TMI Tax Updates - e-Newsletter
January 11, 2021

Case Laws in this Newsletter:

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

Articles

1. ANTI-PROFITEERING AUTHORITY- MATTER REMANDED TO DGAP FOR FURTHER INVESTIGATION

   By: Dr. Sanjiv Agarwal

2. NON FILING OF RETURN – FORM GSTR 3B

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. DGGI Gurugram arrests one for fraudulently availing input tax credit of ₹ 8 crore

2. Invitation of comments from public on Pre-packaged Insolvency Resolution Process under Insolvency and Bankruptcy Code, 2016

3. NITI Aayog organises Prime Minister’s Interaction with LeadingEconomists on charting the economic agenda in the post covid world

4. Sovereign Gold Bond Scheme 2020-21 (Series X) – Issue Price

5. Income Tax Department conducts searches in Kolkata

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD2/DCAP/CIR/P/2021/03 - dated 8-1-2021

Transfer of excess contribution made by Stock Exchanges from Core SGF of one Clearing Corporation to the Core SGF of another Clearing Corporation

2. SEBI/HO/IMD/DF6/CIR/P/2021/004 - dated 8-1-2021

Amendment to Regulation 20(6) of SEBI (AIF) Regulations, 2012

3. SEBI/HO/IMD/DF1/CIR/P/2021/02 - dated 8-1-2021

Monthly Reporting of Portfolio Managers

IBC

4. IBBI/CIRP/38/2021 - dated 6-1-2021

Retention of records relating to Corporate Insolvency Resolution Process

Highlights / Catch Notes

GST

• GST Law: Key Procedures for Inspection, Search, Seizure, and Arrest u/ss 69, 132, 70(1), 67(1), 137, 135.

  Case-Laws - SC : Powers of inspection, search, seizure and arrest - penalties and prosecution - validity of section 69 &132, section 70(1), section 67(1) and 69, Section 137 and section 135 of GST - There is regime of well-established remedies and procedures under the laws of criminal procedure. Revenue legislation also provides its own internal discipline. Short circuiting this should not become a ruse for flooding this court with petitions which can, should and must be addressed before the competent fora. Hence we are of the view that it would be appropriate to relegate the petitioner to the remedy of a petition under Article 226 so that this Court has the benefit of the considered view of the jurisdictional High Court. - SC
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• Contractors Seek Tax Reimbursement from VAT to GST Transition; Authority to Resolve by March 15, 2021, per 2018 Guidelines.

  Case-Laws - HC : Reimbursement of differential tax due to change of regime from VAT to GST - difficulty faced by the contractors due to change in the regime regarding works contract under GST - The petitioner shall make a comprehensive representation before the appropriate authority within two weeks from today ventilating the grievance. If such a representation is filed, the authority will consider and dispose of the same, in the light of the revised guidelines dated 10.12.2018 issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by 15.03.2021 - HC
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Income Tax

• Single Transaction Can Qualify as Business Activity Under Income Tax Law, No Series of Transactions Needed.

  Case-Laws - AT : Disallowance of business loss - Proof of commencement of business - It is well settled law that even a single transaction may constitute business as defined in section 2(13). It is not asking there should be a series of transaction. Both of purchase and the sale to constitute trade. - AT
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• Exemption for Long-Term Capital Gains Allowed: Possession Proven; Unregistered Sale Agreement Not a Barrier u/s 54F.

  Case-Laws - AT : Denial of exemption u/s 54F - LTCG - agreement of sale was not registered - though residential property is not registered but the assessee was able to prove the possession and confirmed by the builder, the exemption cannot be denied on this ground. - AT
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• Section 40A(2)(b): No Disallowance for Directors' Pay Raise as No Tax Evasion or Excessive Salary Proven.

  Case-Laws - AT : Addition u/s 40A (2) (b) - exponential increase in the Directors’ remuneration - CBDT Circular clearly states that no disallowance is to be made u/s 40A (2) in respect of payments made to relatives and sister concerns where there is no attempt to evade tax. Clearly no case of evasion of tax can be made out in the present appeal. This circular is binding on the Department and since no motive to evade tax is established and further since the AO has not pointed out any comparables to demonstrate that the salary paid to Directors was excessive, - AT
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• Assessment Reopening u/s 147 Challenged Due to Delayed Notice and Discrepancies in Department's SPA Number Records.

  Case-Laws - AT : Reopening of assessment u/s 147 - Delay in issuing notice - The speed post booking list maintained by the Department is of no use in this matter because there is discrepancy with respect to the SPA number and also the SPA numbers that followed this particular entry are not in the immediate proximity of this particular ED48...... and also that they are corrected SPA numbers with 9 numericals. - AT
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• Allocating Administrative Expenses for Tax Deductions: Section 80 IB (10) Guidelines on Projects and TDR Sales.

  Case-Laws - AT : Deduction u/s 80 IB (10) - allowable expenses to project - Since all the administrative expenses cannot be linked to the activities reasonably, it can be allocated reasonably to all the activities carried on by the assessee. We notice that assessee is currently carrying on 2 projects by name Classique and Royal and other activities i.e., sale of TDR - common administrative expenses must be allocated on all the activities carried on by the assessee therefore allocated based on gross revenue. - AT
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Indian Laws

• Dishonored Cheque by Partnership: Managing Partners Held Liable u/s 138 of Negotiable Instruments Act.

  Case-Laws - HC : Dishonor of Cheque - when an offence is alleged to have been committed by the partnership firm, every person who, at the time the offence was committed, was in charge of and was responsible to the firm for the conduct of its business as well as the firm shall be deemed to be guilty of the offence and shall be liable to be proceeded under Section 138 of the NI Act. - HC
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IBC

• Guarantees for payment defaults in product sales not financial debts u/s 5(8)(f) of Insolvency Code.

  Case-Laws - Tri : CIRP Proceedings - Operational Debts or Financial Debts - financial guarantor - The guarantee essentially was for payment against default in the sale consideration of the products agreed to be purchased respectively from Respondent Nos. 2 and 3. The guarantees being not a liability arising out of the transaction in terms of section 5(8)(f) of the Code, would not come within the purview of the financial debt. - Tri
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Service Tax

• High Court Rules Service Tax Applies to Managing Public Parking; No Exemption for Public Service Claimed by Petitioner.

  Case-Laws - HC : Levy of service tax - managing car and two wheeler parking in a public place while serving public - petitioner is rendering public services, therefore, service tax is payable. - Not entitled for exemption - HC
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Case Laws:

• GST

• 2021 (1) TMI 302
  Powers of inspection, search, seizure and arrest - penalties and prosecution - validity of section 69 132, section 70(1), section 67(1) and 69, Section 137 and section 135 of GST - right to life under Article 21 of the Constitution - HELD THAT:- The petitioners have an efficacious remedy in the form of proceedings under Article 226 of the Constitution to challenge the constitutional validity of the provisions of the statute which are placed in issue. Following this course of action is desirable, for this Court will then have the benefit of a considered view emanating from the High Court. Though the Counsel for the petitioners invokes Article 21, this is a case involving essentially a challenge to revenue legislation. Undoubtedly, the jurisdiction of this Court under Article 32 is a salutary constitutional safeguard to protect the fundamental rights of citizens. The Court must be solicitous in exercising it where a breach of fundamental human rights is in issue. But equally, whether recourse to the jurisdiction under Article 32 should be entertained in a particular case is a matter for the calibrated exercise of judicial discretion. There is regime of well-established remedies and procedures under the laws of criminal procedure. Revenue legislation also provides its own internal discipline. Short circuiting this should not become a ruse for flooding this court with petitions which can, should and must be addressed before the competent fora. Hence we are of the view that it would be appropriate to relegate the petitioner to the remedy of a petition under Article 226 so that this Court has the benefit of the considered view of the jurisdictional High Court. The petitioners must be relegated to pursue the remedies in accordance with law - Petition dismissed.

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• 2021 (1) TMI 301
  Service of notice - Validity of freezing of bank accounts of the petitioner - respondents explains that a large amount of tax evasion is suspected but notice could not be issued because of a large number of people involved and who are evading summons/information - Section 74 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The counsel for the petitioner states that once admittedly no notice exists and a year has passed since the search, there was no need for the emergent action of freezing of bank accounts. On request of the counsel for respondents, list on 11th January, 2021.

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• 2021 (1) TMI 300
  Seeking direction to respondent authorities to accept the manual GSTR 3B return from the petitioner and to process the same for the period August, 2018 to August 2019 - seeking direction to respondent authorities to open the GST portal by permitting the petitioner to amend its summary GSTR 3B return for the period August, 2018 to August, 2019 - seeking direction to respondent authorities to decide the representation dated 15.11.2019 and 5.11.2019 (Annexure Nos.6 4) filed by the petitioner - seeking direction to respondent authorities to refund the input tax credit as is available to the petitioner for the period August, 2018 to August, 2019. HELD THAT:- Without expressing any opinion on the merits of the case and with the consent, the writ petition is disposed of asking the competent authority, i.e. respondent nos. 4 and 5, Joint Commissioner (I.T. Cell), Commercial Tax, 7-A, Ashok Marg, Lucknow and Deputy Commissioner, Commercial Tax, State GST Department, Division-4, Jhansi to decide the representation of the petitioner strictly in accordance with law, expeditiously. Petition disposed off.

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• 2021 (1) TMI 299
  Reimbursement of differential tax due to change of regime from VAT to GST - difficulty faced by the contractors due to change in the regime regarding works contract under GST - grievance of the petitioner is that in view of the introduction of the GST, petitioner is required to pay tax which was not envisaged while entering into the agreement - HELD THAT:- The Government has now come out with a revised guidelines in this respect in supersession of the guidelines issued vide Finance Department letter dated 07.12.2017. He has filed Additional Counter Affidavit of O.P.-authority in similar cases annexing the revised guidelines relating to works contract under GST issued by the Government of Odisha, Finance Department vide Office memorandum No. FIN-CTITAX- 0045-2017/38535/F Dated 10.12.2018. The petitioner shall make a comprehensive representation before the appropriate authority within two weeks from today ventilating the grievance. If such a representation is filed, the authority will consider and dispose of the same, in the light of the revised guidelines dated 10.12.2018 issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by 15.03.2021 - petition disposed off.

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• 2021 (1) TMI 298
  Grant of Regular Bail - offence under Sections 132(1)(a)(b)(c)(d) of the CGST Act - HELD THAT:- In the facts and circumstances of the case and considering the nature of the allegations made against the applicant in the FIR, without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail. The applicant is ordered to be released on regular bail, on executing a personal bond of Rs. 10,000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions imposed - Bail application allowed.

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• 2021 (1) TMI 297
  Direction to respondent to recalculate the due amount payable by the petitioner - HELD THAT:- As the petitioner is seeking only enlargement of time to pay the admitted tax liability, and it is undisputed that the notice for payment of admitted liability is yet to be issued, it would be appropriate to dispose of this writ petition reserving liberty to the petitioner to make appropriate request with the authorities, who shall consider the same, in the light of the fact that the petitioner admits the liability strictly in accordance with law. Petition allowed.

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• Income Tax

• 2021 (1) TMI 303
  Deduction u/s 80 IB (10) - allowable expenses to project - assessee is engaged in the business of development of real estate - AO considering the status of the project completion estimated @ 15% of the common expenses attributable to the project Classique, accordingly reduced the deduction under section 80 IB - CIT(A) rejected the proposition of the AO and enhanced the allocable expenses to the project Classique by observing that the common expenses has to be allocated based on the ratio of sales - HELD THAT:- We notice that assessee is into construction of flats and also sale of TDR. Ld CIT(A) treated the activity of sale of TDR as sundry activity and cannot be regarded as business of the assessee.The details submitted by the assessee that some of the expenses incurred by the assessee relating to sale of TDR. Assessee is in real estate business and any sale of transferable development rights will fall within the activity of real estate business. Therefore, all the expenses relevant for the business is eligible to be apportioned between all the activities carried on by the assessee. The expenses attributable to the industrial unit or profit centre should have relevance to such industrial unit or profit centre. In the given case, the expenses of administrative and other common expenditure have direct relevance to the respective profit centres i.e., 2 projects and other activities of sale of TDR. We notice that the administrative functions carried on by the assessee are common to all the projects and activities carried on by the assessee. The expenses can be direct to the ongoing project, allocable or reasonably estimated with relevance to the respective projects carried on by the assessee. Since all the administrative expenses cannot be linked to the activities reasonably, it can be allocated reasonably to all the activities carried on by the assessee. We notice that assessee is currently carrying on 2 projects by name Classique and Royal and other activities i.e., sale of TDR - common administrative expenses must be allocated on all the activities carried on by the assessee therefore allocated based on gross revenue. Accordingly we direct AO to allocate the expenses relevant for the project Classique in the ratio of gross revenue and closing WIP i.e. total common expenses divided by total gross revenue including closing WIP multiplied by revenue from Classique Project - Appeal filed by the assessee is partly allowed.

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• 2021 (1) TMI 296
  Assessment u/s 153C - Unabsorbed depreciation - whether eligible for set off against any income of the appellant - HELD THAT:- The Hon ble Supreme Court, in the Judgment reported in Commissioner of Income tax v. Bajaj Hindustan Ltd [ 2019 (1) TMI 1843 - SC ORDER] held that unabsorbed depreciation pertaining to the assessment year 1997-98 to 2001-02 can be carry forward and adjusted after the lapse of eight assessment years in view of the section 32(2) as amended by the Finance Act, 2001. Appellant also submitted that the 3rd questions of law raised in the present Tax Case Appeal is covered by the above decisions of the Hon ble Apex Court and the Division Benches of this court, hence, the Tax Case Appeal should be allowed. In view of the submissions made by the learned counsel on either side, following the Judgments passed by the Hon ble Apex Court and the Division Benches of this court, the order passed by the Income Tax Appellate Tribunal is liable to be set aside. Accordingly, the same is set aside. The 3rd question of law is decided in favour of the appellant.

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• 2021 (1) TMI 295
  Claim of deduction u/s 10A/10B - claim with respect to Misc. income and interest income - HELD THAT:- The Tribunal in the case of assessee for assessment year 2008-09 found that the miscellaneous income was consisted of sale of the scrap and written off certain credit balances. In the year under consideration, there is no detail of source of miscellaneous income available on record except amount of income. In the instant assessment year, the amount of the scrap sales was separately identified and not included in miscellaneous income and so benefit of deduction on a scrap sales has already been allowed by the Learned CIT(A). In absence of detailed source of miscellaneous income, it cannot be decided conclusively, whether it forms part of profit of the undertaking or not. Similarly, in case of the interest income, the Tribunal in assessment year 2006-07 held that amount in question was not interest on loan, but it was investment made in purchase of shares of subsidiary company for the purpose of having control over it. In view of the above distinguishing facts, the ratio of the decision of the Tribunal (supra) cannot be applied in the instant case without verifying the facts. It is also not clear from the order of the Assessing Officer in the instant year, whether the FDR were made for the purpose of the business or for merely earning interest income. No such details have been provided before us also. Thus restore the issue in dispute to the file of the Assessing Officer for deciding in accordance with law

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• 2021 (1) TMI 294
  Disallowance of rental expenses u/s 40A(2)(b) - adopting the annual rental value fixed by the BBMP is not be correct in the context of the provisions of section 40A(2)(b) - HELD THAT:- What is important under the relevant provision is the excessiveness of expenditure having regard to the fair market value. Since neither the AO nor the CIT(A) has examined the fair market value of rent of the building in question, we are of the view that the issue needs to be remanded to the AO for consideration afresh. The assessee will furnish evidence to establish the fair market value of the rent for the building in question and the AO will examine the claim in accordance with law, after affording assessee opportunity of being heard. This issue is accordingly set aside to the AO for fresh consideration. Disallowance of expenses under section 14A - suo moto disallowance - non recording of satisfaction - HELD THAT:- Assessee on his own has made the disallowance as expenditure incurred in earning exempt income. AO, without rejecting the basis of disallowance made by the AO, applied the provisions of Rule 8D(2) and made a disallowance under section 14A. Under section 14A(2) of the Act, the AO has recorded the satisfaction that the disallowance of expenses made by assessee suo-moto under section 14A of the Act is not correct. Without recording such a finding, he cannot make disallowance under section 14A of the Act by resorting to Rule 8D of the Income Tax Rules, 1962. As relying on RADHA MADHAV INVESTMENTS LTD [ 2019 (1) TMI 1213 - BOMBAY HIGH COURT] we are of the view that the disallowance under section 14A of the Act should be restricted to a sum of Rs. 72,000/- as claimed by the assessee and the addition made by the Revenue authorities is directed to be deleted.

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• 2021 (1) TMI 293
  Denial of registration u/s.12AA - case of the assessee that an application for registration u/s.12AA was rejected by the CIT(Exemption) since requisite details/evidences as sought for, were not submitted by the assessee - HELD THAT:- Non compliance as recorded in the order of theCIT(Exemption) cannot be attributed to deliberate or willful default of the assessee and it was due to compelling circumstances which were beyond the reasonable control of the assessee. As observed from record that one letter was issued on 15.06.2020 and another letter was issued on 10.09.2020 asking the assessee to upload documents and credible evidences of activities carried out by them. It is also observed that this was the period of pandemic being effective specially in Maharashtra, particularly in the city of Pune wherein most of the offices remain closed and were not functioning. In such scenario, non compliance by the assessee is definitely not a deliberate act. The assessee has acted bona-fide explaining reasons, more particularly that their office was closed and therefore, they were not able to upload the requisite details/evidences in the department s portal. Therefore, we are of the considered view in the interest of justice, one final opportunity should be given to the assessee and in view thereof, we set aside the order of the Ld. CIT(Exemption) and restore the matter back to his file for adjudicating the matter while complying with the principles of natural justice.

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• 2021 (1) TMI 292
  Penalty u/s 271(1)(c) - allegation that, assessee making incorrect claim of deduction u/s 80P thus furnishing of inaccurate particulars of income - HELD THAT:- We observe that similar issue under identical facts has came up before this Tribunal in assessee s own case for Assessment Year 2011-12 and revenue s appeal was dismissed and the finding of Ld. CIT(A) deleting the penalty levied u/s 271(1)(c) held that bona fide of the assessee in claiming the deduction cannot be disputed and therefore, the penalty imposed should be cancelled. In this situation, we are inclined to hold that since appeal of the assessee on this issue which is pending for decision before Hon ble High Court till disposal of such appeal bona fide in claiming deduction u/s. 80P of the Act cannot be ruled out and hence penalty u/s 271(1)(c) of the Act cannot be sustained and only on this count penalty deserves to be deleted. Decided against revenue.

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• 2021 (1) TMI 291
  Disallowance of business loss - assessee is still in the process of setting up of business and therefore the business of the assessee has not commenced during the year - HELD THAT:- As perused the relevant records especially the documentary evidences filed by the assessee alongwitth the decision of the ITAT, Delhi B Bench in the csse of ITO vs. Amrit Foods (P) Ltd. [ 1984 (3) TMI 150 - ITAT DELHI-B] the assessee has commenced its business in the said assessment year as the assessee had made its sale and purchase i.e. Harpic which is evident from the table below which has already been mentioned in the written submissions. It is well settled law that even a single transaction may constitute business as defined in section 2(13). It is not asking there should be a series of transaction. Both of purchase and the sale to constitute trade. Therefore, we delete the addition in dispute. - Decided in favour of assessee.

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• 2021 (1) TMI 290
  Rectification u/s 254 - excess depreciation written back and shown negative under the head prior period expenses in the annual account - HELD THAT:- We have observed that learned CIT(A) has given elaborate finding and reasoning wherein it is stated that the assessee has computed its Brought forwards losses and unabsorbed depreciation in an incorrect manner and further elaborations were made by learned CIT(A) while enhancing the income of the assessee on this issue. The tribunal has not dwelt upon /adjudicated this issue of enhancement of income by learned CIT(A) , which may require detailed arguments. The tribunal has dismissed the said ground of appeal raised by assessee on the grounds as being not pressed. The assessee is prejudiced by said dismissal in limine. Since Tribunal has restricted its finding to 43.95 lacs, it will be in the interest of justice that the Grounds No.5 and 6 which were not adjudicated completely by tribunal are restored back to the file of Tribunal for fresh adjudication and to this extent the MA filed by the assessee on this issue is partly allowed for statistical purposes, as indicated above. Restricting of the relief by tribunal u/s. 145A of the Act to the tune 48.33 lacs as was relatable to income enhanced by learned CIT(A) , while Tribunal has not adjudicated on the additions to the tune of Rs. 16.4 lacs made by the AO , on the grounds that the AR of the assessee has made amendment in Ground No. 7 which was made post hearing of the appeal by taking file by AR from Bench Clerk, which move by the learned AR was not appreciated by the Tribunal. Now the assessee, who is Government of India undertaking being Public Sector Enterprises has come out with three affidavits, two by the counsel namely, CA Ms. Tanu Singhal and CA Mr. Amitava Ray, who have categorically denied and averred that they did not made any amendment in Ground No.7 in the memo of appeal filed with tribunal, and further stated that the aforesaid amendments were made by Mr. Sanjay B. Gupta, Manager( Finance) of the assessee who was authorized and competent to make such additions.It is further averred in the affidavit that the said amendment in grounds of appeal was made under instructions from the Bench. They have also given specimen signatures/initials in the affidavit filed with the tribunal, which is placed on record in file. Without going into the dispute as to who instructed to amend the Ground No.7, we are of the considered view that the fundamental purpose and duties of tribunal is to grant justice to both the parties with an objective so that rightful and legitimate income-tax within provisions of the 1961 Act which is rightfully due and payable by tax-payer for an assessment year be computed and collected under the authority of law , and with a view to subserve interest of justice, we are inclined to restore Ground No.7 back to the file of Tribunal for fresh adjudication and to this extent the MA filed by the assessee on this issue is allowed.

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• 2021 (1) TMI 289
  Rectification u/s 254 - Period of limitation - condone delay in filing of miscellaneous petition - TDS u/s 194C - HELD THAT:- No power vested with Tribunal to condone delay in filing of miscellaneous petition u/s 254(2) of the 1961 Act. Hence, we are bound by provisions of the 1961 Act and we are afraid that this MA filed by assessee in the instant case is barred by limitation and is to be dismissed on that short ground itself. For the sake of completeness and also that the assessee has invoked cause of substantial justice and that act of court should not prejudice anyone, we are going ahead to see whether even otherwise there is any merit in this MA. As observed that even otherwise, on merits of the miscellaneous petition Tribunal has passed a well-reasoned appellate order dated 08th June 2016 , whereby the Tribunal has elaborately discussed the contentions of the assessee and arrived at well reasoned conclusion/ decision in its appellate order. The assessee has purchased raw material on FOR basis from suppliers namely M/s. Pioneers Wires Private Limited and M/s. Saudagar Mal Mamman Lal Private Limited, and hence accordingly transportation of raw material purchased from the factory of the supplier to the assessee s place of business is obviously liability of the assessee and are to be borne by the assessee. The assessee has itself admittedly and rightly booked transportation/freight charges under the head transportation charges in its books of accounts , instead of debiting the same to purchase of material. Thus, contention of the assessee that said freight /transportation charges are part of purchase cost are devoid of any merit and the tribunal rightly held that assessee was liable to deduct income tax at source u/s 194C of the 1961 Act, which assessee in the instant case failed to do. The tribunal, keeping in view and after considering the amended provisions of Section 40(i)(ia) as amended by Finance Act, 2012, wherein second proviso was inserted, took a well reasoned and conscious decision of setting aside the matter to the file of the AO for verification as to whether the payee of the transportation charges has duly paid income-tax on the said income and to grant relief if the assessee is able to demonstrate that the payee has duly paid income tax on the said receipt. No mistake which is apparent from record in the well-reasoned order passed by the Tribunal and thus both on merits as well as on legal grounds, the contentions of the assessee cannot be accepted and hence this MA stands dismissed.

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• 2021 (1) TMI 288
  Rectification u/s 254 - disallowance of indexed cost of improvement claimed by the assessee on sale of plots, thereby computing the long term capital gain as against long term capital loss computed by the assessee - HELD THAT:- Coordinate Bench has duly considered the contents of the sale deed and even where description of the property at page 2 of the sale deed is taken into consideration, we find that the same will not lead to any change or impact the outcome or the findings of the Coordinate Bench where it was held that there was inconsistency in the sale deed so executed as far as the exact description of the property is concerned. Decision of the Coordinate Bench is not based solely on review of the sale deed but it has taken into consideration the agreement with the contractor dated 30.04.2009 and subsequent affidavit of the contractor dated 23.10.2017 and has thereafter arrived at its findings that, given the inconsistency in the description of the property in the sale deed and in absence of any corroboration in terms of buyer s confirmation/affidavit or photographs of the property at the time of sale which can demonstrate that what has been sold is not just a plot of land but a plot of land along with construction thereon, the assessee has failed to discharge the necessary onus placed on him in support of his claim of construction on the property at the time of sale and cost of construction as so claimed has therefore rightly been rejected by the lower authorities. We therefore donot find any basis to interefere with the findings of the Coordinate Bench within the well-laid down limited jurisdiction u/s 254(2). Miscellaneous application so filed by the assessee is dismissed.

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• 2021 (1) TMI 287
  Denial of exemption under Section 54F - agreement of sale was not registered - HELD THAT:- Agreement for sale of flats between the M/s Siddi Constructions and the assessee is enclosed. A.O. has not disputed the agreement of sale entered by the assessee with M/s Siddi Constructions but he only alleged that the document is not registered and accept the facts that the M/s Siddhi Construction has delivered and confirmed that the assessee has purchased 12 flats as per the agreement of sale in 3 floors and the registration formalities have to be completed. Under the provisions of Sec. 54F of the Act, the residential property should be purchased within a specified time for claim of exemption and the A.O. has not disputed. There is no mandatory requirement of registration at the time of entering into agreement. Therefore, we are of the view, that though residential property is not registered but the assessee was able to prove the possession and confirmed by the builder, the exemption cannot be denied on this ground. Assessee is entitled for exemption under Section 54F of the Act for more than one residential flat in the same complex - The amendment to Section 54F of the Act in Finance Act, 2014 is effective from Assessment Year 2015-16. We also rely on the observations of CIT Vs. V R Karpagam [ 2014 (8) TMI 899 - MADRAS HIGH COURT ] where it was held that the Amendment to Section 54F of the Act being Para Materia to the Section 54 of the Act with regard to substitution of Residential Unit by Finance Act No.2, 2014 was operative only effective w.e.f. 1.4.2015 whereby exemption for more than one unit /flat (residential house) is to be withdrawn. However, prior to the aforesaid amendment a residential house would include multiple flats, residential units in the same apartment building. Thus we are of the substantive opinion that the assessee is entitled for residential flats exemption under Section 54F - Decided in favour of assessee.

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• 2021 (1) TMI 286
  Addition u/s 40A (2) (b) - exponential increase in the Directors remuneration whereas the salaries of other employees had remained static - assessee had debited Directors remuneration which the Assessing Officer held to be a colorable device to siphon the profits of the assessee company and AO was of the opinion that the assessee could not justify the increase in the Directors remuneration - HELD THAT:- A perusal of the assessment order shows that the Assessing Officer has not brought any comparable cases on record to establish and buttress his allegation that the salary paid to the Directors was excessive as compared to the salary being paid to similar persons with similar qualifications and experience. CIT (A), though has given partial relief to the assessee by limiting the disallowance also did not consider this aspect of the case and has reduced the disallowance in an ad hoc manner. It is also undisputed that the assessee company as well as Directors both are in the same tax bracket, which is the highest in their cases and, therefore, there can be no question of any evasion of tax by paying remuneration to the Directors. CBDT Circular No.6-P dated 6th July, 1968 clearly states that no disallowance is to be made u/s 40A (2) in respect of payments made to relatives and sister concerns where there is no attempt to evade tax. Clearly no case of evasion of tax can be made out in the present appeal. This circular is binding on the Department and since no motive to evade tax is established and further since the AO has not pointed out any comparables to demonstrate that the salary paid to Directors was excessive, we have no option but to set aside the order of the CIT (A) and while doing so, we direct the Assessing Officer to delete the entire addition. - Decided in favour of assessee.

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• 2021 (1) TMI 285
  Reopening of assessment u/s 147 - Delay in issuing notice - time limit for issue of notice - no ntoice within this time stipulated under section 151 - HELD THAT:- Notice sent by email is not to correct address of the assessee; that there is no evidence to clinch the issue that such notice was dispatched anytime on or before 31/3/2017 inasmuch as not only there is discrepancy in the dates of dispatch as pleaded by the postal Department in their letter as well as the AO; and that even if we go by the Russian of the learned Assessing Officer such notice was dispatched by speed post only on 1/4/2017 and not before. The speed post booking list maintained by the Department is of no use in this matter because there is discrepancy with respect to the SPA number and also the SPA numbers that followed this particular entry are not in the immediate proximity of this particular ED481673181IN and also that they are corrected SPA numbers with 9 numericals. Viewing from any angle there is no convincing material before us to believe that the notice was dispatched at any time earlier to 1/4/2017, let alone the letter dated 5/12/2017 issued by the postal Department to say that the notice was handed over to the postal Department to be sent by speed post only on 30/6/2017 is not to be believed. On this factual situation, while applying the law laid down in the case of Kanubhai M Patel [ 2010 (7) TMI 704 - GUJARAT HIGH COURT] , we find that it is only 1/4/2017 that has to be taken as the date of dispatch because that is the date on which the notice is shown to have been handed over to the postal department for service. No material to rebut this conclusion is emanating from any independent source. For these reasons we hold that there is no notice that was issued in this matter well within this time stipulated under section 151 of the Act and the proceedings are barred by limitation. On this score the assessee is entitled to seek the crashing of proceedings under section 147 of the Act. We therefore, hold that the assessment order under section 147/143(3) of the Act cannot be sustained. Appeal of assessee allowed.

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• 2021 (1) TMI 284
  Exemption u/s 11 Denied - non-furnishing of audit report in form No. 10B - HELD THAT:- It is the case of the Ld. A.R. that the assessee sought adjournment before Ld. CIT(A) when the appeal was posted for hearing for the first time on 4.9.2020. Thereafter, the assessee was not given an opportunity of being heard by Ld CIT(A). It is submitted that the assessee filed written submissions before Ld. CIT(A) on 30.9.2020. However, by that time, the Ld. CIT(A) had already passed the order. Accordingly, we notice that the order passed by Ld. CIT(A), in effect, is an ex-parte order, without giving to the assessee opportunity of being heard. Accordingly, in the interest of natural justice, we are of the view that the assessee should be provided with an opportunity to present its case before Ld. CIT(A). Accordingly, we set aside the entire order passed by the Ld. CIT(A) and restore all the issues to his file for adjudicating them afresh. Appeal filed by the assessee is treated as allowed for statistical purposes.

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• 2021 (1) TMI 283
  TDS u/s 194A - Disallowance of interest expenditure incurred u/s 40(a)(ia) for non-deduction of TDS - It is the case of the assessee that he was under bonafide belief that Bajaj Finance Ltd. is a banking corporation and therefore TDS is not required to be deducted - HELD THAT:- In the backdrop of long line of judicial precedents including judgment of Hindustan Coco Cola Beverage Ltd.[ 2007 (8) TMI 12 - SUPREME COURT] we consider it expedient to set aside the disallowance and restore the issue to the file of the Assessing Officer. The assessee shall be entitled to produce such evidences as may be considered necessary to defend its case for non-deduction of TDS. AO shall be entitled to make such enquiry from the payee (Bajaj Finance Ltd.) as may be considered expedient to ascertain whether there is any loss of Revenue by such non-deduction. Assessing Officer shall delete the disallowance of amount carried out under s. 40(a)(ia) where it is found that the payee concerned has included the receipt obtained from the assessee for the purposes of computation of total income in its return. In other words, disallowance under s. 40(a)(ia) of the Act will not survive in the hands of assessee where deductee has also included the corresponding income in its return of income. The issue raised is restored back to the file of the Assessing Officer for fresh determination. Addition u/s 68 - Nature and source in respect of certain loans taken by assessee is not satisfactory - HELD THAT:- As decided in SMT. PK NOORJAHAN [ 1997 (1) TMI 6 - SUPREME COURT] Assessing Officer is not obliged to invoke Section 68/s. 69 of the Act in every case where the explanation offered is found to be unsatisfactory in the opinion of the Assessing Officer. In view of the overriding fact that loans so obtained stood re-paid through banking channel without any real advantage to the assessee, the onus cast upon the assessee is substantially discharged in view of the observations of the Hon ble Supreme Court. The action of Assessing Officer is thus set aside and the issue is restored back to the file of Assessing Officer in terms of directions noted above. Assessee appeal is allowed for statistical purposes.

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• 2021 (1) TMI 282
  Capitalizing interest expenses and treated the entire interest income as income from other source - HELD THAT:- The facts are identical in the present assessment year to that of AY 2014-15. The funds raised by the assessee are inextricably linked with setting up of its mall at Bangalore and, therefore, the interest earned by the assessee by parking the said funds temporarily with bank cannot be treated as Income from other sources . Since the income was earned in a period prior to commencement of business, it was in the nature of capital receipt and, therefore, it would result in reduction in the capital work-in-progress. It is pertinent to note that in the present year, the assessee received the amount on account of interest on fixed deposits in bank. Under expenses incurred on interest cannot be considered as income of the assessee as business income as it is the income from other sources as per the provisions of Income Tax Act. Therefore, in the present assessment year as well, we accept the contention of the Ld. AR that if the expenditure is capital, the interest fund earn on fixed deposits being capital in nature amounts to income from other sources. Transfer pricing adjustment - AR made the contention before us that the adjustment made in the transfer pricing proceedings was made on a protective basis and as per Tribunal s decision in AY 2013-14 in the present assessment year the transfer pricing adjustment would become academic as the expenses would remain to be capitalized and the adjustment will not affect the profit and loss account - HELD THAT:- Contention of the Ld. AR appears to be not correct as the adjustment made by the Transfer Pricing Officer is more of alternative assessment in the nature rather than a protective as claimed by the Ld. AR. There is a substantive assessment in the Assessment Year 2013-14 [ 2019 (8) TMI 835 - ITAT DELHI] . Merely not having any impact/effect to the profit and loss account will not make the present assessment void. Hence, the contention of the Ld. AR that there is no substantive assessment does not sustain. Thus, the protective assessment is valid in this year. Payment of interest on FCCDs - contentions of the Ld. AR that the TPO has inappropriately considered Bright Buildtech as a comparable agreement appears to be correct. The NCDs issued by Bright Buildtech at 1% rate of interest and these have been issued to an overseas entity namely Clear Horizon Investments Pvt. Ltd. in two tranches. The total amount of the NCDs issued to Clear Horizon is Rs. 365 crores. From the balance sheet of Bright Buildtech in the year of issue reveals that the book value of the total assets of Bright Buildtech is Rs. 6,54,33,84,492/- as compared to 365 crores which is the total amount of NCD issued. Thus, percentage of NCDs issued to Clear Horizon to the total assets of Bright Buildtech is 55.78%. As per Section 92(A)(2)(c) of the Act, Clear Horizon shall be treated as an Associated Enterprise of Bright Buildtech since the loan was Clear Horizon exceeds 51% of the book value of the total assets of the Bright Buildtech. Thus, the NCD issued by Bright Buildtech to Clear Horizon cannot be taken as the comparable since Clear Horizon is an AE of Bright Buildtech. Average of the comparables taken by the TPO/AO (after excluding Bright Buildtech) comes at 15.58%. Hence, we direct the TPO to consider the transaction of the assessee in relation to the payment of interest on FCCDs in light of these four comparables - Kapstone Constructions Pvt. Ltd, Flicker Project Pvt. Ltd.,Ashiana Landcraft Realty Pvt. Ltd. AND Ashiana Landcraft Realty Pvt. Ltd.at arm s length.

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• 2021 (1) TMI 281
  Penalty u/s 271(1)(c) - additions made by the Assessing Officer under various heads viz. disallowance u/s 40(a)(ia), disallowance of provision for sales incentives, disallowance of claim of deduction u/s 80IC, disallowance of exchange loss and addition made in respect of foreign exchange gains. HELD THAT:- As brought to our notice that the quantum additions made by the AO stands deleted by the order of the tribunal dated 10.11.2020 and hence, the penalty does not survive. The facts have not been disputed by the Ld. DR. Since all the quantum additions stands deleted, we hereby hold that the penalty levied u/s 271(1)(c) do not survive at this juncture.

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• 2021 (1) TMI 280
  Bogus purchases - CIT-A restricting the addition to 12.5% - HELD THAT:- As relying on Simit P. Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT ] No infirmity in the order passed by the Ld.CIT(A) in restricting the addition/disallowance to the extent of 12.5% of the purchases. Grounds raised by the revenue are dismissed.

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• 2021 (1) TMI 279
  TDS u/s 194C - Contractual receipts of goods under section 194 C by treating them as regular sale by suppliers - Revenue challenging the deletion stating that there is error in the finding of the Ld. CIT(A) inasmuch as it treated the payments not as contractual payments but as consideration for purchase of food and also in not sustaining the unverifiable miscellaneous expenses - HELD THAT:- CIT(A) found that a similar question had arisen in the case of the assessee in the previous assessment years and after examining the contract with the Dewa enterprises, the bills issue and the VAT returns of the assessee and a seller of the goods in the light of the amended section of 194C of the Act, his predecessor reached a conclusion that the transaction between the assessee and the supplier was that of sale and purchase and the same does not fall within the ambit of section 194C of the Act. Ld. CIT(A), therefore, observed that since there is no change in the facts and circumstances of the case nor has the learned Assessing Officer brought anything on record to prove that the agreement fell within the expanded scope of work contract envisaged under section 194C of the Act, explanation (iv) thereto with effect from 1/10/2009, there is no scope to deviate from the view taken by his predecessors for the assessment years 2006-07 to 2012-13. It is not the case of the Revenue that any change occurred either in the facts or in law subsequent to the Ld. CIT(A), taking the consistent view for the assessment years 2006-07 to 2001-13. In the absence of any such change, Ld. CIT(A) is justified in finding it difficult to take a different view from the consistent one taken for the earlier assessment years. We do not find any illegality or irregularity in such course adopted by the Ld. CIT(A). We accordingly decline to interfere with the same and dismiss this ground of appeal. Addition towards and had disallowance of 10% of the miscellaneous expenses - On a consideration of the contentions raised before us, we of the considered opinion that there is no perversity in the finding of the Ld. CIT(A) and he is right in observing that without pointing out any defect in the books of accounts of the assessee and without giving an opportunity to the assessee to explain their stand on this issue, the ad hoc disallowance cannot be sustained. Findings of the Ld. CIT(A) do not warrant any interference and have to be confirmed.

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• 2021 (1) TMI 278
  Validity of reopening of assessment u/s 147/148 - information as per the annual information return [ AIR] that assessee has entered into the commodity/share transactions with one broker - HELD THAT:- In the present case there was a tangible material available with the assessing officer in the form of annual information return. The concrete details were available about the broker through Womb the assessee has made the transaction. AO has further noted that Assessee has not filed any voluntary return of income u/s 139 (1) of the act. Therefore we find that the learned assessing officer was having a tangible material in the nature of Annual Information Return where the concrete information about the trading by the assessee on commodities/shares were available with a particular broker for which assessee has not disclosed any profit/loss - the information available with the assessing officer cannot be found to be vague as there was concrete information with every rupee was found to be correct about the turnover and the name of the broker. It is not the case of the assessee that she denies carrying on any transaction. AO also applied his mind to verify the above information from the ITD however, except the permanent account number of the assessee, no other information was available. Therefore, there was a proper application of mind by the AO. In view of this, we do not find any infirmity in the action of the learned assessing officer in reopening the assessment u/s 147 - Decided against assessee. Addition at profit rate of 1% of the total transaction in commodity in shares and gold - Even before us no bills of the brokers or the statement from the exchange was submitted. Even the 1% profit determined by the learned AO on trading of gold was also without any basis. The confirmation of the above addition by the learned CIT A was also not based on any material. In view of this, in the interest of justice, we set-aside the whole issue of determination of profit on the transaction of Rs. 121,684,248 made by the assessee in trading of gold is required to be examined by the learned assessing officer afresh to arrive at the correct profit earned by the assessee. Assessee has submitted that in subsequent year also on identical transaction assessee has been assessed at a loss. Therefore, we direct the assessee to submit the copies of the bills, the statement of profit and loss on the trading of gold based on the above bills to the assessing officer, which may be examined by the AO in accordance with the law and resultant profit/loss may be taxed accordingly. In view of this ground number 2 4 are allowed with above direction.

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• 2021 (1) TMI 277
  Dismissal of appeal of the Assessee on non-prosecution - Condonation of delay - delay of 124 days in filling of the instant appeal - HELD THAT:- We have perused the affidavit filed by the previous counsel of the assessee who deposed that though appeal was prepared and appeal papers have been handed over to his Assistant for deposit of appeal Fee and filling before ITAT, Amritsar after getting signed by the assessee, however due to complete oversight, the same could not been done and ultimately filed belatedly though local Counsel Sh. Padam Behal Ld. C.A. and consequently resulted into delay of 124 days. The Assessee has demonstrated the bonafide reasons and sufficient cause for non-filling of the appeal within the time limit. The contention of the assessee is supported by the affidavit of the previous counsel and even we could not find any material contrary and/or adverse to the claim of the assessee, therefore explanation offered and cause shown qua delay of 124 days in filling of the instant appeal seems to be bonafide, reasonable, sufficient and unintentional, hence deserves to be condoned. Consequently the same stands condoned. The Appellant most of the times, did not bother itself on one or other reason(s) to appear and co-ordinate with appellate proceedings even after availing various opportunities. Although the instant appeal of the assessee is liable to be dismissed in order to give effect to the principle that law does not assist the person who is inactive and sleeps over his rights by allowing them when challenged or disputed to remain dormant, without asserting them in a court of law. The effort of the court should not be one of finding means to pull down the shutters of adjudicatory jurisdiction before a party who seeks justice, on account of any mistake committed by him, but to see whether it is possible to entertain his grievance if it is genuine, therefore, considering the facts that the Ld. CIT(A) did not pass the order under challenge on merit, we feel it appropriate to set aside the impugned order and to remand back the instant case to the file of the Ld. CIT(A) for decision afresh on merits, suffice to say while affording proper and reasonable opportunity of being heard to the assessee/appellant, in order to follow the principle of natural justice. We also feel it appropriate to direct the Assessee/Appellant to extend its full co-operation and participation in the appellate proceedings before the Ld. CIT(A) as and when would be required. Appeal filed by the assessee is allowed for statistical purposes.

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• Customs

• 2021 (1) TMI 276
  Grant of anticipatory bail - Case of applicant is that summons have been wrongly issued against him on the basis of suspicion and has argued regarding the facts mentioned in the summon - HELD THAT:- This Court finds that Section 108 of the Customs Act gives power to summon persons to give evidence and produce document before any Gazetted Officer of Customs duly empowered by the State Government to produce a document or any other thing in inquiry. All persons so summoned are bound to attend such inquiry and it is deemed to be judicial proceedings within the meaning of Section 198 and Section 228 I.P.C. Almost similar provision exist u/s 70 of the Central Goods and Services Act, 2017. In a case u/s 70 of the aforesaid act, this Court has granted anticipatory bail to the applicant. The applicant, Nabi Ahmad, shall be enlarged on anticipatory bail for a period of six weeks or till the inquiry is concluded by the Officer concerned u/s 108 of the Customs Act, whichever is earlier, on execution of a personal bond of Rs. 1,00,000/- and two sureties of the like amount before the Officer subject to conditions imposed - application allowed.

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• Corporate Laws

• 2021 (1) TMI 275
  Rectification of Mistake - mistake apparent on the face of record - filing of documents - it is submitted by the Applicant Company that it had filed the documents/ clarifications on 17.10.2020 and that the Income Tax Department had given details about the Returns filed by the Applicant Company from the Assessment Years 2007-08 to 2016-17 vide its report dated 07.10.2020 - Section 252 of Companies Act 2013 - HELD THAT:- This Bench observes that the clarifications were sought by this Tribunal from the Appellant Company on 05.10.2020, which were required to be submitted by 08.10.2020. The Applicant Company itself through the present Application has admitted that it had filed the requisite clarifications/ documents on 17.10.2020, whereas the last date notified to file the same was till 08.10.2020. Further, the clarifications were sought from the Applicant Company not from the Income Tax Department. Hence, there is no mistake apparent on the face of record in the order dated 21.10.2020, which may require any rectification. The review of the order dated 21.10.2020 or consideration of documents at this stage is not permissible under law. There is no mistake apparent on the face of record in the order dated 21.10.2020, which may require any rectification - The Application, being devoid of merits, is Dismissed.

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• 2021 (1) TMI 274
  Restoration of name of company in the Registrar of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- The Appellant have submitted sufficient evidence that it has been in operation during the period of striking off and therefore could not be termed as defunct company. Thus, taking into consideration the provisions of Section 252 of the Companies Act, 2013 which vests this Tribunal with a discretion where the Company, whose name has been struck off and such Company is able to demonstrate that there is a running business as on the date when the name was struck off and also keeping in consideration that it is just to do so, can restore the name of the Company in the Register and in the interest of all stakeholders, including the Appellant itself, who seeks restoration of the name of the Company in the register maintained by Registrar of Companies, the company deserved to be restored. The Public Notice of Registrar of Companies striking off the name of the company is set aside. The restoration of the company s name to the Register of Registrar of Companies is ordered subject to its filing of all outstanding documents with proper filing fees along with additional fees required under law and completion of all formalities, including payment of any late fee or any other charges which are leviable by the respondent for the late filing of statutory returns, and also subject to payment of cost of Rs. 25,000/- to be paid to Prime Minister s Relief Fund - Appeal allowed.

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• 2021 (1) TMI 273
  Restoration of the name of the Appellant Company in the register maintained by the Registrar of Companies, NCT of Delhi and Haryana - Section 252 of the Companies Act, 2013 - HELD THAT:- There is nothing placed on record pertaining to the period prior to 01.09.2017, which could prove beyond doubt that the company was in operation or was carrying out its business. The ROC in its report has also observed that the company was not carrying on any operations for a period of two immediately preceding financial years as indicated by non-filing of the financial statements of the Company for two or more years. This Bench is not inclined to interfere with the striking off action taken by the ROC against the Appellant Company under Section 248(5) of the Companies Act, 2013 - Appeal dismissed.

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• 2021 (1) TMI 272
  Approval for Composite Scheme of Arrangement and Amalgamation - Sections 230-232 of the Companies Act, 2013 - HELD THAT:- This Tribunal is of the considered view that the scheme as contemplated amongst the petitioner companies seems to be prima facie beneficial to the Company and will not be in any way detrimental to the interest of the shareholders of the Company. In view of absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the Scheme of Arrangement appended as Annexure A1 with the Company Petition as well as the prayer made therein. The Learned Senior Counsel for the Petitioner companies submitted that no investigation proceedings are pending against the Transferor or Transferee Companies under the provisions of the Companies Act, 1956 or the Companies Act, 2013 and no proceedings against the petitioner companies for oppression or mismanagement have been filed before this Hon ble Tribunal or erstwhile Company Law Board - Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Tribunal will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the petitioners. It is clarified that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any, payment is due or required in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law - Petition allowed.

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• Insolvency & Bankruptcy

• 2021 (1) TMI 271
  CIRP Proceedings - Operational Debts or Financial Debts - The IRP however, was of the opinion that the Corporate Debtor being a financial guarantor owed a financial debt to the Respondent Nos. 2 and 3. Thus the Respondent Nos. 2 3 would have to be regarded as Financial Creditors of the Corporate Debtor. - HELD THAT:- Forward Purchase Agreement may or may not be regarded as a financial transaction for it to be a financial debt. It must have the commercial effect of a borrowing. The recitals of the Forward Purchase Agreement indicated above do not envisage the financial transactions in the nature of financial debt as defined under section 5(8) of the Code. The Agreements do not satisfy the parameters discussed in the cited precedent supra. A forward contract to sell a product at the end of a specified period cannot be regarded as a financial contract. Both the FPAs indicate that they were essentially forward contracts for supply of specified goods (products). The Corporate Debtor or for that matter the purchaser under the Agreement dated 29.09.2018 has not raised any amount thereunder. Under the Agreements they agreed to purchase certain products and pay therefor. The Corporate Debtor executed deeds of guarantee binding itself to pay any shortfall in case of default. Such transactions accordingly may at best amount to an operational debt in terms of section 5(21) of the Code for provision of goods and services and payment in respect thereto. Therefore, the FPAs dated 29.09.2018 and 28.12.2018 cannot be regarded as financial transactions in which a debt was raised or payment was made against the consideration for the time value of money which also had the commercial effect of borrowing - the transactions were essentially simple agreements of sale and purchase. The same would not come within the definition of financial debt under section 5(8)(f) of the Code. The principal agreements not being financial transactions and the amount of any liability in respect of the guarantee contemplated under section 5(8)(i) of the Code, would accordingly not come within the purview of the financial debt. The guarantee essentially was for payment against default in the sale consideration of the products agreed to be purchased respectively from Respondent Nos. 2 and 3. The guarantees being not a liability arising out of the transaction in terms of section 5(8)(f) of the Code, would not come within the purview of the financial debt. The Respondent No 2 and Respondent No 3, accordingly cannot find a place in the CoC - decision of the Respondent No. 1 admitting the claims of Respondent Nos. 2 and 3 as financial creditors is set aside - Application is allowed in part on contest.

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• 2021 (1) TMI 270
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- In the part-IV of the application, it is mentioned that the date of default is 06.08.2012 i.e. the date of the NPA and it is mentioned that total days of default are 640 days calculated from 31.03.2018. We also notice that the application was filed on 26.02.2020 - Also, the agreement for restructuring of credit facility was executed on 29.04.2014 between the Corporate Debtor and the Financial Creditors bank. Therefore, the contention of the applicant is that although the NPA was declared on 06.08.2012, the Corporate Debtor within the period of three years had acknowledged the debt and restructuring of credit facility was arrived between the Corporate Debtor and the Financial Creditor within the period of three years. The heading of the document is status of plant and repayment of loans and from the plain reading of the averment made in this document, it is noticed that there is no clear cut acknowledgment as it was in the settlement agreement dated 29.04.2014 - when we consider the letter dated 24.03.2017 upon which the applicant has placed reliance, we are of the considered view that this letter would not be treated as acknowledgement of debt under Section 18 of the Limitation Act. Admittedly the date of default is the date of NPA - If we accept the contention of the Ld. Counsel for the applicant that within a period of three years from the date of NPA, the loan was restructured by the restructuring settlement agreement dated 29.04.2014 then, the limitation shall run from 29.04.2014 but we are unable to accept the contention of the applicant, that again during the period of three years vide letter dated 24.03.2017, there was acknowledgement of debt. In our considered view, that letter was regarding the status of the plant and not an acknowledgement of debt as it was earlier done by settlement agreement dated 29.04.2014, which is at page 475 of the application. Thus, the present application is barred by limitation - application dismissed.

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• Service Tax

• 2021 (1) TMI 269
  Benefit under the SVLDRS - writ applicant would submit that, the issue involved is very limited and if this Court takes the view that his client is entitled to claim the benefit under the SVLDRS, the order in original passed by the Commissioner, CGST, Vadodara would pale into insignificance - HELD THAT:- As the other side is not ready with the matter, it is not possible for this Court to proceed today with the hearing of the main matter. As a last chance, post this matter on 20.01.2021. We are adjourning this matter with a distinct understanding that on the next date of hearing, if none appears for the respondent, this Court shall proceed to hear Mr. Sujit Ghosh, the learned Senior Counsel appearing for the writ applicant on merits and pass an appropriate order.

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• 2021 (1) TMI 268
  Principles of Natural Justice - Validity of Clause (m) of Section 121 and Section 125 of the Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 - the clause the assesseee ineligible based on an inquiry or summons has been given up - whether the Designated Committee should have given an opportunity of hearing to the writ applicant before passing the impugned order dated 17.06.2020? - HELD THAT:- In the case on hand, the Designated Committee took the view that as an inquiry has been initiated pursuant to the summons under Section 14 of the Central Excise Act, 1944, the declaration of self assessment cannot be accepted. Let Notice for final disposal be issued to the respondents, returnable on 19.01.2021.

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• 2021 (1) TMI 267
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Determination of amount of pre-deposit before filing an appeal or Total amount as deposited earlier to be adjusted with Declaration of tax - whether in the facts and circumstances of the case could there be a dispute on the Service Tax deposited by the petitioner, and if there cannot be any dispute in this regard, would the petitioner upon reading the provisions of Sections 123(a)(i) and 124(2) of SVLDR Scheme, be entitled to Tax Relief thereunder which would absolve the petitioner from paying further amounts? - HELD THAT:- The SVLDR Scheme contemplates Tax Relief as detailed in Section 124: Section 124(2) stipulates that the Tax Relief shall be calculated subject to the condition that any deposit during enquiry or investigation or audit shall be deducted when issuing the statement indicating the amount payable by a declarant and subject to the condition that if the amount so paid exceeds the amount payable by the declarant as indicated in the statement, the declarant shall not be entitled to any relief. If it is undisputed that the petitioner has deposited a sum of that the petitioner has paid Rs. 92,33,857/- after the audit and the petitioner is disputing the liability in a sum of R1,77,06,985/- in an appeal before the CESTAT In the light of the provisions of Section 124 of the SVLDRS Scheme, the petitioner would be entitled Tax Relief subject deduction of Rs. 92,33,857/-. However, the Tax relief is refused referring to the order-in-original which does not even refer to the deposit made by the petitioner after the Show Cause Notice dated 29.12.2014. The assertion on behalf of the first respondent that the petitioner has itself declared that a sum of Rs. 27,66,646/- in the appeal memorandum of appeal before the CESTAT cannot also be accepted in the view of the explanation offered by the learned counsel for the petitioner in Rejoinder and duty cast upon the first respondent Rule 6 of the SVLDRS Rules to verify the records. It is also undisputed that after SVLDRS-2 is issued, repeated representations have been made to bring out the aforesaid circumstances. The impugned Form No.SVLDRS-2 and Form No.SVLDRS-3 issued by the Designated Committee, SVLDRS are quashed and the first respondent is called upon to issue appropriate Discharge Certificate considering the undisputed deposit of duty in a sum of Rs. 2,52,46,749/- and the disputed claim of Rs. 1,77,06,985/- - Petition allowed.

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• 2021 (1) TMI 266
  Levy of service tax - managing car and two wheeler parking in a public place while serving public - N/N. 25/2012-Service Tax dated 20.06.2012 - HELD THAT:- Reading of the clause Paragraph 24 of the notification 25/2012 vide Annexure-R2 read with the statement of objections filed by the second respondent cited supra, the petitioner is not entitled to exemption in payment of service tax, for the reasons that petitioner is rendering service to general public in permitting them to park the vehicles for a certain period of time and collecting fee. In other words, petitioner is rendering public services, therefore, service tax is payable. Petition dismissed.

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• CST, VAT & Sales Tax

• 2021 (1) TMI 265
  Attachment of Bank Accounts - non-consideration of the interim relief - consequential Section 45 Notice issued by the respondent/Revenue to its Bankers - HELD THAT:- We hope that wiser counsel would prevail and the respondents will not take any coercive action pending the hearing on 07.01.2021. Counsel for the appellant submits that on 07.01.2021 they will not seek any adjournment and the learned Additional Advocate General also submits that the matter lies in a short compass and that they would assist the Court in disposal of the matter itself. The writ appeal is disposed of with a request to the learned Single Judge to expedite the hearing and disposal, as the writ petition involves revenue to the State.

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• 2021 (1) TMI 263
  Validity of Recovery Notice issued after the Best Judgment Assessment order - Defreezing of Bank Accounts - Section 9(2) of the Central Sales Tax Act, 1956 - HELD THAT:- After the impugned Recovery Notice is issued, pursuant thereto approximately 10% of the demand has been recovered. Therefore, it would be just and reasonable to quash the impugned Recovery Notice with liberty to the authorities to initiate appropriate action for refund of the amount recovered once the petitioner s appeal is decided on merits by the appellate authority. This Court is of the view that the petition could be disposed of directing the respondents not to take any precipitous action for the next ten working days and to issue appropriate Communication to the petitioner s banker to de-freeze the account subject to further orders that could be made in the event the petitioner does not file an appeal within the next ten working days. Petition disposed off.

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• Indian Laws

• 2021 (1) TMI 262
  Dishonor of Cheque - offence punishable under Section 138 of the NI Act - rebuttal of presumption - Sections 118 and 139 of the NI Act - Sections 118 and 139 of the NI Act - HELD THAT:- Section 118 of the NI Act provides certain presumptions to be raised laying down some special rules of evidence relating to presumptions. The presumption, therefore, is a matter of principle to infuse credibility to negotiable instruments including cheques and to encourage and promote the use of negotiable instruments in financial transactions. Section 118 of the NI Act provides presumptions to be raised until the contrary is proved, (i) as to consideration, (ii) as to date of instrument, (iii) as to time of acceptance, (iv) as to time of transfer, (v) as to order of indorsements, (vi) as to appropriate stamp and (vii) as to holder being a holder in due course. That apart, Section 139 of the NI Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 of the NI Act for the discharge, in whole or in part, of any debt or other liability. Applying the definition of the word proved in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the NI Act, it becomes evident that in a trial under Section 138 of the NI Act, a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. Section 141 of the NI Act provides constructive liability on the part of the Directors of the company or other persons responsible for the conduct of the business of the company. Though the heading of Section 141 of the NI Act reads Offences by companies , as per the Explanation to that Section company means any body corporate and includes a firm or other association of individuals ; and director in relation to a firm, means a partner in the firm. Their liability is joint and several. Consequently, therefore, when an offence is alleged to have been committed by the partnership firm, every person who, at the time the offence was committed, was in charge of and was responsible to the firm for the conduct of its business as well as the firm shall be deemed to be guilty of the offence and shall be liable to be proceeded under Section 138 of the NI Act. The conclusions drawn by the trial court and the appellate court to convict the accused 1 and 2 are perfectly legal. The cheque in question was drawn for consideration and the holder of the cheque received the same in discharge of an existing debt. Thereafter, the onus shifts on the accused to establish a probable defence so as to rebut such presumption, which onus has not been discharged by the accused. Once the cheque is proved to be issued, it carries statutory presumption of consideration under Sections 118 and 139 of the NI Act. Then, the onus is on the accused to disprove the presumption at which they have not succeeded. It is well settled law that when concurrent findings of facts rendered by the trial court and appellate court are sought to be aside in revision, the High Court does not, in the absence of perversity, upset factual findings arrived at by the two courts below. It is not for the revisional court to re-analyse and reinterpret the evidence on record in a case, where the trial court has come to a probable conclusion. Unless the contrary is proved, it is presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 of the NI Act for the discharge, in whole or in part, of any debt or other liability. In the case at hand, the accused has no case that he has not signed the cheque or parted with under any threat or coercion. That apart, the accused has no case that unfilled cheque had been lost irrecoverably or stolen. The accused failed to prove in the trial by leading cogent evidence that there was no debt or liability - Thus, both the trial court and the appellate court rightly held that the burden was on the accused to disprove the initial presumption under Sections 118 and 139 of the NI Act. The accused was examined as DW1 in this case. He stated that the cheque was entrusted to M/s Leap Forwarders as a blank signed one. No evidence was let in to prove the alleged entrustment with M/s Leap Forwarders as contended. The burden is not discharged rightly. Hence, the conviction of the accused for the offence under Section 138 of the NI Act is only to be upheld. Question of sentence - HELD THAT:- The trial court convicted and sentenced the 1st accused to pay a fine of Rs. 5,000/- each and 2 nd accused to undergo simple imprisonment for three months each in CC Nos. 592 and 593 of 1999 on the file of the Judicial First Class Magistrae Court-I, Ernakulam. Further, it was ordered to pay a sum of Rs. 1,19,000/- in CC of 1999 to the complainant under Section 357(3) of Cr.P.C. and default of payment of fine to undergo simple imprisonment for three months each more. The amount involved in CC No. 592 of 1999 is Rs. 79,160/- as per cheque bearing No. 509028 dated 26.05.1999. The concurrent conviction under Section 138 of the NI Act is sustained. Section 138 of the NI Act provides sentence of imprisonment or with fine or with both. Sentence of imprisonment is not compulsory. The object is to pay the amount covered under the cheque. Hence, the mandatory term of imprisonment awarded by the trial court, which was confirmed in appeal, is liable to be set aside. The conviction and sentence as against the 1st accused stand confirmed - While confirming the conviction of the 2nd accused, in modification of the sentence, the 2nd accused is sentenced to pay a fine of Rs. 79,160/- and in default of payment of fine to undergo simple imprisonment for a period of three months. If the amount is paid as compensation, the same shall be given to the complainant as compensation under Section 357(3) of Cr.P.C. In view of the situation prevailing in the country due to the outbreak of Covid-19 pandemic, this Court is inclined to grant six months time from today to the revision petitioners/accused 1 and 2 to deposit the compensation and the fine amount before the trial court, failing which the learned Magistrate shall take necessary steps to execute the sentence against the revision petitioners/accused 1 and 2 in accordance with law - Petition allowed.

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