Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 1, 2021
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Companies Law
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G.S.R. 806 (E) - dated
30-12-2020
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Co. Law
Companies (Meetings of Board and its Powers) Fourth Amendment Rules, 2020
Customs
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48/2020 - dated
30-12-2020
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ADD
Seeks to rescind notification No. 51/2015-Customs(ADD) dated 21st October, 2015, to revoke ADD imposed on "All Fully drawn or Fully Oriented Yarn/ Spin Draw Yarn/ Flat yarn of polyester (non-textured and non-POY)" originating in or exported from China PR and Thailand
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45/2020 - dated
30-12-2020
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Cus
Seeks to amend Notification No. 46/2011-Customs, dated the 1st June, 2011
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115/2020 - dated
30-12-2020
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Cus (NT)
Courier Imports and Exports (Electronic Declaration and Processing) Amendment Regulations, 2020
GST
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95/2020 - dated
30-12-2020
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CGST
Seeks to extend the time limit for furnishing of the annual return specified under section 44 of CGST Act, 2017 for the financial year 2019-20 till 31.03.2021.
GST - States
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78/2020 - State Tax - dated
28-10-2020
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Chhattisgarh SGST
Amendment Notification No. 12/2017-State Tax, dated 29th June, 2017
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77/2020 - State Tax - dated
28-10-2020
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Chhattisgarh SGST
Amendment in Notification No. 47/2019-State Tax, dated the 9th October, 2019
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76/2020 - State Tax - dated
28-10-2020
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Chhattisgarh SGST
Seeks to prescribe return in FORM GSTR-3B of Chhattisgarh Goods and Services Tax Rules, 2017 along with due dates of furnishing the said form for October, 2020 to March, 2021
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75/2020 - State Tax - dated
28-10-2020
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Chhattisgarh SGST
Seeks to prescribe the due date for furnishing FORM GSTR-1 by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from October, 2020 to March, 2021
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75/2019 – State Tax - dated
29-12-2020
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Delhi SGST
Delhi Goods and Services Tax (Ninth Amendment) Rules, 2019
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68/2019- State Tax - dated
29-12-2020
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Delhi SGST
Delhi Goods and Services Tax (Eighth Amendment) Rules, 2019
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F. 1-11 (91)-TAX /GST/2020 (Part-II) - dated
29-12-2020
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Tripura SGST
Seeks to extend the due dates for compliance and actions in respect of anti-profiteering measures under GST till 31.03.2021
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1404/XI-2-20-9(47)/17-U.P. Act-1-2017-Order-(169)-2020 - dated
22-12-2020
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Uttar Pradesh SGST
Waiver of penalty payable for noncompliance of the provisions of Notification No. 429/XI-2-9(47)/17-U.P. Act-1-2017-Order-(107)-2020 dated 30 April, 2020
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seeks to extend the time limit for furnishing of the annual return specified under section 44 of CGST Act, 2017 for the financial year 2019-20 till 28.02.2021. - Notification
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Profiteering - supply of Services by way of admission to exhibition of cinematograph films - The Respondent has resorted to profiteering by way of either increasing the base prices of the service while maintaining the same selling prices or by way of not reducing the selling prices of the service commensurately, despite a reduction in GST rate on “Services by way of admission to exhibition of cinematograph films where price of admission ticket is one hundred rupees or less” from 18% to 12% w.e.f. 01.01.2019 to 30.06.2019. - Allegation proved - NAPA
Income Tax
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Revision u/s 263 - Characterization of income - Real estate business - Assessing Officer has conducted sufficient enquiry as required under Explanation 2(a) to Section 263 and there was material available on record to arrive at a conclusion, which was recorded by the Assessing Officer. It is trite law that merely because a different view can be taken, the powers under Section 263 of the Act cannot be invoked - Decided in favour of assessee. - HC
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Exemption u/s 10(23C)(iv) denied - activities of the assessee Trust as hit by the proviso to section 2(15) - the activities of the Trust of providing accommodation and food and beverages etc. does not constitute commercial activities and activities of the Trust are not hit by any proviso to section 2(15) of the Act. - AT
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Addition u/s 68 - Unexplained cash creditors - once it is established that it is the creditors' money that has found its way in the books of the assessee, no adverse inference u/s. 68 could be drawn in its respect in the case of the assessee. The said establishment, it may be though clarified, is to be, in terms of the settled law, not on the basis the creditors' identity alone, as where the sum credited is shown to originate from his bank account, but also his capacity as well as the genuineness of the credit transaction - Additions cannot be made - AT
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LTCG - Deduction u/s 54 - Adoption of the cost of acquisition of new asset - - what is to be treated as cost of the residential house is the entire cost of house and it cannot be open to the Assessing Officer to treat only the cost of only civil construction as cost of house and segregate the cost of other things as not eligible for deduction u/s 54. - AO would allow the expenses incurred for furniture and Air Conditioners if it is part and parcel of the contract for construction of new house. - AT
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Revision u/s 263 - Clearly, what was being directed by the learned Commissioner was already done by the Assessing Officer, and, therefore, these directions clearly show that there was a clear and glaring non- application of mind to even undisputed material facts of the case. We, therefore, cannot approve justification of the subject assessment order being held to be ‘erroneous and prejudicial to the interests of the revenue’ for this reason as well. No other reason is pointed out to us. - AT
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Computation of book profit u/s. 115JB - A.O. took the view that the Provision for bonus is a contingent liability and hence, the same is required to be added to the net profit for the purpose of computing book profit u/s. 115JB - the assessee that the assessee has actually paid the bonus in the succeeding year. Accordingly, we hold that the provision for bonus created by the assessee is an ascertained liability. - A.O. directed to exclude it from book profit. - AT
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TDS u/s 195 - interest income accrued in the hands of the foreign entity - There was no expenditure accrued during the previous year and also claimed and hence, the provisions of section 195 of the Act has no application. The interest payable was eventually waived, therefore, the assessee had not paid any interest. Since no interest was paid or claimed as expenditure, the provisions of section 195 of the Act cannot be applied. - AT
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Disallowance of depreciation - enhanced cost on account of exchange fluctuation - wherever there was an exchange gain to the assessee, the same was reduced from the WDV and claim was made accordingly, therefore, assessee is following the AS-11 consistently and as such the same should not have been disputed by the authorities below. The Ld. D.R. has not pointed-out any infirmity in the Order of the Ld. CIT(A) in allowing the depreciation to the assessee as per Law. - AT
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Revision u/s 263 - Unexplained cash investment u/s 69 - PCIT has no right to review the order which was subject matter of appeal before Ld. CIT(A) and we notice that the issue which is challenged before Ld. CIT(A) is the same issue in which Ld. PCIT has reviewed u/s 263 - AT
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Income from salary - addition being the amount of salary refunded to the employer company - The ld. CIT(A) has deleted the addition holding that refund of salary by the assessee was not voluntary but was to comply with the legal requirements of law, therefore, the same cannot be considered as income assessable to tax - Order of CIT(A) sustained - AT
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TDS u/s 195 - reimbursement of travelling expenses paid to foreign parties - a payment in the nature of a mere reimbursement of actual expenses would not be covered by the obligations cast under s. 195 of the Act in the absence of any chargeable income annexed to such payment and consequently Section 40(a)(i) would not be attracted - AT
Customs
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Import and export of vaccines in relation to COVID-19 through Courier - In order to facilitate the import/ export of vaccines in relation to COVID -19 through Courier, at locations where the Express Cargo Clearance System (ECCS) is operational, the Board has issued the Courier Imports and Exports (Electronic Declaration and Processing) Amendment Regulations, 2020. - Circular
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Courier Imports and Exports (Electronic Declaration and Processing) Amendment Regulations, 2020 - Notification
Corporate Law
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Oppression and mismanagement - Waiver of compliance of Section 244(1) of the Companies Act - The Tribunal, has exercised its discretion and opined that a meritorious litigation cannot be thrown at threshold without examining the merits of the case and further observed that the First Respondent / Petitioner had made out a prima facie case to entertain the main company petition for its final adjudication - AT
Central Excise
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CENVAT Credit - input services - Warranty Services - whether warranty services are part of the manufacturing and sale activity as they are required for the purpose of ensuring sale of the goods or not? - there is no requirement in the definition of Input Service that the value is to be included in the assessable value for the purpose of Central Excise before the credit can be allowed - Credit allowed - AT
VAT
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Violation of principles of Natural Justice - Validity of assessment order - Office of the assessee was closed due to lockdown - While on one hand the petitioners acted in consonance / compliance with the Government order issued to prevent and contain the spread of virus, the assessing authority on the other hand fastened the petitioners with the liability to tax by passing the impugned order of assessment, behind their back. The said action on the part of the respondent authorities cannot be upheld even though the authority may have compelling reasons to do so, having regard to the limitation to make assessment getting over - HC
Case Laws:
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GST
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2020 (12) TMI 1207
Scope of Advance Ruling application - Classification of goods - Flavored Milk - to be classified under HSN 0402 99 90 or under 2202 99 30 or under any other Chapter? - HELD THAT:- It is an undisputed fact that the applicant supplies the impugned product under the brand name Nandini , to the owner of the said brand M/s. KMF, against whom an offence case is pending before DGGI, Bangalore. The applicant themselves admitted that M/s KMF hold 90% shares and hence have management / administrative control over the applicant. M/s KMF are the owners of Nandini brand, against whom an offence case is pending before DGGI, Bengaluru on classification of flavoured milk. Thus it is very clear that the applicant, being the job worker to M/s KMF, becomes part of M/s KMF, as they also supply the same product of flavoured milk and hence is bound to oblige the conclusion of the proceedings in this regard. Hence the pendency of the proceedings automatically applies to the applicant also. Therefore the instant application is liable for rejection, under first proviso to Section 98(2) of the CGST Act 2017. The application is rejected as inadmissible , in terms of first proviso to Section 98(2) of the CGST Act 2017.
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2020 (12) TMI 1206
Scope of Advance Ruling application - Classification of goods - Flavored Milk - to be classified under HSN 0402 99 90 or under 2202 99 30 or under any other Chapter? - HELD THAT:- It is an undisputed fact that the applicant supplies the impugned product under the brand name Nandini , to the owner of the said brand M/s. KMF, against whom an offence case is pending before DGGI, Bangalore. The applicant themselves admitted that M/s KMF hold 90% shares and hence have management / administrative control over the applicant. M/s KMF are the owners of Nandini brand, against whom an offence case is pending before DGGI, Bengaluru on classification of flavoured milk. Thus it is very clear that the applicant, being the job worker to M/s KMF, becomes part of M/s KMF, as they also supply the same product of flavoured milk and hence is bound to oblige the conclusion of the proceedings in this regard. Hence the pendency of the proceedings automatically applies to the applicant also. Therefore the instant application is liable for rejection, under first proviso to Section 98(2) of the CGST Act 2017. The application is rejected as inadmissible , in terms of first proviso to Section 98(2) of the CGST Act 2017.
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2020 (12) TMI 1205
Profiteering - purchase of flat - allegation that the Respondent had not passed on the benefit of additional Input tax Credit (ITC) to the Applicants as well as other home buyers who had purchased Flats - violation of the provisions of Section 171 (1) of the Act - HELD THAT:- It has been revealed that the Respondent has not passed on the benefit of additional Input tax Credit (ITC) to the above Applicants as well as other homebuyers who have purchased them in his Project Green Court for the period from 01.07.2017 to 31.08.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017 - It is also revealed from the perusal of the CGST Act and the Rules framed under it that the Central Government vide Notification No. 01/2020-Central Tax dated 01.01.2020 has implemented the provisions of the Finance (No. 2) Act, 2019 from 01.01.2020 vide which sub-section 171 (3A) was added in Section 171 of the CGST Act, 2017 and penalty was proposed to be imposed in the case of violation of Section 171 (1) of the CGST Act, 2017. Since, no penalty provisions were in existence between the period w.e.f. 01.07.2017 to 31.12.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, the notice dated 04.02.2020 issued to the Respondent for imposition of penalty under Section 171 (3A) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped.
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2020 (12) TMI 1204
Purchase of flat - Vaseline VTM 400 ml - allegation that the Respondent had not passed on the benefit of reduction in the rate of tax to the Applicant by way of commensurate reduction in the price of the product - violation of the provisions of Section 171 (1) of CGST Act - Penalty - HELD THAT:- It has been revealed that the Respondent had not passed on the benefit of reduction in the rate of tax to the Applicant No. 1 and other customers by way of commensurate reduction in the price of the product Vaseline VTM 400 ml for the period from 15.11.2017 to 31.01.2018and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017 - It is also revealed from the perusal of the CGST Act and the Rules framed under it that no penalty had been prescribed for violation of the provisions of Section 171 (1) of the above Act, therefore, the Respondent was issued show cause notice to state why penalty should not be imposed on him for violation of the above provisions as per Section 122 (1) (i) of the above Act as he had apparently issued incorrect or false invoice while charging excess consideration and GST from the buyers. However, from the perusal of Section 122 (1) (i) it is clear that the violation of the provisions of Section 171 (1) is not covered under it as it does not provide penalty for not passing on the benefits of reduction in the rate of tax and hence the above penalty cannot be imposed for violation of the anti-profiteering provisions made under Section 171 of the above Act. Penalty - HELD THAT:- Since, no penalty provisions were in existence between the period w.e.f. 15.11.2017 to 31.01.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, the notice dated 13.09.2018 issued to the Respondent for imposition of penalty under Section 122 (1) (i) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped.
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2020 (12) TMI 1203
Profiteering - Respondent had not passed on the benefit of rate reduction to the Applicant as well as other customers as per the provisions of Section 171 (1) of the CGST Act, 2017 - penalty - HELD THAT:- It has been revealed that the Respondent has not passed on the benefit of rate reduction to the above Applicant as well as other customers who had purchased various items from him during the period from 15.11.2017 to 31.01.2018 and hence, the Respondent has violated the provisions of Section 171 (1) of the CGST Act, 2017. It is also revealed from the perusal of the CGST Act and the Rules framed under it that no penalty had been prescribed for violation of the provisions of Section 171 (1) of the Act, therefore, the Respondent was issued show cause notice to state why penalty should not be imposed on him for violation of the above provisions as per Section 122 (1) (i) of the Act as he had apparently issued incorrect or false invoices while charging excess consideration and GST from the buyers. However, from the perusal of Section 122 (1) (i) it is clear that the violation of the provisions of Section 171 (1) was not covered under it as it does not provide penalty for not passing on the benefit of rate reduction and hence the above penalty cannot be imposed for violation of the anti-profiteering provisions made under Section 171 of the Act. Since, no penalty provisions were in existence between the period w.e.f. 15.11.2017 to 31.01.2018 when the Respondent had violated the provisions of Section 171 (1), the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, the notice dated 01.10.2018 issued to the Respondent for imposition of penalty under Section 122 (1) (i) is hereby withdrawn and the present penalty proceedings launched against him are accordingly dropped.
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2020 (12) TMI 1202
Profiteering - supply of Services by way of admission to exhibition of cinematograph films where price of admission ticket is one hundred rupees or less - allegation that the reduction in the rate if GST not passed on - contravention of section 171 of CGST Act - penalty - Whether there was any reduction in the GST rate and whether the benefit of reduction in the rate of tax was passed on or not to the recipients as provided under Section 171 of the CGST Act, 2017? - HELD THAT:- It has been revealed that the Central and the State Governments had reduced the rates of GST on Services by way of admission to exhibition of cinematograph films where the price of admission ticket was above one hundred rupees from 28% to 18% and Services by way of admission to exhibition of cinematograph films where the price of admission ticket was one hundred rupees or less from 18% to 12% w.e.f. 01.01.2019, vide Notification No. 27/2018- Central Tax (Rate) dated 31.12.2018, the benefit of which was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 of the above Act. The Respondent has resorted to profiteering by way of either increasing the base prices of the service while maintaining the same selling prices or by way of not reducing the selling prices of the service commensurately, despite a reduction in GST rate on Services by way of admission to exhibition of cinematograph films where price of admission ticket is one hundred rupees or less from 18% to 12% w.e.f. 01.01.2019 to 30.06.2019. On this account, the Respondent has realized an additional amount to the tune of ₹ 2,23,850/- from the recipients which included both the profiteered amount and GST on the said profiteered amount. Thus the profiteering is determined as ₹ 2,23,850/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. The Respondent is therefore directed to reduce the prices of his tickets as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. The Respondent is also directed to deposit the profiteered amount of ₹ 2,23,850/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited. Since the recipients, in this case, are not identifiable, the Respondent is directed to deposit the amount of profiteering of ₹ 1,11,925/- in the Central Consumer Welfare Fund (CWF) and ₹ 1,11,925/- in the Telangana State CWF as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, along with 18% interest. The above amount shall be deposited within a period of 3 months from the date of receipt of this Order failing which the same shall be recovered by the Commissioner CGST and SGST as per the provisions of the SGST Act, 2017. This Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of SGST Telangana to monitor this Order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as Ordered by the Authority is deposited in the respective CWFs. A report in compliance of this Order shall be submitted to this Authority by the DGAP within a period of 3 months from the date of receipt of this Order - As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this Order was required to be passed within a period of 6 months from the date of receipt of the Report furnished by the DGAP under Rule 129 (6) of the above Rules. Since the present Report has been received by this Authority on 30.10.2019, this Order was to be passed by 29.04.2020. However, due to the prevalent pandemic of COVID-19 in the country, this Order could not be passed before the above date due to force majeure. Accordingly, this Order is being passed today on 17.11.2020 in terms of the Notification No. 65/2020- Central Tax dated 01.09.2020 issued by the Government of India, Ministry of Finance (Department of Revenue), Central Board of Indirect Taxes and Customs under Section 168 A of the CGST Act, 2017.
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Income Tax
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2020 (12) TMI 1201
Revision u/s 263 - Characterization of income - As per CIT AO has not satisfied itself that the assessee was engaged in the business of purchase and sale of plots and has not brought any material on record to show that investment in the property was made for the purposes of trading - income assessed as income from business in respect of sale of properties as income from capital gains to disallow interest on loan of purchase of property as deduction from sale consideration, to direct the Assessing Officer to adopt guidance value of sub registrar in respect of one property as deemed sale value and to bring to tax the difference and to allow deduction under Section 80C - HELD THAT:- Commissioner of Income Tax as well as the tribunal has failed to appreciate that the Assessing Officer had put 36 questions to the assessee to ascertain the nature of business of the assessee and from perusal of questions Nos.16 and 18, it is evident that the aforesaid questions specifically pertain to issue of classification of income. It is pertinent to note that several notices were issued to the assessee and detailed hearings were conducted and the Assessing Officer in its order has mentioned the details of all the properties with dates of purchase and sale and from perusal of the same, it is evident that the properties were brought and sold within a maximum period of 20 months, from which it is evident that the assessee was engaged in real estate business. Assessing Officer has conducted sufficient enquiry as required under Explanation 2(a) to Section 263 and there was material available on record to arrive at a conclusion, which was recorded by the Assessing Officer. It is trite law that merely because a different view can be taken, the powers under Section 263 of the Act cannot be invoked - Decided in favour of assessee.
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2020 (12) TMI 1200
Exemption u/s 10(23C)(iv) denied - activities of the assessee Trust as hit by the proviso to section 2(15) - according to AO assessee s activities of providing food and beverages, accommodation against which charges are made from the members and non-members constitute commercial activities and therefore according to the AO the activities of the assessee Trust are not governed by the proviso to section 10(23C)(iv) - HELD THAT:- We have gone through the record in the light of the submissions made on either side. Record reveals that the main reasons of denying exemption u/s 10(23C)(iv) of the Income Tax Act by the learned Assessing Officer is that the activities of the assessee Trust are hit by the proviso to section 2(15) and according to the learned Assessing Officer, assessee s activities of providing food and beverages, accommodation against which charges are made from the members and non-members constitute commercial activities and therefore according to the Assessing Officer, the activities of the assessee Trust are not governed by the proviso to section 10(23C)(iv) of the Act. Ld. Assessing Officer has also noted that although the assessee claims that it is working on no profit and no loss basis , yet the income and expenditure account of the assessee Trust reveals that it earning surplus year after year. Reasons for denying the exemption by the learned Assessing Officer in 2013-14 and 2014-15 or identical to the reasons recorded for earlier years, namely, Assessment Year 2009-10 by the learned DIT in his order u/s 263 of the Income Tax Act and thereafter, on the identical grounds and by making similar observations the exemption has been denied. It is also not in dispute that the order u/s 263 for the Assessment Year 2009-10 was quashed by a coordinate Bench of this Tribunal [ 2015 (5) TMI 515 - ITAT DELHI] wherein it was held that the activities of the Trust of providing accommodation and food and beverages etc. does not constitute commercial activities and activities of the Trust are not hit by any proviso to section 2(15) of the Act. There is no denial of the fact contended by the Ld. AR that though Revenue carried the matter in appeal to the Hon ble Delhi High Court, such an appeal was dismissed by Hon ble High Court. Further there is no denial of the contention of the assessee that the order of the Tribunal for the Assessment Year 2009- 10 was followed another Bench of this Tribunal in Assessment Year 2011-12 [ 2017 (10) TMI 1410 - ITAT DELHI] against which the Revenue challenged before dismissed by Hon ble Supreme Court in SLP due to low tax effect.
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2020 (12) TMI 1199
Reopening of assessment - addition u/s 68 - Information was received from the investigation wing regarding the assessee was beneficiary of the accommodation entry - HELD THAT:- As perused the order passed by the Revenue Authority especially assessment order and we are of the view that no doubt there is information from the investigation wing. But in this case no enquiry has been conducted by the Assessing Officer and the said information could not be said to be the tangible material. Therefore, on this ground reassessment was not justified. See RMG POLYVINYL (I) LTD. [ 2017 (7) TMI 371 - DELHI HIGH COURT] Case of the assessee was reopened on the basis of information received from the Investigation wing but the Assessing Officer has not made any enquiry on this information and reopened the case of the assessee and made the addition in dispute and completed the assessment. Similarly learned First Appellate Authority has also upheld the assessment order. In our view it is contrary to the various decision rendered by the Hon ble Delhi High Court. Therefore, the reassessment on the basis of said information is not justified and legally valid, we quash the assessment order - Decided in favour of assessee.
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2020 (12) TMI 1198
Addition u/s 68 - Unexplained cash creditors - onus to prove - HELD THAT:- A perusal of the material on record shows that the entire sum credited stands explained with reference the creditor's existing capital and/or current income. No verification of the same was however done by the AO. In fact, as explained by Sh. Bardia during hearing, the production of the creditors by the assessee was sought by the AO in the assessment proceedings as an alternate to the submission of an explanation in writing - Even so, the assessee, despite furnishing documentary evidences, offered to produce the creditors, and for which he referred to the assessee's communications to the AO dated nil and 07/12/2017 - It was for this reason that we have opined that the impugned credits are to be regarded as explained upon confirmation of the claims not clarified with reference to the material on record. Our decision, it may be appreciated, is in complete agreement with Metachem Industries [ 1999 (9) TMI 21 - MADHYA PRADESH HIGH COURT] by the jurisdictional High Court, wherein it stands held that once it is established that it is the creditors' money that has found its way in the books of the assessee, no adverse inference u/s. 68 could be drawn in its respect in the case of the assessee. The said establishment, it may be though clarified, is to be, in terms of the settled law, not on the basis the creditors' identity alone, as where the sum credited is shown to originate from his bank account, but also his capacity as well as the genuineness of the credit transaction. Assessment is bad in law inasmuch as the same is not u/s. 153C as the filing of the return of income for the year on 26/9/2015 was followed by a search u/s. 132(1) at the premises of Sh. Tara Chand Khatri, loose papers and documents from whose residence relating to the assessee were found and seized - We are wholly unable to appreciate the assessee's case in this regard. A seizure of a document pertaining to the assessee would not by itself give rise to the jurisdiction to the AO to proceed u/s. 153C by issuing notice u/s. 153A. The same could only be on the AO being positively satisfied as to the said material having a bearing on the assessee's income for a specified year/s. There is no whisper of any reliance by the AO on the said material while assessing the assessee's income for the relevant year, or even in the appellate proceedings. Now it could be nobody's case that the AO ought to be necessarily so satisfied - a matter of fact, and which therefore is to be demonstrated, and, further, without in any manner stating, much less showing, the basis thereof, even as there is nothing on record, nor any pointed out, to exhibit the said satisfaction. The provision, as its' reading would show, is for the benefit of the Revenue, providing it additional time to frame an assessment in search and search-related cases. No case stands made out, with there even being no reference to any such material relied upon in determining the assessee's income even during hearing. The assessee's challenge is without any basis on facts and in law
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2020 (12) TMI 1197
Capital gain - collaboration agreement entered by assessee for a property - indexation of the cost the capital gain chargeable in the hands of the assessee - whether the transfer took place in Assessment Year 2007-08 as claimed by the Revenue or in Assessment Year 2009-10 as claimed by the assessee? - HELD THAT:- Hon'ble Supreme Court in the case of Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT ] held that the execution of unregistered Joint Development Agreement with an irrevocable Power of Attorney in favour of the Developer does not result in the transfer for capital gains liability. The agreement in the present case is not registered one, it does not have any impact in the eye of law for the purpose of Section 53A of the transfer of property act and similarly for defining transfer Under the income tax act. Therefore In the present case, the Collaboration Agreement was never registered. Therefore, the presumption of delivery of possession to the Collaborator cannot be assumed on signing the Collaboration Agreement, i.e., in AY 2007-08. Even otherwise the assessee has offered the above capital gain in assessment year 2009 10, which is the property for the assessment of the transfer of capital asset and consequent capital gain in view of the decision of the honourable Supreme Court as stated above.
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2020 (12) TMI 1196
Revision u/s 263 - LTCG - Assessee eligible for deduction u/s 54 - expenses incurred for furniture and Air Conditioners while constructing the residential house property - HELD THAT:- So far exercising of powers u/s 263 of the Act is concerned, we find no infirmity in the order of Ld. PCIT as the Assessing Officer has wrongly allowed the claim without examining that how much deduction can be allowed. Ld. Counsel for the assessee argued that this order could be rectified by the Assessing Officer u/s 154 of the Act. However Ld. Counsel for the assessee did not bring to our notice any such action being taken by the Assessing Officer. Hence on this ground revision of the order is justified. Adoption of the cost of acquisition of new asset - A residential house may have many other things, other than civil construction and including things like furniture and fixtures, as its integral part and may also be on sale as an integral deal. Further if these things are integral part of house being purchased, the cost of house has to essentially include the cost of these things as well. In such circumstances, what is to be treated as cost of the residential house is the entire cost of house and it cannot be open to the Assessing Officer to treat only the cost of only civil construction as cost of house and segregate the cost of other things as not eligible for deduction u/s 54. In this case it was not a composite deal, we find that the Ld. PCIT has also considered these case laws. However it is not clear whether the assessee had entered into with a contract with the contractor that included the cost of furniture and other fixtures. Ld. PCIT has also not brought any such evidence on record. Under these facts we modify the direction of Ld. PCIT to the extent that the Ld. Assessing Officer would allow the expenses incurred for furniture and Air Conditioners if it is part and parcel of the contract for construction of new house. This ground of the assessee is partly allowed.
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2020 (12) TMI 1195
Rectification of mistake - Reopening of assessment on basis of audit objection raised by Revenue Audit Party - HELD THAT:- DR could not controvert the fact that before Hon'ble High Court of Madhya Pradesh it was stated on behalf of the Revenue that the assessment was not re-opened on the basis of audit objection. Hence, the Revenue has contrary stand. We therefore dismiss the Miscellaneous Application of Revenue.
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2020 (12) TMI 1194
Revision u/s 263 - Exemption u/s 11 eligibility - dividend income received by assessee trust - HELD THAT:- As decided in Sir Dorabji Tata Trust [ 2020 (12) TMI 1121 - ITAT MUMBAI] observations so made by the learned Commissioner show that he has not even applied his mind to the undisputed facts of the case. If he had cared to look at paragraph 8 of the subject assessment order, he would have noticed that the Assessing Officer has already included the dividend income in the available gross receipts of the assessee trust and examined the application of the said income. That is beside the point that such an action was contrary to the claim of the assessee that once this income is held to be exempt under section 10(34), it cannot be brought to taxation under section 11 of the Act, and the rejection of the said claim is the subject matter of assessee s appeal before the CIT(A). Clearly, what was being directed by the learned Commissioner was already done by the Assessing Officer, and, therefore, these directions clearly show that there was a clear and glaring non- application of mind to even undisputed material facts of the case. We, therefore, cannot approve justification of the subject assessment order being held to be erroneous and prejudicial to the interests of the revenue for this reason as well. No other reason is pointed out to us. In view of the detailed reasons set out above, as also bearing in mind the entirety of the case, we hold the impugned revision order as devoid of legally sustainable merits. We, therefore, quash the impugned revision order. Respectfully following the views so taken, we hold that the impugned revision order is devoid of any legally sustainable merits. Accordingly, we hereby quash the impugned revision order - Decided in favour of assessee.
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2020 (12) TMI 1193
TP Adjustment - Comparable selection - Geometric Software Solutions Co. Limited, Bodhtree Consulting Limited, Flextronics Software Systems Limited (Seg.) and Tata Elxsi Limited (Seg.) - HELD THAT:- All the four companies referred above were considered by co-ordinate bench in the case of Sharp Software Development India P. Ltd. [ 2017 (1) TMI 1734 - ITAT BANGALORE] and they have been held to be not good comparable companies. Accordingly, following the decision rendered by the co-ordinate bench in the case of Sharp Software Development India P. Ltd. (supra), we direct exclusion of four companies cited above Computation of book profit u/s. 115JB - A.O. took the view that the Provision for bonus is a contingent liability and hence, the same is required to be added to the net profit for the purpose of computing book profit u/s. 115JB - HELD THAT:- We notice that the nature of liability in respect of provision for bonus was examined by Chennai bench of Tribunal in the case of ACIT Vs. Sun Paper Mills Ltd. [ 2011 (7) TMI 1372 - ITAT CHENNAI] - The above said decision was rendered by Chennai Bench of Tribunal in the context of Section 115JB only. The Ld A.R. also submitted that the assessee that the assessee has actually paid the bonus in the succeeding year. Accordingly, we hold that the provision for bonus created by the assessee is an ascertained liability. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to exclude it from book profit. Disallowance u/s. 14A - A.O. computed the disallowance by applying rule 8D(2)(iii) of I.T. Rules - HELD THAT:- Since the provisions of Rule 8D has been held to be prospective in nature, i.e., from AY 2008-09 onwards, the tax authorities are not justified in applying the same to the assessment year under consideration. However, the provisions of sec. 14A shall apply to the exempt income. Hence the disallowance u/s. 14A should be made on a reasonable basis. Hon'ble Bombay High Court, in the case of Godrej Agrovet Ltd. [ 2014 (8) TMI 457 - BOMBAY HIGH COURT] has upheld disallowance of 2% of the dividend income to meet the requirements of sec. 14A prior to insertion of Rule 8D. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to restrict the disallowance u/s. 14A to 2% of the exempt dividend income.
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2020 (12) TMI 1192
TDS u/s 195 - interest income accrued in the hands of the foreign entity - Interest was waived later - Liability to deduct TDS on accrual basis - demand u/s. 201(1) and 201(1A) - HELD THAT:- Section 195 specifies that taxes will have to be deducted either at the time of credit of such income in the account of the payee or at the time of payment thereof in cash or any other mode. In the case of the assessee there is no interest credited to the payee's account and there was no payment made as per books of account. No expenditure was claimed towards interest payable. In the light of these facts, we find that the provisions of section 195 is not applicable. As per the terms of agreement, the interest for the F.Y. 2010-11 was required to be credited on 30.04.2011 and during this period, there was no interest required to be credited also. There was no expenditure accrued during the previous year and also claimed and hence, the provisions of section 195 of the Act has no application. The interest payable was eventually waived, therefore, the assessee had not paid any interest. Since no interest was paid or claimed as expenditure, the provisions of section 195 of the Act cannot be applied. As decided in the case of CIT vs. Kalyani Steels Ltd [ 2018 (5) TMI 152 - KARNATAKA HIGH COURT] wherein it was held that if there is no income embedded in a payment there is no tax deductible at source. In the case of the assessee neither any interest is paid nor provided for in the books as payable. Further, an amount which will not be included in the total income of a person cannot be considered as income for the purpose of deduction of tax at source at all. The purpose of deduction of tax at source is not to collect a sum which is not a tax levied under the Act, it is to facilitate the collection of tax lawfully leviable under the Act. For the aforesaid reasons, we hold that the liability to deduct tax did not arise in the year under consideration. Whether the order passed u/s. 201(1) and 201(1A) of the Act for the assessment year 2011-12, was barred by limitation? - In the instant case, the financial year concerned is 2010-11 and notice for initiating proceedings u/s. 201(1)/201(1A) was issued on 19.03.2018. The orders u/s. 201(1)/201(1A) of the I.T. Act was finally passed on 31.03.2018, which is seven years from the end of the financial year. Therefore, it cannot be stated in facts of this case, the order u/s. 201(1)/201(1A) was passed within a reasonable time, going by the dictum laid down by the judicial pronouncement mentioned supra and the prescription of limitation mentioned u/s. 201(3) and (4) of the I.T. Act. Similar view was taken in the case of M/s. U.S. Technology Resources (P) Ltd. [ 2018 (4) TMI 991 - ITAT COCHIN] wherein the present Accountant Member was the co-author of the said order. In view of the aforesaid reasoning, we hold that the order passed u/s. 201(1)/201(1A) of the I.T. Act was barred by limitation in the facts and circumstances of the case.
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2020 (12) TMI 1191
TP Adjustment - comparable selection - HELD THAT:- Persistent Systems Limited - As segmental details were not available and it cannot be included in the list of comparables. Accordingly, we direct the TPO/Assessing Officer to exclude the company from the list of comparables. Sasken Communication Technologies Limited - As considered as not comparable in the case of LG Software India Pvt. Ltd. [ 2020 (8) TMI 832 - ITAT BANGALORE] in the Assessment Year 2011-12 on the reason that the company is functionally distinguishable to the assessee's company since Sasken Communication Technologies is dealing with the Media Products and R D activities with no break up of segmental information. Accordingly, we direct the TPO/Assessing Officer to exclude this company from the list of comparables. Evoke Technologies Limited - When both the Assessee and the revenue seek inclusion of this company, there was no valid basis for the DRP to suo motto exclude this company from the list of comparable companies. In the decision cited STERLING COMMERCE SOLUTIONS INDIA PRIVATE LTD. [ 2020 (2) TMI 1279 - ITAT BANGALORE] such as the Assessee, this company was held to be a valid comparable company and included in the list of comparable companies. We therefore direct inclusion of this company in the list of comparable companies.
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2020 (12) TMI 1190
Addition on account of buy back/prepayment of foreign currency convertible bonds (FCCBs) at discount - The assessee had availed Foreign Currency Convertible Bonds (FCCBs) from Europeon Union aggregating US $36 millions - Reason to make the addition is that FCCBs were utilised in increasing the depreciable asset of the assessee company - HELD THAT:- The assessee satisfied the conditions of RBI to buy-back FCCBs. The assessee also proved on record that all the conditions of RBI in this regard have been made by assessee company. Section 41(1) of the I.T. Act would not apply because the amount of FCCBs was not allowed as expenditure or trading liability in earlier year - no addition could be made under section 28(iv) - The assessee is in manufacturing business and has admittedly utilised the FCCBs by increasing the asset of the assessee company and most of them being depreciable asset which fact is also mentioned by the A.O. in the assessment order. Since the FCCBs were raised to use the proceeds for setting-up of new project and this fact is admitted by the A.O. in the assessment order, therefore, assessee used the loan to purchase the capital asset for the company. ITAT, Delhi E-Bench, Delhi in the case of M/s. OK Play India Ltd., [ 2020 (2) TMI 416 - ITAT DELHI] considering the Judgment of the jurisdictional Delhi High Court in the case of Logitronics P. Ltd., vs., CIT ( 2011 (2) TMI 12 - DELHI HIGH COURT] and Judgment of Hon ble Supreme Court in the case of CIT vs.Mahindra Mahindra Ltd., (supra), decided the identical issue in favour of the assessee [ 2003 (1) TMI 71 - BOMBAY HIGH COURT] . Disallowance of depreciation - enhanced cost on account of exchange fluctuation in respect of assets acquired in India - HELD THAT:- Assessee purchased the machinery in India from the foreign funds through FCCBs which fact is not disputed by the authorities below. It is, therefore, clear that though Section 43A apply to the assets acquired from Abroad, still the A.O. without justification applied Section 43A for making the disallowance of depreciation against the assessee. Section 43A thus could not apply in the case of the assessee which is also held by various Benches of the Tribunal in the decisions quoted above. Accounting Standard-11 would also apply in the case of the assessee. The assessee has also explained that Companies Amendment Rules also apply to the facts of the case because option is given to assessee and it provided Where long term foreign currency monetary items relates to acquisition of depreciable capital asset, the same shall be added/deducted from the cost of the asset and shall be depreciated accordingly over the balance life of the asset. . It is not in dispute that assessee followed AS-11 regularly.In A.Y. 2010-2011 the Ld. CIT(A) allowed similar claim of the assessee, but, the Department did not file any appeal against the same Order. No infirmity in the Order of the Ld. CIT(A) in following the same. It may also be noted here that wherever there was an exchange gain to the assessee, the same was reduced from the WDV and claim was made accordingly, therefore, assessee is following the AS-11 consistently and as such the same should not have been disputed by the authorities below. The Ld. D.R. has not pointed-out any infirmity in the Order of the Ld. CIT(A) in allowing the depreciation to the assessee as per Law. Addition of returned loss of the exempted unit u/s 10B - HELD THAT:- When the Tribunal has allowed similar claim of assessee in preceding A.Y. 2008-2009 and ultimately in group appeals, the Hon ble Supreme Court has allowed the claim of assessee, the issue is covered by the aforesaid decisions in favour of the assessee which fact is also accepted by the Ld. D.R. Therefore, there is no infirmity in the Order of the Ld. CIT(A) in allowing the claim of assessee. Addition to the book profit under section 115JB under section 14A - HELD THAT:- As decided in VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI] we answer the question referred to us in favour of assessee by holding that the computation under clause( f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income-tax Rules, 1962 Disallowance u/s 14A - HELD THAT:- In the case of Joint Investments Pvt. Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] the Hon ble Delhi High Court held that by no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure incurred by assessee in relation to the tax exempt income. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. It is, therefore, well settled Law that disallowance cannot exceed the exempt income. We, therefore, set aside the Orders of the authorities below and direct the A.O. to restrict the disallowance to ₹ 2,37,896/- only.
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2020 (12) TMI 1189
TP Adjustment - selecting the tested party for the purpose of applying the TNMM - Comparable selection - HELD THAT:- While selecting the tested party for the purpose of applying the TNMM, the functional profile of the transacting entities is required to be taken into consideration and the entity having simpler functional profile i.e. the entity not assuming significant risks and employing non-routine intangibles should be selected as the tested party. We note that the assessee s objection being selected as a tested party were not dealt in the proper perspective by the Ld. CIT (A) and, therefore, this issue needs re-examination by the Ld. CIT (A). Comparable selection - TPO has selected 99 comparables without actually conducting FAR analysis in respect of each comparable and has undertaken the exercise of selection without applying any quantitative and qualitative filters. TPO has also not assigned any reason for the selection of these comparables and the Ld. CIT (A) has also dismissed the assessee s objection against selection of these comparables without assigning any reason except by making general observations like that the data provided by the assessee was insufficient, the evidences were sketchy and that quantitative details were not available. We are not in agreement with the summery dismissal of the objections of the assessee in this regard. Contention of the department that relevant details were not filed is wholly incorrect as we have gone through the voluminous evidences and data supplied by the assessee before the TPO as well as the Ld. CIT (A) in this regard. In a such situation, it is our considered opinion that the entire transfer pricing exercise needs to be done afresh by the TPO and, therefore, we restore the issue of transfer pricing adjustment to the file of the TPO for fresh analysis and verification for deciding the issue afresh after duly considering the detailed workings, arguments and evidences filed earlier by the assessee in this regard. The TPO is also directed to give proper opportunity to the assessee to present its case prior to passing a detailed order as per provision of law.
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2020 (12) TMI 1188
Revision u/s 263 - Unexplained cash investment u/s 69 - Revision of assessment based on order of Settlement Commission - AO treated the cash loan given by the assessee as 'On Money' given to the builder for the purchase of flat and accordingly, AO made the additions - Builder Ahuja Group has accepted the unaccounted nature of the transaction before Settlement Commission - HELD THAT:- From the order passed u/s 263 of the Act, we notice that Ld. PCIT is trying to review the assessment based on order of Settlement Commission which was passed on 26.06.18 and coming to a new conclusion based on new information which is different from the view taken by the AO at the time of passing assessment order. As per the provision of section 263(1) Explanation-1(C), the order of the AO which was a special matter of any appeal before Commissioner, powers of the PCIT under this sub-section only to the matter which has not been considered and not decided in the appeal. PCIT has no right to review the order which was subject matter of appeal before Ld. CIT(A) and we notice that the issue which is challenged before Ld. CIT(A) is the same issue in which Ld. PCIT has reviewed u/s 263 PCIT has no power to review the order passed u/s 143(3) and the same order was appealed and adjudicated u/s 254 of the Act. Therefore, we are in agreement with the submission of assessee and we quash the order passed u/s 263 of the Act without going into any merits of the case since Ld. CIT(A) has already considered the merits of this case and passed an order in this regard. Accordingly, the grounds raised by the assessee in this regard are allowed. PCIT has initiated the proceedings u/s 263 of the Act and treated the order passed by AO u/s 153C r.w.s. 143(3) of the Act for the AY 2014-15 and 2015-16. We notice that the issue under consideration is exactly similar to the issue raised in Assessment Year 2016-17. PCIT has reviewed the assessment order which was passed on 11.12.17. It is fact on record that search and seizure operation was initiated on 25.06.15 and assessment orders under consideration for Assessment Year 2014-15 and 2015-16 were assessed u/s 153C and combined order for all the assessments including Assessment Year 2016-17 were passed on the same date 11.12.17. Therefore, in our considered view, AO has considered the facts on records and taken a view on the transactions with M/s. Ahuja Group in Assessment Year 2016-17 and also made the additions in Assessment Year 2016-17 after analyzing the same sets of documents which was reviewed by Ld. PCIT now. Therefore, Ld. PCIT cannot review the order which was already verified and investigated by AO at the time of assessment and the same order which was investigated on coordinated basis, Ld. PCIT cannot review and cannot take a different view. - PCIT has not investigated this issue himself and not offered any cross examination to the assessee - Decided in favour of assessee.
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2020 (12) TMI 1187
Revision u/s 263 - Unexplained investment in the residential property - HELD THAT:- When the Assessing Officer adopts one of the course permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the Ld. CIT does not agree, it cannot be treated as an order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law. Reverting to the facts of the present case the AO has called for necessary details regarding the investment source in the said residential property and the assessee in their letter dt. 29.06.2016 received by the Department on 01-07-2016 has replied to all such queries and after such examination and enquiry only the AO has passed the assessment order, when investigation was done by the AO details/evidences regarding the house property were called for in such situation the order of the AO is not erroneous. Once the AO has taken a view after enquiry and the Ld. Pr. CIT is not agreeable to that view of the AO the assessment order cannot be treated as an order prejudicial to the interest of the revenue. That further the Ld. Pr. CIT has not specifically with evidences shown the reasons why the order of the AO is erroneous and prejudicial to the interest of the revenue. There is no satisfaction arrived at before assuming revisional jurisdiction by the Ld. Pr.CIT, no reasons have been enumerated in his order showing any nexus between his satisfaction arrived at and the assessment order being erroneous so as to be prejudicial to the interest of the revenue. Order passed u/s. 263 of the Act by the Ld. Pr. CIT in respect of both the assessee is arbitrary, ambiguous bad in law and liable to be quashed - Decided in favour of assessee.
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2020 (12) TMI 1186
Income from salary - addition being the amount of salary refunded to the employer company - Double addition - appellant was working as Whole Time Director (WTD) with Sun Pharma Advanced Research Company Ltd. (SPARCL) and his remuneration was fixed at maximum salary of ₹ 3,50,00,000/- in AGM - HELD THAT:- Since there was limit for payment of remuneration to the whole time director as per the Company Act, 1956, therefore, the company has made an application to the Ministry of Corporate Affairs, Govt. of India for approving the salary of the whole time director as per the resolution passed in the annual general meeting dated 31st July, 2012. Central Government has approved the salary of the whole time director at a lesser amount. Thereafter, the company had made second application to the Central Government to approve the excess salary, however, no response was received from the Central Government. Assessee was asked to refund the excess salary of ₹ 2.14 crores out of ₹ 1.99 crores pertained to the year under consideration. The assessee has refunded the excess amount of salary to the company and filed revised return of income showing the actual amount of salary received as approved by the Ministry of Corporate Affairs, Govt. of India. However, the Assessing Officer has taxed the excess amount as salary income on the ground that the amount was received by the assessee. The ld. CIT(A) has deleted the addition holding that refund of salary by the assessee was not voluntary but was to comply with the legal requirements of law, therefore, the same cannot be considered as income assessable to tax In the case of the assessee, the Central Government had decided the remuneration according to the provisions of Companies Act, 1956 and the refund of the salary was not voluntary but was to comply with the legal requirement of law. We find that the facts and issue involved in the case of the assessee are similar to the case of the CIT Vs. Raghunath Murti [ 2008 (8) TMI 996 - DELHI HIGH COURT] . We consider that the refund was made merely with a view to comply with the provisions of Companies Act, 1956, therefore, we do not find any infirmity in the decision of ld. CIT(A). Accordingly, the appeal of the Revenue is dismissed.
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2020 (12) TMI 1185
Estimation of income - bogus purchases - CIT(A) restricting the disallowance of purchases to 12.5% as against 15% done by the AO - HELD THAT:- CIT(A) considered this aspect of the matter elaborately with reference to the submissions of the assessee and the averments in the Assessment Order and following case of CIT v. Simit P. Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] correctly restricted the disallowance to 12.5% of the non-genuine purchases. Appeal of the Revenue is dismissed.
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2020 (12) TMI 1184
Deduction u/s 10A - export revenue subsidy, Miscellaneous income and sundry balances written off as not derived from the business carried on by the Appellant and hence not eligible for deduction - HELD THAT:- As relying on M/S. PRIYANKA GEMS [ 2014 (3) TMI 938 - GUJARAT HIGH COURT] and M/S. GEM PLUS JEWELLERY INDIA LTD. [ 2010 (6) TMI 65 - BOMBAY HIGH COURT] once export is made, the profits/losses may arise due to variety of reasons from such export activity. Noticeably, sub-section (4) to Section 10A of the Act explicitly explains the term 'profits derived from the export of particles or things' to mean amount which bears to the 'profits of the business of the undertaking', the same proportion as the export turnover bears to the total turnover of the business carried on by the undertaking. What is required to be determined is 'profits of the business undertaking'. In short, the profits derived from export have been equated with business profits of the undertaking in view of the statutory formula provided in Section 10A(4) of the Act. In view of the statutory formula available for determination of quantum of deduction, the expression 'derived from' used in Section 10A(1) fades into insignificance and the quantum of deduction is required to be determined as per the aforesaid formula provided in Section 10A(4) - considerable weight in the plea advanced on behalf of the assessee for eligibility of deduction of the incidental profits alongwith the export profits for the purposes of Section 10A of the Act. We thus set aside the order of the CIT(A) on the point. The AO is directed to compute the quantum of deduction under s. 10A of the Act in the light of formula provided in Section 10A(4) of the Act - Appeal of the assessee is allowed.
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2020 (12) TMI 1183
Addition to closing stock towards unutilized CENVAT credit u/s 145A - HELD THAT:- The availability of CENVAT credit is dependent on the extent of utilization of credit against the liability arising to an assessee on goods manufactured and has no co-relation to the closing stock. The Excise Duty component on closing stock is thus required to ascertained independently as per quantum of stock. CIT (A) has rightly approached the issue on determination of exact liability by either inclusive or exclusive method. No justification in the action of the CIT (A) in dismissing the plea of the assessee altogether on the point. CIT (A), in our view, ought to have given a reasonable opportunity to the assessee for substantiating its claim that method of accounting followed by the assessee does not impinge upon the provisions of Section 145A of the Act, in tandem with the action of the CIT (A) in AY 2010-11. We therefore consider it expedient to set aside the direction of the CIT (A) on the issue and remit the issue to the file of the AO for suitable verification of facts afresh. The AO may satisfy itself that while the assessee follows exclusive method of accounting towards purchase costs, such method does not impact the ultimate profit in any manner. Needless to say, the addition towards Excise Duty, VAT etc. will not be permissible by resorting to section 145A of the Act where the action of the assessee is found to be tax neutral. Addition on account of short receipts shown as per Form 26AS - HELD THAT:- In the absence of any cogent explanation offered on behalf of the assessee either before the CIT (A) or before us towards impugned difference detected by Revenue from the annual statement in Form 26AS, we decline to interfere with the order of CIT (A) in this regard. Disallowance towards reimbursement of travelling expenses paid to foreign parties without deduction tax at source - HELD THAT:- A contradictory version is coming to the fore. Hence, we consider it expedient that the issue is remitted back to the file of the AO for enabling the assessee to establish that the aforesaid amount of ₹ 17,21,392/- represents actual reimbursement of travelling expenses claimed to have been paid to foreign parties without any profit element embedded in it. AO shall provide reasonable opportunity to the assessee to make suitable representations and submissions to establish its case. Needless to say that a payment in the nature of a mere reimbursement of actual expenses would not be covered by the obligations cast under s. 195 of the Act in the absence of any chargeable income annexed to such payment and consequently Section 40(a)(i) would not be attracted in the light of decision in the case of CIT vs. Gujarat Narmada Valley Fertilizers Co. Ltd. [ 2014 (4) TMI 235 - GUJARAT HIGH COURT] . Hence, no part of amount in the nature of actual reimbursement can be disallowed owing to non-deduction of tax. TDS u/s 195 - disallowance on account of training expenses - HELD THAT- AO noticed that the training expenses is in the nature of fee for technical service and is covered by obligations of deduction of tax as stipulated u/s 195 of the Act. No reasons could be assigned for non-compliance of Section 195 of the Act. In the absence of any satisfactory explanation for non-deduction of TDS on such remittance, the expenses incurred were disallowed with the aid of Section 40(a)(i) of the Act. The assessee has failed to substantiate its action for non-deduction either before the CIT (A) or before the Tribunal with any reasonings. We thus decline to interfere with the action of the AO.
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2020 (12) TMI 1182
Bogus LTCG - Addition u/s 68 - HELD THAT:- The issue is squarely covered by the decision of co-ordinate Bench in the case of Mukesh B. Sharma [ 2019 (5) TMI 1845 - ITAT MUMBAI] as held CIT-A was not justified in upholding the action of the ld AO in bringing the sale proceeds of shares of GIFL [Global Infratech and Finance Ltd.] as unexplained income of the assessee treating the same as just an accommodation entry. Consequentially, the addition made towards commission on such accommodation entry at the rate of 5% is also hereby directed to be deleted. - Decided in favour of assessee.
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2020 (12) TMI 1181
Disallowance on account of prior period expenses - HELD THAT:- In the present case all the expenses claimed by the assessee under the head prior period expenses do not represent the expenses. As such the 2 items namely interest income and rental income represent the income which was offered to tax in the earlier years and written off in the year under consideration as claimed by the assessee which in our considered view represent the bad debts - assessee cannot be allowed deduction for these items as prior period expenses. But the same can be claimed as bad debts under the provisions of section 36(1)(vii). On perusal of the documents filed by the assessee it is not decipherable whether the impugned amount of bad debts were offered to tax in the earlier years and the same were written off in the books of accounts in the current year as on 31-3-2006 as contended by the assessee. Similarly, it is also not clear that the assessee has not claimed such interest as bad debt along with the bad debts of the debtors as apprehended by the learned CIT(A) in his order dated 4th June 2015. On perusal of the financial statements prepared under the companies Act for 11 months, the assessee has shown prior period adjustments - where the assessee has adopted a different period under the companies Act than the previous year defined under the Income Tax Act, it is to file separate financial statements under the Income Tax Act. But we note that the assessee has not filed such financial statements prepared under the Income Tax Act. Thus in the absence of sufficient documentary evidence by the assessee even in the set-aside proceedings, we are not inclined to disturb the finding of the authorities below. Reversal of the rental income - Assessee has justified its claim based on the documentary evidence that it has reversed the entry in respect of accounts of the rental income which was offered to tax. Accordingly, we find that the conditions as specified under section 36(1)(vii) of the Act have been duly satisfied. Accordingly, we reverse the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Advance given to the sales representative - Though it is not a prior period expenses/adjustment, but represent the loss which has been incurred in the course of the business. Once the assessee has written of any loss in the books of accounts which was incurred in the course of the business, we are of the view that such loss is eligible for deduction. Accordingly, we reverse the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Thus the ground of appeal of the assessee is partly allowed.
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Corporate Laws
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2020 (12) TMI 1180
Approval of Scheme of Arrangement by way of Amalgamation - section 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions regarding holding and convening of various meeting issued - various directions regarding issuance of various meetings issued. The scheme is approved - Application allowed.
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2020 (12) TMI 1179
Restoration of the name of the Company in the Register maintained by the Registrar of Companies - Section 252 (3) of the Companies Act, 2013 - HELD THAT:- The provisions pertaining to restoration of the name of the company has been provided in Section 252 of the Companies Act, 2013 which includes that, if it is just and equitable to restore the name of the company in the Registrar of Companies, it may direct the RoC to restore the name in its Register - The appellant has been able to satisfy this Bench that it has certain assets which necessitate and justify restoration of its name in the Register of Companies. A step as stringent as what has been taken at least requires an opportunity to the appellant to take remedial measures. Merely to disallow restoration on grounds of its failure to file annual returns would neither be just nor equitable. The restoration of the Appellant Company s name in the Register will be subject to their filing all outstanding documents for the defaulting years as required by law and completion of all formalities, including payment of any late fee or other charges which are leviable by the respondent for the late filing of statutory returns - Appeal allowed.
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2020 (12) TMI 1178
Transmission of shares made by the Applicants - Section 58 of Companies Act - HELD THAT:- The Petitioners are admittedly natural legal heirs of deceased shareholder and have submitted representation/ request to the Company along with requisite documents and the Company failed to act upon, forcing the Applicants to approach the Tribunal bearing the cost of litigation. Section 58 clearly mandates the Company to act within stipulated period. However, the Company failed to do so. Since the issue is mere transmission of un-disputed shares of mother of the Petitioners, and it do not involve any contentious issues to be adjudicated upon by the Tribunal, it would be just and proper to direct the Company to take appropriate action for transmission of shares in question to the Applicants. And no prejudice would be caused to the Company to accede the request of Applicants, their inaction is illegal and against the said provision. The Contention of learned counsel for the Respondent that the Applicants have not submitted Will of deceased share holder is not tenable in the instant case. The Respondent Company is directed to take appropriate action for transmission of shares held in the name of Mrs. Parvathamma to the Petitioners, within a period 3 (three) weeks from today - petition allowed.
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2020 (12) TMI 1177
Approval of scheme of Merger by Absorption - section 230-232 of Companies Act - HELD THAT:- This Bench hereby dispensed with the meeting of unsecured Creditors of Applicant Company No. 1. further, this Bench directs to the Applicant No. 1 to issue notice to all the Unsecured Creditors Under Section 230(3) of Companies Act, 2013 with such direction that they may submit their representation, if any, to the Tribunal and copies of such representation shall simultaneously be served upon the respective Applicant No. 1. The Applicant Companies shall serve notice upon the Official Liquidator, High Court, Bombay pursuant to Section 230(5) of the Companies Act, 2013 read with Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The Tribunal hereby appoint a Chartered Account from the Panel of Official Liquidator/MCA to scrutinize the books of accounts of the Applicant No. 1 and Applicant No. 2 and submit its report to the Tribunal as Proposed or suggested by the office of the Official Liquidator. The scheme is approved - application allowed.
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2020 (12) TMI 1176
Oppression and mismanagement - fraudulent reduction of the First Respondent shareholding in the First Appellant / Company - Waiver of compliance of Section 244(1) of the Companies Act - injury caused to an affected person by the concerned as visualised in section 241 of the Companies Act, 2013 - time limit - Jurisdiction of Civil Court - Further issue of share capital - Agents - principles of res judicata - HELD THAT:- The concept of oppression is larger than the idea of legal rights and indeed, the term interests is wider than rights. As a matter of fact, the law does not define an oppressive act . Whether an act is oppressive one or not is fundamentally a question of fact. The law relating to oppression is cemented on the principles of equity and fair play as against the strict compliance of law - A Company is merely an abstract of Law. It cannot be gainsaid that right to complain about oppression and mismanagement lies with the members of a company. No wonder fairness and probity rather than legality are the key factors to be taken into consideration by a Tribunal in case of oppression. What kind of oppression or prejudice or unfairness is caused in a given case will depend on the injury caused to an affected person by the concerned as visualised in section 241 of the Companies Act, 2013? - HELD THAT:- Undoubtedly, the burden is on the petitioner to prove oppression or mismanagement and the Tribunal is to consider the entire material on record and to arrive at a final conclusion. The Rights Issue can be examined by the Tribunal in a petition u/s 241 of the Companies Act, 2013. Also, that, in law the Tribunal is to ascertain when the right to sue / to file an application accrued to the petitioner. There is no impediment for the Tribunal to consider the preliminary objections raised by a party at a later stage of the main proceedings. If maintainability is a triable issue, the acceptance of a petition or rejection of the same has to be decided along with the issues raised, to be heard with the merits of the case in the considered opinion of this Tribunal. Time limit - HELD THAT:- Although for filing a petition no time limit is specified under Section 241 of the Companies Act relating to oppression and mismanagement , the residuary Article 113 of the Limitation Act, 1963 concerning when the right to sue accrues is to be borne in mind. Jurisdiction of Civil Court - HELD THAT:- Section 9 of the Civil Procedure Code confers jurisdiction upon the civil courts to decide all disputes of civil nature unless the same is prohibited under a statute either expressly or by necessary implication. In short, one cannot infer the bar of civil courts jurisdiction and in this regard a strict interpretation is required in regard to a provision seeking to bar the jurisdiction of a civil code - this Tribunal worth recalls and recollects the decision of Hon ble Supreme Court in DHULABHAI VERSUS STATE OF MADHYA PRADESH AND ANOTHER [ 1968 (4) TMI 64 - SUPREME COURT ] wherein it is observed that where under the scheme of any particular Act, there is no express exclusion of jurisdiction it becomes necessary to examine the scheme of the Act to find out whether it is necessary to spell out intendment to exclude the jurisdiction of the Civil Court. Such exclusion is not readily to be inferred unless the conditions which are mentioned in the said judgement are satisfied. Further issue of share capital - HELD THAT:- Section 62 of the Companies Act, 2013 speaks of Further issue of share capital . In fact, the Rights Issue is not defined under the Companies Act, 2013. The power to issue further shares ought to be exercised for the benefit of the Company, notwithstanding the fact that the Increase of Capital is an internal administration matter of the Company. Continuing further, whether the decision of the Board of Directors to increase share capital by way of issuing rights is in the interest of the company or bonafide or otherwise can be ascertained from each and individual set of attendant facts of a given case. Agents - HELD THAT:- It is an axiomatic principle in law that the Directors of a Company are just Agents of the Company and they are quite competent to decide the Agency at his / her own end. In fact, Section 168 of the Companies Act, 2013 pertains to Resignation of director . Res Judicata - HELD THAT:- The aspect of Res Judicata is inhibition against the Court / Tribunal and it is certainly a mixed question of facts and law, to be specifically averred in one s pleading before the competent fora. In fact, Res Judicata precludes a person from pleading the same thing in successive litigation. The burden to establish the plea of Res Judicata is on the person to raises such plea. No wonder, the doctrine of Res Judicata is rested on the principles of equity, good conscience and justice applies to all judicial proceedings equally before the Tribunals - In a petition under Section 241 of the Companies Act, 2013, the petitioner is to furnish (i) relevant materials (ii) to furnish the figures (iii) the allegations are to be proved. The power of a Tribunal under Section 241 of the Companies Act, 2013 is to put an end to oppression and mismanagement on the part of controlling shareholders to suppress mischief. An individual who approaches the Tribunal alleging oppression must come before it with utmost clean hands and in a bonafide manner. Waiver of requirements to file a petition under section 241 of Companies Act - HELD THAT:- The interest of an applicant in a company whether it is substantial or significant, the issues raised in the petition u/s 241 of the Companies Act, 2013 is the appropriate / competent jurisdiction to deal with them by the Tribunal, and whether the cause / case projected in the petition is of primordial importance to an applicant or to the company or to any class of members etc. are some of the pertinent factors to be taken note of for projecting an application for waiver of the requirements under section 244 of the Companies Act, 2013 - It cannot be forgotten that in genuine and hardship cases, the discretion to waive the conditions specified in Section 244(b) of the Companies Act can be pressed into service. The Tribunal, has exercised its discretion and opined that a meritorious litigation cannot be thrown at threshold without examining the merits of the case and further observed that the First Respondent / Petitioner had made out a prima facie case to entertain the main company petition for its final adjudication - Appeal dismissed.
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Insolvency & Bankruptcy
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2020 (12) TMI 1175
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Hon'ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT] , has inter alia, held that I B Code, 2016 is not intended to be substitute to a recovery forum. The Code cannot be used prematurely or for extraneous considerations or reasons as a substitute for debt enforcement procedures. It is also not the purpose of the Code to put viable and profit making entities into insolvency for the recovery of debt. On perusal of the Invoices annexed to the Petition, it is seen that the invoices annexed are from 27.10.2014 to 10.08.2018. However, the amounts that fall within the period of limitation are approximately a sum of ₹ 4,89,849/- as the invoices from the period 06.02.2017 have to be considered for the purposes of calculating the amounts due. Further, the Debit Note dated 21.04.2017 annexed to the Statement of Objections for ₹ 29,02,650/- with a statement that the said debit note is issued on account of Towards Debit for Rejection of cotton Trousers processed during the year 2015 and 2016 due to Silicon Stains - It is also seen that the two parties were continuously transacting between themselves till August 2018. Supplies were being made and part payments were being received, thereon from time to time. This means that the Petition filed by the Operational Creditor is only for the recovery of dues on the outstanding bills, that too on account of the dispute on the quality of goods supplied. This forum cannot be used for recovery On perusal of the audited balance sheet of the Corporate Debtor Company, it is clear that it is an ongoing concern with substantial turnover and therefore pushing a company with such revenue into CIRP will be an act contrary to the objects of the code. The Code aims at resolving the insolvency of a corporate debtor through the CIRP, and cannot be used done if the Corporate Debtor/ Respondent Company in question is not insolvent. This also makes it clear that when the Petitioner has filed this petition not to aid in resolving its debt and insolvency but with an intention to recover its dues. We are very clear that the intent and purpose this Tribunal is not recovery, and when no case of insolvency is made out against the Respondent Corporate Debtor, the provisions of section 9 of the Code cannot be attracted. Hence, in the presence of a pre-existing dispute in terms of the Code, 2016 before the issuance of Demand Notice dated 27.12.2019, no case is made out for admitting the Petition against a solvent and on-going concern. This is merely a Petition for recovery, and falls outside the ambit and objectives of the Code, 2016. Further, the Petitioner has claimed amounts due from 2014 which are clearly barred by limitation. However, this order under the IBC shall not come in the way of the Petitioner to seek recovery of dues, if any, in any other forum - Petition dismissed.
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2020 (12) TMI 1174
Maintainability of application - initiation of CIRP - Corporate Debtor has committed default in paying the financial debt - Existence of debt and default or not - HELD THAT:- In this case, it is not in dispute that Corporate Debtor has committed default in paying the debt in entirety. From the documents produced by the Financial Creditor, it is apparent that as per revised payment schedule arrived at after restructuring of Term Loan, the amount is payable in 2015-2016, 2016-2017, 2017-2018 2018-2019. Further, record of default as per Information Utility Report dated 24.08.2020 has also been produced by the Financial Creditor. These facts clearly establish that the debt is due and payable both in law and in fact. It is now well settled law that in the proceeding under Section 7 of the Insolvency and Bankruptcy Code, 20, Adjudicating Authority has to see only two relevant facts (i) whether debt more than ₹ 1 lakh before 24.03.2020 in case of default prior to that date is due and payable by the Corporate Debtor (ii) whether the Corporate Debtor committed default in paying the debt. In this case, both facts have been established by evidence on record. The Corporate Debtor is required to be admitted in Corporate Insolvency Resolution Process as per Section 7 of the Insolvency and Bankruptcy Code, 2016 - Application admitted - moratorium declared.
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2020 (12) TMI 1173
Maintainability of application - initiation if CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- On perusal of the affidavit in reply filed by the Respondent, it is found that no claim was received by the Liquidator from the Applicant till the last date of submission of claims i.e. 31.10.2019 and admittedly, the Applicant has filed its claim only on 22.05.2020 i.e. after more than 6 months from the last date of filing of the claims. The Respondent also pointed out that said claim is time barred as the Gas Sale Transmission Agreement between the Applicant and the Corporate Debtor was from 01.01.2011 to 31.12.2015. On perusal of the record, it is found that the Applicant has put its claim before the Liquidator, for the first time, only on 22.05.2020 whereas the last date submission of claims was 31.10.2019 - the application is not allowed and is dismissed.
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Central Excise
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2020 (12) TMI 1172
CENVAT Credit - input services - Warranty Services - whether warranty services are part of the manufacturing and sale activity as they are required for the purpose of ensuring sale of the goods or not? - HELD THAT:- It is the Warranty Service which implies that the value is already included in the sale price of the goods. Moreover, there is no requirement in the definition of Input Service that the value is to be included in the assessable value for the purpose of Central Excise before the credit can be allowed. There is no such restriction in the definition of input service. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (12) TMI 1171
Reassessment order - input credit which was allowed in the original assessment, is now disallowed - jurisdiction - time limitation - violation of the principles of natural justice - whether the impugned order of reassessment once again raising a demand by disallowing the very same input tax credit which was disallowed in the original assessment, is tenable in law? - Section 35 of the Gujarat VAT Act, 2003 - HELD THAT:- The provisions of Section 35 of the Act, 2003 would indicate that after a dealer has been assessed under Sections 33, 34 and 35 of the Act as the case may be in any particular year, if the Commissioner has reason to believe that the the whole or any part of the taxable turnover of the dealer in respect of any period, has escaped assessment or has been under assessed or has been assessed at a rate lower than the rate at which it is assessable or wrongly been allowed any deduction therefrom, or has wrongly been allowed any tax credit therein, the Commissioner may serve a notice on the dealer and after giving an opportunity of hearing, proceed to pass appropriate order to determine the best of his judgment, the amount of tax due from the dealer. In this petition, it is the original assessment order disallowing the credit which is made the subject matter of challenge. This Court is yet to adjudicate this writ application. If ultimately the writ applicant is not successful in the Special Civil Application No.18263 of 2019, then he will have to pay the tax as assessed - the impugned reassessment order is not tenable in law as there was no scope for the authority to invoke Section 35 of the VAT Act. The impugned order of reassessment order is quashed and set aside - Application allowed.
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2020 (12) TMI 1170
Principles of Natural Justice - service of SCN - petitioner contends that the alleged show-cause notice dt.10.07.2019 was served on the petitioner by e -mail only on 16.11.2019 along with personal hearing notice - HELD THAT:- The 1st respondent was bound to taken into account the response filed by petitioner on 20.11.2019 to the show-cause notice dt.10.07.2019 issued by the 1st respondent before passing the impugned assessment order. He also ought to have considered the CST returns filed by the petitioner. Failure to do so, has vitiated the impugned order. The matter is remitted to the 1st respondent for fresh consideration; the 1st respondent is directed to provide a personal hearing to the petitioner - Petition allowed by way of remand.
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2020 (12) TMI 1169
Validity of attachment of property - recovery of arrears of property tax - petitioner requested to remove the encumbrance on the ground that she is a bonafide purchaser of the property for valuable consideration - HELD THAT:- It is very clear that the petitioner purchased the property only after obtaining encumbrance on 08.08.2014. On the date of encumbrance dated 08.08.2014, there was no attachment made by the first respondent. The petitioner purchased the property from Rajiv under sale deed dated 04.09.2014, registered as document No.2758 of 2014 in Sub Registrar's Office, Kanniyakumari District. As seen from the sale deed dated 04.09.2014, the petitioner has paid a sale consideration of ₹ 13,43,048/- for the extent of property 3.850 cents situated at Agasteeswaram Taluk, Kanniyakumari District - Admittedly, the attachment over the property was executed by the first respondent only on 06.10.2015 for the arrears of property tax payable by V.S.K.Radha Krishnan, the father of the petitioner's vendor R.Rajiv. The respondents have also not produced any iota of evidence against the petitioner before this Court that the petitioner was aware of the proceedings initiated by the first respondent against the father of the petitioner's vendor for arrears of property tax. In the case on hand, the petitioner is a bonafide purchaser and has taken the property free of all encumbrance and she has no notice either actual or constructive about the proceedings initiated by the first respondent against the vendor's father Mr.Radha Krishnan for arrears of tax. The encumbrance (Attachment) reflected in the encumbrance as on 06.10.2015, will have to be removed by the second respondent, within a period of one week from the date of receipt of a copy of this order - Petition allowed.
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2020 (12) TMI 1168
Demand of differential amount of tax due with interest and penalty - Verification of the sales transactions of the Petitioner during the year 2014-2015 - HELD THAT:- The issue decided in the case of M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [ 2017 (3) TMI 536 - MADRAS HIGH COURT] where it was held that this Court is fully convinced that the procedure adopted by the respondent, Assessing Officers in all these cases are half baked attempts, which have not yielded results and these cases are before this Court or before the Appellate Authorities and all that the Assessing Officers can record is that they have issued show cause notices or passed orders reversing the Input Tax Credit with no appreciable impact on the revenue collection. The concerned assessing officer shall issue fresh show cause notice with all required details in respect of levy of tax for mismatch invoices and the Petitioner shall be entitled to submit his explanation within the prescribed time. It is made clear that the Petitioner shall not be entitled to raise any plea of limitation when the fresh show cause notice is issued - It shall be incumbent upon the assessing officer to afford opportunity of hearing to the Petitioner following the prescribed procedure - petition allowed by way of remand.
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2020 (12) TMI 1167
Violation of principles of Natural Justice - Validity of assessment order - assessment order assailed on the ground that the said orders have been passed at the fag end of the limitation period, that too during the period when the lockdown announced by the State Government was in force - HELD THAT:- Admittedly, as can be seen from the G.O. Ms. No. 45, General Administration, dated 22.03.2020, issued by the Government of Telangana, wherein it is stated that consequent upon the Covid-19 being declared as a pandemic by the World Health Organization, the State Government, as an emergency measure to prevent and contain the spread of virus, is notifying lockdown in the entire State of Telangana with immediate effect, initially till 31 March 2020. By the said G.O issued, the Government had prescribed certain regulations and measures to be followed during the said period. The said period of lockdown was extended from time to time till the end of June, 2020. It is only thereafter, certain relaxations were given. It is not the case of the respondent authorities that the petitioners belong to the category of business entities/ undertakings whose activities were permitted by the above regulations. On the contrary, it is the case of the petitioners that the petitioners being commercial establishments, offices were required to keep their businesses closed upon issue of the above G.O by the Government of Telangana, with immediate effect. If the petitioners had not complied with the above regulation and had kept their offices functioning thereby violating the same, the petitioners were liable to be proceeded against under the provisions of Epidemics Diseases Act, 1897 and the Disaster Management Act, 2005 - Taking note of the regulation no.7 and also the consequences of violation thereof specified in regulation no.22, the petitioners cannot be expected to keep their business establishments, offices functioning after 22.03.2020. While on one hand the petitioners acted in consonance / compliance with the Government order issued to prevent and contain the spread of virus, the assessing authority on the other hand fastened the petitioners with the liability to tax by passing the impugned order of assessment, behind their back. The said action on the part of the respondent authorities cannot be upheld even though the authority may have compelling reasons to do so, having regard to the limitation to make assessment getting over - this court is of the view that the petitioners were prevented to represent themselves before their respective assessing authorities for getting the assessments completed from 22.03.2020 onwards. The impugned order of assessment passed by the respective assessment authorities would have to be considered as having been passed without affording adequate opportunity to the petitioners and as such is in violation of principles of natural justice - the matters are remitted back to the respective authority to pass orders afresh after issuing notice to the concerned petitioner - Petition allowed by way of remand.
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2020 (12) TMI 1166
Validity of assessment order - Transfer of title of goods - seeking direction to First Appellate Authority to hear appeal without insisting for pre-deposit as required under Section 62(5) of the PVAT Act - HELD THAT:- The respondent issued Form C for all the years in question and in case of doubt must have stopped as well initiate appropriate steps instead of waiting for framing assessment at fag end of limitation period. It would be harsh if petitioner is required to deposit 25% of tax, interest and penalty. Penalty imposed is 200% and it is a case of interpretation and not fraud. Keeping in mind that petitioner has prime facie case on merits, we direct the petitioner to make pre-deposit of 25% of tax and further some amount towards interest, which would make a total deposit ₹ 7.5 Crore towards the condition of pre-deposit for hearing of the three appeals for assessment years concerned. We make it clear that petitioner shall make deposit of ₹ 7.5 Crore within one month from the date of receipt of certified copy of this order and it would be in respect of Assessment years 2010-11, 2011-12 and 2012-13 - On furnishing of proof of deposit, First Appellate Authority i.e. Deputy Excise and Taxation Commissioner (Appeals) shall hear and decide appeals preferably within three (03) months - petition disposed off.
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