TMI Tax Updates - e-Newsletter
January 21, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Law of Competition Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. NOTICE PAY: SERVICE UNDER GST, NON-SERVICE UNDER SERVICE TAX

   By: Dr. Sanjiv Agarwal

2. CREDIT GUARANTEE TO MSMEs IN SUPPORT OF ATMANIRBHAR BHARAT ABHIYAN

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Launch of Regulatory Compliance Portal to minimize Regulatory Compliance Burden for Businesses and Citizens

2. States to join the Centre and the Private sector to improve the Country’s Logistics performance

3. NITI Aayog Releases Report on Faecal Sludge and Septage Management in Urban Areas: Service and Business Models

4. Shri Piyush Goyal addresses1st National Conference of States on Logistics;

Notifications

Companies Law

1. S.O. 222 (E) - dated 18-1-2021 - Co. Law

Corrigendum - Notification No. S.O. 220 (E), dated the 18th January, 2021

2. S.O. 220 (E) - dated 18-1-2021 - Co. Law

Central Government authorizes Shri Rakesh Sasibhushan, Chairman- cum- Managing Director, Antrix Corporation Limited

GST - States

3. 67-F.T. - dated 18-1-2021 - West Bengal SGST

Seeks to make amendment (2021) to WBGST Rules, 2017 by inserting a new sub-rule (6) to rule 59 to restrict a registered person who has defaulted in filing return in Form GSTR-3B to furnish statement of outward supplies in GSTR-1/IFF

Circulars / Instructions / Orders

GST - States

1. Trade Circular No. 04 T of 2021 - dated 12-1-2021

Waiver from recording of UIN on the invoices for the months of April 2020 to March 2021

Central Excise

2. 1077/01/2021 - dated 19-1-2021

Strict compliance to Limitation while filing Appeals/Petitions before Courts/ Tribunal

Highlights / Catch Notes

Income Tax

• High Court Denies Exemption Claim Due to Late Receipt of Convertible Foreign Exchange u/s 10B for 2004-05.

  Case-Laws - HC : Exemption u/s 10B - failure to receive the convertible foreign exchange within the stipulated period - Since the appellant had sought for the approval from the RBI only in the year 2007, the said correspondence shall not be helpful to the appellant in any manner whatsoever for the reason that the subject matter of the appeal is pertaining to the assessment year 2004-05. Explanations 1 and 2 to section 10B(3) are applicable to the case on hand. - HC
  Visit to Get Source

  ---

• Penalty u/s 271AAB Not Applicable Without Section 132 Search; Assessment Order Penalty Unjustified u/s 153C.

  Case-Laws - AT : Levy of the penalty u/s. 271AAB - assessment order u/s. 153C - the penalty in the case of assessee cannot be sustained as the assessee was not a person who was subjected to search u/s. 132 of the Act and consequently the provisions of section 271AAB could not be invoked in his case - AT
  Visit to Get Source

  ---

• Stamp Duty Charges on Five-Year Lease Agreement Deemed Allowable as Revenue Expenditure by Court.

  Case-Laws - AT : Disallowance on account of stamp duty charges of lease agreement pertaining to lease period of five years - Stamp duty was required to be paid in order to bring about document of Lease. Expenses so incurred for securing premises on lease for a short period of five years were, therefore, allowable as revenue expenditure - - AT
  Visit to Get Source

  ---

• TDS Payment Acknowledged: Assessee Deposits Tax Deducted at Source on Time, Recognized Under Cash Accounting System.

  Case-Laws - AT : Disallowance of TDS payable - the amount of TDS is to be considered as the sum paid by the assessee on behalf of the recipient of the income. Therefore, it cannot be said that the above sum had not been paid by the assessee even while following the cash system of accounting. It is also not in dispute that the assessee has duly deposited the tax deducted at source within the time prescribed under the Act. - AT
  Visit to Get Source

  ---

• Section 40A(3) Disallowance: No Expense Claim for Land Purchase as Reimbursements Received for Development Rights Assignment.

  Case-Laws - AT : Disallowance u/s 40A(3) - cash payment made by the assessee for purchase of land - issue of disallowance of expenses does not arise as the amount paid for purchase of land is neither debited to the Profit & loss a/c nor claimed as expenditure in the Computation of taxable income as the assesses have got reimbursements of the amounts paid for purchase of land on assignment of development rights in land purchased by assesses - AT
  Visit to Get Source

  ---

• CIT(A) Confirms Companies' Existence and Investment Capacity; No Additions u/s 68 After Successful Proof by Assessee.

  Case-Laws - AT : Addition u/s 68 - CIT(A) accepts that these companies actually exist and have capacity to make investments in assessee company as it was proved in the case of the investigation at Ahmedabad and Baroda. The CIT(A) also observed that the assessee has discharged his onus of burden of proof in respect of identity of investor, creditworthiness and genuineness of the transaction. - No additions - AT
  Visit to Get Source

  ---

• State Incentives for New Units Aim to Boost Industrial Development, Not Subject to Entry Tax Exemption Mechanism.

  Case-Laws - AT : Additions towards Entry Tax Exemption - As held in the various decisions, it is not relevant what mechanism was adopted by the State Govt. to award the incentive, but for what purpose this incentive were awarded whether these were awarded to benefit the units to function profitably or in order to bring capital inside the State in order to improve the industrial development in the State. As per the scheme, it is clear that incentives were awarded only because of new industrial units were commenced after 2004 - No additions - AT
  Visit to Get Source

  ---

• Assessment Reopening u/s 147 Invalid Due to Incorrect Reasons and Lack of Verification by Assessing Officer.

  Case-Laws - AT : Reopening of assessment u/s 147 - A.O. has recorded incorrect, wrong and non-existing reasons for reopening of the assessment and also failed to verify the information received by him before recording the reasons for reopening of the assessment. Thus, there was clearly non-application of mind on the part of the A.O. to initiate the re-assessment proceedings. - AT
  Visit to Get Source

  ---

• Presumption of Service Validates Tax Assessment Reopening: Non-Receipt Claim Insufficient Without Evidence u/s 148.

  Case-Laws - AT : Validity of reopening of assessment - Since the presumption as to the service of notice when the notice was issued to proper address by registered mail with postage prepaid is in favour of the Department, it is for the assessee to rebut the same with cogent evidence. It is always open for the assessee to verify with the postal authorities with reference to the speed post number and submit the evidence of non-service to him, which the assessee did not do. In the circumstances, mere statement of the assessee that there is no service of notice under section 148 of the Act cannot rebut the presumption. - AT
  Visit to Get Source

  ---

• Commission on Bogus Sales: Sales Cannot Be Both Legitimate and Fraudulent; Challenges Dismissed as Academic.

  Case-Laws - AT : Addition for commission earned on the bogus sales - Sales cannot be correct and bogus at the same time. - This follows the common law maxim of approbate and reprobate. When the addition has already been deleted by us on merits, in our considered opinion the challenge to addition on other aspects are now only of academic interest. Hence we are not engaging in to the same. - AT
  Visit to Get Source

  ---

Customs

• IGST Exemption for Re-Imported Aircraft Parts After Repair: Pay Only Basic Customs Duty, No Integrated Tax or Cess.

  Case-Laws - AT : Availability of IGST exemption - aircrafts and parts thereof that are re-imported into India after repairs - The inevitable conclusion that follows from the aforesaid discussion is that the absence of mention of integrated tax and compensation cess in column (3) under serial no. 2 of the Exemption Notification would mean that only the basic customs duty on the fair cost of repair charges, freight and insurance charges are payable and integrated tax and compensation cess are wholly exempted. - AT
  Visit to Get Source

  ---

Service Tax

• Personnel Secondment Not Classified as Manpower Supply Service; Employer-Employee Relationship Established in Tax Case.

  Case-Laws - AT : Manpower Recruitment and Supply of Manpower Agency Service or not - secondment charge - The persons seconded to the appellant working in the capacity of employees and payment of salaries etc is made to such employees by group companies only for disbursement purposes and hence employee-employer relationship exist and such an activity cannot be termed as “manpower recruitment or supply agency” - AT
  Visit to Get Source

  ---

Central Excise

• Charge of Clandestine Manufacture Dismissed Due to Non-compliance with Section 36(2) & (4) Central Excise Act.

  Case-Laws - AT : Clandestine manufacture and clearance - under valuation - The charge of clandestine removal/undervaluation cannot sustain on the basis of the Pen drive data alone more so when the printouts have not been obtained in compliance with the mandatory conditions of Section 36(2) & (4) of the Central Excise Act - AT
  Visit to Get Source

  ---

VAT

• Interest on Delayed VAT Payments Cut to 6% During Court Writs; Statutory Rates Apply Otherwise.

  Case-Laws - HC : Rate of interest on delayed payment of VAT / Tax - the rate of interest is scaled down to 6% per annum for the period during which the writ petitions were pending before this Court. The petitioner of course has to pay at the statutory rate of interest for the period before filing of the writ petitions and for the period commencing from the date of disposal of the writ petitions till the date of payment. - HC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2021 (1) TMI 747
  Permission for withdrawal of petition - Direction to Respondent Authorities to reopen the Form GST TRAN-I and enable the petitioner to file the GST TRAN-1 and transfer the transitional credit into its electronic credit ledger - HELD THAT:- Learned counsel appearing on behalf of the petitioner submits that the grievance of the petitioner in connection with availment of ITC has been redressed by giving due credit to the ITC to the petitioner in the Financial Year 2017-18 ending on 30.06.2017 under the VAT Act and CST Act. Upon this, learned counsel for the petitioner seeks permission to withdraw this writ petition. This writ petition is dismissed as withdrawn.

  ---

• 2021 (1) TMI 746
  Seeking a direction to the respondent to supply copies of summons issued, arrest memo with regard to the husband of the petitioner and panchnama drawn during search at office premises - HELD THAT:- The instant petition has been preferred by the wife of the accused, Ankur Garg. Learned counsel has not been able to tender any explanation as to why husband of the petitioner has not come forward for the redressal of his grievance. The petitioner, being spouse of the accused, cannot be said to have any locus standi, while approaching this Court by way of the instant petition. Petition dismissed.

  ---

• Income Tax

• 2021 (1) TMI 745
  Exemption u/s 10B - failure to receive the convertible foreign exchange within stipulated period - Scope of amended provision of Section 155(11A) - AO restricted the deduction on the ground that out of the total export turnover the foreign exchange realized was calculated by refusing to take into consideration of the payment which was adjusted towards the imports of certain raw materials made by the assessee for the manufacture of the very same goods which were exported - According to the appellant-assessee, the word sale proceeds occurring in section 10B(3) cannot be construed to be only as the total value of the goods exported but would need to be interpreted as net sale proceeds when the competent authority, viz., the Reserve Bank of India, permits such realization of foreign exchange of net sale value - HELD THAT:- It is pertinent to note that as per Explanations 1 and 2 to section 10B(3) the sale proceeds shall be deemed to have been received in India where such sale proceeds are credited to a separate account maintained for the said purpose by the assessee with any bank outside India with the approval of the Reserve Bank of India. Appellant as submitted that under section 155 (11A), the prior approval of the Reserve Bank of India is not required. The amended provision of Section 155(11A) came into effect from 13.07.2006.When the subject matter of the appeal is pertaining to the assessment year 2004-05, the provisions of the amended section, which came into effect on 13.07.2006, has no application for the present case. Therefore, the appellant cannot take shelter under the amended provision of Section 155(11A). Application seeking approval from the RBI only in the year 2007 - Since the appellant had sought for the approval from the RBI only in the year 2007, the said correspondence shall not be helpful to the appellant in any manner whatsoever for the reason that the subject matter of the appeal is pertaining to the assessment year 2004-05. Explanations 1 and 2 to section 10B(3) are applicable to the case on hand. The materials available on record would clearly establish that the appellant had not obtained prior approval from the RBI as contemplated under Explanations 1 and 2 to section 10B(3) of the Act. That apart, Form 56G would reflect that the Foreign Inward Remittances with regard to the sale proceeds have not been brought in foreign currency during the previous year and within six months period. As per Section 10B of the Act, the entire sale proceeds should have been brought into India in convertible foreign exchange, within the prescribed period. Out of the total export turnover of Rs. 4,25,32,628/-, the foreign exchange realized within the prescribed period was Rs. 2,10,35,760/- . Since the appellant-assessee did not bring the entire sale proceeds in convertible foreign exchange as per the provisions, the authorities disallowed the said deduction. The obligation on the part of the assessee to avail the beneficial section is that the entire sale proceeds ought to have been received in convertible foreign exchange as per the above section. Alternatively, the assessee should have opened a bank account as per the Explanation 2 of the above section. Assessing Officer restricted the deduction to Rs. 9,25,865/-. The appeal preferred by the appellant before the Commissioner of Income Tax (Appeals)-I, Coimbatore was also dismissed by the Commissioner. The Income Tax Appellate Tribunal, A Bench, Chennai, had also confirmed the order passed by the authorities and dismissed the appeal. The reasoning given by the authorities restricting the deduction of Rs. 9,25,865/- is just and proper. - Decided against assessee.

  ---

• 2021 (1) TMI 744
  Assessment of income of minor sons in the hands of the assessee father u/s 64(1)(iii) - scope of amended provision came into force with effect from assessment year 1976-77 - HELD THAT:- In view of the observations made by a three-judge Bench of this Court in its judgment [ 2019 (8) TMI 458 - PATNA HIGH COURT ] dated 01.08.2019, relevant portion whereof stands extracted hereinabove, it cannot be said that the income including the component of interest of the two minor sons, namely Shri Alok Kumar Goenka and Shri Atul Kumar, would be assessable in the hands of their father, namely Lok Nath Goenka, for the reason that the amendment making such income taxable in the hands of father, came into effect with effect from 01.04.1976, the period prior to the accounting year ending on 31st December, 1975.

  ---

• 2021 (1) TMI 743
  Levy of the penalty u/s. 271AAB - assessment order u/s. 153C - undisclosed income declared by the assessee during the postsurvey proceedings - Assessee argued there was no search in the case of assessee u/s. 132 - HELD THAT:- Applicability of Section 271AAB is integrally connected to search under s.132 of the Act. In the absence of search under s. 132 of the Act, the assessee has no occasion to avail the concessional treatment by way of admission under s.132(4) of the Act. Thus, we find obvious merits in the observations made by the first appellate authority that provisions of Section 271AAB of the Act are not applicable to the case of the assessee. In the absence of search under s.132 of the Act, the consequential or incidental assessment proceedings under s.153C of the Act will not, in our view, entitle the AO to usurp jurisdiction under s.271AAB of the Act for the purposes of imposition of penalty - See Shri Suresh H. Kerudi [2019 (10) TMI 1175 - ITAT BANGALORE]. We are of the view that the penalty in the case of assessee cannot be sustained as the assessee was not a person who was subjected to search u/s. 132 of the Act and consequently the provisions of section 271AAB could not be invoked in his case. - Decided in favour of assessee.

  ---

• 2021 (1) TMI 742
  Disallowance on account of stamp duty charges of lease agreement pertaining to lease period of five years - AO held that as lease is for 5 years, only 1/5th of lease rent charges are allowable and therefore, 4/5th of such charges should be disallowed - HELD THAT:- Period of lease for which property has been taken, cannot be regarded as a decisive test to determine nature of expenditure. In any case, it is not disputed that stamp duty amount has been paid on lease deed for purposes of carrying on assessee s business. Once aforesaid position is accepted then amount of Stamp Duty paid for has to be allowed as revenue nature. The period of lease [5 years] could not be said to be such a long period that assessee could be said to have acquired or brought into existence an advantage of an enduring character. The office premises were obtained with a view to carry on business activity of assessee-company and facility so obtained could not be said to be an advantage of any enduring nature. Besides, terms of lease were not on record and, therefore, no other considerations could be taken into account for finding out whether any asset of an enduring character was acquired. Stamp duty was required to be paid in order to bring about document of Lease. Expenses so incurred for securing premises on lease for a short period of five years were, therefore, allowable as revenue expenditure - Decided against revenue. Disallowance of renovation expenditure - assessee has incurred expenditure under head of repairs and maintenance expenditure of premises taken on lease - HELD THAT:- The facts show that cost of renovation was incurred by assessee who is lessee in respect of premises. It is not a long lease of property but only for five years. Rent of assessee is also not concessional as LD AO himself disallowed some part of this. It is not case that by incurring this expenditure some additional floors or some extra construction was carried out. In view of this, we do not find any infirmity in order of LD CIT (A) in deleting disallowance holding them to be revenue expenditure. More so, decision is correct for reason that assessee out of total expenditure of Rs. 2.5 crores itself classified some of expenditure as capital expenditure and only claimed revenue expenditure of Rs. 125,00,000/-. Accordingly, ground No. 2 of appeal is dismissed. Disallowance of excess rent paid u/s 40A(2)(a) - as during year assessee has taken a building on rent and rent agreement was entered into with one of sister concern - AO held that as rent agreement was entered with a sister concern questioned about justification - HELD THAT:- Assessee company as well as sister company, both are assessed to income tax at maximum marginal rate, and, therefore it cannot be said that rent is paid to respondent company at an unreasonable rate to evade income tax. Further In absence of any material before Assessing Officer, such as comparative chart etc. to suggest that any excessive rent payment was made to sister concern and 50 % ad hoc disallowance was made on payment made under Section 40A(2)(b) of Act to Aditya Prakash entertainment private limited solely on ground that party to whom payment was made, it is a sister concern and there is an attempt to evade Tax and therefore, there was an element of excessive claim. Further cost price of property purchased by owner of property long back, cannot be basis for making any disallowance applying provisions of Section 40 A (2) (a) - We are of opinion that Assessing Officer was not justified in making disallowance to extent of 50 % payment under Section 40 A(2)(a) For purpose of making disallowances u/s 40 A(2)(a) it is duty of revenue to show that expenditure incurred by assessee is excessive and unreasonable by drawing such inference from prevailing market price of similar kind of service or goods.Unless, LD AO brings those facts on records, disallowance u/s 40 A(2)(a) cannot be made. No infirmity in order of LD CIT (A) in deleting disallowance. Disallowance legal and professional fees and consultancy charges u/s 40 A (2) (a) - AO disallowed 50% of above consultancy charges - HELD THAT:- As assessee has also earned consultancy income, which is placed at page number 37 of paper book, such income is of Rs. 201,609,736 also from sister concerns such as opus reality development of Rs. 90 lakhs and from Alliance Promoters Ltd of Rs. 104,787,858. It is in fact to be seen that assessee has not paid any sum to Opus Reality Development Or Alliance Promoters Ltd any legal and professional fees but in fact, it has earned such professional fees from them and shown it as income. Thus, assessee has earned income from related parties but has not paid sums to related parties. Thus expenditure incurred by assesses was not to related parties, therefore application of provisions u/s 40A (2) is misplaced. Accordingly, we do not find any infirmity in order of learned CIT A in deleting disallowance. Disallowance of foreign travel expenses - director of assessee has incurred an expenditure towards foreign travel expenditure for visiting various places in Malaysia, Hong Kong, Goa, USA and Dubai - CIT-A deleted the addition - HELD THAT:- On perusal of details of travelling expenditure, LD AO should have clearly stated which details were not on record in respect of travelling expenses. He further held that merely on suspicion LD AO has disallowed above expenditure and that too on an ad hoc basis. He further held that in addition on estimated basis could not be sustained. Therefore, he deleted above addition/disallowance. We do not find any infirmity in order of learned CIT A as learned assessing officer has disallowed only 50% of expenditure on d hoc basis without pointing out any infirmity in details submitted by assessee and assessee has also given a detailed justification for incurring such expenditure, which was not found to be incorrect. Undisclosed management fee - some amount was carried forward to a subsequent year as advance received - CIT-A deleted the addition as noted that assessee has offered above amount in subsequent year as it pertained to that financial year - HELD THAT:- Admittedly, assessee has offered balance sum in next year as it on basis of period of consultancy services pertains to next financial year. The amount of tax deduction or its period is the responsibility of payer and it does not determine the liability of the recipient as income. For determining the income in the hands of the recipient, method of accounting of recipient as well as the nature of income is required to be examined. CIT A has also given direction to Ld assessing officer to verify above aspect whether a sum of Rs. 81,176,086 has been offered by assessee in subsequent year or not. There is no denial from the ld DR that above sum is not offered by assessee as income in next Financial Year. Thus, we do not find any infirmity in order of learned CIT A. Addition on account of consultancy charges by applying Provisions of Section 40 A (2) (a) - HELD THAT:- CIT A deleted above disallowance holding that AO has not been able to show that expenditure incurred was excessive or unreasonable having regard to fair market value of services for which payment was made. Undoubtedly, genuineness of expenditure is not doubted otherwise Learned-assessing officer should have disallowed whole of expenditure. The learned assessing officer has also failed to show that expenditure incurred was excessive or unreasonable having regard to market price. We have also deleted the similar disallowance made in assessment year 2010 11 as per ground number 4 of that appeal. Therefore, for similar reasons we uphold order of learned assessing officer deleting above disallowance. Disallowance on account of consultancy charges paid to Signature Group India Private Limited. - HELD THAT:- AO is required to show that above expenditure incurred was excessive and unreasonable, which he failed. It is also to be noted that in earlier year assessee has paid a sum of Rs. 270,58,844 as consultancy expenditure to signature group India private limited. For current year, it has only paid consultancy charges of Rs. 173,26,487 to that party. It is also fact that if above expenditure is unverified expenditure, learned assessing officer should have disallowed 100 % of such expenditure, where as he has disallowed only 50% of expenditure on estimated basis. There is no reference to market price of such services. In view of this, we do not find any infirmity in order of learned CIT A in deleting above disallowance of consultancy charges. Disallowance u/s 14 A - CIT A only corrected figures of average value of investment at Rs. 146,158,495 and confirmed disallowance of 0.5% - HELD THAT:- Principally CIT A has upheld disallowance made by learned assessing officer however directed to correct only arithmetic inaccuracy in the order. Before us, learned departmental representative could not show that figure adopted by learned CIT A for confirming above disallowance are not correct.

  ---

• 2021 (1) TMI 741
  Disallowance u/s 40(a)(i) - AO noticed that assessee had paid to a foreign entity and no TDS was deducted - HELD THAT:- Since the assessee bonafidely believed that such certification fee was not liable to tax in India, as the same was not covered within the meaning of Fee for Technical Services as provided u/s 9(1) (vii) of the Act and/or the overriding provisions of the Double Taxation Avoidance Agreements. The aforesaid issue stands covered in favour of the assessee by the order of the Tribunal passed in the assessee s own case [ 2020 (11) TMI 478 - ITAT DELHI] Disallowance in respect of provision made for sales incentive under Shahenshah Scheme - Shahenshah Scheme towards sales incentive payable to dealers and distributors - AO had disallowed the provision by holding that the provision made by the assessee was not based on any scientific method and there is an element of contingent liability and therefore the sum is not allowable - HELD THAT:- In earlier years has decided the issue in favour of the assessee by holding that the provision made by the assessee in respect to Shahenshah Scheme to be on scientific basis. Before us, no material has been placed by the Revenue to point out any distinguishing feature in the facts of the case in the year under consideration and that of earlier years. Further Revenue has also not placed any material to demonstrate that the decision of the Tribunal in assessee s own case in A.Y. 2006-07, 2007-08, 2008-09 has been set aside/ stayed or over ruled by the higher judicial forum. Considering the totality of the aforesaid facts and following the order of the Co-ordinate bench in the assessee s own case and for similar reasons, we hold that the Revenue was not justified in making the addition. Denial of claim of deduction u/s 80IC on interest income - interest income in the accounts of Baddi Unit and Haridwar Unit - HELD THAT:- We find that the Hon ble Delhi High Court in the case of PCIT vs. Bharat Sanchar Nigam Ltd. [ 2016 (8) TMI 270 - DELHI HIGH COURT] and the Co-ordinate Bench of Tribunal in the case of M/s. NHPC Ltd [ 2019 (5) TMI 1664 - ITAT DELHI] has held that the Revenue was not justified in denying the claim of deduction on such income. Before us, Revenue has not pointed any contrary binding decision in its support. We therefore, hold that AO not justified in denying the claim of deduction u/s 80IC of the Act and thus direct the AO to grant deduction u/s 80IC on the interest income earned by the assessee. Thus the ground of the assessee is allowed. Deduction of education cess and secondary and higher education cess - HELD THAT:- As in the assessee s own case for AY 2008-09 [ 2020 (11) TMI 478 - ITAT DELHI] and for similar reasons we hold that the Revenue was not justified in denying the claim of deduction. Denial of claim of deduction of interest expenses - HELD THAT:- CIT(A) while deciding the issue and after examining the excise returns of various manufacturing units of Assessee has given a finding that the products manufactured at Greater Noida are capacitors and reactors and the products manufactured at Neemrana are electric motors, CFL bulbs etc. The products manufactured at Greater Noida and Neemrana Unit are completely different and the technology, plant machinery, skill required for its production cannot be same for the manufacturing of existing products and therefore assessee had entered into extension of business and it is not a case of expansion of business. In such a situation he held that proviso to Section 36(1)(iii) are applicable and therefore assessee is not eligible for deduction of interest. Before us, no fallacy has been pointed in the finding of CIT(A) therefore we find no reason to interfere with the order of CIT(A). Thus the ground of Assessee is dismissed. Transfer Pricing Adjustments - Comparable selection - HELD THAT:- Piramal Healthcare Ltd. - extract of services income extracted the TPO in the order does not match with the figures reported in the Annual Report which are available in the public domain - Annual Report placed in the paper book has also pointed out that 98.79% of its revenue are earned from sale of manufactured and traded pharmaceutical products revenue earned by the assessee are for various business services. In such a situation, we find force in the argument of Learned AR that it cannot be considered to be a comparable to assessee company. WAPCOS Ltd. - Considering the functions undertaken by it, we are of the view that the functions performed by it are not comparable to the assessee company which is engaged in providing basic business support services and therefore we are of the view that it cannot be considered to be a comparable company - in the case of Worley Parsons India Pvt. Ltd [ 2017 (2) TMI 117 - ITAT HYDERABAD] has noted that public sector undertakings are not driven by profit motive alone but other considerations such as discharge of social obligations etc also weigh and hence they cannot be considered as comparable to the private companies - we hold that WAPCOS Ltd. cannot be considered to be a comparable company and we therefore direct its exclusion.

  ---

• 2021 (1) TMI 740
  Challenging the assessment framed by the AO u/s 143(3) - AO had obtained prior approval of JCIT u/s 153D of the Act which is contrary to the provisions of the Act - HELD THAT:- We find that CIT(A) while deciding the ground has noted the fact that he had called for the assessment records and after its examination, he has noted that AO had sought consolidated approval of Addl.CIT for A.Y. 2007- 08 to 2012-13 pertaining to proceedings u/s 153A of the Act. He has thereafter noted that the draft order for AY 2013-14 was also clubbed with the consolidated proposal which appeared to be a bonafide mistake. He has further given a finding that no directions were issued by Addl.CIT to the AO to complete the assessment order for 2013-14 in any particular manner. Before us, no material has been placed by the assessee to demonstrate that the findings of CIT(A) is incorrect or there is any fallacy in the findings of CIT(A). In such circumstances, we do not find any merit in the present ground raised by the assessee. Thus Ground Nos. 1 and 2 are dismissed. Unexplained cash found at the time of search - AO had made the addition of cash found from the locker as being unexplained - HELD THAT:- We do not find any justifiable reason by CIT(A) for disregarding the submission of assessee of the amount being out of Stridhan more so when the assessee has been maintaining cash book and has stated to withdrawn more Rs. 20,00,000/- from the bank account and substantial addition has been deleted by accepting the explanation of the assessee - we find merit in the submission of the Learned AR. CIT(A) was not justified in upholding the addition of Rs. 60,000/-. We therefore direct its deletion. As far as the relief of Rs. 5,33,000/- which has been granted by CIT(A) and against which Revenue is before us, Revenue has not pointed to any fallacy in the findings of CIT(A). Unexplained jewellery - assessee had acquired jewellery weighing approximately 7090 gms between 08.05.2003 (date of previous search) and 16.01.2013 (date of the present search) - CIT-A deleted addition - HELD THAT:- CIT(A) while deleting the addition has given a finding that assessee had given the breakup of purchase of jewellery made during AY 2004-05 to 2012-13 duly supported by bank statements showing the details of such purchases and that the payment for bulk of the purchases have been made by cheque. He has further noted that the aforesaid details were available before the AO but the AO for mysterious reasons has not examined the same. He has also given a finding that assessee has also provided the capital accounts which are duly supported by purchases and which also support the year wise purchase as claimed by the assessee. He has further given a finding that the difference in quantity between the weight of jewellery as per the statement of acquisition (8678.323 gms) and the actual quantity of jewellery found at the time of search (9373.3 gms) was 694.977 gms valued at Rs. 21,68,485/- for A.Y. 2013.14 and against which Smt Kanchan Bhalla and Smt Divya Bhalla had made additional disclosure of Rs. 35,79,530/- and Rs. 39,64,299/- respectively on account of unexplained jewellery thus covering the shortfall. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue. - Revenue appeal dismissed.

  ---

• 2021 (1) TMI 739
  Reopening of assessment u/s 148 - As argued notice has been issued purely on the borrowed satisfaction of DIT (Investigation) and no belief has been recorded in the reasons for reopening the case - bringing to tax the value of Sweat Equity issued by Rockland Hospital Ltd. to the assessee and which assessee was stated to have received without any consideration - HELD THAT:- We find force in the submissions of Ld AR that when the taxation of the value of sweat equity shares which is alleged to have escaped the assessment has itself been set to nought by the order of H ble High Court in the company petition, then its taxability does not remain on the date of issuance of initiation of reassessment proceedings. By the same Sweat Equity agreement apart from assessee, Shri Umesh Upadhaya was also allotted Sweat Equity shares and in his case also the reopening was initiated on identical facts. When the matter in the case of Umesh Upadhaya was carried before CIT(A), CIT(A) had noted the aspect of reversal of share account, that was used to derive valuation and he has noted that as per the order of Hon ble High Court, it was clear that no effective transaction can be said to the taken place and the reversal of share premium account were automatically related back to date of allotment. In such a situation, he noted that it was the case of hypothetical income and since the income did not result at all, there cannot be a tax and notional hypothetical income was not amenable to tax as perquisite . He accordingly decided the issue in favour of the assessee. Against the aforesaid order of CIT(A) in the case of Shri Umesh Upadhaya the matter was carried by the Revenue before the Tribunal. Considering the factual situation as noted by the CIT(A) in the case of Umesh Upadhaya, the Coordinate Bench of Tribunal has upheld the order of CIT(A) and dismissed the appeal of Revenue. We find that the facts of the case in the case of Umesh Upadhyaya (supra) and assessee are identical and in such a situation the decision in the case of Umesh Upadhaya would be squarely applicable to the present assessee s case also. Considering the totality of these facts we find force in the argument of the assessee that the AO was not justified in invoking the reassessment proceedings. - Decided in favour of assessee.

  ---

• 2021 (1) TMI 738
  Disallowance of Subscription Fees paid to Deloitte Touche Tohmatsu - HELD THAT:- As relying on assessee ow case We note that the said amount was towards the reimbursement of the expenses, which was in fact incurred on behalf of the assessee and there was no profit element. That being so, we decline to interfere with the order of Ld. CIT (A) deleting the aforesaid addition. we allow ground No.1 in both the years under consideration and direct the Assessing Officer to delete the disallowance. Disallowance of TDS payable - HELD THAT:- TDS is a liability cast upon the assessee to deduct the sum from the recipient of such income. The moment the assessee deducts the tax at source from the sums paid to the other person it becomes the liability of the assessee who can be held to be an assessee in default for the above sum as well as liable to pay interest and penalty also. Therefore, the amount of TDS is to be considered as the sum paid by the assessee on behalf of the recipient of the income. Therefore, it cannot be said that the above sum had not been paid by the assessee even while following the cash system of accounting. It is also not in dispute that the assessee has duly deposited the tax deducted at source within the time prescribed under the Act. Accordingly, we are unable to concur with the findings of the Ld. CIT (A) on the issue and direct that the impugned amount of TDS be granted as a deduction in assessment year 2011-12. Thus, ground no. 2 also stands allowed in assessment year 2011-12. Disallowance of payments to Retiring Partners - HELD THAT:- The undisputed facts are that the partnership firm envisaged payment to a outgoing partner on the basis that the partner would have rendered service during his tenure as a partner of the firm but could not enjoy the fruits thereof on account of the fact that the work having remained incomplete, the concerned client had not been billed for the work already done. The Hon ble Bombay High Court held that in similar circumstances, the courts have held that payment to the partner would amount to diversion of income at source by overriding title. The Ld. senior departmental representative could not point out any judgment to the contrary on this issue as well and, therefore, in view of the ratio of the decisions as aforesaid and as relied upon by the Ld. Authorized Representative, on identical facts, respectfully following the above cited judicial precedents, we allow ground No.3 of the assessee s appeal in Assessment Year 2011-12 and direct the Assessing Officer to delete the disallowance.

  ---

• 2021 (1) TMI 737
  Reopening of assessment u/s 147 - Addition on account of interest paid on Post Dated Cheques (PDCs) in cash and outside books of accounts - use of seized documents found during the course of search on BPTP and some of its group companies - HELD THAT:- Each and every assessee is a separate and distinct assessee. It is a fact on record that no seized material belonging to the assessee was found during the course of search on BPTP Ltd. and some of its group companies. None of the vendors of land who sold land to assessee were called and examined by the AO. There is nothing adverse brought on record by the AO in form of any material or any statement that interest outside the books was paid in cash by the assessee. The reasons were recorded by the AO by relying on seized documents which belonged to some other assessee during the course of search on BPTP Ltd. and some of its companies. Considering the rules of precedence and consistency and in absence of any material, document, evidence or statement which could implicate the assessee, in our view, the impugned assessment could not have been reopened. In view of these specific facts, the action taken by the AO of reopening of the assessment u/s 147 of assessee is not sustainable and the same is quashed as being void ab-initio as being based on seized documents of other assessee and based on presumptions, assumptions and incorrect interpretation of law. Assessee s appeal for AY 2007-08 - This issue is settled by the co-ordinate bench in case of Westland Developers Pvt. Ltd. [ 2015 (11) TMI 1682 - ITAT DELHI] wherein it was held by the Tribunal that in absence of any cogent, definite material which belonged to the assessee or any evidence demonstrating the payment of interest by the assessee on PDCs, reasons recorded for initiation of proceedings u/s 147 were not in consonance with law having been based on mere suppositions, surmises and extrapolation of material seized. The bench completely discarded the argument of AO and Ld. CIT (A) of common management and the assessee belonging to the same group and held that it cannot be equated with existence of incriminating seized material belonging to the assessee. In this case also, there is no seized document found which belongs to the assessee and it is so confirmed by the Ld. CIT (A) also in his order. No statement of any vendors of land is recorded by the AO. Statement of Shri Chottu Ram is referred to although the assessee has denied to have purchased any land from Shri Chottu Ram. The statement of Shri Chottu Ram was not even provided to the assessee. In our view, the statement of Shri Chottu Ram cannot be made as the basis for taking adverse inference without the assessee even having been confronted with it -None of the vendors of land and the alleged recipients of interest paid by the assessee were examined by AO who would have confirmed of having received any such interest. It is the basic principle of law that unless there is a corroborative evidence, no addition can be made in an assessment. Ground nos. 2 3 relating to addition confirmed by the Ld. CIT (A) in respect of interest paid on post-dated cheques outside the books is deleted. Disallowance u/s 40A(3) - cash payment made by the assessee for purchase of land - AR has submitted that the assessee has not claimed the amount paid for purchase of land as amount paid is neither debited to the Profit Loss a/c nor claimed as deduction in the Computation of Taxable income as the assessee has received reimbursement of amount from M/s Countrywide Promoters Pvt. Ltd. - HELD THAT:- It is seen that the issue of disallowance u/s 40A (3) is decided by several co-ordinate benches in various cases of group companies of BPTP in favour of the respective assessees by taking the view that issue of disallowance of expenses does not arise as the amount paid for purchase of land is neither debited to the Profit loss a/c nor claimed as expenditure in the Computation of taxable income as the assesses have got reimbursements of the amounts paid for purchase of land from M/s Countrywide Promoters Pvt. Ltd. on assignment of development rights in land purchased by assesses in favour of M/s Countrywide Promoters Pvt. Ltd. This issue was first decided in the case of M/s West Land Developers Pvt. Ltd.[ 2015 (11) TMI 1682 - ITAT DELHI] and later on in more than 30 other cases of BPTP group on identical facts. Therefore following the rules of precedence and consistency, the disallowance made by the AO is hereby deleted. - Decided in favour of assessee.

  ---

• 2021 (1) TMI 736
  Application for condonation of delay filed at belated stage - HELD THAT:- As relying on STATE OF M.P. AND ANR. VERSUS PRADEEP KUMAR AND ANR. [ 2000 (9) TMI 1042 - SUPREME COURT] application for condonation of delay filed in appeal at later stage is also maintainable and entertainable. Let us to proceed on merits of the application for condonation of delay. Delay of 221 days in filing of the appeal - Assessee specifically averred that her counsel forwarded a copy of the same to the Assessee immediately but it was received by the Assessee s mother-in-law who is aged about 65 years and somehow due to old age ailments, she misplaced the said order and skipped to inform the Assessee and therefore the Assessee did not receive the said order - immediately after getting the knowledge qua passing of order against the Assessee, the Assessee acted diligently and filed the appeal with delay of 221 days which occurred unintentionally and bonafidely. The explanation of the Assessee is supported by her affidavit and the department did not expressly refute the stand taken by the Assessee. The delay can be explained as bonafide mistake if any occurred due to the non-communication of the impugned order upon the Assessee therefore there seems to be no malafide intention for causing delay but the same prima facie appears to be bonafide and reasonable, hence in our considered opinion the Assessee has shown the sufficient cause for delay and therefore the delay of 221 days in filing of the appeal deserves to be condoned. Even the Assessee intends to get settled the dispute through the VSV Scheme and already initiated the process and willing to pay the relevant taxes. It is the public policy of nation that litigations must come to an end. Hence considering the peculiar facts and circumstances collectively, we are inclined to admit the appeal by condoning the delay of 221 days in filing of the appeal, consequently the delay stands condoned.

  ---

• 2021 (1) TMI 735
  Addition u/s 68 - Assessee received as preference share capital including share premium front parties unexplained - admission of additional evidence by CIT-A while deleting the addition - HELD THAT:- CIT(A) has admitted the additional evidence relying on the facts and the judicial decisions in particular of Coordinate Bench of Hon ble tribunal in the case of Shahrukh Khan and DCIT [ 2006 (7) TMI 532 - ITAT MUMBAI] where it was held, that after calling for remand report from the A.O. on merits as envisaged in Rule 46A of IT Rules, 1962, the CIT(A) has no discretion to refuse to admit the additional evidence. Considering the overall facts in respect of admission of additional evidence, the Ld CIT(A) plays a vital role in exercising his powers and they are co terminus in line with the A.O. and further opportunity was provided to the A.O. by calling for the remand report. The assessee was provided time to file the counter arguments therefore, the CIT(A) action in admitting the additional evidence is within his jurisdiction supported by the judicial decisions and facts and in accordance with law. The Revenue cannot agitate that the CIT(A) should not have admitted the additional evidence. Addition u/s 68 - We find that the Ld. AR has substantiated his arguments with the judicial decisions and the material facts with the evidences which cannot be disputed and the Ld. CIT(A) has also considered the legal aspects and the remand report and took a reasonable decision. We also find that in respect of third ground raised by the revenue, that the CIT(A) has not considered the findings of the A.O. in the remand report in respect of two investors who have nothing to do with the investment but only accommodating operations. Whereas, the Ld CIT(A) having received the remand report has dealt at para 6.4.1 of the order, where these companies have been tested and investigated by the DDIT, (Inv) Ahmedabad and the documentary evidence was filed. CIT(A) accepts that these companies actually exist and have capacity to make investments in assessee company as it was proved in the case of the investigation at Ahmedabad and Baroda. The CIT(A) also observed that the assessee has discharged his onus of burden of proof in respect of identity of investor, creditworthiness and genuineness of the transaction. As relying on M/S. AMI INDUSTRIES (INDIA) P. LTD. [ 2020 (2) TMI 269 - BOMBAY HIGH COURT] we find that the CIT(A) has passed a reasonable and logical order considering the provisions of law, judicial decisions, remand report and the assessee s own case, and applied the ratio of the judicial decisions to the present case and deleted the addition. The Ld. DR has submitted that the order of the Ld. CIT(A) is bad in law and supported his arguments relying on the order of the A.O. and remand report and could not controvert the findings of the CIT(A) with any new or cogent evidence - Decided against revenue.

  ---

• 2021 (1) TMI 734
  Disallowance u/s.14A r.w.r. 8D - Suo moto disallowance by assessee - AR submitted that the AO had made the impugned disallowance in terms of provision of Rule 8D(2) (iii), which was incorrect because there was no opening and closing balance of investments in the assessee s books on the first day and the last day of the year under consideration - HELD THAT:- We note that the AO has mentioned that the assessee has suo motu disallowed as disallowance u/s. 14A of the Act. Although, AR has argued that no such suo motu disallowance was made by the assessee in its computation of income, for want of evidences we cannot look into the issue at this juncture. Considering the smallness of the amount and also the alternate plea of the Ld. Authorized Representative on overall facts of the case, we direct that the disallowance be restricted to Rs. 67,853/- i.e. the amount of dividend earned by the assessee during the year under consideration. Appeal of the assessee stands partly allowed.

  ---

• 2021 (1) TMI 733
  Nature of expenditure - expenditure incurred on the cost of Gripper which is used in the robotic arms forming part of high pressure die casting machines - revenue or capital expenditure - HELD THAT:- Hon ble Supreme Court in the case of Sarvana Spinning Mills Ltd. [ 2007 (8) TMI 16 - SUPREME COURT] cannot be applicable to the facts of the present case and undisputedly the claim for deduction is not u/s. 31 but u/s. 37 of the Act. Therefore, the finding of the ld. CIT(A) replacement of part of machinery does not fall under current repairs is irrelevant. In the circumstances, the reasoning of the ld. CIT(A) cannot be sustained in the eyes of law. In the present case admittedly the claim for deduction was not u/s. 31 but u/s. 37 of the Act. Therefore, the test to be applied what is replaced is only part and the necessity of replacement had arisen on account of the part become old and there is no increase in productivity or capacity after the replacement. Admittedly, it is not the case of the Revenue that on account of replacement of this part of machinery in productivity or capacity of production had gone up and this machine can independently work and deliver the different output. In the circumstances, we hold that the expenditure can be allowed as revenue deduction. The expenditure incurred on the replacement of Gripper can be allowed as revenue deduction - Decided in favour of assessee.

  ---

• 2021 (1) TMI 732
  Disallowance u/s. 14A by applying rule 8D - Suo moto addtion made by assessee - No recording of satisfaction by AO - HELD THAT:- AO has not recorded any satisfaction before rejecting the suo moto disallowance made by the assessee and Ld. CIT(A) also clearly accepted this fact that no satisfaction was recorded. We notice from the record that no satisfaction was recorded even in the earlier Assessment Year 2008-09 and 2009-10 [ 2017 (8) TMI 405 - ITAT MUMBAI] and based on the above facts on record, Coordinate Bench of ITAT has deleted the disallowance made u/s. 14A - Thus delete the addition made u/s. 14A by observing that there is no satisfaction recorded by the AO as per the findings of Ld. CIT(A). - Decided in favour of assessee. Disallowance u/s. 40A(9) for reimbursement of school expenses - AO rejected the submissions made by assessee and observed that the expenses reimbursed by the assessee are relating to educational institution, which is a separate tax entity and the business of the assessee is not relating to carrying out business of the school thus the provisions of section 40A(9) are clearly attracted in this case - HELD THAT:- We notice that the Coordinate Bench of ITAT in assessee s own case for Assessment Year 2003-04 to 2009-10 [ 2017 (8) TMI 405 - ITAT MUMBAI] has already allowed the reimbursement of expenses to the educational institution. Therefore, respectfully following the decision of Coordinate Bench of ITAT which is applicable mutatis mutandis in the present case, we are inclined to dismiss the ground raised by the revenue. Claim of depreciation - Allowance of depreciation for earlier years, when such depreciation was not actually allowed in those years - HELD THAT:- As decided in own case [ 2016 (5) TMI 1386 - ITAT MUMBAI] it is not open for the Assessing Officer to assume the allowance of depreciation for earlier years, when such depreciation was not actually allowed in those years, because, the situation could have been different, if he would have reopened the assessment of those earlier years. Without amending the assessments of those years, the assumed written down value could not be considered to work out the depreciation of the current year. - Decided against revenue. VAT subsidy - CIT(A) observed that assessee is making this claim first time during the appellate proceedings and this was not in the return of income or had not claimed during the assessment proceedings, assessee had shown it as income in its return of income - DR submitted that this issue may be remitted back to the AO for factual verification and documents and AO may be given opportunity to verify the claim of the assessee - HELD THAT:- CIT(A) observed that subsidy given by the government is after the commencement of the business and to promote the business and not to set up the business. The creation of the infrastructure is of the State Govt. and assessee cannot take advantage of such objectives of the State Govt. - sales tax subsidy received by the assessee from the Govt. of Madhya Pradesh is after setting up of the new industry and the subsidy received by the assessee is revenue nature and it is liable to tax We notice that this issue was analyzed and adjudicated by Ld. CIT(A) after verifying the relevant documents submitted by the assessee before him and moreover, the proceedings before Ld. CIT(A) is only extension of assessment, it is otherwise known as extended assessment proceedings, therefore Ld. CIT(A) has applied his mind and came to the conclusion with his own reasoning and rejected the submission /contention of the assessee. Therefore, there is no necessity to remit this issue back to the AO for further verification. Sales Tax exemption scheme by the Maharashtra Govt . - CIT(A) observed that for the reasons discussed while adjudicating the issue of VAT subsidy received from Madhya state government and the entry tax exemption received from the Madhya Pradesh state government the sales tax exemption received from the Maharashtra state government is also treated as revenue receipts liable to be taxed - HELD THAT:- We notice that this issue was analyzed and adjudicated by Ld. CIT(A) after verifying the relevant documents submitted by the assessee before him and moreover, the proceedings before Ld. CIT(A) is only extension of assessment, it is otherwise known as extended assessment proceedings, therefore Ld. CIT(A) has applied his mind and came to the conclusion with his own reasoning and rejected the submission/contention of the assessee. Therefore, there is no necessity to remit this issue back to the AO for further verification. Entry Tax Exemption - HELD THAT:- We notice that assessee was awarded a certificate of eligibility for exemption of entry tax considering the fact that assessee has made investments in the Units established in the State of Madhya Pradesh and the Industrial Development Scheme clearly states that the incentive awarded only because, the assessee has made the investments and also the Scheme of incentive clearly based on the range of the investment made by the respective industries. As held in the various decisions, it is not relevant what mechanism was adopted by the State Govt. to award the incentive, but for what purpose this incentive were awarded whether these were awarded to benefit the units to function profitably or in order to bring capital inside the State in order to improve the industrial development in the State. As per the scheme, it is clear that incentives were awarded only because of new industrial units were commenced after 2004 - Thus we are inclined to allow the ground raised by the assessee. Sale of Carbon Credit - assessee treated the above receipt as capital receipt with the submission that if the absence of any element or profit or gain, income from sale of carbon credit should be treated as capital receipt and should be excluded in computing the total income both under the normal provisions of the Act as well as in computing book profit under section 115JB - HELD THAT:- In Dodson Lindblom Hydro Power Ltd. Bom HC [ 2019 (4) TMI 1034 - BOMBAY HIGH COURT] which are similar to the facts of the present case, wherein the Hon ble Jurisdictional High Court held that the sale of carbon credit is to be considered as capital receipt, therefore not liable to tax. The same reasoning was followed by Hon ble Allahabad and Rajasthan High Court. Therefore, considering the consistent view of the different High Courts in the country, we see no reason to take a different stand since the different High Courts has decided this issue in favour of the assessee. Respectfully following the aforesaid decisions of various High Courts which are applicable mutatis mutandis in the present case, we are inclined to allow the ground raised by the assessee. MAT computation - exclusion of VAT subsidy, sales tax exemption, entry tax exemption and income from sale of carbon credit while computing income u/s. 115JB - HELD THAT:- We notice that since we have already decided that the subsidies are in the nature of capital receipt and also by following the decision of Ankit Metal Power [ 2019 (7) TMI 878 - CALCUTTA HIGH COURT] , we direct the AO not to consider these receipts in calculating the book profit as that these incentives/receipts are capital receipt and does not fall within the definition of income under section 2(24) of the Act and also receipts are not in the character of income. Therefore, it cannot form part of the book profit u/s. 115JB of the Act.

  ---

• 2021 (1) TMI 731
  Reopening of assessment u/s 147 - proceedings initiated on the basis of information that assessee had deposited cash amounting with ICICI Bank and also earned commission payment from Karvat Healthcare Services Pvt. Ltd., in assessment year under appeal and no return have been filed - HELD THAT:- The assessee has filed copy of the reply filed before the Ld. CIT(A) in the paper book in which it is clearly explained that A.O. has wrongly assumed that entire cash deposited in the ICICI Bank account was income of the assessee as there are deposits and withdrawals multiple times throughout the year for business purposes. It was also explained that assessee in the business during the relevant year because assessee deals in Hardware, Sanitary and Sanitary-ware at Chawdi Bazar, Delhi. These facts clearly show that total cash deposited in the Bank Account of the assessee with ICICI Bank Ltd., per se may not be the income of the assessee. A.O. has recorded incorrect, wrong and non-existing reasons for reopening of the assessment and also failed to verify the information received by him before recording the reasons for reopening of the assessment. Thus, there was clearly non-application of mind on the part of the A.O. to initiate the re-assessment proceedings. The A.O. would not get assumption of jurisdiction legally to frame the re-assessment under section 147/148. In view of the above, we set aside the Orders of the authorities below and quash the reopening of the assessment. - Decided in favour of assessee.

  ---

• 2021 (1) TMI 730
  Validity of reopening of assessment - non-service of notice u/s 147/148 - no due and proper service of notice issued - change in address - as per assessee West Punjabi Bagh, New Delhi premises was sold out and the assessee moved out of the same during the year 2007-08 and thereafter filed the return of income from the new address - According to the CIT(A), there is no specific information to the Department as to the change of address - HELD THAT:- As seen from the record that there is no dispute that when the assessment order was passed on 20/12/2010, and dispatched to the address of the assessee at 5/48, West Punjabi Bagh on 27/12/2010, the same was returned with the endorsement left made by the postal servant on 28/12/2010. Basing on this learned DR submitted that when the notice could not be served, as on 28/12/2010, the postal envelope was returned by the postal department with suitable endorsement and this is conspicuously absent when the notice under section 148 was issued on 26/3/2010 which indicates that as on 26/3/2010, the assessee was very much present in the said address or received such mail addressed to the old address, and that is reason why the postal envelope was not returned by the postal department. DR further submitted that there is no evidence as to when exactly the assessee moved out of the property and merely because the return was filed from the new address of 28/72, West Virginia be Bagh, it cannot be said that the assessee was not available at 5/48, West Punjabi Bagh or because the assessee was living in the same locality the postal servant must have delivered the mail to the old address at the new address, and the fact that the postal envelope was not returned indicates that the assessee accepted the same. When the notice could not be served in the old address, the postal and envelope was returned. Since the presumption as to the service of notice when the notice was issued to proper address by registered mail with postage prepaid is in favour of the Department, it is for the assessee to rebut the same with cogent evidence. It is always open for the assessee to verify with the postal authorities with reference to the speed post number and submit the evidence of non-service to him, which the assessee did not do. In the circumstances, mere statement of the assessee that there is no service of notice under section 148 of the Act cannot rebut the presumption. No reason to reject the reasoning and finding of the Ld. CIT(A) - Decided against assessee.

  ---

• 2021 (1) TMI 729
  Reopening of assessment u/s 147 - proceedings beyond 4 years - HELD THAT:- As held in the case of PCIT versus Light Carts (P) Ltd [ 2017 (9) TMI 46 - ALLAHABAD HIGH COURT] that where assessee disclosed all the material facts necessary for assessment, AO could not reopen assessment after expiry of 4 years from the end of relevant year merely on the basis of information supplied by investigation wing that certain income earned by assessee had escaped assessment. We are inclined to quash the reassessment order based on the fact that it is reopened beyond 4 years without bringing on record any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The order passed by Ld. CIT(A) that the assessment was reopened within 4 years and he proceeded to adjudicate the issue on reopening of the assessment in the above said wrong notion and sustained the addition made by the assessing officer. It is brought on record clearly that the reassessment was initiated beyond 4 years, therefore we restrict ourselves to adjudicate on jurisdiction issue and not going into merits of the case - Decided in favour of assessee.

  ---

• 2021 (1) TMI 728
  Addition u/s 68 - unexplained cash credit - as per revenue large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus - HELD THAT:- Assessee has given all the necessary details required for establishment of identity creditworthiness and genuineness under extant provisions of section 68 of the IT Act. The onus cast upon the assessee stands discharged. The addition by invoking amended provisions of section 68 of the Act which are not applicable for the assessment year is not sustainable. The decisions relied upon by the Revenue are not applicable on the facts of this case. Hence in our considered opinion the addition under section 68 is not sustainable. Hence we set aside the orders of authorities below and delete the addition - Decided in favour of assessee.

  ---

• 2021 (1) TMI 727
  Addition for commission earned on the bogus sales - notional 2% addition for commission - HELD THAT:- We find that pursuant to search and seizure action, the authorities below upon noting that there were bogus sales entry given by the assesses, have made notional 2% addition for commission earned on the said bogus sales - As noted that the said sales have been included in income and the income so derived has also been taken into account in the assessment. We find that the assessee is correct in this regard that when the sale is taken into income, there cannot be a further addition of 2% notional addition for bogus sales. The same sale cannot be genuine and bogus at the same time. In this view of the matter the notional addition of 2% as bogus sales commission is not a sustainable. When the sales have been accepted and taken into account in determining the income of the assessee there cannot be at the same time a notional 2% disallowance for commission on bogus sales, resulting in a double prejudice unsustainable in law - sales cannot be correct and bogus at the same time. This follows the common law maxim of approbate and reprobate. When the addition has already been deleted by us on merits, in our considered opinion the challenge to addition on other aspects are now only of academic interest. Hence we are not engaging in to the same. In the result we set aside the orders of authorities below and delete the addition. - Decided in favour of assessee.

  ---

• Customs

• 2021 (1) TMI 726
  Availability of IGST exemption - aircrafts and parts thereof that are re-imported into India after repairs - serial no. 2 in the General Exemption Notification No. 45/2017 dated June 30, 2017, as amended by Corrigendum Notification dated July 22, 2017 - HELD THAT:- It is in exercise of the power conferred by sub-section (1) of section 25 of the Customs Act that the Exemption Notification has been issued. The Central Government exempted the goods falling within any Chapter of the First Schedule to the Tariff Act and specified in column (2) of the Table when re-imported into India, from so much of the duty of customs leviable thereon which is specified in the First Schedule, and the integrated tax, compensation cess leviable thereon respectively under sub-sections (7) and (9) of section 3 of the Tariff Act, as is in excess of the amount indicated in the corresponding entry in column (3) of the Table - The Exemption Notification makes reference to the Tariff Act. Section 12 of the Customs Act also provides that duties of customs on goods imported into India shall be levied at such rates as may be specified under the Tariff Act. Section 2 of the Tariff Act provides that the rates at which duties of customs shall be levied under the Customs Act are specified in the First and the Second Schedules. Section 3 of the Tariff Act deals with levy of additional duty equal to excise duty, sales tax, local taxes and other charges. There is no dispute that it is serial no. 2 of the Exemption Notification that is applicable to aircrafts/ parts re-imported into India after repairs. What would, therefore, be payable in terms of serial no. 2 would be the duty of customs on the fair cost of repairs carried out including cost of materials used in repairs, insurance and freight charges, both ways. It is clear that even the levy of additional duty under section 3 of the Tariff Act, which is in addition to the duty of customs under section 2 of the Tariff Act, would not be duty of customs for the purpose of Notifications issued under the Customs Act. Integrated Tax has been defined under section 2(12) of the Integrated Tax Act to mean the integrated goods and services tax levied under the Integrated Tax Act. Section 5 of the Integrated Tax Act deals with levy and collection. It provides that there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both on the value as determined under section 15 of the Central Goods and Services Act and at such rates, not exceeding 40 per cent as may be notified by the Government. The proviso stipulates that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Tariff Act on the value as determined under the Tariff Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act - It is, therefore, clear that though integrated tax is levied under section 5 of the Integrated Tax Act, but it is collected in accordance with the provisions of section 3 of the Tariff Act on the value as determined under the Tariff Act and at the point when duties of customs are levied under section 12 of the Customs Act. Thus, integrated tax is levied under section 5(1) of the Integrated Tax Act and only the procedure for collection has been provided under section 3 of the Tariff Act. A perusal of the main body of the Exemption Notification would indicate that it refers not only to duty of customs leviable thereon which is specified in the First Schedule to the Tariff Act, but also to integrated tax and compensation cess which are leviable thereon respectively under sub-sections (7) and (9) of section 3 of the Tariff Act. However, column (3) of the Table accompanying the main Notification for serial no. 2 refers to only duty of customs (without mentioning leviable thereon which is specified in the First Schedule ), on the fair cost of repairs carried out with insurance and freight charges - It is for this reason that it has been contended by the learned Authorised Representative of the Department that omission to mention specified in the said First Schedule in the conditions set out in column (3) of the Table for serial no. 2 after Duty of customs , would mean that the Government intended to include integrated tax and compensation cess in the expression duty of customs . It would also be relevant to refer to the entries at serial no. 1 of the Exemption Notification. Serial no. 1 specifically refers to what types of duties or taxes are leviable under different situations. There is a specific reference to integrated tax in column (3) in connection with serial no. 1 (d) and to integrated tax and compensation cess in connection with serial no. 1(e). There is, therefore, enough intrinsic evidence in the Exemption Notification itself to show that integrated tax cannot be understood as duty of customs in the Exemption Notification - the additional duty leviable thereon under Section 3 of the Tariff Act and special duty of customs leviable under section 68(1) of the Finance Act have been replaced by the integrated tax under section 3(7) and compensation cess under section 3(9) of the Tariff Act. It cannot, therefore, be contended that duty of customs referred to in the condition against serial no. 2 of the Exemption Notification would include integrated tax. The inevitable conclusion that follows from the aforesaid discussion is that the absence of mention of integrated tax and compensation cess in column (3) under serial no. 2 of the Exemption Notification would mean that only the basic customs duty on the fair cost of repair charges, freight and insurance charges are payable and integrated tax and compensation cess are wholly exempted. The 415 orders passed by the Commissioner (Appeals) are, accordingly, set aside and it is held that the Appellant is entitled to exemption from payment of integrated tax under the Exemption Notification on re-import of repaired parts/ aircrafts into India - Appeal allowed.

  ---

• Corporate Laws

• 2021 (1) TMI 725
  Rejection of scheme for amalgamation proposed by the Appellants - Section 421 of the Companies Act, 2013 - HELD THAT:- The Ministry of Corporate affairs in its General Circular bearing No. 09/2019 dated 21.08.2019 made the clarification under section 232(6) of Companies Act, 2013. According to such circular, section 232(6) of the Companies Act enables the companies in question to choose and state in the scheme an appointed date . This date may be a specific calendar date or may be tied to the occunence of an event such as grant of license by a competent authority or fulfilment of any preconditions agreed upon by the parties, or meeting any other requirement as agreed upon between the parties, etc., which are relevant to the scheme - Also, since the appointed date under the Scheme was specified as 01.01.2019 but Clause 1.1.3 of the Scheme provides that the Appointed Date can be such other date as may be fixed by the NCLT. Therefore, NCLT shall not reject the Scheme solely on the ground that the appointed date and valuation date is different. The Appellants to put the entire issue at rest, are agreeable and filed an affidavit to this effect that the appointed date should be same as the Valuation Date i.e. 31.07.2018. Since a considerable amount of time have been lost and as the Appellants are agreeing under the scheme that the appointed date may be such date as the NCLT may decide i.e. the valuation date (31.07.2018) - the appeal is allowed and the appointed date shall be the valuation date i.e. 31.07.2018.

  ---

• 2021 (1) TMI 724
  Seeking for restoration of the name of the Company in the Register of members maintained by ROC - Section 252(3) of the Companies Act, 2013 - Divergent views among members - HELD THAT:- The present opinion/decision/Judgement may be placed before the Regular Bench which recorded the divergent views for the Hon ble Bench to pass Orders with regard to disposal of the Appeal.

  ---

• 2021 (1) TMI 723
  Restoration of name of the Company in the Register maintained by the Respondent/RoC - Section 252(3) of the Companies Act, 2013 - HELD THAT:- It is evident from the plea of the Applicant that the Applicant Company seeking for restoration of its name in the register as maintained by RoC is not seriously pressing the validity of the process undertaken by the RoC in striking off the name of the Applicant Company as envisaged under Section 248 of the Companies Act, 2013 read with attendant Rules. However, the Applicant is seeking restoration of its name in the register as maintained by RoC by relying up on the ground that the Applicant Company as of date is carrying on the business for which it was incorporated and it is in operation and in the circumstances, it is just that the name of the Company should be restored on the Register of Companies as maintained by the Respondent. From the record, it is seen that the name of the Company was struck off from the Register maintained by the Respondent/RoC on 29.10.2019 and it is incumbent upon the Applicant to demonstrate that two years immediately preceding 29.10.2019 that the Company has been active and carrying on its business activities. Taking into consideration the provisions of Section 252 of the Companies Act, 2013 which vests this Tribunal with a discretion where the Company whose name has been struck off and such Company is able to demonstrate that there is a running business as on the date when the name was struck off and also keeping in consideration that it is just to do so can restore the name of the Company in the register and in the interest of all the stakeholders including members of the Company, its employees as well as the revenue and the Applicant itself who seeks restoration of the name of the Company in the register being maintained by ROC and in the above said circumstances the Application is allowed subject to the directions issued.

  ---

• 2021 (1) TMI 722
  Direction to restore the name of the Company in register of Companies - Section 252(3) of the Companies Act, 2013 - direction to Respondent to place the company, directors and all other persons in the same position as nearly as may be as if the name of the company had not been struck off from the register of companies - HELD THAT:- It is seen from the pleadings and documents that not only Annual Balance Sheets and Financial Statements have been submitted by the Appellants, but a. copy of the Axis Bank i.e., A/c No. 912020061365270 for the period 01.04.2017 to 31.03.2018 has been filed. 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 Applicant s Company has been doing business but failed to file Annual Returns and Income Tax Returns due to oversight and unintentional. The provisions of Section 252(3) of the Act stipulate that this Tribunal may direct restoration of a Company s name, if it is just and equitable to do so. In view of the above evidence, refusal to restore will be an excessive penalty for the over-sight on the part of the Applicant s Company - this Tribunal is of the opinion that it would be just and proper to order the restoration of name of the Applicant s Company in the Register of Companies, maintained by the RoC Hyderabad, Telangana. The Applicant shall file all the pending Financial Statements and Annual Returns with 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 - the Applicant is directed to pay the cost of Rs. 25,000/- to the RoC while submitting the documents. This is for the expenses to be incurred by RoC for publication in the Official Gazette and for other related expenses. Accordingly, the instant Application is allowed.

  ---

• Law of Competition

• 2021 (1) TMI 721
  Scheme of merger and Amalgamation - seeking the dispensation of meeting of all the shareholder and creditors of all the petitioner companies as all the shareholders and creditors of the applicant/transferor companies as well as applicant/transfree company for the proposed scheme of merger and amalgamation - section 230-232 of the Companies Act, 2013 - HELD THAT:- On perusal of the record it is found that there are no Secured Creditors in the Transferor Company No. 1 and 2, hence, no need of convening a meeting of the secured creditors of Transferor Company No. 1 and 2. The meetings of share holders of the applicant companies no. 1, 2 and 3 Companies shall be held on 10.10.2020 at 1:00 P.M., 2:00 PM and 3: 00 A.M. respectively at registered office of transfree company i.e. at Plot no. 5520, Road No. 55 GIDC, Sachin Surat or through video conferencing for the purpose of considering and if, thought fit, approving, with or without modification(s), the Scheme of Arrangement - the meetings of the unsecured creditors of applicant company no. 2 and applicant/transfree company no. 3 shall be held on 10.10.2020 at 4:00 PM and 5:00 PM respectively at registered office of transfree company i.e. at Plot no. 5520, Road No. 55 GIDC, Sachin Surat or through video conferencing for the purpose of considering and if, thought fit, approving, with or without modification(s), the Scheme of Arrangement. Various directions regarding the meetings, issued - application allowed.

  ---

• Corporate Laws

• 2021 (1) TMI 720
  Approval of Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements Amalgamations) Rules, 2016 - HELD THAT:- A certificate of Statutory Auditor of the Petitioner Company has been placed on record to the effect that Accounting Treatment proposed in the Scheme of Amalgamation is in conformity with the Accounting Standard notified by the Central Government as specified under the provisions of Section 133 of the Companies Act, 2013. The Appointed date of the said Scheme is 01.04.2018 - There is no requirement for any modification and the said Scheme of Amalgamation appears to be fair and reasonable and is not contrary to public policy and not violative of any provisions of law. All the statutory requirements of sections 230 to 232 of the Companies Act, 2013 are compiled with. The Company Petition is allowed and the Scheme of Amalgamation annexed with the Petition is hereby sanctioned which shall be binding on the members, creditors and shareholders of the Transferor Company - Application allowed.

  ---

• 2021 (1) TMI 719
  Seeking 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 31.03.2012 which prompted ROC, Gwalior, Madhya Pradesh to strike off the name of such company from its Register of Companies. However, it has been claim that company was already in operation and carrying on business. In support of this claim, Financial Statements produced for the period mentioned, it is found that there exists negative surplus to the tune of Rs. 1.88 Lakhs, the long term borrowings also to the tune of Rs. 14 Lakhs exist apart from this, other current liabilities also exist. Such liabilities are represented by inventories, trade receivables, cash and Bank Balances and loans and advances. In the profit and loss account in the year turnover to the extent of Rs. 1.81 Crores and Rs. 1.01 Crores respectively has been shown. Thus, the name of the company needs to be restored in the Register of Companies maintained by ROC, Gwalior from the date of its striking off. However, for want of plausible explanation for non-compliance of filing of statutory returns, suitable costs need to be imposed - application allowed.

  ---

• Insolvency & Bankruptcy

• 2021 (1) TMI 718
  Seeking listing of its petition, under Section 9 of the Insolvency and Bankruptcy Code, 2016, before the appropriate bench of the National Company Law Tribunal (NCLT) - case of the Petitioner is that the Registrar of the NCLT has failed to even list the Petitioner s matter before the appropriate bench of NCLT, on the ground that the threshold of the pecuniary jurisdiction of the NCLT has now been amended by a notification dated 24th November, 2020, from Rs. 1 lakh, to Rs. 1 crore - HELD THAT:- This court is of the opinion that the question as to whether the NCLT has jurisdiction to entertain a particular case or not cannot be determined by the Registrar in the administrative capacity. The Registrar would have to place the matter before the appropriate bench of the NCLT, for the said question to be judicially determined. The appropriate bench of the NCLT would have to then, take a considered view as to whether notice is liable to be issued in the matter or not. The question as to whether the notification dated 24th March, 2020 applies to a particular petition that has been filed prior to the said notification or not is also a question to be determined by the Bench of the NCLT and not by the Registrar of the Tribunal - it is directed that the petition under section 9 of the IBC, moved by the Petitioner before the NCLT, shall be placed by the Petition disposed off.

  ---

• 2021 (1) TMI 717
  Maintainability of application - iitiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Financial Debt or not - HELD THAT:- It appears that it is registered as a Non-Banking Financial Institution but is not authorised to accept public deposits. The alleged inter-corporate loan for a short period of 90 days repayable with a 15% per annum cannot be treated as a public deposit. Therefore, the objection of the Corporate Debtor in this regard is without any basis - the Corporate Debtor admits that up to 26th November 2018 he has paid only Rs. 2,69,075/ against the loan of Rs. 25 lacs, which was to be repaid with 15% interest per annum, within 90 days from the date of disbursal of loan. But the Corporate Debtor defaulted in repaying the amount. Therefore, it remains undisputed that the Corporate Debtor owes more than Rs. 1 lacs and committed default in repaying the same. Thus, it is clear that when a default takes place, and debt becomes due and is not paid, the Insolvency Resolution Process begins. Non-payment of debt, once it becomes due and payable, is considered a default under Section 3(12) of the Code. It is further held that the Adjudicating Authority is satisfied that default occurs, the Application must be admitted unless it is incomplete. In the instant case, the amount of Rs. 25 lacs was given as inter-corporate loan to the Corporate Debtor for 90 days which was repayable with interest @ 15% per annum. It is also clear that the Corporate Debtor has not paid the amount due and more than Rs. 1 lac. The Application is complete. Therefore, the Adjudicating Authority was justified in admitting the petition. Appeal dismissed.

  ---

• 2021 (1) TMI 716
  Replacement of Appellant which was based on 4th Committee of Creditors meeting - Section 22 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Power Department of Government of Sikkim being the major stakeholder had serious reservations about the conduct of the Appellant and disapproved of his behavior and action. The decision was taken to remove the Resolution Professional as the Committee of Creditors was not satisfied with the conduct of Corporate Insolvency Resolution Process by him. It cannot be termed to be a case of casting any stigma on the conduct of the Appellant. If the conduct of Corporate Insolvency Resolution Process was disapproved by the Committee of Creditors and he lost their confidence, the Appellant has no vested right of foisting himself on the Committee of Creditors for his continuance. The removal having the requisite majority vote shares cannot be held to be flawed in any manner. Since there are no adverse observations against the Appellant alleging or attributing any misconduct to him, there is no occasion for expunging of any such remarks. Appeal dismissed.

  ---

• 2021 (1) TMI 715
  Condonation of delay of 1111 days in submitting proof of claim against against Corporate Debtor - recall of order on the ground that the Resolution Professional failed to check/consider Book of Accounts vis a vis Appellant while making the Resolution Plan and the Adjudicating Authority failed to appreciate the important issue - Resolution Plan approved by the Committee of Creditors - HELD THAT:- The Resolution Plan in the Corporate Insolvency Resolution Process against the Corporate Debtor has been approved by the Committee of Creditors as also by the Adjudicating Authority. That being the admitted position, Section 31 (1) of the I B Code would come into play which provides that the Resolution Plan approved by the Committee of Creditors shall be binding on all stakeholders. After approval of the Resolution Plan by the Adjudicating Authority, the Successful Resolution Applicant could not be allowed to be faced with claims filed or admitted after the Resolution Plan was submitted by such Successful Resolution Applicant. The Successful Resolution Applicant, before submission of the Prospective Resolution Plan is entitled to know the liability of the Corporate Debtor so that he can tailor his Prospective Resolution Plan accordingly and make provision for satisfaction of the claims and making payments in terms of the approved Resolution Plan. In the instant case it is not disputed that the claim has been filed by the Appellant not only at a highly belated stage but also after approval of the Resolution Plan. In these circumstances, the Adjudicating Authority was right in rejecting the application as being non maintainable. Appeal dismissed.

  ---

• 2021 (1) TMI 714
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- There is no dispute as regards to the sanction and disbursement of loan by the Financial Creditor to the Corporate Debtor. It is also not in dispute that such outstanding debt is due and payable, both in law and in-fact. There is a default in repayment of the same. Thus, the application under Section 7 of the Insolvency Bankruptcy Code, 2016 is liable to be admitted, as it meets the basic ingredients thereof. The Application is complete in all respects and meets requirements of Regulations made under Insolvency Bankruptcy Code, 2016. The Application filed under Section 7 of the Insolvency Bankruptcy Code, 2016 is defect free and is admitted.

  ---

• 2021 (1) TMI 713
  Seeking extension of period of 60 days beyond 270 days for the Corporate Insolvency Resolution process - 2nd Proviso to Section 12(3) of the I B Code, 2016 - HELD THAT:- The Hon ble National Company Law Appellate Tribunal in IN RE : SUO MOTO [ 2020 (6) TMI 495 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] that the period of lockdown ordered by the Central Government and the State Governments including the period as may be extended either in whole or part of the country, where the registered office of the Corporate Debtor may be located, shall be excluded for the purpose of counting of the period for Resolution Process under Section 12 of the Insolvency and Bankruptcy Code, 2016, in all cases where Corporate Insolvency Resolution Process has been initiated and pending before any Bench of the National Company Law Tribunal or in Appeal before this Appellate Tribunal. Thereafter, the Insolvency and Bankruptcy Board of India, inserted Regulation 40C to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, vide notification dated 29.03.2020 which states that Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process - Similarly, the Insolvency and Bankruptcy Board of India, vide notification dated 20.04.2020, inserted Regulation 47 A to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and the said regulation states that Subject to the provisions of the Code, the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purpose of computation of the timeline for any task that could not be completed due to such lockdown, in relation to any liquidation process. In the circumstances and in view of the orders referred and the IBBI Regulations and also in view of the receipt of resolution plans, the instant IA is disposed of by extending the period of CIR Proceedings by 60 days beyond 270 days, after deducting the period from 25.03.2020 to 31.07.2020 - Application allowed.

  ---

• Service Tax

• 2021 (1) TMI 1345
  Refund of Service tax - time limitation - case of Revenue is that the appellant has filed refund claim on 09,08,2016 for the period June, 2012 which is highly time barred, the appellant again filed refund application on 13.2.2018 consequent to the order dated 21.3.2016 and the relevant date of filing the refund was 21.03.2016 - Revenue claims that the refund claim is highly time barred - HELD THAT:- It is fact on record that initially the refund claim was filed on 29.6.2012, the same was allowed by the Commissioner (Appeals) on 21.3.2016. Instead of sanctioning the refund claim, the revenue preferred to file appeal before this Tribunal and this Tribunal dismissed the appeal of the Revenue. Therefore, it is the duty of the Revenue that after the order of this Tribunal, they are required to refund sou moto within 3 months from 1.3.2017. Instead of doing so, the appellant was forced to file refund claim again which was filed on 13.2.2018. The departmental officer did not stop here, they reviewed the order of the adjudicating authority sanctioning the refund and held that the refund claim is barred by limitation without any basis to drag the appellant in unnecessary litigation. The said act of the department cannot be appreciated. As the appellant has filed refund claim on 29.6.2012, the said refund application is still pending for disposal, than how can Revenue officer ask to file refund claim again. The Review order is gross violation of legal principle. Appeal allowed - decided in favor of appellant.

  ---

• 2021 (1) TMI 712
  Manpower Recruitment and Supply of Manpower Agency Service or not - secondment charge - amount reimbursed or reimbursable by the applicant to Target Corporation, USA under the terms of the secondment agreement - whether in the nature of income accruing to Target USA in respect of which, tax is liable to be deducted at source by the applicant under the provisions of Income Tax Act, 1961? - payroll processing charges - payment proposed to be made by the applicant towards payroll processing charges - applicability of provisions of Double Taxation Avoidance Agreement (DTAA) entered into between India and USA. HELD THAT:- It is found from the definition of Manpower Recruitment or Supply Agency seeks to bring under its ambit, two types of activities i.e. recruitment of manpower and supply of manpower and further the service becomes the taxable service only if provided by a manpower recruitment or supply agency but in the present case, we are concerned only with the supply of manpower - Further, we find that post July 2012, the definition of service specifically incorporated seeks to exclude certain transactions from the ambit of service and provision of service by an employee to the employer in the course of or in relation to his employment stands excluded from the definition of service. We also note that the legal position post negative list regime does not make any departure from the settled position of law as existed before 2012 with respect to the service tax implications on deputation of employees. In fact, the above exclusion in the definition of service amplifies the position of law to keep employees providing service to the employer in the course of their employment out of the purview of service tax. The persons seconded to the appellant working in the capacity of employees and payment of salaries etc is made to such employees by group companies only for disbursement purposes and hence employee-employer relationship exist and such an activity cannot be termed as manpower recruitment or supply agency and the whole arrangement between the appellant and its group companies does not fall under the taxable service of manpower recruitment or supply agency service as defined under the Finance Act, 1994. We also find that there is no service provider-recipient relationship in the present case, as required by Section 65(105)(k). The Division Bench of this Tribunal recently in the case of Northern Operating Services Pvt. Ltd. [ 2020 (12) TMI 1018 - CESTAT BANGALORE ] has allowed the appeal of the assessee and set aside the demand raised by the Department under the category of manpower recruitment or supply agency service. Further, the charge of service tax @ 15 dollar per employee per pay role cycle for processing pay role of the seconded employee by the Target USA cannot fall under the category of manpower recruitment or supply of manpower agency service as per the definition provided in Section 65(68) of the Finance Act, 1994. Further the ruling given by advance ruling authority was under the Income Tax Act, 1961 and the said ruling is not having any binding precedent under the Service Tax Laws. We also note that in the advance authority ruling, there is no finding to the extent of pay role processing. Appeal allowed - decided in favor of appellant.

  ---

• 2021 (1) TMI 711
  Levy of Service tax - Business Auxiliary Services - Cargo Handling Services - handling and processing of slag mixture generated by steel companies (clients) during the manufacturing process undertaken by them - period prior to 16.06.2005 - extended period of limitation - HELD THAT:- For the period prior to 16.06.2005, the definition of BAS under Section 65(19)(v) of the Act, inter-alia, mean any service in relation to production of goods on behalf of the client. The Principal Bench in assessee s own case, M/S FERRO SCRAP NIGAM LIMITED VERSUS CCE, RAIPUR [ 2014 (1) TMI 1049 - CESTAT NEW DELHI] as relied by the assessee, has already observed in identical set of facts that there is no third person in the instant case, whereas the tax can be levied under BAS only in case the service is provided on behalf of the client i.e. there would be involvement of three parties. Further, for the period after 16.06.2005, the Tribunal in their own case as reported in M/S FERRO SCRAP NIGAM LTD. VERSUS COMMR. OF CENTRAL EXCISE SERVICE TAX, RANCHI [ 2019 (2) TMI 766 - CESTAT KOLKATA] , has held that the assessee is entitled to exemption under Notification no. 8/2005 dated 01.03.2005. Cargo Handling services - shifting, transportation, loading and unloading from one p lace to another inside the steel plant of the client itself - HELD THAT:- The Tribunal in their own case M/S FERRO SCRAP NIGAM LIMITED VERSUS CCE, RAIPUR AND VICE-VERSA [ 2014 (1) TMI 1051 - CESTAT NEW DELHI] where it was held that service of shifting, transportation or raw materials, waste materials, and finished products from one place to another, inside the plant itself, does not fall under the taxing category of Cargo Handling Services. T he demand raised vide the impugned adjudication order cannot be sustained and hence, the same is set aside - Appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2021 (1) TMI 1344
  Levy of penalties under Rule 25 or 26 of the Central Excise Rules, 2002 - allegation of creation of fictitious firms in the name of co appellants to issue cenvatable invoices without accompanying the goods - HELD THAT:- It has been alleged that the invoices in question have been issued by M/s. Moral Alloys and M/s. Unnati Alloys but, no investigation has been conducted with the Directors/authorised persons of these appellants to ascertain the fact that weather they have issued the invoices in question or not? In that circumstance, the investigation is faulty. Further, in the absence of evidence on record that if the invoices were not accompanying the goods then from where these manufacturers have procured the goods who has manufactured the dutiable goods which has been cleared on payment of duty. In some of the cases, the cenvet credit has already been allowed, therefore, no penalty is imposable on the appellants under Rules 25/26 of the Central Excise Rules, 2002. Appeal allowed - decided in favor of appellant.

  ---

• 2021 (1) TMI 710
  Seeking reversal of CENVAT Credit - demand of interest and penalty as well - exempt goods or not - removal of byproducts (i.e spent sulphuric Acid) under serial No 32 of Notification No. 04/2006 CE dated 1st March, 2006 to fertilizer manufacturing units following the procedure laid down under Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods)Rule 2001 - applicability of Rule 6 (3)(b) and Rule 6 (3)(i)(ii) of Cenvat Credit Rules, 2004 - HELD THAT:- The appellant are engaged in manufacture of Chemicals namely Dichloro Nitro Benzene, etc. The appellants are availing Cenvat Credit in respect of certain inputs and inputs services during the process of manufacture Sulphuric Acid also comes into existence. The appellants were clearing such Sulphuric acid to manufacturers of fertilizers by availing benefit of Procedure Chapter X (Cleared at Nil Rate of Duty). Revenue is of the opinion that since common inputs and input services have been used for generation of Sulphuric Acid and appellant has not maintained separate records, the Appellant is liable to pay 5% on the value of clearances of Sulphuric Acid cleared under exemption Notification No 4/2006-CE 01.03.06 in terms of Rules 6(3) of the Cenvat Credit Rule. Identical issue was decided by the tribunal in the case of M/S NIRMA LTD. VERSUS CCE AHMEDABAD [ 2011 (4) TMI 379 - CESTAT, AHMEDABAD] where it was held that Commissioner(Appeals) s reference to Hon ble Supreme Court s judgment in the case of M/s Nirma Chemical Works was on altogether different ground as it dealt with classification of Spent Sulphuric Acid and has got nothing to do with the provisions of Rule 6(3) of MODVAT Credit Rules. Appeal allowed - decided in favor of appellant.

  ---

• 2021 (1) TMI 709
  Valuation - exclusion of freight amount from arriving at the assessable value for the purpose of payment of central excise duty - transaction value or not - place of removal - Section 4(1)(a) of the Central Excise Act, 1944 - time limitation - HELD THAT:- The facts in that instant case, in essence, were that the assessee had paid the duty by including freight amount. Considering the judgment of the Hon ble Supreme Court in COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. [ 2015 (10) TMI 613 - SUPREME COURT] , the duty paid on freight was legally not payable. So the duty amount paid legally as well as the amount legally not payable but paid, both were entitled for refund if the refund claim was filed as per law. The issue whether or not place of removal can be manufacturer s premises or buyer s premises has since been settled by the Apex Court in Ispat Industries, which has to be respectfully followed for the purpose of assessment of duty as per law. Since the instant case is being decided on merits, we are not inclined to go into the aspect of limitation. Appeal allowed - decided in favor of appellant.

  ---

• 2021 (1) TMI 708
  Clandestine manufacture and clearance - under valuation - laminated spring leaves - Mismatch in the books of accounts and invoices - case of the department in the SCN is that the difference in the sales value as appearing in the alleged Sales Ledger obtained from the seized Pen drives vis- -vis the available Central Excise Invoices for the relevant period represents clandestine clearances - Existence of corroborative evidences or not - HELD THAT:- The manner in which the Pen drives were seized and the retrieval of data (printouts) from the Pen drives along with its evidentiary value has been strongly agitated by the Appellants. We find that the seized Pen drives were not sealed with paper seal or otherwise as evident from the Panchnama dated 3 August 2012 drawn at the residence of the Appellant No. 1. Such sealing should have been done in the presence of the persons before whom the pen drives were sealed and signatures should have been obtained on the paper seal/sticker as provided in the Circular dated 1st December 2015 so as to allay any possibilities of tampering. It is also forthcoming from the case records that most of the printouts from the Pen drives were taken after conclusion of Panchnama proceedings. There is considerable force in the contention of the Appellants that the computer printouts relied upon to uphold the charge of clandestine clearance were not obtained in conformity with the mandatory conditions and safeguards laid down in Section 36B(2) (4) of the Central Excise Act, as these were not produced by a computer which was being used regularly to store or process the information during the period in dispute and Certificate referred to Section 36B(4) of the Central Excise Act was also not obtained. Even the statement of Appellant No. 2 could not be admitted as evidence being not in accordance with the procedure prescribed under clause (b) of section 9D(1)of the Central Excise Act. It is also found from the case records that the printouts from the Pen drives are neither co-relatable with the central excise invoices raised by the Appellant during the relevant period nor corroborated by any independent evidence establishing clandestine manufacture or clearance. No efforts have been made by the investigating agencies to establish the existence of any unaccounted manufacturing activity in the form of unaccounted raw material, shortage of stock, shortage of raw material/finished goods, excess consumption of electricity, unaccounted labour payments, interrogation of buyers/transporters or any incriminating record/document to suggest any flow back of cash etc. The revenue authorities in this case have failed to discharge the burden of proving the serious charge of clandestine clearance or undervaluation with cogent and clinching evidence. It has been consistently held that no demand of clandestine manufacture and clearance can be confirmed purely on assumptions and presumptions and the same is required to be proved by the revenue by direct, affirmative and incontrovertible evidence. The charge of clandestine removal/undervaluation cannot sustain on the basis of the Pen drive data alone more so when the printouts have not been obtained in compliance with the mandatory conditions of Section 36(2) (4) of the Central Excise Act - Appeal allowed - decided in favor of appellant.

  ---

• CST, VAT & Sales Tax

• 2021 (1) TMI 707
  Validity of assessment order - rate of tax - restaurant where ready to eat unbranded foods including sweets, savories, unbranded, non-alcoholic drinks and beverages are served - respondent pointed out that though the petitioner was liable to pay tax at 12.5% as per Section 7(1)(a) of the Act, they had paid tax only at 2% - interest on short paid tax - Section 27(1)(b) of TNVAT Act - HELD THAT:- The petitioner who was not eligible to invoke Section 8 of the Act cannot advance the contention that re-assessment is without jurisdiction. Mere filing of the return in Form-L cannot be determinative of the issue. Section 27(1)(b) of the Act can be invoked when it is noticed within the limitation period that the whole or any part of the turn over of business of a dealer has been assessed at a rate lower than the rate at which it is assessable. The petitioner who ought to have been assessed and directed to pay at 12.5% of the taxable turn over had paid only at 2%. The respondent rightly determined the difference of tax payable by the petitioner at Rs. 59,52,423/-. Rate of tax - HELD THAT:- As per Section 42 of the Act, the interest is computed at the rate of 2% per month. The contention of the petitioner s counsel is that there can be levy of interest only if after a formal assessment order is passed, the amount remains unpaid. In the case on hand, the impugned orders came to be passed only on 16.08.2012. Therefore, there cannot be direction to pay interest for the period preceding the said date. Though this contention is attractive, it is necessary to reject the same because the petitioner had filed false returns. The petitioner is therefore liable to pay interest at the statutory rate from the date when the tax became due and payable by them. The petitioner by their conduct invited the impugned orders and have to blame themselves for the resulting consequences - The impugned orders do not call for any interference and is sustained. Interest on the difference in amount at the rate of 24% even for the period during which these writ petitions were pending before this Court - HELD THAT:- The writ petitions were admitted and Rule Nisi was issued on 05.10.2012. They were taken up for final disposal only in June 2019. The cases were adjourned as the government counsel wanted time to file counter. Counters were eventually filed on 01.08.2019. Records were called for on 26.08.2019 and the matters were directed to be listed on 13.09.2019. They came to be listed only now. The petitioner cannot be blamed for non listing of the cases. If the petitioner is made to pay interest even for this period, the petitioner will definitely be put to immense hardship. He will have to suffer disproportionate burden. The executive branch has contributed to accumulation of arrears. The wages of delay has to be borne by the department in this case to some extent. The principle of proportionality will have to be incorporated even in matters relating to levy of interest. It is relevant to recollect a rule of Hindu law, namely, Damdupat. It was evolved as a warning to the creditor to take effective steps for realising the debt from the borrower within reasonable time so that there be not such accumulation of interest as would be in excess of the principal amount due, as in that case he would have to forego the excess amount - instead of directing the respondent to levy the interest at the statutory rate as per Section 42 of the Act, the rate of interest is scaled down to 6% per annum for the period during which the writ petitions were pending before this Court. The petitioner of course has to pay at the statutory rate of interest for the period before filing of the writ petitions and for the period commencing from the date of disposal of the writ petitions till the date of payment. Petition disposed off.

  ---

• Indian Laws

• 2021 (1) TMI 706
  Seeking grant of regular bail - recovery of contraband from a vehicle in transit - tablets of Clovidol-100-SR (Tramadol) - tablets of Clovidol-100-SR (Tramadol) - Wincerex - HELD THAT:- It is a case where pursuant to receipt of secret information, the police intercepted a car in which the petitioner and one Sanju Singh were found travelling and search of which led to recovery of 23,500 tablets of Clovidol-100-SR (Tramadol) and another 17,000 tablets of Clovidol-100-SR (Tramadol) apart from 200 vials 100 ml each of Wincerex. Section 42 of the Act pertaining to power of entry, search, seizure and arrest without warrant or authorisation. The material question would be as to whether it is the procedure mandated under Section 42 of the Act which would be applicable or as to whether Section 43 of the Act alone will apply in such cases of recovery from a vehicle in public place. Even if it is taken that provisions of Section were to apply, still it is a case where secret information had been duly conveyed to the superior officer i.e. the SHO, by the person receiving secret information namely ASI Walaiti Ram by way of sending a ruqa stating factum of receipt of secret information, before the vehicle in question was intercepted and before recovery was effected, which would be sufficient compliance of section 42 of the Act - it is a case covered under Section 43 of the Act, the contention raised by learned counsel regarding non-compliance of Section 42 of the Act cannot be accepted. Additionally, the recovered quantity of contraband which falls in the category of commercial quantity would attract fetters imposed by Section 37 of the Act in the matter of grant of bail - there is nothing on record at this stage from which it could be inferred that the petitioner is not guilty of the offence in question. Petition dismissed.

  ---