Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 19, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Classification of services - services of Electroplating surface coating and Electroless nickel plating provided by the applicant - The services of Electroplating surface coating and Electroless nickel plating provided by the applicant are classifiable under Heading 9988 (Manufacturing services on physical inputs(goods) owned by others) - Rate of GST from 22.11.2019 onwards would be (i) 12% (6% SGST + 6% CGST) in respect of services supplied to registered persons and (ii) 18%(9% SGST + 9% CGST) in respect of services supplied to unregistered persons. - AAR
Income Tax
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Extension of due date for filing the Income Tax Returns - The Board has now thought fit in the interest of the Revenue not to extend the time period any further. There are so many vital issues which the Revenue needs to keep in mind before taking such decision. The question is whether this Court should go into all such issues which weighed with the CBDT in taking a particular decision one way or the other and substitute the same with that of this Court on the ground that if the time limit is not extended, then the people at large would be put immense hardships? - We have reached to the conclusion that we should not interfere in the matter. - HC
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Nature of expenses - Disallowance on account of expenditure on consultancy and legal fees - - purpose for which the expenditure was incurred is specific and the claim of expenditure against Tax Consultancy under the column “Transaction Text” of ledger of Transactions, the term “Preparation of Amalgamation of MRPL with MIP” and “Lawyer fees for Merger” respectively mentioned, were not successfully rebutted by the assessee before us also. - Additions confirmed - AT
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Set off of MAT credit u/s.115JAA - assessee being a company had filed its return of income in ITR-6 (i.e. prescribed form) under schedule for MAT credit (Schedule MATC), the assessee is precluded from filling up any figure as they are automatically picked from yet another schedule in the same ITR form - there is absolutely no scope for ignoring surcharge and education cess for the purpose of computing MAT credit u/s.115JAA of the Act. It is a well known fact that the ITR return form is a form prescribed by CBDT and the revenue is bound to follow the same. - AT
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Levy penalty u/s. 271B - not filing tax audit report within the due date specified under the Act - When audit report was obtained within due date, merely for delay in filing audit report in e-portal of the Department cannot be considered as deliberate attempt made by assessee for not filing audit report so as to impose penalty u/s. 271B - AT
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Deduction u/s 35AD and set off u/s 73A against the loss incurred by it in other unit - Loss of assessee on account of a specified business claiming deduction u/s 35AD would be allowed to set of against the profit of another specified business. U/s 73A, whether or not the later is eligible for deduction u/s 35AD. Therefore, by the above clarification, it is clear that assessee can claim set off against the profit from specified business units of Mumbai and Indore. - AT
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Addition on account of commission income for obtaining accommodation entries - addition cannot be made merely on the presumption that family concerns have admitted providing accommodation entries in their statement of facts before the Settlement Commission. - AT
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Capital gain Computation - Stamp duty valuation u/s 50C - Once legislature very graciously accepts, by introducing the legal amendments in question, that there were lacunas in the provisions of Section 50C in the sense that even in the cases of genuine variations between the stated consideration and the stamp duty valuation, anti-avoidance provisions under section 50C could be pressed into service, and thus remedied the law, there is no escape from holding that these amendments are effective with effect from the date on which the related provision, i.e., Section 50C, itself was introduced. These amendments are thus held to be retrospective in effect. - AT
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Addition of loss claimed in Future & Options (‘F&O’) - Reliance on statement of third party (Broker) recorded during survey u/s. 133A - it is trite that the statement recorded during survey u/s. 133A cannot be the sole basis on which adverse inference can be drawn against the assessee. The assessee has been kept in the dark and has not been given the entire copy of the statement - there are no other material against the assessee in respect of its transaction in F&O - Additions deleted - AT
Customs
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Classification of imported goods - LCD panels and parts of LCD panels - LCD panels are classifiable under CTH 9013 8010 and parts of LCD panels are classifiable under CTH 9013 9010 - the classifications are to be under CTH 9013 8010 and CTH 9013 9010, the denial of exemption benefit to the appellant as per amendment Notification No. 92/2017-Cus. dated 14.12.2017 is without any factual or legal basis and requires to be set aside. - AT
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Writing off the duty free imported material from the books of accounts without paying duty - violation of norms of 'Actual User Condition' - respondent (importer) was allowed to import 2% in excess of their actual requirement towards wastage - Clause (vii) of the Notification has to be read in the context of the legal provisions and cannot be read in isolation. The word 'any manner' therefore, cannot include within its ambit written off duty free imported material in the books specially when the same was in the custody of the respondent itself as writing off of the same is permissible in law. Therefore, the contention of the revenue that provision or clause (vii) of the Notification. Was violated does not deserve acceptance. - HC
Indian Laws
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Dishonor of Cheque - insufficiency of funds - Rebuttal of presumption - When once the rebuttal has been established and proved to the contrary by the respondent/accused, then the burden shifts on appellant to satisfy such rebuttal and prove that cheque has been issued towards legally enforceable debt or liability. - HC
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Dishonor of Cheque - acquittal of accused - Existence of debt - As stated earlier, at one breath she says that amount is deposited by her and at another breath she says amount is deposited by her husband. It is also apparent that after cross-examination of PW.1 and evidence of DW.1, no other material has been placed before the Court other than Ex. P.1 by complainant to substantiate the fact that there is existence of subsisting legally recoverable debt - HC
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Maintainability of petition - right to prefer an appeal - condonation of delay - It is true that in the absence of a stay, it is open to a Learned Appellate Court to proceed with the matter. However, every discretion has to be exercised judiciously. Furthermore, it is also true that the delay in disposing of a matter does not depend merely on a litigant who prefers an application. Sometimes, there are systematic delays. Sometimes, there are other factors which come into play like the onset of a pandemic, as in the present case. - Application for condonation restored, after deposit of 25% amount - HC
IBC
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Non-appointment of persons selected by the COC (Committee of Creditors) as Resolution Professional and Authorized Representative - Section 22 of IBC - Adjudicating Authority had no power to impose Resolution Professional of its choice. Even for Authorised Representative decision of the majority is to be respected. - AT
Case Laws:
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GST
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2021 (1) TMI 648
Classification of services - services of Electroplating surface coating and Electroless nickel plating provided by the applicant - service supplied by the applicant would fall under (id) or (ii) of Entry No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 as amended or otherwise? - rate of GST. HELD THAT:- The processes results in the formation of a coating on the materials/metals on which it is carried out. Also, as per the submission of the applicant, the coating done by carrying out the aforementioned processes enhances the durability of the materials/metals to some extent. However, as per the data available online, electroplating changes the chemical, physical, and mechanical properties of the workpiece. An example of a chemical change is when nickel plating improves corrosion resistance. An example of a physical change is a change in the outward appearance. An example of a mechanical change is a change in tensile strength or surface hardness which is a required attribute in tooling industry. Electroplating of acid gold on underlying copper- or nickel-plated circuits reduces contact resistance as well as surface hardness. Copper-plated areas of mild steel act as a mask if case hardening of such areas are not desired. Tin-plated steel is chromium-plated to prevent dulling of the surface due to oxidation of tin. The inside of a steel food can is electroplated with tin, a less reactive metal than iron which provides a physical barrier to oxygen and water, stopping the can from rusting. Compared to the electroplating process, a major advantage of electroless nickel plating is that it creates an even coating of a desired thickness and volume, even in parts with complex shape, recesses, and blind holes. Because of this property, it may often be the only option. Another major advantage of electroless nickel plating is that it does not require electrical power, electrical apparatuses, or sophisticated jigs and racks. Electroless nickel plating can have a matte, semi-bright, or bright finish. The manufacturing services is not akin to manufacture but are services which are related to the process of manufacture or assist in the process of manufacture of goods. It also appears that the process of Electroplating surface coating and Electroless nickel plating are, perhaps, the last of the processes to be carried out on goods/products during the course of manufacture, akin to coating goods/products with paint or spray painting, and completing of this process would result in the emergence of a finished product. We therefore find that the very purpose of the manufacturer of sending these goods/products for Electroplating surface coating/electroless nickel plating is that they are a very essential or indispensible part of the process of manufacture towards making the product a finished product i.e. without this process, the goods/products in question would not be finished products. It is found that although the procedure followed by the applicant is that of jobwork, we find that the process of Electroplating surface coating and Electroless nickel plating are essential services connected to the process of manufacture of the goods which results in the emergence of the finished product and would therefore be rightly covered under manufacturing services or services related to the manufacture of goods. Entry at item(iv) of Sr.No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 (as amended) provides the most specific description to the services provided by the applicant as compared to the general description provided at item(id) of the said entry. It is therefore concluded that the services of electroplating surface coating and electroless nickel plating provided by the applicant are classifiable under item(iv) of Sr.No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017(as amended). The services of Electroplating surface coating and Electroless nickel plating provided by the applicant are classifiable under Heading 9988 (Manufacturing services on physical inputs(goods) owned by others) which appears at item(iv) of Entry No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 (as amended). The GST liability on the above would be 18% upto 21.11.2019.
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2021 (1) TMI 647
Constitutional validity of levy of IGST on Ocean Freight - Ultra Vires provisions - Reverse charge - Levy tax twice - once levy of customs duty on imported goods, second IGST on ocean freight - estimated component of the Ocean Freight paid for the transportation of the goods by the foreign seller - N/N. 8 of 2017-Integrated Tax (Rate) dated 28th June 2017 - it was held by High Court that No tax is leviable under the Integrated Goods and Services Tax Act, 2007, on the ocean freight for the services provided by a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India upto the customs station of clearance in India and the levy and collection of tax of such ocean freight under the impugned Notifications is not permissible in law. HELD THAT:- Issue notice, returnable in eight weeks.
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2021 (1) TMI 646
Validity of provisional attachment order - Section 83 of the Central GST Act, 2017 - HELD THAT:- In compliance to the order, learned counsel for the respondents has placed on record order dated 05.01.2021 passed by respondent No.1, whereby Loan Account of petitioner bearing No.34410423938 maintained in State Bank of India has been released and objections raised by the petitioner stand rejected - In compliance to the aforesaid reproduced order, learned counsel for the respondents has placed on record order dated 05.01.2021 passed by respondent No.1, whereby Loan Account of petitioner bearing No.34410423938 maintained in State Bank of India has been released and objections raised by the petitioner stand rejected another petition. The petition is disposed of as having been rendered infructuous.
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2021 (1) TMI 645
Principles of Natural Justice - petitioner has demonstrated that the petitioner was noticed on wrong address - HELD THAT:- Noticing the petitioner on the wrong address is against principles of natural justice. The order inviting adverse civil consequences was passed without hearing the petitioner herein because of issuance of notice on wrong address. The matter is remitted back to the 1st respondent for fresh hearing - Petition allowed by way of remand.
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2021 (1) TMI 644
Seeking direction directing the respondents for the extension of the last date of filing the GSTR GSTR 9C - direction to respondents to grant relief of waiver of late fees or penalty for filing the GSTR GSTR 9C beyond the last date as prescribed under the section 47 of the CGST Act, 2017 - Constitutional right of Natural justice - HELD THAT:- In our opinion, no case worth the name is made out. Application rejected.
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Income Tax
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2021 (1) TMI 649
Extension of due date for filing the Income Tax Returns - COVID -19 Pandemic difficulties - whether this Court should issue a writ of mandamus to the CBDT for the purpose of extending the time limit to file the Tax Audit Reports and the Income Tax Returns? - HELD THAT:- Mandamus is an action or judicial proceeding of a civil nature extraordinary in the sense that it can be maintained only when there is no other adequate remedy, prerogative in its character to the extent that the issue is discretionary, to enforce only clear legal rights, and to compel courts to take jurisdiction or proceed in the exercise of their jurisdiction, or to compel corporations, public and private, and public boards, commissions, or officers, to exercise their jurisdiction or discretion and to perform ministerial duties, which duties result from an office, trust, or station, and are clearly and peremptorily enjoined by law as absolute and official It is true that a Coordinate Bench of this Court in the year 2015 had the occasion to deal with almost a similar issue as the one involved in the present case. This High Court had directed the CBDT to extend the due date for filing the Income Tax Returns under Section 139 from 30th September 2015 to 31st October 2015 so as to alleviate to a certain extent, the hardships caused to the assesses on account of delay in providing the utilities. However, this Court had to interfere in a situation when for the first time by way of a Notification the CBDT made it mandatory for the assessees to electronically file the Income Tax Returns relevant for the assessment year 2013 14 and onwards. Although Mr. Soparkar, the learned Senior Counsel has criticized the manner in which the decision is taken by the CBDT not to extend the time limit any further, yet we believe that such decision must have been taken after due deliberations, and in taking such decision, many financial experts must have applied their minds. It is true that the Board is vested with the power under Section 119 of the Act to extend the due date and the powers are discretionary in nature and that is the reason why we thought fit to ask the CBDT to look into the matter and take an appropriate decision in accordance with law. If the CBDT has looked into the matter closely and has arrived at the conclusion that the extension of time limit would not be in the interest of the Revenue, then it cannot be said that the CBDT has failed to exercise its discretionary powers vested in it under Section 119 of the Act. When there is a power coupled with duty, there is an obligation on the Board to exercise the same if the facts so warrant. Upon due consideration of all the relevant aspects of the matter, if the Board has taken the final decision not to extend the time limit any further, then it is difficult for this Court to issue a writ of mandamus to the Board to extend the time limit on the assumption that undue hardship would be caused to the taxpayers and the tax professionals, more particularly, in view of the latest data put forward before us by the Revenue. It is the case of the CBDT that it has declined to exercise its power under Section 119 of the Act as the conditions for exercise of such power do not exist. It is the case of the Revenue that the issue of hardship was dealt with considerably at the relevant point of time and that is the reason why three times the time limit came to be extended. The Board has now thought fit in the interest of the Revenue not to extend the time period any further. There are so many vital issues which the Revenue needs to keep in mind before taking such decision. The question is whether this Court should go into all such issues which weighed with the CBDT in taking a particular decision one way or the other and substitute the same with that of this Court on the ground that if the time limit is not extended, then the people at large would be put immense hardships? Interference at the end of this Court, at this point of time, in the matters relating to the Revenue may have far reaching implications. This Court may find it very easy to issue a writ of mandamus, as prayed for, saying that if the time limit has been extended in the past on three occasions, then why not for one last time upto 31st March 2021. However, such a line of reasoning or approach may upset the entire functioning of the Government and may lead to undesirable results. We have reached to the conclusion that we should not interfere in the matter. Both the writ applications fail and are hereby rejected. At this stage, we may only observe that the CBDT may consider issuing an appropriate circular taking a lenient view as regards the consequences of late filing of the Tax Audit Reports as provided under Section 271B of the Act. We leave it to the better discretion of the CBDT in this regard.
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2021 (1) TMI 643
Income from house property under section 23(1)(a) - rental income exceeded the standard rent and municipal ratable value of that area - HELD THAT:- As relying on assessee's own case wherein Assessee has not been able to consider the Judgment of TIP TOP TYPOGRAPHY [ 2014 (8) TMI 356 - BOMBAY HIGH COURT] wherein expounded that the municipal ratable value cannot be brushed aside unless the AO is able to show that there was effort on the part of the assessee to show lesser rent. In this regard we note that Hon'ble Jurisdictional High Court decision is binding upon the Tribunal - Accordingly, in our considered opinion the issue in this regard needs to be examined on the touchstone of Hon'ble Jurisdictional high Court decision - Thus we restore the disputed issue to the file of the A.O. for limited purpose with similar directions to examine the issue and allow the grounds of appeal of the assessee for statistical purposes.
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2021 (1) TMI 642
Addition on account of under valuation of closing stock - AO exclusively relied on the stock valuation made by the survey team on the date of survey - HELD THAT:- Assessee is engaged in the business of manufacturing and trading in bricks. Action u/s. 133A of the Act was conducted in the business premises of the assessee on 20th January, 2015. The survey team has adopted rough method through guess work, to estimate virtually the closing stock of the assessee, as on the date of survey. The quantity of kachha and pucca bricks cannot be physically counted, when there is no such expertise in the members of the survey team and when there is no required manpower. The exact quantum of earth and coal was not available. Above all the stock valuation was done by the survey team on 20.01.2015 and this is extrapolated to value stock as on 31.03.2010. Such an exercise is arbitrary and erroneous. When the assessee is maintaining proper books of account and when the AO has not pointed out any defects in these books and when he did not reject them, it is not open for the AO to ignore these books of account and adopt the value of stock as estimated by the survey team. Such an addition cannot be upheld. Thus we delete the same. Eligible jurisdiction of AO - whether such an assessment order is valid in the eyes of law when the jurisdictional assessing officer has not issued a notice u/s. 143(2)? - HELD THAT:- This issue is no more res integra. The Lucknow Bench of the Tribunal in the case of Arti Securities Services Ltd. [ 2020 (11) TMI 310 - ITAT LUCKNOW] and K.A. Wires Ltd. [ 2020 (3) TMI 418 - ITAT KOLKATA] have adjudicated, a similar issue, in favour of the assessee. Respectfully follow the same we hold that the assessment order is bad in law.
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2021 (1) TMI 641
Depreciation @15% on Bolero Van - claim by the Appellant that it should be totally allowed as an expenditure - Whether CIT-A failed to note that since the vehicle is being used for research and development its entire cost is entitled for 100% deduction u/s.35(1)(iv) - HELD THAT:- Respectfully following the above decision in the case of CIT v. Smith Kline French (India) Ltd. [ 1989 (2) TMI 406 - KARNATAKA HIGH COURT] the claim of 100% depreciation under section 35(1)(iv) of the Act stands allowed. Disallowance being the loss on silver futures - assessee has not provided the supporting documents in proof of loss on commodities trading in silver futures - HELD THAT:- Loss due to foreign exchange fluctuation in foreign currency transactions in derivatives has to be considered on the last date of accounting year and it is deductible under section 37(1) of the Act. Accordingly, we set aside the orders of authorities below and direct the Assessing Officer to allow the loss claimed by the assessee. Disallowance u/s 14A of the Act r.w. Rule 8D - assessee made non-trade investments - HELD THAT:- AO has not stated any exempted income having earned by the assessee in the assessment year under consideration. The ld. Counsel for the assessee has also not filed any details with regard to the quantum of exempt income earned by the assessee. Accordingly, we direct the Assessing Officer to verify as to whether the assessee has earned any exempt income or not and in case, if no exempt income is found, then the Assessing Officer is directed to delete the addition made under section 14A of the Act in view of various decisions including the decision in the case of CIT v. Chettinad Logistics (P) Ltd.[ 2018 (7) TMI 567 - SC ORDER] . Thus, the ground raised by the assessee is allowed for statistical purposes.
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2021 (1) TMI 640
Disallowance of deduction u/s 43B - employees contribution to the Employees Provident Fund (EPF)/ Employees State Insurance Corporation (ESIC) deposited beyond the due date - HELD THAT:- With respect to the employees contribution received by the assessee if the assessee has not credited the said sum to the employees account in the relevant fund or funds on or before the due date mentioned in explanation to section 36(1) (va), the assessee shall not be entitled to deduction of such amount in computing the income referred to in section 28 of the Act. Therefore, there is no merit in this ground of appeal assessee. In the case of Gujarat State Road Transport Corporation Ltd. [ 2014 (1) TMI 502 - GUJARAT HIGH COURT ] and M/s.Checkmate Facility Electronics Solutions P.Ltd. Vs. DCIT [ 2018 (10) TMI 994 - GUJARAT HIGH COURT ] wherein it is held that the employees contribution to the Employees Provident Fund (EPF)/ Employees State Insurance Corporation (ESIC) deposited beyond the due date prescribed under section 36(1)(va) of the Income-tax Act, 1961 would not be eligible for deduction under section 43B of the Act, even if deposited before the due date of filing the tax return - Decided against assessee. Disallowance on account of expenditure on consultancy and legal fees - As per AO since the transaction entered under Preparation of Amalgamation of MRPL with MIP and Lawyers fees for Merger which itself explains that the said expenses were incurred wholly and exclusively for the purpose of amalgamation or demerger of an undertaking, and therefore section 35DD is applicable - HELD THAT:- The concurrent findings of Revenue authorities that purpose for which the expenditure was incurred is specific and the claim of expenditure against Tax Consultancy under the column Transaction Text of ledger of Transactions, the term Preparation of Amalgamation of MRPL with MIP and Lawyer fees for Merger respectively mentioned, were not successfully rebutted by the assessee before us also. This treatment and classification of the said expenditure in the accounting transaction by the assessee clearly shows that the expenditure was incurred wholly and exclusively for the purpose of amalgamation or demerger which would attract provisions of section 35DD. Before us also, the assessee cannot better its case, and rather simply reiterated the submissions as were made before the lower authorities. Therefore, for the reasons discussed in the orders of the Revenue authorities, and the very premise on which the Assessing Officer denied the claim of the Assessee is found to be factually tenable and hence, invocation of provision under section 35DD of the Act cannot be said to be incorrect and unjustified. - Decided against assessee.
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2021 (1) TMI 639
Addition of accrued interest on the investments made by the assessee with portfolio management - 20% assured income is guaranteed by the recipient of the amount - AR contentions are that ₹ 4 crore are given for investment in equity shares - HELD THAT:- We find that the concept of real income will come into the picture and only real income will be taxable in the hands of the assessee irrespective of the assessee following mercantile system of accounting or cash system of accounting. In the present case, the assessee has made an investment of ₹ 4 crores and on the assurance that 20% of the assured income by investment in equity will be paid to the assessee. Since there is lapse on the part of the portfolio management person and no interest nor dividend income is received. A.O has estimated the income on such investments. We found that the assessee has not received any income as per the financial statement nor any dividend income on investments has accrued. Assessee has initiated legal proceedings against the loan creditor and yet to recover the amount. AO has not disputed the fact of filing of complaint and legal proceedings and also there is no real income accrued to the assessee. We are of view that no real income has accrued even though the assessee fallows the mercantile Accounting System. Accordingly, the estimation of interest income is not tenable and the notional income cannot be hypothetical basis for making an addition by the A.O, and we set aside the CIT(A) order on this particular ground of appeal and direct the A.O to delete the addition and allow the ground of appeal of the assessee. Addition u/s 68 - HELD THAT:- CIT(A) on this disputed issue has granted the partial relief based on the evidences filed in the course of the appellate proceedings and remand report. Whereas, in respect of ₹ 50,000/-addition sustained by the CIT(A).Even before us, the assessee could not substantiate with any evidence of the sources.Accordingly, we find, there is no merits in the submissions of the Ld.AR and confirmed the order of the CIT(A) on this disputed issue and dismiss the ground of appeal of the assessee. Disallowance of trading loss treated as speculation loss - AR submitted that the tax authorities have not considered the various facts, which were placed in the hearing proceedings and prayed for an opportunity to substantiate with evidences before lower authorities - HELD THAT:- We find this matter requires verification of facts and accordingly, we restore the disputed issue for limited purpose to the file of the A.O to verify and examine the facts on trading in commodities and allow the ground of appeal for statistical purposes.
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2021 (1) TMI 638
Penalty u/s 271(1)(b) - non-compliance of notice u/s 142(1) - HELD THAT:- Assessee was non-cooperative and in default so as to attract penalty under section 271(1)(b) - In the case laws relied upon by assessee cited ITAT held that when an assessment was made under section 143(3) and not under section 144 subsequent compliance in the assessment proceedings was considered as good compliance so as to mitigate one single instance of default committed earlier, and ignored by the AO while framing assessment under section 143(3), levy of penalty under section 271(1)(b) is not justifiable. We do not find any compelling reasons to impose penalty under section 271(1)(b) and therefore, we delete the same and cancel the orders of the Revenue s authorities passed under section 271(1)(b). Appeal of the assessee is allowed.
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2021 (1) TMI 637
Best judgment assessment u/s 144 - CIT(A) refusing to admit additional evidences - addition relating to bank deposits and interest from banks - HELD THAT:- A.O. was constrained to complete the assessment to the best of his judgement u/s 144 of the Act in view of non-cooperation from the assessee s side. As stated assessee was unwell and hence he did not properly represent the matter before A.O. Hence, the assessee has furnished evidences before Ld. CIT(A) to substantiate the cash deposits made into the bank account. CIT(A) has refused to admit them. Assessee did not represent before the AO for the reasons stated above. Hence assessee should not be put into difficulties for the failure of the Ld A.R. Further assessment has been completed by AO to the best of his judgement u/s 144 of the Act. Hence, we are of the view that there was sufficient cause for the assessee in not presenting the evidences before the AO. Accordingly, in the interest of natural justice, the additional evidences furnished by the assessee should have been admitted by Ld CIT(A). Accordingly, we admit the additional evidences. However, these evidences require examination at the end of AO. Since there was failure on the part of the assessee to properly represent before the A.O., we are of the view that the assessee should bear a cost for causing unwarranted inconveniences to the department. Accordingly, we impose a cost of ₹ 2,000/- (Rs. Two thousand only) upon the assessee,
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2021 (1) TMI 636
Penalty u/s 271(1)(b) - non-compliance to the statutory notice issued u/s 142(1) along with the questionnaire - CIT(A) confirmed the penalty so levied by the AO on the ground that despite issue of notice the assessee did not appear before him - HELD THAT:- It is the submission of the ld. Counsel that given an opportunity the assessee is in a position to substantiate its case before the CIT(A) regarding the non-compliance. Considering the fact that the ld.CIT(A) has issued only one notice of hearing to the assessee and, thereafter, passed the ex parte order, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the CIT(A) with a direction to grant one final opportunity to the assessee to substantiate its case and decide the issue as per fact and law. The assessee is also hereby directed to appear before the CIT(A) and present its case failing which the ld.CIT(A) is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2021 (1) TMI 635
No sufficient opportunity granted by the Ld. CIT(A) for hearing of the case - Income from compensation received against acquisition agriculture exempted income 10(37) - HELD THAT:- We find that due to non-appearance of the assessee before the Ld. CIT(A), she passed the exparte order sustaining the various additions made by the AO for both the years. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issues to the file of the Ld. CIT(A) with the directions to grant one final opportunity to the assessee to substantiate his case and decide the appeal as per fact and law. The assessee is also hereby directed to appear before the Ld. CIT(A) and substantiate his case failing which, the Ld. CIT(A) is at liberty to pass appropriate order, as per law. No grounds raised by the assessee are accordingly allowed for statistical purposes.
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2021 (1) TMI 634
Set off of MAT credit u/s.115JAA - interest u/s.234C of the Act was also charged by the ld. AO for the deficit in tax - Difference in figure arose because of the fact the assessee computed the difference in tax payable under normal provisions of the Act and tax payable u/s.115JB after including surcharge and education cess to be part of the tax AND AO computed the same ignoring surcharge and education cess from the tax portion - HELD THAT:- Purpose of computation of MAT credit u/s.115JAA tax portion has to be inclusive of surcharge and education cess and accordingly, the computation made by the assessee in its return of income in respect of MAT credit is correct. We find that assessee being a company had filed its return of income in ITR-6 (i.e. prescribed form) under schedule for MAT credit (Schedule MATC), the assessee is precluded from filling up any figure as they are automatically picked from yet another schedule in the same ITR form i.e. 1d of Part-BTT1 and 5 of part-B-TT1, wherein the figures mentioned thereon, represent tax payable under normal provisions and u/s.115JB of the Act respectively, which is admittedly inclusive of surcharge and education cess. Hence, there is absolutely no scope for ignoring surcharge and education cess for the purpose of computing MAT credit u/s.115JAA of the Act. It is a well known fact that the ITR return form is a form prescribed by CBDT and the revenue is bound to follow the same. We find lot of force in the argument advanced by the ld. AR and accordingly, allow the grounds raised by the assessee. With regard to MAT credit u/s.115JAA and direct the ld. AO to accept the working given by the assessee as per the return of income. Charging of interest u/s.234C of the Act should always be on returned income and not on assessed income as it is a settled law. Accordingly grounds raised by the assessee allowed.
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2021 (1) TMI 633
Disallowance u/s 14A read with Rule 8D(2) - assessee had made suo moto disallowance - assessee pleaded before the ld CIT-A that it had sufficient own funds and hence there cannot be any disallowance of any interest under the second limb of Rule 8D(2) of the Rules - HELD THAT:- Once sufficient own funds are available with the assessee for making investments, then there cannot be any disallowance of interest under second limb of Rule 8D(2) of the Rules, eventhough the same was erroneously made by the assessee in the return of income. We are conscious of the fact that this direction may eventually go to reduce the returned income of the assessee and in that regard, we hold that the revenue is authorised to collect taxes in accordance with law as per Article 265 of the Constitution of India and not based on the consent or acceptance of the assessee either in the return or during the course of assessment or appellate proceedings. There is no estoppel against the statute. In view of our aforesaid decision directing the ld AO to delete the disallowance of interest under second limb of Rule 8D(2) of the Rules, the alternative ground raised by the assessee on without prejudice basis that only the net interest is to be considered for working out the disallowance, need not be gone into and accordingly not adjudicated herein. Disallowance of indirect expenses under third limb of Rule 8D(2) of the Rules, we direct the ld AO to consider only those investments which had actually yielded exempt income for working out the disallowance thereon by placing reliance on the decision in the case of Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] - AO is directed to recompute accordingly and further reduce the disallowance already made by the assessee in the return under the third limb thereon. The grounds raised by the assessee as well as the revenue are disposed off in the aforesaid terms.- Decided in favour of assessee.
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2021 (1) TMI 632
Penalty u/s. 271(l)(c) - assessee argued that the CIT(A) has decided the matter of controversy in absence of the assessee and without giving an opportunity of being heard to the assessee in accordance with law - HELD THAT:- Order of the CIT(A) in question is wrong against law and facts and is liable to be set aside. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. On appraisal of the order of the CIT(A) dated 13.02.2017, we noticed that the CIT(A) decided the matter of controversy in absence of the assessee without giving an opportunity of being heard to the assessee. It is against the principle of natural justice. A proper and reasonable opportunity is required to be given to the assessee before the deciding the matter of controversy in accordance with law. The order of the CIT(A) is not liable to be sustainable in the eyes of law, therefore, we set aside the finding of the CIT(A) on all the issues and restored the matter before the CIT(A) to decide the matter afresh by giving an opportunity of being heard to the assessee in accordance with law. Apeals filed by the assessee are hereby allowed statistical purposes.
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2021 (1) TMI 622
Addition of loss claimed in Future Options ( F O ) - Reliance on statement of third party (Broker) recorded during survey u/s. 133A - AO discarded the primary documents produced by the assessee to establish the veracity of the transaction in F O, by bringing in the statement of director and accountant of M/s KSPL which was the broker of the assessee in the transaction of F O - HELD THAT:- The statement of both Shri Harshvardhan Kayan and Shri Mukesh Agarwal extracted by the AO neither bring out any wrong doings on the part of assessee nor say anything about F O transactions. It only says about facilitation of bogus LTCG through jamakharchi companies which were their clients - if the AO had any doubts lingering in his mind, then he should have summoned these persons and questioned them and un-earthed the truth. Rather than doing so, he simply relied upon the statements of both these persons during survey of a third party and without any incriminating oral statements/documentary evidence or material against the assessee or the F O transactions carried out by the assessee, based on suspicion only has drawn adverse inference/finding against the assessee which action of both AO as well as Ld CIT(A) cannot be countenanced. AO himself has admitted that the statement of Shri Harshavardhan Kayan as well as that of Shri Mukesh Agarwal has been recorded during survey u/s. 133A and it is noted that the statement is not incriminating against the assessee since its name or the transaction of F O has not been negatively commented upon by them. Further, it is trite that the statement recorded during survey u/s. 133A cannot be the sole basis on which adverse inference can be drawn against the assessee. The assessee has been kept in the dark and has not been given the entire copy of the statement of Shri Harshavardhan Kayan as well as that of Shri Mukesh Agarwal; and no opportunity has been granted to the assessee to cross examine Shri Harshavardhan Kayan as well as that of Shri Mukesh Agarwal. The statement of Shri Harshavardhan Kayan as well as that of Shri Mukesh Agarwal cannot be looked into for drawing an adverse inference against the assessee. And though their statements are not incriminating against the assessee, any way if both their statements reproduced are kept aside for the legal infirmities, there are no other material against the assessee in respect of its transaction in F O - Based on the supporting evidence produced by the assessee to validate its transaction of F O in recognized stock exchange, the loss suffered in the said transaction has to be allowed and it is ordered accordingly. Appeal of assessee is allowed.
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2021 (1) TMI 621
TP Adjustment - Comparable selection - HELD THAT:- For the purpose of exclusion or inclusion of any comparable, only two things are required to be looked into (1) the functional profile of the assessee, (2) the annual reports of the comparable companies. Accentia Technologies Limited - Merely because the assessee as well as the comparable company operates in different business segment, it does not make their functions different. It is undisputedly both are engaged in BPO services. As the comparable company has only one segment of Health Care BPO services, we do not find any requirement of segmental information. With respect to the extra-ordinary events stated by the ld. AR it is apparent that this company has entered into scheme of amalgamation wherein earlier the subsidiary of the company, amalgamated with the assessee company, with effect from 1st April, 2008. Therefore, in this year there is no extra-ordinary event but it was in financial year 2008-09. There is no fluctuation in profit. Therefore we find this comparable company functionally similar and does not have any other reasons to exclude it. In view of this we do not find any infirmity in the order of the ld. Lower authorities in retaining this comparable. This comparable company cannot be excluded. Fortune Infotech Ltd. fails the receding sales filter applied by the TPO and also owns its own software Finetran index - this comparable company does not pass is a filter applied by the learned TPO himself. In view of this, we direct the ld. TPO to exclude it. Igate Clobal Solutions Ltd - Such a large company whereby turnover of 509 times cannot be considered as a comparable. We direct the ld. TPO to exclude the same. Infosys BPO Ltd.- The turnover of the comparable is ₹ 1126 crores which is 616 times more than the assessee. Therefore, on this criteria itself, we direct the ld. TPO to exclude this comparable company. TCS E-Serve International Ltd - It has a huge brand value as it belongs to Tata Group. We find that this comparable company has a turnover of ₹ 1,492,956,000/ whereas the turnover of the assessee is merely ₹ 1.82 crores. Therefore on this criteria itself the learned TPO is directed to exclude this comparable company. TCS E Serve Limited company has a turnover of ₹ 1359 crores and therefore on this criteria itself the learned TPO is directed to exclude this comparable company.
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2021 (1) TMI 620
Capital gain Computation - Stamp duty valuation u/s 50C - difference between sale consideration and value adopted for the purpose of stamp duty was only 6.55% - HELD THAT:- There is no variation in the material facts in this respect in 2021 vis- -vis the material facts in 2003. What holds good in 2021 was also good in 2003. If variations up to 10% need to be tolerated and need not be probed further, under section 50C, in 2021, there were no good reasons to probe such variations, under section 50C, in the earlier periods as well. We are, therefore, satisfied that the amendment in the scheme of Section 50C(1), by inserting the third proviso thereto and by enhancing the tolerance band for variations between the stated sale consideration vis- -vis stamp duty valuation to 10%, are curative in nature, and, therefore, these provisions, even though stated to be prospective, must be held to relate back to the date when the related statutory provision of Section 50C, i.e. 1st April 2003. What is means is that even if the valuation of a property, for the purpose of stamp duty valuation, is 10% more than the stated sale consideration, the stated sale consideration will be accepted at the face value and the anti-avoidance provisions under section 50C will not be invoked. Once legislature very graciously accepts, by introducing the legal amendments in question, that there were lacunas in the provisions of Section 50C in the sense that even in the cases of genuine variations between the stated consideration and the stamp duty valuation, anti-avoidance provisions under section 50C could be pressed into service, and thus remedied the law, there is no escape from holding that these amendments are effective with effect from the date on which the related provision, i.e., Section 50C, itself was introduced. These amendments are thus held to be retrospective in effect. Therefore, the provisions of the third proviso to Section 50C (1), as they stand now, must be held to be effective with effect from 1st April 2003. DR, however, does not give up. DR has suggested that we may mention in our order that relief is being provided as a special case and this decision may not be considered as a precedent . Nothing can be farther from a judicious approach to the process of dispensation of justice, and such an approach, as is prayed for, is an antithesis of the principle of equality before the law, which is one of our most cherished constitutional values. Our judicial functioning has to be even-handed, transparent, and predictable, and what we decide for one litigant must hold good for all other similarly placed litigants as well. We, therefore, decline to entertain this plea of the assessee. As against the stated consideration of ₹ 75,00,000, the stamp duty valuation of the property is ₹ 79,91,500. The difference is just ₹ 4,91,500, which is about 6.55% of the stated sale consideration. As the difference between the stated consideration vis- -vis the stamp duty valuation is admittedly less than 10% of the stated consideration in this case, we are of the considered view that Section 50C will have no application in the matter. The enhancement in capital gain computation, as made by the AO, thus stands disapproved.
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2021 (1) TMI 619
Unexplained jewellery - jewellery found from the premises R-4 during search action - source of acquisition of the jewellery found from the room of the assessee - HELD THAT:- From the facts recorded by the lower authorities, it is not clear whether the jewellery stated to be issued on approval, was forming part of the stock of M/s Raj Mahal Jewellers Private Limited as on the date of the search. In absence of such a finding of the fact, the jewellery found from room of the assessee cannot be treated as explained merely by presenting approval notes. In the facts and circumstances of the case, we feel appropriate to set aside the finding of the Learned CIT(A) and restore the matter back to the file of the AO for verifying source of acquisition of the jewellery. AO may also carry out any other inquiries or verification deem fit in the facts and circumstances of the case and ensure that reconciliation is done with genuine evidences found during the course of the search action. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. Addition on account of commission income for obtaining accommodation entries - AO observed huge amount of credits in two bank accounts maintained with Federal Bank Ltd. and Karnataka Bank Ltd. respectively - HELD THAT:- On perusal of the order of the AO, we find that addition has made on the presumption that assessee was engaged in providing accommodation entries, but no evidence has been brought on record by the AO to substantiate that the assessee was engaged in providing accommodation entries. The assessee has been subject to search and if at all the assessee was carrying out business of providing the accommodation entries, then such evidence must have been found against the assessee. But as per record no such evidences have been found even after conducting search at the premises of the assessee. Thus, addition cannot be made merely on the presumption that family concerns have admitted providing accommodation entries in their statement of facts before the Settlement Commission. Accordingly, we do not find any infirmity in the finding of the Ld. CIT(A) on the issue-in-dispute and accordingly, we uphold the same. The ground No. 2 of the appeal of the Revenue is accordingly dismissed. Unexplained investment in shares - HELD THAT:- We find that the AO held the investment in shares as unexplained mainly due to reason that no information regarding source of investment was provided by the assessee, however, before the Learned CIT(A), the assessee has duly explained the bank account through which investment was made and the source of money. DR has not disputed this finding of the CIT(A) that investment had been made through bank account. In our opinion, finding of the CIT(A) on the issue-in-dispute is well reasoned and we do not find any infirmity in order of the learned CIT(A) and accordingly, we uphold the same. The ground of the appeal of the Revenue is accordingly dismissed.
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2021 (1) TMI 613
Maintainability of appeal due to low tax effect - Bogus loan taken - Addition u/s 68 - Assessee obtained bogus share application money of premium - HELD THAT:- It is not the case where claim of bogus long term capital gain or short term capital gain is made. It could be a case of suspicious loan transaction. Since the suspicious loan transaction is not covered in the exceptions clause of CBDT circular. We find merit in the contention of the Ld. counsel for the assessee. Hence, we hold that the present appeal is not maintainable in view of the monetary limit prescribed by CBDT Circular No. 17 of 2019 dated 8th August 2019. The appeal is dismissed as not maintainable.
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2021 (1) TMI 612
Grant of exemption u/s. 10(23C)(vi) denied - main object of the trust is to carry out educational activities - HELD THAT:- As observed that the assessee trust has e-filed application in Form 56 for grant of exemption u/s. 10(23C)(vi) for the year 2020-21 on 29.02.2020. Thereafter, whatever notices were issued to the assessee asking them to furnish all the requisite details/evidences, that was the time when pandemic was at its peak. That various offices were closed and there was no communication with people whatsoever and the entire working atmosphere was brought to a standstill. Assessee was unable to furnish the details called for by the Ld. CIT(Exemption) and uploaded the same in the Department's portal. This non-compliance is definitely not deliberate or intentional rather possibly due to prevailing circumstances. As known principle recognized by the Higher Judicial Forums and even by the Tribunal that Income Tax Legislation is a part and parcel of welfare legislation where the interest of the tax payers needs to be protected. One more opportunity should be given to the assessee to furnish requisite details/evidences before the Ld. CIT(Exemption) so that the case may be represented on merits and thereafter, the Ld. CIT(Exemption) shall adjudicate the matter while complying with the principles of natural justice.Appeal of the assessee is allowed for statistical purposes.
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2021 (1) TMI 608
Penalty u/s. 271(1)(c) - difference in the actual service tax paid and that claimed at the assessee's behest - HELD THAT:- Difference appears to have arisen on account of assessee's auditor's certificate issued inadvertently. Hon'ble apex court decision in Price Waterhouse Coopers Pvt. Ltd. [ 2012 (9) TMI 775 - SUPREME COURT] holds in such a case of an inadvertent mistake in raising a claim is neither concealment nor that of filing of inaccurate particulars of income. Their lordships yet another decision in CIT Vs. Reliance Petroproducts P. Ltd., [ 2010 (3) TMI 80 - SUPREME COURT] also settled the law much earlier that - quantum and penalty are distinct proceedings wherein each and every disallowance/addition made in case of the former and does not automatically attract the latter penal provision. Thus both the learned lower authorities have erred in penalising assessee u/s. 271(1)(c) in this case of the assessee's auditor's inadvertent mistake in raising higher service tax claim. This penalty is directed to be deleted therefore. - Decided in favour of assessee.
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2021 (1) TMI 607
Disallowance of non-genuine purchases - CIT- A restricting the Gross Profit to 5%, restricted the disallowance of bogus purchases to the of 12.5% only - HELD THAT:- CIT(A) has not referred GP for earlier or subsequent years or Net Profit in assessee s own case. CIT(A) in a single sentence held that the assessee has merely shown Gross Profit of 1.66% of sales. In our view, in absence of any material evidence the ld.CIT(A) ought to have followed the decision of Mayank Diamonds Pvt Ltd. [ 2014 (11) TMI 812 - GUJARAT HIGH COURT] . Therefore, we direct the AO to restrict the disallowance to 5% of the gross profit, accordingly, appeal of the Revenue is partly allowed.
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2021 (1) TMI 606
Deduction u/s 35AD and set off u/s 73A against the loss incurred by it in other unit - HELD THAT:- We have considered the submission of the assessee in regular hearing and came to the conclusion that assessee is eligible to claim deduction and set off u/s 35AD and 73A respectively. While dealing with individual units, we have already adjudicated that the units Mumbai and Indore are specified business units and eligible to set off u/s 73A and can claim deduction u/s 35AD. We observe that Indore Unit was established before the cut off dates specified in section 35AD. Accordingly, even though Indore unit is comes under specified business, but cannot claim any benefit u/s 35AD. The same was acknowledged by the assessee. Loss of assessee on account of a specified business claiming deduction u/s 35AD would be allowed to set of against the profit of another specified business. U/s 73A, whether or not the later is eligible for deduction u/s 35AD. Therefore, by the above clarification, it is clear that assessee can claim set off against the profit from specified business units of Mumbai and Indore. We notice from the record that assessee has acknowledged that it is not claiming deduction u/s 35AD only. But we came to conclusion that assessee is not claiming deduction u/s 35AD as well as surrendering the set off u/s 73A. From the records placed before us, we direct AO to allow the assessee to claim set off against the profit earned from units Mumbai and Indore against the carry forward losses of Chandigarh units, as per the amended provision and clarification note given for Finance Bill 2011. Accordingly, MA filed for both the AYs are allowed.
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2021 (1) TMI 605
Levy penalty u/s. 271B - not filing tax audit report within the due date specified under the Act - HELD THAT:- In this case, on perusal of details filed by the assessee, we find that although there is a delay in filing of audit report as required u/s. 44AB electronically, but such return has been filed much before the date of completion of assessment proceedings. Moreover, audit report as required to be obtained u/s. 44AB was obtained from auditors on 23.09.2013. When audit report was obtained within due date, merely for delay in filing audit report in e-portal of the Department cannot be considered as deliberate attempt made by assessee for not filing audit report so as to impose penalty u/s. 271B - This view is supported by the decision in the case of Harishbhai Babubhai Patel [ 2017 (2) TMI 1227 - ITAT AHMEDABAD] where the Tribunal, after considering relevant facts has deleted penalty levied by the Assessing Officer for non-submission of electronic audit report within the due date allowed under the Act. Hence, we direct the Assessing Officer to delete penalty levied under section 271B for non-submission of audit report within due date allowed under the Act. Appeal filed by assessee is allowed.
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2021 (1) TMI 604
Disallowance of fees and service charges paid - Service charges and fees paid to related concerns of assessee - Whether AO has disallowed fees and service charges paid to two parties on ad-hoc basis and has also applied provisions of section 35D and amortized remaining expenditure over a period of five years - HELD THAT:- Appeal filed by the assessee for the assessment year 2008-09 has been set aside by the Tribunal to the file of learned CIT(A) and directed the CIT(A) to decide issue after considering additional evidences filed by the assessee. The assessee claims before us that issue in present appeal is linked to disallowance made by Assessing Officer towards fees and service charges paid to above two concerns for the assessment year 2008-09 and finding or outcome of the appeal for assessment year 2008-09 would have bearing on the present appeal. Considering the facts and circumstances of this case and consistent with the view taken by the co-ordinate Bench for assessment year 2008-09[ 2015 (12) TMI 1844 - ITAT MUMBAI] we set aside the appeal to the file of learned CIT(A) and direct him to reconsider the issue in accordance with law, after considering outcome of appeal filed by the assessee for assessment year 2008-09. Appeal filed by the assessee is allowed for statistical purposes.
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2021 (1) TMI 603
Ad hoc disallowances @20% of expenses for want of proper bills and vouchers as well as the telephone and vehicle expenses on the ground of personal use - assessee has submitted that the AO has made ad hoc disallowances in respect of certain expenses without pointing out any specific defect or the profit declared by the assessee is less than the past history - HELD THAT:- So far as the expenditure in respect of advertisement, miscellaneous expenses, repair and maintenance of shop expenses special discount, the same are disallowed by the AO for want of bills and vouchers. The expenditure on account of telephone and vehicle running are also disallowed to the extent of 20% for personal purpose. The assessee has not disputed the fact that the proper bills and vouchers were not produced by the assessee for verification therefore to that extent the assessee has failed to prove that all the expenses were incurred wholly and excessively for business purpose. The onus to prove the claim of expenditure incurred wholly and excessively for business purpose lies on the assessee. Accordingly, there is a default on the part of the assessee to substantiate the claim of the expenditure. However, the disallowance of 20% made by the AO is arbitrary and excessive. As relying on M/S. RIMJHIM ISPAT LIMITED [ 2016 (1) TMI 374 - ALLAHABAD HIGH COURT] ad hoc disallowance made by the AO @ 20% is restricted to 5%. The AO is directed to re-compute the disallowance by applying 5%. The appeal is partly allowed.
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2021 (1) TMI 602
Stay u/s 220(6) rejected - revenue s suggestion to direct the assessee to make payment of 20% of the disputed demands - HELD THAT:- AO does not wish to recover the demands in the hope that as a law-abiding corporate citizen, the assessee will volunteer to cooperate with the income tax department and the Assessing Officer chooses to wait till suitable clarification is obtained from the Hon ble High Court to the effect that the stay granted in a writ petition challenging the validity of order declining stay under section 220(6), which is now admittedly infructuous in the light of the appeal having been disposed of by the learned CIT(A), ceases to hold good. This is indeed a welcome approach and reflects the utmost faith in and courtesy with which our taxpayers are being treated. In view of this factual position, we see no need to take a call on merits on this stay petition at this stage.The stay petition is, given the approach adopted by the field authorities, infructuous and must be dismissed as such. We must, however, take this paradigm shift in the approach of the field authorities, with a reasonable degree of circumspection. As for the revenue s suggestion to direct the assessee to make payment of 20% of the disputed demands, we find it difficult to understand, much less approve, such a request. It is not for the Income Tax Appellate Tribunal to supplement or support the recoveries by the field officers. Once the Assessing Officer himself has decided not to take coercive measures, for the time being, it cannot be open to us to direct the assessee to pay any part of the disputed demands. When the powers of recovering the disputed taxes are with the Assessing Officer, and when, according to him, there are no fetters imposed on the exercise of such powers, it cannot be open to him to ask anyone else to direct him to exercise these powers. As for the request for an early hearing made by the learned senior counsel, we have taken note of no objection thereto by the revenue authorities and the submission of the learned Departmental Representative that the Assessing Officer is in the process of filing cross-appeal, along with a petition seeking condonation of delay, against the partial relief granted by the CIT(A), as also the fact that both the cross-appeals are required to be heard together. Therefore, while we direct the Registry to list this appeal for the out of turn hearing on 18th January 2021, we also direct the Departmental Representative to move a petition seeking consolidation of appeals, if any such cross appeal is filed, so that the cross appeals can be taken up together.
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2021 (1) TMI 601
Disallowance u/s 14A r.w.r. 8D - Whether no nexus between expenses debited to profit loss account and exempt income earned for the year? - HELD THAT:- Tribunal has considered the arguments of the assessee that unless there is a direct nexus between the expenses incurred and exempt income, no disallowance can be made u/s.14A of the Act by invoking Rule 8D of the Rules and held that since provisions of Section 14A is a deemed fiction where direct nexus between expenditure debited to the profit loss account and exempt income is not necessary. Therefore, we reject the arguments taken by the assessee that there is no nexus between expenses debited to profit loss account and exempt income earned for the year. Unless AO records satisfaction having regard to books of accounts that suo moto disallowance or no disallowance made by the assessee is not correct and he cannot proceed to compute disallowance u/s.14A - As in MAXOPP INVESTMENT LTD. [ 2018 (3) TMI 805 - SUPREME COURT] has considered the issue of satisfaction in the above case and held that where the AO is not satisfied with suo moto disallowance made by the assessee having regard to books of accounts that suo moto disallowance made by the assessee is not correct, he cannot invoke provisions of Rule 8D of the Rules. In this case on perusal of facts available on record, we find that the AO has recorded satisfaction as required u/s.14A(2) of the Act and applied Rule 8D(2) of the Rules to compute disallowance. Therefore the arguments taken by the assessee that no satisfaction is recorded by the AO is rejected. Disallowance computed by the AO and modified by the ld.CIT(A) on the basis of revised computation filed by the assessee during appellate proceedings - Once Rule 8D(2) of the Rules is applicable for computation of disallowance then the AO has to take net investments recorded in the books of accounts which yield exempt income for the purpose of determining disallowance under Rule 8D(2)(iii) of the Rules. The ld.CIT(A) has considered revised computation filed by the assessee and has directed the AO to exclude investments which do not yield exempt income for the purpose of computation of average value of investments and delete excess disallowance made under Rule 8D(2)(iii) of the Rules. We therefore are of the opinion that there is no error in the findings recorded by the CIT(A) to confirm / modify disallowance of expenditure in relation to exempt income u/s.14A r.w.rule 8D(2)(ii) of the Rules. Hence, we are inclined to uphold findings of the CIT(A) and dismiss the appeal filed by the assessee.
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2021 (1) TMI 600
Validity of Reassessment proceedings u/s. 147/148 - Notice issued after the four years from the date of expiry of the relevant assessment year - HELD THAT:- Reason recorded on 20.05.2014 should be considered to be final and absolute reason recorded by the Ld. A.O. for reopening the assessment for assessment year 2009-10 - no allegation is found to be made by the Revenue for not disclosing truly and fully all material facts necessary for the assessment year 2009-10 by the assessee - when the second reason was recorded on 20.05.14, the first reason dated 20.03.14 has lost its force. Had there been no latches on the part of the Revenue in recording reasons by issuing of the Memo on 20.03.14 there would have not been any necessity in issuing the further reason recorded on 20.05.14. Therefore the submission made by the Ld. Counsel appearing for the assessee that the proceeding itself has initiated on the basis of the reasons recorded on 20.05.14 is justified. Whether the subsequent notice dated 20.5.14 issued after the expiry of four years from the date of completion of the relevant assessment year has fulfilled the pre-condition as stipulated by the 1st Proviso of section 147 of the Act by the Revenue? - We find no merit in the reasons recorded for reopening of assessment finally on 20.05.2014, in the absence of any allegation made by Revenue against the assessee for his failure to disclose truly and fully all relevant material facts for assessment for the year under consideration thereby failed to fulfil the pre-condition provided by the 1st Proviso of Section 147 of the Act. The entire proceeding of reassessment dehors the statute, is not maintainable in the eyes of law and hence liable to be rejected. We, therefore, quash the reopening/reassessment proceedings initiated u/s. 147/148 of the Act.- Decided in favour of assessee.
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Customs
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2021 (1) TMI 628
Seeking direction to the Respondents to grant copies of Panchnama, Seizure Memo issued under section 110 of the Customs Act, 1962 - HELD THAT:- The grievance ventilated by the Petitioner is redressed. Petitioner may send an Authorized Representative to the concerned officer of the Respondents, to collect the documents as enumerated in this prayer of the writ petition. Direction to respondent to allow provisional release of the subject goods - HELD THAT:- In any case learned counsel for the Petitioner candidly admits that the impugned order dated 14th October, 2020 passed under Section 110A of the Customs Act, 1962 is an appealable order and the Petitioner would be filing an appeal against the said order, before the appropriate Authority, in accordance with law and thus does not press this prayer. Petition disposed off.
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2021 (1) TMI 627
Writing off the imported duty-free materials from the books of accounts of the importer - Whether amounts to disposed of within the meaning of Customs Notification No.30/97-Cus dated 01.04.1997 under which the goods/materials are imported? - 'write off' the duty free imported material from the books of accounts without paying duty - violation of norms of 'Actual User Condition', 'export obligation' or not - utilization in discharge of export obligation or for replenishment' prescribed under Customs Notification No.30/97-Cus dated 1.4.1997 - writing of the duty free imported material without complying with the condition of 'actual user' imposed in the exemption order by the Department - clause (vii) of Notification No.30/1997-Cus dated 01.04.1997 - HELD THAT:- The tribunal on the basis of advance licences issued to the respondent and the standard input output norms has recorded a finding that the respondent was allowed to import 2% in excess to provide for the wastage. It is also pertinent to mention here that since, the respondent was allowed to import 2% in excess of their actual requirement, it is the case of the respondent that some of the components remained unutilized due to closure of messaging products division as the components were rendered obsolete. Admittedly, the respondent has fulfilled the entire export obligation and has realized the foreign exchange and has neither diverted the import material nor has sold it and has used all the imported materials. It is pertinent to mention here that the provisions of the Income Tax Act, 1961, permit the respondent to write off the unused assets. Therefore, clause (vii) of the Notification has to be read in the context of the legal provisions and cannot be read in isolation. The word 'any manner' therefore, cannot include within its ambit written off duty free imported material in the books specially when the same was in the custody of the respondent itself as writing off of the same is permissible in law. Therefore, the contention of the revenue that provision or clause (vii) of the Notification. Was violated does not deserve acceptance. Appeal dismissed - the substantial questions of law involved in this appeal are answered against the revenue and in favour of the assessee.
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2021 (1) TMI 623
Classification of imported goods - LCD panels and parts of LCD panels - Department contends that both these items would fall under CTH 8529 9090 whereas the appellant contends that LCD panels would fall under CTH 9013 8010 and parts of LCD panels would fall under CTH 9013 9010 - period of dispute is from January 2018 to February 2018 and February 2018 to February 2019 - HELD THAT:- The very same issue came up for consideration before the Tribunal in the case of M/S SAMSUNG INDIA ELECTRONICS PVT LTD, M/S MOSER BAER INDIA LTD VERSUS COMMISSIONER OF CUSTOMS, NOIDA [ 2015 (10) TMI 2258 - CESTAT NEW DELHI] . The competing classification with regard to Liquid Crystal Devices (LCDs) imported was CTH 9013 8010 as against CTH 8529 9090. The Department was of the view that the goods will fall under CTH 8529 by relying on Section Note 2(b) of Section XVI of the Customs Tariff Schedule. The Tribunal held that the goods would fall under CTH 9013 8010 and relied upon the decision of the Hon'ble Apex Court in the case of M/S. SECURE METERS LTD. VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2015 (5) TMI 241 - SUPREME COURT] . LCD panels are classifiable under CTH 9013 8010 and parts of LCD panels are classifiable under CTH 9013 9010 - the classifications are to be under CTH 9013 8010 and CTH 9013 9010, the denial of exemption benefit to the appellant as per amendment Notification No. 92/2017-Cus. dated 14.12.2017 is without any factual or legal basis and requires to be set aside. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2021 (1) TMI 616
Seeking directions for holding and convening of AGM - Seeking appointment of Chairman to conduct the Annual General Meeting - HELD THAT:- It appears from the records that the Petitioner Company is a shareholder of the Respondent No.1 Company [M/s. Sayegh Paint Factories India Private Limited]. It is also seen that the Petitioner Company through its Directors made a specific demand in writing to conduct the Annual General Meeting of the Respondent Company, but no steps have been taken by the Respondent-Company or its Directors to convene the Annual General Meeting for the financial years 2018-2019 to transact the businesses sought for. This Tribunal has power to direct the calling of an Annual General Meeting of the Company as the Annual General Meeting of the Company for the year 2018-2019 and 2019-2020 have not been held. This Tribunal appoints Shri. K. R Jinan as the Chairman to conduct the meeting of Respondent Company - Chairman is to conduct the Annual General Meeting of the Respondent Company as prescribed under the Companies Act,2013 for the Financial Years 2018-2019 and 2019-2020 for which notice is to be given as per rules making it clear that one member of the Company Present in person or proxy shall be deemed to constitute a meeting - Petition disposed off.
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2021 (1) TMI 614
Seeking expulsion of the appellants from membership of the club taken by the managing committee of the respondent company - seeking rectification of register of Member of Respondent NO. 1 company by restoring the name of the appellant in the register without any break or interruption in his membership - HELD THAT:- The right of a member in a club is an important right which cannot be taken away only if such member raises his voice amongst members inter se regarding some irregularities in functioning of the Club and which messages are not made public, specially the content of which do not indicate that it was in any way derogatory to the prestige of the Club or was made With the intention to malign the reputation of the Club. Expulsion or termination of membership after initiation of the disciplinary proceedings is like imposing a major punishment which is to be done Very carefully and in such cases where it is proved beyond doubt that the member is guilty of a misconduct which has amounted to tarnishing the image of the Club or in any way hampering the best interest of the club. Records of the present case does not show anything to that affect. Perusal of Clause 36 of the Articles of Associations pertains to termination of membership of the Club, Clause 61 relates to the disciplinary proceedings against a member and Clause 62 relates to the expulsion of a member from the membership of the Club - The said provisions will apply only in case it is found by the Committee of Members that a particular member is showing/ doing such misconduct which requires the termination of membership to attract Clause 36 and identically Clause 61 and 62 of the Articles of Associations would only be applied when such allegations is found to be proved beyond any doubt. As in the present matter, a passing referencing has been made in the enquiry report about the publication in the newspaper but no such publication was brought on record apart from the two messages which has also being admitted by the Respondents that they have sent the same but on that basis alone it cannot be said that the said provisions would be attracted in the present case - Petition allowed.
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Insolvency & Bankruptcy
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2021 (1) TMI 618
Non-appointment of persons selected by the COC (Committee of Creditors) as Resolution Professional and Authorized Representative - Section 22 of IBC - HELD THAT:- Under Sub-Section (5) of Section 22 if the Board does not confirm the name of the proposed Resolution Professional within 10 days of the receipt of the name of the proposed Resolution Professional, then the Adjudicating Authority shall direct the IRP to continue to function as Resolution Professional until such time as the Board confirms the appointment of the Resolution Professional - Section 21(6-A) has provision with regard to Authorized Representative. This Section is required to be read with Regulation 16A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Regulation 16A of these Regulations records procedure with regard to selection of Resolution Professional to act as Authorized Representative. When Section 21(6-A) is read with these Regulations, and Resolutions passed by COC are kept in view, it is apparent that the Adjudicating Authority was required to treat Mr. Hari T. Devadiga as Authorized Representative whose name was even recognised by the Respondent No.1 when he filed CA No.669 of 2019. We find Adjudicating Authority had no power to impose Resolution Professional of its choice. Even for Authorised Representative decision of the majority is to be respected. The Impugned Order to the extent it appointed Respondent No.1 as Resolution Professional and Respondent No.2 as Authorised Representative - Matter remitted to the Adjudicating Authority directing that Mr. Hari T. Devadiga will be treated as the Authorized Representative of class of Financial Creditors (home or shop buyers) of Dreamz Infra India Ltd. under Section 21(6-A)(b) of IBC. Charge, if any, required to be handed over by Respondent No.2 shall be handed over to Mr. Hari T. Devadiga. The Adjudicating Authority shall in compliance of Section 22(4) forward the name of Mr. Konduru Prasanth Raju to the IBBI and follow the procedure as laid down in Section 22(4) and (5) of IBC. Appeal allowed by way of remand.
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2021 (1) TMI 617
Seeking direction to Committee of Creditors (CoC) and Resolution Professional (RP) to consider the Resolution Plan submitted by one M/s. Alkon Projects - HELD THAT:- If we pass order of liquidation of the Corporate Debtor, it may prejudicially affect the rights of such Horne-buyers. Some of them may render to be home-less despite paying some amount to the Corporate Debtor. Hence, we have taken for consideration these two applications, so that we can set right the CIRP of the Corporate Debtor. Moreover, the application for liquidation of the Corporate Debtor filed by RP has not been supported [confirmed final account and even 'by the resolution of the CoC. In this case, we are faced with the difficulty that CIRP period of 330 days has been over on 05.03.2020. Accordingly, RP has filed application for liquidation of the Corporate Debtor, but due to the declaration of 'Lock Down,' that application remained pending. In our considered view, since, the RP and CoC have received the resolution plans of one M/s. Alkon Projects, it would be appropriate if we direct the RP and CoC to consider the resolution plans first - in view of facts that the grievances of Some of the Home-Buyers/Plot-Holders can be addressed to. It is seen from the record that a period of 172 days was wasted due to pendency of application of RP for appointing an authorized representative of the Financial Creditors. It is seen from the record that RP could not hold CoC meeting during that period for want of corum and hence, that period has to be excluded from the CIRP period. Thereafter, when the matter was listed before this Adjudicating Authority, for the first time on 17.06.2020, the 'Lock-Down' was declared. Therefore, we stayed the proceedings. RP and CoC are directed to consider the Resolution Plan - application disposed off - The main matter to appear on 12.02.2021.
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2021 (1) TMI 615
Maintainability of application - initiation of CIRP - default on the part of Corporate Debtor in repayment of an amount together with the agreed rate of interest, to Financial Creditor - existence of Operational Debt or not - presence of document evidence to show that the aforesaid debt is payable and has not yet been paid - existence of a dispute between the parties or not - HELD THAT:- It is noticed that the foremost objection of the applicant/Corporate Debtor regarding maintainability of the IB application is based on the arbitration clause mentioned in Memorandum of Understanding dated 27.12.2010, Joint Development Agreement dated 09.02.2012 and Agreement dated 28.06.2013, which was already been dismissed on 17.02.2020 under separate Interlocutory Application (IA/09/KOB/2020 in IBA/46/KOB/2019), to which an appeal was filed before the Hon ble NCLAT (Company Appeal (AT) (Insolvency) No. 429 of 2020) and the same was also dismissed as being premature stating that it is open to the learned Adjudicating Authority to decide the application on merits and in the event of the Appellant being aggrieved of the order of admission passed under Section 7, it shall be open to the Appellant to raise all issues in appeal. As regards the allegation that no demand notice has been issued by the Applicant as mandated under Section 8 of the Code, it does not hold ground for the reason that the Application has been filed by the Financial Creditor for recovery of money borrowed as Inter Corporate Deposit by the Corporate Debtor against payment of interest. In terms of clause (a) Sub-Section (8) of Section 5 of the I B Code, the same tantamount to a debt disbursed against consideration of time value of money, which falls within the ambit of Financial Debt . This Bench is of the view that the provisions of Limitation Act do apply while implementing the provisions of Insolvency Code. Since it is clear that there is an acknowledgement in the records of the Financial Creditor, the Limitation Act are to be examined in the light of the facts and circumstances of this particular case. In the present case, the true extract of statement of accounts maintained by the Financial Creditor clearly depicts that the period of non-payment is from April 2017 and the last date of payment received by the Financial Creditor as 24.11.2017. Indisputably, in the present case, the Financial Creditor itself came out with a pleading with the documents stating the date of default of outstanding principal and interest is from 01st April 2017 till 31st March 2019, as stated in Part IV of the application. Hence, this Bench is of the view that the application filed by the Financial Creditor (TATA Global Beverages Limited) is well within the limitation period and the contention of the applicant that the debt is time barred is to be rejected. Application disposed off.
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2021 (1) TMI 611
Classification of Debt - Financial Debt of Operational Debt - payment of advanced money for receivable of gold stock and jewellery in future was arrangement between the Applicant and Corporate Debtor - Novation of contract between parties - Preferential Transactions or not - HELD THAT:- In terms of Section 43 (2) (a) the Corporate Debtor by virtue of executing a loan agreement dated 15.04.2019 has converted operational debt into a financial debt, with an intention to prefer the creditor and to put him in a beneficial position that he could have been in the event of distribution of asset in according with section 53 of IBC - this sort of arrangement could not have been done in its ordinary course of business, an Operational Creditor who advanced money with an intention of buying gold was treated as a lender under the Loan Agreement dated 15.04.2019. Looking at the facts of the present case that the CIRP against the Corporate Debtor commenced on 13.11.2019, the Loan Agreement dated 15.04.2019 executed by the Corporate Debtor, substituting the earlier MOU dated 07.03.2017 between the same parties, was created, seven months prior to CIRP, it is concluded that this arrangement is a preferential transaction in terms of Sec 43 (2)(a) of Code and is well within the two years look back period as prescribed by the code. Therefore, this bench declares that Resolution Professional has rightly rejected the claim of Financial Creditor, but has not filed any application under sec.43 for avoidance of transaction, this bench has Suo Moto considered the facts and gravity of the transaction to the extent of conversion of Operational Debt to financial debt for the benefit of the operational creditor and thus treated the transaction dated 15.04.2019 to be a preferential transaction. Application dismissed.
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2021 (1) TMI 610
Approval of Resolution Plan - Section 31(1) of the Code - seeking appointment of RP to monitor the implementation of the scheme - HELD THAT:- Section 30(6) of the Code enjoins the resolution professional to submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority. Section 31 of the Code deals with the approval of the resolution plan by the Adjudicating Authority, if it is satisfied that the resolution plan as approved by the committee of creditors under section 30(4) meets the requirements as referred to in section 30(2) - Thus, before approving the Resolution plan, it is the duty of the Adjudicating Authority that it should satisfy itself that the Resolution plan as approved by the CoC meets the requirements as referred to in sub-section (2) of Section 30. In terms of Regulation 27 of CIRP Regulations, Fair value and Liquidation value was ascertained through two registered valuers, and the same stands at ₹ 109.18 Crores and ₹ 96.92 Crores respectively. The total Resolution Plan value of ₹ 98.15 Crores is higher than the liquidation value - RP has complied with the code in terms of Section 30(2)(a) to 30 (2) (f) and Regulations 38(1), 38(1)(a), 38(2)(a), 38(2)(b), 38(2)(c) 38(3) of CIRP regulations. The 'Resolution Plan' filed with the Application meets the requirements of Section 30(2) of the code, 2016 and Regulations 37, 38, 38(1A) and 39 (4) of IBBI (CIRP) Regulations, 2016. The 'Resolution Plan' is also not in contravention of any of the provisions of Section 29A. Hence, this Adjudicating Authority is satisfied that the Resolution Plan is in accordance with Law - While approving the 'Resolution Plan', it is clarified that the Resolution Applicant shall pursuant to the Resolution Plan approved under Sub-Section (1) of Section 31 of the I B Code, 2016, obtain all the necessary approvals as may be required under any law for the time being in force within the period as provided for in such law. This Adjudicating Authority orders for the Constitution of Monitoring Committee consisting of Mr TSN Raja, RP, representatives nominated by the Financial Creditors and the Resolution Applicant to supervise the implementation of the Resolution Plan and further Resolution Professional is directed to file status of implementation of Resolution Plan before this Adjudicating Authority from time to time - approved 'Resolution Plan' shall become effective from the date of passing of this Order. Application allowed.
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2021 (1) TMI 609
Contempt petition - Oppression and Mismanagement - matter is still pending for final disposal before the learned National Company Law Tribunal (NCLT) - Sections 241 242 of the Companies Act, 2013 - seeking direction to Respondent No.2 to 5 to give access to the Petitioner Company/GETL immediate access to all of the Company s data including electronics data and emails of employees of the Company which are saved on/available on the servers of Respondent No.5 and/or its group Companies - HELD THAT:- The Interim Orders passed by NCLT were substituted by the Interim Orders of this Tribunal which were passed on 27th August, 2019 by Judgement dated 17th February, 2020, [ 2020 (2) TMI 820 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI ] the Order concerned of NCLT has been substituted by the Interim Orders as were passed by this Tribunal. The matter is now squarely before the learned NCLT. If the Applicant has any grievance, the Applicant can move the learned NCLT for any relief (including seeking action of contempt), as may be admissible in law. The present Contempt Case is disposed with liberty to the Applicant to move the learned NCLT for relief as may be admissible in law.
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PMLA
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2021 (1) TMI 630
Money Laundering - seeking a copy of order dated 1st January, 2021 passed under Section 8(3) of the Prevention of Money Laundering Act, 2002 be supplied to the Petitioner - further seeking that the period of at least 45 days in order to enable the Petitioner to approach the Appellate Tribunal under Section 26 of the PMLA, should not be affected. HELD THAT:- Considering the facts and circumstances of the present case, 20 days time is granted to the Petitioner to avail of its appellate remedies and physical possession of the immovable property shall not be taken for a period of 20 days from today. The question of law raised is left open. Further, in order to avoid such a dispute in future and to ensure fairness and non-arbitrariness, the Registrar of the Adjudicating Authority under the PMLA shall ensure that in future, all orders passed by the Adjudicating Authority, apart from being served in accordance with the provisions of the Act, Rules and Regulations, would also be uploaded on the website of the Adjudicating Authority within 48 hours from the date of the pronouncement. The Adjudicating Authority shall also fix a specific date for pronouncement of orders in open Court in terms of Regulation 27. Petition disposed off.
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Service Tax
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2021 (1) TMI 631
Maintainability of writ application - alternative remedy of filing a statutory appeal is available - service tax on education related services - Gujarat Technological University Act, 2007 - HELD THAT:- This writ application should not be entertained as the writ applicant has an alternative remedy of filing a statutory appeal against the impugned order-in-original under Section 86 of the Finance Act, 1994. This writ application is disposed off without expressing any opinion on the merits of this case by relegating the writ applicant to avail the statutory remedy of appeal before the Appellate Authority under Section 86 of the Finance Act, 1994.
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2021 (1) TMI 629
Maintainability of appeal - non-submission of pre-deposit - Section 35 F of the Finance Act, 1994 - HELD THAT:- Considering the fact that the appeal is a statutory appeal and the same is only rejected because of non-deposit of the amount required for entertaining the appeal per provisions of Section 35 F of the Finance Act, 1994, it is considered appropriate that one more opportunity needs to be granted to the petitioner for depositing the amount as required by Section 35 F of the Finance Act for entertaining the statutory appeal on merits. The petitioner is permitted to deposit the amount as envisaged by Section 35 F of the Finance Act, 1994 towards pre-deposit for entertaining his statutory appeal. Said amount be deposited within a period of one month from today - petition disposed off.
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Indian Laws
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2021 (1) TMI 626
Maintainability of petition - right to prefer an appeal - condonation of delay application under Section 5 of the Limitation Act - Dishonor of cheque - Section 148 of the Negotiable Instruments Act - HELD THAT:- As per section 148 of NI Act, A minimum of 20% of the compensation amount may be directed to be paid at the time of hearing of the appeal. Thus, fixing 50% of the compensation amount as a pre-condition for hearing of the application and the appeal was not an absolute imperative. It has to be remembered that the right of appeal of a convict is too precious to be thwarted by technical embargoes, that too discretionary ones. As such, so far as the direction to pay 50% of the compensation amount is concerned, the same ought to be suitably modified. In the present case, during pendency of this revision, the Learned Appellate Court has proceeded with the matter and dismissed the appeal and the application of the present petitioner on the technical ground that 50% of the compensation amount could not be paid by him. It is true that in the absence of a stay, it is open to a Learned Appellate Court to proceed with the matter. However, every discretion has to be exercised judiciously. Furthermore, it is also true that the delay in disposing of a matter does not depend merely on a litigant who prefers an application. Sometimes, there are systematic delays. Sometimes, there are other factors which come into play like the onset of a pandemic, as in the present case. Without going into the petitioner's role in protracting a proceeding, he cannot be penalised for the purported delay. It shall be just and proper if the petitioner is directed to deposit 25% of the compensation amount in terms of Section 148 of the Negotiable Instruments Act - The impugned order are set aside, the application for condonation of delay and the appeal are restored to their original file and number before the Learned Appellate Court, the matter is remanded back to the Learned Appellate Court so that the application and the appeal can be decided afresh - Petition allowed by way of remand.
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2021 (1) TMI 625
Dishonor of Cheque - acquittal of accused - offence under Section 138 of the Negotiable Instruments Act, 1881 - the trial Court came to the conclusion that the complainant failed to establish the ingredients of Section 138 of the N.I. Act and the trial Court held that in view of material alterations of cheque-Ex. P1, Section 87 of the N.I. Act renders the same instrument as void and Ex. P1-cheque is materially altered - HELD THAT:- It is not in dispute that complainant is seeking to recover an amount of ₹ 4,00,000/- from society namely Sasya Shyamala Souharda Credit Co-operative Limited. Complainant has not made society as party, accused in the complaint. Though trial Court has dismissed the case and discharged accused No. 2, no challenge is made to such dismissal of case against accused No. 2. Nevertheless, accused No. 1/respondent herein has deposed that she has not signed the cheque Ex. P.1 and she disputes the signature on Ex. P.1. She has also disputed issuance of cheque itself and also existence of any debt or liability. When there is any alteration made by an indorsee, the same is void if the indorsee does not consent thereto with regard to making of such alteration. Therefore the word consent used in the said provision would be an express consent on such material alterations. In the present case on hand Ex. P.1 clearly exhibits the indorsement by accused No. 2 just below the alterations made on date of cheque. But admittedly there is no such indorsement by respondent/accused No. 2 who is also supposed to be the signatory of the cheque. It is also apparent on face of Ex. P.1 that there is no indorsement made below the alteration of the account number on Ex. P.1. When this fact was confronted to DW.1 complainant, she has no doubt admitted alterations on the cheque, but has denied suggestion that she altered the cheque. On a perusal of evidence of PW.1, it is clearly seen that PW.1 does not know about alleged transaction mentioned in the complaint as she has clearly deposed by stating that she does not know as to when and on what date she has deposited a sum of ₹ 68,75,148/- with the society. As stated earlier, at one breath she says that amount is deposited by her and at another breath she says amount is deposited by her husband. It is also apparent that after cross-examination of PW.1 and evidence of DW.1, no other material has been placed before the Court other than Ex. P.1 by complainant to substantiate the fact that there is existence of subsisting legally recoverable debt - on the basis of the evidence adduced by the respondent - accused No. 1, it can be safely concluded that the respondent - accused No. 1 has rebutted the presumption under Section 139 of NI Act in favour of the Complainant. No evidence is forthcoming to prove the contents of the said Ex. P9. In fact, the undated Ex. P9 produced by the Complainant and the material alteration on Ex. P1 which is indorsed by accused No. 2 and dismissal of the Complainant for non-prosecution as against accused No. 2, the same having reached finality and no action has been taken by the Complainant against accused No. 2, all goes to prove that there is collusion between the Complainant and accused No. 2. All these aspects have been considered by the trial Court in detail and an order of acquittal is rightfully passed by the trial Court. It is apparent on the face of Ex. P1 that there is material alteration and there is no endorsement by respondent - accused No. 1 to consent to the said material alteration on Ex. P1. Therefore, as per Section 87 of NI Act any negotiable instrument with material alteration renders the same void as there is no consent thereto for the said material alteration. In the present case, admittedly there is only one signature under the date on Ex. P1 and admittedly, the respondent - accused No. 1 has not indorsed the material alteration - without any doubt it can be safely concluded at Ex. P1 is hit by Section 87 of NI Act. The trial Court has considered all these material aspects both oral or documentary and has arrived at a well reasoned order of acquittal, which does not call for interference - Appeal dismissed.
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2021 (1) TMI 624
Dishonor of Cheque - insufficiency of funds - Rebuttal of presumption - trial Court came to the conclusion that appellant utterly failed to prove the guilt of accused beyond all reasonable doubt to the satisfaction of the Court - offence punishable under section 138 of Negotiable Instruments Act and section 139 of NI Act - HELD THAT:- The primary requirement is the existence of any debt or liability and that the said debt has to be legally enforceable debt. Therefore, it is stated that when any cheque is drawn by a person on account maintained by him with Bank for payment of any amount of money to another person from out of that account for discharge in whole in part, of any debt or other liability is returned by the Bank unpaid, in such situations, the provision under this section will come into play. Therefore, the primary requirement would be the existence of legally recoverable debt or other liability. In the present case on hand, on complaint being registered and cognizance being taken, the presumption in law will act in favour of appellant as any cheque i.e., presented to the Bank would be presumed to be issued for the purpose of discharge of whole or in part of any debt or other liability. Therefore, this provision acts as reverse burden on respondent/accused to prove to the contrary to rebut the said presumption and to prove to contrary that there does not exist or that there never existed any legally recoverable debt or liability. In the present case, in the cross-examination of P.W.1, he has categorically admitted that respondent was due only ₹ 41,545/- Therefore, this amount of ₹ 41,545/- is legally recoverable debt assuming and believing the statement of P.W.1 and to substantiate the same strangely. P.W.1 has himself produced and got marked Ex. P.7 which shows outstanding balance of respondent ₹ 41,545/- as on 25.10.2004 - Admittedly, even according to P.W.1-complainant, no cement was purchased by respondent after 08.09.2003, and according to the appellant, as on 08.09.2003 respondent was due ₹ 49,545/- as per their statement. But somehow strangely appellant comes with the theory that respondent has got issued a cheque on 11.10.2004, wherein he has not only agreed to pay ₹ 41,545/- but agreed to pay a debt of other person namely, Mallikarjun Sangannavar which is not admitted and on careful examination of P.W.1, it is seen that the said Mallikarjun Sangannavar was due ₹ 22,500/- to the appellant as on 31.07.2003. In order to rebut the presumption, there has to be preponderance of probabilities and probable defence which is required to be raised by respondent, as there is already a presumption in favour of appellant that the cheque is issued towards discharge of legally recoverable debt either whole or in part. When once the rebuttal has been established and proved to the contrary by the respondent/accused, then the burden shifts on appellant to satisfy such rebuttal and prove that cheque has been issued towards legally enforceable debt or liability. In the present case, the trial Court has considered all these aspects and has passed a detailed order appreciating all the contentions raised by both the parties and has arrived at a conclusion that the cheque issued by respondent as per Ex. P.2 was towards discharge of legally recoverable debt for ₹ 64,045/- - it can be safely said that the cheque presented by appellant for ₹ 64,045/- cannot be said to be issued towards discharge of legally recoverable debt or liability and hence, same will not come within the purview of Section 138 of the N.I. Act. The trial Court has passed a just and reasonable Judgment which does not call for interference by this Court and the same deserves to be upheld - Appeal dismissed.
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