Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 2, 2021
Case Laws in this Newsletter:
Income Tax
Corporate Laws
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Customs
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117/2020 - dated
31-12-2020
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seed, Areca nut, Gold & Silver
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116/2020 - dated
31-12-2020
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Cus (NT)
Notifying the date of implementation of Notification No. 102/2020-Customs (NT) dated 23.10.2020 - Appointment and function of Customs Authority for Advance Rulings, at Delhi and Mumbai,
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70/2020-Customs (N.T./CAA/DRI) - dated
29-12-2020
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Cus (NT)
Appointment of CAA by DGRI
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69/2020-Customs (N.T./CAA/DRI) - dated
29-12-2020
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Cus (NT)
Appointment of CAA by DGRI
DGFT
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54/2015-2020 - dated
1-1-2021
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FTP
Insertion of a Policy Condition for items under HS Code 33074900 of Chapter- 33 of ITC (HS), 2017, Schedule-I (Import Policy)
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53/2015-2020 - dated
31-12-2020
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FTP
Central Government hereby authorizes the officers for the purposes of exercising powers under Section 13 read with Section 11 of the FT(DR) Act, 1992
GST - States
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S.O. 241 - dated
30-12-2020
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Bihar SGST
Amendment in Notification No. S.O. 129, dated the 09th June, 2020
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(49/2020)-FD 03 CSL 2020 - dated
30-12-2020
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Karnataka SGST
Seeks to bring into force Sections 3, 4, 5, 6, 7, 8, 9, 10 and 14 of Karnataka Goods and Services Tax (Amendment) Act, 2020.
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16/2020–C.T./GST - dated
31-12-2020
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West Bengal SGST
Extension of due date for filing Annual Return for the financial year 2019-20 till 28.02.2021
Income Tax
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93/2020 - dated
31-12-2020
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IT
Prescribed Time Limit - Relaxation of Certain Provisions of Specified Act - Supersession Notification No. 88/2020 dated the 29th October, 2020
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92/2020 - dated
31-12-2020
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IT
Due date of filing of declaration Extended for Vivad se Vishwas Scheme - Seeks to amendment in Notification No. 85/2020, dated the 27th October, 2020
SEBI
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S.O. 4796(E) - dated
31-12-2020
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SEBI
Amendment in Notification No. S.O. 147(E) dated 21st February, 1992 - Appoints the persons as Chairman and Member of the Board (SEBI)
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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GST Revenue collection for December 2020 recorded all time high since implementation of GST - News
Income Tax
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Prescribed Time Limit - Relaxation of Certain Provisions of Specified Act - Time limit for issuing notices, passing orders, filing of ITR and returns etc. - Notification
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Disallowance of Lease Deed Registration Charges - registration charge for a leased property - Merely because Joint venture partners decides about who puts in money in J V for what purposes, it is merely that they are deciding about the sources of the funds, expenditure of J V may be financed out of that , but that does not make it the liabilities of J V partners, Instead of J V Itself. Therefore, in view of this we hold that the expenditure is incurred by the assessee for registration of lease deed. - Deduction of expenditure allowed u/s 37(1) - AT
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Addition of overlay expenses claimed in Profit & Loss A/c - the assessee company has a present obligation arising out of the concessionaire agreement executed with NHAI to maintain the highway in traffic worthy condition through regular and preventive maintenance of the highway and which mandatorily requires it to maintain the pavement riding quality by way of roughness meeting the minimum standards throughout the service life of the pavement - We failed to understand that where the provision for periodic wearing course overlay has been accepted all these years as an ascertained liability, then on what basis, the said provision is treated as a contingent liability for A.Y 2014-15 and A.Y 2015-16. - AT
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TP Adjustment - The interest on receivables is an international transaction as it is subsequent to the amendment to section 92B of the I.T. Act - We are inclined to accept the alternate argument of the assessee that since the receivables are in foreign currency, the rate of interest to be applied is at LIBOR + and nor SBIPLR rate. - AT
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Assessment u/s 153A in violation of section 153D - Simply because approval has been taken on the same date does not lead to any presumption that is mechanical or without application of mind by the approving authority. We agree with the contention of the ld. DR that, what is required in the statute is the approval of JCIT which was available on record and the detail have been mentioned in the assessment order also and there is no statutory requirement under the law that copy of such approval or opportunity of hearing is to be given to the assessee. - AT
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Nature of expenditure - expenses towards fees to HUDA - revenue or capital expenditure - only to lease out a part of the area in which the hospital is run, for running a food court, a pharmacy and parking area the fees paid and such payment is directly related to the day-to-day running of the business of hospital by the assessee. Inasmuch as the assessee is not the owner of the land, the question of assessee getting the benefit of enhancement of value of the property does not arise - AT
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Search warrant u/s 132 - Retention of cash seized in search - A return of income would be filed by the petitioner for the annual year 2019-20 only after 31st March, 2020. The explanation of the cash transaction can be expected to be found only after such return of income is filed by the petitioner. There is no basis for the respondents to presume that petitioner would not disclose the cash transaction in its Income Tax return which was not filed by the alleged date of seizure of the cash by the Police, i.e., 26.08.2019. - HC
Customs
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Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seed, Areca nut, Gold & Silver - Notification
DGFT
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Central Government hereby authorizes the officers for the purposes of exercising powers under Section 13 read with Section 11 of the FT(DR) Act, 1992 - Notification
Indian Laws
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Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme gets implemented from 01.01.2021 - News
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Dishonor of Cheque - The Trial Court ought to have drawn the presumption against the accused under Section 139 of the NI Act. When the accused though denied the signature when he has not sent the same to the handwriting expert and also not given any reply to the notice and instead of drawing the presumption in favour of the complainant, the trial judge believed the evidence of the accused and committed an error which amounts to perversity and also not considering the material available on record. - HC
Service Tax
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Reversal of CENVAT Credit - Banking and other Financial Services - once there is an excess payment, malafide intention that too of tax evasion cannot be alleged qua the appellant. No doubt the period of one year of serving Show Cause Notice stands extended to 5 years had there been the intent to evade tax or there is suppression of tax but from the above discussion it is apparently clear that there is no evasion of tax /duty, no question of intent to evade at all arises. - AT
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SVLDRS Scheme - writ applicant was able to generate the challan, yet was not able to make the payment, as the portal reflected an error on the ICEGATE - This writ application is disposed off asking the writ applicant to immediately approach the Chairman, CBIC with a request to accept the payment in any mode that Chairman may deem fit having regard to the scheme. Once such application or representation is filed, the Chairman, CBIC shall look into the same at the earliest and take an appropriate decision and communicate the same to the writ applicant in writing - HC
Case Laws:
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Income Tax
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2021 (1) TMI 29
Addition u/s.68 - loans received from certain parties - CIT-A deleted the addition admitting additional evidence - HELD THAT:- Assessee produced copies of affidavit of Mr. Vijay Narendra Kothari who had retracted his statement made u/s.132(4) of the Act and also denied having given any accommodation entry. The said party had categorically stated that the statement u/s.132(4) of the Act was given out of mental pressure and was given in abnormal circumstances. It was also submitted by Mr. Vijay Narendra Kothari in the said affidavit that he is a proprietor of Kothari Impex and Director of Khushi Gems Pvt. Ltd. CIT(A) duly appreciated the aforesaid transactions and factual submissions made by the assessee together with all the supporting evidences and deleted the addition made u/s.68 of the Act. The ld. CIT(A) also with regard to admission of additional evidences had dedicated an exclusive paragraph in para 11.1 in his appellate order stating that the assessee had infact submitted basic details of confirmations before the ld. AO which was not found satisfactory by the ld. AO as the assessee had not submitted the copy of PAN and balance sheets of the concerned loan creditors before the ld. AO. The said deficiencies were set right by the assessee by filing additional evidences before the ld. CIT(A). Hence, the said additional evidences need to be admitted and had to be examined as to its evidentiary value. None of the aforesaid factual observations recorded by the ld. CIT(A) had been controverted by the ld. DR before us with cogent evidences. We find that the ld. DR reiterated the contentions made by the ld. AO in his assessment order. We find after that, much water has flown in the instant case by way of additional evidences and by way of two remand reports from the ld. AO etc. - Decided against revenue.
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2021 (1) TMI 28
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- CIT(A) is justified in his findings that in view of the undisputed position that no dividend has been earned during the year, no disallowance is called for under section 14 A of the Act and the same does not warrant any interference. We accordingly holding so, dismiss ground numbers 1 to 4. Undisclosed sources in the form of trade creditors - CIT-A observed that remission or cessation of trading liability is governed by section 41 (1) of the Act and not by section 28 (iv) - HELD THAT:- Since the Ld. CIT(A) correctly applied the law to the facts on the case in the light of the decisions referred to by him in his order, we do not find any legal infirmity in such findings and, therefore, uphold his conclusion that unless and until there is an irrevocable cessation of liability without any possibility of the same being revived, merely because the amounts remained unpaid for a sufficiently long time is not a ground to invoke the provisions under section 41 (1) of the Act. The fact remains that so long as the assessee is acknowledging the debt, the law of limitation does not run agnistthe assessee to conclude that there is an irrevocable cessation of the liability of the assessee. We do not find any reason to interfere with the findings of the Ld. CIT(A). Appeal of the Revenue is dismissed.
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2021 (1) TMI 27
Disallowance of Lease Deed Registration Charges - registration charge for a leased property - allowable expenditure u/s 37(1) or not? - HELD THAT:- For the purpose of the payment of lease deed registration charges and stamp duty, Alok Industries will bring in the money into the joint venture. However, that does not mean that liability of the assessee does not exists for payment of stamp duty. In fact the source of the fund for payment of the stamp duty is by way of share capital and share premium from M/s. Alok Industries Ltd. Liability to pay the above sum remains with the assessee. Therefore, the above expenditure has to be incurred by the assessee and not by Alok Industries. Only the source of the funds in the joint venture company is to be provided by Alok Industries. When the leased premises are to be used for the purposes of business of the assessee, necessary lease registration charges are also liability of the assessee. Merely because Joint venture partners decides about who puts in money in J V for what purposes, it is merely that they are deciding about the sources of the funds, expenditure of J V may be financed out of that , but that does not make it the liabilities of J V partners, Instead of J V Itself. Therefore, in view of this we hold that the expenditure is incurred by the assessee for registration of lease deed. Therefore, such expenditure is allowable in the hands of the assessee under Section 37(1) of the Act. Hence the orders of the lower authorities are reversed and the Assessing Officer is directed to allow and delete the disallowance - Decided in favour of assessee.
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2021 (1) TMI 26
Treatment of interest income for the purposes of computation of deduction u/s 80IA - During the course of hearing, the assessee has sought permission to raise the modified ground of appeal in place of existing grounds of appeal stating that the assessee has itself disallowed the interest receipt while working out the deduction u/s 80IA - HELD THAT:- Where the assessee has suo moto disallowed the interest receipt while working out the deduction u/s 80IA of the Act, we find that principally, both the parties are in agreement that such interest receipts should not qualify for deduction under section 80IA of the Act and the matter is no more in dispute. The fact that assessee has suo moto disallowed the interest receipt for the purposes of deduction u/s 80IA is a matter of record which can be verified from the return of income filed by the assessee for the respective assessment years. We accordingly allow the modification in the ground of appeal so taken by the assessee company and the matter is set aside to the file of the Assessing Officer to carry out the necessary verification and where on such verification, it is so found that the assessee has suo moto disallowed the interest receipts while working out the deduction u/s 80IA of the Act, no further addition is sustainable in the eyes of law and the addition made by the Assessing Officer is hereby directed to be deleted. The existing grounds of appeal are treated as withdrawn as per request of the assessee and modified ground of the appeal for the respective assessment years i.e, A.Y 2010-11 to A.Y 2015-16 so taken by the assessee are admitted and allowed for statistical purposes. Treatment of misc. income for the purposes of computation of deduction u/s 80IA - receipts on account of scrap sale in each of the years under consideration and receipts on account of insurance claim for A.Y 2011-12 - Claim of the Revenue is that such receipts are not having the first degree of nexus with toll operation activity and thus not derived from the maintaining and operating the highway and accordingly not eligible for deduction u/s 80IA - HELD THAT:- Where the matter has already been examined by the Coordinate Bench in the earlier year in assessee s own case, and the fact that the Revenue has not challenged the same before the Hon ble High Court, and in absence of any change in the facts and circumstances of the case and following the consistent view taken by other Benches of the Tribunal, we donot see any basis to interfere with the earlier decision taken by the Coordinate Bench in assessee s own case, where one of us was also a party. We accordingly direct the Assessing officer to allow claim of deduction u/s 80IA on such scrap sale receipts for the respective assessment years. Insurance receipts - We find that where such insurance claims are in respect of assets used in the toll operations which have been capitalized and form part of block of assets, the receipts arising in form of insurance claims will go to reduce the block of assets instead of being eligible for deduction under section 80IA of the Act. The matter is accordingly set-aside to the file of the Assessing officer to examine the same afresh after providing reasonable opportunity to the assessee. Addition of overlay expenses claimed in Profit Loss A/c - HELD THAT:- There is no dispute that such provision towards cost of overlay expenses is related to the business activity of operating and maintaining of the highway and any addition made towards such provision would enhance the taxable profit which is eligible for deduction u/s 80IA(4)(i) - Here, it is also relevant to note that the disallowance has been made by the Assessing officer while computing the profits of the business under the regular provisions of the Act however no adjustment has been made while computing the book profits for the purposes of MAT u/s 115JB of the Act and therefore, as far as computation of book profits and consequent MAT liability is concerned, the same is not under dispute and our findings on revenue neutrality is thus limited to computation of profits under the regular provisions of the Act which are eligible for deduction u/s 80IA(4)(i) of the Act. The CBDT has stated in its aforesaid Circular that the appeal and ground where so taken should not be pressed/withdrawn and therefore, taking the same into consideration which is binding on the Revenue authorities, the ground of appeal so taken by the Revenue deserved to be dismissed on this account itself for both the years under consideration. No finding recorded by the Assessing officer that the nature of provision so made by the assessee company is different from the past years or not flowing from the requirements of the concessionaire agreement executed with NHAI. Even the report of the independent Consultant was obtained in the first year where it had estimated the total cost of ₹ 56.64 crores which has therefore formed the basis for spreading the total cost equally across five years. We therefore failed to understand that where the provision for periodic wearing course overlay has been accepted all these years as an ascertained liability, then on what basis, the said provision is treated as a contingent liability for A.Y 2014-15 and A.Y 2015-16. Therefore, on this ground as well, where there are no changes in the facts and circumstances of the case, following the rule of consistency as upheld by the Courts from time to time, we are of the considered view that there is no basis to interfere with the consistent position which has been accepted in the earlier years. In the instant case, the assessee company has a present obligation arising out of the concessionaire agreement executed with NHAI to maintain the highway in traffic worthy condition through regular and preventive maintenance of the highway and which mandatorily requires it to maintain the pavement riding quality by way of roughness meeting the minimum standards throughout the service life of the pavement, the settlement of which is expected to result in an outflow of resources and in respect of which a reliable estimate has been made based on report of an independent consultant. - Decided in favour of assessee. Disallowance u/s 14A - HELD THAT:- There was no investment by way of shares which were capable of even yielding any dividend income and the amount remain invested as share application money for A.Y 2012-13 to A.Y 2014-15 and even for A.Y 2015-16 where the shares were finally allotted, there was no dividend income which has accrued and claimed exempt, the provisions of section 14A cannot be invoked. In the result, the findings, of the Assessing officer for all the years under consideration as well as of the ld CIT(A) for A.Y 2014-15 2015-16, in so far as invocation of section 14A is concerned, are set-aside. Invoking provisions of 36(1)(iii) for making disallowance of interest on the amount employed in making share application money out of the funds so borrowed - We set-aside the invocation of provisions of section 14A and uphold the invocation of provisions of section 36(1)(iii) for the purposes of making the disallowance of interest expenses debited in the profit/loss account for each of the respective assessment years i.e, A.Y 2012-13 to A.Y 2015-16 under appeal before us. Inclusion of the disallowance made u/s 14A while computing the Book profit u/s 115JB(2) - HELD THAT:- In the instant case, as we have held that provisions of section 14A cannot be invoked for the impugned assessment years and thus, no disallowance can be made u/s 14A of the Act, the question of resorting to disallowances made under section 14A doesn t arise at first place while computing the books profits u/s 115JB - Similar view has been taken by the Hon ble Kolkata High Court in case of CIT vs Jayshree Tea Industries Ltd [ 2014 (11) TMI 1169 - CALCUTTA HIGH COURT] wherein it was held that the provision of section 115JB in the matter of computation is a complete code in itself and resort need not and cannot be made to section 14A . Whether there could be any independent adjustment to book profits by applying clause (f) of explanation under section 115JB? - The Hon ble Kolkata High Court in case of CIT vs Jayshree Tea Industries Ltd (supra) has held that the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act is required to be determined independently as the same is a complete code in itself and considering the said decision, the Coordinate Ahmedabad Benches of the Tribunal in case of Asian Grantio India Ltd [ 2019 (10) TMI 1193 - ITAT AHMEDABAD] has held that there is no mechanism/ manner given under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the expenses with respect to the exempted income, and drawing support from the principles laid down under normal provisions further held that the disallowance of the expenses cannot exceed the exempt income and limited the disallowance of the expenses to the extent of exempt income which was NIL in that case. Following the said proposition, in the instant case as well, given that there is no income which is claimed exempt in any of the years under consideration, no disallowance of the expense is warranted under Section 115JB of the Act even in terms of clause (f) to Explanation-1 of Sec. 115JB of the Act in respect of all the impugned assessment years. Depreciation claim of the assessee on toll road @ 10% treating the same as building for A.Y 2011-12, 2012-13 2013-14 respectively - HELD THAT:- Matter has been decided in favour of the assessee by the Hon ble Rajasthan High Court [ 2017 (10) TMI 1380 - RAJASTHAN HIGH COURT] where the depreciation claim on the Toll road has been held allowable at the rate of 10% as applicable to buildings. Depreciation @ 60% in respect of EDP equipments consisting of computers, servers, computer software etc which are directly used in toll booth operations and back office operations connecting to toll collection booths - HELD THAT:- We find that the matter is squarely covered by the decision of the Co-ordinate Benches right from A.Y 2006-07 onwards wherein EDP equipment have been held as qualifying for depreciation @ 60% as against 15% applied by the Assessing Officer. Claim of employee s share of PF and ESI contributions deposited beyond the prescribed period - HELD THAT:- CIT(A) has recorded a finding of fact that the assessee has deposited the employee s contribution towards PF/ESI before the due date of filing the return of income. The said finding of the ld CIT(A) remain undisputed before us. It is therefore an admitted fact that the entire amount was deposited by the assessee before the due date of filing of the return under section 139(1) of the Act, then in such a scenario, the amount cannot be disallowed under section 36(1)(va) of the Act as the due date referred to in section 36(1)(va) of the Act need to be read in conjunction with section 43B(b) of the Act.- Decided in favour of the assessee
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2021 (1) TMI 25
TP Adjustment - comparable selection - HELD THAT:- Not only high turnover but even where the comparables have earned super normal profit, they also have to be excluded - Companies functinally dissimilar with that of assessee need to be deselected. Correct margin of the comparable companies - HELD THAT:- We find that the assessee is seeking correct computation of margins of E-Infochips Ltd, Thirdware Solutions Ltd, Persistent Systems Ltd and Tata Elxsi Ltd with regard to software development services and Infosys BPO Ltd and Microland with regard to ITeS services are concerned. We therefore, remit the issue to the file of the AO/TPO for computation of the correct margins of these companies. Working capital adjustment - HELD THAT:- We find that the TPO has not granted working capital adjustment for both SDS and ITeS transactions by holding that the assessee has failed to substantiate that WCA has an impact on the profit of the assessee vis- -vis comparable companies. Even before us, the assessee has not shown how the working capital adjustment is required in the case of the assessee as comparable to the compared companies. Therefore, we do not see any reason to direct the AO/TPO to grant working capital adjustment to the assessee. Thus, ground is accordingly rejected. Interest on outstanding receivables - Case of the assessee that the interest on receivables is not an international transaction as notional interest cannot be brought to tax - HELD THAT:- We find that the A.Y before us is 2014-15 and hence, the interest on receivables is an international transaction as it is subsequent to the amendment to section 92B of the I.T. Act - We are inclined to accept the alternate argument of the assessee that since the receivables are in foreign currency, the rate of interest to be applied is at LIBOR + and nor SBIPLR rate. AO/TPO is directed accordingly.
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2021 (1) TMI 24
Search warrant u/s 132 - Retention of cash seized in search - HELD THAT:- There were no circumstances existing for the Principal Director of Income Tax (INV), Hyderabad to issue any warrant for search or seizure under Section 132 of the Act on 28.8.2019 when the cash had been handed over to the Income Tax Department by the Task Force Police on 27.8.2019 and therefore the seizure of the cash from Vipul Kumar Patel by the respondents and its retention till date by them is per se illegal. Intimation by the Police to the Income Tax Department on 27.08.2019 would not confer jurisdiction on the Income Tax Department to detain and withhold cash, that too by issuance of an invalid search warrant under Section 132 of the Act; and there is no basis for the Income Tax Department to invoke the provisions of Section 132, 132A and 132B of the Act since there is no 'reason to believe' that the assessee has violated any provision of Law. This is because, as held in Vindhya Metal Corporation and others [ 1997 (3) TMI 3 - SUPREME COURT ] mere possession of cash of large quantity, without anything more, could hardly be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which would not have been disclosed by the person in possession for purpose of the Income Tax Act. In the absence of any rival claim for the cash amount of ₹ 5.00 crores by any third party, the respondents cannot imagine a third party claimant and on that pretext retain the cash indefinitely from M/s.Mectec thereby violating Article 300-A of the Constitution of India. A return of income would be filed by M/s.Mectec, the petitioner for the annual year 2019-20 only after 31st March, 2020. The explanation of the cash transaction can be expected to be found only after such return of income is filed by the petitioner. There is no basis for the respondents to presume that petitioner would not disclose the cash transaction of ₹ 5.00 crore in its Income Tax return which was not filed by the alleged date of seizure of the cash by the Police, i.e., 26.08.2019. As rightly contended by the petitioner, an income tax inspection and/ or investigation would be permissible only in respect of a past event but not for possible future contingencies; and if the petitioner was going to disclose and explain the cash of ₹ 5.00 crore in its income tax returns for 2019-20, there was no basis for proceeding with any coercive action against the petitioner such as retention of cash. Retention of cash by the respondents even before the commencement of an offence under the Income Tax Act, 1961, i.e., possible future non- disclosure by the petitioner in its income tax return which would be filed after 31st March, 2020 would clearly violate Article 300-A of the Constitution of India. Even the statements recorded under Section 132 of the Act from Vipul Kumar Patel cannot be relied upon by the respondents to contend that he is working with M/s. P. Umesh Chandra and Sons or M/s. P. Umesh Chandra and Company and not the petitioner. The very seizure and retention of the cash amount of ₹ 5.00 crore by the respondents from 27.08.2019 till date is illegal and unsustainable. Writ Petitions are allowed.
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2021 (1) TMI 18
Disallowance of expenditure u/s.14A r.w. Rule 8D - AO made disallowance on the ground that although the assessee has not earned any exempt income for the impugned assessment years, but incurring of expenditure in relation to dividend bearing investments cannot be ruled out, more particularly when the assessee had made huge investments in shares and securities which yield exempt income - HELD THAT:- Madras High Court in the case of Chettinad Logistics Pvt. Ltd. [ 2017 (4) TMI 298 - MADRAS HIGH COURT] examined this issue and by following the judgment in Redington India Ltd., found that there cannot be any disallowance when there was no exempt income. In fact, the Revenue filed an appeal before the Apex Court in Chettinad Logistics Pvt. Ltd. The appeal filed by the Revenue was dismissed. In those circumstance, this Tribunal is of the considered opinion, the CIT(A) is not justified in observing that the judgment of Madras High Court in Redington India Ltd., was overruled by the Apex Court [ 2018 (7) TMI 567 - SC ORDER] There may be difference of opinion with regard to issues arises for consideration. Irrespective of the personal difference of opinion, the CIT(A) while deciding the appeal is bound to follow the judgment of the Apex Court and the jurisdictional High Court. Judicial discipline demand that all authorities in the State of TamilNadu and Pondicherry has to follow the judgment of the Madras High Court including the present CIT(A). Therefore, we are unable to uphold the order of the CIT(A). Accordingly, the orders of both the authorities below are set aside and the disallowance made by the Assessing Officer U/s.14A of the Act is deleted. - Decided in favour of assessee.
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2021 (1) TMI 17
Reopening of assessment u/s 147 - Assessee submits that in view of the long gap of time, the re-assessment under Sections 147-148 of the Act, despite the order of the learned Single Judge, has now become time barred - HELD THAT:- As assessee submits that he need not press the challenge against the order of the learned Single Judge, before this Court, in this intra-court Appeal and the Appellant/Assessee may be left free to take appropriate legal remedy against the re-assessment order, if any, passed by the Assessing Authority, for AY 2007-08. Writ Appeal is accordingly dismissed as infructuous, with the aforesaid liberty to the Appellant / Assessee
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2021 (1) TMI 15
Nature of expenditure - expenses towards fees to HUDA - revenue or capital expenditure - HELD THAT:- It s not the case of the Revenue that the one-time payment made to HUDA would in any way increase the value of the land, but on the other hand it is only for the purpose of improvements effected on the land. CIT(A) also found that the fee paid to HUDA is to secure permission to lease a part of the area for a food court, a pharmacy and parking area, which clearly indicates that the government s permission is required as the hospital is on a leasehold land and the assessee does not have the right to alienate, which is the ultimate test for ownership. CIT(A) further found that this expenditure is directly related to the day-to-day running of the business of the assessee in connection with the running of the hospital because the patients and doctors as well as the paramedical and administrative staff from the vertex around which the activities/business of the hospital operates. In Arvind Mills Ltd [ 1992 (7) TMI 2 - SUPREME COURT] as rightly culled out by the Ld. CIT(A), in deciding whether an expenditure is a capital are Revenue expenditure, the question of voluntary and/or involuntary payment becomes immaterial and it is only the nature of expenditure that determines the issue, and in such case the owner got the advantage of betterment of land in question and there was no manner of doubt that the valuation of the land had increased because of the improvements effected on the land, but such payments had no direct nexus with the day-to-day running of the business. Insofar as the case on hand are concerned, there is no dispute as to the facts recorded by the Ld. CIT(A) that it is only to lease out a part of the area in which the hospital is run, for running a food court, a pharmacy and parking area the fees paid and such payment is directly related to the day-to-day running of the business of hospital by the assessee. Inasmuch as the assessee is not the owner of the land, the question of assessee getting the benefit of enhancement of value of the property does not arise - We, therefore, uphold the findings of the Ld. CIT(A) and dismiss the grounds of appeal of the Revenue.
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2021 (1) TMI 13
Unexplained cash deposits in bank accounts - assessee submitted that the assessee had purchased land at Dehu Road and since payment for purchase of land was to be made urgently, the assessee deposited cash in his bank account - new ground raised by the assessee whether the provisions of section 68 of the Act are attracted where the assessee has not maintained books of account and has filed return of income on the basis of presumptive income under section 44AD of the Act? - HELD THAT:- The new ground raised by the assessee before the Tribunal being legal in nature is admitted for adjudication on merits in the light of decision rendered by Hon ble Apex Court in the case of National Thermal Power Co. Ltd. vs. CIT [ 1996 (12) TMI 7 - SUPREME COURT ] A bare perusal of section 68 of the Act makes explicitly clear that the addition can be made under the section if, any sum is found credited in the books maintained by the assessee. That is the books should be that of the assessee. The definition of books under the Act is inclusive. A perusal of the definition shows that the same does not include bank passbook or bank statement. A conjoint reading of above provisions would thus lead to the conclusion that the addition u/s 68 can be made only where any amount is found credit in the books as defined u/s 2(12A) of the Act maintained by the assessee. Maintaining of books by the assessee is sine qua non for making addition u/s 68 of the Act. Since section 44AD does not obligates the assessee to maintain books, the provisions of section 68 cannot be invoked where the assessee has filed return of income under the provisions of section 44AD of the Act without maintaining books of account. As in the case of Anand Ram Raitani vs. CIT [ 1996 (8) TMI 95 - GAUHATI HIGH COURT ] has held that existence of books of account is a condition precedent for invoking the provisions of section 68 by the Assessing Officer. The Tribunal in the case of Madhu Raitani [ 2010 (10) TMI 905 - ITAT GAUHATI ] held that if books of account are not maintained by the assessee, the provisions of section 68 cannot be invoked. The Tribunal further held that bank passbook cannot be considered as books of account. Thus no addition under section 68 can be made in the instant case. We find merit in ground no.1 raised by the assessee in appeal.
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2021 (1) TMI 12
Disallowance u/s 14A r.w.r. 8D - AO computed the disallowance at 1% of the average monthly balance of the investment - Suo moto disallowance by assessee - HELD THAT:- While invoking Rule 8D of the I.T. Rules, 1962 the AO has not pointed out/identified any specific infirmity in the disallowance so offered by the appellant/assessee. A single sentence explanation of the assessee was considered, but not acceptable has been made instead of giving specific reason for such non acceptance. It is evident from the records particularly the order passed by the Ld. AO that without recording satisfaction about the correctness of the claim of assessee u/s. 10(34) of the Act, the Ld. AO has made the quantum of disallowance by invoking the Rule 8D of the Income-tax Rules, 1962. The accounts of the assessee has been examined, in absence of which the order of disallowances and Ld. AO is not sustainable. It appears from the documents submitted before us that for the AYs. 2010-11, 2011-12 and 2012-13 though such query in respect of disallowance under section 14A/Read with Rule 8D was raised by the AO, after examining the same manner and method of working out disallowance of administrative expenses no further disallowance was made by the AO accepting the same as fair and reasonable. Under the circumstances of the case, we find no reason as to why the suo motu disallowance made by the assessee to be disturbed in the same set of factual position - no reason for such disallowance and the same is hereby deleted. This ground of appeal filed by the assessee is, thus, allowed. Disallowing credit for advance tax paid and full TDS credit - HELD THAT:- As considered the enclosed copy of 26 AS, from which it appears that the assessee is entitled to avail such relief. We find that though such additional ground was raised by the assessee before the Ld. CIT(A), but the same was not adjudicated by him. We direct the Ld. AO to grant relief to the assessee in respect to the additional ground in accordance with law.
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2021 (1) TMI 11
Reopening of assessment - AO reopened the assessment on the ground that the assessee partners have introduced capital - reasons recorded for reopening of the assessment not supplied to the assessee - HELD THAT:- During the assessment proceedings, the AO has accepted the facts that the amount of ₹ 7,90,266/- is actually the opening capital of the partners as on 01.04.2008 which includes interest on capital. Once this fact is accepted then the question arises about the validity of the reopening of the assessment. Since the Assessing Officer has not supplied the reasons recorded for reopening of the assessment to the assessees therefore, the objections if any to be raised by the assessee remained undecided. Further the AO has made the addition on account of unexplained investment by estimating ₹ 3 lacs out of 6 lacs introduced by each assessee. Only in the case of Shri. Shashi Bala Singh, the AO made the addition of full amount of ₹ 6 lacs towards the unexplained investment for introduction of the capital in the partnership firm. Therefore, the impugned orders of AO and CIT(A) are set aside and all these matters are set remitted to the record of the AO with the direction to supply the reasons recorded for reopening of the assessment to the assessee and then decided the objections to the filed by the assessee against the notice under section 148 - Assessee appeals are allowed for statistical purposes.
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2021 (1) TMI 10
Assessment u/s 153A in violation of section 153D - AO no jurisdiction (below the rank of Joint Commission) without prior approval of the Joint Commissioner - contention of the ld. counsel before us is that the copy of approval granted by JCIT u/s.153D has not provided to them, and therefore, it is presumed that requisite sanction was not obtained by the Assessing Officer or the approval obtained may not be proper - HELD THAT:- Such a presumption first of all is unfounded, because nowhere Section 153D provides that before according the approval, JCIT should give opportunity of hearing or who provide the copy of approval to the assessee. This section only provides that, no order of assessment or re-assessment shall be passed by an officer below the rank of JCIT, except for the prior approval of the JCIT. Simply because approval has been taken on the same date does not lead to any presumption that is mechanical or without application of mind by the approving authority. We agree with the contention of the ld. DR that, what is required in the statute is the approval of JCIT which was available on record and the detail have been mentioned in the assessment order also and there is no statutory requirement under the law that copy of such approval or opportunity of hearing is to be given to the assessee. Accordingly, Ground no.2 as raised by the appellant is dismissed. Addition u/s 69C in respect of cash purchases of milk, namely Milk Tanki Purchases - appellant is stated to be one of the reputed manufacturers and exporters of milk and milk products - dispute is only with regard to purchases categorised as tanki purchases - As against the total milk purchases during the relevant year, the AO, has accepted all other purchases, except he has made addition qua Milk purchases Tanki payment which was made in cash by the appellant - CIT (A) has upheld the addition made by the appellant under section 69C holding that the appellant could not properly establish the bona fides of the purported purchases by either producing the suppliers with proper supporting evidences or establish the supply of milk in the manner as specified by the appellant during the course of scrutiny proceedings or even during search - alternate disallowance under section 40A(3) - HELD THAT:- All the purchases under the head Tanki have been duly recorded in the books of account and is reflected in the audited financial statements, wherein total purchases including Milk Tanki Purchases have been debited to the profit and loss account. Secondly, these purchases are duly reflected in ledger account forming part of regular books of account placed before the Assessing Officer and also acknowledged by him and the entire source of purchases are duly recorded in the books of account. Once the source of purchases are duly recorded in the books of account, ostensibly, then source of such purchase/ expenditure stands established, because it has been incurred out of the funds shown in the books of account. In such a case, at the threshold, addition under section 69C cannot be resorted to, because the source of such expenditure stands duly explained from the funds available in the books of account and it cannot be held that purchases have been made outside the books of account. Case of the Revenue is that the genuineness of the purchases could not be established merely for the reason that the payments have been made in cash to the farmers which was not open to independent verification from all the farmers - When the milk or the milk products are sold, the relevant sale register and invoice are maintained. In support of these purchases, the assessee has filed weighment/ quality slips generated at the time of receipt of milk in the factory, copies of milk receipts issued by the assessee and the details of milk brought by the farmers including the weight and amount, details of ledger account of the parties from whom purchases and sales have been made; monthly summary of milk purchase made from the farmers of different villages, month wise payment, stock details and quantity of milk products manufactured, etc. In none of the above details, the Assessing Officer has found any discrepancy or has found any fault, that the same is either not explainable or is not corroborated with other records - AO has nowhere rejected the trading result or the gross profit, which inter alia means that he accepts the quantity of stock, production and consequential sales and the closing stock. Once the sales have been accepted, then corresponding purchases cannot be doubted especially when all the purchases and sales are recorded in returns filed before the VAT authorities. We agree with the contention of Mr. Vohra that assessee could not have made admitted sale without having made the disputed purchases especially when sales quantity and value has been accepted, and therefore, we hold that the corresponding purchases cannot be disallowed. Lastly, if the Assessing Officer has not rejected the books of account or the trading result, then Assessing Officer cannot tinker with the gross profit by disallowing entire purchases. Accordingly, the addition made by the Assessing Officer and sustained by the CIT (A) is deleted. Alternate disallowance u/s.40A(3) - In terms of exception provided under clause (e) of Rule 6DD of the Income Tax Rules, if the assessee and producer of milk have agreed upon the arrangement that milk in a particular village would be collectively supplied to the assessee through mutually agreed person and assessee has agreed to make payment to the farmers for milk, then also no disallowance can be made even if the cash is in excess of ₹ 20,000/- .In terms of Rule 6DD and on the facts and circumstances of the case as discussed we hold that such a disallowance is outside the purview of Section 40A(3). Addition u/s 69C - unexplained salary expenditure on the basis of contents of seized material - CIT(A) upheld the addition made on the ground that the details in the annexure appears to be salary paid outside books of accounts - HELD THAT:- Since its entry was not verified from the regular books of account, the Assessing Officer has treated the salary outside the books and has made the addition. The case of the assessee is that the seized paper content proposed salary arrears which were never given to the employees. Before us, the Ld. Senior counsel has stated that these are dump documents and is in the nature of rough jottings. Heavy reliance has been placed on the decision of the Tribunal in assessee s own case for the preceding year 2008-09 to 2012-13, wherein based on same alleged difference of salary, similar addition has been deleted. Since this issue has been dealt and discussed by the Tribunal in assessee s own case on the same issue, and no material difference has been pointed out by the Department, therefore the finding of the Tribunal will act as precedence and this year also. Accordingly additions to be deleted. Addition u/s.69C - as during the course of search, certain expenses were noted in the vouchers which were seized and were not recorded in the books of account - HELD THAT:- The case of the ld. counsel before us is that these are rough jottings and the amounts mentioned in the vouchers are not actual and are only draft vouchers which were prepared by various employees not been submitted before the management for reimbursement is too vague and cannot be accepted, because once a document has been found and seized from the possession of the assessee and there is specific mention of expenditure incurred which is a sum total of various pages of Annexure A-6, the onus was upon the assessee to prove that, either this paper does not belong to the assessee or could have explained the entries made therein, especially when these expenses are specific and not recorded in the books of account. Simply saying that it is a dump document or rough jottings cannot absolve the assessee and onus cannot be shifted upon the Assessing Officer that he has to bring some corroborative evidence to substantiate the addition. On the contrary the onus is upon the assessee, because presumption of the law u/s.292 C is that, if any such seized document is found from the possession of the assessee during the course of search, then it is presumed to be belonging to such person only. Though this presumption is rebuttable but such a rebuttal has to be based on certain cogent evidences and explanation, which in our opinion has not been discharged by the assessee. Therefore, the addition is confirmed. Levying and computing interest under sections 234A, 234B and 234C - HELD THAT:- Here in this case, assessee was required to file the return u/s.153A within 15 day from the dated of notice, i.e., 26.05.2015, which assessee has filed on 11.01.2016. Therefore, interest has to be computed for the period of 8 months. As regard interest u/s 234C, the Assessing Officer has to verify the computation of interest u/s.234C which is to be computed on the basis of return of income. In so far as interest u/s.234B is concerned, same is consequential. Addition u/s 69C - certain expenditure incurred towards packing material was not accounted or recorded in the books of accounts - HELD THAT:- Once the quantity and value of the material returned is matching with the returned vouchers as shown from the paper book and the column of cash , then the explanation of the assessee cannot be held to implausible and it cannot be said that any expenditure has been made outside the books of account. Moreover, when packing material is used only for product for sale and sales have been accepted, then there can be no inference that assessee must have sold packing material outside the books also. Under these circumstances, we do not find that addition is called for. Addition based on seized document which has been inferred as unaccounted sales not recorded in the books of account - HELD THAT:- No where it has been pointed out, whether the same seized document or annexure was subject matter of examination or consideration by the Tribunal. However, we agree with the alternate contention that, since addition on account of gross profit ratio on alleged unexplained balances of sundry creditors as suppressed profit element in respect of unexplained balances/ purchases, which was challenged vide ground no.3, is not pressed, therefore, no separate addition qua the sales outside the books can be made. On this ground the addition made by the Assessing Officer is deleted. Unexplained difference between receipts and payments recorded in pages found - HELD THAT:- From a bare perusal of the document, it is seen that specific items of expense and receipts have been mentioned with dates and the document has been found from the possession of the assessee. In such a situation, the onus was heavily upon the assessee to explain the difference of receipt and the payment and the nature of entries in view of section 292C of the Act. The assessee cannot absolve itself by simply saying that it is a dump document. Assessee has to establish either it does not belong to him or it does not reflect any income element. If these figures are not reflected in the books of account, then assessee has to explain what the nature of these receipts and payments is. We do not find any infirmity in the order of the Assessing Officer that the differences remain unexplained and the onus cast upon the assessee has not been discharged . Unexplained expenditure - HELD THAT:- Specific expenditure mentioned against specific name which contains the signature and the dates and in such a case, the onus was heavily upon the assessee to explain the same. If these expenditures are not recorded in the books of account, then ostensibly such expenditure has rightly been added by the Assessing Officer as unexplained expenditure.Accordingly, addition is confirmed. Un-reconciled balance between seized manual ledger account of parties and the books of account has been treated as unaccounted sales - HELD THAT:- Once the two entries are verifiable form party wise ledger account appearing in books of account; Ledger account of various bank accounts maintained by the assessee; and Bank statements showing receipts of sales made, then such a difference of ₹ 9,78,194/- which remained un-reconciled between balance as per seized ledger and ledgers as per books of account cannot be sustained. Even otherwise also the difference of ₹ 9,78,194/- is very meagre looking to the volume of transaction recorded in the books of account which is more than ₹ 20 crores and if simply balance of ₹ 9,78,194/- could not be un-reconciled it cannot be inferred that same are outside books of account. If so many entries are made in the manual ledger and then same are accounted for finally in the books of account then there could be possibility of some errors in corrections. In absence of any rejection of books of account and the ledger account such a petty amount of sales cannot be treated as outside the books. Thus, the addition is directed to be deleted.
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2021 (1) TMI 9
Bogus purchases - CIT(A) restricting the addition made on account of non genuine purchases at 12.5% of value of purchases as against 100% made by the Ld. AO - HELD THAT:- It is not in the dispute that the assesee had indeed made purchases from certain parties whose names appeared in the list of hawala bills maintained by the sales tax department, Government of Maharashtra, but however the assessee could not prove the genuineness of such purchases - There could not be any sales without making purchases. Hence, it could be safely presumed that assessee could have made purchases from the grey market in order to saving indirect taxes and incidental profit element thereon. CIT(A) had reasonably estimated such profit element to be at 12.5% of the value of disputed purchases, which is prevalent rate adopted by this Tribunal in series of decisions considering the nature of industry in which the assessee is engaged in, which is also approved by the Hon ble Gujarat High Court in the case CIT vs Simith P.Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] - No infirmity in the order of the Ld.CIT(A) in this regard - Appeal of revenue dismissed.
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2021 (1) TMI 7
Reopening of assessment - approval in respect of reasons - addition u/s 68 - HELD THAT:- The approval in respect of reasons given by the Assessing Officer for reopening are just and proper and as per the provisions of the Income Tax Act, 1961. As the case laws referred by the Ld. AR are distinguishable as in those case laws, the reasons and the competent authority has not given an approval as per the provisions of Section 147/148. Therefore, the legal issue raised by the assessee does not stand and is dismissed. Addition u/s 68 - AR submitted that there is an additional evidence which was obtained after assessment proceedings and appellate proceedings before CIT(A) was over. Therefore, it will be appropriate to look into the additional evidence. While going through the additional evidence, we noticed that these are the primary evidences which will show the creditworthiness of the source of source which was asked by the Assessing Officer as well as CIT(A). Therefore, we are admitting additional evidence and remanding back the entire issue to the file of the Assessing Officer for verifying this additional evidence and after going through the said evidence, arrive at a proper conclusion as to whether the addition in respect of Section 68 is sustainable or not Appeal of the assessee is partly allowed for statistical purpose.
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2021 (1) TMI 6
Revision u/s 263 - A.O. did not make any enquiry with regard to assessee's claim towards provision for warranty expenses - HELD THAT:- AO has passed the order without making any enquiry on this issue and the same would render the order erroneous and in view of its tax implications, the same would cause prejudice to the interests of revenue. Before us, the Ld A.R submitted that the assessment order cannot be considered to be prejudicial to the interests of revenue as the claim of the assessee is supported by the decision rendered by Hon ble Supreme Court in the case of Rotork Controls India (P) Ltd [ 2009 (5) TMI 16 - SUPREME COURT ] . The fact remains that the AO has not made any enquiry with the regard to the impugned claim and hence Explanation 2 to sec.263(1) shall apply to the facts of the present case. There should not be any doubt that, unless the facts relating to the claim are examined, the question of application of the decision rendered by Hon ble Supreme Court cannot be examined. No no infirmity in the revision order passed by Ld Pr. CIT. - Decided against assessee.
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2021 (1) TMI 1
TDS u/s 195 - Disallowance of commission expenses u/s 40(a)(i) - as contended that the AO has disallowed commission expenses for non-compliance of withholding taxes obligations allegedly cast under s. 195 of the Act, whereas, the CIT(A) has endorsed the disallowance on an altogether different pedestal of genuineness of the expenses - as submitted that the additional evidences have been placed before the Tribunal to support the bonafides of the commission payments - HELD THAT:- We find merit in the prayer made by the assessee for admission of additional evidence to support the bonafides of commission payments. In the absence of any discussion on the aspects of bonafides of commission payments on which heavy impetus has been placed by the CIT(A), we consider it expedient to restore the entire issue back to the file of the AO for de novo examination in accordance with law. It shall be open to the assessee to place all relevant evidences to justify the bonafides and genuineness of commission expenses in question as well as the reason for non-deduction of tax on such commission payments having regard to the provisions of Section 195 - Appeal of the assessee is allowed for statistical purposes.
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Corporate Laws
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2021 (1) TMI 14
Restoration of the name of the company into the Register of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- This Tribunal is of the opinion that it would be just and proper to order restoration of name of the Company in the Register of Companies. In view of the averments made and evidence placed, refusal to restore will be an excessive penalty for the over-sight on the part of the Company. The Applicant shall file all the pending Financial Statements and Annual Returns with Respondent (RoC) as per the Act and Rules made thereunder. It shall also comply with the provisions of the Companies Act, 2013 without any delay in future. Form INC 28 shall also be filed as per procedure - Further the Applicant is directed to pay the cost of ₹ 25,000/- to the Respondent (RoC) while submitting the documents. This is for the expenses to be incurred by Respondent (RoC) for publication in the Official Gazette and for other related expenses. The Respondent (RoC) is directed to restore the name of the Company in the Register of Companies - Application allowed.
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2021 (1) TMI 5
Restoration of the name of the 1st Respondent Company in the Register of Companies maintained by the Registrar of Companies, Telangana - section 252(3) of the Companies Act, 2013, read with rule 87A of the National Company Law Tribunal (Amendment) Rules, 2017 - HELD THAT:- It is seen from the pleadings and documents that the Applicant not only filed the copies of income computation statements for the financial years 2016-17 and 2017-18, but also filed copy of the statement of Bank account i.e., Canara Bank A/c No. 2493201005710 for the period 01.11.2017 to 05.11.2019. Various entries in this account show day to day transactions with various parties located within and outside Hyderabad. Such transactions do support the contention of the Applicant that it is a functional, going concern - Further, the counsel for the Applicant has also submitted copies of Assets and Liabilities, Revenue figures, profit/loss figures for various years based on the Audited Financial Statements, from which it appears that the 1st Respondent Company has been doing business but failed to file Annual Returns and Income Tax Returns due to reason said in the Application. The provisions of Section 252(3) of the Companies Act, 2013 stipulate that this Tribunal may direct restoration of 1st Respondent name, if it is just and equitable to do so. In view of the averments made and evidence placed, refusal to restore will be an excessive penalty for the over-sight on the part of the 1st Respondent Company - The 2nd Respondent (ROC) is directed to restore the name of 1st Respondent Company in the Register of Companies. Application allowed.
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2021 (1) TMI 4
Restoration of the name of the struck off company in the Register of Companies maintained by the ROC - Section 252(3) of the Companies Act, 2013 - HELD THAT:- It is noted that company has failed to file returns since incorporation which prompted ROC, Gwalior, Madhya Pradesh to strike off the name of such company from its Register of Companies. No plausible explanation has been given for such failure. However, from the records produced before us it is noted that company is maintaining a Bank Account wherein reasonable regular transactions are happening. The company has also filed return of income for assessment year 2019-20. It has also been pleaded that the company is not a shell company. It has also been pleaded that they wish to carry on the business after restoration of name. It is considered just and proper to restore the name of the company in the Register of Companies, from date of its striking off subject to payment of cost for non-compliance of rules relating to filing the Statutory Returns and Audited Financial Statements - Registrar of Companies, Gwalior, Madhya Pradesh the respondent herein, is ordered to restore the original status of the Applicant Company as if the name of the Company has not been struck off from the Register of Companies with resultant and consequential actions like changing status of Company from 'Struck off to Active - application allowed.
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2021 (1) TMI 2
Restoration of the name of the Respondent Company in the Register of Companies maintained by the Registrar of Companies, Telangana - section 252 (3) of the Companies Act, 2013 - HELD THAT:- The Annual Balance Sheets and Financial Statements have been submitted by the Applicants for the period from 2013-14 to 2018-2019. Further, the counsel for the Applicant has also submitted copies of Assets and Liabilities, Revenue figures, profit/loss figures for various years based on the Audited Financial Statements, from which it appears that the Company continued to do business during aforesaid period, but failed to file the Annual Returns with RoC under a wrong notion of the provisions of the Companies Act, 2013 - the provisions of Section 252(3) of the Act stipulate that this Tribunal may direct restoration of a 1st Respondent Company's name, if it is just and equitable to do so. In view of the averments made and evidence placed, refusal to restore will be an excessive penalty for the over-sight on the part of the 1st Respondent Company. The 2nd Respondent (RoC, Hyderabad) is directed to restore the name of 1st Respondent Company in the Register of Companies - application allowed.
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Insolvency & Bankruptcy
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2021 (1) TMI 3
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- On a perusal of the material brought on record it is clear that this is a fit case for dismissal. The Corporate debtor denies the debt. The copy of the Memorandum of Agreement filed by the Petitioner shows that it has no date on which it was stated to have been agreed to. It also does not have the signature of the parties to the agreement. The witness column is blank. The same therefore cannot be relied upon by the Petitioner. No right to payment or debt can arise in the absence of a valid agreement. The notice issued to the Respondent by the Petitioner also states that the Agreement was entered into in the month of March 2016, and provides no specific details or evidence of the agreement having been signed or amounts spent on purchase and supply of kitchen plant and machinery etc. for the Respondent. Hence in the absence of any valid agreement, any evidence regarding the expenditure stated to have been incurred out of his own funds, or sums due to him as an investor or as share in profits as claimed in the Petition, and the Respondent's denial of all the averments made by the Petitioner, with no counter by the Petitioner in spite of sufficient opportunity, we have no option but to dismiss the petition - Petition dismissed.
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Service Tax
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2021 (1) TMI 23
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - permission to make payment physically or electronically under the SVLDRS scheme - although the writ applicant was able to generate the challan, yet was not able to make the payment, as the portal reflected an error on the ICEGATE - HELD THAT:- The writ applicant should take up this matter with the Chairman, CBIC at the earliest by filing an appropriate application or representation - As a writ Court, it has its own limitations, but if the writ applicant is ready and willing to deposit the requisite amount, then, the Chairman, CBIC should look into the matter and try to resolve the dispute. Ultimately, the revenue is going to be benefited with the amount, that the writ applicant may deposit for the purpose of seeking the benefit under the Scheme, if found eligible. This writ application is disposed off asking the writ applicant to immediately approach the Chairman, CBIC with a request to accept the payment in any mode that Chairman may deem fit having regard to the scheme. Once such application or representation is filed, the Chairman, CBIC shall look into the same at the earliest and take an appropriate decision and communicate the same to the writ applicant in writing - application disposed off.
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2021 (1) TMI 8
Reversal of CENVAT Credit - Banking and other Financial Services - It was alleged that the appellant has not complied with the provision of of Rule 6 (3B) of Cenvat Credit Rules, 2004 in as much as it has failed to pay on monthly basis, an amount equal to 50% of the credit availed on inputs and input services used for provision of output service of banking and other financial services - Penalty - HELD THAT:- The perusal of Rule makes it clear that it require reversal of Cenvat Credit availed on inputs and input services used for provision for output service of Banking and Other Financial Services in each month but to an amount equal to 50% of the such credit availed. The Adjudicating authority below has acknowledged the reversal of credit by the appellant. However has held that reversal is not the equivalent to 50% of the total credit as is required under Rule 6 (3B) of the Cenvat Credit Rules in some of the months and, accordingly, to the extent of short reversal, the demand has been confirmed. It is also an admitted fact that at the time of filing Service Tax Returns after each six months, the short reversal of few of such months has been made good. Not only this, it is also an admission on part of department that due to deposits made at the time of filing the Service Tax returns the reversal becomes more than 50%. Thus, the issue stands squeezed to the effect as to whether adjustments of payment is permissible despite the mandate of monthly reversal of Cenvat Credit for an amount equal to 50% of the credit availed - A conjoint reading of these Rules make it clear that the adjustments of excess reversal of credit with short reversal and vise verse to that extent is statutorily permissible. This observation when clubbed with the admitted fact of excess reversal of Cenvat Credit by the appellant though at the time of filing the return is sufficient to hold that the allegation of authority below and findings against appellant are not sustainable. Thus, once there is an excess payment, malafide intention that too of tax evasion cannot be alleged qua the appellant. No doubt the period of one year of serving Show Cause Notice stands extended to 5 years had there been the intent to evade tax or there is suppression of tax but from the above discussion it is apparently clear that there is no evasion of tax /duty, no question of intent to evade at all arises. Admittedly entire Ledger Accounts duly supported by CA Certificate were submitted by the appellant to the authorities, the question of suppression of facts that too willful does not at all arises. Present is therefore, the case which is not covered by the proviso of Section 73 of Central Excise Act - mere failure to pay tax is not a justification for imposition of penalty. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (1) TMI 20
Principles of Natural Justice - ex parte order - no notice of the assessments was served - HELD THAT:- The petitioner has not filed a rejoinder disputing the averments made in the reply. In absence of any denial to the assertions of the respondents about service of the notice and participation of the petitioner during assessment proceedings, the petitioner s ground of lack of service of notice must be turned down. All other grounds, need to be examined in an Appeal if, the petitioner so chooses to file. We have noticed that the assessing officer has raised tax demand only for the period of A/Y2000-01 by passing the impugned order in the year 2007. There is no document showing that the order of assessment was duly served on the petitioner. Even the order of assessment records that upon inquiry it was found that the establishment of the petitioner is closed and no business was being transacted at that time. The petitioner s challenge to the impugned order on the ground of no hearing or non-service of notice before passing the order of assessment is turned down - petition disposed off.
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Indian Laws
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2021 (1) TMI 22
Dishonor of Cheque - Unsigned Cheque - insufficiency of funds - rebuttal of presumption - burden of proving that a cheque had not been issued for a debt or liability - main grounds urged in the appeal is that the Trial Judge has committed an error in acquitting the accused and failed to take note of the mischievous act of the accused in issuing an unsigned cheque - HELD THAT:- These are the aspects which have not been considered by the Trial Court while considering the material available on record both oral and documentary evidence and in the cross-examination of PW.1 also nothing is elicited to prove preponderance of probabilities of the case of the accused. PW.1 only gives the admission with regard to the transaction is concerned and having acquaintance with the accused and also admits that the payment was made in respect of consultation charges of the accused and it is clear that the services of the accused was availed for conversion of the land. No doubt, in the cross-examination of PW.1, it is elicited that no documentary proof with regard to entrusting the work to the accused for conversion of the land and then, the accused has to explain why he has received the amount more than ₹ 7,50,000/- other than the exhibits he relied upon. There is no explanation on the part of the accused for having received more than ₹ 7,50,000/-, when this Court comes to a conclusion that the document - Ex.P4 is issued by the accused only since he has not sent the document to the handwriting expert and the very theory of he has given the blank cheque as security cannot be accepted that too unsigned cheques. The trial Judge has committed an error in coming to the conclusion that the accused has made out the case by rebutting the evidence of the complainant and preponderance of probabilities are made out. The trial Judge did not consider the material available on record in a proper perspective. The Trial Court ought to have drawn the presumption against the accused under Section 139 of the NI Act. When the accused though denied the signature when he has not sent the same to the handwriting expert and also not given any reply to the notice and instead of drawing the presumption in favour of the complainant, the trial judge believed the evidence of the accused and committed an error which amounts to perversity and also not considering the material available on record. The impugned judgment of acquittal is hereby set aside - Appeal allowed.
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2021 (1) TMI 21
Dishonor of Cheque - insufficiency of funds - acquittal of accused - grounds urged in the appeal are that the Trial Judge has committed an error in coming to the conclusion that the complainant was insolvent even though there were no material to declare him as insolvent - HELD THAT:- The evidence of P.W.1 does not inspire the confidence of the Court that loan transaction was taken place between the complainant and the accused. The accused has led the probable defence by examining D.W.2 and also setting up the defence immediately after the receipt of notice and gave the reply in terms of Ex.P.8 that the cheque given to Raghupathi Bhat on 26.03.2007 was misused by the complainant. No doubt, though the complaint filed by the accused was registered, after the investigation 'B' report was filed. The Court has to take note of the material on record. The very contention that the Appellate Court ought to have drawn the presumption in favour of the accused, cannot be accepted. Mere signature found in Ex.P.1 is not a ground to draw the presumption. Instead the accused has made out the case leading probable defence rebutting the evidence of the complainant. There are no error committed by the Appellate Court in re-appreciating the evidence available on record. However, committed an error in coming to the conclusion that the complainant is insolvent and the Appellate Court ought not to have made such an observation. But the documentary proof discloses that the complainant was not having sufficient amount in his account and also in his wife's account to lend the money during the particular period. However, it does not mean that the complainant became insolvent - there are no error committed by the Appellate Court in coming to the conclusion that the accused rebutted the case of the complainant. Appeal dismissed.
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2021 (1) TMI 19
Dishonor of Cheque - existence of legally enforceable debt or not - rebuttal of presumption - Section 139 of the NI Act - HELD THAT:- It is clear that the amounts are not given to the complainant. DW.3 though in his evidence, he says that the amount was paid in his presence and the complainant has affixed the signature on Ex.D2. It is elicited in the cross-examination that he does not know anything about the payment of money by the complainant to the accused and also how much amount was paid to him, but he claims that the complainant told him that the accused has availed an amount of ₹ 3,50,000/- and insisted him to get the money from the accused. He also claims that in the Hotel, it was decided to return the amount of ₹ 5,50,000/-. All of them have signed the documents in the Kanishka Hotel, DW.2 was also present and he claims that an amount of ₹ 2 lakhs was paid, but he came to know that already an amount of ₹ 3,50,000/- was paid prior to that. DW.2 says that in his presence the amount was not paid and he subsequently signed the documents-Exs.D2. But DW.3 claims that in his presence only after receiving the amount of ₹ 2 Lakhs, the complainant has signed the documents. The trial Judge failed to appreciate the admission elicited from the mouth of DWs.1 to 3 particularly with regard to the defense which he has taken instead of that doubted the case of the complainant. Even though nothing is elicited in the cross- examination of PW.1 except not disclosing the same in the Income Tax returns. Hence, the Judgment of the Trial Court requires to be set aside, the same is perverse and not based on the material available on record and also the documents relied upon by the accused also not creditworthy and the accused even gone to the extent of indulging in creating of document - Ex.D2 and other documents not comes to the aid of the accused and in spite of that he has not rebutted the evidence of the complainant, erroneously acquitted the accused. The subject matter of the cheque is for the year 2008 and almost 12 years has elapsed and while imposing the fine, this Court has to take note of the period of 12 years in sentencing the accused for the offence under Section 138 of the NI Act - the impugned judgment of acquittal is set aside - appeal allowed.
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2021 (1) TMI 16
Dishonor of Cheque - insufficiency of funds - demand arising out of statutory notice, not paid - Acquittal of the accused - Section 138 of the Negotiable Instruments Act - HELD THAT:- The trial court acquitted the accused in all the five cases. According to the trial court since one of the clause in the agreement says the consequence of the dishonour of the cheque, the offence under Section 138 of the Negotiable Instruments Act is not attracted. I cannot agree with the same - There cannot be an agreement against the statutory provision or an offence which is made out if the formalities in the Negotiable Instruments Act are complied. Therefore, according to me, the impugned judgments in these appeals are unsustainable. I do not want to make any further opinion in this case because I am remanding these five appeals to the lower court for fresh consideration in accordance to law. There is no representation for the accused in these cases. The matter remanded to the lower court to settle the matter or to defend the cases on any other point, if it is available - appeal allowed by way of remand.
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