TMI Tax Updates - e-Newsletter
January 28, 2021

Case Laws in this Newsletter:

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

Articles

1. Need of CFC legislation in India

   By: CAPushpkumar Sahu and Laxminarayan WritersandPublishers

2. e-invoice FAQs

   By: Mallikarjuna Gupta

3. Error apparent on record -rectification applications under sec 74 of Finance Act,1994.

   By: Ajit Ramakrishnan

4. Income Tax Search and Seizure & Income Tax Settlement Commission (ITSC)- Detection of any undisclosed income subsequent to the final order of ITSC

   By: MOHIT GUPTA

5. PREPARATION OF INFORMATION MEMORANDUM DURING CORPORATE INSOLVENCY RESOLUTION PROCESS

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Total FDI inflow of US$ 58.37 billion received during April to November, 2020

2. Grant of ₹ 12,351 crore released for Rural Local Bodies

Notifications

Customs

1. 07/2021 - dated 25-1-2021 - Cus (NT)

President is pleased to award Appreciation Certificates and Medals for–“Exceptionally Meritorious Service at Risk to Life” and “Specially Distinguished Record of Service”-to the officers and staff of Central Board of Indirect Taxes and Customs

2. 06/2021 - dated 25-1-2021 - Cus (NT)

President is pleased to award Appreciation Certificates and Medals for –“Specially Distinguished Record of Service”- to the officers and staff of Central Board of Indirect Taxes and Customs

GST - States

3. CCT/26-2/2020-21/68/2319 - dated 27-1-2021 - Goa SGST

Seeks to extend the time limit for furnishing of the annual return specified under section 44 of GGST Act, 2017 for the financial year 2019-20 till 28.02.2021

4. 38/1/2017-Fin(R&C)(188)1051 - dated 20-1-2021 - Goa SGST

Seeks to bring in force sections 3, 4, 5, 6, 7, 8, 9, 10 and 14 of the Goa Goods and Services Tax (Second Amendment) Act, 2020

5. VI(1)/534(a)/2020 - dated 31-12-2020 - Tamil Nadu SGST

Extend the time limit for furnishing of the annual return specified under section 44 of TGST Act, 2017 for the financial year 2019-20 till 28.02.2021

Highlights / Catch Notes

GST

• High Court Limits Provisional Attachment Under GST Act Sec 83 to Cash Credit Accounts, Excludes Fixed Deposits.

  Case-Laws - HC : Provisional attachment of the immovable properties - Section 83 of GST Act - It is submitted that, the order of provisional attachment is specifically confined to the cash credit account only and not to the other accounts including the fixed deposits referred to above in the chart. - Relief granted - HC
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• Court Denies Anticipatory Bail in Irregular Input Tax Credit Case, No Opinion on Case Merits Given.

  Case-Laws - HC : Grant of anticipatory Bail - irregular input tax credit (ITC) - Considering the submissions made by learned counsel for CGST and taking into consideration overall facts and circumstances of the case but without expressing any opinion on the merits/demerits of the case, it is not deemed proper to enlarge the petitioner on anticipatory bail - HC
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• Court Directs Parties to File Statutory Appeal for Confiscated Goods Under GST Act Sections 129 & 130.

  Case-Laws - HC : Provisional Release of detained goods alongwith Truck - Section 129 and 130 of the GST Act - As we are relegating the writ­applicants to avail an alternative remedy of preferring a statutory appeal against the final order of confiscation, the request for provisional release of the goods and the vehicle pending final disposal of the appeal also should made before the appellate authority. - HC
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Income Tax

• Penalty Imposed for Non-Compliance: Assessee Fails to File Return Despite Multiple Opportunities Under Sec 271(1)(b) of Income Tax Act.

  Case-Laws - AT : Penalty u/s. 271(1)(b) - in spite of the various adjournments given by the AO to assessee, no return of income was filed by the assessee in spite of the various opportunities given by the AO to the Authorised Representative of the assessee and lastly the AR of the assessee shows his inability and therefore, the AO has rightly imposed the penalty in dispute - AT
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• Understanding MAT Credit Eligibility: Section 115JAA Requires Deduction of Surcharge and Cess Before Interest Calculation.

  Case-Laws - AT : Eligibility for MAT credit u/s 115JAA - the amount of the MAT tax credit, inclusive of surcharge and education cess etc., if any, should be reduced from the amount of tax determined on the total income after adding surcharge and education cess, etc., and only the resultant amount payable will suffer interest under the relevant provisions of the Act. - AT
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• Income Tax Revision: Pr. CIT Corrects AO's Error u/s 263 on One-Time Settlement Loss Claim.

  Case-Laws - AT : Revision u/s 263 - loss on OTS - since the AO has ignored the relevant provisions of the Act before allowing the claim of the assessee of loss on OTS account and without making proper and adequate enquiry and the view taken thereafter was also not sustainable, therefore, the impugned order passed by ld Pr. CIT revising the order u/s.263 is fully justified and correct alleging the impugned assessment order as erroneous and prejudicial to the interest of the revenue - AT
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• Disallowance of Exceptional Expenditure for Bad Debts Claimed u/s 36(1)(vii) Hinges on Ledger Verification.

  Case-Laws - AT : Disallowance of expenditure in nature of exceptional items claimed u/s 36(1)(vii) - Bad debts - All the AO has to examine is whether the amount of aforesaid charges so recoverable have been actually reversed in respective ledger accounts of individual allottees/debtors and written off in the books of accounts of the assessee during the previous year relevant to impugned assessment year or not. - AT
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• Section 68 Dispute: Alleged Bogus LTCG from Equity Shares Sale, Supported by Bank and DEMAT Statements as Genuine Evidence.

  Case-Laws - AT : Addition u/s 68 - Bogus LTCG on the sale of equity shares - The sale proceeds of such shares was credited to the bank account of the assessee. A copy of bank account where the proceeds are reflected is placed. The copy of DEMAT statement of assessee reflects various other shares also which the assessee was holding. All these documentary evidences, which were before the Assessing Officer, show that assessee did earn Long Term Capital Gain - AT
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• Parties to Follow Income Tax Act Procedure; Section 69C Issue Remanded to Assessing Officer for Review with New Evidence.

  Case-Laws - AT : Deemed unexplained expenditure u/s 69C - As both the parties agreed that in conformity with the procedure of law laid down in the Act for admission of additional evidences, the matter may be restored to the file of the Assessing Officer and the assessee may be directed to produce all the necessary documents/evidences before him in order to represent his case on merits. - AT
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• Court Rules Against AO's 8% Income Estimation on Property Value; Methodology Misaligned with Legal Standards.

  Case-Laws - AT : Income from house property - ALV determination - Methodology as adopted by Ld. AO to estimate the income @8% of value of the property is not in accordance with the principles laid down by Hon'ble Court and therefore, the same could not be sustained. - AT
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VAT

• Court Emphasizes Case-Specific Decisions, Warns Against Over-Reliance on Precedents Without Fact Alignment.

  Case-Laws - HC : It is well settled in law that a decision of the court is only an authority for what it decides and not what can logically be deduced therefrom. It cannot be quoted for a proposition that may seem to follow logically from it and such a mode of reasoning assumes that law is necessarily a logical code, whereas it must be acknowledged that law is not always logical. It is equally well settled legal position, that court should not place reliance on a decision without discussing as to how the factual situation fits in with the fact situation of the decision, on which reliance is placed - the revisional authority could not have concluded in the fact situation of the case that the tribunal has failed to decide or has decided erroneously any question of law. - HC
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Case Laws:

• GST

• 2021 (1) TMI 972
  Classification - taxability - provision of hostel accommodation along with food facility to the students wherein consolidated amount is charged from the students - composite supply or principal supply - recovery of entire charge from the students - exemption from GST under Sr. No. 14 of the CGST (Rate) Notification No. 12/2017 dated 28.06.2017 as amended if the charges per day is less than Rs. 1000/- - taxability on supply of hostel accommodation along with food facility - CBEC Flyer No. 40 dated 01.01.2018. HELD THAT:- In the instant case the appellant is supplying various services like supply of food, TV in dining hall, Playroom, Gym, Housekeeping of entire hostel premises, Room cleaning and Washing/ dry-cleaning of bed sheets linen of rooms along with Hostel Accommodation service. The supply of various other services as detailed above with Hostel Accommodation service is not naturally bundled in normal course of business. Each service is an independent service and can be supplied separately. It is obvious that a person can live on the hostel without availing other services like food, TV, gym, etc; but to make ones stay more comfortable, the said ancillary services are availed by him - Rajasthan Authority of Advance Ruling has held that naturally bundled services are those services wherein one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. If current nature of supply of services is tested based on above factors, it can be ascertained that the provision of hostel accommodation could be a principal supply but ancillary services like food, gym, housekeeping, play room, cannot be said to arise naturally with the principal service of hostel accommodation and therefore are not bundied naturally with principal supply. Rajasthan Authority of Advance Ruling has placed reliance on the ruling of West Bengal Authority for Advance Ruling in the case of Sarj Educational Centre [ 2019 (2) TMI 1605 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL ] involving similar facts and circumstances, wherein the applicant was engaged in supplying food and other services, etc and it was held that they are not naturally bundled with the lodging service. All these components are independent of each other. The said ruling has been upheld by the Appellate Authority of Advance Ruling of West Bengal. There are no infirmity in the Advance Ruling pronounced by Rajasthan Authority of Advance Ruling - the Advance Ruling pronounced by the Rajasthan Authority of Advance Ruling upheld - appeal dismissed.

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• 2021 (1) TMI 971
  Raid - validity of search and seizure proceedings - Section 67 of the CGST Act - simultaneous proceedings of investigation when audit in progress - attachment of Bank Accounts - allegation of harassment and high-handedness - HELD THAT:- We are not inclined to entertain the Special Leave Petition under Article 136 of the Constitution of India. SLP dismissed.

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• 2021 (1) TMI 970
  Constitutional validity of the proviso to Section 50 of the Central Goods and Services Tax Act, 2017 - interest on delayed payment of tax - HELD THAT:- Let Notice be issued to the respondents, returnable on 11.02.2021 . The respondents shall be served directly through email. In the meantime, Mr. Choksi, the learned counsel appearing for the writ applicants shall furnish one set of entire paperbook to Mr. Devang Vyas, the learned Addl. Solicitor General of India, so that by the next returnable date, Mr. Vyas can seek appropriate instructions in the matter.

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• 2021 (1) TMI 969
  Provisional attachment of Bank Account - Section 83 of the CGST Act, 2017 - HELD THAT:- The Bank Account has been ordered to be provisionally attached under Section 83 of the CGST Act, 2017. This Writ Application need not be adjudicated on merits as the impugned order of provisional adjudication has outlived its statutory life. As per Section 83 of the Act, other provisional attachment shall cease to have effect after the expiry of period of one year from the date of order made under sub-Section (1). The impugned order is dated 24.10.2019. The period of one year expired way back in October 2020 - In such circumstances, it can be said that there is no provisional attachment of Bank Account in existence or in operation as on date. This writ application disposed off.

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• 2021 (1) TMI 967
  Grant of anticipatory Bail - irregular input tax credit on the basis of invoices generated by the non-existing firms formed by the petitioner himself in the name of his employees - Section 438 of Cr.P.C - HELD THAT:- As per rejection bail order petitioner is proprietor of M/s Allied Enterprises and had purchased the goods amounting to about Rs. 32 Crore and got 4.97 Crore of input tax credit and the department is investigating the matter. If the petitioner is found to be correct, he should have to personally produce all the documents before the department and would also raise his grievance as to why he is not appearing before the department but he failed to clarify all these things. Considering the submissions made by learned counsel for CGST and taking into consideration overall facts and circumstances of the case but without expressing any opinion on the merits/demerits of the case, it is not deemed proper to enlarge the petitioner on anticipatory bail - this anticipatory bail application is dismissed.

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• 2021 (1) TMI 929
  Maintainability of application - alternative remedy of preferring a statutory appeal - Provisional Release of detained goods alongwith Truck - Section 129 and 130 of the GST Act - HELD THAT:- As we are relegating the writ applicants to avail an alternative remedy of preferring a statutory appeal against the final order of confiscation, the request for provisional release of the goods and the vehicle pending final disposal of the appeal also should made before the appellate authority. In this regard, we may say that the writ applicants may prefer an application under Section 66(6) of the Act for the provisional release of the goods and the vehicle. If any such application is filed, then the appellate authority shall take it out for hearing and may consider releasing the goods and the vehicle on the writ applicants depositing the amount towards the penalty and fine in lieu of the confiscation. We may clarify that according to Mr. Parikh, the amount of towards the tax has already been deposited. If the writ applicants agreed to deposit the entire amount, then in such circumstances, the appellate authority shall provisionally release the goods and the vehicle pending the final disposal of the appeal. This writ application stands disposed of.

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• Income Tax

• 2021 (1) TMI 962
  Deduction u/s 80IB - Reopening of assessment - material evidence being available, the same had been ignored by the Assessing Officer and the same was taken note of by the CIT(Appeals) to allow the deduction claimed under section 80-IB by the assessee - HELD THAT:- We are of the view that the impugned Judgment does not warrant any interference. However, we make it clear that the observations as to the scope of Section 310(2) of the Income Tax Act, made in the impugned Judgment are qua the State of Karnataka, given the particular local act in that case.

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• 2021 (1) TMI 961
  Penalty u/s. 271(1)(b) - AO issued a notice u/s. 142(1) - jurisdiction of the AO by holding that this penalty proceedings has been initiated after the insertion of Section 292BB - HELD THAT:- The assessee has given his reply dated 06.10.2008 that he has not received the earlier notices and given the new address of his Advocate and he further sent a letter dated 10.10.2008 and argued that having not received the earlier notices u/s. 142(1) and there could not be any proceedings pending under the Act before the AO meaning thereby the assessee is having the knowledge of all the notices which has already been served upon the assessee and he was watching the proceedings through his counsel/AR. Assessee has also requested for various adjournments which was given by the Assessing Officer. Sh. Sachin Kumar, CA/Authorised Representative of the Assessee appeared before the AO and file his Power of Attorney and requested for various adjournments which were granted by the AO, but in spite of the various adjournments given by the AO to assessee, no return of income was filed by the assessee in spite of the various opportunities given by the AO to the Authorised Representative of the assessee and lastly the AR of the assessee shows his inability and therefore, the AO has rightly imposed the penalty in dispute and the Ld. CIT(A) has also rightly dismissed the appeal filed by the Assessee. Non-cooperation of the assessee before the authorities below, we are of the view that the assessee is not entitled for any leniency in this matter. Therefore, we uphold the impugned order of the Ld. CIT(A) by dismissing the appeal filed by the Assessee.

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• 2021 (1) TMI 960
  Eligible to claim deduction u/s 54 on account of investment made - exemption of reinvestment of capital gain to one residential house property by taking view of phrase a residential property in Section 54(1) as only one house property ignoring the explanations and submissions made before him - HELD THAT:- We find that the provisions of Sec. 54 as it stood during AY 2011-12, provides for a deduction against certain Long-Term Capital Gains earned by an individual assessee on account of investment made by way of purchase / construction of a residential house property within specified time period. The Finance Act, 2014 substituted the expression a residential house property with the words one residential house with effect from 01/04/2015. The Finance Act, 2019 has further amended the said provision with effect from 01/04/2020 to provide that in case of capital gain not exceeding Rs. 2 Crores, deduction shall be available even against investment in two residential houses in India. Interpreting the provisions of Section 54, Hon ble Madras High Court in recent decision titled as Tilokchand Sons V/s ITO [2019 (4) TMI 713 - MADRAS HIGH COURT] held that if the word a as employed under Section 54 prior to its amendment and substitution by the words one with effect from 01/04/2015 could not include plural units of residential houses then there was no need to amend the said provisions by Finance Act No.2 of 2014 which the Legislature specifically made it clear to operate only prospectively from AY 2015-16. Once it is held that the word a employed can include plural residential houses also within the meaning of Section 54 prior to its amendment, then such interpretation will not change merely because the purchase of new assets in the form of residential houses is at different addresses. So long as the same Assessee purchased one or more residential houses out of the sale consideration for which the capital gain tax liability is in question, in its own name, the same Assessee should be held entitled to the benefit of deduction u/s 54 of the Act, subject to the purchase or construction being within the stipulated time limit in respect of the plural number of residential houses also. It was also held that the amendment made by The Finance Act, 2014 was intended to be specifically applied only prospectively with effect from AY 2015-16 since it took note of the judicial precedents for period prior to 01/04/2015. In view of the foregoing accepting the interpretation of word a as occurring in Section 54 as made by Hon ble Madras High Court in Tilokchand Sons V/s ITO [2019 (4) TMI 713 - MADRAS HIGH COURT] we hold that on the facts and circumstances, the assessee would be eligible to claim deduction u/s 54 on account of investment made in both the flats. We order so. The Ld. AO is directed to re-compute assessee s income in terms of our above order. AO is directed to re-compute assessee s income in terms of our above order.

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• 2021 (1) TMI 959
  Addition on account of bonus payable to General Electric International Ltd. - HELD THAT:- Assessee has entered into a long term Comprehensive Service Agreement (CSA) with GE International, a renowned International organization, on 20.06.2009 for the power plant and the said agreement is valid till March 31, 2025. As per the agreement with GE, the party has to ensure 90% availability of the Power Plant for operation and if they ensure availability above 90% then they are eligible for Bonus otherwise they are liable for penalty. This will accrue on year to year basis and will be finally settled on closure of the contract. During the year under consideration, the contractor has ensured the 90% availability of the power plant to the assessee. Accordingly, the assessee booked an expenditure on account of bonus payable to the contractor. These facts were not disputed by the revenue at any point of time. There was no uncertainty regarding the incurrence of the expenditure and assessee becomes liable to pay the bonus to the contractor as soon as the contractor fulfills the conditions of annual availability of power plant in terms of the factors given under the said contract. Assessee has established that a business liability has definitely arisen in the accounting year which is year to year basis. The assessee is following the mercantile system of accounting which is not disputed by the revenue. Therefore, the liability is ascertained liability and is allowable u/s 37(1) of the Act which was not taken cognizance by the Assessing Officer as well as the CIT(A). - Decided in favour of assessee.

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• 2021 (1) TMI 958
  Addition u/s 40A(2)(a) - interest expenditure crystallized as an liability to the assessee during the previous - admission of additional evidence is a loan availed by the assessee from Kotak Mahindra Bank @ 13.5% without security which will have a bearing on a decision on grounds 4 to 8 and the invocation of provisions to section 40A(2)(b) - HELD THAT:- We are of the view that the issue sought to be raised in grounds 4 to 8 which is a disallowance under section 40A(2)(b) of the Actand the issue sought to be raised in grounds 9 to 12 with regard to the question whether interest expenditure of Rs. 1,90,06,180/- crystallized as an liability to the assessee during the previous year relevant to Assessment Year 2011-12 requires fresh consideration by the AO in the light of the additional evidence filed before us by the assessee - we remand the aforesaid two issues to the AO for fresh consideration, after affording opportunity of being heard to the assessee. Nature of expenditure - compensation paid on termination of the licence agreement - capital expenditure or revenue expenditure - HELD THAT:- We are of the view that the payment in question was owing to commercial expediency and enabled the assessee to avoid payment of future licence fee and thereby reduced the operating cost of the assessee. Such payment cannot be regarded as a capital expenditure. We, therefore, hold that the expenditure in question is revenue in nature and should be allowed as a deduction Eligibility for MAT credit u/s 115JAA arrived at after considering surcharge and cess - AO has not considered surcharge and cess applicable on such MAT credit and allowed MAT credit which has been set off against the tax liability arrived under normal provisions inclusive of surcharge and cess, which has resulted in an increased tax liability - HELD THAT:- In the case of Consolidated Securities Ltd. v. Asstt. CIT [ 2018 (7) TMI 1722 - ITAT DELHI] wherein, it was held that the amount of the MAT tax credit, inclusive of surcharge and education cess etc., if any, should be reduced from the amount of tax determined on the total income after adding surcharge and education cess, etc., and only the resultant amount payable will suffer interest under the relevant provisions of the Act.The aforesaid decision is applicable to the facts of the present case on all fours and by respectfully following the same, we set aside the impugned order and remit the matter to the file of the Ld. AO for ascertaining the correct amount of MAT tax credit available to the assessee including of surcharge/cess and then allow tax credit.

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• 2021 (1) TMI 957
  Validity of reopening of assessment u/s 147 - whether new information or facts for issuance of notice of re-assessment should be seen? - whether the reopening of the assessment amounts to review or change of opinion should be seen at a next stage? - HELD THAT:- In the instant case in the light of the decision of the Hon ble Delhi High Court in the case of Madhukar Khosla [ 2014 (8) TMI 568 - DELHI HIGH COURT] it is evident that the Assessing Officer has merely perused the records available with him and formed reason to believe that income had Assessment. There is no mention of any trigger as how the Assessing Officer came to know this under assessment. If without any information or any new fact came into his possession, he simply revisit or peruse the completed assessment, it definitely amounts to review of the assessment by the Assessing Officer, which is not permitted in law. Even in the instant case, no addition has been made on this issue either in the earlier or subsequent regular assessments. As the reassessment in the instant case fails at this stage of examining reasons to believe , we are not required to examine the stage of change of opinion . In the instant case before us, the information regarding dues from Iraqi Government was available at the time of regular assessment u/s 143(3) in the form of notes to account of annual report, which is evident from the reasons recorded. - Decided in favour of assessee.

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• 2021 (1) TMI 956
  Revision u/s 263 - loss on OTS is nothing but the claim of deduction of bad debt during the previous year and same is allowable as a deduction u/s.36(1)(vii) - HELD THAT:- The provisions of section 36(1)(vii) provides that in case of the banks, who are eligible deduction u/s.36(1)(viia), deduction on account of bad debts relating to rural advance/loans shall be first set off against credit balance in the provision for bad and doubtful debts account and deduction will be allowed to the extent of debts relating to rural debts which exceeds credit balance available in the said provision created under section 36(1)(vii). Present case are that the assessee had a credit balance in its balance sheet as on 31.3.2014 as provision for bad and doubtful account . Thus, as per proviso to section 36(1)(vii) of the Act, the amount of loss on TOS, which was in the nature of rural debts which was extended as benefit to the weaver in the rural areas, which should have been first set off against credit balance available in the balance sheet, which was more than the actual rural bad debts was not available u/s.36(1)(vii). The rider created by the legislature by way of insertion of proviso to section 36(1)(vii) of the Act raises a clear-cut bar on the allowability of claim of the assessee made before the AO during the original assessment proceedings under the head loss on OTS account in a situation, when the amount standing in the balance sheet as provision for bad doubtful debts is higher than the amount of bad debts shown as loss on OTS a/c. . We are inclined to hold that since the AO has ignored the relevant provisions of the Act before allowing the claim of the assessee of loss on OTS account and without making proper and adequate enquiry and the view taken thereafter was also not sustainable, therefore, the impugned order passed by ld Pr. CIT revising the order u/s.263 is fully justified and correct alleging the impugned assessment order as erroneous and prejudicial to the interest of the revenue and there is no valid reason to interfere with the same. - Appeal of the assessee is dismissed.

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• 2021 (1) TMI 955
  Disallowance of the expenditure claimed on account of interest paid on borrowed funds - HELD THAT:- Issue decided in favour of assessee as relying on assessee s own case. [ 2016 (8) TMI 1522 - ITAT JAIPUR] . Disallowance of depreciation charged for the year under appeal - HELD THAT:- There is no dispute that there are assets which were acquired in the earlier years and forms part of the opening block of assets and there are fresh assets in the nature of air conditioner and open well (pump) to the tune of Rs. 62,455 which have been acquired by the assessee during the year under consideration and used for the purposes of business. Therefore, in absence of any adverse finding by the AO, the disallowance of claim of depreciation is hereby set-aside and the ground of appeal so taken by the assessee is allowed. Disallowance of expenditure in nature of exceptional items claimed u/s 36(1)(vii) - HELD THAT:- It is the case of the assessee that it had cancelled the allotment of certain flats in its commercial complex as the allottees/debtors refused to pay the outstanding amount towards the interest, complex maintenance charges and electric installation charges and the same were reversed and written off in respective ledger accounts of the parties and claimed in its profit/loss account for the previous year relevant to impugned assessment year. As further submitted that such interest, complex maintenance charges and electric installation charges were duly offered to tax in previous assessment years and the return for those years have been assessed u/s 143(3) wherein such charges have been brought to tax and accepted by the Assessing officer. We find force in the contentions so advanced on behalf of the assessee and agree with the same. It is a settled legal position as laid down by the Hon ble Supreme Court in case of TRF Ltd [ 2010 (2) TMI 211 - SUPREME COURT] and also accepted by the CBDT as communicated vide circular no. 12/2016 dated 30.05.2016 that claim for any debt or part thereof in any previous year, shall be admissible under section 36(1)(vii) of the Act, if it is written off as irrecoverable in the books of accounts of the assessee for that previous year and it fulfills the conditions stipulated in sub section (2) of section 36 i.e, such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year. All the AO has to examine is whether the amount of aforesaid charges so recoverable have been actually reversed in respective ledger accounts of individual allottees/debtors and written off in the books of accounts of the assessee during the previous year relevant to impugned assessment year or not. AO has to examine whether such charges which have not been claimed as irrecoverable and written off were forming part of income and offered to tax in the previous assessment years or not. Given that these details have been claimed to be on record and in absence of findings of the AO, we are constrained to remand the matter to the file of the AO. Therefore, for the limited purposes of verifying these two aspects, the matter is set-aside to the file of the AO and where the same is found to be in order, the AO is directed to allow the necessary relief to the assessee. In the result, the ground of appeal is partly allowed for statistical purposes.

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• 2021 (1) TMI 954
  Disallowance of Printing Stationery expenses - Whether the payments (expenses) disallowed by AO were such that they violate the IRDA regulations and are therefore hit by the Explanation to Section 37(1) ? - Whether the expenses disallowed were indeed business expenditure with reference to the details of expenses and the benefits derived from them? - Whether the expenses disallowed, were also claimed by the sister concerns. And if the payments were in the nature of reimbursements, then whether the reimbursement and the related expenses were duly accounted in the books of the sister concerns. HELD THAT:- Since the assessee has not furnished satisfactory explanations before the AO with regard to the manner of utilisation of printed materials, in the interests of natural justice, we are of the view that this issue may be restored to the file of AO so that the assessee may furnish explanations to the satisfaction of the AO. Accordingly we set aside the order passed by Ld CIT(A) on this issue in AY 2008-09, 2010-11 and 2012-13 and restore the same to the file of AO. We direct the assessee to furnish the details of manner of utilisation of printing and stationery expenses for the purposes of business of the assessee. After hearing the assessee, the AO may take appropriate decision in accordance with law.

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• 2021 (1) TMI 953
  Addition u/s 68 - Bogus LTCG on the sale of equity shares - HELD THAT:- The sale of such shares is corroborated by contract notes issued by SEBI registered broker M/s Edelweiss Financial Advisors Ltd., a copy of contract note is placed - These contract notes show the order time, trade number and trade time of the shares sold and also show that Security Transaction Tax and Service Tax was also paid by the assessee. See SHRI ACHAL GUPTA, SHRI UDIT GUPTA, SHRI RAKESH NARAIN GUPTA VERSUS INCOME TAX OFFICER-3 (1) , KANPUR. [ 2021 (1) TMI 896 - ITAT LUCKNOW] The sale proceeds of such shares was credited to the bank account of the assessee. A copy of bank account where the proceeds are reflected is placed. The copy of DEMAT statement of assessee reflects various other shares also which the assessee was holding. All these documentary evidences, which were before the Assessing Officer, show that assessee did earn Long Term Capital Gain on the sale of equity shares of CCL International Ltd. - Decided in favour of assessee.

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• 2021 (1) TMI 952
  Addition u/s 68 - main grievance of the assessee is that when the AO asked the assessee to produce the cash flow statement, though it filed the cash flow statement, there was a mistake which crept into the cash flow statement, which led to the misunderstanding and led to the addition - HELD THAT:- According to the assessee, though the accounts were maintained correctly in tally system, however due to wrong classification of the entries made by the accountant while entering the same certain mix-up happened like sale in cash were wrongly classified under the credit sales etc. Realizing this mistake which crept in to the cash flow statement filed at the assessment stage, the assessee at the first appellate proceedings has filed reconciliation of the cash flow statement which has been reproduced by the Ld. CIT(A) - Rather than examining the correctness of reconciliation statement filed by the assessee, the Ld. CIT(A) has erred in confirming the action of AO and that too without even calling for a remand report from the AO. From the records, it is evident that the assessee s aforesaid submission and reconciliation is before the authorities below - We set aside the order of Ld. CIT(A) and remand the matter back to the file of AO. with a direction to verify the reconciliation statement/summary and submissions made by the assessee in this respect and in the event it is found to be correct after due verification, then no addition on this issue is warranted - Appeal of the assessee is allowed for statistical purposes.

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• 2021 (1) TMI 951
  Deemed unexplained expenditure u/s 69C - admission of additional evidence - HELD THAT:- In the appeal before the Tribunal, the assessee has produced on record certain documents by its application dated 3rd May, 2011 and those documents inter alia includes reference to certain cheques which explains the source of the amount and the source of expenditure. Along with the application, even agreement dated 30th March, 2004 was produced. In the case of M/s. Braganza Construction Pvt. Ltd [ 2019 (12) TMI 382 - BOMBAY HIGH COURT] has observed that the Tribunal in the first round of appeal before it has not considered the application by the assessee for admitting those evidences and also there is no discussion whether such materials/evidences could be admitted as evidence at the appellate stage or not. Taking the proviso of Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963, the Hon ble High Court was satisfied that substantial question of law was involved in this matter and hence, the matter was admitted. As both the parties agreed that in conformity with the procedure of law laid down in the Act for admission of additional evidences, the matter may be restored to the file of the Assessing Officer and the assessee may be directed to produce all the necessary documents/evidences before him in order to represent his case on merits. Having heard the parties herein, we are of the considered view that in the due process of natural justice, the additional evidences placed on record before the Tribunal should have to be always verified by the Sub-ordinate Authorities, more particularly, by the Assessing Officer and his submissions are also to be brought on record while admission of the same - Appeal of the Revenue is allowed for statistical purposes.

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• 2021 (1) TMI 950
  Rejection of books of accounts - NP determination - adoption of N.P. at 8% by the Assessing Officer - HELD THAT:- CIT(A) has reproduced the submissions of the assessee in Para 3 of the impugned however, the contentions as raised by the assessee in the written submission regarding the rejection of books of account, adoption of N.P. at 8% by the AO, without considering the past history of the assessee own case as well as comparable cases and the additions made on account of loan and advances and cash in hand have not been properly analyzed and discussed by the ld. CIT(A). Accordingly, in the facts and circumstances of the case, the impugned order of ld. CIT(A) is set aside and the matter is remanded to the record of the ld. CIT(A) for deciding the same afresh after giving one more opportunity of hearing to the assessee as well as to produce the books of account and other supporting evidence. Appeal of the assessee is allowed for statistical purposes.

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• 2021 (1) TMI 949
  Reopening of assessment u/s 147 - borrowed satisfaction - non independent application of mind by AO - argued approval granted u/s. 151 for issuance of notice u/s. 148 of the Act by the JCIT, Range-24, New Delhi was a mechanical approval, hence, initiation of proceedings u/s. 147 of the Act on this ground is also invalid - accommodation entries received - HELD THAT:- Reasons to believe recorded by the AO are mechanically based on borrowed satisfaction of Investigation Wing even does not disclose the nature of alleged accommodation entries whether loan, share application, share capital etc. The entire reasons to believe recorded by the AO is reproduction of conclusions drawn by the Investigation Wing. It is settled law that reopening of assessment based on the opinion and information wherein the AO has not investigated/enquired the matter independently, then the Department was not entitled to reopen the assessment. It is noted that AO has not investigated the matter himself and has not made any enquiry to corroborate the Information of the Investigation Wing on which basis the case of the assessee has been reopened, meaning thereby the AO has not applied his mind and only issued notice u/s. 148 of the Act. Thus, the AO has acted mechanically and without any independent application of mind. It is further noted that initiation of proceedings is based on non application of mind much less independent application of mind but is a case of borrowed satisfaction. Nothing is independently examined or considered by the AO which can demonstrate application of mind by him. Even otherwise, we find that Ld. Joint CIT, Range-24, New Delhi has granted the approval in a mechanical manner by mentioning only Yes, I am satisfied that this is a fit case for issue of notice u/s. 148 of the I.T. Act. which is not valid for initiating the reassessment proceedings. Thereafter, the AO has mechanically issued notice u/s. 148 - Even otherwise, we find that Ld. Joint CIT, Range-24, New Delhi has granted the approval in a mechanical manner by mentioning only Yes, I am satisfied that this is a fit case for issue of notice u/s. 148 of the I.T. Act. which is not valid for initiating the reassessment proceedings. Thereafter, the AO has mechanically issued notice u/s. 148 - Decided in favour of assessee.

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• 2021 (1) TMI 948
  Income from house property - ALV determination - AO estimated rental income @8% of value of the property - assessee has offered the deemed rental value on the basis of Municipal Valuation and property has not been let out, at all, during the year - HELD THAT:- As per the provisions of Sec. 23(1)(a), the annual value of such property shall be deemed to the sum for which the property might reasonably be expected to be let out from year to year In the case of CIT V/s. Tip Top Typography [ 2014 (8) TMI 356 - BOMBAY HIGH COURT] concurred with following principles laid down by full bench of Hon ble Delhi High Court in the case of CIT V/s. Moni Kumar Subba [ 2014 (8) TMI 356 - BOMBAY HIGH COURT] and held Annual Letting Value (ALV) of the property could not exceed Standard Rent as per the Rent Control Legislation as applicable to the property and the Standard Rent is the upper limit. ALV of the property has to be determined at sum at which property might reasonably be let out between willing parties. Methodology as adopted by Ld. AO to estimate the income @8% of value of the property is not in accordance with the above principles laid down by Hon ble Court and therefore, the same could not be sustained. Nothing has been brought on record by Ld. AO that the aforesaid estimation was the approximate sum between willing parties. The assessee offered the rent on the basis of Municipal Valuation which is in accordance with the principle laid down by Hon ble Court as above. Therefore, the estimation thus made and confirmed by lower authorities could not be sustained. We direct Ld. AO to adopt the ALV of the property at Rs. 8,400/-, being deemed rental value based on municipal valuation of the property - Decided in favour of assessee.

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• 2021 (1) TMI 947
  TP Adjustment - determination of Arm s Length Price(ALP) in respect of international transaction of rendering of Software Development Services by the Assessee to its Associated Enterprise (AE) - Assessee is a company engaged in the business of providing contract Software Development Services (SWD Services) - transaction of rendering software development services by the Assessee to its AE was a transaction with an Associated Enterprise (AE) and was therefore an international transaction - HELD THAT:- Genesys International Corpn. Ltd., Infosys Ltd., Larsen and Toubro Infotech Ltd. and Persistent Systems Ltd.be excluded from the final list of comparable companies for the purpose of arriving at the arithmetic mean of comparable companies for the purpose of comparison with the profit margins. Comparable company ICRA Techno Analytics Ltd. exclusion of the said company was sought by the Assessee before CIT(A) on the ground of functional comparability. CIT(A) has however excluded this company on the basis of export turnover filter. It is also the claim of the Assessee that the related party transaction in the case of the aforesaid company was more than 25%. As far as the request of the Revenue that the export sales to turnover of this company is 92% and therefore passes the test of export turnover filter being at least 75% or more of the total turnover. We are of the view that the comparability of this company has not been properly analyzed and hence the comparability of this company is set aside to the TPO/AO to be considered afresh on both the functional filter as well as RPT and export turnover filter. Exclusion of Mindtree Ltd. from the list of comparable companies - Assessee has no objection to its inclusion in the list of comparable companies of the TPO. Hence, this company is directed to be included in the list of comparable companies. Exclusion of M/s. Datamatics Global Services Ltd. - Assessee sought exclusion of this company before CIT(A) on the ground that this company is functionally different from that of the Assessee. CIT(A) has however in his order excluded this company on the basis that this company s export sales are 58% of the total turnover and therefore the company fails the application of export turnover filter. As far as the request of the Revenue that the export sales to turnover of this company is 98% and therefore passes the test of export turnover filter being at least 75% or more of the total turnover. After hearing the rival submissions, we are of the view that the comparability of this company has not been properly analyzed and hence the comparability of this company is set aside to the TPO/AO to be considered afresh on both the functional filter as well as export turnover filter. Exclusion of M/s. Sasken Communication Technologies Ltd. CIT(A) excluded this company after finding that this company was functionally different. Comparability need not be exact and that the requirement of law is only similar companies. We are of the view that the functional comparability not having been disputed, the plea taken by the revenue deserves to be rejected. Treatment of foreign exchange gain as part of the operating profit of the Assessee - HELD THAT:- As decided in own case [ 2019 (8) TMI 350 - ITAT BANGALORE] we feel it proper to restore the matter back to the file of AO/TPO for fresh decision with the direction that if it is found that foreign exchange fluctuation gain/loss of the tested party i.e. of the assessee or of the comparable companies is in respect of the current year s turnover then the same should be considered for TP analysis but if such gain/loss is not in respect of current year s turnover, then the same should be ignored in case of both i.e. the tested party and of the comparable companies. In case the data in this regard regarding comparable company is not made available by the assessee, then it should be presumed that such foreign exchange gain/loss for comparable company is not in respect of current year s turnover because generally, the accounting of foreign exchange gain/loss is considered in the sales only if such gain/loss has been received in the year of sale itself and only when such gain/loss is received and accounted for in a later year then only the same is accounted for separately as exchange fluctuation gain/loss.

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• 2021 (1) TMI 946
  Disallowance of development charges - applicability of provisions of section 40A(3) - In the absence of details relating to development expenses, the A.O. had disallowed the above said amount in assessment year 2010-11 - HELD THAT:- Applicability of provisions of sec. 40A(3) could well be appreciated only if the documentary evidences were also examined, besides the ledger extracts. We have earlier noticed that the assessee has not furnished documentary evidences before A.O. and hence the applicability of provisions of section 40A(3) of the Act was also not actually examined by the A.O. The expenditure claimed by the assessee formed part which was incurred by the assessee during the year relevant to the assessment year 2010-11. As noticed earlier, the assessee has claimed proportionate expenditure relating to the whole of sites affected by it. Since the assessee has claimed the expenditure during the year under consideration, it is the duty of the assessee to prove the expenditure before the A.O. by furnishing relevant documentary evidences. Since the Ld. CIT(A) has also not examined the documentary evidences, we are of the view that this issue requires fresh examination at the end of the A.O. with regard to both the issues, viz., the genuineness of the expenses and applicability of section 40A(3) of the Act. Disallowance of payment for purchase of land u/s. 40A(3) - A.O. noticed from the details furnished by the assessee that the assessee has paid a sum by way of cash towards purchase of land and since the land formed trading stock of the assessee, the A.O. disallowed the above said payment by invoking the provisions of section 40A(3) - HELD THAT:- We noticed earlier that the assessee did not offer any explanation before A.O. with regard to the payment made by way of cash towards purchase of land. However, before Ld. CIT(A), the assessee has taken support of provisions of rule 6DD and the Ld. CIT(A) has also granted relief without properly examining the claim of the assessee. Under these set of facts, we are of the view that this issue also requires fresh examination at the end of the A.O. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining the claim of the assessee afresh. Appeal filed by the revenue is treated as allowed for statistical purposes.

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• 2021 (1) TMI 945
  Addition u/s 68 - unexplained loan received - HELD THAT:- In order to prove the identity, genuineness and creditworthiness of the cash creditor Rimsha Maheswhari, assessee had been provided sufficient opportunity. Inspite of that assessee has only provided copy of confirmation letter and copy of bank account which too is not legible. There is no evidence to show the Permanent Account Number, identity details, details of bank account, Income Tax Return and salary certificate. The copy of bank statement shows that assessee is receiving salary of Rs. 21,666/- per month but assessee has been unsuccessful to provide the details of other credit entries. In this situation we are of the considered view that the assessee has failed to discharge its onus to prove the identity and creditworthiness of the cash creditor. In these given facts and circumstances of the case we find no reason to interfere in the finding of Ld. CIT(A) confirming the addition for unexplained loan received from Rimsha Maheshwari. Additional income surrendered in the statement given u/s 132(4) - HELD THAT:- Impugned addition made by the Ld. A.O was purely based on the statement given u/s 132(4) of the Act and there was no reference to any incriminating material found during the course of search which could support the impugned addition, we thus delete the addition of Rs. 25,00,000/- for Assessment Year 2013-14 and Rs. 3,00,00,000/- for Assessment Year 2014-15 and set aside the finding of both the lower authorities and accordingly allow Ground No.3 raised in assessee s appeal. Undisclosed investment u/s 69B of the Act based on the Departmental Valuation Officer Report - HELD THAT:- Assessee has maintained regular books of accounts which are not found to be incomplete or unreliable and also have not been rejected by the Ld. A.O and secondly Valuation was done of the incomplete project which has been valued not on the basis of local price but on the basis of Delhi rates which are universally accepted on higher side. Therefore since no defects were pointed out in the books of accounts regularly maintained by the assessee and are duly audited and no incriminating material was found in the search to show that unaccounted investment in the building project has been made, addition made purely on the basis of Departmental Valuation Report, we find no reason to interfere in the finding of Ld. CIT(A) who was rightly deleted the addition for the alleged undisclosed investment u/s 69B. Claim of set off income against the additions made u/s 69B - HELD THAT:- Assessee is entitled to claim deduction of any expenses which has been deemed to be its income u/s 69B. Accordingly the AO is directed to provide deduction of the addition made u/s 69B towards unexplained expenditure incurred by the assessee. Addition of undisclosed investment in purchase of land - HELD THAT:- Addition was made on the basis of cash deposits in the bank account of seller who do not response to the summons of the department nor ever appeared before the Ld. A.O so as to explain the cash deposits in her account. Under these circumstances we find no justification in the observation of the Ld. A.O that the cash deposit of Rs. 10,00,000/- in the account of seller on 10.8.2010 is in connection with the land sold vide Registry deed in favour of the assessee on 24.02.2010 was paid by the assessee. In these given facts the deposit of cash in the account of the seller cannot be connected with the assessee without any material on record to suggest such transaction. Therefore Ld. CIT(A) has rightly appreciated the facts and deleted the addition. Unexplained investment u/s 69 - HELD THAT:- Addition was the price of Rs. 1 crore per acre stated by the seller which was subsequently revised/rectified in the remand proceedings by the seller stating at Rs. 1 crore per hectare and the same if applied to the transaction under consideration and the same will arrive at 2.59 crores which is less than the actual purchase consideration paid by assessee at Rs. 2.91 crores (approx.) and thus do not call for any addition for unexplained investment in the purchase of 2.59 ha of land at Village Bagli by the assessee. Since there is no inconsistency in the finding of Ld. CIT(A) we uphold the same and dismiss Revenue s Ground No.1 for Assessment Year 2012-13. Unexplained investment in purchase of land at village Bagli - HELD THAT:- In the unsigned draft agreements is the basis and Ld. A.O had applied the higher rate mentioned in the seized unsigned two draft agreements i.e. 1.12 crores per acre and completely ignored the rate of Rs. 20,00,000/ - per acre mentioned in the other two draft agreements. Ld. A.O has also ignored the actual registered sale deed showing the purchase of land in question at a price in between Rs. 40,00,000/ - and Rs. 45,00,000/-per hectare. Ld. A.O has failed to bring on record any other documentary evidence to support the fair market value of 1.12 crores adopted by him. In these facts and circumstances of the case we find no justification in the action of the Ld. A.O in making the addition for undisclosed investment merely on the basis of unsigned draft agreements which also have not been given equal weightage and the Ld. A.O. has merely picked those documents showing higher purchase consideration which ID our view is not justified. Thus the Ld. CIT(Al has rightly deleted the addition. Addition on account of disallowance u/s 40(A) - HELD THAT:- Genuineness of the payment were not doubted and there is no iota of evidence to show that the assessee wanted to evade any tax liability and more so the transactions have been carried out before the Registering authority of State Government and impugned cash payments are part of the consideration appearing in the registered deed. We thus respectfully following the judicial precedents referred herein above find no inconsistency in the finding of Ld. CIT(A) deleting the disallowance u/s 40A(3) of the Act for the alleged cash payment u/s 40A(3) of the Act and the same is upheld. Addition u/s 68 of the Act for unexplained unsecured loan received from Non Resident Indian Shri Rajesh sadhwani - HELD THAT:- From perusal of the finding of Ld.CIT(A), various documentary evidences filed by the assessee to support the identity, genuineness and creditworthiness of Shri Rajesh Sadhwani which are in itself sufficient enough to satisfy that the alleged amount of Rs. 2,45,OO,OOO/- should not have been treated as unexplained cash credit and further in view of the decision of this Tribunal relied by Ld. CIT(A) in the case of Umesh Electricals Vis ACIT 2011 (2) TMI 1584 - ITAT AGRA] and Aseem Singh V/s ACIT [ 2011 (9) TMI 1209 - ITAT INDORE] we are satisfied with the finding of Ld. CIT(A) and of the considered view that since the assessee has furnished all the required details to prove the identity of the lender, genuineness of the transaction and creditworthiness of the lender i.e. Shri Rajesh Sadhwani there is no justification at the end of the Ld. A.O in making the addition for unexplained cash credit u/s 68.

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• 2021 (1) TMI 944
  CIT-A dismissing the appeal in limine on the ground of delay of 21 days in filing of appeal - HELD THAT:- In the present case it is noticed that the Ld. CIT(A) dismissed the appeal of the assessee in limine for the reasons that there was delay in filing the appeal before him. In this regard, the explanation of the assessee is that due to theft in his shop, he remained busy in police enquiry, in support of his claim he furnished the additional evidences which were not before the Ld. CIT(A). The said evidences are a cutting of the news paper wherein the news relating to the theft in the shop of the assessee is published and the copy of the FIR. It is also noticed that the Ld. CIT(A) dismissed the appeal of the assessee in limine for the reasons that the assessee could not furnish any documentary evidence in support of his claim. In the present case, the delay in filing the appeal before the Ld. CIT(A) occurred due to the involvement of the assessee in police enquiry relating to theft in his shop and his illness. Referring to explanation of the assessee and the principle of natural justice deem it appropriate to set aside this case back to the file of the Ld. CIT(A) to be adjudicated afresh - Appeal of the Assessee is allowed for statistical purposes.

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• 2021 (1) TMI 943
  Estimation of income - Bogus purchases - HELD THAT:- It is not in dispute that the assessee should have made purchases from the grey market in order to have some savings in indirect taxes and incidental profits thereon. We find that this Tribunal in series of decisions by placing reliance on the decision in the case of Simit P. Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT ] had categorically held that profit percentage of disputed purchases for the persons engaged in similar line of industry in which assessee is engaged in should be reasonably estimated at 12.5% of value of disputed purchases. Respectfully following the same, we direct the ld. AO to restrict the disallowance made on account of bogus purchases to 12.5% of value thereon. Accordingly, the ground raised by the assessee are partly allowed.

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• 2021 (1) TMI 942
  Addition u/s 68 - unsecured loans as unexplained cash credits - interest therein as unexplained expenditure u/s. 69C - HELD THAT:- When the assessee files all necessary evidences on record before the Assessing Officer, then mere failure of the creditor party(ies) to appear cannot form the so basis to invoke sec. 68.- Keeping in mind the detailed evidence as well as judicial precedents, we hold that once the assessee has discharged its onus on identity, genuineness and creditworthiness of running account discharged its onus qua credit side of loan and interest expenditure thereupon before the AO, both the lower authorities have erred in law and on facts in treating the same as unexplained cash credits unexplained expenditure u/s. 68 69C respectively. These two additions made u/s. 68 69C of the Act are directed to be deleted therefore. - Decided in favour of assessee.

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• 2021 (1) TMI 941
  Additions u/s 68 - unsecured loan from the Director - HELD THAT:- Since the assessee has only submitted bank statement and return of income of the Director AO came to conclusion that assessee has not proved identity, credit worthiness and genuineness of the transaction. AO himself observed that this unsecured loan is from director of the company and all the transactions are through banking channel. Therefore, identity and credit worthiness is already proved considering the fact that these transactions were carried out throughout the year and it is accepted fact that Mr. Vivek Surana is director of the assessee s company. Genuineness of the transaction, there is no bar in the I. T. Act that assessee cannot deal or take unsecured loan from the director. Disallowance u/s 68 is far fetched and the loan transaction with Director cannot be termed as non-genuine. Therefore, we are inclined to accept the findings of Ld. CIT(A). Accordingly, ground no. 1 is dismissed. Disallowance of trade creditors - assessee could not bring them to AO in person - HELD THAT:- We notice that these are trade creditors and also two directors accounts are involved. We considered the findings of the Ld CIT(A) carefully and found that trade creditors M/s Divya Jewels, M/s Jewel Diamond and M/s Kingstar has no business transaction during this assessment year and these are outstanding balances of previous assessment year. Since these are transactions of earlier AY and its settlements were made in the subsequent AY, in our view there is no scope for disallowance u/s 68. Therefore, we are inclined to accept the findings of Ld CIT(A). With regard to M/s Renisha Impex and Varun Gems, it is noticed that these parties are having regular business transactions and without any findings on transactions with them as bogus or accommodation entries, there is no scope for AO to disallow these transactions. Therefore, we are inclined to accept the findings of Ld CIT(A). With regard Mr Girish Agarwal and Poonam Agarwal, these are directors and their accounts shows regular salary payments and tax deductions. Since these are directors, there is issue of identity and genuineness issues. Accordingly, we are inclined to accept the findings of Ld CIT(A) and accordingly grounds raised by revenue is dismissed. Bogus purchases - There is no findings by the AO that these are bogus transaction or findings from any other external agencies that these party is involved in providing accommodation entries to assessee. It is only presumption made by the AO simply because Kalash Enterprises is associated with the Rajendra Jain Group. Unless there is specific finding that these are bogus entries, AO cannot presume and disallow the same. Accordingly, we are inclined to accept the findings of Ld CIT(A). Accordingly, Ground raised by the revenue is dismissed. Appeal filed by the revenue is dismissed.

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• Customs

• 2021 (1) TMI 966
  Allocation of additional Raw Petroleum Coke (RPC) in favour of M/s Sanvira Industries for production capacity in excess of 2,00,000 Metric Tonnes (MT) - it is the assertion of the petitioners that the decision to consider the Production Capacity of M/s Sanvira Industries as 3.30 lakh MT for purposes of allocation of RPC is contrary to the orders of the Supreme Court - HELD THAT:- Not only was the RPC allocated to industries whose installed capacity had not been taken into account in the EPCA Report dated 06.10.2018, but even for the petitioner-Rain CII Carbon, Production Capacity was taken as 5.11 lakh MT as against 5 lakh MT taken in the Report while determining the quantity of 1.4 million MT for import of RPC. On the issue as to whether on account of the orders dated 28.01.2019 or 08.07.2019 of the Supreme Court, SANVIRA INDUSTRIES LIMITED AND ANR. VERSUS DIRECTORATE GENERAL OF FOREIGN TRADE AND ANR. [ 2019 (12) TMI 1300 - DELHI HIGH COURT] Production Capacity could not have been taken as 3.30 lakh MT, I again do not find any merit in the submissions made by the learned senior counsels for the petitioners. While under the Public Notices dated 26.11.2018 and 22.03.2019, the applicant was to produce documents showing its Production capacity, in the Public Notice dated 17.04.2020, only a Certificate from the State Pollution Control Board indicating capacity of the unit as on 09.10.2018 could suffice. No other document for supporting claim of Production Capacity as on 09.10.2018 could have been taken into account in terms of the Public Notice dated 17.04.2020. The Consent to Operate from the State Pollution Control Board is required for establishing or operating any industrial plant or operation. As noted hereinabove, DGFT in its Public Notice(s) has required the eligible entity to produce valid Consent to Operate in support of their application for allocation of RPC. While, by the Public Notices dated 26.11.2018 and 22.03.2019, the Consent to Operate was taken as the sole document showing the production capacity of the unit as also the allocation to which it is entitled, a departure was made in the Public Notice dated 17.04.2020 inasmuch as now apart from a Consent to Operate, the industrial unit was also to provide a certificate of its production capacity as on 09.10.2018 issued by the relevant State Pollution Control Board. M/s Sanvira Industries had produced both the documents, that is, a certificate showing the production capacity as on 09.10.2018 issued by the APPCB as also the Consent to Operate. The submission of the learned senior counsels for the petitioners that certificate mentioned in the first part to the condition of the Public Notice dated 17.04.2020 is the Consent to Operate, also cannot also be accepted. Clearly, the Public Notice dated 17.04.2020 makes a distinction between a certificate in the first part and the Consent to Operate in the second part. If both, the certificate and the Consent to Operate, were the same document, clearly there would have been no necessity of making a separate mention of the certificate and the Consent to Operate in the two parts of the same Clause of the Public Notice. The Public Notice has to be read in a reasonable manner, excluding any superfluity. It cannot be said that there is no application of mind by the Committee and no reasons recorded while making such allocation in favour of M/s Sanvira Industries - petition dismissed.

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• 2021 (1) TMI 940
  Seizure of export goods - overvaluation in exports - fraudulent availment of duty drawback and other export incentives by some exporters including the applicant - HELD THAT:- Even the applicant had conceded that if necessary it would furnish bank guarantee to the extent of 20% of the duty drawback amount which would accrue on export of the goods - That being the position we modify the provisional release order dated 31.12.2020 by directing the respondents to release the goods of the applicant for export subject to submission of bond equivalent to declared value of goods and submission of bank guarantee to the extent of 20% of the duty drawback payable. On such compliance respondents to release the goods of the applicant forthwith within 48 hours from the date of furnishing such bond and bank guarantee. Regarding seizure of computers etc. we find that those were seized on 07.12.2020 and continues to be retained by the respondents. Respondents are therefore directed to release the electronic goods seized from the residential and business premises of the applicant vide panchanama dated 07.12.2020 immediately after making clone copies therefrom. Application disposed off.

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• Corporate Laws

• 2021 (1) TMI 939
  Contempt petition - guilty of contempt - specific performance of family settlement - oppression and mismanagement - allegation is that the high value contracts were executed by issuing multiple cheques under the value of Rs. 10 lakhs, though, the contract amount was much more - vital information with regard to management of the Company was withheld - unilateral settlement with trade union - appointment and promotion of senior executives - Sections 397, 398 and 403 of the Companies Act, 1956 - HELD THAT:- Perusal of Section 397 would reveal, that a member of a Company is entitled to apply to the CLB complaining that the affairs of the Company were being conducted in a manner prejudicial to the public interest or in a manner oppressive to any member or members including anyone or more of themselves, for an order under the said section. The only rider is that such a Member should have a right to do so by virtue of Section 399. Under sub-section (2) of Section 397, if the CLB was of the opinion, that the Company s affairs are being conducted in a manner prejudicial to the public interest or in a manner oppressive to any member or members and that to wind up the Company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding up order on the ground, that it was just and equitable that the Company should be wound up; it was entitled to make such order as it thinks fit, with a view to bringing to an end such matter complained of - It could thus be seen, that any member of a Company is entitled to make an application to the CLB complaining that the affairs of the Company are being conducted in a manner prejudicial to public interest or in a manner prejudicial to the interest of the Company and the CLB is empowered to make such order as it thinks fit, with a view to bring to an end the matter complained of. A similar provision contained in Section 398, enables the members of a Company to complain, that the affairs of the Company are being conducted in a manner prejudicial to public interest or in a manner prejudicial to interest of the Company. It also enables a member to complain with regard to material change which has taken place in the management and control of the Company and by reason of such change, it is likely that the affairs of the Company will be conducted in a manner prejudicial to the public interest or to the interest of the Company. Again, the only rider is, that such a member must have a right to apply by virtue of Section 399. Perusal of sub-section (2) of Section 398 would further reveal, that if such an application was made under sub-section (1) of Section 398 and if the CLB was of the opinion, that the affairs of the Company are being conducted as aforesaid, the Tribunal may, with a view to bringing to an end or preventing the matter complained of or apprehended, is entitled to make such orders as it thinks fit - It could thus be seen, that the respondents had legitimately approached the CLB invoking its jurisdiction under Sections 397, 398 and 403 of the Companies Act. The learned CLB had also passed interim orders in exercise of its powers under Section 403 of the Companies Act. The petitioner had approached this Court immediately after the order dated 10th April 2008, was passed by the CLB by way of present contempt petition. Along with the contempt petition, IA No. 1 of 2008 was also filed for stay of the order passed by CLB. Subsequently, another IA No. 2 of 2008 was also filed seeking stay of the proceedings before CLB and the communications/directions passed by the Facilitator. However, no orders have been passed by this Court on the said IAs. In the present case, undisputedly, the respondents were entitled to invoke the jurisdiction of the CLB under Sections 397, 398 and 403 of the Companies Act. The CLB has passed the order on 10th April 2008 appointing a Facilitator and further passed order dated 28th April 2011, enhancing the powers of the Facilitator. Perusal of the orders passed by this Court dated 21st July 2009 and 29th July 2009, would reveal, that though this Court had appointed independent Director, it is clarified, that the independent Director s functioning would not come in the way of the functioning of the Facilitator. On the contrary, by order dated 29th July 2009, this Court observed, that the appointment of Shri Ranina as independent Director would facilitate the functioning of the Facilitator, appointed by the CLB - It can thus be seen, that this Court has held, that the contempt proceeding is not like an execution proceeding under the Code of Civil Procedure. It has been held, that though the parties in whose favour, an order has been passed, is entitled to the benefits of such order, but the Court while considering the issue as to whether the alleged contemnor should be punished for not having complied with and carried out the directions of the Court, has to take into consideration all facts and circumstances of a particular case. It has been held, that is why the framers of the Act while defining civil contempt, have said that it must be wilful disobedience of any judgment, decree, direction, order, writ or other process of the Court. It has been held, that before punishing the contemnor for non-compliance of the decision of the Court, the Court must not only be satisfied about the disobedience of any judgment, decree, direction, writ or other process but should also be satisfied that such disobedience was wilful and intentional. In the present case, the petitioner has failed to make out a case of wilful, deliberate and intentional disobedience of any of the directions given by this Court or acting in breach of an undertaking given to this Court. On the contrary, we find that the respondents had taken recourse to the legal remedy available to them under the statutory provisions. No doubt, Mr. Rohatgi has argued, that the proceedings before the CLB are itself without jurisdiction. Though the counsel for the present petitioner had raised an issue that without deciding on the maintainability of the petition, the interim order could not be passed, the CLB observed, that under Sections 397 and 398 of the Companies Act, it is well settled, that only if the maintainability is challenged either in terms of Section 399 or jurisdiction of the CLB, challenges on other grounds have to be considered along with the merits of the case. It further observed, that in the present case, it was admitted fact, that the petitioner qualified under Section 399 of the said Act and that the CLB has jurisdiction to deal with the petition under Sections 397 and 398 of the Act. It further observed, that in the proceedings under Sections 397/398, it is the interest of the Company which is paramount. It observed, that it was quite evident from the various annexures enclosed with the petition, that due to differences among the Directors, many operational issues concerning the management of the Company like payment of salary/wages, payment to suppliers etc. were pending, resulting in agitation by the employees and irregularity in supplies - it should not be construed, that we have held that the proceedings under the CLB were maintainable in law. Since the proceedings are pending final adjudication, the parties would be at liberty to raise all issues available to them including the issue of jurisdiction. The present contempt petition is without any merit and deserves to be dismissed, and is accordingly dismissed.

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• 2021 (1) TMI 938
  Seeking to dispense with convening a meeting of the Equity Shareholders of the Transferor Company for the purpose of considering the proposed Scheme - Sections 230 to 232 of the Companies Act, 2013, R/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions regarding holding and convening of various meetings issued - Various directions regarding issuance of various notices also issued - application disposed off.

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• Insolvency & Bankruptcy

• 2021 (1) TMI 965
  Suit for recovery of price of goods sold and delivered - the claim of the plaintiff does not survive the approval of the Resolution Plan - Chapter XIIIA of the Original Side Rules - HELD THAT:- The Adjudicating Authority had accepted the Resolution Plan of the corporate debtor, that is the predecessor-in-interest of the defendant herein. The Resolution Plan has tabulated the liability of such corporate debtor. The plaintiff has not produced any document to establish that, the Resolution Plan approved in respect of the corporate debtor had the claim of the plaintiffs therein. The contentions of the plaintiffs that, the plaintiffs, subsequent to the death of the original plaintiff, was not aware of the insolvency proceedings in respect of the corporate debtor is of no consequence. In view of the ratio laid down in Committee of Creditors of Essar Steel India Ltd. [ 2019 (11) TMI 731 - SUPREME COURT ] , the plaintiffs cannot be said to have a valid claim as against the defendant any longer and at least subsequent to the approval of Resolution Plan of the corporate debtor. In a proceedings under Chapter XIIIA of the Original Side Rules the defendant is entitled to unconditional leave to defend the suit, in the event, the defendant establishes that it has a substantial defense to the claim. In the facts of the present case, the defense set up by the defendant on the basis of the ratio of Committee of Creditors of Essar Steel India Ltd. [ 2019 (11) TMI 731 - SUPREME COURT ] , is substantial. The application of the plaintiffs fail - Application dismissed.

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• 2021 (1) TMI 937
  Fraudulent or wrongful trading with an intent to defraud the creditors of the Corporate Debtor - Section 66 of IBC Code - conduct and liability of Respondent No.1 to repay the assets and benefits of the Corporate Debtor which has wrongfully been received by Respondent - HELD THAT:- Reference is made to the decision of Hon ble NCLAT in the case of Vijay Pal Garg Ors vs Pooja Bahry (Liquidator of Gee Ispat Private Limited) [2020 (4) TMI 420 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] wherein the Hon ble NCLAT was dealing with identical facts of an Application filed by R Punder section 66 and it was found that the records and accounts of the Corporate Debtor have been falsified and eventually proceeded to trigger an investigation under section 213 of the Companies Act 2013. Thus in view of the judgement, it becomes clear that Respondent No.1 is clearly covered u/s of 66(1) and Respondent 2 and 3 are also covered u/s. 66(2)(a) and 66(2)(b) of the Code. The Bench in view of the view that R1 i.e. Royal India Corporation Limited through various fraudulent transactions and by way of fudging the Books of Accounts in connivance with the R2 and R3 have defrauded the Corporate Debtor company to the extent of Rs. 1,19,08,05,762/-. This includes the clear admitted dues of Rs. 31.01 crore - The Bench directs that the total amount of Rs. 1,19,08,05,762/- be returned by R1 into the Corporate Debtor s account within a period of 7 days from the pronouncement of this Order. Application allowed.

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• 2021 (1) TMI 936
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Respondent has failed to comply with the order passed by the Hon ble K-RERA and are in default of financial debt - HELD THAT:- It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. The Hon ble Supreme Court in the case of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited [ 2017 (9) TMI 1270 - SUPREME COURT ] , has inter alia, held that I B Code, 2016 is not intended to be substitute to a recovery forum. In the instant case, it is seen that the Petitioners have already obtained an order from the relevant forum under the RERA Act and the same can be executed before any relevant forum. This Tribunal cannot be used as a recovery forum when orders of the K-RERA or any other forum are not complied with. Merely because the other courses may be cumbersome, as pleaded, cannot be a ground for taking recourse to the I B Code when no case is even otherwise made out for admission, since the Petitioners do not admittedly meet the minimum threshold of 10% etc. of Financial Creditors of the same class. For this reason, the Ld Counsel for the Petitioner s plea that liberty may be granted to file a fresh petition also cannot be acceded to. The petition is clearly an attempt at forum shopping and deserves to be dismissed. Petition dismissed.

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• 2021 (1) TMI 935
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - debt, limited by time or not - Financial Creditors or not - debt due is a Financial Debt or not - HELD THAT:- In view of the law laid down by the Hon ble Supreme Court in ITC LIMITED VERSUS BLUE COAST HOTELS LTD. ORS. [ 2018 (3) TMI 932 - SUPREME COURT] , we hold that the WhatsApp communication dated 23-5-2019 annexed by the Financial Creditor along with the rejoinder constitutes an acknowledgement of liability, where the debtor who sent such a message has no intention of paying so long as he can avoid payment, and nothing before his mind but a desire, somehow or other, to gain time and avert pressure and falls within the meaning of Section 18 of the Limitation Act, 1963. Therefore, this Tribunal holds that the Application filed by the Financial Creditor is within the limitation period. From the definition of Financial Creditors, Section 5(8) of the I B Code , it is clear that a financial debt is a debt along with interest which is disbursed against the consideration for the time value of money and may include any of the events enumerated in sub-clause (a) to (i). Therefore, this Tribunal is to see whether the amount paid by the Applicants to the Corporate Debtor, fulfil the other condition of disbursement against consideration of time value and money , in order to come within the definition of Financial Creditor. There is a Financial Debt as defined in Section 3(11) of IBC; there is a default within the meaning of Section 3(12) of IBC. Therefore, the application filed by the Financial Creditors is complete in all respects as required by the law. Therefore, the default stands established and there is no reason to deny the admission of the application. Hence, this Adjudicating Authority Admits this Petition and orders initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - Application admitted - moratorium declared.

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• 2021 (1) TMI 934
  Seeking directions to dismiss the proceedings in the instant matter since no quorum has been reached in accordance with Section 408 and 410 of Companies Act, 2013 - HELD THAT:- A bare reading of the provisions of Section 419(3) of the Companies Act as well as the order of the NCLT, Principal Bench, which has been issued with the approval of Hon ble President, makes it clear that even though the Bench of NCLT consists of two members, it shall be competent for the Members of the Tribunal authorised in this behalf to function as a Bench, by a Single Judicial Member and exercise the powers of the Tribunal in respect of such class of cases or such matters pertaining to such class of cases, as the President may by general or special order specify. In regard to constitution of special Bench for NCLT, Kochi the Hon ble President has issued the order under Section 419(3) of the Companies Act, 2013 authorising the Judicial Member to function as such. It may also be mentioned that by the aforesaid order, no direction is issued that the Special Bench of Member (Judicial) is not empowered to take up cases under the I.B. Code, 2016. The contentions raised by the applicant herein that a Single Member Bench cannot hear the IBC matters has no foots to stand and is liable to be dismissed - Application dismissed.

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• 2021 (1) TMI 933
  Permission for withdrawal of petition - Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- Since the Company Petition is not yet admitted, and the Petitioner has itself filed the above joint memo praying for withdrawal of the the instant Company Petition, we are inclined to permit the Petitioner to withdraw the instant Company Petition. Petition is hereby disposed of as withdrawn by granting liberty to the Petitioner to file a fresh petition in case of non-adherence to the agreed terms of payment by the Corporate Debtor.

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• 2021 (1) TMI 932
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor or not - pre-existing dispute or not - HELD THAT:- After the reply of Corporate Debtor, Operational Creditor has filed its rejoinder, in its rejoinder the Operational Creditor states that, on 27-10-2018, the Operational Creditor issued a Demand Notice against the Corporate Debtor which the Corporate Debtor responded to vide its response letter dated 6-11-2018. The Corporate Debtor issued a show cause notice dated 29-10-2018 after almost 3 months of termination of the Consultancy Agreement of the Operational Creditor w.e.f 4-8-2018 and also replied to the Demand Notice on 6-11-2018 creating a false/moonshine dispute to avoid the payment of the operational debt due to the Operational Creditors. The Operational Creditor further states that, aforementioned handover is being portrayed by the Corporate Debtor as a moonshine dispute whereas this has no relation with the contract, the 6 months notice period and even the termination of the Operational Creditor s contract which was terminated for convenience and not misconduct - In M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. [ 2017 (9) TMI 58 - SUPREME COURT] the Hon ble Supreme Court held that pre-existing dispute is the dispute raised before demand notice or invoices was received by the Corporate Debtor . Any subsequent dispute raised while replying to the demand notice under section 8(1) cannot be taken into consideration to hold that there is a pre-existing dispute. It is made clear that any observations made in this order shall not be construed as an expression of opinion on the merit of the controversy and the right of the applicant before any other forum shall not be prejudiced on account of dismissal of the instant application - application dismissed.

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• 2021 (1) TMI 931
  Seeking to direct the Resolution Professional to accept the claim of the Applicant under the category of Financial Creditor and reconstitute the Committee of Creditors by including the name of Applicant - nature of the debt - Financial Debt or Financial debt - HELD THAT:- In the instant case, the amount in claim is arising out of the judgment of XIII Additional District and Sessions Judge cum Commercial Court, Ranga Reddy District, Hyderabad and the said judgment arose out of the issue regarding payment of entire amount as advance by the Applicant towards the purchase orders placed with the Corporate Debtor and further on account of non-supply of goods. The transaction entered into between the Applicant and Respondent squarely falls within clause 2(c)(xviii) supra and therefore the Commercial Court had jurisdiction over disputes arising out of such commercial transactions. As a result, the above said Court could entertain the claim of the Applicant herein and duly adjudicated upon the same. In fact, if the said transaction was not a commercial transaction but was financial in nature, the Commercial Court could not have adjudicated upon the same. Therefore, it is obvious that the claim made by the Applicant herein pertains to a commercial transaction between the parties - It is an admitted fact that pursuant to the agreement in the form of purchase order the Applicant has paid the money as an advance for supply of goods and not as a disbursement of debt for time value of money. In the Purchase Order between the Appellant and the Respondent, nowhere it is mentioned that the amount paid by the Appellant to the Respondent will be repayable by the Respondent along with interest over a period of time in a single or series of payments in future. The Appellant has not disbursed any money against the consideration for the time value and hold that the claim of the Appellant is not a Financial Debt within the meaning of section 5(8) of the Code - this Adjudicating Authority does not find any infirmity in the decision of the RP. Application dismissed.

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• Service Tax

• 2021 (1) TMI 928
  Stay of pre-deposit - seeking direction to the 1st respondent to entertain the appeal filed by the petitioner without insisting on further pre-deposit of amount - delay in filing of appeal before the Commissioner (appeals) - HELD THAT:- Though there is appear to be a deficit in pre-deposit of amount in so as far as the Order in Original No.14/2017 is concerned as the report filed, it is noticed that the petitioner has paid amounts in excess in their appeal against the order in Original Nos.15 16/2017 for a sum of Rs. 74,825/- and Rs. 85,479/-. Thus, there is excess payment of Rs. 1,60,304/- by the petitioner which amount can be allowed to be adjusted against the amount of pre-deposit in the petitioner s appeal against Order in Original No.14/2017 dated 10.2.2017 - The impugned communication dated 03.05.2017 also states that the appeal has been filed with a delay of one day. However, there is no explanation forthcoming from the petitioner on the same. The petitioner is given liberty to file appropriate applications for condoning the delay or in the alternative, give their explanation as to why there was no delay in filing the appeals and how the amounts paid by the petitioner in appeal against the Order in Original No.14 of 2017 was in excess of 7.5% required to be pre-deposited under Section 35 F of the Central Excise Act, 1944 for entertaining the aforesaid appeal - In case, the office of the 1st respondent still finds there was deficit in the pre-deposit amount by petitioner against its appeal against the Order in Original No.14 of 2017- dated 10.02.2017, the petitioner shall be informed about the same in writing consequent to which the petitioner shall deposit the deficit amount within a period of one week from the date of receipt of such communication from the office of the 1st respondent - On such deposit, the appeals shall be numbered forthwith subject to formal order for condoning the delay if such application is required and dispose the appeals within a period of three months thereafter. Petition allowed.

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• Central Excise

• 2021 (1) TMI 927
  Validity of order passed by the Tribunal - Whether the order of the Tribunal is vitiated inasmuch as it fails to take into account relevant aspects viz. a. mode of annexation b. object of annexation c. beneficial enjoyment and thus stands vitiated? - Whether the first respondent ought to have allowed credit under the Capital Goods Scheme if not under the Inputs Scheme? HELD THAT:- In the light of the recent decision of the Hon ble Division Bench of this Court in the case of M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX THE COMMISSIONER OF CENTRAL EXCISE, [ 2015 (3) TMI 661 - MADRAS HIGH COURT] wherein an identical question was considered and the only difference being that the case arose under the CENVAT Credit Rules, which subsequently stood substituted by the MODVAT Rules. The substantial questions of law are answered in favour of the appellant/assessee.

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• CST, VAT & Sales Tax

• 2021 (1) TMI 964
  Principles of Natural Justice - Validity of assessment order - petitioner contends that the Assessment Orders were passed for the said periods on different dates, but none of those orders were served on the petitioner - HELD THAT:- It is not in dispute that notices as well as orders passed are required to be served on the assessee in accordance with Rule 64(1)(b) of the TVAT Rules, which does not contemplate service of either notices or orders through the mode of e-mail. In Soa Software Engineering India Private Limited Vs. Commercial Tax Officer [ 2013 (3) TMI 850 - ANDHRA PRADESH HIGH COURT ], a Division Bench of this Court held that as per Rule 64(1)(b) of the Telangana State Value Added Tax Rules, 2005 read with Section 9(2) of the Central Sales Tax Act, 1956, show-cause notice should be served on the nominated person or left at the registered office of the person or sent by registered post to any office or place of business of that person, and it cannot be sent by e-mail - This legal position is not disputed by the learned Special Counsel. It has to be held that there was neither service of a show-cause notice on the petitioner nor service of the Assessment Order on the petitioner for the period 2010-11 and therefore, there was a violation of principles of natural justice which caused prejudice to the petitioner. Period 2011-12 - HELD THAT:- This order mentions that a show-cause notice was sent through e- mail and was also served through registered post - But there is no material produced by the learned Special Counsel to show service of the show-cause notice on the petitioner through registered post - We have already noticed that service of show-cause notice through e-mail is not a valid service as per Rule 64(1)(b) of the TVAT Rules. Period 2012-13 - HELD THAT:- But there is no evidence of service of the same on the petitioner. The said Assessment Order was dispatched to the petitioner on 26.05.2016 but is also returned with endorsement addressee left . Therefore, even for 2012-13 period there is no evidence of service of pre-assessment show-cause notice or even the Assessment Order and it has to be held that there was a violation of principles of natural justice which caused prejudice to the petitioner - Assessment order cannot be sustained. 2013-14 period - HELD THAT:- It is already pointed out that service of such show-cause notice through e-mail is not a valid service and admittedly the notice sent through registered post was not served on the petitioner - The postal cover enclosing copy of the Assessment Order was also returned with endorsement addressee left . So the said Assessment Order was also not served on the petitioner. So it has to be held that there was a violation of principles of natural justice which caused prejudice to the petitioner - assessment order also not sustainable. Assessment year 2014-15 - HELD THAT:- A reading of the said Assessment Order indicates that a show- cause notice dt.04.10.2017 was issued to the petitioner, which was served by dispatch and that the petitioner filed a letter dt.23.10.2017 and declared certain turnovers. No proof of service of the pre-assessment show cause notice is filed by the 1st respondent and even the alleged letter dt.23.10.2017 has not been produced - No evidence produced by respondents 1 to 3 of proof of service of the said Assessment Order also on the petitioner - Without service of show cause notice and Assessment Order on the petitioner, the respondents cannot seek to enforce any demand raised thereunder as there has been a violation of principles of natural justice which has caused prejudice to the petitioner. The demand of tax raised in the impugned notice dt.17.02.2020 under Section 29 of the Telangana State VAT Act, 2005 served on the petitioner s banker, the 4th respondent, for the periods 2010-11 to 2014-15 cannot be sustained. The assessments for the said periods 2010-11 to 2014-15 are all remitted to the 1st respondent for fresh consideration - the 1st respondent is directed to serve pre-assessment show-cause notice for each of the aforesaid periods on the petitioner strictly in accordance with Rule 64(1)(b) of the TVAT Rules, 2005 to the address mentioned in this writ petition affidavit - Petition allowed by way of remand.

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• 2021 (1) TMI 930
  Maintainability of application - HELD THAT:- No explanation has been offered for inaction between 17.08.2017 until 10.02.2020 despite the tax amount involved is over Rs. 24 crores. List the matter after two weeks.

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• 2021 (1) TMI 926
  Levy of Entry Tax - petroleum based lubricating oil - Entry 67 of 3rd Schedule of Karnataka Tax on Entry of Goods Act, 1979 read with Entry 1(viii)(a) Notification bearing No. FD/11/CET/2002 dated 30.03.2002 - HELD THAT:- Section 3 of the 1979 Act is the charging Section, which mandates that there shall be levy and collection of tax on entry of any goods specified in First schedule into a local area for consumption, use or sale therein at such rates not exceeding 5% of the value of goods as may be specified retrospectively or prospectively by the State Government by a Notification. The aforesaid Section further provides that different dates on different rates may be specified in respect of different goods or different classes of goods or different local areas. First Schedule to the Act specifies the items or goods, on which tax is levied - Thereafter, the Finance Department of Government of Karnataka issued Circulars. By Circular dated 12.04.2006, it was provided that petroleum products, which are similar to tar would be covered by the words and others . Similar view was taken in the Circular dated 02.05.2006 and it was provided that benzene, toluene and xylene are not covered under the Entry tar and others or under any other sub entry, therefore, they are not petroleum products specified in the Notification. Thereafter, by Circular dated 09.04.2013, the Circular dated 12.04.2006 was withdrawn. However, the Circular dated 02.05.2006 issued by the I9nance Department of Government of Karnataka is in force. It is well established rule of interpretation of taxing statutes in words of Lord Simonds that subject is not to be taxed without clear words for that purpose and that every Act of Parliament must be read according to natural construction of its words - From perusal of the Entry 67 as well as Sl.No.1 of the Notification, it is evident that Entries seem to cover only petroleum based lubricating oil which entry tax is being paid by the appellant. The synthetic based lubricating oil is not a petroleum product and is therefore, not covered under the entry. Similarly, the grease and base oil have also not been specifically enumerated in the Notification and therefore, the same also cannot be subjected to entry tax. It is also pertinent to mention here that grease and base oil not being similar to tar cannot be classified within the expression tar and others which are already been clarified by the revenue department vide Circular dated 02.05.2006. It is trite law that the Circulars issued by the department are binding on it. It is well settled in law that a decision of the court is only an authority for what it decides and not what can logically be deduced therefrom. It cannot be quoted for a proposition that may seem to follow logically from it and such a mode of reasoning assumes that law is necessarily a logical code, whereas it must be acknowledged that law is not always logical. It is equally well settled legal position, that court should not place reliance on a decision without discussing as to how the factual situation fits in with the fact situation of the decision, on which reliance is placed - the revisional authority could not have concluded in the fact situation of the case that the tribunal has failed to decide or has decided erroneously any question of law. Appeal allowed.

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• Indian Laws

• 2021 (1) TMI 963
  Grant of Bail - offences under Sections 406, 409, 420, 467, 468, 471, 477-A, 201, 120-B of IPC and Section 5 of the Prize Chits Money Circulation Scheme (Banning Act), 1978 and Section 65 of the IT Act - High Court ruled in his favour by holding that the appellant is entitled to bail under Section 167 as a complete charge sheet was not filed within the prescribed period - HELD THAT:- It is clear from the judgment of this Court in Bashir s case [ 1977 (10) TMI 125 - SUPREME COURT ] that filing of charge sheet by itself cannot be a ground for cancellation of bail. Bail granted under Section 167 Cr.P.C. can be cancelled on other grounds available in law to the prosecution. Appeal disposed off.

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