TMI Tax Updates - e-Newsletter
October 1, 2020

Case Laws in this Newsletter:

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

Articles

1. GST ON SUPPLY OF FOOD AND ACCOMMODATION SERVICES FOR COACHING SERVICES

   By: Dr. Sanjiv Agarwal

News

1. Calendar for Auction of Government of India Treasury Bills (For the Quarter ending December 2020)

2. Tariff Notification No. 93/2020-Customs (N.T.) in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver

3. Shri Piyush Goyal describes Agriculture reforms as a watershed movement for our farmers

4. Monthly Review of Accounts of Union Government of India upto the month of August, 2020 for the Financial Year 2020-21

5. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

6. CCI approves demerger of the Textiles Business of GHCL Ltd. (“GHCL”)into its wholly owned subsidiary GHCL Textiles Limited (“GHCL Textiles”)

7. CCI approves acquisition of certain real estate projects of RMZ Group and 100% equity shareholding in CoWrks by Brookfield Private Capital (DIFC) Limited

Notifications

Customs

1. 93/2020 - dated 30-9-2020 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seed, Areca nut, Gold & Silver

GST

2. 70/2020 - dated 30-9-2020 - CGST

Seeks to amend Notification No. 13/2020 – Central Tax, dated the 21st March, 2020

3. 69/2020 - dated 30-9-2020 - CGST

Seeks to amend Notification No. 41/2020-Central Tax, dated the 5th May, 2020

GST - States

4. 38/2020-State Tax - dated 4-9-2020 - Jharkhand SGST

Jharkhand Goods and Services Tax (Fifth Amendment) Rules, 2020.

5. 37/2020-State Tax - dated 4-9-2020 - Jharkhand SGST

Appoints the 21st day of April, 2020, as the date from which the provisions of Jharkhand Goods and Services Tax (Fourth Amendment) Rules, 2019, shall come into force.

6. 26601-FIN-CT1-TAX- 0002 /2020 - dated 29-9-2020 - Orissa SGST

Notification to give one time extension for the time limit provided under section 31(7) of the OGST Act, 2017 till 31.10.2020

7. F.1-11 (91 )-TAX/GST/2020 (Part-V) - dated 29-9-2020 - Tripura SGST

Seeks to extend due date of compliance under Section 171 which falls during the period from "20.03.20 to 29.11.20" till 30.11.20

8. F.1-11 (91)-TAX/GST/2020 (Part-IV) - dated 25-9-2020 - Tripura SGST

Extension of due date for furnishing of FORM GSTR-3B for the month of August, 2020 for taxpayers having Annual T.O. upto ₹ 5 cr

9. F.1-11 (91)-TAX/GST/2020 (Part-IV) - dated 25-9-2020 - Tripura SGST

Seeks to bring into force clauses 2 and 13 of the TSGST (3rd Amendment) Ordinance, 2020

10. F.1-11 (91)-TAX/GST/2020 (Part-IV) - dated 25-9-2020 - Tripura SGST

Seeks to provide relief by lowering of interest rate for a prescribed time for tax periods from February, 2020 to July, 2020.

11. F.1-11 (91)-TAX/GST/2020 (Part-IV) - dated 25-9-2020 - Tripura SGST

Seeks to provide one time amnesty by lowering/waiving of late fees

12. F.1-11 (91)-TAX/GST/2020 (Part-IV) - dated 25-9-2020 - Tripura SGST

Seeks to provide relief by waiver of late fee for delay in furnishing outward statement in FORM GSTR-1

13. F.1-11 (91)-TAX/GST/2020 - dated 25-9-2020 - Tripura SGST

Seeks to extend the due date for filing FORM GSTR-4 for financial year 2019-2020 to 31.10.2020

Circulars / Instructions / Orders

Income Tax

1. F. No. 225/150/2020-ITA-II - dated 30-9-2020

Order u/s 119 of the Income-tax Act,1961 regarding extension of dates for filing of belated and revised ITRs for the A.Y 2019-20

2. 17/2020 - dated 29-9-2020

Guidelines under section 194-O (4) and section 206C (1-I) of the Income-tax Act, 1961

DGFT

3. Trade Notice No. 28/2020-21 - dated 30-9-2020

Submission of ICLCs (Irrevocable Commercial Letter of Credits) eligible as per Para 1.05(b) of Foreign Trade Policy 2015-20 for export of Onions

4. 21/2015-2020 - dated 30-9-2020

Amendment of Para 2.54 of the Handbook of Procedures, 2015-2020

Customs

5. 42/2020 - dated 29-9-2020

Amending Circular 38/2016-Cus on Guidelines for Provisional Assessment under Section 18 of the Customs Act 1962

Highlights / Catch Notes

GST

• Sale of Transferable Development Rights or Floor Space Index Subject to 18% GST Under Heading 9972.

  Case-Laws - AAAR : Levy of GST - taxable supply or not - sale of Transferable Development Rights (TDR)/ Floor Space Index (FSI) received as consideration for surrendering the joint rights in land in terms of Development Control Regulations - The sale of TDR/FSI would be leviable to GST under Heading 9972, at the rate of 18% - AAAR
  Visit to Get Source

  ---

• Appellant Denied ITC on GST for Lift Installation; Expense Recorded as Capital Expenditure Without Depreciation Claim.

  Case-Laws - AAAR : Input Tax Credit - lift installation charges paid to Fujitec - credit booked as Capital expenditure in their books without availing the depreciation on 18% GST charged by Fujitec - The Appellant will not be eligible to avail the ITC in respect of the GST paid on lift installation charges paid to the lift contractor, in terms of section 16(2)(b) read with section 17(5)(c) and 17(5)(d) of the CGST Act, 2017 - AAAR
  Visit to Get Source

  ---

• GST Classification on Tunnel Construction: Earthwork Over 75% Qualifies for Tax Exemption, Says AAAR Modification.

  Case-Laws - AAAR : Works Contract - Earth Work or not - construction of tunnel and its allied works - the Contract may be for something else- be it construction of building, tunnel, canal, road and in these contracts if the earthwork constitutes more than 75% then it qualifies for the above entry. If the intention of the Legislature had been to cover only pure contract of earthworks in it then a qualifying condition of more than 75% by value wouldn't have been provided. Benefit of exemption allowed - AAR modified - AAAR
  Visit to Get Source

  ---

• Affordable Housing Construction Taxable Under Entry No. 3(v)(da) Unless Opting for Rates in (ie) or (if.

  Case-Laws - AAR : The works contract service for the construction of those dwelling units in the RREP that are affordable residential apartments in terms of clause 4(xvi) of the Rate Notification are taxable under Entry No. 3(v)(da) of the said notification, provided the applicant does not opt for paying tax at the rate specified in (ie) or (if) of Entry No. 3. - AAR
  Visit to Get Source

  ---

• E-way Bill Error Leads to Vehicle Detention: Officer to Evaluate Petitioner's Defense and Determine Liability.

  Case-Laws - HC : Detention of vehicle - E-way bill did not mention correct details - The proper Officer is requested to examine such defence of the petitioner and thereafter determine the liability, if any, in accordance with law. - HC
  Visit to Get Source

  ---

Income Tax

• Court Criticizes Tax Authority for Denying Delay Condonation in Revised Return u/s 139(5), Cites No Justification.

  Case-Laws - HC : Condonation of delay in filing the revised return - belated return u/s 139 (5) - No valid justification for the 4th respondent to have rejected the request of the petitioner under S. 119 (2) of the Act, more so when granting the relaxation as prayed for by the petitioner would not have prejudiced the interests of the department in any manner. - HC
  Visit to Get Source

  ---

• Tribunal Must Explain If No Failure Found in Assessee's Disclosure for Reopening Assessment u/s 147.

  Case-Laws - HC : Reopening of assessment u/s 147 - the assessment order as well as the order passed by the CIT(A) are speaking orders. If the Tribunal comes to the conclusion that the Assessing Officer has not recorded any failure on the part of the assessee to disclose fully and truly any material facts necessary for its assessment, it is required that the Tribunal expresses itself as to how it formed such a opinion. - HC
  Visit to Get Source

  ---

• Deduction Eligibility u/s 80IB: Strict Adherence to Statutory Language in Housing Projects Tax Recovery.

  Case-Laws - HC : Eligibility for deduction u/s 80IB - housing projects - if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be'. In other words, if there be admissible in any statute, what is called an equitable construction, certainly, such a construction is not admissible in a taxing statute where you can simply adhere to the words of the statute. - HC
  Visit to Get Source

  ---

• Court Orders Company Officer to Identify Individual for Tax Return Submission; Provide 2011-2012 Director Details.

  Case-Laws - HC : Action against the Principal officer of the company - identifying a person who is in a position to prepare and submit a return on behalf of the Company. - the petitioner is directed to furnish the details of the acting Directors of the Company during the Financial Year 2011-2012 to the respondent herein, by way of a reply. - HC
  Visit to Get Source

  ---

• Tribunal Reinstates Penalty for Concealment Despite Voluntary Disclosure; ITAT to Reconsider Unraised Penalty Issues u/s 271(1)(c).

  Case-Laws - HC : Penalty u/s 271(1)(c) - While apparently surrendering all the income on its own by the Assessee ought not to have attracted penalty for concealment under Section 271(1)(c) Tribunal has not only restored the penalty by the impugned order but also restored the penalty on the issue for which no ground was raised in the Grounds of Appeal filed by the Revenue before it. - Matter restored before ITAT - HC
  Visit to Get Source

  ---

• High Court rules reassessment u/ss 147/148 invalid due to change of opinion on TDS deduction u/s 194-I.

  Case-Laws - HC : Validity of reopening of assessment - even if anything is not highlighted in the Audit Report, the Assessee has shown that this aspect viz., non-deduction of TDS on the Machine Hire Charges attracting Section 194-I of the Act was very much discussed by the AO during the original Assessment proceedings. - Thus on mere change of opinion, the AO could not have invoked the reassessment proceedings u/s 147/148 - HC
  Visit to Get Source

  ---

• AO's Order on Loans and Creditors Revised as Erroneous; Pr.CIT Directs Action u/s 263. No Stock Check Needed.

  Case-Laws - AT : Revision u/s 263 - Order of the AO in respect of unsecured loans, sundry creditors/liabilities and sundry debtors accepted by the AO is erroneous and prejudicial to the interest of revenue. We hereby make it clear that the direction of the ld. Pr.CIT in respect of stock differences found from the record is not required to further verification and in respect of unsecured loans, sundry creditors/liabilities and sundry debtors the AO has to follow the direction of the ld. Pr.CIT. - AT
  Visit to Get Source

  ---

• Penalty u/s 271(1)(c) Deleted as Assessee's Property Value Details Found Sufficient and Accurate by Appeals Authority.

  Case-Laws - AT : Levy of penalty u/s 271(1)(c) - it was the assessee which has actually provided all the details in respect of value of properties which were purchased from Financial Year 1990-91 onwards and the respective written down value at the end of each year before the lower authorities. It was the very same details that were furnished by the assessee which was placed reliance by the ld. CIT(A) while levying the penalty. - Penalty deleted - AT
  Visit to Get Source

  ---

Customs

• Revenue's Right to Appeal CESTAT Order: Enforcement Only If No Appeal Filed or Dismissed Within Statutory Period.

  Case-Laws - HC : Seeking implementation of the order of CESTAT - Right of Revenue to file an appeal in the HC against the order of tribunal - The right of the petitioner to insist on the respondent's complying with Ext.P7 order will arise only in the event of the respondents not filing an appeal within the statutory period provided for the same or if an appeal, when preferred within the said time, is dismissed by the appellate authority. - Prudence would dictate, therefore, that this court refrain from issuing peremptory directions at the said stage of the proceedings by following the well settled principles - HC
  Visit to Get Source

  ---

Indian Laws

• Court Rules Postdated Cheques Presented in 2007 Comply with Section 138 of Negotiable Instruments Act.

  Case-Laws - HC : Dishonor of Cheque - In this case, the cheques were postdated to 10.12.2017. They became payable only from the dates endorsed therein. Even though the dates of presentation and dishonour were not specifically pleaded, it is clear from the averments made in the plaint that the cheques were presented within the period of two months since they became payable - thus notwithstanding that the issue of cheques was as early as in 2001, the presentation made in 2007 in accordance with proviso (a) to Section 138 cannot be said to offend Section 84 (2) of NI Act - HC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2020 (9) TMI 1145
  Levy of GST - taxable supply or not - sale of Transferable Development Rights (TDR)/ Floor Space Index (FSI) received as consideration for surrendering the joint rights in land in terms of Development Control Regulations - Agreement entered between the Appellant and Pune Municipal Corporation (PMC) read with Development Control Regulations - classification under GST - Applicable rate of GST. Whether TDR in itself is land and Building or Immovable property other than Land Building ? HELD THAT:- The Appellant has referred to various definitions of the term land occurring under other legislations where the term land has been defined to include benefits arising out of land and as TDR is a benefit arising out of land it will also come under Clause 5 of schedule III to the CGST Act, 2017. We do not agree with the argument of the Appellant as the Clause 5 speaks only of land and building . Neither the GST Act nor the schedules define land or choose to do that. In that case there is no need to qualify the term land by ascribing any meaning to it or defining it by borrowing definitions from other laws. The CGST law does not make a reference to any other law while mentioning land in Schedule III. Also, if it had wanted to widen the scope of land to include benefits arising out of land it could have very well done so. Schedule III to the CGST Act, 2017 is so to speak an exemption notification and exemption notifications have to be strictly interpreted - The term land has to be interpreted strictly and cannot be extended to cover benefits arising out of land . W hether supply of TDR is supply of service or supply of Goods ? - HELD THAT:- The transferable development right that is TDR is an immovable property and hence not covered under the definition of goods. But the transfer of development right which is an immovable property is covered under the definition of service as the definition of service is very wide and it covers anything other than goods under its ambit. Hence as per the definition of supply under Section 7 of the CGST Act, 2017, the transfer of TDR made for consideration in the course or furtherance of business is supply of service and taxable as per the provisions of CGST Act, 2017. It is again made clear that levy of a tax is not on land but levy of tax is on the benefits arising out of the land, which are in the nature of service - The definition of service is broadened so as to cover all commercial transactions within its ambit and sale of TDR is a commercial transaction. There is no section under the Act which explicitly prohibits the taxation of TDR. The Schedule Ill to the CGST Act, 2017 only mentions land to be outside the ambit of GST and not benefits arising out of land. TDR is a benefit arising out of land and not land itself - Therefore, it is liable to tax. As the Act casts a liability on the supplier to pay tax on supply or transfer of TDR, the Central Government, in exercise of the powers conferred by sub-section (1) of section 9, sub-section (1) of section 11, sub-section (5) of section 15 and sub-section (1) of section 16 of the Central Goods and Services Tax Act, 2017 (12 of 2017), on the recommendations of the GST Council notified the rate as 9% (CGST) covered under Si. No. 16, item (iii) of Notification No. 11/2017 - Central Tax (Rate), dated 28-06-2017 (heading 9972). Therefore, the effective rate of GST on TDR/FSI is 18% . Further, the Central Government issued Notification No. 4/2018 - C.T. (Rate) dated 25.01.2018, thereby postponing the time of supply till the time of supply of the developer arises. The Government presupposes a liability to pay tax before the time of supply arises. The subject transaction would adequately get classified under the Heading 9972. Now, the Notification No. 11/2017- C.T.(Rate) dated 28.06.2017 to ascertain the exact entry and the GST rate thereto. On perusal of the aforesaid Notification, it is observed that the subject transaction would be covered under entry at SI. No. 16 (iii) of the Notification No. 11/2017-C.T. (Rate), dated 28.06.2017, bearing description Real estate services other than (i) and (ii) above , and accordingly, would attract GST at the rate of 18%. The sale of TDR/FSI would be leviable to GST under Heading 9972, at the rate of 18%, as prescribed under the entry at St. No. 16 (iii) of Notification No. 11/2017 - Central Tax (Rate), dated 28-06-2017 - advance ruling upheld.

  ---

• 2020 (9) TMI 1144
  Input Tax Credit - lift installation charges paid to Fujitec - credit booked as Capital expenditure in their books without availing the depreciation on 18% GST charged by Fujitec - challenge to AAR decision - HELD THAT:- The definition of the Plant and Machinery categorically excludes building or any other civil structure. Since, the lifts/elevators, erected, installed and commissioned in the buildings, are construed as an integral part of those building as held by the Advance Ruling Authority on the basis of the Hon ble Apex court judgment mentioned in the impugned Advance Ruling, hence, the same would be excluded from the category of Plant and Machinery , in terms of the provisions related to the Plant and Machinery laid out. Further, the Larger Bench of the Supreme Court in the case of M/S. KONE ELEVATOR INDIA PVT. LTD. VERSUS STATE OF TAMIL NADU AND OTHERS [ 2014 (5) TMI 265 - SUPREME COURT ] has held that in the case of installation of lift after the goods are assembled and installed with skill and labour at the site, it becomes a permanent fixture of the building. Once it has been established that the lift, after its erection, installation and commissioning, would be considered as part of the building, and hence immovable property, the Appellant cannot claim ITC on the input services in terms of the provisions laid out under section 17(5)(d) of the CGST Act, 2017. The provision of Section 17 of CGST Act, says that ITC would be available on tax paid on works contract services when such services are an input service for further supply of works contract service. The appellant does not fulfill the conditions laid down above. It has to be understood that the exception carved out to provide ITC in the case of tax paid on works contract is for those who in turn provide works contract service. For eg when a principal gets a contract of work executed from a sub-contractor and provides the same to the employer. In such a case, the principal becomes eligible for ITC even though the contract results in immoveable property. However, the situation is far from it in the present case. Firstly, the society itself is not a works contract service provider. Nor is it in the business of providing works contract services. It has not itself provided any works contract service to the members. If the society is not itself a provider of the service there is no question of any ITC on input service. The works contract service is received by the society for the common benefit of the members. Circular No. 109/28/2019-GST, dated 22.07.2019 ,issued by the CBIC as referred to by the Appellant to contend that the Circular does not disallow the ITC in respect of goods, which become immovable property after being installed, and hence they are rightfully eligible to avail ITC in respect of the lift installation charges paid to the lift contractor, even if the lift is considered as immovable property, as held by the Maharashtra Advance Ruling Authority - we are of the view that the said Circular allows the ITC in respect of GST paid on Capital Goods only, and not on the works contract services. It is not in dispute that the Appellant is availing the works contact services from the lift contractor for the replacement of the lift in the Society, which after being installed, becomes immovable property, and therefore ITC in respect of GST paid on such works contract services would not be admissible to the Appellant. The Appellant will not be eligible to avail the ITC in respect of the GST paid on lift installation charges paid to the lift contractor, in terms of section 16(2)(b) read with section 17(5)(c) and 17(5)(d) of the CGST Act, 2017 - decision of AAR upheld - appeal not maintainable.

  ---

• 2020 (9) TMI 1143
  Works Contract - Earth Work or not - construction of tunnel and its allied works - Composite supply of goods and services - Sl.No. 3A of Notification no. 12/2017-CT (Rate) dated 28th June 2017 - any activity in relation function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution - HELD THAT:- It is evident that as per the work order, the work deals with excavation of earth and depositing it on the sides. As per the definitions, it is clear that Earthwork includes excavation and as per the contract the Earthwork constitutes more than 92.66% of the contract by value . On a careful reading of the entry, we find ourselves in disagreement with the finding of the AAR. The entry says that the Composite supply should have earthwork forming more than 75% of the contract by value. Thus it very much clear from the wording that the Contract may be for something else- be it construction of building, tunnel, canal, road and in these contracts if the earthwork constitutes more than 75% then it qualifies for the above entry. If the intention of the Legislature had been to cover only pure contract of earthworks in it then a qualifying condition of more than 75% by value wouldn t have been provided. We therefore find the reasoning of the AAR untenable. The Services provided by the appellant in the impugned matter qualifies for inclusion under entry 3(vii) of the Notification 12/2017 dt 28.6.2017.(as amended by Notification 31/2017 - dt 13.10.2017).

  ---

• 2020 (9) TMI 1142
  Concessional rate of GST - affordable housing project (AHP) - Works Contract - whether Entry No. 3(v)(da) of Notification 11/2017 Central Tax (Rate) dated 28/06/2017, as amended time to time, applies to the works contract service received from the contractors? - HELD THAT:- Entry No. 3(v)(da) of the Rate Notification is related to the construction of low-cost apartments. Clause 4(xvi) of the Rate Notification defines an affordable residential apartment. It shall mean a residential apartment in a project which commences on or after 01/04/2019 or in an ongoing project in respect of which the promoter has not exercised the option to pay tax at the rate specified in (ie) or (if) of Entry No. 3, having carpet area not exceeding 60 sqm in metropolitan cities or 90 sqm in cities or towns other than metropolitan cities and for which the gross amount charged is not more than 45 lakh - It is ascertained from the WBHIRA website that the project is under construction and the flats offered on sale are partly booked. The flats having a carpet area of 60 sqm or less per unit in the RREP qualify as affordable residential apartments, provided the gross amount charged per unit does not exceed Rs. 45 lakh and the promoter has not exercised the option to pay tax at the rate specified in (ie) or (if) of Entry No. 3. It now needs to be ascertained whether the RREP is an affordable housing project, which enjoys infrastructure status vide the AHP Notification - The built-up area for the affordable residential apartments, as identified by the architect, under the RREP is 7885 sqm (the calculation sheet is attached). The relevant FAR, therefore, comes out to be 1.401, which is 50.96% of the FAR for the project. The RREP, therefore, is an affordable housing project in terms of the AHP Notification. Thus, the works contract service for the construction of those dwelling units in the RREP that are affordable residential apartments in terms of clause 4(xvi) of the Rate Notification are taxable under Entry No. 3(v)(da) of the said notification, provided the applicant does not opt for paying tax at the rate specified in (ie) or (if) of Entry No. 3.

  ---

• 2020 (9) TMI 1141
  Detention of vehicle - E-way bill did not mention correct details - the G.S.T. Tribunal has not been constituted so far by the Central Government for the State of Uttar Pradesh - Section 129 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Admittedly, in the facts of the present case the petitioner did accept that the e-way bill with the vehicle did not contain correct description with regard to movement of goods. Another e-way bill (though not available with the vehicle, at the time of detention) has also been produced along with details of job work executed in favour of the petitioner. The tax invoice which has been relied upon for determining the liability of tax admittedly is of the year 2018 and it is not the case of the Department that such amount of tax was not paid at the time when the machine was purchased in the year 2018 itself. It is also not the case of the Department that this machine has been sold to anybody. Perusal of the orders passed would clearly go to show that the claim set up by the assessee with regard to transportation of machine for performance of job work has not been examined on merits. There is also no consideration or finding in the orders passed by the authority which may suggest that this transportation of machine was for any other purpose. The proper Officer in terms of the scheme was expected to examine the specific defence set up by the petitioner and consequently determine the liability of tax payable by the petitioner. It is only after determining the liability to pay tax that the liability to pay penalty could be determined. This exercise does not appear to have been performed by the proper Officer in the manner expected by it in accordance with the Act. Petitioner s claim that no liability to pay tax had arisen till the time when the machine was being transported is also required to be examined. Such factual issues require proper determination at the level of the proper Officer, at the first instance. The proper Officer is requested to examine such defence of the petitioner and thereafter determine the liability, if any, in accordance with law. It is made clear that this Court has not determined the liability of the petitioner on merits and all issues of fact are left open to be examined by the proper Officer, at the first instance - petition allowed by way of remand.

  ---

• Income Tax

• 2020 (9) TMI 1140
  Condonation of delay in filing the revised return - belated return u/s 139 (5) rejected by Principal Commissioner - HELD THAT:- The delay that the petitioner sought to get condoned was only 42 days. Through Ext.P2 revised return, the petitioner had in fact brought to the notice of the Department, the details of tax that had been deducted at source from amounts received by the petitioner by way of compensation for land acquired from him during the previous year relevant to the assessment year Assessing authority cannot ignore the fact of deduction of tax at source, from payments made to the petitioner during the relevant previous year, while completing the assessment for the assessment year in question. This would be more so because, after deduction of tax at source, the person deducting tax at source would have issued the necessary intimation to the Income Tax Department while forwarding the deducted tax amounts to the Department on behalf of the petitioner assessee. No valid justification for the 4th respondent to have rejected the request of the petitioner under S. 119 (2) of the Act, more so when granting the relaxation as prayed for by the petitioner would not have prejudiced the interests of the department in any manner. Accordingly,quash Ext.P9 order and direct the respondents to consider the details given in Ext.P2 revised return also while finalising the assessment in relation to the petitioner for the assessment year 2014-2015 with consequential benefits.

  ---

• 2020 (9) TMI 1139
  Reopening of assessment u/s 147 - whether AO recorded any reason for the failure on the part of the assessee to disclose fully and truly all material facts? - HELD THAT:- Substantial portion deals with the statement of law as to how the re-assessment proceedings have to be done and as to how the Courts have interpreted the procedure to be followed by the AO while exercising the powers u/s 147 - Tribunal did not spell out as to how it came to the conclusion that the Assessing Officer did not record any failure on the part of the assessee to disclose fully and truly any material facts necessary for its assessment. Assessee as accepted notice for the respondent assessee, on instructions, submits that substantial material was placed before the Tribunal and merely because the Tribunal had not recorded those submissions nor brought on record the materials, the assessee should not be put to prejudice. An order passed by a Court or a Tribunal should stand or fall based on the reasons contained in that order. The order cannot be substituted by reasons at the appellate stage when the same did not find place in the original order. This legal principle has been well explained in the celebrated judgment in the case of Mohinder Singh Gill Vs. Chief Election Commissioner [1977 (12) TMI 138 - SUPREME COURT] We would not be justified in making any observations on the merits of the matter as to whether the reasons have been recorded or not. All that we can say is that the assessment order as well as the order passed by the CIT(A) are speaking orders. If the Tribunal comes to the conclusion that the Assessing Officer has not recorded any failure on the part of the assessee to disclose fully and truly any material facts necessary for its assessment, it is required that the Tribunal expresses itself as to how it formed such a opinion. In the absence of any such reasons emanating from the impugned order, we have to necessarily hold that the impugned order passed by the Tribunal is devoid of reasons and would call for interference. For all the above reasons, we are inclined to interfere with the impugned order. As mentioned earlier, we do not want to express anything on the merits of the matter as it may prejudice the interest of the assessee. Tax case appeal is allowed, the impugned order is set aside and the matter is remanded to the Tribunal for a fresh consideration.

  ---

• 2020 (9) TMI 1138
  Deduction u/s 80IB(10) - unaccounted money, found during the search proceedings and explained as on money received - Whether the Tribunal was right in holding that, transactions entered into, with the buyers of flats, are eligible for deduction, even though there is violation of the sub-Sections(e) and (f) of Section 80IB(10), on the ground that these transactions were entered into before the amendments to sub-Section (3) and (f) of Section 80IB(10)? - HELD THAT:- In case, a residential unit is allotted prior to 01.04.2010, the conveyance in such a residential unit can be registered subsequently also and in such a case also the assessee will be entitled to the benefit of deduction under Section 80IB(10) of the Act. Clauses (e) and (f) of Section 80IB(10) of the Act are prospective in nature and apply in respect of transactions entered on or after 01.04.2010, which is evident from Circular No.5/2010 dated 03.06.2010. From perusal of the order passed by the Assessing Officer, it is evident that unaccounted money during the search proceedings has been treated to be business income by the Assessing Officer. Tribunal itself has found that all the transactions except in respect of two flats have been entered into by the assessee in the year 2007-08 and therefore, the provisions cannot be applied to transactions entered into by the assessee prior to introduction of clauses (e) and (f) to Section 80IB(10) - Decided against revenue.

  ---

• 2020 (9) TMI 1137
  Eligibility for deduction u/s 80IB - housing projects - satisfaction of the requirements as laid down in clauses (a) to (d) of sub-Section (1) of Section 80IB - individual units measuring less than 1500 sq.ft. - object of Section 80IB(10) of the Act is to provide 100% deduction of the profits derived by an undertaking from developing and building housing projects - HELD THAT:- In the instant case, the housing project of the assessee was approved in respect of an area of 48,939 square feet, which is more than one acre i.e., 43,500 square feet, therefore, we hold that the assessee has complied with requirement contained in Clause (b) of Section 80IB(10). 32% of the units of the assessee are having an area of more than 1,500 square feet - It is well settled rule of statutory interpretation that when a situation has been expressed differently, the legislation must be taken to have been tended to express a different intention. [SEE: COMMISSIONER OF INCOME TAX, NEW DELHI VS. EAST WEST IMPORT AND EXPORT (P) LTD [ 1989 (2) TMI 1 - SUPREME COURT] . On plain reading of clause (c) of Section 80IB(10) of the Act, it is evident that the same does not exclude the principle of proportionality in any manner. Therefore, we hold that the CIT (Appeals) as well as the Tribunal have rightly found that the assessee has complied with the requirement contained in clause (c) of Section 80IB(10). Requirement of commercial area in a project not exceeding 5 % of build up area - The Supreme Court in RADHASOAMI SATSANG Vs. COMMISSIONER OF INCOME-TAX [ 1991 (11) TMI 2 - SUPREME COURT] has held that even though principles of res judicata do not apply to income tax proceedings, but where a fundamental aspect permeating through the different Assessment Years has been found as the fact one way or the other and the parties have allowed the position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in subsequent year. For this reason also, in the facts of the case, a different view cannot be taken. It is held that the assessee has complied with the requirements contained in clauses (a), (b), (c) (d) of Section 80IB(10) of the Act. The substantial questions of law framed by a bench of this court are answered against the revenue and in favour of the assessee.

  ---

• 2020 (9) TMI 1136
  Disallowance u/s 40A(3) - CIT-A deleted the addition also confirmed by ITAT - Whether the Appellate Tribunal has erred in law and on facts in holding that the payments were covered by Rule 6DD(b) although the payments were made by the assessee to M/s. C.C.Gandhi Co. and not to the Government ? - HELD THAT:- Having considered the concurrent findings, we do not find that, the Tribunal has erred in law and on facts in confirming the decision of CIT (A) deleting the disallowance made under Section 40A(3) of the Act. Hence, we find that, both the authorities have correctly deleted disallowance made by the assessing officer. No interference is called for. Therefore, we are not inclined to admit this appeal. Questions raised in the appeal are decided against the revenue and in favour of the assessee.

  ---

• 2020 (9) TMI 1135
  Action against the Principal officer of the company - identifying a person who is in a position to prepare and submit a return on behalf of the Company. - Direction to treat the petitioner herein as a Principal Officer as defined under Section 2(35)(b) of the Income Tax Act, 1961, the petitioner herein, who had acted as a Director of the Company for a short period between 01.04.2010 and 14.10.2010 - HELD THAT:- This Court is of the view that when there were acting Directors of the Company, who are said to be still continuing as the Directors of the Company, the department could have proceeded against any one of such acting Directors for the reassessment proceedings and could have treated any one of them as the Principal Officer. Petitioner claims that he is in possession of the details of the acting Directors during the relevant Assessment Year. If such details are directed to be furnished to the respondent department and thereafter a decision could be taken, it would be more appropriate and convenient for the further assessment proceedings - since effective proceedings may not be possible with the petitioner as the Principal Officer, who had acted for a very short period as a Director and had retired thereafter. Impugned order treating the petitioner namely, Suvendra Kumar Panda as a Principal Officer is set aside. Consequently, the petitioner is directed to furnish the details of the acting Directors of the Company during the Financial Year 2011-2012 to the respondent herein, by way of a reply.

  ---

• 2020 (9) TMI 1134
  Penalty u/s 271(1)(c) - non-disclosure of income and by voluntary surrender of income in the return of income filed which was claimed to be an expenditure for Land Development Charges debited to Profit and Loss Account, which later on, the Assessee did not claim in the revised return filed after issuance of notice under Section 148 - HELD THAT:- Matter deserves to be remanded back to the learned Tribunal as it seems, it has not only committed some factual errors in respect of filing of return of income by the Assessee but also invoked Explanation 3 and 5A of Section 271(1)(c) with respect to the alleged non-filing return of income by the Assessee in pursuance of notice issued after the Search which took place in the business place of the Assessee and such a revised Return was filed by the Assessee voluntarily surrendering such income. While apparently surrendering all the income on its own by the Assessee ought not to have attracted penalty for concealment under Section 271(1)(c) Tribunal has not only restored the penalty by the impugned order but also restored the penalty on the issue for which no ground was raised in the Grounds of Appeal filed by the Revenue before it. Tribunal ought to decide the Appeal again after giving opportunity to both the parties afresh on the grounds of Appeal raised by the Revenue. We set aside the order passed by Tribunal in respect of penalty under Section 271(1)(c) of the Act and we request the learned Tribunal to decide the Appeal again.

  ---

• 2020 (9) TMI 1133
  Validity of reopening of assessment - reassessment initiated after four years - whether no fresh material on record for such reassessment proceedings? - addition 40(a)(ia) as non deduction of TDS on Machine Hire Charges - HELD THAT:- In our opinion, even if the relevant facts are not placed before the Auditors by the Assessee himself, they may qualify their Audit Report under Section 44AB - If the Auditor s Report does not specifically disclose any relevant facts, or if there is any omission or non-disclosure, it has to be attributed to the Assessee only rather than to the Auditor. There are no facts placed before us like this that the Assessee had disclosed the relevant facts, but, still the Auditor failed to disclose the same in his Audit Report. Even if anything is not highlighted in the Audit Report, the Assessee has shown that this aspect viz., non-deduction of TDS on the Machine Hire Charges attracting Section 194-I of the Act was very much discussed by the Assessing Authority during the original Assessment proceedings. There was really a disclosure of full and complete facts by the Assessee before the Assessing Authority during the course of Original Assessment Proceedings itself under Section 143(3) - Thus on mere change of opinion, the Assessing Authority could not have invoked the reassessment proceedings under Section 147/148 - Decided in favour of assessee.

  ---

• 2020 (9) TMI 1132
  Entitlement to the benefit of Section 10AA - AO denied the benefit on the ground that the assessee has violated the terms and conditions in the Letter of Approval, which was granted by the Development Commissioner, for manufacture of bangles and pendants - Development Commissioner initiated proceedings under the provisions of the Foreign Trade (Development and Regulations) Act 1992, as the assessee had violated the conditions in the Letter of Approval, which culminated in issuing the order of penalty to them - HELD THAT:- Writ Court has referred to the letter of the Customs Department dated 12.03.2014, addressed to the Assistant Development Commissioner of MEPZ, SEZ, wherein they have clarified that medallions are also pendants. This was also taken note of by the learned Writ Court and quashed the order of penalty imposed by the Development Commissioner under the provisions of the Foreign Trade (Development and Regulations) Act 1992. Thus, the basis or the substratum, based on which the assessment was completed denying the benefit to the assessee, did not no longer survive. What is required to be seen for extending the benefit under Section of the 10AA Act is, to see whether the assessee is an entrepreneur as referred to, defined under Section 2(j) of the Special Economic Zone Act. No doubt, the assessee falls within the said definition, as they had been granted a Letter of Approval by the Development Commissioner under Section 15(9) of the Special Economic Zones Act. That apart, the competent authority who intends to certify as to what would be the date of commencement of production, would be the Development Commissioner and not the Income Tax Officer. Relief granted by the Tribunal by interpreting as to what is the pendant and medallion, cannot be interfered in an appeal filed under Section 260-A of the Act. The argument of Mr.T.R.Senthil Kumar, learned Senior Counsel appearing for the Revenue, that the issue goes to the root of the matter is not acceptable because of the subsequent developments that had taken place in the writ petition filed by the assessee, being allowed by this Court and the order of penalty imposed by the Development Commissioner being set aside. The reason for setting aside the order of penalty imposed on the assessee, is that the assessee has not violated the terms and conditions of the Letter of Approval and that the medallion is also classifiable as a pendant. - Decided against revenue.

  ---

• 2020 (9) TMI 1131
  Violation of principles of natural justice - petitioner did not appear for the hearing on 11.011.2019, as scheduled - As per petitioner all prior notices and communications have been received by e-mail, this show cause notice was only uploaded on the website and thus had not come to its attention - HELD THAT:- There is no serious dispute to the position that the show cause notice dated 06.11.2019 has only been uploaded and not served by e-mail. Petitioner has not been granted an effective opportunity to state its case before the AO - it is only at the stage of show cause notice that the issue to be decided in assessment is crystallised and communicated to the assessee and it is thus incumbent upon the Officer to have ensured that such notice was properly served and sufficient time granted to the assesse to respond prior to finalisation of assessment. Impugned order of assessment dated 19.11.2019 is set aside. The petitioner will appear before the Assessing Officer on Friday, the 18th of September, 2020, without expecting any further notice in this regard, armed with a reply to the show cause notice.

  ---

• 2020 (9) TMI 1130
  Rectification u/s 254 - part of income which was not accounted on the basis of accrual system of accounting had been offered to tax in the very same assessment year i.e., AY 2012-13 - plea of assessee that the sum added by the AO on the basis of mercantile system of accounting was offered by the assessee to tax in a later assessment year as income and therefore the addition made will amount to taxation of the same income twice - HELD THAT:- We are of the view that the words either in this year or should be added to line 6 of para 14 of the order of Tribunal, after the words how the income offered so that the 6th line of para 14 reads as under:- how the income offered either in this year or in a later assessment year was income which was We hold and order accordingly. Absence of insertion of the aforesaid words in the order of Tribunal would give rise to an interpretation, which may not be in tune with the intent of para 14, which is that, the same income cannot be taxed twice.

  ---

• 2020 (9) TMI 1129
  Rectification of mistake u/s 254 - Capital gains chargeable to tax - sum was received by the assessee on his retirement from a partnership firm - Tribunal said that right of a partner in the firm is a capital asset and when that is relinquished, the consideration paid on such relinquishment, over and above the sum credited to the capital account of the concerned partner should be regarded as capital gain and brought to tax. Goodwill was not an asset which was subject matter of transfer and therefore the provisions of section 55(2)(a) of the Act will not apply - HELD THAT:- What was subject matter of transfer was right of partner in the partnership firm which comprises of several components, goodwill being one of the components. Apart from the above, we are also of the view that the issue that is sought to be agitated by the revenue in this miscellaneous petition is a highly debatable issue. The jurisdiction u/s. 254(2) of the Act confined only to rectifying mistakes that are apparent on the face of record. In the garb of an application u/s 254(2) of the Act, the assessee cannot seek a review of the order of Tribunal. There is no mistake apparent on the face of the record. We are, therefore, of the view that there is no merit in this petition filed by the revenue and accordingly dismiss the same.

  ---

• 2020 (9) TMI 1128
  Revision u/s 263 - addition in respect of notional annual letting value on unsold flats held as stock in trade - assessee contended that notional annual letting value of unsold flats held as stock-in-trade is a debatable issue - HELD THAT:- In the present case we are of considered view that the assessment order sought to be revised does not suffer from error as pointed by the PCIT. Merely for the reason that PCIT does not agree with one of the possible view taken by the AO, would not make the assessment order erroneous. PCIT has erred in invoking the provisions of section 263 therefore, the impugned order is liable to be quashed. We may also like to add here that sub-section (5) to Section 23 has been inserted by the Finance Act, 2017 w.e.f. 01-4-2018, whereby notional annual value of property/part of property held has stock-in-trade has been brought to tax subject to conditions specified in the newly inserted sub-section. The amendment is substantive in nature and hence, would be effective prospectively i.e. it would no application in the impugned assessment year. No addition on account of notional rental value of the flats held as stock in trade by the assessee could have been made by the Assessing Officer in the impugned assessment year. We hold that the PCIT clearly fell in error in invoking revisonal jurisdiction u/s 263 of the Act. Consequently, the impugned order is quashed and the appeal of assessee is allowed. Revision u/s 263 - Income from House Property - AO being satisfied with the reply made no additions on account of notional rental value of flats in inventory - HELD THAT:- We find that facts in the assessment year under appeal are pari-materia to the facts in the assessment year 2014-15. The reasons for invoking revisional jurisdiction under section 263 of the Act in both the assessment years are identical. The findings given by us while adjudicating the appeal of the assessee for assessment year 2014-15 would mutatis mutandis apply to the present appeal. In the result, the impugned order is quashed and the appeal of the assessee is allowed.

  ---

• 2020 (9) TMI 1127
  Unaccounted cash receipt for sale of property - during the course of examination by the Investigation Wing, the assessee was confronted with a receipt and the assessee was never asked for any further amount received by him - cancelled receipt which the Investigation Wing considered proper not to confront with the assessee - HELD THAT:- A perusal of the receipt which is placed shows that it is a cancelled one. AO has not confronted the contents of the said receipts from Shri Shashi Kant Aggarwal, although his complete address was mentioned in the said sheet of paper. Since the Investigation Wing after considering this cancelled cheque has never confronted the assessee regarding the receipt of Rs. 50 lacs, therefore, in absence of any other corroborative material before the AO, he is not justified in making the addition. A perusal of the assessment order shows that the AO has simply made the addition merely on the basis of presumption. Although the assessee has surrendered an amount of Rs. 11 lakhs, at no point of time the assessee has agreed for addition of Rs. 50 lacs. As mentioned earlier, although complete address of the payer was available in the cancelled money receipt, the AO has never bothered to summon Shri Shashi Kant Aggarwal to find out the authenticity of the said receipt. CIT(A) is not justified in sustaining the addition of Rs. 50 lacs made by the AO on the basis of a cancelled money receipt found during the course of search conducted in the case of Micromax Group of Companies on 10th February, 2011. Accordingly, the same is directed to be deleted. The grounds raised by the assessee are accordingly allowed.

  ---

• 2020 (9) TMI 1126
  Revision u/s 263 - CIT directing AO for re-examination of the audited accounts and examine the genuineness of unsecured loan, Sundry Creditors/ details of payable and also Sundry Debtors shown under current assets of the balance sheet - Also re-examine the valuation of stock recorded in the books of account of the assessee which has reported to the bank - HELD THAT:- Pr.CIT has observed that there is stock statement on record which has been submitted by the assessee to the Punjab National Bank in inflated value, therefore, the difference shall be treated as unaccounted sales. In respect of other findings of the ld.Pr.CIT, the AO did not enquire in depth which ought to have been done for competing the assessment proceedings as per the provisions of I.T.Act. Even before the proceeding u/s.263/143(3) of the Act before the AO, the assessee did not produce books of accounts. CIT should have got confirmed from Punjab National Bank as to whether the stock statement has been submitted before the bank is correct or not by making independent enquiry. From the order of ld. Pr.CIT it is not clear that as to whether any enquiry has been done by the ld.Pr.CIT or not and it is also not clear whether there was a difference in quantitative details or only on value shown in the stock statement. In this regard, the ld. Pr.CIT is not justified for making direction to the AO for reexamination of the valuation of stock recorded in the books of accounts of the assessee reported to the bank. We observe from the record of authorities below and order sheet the AO had asked to the assessee many times for producing the books of accounts but the assessee failed to produce at any stage before the authorities below. The ld.Pr. CIT has observed that in respect of unsecured loans sundry creditors/liabilities and sundry debtors on asset side appearing on the balance sheet as on 31.03.2010 - AO should have done enquiry for the genuineness of the current liabilities and current assets which has been observed by the ld.Pr.CIT. The AO is not only an adjudicator, he is also an investigator before coming to any conclusion with regard to the genuineness of the transactions done by the assessee, which is lack in this case. Order of the AO in respect of unsecured loans, sundry creditors/liabilities and sundry debtors accepted by the AO is erroneous and prejudicial to the interest of revenue. We hereby make it clear that the direction of the ld. Pr.CIT in respect of stock differences found from the record is not required to further verification and in respect of unsecured loans, sundry creditors/liabilities and sundry debtors the AO has to follow the direction of the ld. Pr.CIT. Therefore, the ld. Pr.CIT has rightly invoked his power provided u/s.263(1) of the Act to the extent of the decision of the ld. Pr.CIT in this regard. Appeal of the assessee is partly allowed.

  ---

• 2020 (9) TMI 1125
  Reopening of assessment u/s 147 - non issue of notice u/s 148 on correct address - Applicability of section 292 BB - plea of the assessee that notice u/s 148 was wrongly issued to the assessee, as he had duly complied AIR notice and explained the source of deposit - whether the notice issued u/s 148 of the Act was served upon the assessee or not? - HELD THAT:- As clearly held that notice has to be issued either on the address available in PAN database or address available in the income tax return and has clearly held that the AO was circumscribed and bound by the express mandate of Rule 127. As held in this case that is the notice could not be served on the address available in the PAN data base or at the address mentioned in Income Tax Return only then the notice can be issued on the address mentioned in banking company or post office. No such attempt has been made in this case. In the present case, clearly the notice u/s 148 was not served on the assessee on the address mentioned in PAN database but was straight forwarded issued at another address. As decided in MOHD. RIZWAN PROP. M/S M.R. GARMENTS MOULVIGANJ LUCKNOW [ 2017 (3) TMI 1792 - ALLAHABAD HIGH COURT] as considered the applicability of section 292 BB wherein it has been held that notice issued u/s 147/148 is a jurisdictional step and it cannot be treated to be mere irregularity curable u/s 292 BB of the Act - Decided in favour of assessee.

  ---

• 2020 (9) TMI 1124
  Levy of penalty u/s 271(1)(c) - whether the assessee is entitled for depreciation on properties which were let out, income from which is taxed under the head income from house property ? - CIT(A) had disallowed the said depreciation on the ground that since the rental income derived from those properties were taxed under the head income from house property and assessee would be entitled for statutory deduction @30% towards repairs alone and no further deduction is permissible under the head income from house property - HELD THAT:- This is a case where penalty has been initiated on one limb of the offence and penalty levied ultimately on a different limb of the offence. In these type of cases, the Hon ble Jurisdictional High Court had held that when there is no satisfaction recorded by the ld. AO in the quantum assessment order and penalty initiated on one limb and ultimately levied on different limb of the assessee, then in such cases, the penalty levied deserved to be cancelled. Reliance in this regard is placed on the decision of SHRI SAMSON PERINCHERY [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] . Similar view has also been taken by the Hon ble Jurisdictional High Court in the recent decision in the case of Ventura Textiles Ltd., vs. CIT [ 2020 (6) TMI 305 - BOMBAY HIGH COURT] . Respectfully following the aforesaid decision, we hold that the penalty levied in the instant case is not sustainable in the eyes of law. We find that it was the assessee which has actually provided all the details in respect of value of properties which were purchased from Financial Year 1990-91 onwards and the respective written down value at the end of each year before the lower authorities. It was the very same details that were furnished by the assessee which was placed reliance by the ld. CIT(A) while levying the penalty. Hence, there cannot be any concealment of particulars of income on the part of the assessee. When all the information available for determining the income of the assessee is placed on record voluntarily by the assessee either in the return or before the authorities at the time of assessment or appellate proceedings, then there cannot be any concealment of particulars of income that can be attributed on the assessee. See RELIANCE PETROPRODUCTS PVT. LTD. [ 2010 (3) TMI 80 - SUPREME COURT] - Decided in favour of assessee.

  ---

• 2020 (9) TMI 1123
  Disallowance of selling and marketing expenses paid - Commission on sale - receipt from the sale of FSI was not offered to tax, therefore, the expenses was not liable to be allowed - As argued that the commission or brokerage expenses are accrued and the liabilities towards such expenses are created as soon as the deal takes place between the assessee company and the party and accordingly the brokerage/commission is due, hence, the claim of the assessee is liable to be allowed - HELD THAT:- The assessee company has paid 2% commission on sale of FSI 53.33 crores for the year under consideration. The commission has been booked against these transactions in the year under consideration. Since the FSI was not offered in the current year, therefore, the AO has declined the claim. It nowhere seems justifiable in view of the decision in the case of Mysore Tobacco Co. Ltd. Vs. CIT [ 1978 (5) TMI 29 - KARNATAKA HIGH COURT] in which it is held that the accepting certain specific provisions relating to amortization of initial expenses in certain cases, there is no other statutory provision for allowing revenue expenses in a phased or spread out manner. Expenses are required to be claimed and allowed only in the year in which the expenses are incurred or the liability towards such expenses accrued. Revenue expenditure is essentially allowable in the year to which it pertains or in which it is incurred. However, to support his claim, the assessee has also relied upon the decision in the case of Calico Dyeing Printing Works Vs. CIT [ 1958 (3) TMI 59 - BOMBAY HIGH COURT] wherein claim of the assessee was allowed in similar circumstances. We are of the view that the declining of the claim of commission expenses is nowhere justifiable, hence, we set aside the finding of the CIT(A) on the issue. The claim is hereby allowed in the relevant year. Accordingly, we allowed the claim of the assessee.

  ---

• 2020 (9) TMI 1122
  Estimation of income - bogus purchases - addition made on account of @8% on the value of alleged bogus purchases - HELD THAT:- Assessee had disclosed total gross profit of 3.6%. Since, assessee is engaged in the business of export of cut and polished diamonds, there is no question of any VAT portion incurred by the assessee on the purchases. Gross profit disclosed by the assessee on the disputed purchases was 2.42%. These facts were not controverted by the revenue before us. Profit element determined @8% is on the much higher side and we deem it fit to estimate the profit @3% on the value of purchases treated as non-genuine by placing reliance on Ralf Jems Pvt. Ltd [ 2019 (9) TMI 1402 - ITAT MUMBAI]. Ground raised by the assessee is partly allowed.

  ---

• Customs

• 2020 (9) TMI 1121
  Seeking implementation of the order of CESTAT - Right of Revenue to file an appeal in the HC against the order of tribunal - It is the submission of the learned counsel for the petitioner that the mere fact that the respondent is contemplating the filing of an appeal against Ext.P7 order cannot be a reason for not issuing directions for the implementation of Ext.P7 order - HELD THAT:- It is trite that the appellate remedy being a statutorily conferred one, no litigant can be deprived of the statutorily permitted period for availing the appellate remedy, through coercive steps that effectively curtail the said period. Just as an assessee, who suffers an order of assessment cannot be compelled to fast track an appellate remedy through coercive steps initiated against him before the expiry of the statutory period available to him for approaching the appellate authority, the respondent herein cannot be compelled to implement Ext.P7 order when the statutorily granted time for filing an appeal against the said order is not over, and it is their stated case that they are preferring such an appeal against Ext.P7 order before a division bench of this Court. The right of the petitioner to insist on the respondent s complying with Ext.P7 order will arise only in the event of the respondents not filing an appeal within the statutory period provided for the same or if an appeal, when preferred within the said time, is dismissed by the appellate authority. Assuming that this court directs the respondent to implement Ext.P7 order of the appellate tribunal, before the statutory period for filing an appeal against the said order before the appellate authority is over, and the respondent fails to implement the directions of this court on the contention that it intends to file the statutory appeal within the time granted by the statute, this Court would not view the said conduct of the respondent as contumacious for the purposes of a contempt action at the instance of the petitioner herein - Prudence would dictate, therefore, that this court refrain from issuing peremptory directions at the said stage of the proceedings by following the well settled principles informing the exercise of writ jurisdiction, one of which is that the courts should not issue writs that are futile in nature. Petition dismissed.

  ---

• 2020 (9) TMI 1120
  Customs Brokers Licensing - Validity of N/N. 41/2018-Cus. (N.T.), dated 14-5-2018 - Examination with respect to screening and selection of candidates from H Card to G Card - permission to hold G Card license - HELD THAT:- It is clear that the respondent authorities have conducted the examination not with a view to upgrade the licence holder, but with a view to reject the upgradation from H to G . The object of any examination is to ensure that the qualified candidate is promoted to the next post. If an examination is conducted with the object to reject candidates, then the examination itself has to be struck down. In this case, the respondent had no right to conduct any oral examination. It is not provided in the Rules. The Rules stipulate that written examination alone must be conducted. Except merely stating that only two candidates passed in the oral examination, no other specific details have been given in the counter-affidavit. The counter-affidavit has to be rejected - The conducting of the examination on 30-1-2019 and the Public Notice No. 1 of 2019, wherein both the written examination and the oral examination were stipulated, has to be struck down and accordingly struck down. A direction is issued to the respondent, insofar as the petitioner is concerned, since he has passed the written examination, to appoint him as G card licence holder on or before 31-3-2020, if he is otherwise eligible. Petition allowed.

  ---

• Corporate Laws

• 2020 (9) TMI 1119
  Approval of the Scheme of Amalgamation - Section 230 to 232 of the Companies Act, 2013 read with the Companies (Compromise, Arrangement and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- Upon considering the approval accorded by the members and creditors of the petitioner Companies to the proposed Scheme, and the affidavit by the Regional Director, Northern Region, Ministry of Corporate Affairs reply submitted by the Transferee Company and the report of the Official Liquidator and, there appears to be no impediment in sanctioning the present Scheme. Consequently, sanction is hereby granted to the Scheme under Section 230 to 232 of the Companies Act, 2013. The petitioner shall however remain to bound to comply with the statutory requirements in accordance with the law. The scheme is hereby granted to the scheme under section 230 to 232 of the Companies Act, 2013 - Petition allowed.

  ---

• 2020 (9) TMI 1118
  Sanction of Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- From the material on record, the Scheme of Amalgamation appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, the Company Scheme Petitions are made absolute in terms of prayer clauses (a) to (c) of Company Scheme Petition No. 4003 of 2019 and prayer clauses (a) to (c) of Company Scheme Petition No. 3946 of 2019. The Scheme is sanctioned and Appointed date is fixed as 1st April, 2018.

  ---

• Insolvency & Bankruptcy

• 2020 (9) TMI 1117
  Direction to Appellant Bank to release of the margin money amount - Respondent submits that Performance Bank Guarantee is not included in the definition of security interest for the benefit of the beneficiary of such Performance Bank Guarantee - HELD THAT:- Admittedly, Rs. 51,27,591/- was the margin money, while was deposited by the Corporate Debtor to secure Bank Guarantee in favour of M/s Tata Steel Processing Distribution Limited for an amount of Rs. 4,01,94,954/-. The said Bank Guarantee was invoked during the moratorium period, i.e. on 27th December 2018. Given Section 14(3) of the I B Code, 2016 invocation of the said guarantee could not be stopped by the Bank. The Security Interest does not include the Performance Bank Guarantee . The Performance Bank Guarantee is not covered by Section 14 of the Code - It is pertinent to mention that the margin money is not a security as has been argued by the Respondent and does not require any registration of charge. Only the assets gave by the Company as securities are required to be registered under Section 77 of the Companies Act, 2013. In this case, Bank Guarantee was invoked on 27th December 2018 by the beneficiary M/s Tata Steel Processing Distribution Limited, and the margin money amount was used towards the payment of the Bank Guarantee. Once this margin money was used to honour the bank guarantee, nothing remained with the Bank, and as such, the Respondent Resolution Professional cannot demand that amount - The Resolution Professional/IRP is only entitled to those payments to which the Corporate Debtor is entitled if no orders of Moratorium would have been passed under Section 14 of the Code. The Corporate Debtor had no right to claim the margin money after the invocation of Bank Guarantee. Appeal allowed in part.

  ---

• 2020 (9) TMI 1116
  Maintainability of application - initiation of CIRP - Corporate Debtor did not clear the dues - existence of dispute or dues - HELD THAT:- The Operational Creditor could not invoke confidence of the Adjudicating Authority for initiating such stringent action as one under Section 9 of Insolvency and Bankruptcy Code, 2016. The Learned Counsel for the Appellant states that the Adjudicating Authority wrongly referred the notice under Section 8 of I B Code (copy of which is at Page 43 Annexure A/13) to be not in Format. Clearly, the Addresses do not match and service of Notice under Section 8 on Corporate Debtor cannot be accepted. The Learned Counsel is relying only on the Postal Cash Receipts which are at Page 44 which relate to booking of the document with the Postal Authorities. The Respondent did not appear or did not contest. That would not be material looking to the fact that it is burden on the Operational Creditor to make out a case for admitting an Application under Section 9 when the address of the Section 8 notice does not match with the registered address mentioned in Application under Section 9, it cannot be said that the burden on the Operational Creditor has been discharged - Even if such stand was not taken, we cannot close our eyes to what is obvious from the record. Insolvency and Bankruptcy Code, 2016 Proceedings are serious mattes and we cannot simply admit Application under Section 9 if we are not satisfied with compliance of requirements of law. We are also not convinced that the Application under Section 9 is required to be admitted - Appeal dismissed.

  ---

• 2020 (9) TMI 1115
  Early hearing of application - Auction - section 60(5) of Insolvency and Bankruptcy Code, 2016 read with Rule 11 of National Company Law Tribunal Rules, 2016 - HELD THAT:- The applicant has paid the entire sale consideration in respect of both the properties in the account of certificate holder banks on 17th September, 2019. The DRT proceedings against CD were initiated by a consortium of Banks who are the members of the CoC in the case in hand. So no doubt keeping the money in their hand after setting aside the sale is not proper and just. An application of this nature wherein a claim is raised not against the CD or against the properties now held by the CD but is against certificate holder banks who are the members of CoC is not maintainable. It is an inter-se claim in between certificate holder banks who received the consideration and the auction purchaser - there are force in the said submission on the side of the applicant/auction purchaser, especially wherein the lead bank representing the CoC showed its readiness to refund the amount. The certificate holder of the bank who are members of CoC are directed to keep the money paid by the applicant with accrued interest @ applicable to the Banks, till the date of refund to the applicant preferably with in two weeks from the date of receipt of this order by the bank. If such an order is not issued it would work much hardship, economical loss and injustice to the applicant who had purchased the property higher than the upset price notified by the Banks - application disposed off.

  ---

• 2020 (9) TMI 1114
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt ad dispute or not - HELD THAT:- The Corporate Debtor, has admitted its liability to repay the debt amount and is willing to pay the same. However, it sought for additional time for clearing the financial dues of the Petitioner - On perusal of the records, there is no doubt that there is an admitted debt and a default as per the agreed terms between the two parties. The Petitioner admits that the present loan was renewed as the Corporate Debtor had been repaying the earlier debts. Thus there is a running account between the two and the Corporate Debtor has given an undertaking that it has made arrangements for paying the debt and only requires some more time to settle the debt. The Corporate Debtor s plea that it be given some more time to repay the debt needs to be accepted, and the Respondent/Corporate Debtor be directed to settle the debt at the earliest in consultation with the Petitioner/Financial Creditor - Petition disposed off.

  ---

• 2020 (9) TMI 1113
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is settled position of law that provisions of Code cannot be invoked for recovery of outstanding alleged amount(s) - The Hon ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT ] has inter alia, held that IBC, 2016 is not intended to be substitute to a recovery forum. Since the Respondent has already drawn six cheques for total amount of Rs. 6,69,362/-(which is total principal amount claimed in the Petition), and undertakes to honor those cheques whenever presented for realization, we are inclined to dispose of the instant Company Petition with directions. The Petitioner cannot claim interest due to circumstances. Application disposed off.

  ---

• 2020 (9) TMI 1112
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The debt and default in question are not in dispute and on the other hand, the Corporate Debtor has also accepted the debt, and the Respondent is prima facie found to be insolvent. The instant application is filed strictly in accordance with the extant provisions of the Code, and debt and default established and also suggested a qualified Resolution Professional namely Shri Surender Devasani, with Registration No. IBBI/IPA-001/IP-P00775/2017-2018/11348, who also filed written Consent in Form-2 on 26.08.2019, by inter alia declaring that no disciplinary proceedings pending against him with the Board or the Indian Institute of Insolvency. Therefore, he is provisionally eligible to be appointed as IRP. Application admitted - moratorium declared.

  ---

• 2020 (9) TMI 1111
  Maintainability of Objections - applicant is representing 1500 home buyers of real estate projects, but whereas RP has categorically mentioned that only 448 home buyers voted against the plan - HELD THAT:- This objector has no locus to raise such objections without following the procedure, hence these objections have been rejected without going into the merits of the objections. As to the request made by the Counsel, we express our helplessness to consider the plea of the counsel because whenever any proceedings is initiated or any reply is filed, it shall be filed in accordance with the Law. Moreover, Hon ble Supreme Court of India has also categorically mentioned giving liberty to Wishtown Home Buyers Welfare Society that the said entity is at liberty to pursue the remedy in accordance with the law - The Counsel Mr. Lahot has stated that he would supply the list of the home buyers. However, list has not even been mentioned in these objections, the question of granting any permission to provide list after passing this order will not arise. Objections rejected.

  ---

• CST, VAT & Sales Tax

• 2020 (9) TMI 1110
  Principles of Natural Justice - the order of Tribunal is assailed primarily on the ground that prima facie case of assessee has neither been examined nor there is any consideration of the financial health of the company and, therefore, the order impugned cannot be sustained - Maintainability of revision - requirement of pre-deposit - HELD THAT:- It is settled that the appellate authority for the purposes of consideration of waiver cum stay application is required to examine the prima-facie case, in addition to the financial condition of the assessee. In the facts and circumstances of the present case, this Court finds that there is no examination of prima-facie case of the assessee either by the Tribunal. Since the order of the Tribunal fails to meet the requirement of law, inasmuch as prima-facie case of the revisionist has not been examined or even referred to, as such, the order of the Tribunal under challenge is not liable to be sustained. This revision is disposed of with the direction upon the appellate authority to conclude the proceedings in pending appeal within a period of three months from the date of presentation of a copy of this order, provided the revisionist furnishes bank guarantee of 10% amount of tax within four weeks, which shall remain subject to the final determination made in appeal.

  ---

• 2020 (9) TMI 1109
  Benefit of concessional rate of tax - difficulty in obtaining C forms - purchase of High Speed Diesel from suppliers in other States - HELD THAT:- The petitioner is entitled to the inclusion of High Speed Diesel Oil as a commodity in the registration certificate. The issue involved in the Writ Petition is squarely covered by a decision of this Court in M/S. DHANDAPANI CEMENT PRIVATE LTD., M/S. TERU MURUGAN BLUE METAL VERSUS THE STATE OF TAMIL NADU, THE PRINCIPAL COMMISSIONER COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE JOINT COMMISSIONER (ST) TERRITORIAL, THE DEPUTY COMMISSIONER (ST) [ 2019 (2) TMI 1850 - MADRAS HIGH COURT] , wherein it was held that The Petitioner in these Writ Petitions has stated on affidavit that it is unable to download the C forms from the websites as the same stand blocked from use. Upon enquiry with the Assessing Authorities, they have been informed that the benefit of the decision in M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] Ltd can be extended only to those dealers in that are party to the decision. This stand is unacceptable in so far as the decision of this Court as well as other High Courts, one of which has been confirmed by the Supreme Court, are decisions in rem, applicable to all dealers that seek benefit thereunder, of course, in accordance with law. The State has, after the date of the above order, filed a Writ Appeal in THE COMMISSIONER OF COMMERCIAL TAXES, CHEPAUK, CHENNAI, THE ADDITIONAL COMMISSIONER (CT) VERSUS THE RAMCO CEMENTS LTD. AND THE STATE TAX OFFICER, THE JOINT COMMISSIONER (CS) (SYSTEMS) VERSUS SUNDARAM FASTENERS LIMITED [ 2020 (3) TMI 450 - MADRAS HIGH COURT] challenging the decision in the case of Ramco Cements that has been considered and dismissed by a Division Bench of this Court. Ms.Dhanamadhri, further agrees that there is complete identity on facts and in law in the matter before me as well as in the matter considered earlier. I thus reiterate the view taken in the above matter. Petition allowed.

  ---

• Indian Laws

• 2020 (9) TMI 1108
  Dishonor of Cheque - Time Limitation - decree for money in favour of the respondent was confirmed - HELD THAT:- It is true that the cheques were presented to the Bank for encashment after passage of hardly seven years, since the date of delivery. As per Section 84(2) of the NI Act, the reasonableness of time to be taken for presentation from the date of issue of cheque, shall be determined with due regard to the nature of the instrument, the banking and trade usage and also the facts of each particular case. In this case, the cheques were postdated to 10.12.2017. They became payable only from the dates endorsed therein. Even though the dates of presentation and dishonour were not specifically pleaded, it is clear from the averments made in the plaint that the cheques were presented within the period of two months since they became payable - thus notwithstanding that the issue of cheques was as early as in 2001, the presentation made in 2007 in accordance with proviso (a) to Section 138 cannot be said to offend Section 84 (2) of NI Act. Review petition partly allowed.

  ---