TMI Tax Updates - e-Newsletter
October 13, 2021

Case Laws in this Newsletter:

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

News

1. Income Tax Department conducts searches in Bengaluru

2. Leading India’s intervention, Shri Piyush Goyal calls for waiver of IPR and dismantling new trade barriersin the global fight against the pandemic

Notifications

Customs

1. 35/2021-Customs (N.T./CAA/DRI) - dated 11-10-2021 - Cus (NT)

Appointment of Common Adjudicating Authority

Income Tax

2. 119/2021 - dated 11-10-2021 - IT

Exemption to specified persons from requirement of furnishing a return of income under section 139(1) for assessment year 2021-2022

Highlights / Catch Notes

GST

• Court Confirms GST Pre-Deposits Must Be Cash Payments, Not From Electronic Credit Ledger or Input Tax Credit.

  Case-Laws - HC : Manner of pre-deposit - To be made in cash or by debiting the electronic credit ledger (ECRL)/ ITC - The Court is unable to find any error having been committed by the appellate authority in rejecting the Petitioner’s contention that the ECRL could be debited for the purposes of making the payment of pre-deposit. - Pre-deposit should be made in Cash - HC
  Visit to Get Source

  ---

• Authority's Power to Attach Bank Accounts u/s 83 Requires Justification Before Tax Liability Determination.

  Case-Laws - HC : Attachment of Bank Accounts of petitioner - The power conferred upon an authority under Section 83 is substantial and with great power comes great responsibility. The authority concerned must justify the invocation of the coercive and intrusive recovery proceedings against the assessee, even prior to determination of liability and passing of an assessment order. The burden that lies upon the revenue is heavy and has to be seen to be discharged by them in a proper manner in each and every case where power under Section 83 is invoked. - HC
  Visit to Get Source

  ---

• Telangana's e-Procurement transaction fee for online tenders is subject to GST; services to business entities are non-exempt.

  Case-Laws - AAR : Benefit of exemption from GST - e-Procurement transaction fee collected on behalf of ITE&C Department of Telangana State Government towards online tenders’ - The applicant is providing services to the Government. Therefore the services provided by the applicant to the Government are not exempt under this Notification. Further the services provided by the applicant on behalf of the Government to business entities is covered by the exception to the above entry, therefore such services also are not exempt. - AAR
  Visit to Get Source

  ---

• Warehousing Services for Raw Cotton Not Exempt from GST; Subject to 9% CGST and SGST under Entry 24B.

  Case-Laws - AAR : Exemption from GST - Godown Rent collected from the CCI - CCI has purchased raw cotton from farmers in the primary market and then processed it in ginning mills on job work basis - The warehousing services rendered by the applicant to CCI do not fall under Entry 24B Notification No. 21/2019 dated:30.09.2019 and hence are taxable at the rate of 9% under CGST and SGST each. - AAR
  Visit to Get Source

  ---

Income Tax

• Re-assessment Notices Post-April 1, 2021, Invalid Under Old Sections 147/148 Without Compliance to New Section 148A.

  Case-Laws - HC : Validity of re-assessment notice issued under the erstwhile section147/148 after 1.4.2001 without following the mandate of new section 148A - In absence of any specific clause in Finance Act, 2021, either to save the provisions of the Enabling Act or the Notifications issued thereunder, by no interpretative process can those Notifications be given an extended run of life, beyond 31 March 2020. They may also not infuse any life into a provision that stood obliterated from the statute with effect from 31.03.2021. Inasmuch as the Finance Act, 2021 does not enable the Central Government to issue any notification to reactivate the pre-existing law (which that principal legislature had substituted), the exercise made by the delegate/Central Government would be de hors any statutory basis. In absence of any express saving of the pre-existing laws, the presumption drawn in favour of that saving, is plainly impermissible. - HC
  Visit to Get Source

  ---

• Employers Face Penalties for Late ESI/EPF Contributions but Can Deduct If Paid Before Tax Filing Under Sec 36(1)(va.

  Case-Laws - AT : Disallowance u/s 36(1)(va) - delayed payment of ESI/EPF - if the employees‟ contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. Insofar as the Income Tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed - AT
  Visit to Get Source

  ---

• Income Accumulation Claim Denied u/s 11(2) Due to Non-Submission of Form No.10; Technical Issues Cited.

  Case-Laws - AT : Benefit of accumulation of income u/s.11(2) - denial of claim on non-submission of Form No.10 along with return of income - In this case, the assessee claims that requisite Form No.10 was ready while filing return of income, but same could not be uploaded along with return of income due to technical glitches in web portal provided for filing return of income - CIT(A) has erred in not considering claim of the assessee for accumulation of income u/s.11(2) of the Income Tax Act, 1961, even though the assessee made available such Form No.10 before the CIT(A) at the time of appellate proceedings - AT
  Visit to Get Source

  ---

• Paper Company Cleared of Tax Evasion; PoEM and GAAR Provisions Not Applicable for the Assessed Year.

  Case-Laws - AT : Whether the paper company is engaged in any tax evasion? - Income Tax Act has been amended by incorporating the provisions of PoEM, GAAR for bringing such transactions under the net of tax. However, the provisions are not applicable to the year under consideration. Therefore, we are of the view that until and unless there is any violation of the provisions of law, it cannot be alleged that the assessee by adopting the colourable device has diverted the profit. - As we have decided the issue that profit attributable to RFZC belongs to DRC companies, then the question of the colourable device used by the assessee for diverting its profit does not arise. - AT
  Visit to Get Source

  ---

• Court Rules Provisions for Bad Debts Must Be Added Back When Calculating Book Profits u/s 115JB of Income Tax Act.

  Case-Laws - AT : MAT - Deduction for provision of bad and doubtful debts while computing book profits u/s.115JB - There is absolutely no quarrel that the case does not fall under Clause “C” of Explanation 1 to Section 115JB(2) of the Act. We hold that the issue in dispute falls in Clause (i) of Explanation 1 to Section 115JB(2) of the Act. We are not inclined to make this provision redundant or otiose - we hold that provision for bad and doubtful debts is required to be added back while computing book profits u/s.115JB - AT
  Visit to Get Source

  ---

• Reopening of tax assessment invalid without Joint Commissioner's approval u/s 151(2) of the Income Tax Act.

  Case-Laws - AT : Validity of reopening of assessment - validity of approval from a superior authority - when 151(2) of the Act mandates that sanction to be taken for issuance of notice u/s. 148 of the Act in certain cases has to be of Joint Commissioner, then reopening of assessment with the approval of Commissioner is unsustainable - AT
  Visit to Get Source

  ---

• Advance Payment for Development Not Taxed as Income; CIT(A) Justifies Removing Addition Under Agreement Terms.

  Case-Laws - AT : Accrual of income / Undisclosed income - Nature of advance money received - The amount so received is only for carrying out the development work in terms of the agreement between the parties and it was duly shown in the balance sheet filed with the authorities, as such it cannot be considered as commission or brokerage paid to assessee. It was received by the assessee as an agent to carry out the work entrusted to the assessee by Astitva group of companies and it cannot be taxed in the hands of assessee as income. Being so, the CIT(Appeals) was justified in deleting the addition on this count. - AT
  Visit to Get Source

  ---

• Assessee Cleared of Section 68 Charges as Officer Fails to Investigate Evidence; Addition Based on Assumptions Dismissed.

  Case-Laws - AT : Addition u/s. 68 - allegation of accommodation entries taken by assessee - initial burden to prove - once the initial burden is discharged by the assessee the burden shifts to the revenue to disprove the claim of the assessee. It is noticed that AO did not make any sort of enquiries to disprove the genuineness of the transaction on the evidences furnished by the assessee. He has completely ignored even the statement retracted by the PKJ. The addition is made merely on surmises and conjectures without probing further by the Assessing Officer. - AT
  Visit to Get Source

  ---

• Interest Deduction Dispute: Section 36(1)(iii) on Borrowed Funds for Office Purchase Backed by Documents and Tax Deductions.

  Case-Laws - AT : Disallowance of interest u/s 36(1)(iii) incurred on money borrowed & invested for purchase of office premises - the interest has been rightly claimed as business expenditure as it has been paid on the loan taken to purchase property for business purposes and interest expenditure has been claimed after deducting tax at source and all documentary evidence placed before us asserts this fact. - AT
  Visit to Get Source

  ---

• CSR Expenses for Assessment Year 2014-15 Not Disallowed; Explanation-2 to Section 37(1) is Prospective, Not Retrospective.

  Case-Laws - AT : Disallowance on account of expenses incurred on corporate social responsibility - Both the lower authorities have disallowed the expenses only on the ground that Explanation -2 is clarificatory and retrospective in nature - said Explanation -2 is prospective in nature, we hold that expenses incurred on corporate social responsibility in the year under consideration i.e. AY 2014-15, cannot be disallowed invoking Explanation-2 to section 37(1) of the Act. - AT
  Visit to Get Source

  ---

Indian Laws

• Supreme Court Confirms Mandatory 75% Pre-Deposit for Appeals u/s 19 of MSME Development Act 2006.

  Case-Laws - SC : Requirement of pre-deposit - Direction to deposit 75% of the awarded amount in terms of Section 19 of Micro, Small and Medium Enterprises Development Act, 2006 - Considering the language used in Section 19 of the MSME Act, 2006 and the object and purpose of providing deposit of 75% of the awarded amount as a pre-deposit while preferring the application/appeal for setting aside the award, it has to be held that the requirement of deposit of 75% of the awarded amount as a predeposit is mandatory. - SC
  Visit to Get Source

  ---

PMLA

• Anticipatory Bail in Money Laundering Cases May Hinder Investigations, Affecting Interrogation and Evidence Gathering Effectiveness.

  Case-Laws - HC : Seeking grant of Anticipatory Bail - Money Laundering - In the instant cases, grant of anticipatory bail at the stage of investigation may frustrate the investigating agency in interrogating the petitioners/accused and in collecting the useful information and also the material, which might have been concealed. Success in such interrogation would escape, if the petitioners/accused knows that they are protected by the order of the Court. Grant of anticipatory bail, particularly in economic offences, would definitely hamper the effective investigation. - HC
  Visit to Get Source

  ---

Service Tax

• Refund Claim for Mistaken Service Tax Payment Not Limited by Section 11B Time Restrictions; Exemption Notification Irrelevant.

  Case-Laws - HC : Refund claim - Applicability of time limitation on refund of service tax - assessee paid service tax on the LPC inadvertently - Indisputably, the exemption notification is not under consideration. If the payment made by a mistaken notion does not come within the realm of `duty', Section 11B of the Act, 1944 would not be applicable. - HC
  Visit to Get Source

  ---

• Service tax on TDS portion of royalty payments to foreign company deemed unsustainable u/s 67 and Rule 7.

  Case-Laws - AT : Demand of service tax - Valuation - Inclusion of TDS portion of the royalty paid to the foreign company - On the plain reading of Section 67 with Rule 7 of Service Tax Valuation Rules, in this case in hand, Service Tax liability needs to be discharged on amounts which have been billed by the service provider - - The levy of service tax on the TDS portion borne by the appellant cannot sustain and requires to be set aside - AT
  Visit to Get Source

  ---

• Service Tax Refund Granted: No Time Limit on Claims for Taxes Paid Under Protest Amid Legal Proceedings.

  Case-Laws - AT : Refund of service tax - amount was paid under protest or not - time limitation - in the appeal filed, wherein the appellant stated that they have deposited the tax in response to the repeated correspondence and had reiterated that the matter is sub-judice with regard to levy of service tax - There is no limitation applicable for the refund claimed by the appellants - the Adjudicating Authority is directed to grant refund - AT
  Visit to Get Source

  ---

Central Excise

• Court Rules Education Cess Refunds Final; Cannot Be Recovered Despite Law Declared "Per Incuriam.

  Case-Laws - HC : Recovery of refunded earlier, deposited by each of the petitioners as Education Cess and Secondary and Higher Education Cess - erroneous refund or not - under the facts and circumstances of the case, the amount refunded to them cannot be recovered, as it was not refunded to them erroneously, but it was returned to them for the reason that it was the requirement of law; law as it stood at the relevant time. The matter having attained finality cannot be re-opened for the reason that the earlier law has been declared to be “per incuriam”. - HC
  Visit to Get Source

  ---

• CENVAT Credit Issue: Provision for Non-Moving Inventory Without Value Reduction u/r 3(5B) of Cenvat Credit Rules 2004.

  Case-Laws - AT : CENVAT Credit - provision made in the books of accounts on account of Non-Moving Inventory, without reducing (writing down) the value of inventory - Rule 3(5B) of Cenvat Credit Rules, 2004 - the appellant has made only a ‘general provision’, which is not attributable to any particular capital asset/input. - , the show cause notice is erroneous as the demand has been made even on the reversal of the provision. - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2021 (10) TMI 524
  Manner of pre-deposit - To be made in cash or by debiting the electronic credit ledger (ECRL)/ ITC - It is in the nature of Output Tax or not - petitioner made payment of pre-deposit being 10% of the disputed amount under the IGST, CGST and SGST by debiting its electronic credit ledger (ECRL) and did not pay it from the electronic cash ledger (ECL) - HELD THAT:- It is not possible to accept the plea of the Petitioner that Output Tax , as defined under Section 2(82) of the OGST Act could be equated to the pre-deposit required to be made in terms of Section 107 (6) of the OGST Act. Further, as rightly pointed out by Mr. Mishra, learned ASC, the proviso to Section 41 (2) of the OGST Act limits the usage to which the ECRL could be utilised. It cannot be debited for making payment of pre-deposit at the time of filing of the appeal in terms of Section 107 (6) of the OGST Act. The Court is unable to find any error having been committed by the appellate authority in rejecting the Petitioner s contention that the ECRL could be debited for the purposes of making the payment of pre-deposit. The Court is of the view that the prayer of the Petitioner that the debiting of the ECRL made by it should be reversed is a separate cause of action for which the Petitioner should independently seek appropriate remedies in accordance with law. The making of the pre-deposit by the Petitioner is not contingent upon the above reversal of the debit entry in the ECRL. The Court finds no merit in these writ petitions - Petition dismissed.

  ---

• 2021 (10) TMI 523
  Attachment of Bank Accounts of petitioner - case of petitioner is that the impugned attachment is without any statutory sanction as it is consequent upon action under Section 67 of the Act, which deals with the power of the authorities to engage in inspection, search and seizure - Section 83 of CGST Act - HELD THAT:- In the present case, there are serious allegations in regard to the excess claim of ITC based on transactions with non-existent or fraudulent entities. However, such allegations are to be based upon supporting materials and evidences if they are to translate into an opinion as required in terms of Section 83. No doubt, there are instances where, even prior to the passing of the assessment order sufficient material would be available even at the time of investigation to support a prima facie conclusion of suppression or excess claim. However, the brief for opinion by R1 and the opinion of R2 must contain references to the material while according sanction under Section 83. The power conferred upon an authority under Section 83 is substantial and with great power comes great responsibility. The authority concerned must justify the invocation of the coercive and intrusive recovery proceedings against the assessee, even prior to determination of liability and passing of an assessment order. The burden that lies upon the revenue is heavy and has to be seen to be discharged by them in a proper manner in each and every case where power under Section 83 is invoked. The opinion of R2 in this case is far more cryptic revealing total nonapplication of mind and merely repeating what R1 has stated in his request for sanction. The impugned order of attachment is set aside. Petition allowed.

  ---

• 2021 (10) TMI 522
  Blocking of credit in the Electronic Credit Ledger - proceedings under Section 74 of CGST Act, 2017 - HELD THAT:- The sequitur is temporary blocking of the Electronic Creditor Ledger will be unblocked within a week from today. Captioned Writ Petition is disposed of by recording the stated position of the learned Revenue counsel. There shall be no order as to costs. List this matter under the cause list caption FOR REPORTING COMPLIANCE on 08.10.2021.

  ---

• 2021 (10) TMI 521
  Classification of supply - Benefit of exemption from GST - supply of goods or supply of services - e-Procurement transaction fee collected on behalf of ITE C Department of Telangana State Government towards online tenders - applicability of Entry No.6 of exemption of N/N. 12/2017- Central Tax (Rate) Dated 28th June, 2017 - HELD THAT:- The applicant is providing service to various departments of Telangana Government in the field of Information technology and related services. These services include e-procurement of various goods services for these Government departments. It is the opinion of the applicant that such services provided by him fall under Entry 6 of Notification No. 12/2017 dated: 28.06.2017 and therefore are exempt from any tax under GST. A careful reading of the said Entry in the Notification reveals that this entry pertains to services provided by the Government and not services provided to the Government. The applicant is providing services to the Government. Therefore the services provided by the applicant to the Government are not exempt under this Notification. Further the services provided by the applicant on behalf of the Government to business entities is covered by the exception to the above entry, therefore such services also are not exempt. Application disposed off.

  ---

• 2021 (10) TMI 520
  Exemption from GST - Godown Rent collected from the CCI - N/N. 21/2019 Central Tax (Rate) Dated 30.09.2019 based on the Circular No.16/16/2017-GST - HELD THAT:- The CCI has purchased raw cotton from farmers in the primary market and then processed it in ginning mills on job work basis. CCI has paid tax on ginning and pressing to the ginning mills as it cannot claim exemption under Entry 24 of the modified Notification No. 11/2017. This processing is not meant for primary market and hence it cannot be treated as raw cotton. Therefore it cannot be claimed that the cotton stored by CCI in the warehouses of the applicant fall under Entry 24B of Notification No. 21/2019 dated: 30.09.2019. The warehousing services rendered by the applicant to CCI do not fall under Entry 24B Notification No. 21/2019 dated:30.09.2019 and hence are taxable at the rate of 9% under CGST and SGST each. Application disposed off.

  ---

• Income Tax

• 2021 (10) TMI 519
  Reopening of assessment u/s 147 - eligibility of reasons to believe - no assessment order passed under Section 143(3) - disallowance u/s 40-A(3) - HELD THAT:- No assessment order came to be passed in the case of assessee under Section 143(3) - Thus, no opinion had been formed by the assessing authority with respect to the matters considered while recording the reasons to believe that income had escaped the assessment at the hands of the assessee. Those reasons dated 30.03.2005 are confined to cash expenditure contrary to the mandate of Section 40-A(3) - in absence of any opinion having been formed by the AO may not be right in asserting that reasons to believe could have been recorded only on the strength of any fresh material that may have come into existence or that may have come to the knowledge of the AO after the assessment order came to be passed. That principle would remain applicable only to cases where an opinion had been formed on the subject matter considered in the reassessment proceeding, in an assessment order passed under Section 143(3). Addition u/s 40A(3) - Only a statutory presumption exists in favour of the revenue to disallow such expenditure as may have been made in cash by making payments in excess of Rs. 20,000/- during the previous year, to any persons. The presumption is rebuttal. We find that the affidavits filed by the assessee during the assessment proceeding were not rebutted by the revenue. Those affidavits contain clear recital that the purchasers insisted for cash payment. Their identity is certainly not in doubt. There is no finding to that effect in any of the orders leading to this appeal. The sale deeds are also admitted to be registered documents and there is no other material as may be considered adverse to the claim set up by the assessee. In view of the undisputed facts of the present case we find no good ground to distinguish the law laid down by this Court in Commissioner of Income Tax Vs. Chaudhary And Co. [ 1995 (9) TMI 53 - ALLAHABAD HIGH COURT ] that has held the field for more than 26 years now. - Decided in favour of assessee.

  ---

• 2021 (10) TMI 518
  Validity of Reopening of assessment u/s 147 - eligible reason to believe - change of opinion - Non furnishing of reasons within reasonable time - whether new facts coming to the knowledge of the Assessing Officer subsequent to the original assessment proceedings? - HELD THAT:- AO while disposing of the objections by order dated 16.10.2018, has accepted the fact that the grounds on which the assessment was reopened were verified by his predecessor, while completing the assessment u/s 143(3) of the Act. If such is the understanding of the Assessing Officer, then we have no hesitation to hold that the reopening is a clear case of change of opinion. Assessee, in their objections, had also referred to the Circular issued by the Central Board of Direct Taxes, vide Circular No.549 dated 31.10.1989, wherein, it was clarified that a mere change of opinion cannot constitute a reason to believe under Section 147 of the Act so as to justify the reopening of assessment. Thus, in the absence of new facts coming to the knowledge of the AO subsequent to the original assessment proceedings, the reopening could not have been done on the same materials - from reasons for reopening, it is evidently clear that all the materials have been culled out from the return of income filed by the assessee and the Annexure thereto. Thus, the impugned reassessment proceedings, having been done with the same set of facts which were available during the regular assessment, is to be held to be a clear case of change of opinion. Delay in furnishing the reasons - Notice u/s 148 was issued on 29.03.2018. The assessee within 30 days by their letter dated 27.04.2018 had sought for reasons for initiating the reopening proceedings. AO did not furnish the reasons nor responded to the said letter, but proceeded to issue the notice under Section 143(2) dated 21.08.2018 - assessee submitted another letter dated 27.08.2018, requesting for furnishing the reasons for reopening. It is only thereafter, the reasons for reopening were furnished vide letter dated 30.08.2018. It is not clear as to why there was such a delay in furnishing the reasons. As in the case of GKN Driveshafts (India) Limited [ 2002 (11) TMI 7 - SUPREME COURT ] has held that the reasons shall be furnished within a reasonable time by the Assessing Officer, upon receiving the request for the same from the assessee. There is an enormous delay in furnishing the reasons for reopening and we are of the opinion that the reasons were not furnished to the assessee within a reasonable time. - Decided in favour of assessee.

  ---

• 2021 (10) TMI 517
  Validity of re-assessment notice issued under the erstwhile section147/148 after 1.4.2001 without following the mandate of new section 148A - Validity of the re-assessment proceedings initiated against the individual petitioners, after 01.04.2021, having resort to the provisions of the Income Tax Act, 1961 as they existed, read with the provisions of Act No. 38 of 2020 and the notifications issued thereunder - issuance of notices under Section 148 of the Act and also with respect to completion of reassessment proceedings - Insertion of new section 148A - validity of the Explanation appended to clause (A)(a) of CBDT Notification No. 20 of 2021, dated 31.03.2021 and Explanation to clause (A)(b) of CBDT Notification No. 38 of 2021, dated 27.04.2021 - Ordinance, the Enabling Act and Sections 2 to 88 of the Finance Act 2021, as enforced w.e.f. 01.04.2021 - substitution of Sections 147, 148, 148A, 149, 151 151A - scope of amendment - pre-existing provisions of the Act, with reference to pending proceedings - scope of provisions of the Enabling Act or the Notifications issued - as submitted procedural amendments cannot recreate a non-existing substantive law - HELD THAT:- Enabling Act only protected certain proceedings that may have become time barred on 20.03.2021, upto the date 30.06.2021. Correspondingly, by delegated legislation incorporated by the Central Government, it may extend that time limit. That time limit alone stood extended upto 30 June, 2021. Additional Solicitor General of India may not be entirely correct in stating that no extension of time was granted beyond 30.06.2021. Vide Notification No. 3814 dated 17.09.2021, issued under section 3(1) of the Enabling Act, further extension of time has been granted till 31.03.2022. In absence of any specific delegation made, to allow the delegate of the Parliament, to indefinitely extend such limitation, would be to allow the validity of an enacted law i.e. the Finance Act, 2021 to be defeated by a purely colourable exercise of power, by the delegate of the Parliament. Here, it may also be clarified, Section 3(1) of the Enabling Act does not itself speak of reassessment proceeding or of Section 147 or Section 148 of the Act as it existed prior to 01.04.2021. It only provides a general relaxation of limitation granted on account of general hardship existing upon the spread of pandemic COVID -19. After enforcement of the Finance Act, 2021, it applies to the substituted provisions and not the pre-existing provisions. Reference to reassessment proceedings with respect to pre-existing and now substituted provisions of Sections 147 and 148 of the Act has been introduced only by the later Notifications issued under the Act. Therefore, the validity of those provisions is also required to be examined. We have concluded as above, that the provisions of Sections 147, 148, 148A, 149, 150 and 151 substituted the old/pre-existing provisions of the Act w.e.f. 01.04.2021 - in absence of any proceeding of reassessment having been initiated prior to the date 01.04.2021, it is the amended law alone that would apply. We do not see how the delegate i.e. Central Government or the CBDT could have issued the Notifications, plainly to over reach the principal legislation. Unless harmonized as above, those Notifications would remain invalid. Unless specifically enabled under any law and unless that burden had been discharged by the respondents, we are unable to accept the further submission advanced by the learned Additional Solicitor General of India that practicality dictates that the reassessment proceedings be protected. Practicality, if any, may lead to legislation. Once the matter reaches Court, it is the legislation and its language, and the interpretation offered to that language as may primarily be decisive to govern the outcome of the proceeding. To read practicality into enacted law is dangerous. Also, it would involve legislation by the Court, an idea and exercise we carefully tread away from. Similarly, the mischief rule has limited application in the present case. Only in case of any doubt existing as to which of the two interpretations may apply or to clear a doubt as to the true interpretation of a provision, the Court may look at the mischief rule to find the correct law. However, where plain legislative action exists, as in the present case (whereunder the Parliament has substituted the old provisions regarding reassessment with new provisions w.e.f. 01.04.2021), the mischief rule has no application. As we see there is no conflict in the application and enforcement of the Enabling Act and the Finance Act, 2021. Juxtaposed, if the Finance Act, 2021 had not made the substitution to the reassessment procedure, the revenue authorities would have been within their rights to claim extension of time, under the Enabling Act. However, upon that sweeping amendment made the Parliament, by necessary implication or implied force, it limited the applicability of the Enabling Act and the power to grant time extensions thereunder, to only such reassessment proceedings as had been initiated till 31.03.2021. Consequently, the impugned Notifications have no applicability to the reassessment proceedings initiated from 01.04.2021 onwards. Upon the Finance Act 2021 enforced w.e.f. 1.4.2021 without any saving of the provisions substituted, there is no room to reach a conclusion as to conflict of laws. It was for the assessing authority to act according to the law as existed on and after 1.4.2021. If the rule of limitation permitted, it could initiate, reassessment proceedings in accordance with the new law, after making adequate compliance of the same. That not done, the reassessment proceedings initiated against the petitioners are without jurisdiction. According to us, it would be incorrect to look at the delegation legislation i.e. Notification dated 31.03.2021 issued under the Enabling Act, to interpret the principal legislation made by Parliament, being the Finance Act, 2021. A delegated legislation can never overreach any Act of the principal legislature. Second, it would be over simplistic to ignore the provisions of, either the Enabling Act or the Finance Act, 2021 and to read and interpret the provisions of Finance Act, 2021 as inoperative in view of the fact circumstances arising from the spread of the pandemic COVID-19. In absence of any specific clause in Finance Act, 2021, either to save the provisions of the Enabling Act or the Notifications issued thereunder, by no interpretative process can those Notifications be given an extended run of life, beyond 31 March 2020. They may also not infuse any life into a provision that stood obliterated from the statute with effect from 31.03.2021. Inasmuch as the Finance Act, 2021 does not enable the Central Government to issue any notification to reactivate the pre-existing law (which that principal legislature had substituted), the exercise made by the delegate/Central Government would be de hors any statutory basis. In absence of any express saving of the pre-existing laws, the presumption drawn in favour of that saving, is plainly impermissible. Also, no presumption exists that by Notification issued under the Enabling Act, the operation of the pre-existing provision of the Act had been extended and thereby provisions of Section 148A of the Act (introduced by Finance Act 2021) and other provisions had been deferred. All the writ petitions must succeed and are allowed. It is declared that the Ordinance, the Enabling Act and Sections 2 to 88 of the Finance Act 2021, as enforced w.e.f. 01.04.2021, are not conflicted. Insofar as the Explanation appended to Clause A(a), A(b), and the impugned Notifications dated 31.03.2021 and 27.04.2021 (respectively) are concerned, we declare that the said Explanations must be read, as applicable to reassessment proceedings as may have been in existence on 31.03.2021 i.e. before the substitution of Sections 147, 148, 148A, 149, 151 151A of the Act. Consequently, the reassessment notices in all the writ petitions are quashed. It is left open to the respective assessing authorities to initiate reassessment proceedings in accordance with the provisions of the Act as amended by Finance Act, 2021, after making all compliances, as required by law. Reassessment notice issued to the present petitioner is quashed.

  ---

• 2021 (10) TMI 516
  Disallowance u/s 80IC - company stated to be engaged in the business of induction Heat Seal Cap liner material and Induction Wads - products manufactured by the assessee fall under schedule 13 (at serial No. 19) which is a negative list and, therefore, profitderived from the manufacture of these products is not eligible for deduction - AO denied the claim of deduction u/s 80IC of the Act for the reason that though the claim of assessee was allowed by CIT(A) in earlier years but the order of CIT(A) has been challenged by Revenue before ITAT and the decision was awaited therefore to keep the issue alive denied the claim of assessee - HELD THAT:- As the industrial unit was set up on 26/10/2006, and the initial assessment year in which deduction under section 80 IC of the Act was claim, was assessment year 2007-08 from each year onwards such a claim was allowed to the assessee, and, therefore, tribunal returned a finding that the assessee is entitled to the deduction in section 80 IC of the Act and the classification of aluminium foil laminated on both sides with plastic films would be under Chapter Headings 7607 instead of Chapter Headings 3920. We find that the issues involved in this matter are directly and substantially covered in assessee s own case in earlier years [ 2019 (2) TMI 1191 - ITAT DELHI ] and while respectfully following the same we hold that the assessee is entitled to deduction under section 80 IC - Decided in favour of assessee.

  ---

• 2021 (10) TMI 515
  Penalty u/s 271(1)(c) - defective notice u/s 274 - non specification of clear charge - non-striking off of the inappropriate words in notice HELD THAT:- As inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. Although the Ld. DR submitted that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, the decision of the Hon ble Karnataka High Court in the case of SSA S Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT ] where the SLP filed [ 2016 (8) TMI 1145 - SC ORDER] by the Revenue has been dismissed is directly on the issue contested herein by the Assessee. Further, when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down by the Hon ble High Court in case of M/s. Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT ] will be applicable in the present case. - Decided in favour of assessee.

  ---

• 2021 (10) TMI 514
  Disallowance u/s 36(1)(va) - delayed payment of ESI/EPF - deduction on account of employees contribution to PF on the ground that it is not paid within the due date - As argued most of the payments were made within the extended period of 5 days - whether CIT(A) has erred on facts and in law in not allowing the deduction on account of employees contribution to PF on the ground that it is not paid within the due date as provided u/s 36(1)(va) of the IT Act, even though it was paid before due date of the filing of return of income? - HELD THAT:- CIT(A) while deciding the issue in favour of the assessee has given a finding that though there was delay in deposit of ESI EPF contribution but the same were deposited with the appropriate authorities before the due date of filing of return of income. We find that Hon ble Delhi High Court in the case of CIT vs. AIMIL Limited [ 2009 (12) TMI 38 - DELHI HIGH COURT ] held that if the employees contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. Insofar as the Income Tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed - Decided in favour of assessee.

  ---

• 2021 (10) TMI 513
  Exemption u/s 11 - denial of Exemption u/s 11 for violation of Section 13(1) (C) read with Section 13(3) - HELD THAT:- It is pertinent to note that the CIT(A) has categorically given the finding that for the Assessment Years 2011-12, 2012-13, 2013-14 and 2014-15. The assessee s application of income of trust outside India was denied and thus Exemption u/s 11 was denied to the assessee on account of violation in terms of Section 11 (1)(c), Exemption under this Section cannot be denied under this Section and only the portion of income to the extent not applied in India will not be eligible for Exemption. The Assessing Officer was directed according by the CIT(A). CIT(A) has held that the Assessing Officer is not justified in deny the benefit of Exemption u/s 11 of the Act and thus deleted the disallowance made in Assessment Year 2014-15 being 15% of salary made u/s 40A(2) (a) and allowed the said ground of the assessee. As related to floating the levy of interest u/s 234B and Section 234D. CIT(A) relied the decision of Anjuman H Glass Ware [ 2001 (10) TMI 4 - SUPREME COURT] , Hindustan Bulb Carriers [ 2002 (12) TMI 10 - SUPREME COURT] as well as the decision of Kerala Chemicals and Proteins. [ 2010 (1) TMI 263 - KERALA HIGH COURT] and Infrastructure Finance Company Ltd. [ 2011 (9) TMI 591 - MADRAS HIGH COURT] for the period after 1/6/2003 irrespective of the Assessment Year involved as it was introduced w.e.f. that date and thus, dismiss the grounds of the assessee. The decision of the CIT(A) on each of the issues were elaborated and the same are as per law. Thus, there is no need to interfere with the findings of the CIT(A) - Decided against assessee.

  ---

• 2021 (10) TMI 512
  Stay of outstanding demand - assessee s application u/s 154 of the Act is still pending before the assessing officer - HELD THAT:- As stay of outstanding demand raised for the impugned assessment year was granted to the assessee initially vide order dated 27-01-2020 on the condition that assessee would not press for issuance of refund amounting to Rs. 22,46,40,320/-. Subsequently, the stay granted earlier was extended vide order dated 26-02-2021 on the same conditions as were imposed earlier. Though, learned senior counsel for the assessee has pleaded for variation in the conditions of stay; however, we are not inclined to do so. Reason being, assessee s application u/s 154 of the Act is still pending before the assessing officer and the actual demand as per the claim of the assessee has not yet crystallized - considering the fact that non disposal of the corresponding appeal of the assessee is not solely attributable to the assessee, we are inclined to extend the stay for a further period of 180 days or till disposal of the appeal, whichever is earlier, under the same terms and conditions on which the stay was granted earlier. AO is directed to dispose of the rectification application filed by the assessee expeditiously after providing opportunity of hearing to the assessee.

  ---

• 2021 (10) TMI 511
  Rectification u/s 154 - Assessment of trust - contravention of the provisions of section 13(1)(c) for payment of unreasonable rent for properties owned by M.N. Navale (Bigger HUF) - Bigger HUF was a concern in which trustees of the trust had a substantial interest - whether M.N. Navale (Bigger HUF) is a person specified in section 13(3)? - violation of section 13(1)(c) - whether CIT(A) has erred in holding that the Shri M.N. Navale (Bigger HUF) does not stand in a relationship specified under section 13(3) of the Act? - HELD THAT:- When we read the order of the Tribunal for assessment year 2009- 10 in conjunction with the order for assessment year 2007-08, it becomes clear that the matter has been sent back to the file of ld. CIT(A). It is the very same finding which was taken up by the assessee through proceedings u/s.154 before the ld. CIT(A). Since the original order itself on this issue has been sent back by the Tribunal, the sequitur is that the instant rectification also, flowing from the original ground, should also follow the suit. We, therefore, set-aside the impugned order and remit the matter to the file of the ld. CIT(A) for deciding it in conformity with the view taken by him in the proceedings flowing from the order of the Tribunal for the assessment year 2009-10 on this issue - Appeal is allowed for statistical purposes

  ---

• 2021 (10) TMI 510
  Income from other sources - Unexplained business income - development management agreement with subsidiary company - HELD THAT:- The main object of the assessee was, inert-alia, to develop real estate for the purpose of commercial, industrial or residential use and other immovable properties and act as realtors, builders, contractors, designers, architects, consultants, developers, construction managers of all types of real estate development. Pursuant to the main objects, the assessee acquired M/s CDPL who became 100% subsidiary of the assessee. M/s CDPL was engaged in developing a mall i.e. Pride Mall at Pune. For the same, the assessee was appointed for providing development management services w.e.f. 01/09/2011 in respect of the said project and an agreement was entered into with CDPL - To render the services, the assessee had employed Mr. Peter Young who was stated to have expertise in managing development of malls and commercial complexes. Pursuant to development management agreement, the assessee raised invoices on CDPL from time to time and received the payment after deduction of tax at source. M/s CDPL confirmed the transactions in response to notice u/s 133(6). All these facts as well as documentary evidences bolster the claim of the assessee that it has provided management services to M/s CDPL. Merely because there were deficiency in the agreement would not invalidate the agreement since both the parties have acted on the terms of the agreement for which sufficient documentary evidences have been filed by the assessee before lower authorities. Therefore, the lower authorities, in our considered opinion, were not justified in doubting the business receipts of the assessee and assess the same as Income from other sources as unexplained income. We order so. Ground No.1 of the appeal stand allowed. Assessment of interest income - Allowable Business Income or not? - We find that the funds have been advanced by the assessee to its wholly owned subsidiary for the purpose of business. The project being carried out by M/s CDPL was in line with the main object of the assessee. It could also be seen that the loans have been funded out of the proceeds of the debentures issued by the assessee during the year. Therefore, interest income was rightly offered as Business Income by the assessee. Consequently, interest expenditure would be allowable business expenditure. Ground No.2 of the appeal stand allowed. Disallowance of various business expenditure as claimed in the Profit Loss Account - Since, we have held the management fees and interest income as Business income and negated the stand of lower authorities that there was no business activity, these expenditure would be allowable as business expenses. The Ld. AO is directed to verify the same and allow deduction thereof. Ground No.3 stand allowed for statistical purposes.

  ---

• 2021 (10) TMI 509
  Benefit of accumulation of income u/s.11(2) - denial of claim on non-submission of Form No.10 along with return of income - whether intimation issued u/s.143(1) is an assessment and the Assessing Officer can make adjustment towards rejection of accumulation of income u/s.11(2) ? - HELD THAT:- Except as provided under Explanation to section 143(1), no adjustments can be made to total income. In this case, the Assessing Officer has made adjustment to total income by rejecting accumulation of income u/s.11(2) and said adjustment is not in accordance with law. It is also an admitted fact that an appeal being continuation of original proceedings, appellate authority has co-terminus and co-extensive powers that of the Assessing Officer. Therefore, when the assessee has filed Form No.10 before the CIT(A),NFAC, he ought to have admitted Form No.10 filed by the assessee to consider accumulation of income u/s.11(2). See HARDEODAS AGARWALLA TRUST [ 1991 (7) TMI 22 - CALCUTTA HIGH COURT] In this case, the assessee claims that requisite Form No.10 was ready while filing return of income, but same could not be uploaded along with return of income due to technical glitches in web portal provided for filing return of income . The assessee has also filed copies of Form No.10 along with copy of resolution before us, as per which income has been accumulated for specified purposes vide Board resolution and further said sum was also invested in specified investments referred to u/s.11(5) of the Act. Therefore, we are of the considered view that the assessee is entitled for accumulation of income u/s.11(2) of the Income Tax Act, 1961. CIT(A) has erred in not considering claim of the assessee for accumulation of income u/s.11(2) of the Income Tax Act, 1961, even though the assessee made available such Form No.10 before the CIT(A) at the time of appellate proceedings. Hence, we set aside order passed by CIT(A) and restore the issue to the file of the Assessing Officer and direct the AO to allow benefit of accumulation of income u/s.11(2) of the Income Tax Act, 1961 by considering Form No.10 filed by the assessee along with other evidences. - Decided in favour of assessee.

  ---

• 2021 (10) TMI 508
  Recognized method of accounting - project completion method - whether the assessee, who is a real estate developer, was justified in computing his income by adopting project completion method as against the action of the lower authorities in estimating the income of the assessee on the basis of percentage completion method of accounting? - HELD THAT:- As it is held that the assessee was justified in adopting the recognized method of accounting i.e. project completion method. The impugned addition made by the lower authorities by applying percentage completion method is hereby ordered to be deleted. The alternative plea taken by the assessee regarding the dispute relating to figures of amount in case of percentage completion method, has become infructuous and no adjudication is required in that respect. Appeal of the assessee stands allowed.

  ---

• 2021 (10) TMI 507
  Assessment u/s 153A - Whether no incriminating material was found in the premises of the assessee during the search action relating to the aforesaid share capital/share premium received by the assessee? - HELD THAT:- Admittedly, the original assessment in this case was already completed and not abated as on the date of search. It is also an admitted fact that no incriminating material was found in the premises of the assessee during the search action relating to the aforesaid share capital/share premium received by the assessee. Now, the Ld. CIT(A) while deleting the addition in respect of the three parties has relied upon the decision of the Hon ble Delhi High Court in the case of CIT vs Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] wherein, it has been held that in case of completed assessment, no addition can be made in the absence of any incriminating material. We do not find any infirmity in the order of the Ld. CIT(A) in this respect. Since, the words and such other materials or information as are available with the Assessing Officer and relatable to such evidence do not find mention under the provisions of section 153A of the Act and further it has been held time and again by the various High Court that addition can be made in case of completed assessment as on the date of search only on the basis of incriminating material found during the search action, hence, in our view, the action of the Ld. CIT(A) in confirming the addition on the basis of sole statement of one dummy director, recorded during the survey action in case of that company, without confronting the same to the assessee, cannot be held to be justified. The impugned addition is, therefore, ordered to be deleted. In view of the above discussion, the appeal of the Revenue is hereby dismissed, whereas the appeal of the assessee is allowed.

  ---

• 2021 (10) TMI 506
  Validity of assessment order on the reasoning that it is barred by time - HELD THAT:- As assessee i.e. profit of Rubamin FZC be merged with the assessee s profit by treating Rubamin FZC as part or arm of assessee, then the assessment should be barred by time as in such scenario the provision of TP will not apply. Accordingly, the AO would not have the extended period of time for completing the assessment - It was held that the profit of Rubamin FZC shall not be included the profit of the assessee. Thus in view of assessee submission and decision held in raised by the assessee on merits, we dismiss this ground of appeal of the assessee. Addition by holding that the profit earned by its AE, M/s Rubamin FZC located at Sharjah UAE belongs to the assessee - AO concluded that the sole purpose of creating the RFZC was to shift the profit from India to the tax heaven i.e. RFZC - AO during the assessment proceedings also noted that there was no telephone/Internet connection up to November 2010 at the office of RFZC at UAE which evidences that the office was not functioning independently and properly - whether the company namely RFZC located in UAE was a paper company? - HELD THAT:- Indeed the RFZC was incorporated after due compliance of RBI as well as the local laws of UAE - approval of RBI and the local laws of UAE do not decide the nature of transactions. The purpose of RBI is to approve the company within the provisions of relevant law which has no role to play with respect to the provisions of income tax Act. Accordingly, in view of the above facts and definitions, we hold that the company namely RFZC is a shell or paper company which is not doing any business activity in reality and only used as vehicle to books sales and profit and the employees cost which it has shown but actually, it is working for DRC companies. Thus, we also hold that the approval given by the RBI will not help to the assessee insofar holding the RFZC as a paper company. As pertinent to note that in earlier assessment years, there was not any search or survey carried out. Indeed in those assessment years, the assessment was completed based on the information furnished in the return and books of account submitted along with return of income. Now there was a search action u/s 132 of the Act carried out at the premises of the assessee and new facts emerged and in view of the new facts the Revenue changed its stand. Therefore we are of the view that the learned AR s contention to this extent is not maintainable. Whether it was necessary for the assessee to establish a company for carrying out its business activities in DRC? - A conjoint reading establishes the fact that the banking facility in DRC was poor. Thus to cope up with the uncertainty prevailing in DRC and safeguard its business and financial interest the assessee has to rout the transaction through third party or intermediary. At the same time liberalized exchange for third party payment were not available in India for the type of transaction it (RFZC) was carrying out i.e. exporting goods directly from DRC to ultimate customer in third country but routing the bill through RFZ to final customer - at that time it was not possible from India to export the goods directly from DRC to third country but issue bill from India and receive the remittance against such export from DRC in India. Whether the paper company as discussed above is engaged in any tax evasion? - As revenue has not invoked the provisions of section 6 of the Act. It was alleged by the revenue that RFZC has been used as the colourable device for diverting the profit - we find that there was no violation of any provisions of the law leading to draw the inference the assessee has acted in a manner which was prohibited under the provisions of law. Any transaction which is within the four corners of the law cannot be termed as colourable device merely on the reasoning that the assessee is able to save tax liability. Income Tax Act has been amended by incorporating the provisions of PoEM, GAAR for bringing such transactions under the net of tax. However, the provisions are not applicable to the year under consideration. Therefore, we are of the view that until and unless there is any violation of the provisions of law, it cannot be alleged that the assessee by adopting the colourable device has diverted the profit. Whether the profit shown by the RFZC belongs to the assessee? - As profit attributable to DRC for the reasons as discussed above cannot be clubbed with the assessee on the reasoning that the assessee has diverted the profit by using the colourable device. In either situation whether the profit belongs to RFZC or the DRC, the position of the assessee cannot be altered. In other words the assessee company can earn from either of subsidiary companies in the form of dividend only which is also a reality that the assessee has taken a dividend. In a situation of holding the profit of RFZC attributable to the DRC companies, the assessee would have taken the dividend which would have been subject to tax its hands in the same manner as the dividend from RFZC is taxable. Accordingly we hold that position of the assessee in either case cannot be detrimental to it. As we have decided the issue that profit attributable to RFZC belongs to DRC companies, then the question of the colourable device used by the assessee for diverting its profit does not arise. The profit attributable to RFZC with respect to the transactions carried out by it with the company based in China namely Trafigura Beheer BV belongs to DRC companies. Likewise, the profit attributable to RFZC with respect to the transactions carried out by it with the assessee company has already been subject to transfer pricing provisions. Therefore, no inference can be drawn that the profit of the assessee company got diverted. Hence the ground of appeal of the assessee is allowed. Allowing the deduction of the loss for the reason that it was not crystallized in the year under consideration - HELD THAT:- It is a fact on record that the income shown by Rubamin FZC has not been held to be taxable in India along with the profit of the assessee in the ground raised by the assessee bearing of this order. Once, the profit of Rubamin RZC is not taxable in India, the question of allowing the loss as claimed by the assessee in the ground of appeal against the profit of the assessee does not arise. Hence the ground of appeal of the assessee is dismissed. TP Adjustment - Transaction of corporate guarantee furnished by the assessee to its AE as international transaction and thereby making an addition being guarantee commission - TPO treated the transaction of furnishing the corporate guarantee by the assessee to the AE as international transaction - HELD THAT:- We hold that the issue in the case of the assessee is no longer a covered issue. It is for the reason that, the ITAT on the earlier occasion in the own case of the assessee after making a reference to the order of the coordinate bench in the case of Micro Ink Ltd [ 2015 (12) TMI 143 - ITAT AHMEDABAD] has held that the corporate guarantee was not the international transaction requiring to be benchmarked at the arm length price as the assessee has not charged any commission from the AE. However, the ruling in the own case of the assessee has been overruled by the Hon ble Madras High Court as discussed above. Accordingly we hold that the assessee cannot take the benefit of the order of the ITAT in its own case. Determination of the ALP of the impugned international transaction - TPO in the case on hand has adopted the basis of credit rating of the assessee and AE and accordingly calculated the average coupon rate difference based on such rating as per the data available for US bond - HELD THAT:- Mumbai tribunal in the case of Greatship (India) Ltd. [ 2021 (4) TMI 254 - ITAT MUMBAI] after considering the plethora of orders has reached to the conclusion that what the assessee would have paid the guarantee commission, had it obtained guarantee from the bank. That rate of commission should be applied to determine the ALP. The relevant extract of the order has already been reproduced in the submission of the learned AR for the assessee. In the order of the Mumbai ITAT in the case of Greatship (India) Ltd. supra, various judgements were referred therein and in all those judgements average rate of commission was ranging from 0.2 to 0.5 percent. Thus we are of the view that the justice will be served to the assessee and the revenue if the addition is restricted to 0.5% of the guarantee amount. We accordingly hold so. Hence the ground of appeal of the assessee is partly allowed. Characterization of receipts - sales tax subsidy as revenue receipt chargeable to tax - Alternatively, if it is treated as revenue receipt then the amount of deduction under section 80IB of the Act should be enhanced by the corresponding amount - HELD THAT:- As decided in own case [ 2017 (2) TMI 1085 - ITAT AHMEDABAD] we hold that the impugned receipt of sales tax subsidy is a revenue receipt which is chargeable to tax Deduction u/s 80IB - DRP has already given a direction to allow the deduction under section 80IB of the Act for the amount of sale tax subsidy but after verification. We find that the direction given by the learned DRP is clear and without any ambiguity. Therefore, we do not find any reason to interfere the direction of the learned DRP. Thus the alternate contention of the assessee is allowed. Hence the aground of appeal of the assessee, in terms of above, is allowed. Capital gain computation - applicability of section 50C - difference between the Jantri Value and the sale consideration under the provisions of section 50C - HELD THAT:- As identical issue was raised by the assessee in its own case in the assessment year 2008-09 wherein as held CIT(A) justifies the Assessing Officer s action in not making any such reference. The same admittedly goes to the well settled law hereinabove that the impugned addition is not to be made without a necessary reference under the relevant statutory provision. We accordingly restore the instant issue back to the Assessing Officer for proceedings afresh as per law after affording adequate opportunity of hearing to the assessee. The assessee s instant ground is treated as accepted for statistical purposes. Consequently, the ground of appeal of the assessee of this year is set aside to the file of the AO for fresh adjudication as per the provisions of law and after giving the reasonable opportunity of hearing to the assessee. Hence the ground of appeal of the assessee is allowed for the statistical purposes. Not reducing the dividend income received from Rubamin FZC in the event profit of Rubamin FZC merged with assessee s income - HELD THAT:- It is a fact on record that the income shown by Rubamin FZC has not been held to be taxable in India along with the profit of the assessee in the ground raised by the assessee bearing Nos. 4 to 7 vide paragraph No. 47 to 65 of this order. Once, the profit of Rubamin RZC is not taxable in India, the question of reducing the dividend income as claimed by the assessee in the ground of appeal against the profit of the assessee does not arise. Hence the ground of appeal of the assessee is dismissed. Consideration of income as per revised return of income - HELD THAT:- At the outset we note that the return of income can be revised under the Act if it has been done within time limit as per the provision of the Act. Then it is the duty of Revenue authority to consider the income as per the revised return. Accordingly we direct the AO to consider the income as per revised return if the same is filed within the framework of law. Hence the ground of assessee is allowed in terms of above for the statistical purposes. Not allowing the loss occurred due to fraud on reason that the same not crystallized in the current year - no documentary evidence furnished by the assessee with respect to the loss incurred on account of the fraud committed by the then CFO except the copy of the FIR - whether the impugned loss was crystallised in the year under consideration or in the subsequent year so as to allow the deduction to the assessee? - HELD THAT:- The expression detection and discovery have different and distinct implications in law. The expression discovery has to be interpreted so as to mean that loss must be deemed to have arisen only when the assessee comes to know about it and realizes that the amount embezzled cannot be recovered and not merely from the date of acquiring knowledge in which that embezzlement has taken place. In the present case, the ld. DRP has given finding that last amount was received in the financial year under consideration which implies that the balance amount is not recoverable. Accordingly it can be inferred that, such loss is eligible for deduction as it was discovered to the assessee that the amount of loss was not recoverable. Accordingly we set aside the finding of the learned DRP and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. TP Adjustment - upward adjustment made by TPO by using CUP on account of loan advanced to AE - assessee has advanced loan to its AE without charging any interest thereon - CIT (A) allowed the ground of appeal of the assessee in part after placing his reliance on the order of his predecessor in the case of the assessee for the assessment year 2007-08 and 2008-09 by directing the AO to adopt interest rate at LIBOR +0.75% - HELD THAT:- This tribunal in the own case of the assessee for the assessment years 2008-09 - DR has not brought anything on record indicating that the above finding of the ITAT was either overruled or stayed. Thus we hold that the above finding of the ITAT is also applicable to the assessee for the year under consideration. Therefore we set aside the issue to the file of AO for fresh adjudication as per the provision of and in the light of above stated discussion. Hence the grounds of appeal of the assessee are allowed for statistical purposes. Loss on sale of shares - AO treated the entire transaction of sale purchase of the shares as a colourable device and reworked the amount of loss in accordance with the method adopted under rule 11UA - HELD THAT:- As perused the details available in the form of sale or purchase agreement of share. All these details, evident that the necessary details to whom the shares were sold by the assessee were available before the learned CIT (A). Thus to this extent, we hold that the finding of the learned CIT (A) is contrary to the materials available on record. Additionally, we also note that there was nothing brought on record by the Revenue indicating/suggesting that the assessee has received any consideration in cash against the sale of shares. In view of the above and after considering the facts in totality we are not convinced with the finding of the authorities below that the assessee has adopted the colourable device for incurring the impugned losses. Whether the price (Rs.400 per share) at which the shares were sold was supported based on any documentary evidence? - We note that the section 48 deals with computation of income chargeable under the head capital gains . Section 48 refers to the full value of consideration received or accruing as a result of transfer of a capital asset. It states that from the full value of consideration received or accruing, deduction would be allowed in respect of expenditure incurred wholly and exclusively in connection with the transfer and cost of acquisition of asset and cost of any improvement thereto. In other words, the provision does not provide that the fair market value of the property as on the date of transfer should be considered as the sale consideration provided under such 48. There is no provision under the Act prescribing the guidelines for pricing of the shares unlike the provisions contained under section 50C of the Act concerning immovable properties under the head capital gain. Thus in the absence of any specific provision to determine the sale price of the shares of unlisted company at prevailing point of time, we are inclined to hold that the price declared by the assessee is correct and within the provisions of law. We note that the law was amended to bring the transaction of unquoted sale and purchase of shares under the net of income tax concerning the sale price of the shares. As per the provisions of section 50CA of the Act, the sale price of shares other than quoted shares shall be the fair market rate which shall be determined as prescribed under the rule 11UA of the Income Tax Rule. As the purchase and sale of the shares by the assessee of the shares of company were duly supported with the relevant documentary evidences such share purchase agreement, copy of annual return and share sale agreement which are placed on pages 122 to 139, 100 to 113 and 266 to 268 of the paper book. It is also pertinent to note that the lower authorities did not doubt the details of the purchases and sales of the shares. In view of the above, we are not inclined to uphold the finding of authorities below. Accordingly, we set aside the order of learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.

  ---

• 2021 (10) TMI 505
  Depreciation on the basis of computation made by the assessee - itemized sale of assets or slump sale - HELD THAT:- We find that both the parties before us fairly agreed that this issue is already covered in favour of the assessee by the order of this Tribunal in [ 2019 (5) TMI 689 - ITAT MUMBAI] as is discernible from the order of the DRP, the issue as to whether the sale of the aforesaid two divisions was to be construed as itemized sale of assets or slump sale is pending before the ITAT in the preceding years of the assessee. Accordingly, the DRP had directed the A.O to allow depreciation to the assessee on the basis of the outcome of the main appeal regarding slump sale vs. itemized sale. In the backdrop of the aforesaid fact situation, now when the matter as to whether the sale of the aforesaid two divisions by the assessee is to be treated as an itemized sale or a slump sale is pending in the case of the assessee for the preceding years, therefore, we find no infirmity in the order of the DRP who had rightly directed the A.O to allow depreciation to the assessee on the basis of the outcome of the main appeal - Decided against revenue. MAT computation - Computation of deduction u/s.80HHC of the Act for the purpose of calculating book profits u/s.115JB - HELD THAT:- We find that this issue is no longer res integra in view of the decision Bhari Information Technology Systems (P) Ltd. [ 2011 (10) TMI 19 - SUPREME COURT] wherein the decision of the Syncom Formulations India Pvt. Ltd. [ 2007 (3) TMI 288 - ITAT BOMBAY-H] had been duly approved by the Hon ble Apex Court. Though this decision was rendered by the Hon ble Apex Court in the context of claiming deduction u/s.80HHE of the Act vis- -vis computation of book profits u/s.115JA of the Act, the same analogy would apply to the issue in dispute before us. We find that the Hon ble Apex Court had held that deduction u/s.80HHE had to be worked out on the basis of adjusted book profit u/s.115JA of the Act and not on the basis of profits computed under regular provisions of law applicable to computation of profits and gains of business. Respectfully following the same, we do not find any infirmity in the order passed by the ld. CIT(A). Accordingly, the ground No.1(b) raised by the Revenue is dismissed. Deduction for provision of bad and doubtful debts while computing book profits u/s.115JB - HELD THAT:- Section 115JB of the Act is a self-contained code by itself starting with a non-obstante clause. The Hon ble Supreme Court in the case of Apollo Tyres [ 2002 (5) TMI 5 - SUPREME COURT] had already held that the book profits reported by the assessee which has been approved by their shareholders in the Annual General Body meeting could not be tinkered with by the ld. AO other than those additions or deductions specified in Explanation-1 to Section 115JB (2) of the Act. Clause (i) of Explanation to Section 115JB(2) of the Act specifically mandates that provision for diminution in value of any asset should be added back while computing book profits u/s.115JB of the Act. It is not in dispute that the provision for doubtful debts in the instant case does represent provision made for diminution in value of asset. There is absolutely no quarrel that the case does not fall under Clause C of Explanation 1 to Section 115JB(2) of the Act. We hold that the issue in dispute falls in Clause (i) of Explanation 1 to Section 115JB(2) of the Act. We are not inclined to make this provision redundant or otiose - we hold that provision for bad and doubtful debts is required to be added back while computing book profits u/s.115JB Set off of Losses of amalgamating company in the hands of the assessee company - Slump sale - whether the assessee had complied with the provisions of Section 72A of the Act r.w.rule 9C of the Rules which alone would enable it to get the benefit of set off of accumulated losses of amalgamating company in addition to the scheme of merger approved by the Hon ble Bombay High Court? - HELD THAT:- The income tax dispute cannot be determined based on newspaper reports. But in the instant case, the facts stated in the newspaper reports stood subsequently ratified by the actual events that had taken place post merger. We are completely in agreement with the argument advanced by the ld. AR that since assessee was not in control of the operations of GBDFC prior to the merger including the sale of ibuprofen undertaking on 01/11/2002 by way of slump sale, the assessee cannot be held responsible for the same. The act of GBDFC prior to merger, to sell any of its undertaking to its sister concern Alpex for a paltry consideration is of absolutely no relevance to the assessee company herein. In view of the aforesaid observations, we hold that the ld. CIT(A) had rightly directed the ld. AO to allow set off of losses of amalgamating company in the hands of the assessee. Accordingly, ground No. 1(d) raised by the revenue is dismissed. Allowability of capital loss on sale of shares - AO has alleged that the assessee has not furnished any tenable reason for the loss that it has incurred by selling off its share holding - HELD THAT:- Revenue did not point out any facts which would evidence that the transaction was not genuine. In such a case where the genuineness is not disputed with any evidence, it is not open to discard the documents and/or transaction on the basis of some supposed object/intent. In the present facts the Revenue accepts the documents but only substitutes the consideration. Therefore, the issue is whether such substitution of full consideration received by fair market value of the asset is permissible. As held by the Tribunal at the relevant time there was no power vested in the authorities under the Act to substitute a full value of consideration received for sale of shares by fair market value in respect of stocks and shares. The power to substitute full consideration with fair market value in respect of shares came into the statute only on introduction of Section 50D with effect from 1st April, 2013. Moreover, such a power under Section 50D of the Act is only to be exercised if the Assessing Officer comes to a finding that the consideration received is not ascertainable or cannot be determined - we do not find any infirmity in the action of the ld. CIT(A) allowing capital loss on sale of shares of Reckitt Piramal Pvt. Ltd., and Charak Piramal Pvt. Ltd. Allowability of bad debts as deduction - HELD THAT:- As it is no longer necessary for the appellant to establish that the debt which is written off has become bad during the year. The A.O. is therefore directed to allow bad debts. Addition in respect of unutilized MODVAT credit u/s.145A - HELD THAT:- As relying on own case [ 2019 (5) TMI 689 - ITAT MUMBAI] we restore this issue to the file of the ld. AO to decide the same in the light of directions issued by this Tribunal for A.Y.2009-10. Accordingly, the ground No. I raised by the assessee is allowed for statistical purposes. Disallowance of interest expenditure paid to various banks u/s.36(1)(iii) - payment was made for the loan which was utilized for acquiring the capital asset and an amount expended in the sum of Rs. 9.47 Crores which was upheld by the ld. CIT(A) by placing reliance on the order passed by his predecessor in assessee s own case for A.Y.2002-03 - HELD THAT:- We find that the appeal preferred to this Tribunal in assessee s own case for A.Y.2002-03 had been adjudicated already by this Tribunal in [ 2020 (4) TMI 812 - ITAT MUMBAI] to hold that the payment of prepayment charges also partakes the character of interest . We find that there cannot be any iota of doubt that the entire transaction of acquisition of business assets by the assessee has been done on the grounds of commercial expediency and hence the entire interest payment and prepayment charges would be squarely allowable as deduction u/s 36(1)(iii) of the Act itself. Accordingly, the Ground raised by the assessee is allowed. Granting deduction only in respect of 1/5th of the expenditure in respect of payment made to M/s. Accenture by applying the provisions of section 35DD of the Act as against the claim of deduction of the whole expenditure u/s.37(1) by assessee - HELD THAT:- We find that the very same issue was the subject matter of adjudication by this Tribunal in assessee s own case for A.Y.2002-03 wherein it was held that assessee would be eligible for deduction u/s.37(1) - We hold that the provisions of Section 35DD of the Act as alleged by the ld. CIT(A) cannot be made applicable in the instant case as admittedly the same only refers to expenses incurred pursuant to amalgamation. Hence, we direct the ld. AO to grant deduction of the said expenditure u/s.37(1) of the Act. Computation of deduction u/s.80HHC - AO show-caused the assessee with regard to claim of deduction u/s.80HHC of the Act to explain as to why the profits of the business should not be recomputed in view of Explanation (baa) of Section 80HHC(4) - HELD THAT:- While computing the 90% of interest together with rent, miscellaneous income, service charges, commission etc., for the purpose of reducing the same from profits from business eligible for deduction u/s.80HHC of the Act in order to arrive at the adjusted profits of the business, whether the gross interest income or net interest income is to be considered. We find that this issue is no longer res integra in view of the decision of ACG Associated Capsules (P) Ltd., [ 2012 (2) TMI 101 - SUPREME COURT] wherein it was held that net interest is to be considered. We find that the Hon ble Apex Court in para 10 of its order had held that 90% of net amount of receipt of nature of interest, rent, commission etc. which is actually included in the profits of the assessee is to be deducted from the profits of the assessee for determining profits of the business of the assessee under Explanation (baa) of Section 80HHC. Correct head of income - Treatment of rental income from let out portion of Rhone Poulenc House (RPIL) as income from other sources instead of income from house property - HELD THAT:- We find that the ownership of the RPIL House vests with the assessee for four years and hence, assessee continued to be the owner of the part premises of RPIL House and hence, the rental income thereon should be assessed only under the head income from house property and assessee would be entitled for statutory deduction @30% u/s.24(a) of the Act for the same. Enhancing the income of the assessee by disallowing the loss on redemption of shares by treating it as not a legitimate commercial transaction - AO accepted the claim of long term capital loss in the order passed by him u/s.143(3) - HELD THAT:- We hold that the ld. CIT(A) grossly erred in making enhancement of income by disallowing the claim of long term capital loss on redemption of preference shares. Levy of penalty u/s 271(1)(c) of the Act in respect of professional fees to Accenture - HELD THAT:- We find that we have already held that the professional fees paid to Accenture would be allowable as deduction u/s.37(1) of the Act. Since in the quantum appeal, it has already been held to be revenue expenditure, the levy of penalty would have no legs to stand. Accordingly, the grounds raised by the assessee are allowed.

  ---

• 2021 (10) TMI 504
  Disallowance u/s.14A r.w.r. 8D - Suo moto disallowance by assessee - HELD THAT:- Upon perusal of assessment order, we find that though suo-moto disallowance has not been considered by Ld. AO, however AO has recorded such satisfaction and thereafter computed the disallowance u/r. 8D. Therefore, this plea is to be rejected. Another argument is that while computing the disallowance, only those investments are to be considered which have yielded exempt income during the year. This plea is also to be rejected since after amendment to Rule 8D w.e.f. 02/06/2016, the computation u/r. 8D has undergone change and it has been made clear that the amount equal to 1% of the annual average of the monthly averages of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income, shall be disallowed. Therefore, post 02/06/2016, the plea to exclude the non-income yielding investment is to be rejected. Though the assessee has identified direct expenses towards earning of exempt income but it has not made any disallowance of indirect expenditure - application of Rule 8D would not be automatic or mechanical and the disallowance has to be computed having regards to the accounts of the assessee - disallowance u/s. 14A r.w.r. 8D stand restored to the file of Ld. AO for de novo adjudication in the light of our above observations. This ground stand partly allowed for statistical purposes. Repair Maintenance disallowance - assessee incurred expenditure which was in the nature of installation of lawn tennis court, repairs of boundary wall, supply of aluminum sheets, electrical works, purchase of water closet, fabrication charges, hardware items etc - HELD THAT:- We find that the expenditure on installation of tennis court is nothing but re-laying of the surface of the courts. The repairs to boundary wall is on account of plastering, painting, water proofing, stone fixing, chemical coating etc. The aluminum sheets are for the purpose of window replacement etc. Similar is the nature of other expenses. All these expenses, in our opinion, are not capital expenditure by which the assessee has acquired any new assets but the same are more in the nature of repair renovation expenses. The benefit may be enduring in nature but nevertheless, the expenditure could not be termed as capital expenditure. Similar is the view of Tribunal in assessee s own case for A.Y. 2009-10 [ 2017 (12) TMI 1265 - ITAT MUMBAI] - Therefore, we direct Ld. AO to allow the same as revenue expenditure and reverse the depreciation granted on these items. This ground stand allowed.

  ---

• 2021 (10) TMI 503
  Validity of reopening of assessment - validity of approval from a superior authority - whether Notice issued by obtaining prior approval from the learned Commissioner of Income-tax is bad in law and contrary to the provisions of section 151(2)? - HELD THAT:- An identical issue has been examined in the case of Ghanshyam K. Khabrani [ 2012 (3) TMI 266 - BOMBAY HIGH COURT ] and it was held that when 151(2) of the Act mandates that sanction to be taken for issuance of notice u/s. 148 of the Act in certain cases has to be of Joint Commissioner, then reopening of assessment with the approval of Commissioner is unsustainable We hold that notice issued u/s. 148 of the Act with the prior approval of Ld. CIT is not in accordance with the provisions of section 151(2) of the Act and hence the same is not sustainable. In that view of the matter the impugned assessment order would get vitiated. Accordingly, the assessee wins on this issue. - Decided in favour of assessee.

  ---

• 2021 (10) TMI 502
  Estimation of income - Bogus purchases - sole basis of addition was surrender made by the assessee - adoption of profit rate of 0.5% of the turnover by AO HELD THAT:- It is an admitted fact that this is the first year of operation of the assessee-company. The assessee has produced books of account before A.O. and the sales declared by the assessee has not been doubted - A.O. in the subsequent years has accepted the book results i.e., 0.045% in A.Y. 2016-17 under section 143(1) of the I.T. Act, 1961 and 0.029% in the order passed under section 143(3) I.T. Act, 1961 for the A.Y. 2017-18. Therefore, for the impugned assessment year, when the sales has not been doubted and the assessee has produced the books of account including details of purchases, sales, sundry debtors, creditors, stock statement, quantitative of details etc., therefore, adoption of net profit @ 0.5% appears to be on higher side. Adoption of net profit rate of 0.075% under the facts and circumstances of the present case will meet the ends of justice. I hold and directly accordingly. It is also made clear that this profit rate is only for the impugned year for the assessee and cannot be considered as a precedent for other years or for any other assessee. The ground raised by the assessee on this issue is accordingly partly allowed. Addition u/s 68 in respect of share capital - It is an admitted fact that the share capital was invested by the Directors and this is the first year of the incorporation. Therefore, in the year of incorporation the assessee-company in our opinion cannot have income from undisclosed source towards introduction of share capital and addition, if any, could have been made in the hands of the Directors - therefore, set aside the order of the Ld. CIT(A) on this issue and direct the A.O. to delete the addition.

  ---

• 2021 (10) TMI 501
  Mark to market loss on account of decrease in the value of closing stock - diminution in the value of stock-in-trade of equity shares - disallowance of claim as per Board circular No. 3/2010 dated 23.03.2010 and the fact that such loss is nothing but speculation loss within the meaning of Explanation to section 73 of the IT Act, 1961 - CIT-A allowed the claim - HELD THAT:- As the addition made by the A.O. w.r.t. diminution in the value of closing stock of equity shares remains the same as were there before the Tribunal in the assessee s own case for preceding years [ 2017 (12) TMI 1815 - ITAT MUMBAI] therefore, finding no infirmity in the view taken by the CIT(A) who had followed the view taken by the Tribunal we find no reason to dislodge the well reasoned order of the CIT(A) and uphold the same. Insofar the support drawn by the A.O. from the CBDT Instruction No. 03/2010, dated 23.03.2010, to the effect that the notional loss should not be allowed is concerned, we are of the considered view that as stated by the ld. A.R., and rightly so, as the said CBDT instruction is in context of reporting of mark-to-market losses on account of forex-derivatives by an assessee, thus, the same cannot be applied to the method of valuation of closing stock of equity shares. - Decided in favour of assessee.

  ---

• 2021 (10) TMI 500
  Accrual of income / Undisclosed income - Nature of advance money received - Addition as facilitation fee / commission / brokerage - Eligible material to establish the fact that the advance was in the nature of Commission/Brokerage or facilitation fee - assessee received the sum from K.G. Krishna who was the Purchaser of the property on behalf of whom the assessee rendered various services to various properties in and around Bangalore -assessee himself has admitted on Oath before made by the AO in respect of that he has received - HELD THAT:- As there was an agreement of development work between the assessee and Astitva group of concerns, on whose instructions, the ultimate buyer of the land, K.G. Krishna has made these payments. As rightly pointed out by the assessee, the development work could not be done in view of the pending litigation before the City Civil Court in OS 198/2009. The transaction took place in the FY 2007-08 and the said suit was in respect of ownership of the property and the assessee is having no ownership rights over the disputed land, but he was only concerned with the development work as a contractor. Accordingly, the assessee was not a party to the litigation. The amount so received of Rs. 2.55 cores is only for carrying out the development work in terms of the agreement between the parties and it was duly shown in the balance sheet filed with the authorities, as such it cannot be considered as commission or brokerage paid to assessee. It was received by the assessee as an agent to carry out the work entrusted to the assessee by Astitva group of companies and it cannot be taxed in the hands of assessee as income. Being so, the CIT(Appeals) was justified in deleting the addition on this count. Validity of Reopening of assessment u/s 147 - whether AO did not have any information, except information received from the Investigation Wing for reopening the assessment? - HELD THAT:- In the present case, the AO simply relied upon the information received by him and stated that income has escaped assessment which has not been disclosed by the assessee and it is the income which escaped assessment in the hands of assessee. It clearly shows that AO simply acted upon the information and did not apply his own mind to the information to arrive at a belief independently that on the basis of material before him to come to the conclusion that income has escaped assessment. It was only a doubt, but not a reason to believe meaning thereby that, even if there was some material in respect of source of receipt, it was not sufficient for arriving at the conclusion that the receipt represented unexplained income of the assessee. In other words, the AO has just suspicion in his mind and it is trite law that an assessment cannot be reopened merely on the basis of suspicion and initiation of reassessment proceedings u/s. 148 of the Act on the basis of this aspect was invalid in the eye of law. AO reopened the assessment merely on suspicion and surmise, without there being any positive material in his possession to prove that the assessee is the owner of the bank account or having beneficial interest in this bank account. Therefore, we are of the opinion that the reopening of assessments are bad in law, which cannot be sustained. Accordingly, we quash the reassessment. Reopening of assessment u/s 147 or 153C - Whether Reopening of assessment on the reason that assessment was reopened consequent to search action in the case of K.G. Krishna K.G. Krishna u/s. 148, it should be reopened u/s. 153C? - HELD THAT:- First of all, the AO of the searched person would have to arrive at a satisfaction that document or asset seized does not belong to a person searched, but to some other person, and secondly, the seized documents or assets are handed over to the AO having jurisdiction over that person, i.e., person other than the one searched and to whom the seized document or assets are said to belong. In the present case, the basis for reopening the assessment was information received from DDIT (Inv)Unit 1(2), Bangalore, about the payment of Rs. 2.55 crores to the assessee by K.G. Krishna who was searched u/s. 132 of the Act. The search team had not found any assets or documents seized belonging to the present assessee. Since there was no unearthing of document or assets during the course of search u/s. 132 belonging to the present assessee, consequent to search action in the case of K.G. Krishna. Being so, as per the provisions of section 153C as it stood on 1.6.2015, the assessee s case cannot be reopened u/s. 153C of the Act and on the basis of information gathered through DDIT (Inv)Unit 1(2), Bangalore, the assessment of present assessee could be reopened only u/s. 147/148 of the Act and this is subject to our findings in ground No.3 in CO. This ground of objection by the assessee is dismissed. Competent authority to approve the reopening of assessment - Notice u/s. 148 was issued to the assessee after 4 years and no approval was obtained from the CCIT as required u/s. 151 - HELD THAT:- In the instant case, though the assessment was reopened after 4 years, there was no assessment u/s. 143(3) of the Act. As seen from the provisions of section 151(2), Jt. Commissioner is the competent authority to approve the reopening of assessment and there is no necessity of approval of Commissioner of Income Tax to reopen the assessment. The assessee is relying on proviso to section 151(1) of the Act, which is only applicable to assessment to be reopened after four years in case original assessments were completed u/s. 143(3) of the Act. Being so, this argument of the assessee is also dismissed.

  ---

• 2021 (10) TMI 499
  Addition u/s. 68 - Accommodation entries taken by assessee - initial burden to prove - assessee s name appeared in the list of beneficiaries who have taken loans from the concerns operated by the PKJ - addition made as no evidence to say transactions are genuine, creditors identity and creditworthiness is not proved - HELD THAT:- AO has gone only by the statement recorded from Shri Pravin Kumar Jain who said to have been deposed that he is only providing accommodation entries and no real business is carried on by the entities. AO has not made any efforts to make independent enquiries with the lender company - AO has not provided the statements of Shri Pravin Kumar Jain to the assessee for his rebuttal. Nothing is placed on record to suggest that the information furnished by the assessee in the form of copy of affidavit, establishing identify of the lender, copy of the ledger giving details of loans confirmation taken and also repayment in subsequent years, copy of bank statement highlighting the natures of loan taken and repayment in subsequent years to establish the genuineness of the transactions copy of ITR V filed establishing creditworthiness of the lender are non-genuine. The assessee has discharged his primary onus on providing complete details in respect of the loan transaction and the Assessing Officer failed to carry out any fruitful investigation. Therefore, no addition can be made towards unexplained unsecured loan. In the case on hand assessee provided various evidences to establish the transactions are genuine, creditors identity and creditworthiness is proved by providing all the information to the Assessing Officer the assessee has discharged the initial onus of providing genuineness of the transactions under u/s 68 - once the initial burden is discharged by the assessee the burden shifts to the revenue to disprove the claim of the assessee. It is noticed that AO did not make any sort of enquiries to disprove the genuineness of the transaction on the evidences furnished by the assessee. He has completely ignored even the statement retracted by the PKJ. The addition is made merely on surmises and conjectures without probing further by the Assessing Officer. - Decided in favour of assessee.

  ---

• 2021 (10) TMI 498
  Addition u/s 68 - unexplained cash credit - HELD THAT:- Under section 68 of the Act, the AO has power to make addition of any sum found credited in the books of account of the assessee maintained for any previous year, as income of the assessee of that previous year if the assessee fails to explain about the nature and source thereof or the explanation offered by the assessee is not satisfactory in the opinion of the AO. In the present case, CIT(A) has confirmed the addition made by the AO on account of opening capital balance as on 01.04.2013. AO has already reopened the returns of the assessee for the earlier assessment years including the assessment year 2013-14 and made additions. Under these circumstances, CIT(A) has wrongly confirmed the addition ignoring that the credit entry in question does not pertain to the year relevant to the assessment year under consideration - we hold that the action of the Ld. CIT(A) is not in accordance with the provisions of the Act and contrary to the ratio laid down in the cases discussed above - allow this ground of appeal and set aside the findings of the Ld. CIT(A) and direct the AO to delete the addition. Unexplained investment u/s 69 - Whether assessee has explained the source of payments made towards installments of home loan? - HELD THAT:- As per the said statement of account, the cheques received from M/s Prem Oil Store from time to time were deposited in assessee s account and thereafter the amounts of EMI were transferred to the loan account through cheques. So, the assessee has proved the source of amount paid towards repayment of home loan - CIT(A) has sustained the addition inter alia on the ground that the assessee has filed copy of account of M/s Prem Oil Store as per which the said firm has paid the tanker rent in cash. Since the assessee has explained the source of the said amount on the basis of entries in the bank account, we find merit in the contention of CIT(A) has sustained the said addition ignoring the documentary evidence i.e., entries in the statement of bank account of the assessee. On the other hand, there is no reference of the statement of bank account of the assessee in the assessment order - we set aside the findings of the Ld. CIT(A) and send this issue back to the AO with the direction to delete the addition after verification of entries in the statement of bank account of the assessee. Assessee is partly allowed for statistical purposes.

  ---

• 2021 (10) TMI 497
  Disallowance of interest u/s 36(1)(iii) incurred on money borrowed invested for purchase of office premises - allowable business expenditure or not - appellant seeks fro opportunity of being heard for producing additional evidence to prove that the interest is incurred for business purposes - case was selected for scrutiny under CASS and serving notices u/s 143(2) and 142(1) duly served - HELD THAT:- As AIR i.e. individual transaction statement issued by the Department which relates to the details of transactions for purchases of immovable property, all the details of the property in question before us along with detail of person who purchased the property are mentioned therein. It clearly shows that the property of Andheri (East) referred above was purchased by two persons i.e. assessee and his brother. The property being commercial is not disputed. Under the given facts and circumstances of the case we are the considered view that the interest has been rightly claimed as business expenditure as it has been paid on the loan taken to purchase property for business purposes and interest expenditure has been claimed after deducting tax at source and all documentary evidence placed before us asserts this fact. We therefore, set aside the finding of the Ld. CIT(A) and allow the ground no. 2(a) raised by the assessee.

  ---

• 2021 (10) TMI 496
  Allowable business expenses - deduction on account of shortfall of PF Trust Earning (Interest) as per schedule 9.4 of the P L Account of the assessee - AO was of the view that since liability for payment of interest was of the PF Trust fund and not of the assessee company, hence these expenses are not allowable to the assessee company as deduction from income from busines and hence consequently should be disallowed by adding to income of the assessee and brought to income-tax - HELD THAT:- As the applicability of provision of Section 36(1)(iv) read with Schedule IV of the Income-tax Act,1961, Section 43B of the 1961 Act, and Rule 75 and 88 of the Income-tax Rules, 1962 and other relevant applicable provisions/rules/notifications/judicial precedence s etc. dealing with employer contribution to PF and the quantum allowable has not been looked into by both the authorities below - these provisions/rules prima facie have bearing on the resolution of the dispute between both the rival parties and it is only after detailed arguments and bringing relevant evidences on record which may requires inquiry into facts, the dispute between both the rival parties can be resolved both as to allowability as well on quantum allowable. In our considered view in the fitness of matter, fairness to both the parties and in the interest of justice , the issue need to be restored to the file of the AO for fresh adjudication on merit in accordance with law. Allowance of Employee s Contribution to Provident Fund received - Addition made on the ground that the said amount received by assessee from employees towards employees contribution of PF was not deposited by assessee to the credit of employees with the Provident Fund trust before the due date as prescribed under the P.F Act as stipulated under Section 36(1)(va) - assessee submitted before AO that amount was deposited on various dates which were all prior to the date of filing of return of income u/s 139(1) - HELD THAT:- As observed that Hon ble Jurisdictional High Court in the case of Sagun Foundry Private Limited [ 2016 (12) TMI 1479 - ALLAHABAD HIGH COURT] has held that deduction is to be allowed for belated payment of employee contribution to PF/ESI which is deposited beyond the due date stipulated under the relevant statutes governing PF/ESI , but the same stood deposited before the due date for filing of return of income as is prescribed u/s 139(1) of the 1961 Act. We at tribunal being inferior judicial body to Hon ble Allahabad High Court , are bound by decision of Hon ble jurisdictional High Court in the case of Sagun Foundry (supra) as a cardinal principles of judicial discipline and to instill certainty among tax-payers, thus, Respectfully following it we allow the claim of the assessee for deduction towards employees contribution to PF which was deposited late beyond due date as prescribed under relevant statute governing PF but the same stood deposited to the credit of employees with relevant fund before the due date for filing of return of income as prescribed u/s 139(1) of the 1961 Act. The assessee has , however, itself conceded that the assessee has not deposited Rs. 49,96,680/- received towards employee contribution to PF before the due date for filing of return of income u/s 139(1) of the 1961 Act and hence the said amount was rightly disallowed by authorities below. Undisclosed deposit/ investment by assessee - AO observed that the assessee has credited interest income of Rs. 73,93,000/- in its P L Account, while the assessee was able to submit evidences of interest bearing investments/deposit held to the tune of Rs. 1951.42 lacs corresponding to interest income - Assessee filed reconciliation statement before ld. CIT(A) to explain the difference which was accepted by ld CIT(A) and the additions to the tune of Rs. 1,47,36,408/- were deleted by ld. CIT(A) - HELD THAT:- As observed on perusal of the appellate order passed by ld CIT(A), that the ld. CIT(A) passed a cryptic unreasoned order accepting the contentions of the assessee without passing a reasoned/detailed /speaking order as to how the contentions of the assessee stood accepted - CIT(A) did not forwarded to AO additional evidences filed by the assessee to reconcile the issue of interest income for seeking AO s comments, as no remand report/comments were called by ld. CIT(A) from the Assessing Officer. Reference is drawn to sub-rule (3) of Rule 46A of the Income-tax Rules, 1962 - appellate order passed by ld. CIT(A) cannot be accepted and is hereby set aside. Thus, keeping in view the entire factual matrix of the case as well in the interest of justice and fairness to both the parties, in our considered view, the matter need to be set aside and restored to the file of Assessing Officer for fresh determination of the issue after considering the evidences/details/explanation filed by assessee in its defense in the set aside proceedings . AO shall provide proper and adequate opportunity of being heard to the assessee in set aside proceedings in accordance with principles of natural justice. Difference in income as reflected in 26AS and income as declared in Profit and Loss Account - CIT(A) remitted the matter to the file of AO to reconcile the figures as submitted by assessee - HELD THAT:- CIT(A) did not have powers u/s 251 to set aside and restore the matter to the file of the AO , as he is required to pass an order in an appeal against an order of assessment either confirming, reducing, enhancing or annulling the assessment , but there are no powers vested with ld. CIT(A) to set aside or restore the matter to the file of AO. Reference is drawn to provisions of Section 251(1)(a) of the 1961 Act. Secondly, in case additional evidences are filed by the assessee, the ld. CIT(A) is required to forward additional evidences to AO for its comments/remand report - CIT(A) in the instant case did not call for any remand report/comments from AO and rather set aside the matter to AO for reconciliation/verification - Reference is drawn to sub-rule (3) of Rule 46A of the Income-tax Rules, 1962. Thus , keeping in view the entire factual matrix of the case and in the interest of justice and fairness to both the parties, we are inclined to restore this issue back to the file of Assessing Officer for fresh determination of the issue after considering the evidences/details/explanation filed by assessee in its defense.

  ---

• 2021 (10) TMI 495
  Disallowance on account of expenses incurred on corporate social responsibility - expenses has enhanced the brand image of the company which in turn has got a positive long-term impact on the business of the assessee - HELD THAT:- Expenses have been incurred on the direction of the relevant Ministry / Government of India - neither the AO nor the learned DR has rebutted the contention of the assessee that expenses have been incurred for enhancing brand image of the company which are wholly and exclusively for the purpose of the business of the assessee. Both the lower authorities have disallowed the expenses only on the ground that Explanation -2 is clarificatory and retrospective in nature - said Explanation -2 is prospective in nature, we hold that expenses incurred on corporate social responsibility in the year under consideration i.e. AY 2014-15, cannot be disallowed invoking Explanation-2 to section 37(1) of the Act. The ground of the appeal of the assessee is accordingly allowed.

  ---

• 2021 (10) TMI 494
  Disallowance of professing fees - AO after treating the income disclosed by the appellant firm as unexplained cash credit - whether the assessee can claim expenses of professional fees against the additional unaccounted income disclose during the survey - HELD THAT:- There is no dispute that during the survey, the statement of partners of assessee was recorded. During the statement the partners of the assessee declared unaccounted income of Rs. 8.00 crores. However, while filing return of income, the assessee-firm claimed expenses of Rs. 8 lakhs on account of professional fees. As perused the statement of partners recorded by survey party. On perusal of the statements, we find that while making disclosure of Rs. 8.00 crores, the partners gave the bifurcation of disclosed income. From carefully perusal of answer to the Q.No.5 we find that there is no such averment that the assessee would not claim any expense is made. As disallowed the expenses by treating the disclosure at admission of assessee over and above the regular income and disallowed the legal expenses - assessee has not undertaken any other activities except the development of flat construction of various housing projects. We find that on similar facts of the case of DCIT vs. Suyog Corporation 2015 (8) TMI 1484 - ITAT AHMEDABAD] while affirming the order of Lt. CIT(A) in that case allowed expenses against the on-money to the assessee which were also engaged similar business activities. Similar view was taken in DCIT vs. Jamnadas Muljibhai [ 2005 (1) TMI 366 - ITAT RAJKOT] by treating the on-money as business receipt of the assessee. Considering the decisions of co-ordinate benches and the fact that professional fees was paid to the firm of consultant after deducting the TDS. Therefore, we do not find any justification in disallowing such expenses. - Decided in favour of assessee.

  ---

• Insolvency & Bankruptcy

• 2021 (10) TMI 493
  Partial rejection of claim as Operational Creditors - seeking directions for the Respondent to accept the entire claim filed by the Applicant - Section 60(5) of the Insolvency and Bankruptcy Code 2016, with rule 11 of the National Company Law Tribunal Rules, 2016 - HELD THAT:- The Petitioner has now filed his claim as a OC and the RP has admitted the claim of the Petitioner as Operational Creditor as per the documents and Audited Balance Sheet of the CD. On perusal of the documents, affidavits submitted and submissions made by both the sides, it is found that the claim made by the Petitioner is now as Operational Creditor and the same has been admitted by the RP as Operational Debt. The RP is to consider the claim amount to be admitted as per the provisions of IBC. In our considered view, nothing is surviving in this Petition now. It is made clear that no one should make any attempt to delay the process of CIRP by filing irrelevant IAs. If further IAs are filed without any substance to delay the CIRP, the same may be dismissed with costs. Application disposed off.

  ---

• 2021 (10) TMI 492
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- It is considered that the Loan/Credit facilities have been sanctioned to the Corporate Debtor under Multiple Banking Arrangement - Further, it is seen from the records available that the Corporate Debtor Company has filed its Additional Affidavit wherein the Corporate Debtor has admitted its liability to pay to the Financial Creditor. Also the Financial Creditor has established that the various term loans/Credit Working Capital were duly sanctioned and duly disbursed to the Corporate Debtor but there is no payment of Debt on the part of the Corporate Debtor. Hence, owing to the inability of the Corporate Debtor to pay its dues, this is a fit case to be admitted u/s 7 of the I B Code. The Financial Creditor has established that the loan/ Working Capital Credit facilities was duly sanctioned and duly disbursed to the Corporate Debtor but there has been default in payment of Debt on the part of the Corporate Debtor - the nature of Debt is a Financial Debt as defined under section 5 (8) of the Code. It has also been established that there is a Default as defined under section 3 (12) of the Code on the part of the Debtor. The two essential qualifications, i.e. existence of debt and default , for admission of a petition under section 7 of the I B Code, have been met in this case. The Petitioner has not received the outstanding Debt from the Respondent and that the formalities as prescribed under the Code have been completed by the Petitioner, this Petition deserves Admission . Petition admitted - moratorium declared.

  ---

• 2021 (10) TMI 491
  Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its dues occurred during the period when there was specific bar enforced by the statute under Section 10A - Financial Creditors - mortgage of office premises as collateral security - existence of debt and dispute or not - HELD THAT:- This Bench is of the considered opinion that the notification dated 06.06.2020 categorically declared that no application for initiation of Corporate Insolvency Resolution Process of Corporate Debtor shall be filed for any default arising on or after 25.03.2020. The notification also provided an explanation for removal of doubt that this Section shall not apply to any default committed before 25.03.2020. In the instant case, the Petitioner in Form-1 claimed that the date of default is as on 30.10.2020 and claimed an amount of Rs. 55,75,27,571/-. An attempt was made to set back the Date of default by filing an Additional Affidavit by the Petitioner. However, the same is untenable as the date of default in Form-1 is 31.10.2020. Whether the provision for Section 10A attracted to an application filed u/s 7 on 30.12.2020 claiming the default occurred on 31.10.2020? - HELD THAT:- The initiation of CIRP against the Corporate Debtor where a default has occurred after 25.03.2020 cannot be initiated in view of the provision engrafted in Section 10A which clearly barred filing of such application by the Petitioner for initiation of CIRP for the default which has occurred on 31.10.2020. The object of legislature was to suspend the operation of Section 7, 9 and 10 in ambit of default arising on or after March, 2020, the date on which nationwide lock down was imposed which affected normal business operation and impacted global economy. The Petition is dismissed on the ground that there was specific plea in initiating CIRP against Corporate Debtor where the default has occurred during the period when there was specific bar enforced by the statute under Section 10A.

  ---

• 2021 (10) TMI 490
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor raised the issue of pre-existing dispute between the parties. The Counsel for the Operational Creditor invites attention of this Bench to the demand notice and submits that the Corporate Debtor has not sent any reply to the notice. The Corporate Debtor did not issue any reply within the statutory period in response to the demand notice nor raised any issue regarding to price, quality of service prior to issuing the demand notice. Therefore, the contention raised by the Corporate Debtor will not stand to the test of legal scrutiny. Under these circumstances, this bench is of the view that there is no pre-existing dispute between the parties and accordingly the above issue is decided against the Corporate Debtor. The Operational Creditor has successfully demonstrated and proved the debt and default in this case and has also proved that there is absolutely no reason for the Corporate Debtor to hold on to the payment of the invoices. The Operational Creditor has also suggested the name of proposed Interim Resolution Professional along with his consent letter in Form-2. Hence this Bench is left with no option except to admit the above Company Petition, since the above Company Petition in hand satisfies all necessary legal ingredients for admission under Section 9 of the Code. Petition admitted - moratorium declared.

  ---

• 2021 (10) TMI 479
  Seeking withdrawal of company petition - seeking to set aside the initiation of Corporate Insolvency Resolution Process (CIRP) based on the settlement between the parties arrived before the constitution of Committee of Creditors (CoC) - HELD THAT:- This Court in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT] has held that at any stage, before a Committee of Creditors is constituted, a party can approach National Company Law Tribunal (NCLT) directly and that the Tribunal may, in exercise of its inherent powers under Rule 11 of NCLT Rules, allow or disallow an application for withdrawal or settlement. In the instant case, the applicant-respondent no.1 had made an application before the NCLT, Mumbai Bench, under Rule 11 of the NCLT Rules for withdrawal of company petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) on the ground that the matter has been settled between the Corporate debtor and the applicant-respondent no.1 - the applicant-respondent no.1 was justified in filing the application under Rule 11 of the NCLT Rules for withdrawal of the company petition on the ground that the matter has been settled between the parties. The order of the NCLT dated 06.08.2021 is hereby set aside and the company petition, for which withdrawal application was filed under Rule 11 of the NCLT Rules, is ordered to be withdrawn - Appeal allowed.

  ---

• PMLA

• 2021 (10) TMI 489
  Seeking grant of Anticipatory Bail - Money Laundering - siphoning of funds - fake transactions - shell/dummy entities incorporated to perpetuate the fraud - HELD THAT:- Both the petitioners are said to be erstwhile directors of M/s. VMC Systems Limited, which was in the business of manufacture and sale of electronic products, with specific focus on AC-DC power convertors and communication products. A huge amount of about Rs. 1747.45 crores has been laundered/siphoned and that lead to registration of subject FIR No.15 of 2018 on the file of CBI, BS FC, Bangalore. There are serious and grave allegations against the petitioners that they have indulged in money laundering offences by resorting to various dubious transactions in between the companies, involving the shell/dummy entities incorporated to perpetuate the fraud and siphoned the amounts. In view of huge magnitude of conspiracy angle and possible involvement of the petitioners herein and pending their interrogation, granting any sort of relief, including anticipatory bail, to the petitioners would disable the respondent/ prosecution from further proceeding to trace the proceeds of crime and attaching it provisionally under Section 5(1) of PML Act, which is the basic objective of the said Act. In view of the serious allegations, thorough investigation and interrogation is warranted. It is also pertinent to state that in the event of grant of bail under Section 438 Cr.P.C, it may not be possible for the respondent/prosecution to trace the proceeds of the crime and take necessary action in terms of Section 5(1) of the PML Act. While granting bail, the Court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations - In the instant cases, grant of anticipatory bail at the stage of investigation may frustrate the investigating agency in interrogating the petitioners/accused and in collecting the useful information and also the material, which might have been concealed. Success in such interrogation would escape, if the petitioners/accused knows that they are protected by the order of the Court. Grant of anticipatory bail, particularly in economic offences, would definitely hamper the effective investigation. This Court is of the view that it is not a fit case to grant anticipatory bail to the petitioners/accused under Section 438 of Cr.P.C. - Petition dismissed.

  ---

• Service Tax

• 2021 (10) TMI 488
  Refund claim - Applicability of time limitation on refund of service tax - assessee paid service tax on the LPC inadvertently for the period April 2009 to March 2011 - whether the amount paid by the assessee under a mistaken notion by the assessee was refundable? - section 11B of CEA - HELD THAT:- Mere payment made will neither validate the nature of payment nor the nature of transaction. The same could not make it a service tax. When there is a lack of authority to collect such service tax not liable to be paid by the assessee, it would not give the Department the authority to retain the amount paid by the assessee. Therefore, mere nomenclature would not be an embargo on the right of the petitioner to demand refund of payment made under a mistaken notion. Indisputably, the exemption notification is not under consideration. If the payment made by a mistaken notion does not come within the realm of `duty , Section 11B of the Act, 1944 would not be applicable. The arguments of the learned counsel for the Revenue that no material evidence was placed to show that in the account statement of invoice/bill, etc, it was shown that delayed payment charges was indicated separately, is wholly misconceived since the Commissioner of Service Tax (Appeals) has categorically held that the rejection of the claim by the adjudicating authority without considering the certification issued by the chartered accountant amounts to technical/procedural lapses which should not be a ground for rejection of refund. The period of limitation would not be applicable in the present case - Appeal allowed - decided in favor of appellant.

  ---

• 2021 (10) TMI 487
  Demand of service tax - Valuation - Inclusion of TDS portion of the royalty paid to the foreign company - foreign company does not have any establishment in India - period April 2007 to March 2008 - HELD THAT:- The issue stands decided by the order of the Tribunal in the appellant s own case for a different period in [ 2018 (6) TMI 523 - CESTAT CHENNAI] . The Tribunal had relied upon the decision in the case of Magarpatta Township Development and Construction Co. Ltd. [ 2016 (3) TMI 811 - CESTAT MUMBAI] where it was held that There is nothing on record that indicates that the appellant had recovered that amount of Income Tax paid by them on such amount paid to the service provider from the outside India and any other material to hold that this amount is paid as consideration for services received from service provider. On the plain reading of Section 67 with Rule 7 of Service Tax Valuation Rules, in this case in hand, Service Tax liability needs to be discharged on amounts which have been billed by the service provider. The levy of service tax on the TDS portion borne by the appellant cannot sustain and requires to be set aside - Appeal allowed - decided in favor of appellant.

  ---

• 2021 (10) TMI 486
  Refund of CENVAT Credit - time limitation - rejection for want of any evidence being produced by the appellant showing compliance of proviso to sub-rule (2) of Rule 5 of CENVAT Credit Rules, 2004 - section 35 of Central Excise Act, 1944 with Section 83 of Finance Act - HELD THAT:- Perusal makes it clear that period of 60 days has to reckon from the date of the communication of decision / order to the person aggrieved of the such decision/ order. Mode of communication is prescribed under Section 37C of the Act - bare perusal of sub clause (a) of section 37C clarifies that decision/ orders/ summons/ notices have to be sent by registered post with acknowledgement due to the person for whom it is intended. Joint reading of sections 35 and 37C makes it abundantly clear that it is date of receipt of dispatch in such modes as prescribed under section 37C, CEA which that is relevant for the reckoning the date period of limitation prescribed therein. The Order-in-Original was announced on 19.4.2017 after affording an opportunity of personal hearing to the appellant on 22.02.2017. However, it is mentioned on behalf of the appellant that there was no subsequent intimation to the appellant about the status of the adjudication post 22.02.2017. Accordingly, the appellant had to file a letter on 4.01.2019 requesting for the status thereof - all the submissions have been rejected by the Commissioner (Appeals) holding that there is no evidence on record to show that the appellant has not received the impugned order. This finding is not sustainable because evidence required by the learned Commissioner (Appeals) will be the evidence proving the negative fact. It is not permissible in the eyes of law. It is otherwise settled provision of law that burden was upon the dispatcher to prove that the documents/ orders / summons/ notice etc. was not merely dispatched but was duly received by the recipient. Apparently and admittedly, there is no such evidence on record which may prove the receipt of Order-in-Original to the appellant within the statutory period required for filing the appeal before the Commissioner (Appeals). Rather it is apparent that it was because of the appellants own efforts that the copy of Order-in-Original could be received by the appellant on 03.07.2019. The appeal before Commissioner (Appeals) was filed on 29.08.2019, i.e. very much within the period of 60 days as required under Section 35 of Central Excise Act - the appeal was filed within the statutory period from the date of receipt of Order-in-Original. Commissioner (Appeals) has observed to have committed an error while calculating the period of limitation from the date of Order-in-Original. There is also failure observed on part of the Department for not dispatching the order-in-original properly through the prescribed mode till it was precisely demanded by the appellant. This matter to Commissioner (Appeals) requiring him to decide the matter on merits - appeal allowed by way of remand.

  ---

• 2021 (10) TMI 485
  Refund of service tax - amount was paid under protest or not - time limitation - application of Section 11B(5) of the Central Excise Act, as applicable to the provisions of Service Tax - reverse charge mechanism - HELD THAT:- From the facts on record and particularly the correspondence after the grant of stay by the Hon ble Madras High Court to the Association of the appellant, the fact of payment under protest is ipso facto writ large on the face of the record, in view of the series of correspondence discussed. The fact of payment under protest is also evident from the letter dated 27.09.2019 (Annexure A-8), in the appeal filed, wherein the appellant stated that they have deposited the tax in response to the repeated correspondence and had reiterated that the matter is sub-judice with regard to levy of service tax. There is no limitation applicable for the refund claimed by the appellants - the Adjudicating Authority is directed to grant refund within a period of thirty days from the date of receipt of copy of the order, alongwith interest as per rules. Appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2021 (10) TMI 484
  Recovery of refunded earlier, deposited by each of the petitioners as Education Cess and Secondary and Higher Education Cess - erroneous refund or not - case of the petitioners (manufacturers) was that Education Cess and Higher Education Cess was part of excise duty and since they have been exempted from excise duty they are also liable to be exempted from paying Education Cess and Higher Education Cess and as excise duty has been returned to them, the amount paid by them as Education Cess and Higher Education Cess is also liable to be returned to them. HELD THAT:- What amounts to be paid erroneously has been explained by another Division Bench of this Court in the case of Rajendra Singh -Vs- Superintendent of Taxes Ors. [ 1989 (7) TMI 317 - GAUHATI HIGH COURT] . Though it relates to the Tripura Sales Tax Act, 1976, but the principle would be the same. In para 10 of the said judgment, it has been held that an erroneous order would be one which has been passed without any authority of law or which has been passed by an authority without making an enquiry - To our mind an erroneous refund would also be a refund which has been made by an order which is without jurisdiction. All the same, such is not the case here in the present matters. To summarize the basic argument of the respondents would be that irrespective of the fact that M/s SRD Nutrients Private Limited [ 2017 (11) TMI 655 - SUPREME COURT] has been declared as per incuriam, the matter has attained finality between the parties, inasmuch as, the order passed by the Revenue for refund of the amount has not been challenged, nor has the order of the learned Single Judge, by which the learned Single Judge has directed that in view of the M/s SRD Nutrients Private Limited the amount should be refunded, been taken in writ appeal before this High Court. The matter having attained finality, it cannot be now opened at this stage even though M/s SRD Nutrients Private Limited has been declared as per incuriam, in the case of M/s Unicorn Industries. We agree with the submissions of the learned counsels for the assessees/petitioners that, under the facts and circumstances of the case, the amount refunded to them cannot be recovered, as it was not refunded to them erroneously, but it was returned to them for the reason that it was the requirement of law; law as it stood at the relevant time. The matter having attained finality cannot be re-opened for the reason that the earlier law has been declared to be per incuriam . Appeal of Revenue dismissed.

  ---

• 2021 (10) TMI 483
  CENVAT Credit - input services - place of removal - GTA Services - transportation charges for transfer of finished goods/ semi finished goods from appellant unit to the other unit of the same appellant company - installation of special doors for manufacture of drugs under good manufacturing practices - revenue neutrality - HELD THAT:- The appellant is entitled to cenvat credit on the doors and windows, which are admittedly essential for manufacture of finished goods of the appellant, by way of goods manufacturing practices. Any input purchased by the manufacturer which are used in the factory for the manufacture of final products, are allowable as inputs, whether it forms part of the finished goods or not. Admittedly, the doors and windows have been used in the factory of the appellant for manufacture of good quality drugs. Accordingly, cenvat credit is allowable on the doors/window. GTA Services - revenue neutrality - HELD THAT:- The appellant have demonstrated that they have cleared goods to their sister concern by charging duty on the value of the goods (cost plus, 110% on cost) as per Rule 8 of Central Excise Rules, and such goods have admittedly been received in the other unit. Further, it has been demonstrated in the consignment note, they have mentioned the amount payable towards freight is zero - Admittedly, both the units are under the same company, and the situation is wholly Revenue neutral, as the output duty of the appellant unit at Pithampur, is the input of their Goa unit - the appellant is entitled to cenvat credit of GTA service under Rule 2(l) of Cenvat Credit Rules, 2004. Appeal allowed - decided in favor of appellant.

  ---

• 2021 (10) TMI 482
  CENVAT Credit - provision made in the books of accounts on account of Non-Moving Inventory, without reducing (writing down) the value of inventory - Rule 3(5B) of Cenvat Credit Rules, 2004 - HELD THAT:- Rule 3(5B) of the CCR is attracted only when the value of the asset and/or inventory is write-off fully or partially, or wherein any specific provision to write-off fully or partially has been made in the books of accounts. Admittedly, in the facts of the present case, the appellant has made only a general provision , which is not attributable to any particular capital asset/input. Admittedly, Revenue has not been able to identify the details of inventory or any asset, for which the general provision has been made. Thus, the show cause notice is erroneous as the demand has been made even on the reversal of the provision. Appeal allowed - decided in favor of appellant.

  ---

• CST, VAT & Sales Tax

• 2021 (10) TMI 481
  Input Tax Credit - inter-state trade or commerce - credit reversed or not allowed by the respondent revenue / assessing authority on the ground of applying proviso to Section 19(2) (ii) (vi) of the TNVAT Act - HELD THAT:- Where the issue has been settled as early as in the year 2017 in M/S. EVEREST INDUSTRIES LIMITED VERSUS THE STATE OF TAMIL NADU, THE DEPUTY COMMISSIONER (CT) (FAC) [ 2017 (3) TMI 279 - MADRAS HIGH COURT ] that proviso in question cannot be made applicable to the category of dealers industries or manufacturers like the petitioners and therefore, they are entitled to get full credit of ITC. Therefore, such a reversal is not possible by applying the said proviso by deducting 3 percent. This Court feels that, all these impugned orders are liable to be interfered with, as that was passed only by making application applying the proviso to Section 19(2) (ii) (vi) of the TNVAT Act - Petition allowed.

  ---

• Indian Laws

• 2021 (10) TMI 480
  Requirement of pre-deposit - Direction to deposit 75% of the awarded amount in terms of Section 19 of Micro, Small and Medium Enterprises Development Act, 2006 - question of law or question of fact - HELD THAT:- On a plain/fair reading of Section 19 of the MSME Act, 2006 at the time/before entertaining the application for setting aside the award made under Section 34 of the Arbitration Conciliation Act, the applicant/appellant has to deposit 75% of the amount in terms of the award as a pre-deposit. The requirement of deposit of 75% of the amount in terms of the award as a pre-deposit is mandatory. However, at the same time, considering the hardship which may be projected before the appellate court and if the appellate court is satisfied that there shall be undue hardship caused to the appellant/applicant to deposit 75% of the awarded amount as a predeposit at a time, the court may allow the pre-deposit to be made in instalments. Considering the language used in Section 19 of the MSME Act, 2006 and the object and purpose of providing deposit of 75% of the awarded amount as a pre-deposit while preferring the application/appeal for setting aside the award, it has to be held that the requirement of deposit of 75% of the awarded amount as a predeposit is mandatory. Therefore, as such, both the High Court as well as the learned Additional District Judge (Commercial), Dehradun were justified in directing the appellant to deposit 75% of the awarded amount as a pre-deposit. The question posed is answered against the appellant.

  ---