TMI Tax Updates - e-Newsletter
January 31, 2022

Case Laws in this Newsletter:

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

Articles

• MULTIPLE ADJUDICATION ORDERS
• Expenses w.r.t promotion for brand 'Snapdeal' are revenue in nature
• GST-Kt’Qs: GST e-Way Bill – e-Way Bill Expired - Whether taxpayer bemused or amused? If the e-way bill is expired, in such case whether taxpayer has to surrender his tittle of the goods with “No GO” if he is otherwise unwillingness to penalty? Whether challenges of expiry of e-way Bill is technical or procedural? Issues with e-way Bill on its extension?
• ADVISORY JURISDICTION OF GST AUTHORITIES
• Substantive benefit of refund claim cannot be denied on technical reasons

News

• Joint Outcome Statement: Round One of Negotiations for A Free Trade Agreement Between The Republic of India and The United Kingdom

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Notifications

GST - States

• 15/2021 – State Tax - dated 24-12-2021 - Jharkhand SGST
  Jharkhand Goods and Services Tax (Fourth Amendment) Rules, 2021

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• ERTS (T) 65/2017/Pt. III/6 - dated 1-12-2021 - Meghalaya SGST
  Meghalaya Goods and Services Tax (Ninth Amendment) Rules, 2021.

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• S.O. 07/P.A.5./2017/S.11/2022 - dated 28-12-2021 - Punjab SGST
  Seeks to exempt PGST on specified medicines used in COVID-19, up to 31st December, 2021

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• S.O. 03/P.A.5/2017/Ss. 9 and 15/Amd./2022 - dated 28-12-2021 - Punjab SGST
  Amendment in Notification No. S.O 16/P.A.5/2017/S.9/2017, dated the 30th June, 2017

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• S.O. 01/P.A.5/2017/Ss.9, 11, 15, 16 and148/Amd./2022 - dated 28-12-2021 - Punjab SGST
  Amendment in Notification No. S.O 17/P.A.5/2017/Ss.9,11,15 and 16/ 2017, dated the 30th June, 2017

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SEBI

• SEBI/LAD-NRO/GN/2022/72 - dated 28-1-2022 - SEBI
  Securities and Exchange Board of India {KYC (Know Your Client) Registration Agency} (Amendment) Regulations, 2022

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Circulars / Instructions / Orders

GST - States

• 16/2021-GST - dated 7-1-2022
  Clarification in respect of applicability of Dynamic Quick Response (QR) Code on B2C invoices and compliance of notification 14/2020- State Tax dated 04 November, 2020
• GST-20/2021 - dated 18-12-2021
  GST on service supplied by restaurants through e-commerce Operators
• 165/21/2021-GST - dated 24-11-2021
  Clarification in respect of applicability of Dynamic Quick Response (QR) Code on B2C invoices and compliance of notification 14/2020- State Tax dated 27th March, 2020
• GST-19/2021 - dated 18-11-2021
  Clarification on certain refund related issues

Highlights / Catch Notes

GST

• Unblocking of Electronic Credit Ledger - period of one year as prescribed under sub-rule 3 of Rule 86A of the CGST/GGST Rules has elapsed from the date of order of blocking of the Electronic Credit Ledger - We make it clear that next time if we come across such a case, then the concerned authority would be held personally liable for the loss which the assessee might have suffered during the interregnum period. - HC
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Income Tax

• Reopening of assessment u/s 147 - Notice after four years - reopening based on audit objections - The Income Tax Officer must determine for himself what is the effect and consequence of the law mentioned in the audit note and whether in consequence of the law which has come to his notice he can reasonably believe that income had escaped assessment. The basis of his belief must be the law of which he has now become aware. - Further there is nothing under this head to indicate that there was failure on the part of petitioner to truly and fully disclose any fact - Notice and order quashed - however admitted liability of tax by the assessee directed to be paid - HC
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• Validity of assessment order - Assessee unable to provide the information/documents as sought for by the respondent No.1 - due to technical glitches and constraints, certain information was not getting uploaded onto the portal/website of the department - in the interest of justice we deem it just and appropriate to set aside the impugned order and remit the matter back to respondent No.1 for reconsideration afresh after providing an opportunity in favour of the petitioner to provide/furnish the relevant information/documents. - HC
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• Set-off of net operations loss against income from house property and ‘other’ sources - principle of mutuality - once the assessee's impugned deficit arising from mutuality account is neither covered in any of the said heads as well nor u/s. 2(24)(vii) defining “income” in the very account, section 71 of the Act would not apply in isolation. - AT
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• Reopening of assessment u/s 147 - Independent application of mind - There is a case where the survey had taken place in assessee’s own premises and the Director as well as Accountant of the assessee company had failed to provide any evidence regarding introduction of share capital. Further the Addl. CIT while granting approval has also recorded his satisfaction. Under these circumstances, we do not find any infirmity in the order of the CIT(A) in upholding the validity of re-assessment proceedings - AT
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• Revision u/s 263 by CIT - Unexplained cash deposit received from various persons - Once the Assessing Officer has taken a view based on the explanation as well as evidence filed by the assessee, it cannot be the case of lack of enquiry. At the best, it is inadequate enquiry and, therefore, in such a situation the assessment order cannot be cancelled or set aside. Accordingly, we hold that in absence of any charge by the ld. Pr. CIT that assessment order is erroneous and prejudicial to the interest of Revenue, assessment order cannot be set aside - AT
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• Revision u/s 263 by CIT - assessment as erroneous so far as prejudicial to the interest of the revenue - In the present case, undisputedly rather admittedly, the assessee has transferred part of converted capital asset into stock in trade during the relevant financial period and the AO has failed to make any enquiry in this regard and to tax the same in the hands of the assessee partially pertaining to the part of land sold during the year. No enquiry has been conducted by the AO during the assessment p;roceedings in this regard, hence, it is clear case of no enquiry. - CIT assumed valid jurisdiction to review the assessment order u/s.263 - AT
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• Unexplained share application money received from non-genuine parties - the bank has informed the RBI that it has received the proceeds from NRI in the form of inward remittances certificate for each amount received. RBI has noted that the assessee has followed due procedure which is required to be followed for issue of shares to foreign share applicants. Moreover, the Department's query from share applicants during extended period of time barring recorded no adverse remarks. Under these circumstances, we do not find any infirmity in the order of the CIT(A) deleting the addition on this issue. - AT
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• Disallowance of deduction u/s 54B - assessee did not file return under Section 139(1) of the Act and he has not deposited the sale proceeds in the capital account - The correlation between the investment and receipt of sale proceeds within the time stipulated in Section 54B of the Act has duly been demonstrated by the assessee. In view of the above, the appeal of the assessee is allowed and the Assessing Officer is directed to grant deduction under Section 54B - AT
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• Chargeability of Royalty from Associated Enterprises (AEs) - International transaction as contemplated u/s 92B - The facts in the present assessment is also similar and no distinguishing facts were pointed out by the Ld. DR or the Ld. AR, therefore, the finding of the CIT(A) that royalty @ 2% is to be charged from AE, appears to be not correct. Therefore, following the earlier years order by the Tribunal, we are restricting the said royalty to 0.75% in case of AE - AT
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• Validity of appeal before CIT-A u/s 246A - Assessability of capital gains in the hands of Individual or HUF - In the interest of natural justice, the Ld CIT(A) should not have been too technical and should have allowed the assessees to filed revised Form No.35. Accordingly, we are of the view that these assessees should be allowed to file Form No.35 mentioning the PAN of individual. Further, we notice that the Ld. CIT(A) has not adjudicated the grounds urged on merits. Under these set of facts, we are of the view that all the issues urged before us are required to be restored to the file of Ld. CIT(A) for adjudicating them on merits. - AT
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Customs

• Jurisdiction - power of DRI - The show cause notice dated 30.01.2009 issued by the Principal Additional Director General, DRI under Section 28 of the Customs Act is, therefore, without jurisdiction as the said officer was not the proper officer and, therefore all proceedings undertaken by the Department on this show cause notice is, therefore, without jurisdiction. The order dated 29.05.2020 passed by the Principal Commissioner, therefore, cannot be sustained - AT
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• Valuation of export goods - confectionary spare parts - rejection of declared value - There is no huge difference amongst the three values supplied by the 3 different chartered engineers. On this ground alone, the value arrived by the chartered engineer is to be rejected - No other evidence has been brought on record by the Revenue with regard to the value of export consignment. In that circumstance, the value of export consignment cannot be rejected. - AT
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IBC

• Initiation of CIRP - Insufficiently stamped documents - admissible evidence or not - The decision of the Adjudicating Authority that Corporate Debtor has committed default is not vitiated which was fully supported by the materials on record even if Facility Agreement dated 22nd May, 2013 and 19th August, 2013 are ignored. The Corporate Debtor has taken a Financial Benefits from Standard Chartered Bank and obtained disbursal in three tranches of 5 Million Dollar each, which disbursements have not been denied in a pleading before the Adjudicating Authority - The submission of the Appellant that facility agreement being not stamped Section 9 Proceeding ought not to have proceeded has to be rejected - AT
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• Initiation of CIRP - In the instant case, the covenants as mentioned in the Memorandum of Understanding dated 08.06.2015 clearly mentions and admits that the payment of ₹ 6 Crores is a liability on the part of the Corporate Debtor for the services rendered. Therefore, the definition of “Operational Debt” clearly attracts in the instant case, since the Respondent had provided services and in consideration thereof the Corporate Debtor admit its liabilities for the said services. - NCLT rightly admitted the application - AT
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Service Tax

• Levy of service tax - donations received by the appellant from its members and on freight charges - reverse charge mechanism - the present case, consignment notes have not been issued and so the activities cannot be said to be covered under ‘goods transport agency’ services - Thus, service tax liability could not have been fastened on the appellant under the RCM - AT
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• Levy of service tax - Business Auxiliary Service or not - The appellant is neither related to import of goods nor any sale of goods and also nor concern with the payment against those goods, therefore, it cannot be said that the appellant is an “Intermediary” as per Rule 2(f) of POPS Rules, 2012. - The appellant do not qualify as “Intermediary” in terms of Rule 2(f) of POPS Rules, 2012, therefore, no demand of service tax sustainable against the appellant - AT
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• Levy of Service tax - Club or Association Services - The impugned order does not survive in the light of the decisions cited as the services rendered by the Club to its members are held to be service rendered to themselves and no such relation of service provider and service recipient exists between the Club/Associate and its members. - AT
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Central Excise

• Utilization of balance of Cess credit after 01.03.2015 for payment of Central Excise Duty - Though these returns were filed in May 2017, the Show Cause Notice has been issued only two years later, invoking the extended period of limitation - there is no positive act of suppression established by the Department to prove that there is any wilful suppression of facts. - The demand raised invoking the extended period of limitation cannot sustain and requires to be set aside - AT
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• Clandestine manufacture and clearance - Formaldehyde - inputs received without payment of duty - In the absence of any cogent evidence against the appellant, the charge of the clandestine manufacture and removal of the goods by the appellants is not sustainable, the same is on the basis of assumptions and presumptions. - AT
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• Clandestine manufacture - tobacco snuff - It is found that to manufacture snuff of huge quantity, other raw material/packing material also required but no such evidence of procurement of other raw material/packing material on record. Without evidence on record from where quantity of other raw material/packing material has been procured by the appellant used in manufacture of snuff which has been cleared without payment of duty, the charge of clandestine removal of snuff against the appellant is not sustainable. - AT
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VAT

• Classification of supply - sale or stock transfer - movement of goods from Bangalore to Navi Mumbai - If the Excise pass has any inextricable link with the export, certainly the transaction would come within the purview of Section 5(1) of CST Act - the movement of goods occasions such export. These aspects require to be verified by the Tribunal considering the material evidence placed on record by the assessee. - HC
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Case Laws:

• GST

• 2022 (1) TMI 1168
  Seeking direction to the respondent(s) to transfer the investigation pertaining to Summons pending at Delhi to the Directorate General of GST Intelligence, Surat Zonal Unit, Gujarat - another case against the petitioner is being investigated by the Surat Zonal Unit - HELD THAT:- The respondents have filed a detailed reply affidavit and have asserted that two investigations pertain to different causes of action. If so, it is for the investigating Agency to decide whether it would like to have a joint investigation pertaining to the petitioner. No writ of mandamus need be issued in that behalf in light of the factual assertion in the counter affidavit. This writ petition is disposed of.

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• 2022 (1) TMI 1167
  Refund claim - rejection of refund in view of Rule 92(3) of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- A Perusal of the impugned Order indicates that the Respondent No.3 has rejected the application for refund without recording any reasons, though the same is mandatory under Rule 92(3) of the Central Goods and Services Tax Rules, 2017. The Order passed by the Respondent No.3 is in breach of the said provisions and deserves to be granted and set aside. Impugned Order passed by the Respondent No.3 is quashed and set-aside - Application for refund made by the Petitioner for the period July 2017 to March 2018 for the sum of ₹ 4,33,03,066/- is restored to file before the Respondent No.3 - Application allowed.

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• 2022 (1) TMI 1166
  Unblocking of Electronic Credit Ledger - period of one year as prescribed under sub-rule 3 of Rule 86A of the CGST/GGST Rules has elapsed from the date of order of blocking of the Electronic Credit Ledger - HELD THAT:- The rule itself has provided that the Electronic Credit Ledger can be blocked for a period of one year. On expiry of a period of one year, it would automatically get unblocked. In fact, it was the duty of the authority concerned to permit the assessee, i.e. the writ-applicant, to avail the input credit available in his ledger. Once the statutory period comes to an end, the authority has no further discretion in the matter, unless a fresh order is passed - In the case on hand, it is very unfortunate to note that despite the fact that the period of one year elapsed, the authority did not permit the writ-applicant to avail the credit available in his ledger. The authority did not permit the writ-applicant to avail the input credit available in his ledger for about more than two and a half months after the statutory life of the order came to an end We make it clear that next time if we come across such a case, then the concerned authority would be held personally liable for the loss which the assessee might have suffered during the interregnum period. - this writ-application is disposed of.

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• Income Tax

• 2022 (1) TMI 1165
  Income earned on account of the interest as liable to tax under the Interest Tax Act, 1974 - Reopening of assessment beyond the period of four years as per section 10 of the Interest Tax Act, 1974 - Whether the Appellate Tribunal was right in law in concluding that the interest income as chargeable interest under section 2(7) read with section 2(5B) V-A of the Interest Tax Act, 1974 without considering the Memorandum of the Appellant Company, which does not contain the finance business? - HELD THAT:- We find that the expression financial company as defined under section 2(5B) of the Interest Tax Act, 1974, means a company carrying on activities as enumerated in sub-clauses (iv) to (v) thereon. Both the appellate authorities have not set out the sub-clause to the definition of financial company which covers the appellant company. The said aspect relating to identifying the taxable person is an essential criterion for the charge to get attracted. However, the appellate authorities failed to mention the sub-clause to Section 2(5B) of the Interest Tax Act, 1974, under which the appellant would fall. On this score alone, we are inclined to set aside the order of the Tribunal and remand the matter to the Tribunal for fresh consideration. It is apt to refer to the decision of the supreme court in CWT v. Ellis Bridge Gymkhana [ 1997 (10) TMI 2 - SUPREME COURT ] in which, it was held that the rule of construction of a charging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section and no one can be taxed by implication . Thus we set aside the order impugned herein and remand the matter to the Tribunal for fresh consideration. The Tribunal shall examine the facts as regards the activity of the appellant, and set out under which sub clause to the definition of financial company under section 2(5B), the appellant company would fall, so as to attract charge under the Interest Tax Act, 1974 and thereafter, pass appropriate orders. Such an exercise shall be completed within a period of twelve (12) weeks from the date of receipt of a copy of this judgment.

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• 2022 (1) TMI 1164
  Release the seized amount along with the interest - present proceedings was as to where the seized amount was lying i.e. in Delhi or Ahmedabad? - HELD THAT:- The respondents admits that the seized amount is lying in Delhi in PD Account Pr.CIT-10. Since the PAN of the assessee is based in Ahmedabad, the Pr.CIT-10 is directed to transfer the seized amount of ₹ 12,00,000/- to the petitioner s Assessing Officer in accordance with law within two weeks. It shall be open to the petitioner to apply to his Assessing Officer for refund of the seized amount in accordance with the assessment order dated 2nd November, 2010.

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• 2022 (1) TMI 1163
  Adjustment of refund against the outstanding tax demand - HELD THAT:- As refunds have been adjusted against outstanding tax demand by the Authority without mentioning that the case of the assessee falls in the category mentioned in paragraph 4(B) of the Office Memorandum dated 29 th February, 2016 and/or without passing any order under Section 245 of the Act, this Court is of the opinion that the petitioner is entitled to refund of adjustments made in excess of 20% of the disputed tax demands. This Court is also of the view that the restrictive stay order dated 11 th February, 2019 issued by the Respondents granting stay to the Petitioner only till 31 st December, 2019 is in violation of the directions of the CBDT as well as previous orders of this Court wherein it has been held that the assessing officer must grant stay till the disposal of the first appeal. This Court directs the respondents to verify the facts stated in the writ petition and if it finds them to be true and correct, then refund the amount adjusted in excess of 20% of the disputed tax demands for the Assessment Year 2016-17 to the petitioner within four weeks.

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• 2022 (1) TMI 1162
  Reopening of assessment u/s 147 - Notice after four years - reopening based on audit objections - HELD THAT:- Admittedly, this is a case where the notice under Section 148 of the Act has been issued after the expiry of 4 years from the end of the relevant assessment year and assessment u/s 143(3) of the Act has also been completed. Hence, proviso to Section 147 shall apply. Respondents have to show that there was failure on the part of petitioner to truly and fully disclose material facts relevant for the assessment. We have considered the reasons recorded for reopening the assessment and we have no doubt in concluding that respondents have failed in discharging its onus to show that petitioner has failed to disclose truly and fully all material facts. From the reasons itself as well as the documents annexed to the petition, it is quiet clear that there has been full disclosure by petitioner. Jurisdictional Assessment Officer (JAO) has raised 4 heads, under which he feels that income chargeable to tax has escaped assessment. We are in agreement with the explanation offered by petitioner. Moreover, this point has been raised because of audit objections. The Assessing Officer cannot be stated to be satisfied that he had reasons to believe that this item has escaped assessment. The Income Tax Officer must determine for himself what is the effect and consequence of the law mentioned in the audit note and whether in consequence of the law which has come to his notice he can reasonably believe that income had escaped assessment. The basis of his belief must be the law of which he has now become aware. The opinion rendered by the audit party in regard to the law cannot, for the purpose of such belief, add to or colour the significance of such law. The true evaluation of the law in its bearing on the assessment must be made directly and solely by the Income Tax Officer. ( See Indian and Eastern Newspaper Society V/s. Commissioner of Income Tax, New Delhi 1 [ 1979 (8) TMI 1 - SUPREME COURT] Further there is nothing under this head to indicate that there was failure on the part of petitioner to truly and fully disclose any fact. JAO has relied on the documents already filed before the Assessing Officer. Petitioner is therefore, directed to pay the amount of ₹ 30,54,398/- as mentioned in the revenue audit objections. Respondents are directed to raise the demand on petitioner for this amount and petitioner shall pay the amount within time prescribed in the demand. We are making it clear that as noted earlier, the entire 148 notice is quashed and set aside and we have held that assessment could not have been reopened at all by respondents. We have only included this portion in this order in view of the without prejudice offer made by Mr. Thakkar and that cannot be construed as an admission of any liability by petitioner. We also clarify that in view of our observation as above, no penalty proceedings can be initiated by respondents under this head.

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• 2022 (1) TMI 1161
  Validity of assessment order - Assessee unable to provide the information/documents as sought for by the respondent No.1 - due to technical glitches and constraints, certain information was not getting uploaded onto the portal/website of the department - grievance of the petitioner that since the information/documents could not be uploaded/furnished by the petitioner to respondent No.1 by uploading the same on the portal/website of the department, respondent No.1 has proceeded to pass the impugned order on the premise that necessary documents for the purpose of establishing the claim of the petitioner had not been made available by the petitioner and consequently, his claim could not be considered - HELD THAT:- Though several contentions have been urged by both the sides in support of their respective claim, a perusal of the aforesaid representation dated 27.08.2021 at Annexure-E2 as well as the impugned assessment order dated 24.09.2021 will indicate that respondent No.1 has proceeded on the premise that the petitioner had not furnished/uploaded the relevant information/documents prior to passing of the impugned order. Under these circumstances, in view of the specific assertion on the part of the petitioner that he could not upload/furnish the relevant information/documents prior to passing the impugned order on account of the technical glitches/constraints in the website/portal coupled with the undertaking given by the petitioner before this Court that he would furnish/upload the relevant information/documents if one more opportunity is granted to him, in the interest of justice wedeem it just and appropriate to set aside the impugned order and remit the matter back to respondent No.1 for reconsideration afresh after providing an opportunity in favour of the petitioner to provide/furnish the relevant information/documents.

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• 2022 (1) TMI 1160
  Validity of assessment u/s 144C - Non considering objections to the draft assessment order - non adherence to mandatory provisions of Section 144C - Order passed without awaiting directions from the DRP, before whom the matter was pending - HELD THAT:- Undisputed material on record clearly indicates that in response to the draft Assessment Order issued to the petitioner, petitioner submitted objections before the DRP within the prescribed period and intimated the same to the Assessing Officer pursuant to clarification sought for by the Assessing Officer the explanation offered by the petitioner as regards his inability and omission to file objections with the Assessing Officer earlier in addition to the DRP merits acceptance, particularly in view of the Government Orders, circulars etc. as well as the orders of the Apex Courts extending the period of limitation coupled with the intimation provided by the petitioner to the Assessing Officer as sought for by him prior to passing the Assessment Order. At any rate, the petitioner had chosen to exercise the option of filing objections to the draft Assessment Order warranting the DRP to proceed further before the Assessing Officer takes further steps as provided under sub-sections 5 to 13 to Section 144C.. The impugned Assessment Order passed by respondent No.1- Assessing Officer without awaiting directions from the DRP, before whom the matter was pending pursuant to the petitioner filing his objections within the prescribed period is clearly arbitrary, illegal and without jurisdiction or authority of law and the same deserves to be quashed and necessary directions are to be issued to the DRP as well as the Assessing Officer in this regard.

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• 2022 (1) TMI 1159
  Levy penalty u/s 271(1)(C) - defective notice u/s 274 - assessee has argued that the penalty notice nowhere speaks about specific limb to levy the penalty because the particular charge was not tick off in the notice, therefore, in the said circumstances, the penalty is not liable to be sustainable in the eyes of law - HELD THAT:- It is not in dispute that the penalty u/s 271(c) of the Act is leviable on account of the concealment of particular of income and on account of furnishing the inaccurate particulars of income. Both have different connotations. In this regard, the Hon ble Supreme Court has appreciated the distinction between both the limb in the case Dilip N. Shroff [ 2007 (5) TMI 198 - SUPREME COURT] - As per the record, the assessment order speaks about levying the penalty on account of taken the action in view of provisions u/s 274 r.w.s. 271 (1)(c) of the Act but the notice nowhere specify any limb to levy the penalty. The notice is not justifiable in view of the law settled by the Bombay High Court in the case of CIT-11 Vs. Samson Perinchery.[ 2017 (1) TMI 1292 - BOMBAY HIGH COURT ] Notice issued by the Assessing Officer u/s 274 r.w.s. 271(1)(c) of the Act is untenable as it suffers from the vice of non-application of mind - Decided in favour of assessee.

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• 2022 (1) TMI 1158
  Deduction u/s.80P(2)(a)(i) - deduction u/s.80P(2)(a)(i) and 80P(2)(d) in respect of interest earned on deposits made with banks - AO refused deduction u/s.80P on such interest income, which came to be allowed in the first appeal. Aggrieved thereby, the Revenue has approached the Tribunal - HELD THAT:- Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit [ 2019 (4) TMI 682 - ITAT PUNE] decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune ITAT in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [ 2015 (8) TMI 1085 - ITAT PUNE] had allowed the deduction in similar circumstances. Reliance of the ld. DR in the case of Pr. CIT and Another Vs. Totagars Cooperative Sales Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] is not relevant. The issue in that case was the eligibility of deduction u/s.80P(2)(d) of the Act on interest earned by the assessee co-operative society on investments made in co-operative banks. In that case, the assessee was engaged in the activity of marketing agricultural produce by its members; accepting deposits from its members and providing credit facility to its members; running stores, rice mills, live stocks, van section, medical shops, lodging, plying and hiring of goods and carriage etc. It was in that background of the facts that the Hon ble High Court held that the assessee could not claim deduction u/s.80P(2)(d) of the Act. When we consider the effect of this decision, it turns out that the same is not germane to case under consideration in view of the position that the primary claim of the extant assessee is directly about the eligibility of deduction u/s.80P(2)(a)(i) of the Act. In view of the foregoing discussion, we uphold the conclusion drawn by the ld CIT(A) in the impugned order by allowing deduction u/s.80P(2)(a)(i) of the Act. - Decided against revenue.

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• 2022 (1) TMI 1157
  Proportionate deduction u/s.80IB(10) - AO disallowed the entire deduction on the ground that the assessee contravened the provisions of section 80IB(10)(f) by selling two units to one person - HELD THAT:- If there was violation of the relevant provision, only the deduction pertaining to such violation ought to have been disallowed. The ld. CIT(A), in our opinion, was fully justified in allowing the deduction on the amount claimed because the assessee had suo motu claimed deduction u/s.80IB(10) on reduced amount. The view taken by the ld. CIT(A) accords with the judgment of the Hon ble jurisdictional High Court in M/s. Kamat Constructions Pvt. Ltd. [ 2020 (12) TMI 90 - BOMBAY HIGH COURT ] in which identical facts were involved and the Hon ble High Court approved the granting of deduction on proportionate basis. We, therefore, accord our imprimatur to the view taken by the ld. CIT(A).

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• 2022 (1) TMI 1156
  Set-off of net operations loss against income from house property and other sources - set off of loss incurred from the activities coming under the purview of principle of mutuality against the income which is not coming under the purview of mutuality and brought to tax i.e., interest income received from member banks and rental income received from member tenants which was actually assessed under the regular provisions of the Act under the head Other Sources and House Property, respectively - HELD THAT:- As decided is own case [ 2021 (10) TMI 1290 - ITAT HYDERABAD] the legislative expression head of income must be taken as any of the five heads of income provided u/s. 14 of the Act i.e. salary, income from house property, profits and gains of business or profession, capital gains and income from other sources; respectively. We thus are of the opinion that once the assessee's impugned deficit arising from mutuality account is neither covered in any of the said heads as well nor u/s. 2(24)(vii) defining income in the very account, section 71 of the Act would not apply in isolation. Order of CIT(A) sustained wherein it was observed that: it is well settled legal position that operational loss computed by the assessee coming under the purview of principle of mutuality cannot enter the computation of total income as envisaged u/s.2(45) of the Act. Accordingly, the ground of appeal raised by the assessee on treating such loss arising out of transactions covered under principle of mutuality as income / loss within the meaning of Sec. 28(iii) of the Act is dismissed. As a corollary, such loss cannot be set off against other taxable sources I heads of income of the assessee such as interest income from bank falling under Income from Other Sources, Income from House Property etc. as envisaged u/s.71 of the Act. Similarly, the provisions of Sec.72 of the Act are also not applicable with regard to carry forward and set-off of such losses in the subsequent AYs. Accordingly, all the grounds of appeal raised by the assessee are hereby dismissed Decided against assessee.

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• 2022 (1) TMI 1155
  Validity of proceedings u/s 153A - Whether no incriminating material was found as a result of search conducted on the appellant? - As per CIT no incriminating material was found as a result of search conducted on the appellant - HELD THAT:- It is an admitted fact that no incriminating material was found from the search which could form the basis of the addition as made in the assessment order. AO had made routine disallowance of expenses based on information already disclosed along with the return of income. It is now well-settled law that in the case of unabated assessment, where the assessments have become final before the date of search, no addition can be made without any incriminating material or documents found during the course of search. This has been held so by the Hon ble jurisdictional High Court in the case of CIT Vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Pr. CIT Vs. Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] This fact has also not been challenged by the ld. CIT (Appeals) and that the addition cannot be based on the material found during the course of search. Accordingly, the additions made by the Assessing Officer are beyond the scope of assessment proceedings under Section 153A - Decided in favour of assessee.

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• 2022 (1) TMI 1154
  Reopening of assessment u/s 147 - Independent application of mind - introduction towards share capital as well as share premium - HELD THAT:- The various decisions relied on the Assessee in the instant case that the AO has recorded the satisfaction in a mechanical manner without application of independent mind and on borrowed satisfaction do not hold good. In all those cases the reopening had taken place on the basis of search and seizure operation or survey proceedings in the case of entry providers. There is a case where the survey had taken place in assessee s own premises and the Director as well as Accountant of the assessee company had failed to provide any evidence regarding introduction of share capital. Further the Addl. CIT while granting approval has also recorded his satisfaction. Under these circumstances, we do not find any infirmity in the order of the CIT(A) in upholding the validity of re-assessment proceedings. Accordingly, grounds raised by the assessee challenging the validity of re-assessment proceedings are dismissed. There is not a whisper regarding any opportunity to the assessee to substantiate the introduction of ₹ 1 crore towards share capital as well as share premium. The so-called statement of Shri Pramod Kumar Sharma, the entry operator who admitted to have provided entries to the assessee company has not been provided to the assessee nor the assessee was given an opportunity to cross-examine the entry provider Shri Pramod Kumar Sharma. Principles of natural justice demands that the assessee should be given an opportunity to rebut the statement of third party which is the basis for addition and an opportunity to cross-examine the same person, if demanded. We deem it proper to restore the issue to the file of A.O. with a direction to grant one more opportunity to the assessee to substantiate the introduction of ₹ 1 crore towards share capital/share premium and decide the issue as per fact and law. Needless to say the A.O. shall give due opportunity of being heard to the assessee. Appeal filed by the assessee partly allowed for statistical purposes.

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• 2022 (1) TMI 1153
  Revision u/s 263 by CIT - Unexplained cash deposit received from various persons - case was selected for limited scrutiny under cash with the reason large cash deposit in the bank account - only allegation made by the ld. Pr. CIT that the AO should not have accepted the assessee s reply - HELD THAT:- Nowhere Ld. PCIT had himself tried to carry out some enquiry at his level so as to prima facie indicate that the explanation as well as the evidences filed by the assessee are not reliable and cannot be accepted specifically when the cash was stated to be received from relatives and agriculturists. AO has accepted certain explanation and was satisfied with the evidence in the form of confirmations from the parties, then it was incumbent upon the ld. Pr. CIT to dislodge and explanation carrying out some verification and enquiry from any of the parties which could have been the basis for justifying that there was lack of enquiry by the AO. The assessment order passed after due verification and examination simply cannot be set aside on the ground that some more or further enquiry should have been done. One very glaring fact which is evident from the impugned order of the ld. Pr. CIT, (the whole of which has been reproduced above) is that, nowhere the ld. Pr. CIT has held that the assessment order passed by the Assessing Officer is erroneous or prejudicial to the interest of Revenue. The basic requisite condition for acquiring the jurisdiction under Section 263 and cancelling the assessment order is that, the ld. Pr. CIT has to give categorical finding as to how the assessment order is erroneous and not only that, he has to show that it is also prejudicial to the interest of Revenue. Both the conditions have to be satisfied and is to be specified by the Ld. PCIT, in case he intends to set-aside the assessment order. Once the Assessing Officer has taken a view based on the explanation as well as evidence filed by the assessee, it cannot be the case of lack of enquiry. At the best, it is inadequate enquiry and, therefore, in such a situation the assessment order cannot be cancelled or set aside. Accordingly, we hold that in absence of any charge by the ld. Pr. CIT that assessment order is erroneous and prejudicial to the interest of Revenue, assessment order cannot be set aside and accordingly, the order passed by the ld. Pr. CIT is set aside and the order of assessment is restored. Appeal of the assessee is allowed.

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• 2022 (1) TMI 1152
  Disallowance u/s 14A r.w.r. 8D - investments generate exempt-income in the form of dividend or share in profit from firm - whether the disallowance is attracted even when the underlying investment has not yielded any exempt-income during the relevant previous year? - CIT-A deleted the addition - HELD THAT:- As section 14A / Rule 8D is not applicable at all if there is no exempt-income earned during the previous year. Reverting back to the facts of the assessee, the parties have openly accepted that there was no exempt-income earned during the year from the underlying investments. Being so, in view of above analysis of legal provisions, we observe that the Ld. CIT(A) has committed no error in deleting the disallowance made by Ld. AO u/s 14A read with Rule 8D. Therefore we dismiss the Ground No. 1 of Revenue. Not considering the decision of Hon ble Supreme Court in the case of Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT ] - It may be noted that in Maxopp Investment (Supra), the Hon ble Supreme Court has decided only one specific issue, of course which goes in favour of revenue and against the assessee. The Hon ble Court had turned down the argument that section 14A and Rule 8D are not applicable where the investment in shares is made as a part of strategic objective - Hence the Revenue is wrong in Ground No. 2 to urge that the Ld. CIT(A) has not considered the decision in Maxopp Investment (Supra). Therefore, this Ground No. 2 of the Revenue is dismissed. Disallowing additional claim of deduction u/s 32AC - HELD THAT:- We observe that the deduction u/s 32AC is a statutory deduction. Further the purpose of deduction is to incentivize the establishment of new manufacturing industry. Hence it would be better to construe the provision in a holistic manner. In view of above we accept this claim of assessee. However, since the details of qualifying assets are required to be verified, we send the matter back to the file of Ld. AO. AO shall give an opportunity to the assessee, verify the details of qualifying assets and allow deduction. Therefore, this ground of assessee is allowed for statistical purposes. New legal claim to be entertained by judicial authorities - deduction of the Cess on income-taxes paid and DDT paid - HELD THAT:- A new legal claim can be entertained by judicial authorities and the decision of Goetze (India) Ltd. 2006 (3) TMI 75 - SUPREME COURT does not come in the way. It is for this reason that we admit this claim of assessee. However, since the details of claim is required to be verified, we send the matter back to the file of Ld. AO. AO shall verify the claim having regard to the judicial developments to be placed by assessee before him and take an appropriate conclusion. Therefore, this ground of assessee is allowed for statistical purposes.

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• 2022 (1) TMI 1151
  Revision u/s 263 by CIT - chargeability of capital gains as per section 45(2) - applicability of sub-section(2) of Section 45 of the Act to the case of the assessee, wherein, the assessee has sold a part of land, which was converted from capital asset to stock-in-trade during the preceding financial period - HELD THAT:- For the purpose of calculation of capital gains u/s 48 the fair market value of the assessee on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset. This provision does not provide a situation where the assessee has sold a part of converted capital asset into stock in trade but at the same time, we also observe that it is also not the intention of the legislature that if the assessee is transferring a part of converted capital assets during preceding financial period, then the revenue authorities has to wait till the transfer of entire converted stock in trade for the purpose of taxing capital gains accrued to the assessee on conversion of capital asset into stock in trade. Respectfully following the principles that the right income should be taxed in the right hands in the relevant financial period, we are of the considered view that in a case also where the assessee transfers a part of converted capital asset then also profits or capital gain would be chargeable to tax in the hands of the assessee partially pertaining to part of land or property sold during relevant financial period and same shall be chargeable to tax in the previous year in which if such part of stock in trade is sold or otherwise transferred by taking a fair market value on the date of such transfer or treatment shall be deemed to be full value of the consideration received or accrued to the assessee, as a result of transfer of capital asset. In the present case, undisputedly rather admittedly, the assessee has transferred part of converted capital asset into stock in trade during the relevant financial period and the AO has failed to make any enquiry in this regard and to tax the same in the hands of the assessee partially pertaining to the part of land sold during the year. No enquiry has been conducted by the AO during the assessment p;roceedings in this regard, hence, it is clear case of no enquiry. CIT assumed valid jurisdiction to review the assessment order u/s.263 of the Act and the Pr. CIT was right and brandy in treating the assessment as erroneous so far as prejudicial to the interest of the revenue. We are unable to see any ambiguity, perversity in the order of ld Pr. CIT, which is hereby confirmed. - Decided against assessee.

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• 2022 (1) TMI 1150
  Addition u/s 68 - unexplained share application money - addition on account of sale proceeds of shares received by invoking the provisions of section 68 of the IT Act on the ground that the existence of the parties at the given address is not verifiable - CIT-A deleted the addition - HELD THAT:- We do not find any infirmity in the order of the CIT(A) on this issue. We find, the ld. CIT(A), while deleting the addition, has relied on his decision for AY 2013-14 in the case of Maurya Udyog Ltd. [ 2019 (1) TMI 204 - ITAT DELHI ] which is the sister concern of the assessee wherein similar additions were also made by the AO on account of sale of shares of the same parties - we uphold the order of the CIT(A) and the ground raised by the Revenue on this issue is dismissed. Addition on account of unexplained cash - CIT(A) deleted the addition - HELD THAT:- We find, the addition made by the AO in the case of Maurya Udyog Ltd. was deleted by the CIT(A) as facts of the case in hand show that the assessee was never found to be in possession of any real money. The addition having been made only on the strength of some notings found in some file extracted from the computer of Shri Rohtash, clearly establish that the provisions of section 69A of the Act do not apply - there is no mention of the assessee's name in the impugned document. The Assessing Officer has simply assumed that the reference to the impugned amount is in relation to the assessee. In our understanding, no addition can be made on the basis of presumptions and surmises. Assuming, yet not accepting that the amounts were received by the assessee, the same were returned back on the very same date as per Exhibit 85 of the paper book. Even on this count, addition is uncalled for - Decided in favour of assessee. Unexplained share application money received from non-genuine parties - CIT-A deleted the addition - HELD THAT:- The assessee has established the identity of the share applicants by the KYC particulars forwarded by the assessee's bankers to RBI. Further, the bank has informed the RBI that it has received the proceeds from NRI in the form of inward remittances certificate for each amount received. RBI has noted that the assessee has followed due procedure which is required to be followed for issue of shares to foreign share applicants. Moreover, the Department's query from share applicants during extended period of time barring recorded no adverse remarks. Under these circumstances, we do not find any infirmity in the order of the CIT(A) deleting the addition on this issue. Accordingly, the same is upheld and the ground raised by the Revenue on this issue is dismissed.

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• 2022 (1) TMI 1149
  Late deposit of Employees Contribution to ESI and EPF - AR submitted that the assessee has deposited employees contribution towards ESI and PF though with the delay of few days from the due date mentioned in the respective Statutes, however, the same was deposited well before the due date of filing of return of income u/s 139(1) - HELD THAT:- In the instant case, it is not in dispute that employees contribution to ESI and PF had been deposited well before the due date of filing of return of income u/s 139(1) of the Act. We find that the issue is squarely covered by the decisions of the Hon'ble Punjab Haryana High Court as well as other High Courts such as Hon'ble Himachal Pradesh High Court and Hon'ble Rajasthan High Court. We further note that though the Id. CIT(A) has not disputed the various decisions of Hon'ble High Courts including the decision of the jurisdictional Punjab Haryana High Court but has referred to the amendment brought in by the Finance Act, 2021. It is a consistent position across various Benches of the Tribunal including Chandigarh Benches that the amendment which has been brought in by the Finance Act, 2021 shall apply w.e.f. assessment year 2021-22 and subsequent assessment years and the impugned assessment year being assessment year 2019-20, the said amendment cannot be applied in the instant case. Therefore, considering the entirety of facts addition made by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the deposit of employees contribution towards ESI and PF paid before the due date of filing of the return of income u/s 139(1) of the Act, is hereby directed to be deleted. - Decided in favour of assessee. Addition on account of provision for gratuity - as submitted that the assessee while filing its return of income has suo-moto disallowed the provision for gratuity and where such adjustment has been made by the CPC while processing the return of income, the same amount to double taxation which cannot stand in the eyes of law therefore, the said addition needs to be deleted - HELD THAT:- It is manifest from the return of income along with the computation of income so filed by the assessee that the provision for gratuity which has been debited in the profit/loss account has been disallowed by the assessee itself and no claim for the provision for gratuity has been made by the assessee while filing its return of income. Therefore, the action of the CPC in disallowing the same will amount to a situation where there is disallowance of provision which has not been claimed at the first place by the assessee and the same will clearly result in double taxation and which cannot be sustained in eyes of law. In the result, the addition so made towards the provision for gratuity is hereby directed to be deleted and the ground of appeal is thus allowed.

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• 2022 (1) TMI 1148
  Disallowance of deduction u/s 54B - assessee did not file return under Section 139(1) of the Act and he has not deposited the sale proceeds in the capital account - HELD THAT:- The major emphasis of the learned First Appellate Authority is that the assessee should have deposited capital gain in a bank account meant for this purpose; only then he can claim deduction u/s 54B of the Act. In these submissions it would reveal that the assessee has specifically shown the receipt as well as investment for purchase of agricultural land. Both these things have been made almost simultaneously. Section 54B of the Act authorizes an assessee to claim deduction under this section on an investment made for purchase of agricultural land two years prior to sale of an agricultural land. Similarly, it also authorizes to make investment two years after the sale of agricultural land. The investments of the assessee duly fall in this period. Hence, even if he has not deposited in the capital account, but he has already made investment; therefore, he is entitled for the deduction. We, respectfully following the decision in the case of CIT Vs Ms Jagriti Aggarwal [ 2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT ] allow this appeal of the assessee and delete the disallowance, because the objection of the learned CIT(A) is without any basis. The correlation between the investment and receipt of sale proceeds within the time stipulated in Section 54B of the Act has duly been demonstrated by the assessee. In view of the above, the appeal of the assessee is allowed and the Assessing Officer is directed to grant deduction under Section 54B - Decided in favour of assessee.

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• 2022 (1) TMI 1147
  TP Adjustment - selection of MAM - granting an internal margin of 23% worked out by the appellant under the Transactional Net Margin Method - CIT(Appeals) directing the AO to apply the internal Transactional Net Margin Method (TNMM) as the most appropriate method (MAM) for benchmarking the international transactions entered into by the assessee with its Associated Enterprise (AE) - HELD THAT:- As identical issue of applying internal TNMM had come up for consideration before the ITAT Bangalore Bench in assessee s own case for the AY 2010-11 [ 2015 (11) TMI 1545 - ITAT BANGALORE] we uphold the orders of the CIT(Appeals) applying internal TNMM method for determination of the ALP. We may also observe that the manner of determination of internal margin under the internal TNMM has not been questioned. In these circumstances, we dismiss the relevant grounds of appeal of the revenue.

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• 2022 (1) TMI 1146
  Contribution for belated payment of employees share of PF ESIC i.e. after due date specified in respective Act and treated the income of the assessee as per section 2(24)(X) - HELD THAT:- Where there is a delay in deposit of employees contribution to PF/ESIC as per the due date prescribed under the provisions of PF/ESIC but the contribution is deposited before the due date of filing of return of income. No disallowance is called for u/s 36(1)(va) of the Act as held by this Tribunal in the case of M/s Industrial Filters and Fabrics Pvt. Ltd. [ 2018 (9) TMI 1008 - ITAT INDORE] We, accordingly set aside the finding of Ld. CIT(A) and delete the disallowance of employees contribution to PF/ESIC and employees contribution to PF and ESIC - Decided in favour of assessee.

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• 2022 (1) TMI 1145
  Chargeability of Royalty from AEs - International transaction as contemplated u/s 92B - Whether there is no international transaction as contemplated u/s 92CA in respect of the alleged royalty chargeable from three Associated Enterprises (AEs) and consequently the order of the CIT (A) upholding the changeability of royalty from three AEs, as alleged by TPO is arbitrary, unjust and bad in law - assessee allowed its associated enterprises to provide assistance in recruitment and imparting technical know-how, etc. and permitted use of its trademark Dabur for sale of products? - HELD THAT:- As regards to agreement with Dabur Nepal Pvt. Ltd. Nepal, it is pertinent to note that the issue stands covered in favour of the assessee by the order of the Tribunal in the asssessee s own case in [ 2017 (4) TMI 1521 - ITAT DELHI] for the A.Y. 2006-07, wherein the Tribunal held that no royalty was payable assessee by M/s Dabur Nepal Pvt. Ltd and deleted the addition made by TPO/CIT(A). The facts in the present assessment is also similar and no distinguishing facts were pointed out by the Ld. DR, therefore, the finding of the CIT(A) that royalty @ 2% is to be charged from Dabur Nepal Pvt. Ltd. is not correct and has to be deleted. It is pertinent to note that in this year also the AE was not using the technical know-how or R D support from the assessee, therefore it will be appropriate to charge the royalty @ 0.75% by considering this fact that in the year under consideration the assessee had incurred huge expenses on marketing, advertisement brand building etc. and that in the preceding year the royalty was although charged @ 1% on the products manufactured without R D support and technical know-how from the assessee but the aforesaid expenses were comparability less. Thus, royalty to be charged at 0.75% in respect of agreement with Dabur International UAE. As regards to Asian Consumer Cure Pvt. Ltd. Bangladesh, again it is to be noted that the issue is covered partly in favour of the assessee by the order of the Tribunal in assessee's own case for A.Ys. 2007-08 and 2008-09 in [ 2021 (2) TMI 1250 - ITAT DELHI] Tribunal held that royally @ 0.75% is to be charged from Asian Consumer Care Pvt. Ltd. The facts in the present assessment is also similar and no distinguishing facts were pointed out by the Ld. DR or the Ld. AR, therefore, the finding of the CIT(A) that royalty @ 2% is to be charged from Asian Consumer Care Pvt. Ltd., appears to be not correct. Therefore, following the earlier years order by the Tribunal, we are restricting the said royalty to 0.75% in case of Asian Consumer Care Pvt. Ltd., Bangladesh. CIT(A) sustaining the alleged service fee on account of the corporate guarantee in the case of Dabur Egypt Ltd. on the loans availed from HSBC and NSGB Bank @ 0.50% - The action of the CIT(A) of charging service fee at an ad-hoc rate of 0.513% was not correct and the same has to be restricted to 0.30% as the facts are identical to that of A.Y. 2008-09 and no distinguishing facts were pointed out by the Ld. DR at the time of the hearing. Thus, we direct the Assessing Officer to restrict the service fee @ 0.30%. Deduction u/s 80IB and 80IC without further allocation of the Head Office expenses to various units - In the present assessment year i.e. 2009-10, the assessee had 9 industrial units undertaking manufacturing of products and all these units are eligible for deduction u/s 80IB/80IC, the details are reproduced in page 12 of the assessment order itself. During the year also the assessee claimed the deduction u/s 80IB/80IC as per the details given. These units are eligible for the deduction u/s 80IB/80IC which is identical to that of earlier years i.e. 2007-08 and 2009-10. Hence, the CIT(A) has rightly allowed this deduction. It is pertinent to note that similar allocation of expenses and depreciation made by the Assessing Officer in A.Y. 2008-09 was also deleted by the Tribunal. Disallowance of expenses u/s 14A r.w.r. 8D - HELD THAT:- It is pertinent to note that the identical issue of disallowance under Section 14A of the Act in absence of any exempt income has been decided by the Tribunal in the assessee's own case for the A.Y. 2008- 09 [ 2021 (2) TMI 1250 - ITAT DELHI] - This issue is also covered in favour of the assessee by various decisions of the Hon ble Delhi High Court wherein it is held that in the absence of any exempt income, no disallowance can be made under Section 14A. Thus, the CIT(A) has rightly deleted the addition of ₹ 5.22 crore under section 14A of the Act. Ground No. 4 of the Revenue s appeal is dismissed. Allowability of ESOP expense under Section 37 and Exemption of excise duty embedded in sales of Glucose Unit, Baddi (HP) - HELD THAT:- As in assessee's own case [ 2021 (2) TMI 1250 - ITAT DELHI] again admitted said additional ground and restored the issue to the file of the Assessing Officer with a direction to adjudicate the issue in accordance with the law.

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• 2022 (1) TMI 1144
  Revision u/s 263 - addition u/s 14A - CIT disregarded the contention of the assessee by taking view that Rule 8D is mandatory in nature from A.Y. 2008-09 and the AO is bound to compute disallowance as per formulae provided under Rule 8D - HELD THAT:- The assessee has earned exempt income in the form of dividend income of ₹ 202,377/-. Further the AO while passing the original assessment order has already disallowed Rs. ₹ 2,35,039/ under section 14A. Now, it is settled position under the law that disallowance under section 14A must not exceed the exempt income. Thus, the order passed by the AO is not erroneous. Therefore, the twin condition as enumerated in section 263 of the Act is not fulfilled in the present case, therefore, the order passed by the ld. Pr. CIT is not sustainable in law, which we set-aside. Thus, the assessee succeeded on the primary submissions of the ld. AR of the assessee. - Decided in favour of assessee.

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• 2022 (1) TMI 1143
  Validity of appeal before CIT-A u/s 246A - Assessability of capital gains in the hands of Individual or HUF - Assessees have contended that the capital gains, if any, is assessable in the hands of the HUF, they filed appeal memo in form No.35 mentioning the Permanent Account Number (PAN) of HUF - CIT(A) noticed that the assessing officer has passed the assessment order in the status of individual, but the assessees have filed the appeals before him mentioning the PAN of HUF, in whose hands there was no assessment order - HELD THAT:- It is an undisputed fact that the assessments have been passed in the individual status of the assessees. However, while filing appeal before Ld. CIT(A), the PAN belonging to HUF status of the assessees has been mentioned. From the grounds of appeal urged before Ld. CIT(A), which is extracted by Ld. CIT(A) in his order, it can be noticed that the assessees have taken a plea that the capital gain, if any, arises only in the hands of HUF. Accordingly, it appears that the PAN of HUF has been mentioned in Form No.35 instead of mentioning the PAN of individual. In our considered view, in the interest of natural justice, the Ld CIT(A) should not have been too technical and should have allowed the assessees to filed revised Form No.35. Accordingly, we are of the view that these assessees should be allowed to file Form No.35 mentioning the PAN of individual. Further, we notice that the Ld. CIT(A) has not adjudicated the grounds urged on merits. Under these set of facts, we are of the view that all the issues urged before us are required to be restored to the file of Ld. CIT(A) for adjudicating them on merits. Accordingly, we set aside the orders passed by Ld. CIT(A) in the hands of the assessees herein and restore all the issues to his file for adjudicating them on merits. All the assessees are also directed to file revised Form No.35 mentioning PAN of individual status, so that the defect pointed out by the Ld. CIT(A) would get rectified. Assessee appeal allowed for statistical purposes.

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• 2022 (1) TMI 1116
  Revision u/s 263 by CIT - AO had not verified and inquired incriminating documents / evidences found and impounded /seized during the course of search and seizure action u/s 132 which was already available with him and Annual financial statement of the assessee during the course of assessment proceeding u/s 143(3) r.w.s 153A and not made proper inquiry or verification finalized the order of assessment u/s143(3) rws153A - HELD THAT:- As the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench, in assessees own group cases and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench. We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the judgment of the Coordinate Bench in assessees own group cases [ 2021 (9) TMI 1331 - ITAT SURAT] the order passed by ld PCIT under section 263 of the Act should be quashed. We find enough potency in the rebuttal provided by the learned counsels, which was to the effect that the lack of inquiry by the Assessing Officer was not the basis formulated by the Commissioner to invoke the jurisdiction u/s 263 of the Act. It is pertinent to mention here that there was as such no allegation of no enquiry or lack of enquiry or verification, because the Ld. Pr. C.I.T. himself found all the details/evidences in the assessment record, i.e. well within the A.O. s possession and what he alleged was about the plausible view taken by the A.O. as against his perception and understanding on the same set of facts and documents. Therefore, the notices issued for examination of the issues during the assessment proceedings and submission and verification of the same has not been shown to be fallacious. In this connection it is pertinent to mention here that the way in which assessment should be finalized falls in the exclusive domain of the Assessing Officer. Section 142(1) speaks of inquiry before assessment and gives immense power to the A.O. for conducting enquiry. Therefore, the A.O. u/s 142(1)(ii) (iii) can ask the assessee almost any information which he think necessary for passing assessment and even if Ld. Commissioner has such results of enquiries, the resultant order cannot be subjected to revision proceedings. Therefore, the very initiation of proceeding u/s. 263 of the Act by the Ld. Pr. C.I.T. is in violation of the settled position in law. Therefore, in our view, the plea of the learned CIT-DR does not help the case of the Revenue in as much as what is required to be examined, at this stage is the validity of assumption of jurisdiction by the Commissioner u/s 263 of the Act on the basis of the error and prejudice brought out by him. The efficacy of the action of the Commissioner has to be tested only with respect to the basis adopted by him and cannot be further supplemented by the Revenue on any other new point. Thus, we find no merit in the submissions put forth by the learned CIT-DR, which is hereby rejected.

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• 2022 (1) TMI 1115
  Eligibility to claim section 80IA deduction pertaining to twenty nine irrigation and road projects - HELD THAT:- We find no merit in the assessee s foregoing arguments supporting the CIT(A) s action holding it partly eligible for the impugned section 80IA deduction relief. There is hardly any dispute about the assessee having undertaken irrigation and road projects from the concerned government departments in the nature of works contract only wherein it not only received mobilization advances in the initial stage but also there was no risk element involved as it had to carry out the construction of the irrigation project or and widening the road (supra) concerned as per the specific terms and conditions and prescribed specifications only. We notice in this factual backdrop that this tribunal s recent co-ordinate bench s decision in M/s. NEC NCC MAYTAS [ 2021 (5) TMI 1008 - ITAT HYDERABAD] has considered the Explanation regarding works contract u/s 80IA as held assessee has first of all been paid mobilization advances by the state government s department on periodic basis, and, then only it executed the corresponding lift irrigation project works contract followed by its yet another claim of section 80IA of the Act deduction - We accordingly conclude both the learned lower authorities have rightly disallowed assessee's 80IA deduction claim involving varying sum(s) in their respective orders. The same stands confirmed. Section 80IA s Explanation(s) is squarely attracted herein that even if the assessee itself is treated as the developer under sub-section (4) of the very provision, the impugned claim shall be hit by the foregoing Explanation as its business is in the nature of a works contract only. Reliance placed on all earlier orders (supra); not considering the statutory Explanation(s) , are not forced to be binding precedent in light of CIT Vs. B.R. Constructions [ 1992 (6) TMI 13 - ANDHRA PRADESH HIGH COURT ] - Decided in favour of revenue.

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• Customs

• 2022 (1) TMI 1142
  Jurisdiction - power of DRI to issue SCN - Proper Officer under section 17, 28 and 28AAA and second proviso of section 124 of the Customs Act, 1962 - undervaluation of the goods - evasion of payment of appropriate duties of customs - HELD THAT:- The Hon'ble jurisdictional High Court in the case of Quantum Coal Energy P. Ltd. [ 2021 (3) TMI 1034 - MADRAS HIGH COURT] has applied the decision of the Hon'ble Supreme Court to hold that the Show Cause Notice issued by DRI is invalid and the proceedings initiated cannot sustain. The Tribunal in the case of Nitin Jatania vs. Commissioner of Customs (Adjudication), Mumbai [ 2021 (11) TMI 342 - CESTAT MUMBAI ] had occasion to analyse the very same issue as to whether DRI has jurisdiction to issue Show Cause Notice. Applying the decision of the Hon'ble Supreme Court in Canon India Pvt. Ltd. [ 2021 (3) TMI 384 - SUPREME COURT ], the Tribunal held that the Show Cause Notice issued by DRI is invalid. With regard to the appeal filed by M/s. Mining Machinery Service, the learned counsel for the appellant has submitted that the proprietor of the firm is no more and produced the death certificate dated 17 th July 2020. Therefore, the appeal filed stands abated in terms of Rule 22 of the CESTAT (Procedure) Rules, 1982. The Show Cause Notice having been issued by DRI are ab initio void - Appeal allowed - decided in favor of appellant.

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• 2022 (1) TMI 1141
  Jurisdiction - power of Principal Additional Director General, DRI to issue SCN - proper officer under section 28 of the Customs Act to issue the notice or not - HELD THAT:- This precise issue was examined by the Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [2021 (3) TMI 384 - SUPREME COURT]. The Supreme Court observed that the nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import is a power that has been conferred to review the earlier decision for assessment. This power which has been conferred under section 28 of the Customs Act on the proper officer, must necessarily mean the proper officer who, in the first instance, assessed and cleared the goods. Thus, the Additional Director General, DRI did not have the jurisdiction to issue the show cause notice. The Punjab and Haryana High Court in M/S STEELMAN INDUSTRIES VERSUS UNION OF INDIA AND OTHERS [2021 (8) TMI 1236 - PUNJAB AND HARYANA HIGH COURT] also, in view of the decision of the Supreme Court in Canon India, allowed the Writ Petition and set aside the entire proceedings arising from the show cause notice as the Additional Director General, DRI was not the proper officer. The show cause notice dated 30.01.2009 issued by the Principal Additional Director General, DRI under Section 28 of the Customs Act is, therefore, without jurisdiction as the said officer was not the proper officer and, therefore all proceedings undertaken by the Department on this show cause notice is, therefore, without jurisdiction. The order dated 29.05.2020 passed by the Principal Commissioner, therefore, cannot be sustained - In this view of the matter, it would not be necessary to examine the issues raised on the merits of the appeal. Appeal allowed - decided in favor of assessee.

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• 2022 (1) TMI 1140
  Valuation of export goods - confectionary spare parts - rejection of declared value - redetermination of value for the purpose of claiming export benefit - old and used goods or not - Hawala transactions or not - HELD THAT:- Although in the show cause notice, the description of exported machine is old and used and there is no allegation in the show cause in respect of description of goods. Therefore, the argument of ld.AR is not sustainable. Only issue is alleged in the show cause notice with regard to the value of export consignment. In the impugned order, there are no whisper about value when the appellant has received the total value of export consignment and there is no allegation that they have received payment through Hawala from the buyer and from the overseas, in that circumstance, how the value of export consignment be rejected. Shri Anil Kumar Soni, chartered engineer estimated the value of goods of ₹ 55,00,000/- and the value was not accepted by the competent authority and the competent authority again referred the matter to another chartered engineer, who gave the report that the value of goods is ₹ 43,00,000/- and the competent authority is not satisfied with the report and referred the matter to another chartered engineer, who opined that estimated value of export goods is ₹ 38 lakhs. There is no huge difference amongst the three values supplied by the 3 different chartered engineers. On this ground alone, the value arrived by the chartered engineer is to be rejected - No other evidence has been brought on record by the Revenue with regard to the value of export consignment. In that circumstance, the value of export consignment cannot be rejected. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2022 (1) TMI 1139
  Seeking grant of Bail - Conspiracy - allegation of a fraudulent Merchanting Trade (MT) business - submission of false/deceptive statements/financials to different Banks to avail credit facility in the form of opening of Letter of Credit - loss to the Public Sector Banks - abuse of applicant's position as promoter/directors of FIL to cause wrongful loss to public sector Banks - HELD THAT:- Applicant had knowingly falsified the books of accounts and the financial statements of FIL deliberately concealing material facts thereby including public sector Banks to fraudulently credit facilities to FIL which ultimately remained outstanding at ₹ 4041 Crores as account of FIL became NPA. Applicant is also stated to be indulged in speculative currency trading unrelated to MT being undertaken by RGC thereby gambling with Banks money which resulted in huge loss. Applicant was instrumental in holding the currency losses in the books of accounts under the garb of debit notes. These debit notes were raised against foreign parties and made part of trade receivable. Later on, these debit notes were adjusted against the payment received from the LC rotated funds. Falsified financial statements of FIL signed by the applicant was filed with ROC and was submitted to public sector Banks depicted false MT trade receivables. The applicant provided false and bogus documents to the Banks. Abuse of position as promoter/directors of FIL to cause wrongful loss of ₹ 4041 Crores to public sector Banks - HELD THAT:- Applicant utilized the corporate identity of FIL to perpetrate fraud of rotating the funds obtained through Letter of Credits discounting for mopping the interest arbitrage available between LC issuance and discounting charges and that between the interest on fixed deposits. This whole conspiracy was played under the garb of doing MT - The sum and substance of the outcome of the investigation conducted in the matter and the facts mentioned in the complaint for prosecution are that concerned Companies were engaged in fraudulent Merchanting Trade and caused wrongful loss to the Public Sector Bank to the tune of ₹ 7820 Crores approximately applying different modus operandi including siphoning of Bank funds through Merchanting Trade; falsification of financial statement of the Companies involved in the matter by not showing true and fair views. Considering the role of the applicant as alleged against him, nature and gravity of the offence and also the evidence available on record in support thereof, prima facie, it appears that huge amount received by the applicant through Letter of Credit has become NPA due to nonpayment of advance taken by the Company on account of falsification in the books of account furnished by the company before the Bank concerned, therefore, the allegations levelled against the applicant and the company concerned cannot be overlooked at this stage - this court is further of the opinion that the applicant is not entitled to bail even under Section 439 Cr.P.C. even if the bail application is not tested on the touchstone of twin conditions as enumerated in Section 212(6) (ii) of the Company Act, 2013 for the reason that offence committed by the applicant is an economic offence which affects the economy of the nation. Application rejected.

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• 2022 (1) TMI 1138
  Sanction of Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various notices issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.

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• Insolvency & Bankruptcy

• 2022 (1) TMI 1137
  Approval of fair value of Equity share - applicability of Jantri rate - allegation of unrealistic valuation report - buy back of shares - amicable settlement between the parties - Section 421 of the Companies Act, 2013 - HELD THAT:- It is an admitted fact that the MoU was never implemented as seen in para 53 of the final Order dated 13.04.2017. The Impugned Order dated 16.10.2020 has only given an opportunity to the Appellant to sell, have option, quote a face value. As the Order dated 27.09.2019 has attained finality and the Original Order which was appealed to by the Appellant, was dismissed by this Tribunal, we are of the considered view that the contention of the Learned Counsel for the Appellant that the NCLT was traversing behind the decree, is untenable. It is clear from the submissions that the Appellant was ready to accept the Order given by the first Respondent and a direction was issued to both the parties to file a Joint Affidavit indicating the terms of which they seek to settle the matter jointly. As no settlement was arrived at, despite the fact that the first Respondent wanted to put an end to the dispute, being a Senior Citizen filed an Affidavit that he was ready to sell the share at an average value of the shares as per the Order dated 27.09.2019 and ready to purchase the shares at 5% higher value than the average value of shares as per the Order dated 27.09.2019. Despite an opportunity given to the Appellant to submit their offer in a sealed cover before NCLT, the Appellants refused to do so. Dissatisfied with that direction, they had approached this Tribunal and further delayed the proceedings on the ground that settlement talks were going on . Taking into consideration the factual matrix of the matter and that 3 years has lapsed, since the Impugned Order was passed,5 years has passed since the main petition dated 13.04.2017 has attained finality, to avoid any further delay, to put an end to this family dispute, and further having regard to the fact that the Appellant has challenged a reasonable, fair and a judicious Order passed by NCLT; in the interest of justice, we do not find it a fit case to remand the matter back to NCLT for any further evaluation - Mean Value as specified in the Order dated 27.09.2019 means average value and the Respondent is ready to sell the shares at this average value or purchase the shares @5% higher than the average value. The Appellant is bound by the NCLT Order dated 27.09.2019 which has since attained finality. The Appellant is at liberty to choose either of the options of purchase/sell given by the first Respondent and shall file an Affidavit of compliance before the NCLT within 4 weeks from today. Appeal disposed off.

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• 2022 (1) TMI 1136
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - accrual of right to apply - amount of interest which was payable on 30th June, 2015 was not paid by the Corporate Debtor - time limitation for filing an Application under Section 7 of the Code - Insufficiently stamped documents - admissible evidence or not - HELD THAT:- Section 7 (1) of the Code provides that a Financial Creditor may file an Application for initiating Corporate Insolvency Resolution Process against the Corporate Debtor before the Adjudicating Authority when a default has occurred. The definition of Debt under Section 3(12) of the Code the expression used is Default means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not repaid - In the present case, non-payment of amount of interest on 30th June, 2015 was non-payment of part of debt since interest was also part of debt. The submissions of Learned Sr. Counsel for the Appellant is agreed upon that there was default when interest was not paid on 30th June, 2015. When a Financial Creditor has not filed the Application on first default i.e. payment of interest whether he is precluded to file Application for subsequent defaults i.e. when default is committed for an instalment or for whole debt when it becomes due? - HELD THAT:- The Financial Creditor is at liberty to file Section 7 Application but is neither mandatory nor necessary that on first default Financial Creditor should rush to the Insolvency Court. Financial Creditor may await and give more time to Corporate Debtor to find out as to whether actually the Corporate Debtor has become insolvent and unable to repay the debt and even Financial Creditor ignores non-payment of interest when the Corporate Debtor first defaulted it shall not lose its right to file Application under Section 7 of the Code when default of instalment or whole amount became due. The only statutory requirement is that default as claimed in the Application under Section 7 should be within three years from the date when application is filed under Section 7 of the Code because any default of amount committed before three years of filing of the Application shall become time barred debt and cannot be said to be payable and due within the meaning of Section 3(11) and Section 3(12) of the Code. Hon ble Supreme Court of India in B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES [ 2018 (10) TMI 777 - SUPREME COURT] had occasion to consider the law of limitation in reference to Insolvency and Bankruptcy Code and Section 3(11) and 3(12). Hon ble Supreme Court held that Financial Creditor or Operational Creditor can initiate an application with relation to debt which has not become time barred. Thus, non-filing of the Application under Section 7 of the Code by the Appellant on default of interest which occurred on 30th June, 2015 shall not foreclose the right of the Financial Creditor to file an Application under Section 7 of the Code when default on first instalment occurred on 30th November, 2015 and when entire loan became due by notice dated 05.01.2017 - Appellant has not claimed in Section 7 Application the amount of defaulted interest on 30th June, 2015. Thus the Application filed by the Financial Creditor under Section 7 claiming amount of default of the first instalment and default of the entire loan which occurred on 30th November, 2015 and 01st February, 2017 was well within time which has been filed on 28th November, 2018. The submission of Mr. Ramji Srinivasan, Sr. Advocate that no date of default has been given in Part-IV of Section 7 Application is not correct when Item 2 of Part-IV is read, it is clear that computation of amount from the date of default as on 31st October, 2018 in tabular form was from 30th November, 2015 thus 30th November, 2015 was clearly indicated as date of default under Section 7 Application. Insufficiently stamped documents - admissible evidence or not - HELD THAT:- The Supreme Court in N.N. GLOBAL MERCANTILE PVT. LTD. VERSUS INDO UNIQUE FLAME LTD. AND ORS. [ 2021 (1) TMI 1121 - SUPREME COURT] held under the Maharashtra Stamp Act, 1958 the work order is chargeable to extend stamp duty hence till the stamp duty is paid work order remain enforceable. The present is not a case where proof of financial debt by financial Creditor was only the Facility Agreement dated 22nd May, 2013 and 19th August, 2013, other materials including Registered Mortgage Deed clearly proved the financial debt. Furthermore, present is a case where Corporate Debtor has not denied receiving of Financial Facility as extended by Standard Chartered Bank and there is no denial of disbursement of 5 million dollars in three tranches and there was sufficient material before the Adjudicating Authority to come to the conclusion that default has been committed in payment of debt. The decision of the Adjudicating Authority that Corporate Debtor has committed default is not vitiated which was fully supported by the materials on record even if Facility Agreement dated 22 nd May, 2013 and 19th August, 2013 are ignored. The Corporate Debtor has taken a Financial Benefits from Standard Chartered Bank and obtained disbursal in three tranches of 5 Million Dollar each, which disbursements have not been denied in a pleading before the Adjudicating Authority - The submission of the Appellant that facility agreement being not stamped Section 9 Proceeding ought not to have proceeded has to be rejected - Appeal dismissed.

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• 2022 (1) TMI 1135
  Maintainability of application - initiation of CIRP - Dishonor of Cheques - cheques were given prior to the Sale Deed - Corporate Debtor failed to make repayment of its dues - Operational Creditors or not - pre-existing dispute or not - whether the claim made by the Respondent is an Operational Debt and the Respondent is an Operational Creditor? - HELD THAT:- The word claim as defined under sub section 6 of section 3 means (a) a right to payment, whether or not, such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured (b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured. Further, sub section 11 of Section 3 defined debt means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt. The word Operational Creditor defined under sub Section 20 of Section 5 of I B Code, 2016, Operational Creditor means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. In the instant case, the covenants as mentioned in the Memorandum of Understanding dated 08.06.2015 clearly mentions and admits that the payment of ₹ 6 Crores is a liability on the part of the Corporate Debtor for the services rendered. Therefore, the definition of Operational Debt clearly attracts in the instant case, since the Respondent had provided services and in consideration thereof the Corporate Debtor admit its liabilities for the said services. Further, the Respondent also clearly fall under the category of Operational Creditor since an operational debt is owed to the Operational Creditor. This Tribunal comes to a resultant conclusion that the Respondent s claim is an Operational Debt and the Respondent falls under the category of Operational Creditor and there is no pre-existence of dispute. Further, it is not time barred as seen from the Demand Notice issued by the Respondent and reply thereof by the Appellant - this Tribunal hold that the order passed by the Adjudicating Authority has no infirmity or illegality - appeal dismissed.

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• 2022 (1) TMI 1134
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- Perusal of Application as well as the documents enclosed, the Email Communications between the Operational Creditor and the Corporate Debtor clearly establishes the fact that there was pre-existing dispute between both the parties. The fact that the Corporate Debtor vide its emails dated 25.03.2017 and 25.07.2017 communicated to the Operational Creditor regarding issues in services provided in regard to non-operating and defective cleaning machines and issues regarding mail services. Vide email communication dated 25.07.2017 the Corporate Debtor raised the issue regarding salary of House Keeping Boys. These email communications clearly establish the fact that there was a pre-existence of dispute between both the parties prior to the issuance of Demand Notice dated 08.04.2019. The dispute must exist before the receipt of demand notice. On examination of the documents submitted and the arguments advanced by the Ld. Counsels, it emerges that there were disputes existing prior to the issuance of the Demand Notice. Since there was a pre-existing dispute between the parties, there are no option but to reject the prayer of the Operational Creditor to initiate proceedings under Section 9 of IBC, 2016 - application dismissed.

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• 2022 (1) TMI 1133
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - dispute regarding the quality of goods - Time Limitation - HELD THAT:- It is very much clear that though the last invoice was raised on 05.10.2015 but the last payment having been made on 19.06.2017 and there is a running account admittedly towards its outstanding to the Appellant. It would extend the period of limitations as per provision of the Limitation Act. As the Appeal has been filed on 24.06.2019 which is within three years from the last transactions of June 2017. Section 8 9 of the Code clearly provides for the requirements of following three criteria s before admission of a petition under Section 9 of the Code for initiation of CIRP by OC (i) the Debt must be due and payable in law (ii)there must be occurrence of default (iii) the Debt must be undisputed. The OC has issued a demand notice of unpaid operational debt to the CD in the requisite format but the CD/Respondent No.1 has raised a dispute which apparently could not be answered by the OC as the OC has neither done the inspection so far nor has taken back the goods so supplied. The OC has factually failed to communicate that there is no existence of dispute. Further the proceeding under the Code is not for chasing payments, the Hon ble Supreme Court in Transmission Corporation of Andhra Pradesh limited Vs. Equipment Conductors and Cables Limited [ 2018 (10) TMI 1337 - SUPREME COURT ] has already held that IBC is not intended to be a substitute to a recovery forum and also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked. The view of the Adjudicating Authority is upheld.

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• 2022 (1) TMI 1132
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- Since the application filed by the Applicant fulfilled all the conditions required under Section 7 of the Code, this Tribunal ordered issue of notice to the Respondent (Viraman Buildcon and Developers Pvt. Ltd.) by all modes. Except a few appearances no one represented on behalf of the respondent on most occasions. Consequently, the Respondent was proceeded ex-parte by order dated 12.08.2021. The Corporate Debtor had not filed reply from 4.02.2021 to 12.08.2021. He has also not complied with the order dated 23.01.2020 in which he was directed to pay ₹ 20,000/- for not filing the reply for so long. The Applicant has established the existence of debt and default on the part of the Respondent and the Respondent has not availed the opportunities provided by this Tribunal to defend the arguments made by the Applicant. Thus, this Tribunal admits this petition and initiates CIRP on the Respondent with immediate effect. Petition admitted - moratorium declared.

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• 2022 (1) TMI 1131
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- The corporate debtor in it reply has failed to produce any document or communication exchanged between the parties showing any pre-existing dispute with respect to the defect in the quality of the material shortage with respect to quantity of material supplied by the operational creditor. Further, the corporate debtor has for the first time raised its dispute in the reply to the application. The corporate debtor had duly acknowledged its outstanding balance in the letter dated 06.12.2016 wherein the corporate debtor has put its company's stamp and signature. Therefore, the present case is fit for admission. Time Limitation - HELD THAT:- As per Form V, Part IV, the Corporate Debtor is liable to pay an outstanding sum of ₹ 32,16,152.50/-. The date of default is 06.12.2016 and the present application was filed on 06.12.2019. Hence the debt is not time barred and the application is filed within the period of limitation. Jurisdiction - HELD THAT:- The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. The present application is complete and the operational creditor is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the operational debt beyond doubt - Application admitted - moratorium declared.

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• 2022 (1) TMI 1130
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of pre-existing dispute or not - payment for Invoice Nos. 5 6 not paid, other invoices duly paid - whether the Operational Creditor has actually done the work for which he has raised Invoice No. 5 6 and as to whether there is any default to that effect by the Corporate Debtor? - HELD THAT:- It is seen from the record that the Invoice No. 5 was dated 30.09.2017 which is prior to the approval of the Resolution Plan. However, the Operational Creditor/Applicant did not file any claim before the Resolution Professional and therefore he is not entitled to make any claim at this point of time regarding Invoice No. 5. Learned counsel for the Corporate Debtor also submitted that the original agreement between the Corporate Debtor and PWD stood terminated with effect from 23.03.2018 and therefore it cannot be accepted that the Operational Creditor carried out any work after the termination of the said contract - It is seen that the 6th Invoice dated 30.11.2018 i.e., much after the expiration of the main agreement. Learned Counsel for the Corporate Debtor would therefore submit that the Petitioner is not entitled to have any claim on the basis of Invoice Nos. 5 6. There is no cogent evidence filed by the Operational Creditor in order to substantiate its case with respect to the Invoices Nos. 5 6 raised on the basis of the work executed by it - The Operational Creditor has filed a copy of the email dated 20.07.2018 sent by the Corporate Debtor to the Operational Creditor asking it to submit the final measurement of the work and the bill. The Operational Creditor has also filed a copy of the letter dated 20.07.2018 addressed to the Corporate Debtor requesting it to release an amount of ₹ 44,17,530.68/-. The said letter bears endorsement purportedly by the Corporate Debtor which states that the bill will be processed for PWD certification. However, the said endorsement has not been properly stamped - Therefore, it cannot be presumed that the email dated 20.07.2018 and the letter dated 20.07.2018 will have any relevancy to show that the Applicant has done the work during the relevant period for which it has raised Invoice Nos. 5 6. The Applicant has failed to prove his case - Application dismissed.

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• Service Tax

• 2022 (1) TMI 1129
  Validity of SCN - SCN challenged as having been issued without jurisdiction by wrongly invoking proviso to Section 73 of the Finance Act, 1994 - suppression of facts or not - HELD THAT:- The petitioner has not explained on facts how the decision in the case of SIMPLEX INFRASTRUCTURES LTD. VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA [ 2016 (4) TMI 548 - CALCUTTA HIGH COURT] and provisions of section 73 are not attracted and why no case was made for suppression of facts. It is a matter to be decided on facts based on reply before the adjudicating authority. The adjudicating authority is not incompetent to decide the issue relating to limitation. It is therefore open for the petitioner to substantiate the case before the respondent that there is no case made out for invoking extended period of limitation under Proviso to Section 73 of the Finance Act, 1994 - The petitioner has an alternate remedy which is more efficacious. In case an adverse order is passed, the petitioner still has an alternate remedy by filing an appeal before the Appellate Authority. The petitioner cannot short circuiting the show cause proceedings by filing a writ petition by merely citing proviso to Section 73 of the Finance Act, 1994. Petition dismissed.

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• 2022 (1) TMI 1128
  Seeking direction to respondents to issue revised Form SVLDRS-3 in accordance with the provisions of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - reasons for not adjusting the amounts already paid, not provided - non-speaking order - violation of principles of natural justice - HELD THAT:- As rightly contended by the learned counsel for the petitioner, in the remarks column in the impugned certificate at Annexure-M, respondents have specifically stated that petitioner has made certain payments; however, reasons as to why said payments have not been adjusted towards liability of the petitioner under the SVLDRS are not forthcoming and same are conspicuously absent in the impugned certificate which is a cryptic, laconic, non-speaking and unreasoned certificate, without any application of mind and without assigning any reasons as to why payments made by the petitioner having not been adjusted towards the liability under the SVLDRS. Without expressing any opinion on merits and demerits of the contentions of the parties, it is deemed just and proper to set aside the impugned certificate and remit the matter back to respondents for reconsideration afresh in accordance with law and the provisions of SVLDRS - petition allowed.

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• 2022 (1) TMI 1127
  Levy of service tax - donations received by the appellant from its members and on freight charges - reverse charge mechanism - applicability of Notification dated 26.09.2016 from 01.07.2012 to 20.10.2015 and Notification dated 20.06.2012 w.e.f. 21.10.2015 - HELD THAT:- The appellant is registered under section 12AA of the Income Tax Act and the education and training in yoga provided by the appellant is towards the activity of advancement of yoga. Thus, as both the conditions are satisfied by the appellant, the membership donations collected by the appellant would be exempt from payment of service tax for the period from 01.07.2012 to 20.10.2015. Whether the appellant is liable to pay service tax on the freight amount paid by it on a reverse charge mechanism? - HELD THAT:- Goods transport agency service has been defined in section 65(26) of the Finance Act to mean any person who provides service in relation to transport of goods by road and issues consignment notes, by whatever name called. In the present case, consignment notes have not been issued and so the activities cannot be said to be covered under goods transport agency services - In this connection it would be useful to refer to the decision of the Tribunal in BHORAMDEO SAHAKARI SHAKHAR UTPADAM KARKHANA VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, RAIPUR [ 2019 (10) TMI 1416 - CESTAT NEW DELHI ] , wherein it has been held that service tax can be levied only if consignment notes are issued. Thus, service tax liability could not have been fastened on the appellant under the reserve charge mechanism. Appeal allowed - decided in favor of appellant.

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• 2022 (1) TMI 1126
  Levy of service tax - construction of residential complex service and goods transport service - composite services - activities undertaken for the construction of residential flats for individuals fall within the clarification issued by the Board vide Circular No. 108/2/2009-ST dated 29.1.2009 - period January 2009 to January 2010 - HELD THAT:- It is not in dispute that the construction services are composite in nature involving both supply of goods and rendering service. The definition of works contract was introduced under sec. 65(105)(zzzza) with effect from 1.6.2007. The service portion in the composite work contract was specifically made taxable under works contract service with effect from 1.6.2007. The manner of determination of the value of such service portion is prescribed vide Rule 2(A) of Service Tax (Determination of Value) Rules, 2006 framed under sec. 94(2) of the Act. Alternatively in the form of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 was introduced to pay service tax at a lesser rate on the gross amount (including the value of transfer of property in the goods). The issue as to whether a composite contract which has both transfer of property in goods as well as rendering of service would fall under CICS / CCS / CRCS was examined and finally settled by the Hon'ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] . The Hon'ble Supreme Court observed that the service classified under CICS and CCS as defined under clause (zzzq) and (zzzh) of section 65(105) would cover only pure service contracts which does not involve any transfer of property in goods. The demand under construction of residential complex service cannot sustain and requires to be set aside - Appeal allowed - decided in favor of appellant.

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• 2022 (1) TMI 1125
  Levy of service tax - Business Auxiliary Service or not - contract with Syntech (HK) Technology Ltd. Hongkong (STLH) in order to short list states for launching Gionee mobile phones and make arrangement for its advertisement - appellant undertook to set up (STLH) offices in India etc - intermediary services or not - place of provision of services - impugned orders in contradiction with the order of the Commissioner (Appeal) - HELD THAT:- The appellant nowhere of providing service amongst two or more persons, in fact, the appellant is providing service to set up STLH office in India, recruitment service companies, advertisement agency, service staff and also appoint Distribution partners for states short listed for launch of Gionee mobile phones. These services nowhere include any sale of goods and the appellant is nowhere involved in the providing the service of sale of goods. In fact, for sale of goods, M/s STLH has separately entered into contract with the Distribution partners who import goods in their own names and sell in India. The appellant is neither related to import of goods nor any sale of goods and also nor concern with the payment against those goods, therefore, it cannot be said that the appellant is an Intermediary as per Rule 2(f) of POPS Rules, 2012. The appellant do not qualify as Intermediary in terms of Rule 2(f) of POPS Rules, 2012, therefore, no demand of service tax sustainable against the appellant - Appeal allowed - decided in favor of appellant.

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• 2022 (1) TMI 1124
  Levy of Service tax - Club or Association Services - relation of service provider and service recipient exists between the Club/Associate and its members or not - HELD THAT:- The case of the appellant is squarely covered by the decision in SPORTS CLUB OF GUJARAT LTD VERSUS UNION OF INDIA 3 [ 2013 (7) TMI 510 - GUJARAT HIGH COURT] and other decisions passed by this Bench and coordinate benches of the CESTAT, where it was held that Section 65(25a), Section 65(105) (zzze) and Section 66 as incorporated / amended to the extent that the said provisions purport to levy service tax in respect of services purportedly provided by the petitioner club to its members, to be ultra vires. The impugned order does not survive in the light of the decisions cited as the services rendered by the Club to its members are held to be service rendered to themselves and no such relation of service provider and service recipient exists between the Club/Associate and its members.

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• Central Excise

• 2022 (1) TMI 1123
  Recovery of the ineligible credit with the interest and imposed penalties - commissioning and installation services - as a sequel to notices issued for the preceding period time to time, Statements of Demands (SODs) to recover ineligible credit were issued - service eligible to credit or not - HELD THAT:- In para-2 of the statement of demand, it is clearly stated that facts and circumstances leading to the statements of demand are identical to the earlier SCNs. This being so, the authorities below ought to have applied the decision of the Tribunal and allowed the credit. Instead, the adjudicating authority has held that the invoice has been issued in the name of the Head office of the appellant company and that services are rendered at Ambattur plant (Chennai). There is no law which restricts or prohibits the invoice being issued in the name of the Head office which has Centralized Registration. The purpose of taking centralized registration is to help the manufacturer for availment of credit as well as distribution of credit. The disallowance of credit raising such an issue which is not alleged in SCN cannot sustain. The disallowance of credit is without any legal or factual basis - Appeal allowed - decided in favor of appellant.

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• 2022 (1) TMI 1122
  Remission of duty - Show Cause Notice was not issued by Commissioner to give opportunity to appellant to put their case - Rule 21 of the Central Excise Rules, 2002 - Violation of principles of natural justice - HELD THAT:- The learned Commissioner has clearly recorded that the fire taken place in the factory of the appellant is similar to the fire which took place at the earlier occasion, despite this recording he has rejected the application on the ground that the appellant has not submitted the documents and their explanation that whether the fire was avoidable or non-avoidable - when the learned Commissioner was not inclined to grant the permission for remission of duty, he should have brought all the points to the notice of the appellant so the appellant could have made the proper defence and file the documents if any, required. Without informing the appellant regarding the views of the learned Commissioner for rejecting the remission application is clearly a violation of Principles of Natural Justice. The case of the remission of duty needs to be reconsidered by giving the opportunity to the appellant to make their submission on all the points which the learned Commissioner wants to raise - matter remanded to the Commissioner for passing afresh denovo adjudication order after granting the sufficient opportunity to the appellant to present their case - appeal allowed by way of remand.

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• 2022 (1) TMI 1121
  Utilization of balance of Cess credit after 01.03.2015 for payment of Central Excise Duty - contravention of provisions of Rule 3(7)(b) of the CENVAT Credit Rules, 2004 read with Notification No. 12/2015-C.E.(N.T.) dated 30.04.2015 and Rule 4 of the Central Excise Rules, 2002 - time limitation - HELD THAT:- The issue stands covered by the decision of the Hon ble High Court of Delhi in the case of M/s. Cellular Operators Association of India [ 2018 (2) TMI 1264 - DELHI HIGH COURT ] wherein the Hon ble High Court has analysed the various contentions and held that Cess credit cannot be utilized for payment of Excise Duty after 01.03.2015 - the issue on merits has to be answered against the assessee and in favour of the Revenue. Time Limitation - HELD THAT:- The details of the return filed by the appellant has been furnished wherein it can be seen that the appellant has mentioned in the return that they have utilized the credit availed on Education Cess and Secondary and Higher Education Cess for payment of Excise Duty. Though these returns were filed in May 2017, the Show Cause Notice has been issued only two years later, invoking the extended period of limitation - there is no positive act of suppression established by the Department to prove that there is any wilful suppression of facts. The demand raised invoking the extended period of limitation cannot sustain and requires to be set aside - The appeal is allowed on the ground of limitation.

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• 2022 (1) TMI 1120
  Clandestine manufacture and clearance - Formaldehyde - inputs received without payment of duty - issuing invoices to some traders without supplying goods to them - evasion of excise duty - corroborative evidences to prove clandestine manufacture or not - deamnd based on only assumptions and presumptions - HELD THAT:- To manufacture such a huge quantity of the goods clandestinely, the appellant requires other inputs and electricity is to be consumed to manufacture such a huge quantity of the goods. From the records, it is not coming out whether the Revenue has made such effort to ascertain the facts from where the other raw materials were procured and how much is the electricity is consumed. Moreover, when it alleged that the appellant has sold the said clandestine manufactured goods, no statement of any buyer is brought on record to establish the fact that the appellant has cleared clandestinely manufacture goods without payment of duty. In the absence of any evidence on record, the charge of clandestinely manufactured clearance of the goods without payment of duty cannot be sustained. No cross examination of Shri. Ashok Aggarwal has been allowed to the appellant to ascertain the truth. No inculpatory statement of the appellant has been found on record to establish the fact that the appellant has received the goods on the basis of the Dharma-Kantas slips provided by the supplier of the goods - In the absence of any cogent evidence against the appellant, the charge of the clandestine manufacture and removal of the goods by the appellants is not sustainable, the same is on the basis of assumptions and presumptions. The proceedings against the appellants are not sustainable - Appeal allowed - decided in favor of appellant.

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• 2022 (1) TMI 1119
  CENVAT Credit - excisable goods or not - erection, installation and commissioning of various EPCC projects by way 20 contracts with various contractors - denial of credit holding that the contractors only installed plant fixed to the earth, which is not excisable goods - HELD THAT:- This Tribunal in INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF C. EX. S.T, PANCHKULA [ 2020 (1) TMI 373 - CESTAT CHANDIGARH ] has allowed the cenvat credit to the appellant holding that once any item received in the factory is capital goods in terms of Rule 2(a) of the Cenvat Credit Rules, and is used in the factory, the manufacturer would be entitled to Cenvat Credit of excise duty paid in respect of the same. Referring the case, it is held in the present case that the appellant is entitled to avail cenvat credit - appeal allowed - decided in favor of appellant.

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• 2022 (1) TMI 1118
  Clandestine manufacture - tobacco snuff - goods declared as Mehandi under fictitious name of buyers and sellers - it was alleged that the appellant is procuring the tobacco by using name of Roshan Lal Pawan Kumar without payment of duty which was used in the manufacture of snuff which was ultimately cleared without payment of duty - demand based on statement of various persons - retraction of statements - corroborative evidences or not - denial of cross examination - violation of principles of natural justice - HELD THAT:- As per the observations made in the impugned order, wherein it has been held that the allegation of receipt of raw material of tobacco in the manner and denied cross examination of other persons clearly indicated the whole case is made out on the basis of statement of Sh. Roshan Lal and Sh. Pawan Kumar. Further, the cross examination of Sh. Pawan Kumar was concluded by the adjudicating authority holding that the examinationin- chief has been conducted in the presence of Shri Vikash Grover and no further cross examination was warranted as the position will not be going to change even if the appellant would not have conducted the cross examination of Sh. Pawan Kumar which clearly violats the principle of natural justice by denying the cross examination of Sh. Pawan Kumar. During cross examination of Shri Roshan Lal, Sh. Roshan Lal has retracted his own statement and the Revenue has relied on cross examination. In the statement, during investigation, Shri Roshan Lal stated that they were not procuring any goods and the goods were procured by the appellant whereas during the cross examination, he stated that they were engaged in the purchase and sale of raw tobacco. He also admitted that he is not the authorized person to give statement on behalf of M/s Roshan Lal Pawan Kumar whereas Shri Pawan Kumar in his statement stated that his father is correct - The entire case is based on the statement of Sh. Roshan Lal and Sh. Pawan Kumar against the appellant. As there are lot of contradiction in the statement and cross examination of Shri Roshan Lal, therefore, the statement of Shri Roshan Lal cannot be relied upon to allege that the appellant was receiving the goods through M/s Roshan Lal Pawan Kumar directly through suppliers. It is found that to manufacture snuff of huge quantity, other raw material/packing material also required but no such evidence of procurement of other raw material/packing material on record. Without evidence on record from where quantity of other raw material/packing material has been procured by the appellant used in manufacture of snuff which has been cleared without payment of duty, the charge of clandestine removal of snuff against the appellant is not sustainable. Thus, the entire proceeding was based on the statement of Shri Roshan Lal and which is without any cogent evidence on record. Therefore, the charge of clandestine removal of goods on this ground is not sustainable - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2022 (1) TMI 1117
  Classification of supply - sale or stock transfer - movement of goods from Bangalore to Navi Mumbai - only the party actually exporting the goods alone can be said to affect sale in the course of export occasioning such export or not? - levy of central sales tax - goods even if it is conclusively proved by documentary evidence that the goods have been exported proved by reason of failure to furnish F Forms - filing of F Form is mandatory when the goods are not supplied by a dealer to his place of business or his agent or principal or not - proper examination not conducted by the authorities - HELD THAT:- It is pertinent to note that the Tribunal has held that there must be a single sale to attract Section 5(1), but it is not the case of the department that the goods have moved from the branch office in Karnataka to Head Office at Mumbai as a result of sale. On the other hand, it is construed as stock transfer. The test to be applied is whether the contract of the foreign buyers with the Head Office occasioned the movement of the goods from Bangalore branch office. This inextricable link has not been properly examined by the authorities. However, learned Additional Government Advocate argued that it is revenue neutral. This argument would not take the dispute to logical conclusion. The matter requires to be re-examined by the Tribunal in the light of the judgments referred to above vis- -vis the documents produced before this Court. If the Excise pass has any inextricable link with the export, certainly the transaction would come within the purview of Section 5(1) of CST Act - the movement of goods occasions such export. These aspects require to be verified by the Tribunal considering the material evidence placed on record by the assessee. The Revision Petition is allowed in part and part matter on remand.

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