TMI Tax Updates - e-Newsletter
January 6, 2022

Case Laws in this Newsletter:

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

Articles

1. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

2. PERSONALIZED SERVICES REWARD POLICIES FOR REMUNERATION –SOME SPECIAL ASPECTS DUE TO COVID PROBLEMS AND REQUIREMENTS.

   By: DEVKUMAR KOTHARI

News

1. Evasion of Customs duty of ₹ 653 crore by M/s Xiaomi Technology India Private Limited

2. Over 65 lakh enrolments in Atal Pension Yojana in Financial Year 2021-22 so far

Notifications

Companies Law

1. S.O. 35(E) - dated 4-1-2022 - Co. Law

Delegation of powers under sub-section 11 of the Section 132 of the Companies Act to NFRA for appointment of certain posts

DGFT

2. 49/2015-2020 - dated 5-1-2022 - FTP

Amendment in import policy conditions of gold under Chapter 71 of Schedule - I (Import Policy) of ITC (HS), 2017

GST - States

3. 38/1/2017-Fin(R&C)(20/2021-Rate)/3211 - dated 31-12-2021 - Goa SGST

Seeks to amend Notification No. 38/1/2017-Fin(R&C)(21/2018-Rate), dated the 26th July, 2018

4. 38/1/2017-Fin(R&C)(220)/3204 - dated 30-12-2021 - Goa SGST

Seeks to bring in force sub-rule (2), sub-rule (3), clause (i) of sub-rule (6) and sub-rule (7) of rule 2 of the Goa Goods and Services Tax (Eighth Amendment) Rules, 2021

5. 13/2021-State Tax (Rate) - dated 27-10-2021 - Gujarat SGST

Amendment in Notification No. 1/2017-State Tax (Rate) dated 30th June, 2017

6. 28/2021-State Tax - dated 24-12-2021 - Jharkhand SGST

Seeks to waive penalty payable for non-compliance of provisions of Notification No. 14/2020 – State Tax, dated the 25th June, 2020

7. 27/2021 – State Tax - dated 24-12-2021 - Jharkhand SGST

Jharkhand Goods and Services Tax (Fifth Amendment) Rules, 2021.

8. 26/2021 – State Tax - dated 24-12-2021 - Jharkhand SGST

Amendment in Notification No. 11/2021- State Tax, dated the 23rd June, 2021

Money Laundering

9. S.O. 37(E) - dated 4-1-2022 - PMLA

Notifies Aadhaar authentication service of the Unique Identification Authority of India under section 11A of the Prevention of Money-laundering Act, 2002

10. G.S.R. 5(E) - dated 4-1-2022 - PMLA

Functions and obligations of the Central KYC Records Registry - Provisions not to apply to the Foreign Portfolio Investor

SEBI

11. S.O. 5401(E) - dated 24-12-2021 - SEBI

Central Government declares “Electronic Gold Receipt” as securities for the purpose of the Securities Contracts (Regulation) Act, 1956

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD1/MRD1_ICC1/P/CIR/2022/05 - dated 5-1-2022

Increasing Awareness regarding Online Mechanisms for Investor Grievance Redressal

DGFT

2. 44/2015-20 - dated 5-1-2022

Amendment in Para 9.08 of Handbook of Procedures - 2015-20 - Inclusion of new agencies in Standing Grievance Committee

Highlights / Catch Notes

GST

• Bodybuilding and mounting on chassis for tippers and trailers classified as job work; 18% GST applies.

  Case-Laws - AAAR : Nature of activity - Job work - manufacturing or services - body building activity on the chassis provided by the principal - the body building and mounting of body on the chassis of different models of Tippers, Tankers, Trucks and Trailers, on the chassis to be supplied by the Principal, on delivery challans, by collecting job work charges for such fabrication work is taxable @18%, - AAAR
  Visit to Get Source

  ---

• Appellant's Transactions Outside CGST Section 15 Supply Value, Jurisdiction Exceeds Advance Ruling Authority's Scope.

  Case-Laws - AAAR : Inclusion in the value of supply as per section 15 of the CGST Act, 2017 or not - The appellant is a recipient of services in the subject case. The impugned transactions are not in relation to the supply of goods or services or both undertaken or proposed to be undertaken by the appellant and therefore, it is outside the purview of mandate given to Advance Ruling Authority/AppeIIate Authority on Advance Ruling. - AAAR
  Visit to Get Source

  ---

• Soya Husk: GST Exempt for Poultry Feed Use, but 5% Tax Applies as Value-Added Product in Market.

  Case-Laws - AAR : Classification of goods - Soya husk resulting from the extraction of Soyabean Oil - exemption from payment of GST as Poultry feed and Cattle feed - - Soya husk resulting from the extraction of Soyabean oil, being principal input/ ingredient for manufacture or processing of Cattle feed and Poultry feed which may become value added product in the market. Soya husk being principal input/ ingredient to Poultry feed and Cattle feed industry, which is taxable @ 5% - AAR
  Visit to Get Source

  ---

Income Tax

• Expenses Classified as Preoperative, Not for Diamonds; Section 37 Explanation Deemed Unnecessary for Tax Purposes.

  Case-Laws - AT : Business expenditure u/s 37 -invocation of explanation to section 37 is uncalled for as the assessee has not made any expenses for purchase of diamonds rather entire expenses are in the nature of preoperative business expenses. The various expenses incurred by the assessee are not at all prohibited by law. All expenses were incurred in anticipation of business. - AT
  Visit to Get Source

  ---

• Taxpayer's Section 54B Exemption for Agricultural Land Sale Upheld; AO's Presumption on Grass Cultivation Overruled.

  Case-Laws - AT : Exemption claimed u/s 54B - Capital Gain on sale of agriculture land - AO has not made any investigation on the assertion of assessee. AO presumed that growing of grass is not agriculture activities. We noted that the AO arrived on conclusion on the basis of his presumption that Grass is not agriculture product. AO has not brought any adverse evidence to counter the evidence furnished by the assessee. - Mere fact that the assessee has not shown agriculture income from the piece of land would not change its character. In our view, in absence of any adverse material, the presumption of AO that no income is shown from the sale of Ghass is not justified. - AT
  Visit to Get Source

  ---

• Assessing Officer Can Apply Section 14A(2) Provisions Without Further Satisfaction If No Suo Motu Disallowance Made u/r 8D.

  Case-Laws - AT : Addition u/s 14A r.w. Rule 8D(2)(iii) - In the present case, wherein the assessee does not offer any disallowance under Rule 8D(2)(ii) in respect of exempt income, then the provisions of section 14A(2) r.w. Rule 8D(2) can be invoked u/s.14A(3) of the Act by the AO and there is no necessity of recording further satisfaction by the AO - when the assessee itself fails to make disallowance suo motu u/s. 14A r.w. Rule 8D, then the AO is at liberty to invoke these provisions. - AT
  Visit to Get Source

  ---

• Penalty Imposed for Non-Compliance with Section 44AB Auditing Requirement Due to Frequent Share Trading as Business Activity.

  Case-Laws - AT : Levy of penalty u/s 271B - not getting books of account audited u/s 44AB - AO has given categorically finding that the assessee had made frequent transaction in both delivery as well as non-delivery based segment of shares and volume and quantity of buying and selling of shares was also found to be substantially high which are sufficient to prove that transactions of share trading carried out by the assessee during the year are in the nature of business. This plea of the assessee that he was ignorant about the provision of getting books of account audited, find no merit as ignorance of law is no excuse and carrying out the transactions of the magnitude in itself leaves no room for the assessee to make an excuse for not getting books of account audited u/s 44AB - AT
  Visit to Get Source

  ---

Customs

• Plea Bargaining in India: Chapter XXIA Applies Broadly, Including Under the Customs Act, Despite Section 137(3.

  Case-Laws - HC : Smuggling - Gold - plea bargaining versus compounding of offences - The concept of plea bargaining was introduced in Indian criminal jurisprudence by way of amendment Act of 2005 in the Code of Criminal Procedure under Chapter XXIA. Chapter XXIA delineates the guidelines for a Mutually Satisfactory Disposition (MSD). - Had the legislature intended to exclude the applicability of Chapter XXIA Cr.P.C. to those enactments where there are provisions for compounding the offence, then it would have explicitly mentioned the same in Chapter XXIA Cr.P.C. Chapter XXIA Cr.P.C. was introduced to include all statutes, save those that were specifically excluded under Section 265-A(2). It cannot be said that the legislature was unaware of the Customs Act, 1962, while devising the chapter on plea bargaining. Therefore, the presence of Section 137(3) of the Customs Act, 1962, will not take away the applicability of Chapter XXIA Cr.P.C. - HC
  Visit to Get Source

  ---

• DRI's Authority to Issue Show Cause Notice u/ss 114, 114A, 114AA Challenged; Penalty Proposals Invalid per Canon India Ruling.

  Case-Laws - AT : Jurisdiction - power of Additional Director General of DRI to issue SCN - Penalties were imposed under section 114, 114A and 114 AA of Customs Act - The SCN under Section 124 need not be issued by ‘the proper officer’. However, in the present case the basis for the proposed confiscation of goods and imposition of penalties in the SCN has been the re- assessment of the goods and demand of the duty under Section 28(4). The basis for re-assessment being unsustainable in view of Canon India, the proposals for confiscation and of goods and imposition of penalties cannot service either. - AT
  Visit to Get Source

  ---

Corporate Law

• Appellant company faces ongoing investigation; respondents ensure transparency and adherence to Section 212 of the Companies Act.

  Case-Laws - HC : Investigation into the affairs of the appellant company - The matter is only at the stage of investigation and otherwise also the appellant company has not been able to point out the prejudice caused to the appellant company in the matter. The respondents have adopted a transparent process. They have given an opportunity of hearing to the appellant company right from initial stages and the respondents are under obligation to follow the procedure prescribed under Section 212 of the Companies Act and the Companies Act is a complete code in itself. - HC
  Visit to Get Source

  ---

Service Tax

• Court Rules Land Sale Potentially Taxable; Petitioner Must Prove Exemption Under Finance Act Section 65 (B) (44.

  Case-Laws - HC : Nature of activity - service or not - petitioner joined hands with two other owners and sold about 19.07 acres of land, of which, 5.43 acres belongs to the petitioner - There is no merits in this writ petition. It is for the petitioner to convince the appellate authority to come to a conclusion that neither the petitioner has provided any taxable service within the meaning of Section 65 (B) (44) of the Finance Act, 1994 or that the service provided by the petitioner well within the negative list under Section 65 (D) of the Finance Act, 1994 or was exempted under the Mega Exemption notification issued by the Central Government under Section 93 of the Finance Act, 1994. - HC
  Visit to Get Source

  ---

Central Excise

• CENVAT Credit Allowed for GTA Services: 'Place of Removal' is Buyer's Premises, Not Seller's Factory Gate.

  Case-Laws - AT : CENVAT Credit - input services - Goods Transport Agency (GTA) services - outward transportation - The ‘place of removal’ is the premises of the buyer, not the factory gate of the seller, as the finished goods are cleared by the appellant on ‘FOR destination basis’ - the appellant is entitled to cenvat credit on the GTA services for outward transportation of the goods sold on FOR destination basis - AT
  Visit to Get Source

  ---

• Case Remanded for Further Consideration on CENVAT Credit Input Non-Receipt; Clear Determination on RG 23 A Part I Needed.

  Case-Laws - AT : CENVAT Credit - allegation of non-receipt of inputs - Specific invoices are already mentioned in the given columns of these registers. It is otherwise apparent from the copies of the documents as annexed along with the written synopsis. - It is deemed appropriate that the Adjudicating Authority has to give a clear finding to the effect what precisely is still missing for want of RG 23 A Part I register - Matter restored back - AT
  Visit to Get Source

  ---

VAT

• Supreme Court Rules High Court's Quashing of VAT and Sales Tax Orders Under Article 226 Unjustified.

  Case-Laws - SC : Validity of fresh assessment orders - HC quashed the assessment order invoking the writ jurisdiction - othing has been observed by the High Court on the merits of the fresh assessment orders. If the fresh assessment orders would have gone against the State, in that case the State would have been the aggrieved party - The judgment and orders passed by the High Court quashing and setting aside the fresh assessment orders in the writ petitions under Article 226 of the Constitution of India are unsustainable - SC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2022 (1) TMI 152
  Seeking grant of interim bail - prosecution report was submitted to the Commissioner of C.T. G.S.T. for perusal and to accord sanction as per section 134 of Odisha Goods and Service Tax Act, 2017 - HELD THAT:- Since the learned Addl. Standing Counsel for C.T. G.S.T. is seeking for adjournment of the case and the petitioner is in custody for a period of about one year and the offence is triable by Magistrate, I am inclined to release him on interim bail for a period of four weeks from the date of release. The learned Court in seisin over the matter shall release the petitioner on interim bail subject to condition imposed - application allowed.

  ---

• 2022 (1) TMI 151
  Nature of activity - Job work - manufacturing or services - body building activity on the chassis provided by the principal - applicability of clarification of CBIC vide para no. 12.3 of Circular No. 52/26/2018-GST date 09.08.2018 clarifying 18% rate of GST in respect of building of body of buses - HELD THAT:- The job worker can use certain inputs required for fabrication work and the same will not amount to manufacture. Transfer of ownership to the appellant - HELD THAT:- As per Appellant, they are procuring some inputs like steel sheets, windows, glasses, wiring harness etc on payment of duty, which is further claimed as Input Tax Credit whereas the chassis of tippers, tankers and trucks etc are received by them, free of cost, under the delivery challans. Accordingly, the chassis delivered to the Appellant remains in their temporarily possession only for certain time to carry out the process of job work as per direction of the principal. The Appellant has received the chassis only as job worker and on free cost basis under the delivery Challan - the ownership of the chassis always remains with the Principal i.e. M/s TATA Motors. As per Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017, as amended, it has been clarified that the Tax rate for (ic) Services by way of job work in relation to bus body building would be 18% - Circular No. 52/26/2018-GST dated 09.08.2018 is squarely applicable in the case of Appellant. Thus, the body building and mounting of body on the chassis of different models of Tippers, Tankers, Trucks and Trailers, on the chassis to be supplied by the Principal, on delivery challans, by collecting job work charges for such fabrication work is taxable @18%, in accordance with Circular No. 52/26/2018-GST dated 09.08.2018, subject to fulfillment of all the conditions prescribed in the Section 141 and 143 of the CGST Act, 2017 read with relevant Rules/Notifications.

  ---

• 2022 (1) TMI 150
  Liability of GST - reimbursement of Employee Provident Fund ESI - Inclusion in the value of supply as per section 15 of the CGST Act, 2017 or not - taxable at @18% or otherwise? - HELD THAT:- The appellant is a recipient of services in the subject case. The impugned transactions are not in relation to the supply of goods or services or both undertaken or proposed to be undertaken by the appellant and therefore, it is outside the purview of mandate given to Advance Ruling Authority/AppeIIate Authority on Advance Ruling. The subject application cannot be admitted as per the provisions of Section 95 of the CGST Act and should have been rejected ab-initio by the Advance Ruling Authority. The present appeal is rejected, as being non- maintainable as per the provision of law.

  ---

• 2022 (1) TMI 149
  Classification of goods - Soya husk resulting from the extraction of Soyabean Oil - exemption from payment of GST as Poultry feed and Cattle feed under HSN heading 2302, under Entry 102 of Notification No.2/17-Central Tax (Rate) dated, 28.06.2017 - principal input/ ingredient for manufacture or processing of Cattle feed and Poultry feed which may become value added product in the market - HELD THAT:- The applicant is selling only soya husk, resulting from extraction of Soyabean oil to the manufacturers / processors of Cattle feed and Poultry feed. As per the interpretation of the applicant under Rule 3(a), specific entry will prevail over the general entry in case where the goods are covered under more than one entry. Exemption Entry 102 is general entry exempting GST on supply of prepared Poultry feed and Cattle feed under Chapter 2302. - Entry 105 of Schedule I is a specific entry prescribing GST @5% on solid residues, whether or not ground or in the form of pellets, resulting from the extraction of soyabean oil under Chapter 2304. Soya husk resulting from the extraction of Soyabean oil, being principal input/ ingredient for manufacture or processing of Cattle feed and Poultry feed which may become value added product in the market. Soya husk being principal input/ ingredient to Poultry feed and Cattle feed industry, which is taxable @ 5% under Subheading 2304 as per Entry 105 of Notification No.1/17-Central Tax (Rate) dated, 28.06.2017.

  ---

• 2022 (1) TMI 148
  Clandestine manufacture and clearance of finished goods - tiles - excess found goods were seized under Section 67(2) of the CGST Act, 2017 read with Rule 139 of the CGST Rules, 2017 - Contravention of provisions of Section 35 of the CGST Act, 2017 and Rule 56 of the CGST Rules, 2017. Whether the appeal filed by the appellant is within the time limit or not? - HELD THAT:- The appellant has filed the appeal on 17-11-2020 against the impugned order dated 4-8-2020 passed by the adjudicating authority, the delay of 13 days from the normal period prescribed under Section 107(1) of the CGST Act, 2017. Further, as per Section 107(4) of the CGST Act, 2017 - The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month - it is directed to decide the case on merits. Whether there was excess of stock of raw material and finished goods at the time of physically stock verification during search or not? - HELD THAT:- Both the key persons have categorically agreed that they do not maintain any stock register of raw materials and finished goods in the factory premises. Further, during physical verification, the departmental officers concluded the excess raw material and finished goods on the basis of purchase and sales invoices in the presence of the independent witnesses and Shri Girish Kumar Singhal, Manager of the appellant, who at the material of time were not able to produce the books of accounts as well as any plausible explanation thereof which is also obvious from the para 3 of the impugned order - the records of goods were not properly maintained/kept by the appellant and goods seized were duly accounted for in their respective books of accounts. The appellant have contravened the provisions of Section 35 of the CGST Act, 2017 and Rule 56 of CGST Rules, 2017. Therefore, adjudicating authority has rightly confiscated the said seized goods and accordingly imposed fine and penalty under the relevant provisions of CGST Act and Rules made thereunder. Whether penalty under Section 122 and under Section 125 of CGST Act is proper or not? - HELD THAT:- The adjudicating authority has amply justified and established that the appellant has failed to produce the related documents, and also failed to keep account of stock in their factory premise thereby violating/contravening the Section 35 of CGST Act and Rule 56 of CGST Rules. Thus, it is found that the excess/difference in stock found during physical stock verification was meant for clandestine removal with intention to evade the CGST/SGST. Therefore, for failure to keep and non-maintaining of records in respect of the excess stocks as well as non-filings of monthly/periodically returns with intent to evade tax, the adjudicating authority has properly imposed penalty under Sections 122(1)(xvi) and (xviii) and 125 of CGST Act, 2017. On going through the Section 125 of CGST Act it may be seen that this particular penalty is imposable on the person who contravenes any of the provisions of this Act or any rules made thereunder. From the above discussion and findings and perusal of records, it has been established that the Partner of the firm is the key person who deals all the affairs of the appellant firm. Therefore, he cannot be escaped from any offence of the firm and it cannot be imagined that without his involvement such kind of violations of the provisions of the act or rules made thereunder would be happened - it is also seen from the provisions of Section 125 of CGST Act that the word Person has been mentioned. Further, it is found that nowhere mention in the provision of laws and rules that if the penalty has been imposed upon the firm penalty on partner/proprietor cannot be imposed. Since the firm and partner are the separate entity hence penalty imposition in the said provision is correct and proper. The penalty imposed under Section 122 and Section 125 of CGST Act by the adjudicating authority is proper and fully justified. Whether principle of natural justice and judicial discipline have been followed by the adjudicating authority or not? - HELD THAT:- The show cause notice had served to the appellant and opportunity to being heard to the appellant has also been provided by the adjudicating authority. Further, it is found that the adjudicating authority has discussed all the submissions of the appellant in his order and he also examined all the cited case laws quoted by the appellant and observed that the said cited judgment are not squarely applicable in the present case. In view of above, the contention of the appellant is irrelevant and cannot be accepted. The order passed by the adjudicating authority is upheld - there are no infirmity in the impugned order - appeal dismissed.

  ---

• Income Tax

• 2022 (1) TMI 147
  Disallowance of depreciation u/s. 32(1) r.w.s. 43(1) - assets of the assessee company have been acquired by it in a scheme of demerger approved by the Hon ble High Court - HELD THAT:- Since the ld. CIT(A) while allowing the claim of depreciation has followed the order of his predecessor for AYs 2012-13 and 2013-14 and since the order of the CIT(A) for AYs 2012-13 and 2013-14 [ 2019 (8) TMI 1784 - ITAT DELHI] has been restored to the file of the AO by the Tribunal, therefore, respectfully following the decision of the Tribunal in assessee s own case for AYs 2012-13 and 2013-14, we restore the issue to the file of the AO for fresh adjudication in accordance with the directions of the Tribunal for AY 2012-13 and 2013-14.

  ---

• 2022 (1) TMI 146
  Exemption u/s 11 - registration claimed by the assessee u/s 12A - DR submitted that Hon ble High Court has rightly remitted back the issue back to the Tribunal as the Tribunal had allowed appeal of the assessee by granting registration u/s.12A without recording the satisfaction regarding genuineness of the activities of the trust and therefore it was prayed that the appeal filed by the assessee may be dismissed - HELD THAT:- Assessee filed index of all ledger account along with bank passbook along with corpus donations and acknowdgment of ITRs on earlier years. At pg.12 again there is a copy of letter addressed to CIT-1 by the assessee wherein the supporting documents regarding genuineness of activities were stated to have been filed before him. However, the paper book filed by the assessee does not contain any evidences regarding genuineness of activities filed before CIT(E). Therefore, in this obtaining situation, we are unable to record such necessary satisfaction, as ordered by the Hon ble High Court regarding genuineness of activities of the Trust. Accordingly, we remit the issue back to ld. CIT(E) who, on the basis of documents filed by assessee or to be filed by the assessee, will readjudicate the issue and will decide the appeal accordingly. The assessee will be at liberty to file any other documents in support of its claim for registration - Appeal of the assessee is allowed for statistical purposes.

  ---

• 2022 (1) TMI 145
  Business expenditure u/s 37 - whether the assessee is entitled for pre-operative administrative expenses, preliminary expenses, financial expenses and depreciation or not? - HELD THAT:- The assessee is a Special Purpose Vehicle company formed and registered in India as a Public Limited Company, engage in business of sourcing of rough diamonds globally. The assessee is to carry out its business as per MOA, for procuring, cleaving, sawing, cutting, polishing, processing, manufacturing, sorting, grading, buying, selling, handling, supplying, transporting, distributing, warehousing, trading, auctioning, tendering, bidding, importing, exporting, marketing or otherwise dealing or disposing any diamonds, sapphire, ruby topaz, garnet, emerald, pearl, precious or semiprecious or natural stones, aquatic, marine or other such articles, gold, silver, platinum, titanium, bullion or any other precious / semi-precious metals or alloys thereof, in any form whatsoever, and jewelleries, ornaments, articles, decorative and art materials goods or things made of all or any of such things or a combination thereof and to act as broker, auctioneer, importer, exporter, distributor, agent, wholesaler, merchant, goldsmith, silversmith, jewellers, manufacturer, polishers, processors in relation to all or any of the above and to take up all such incidental acts and things necessary for attainment of the above objects. In pursuance of its object, the assessee incurred various expenses. We find that nature of expenses was not examined. The AO, disallowed the expenses by taking view that business of assessee was not setup during the year under consideration. CIT(A) confirmed the action of AO on similar lines. CIT(A) also confirmed the disallowance of additional ground that the expenses were incurred by assessee for illegal business. We may note that we have already held that invocation of explanation to section 37 is uncalled for as the assessee has not made any expenses for purchase of diamonds rather entire expenses are in the nature of preoperative business expenses. The various expenses incurred by the assessee are not at all prohibited by law. All expenses were incurred in anticipation of business. It is a settled law that the AO cannot sit in the chair of businessmen so as to decide what activities are essential in the business should be activities are to be carried out by the businessmen. It has been held so by Hon ble Apex Court in S.A. Builders [ 2006 (12) TMI 82 - SUPREME COURT] Hon ble High Court in CIT Vs Sardar Sarovar Narmada Nigam Limited [ 2013 (10) TMI 162 - GUJARAT HIGH COURT] while considering the question of law whether Special Bench of Tribunal is right in holding that assessee s business had setup w.e.f. 21.02.2001 which is to flow drinking water as a construction work of canal project was still under progress. The Hon ble High Court while referring its earlier decision in CIT Vs Sarabhai Sons (P.) Ltd. [ 1972 (7) TMI 7 - GUJARAT HIGH COURT] and in CIT Vs Saurashtra Cement and Chemicals Industry [ 1972 (8) TMI 19 - GUJARAT HIGH COURT] held that when business can be said to have been setup, the Court observed that when each one of the activities essential and vital and combined together constitute business of the assessee and things being a continuous process, all activities which go to make a business need not be started simultaneously of entire term business without proceeding other activities, no fault can be found. On the finding of the Tribunal, it held the businesses have to be setup without same being commenced and ultimately dismissed the appeal of the Revenue. Disallowance of expenses incurred by assessee on various preoperative expenses is not justified. Hence, we direct the AO to allow the entire business expenditure claimed by the assessee. - Decided in favour of assessee.

  ---

• 2022 (1) TMI 144
  Exemption claimed u/s 54B - decision of the A.O. to treat the Agriculture Land as Non Agriculture - Capital Gain on sale of agriculture land - HELD THAT:- We find that the assessee in the sale deed of said land mentioned the nature of land as agricultural land. The assessee also placed on record the copy of Form-8, wherein the user of land is clearly written in Gujarati language as Kethi LayakUpagyog i.e. agricultural purpose . In the valuation report, the property is shown as agricultural land. Though, in specification of property, the surrounding factors are mentioned. We find that before the AO as well as CIT(A), the assessee categorically stated that land is situated on the bank of river Mindhola, which area is affected by very high salinity and regular crop of sugarcane or other trees are not possible. The assessee used the land for cultivatation and growing of Grass which is not affected by floods. We find that in the documentary evidences furnished by the assessee the nature of land is clearly mentioned as agriculture use. AO has not made any investigation on the assertion of assessee. AO presumed that growing of grass is not agriculture activities. We noted that the AO arrived on conclusion on the basis of his presumption that Grass is not agriculture product. AO has not brought any adverse evidence to counter the evidence furnished by the assessee. The best evidence available before the AO was Form- 7 8 extract, wherein the nature of land is mentioned as agriculture land. Mere fact that the assessee has not shown agriculture income from the piece of land would not change its character. In our view, in absence of any adverse material, the presumption of AO that no income is shown from the sale of Ghass is not justified. Hence, the ground of appeal raised by the assessee is allowed.

  ---

• 2022 (1) TMI 143
  Disallowance made on account of belated payment of Provident Fund and ESI Contributions - HELD THAT:- It is not in dispute that the Contributions to Provident Fund and the ESI were remitted by the assessee before due date for filing of return. The Hon ble Delhi High Court in the case of CIT vs. AIMIL Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT ] held that if the Provident Fund and ESI Contributions were remitted before due date of filing of return of income such contributions cannot be disallowed u/s 43B. The Coordinate Bench of the Tribunal in the case of Chatru Mal Garg [ 2021 (10) TMI 1282 - ITAT DELHI] decided identical issue in favour of the assessee by considering the Amendment made by the Finance Bill 2021 w.e.f. 1/4/2021 to the Provisions to Section 36(1)(va) of the Act - Assessing Officer is directed to delete the disallowance made towards PF ESI Contributions - Decided in favour of assessee.

  ---

• 2022 (1) TMI 142
  Reopening of assessment u/s 147 - original assessment in petition filed u/s. 264 - HELD THAT:- We find that this Tribunal in the case of Sam Portfolios Pvt. Ltd. [ 2020 (2) TMI 1142 - ITAT DELHI] had considered the same set of facts in related concerns, where Ld. CIT had quashed the original assessment in petition filed u/s. 264 and again case was reopened on the same ground u/s.148 and quashed the assessment under Section 147 of the Act. We find that, exactly same reasons recorded were there as have been incorporated in the impugned assessment order. Similarly, the Tribunal in the case Shreya Infra Developers [ 2021 (8) TMI 1267 - ITAT DELHI] following the case of Sam Portfolios Pvt. Ltd. (supra) held that the order of the CIT (Appeals) under Section 264 of the Act and notice u/s 148 of the Act has been issued exactly on same reasons recorded for reopening the assessment, therefore, the reassessment order cannot be sustained and same was quashed. Since the Tribunal in two case exactly on same set of facts had quashed the assessment passed under Section 147 therefore, respectfully following the same in this case also the assessment order passed by the Assessing Officer under Section 147 of the Act is quashed. The Cross Objection filed by the assessee is allowed and the appeal filed by the Revenue is dismissed.

  ---

• 2022 (1) TMI 141
  Late remittance of employees contribution to PF and ESI u/s 139(1) - contribution paid by the assessee before the due date of filing of return of income u/s 139(1) - HELD THAT:- The Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down by the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] had held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1). As the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration - the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee

  ---

• 2022 (1) TMI 140
  Addition u/s 14A r.w. Rule 8D(2)(iii) - disallowance at 0.5% of the average amount of tax exempt investments - as submitted that the disallowance made u/s 14A is that of expenditure in relation to income not forming part of total income - whether the AO could tinker with that formula prescribed under Rule 8D(2)(iii) of the I.T. Rules or interpret in any other manner other than what is mentioned by the plain words of the said Rule? - HELD THAT:- This issue came up before in the case of Godrej Boyce Mfg. Co. Ltd. [ 2010 (8) TMI 77 - BOMBAY HIGH COURT ] wherein constitutional validity of Rule 8D(2)(iii) was challenged. The Court observed that it is only the interest on borrowed funds that will be apportioned and the amount of expenditure by way of interest that will be taken (as A in the formula) will exclude any expenditure by way of interest which is directly attributable to any particular income or receipt - it is not only the interest directly attributable to tax exempt income i.e., under Rule 8D(2)(i), but also directly relatable to taxable income which has to be excluded from the definition of variable A in the formula as per Rule 8D(2)(ii) and rightly so, because it is only then that common interest expenses which are to be allocated as indirectly relatable to taxable income and tax exempt income can be computed. When assessee is paying interest on borrowings and the assessee is not able to show that investment in shares are out of internal accruals or non-interest bearing funds, and in the light in the case of Dhanuka Sons [ 2011 (4) TMI 861 - CALCUTTA HIGH COURT ] disallowance under section 14 A can indeed be made. Thus, interest expenses directly attributable to tax exempt income is also directly attributable to taxable income are required to be excluded from the computation of common interest expenses to be allocated under Rule 8D(2)(ii). In the present case, wherein the assessee does not offer any disallowance under Rule 8D(2)(ii) in respect of exempt income, then the provisions of section 14A(2) r.w. Rule 8D(2) can be invoked u/s.14A(3) of the Act by the AO and there is no necessity of recording further satisfaction by the AO - when the assessee itself fails to make disallowance suo motu u/s. 14A r.w. Rule 8D, then the AO is at liberty to invoke these provisions. We find no infirmity in the action of the lower authorities on this issue and the same is confirmed. Appeal of the assessee is dismissed.

  ---

• 2022 (1) TMI 139
  Levy of penalty u/s 271B - not getting books of account audited u/s 44AB - HELD THAT:- We note that the assessee is a retired employee and files regular return of income. For the year under appeal though the assessee has filed income tax return but he has not disclosed the transaction of purchase/sale of equity shares neither under the head of business and profession nor capital gain. Assessee is maintaining share trading account with Nirmal Bang Securities Pvt. Ltd. Total sales made on delivery based transaction - Assessee has not disputed this figure of sale turnover of share trading of delivery based transaction but only claimed before AO that these transaction were in the nature of purchase and sale of shares held for less than 12 months and there was short term capital loss which was not disclosed in the income tax return. AO has given categorically finding that the assessee had made frequent transaction in both delivery as well as non-delivery based segment of shares and volume and quantity of buying and selling of shares was also found to be substantially high which are sufficient to prove that transactions of share trading carried out by the assessee during the year are in the nature of business. This plea of the assessee that he was ignorant about the provision of getting books of account audited, find no merit as ignorance of law is no excuse and carrying out the transactions of the magnitude in itself leaves no room for the assessee to make an excuse for not getting books of account audited u/s 44AB - Decided against assessee.

  ---

• 2022 (1) TMI 138
  Delayed employees contribution to PF ESIC u/s 36(1)(va) - HELD THAT:- We note that as per the provisions of section 36(1)(va) of the Act any sum received by the assessee from any his employee s towards contribution to any PF or superannuation fund or any fund set up under the provisions of Employee Estate Insurance Act, 1948 or any other fund for the welfare of such employees is allowed as an expenditure if such sum is credited by the employer to the employees account in the relevant fund or funds on or before the due date . And for the purpose of this section 36(1)(va) explanation (1) to this section provides that due date means the date by which the assessee is required as an employer to credit an employee s contribution to the employee s account in the relevant fund under any Act, rule, order or notification issued there under or under any standing order, award, contract or service or otherwise. We further find that the alleged disallowance was made as there was a delay in deposit beyond the due date provided under relevant Act which deals with PF/ESIC. But undisputedly the amount has been deposited with the relevant fund before the due date of filing the return of income u/s 139(1). DR has submitted that for the instant issue is debatable and there are various judgments against the assessee also. We, however, find that Hon ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] has held that if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted . We, therefore, under the given facts and circumstances of the case and taking a consistent view in light of judicial precedence or discussed above as well as the decision taken by this Tribunal in the case of M/s Industrial Filters and Fabrics Pvt. Ltd. [ 2018 (9) TMI 1008 - ITAT INDORE] M/s Parag Fans Cooling System Pvt. Ltd. [ 2021 (2) TMI 425 - ITAT INDORE] delete the disallowance and allow grounds raised by the assessee.

  ---

• Customs

• 2022 (1) TMI 137
  Smuggling - Gold - Mutually Satisfactory Disposition - clubbing of gold in the possion of two persons - total amount of the recovered gold exceeds one crore of rupees - plea bargaining versus compounding of offences - quantum of punishment and fine - Section 132 135(1)(a) (b) of the Customs Act, 1962 - HELD THAT:- The concept of plea bargaining was introduced in Indian criminal jurisprudence by way of amendment Act of 2005 in the Code of Criminal Procedure under Chapter XXIA. Chapter XXIA delineates the guidelines for a Mutually Satisfactory Disposition (MSD). Had the legislature intended to exclude the applicability of Chapter XXIA Cr.P.C. to those enactments where there are provisions for compounding the offence, then it would have explicitly mentioned the same in Chapter XXIA Cr.P.C. Chapter XXIA Cr.P.C. was introduced to include all statutes, save those that were specifically excluded under Section 265-A(2). It cannot be said that the legislature was unaware of the Customs Act, 1962, while devising the chapter on plea bargaining. Therefore, the presence of Section 137(3) of the Customs Act, 1962, will not take away the applicability of Chapter XXIA Cr.P.C. In the instant case, a perusal of the Application under Section 265-B Cr.P.C. filed by the Respondent herein, the Reply to the Application dated 22.09.2021, Statement of the Respondent dated 24.09.2021 as well as the Questions put to her, Statement dated 24.09.2021 of the Second Secretary, Embassy of the Republic of Kazakhstan, Statement of Senior SPP for the Customs Department dated 24.09.2021, the MSD dated 24.09.2021, and the consequent judgement dated 24.09.2021, indicates that the procedure that is to be adhered to for plea bargaining under Chapter XXIA Cr.P.C. has been astutely followed with nothing amiss. In the instant case, the gold recovered from the person of the Respondent weighs 1875 grams, which amounts to Rs. 67,70,400/-. The contention of Mr. Kumar that the total value of the gold recovered from both the accused (including Respondent herein) is Rs. 1,13,74,272/- and that total value of the gold recovered from both the accused should be considered while deciding the quantum of punishment is without any merit. This Court finds weight in the submission that the punishment that is to be imposed on the Respondent should correspond to the gold that has solely been recovered from her. Section 34 of the Indian Penal Code, 1860, cannot be made applicable to the instant case - As the market value of the gold recovered from the respondent herein is Rs. 67,70,400/-, she is liable to be sentenced to imprisonment for a period that may extend to three years, or may pay a fine, or both. This Court finds no legal infirmities in the Order - petition dismissed.

  ---

• 2022 (1) TMI 136
  Seeking extension of interim order - HELD THAT:- It is not necessary to delve into those aspects of the matter as learned Revenue counsel makes it clear that the impugned order has elapsed in the aforementioned manner and therefore, there is no fetters on the writ petitioner in sofar as the impugned order is concerned. This submission is recorded. It is deemed appropriate to leave open all questions including questions raised in the captioned writ petition open to be canvassed by both sides i.e., writ petitioner and Revenue, if there are any further proceedings and the same can also be assailed in a manner known to law and all questions are left open to be canvassed by both sides - captioned writ petition is disposed of as closed making it clear that all questions including questions raised in the captioned writ petition are left open to be canvassed by both sides, if the need arises on a future date in this regard.

  ---

• 2022 (1) TMI 135
  Jurisdiction - power of Additional Director General of DRI to issue SCN - section 28(4) of Customs Act, 1962 - penalty under section 114, 114A and 114 AA of Customs Act - HELD THAT:- In M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] , the Hon ble Supreme Course has held that appeals must fail as the show cause notice(s) in the present cases was also issued by Additional Director General (ADG), Directorate of Revenue Intelligence (DRI), who is not a proper officer within the meaning of Section 28 (4) read with Section 2(34) of the Customs Act, 1962. Penalties were imposed under section 114, 114A and 114 AA of Customs Act - in the impugned order and the SCN for confiscation of goods or imposition of penalties is issued under section 124 of the Customs and not under Section 28 - HELD THAT:- The SCN under Section 124 need not be issued by the proper officer . However, in the present case the basis for the proposed confiscation of goods and imposition of penalties in the SCN has been the re- assessment of the goods and demand of the duty under Section 28(4). The basis for re-assessment being unsustainable in view of Canon India, the proposals for confiscation and of goods and imposition of penalties cannot service either. Appeal allowed - decided in favor of appellant.

  ---

• Corporate Laws

• 2022 (1) TMI 134
  Investigation into the affairs of the appellant company - Section 212(1)(a) and (c) of the Companies Act, 2013 - complaints from the investors and continuous reporting in press and visual media about the fraudulent activities of the appellant company - Inquiry was ordered under Section 206 of the Companies Act by the Registrar of Companies - no opportunity of hearing as required under Section 206(4) of the Companies Act was granted to the appellant company - Central Government has formed any opinion or not, keeping in view Section 210 of the Companies Act for directing investigation into the affairs of the appellant company - principles of natural justice. Opportunity of hearing - principles of natural justice - HELD THAT:- Keeping in view the larger public interest, the Inquiry was not conducted by the Registrar of Companies under Section 206(4) of the Companies Act. Proviso to subsection (4) of Section 206 of the Companies Act dispenses with other requirements of sub-section (4) of Section 206 of the Companies Act. The Inquiry under Section 206 of the Companies Act by the Registrar of Companies and the investigation under Section 212 of the Companies Act by the Serious Fraud Investigation Office (SFIO) operate in different fields and the information gathered by the Registrar of Companies under Section 206 of the Companies Act can be used as a tool for further investigation and an investigation under Section 212 of the Companies Act is in public interest and therefore, the first ground argued by the learned counsel for the appellant company is of no help to the appellant company. In the considered opinion of this Court, for ordering an investigation and further action by the SFIO under Section 212 of the Companies Act, the requirement of obtaining a report of the Registrar of Companies is not at all warranted. The matter is only at the stage of investigation and otherwise also the appellant company has not been able to point out the prejudice caused to the appellant company in the matter. The respondents have adopted a transparent process. They have given an opportunity of hearing to the appellant company right from initial stages and the respondents are under obligation to follow the procedure prescribed under Section 212 of the Companies Act and the Companies Act is a complete code in itself. Appeal dismissed.

  ---

• Insolvency & Bankruptcy

• 2022 (1) TMI 127
  Application for the pre-packaged insolvency of the Applicant - HELD THAT:- The Applicant is directed to file reply to each of these IAs along with a synopsis of the objection wise reply within 2 weeks. Rejoinder, if any be filed within 1 week thereafter. The Applicant is also directed to file replies to the objections already uploaded on the DMS. List the matter on 20th December, 2021.

  ---

• Service Tax

• 2022 (1) TMI 133
  Nature of activity - service or not - petitioner joined hands with two other owners and sold about 19.07 acres of land, of which, 5.43 acres belongs to the petitioner - case of petitioner is that the activity undertaken by the petitioner does not amount to service within the meaning of Section 65 (B) (44) which specifically excludes a transfer of title and goods or immovable property by way of sale, gift or in any other manner - applicability of mega exemption notification - place of provision of services rules - HELD THAT:- There is no merits in this writ petition. It is for the petitioner to convince the appellate authority to come to a conclusion that neither the petitioner has provided any taxable service within the meaning of Section 65 (B) (44) of the Finance Act, 1994 or that the service provided by the petitioner well within the negative list under Section 65 (D) of the Finance Act, 1994 or was exempted under the Mega Exemption notification issued by the Central Government under Section 93 of the Finance Act, 1994. It is also open for the petitioner to make out a case as to whether the show cause notice issued by the respondent on 16.04.2019 was contrary to Rule 5 of the Place of Provisions of Service Rules, 2012 or whether the respondent was justified by concluding with the place of service would be location of the respondent of the service as there are disputed question of facts have to be determined only by the authorities acting under the hierarchy Act. This Writ Petition is dismissed with liberty to the petitioner to file statutory appeal before the Appellate Commissioner, within a period of two months from the date of receipt of a copy of this order.

  ---

• 2022 (1) TMI 132
  Refund of CENVAT Credit - processing of application for one time settlement under SVLDR scheme - refusal of refund by way of change of opinion - HELD THAT:- This is nothing but a callous attitude of the Department in giving the rightful refund to the assessee, which is highly undesirable. Accordingly, it is held that the amount of Rs. 2,50,265/-, which was deposited under wrong head by a common challan, should have been credited to the appellant at the time of processing of SVLDRS application. In such facts and circumstances, the said amount remains with the Department by way of Revenue deposit. The Department is directed to refund the said amount of Rs. 2,50,265/- with interest @ 12% p.a. as prescribed under Section 35FF of the Act, from the date of deposit till the date of refund of the said amount - appeal allowed - decided in favor of appellant.

  ---

• 2022 (1) TMI 131
  Rejection of refund claim - rejection on the ground of unjust enrichment - rejection also on the ground of locus standi of the appellant contractor who is rendering construction services to the Ministry of Defence MES, Raiwala, Meerut Cantt. - HELD THAT:- The appellant have applied for refund under proper authorisation and knowledge of the principal (receiver of service). Thus, there is no issue of locus standi. In the facts and circumstances, the appellant is competent to apply for the refund. Principles of unjust enrichment - HELD THAT:- The lower Court has raised doubts regarding the re-payment of the amount of tax, the refund of which has been sought. In view of the facts taken notice by this Tribunal, the issue of unjust enrichment no longer survives, and the appellant have discharged their onus as required under the provisions of Section 12B of the Act. Accordingly, the appellant is entitled to refund of the amount of Rs. 43,90,718/-. Appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2022 (1) TMI 130
  CENVAT Credit - input services - Goods Transport Agency (GTA) services - outward transportation of its final products from the factory to its buyer s premises - place of removal - FOR destination basis - HELD THAT:- The appellant manufacturer has undertaken sale of H.A. [High Availability] bricks/F.C. [Fire Clay] bricks on FOR destination basis, and the transportation cost was included in the sale price, on which central excise duty has been discharged. The Adjudicating Authority has denied the cenvat credit taken by the appellant on the outward transportation from the factory to the dealer s premises. The place of removal is the premises of the buyer, not the factory gate of the seller, as the finished goods are cleared by the appellant on FOR destination basis - the appellant is entitled to cenvat credit on the GTA services for outward transportation of the goods sold on FOR destination basis - Appeal allowed - decided in favor of appellant.

  ---

• 2022 (1) TMI 129
  CENVAT Credit - inputs were neither actually received in the factory nor were used in the manufacture of final product - all invoices were not examined duly - March, 2005 to October, 2006 - violation of principles of natural justice - HELD THAT:- It has been acknowledged that the appellant had maintained its record of about 35 consignments of HR coils during the year 2005-2006 and of about 30 consignments thereof for the period 2006-07. The copies of all 65 invoices have also been acknowledged to have been received by the Adjudicating Authority on 09.05.2017 along with RG 23 A part II register and original form IV register for the relevant period as is apparent from para 5.1, 5.3.2 of the order-in-original. However, still only 9 invoices for the period 2005-2006 and 13 invoices for the year 2006-2007 have been considered by the Original Adjudicating Authority even after receiving the verification report - the rest of the invoices have not been considered merely for want of non-maintenance of RG 23 A Part I register. It has been explained by the learned Counsel for the appellant that RG 23 A part I register is record maintained for quantity of inputs received. The said detail is very much available in RG 23 A Part II register as well as in form IV register which records the movement of received inputs, opening balance, quantity received, total quantity, opening and received quantity issued to production section, issued to job workers issued to such clearance and closing balance. Specific invoices are already mentioned in the given columns of these registers. It is otherwise apparent from the copies of the documents as annexed along with the written synopsis. It is deemed appropriate that the Adjudicating Authority has to give a clear finding to the effect what precisely is still missing for want of RG 23 A Part I register. In absence thereof, Rs. 27,99,593/- as has been confirmed against the appellant lacks reasonable jurisdiction - matter remanded to the Original Adjudicating Authority directing them to consider all the 65 ( 35 invoices of 2005-06 and 30 invoices of 2006-07) invoices and to appreciate simultaneously the RG 23 A part II register and form IV register. Appeal allowed by way of remand.

  ---

• CST, VAT & Sales Tax

• 2022 (1) TMI 128
  Validity of fresh assessment orders - HC quashed the assessment order - Instead of preferring an appeal/appeals before the First Appellate Authority against the fresh assessment orders, the dealers straight way filed writ petitions before the High Court and by impugned judgment and orders, the High Court has allowed the said writ petitions and quashed the fresh assessment orders, solely on the ground that pending suo moto revisional proceedings, the Assessing Officer ought not to have proceeded further with the fresh assessment. - HELD THAT:- Nothing has been observed by the High Court on the merits of the fresh assessment orders. If the fresh assessment orders would have gone against the State, in that case the State would have been the aggrieved party and the State could have raised the objection that pending suo moto revisional proceedings against the order of remand, the Assessing Officer ought not to have proceeded further with the fresh assessments. However, in the present case the fresh assessments have gone against the respective dealers. Therefore, as such the respective dealers were required to prefer the appeals before the First Appellate Authority against the fresh assessment orders. The judgment and orders passed by the High Court quashing and setting aside the fresh assessment orders in the writ petitions under Article 226 of the Constitution of India are unsustainable - Appeal allowed - decided in favor of appellant.

  ---