
Deduction of advances written off - Deduction being advances paid to Continental Group of Companies for supply of machinery and written off during the year - whether allowable capital expenditure? - HELD THAT:- The assessee has filed appeal for the Assessment Year 2003-04 [ 2021 (9) TMI 736 - KERALA HIGH COURT] and question no.4 in the said appeal relates to disallowing the deduction of advances written off by the assessee. The Counsel appearing for the parties state that the same reason could be adopted for answering the instant question as well. For the reasons recorded in question no.4 therein, the instant question is answered in favour of the Revenue and against the Assessee. Setting off long term capital loss on sale of shares and units of mutual funds against the long term capital gain earned on the sale of land - application of Section 10(38) on one hand and on another the extent to which set-off under Section 70(3) read with Sections 48 to 55 of the Act could be claimed by the assessee - Whether assessee is mixing up heterogeneous heads as homogeneous heads and claiming the set-off? - HELD THAT:- The literal meaning of Section 70(3) clearly shows that both for including the loss against set-off and setting of loss against income the computation must have been made under Sections 48 to 55 of the Act. The language of Section 70(3) is clear and unambiguous. In the understanding of this Court, the Parliament intended homogeneous entries to adjust the loss or profit against one another and not introduce heterogeneous elements or entries. Hence, the interpretation adopted by the assessee would give benefits not otherwise intended by the Section. The effort of the assessee, in our view, includes an excluded claim, i.e., a heterogeneous claim under Section 70(3) of the Act, by claiming that the homogeneity of long term capital gain is satisfied by the assessee. We are of the view that the application of Section 70(3) by the assessee is incorrect and illegal. AO has very clearly appreciated the objection, applied the law to the circumstances of the case, and recorded the findings. As we have noted supra the CIT (Appeals) and the Tribunal have merely adopted the conclusions recorded by the Assessing Officer. After independently examining the implication of each one of the Sections and the principle laid down by the Supreme Court in Harprasad Co. case [ 1975 (2) TMI 2 - SUPREME COURT] , we are of the view that no exception to the view taken by the Assessing Officer, as confirmed by the CIT (Appeals) and Tribunal could be taken by us as well. - Decided in favour of revenue.
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2021 (9) TMI 705
Computation of deduction u/s 80HHC - Whether the computation of deduction under section 80HHC of the Income Tax Act is to be effected after reducing the amount allowed under section 80-IB and section 80-IA? - Whether computation of deduction under section 80HHC of the Income Tax Act is to be done independently without restricting the quantum by reference to the provisions of section 80-IB or section 80-IA ? - activity of packing and sterilization of gloves purchased or produced by the appellant in non-sterilized form from the market would amount to a process of manufacture for the purpose of section 80-IB - HELD THAT:- Section 80HHC which relates to deductions in respect of the profits and gains from export business falls under the heading C of Chapter VI-A. There is no ambiguity in section 80-IA(9) of the Act. The intention of the legislature is clear that there cannot be a simultaneous deduction under section 80-IA and under section 80HHC. The profits and gains allowed as deductions under section 80-IA have to be excluded while computing the deduction under section 80HHC. This Court had, as pointed out by both counsel, already held, succinctly, in Olam Exports (India) Ltd. v. Commissioner of Income Tax [ 2009 (5) TMI 574 - KERALA HIGH COURT] that by virtue of specific exclusion of section 80-IB(13) of the Act the assessee is not entitled to simultaneous deduction of both. In other words, while computing the deduction under section 80HHC, deduction granted under section 80-IB cannot be reckoned or has to be excluded. We find no reason to depart from the aforesaid finding of this Court nor do we find any cause for reconsideration. In K. Ravindranathan Nair's case [ 2007 (11) TMI 10 - SUPREME COURT] the issue that arose for consideration was for the years 1993-94 and as observed in that case, the provisions of section 80HHC is no longer a complete code by itself after the subsequent amendments and restrictions. The Supreme Court was considering the computation of export incentive under section 80HHC(3) and the question, in that case, was whether the processing charges can be included in the total turnover while arriving at the export profits. The deduction under section 80HHC of the Act and the deduction under section 80-IB are not simultaneous. The deduction granted under section 80-IB has to be excluded while computing the deduction claimed under section 80HHC. The Tribunal was correct in its conclusion and the first two questions are answered in favour of the revenue. This appeal, therefore, stands dismissed. Deduction u/s 80IB - Whether sterilization and packing as a manufacture for the purpose of section 80-IB ? - Tribunal rejected the claim and held that there was no manufacture in the activity carried out by the assessee - HELD THAT:- Non-sterilised gloves are purchased by the assessee and the same is subjected to sterilisation to make it more hygienic. It must be appreciated that the gloves have already been manufactured and processed. On a factual consideration, the Tribunal found that the process of sterilisation carried out by the assessee does not create or bring into being a new product so as to make it a 'manufacture'. The Tribunal had, as a final fact-finding authority, found the process adopted by the assessee as one not coming within the purview of manufacture. We are of the view that the said finding needs no interference and hence the third question raised in these appeals is found against the assessee. This appeal therefore fails and is dismissed
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2021 (9) TMI 704
Withdrawal of benefit granted to Petitioner under the DTVSV Scheme - Denial of natural justice - Petitioner sufficient opportunity of hearing or making submissions - HELD THAT:- An email by Revenue dated 23rd March 2021 to explain applicability of Section 9 of the DTVSV Act on the ground of information regarding search conducted on Petitioner gave three days to respond. The period of three days would end on 26th March 2021. But without even waiting for the day of 26th of March to end, the application of Petitioner is shown to be rejected on 26th March 2021 itself, treating Petitioner s case as a Search Case and Petitioner ineligible to opt for DTVSV, as disputed tax is more than 5 crores. Revenue, in short, had sought to withdraw the benefit granted to Petitioner under the DTVSV Scheme entailing adverse consequences. And all this done without affording Petitioner sufficient opportunity of hearing or making submissions. In our view, considering that Form 3 had already been issued, on the declarations and undertaking filed by Petitioner, any action on the same entailing adverse consequences, ought to have been afforded with a fair and reasonable opportunity to explain its case, which the Revenue has ex-facie failed to offer. We set aside the order of rejection dated 26th March 2021 and direct the Respondent No.1 Designated Authority, after giving a proper opportunity of hearing to Petitioner and after considering the submissions made/to be made by Petitioner, to pass an appropriate reasoned speaking order within two weeks from the date of pronouncement of this order.
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2021 (9) TMI 703
Faceless Assessment Scheme - Inclusion of unsecured loans and share capital as part of the total income of the assessee - HELD THAT:- We am not inclined to consider the Writ Petition on merits. Nonetheless, in view of the fact that the main issues for consideration in such appeal are limited largely to the inclusion of unsecured loans and share capital as part of the total income of the assessee, are inclined to direct the expeditious disposal of the Appeal pending before the CIT (Appeals). Such appeal shall be decided after providing a reasonable opportunity to the petitioner, including a personal hearing if so requested.
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2021 (9) TMI 702
Rectification u/s 154 - excess depreciation that was allowed inadvertently - HELD THAT:- In the assessee s case, the matter regarding allowing of depreciation to the assessee by virtue of the assessment order, passed under section 143(3) of the Act, on 26.3.2014, was considered and decided by the ld. CIT(A), vide order dated 15.5.2015. As per section 154(1A) of the Act, since this matter has been considered and decided in appeal by the order dated 15.5.2015, it cannot be amended. The provisions of section 154(1A) of the Act are explicit in this regard. This could not be controverted before us. The issue of other income, shown in the profit and loss account, but not taken into consideration while computing the total income, which was also the subject matter of rectification in the order dated 31.3.2016, passed under section 154 of the Act, is not under challenge before us. In view of the above, the grievance of the assessee is accepted qua the issue of allowing of depreciation to the assessee, which is the only issue in appeal before us. Nothing further survives for adjudication, nor was anything else argued. Accordingly, the order under appeal qua this issue is reversed. - Decided in favour of assessee.
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2021 (9) TMI 701
Addition u/s 56(2)(vii)(b) - difference in value in respect of the subject properties - declared sale consideration shown by the assessee is lesser than the stamp duty value (market value) determined by the stamp duty authority - scope of exception to section 56(2)(vii)(b)(ii) - Difference between section 50C or section 56(2)(vii)(b)(ii) - HELD THAT:- As the amendments to sections 50C, 56(2)(x) and 43CA providing for exception in case of marginal difference between the declared sale consideration and value determined by the stamp valuation authority were introduced to the statute by Finance Act, 2018 with effect from 01-04-2019. Meaning thereby, the legislature did not felt the necessity of introducing such an exception to section 56(2)(vii)(b)(ii) simply for the reason that such provision was applicable for a period between 1st October, 2009 to 1st April, 2017 - non-introduction of similar exception to section 56(2)(vii(b)(ii) cannot be held against the assessee. Rather, section 56(2)(vii)(b)(ii) has to be harmoniously construed along with sections 50C, 56(2)(x) and 43CA and the exceptions provided in the later three provisions have to be read into section 56(2)(vii)(b)(ii) to provide true meaning to the intention of the legislature. This, according to us, clearly answers submissions of learned departmental representative regarding absence of a provision identical to third proviso to section 50C(1) in section 56(2)(vii)(b)(ii). In our considered opinion, the assessee would be eligible to get the benefit of ten per cent margin difference in the valuation between the value determined by the stamp duty authority and the declared sale consideration. Thus, if the variation between the aforesaid two values falls within the range of ten per cent, no addition can be made. A benefit given to a seller of the property in respect of marginal variation cannot be denied to the buyer of the property, since, they stand on the same footing. This aspect of the issue has also been considered by the co-ordinate bench in case of Shri Sandip Patil vs ITO (supra), wherein, the co-ordinate bench has held that there cannot be two different fair market value in respect of the very same property, i.e. one at the hands of the seller and the other at the hands of the buyer. Thus, in our view, if the difference in valuation between the value determined by the stamp duty authority and the declared sale consideration is less than 10%, no addition can be made under section 56(2)(vii)(b)(ii). Whether the exception to section 50C(1) by way of third proviso and section 56(2)(x)(b)(B) would apply prospectively or retrospectively? - The issue is no more res integra in view of a number of decisions of different benches of the Tribunal. The Tribunal has consistently expressed the view that since the aforesaid amendments made by Finance Act, 2018 with effect from 01-04-2019 are curative in nature and beneficial provisions, it would apply retrospectively. See SRI SANDEEP PATIL [ 2020 (10) TMI 923 - ITAT BANGALORE] and MARIA FERNANDES CHERYL [ 2021 (1) TMI 620 - ITAT MUMBAI] - We delete the addition - Decided in favour of assessee. Disallowance being deduction claimed towards cost of acquisition/improvement - HELD THAT:- As we find that the other charges comprise of maintenance charges, water charges, electricity connection charges, etc. In our view, these payments cannot form part of either the cost of acquisition or cost for improvement. Similarly, details of interest expenditure have not been furnished by the assessee. Further, the assessee has failed to prove that such expenditure was incurred wholly and exclusively for the purpose of transfer of the capital asset. That being the case, we are unable to accept assessee s claim of deduction. The decision relied upon by the learned authorized representative being based on its own facts, is not applicable to the present case.
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2021 (9) TMI 700
TP adjustment in respect of a specified domestic transaction with the Associated Enterprise (AE) - benchmarking by the assessee under RPM - specified domestic transaction under dispute in the present appeal relates to purchase of castor meal from one of the AEs - selective approach for determining the ALP of the specified domestic transaction - HELD THAT:- When the assessee has established that the transaction with the AE is at arm s length under RPM, there is no reason to discard assessee s benchmarking without any genuine and valid reason. Thus, in our considered opinion, the departmental authorities have grossly erred in rejecting RPM followed by the assessee for benchmarking the specified domestic transaction with AE. More so, when the departmental authorities have not found any deficiency or error in the gross profit margin computed by the assessee in respect of both, AE and non AE transactions. Thus we hold that benchmarking by the assessee under RPM has to be accepted. What the TPO has done to reject the assessee s claim is, he has ventured into date-wise comparison of purchase price of AE and non AE transactions. Even, while doing so, the TPO was very much conscious that except the month of April, the purchase price paid to the AE is less than the purchase price paid to non AEs. Therefore, he has conveniently restricted himself to the month of April where the purchase price paid to AE is slightly more than the purchase price paid to non AEs, while, ignoring the figures for the rest of the year as it would not have worked out to his liking. Thus, if the average purchase price of AE and non AE transactions are considered even under CUP, the transaction with AE would be at arm s length. The per MT price of non AE transaction compared with date-wise AE transaction in reality is the average price of non AE transaction for the month of April. This fact is clearly discernible from the working note showing calculation of average purchase price and average sale price as placed at page 146 of the paper book. Thus, the aforesaid facts make it abundantly clear that the working of price difference made by the TPO is flawed, as he has compared date-wise price of AE transaction with average price of non AE transaction for the month of April 2012. Thus, it is very much clear that the TPO has adopted a purely selective approach for determining the ALP of the specified domestic transaction. Thus, in our considered opinion, even applying CUP method also assessee s transaction with AE has to be considered to be at arm s length. Accordingly, we delete the adjustment. This ground is allowed. TP adjustment in respect of specified domestic transaction relating to transfer of electricity to other units - what should be the price for transfer of electricity from the eligible unit to non eligible units of the assessee - HELD THAT:- In our view, the issue is no more res integra because of the decision of the Hon ble jurisdictional High Court in case of Reliance Industries Ltd [ 2019 (2) TMI 178 - BOMBAY HIGH COURT] wherein as held that the rate at which the distribution company sells the electricity to the customer has to be adopted as the price at which the transaction between eligible and non eligible unit has taken place. TP adjustment made in respect of the specified domestic transaction relating to transfer of electricity is unsustainable. Accordingly, we delete the addition. These grounds are allowed
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2021 (9) TMI 699
Reopening of assessment - assumption of jurisdiction u/s 147 - reliance on document seized during search - As per AO seized documents belonging to group companies were found during the course of search which indicated payment of interest in cash outside the books of accounts in respect of purchase of land as well indicated additional payment made in cash for the purchase of land - HELD THAT:- As it is the assessee contention that there was no seized documents which were referred to in the assessment order which could the said to be belonging to the assessee. DR has also failed to bring to anything on record to establish that any seized documents were found during the course of search belonging to the assessee. There is a clear finding recorded by the Ld. CIT(A) in the impugned order that none of the seized documents belonged to the assessee. DR was unable to controvert this categorical finding recorded by the Ld. CIT(A). Thus, undisputedly, in the present case, no documents belonging to the assessee were found during the course of search. In the case of group companies [ 2021 (1) TMI 737 - ITAT DELHI] on identical reasons recorded and on identical facts and after duly considering the Rules of consistency and in absence of any material, documents, evidence or statement which could implicate the assessee, it is our considered view that the impugned assessment could not have been reopened. Therefore, we hold that the action taken by the Assessing Officer for reopening of the assessment u/s 147 of the Act is not sustainable and the same is hereby quashed as being based on seized documents of other assessees and being entirely based on presumption and assumptions and incorrect interpretation of law. Accordingly, we set aside the re-assessment. - Decided in favour of assessee.
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2021 (9) TMI 698
Exemption u/s 11 - exemption denied on the ground that registration u/s 12AA granted to the assessee stood cancelled - HELD THAT:- In view of the above observations of the Coordinate Bench of this Tribunal in assessee s own case restoring the registration u/s 12AA of the Act, we are of the opinion that the objects of the assessee authority are charitable in nature and the same are not hit by proviso to Sec.2(15) of the Act. However, we direct the Assessing Officer to examine the activities of the assessee authority and if the same are found to be in consonance with the objects, the benefit of exemption u/s 11 is to be allowed. Accordingly, Ground allowed for statistical purposes. Treating fund earmarked for Infrastructure Development Fund to the income of the assessee - HELD THAT:- As in the case of Saharanpur Development Authority [ 2021 (3) TMI 1223 - ITAT DELHI] and Khurja Development Authority [ 2019 (4) TMI 361 - ITAT DELHI] we are of the view that source of funds transferred to Infrastructure Development Fund, control over the same and obligation of its utilization is required to be examined to ascertain the real nature of Infrastructure Development Fund. Accordingly, we direct the Assessing Officer to adjudicate the issue afresh keeping in mind the ratio laid down. Non-allowance of credit of prepaid taxes - HELD THAT:- As credit of prepaid taxes is a statutory right envisaged under the Income Tax Act, 1961. The Assessing Officer is directed to allow the credit of prepaid taxes after due verification in accordance with law. Accordingly, Ground allowed for statistical purposes.
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2021 (9) TMI 697
Assessment u/s 153A - Unexplained share capital and share premium - statement of 3rd party relied - whether no incriminating documents found during the course of search? - Assessment year 2012-13 - HELD THAT:- AO clearly stated that assessment order passed are based on the statement of Shri Mulchand Malu. In view of the above facts it is apparent that no evidence is available with the revenue with respect to the addition of ₹ 1.32 crores made during the year except the statement of Mr Malu. Naturally, merely the statement of third party cannot be considered an incriminating material unless is certain corroborative material substantiating or confirming the statement of that party is also found. Neither in the assessment order nor in the remand proceedings the learned assessing officer has stated that there is anything else against the assessee available corroborative the statement of Mr Malu. Admittedly, the assessment year 2012-13 is a concluded assessment and the date of issue of the notice u/s 153A read with section 153C is clearly dated 28.09.2016. In view of this, we constrain to hold that there is no incriminating material found during the course of search based on which the return income for the respective year can be disturbed. Only statement of 3rd party could not have been used for making an addition in the hands of the assessee in case of search in absence of any corroborative material. The learned departmental representative also could not produce any material other than the statement of Mr Malu for making the above addition. Assessment Year 2013-14 assessee has sought the cross examination of the persons whose statement are used by the ld AO. Naturally the persons is passed away and therefore, the cross examination could not be given. Even in that case also no fault can be found with the assessee and therefore, the statement recorded of that person could not have been used for making any addition in the hands of the assessee when the assessee has sought cross-examination of that person. The statement alone cannot be said to be any incriminating material based on which any addition can be made in the hands of the 3rd parties. Therefore on the solitary ground of appeals of the assessee are deserves to be allowed. As there was no incriminating material found during the course of search and both the assessment years are concluded the date on which the satisfaction is recorded by the ld AO of the assessee and therefore, no addition could have been made by the ld AO. Thus, on this ground the appeal of the assessee for both the years is allowed and orders of the lower authorities are reversed. - Decided in favour of assessee.
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2021 (9) TMI 696
Disallowance exemption u/s. 54 - assessee invested capital gain in two adjacent flats - Disallowance of claim of the assessee by holding that legislature has allowed investment in one residential house - HELD THAT:- As decided in SYED ALI ADIL [ 2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT] expression a residential house in section 54(1) of the Act has to be understood in a sense that the building should be of residential nature and a should not be understood to indicate a singular number and where an assessee had purchased two residential flats, he is entitled to exemption under section 54 in respect of capital gains on sale of its property on purchase of both the flats, more so, when the flats are situated side by side and the builder has effected modification of the flats to make it as one unit, despite the fact that the flats were purchased by separate sale deeds. - Exemption to be allowed - Decided against the revenue.
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2021 (9) TMI 694
Revision u/s 263 - provision(s) made and debited to its P L A/c towards the varied price of natural gas supplied by M/s.Gas Authority of India Ltd. (GAIL) - HELD THAT:- Assessing Officer s regular assessments forming subject matter of revision herein framed on 02-03- 2016 and 31-08-2016 had rightly not disallowed the assessee s provisions(s) qua its gas pricing. And that the learned PCIT herein therefore has erred in law and on facts in holding the same to be erroneous ones causing prejudice to the interest of the Revenue. We make it clear that the hon'ble apex court s landmark decision Malabar Industrial Co. Vs. CIT [ 2000 (2) TMI 10 - SUPREME COURT] has settled the law that an assessment has to be both erroneous as well as causing prejudice to interest of the Revenue before the CIT or the Pr.CIT; as the case may be, assumes Section 263 revision jurisdiction. We therefore accept the assessee s sole substantive ground. Un-explained cash deposits forming part of other expenses - assessee s case before us is that the same represents cash discount than cash deposits - HELD THAT;- We are of the opinion in this factual backdrop that the instant latter issue requires afresh factual verification at the Assessing Officer s end. We therefore uphold the learned Pr.CIT s directions in principle and leave it open for the Assessing Officer to consider and examine the instant latter issue in AY.2014-15 s consequential proceedings as per law.
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2021 (9) TMI 691
Revision u/s 263 - non reference to TPO made - cases as selected for scrutiny on non transfer pricing risk parameters - Limited or complete scrutiny - case of the assessee was selected for complete scrutiny through CASS and the relevant CASS reason was large outward remittance to a non-resident not being a company or a foreign company (form 15CA) - whether the case has been selected on the basis of TP risk parameters or on the basis of non transfer pricing risk parameters ? - HELD THAT:- On perusal of notice issued u/s. 143(2) dated 13.03.2016, there is a clear mention on the face of the notice that case of the assessee was selected for limited scrutiny under CASS which also find clear assertion in the assessment order where the AO has clearly stated that the case of the assessee was selected for limited scrutiny. It is therefore a case of limited scrutiny and not that of complete scrutiny where the case has been selected under CASS. Not all international transactions as reported in Form 15CA relates to transactions with associated enterprises and only a part of such international transactions relates to associated enterprises - where there are separate and distinct parameters and coding employed through CASS to selected cases on TP risk parameters and non-TP risk parameters and where not all international transactions as reported in Form 15CA are with associated enterprises, it cannot be said that the case of the assessee was selected through CASS on the basis of TP risk parameters and the AO was mandatorily required to refer the matter to the TPO for determination of ALP. We find that under similar circumstances, as in case of Amira Pure Foods Private limited [ 2017 (12) TMI 189 - ITAT DELHI] where the case of the assessee was selected on account of mismatch between income declared in ITR and amount of remittance received (Form 15CA), negated the arguments advanced on behalf of the Revenue that it was mandatory for the AO to refer to TPO since the case of the assessee was selected for scrutiny on account of international transactions. The Instruction No. 3 of 2016 in para 3.3 states that where cases are selected for scrutiny on non transfer pricing risk parameters but also having international transactions or specified domestic transactions, shall be referred to TPO in specified circumstances. The said clause 3.3 of the Instruction specifies three situations and we find that none of the situation is applicable in the case of the assessee. The first situation requires that where there are international transactions or specified transactions or both and the taxpayer has not filed any report required to be submitted under section 92E. This is not a situation in the case of the assessee as the report was duly submitted. The second situation where in previous assessments if any addition on account of transfer pricing adjustment of more than ten crores and addition being upheld in appellate proceedings is also not applicable in the case of the assessee. Thirdly, this is not a case where search or seizure or survey operations had been carried out. In such a situation, it cannot be said that the assessment order is erroneous as reference to TPO was not made. The necessary enquiries and examination as reasonably expected have been carried out by the Assessing officer and he has taken a prudent, judicious and reasonable view after considering the entire material available on record as well as following the CBDT Instruction no. 3 of 2016 and the order so passed u/s. 143(3) cannot be held as erroneous in so far as prejudicial to the interest of Revenue. The impugned order passed by the ld. PCIT u/s. 263 is accordingly set aside - Decided in favour of assessee.
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2021 (9) TMI 690
Undisclosed closing stock - As argued reconciliation statement was not submitted before the Assessing Officer during the assessment proceedings and the Assessing Officer, therefore, should be given an opportunity to examine/verify the same - CIT-A allowed the claim - HELD THAT:- Explanation as regards the alleged closing stock as pointed out by the AO was also made on behalf of the assessee even during the course of assessment proceedings before the AO and as rightly observed by the ld. CIT(A) in his impugned order, the same was summarily rejected by the Assessing Officer without assigning any reason. CIT(A), on the other hand, had duly considered and examined the submission of the assessee in the light of the reconciliation statement prepared and furnished by the assessee and on such examination, he found that the undisclosed 4248 bales of raw jute stock as allegedly pointed out by the Assessing Officer were already included in the closing stock as on 31/02/2008 as credited by the assessee in the profit and loss account. At the time of hearing before us, the ld. D/R has not been able to rebut or controvert this finding recorded by the ld. CIT(A) in this impugned order while deleting the addition made by the Assessing Officer on account of alleged closing stock. We, therefore find no justifiable reason to interfere with the impugned order of the ld. CIT(A) on this issue giving relief to the assessee and dismiss Ground No. 1 of the revenue's appeal. TDS u/s 194C and 194I - Disallowance u/s. 40(a)(ia) - Non deduction of TDS on payment of storage charges and freight - HELD THAT:- CIT(A) in his impugned order remarked to point out that there was a failure on the part of the assessee to deduct tax at source only from the payments on account of freight and godown/storage charges as specifically pointed out by the Assessing Officer. The ld. D/R also not been able to dispute this position which is clearly evident from the remarks made by the Assessing Officer in the remand report submitted to the ld. CIT(A). We, therefore, find no infirmity in the impugned order of the ld. CIT(A) restricting the disallowance made by the Assessing Officer u/s. 40(a)(ia) of the Act to ₹ 40,25,900/- and upholding the same on this issue, we dismiss Ground No. 2 of the revenue's appeal.
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2021 (9) TMI 689
Exemption u/s 11 denied - delay in filing Form no. 10 - computation of the income not allowing the accumulation under section 11(2) condonation of delay of Form no. 10 order - HELD THAT:- As regards the contention regarding the ld. CIT(A) having ignored the provisions of section 12A(1)(b) of the Act, this provision states that the provisions of sections 11 and 12 of the Act shall not apply in relation to the income of any Trust or Institution unless, in a case where the total income of the Trust or Institution as computed under the Income Tax Act without giving effect to the provisions of sections 11 and 12 of the Act exceeds the maximum amount which is not chargeable to income-tax in any previous year, the account of the Trust or Institution for that year have been audited by an Accountant as defined in the Explanation below section 288(2) of the Act, before the specified date referred to in section 44AB of the Act and the person in receipt of the income furnishes by that date the report of such audit in the prescribed form duly signed and verified by such Accountant and setting forth such particulars as may be prescribed. The order dated 19.2.2019 passed by the CIT (Exemptions) under section 119(2)(b) of the Act is part of record and the same has been relied on by the ld. CIT(A) in holding that the addition made by the Assessing Officer by denying the accumulation under section 11(2) of the Act, had become infructuous. It was, therefore, the ld. CIT(A) directed the Assessing Officer to allow the benefit of section 11 of the Act to the assessee and compute the income after allowing the accumulation under section 11(2) of the Act. Department's objection that the audit report in Form no. 10B was also delayed and such delay had neither been applied for condonation of delay nor been condoned, it was the submission of the assessee that the delay in filing Form no. 10B has been condoned, in general, by the CBDT, vide Circular No. 10/2019, dated 22.5.2019, it has been stated at the Bar by the ld. Counsel for the assessee that the Audit Report in Form no. 10B had been e-filed on 4.2.2017 by the Auditor within the time prescribed under the Act, i.e., before the time prescribed for filing the return of income. The same was e-verified on 20.4.2017, as available from the e-verification screen-shot, and as also available from the website of the Department. A copy of such e-verification screen-shot, having acknowledgement No. 761769971200417, has been placed on record. Therefore, this objection is also of no aid to the Department and the same is also rejected. - Decided against revenue.
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2021 (9) TMI 681
Disallowance of deduction claimed towards depreciation, repairs, maintenance and rates and tax - HELD THAT:- Property on which the assessee has claimed depreciation is different from the properties on which the assessee has received rental income. It is observed, the properties from which the assessee had declared rental income are situated at Ahmedabad and Coimbatore. Whereas, depreciation has been claimed in respect of a property at 3rd and 4th Floor V.V. Gandhi Marg, Mumbai, which according to the assessee has exclusively been used for its business - the depreciation claimed by the assessee on the aforesaid property has been allowed in earlier as well as subsequent assessment years. That being the case, we allow assessee s claim of depreciation. As regards repairs and maintenance expenses expenditure has been incurred in respect of the property at Dr. V.V. Gandhi Marg, Mumbai used for assessee s business. Thus, it is not in respect of the properties from which the assessee has offered rental income. Even, the rates and taxes are in respect of property other than the property from which assessee has offered rental income. Thus, in our view, the departmental authorities have disallowed the assessee s claim of deduction under misconception of facts - we are also of the view that the allegation of the departmental authorities that the assessee has not furnished details/evidences in support of its claim that such expenditure relate to property which have been rented out, is incorrect. In view of the aforesaid, we are inclined to delete the disallowance - Decided in favour of assessee.
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2021 (9) TMI 678
Maintainability of appeal low tax effect - Penalty imposed u/s 271(1)(c) - HELD THAT:- Quantum proceedings and penalty proceedings are independent and distinct proceedings and confirmation of an addition cannot on a standalone basis justify imposition/upholding of a penalty u/s 271(1)(c) - Adopting the same logic, we are of the considered view that unless a specific exception is provided in the circular w.r.t penalty also, it could by no means be construed that penalty was to be treated at par with the quantum additions. As is discernible from Clause 10(e) of the aforesaid CBDT Circular No. 3/2018 (as amended on 20.08.2018), the same applied only to additions which were based on information received from external sources. As noticed by us hereinabove, since the levy of penalty by no means could be construed as an addition within the meaning of Clause 10(e) of the aforesaid circular, therefore, we do not find any merit in the contentions advanced by the ld. D.R that the aforesaid exception carved out in the CBDT Circular No. 3/2018 (supra) would also take within its realm a penalty imposed under Sec. 271(1)(c) w.r.t the additions made by the A.O towards bogus purchases on the basis of information received from Sales Tax Department i.e an external agency. Accordingly, finding favour with the claim of the appeal of the revenue is covered by the CBDT Circular No. 17/2019, dated 08.08.2019, the same, thus, in our considered view is not maintainable - tax effect therein involved is lower than that contemplated in the aforesaid CBDT Circular fixing the monetary limit of filing of appeals by the revenue before the Tribunal. - Appeal of revenue dismissed.
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2021 (9) TMI 677
Penalty levied u/s 271(1) (c) - Bogus purchases - CIT(A) has restricted the addition @ 25% of Bogus Purchases - Whether for the year under consideration the income tax payable on total income was computed under normal provisions of the Act and not on Book profit u/s 115 JB? - HELD THAT:- As decided by CIT-A the Board itself vide circular F No279/Misc/140/2015/ITJ dated 31/12/2015 has directed that for a period prior to 01/04/16, no penalty is leviable with reference to the additions and disallowances made under normal provisions, where the Income Tax payable on the normal income is less than the book profits u/s 115JB. The same has been upheld as such by the Hon'ble Delhi High Court as well in the case of Nalwa Sons Investment Ltd. [ 2010 (8) TMI 40 - DELHI HIGH COURT] Thus , on these premises also, the penalty is not maintainable. DR could not controvert the observations of the Ld. CIT (A) with any cogent evidence or information. Accordingly, we find that the Ld. CIT (A) has passed a reasoned order and relied on the judicial decision. Accordingly, we do not find any infirmity in the order of the Ld.CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue.
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2021 (9) TMI 674
Removal of office objection - appeal came to be dismissed for non removal of office objections - HELD THAT:- Applicant is directed to file a further affidavit explaining why the office objections were not removed within four weeks from 28th August 2014 and in any case by 16th March 2016 and why nobody appeared on 16th March 2016 and still the application has been affirmed only on 4th February 2020 but lodged on 4th March 2020 and how after four years applicant realised that the appeal had been dismissed. This further affidavit shall be filed and copy served within two weeks from today. Respondent may file a reply to this application as well as to the additional affidavit to be filed and serve a copy thereof within a week of receiving a copy of the additional affidavit.
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Customs
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2021 (9) TMI 729
Classification of imported goods - Parts of seats of motor vehicle (parts of part) - whether classifiable under heading 8708 of CTH as parts and accessories motor vehicle, or are parts of motor vehicle seats and classifiable under 9401 9000? - HELD THAT:- It was held in the case of SHIROKI AUTO COMPONENTS INDIA PVT LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, AHMEDABAD [ 2020 (7) TMI 706 - CESTAT AHMEDABAD ] that the captioned goods i.e. Child Parts imported by the appellant is correctly classifiable under CETH 9401 90 00 of Customs Tariff Act. There are no reason to interfere with the said order - appeal dismissed.
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2021 (9) TMI 722
Dismissal of stay application pending appeal - erroneous assumption that granting prayer in Miscellaneous Application pending Appeal, would amount to allowing the appeal itself - release of smuggled absolutely confiscated gold - error in not appreciating the difference between the appeal and miscellaneous application filed pending the appeal or not - HELD THAT:- The Tribunal, while considering the prayer for interim stay, has to consider as to whether the balance of convenience is in favour of the Revenue, whether the Revenue has made out a prima faice case for grant of stay and whether irreparable hardship would be caused to the Revenue if the stay is not granted. To consider as to whether prima faice case has been made out by the Revenue, it may be necessary to have a consideration of the facts of the case and the merits of the appeal though not to the extent of deciding the appeal itself. With regard to the balance of convenience, the Tribunal has to examine the aspect that if stay is not granted what would be the consequence that will follow and with regard to hardship, that would be caused by the Revenue has also to be considered. If the stay is not granted, then, the respondent would seek return of the seized gold and that has to be ordered, then the appeal filed before the Tribunal itself would become infructuous - undue hardship would also be viewed from the point of view of the Revenue and to protect the interest of the Revenue - the order passed by the first Appellate Authority dated 14.11.2019 shall remain stayed till the disposal of the appeal filed by the Revenue before the Tribunal. There will be an order of stay of the order passed by the first Appellate Authority dated 14.11.2019 till the disposal of the appeal by the Tribunal - Appeal allowed.
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2021 (9) TMI 686
Demand against violation of bond conditions - Warehousing of goods imported - Gold Bars - N/N. 12/2012 dt. 17.3.2012 - Failure to furnish BRC or pay appropriate duty within 7 days of the stipulated period, also failed to monitor realisation of export proceeds - violation of Section 111 (j) of Customs Act, 1962 - invocation of liability under the bonds executed by the appellant - time limitation - HELD THAT:- After the appellant furnished export details, the bonds executed have been cancelled. The bonds were cancelled only after due verification of the same. The undertaking as per the bond is to comply with conditions of the Notification. As discussed above, the public notice require the appellant to furnish proof of export only. The export is by a third person. As per Public Notice dt. 6.9.2013 it is specifically stated that in respect of export of gold jewellery and export of articles of gold, the Bank Realization Certificate shall not be insisted to be produced as proof of export. The appellant has furnished E.P copy of the shipping bill as proof of export. The appellant therefore has complied with conditions of notification read along with Circular / Public Notice / Hand Book of Procedure. The department accepted the same as fulfilment of obligations as per the bond executed by them - Being satisfied of the same, the bond has been cancelled, after which no demand can be raised alleging violation of conditions of bond. Similar issue was addressed by the Tribunal in the case of Bank of Nova Scotia [ 2008 (7) TMI 246 - CESTAT BANGALORE] . The Tribunal also looked into the issue of non-production of BRC and held that the liability, if any, would be on the exporter. Time Limitation - HELD THAT:- The SCNs have alleged suppression of fact with intent to evade Customs duty. The appellant-bank has furnished details of exports and the bond was cancelled by the department after verification of the same. On such score, the SCNs issued much later alleging suppression of facts is without any factual basis. The issue on limitation is also found in favour of appellant. Demand do not sustain - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2021 (9) TMI 684
Transfer of shares - Oppression and mismanagement - Section 242/244 of the Companies Act 2013 read with NCLT rules, 2016 - HELD THAT:- This Tribunal observes that as the share transfer form annexed as Annexure P-2 of the petition reflects that the entire shareholding has been transferred to the petitioners from its first directors and further the share certificates are still in possession of the petitioners and has not been transferred to anyone which is evident from the fact that there is no share transfer form or any share certificate filed before the ROC showing transfer of shares in favour of the respondents, thus it shows that the petitioners are still holding entire 100% shares of company. It is clear that there are instances of oppression and mismanagement in the company as although the petitioners have resigned from the directorship of the company by means of Form DIR-12 but reducing their shareholding from 100% to 0% is an oppressive act on behalf of the respondents - the respondents acts are held to be oppressive to the petitioner, and there has been mismanagement in the respondent company, hence the petition deserves to be allowed. Petition allowed.
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Securities / SEBI
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2021 (9) TMI 717
Compounding of offence under SEBI Act Rejected - guidelines for compounding under Section 24A - Whether accused/Company has wound up and refunded the entire amount collected under scheme to all their share holders/ creditors? - HELD THAT:- Indisputably, the learned Judge neither referred to wind up repayment report dated 22nd February, 2019, nor the orders passed by this Court in Company Petition; nor SEBIs circular dated 20th April, 2007, nor the Court obtained the views of SEBI before denying to compound the offence. The order dated 28th August, 2019 below Exhibit 11 in SEBI Special Case passed by learned SEBI Special Judge is quash and set aside. As a consequence, learned Judge shall decide the application below Exhibit-11, in accordance with guidelines of the Hon ble Apex Court set out in the case of Prakash Gupta [ 2021 (7) TMI 971 - SUPREME COURT ]
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Insolvency & Bankruptcy
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2021 (9) TMI 733
Validity of permitting withdrawal of Corporate Insolvency Resolution Process - appellant D. Ramjee who is an exemployee of M/s Aruna Hotels Ltd. has filed an appeal as he was not receiving salary regularly, he sought to get relieved from the services with effect from 30.9.2006 and sought for settlement of his salary dues - HELD THAT:- The Adjudicating Authority is entitled to withdraw the application admitted under Section 7 or Section 9 or Section 10, on an application made by the applicant with the approval of 90% voting share of the CoC - It is not in dispute that the resolution of CoC approving withdrawal of CIRP proceedings was supported by the requisite voting majority. One of the principal objects of the IBC is providing for revival of the Corporate Debtor and to make it a going concern. Every attempt has to be first made to revive the concern and make it a going concern, liquidation being the last resort - From the order of NCLT dated 4.6.2021, it could be seen that the Corporate Debtor has already settled the issue with the erstwhile financial creditors, who have resolved to withdraw the CIRP proceedings and by virtue of withdrawal of CIRP proceedings, the Corporate Debtor now is a going concern. NCLT vide order dated 6.7.2021, passed in the application (I.A.No.540/CHE/2021) filed by D.Ramjee, has rightly held that from the date of the order dated 4.6.2021, after the withdrawal of CIRP proceedings, the powers and management of the Corporate Debtor were handed over to the Directors of the Corporate Debtor and from that date RP and CoC in relation to the Corporate Debtor had become functus officio. NCLT has rightly disposed of the application filed by D.Ramjee having rendered infructuous. Appeal disposed off.
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2021 (9) TMI 693
Levy of penalty - Corporate Debtor alleged shortage of supply of Coal and the amounts were never paid - allegations of short supply were strongly denied by the Operational Creditor and no payments made - HELD THAT:- On a query from the Bench, Learned Counsel for the Respondent has fairly conceded that the observations made, do touch upon the merits of the case and that he has no objection to the same being expunged. Keeping in view the facts and circumstances of the case and the observation made in these two Paras, relevant paras of the Impugned Order be expunged and the same is ordered. The merits of the matter with respect to any Pre-Existing Dispute or otherwise is not discussed. Appeal disposed off.
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2021 (9) TMI 685
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - non-compliance with mandatory requirement u/s 9(3)(b) of IBC - HELD THAT:- This Petition has been filed by the Operational Creditor, M/s. Indiabulls Distribution Services Ltd. u/s. 9 for a total claim amount of ₹ 17,35,762/-. The claim is based on an agreement dated 09.03.2016 between the Operational Creditor and the Corporate Debtor wherein the Operational Creditor was appointed as a Consultant/Broker to market the Units in the project named 'Xrbia Eiffle City II' of the Corporate Debtor situated in district Raigad. This bench notes that the brokerage agreed between the parties was 8.5% of the total sale consideration only on the Units which has been booked by the Consultant (Operational Creditor). If unit is cancelled by the prospective purchaser, the Operational Creditor shall not be entitled to any brokerage. In addition, if the purchaser does not pay the minimum of 40%, in case of Self Funded Customer, or 20% in case of a Customer availing loan facility, then no amount will be payable as brokerage fee and any brokerage already paid shall be adjusted from the brokerage future due - the amount of debt does not match the invoices attached to the Petition which states as ₹ 17,35,762/-. Similarly, in the notice issued by the Petitioner to the Corporate Debtor on 20.12.2016 the amount due is shown as ₹ 8,59,655/-. This shows discrepancies/lack of clarity on the amount of debt being claimed by the Petitioner. Be that it may, this bench notes that there are pre-existing disputes between the Petitioner and the Corporate Debtor. This bench notes that in this Petition, several invoices have been annexed and to explain the same, excel sheet has been annexed by the respondent. Thus, it is clear that most of the customers have booked the flats from different sources viz. with a reference of a friend, through newspaper, etc. and not through the petitioner. In view of this, this bench is of the view that no brokerage arises in the flat bookings relating to the customers who have booked flats from the sources other than brokerage. It is evident to the bench that the Corporate Debtor had raised dispute before filing of the Petition. The Corporate Debtor had clearly intimated in its email dated 01.03.2017 about the dispute between the parties and also that no amount was payable to the Operational Creditor - petition dismissed.
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2021 (9) TMI 683
Seeking Liquidation of Corporate Debtor - Section 33(2) and 34(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Despite all possible steps as required under the Code taken during the CIRP, the CoC did not accept any of the resolution plans/proposal for revival of the Company. The CoC in its wisdom has resolved with 81% voting share in favour of the liquidation of the Company. This Authority has no reason before it to take a contrary view in terms of Section 33(1)(a) of the Code. Therefore, there are no option than to pass an order for liquidation of the Company in the manner laid down in Chapter-III of the Code. On reading the Application and the documents enclosed therein, it is found the RP has complied with the procedure laid down under the Code; Regulations made thereunder - this is a fit case to pass liquidation order under sub-clauses (i), (ii) and (iii) of Clause (b) of Sub-Section (1) of Section 33 of the Code for liquidation in the absence of any resolution plan. The Corporate Debtor i.e. M/s. Ind-Barath Power Gencom Limited shall be liquidated in the manner laid down in Chapter-III of the Code - Application allowed.
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2021 (9) TMI 682
Seeking issuance of necessary directions to the Suspended Directors and Statutory Auditors of the Corporate Debtor to provide assistance, co-operation and information required by the Resolution Professional in discharging his statutory duties - Section 19(2) Section 60(5) read with rule 11 of the NCLT Rules, 2016 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In view of the facts of the case on hand and after considering the provisions contained thereof, this adjudicating Authority is of the view that the ex-management are collectively as well as independently, must furnish information and assist the RP in managing the affairs of the Corporate Debtor in order to enable the RP to complete the CIRP expeditiously and therefore, the persons who can cooperate with the RP and persuade the other managerial personnel to supply the documents, cannot escape their obligation. This Adjudicating Authority in order to implement the intention of the Code directs the suspended Directors and managerial persons to extend full cooperation and simultaneously furnish all the information of their accounts as well as all the information as required by the Resolution Professional to complete the CIRP efficiently and in time bound manner and RP is further directed to take possession of the whole record. Further, when information are in knowledge and possession of the Directors, they shall be held responsible for non-submission - Of the information as well as for non-cooperation with the RP as prescribed under Section 19 of the Code, and shall therefore be liable for punishment under Section 70 of the Code, if information is not provided further. Application allowed.
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2021 (9) TMI 680
Seeking liquidation of the Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Application is in accordance with law. The same needs to be approved as provided under Section 33 of the Code. The Corporate Debtor, Orient Tourism Private Limited, shall be liquidated in the manner as laid down in Chapter-III of the Code with the directions issued - application allowed.
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2021 (9) TMI 679
Seeking dissolution of the Corporate Debtor - Sections 54 of the Insolvency Bankruptcy Code, 2016 read with Regulation 14(a) of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and also read with Rule 11 National Company Law Tribunal, Rules 2016 - HELD THAT:- On examining the submissions made by the Counsel appearing for the Applicant and the documents annexed to the Application, it appears that the affairs of the Corporate Debtor have been standstill since last 15 years and there are no assets to liquidate. Also, the name of the company was struck off from the list of the companies by the Registrar of the Companies vide public notice dated 03.10.2018. We are satisfied from the documents on record that the dissolution is not with intent to defraud any person. The liquidation process has been duly completed as per the provisions of the Code without success. From the facts narrated and the law on the subject it would be just and equitable to dissolve the Corporate Debtor. No party is going to be adversely affected or prejudiced thereby - the above the Corporate Debtor deserves to be dissolved - Application allowed.
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FEMA
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2021 (9) TMI 730
Extension of tenure of Director of Enforcement - extension of tenure granted to persons holding the post of Director of Enforcement after attaining the age of superannuation - fixing the tenure for a minimum period of two years - procedure prescribed under Section 25 of the Central Vigilance Commission Act, 2003 ( CVC Act ) - Whether there can be extension of tenure of a person who has been appointed as a Director of Enforcement for a period of two years and who has attained the age of superannuation in the interregnum i.e. before the expiry of two years? - HELD THAT:- Government servant shall retire on attaining the age of 60 years. Posts for which there can be extension beyond 60 years have been specifically mentioned in the Rule and there is no dispute that the post of Director of Enforcement is not mentioned in the Rule for which extension of service can be given. There is no ambiguity in Section 25 (d) of CVC Act and the words not less than two years simply mean a minimum of two years. There is no scope for reading the words to mean not more than two years. Reading such a restriction would be contrary to the recommendations of the Independent Review Committee and the judgment of this Court in Vineet Narain.[ 1997 (12) TMI 615 - SUPREME COURT] - Curtailment of the tenure of a Director Enforcement would be detrimental to the interests of officers who are appointed to the post and have service of more than two years before they attain the age of superannuation. Therefore, we hold that a Director of Enforcement can be appointed for a period of more than two years by following the procedure prescribed under Section 25 of the CVC Act. As held that the initial appointment of the second Respondent cannot be termed to be illegal and that he had a right to continue till 18.11.2020 by virtue of his appointment for a period of two years. For all practical purposes, he should be treated as the Director of Enforcement till that particular date he was holding an office which is not below the rank of an Additional Secretary to the Government of India. Therefore, he was eligible for extension of tenure. The material on record indicates that the extension of service of the second Respondent was pursuant to the recommendations made by the Committee constituted under Section 25 (a) of the CVC Act. One of the conditions of Section 21 is that the power has to be exercised in the like manner and subject to like sanction. Amendment was made to the earlier order of appointment by the Committee after complying with the conditions in Section 21 of the General Clauses Act. Justification given by the Union of India for extension of the tenure of second Respondent is that important investigations are at a crucial stage in trans-border crimes. The decision to extend the tenure of the second Respondent is pursuant to the recommendation made by the high-powered committee. Though we have upheld the power of the Union of India to extend the tenure of Director of Enforcement beyond the period of two years, we should make it clear that extension of tenure granted to officers who have attained the age of superannuation should be done only in rare and exceptional cases. Reasonable period of extension can be granted to facilitate the completion of ongoing investigations only after reasons are recorded by the Committee constituted under Section 25 (a) of the CVC Act. We do not intend to interfere with the extension of tenure of the second Respondent in the instant case for the reason that his tenure is coming to an end in November, 2021. We make it clear that no further extension shall be granted to the second Respondent.
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Service Tax
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2021 (9) TMI 688
CENVAT Credit - duty paying documents - debit notes raised for cost sharing - appellant also reimburses the charges incurred in terms of the agreement - case of Revenue is that no service is provided and here appellant is only claiming reimbursement of actual expenses incurred towards administrative and other cost - also, denial of credit on such debit notes on the ground that these are reimbursement of expenses and not consideration paid for taxable service - eligible documents as per Rule 9 of the CENVAT Credit Rules, 2004 or not - HELD THAT:- The issue as to whether credit availed on the service tax paid is eligible to the appellant or is merely a reimbursement so as to pass on the cost incurred has been analyzed in the similar set of facts by the Hon'ble jurisdictional High Court in the case of M/S. MODULAR AUTO LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI [ 2018 (8) TMI 1691 - MADRAS HIGH COURT] where it was held that the credit cannot be denied on such ground. Payment of service tax on the amounts raised in the debit notes - HELD THAT:- The Show Cause Notice is issued only to the service recipient (appellant herein) who has availed the credit of service tax collected via the debit notes. If the department holds that the payment of service tax is legal and proper, then the credit availed on the tax cannot be denied alleging that no service is provided. Further on the issue whether debit notes are valid documents to avail credit, it has to be stated that though Rule 9(1) of CENVAT Credit Rules, 2004 does not mention debit note as a document on which credit can be availed, when all necessary particulars are mentioned the credit cannot be denied for the only that it is a debit note - In COMMISSIONER OF CENTRAL EXCISE JAIPUR-1, JAIPUR VERSUS BHARTI HEXACOM LTD. [ 2018 (6) TMI 435 - RAJASTHAN HIGH COURT] the credit availed on debit notes was held to be eligible - In the case of M/S GABRIEL INDIA LIMITED VERSUS CCE ST, INDORE [ 2016 (12) TMI 155 - CESTAT NEW DELHI] it was held that credit availed on debit notes cannot be denied when the eligibility of credit is not disputed - the denial of credit on the ground that the document on which credit is availed is a debit note is not legal or proper. Credit allowed - appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (9) TMI 695
Demand of amount collected in the name of duty u/s 11D - CENVAT credit - inputs or capital goods - imported Box Strapping Machines - said machines cleared as such on payment of duty equivalent to Cenvat credit availed in respect of CVD paid - Rule 5(3) of Cenvat Credit Rules, 2004 - HELD THAT:- Right upto the Commissioner (Appeals) order the entire case was decided against the appellant on the premise that the appellant is not entitled for Cenvat credit on imported Box Strapping Machine as the same is falling under Chapter 39. On perusal of record and bills of entry, it is found that it is factually incorrect basis as the correct chapter heading of imported Box Strapping Machine is under heading 84229090. Since this is correct Chapter heading, imported Box Strapping Machine clearly fall under the definition of capital goods which covers the goods under chapter 84 as capital goods - the goods whether used for the manufacture of final product or lying in the factory of the assessee, Cenvat credit on capital goods is admissible. Moreover, the appellant have cleared the imported Box Strapping Machine as such on payment of excise duty which is equivalent to the Cenvat credit availed thereon. For this reason also, no demand can be raised as the appellant is eligible for Cenvat on capital goods cleared as such, in terms of Rule 5(3) of Cenvat Credit Rules, 2004. There is no fault on the part of the appellant either for availing Cenvat credit or for removal of the same on payment of duty. Therefore, the disallowance of Cenvat credit as well as demand under Section 11D are set-aside - Appeal allowed - decided in favor of appellant.
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2021 (9) TMI 692
CENVAT Credit - input services - Goods Transport Agency Service for dispatching their finished goods - outward transportation on FOR destination basis - place of removal - premises of the buyer or factory gate of the buyer - HELD THAT:- In the facts and circumstances of this case, the place of removal is the premises of the buyer, not the factory gate of the buyer, as the finished goods are cleared by the appellant on FOR destination basis . The appellant is entitled to cenvat credit on the GTA service for outward transportation of the goods on FOR destination basis - CENVAT credit allowed - appeal allowed - decided in favor of appellant.
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2021 (9) TMI 687
Classification of goods - Di-calcium phosphate (animal feed grade), manufactured and cleared under brand name PROPHOS - classified under CETH 2835 or under CETH 2309 - HELD THAT:- It is seen that as per the N/N. 4/2016-CE(NT) dated 12.2.2016, levy of duty of excise on di-calcium phosphate (animal feed grade) of rock phosphate origin falling under Heading 2835 of the First Schedule to CETA, 1985 is not required to be paid under the said Notification issued under section 11C of the Act. Taking into account that the Notification issued under section 11C would apply in full force, demand confirmed cannot sustain - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (9) TMI 723
Validity of second appeals - recovery proceedings during the pendency of the appeals before the Tribunal - HELD THAT:- Let the second appeals be decided at the earliest. The Tribunal could take up the same for hearing, more particularly, the applications for early hearing as well as applications for stay. The same shall be decided within two weeks of receipt of the copy of this order. This Court has chosen not to enter into the merits of the matter. It is for the Tribunal to decide on the strength of such material placed before it and in accordance with law. Petition disposed off.
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2021 (9) TMI 720
Reversal of exemption availed - deduction on 2nd sales of clothes, which was allowed - denial on the ground that appellant has effected the purchase of Yarn from unregistered dealers or Registration Certificate canceled dealers - proposal to revise the turnover and assess the Tax at 4%, after adding 10% towards Freight and Gross Profit - ppellant had challenged the Assessment Order on the ground of unfairness in the action of the statutory authority and on the other grounds of violation of principles of natural justice and non-consideration of the documents which were placed before the authority. HELD THAT:- If these were the grounds raised by the appellant, then it goes without saying that the correctness of the Assessment Order could be tested in a writ petition under Article 226 of the Constitution of India. Thus, we hold that the writ petition was maintainable. Reversal of deduction claimed - HELD THAT:- The Assessing Officer continues to maintain the stand that the whereabouts of the selling dealer are not known and sale bills alone have been issued. This finding is not supported by any document or any report, which was called for and obtained by the Assessing Officer. In such circumstances, it has to be held that the Assessing Officer did not enquire into the matter, particularly, with regard to the aspects pointed out by the appellant that the selling dealer's registration was valid and sale bills have been issued and payments have also been effected by the appellant - If such is the factual position, we need to take note of the legal position as to whether, the appellant is required to prove that the selling dealer had paid taxes. The Hon'ble Division Bench pointed out that, admittedly, the Registration Certificates of the selling dealers were in force and their services were not canceled and there is no explanation on the side of the Revenue for not examining the selling dealers. Further, dealing with the issue that the bills were bogus, the Division Bench pointed out that, in the bills, the Registration Number and names of the sellers were given, but the Department failed to identify the sellers and make them available for cross-examination. In the case on hand also, the Assessing Officer took no steps to enquire into the matter, pursuant to the objections filed by the appellant. Also, in the present case, the Assessing Officer took no steps to enquire into the matter, pursuant to the objections filed by the appellant - the revision of assessment made on the appellant is not sustainable in law - petition allowed.
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2021 (9) TMI 711
Recovery of arrears of tax - petitioner made a request to collect the tax arrears by way of instalments as the petitioner company was facing financial crisis due to COVID-19 situation - HELD THAT:- The petitioner is willing to settle the tax arrears by way of 17 instalments, each instalments of ₹ 10,00,000/- per month. The petitioner is directed to settle the entire arrears of tax dues in 17 installment and each instalment is ₹ 10,00,000/- per month and, the first installment will commence from 20 th September 2021. The petitioner is directed to pay the monthly installments on or before 20th day of every calendar month without any fail. In the event of non-payment, the respondents are directed to initiate recovery action by following the procedures as contemplated under law. Petition disposed off.
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2021 (9) TMI 710
Incentives were provided to the new industries established in the State of Assam on or after 01.10.2008 - benefit for the Industrial Policy of Assam 2008 - manufacture of fireclays - process amounting to manufacture or not - HELD THAT:- The Additional Chief Secretary to the Government of Assam in the Industries and Commerce Department had perused the order dated 09.12.2016 passed in WP(C)No.7228/2015, the representation of the petitioner dated 03.12.2013 was also perused. Apart from the above, the letter dated 06.10.2012 of the Commissioner of Taxes, Assam as well as another letter dated 27.10.2014 also of the Commissioner of Taxes Assam as well as the minutes of the State Level Committee meeting dated 05.11.2015 were perused by the Additional Chief Secretary to the Government of Assam in the Industries and Commerce Department while passing the order dated 08.03.2017. By referring to the aforesaid materials, and without stating as to what the materials contain, the Additional Chief Secretary to the Government of Assam in the Industries and Commerce Department arrives at his conclusion that he agrees with the views of the Taxation Department and accordingly concluded that fireclays do not amount to a manufacture. The manner in which the order dated 08.03.2017 was passed by the Additional Chief Secretary to the Government of Assam in the Industries and Commerce Department, the requirement of the earlier order dated 09.12.2016 in WP(C)No.7228/2015 to pass a speaking order in accordance with law had not been duly complied with. The requirement of passing the speaking order be done within a period of one month from the date of receipt of a certified copy of this order - Petition disposed off.
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Indian Laws
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2021 (9) TMI 731
Power of Court to entertain an application under Section 9(1) of the Arbitration and Conciliation Act, 1996, once an Arbitral Tribunal has been constituted - true meaning and purport of the expression entertain in Section 9(3) of the Arbitration Act - whether the Court is obliged to examine the efficacy of the remedy under Section 17, before passing an order under Section 9(1) of the Arbitration Act, once an Arbitral Tribunal is constituted? HELD THAT:- To discourage the filing of applications for interim measures in Courts under Section 9(1) of the Arbitration Act, Section 17 has also been amended to clothe the Arbitral Tribunal with the same powers to grant interim measures, as the Court under Section 9(1). The 2015 Amendment also introduces a deeming fiction, whereby an order passed by the Arbitral Tribunal under Section 17 is deemed to be an order of Court for all purposes and is enforceable as an order of Court - With the law as it stands today, the Arbitral Tribunal has the same power to grant interim relief as the Court and the remedy under Section 17 is as efficacious as the remedy under Section 9(1). There is, therefore, no reason why the Court should continue to take up applications for interim relief, once the Arbitral Tribunal is constituted and is in seisin of the dispute between the parties, unless there is some impediment in approaching the Arbitral Tribunal, or the interim relief sought cannot expeditiously be obtained from the Arbitral Tribunal. In this case there are no materials on record to show that there were any lapses or laches on the part of the Respondent, which delayed the constitution of an Arbitral Tribunal. The allegation that the Respondent had disabled itself from availing the remedy under Section 17, is unsubstantiated. Moreover, mere delay in agreeing to an Arbitrator does not dis-entitle a party from relief under Section 9 of the Arbitration Act. Section 11 of the Arbitration Act itself provides a remedy in case of delay of any party to the arbitration agreement to appoint an Arbitrator. Meaning of the the expression entertain - HELD THAT:- It is now well settled that the expression entertain means to consider by application of mind to the issues raised. The Court entertains a case when it takes a matter up for consideration. The process of consideration could continue till the pronouncement of judgment as argued by Khambata. Once an Arbitral Tribunal is constituted the Court cannot take up an application under Section 9 for consideration, unless the remedy under Section 17 is inefficacious. However, once an application is entertained in the sense it is taken up for consideration, and the Court has applied its mind to the Court can certainly proceed to adjudicate the application. When an application has already been taken up for consideration and is in the process of consideration or has already been considered, the question of examining whether remedy under Section 17 is efficacious or not would not arise. The requirement to conduct the exercise arises only when the application is being entertained and/or taken up for consideration. As observed above, there could be numerous reasons which render the remedy under Section 17 inefficacious - Negative Kompetenz-Kompetenz is a sequel to the rule of priority in favour of the Arbitrators, that is, the requirement for parties to an arbitration agreement to honour their undertaking to submit any dispute covered by such an agreement to arbitration. This entails the consequence that the Courts are prohibited from hearing such disputes. It is reiterated that Section 9(1) enables the parties to an arbitration agreement to approach the appropriate Court for interim measures before the commencement of arbitral proceedings, during arbitral proceedings or at any time after the making of an arbitral award but before it is enforced and in accordance with Section 36 of the Arbitration Act. The bar of Section 9(3) operates where the application under Section 9(1) had not been entertained till the constitution of the Arbitral Tribunal. The appeal is allowed only to the extent of clarifying that it shall not be necessary for the Commercial Court to consider the efficacy of relief under Section 17, since the application under Section 9 has already been entertained and considered by the Commercial Court - Appeal allowed in part.
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2021 (9) TMI 721
Dishonor of Cheque - applicant moved an application for discharge, stating therein that the cheque has not been presented before the bank within prescribed period, as such, proceedings under Section 138 of Negotiable Instruments Act cannot be drawn against him - HELD THAT:- All the submissions/ objections can very well be raised during the course of trial and not at this stage, here only prima facie case is to be seen, as such, impugned order dated 01.05.2014 needs no interference by this Court at this stage. Present application under Section 482 CrPC is devoid of merit - Application dismissed.
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2021 (9) TMI 707
Dishonor of Cheque - cheating versus breach of contract - allegation is that petitioners entered into a criminal conspiracy to misappropriate the outstanding dues payable to the opposite party - fraudulent or dishonest intention at the time of making the promise or not - Section 482 of the Code of Criminal Procedure - HELD THAT:- In the instant case the petitioners practically admitted their outstanding dues by filing the instant application. It is contended on behalf of the petitioners that they have no fraudulent or dishonest intention to induce the opposite party to deliver the goods, viz, C.R Coil and the petitioners have already paid a sum of ₹ 8 (eight) lakh as part payment of the consideration money. Since there is no ingredient of offence under Section 420 of the IPC against the petitioners from the very inception of transaction between the parties the dispute is essentially civil in nature. Applicability of Section 482 of the Code - HELD THAT:- It is no longer a res integra that the power under Section 482 of the Code must be exercised sparingly, with circumspection and in rarest of rare cases. Exercise of inherent power under Section 482 of the Code is not the rule but the exception. The exception is applicable only when it is brought to the notice of the court that grave miscarriage of justice would be committed if the trial is allowed to proceed where the accused would be harassed unnecessarily. This court is not unmindful to note that there remains fine line of distinction between breach of contract and cheating. In case of cheating, it is the duty of the complainant to make out a case that from the very inception of establishment of commercial contractual relation between the parties, the accused had an intention to deceive fraudulently or dishonestly the complainant to induce him to deliver property. It is true that the complainant/opposite party No.2 failed to make out any such case in his petition of complaint. On the other hand, the petitioners paid part of consideration money to the opposite party No.2. Subsequently, the rest amount of ₹ 16,24,723/- was not paid to the opposite party No.2 - This court has inherent power under Section 482 of the Code amongst other to prevent abuse of the process of the court and to otherwise secure ends of justice. The court has the mandatory duty not only to prevent abuse of the process of the court but also to secure ends of justice. The High Court can very well quash the proceeding holding, inter alia, that the dispute between the parties is civil in nature and giving liberty to the opposite party to move the Civil Court to recover the unpaid amount of consideration money - Application disposed off.
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