TMI Tax Updates - e-Newsletter
October 14, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. GST - SUPPLY OF FROZEN GREEN PEAS: PROFIT UNFREEZED

   By: Dr. Sanjiv Agarwal

News

1. 42nd GST Council meeting as on 13-10-2020 (Continuation of 05.10.2020 meeting)

2. Blocking of E-Way Bill (EWB) generation facility for taxpayers with AATO over ₹ 5 Cr., after 15th October, 2020

3. Procedure for opening & operating the designated "FCRA Account" as provided under the amended Section 17(1) of The Foreign Contribution (Regulation) Act , 2010

4. 5th Meeting of the India-Mexico Bilateral High Level Group on Trade, Investment and Cooperation

5. India and ADB Sign $300 Million Loan to Develop Rajasthan’s Secondary Towns

6. Auction for Sale (Re-issue) of ‘5.22% GS 2025’, Auction for Sale (Re-issue) of ‘6.19% GS 2034’, and Auction for Sale (Re-issue) of ‘7.16% GS 2050’.

7. Tax Challenges Arising from Digitalisation – Economic Impact Assessment

Notifications

Customs

1. 97/2020 - dated 13-10-2020 - Cus (NT)

Appointment of CAA in case of M/s Signet Chemical Corporation Pvt. Ltd.

2. 96/2020 - dated 12-10-2020 - Cus (NT)

Seeks to amend Notification No. 50/2020-Customs (N.T.) dated the 5th of June, 2020

3. 52/2020-Customs (N.T./CAA/DRI) - dated 8-10-2020 - Cus (NT)

Appointment of Common Adjudicating Authority

4. 51/2020-Customs (N.T./CAA/DRI) - dated 8-10-2020 - Cus (NT)

Amendment in Notification No. 74/2016- Customs (N.T.) dated 18.05.2016

5. 50/2020-Customs (N.T./CAA/DRI) - dated 8-10-2020 - Cus (NT)

Appointment of CAA by Pr. DGRI

6. 49/2020-Customs (N.T./CAA/DRI) - dated 8-10-2020 - Cus (NT)

Amendment in Notification No. 3/2020-Customs (N.T./CAA/DRI) dated 06.01.2020

GST - States

7. 85/GST-2 - dated 12-10-2020 - Haryana SGST

Notification under section 128 to grant waiver/reduction in late fee for not furnishing FORM GSTR-10, subject to the condition that the returns are filled between 22.09.2020 to 31.12.2020 under the HGST Act, 2017

8. 84/GST-2 - dated 12-10-2020 - Haryana SGST

Notification to grant waiver/reduction in late fee for not furnishing FORM GSTR-4 for 2017-18 and 2018-19, subject to the condition that the returns are filled between 22.09.2020 to 31.10.2020 under the HGST Act, 2017

9. 83/GST-2 - dated 12-10-2020 - Haryana SGST

Notification to give one time extension for the time limit provided under Section 31(7) of the HGST Act, 2017 till 31.10.2020 by amending notification no.43/GST-2, dated 07.05.2020 under the HGST Act, 2017

10. 64/2020-State Tax - dated 8-10-2020 - Himachal Pradesh SGST

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

11. 59/2020-State Tax - dated 8-10-2020 - Himachal Pradesh SGST

Amendment in Notification No. 21/2019-State Tax, dated the 30th May, 2019

12. 48/2020-State Tax - dated 8-10-2020 - Himachal Pradesh SGST

Central Goods and Services Tax (Sixth Amendment) Rules, 2020

13. 44/2020-State Tax - dated 8-10-2020 - Himachal Pradesh SGST

Seeks to give effect to the provisions of Rule 67A for furnishing a nil return in FORM GSTR-3B by SMS

14. 68/2020-State Tax - dated 6-10-2020 - Himachal Pradesh SGST

Seeks to grant waiver / reduction in late fee for not furnishing FORM GSTR-10, subject to the condition that the returns are filled between 22.09.2020 to 31.12.2020

15. 67/2020-State Tax - dated 6-10-2020 - Himachal Pradesh SGST

Amendment in Notification No. 73/2017-State Tax, dated the 16th January, 2018

16. 63/2020-State Tax - dated 6-10-2020 - Himachal Pradesh SGST

Appoint the 1st day of September, 2020, as the date on which the provisions of section 10 of the Himachal Pradesh Goods and Services Tax (Amendment) Act, 2019, shall come into force.

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/CRADT/CIR/P/2020/203 - dated 13-10-2020

Standardisation of procedure to be followed by Debenture Trustee(s) in case of ‘Default’ by Issuers of listed debt securities

DGFT

2. Trade Notice No. 30/2020-2021 - dated 13-10-2020

Electronic filing and Issuance of Preferential Certificate of Origin (CoO) for India’s Exports under GSP, GSTP, India-Malaysia CECA, India-Singapore CECA w.e.f. 15th October 2020

3. Trade Notice No. 29/2020-21 - dated 13-10-2020

Procedure and Criteria for submission and approval of applications for export of Diagnostic Kits

4. 25/2015-20 - dated 13-10-2020

Procedure for application and issuance of Scrips under Scheme for Rebate of State Levies (RoSL)

Customs

5. 45/2020 - dated 12-10-2020

Faceless Assessment - Measures for timely assessment of Bills of Entry and clarification on defacement of physical documents

6. Public Notice No: 129/2020 - dated 7-10-2020

Safety audit of CFS storing and handling hazardous goods

7. PUBLIC NOTICE No. 60/2020 - dated 1-10-2020

Implementation of the Sea Cargo Manifest and Transhipment Regulations

8. PUBLIC NOTICE NO. 22/2020 - dated 29-9-2020

Drive through X-Ray Based Container scanner facility to be launched shortly at Hazira Port

9. PUBLIC NOTICE NO. 30/2020 - dated 19-9-2020

Guidelines regarding implementation of section 28DA of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin and Capturing additional details for Certificate of Origin (COO) as per Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 in Bill of Entry

10. PUBLIC NOTICE No. 57/2020 - dated 18-9-2020

Guidelines regarding implementation of section 28DA of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin

11. PUBLIC NOTICE No. 58/2020 - dated 18-9-2020

Capturing additional details for Certificate of Origin (COO) as per Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 in Bill of Entry-

12. PUBLIC NOTICE NO. 32/2020 - dated 18-9-2020

Guidelines regarding implementation of Section 28DA of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin

13. PUBLIC NOTICE NO. -119/2020 - dated 17-9-2020

Manufacturing and other operations in a Warehouse Regulations (MOOWR) and waiver of interest – Changes in ICES

14. PUBLIC NOTICE NO. 20/2020 - dated 16-9-2020

Guidelines regarding implementation of Section 281)A of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules or Origin under Trade Agreements (ITA/PTA/CECA/CEPA) and verification Of Certificates of Origin

15. PUBLIC NOTICE NO. 29/2020 - dated 15-9-2020

Customs-IGST Refunds& Drawbacks -IGST refunds and Drawbackson exports not disbursed due to PFMS ERRORS

16. PUBLIC NOTICE NO. 118/2020 - dated 11-9-2020

Launch of e-Office in Nhava Sheva–II Commissionerate, JNCH

17. PUBLIC NOTICE NO. 119 / 2020(e-Office) - dated 7-9-2020

Launch of e-Office in the Office of Commissioner of Customs (Import), ACC, Sahar, Mumbai, Zone-III on 07.09.2020

18. Standing Order No. 04/2020 - dated 4-9-2020

Launch of e-Office in the Customs Preventive Commissionerate, Shillong on 04/09/2020

19. TRADE NOTICE 01/2020 - dated 2-9-2020

Launch of e-Office in the O/o the Principal Commissioner of Customs, Custom House, Visakhapatnam on 02.09. 2020

20. PUBLIC NOTICE No. 56/2020 - dated 24-8-2020

Revised guidelines for conduct of personal hearings in virtual mode under Customs Act, 1962,

21. PUBLIC NOTICE NO.113 / 2020 - dated 24-8-2020

Revised guidelines for conduct of personal hearings in virtual mode under CGST Act, 2017, IGST Act, 2017, Customs Act,1962, Central Excise Act, 1944 and Chapter V of Finance Act, 1994

22. PUBLIC NOTICE NO. 112/2020 - dated 24-8-2020

Extension of Deferred payment of Customs duty benefits to Authorised Public Undertakings’

23. PUBLIC NOTICE NO.27/2020 - dated 24-8-2020

Revised guidelines for conduct of personal hearings in the virtual mode under CGST Act, 2017, IGST Act, 2017, Customs Act, 1962, Central Excise Act,1944 and Chapter V of Finance Act,1944

24. PUBLIC NOTICE: 54/2020 - dated 21-8-2020

Procedure to be followed in cases of manufacturing or other operations undertaken in special warehouses under section 65 of the Customs Act

25. PUBLIC NOTICE: 55/2020 - dated 21-8-2020

Extension of Deferred payment of Customs duty benefits to 'Authorised Public Undertakings'

Highlights / Catch Notes

Income Tax

• Refund Orders u/s 244A Must Include Interest; Revenue Must Pay Interest on Any Shortfall.

  Case-Laws - HC : Interest in terms of Section 244A - When an order of refund is issued, the same should include interest payable on the amount, which is refunded. If the refund does not include interest due payable on the amount refunded, the revenue would be liable to pay interest on the short fall. This does not amount to payment of interest on interest. - HC
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• Claim for Deduction u/s 48(i) of Income Tax Act: Expenses in Share Transfer Not Sufficiently Justified.

  Case-Laws - HC : Claim of deduction u/s 48(i) - deduction of expenditure incurred wholly and exclusively in connection with the transfer of shares - whether the expenditure is incurred wholly and exclusively in connection with transfer of an asset is a question of fact, which depends in the facts and circumstances of the case. - Assessee was unable to point out that three share holders who were parties to the same transaction had claimed the similar expenditure in their returns as was claimed by the assessee - HC
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• High Court rules Section 50C proviso of Income Tax Act applies retrospectively, easing capital gains computation for taxpayers.

  Case-Laws - HC : Capital Gain computation - Invoking provision of section 50C - an amendment by insertion of proviso seeks to relieve the assessee from undue hardship - No hesitation to hold that the proviso to Section 50C(1) of the Act should be taken to be retrospective from the date when the proviso exists. - HC
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• Entity Managing Waste Deemed Charitable, Eligible for Tax Exemption u/s 11 of Income Tax Act.

  Case-Laws - HC : Exemption u/s 11 - charitable activity u/s 2(15) - activity of management of liquid and solid wastes - the dominant objects of the assessee are charitable in nature and dominant object is not only preservation of environment but one of general public utility and, therefore, the assessee is entitled to seek exemption under section 11 of the Act. - HC
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• High Court Deletes Additions u/s 68 Due to Lack of AO's Explicit Satisfaction on Specific Individuals' Transactions.

  Case-Laws - HC : Additions u/s 68 - burden of proof - Admittedly in the instant case, the assessee has provided the explanation, such explanation was found acceptable by the AO for the previous and subsequent Assessment Years. AO did not record a specific note of his satisfaction / dissatisfaction with regard to those three persons. - Additions deleted - HC
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• Taxpayers Can Deduct Bad Debts by Simply Writing Them Off in Accounts, No Proof of Irrecoverability Needed.

  Case-Laws - AT : Deduction on account of bad debts written off - after 01.04.1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. - AT
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• High Court's appeal admission on substantial law questions supports assessee's position; Section 271C penalty not applicable.

  Case-Laws - AT : Penalty u/s 271C -LTA - Mere admission of the appeal by the High Court on the substantial questions of law as have been quoted above, would make it apparent that the additions made were debatable. The Tribunal has thus rightly held that the admission of substantial questions of law by the High Court leads credence to the bona fide of the assessee and therefore, the penalty is not exigible u/s 271(1)(c) - AT
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• Rebate or discount to dealers not subject to TDS u/ss 194C or 194H; Section 40(a)(ia) disallowances inapplicable.

  Case-Laws - AT : TDS u/s 194C / 194H - Disallowances u/s 40(a)(ia) - the rebate/discount given by the assessee to the dealers will not coming either within the purview of section 194C or section 194H therefore, would not require deduction of tax at source. - Even AO was not sure, whether it is a payment for carrying out any work or is in the nature of commission / brokerage for any service rendered by another party in the course of buying and selling a product. - AT
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• Interest on FDRs from ECB loan for hotel project is capital receipt, offset against capital expenditure.

  Case-Laws - AT : Interest earned on FDRs - once the ECB loan which is to be utilized for capital expenditure only, then, any interest earned on funds temporarily parked in FDRs is inextricably linked with the setting up of hotel of the assessee, and the same should be held as capital receipts only and is permitted to be set off against the capital expenditure - AT
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• Expenditure on Tool Purchases Reviewed for Revenue vs. Capital Classification; Depreciation Allowed Regardless of Outcome.

  Case-Laws - AT : Disallowance of expenditure towards purchase of tools - Revenue or capital expenditure - Claiming these expenditures as deduction is only revenue neutral because even otherwise depreciation has to be allowed on these petty assets. - AT
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• Penalty for Bogus Purchases u/s 271(1)(c) Overturned: No Active Concealment, Estimation Not Justification for Penalty.

  Case-Laws - AT : Penalty levied u/s 271(1)(c) - Bogus purchases - There is no active concealment of income on the part of the assessee and additions made on estimation by the AO do not called for initiation of penalty. - AT
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• India-Mauritius Tax Treaty: No Permanent Establishment for Assessee as Companies Operate Independently Under Article 5(5.

  Case-Laws - AT : Income accrued in India - Permanent Establishment (PE) in India under Article–5 of the India–Mauritius Tax Treaty - The two companies were not exclusively working for the assessee and are having their independent status - Services provided to the assessee by them are in the ordinary course of their business. - They cannot be considered as dependent agent so as to constitute a PE - assessee does not have a PE in India even under Article-5(5) of the Tax Treaty - AT
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• Refundable Security Deposit Disallowed in Business Income Calculation; Raises Legitimacy Questions on Related Costs for 2010-11.

  Case-Laws - AT : Disallowance of the refundable security deposit in computing the assessee’s business income for the year - when the income arising from the transfer is being subject to tax for AY 2010-11, how could a related cost possibly arise for being claimed/allowed in a subsequent year? The same militates against the concept of income (or income computation), which is (to be) at net of all expenditure incurred in relation thereto. - AT
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• Challenging Assessing Officer's Decision on Interest Calculation Period u/s 244A via Appeal u/s 246.

  Case-Laws - AT : Interest u/s 244A - Once the Assessing Officer has to take a decision regarding the reckoning of the period from which the interest has to be calculated on the outstanding demand then the said order of the AO would certainly be challenged by filing appeal before the CIT(A) u/s 246 - AT
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Customs

• Customs Act Show Cause Notice Deadline Extended Due to COVID-19; High Court Dismisses Petition.

  Case-Laws - HC : Extended period of Limitation for issuing SCN - Release of seized goods - situation during COVID-19 lockdown - The extended period of limitation upto six months as per the first proviso to Sub Section (2) of Section 110 of the Customs Act stood extended by Section 6 of the above Ordinance till 29.09.2020. This is fortified by the order of the Supreme Court dated 23.03.2020 passed in exercise of powers under Article 142 of the Constitution of India read with Article 141 thereof - Petition dismissed - HC
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• Customs Act Section 114(iii) Penalty Deemed Excessive Due to Lack of Financial Gain Evidence in Wrongful Duty Drawback Case.

  Case-Laws - AT : Imposition of penalties u/s 114(iii) of the Customs Act - Wrongful availment of the duty drawback - it is not clear from the show-cause notice or the Order-in-Original that if there was any financial gain obtained by the appellant. In such circumstances, we find that the penalty imposed is very high. Penalty should be commensurate with the offence committed. - AT
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Service Tax

• Service Tax Not Applicable on Third Party Payments for Exports Under 2012 Rules; Hong Kong Entity as Intermediary.

  Case-Laws - AT : Levy of service tax - POPOS rules - Place of supply - Banking and other financial services - ‘third party payments’ for exports - It is not the contractual responsibility of the appellants to collect the dues and, therefore, by no stretch can it be held that the mediation of M/s Amsco Finance Ltd is a substitution for the task that would, otherwise, fall to the appellants. If at all, the Hong Kong entity is an ‘intermediary’ within the meaning assigned in Place of Provision of Service Rules, 2012 to render the service, it has been performed in Hong Kong and, thus, not in the taxable territory. - AT
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• When Does Service Tax Liability Arise on Mobilization Advances: Upon Receipt or Upon Billing?

  Case-Laws - AT : Accrual of Service Tax liability - ‘mobilization advance’ paid to the appellant - payment to be made on which stage? - on receipt or on issue of the bill? - There is no connection with the performance of the contract. It is not in dispute that the ‘mobilization advance’, carrying interest, is granted to enable the contractor to prepare for undertaking the contracted work. The subsequent adjustment with the final payment due does not suffice to construe this as an advance payment for the work to be done merely because the recipient and payee happened to be the provider of service. - AT
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• Tax Dispute Resolved: Services Classified as Works Contract, Not Commercial Construction; No Suppression of Facts Found.

  Case-Laws - AT : Non-payment of Service tax - suppression of facts or not - Extended period of Limitation - The service provided by the appellant falls under Works Contract Service but the department has classified the service under Commercial or Industrial Construction Service and not under Work Contract Service - Demand set aside - AT
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• Satellite Transponder Capacity Hiring Exempt from Infrastructural Support Services Tax Liability: No BSS Classification.

  Case-Laws - AT : Classification of services - Infrastructural Support Service or not - business support service (BSS) - up linking services - hiring of transponder capacity by the appellant in the satellite - the appellant cannot be held to have received the services of infrastructural support service and no tax liability would rest upon them. - AT
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Central Excise

• Appellant Seeks Refund of Excess Excise Duty After Provisional Assessment Finalization; Listed as "Loans and Advances" in Balance Sheet.

  Case-Laws - AT : Refund of excess paid excise duty - finalization of provisional assessment - reflection of the refund amount in the balance sheet under the head of “loans and advances”, clearly depicts that the incidence of excess paid duty amount has all along been borne by the appellant. - AT
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Case Laws:

• GST

• 2020 (10) TMI 527
  Validity of Garnishee notice - proceedings under Sections 67 and 74 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- It would be appropriate if the Respondents produce the order passed by the Commissioner under Section 83 of the Central Goods and Services Tax Act, 2017 in respect of all the garnishee notices. Stand over to 15.10.2020 as a part heard matter.

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• 2020 (10) TMI 526
  Refund of Outstanding GST - the learned counsel for the respondent has placed on record a letter dated 29th September, 2020 issued by Deputy Commissioner (Legal) stating that pending IGST refund of Rs. 7,61,176/- has been scrolled out to the petitioner vide Scroll No.26339/2020 dated 29th September, 2020. HELD THAT:- Learned counsel for the petitioner admits that she has received pending IGST refund of Rs. 7,61,176/- - the present writ petition is disposed of as satisfied.

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• 2020 (10) TMI 525
  Grant of Bail - Second time arrest of a person in different capacity - learned Senior Standing Counsel for the DGGI submits that the impugned order is legally flawed for the reason firstly, that the transactions relating to M/s Gaia Overseas and M/s Aadhar India are separate and distinct transactions, each of which comprise a separate offence under the GST Act; and secondly, that merely because the respondent is a partner in one of the entities and sole proprietor of the other, does not mean that he cannot separately be arrested for a distinct transaction that he undertook through his sole proprietorship concern M/s Aadhar India. HELD THAT:- Let counter-affidavit be filed within 03 weeks; rejoinder thereto, if any, be filed within 02 weeks thereafter - List on 17.12.2020.

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• 2020 (10) TMI 524
  Grant of Bail - Department failed to submit its report about the real culprit who availed the ITC - HELD THAT:- It is informed by the Ld. Standing Counsel for the Department that all the offences under the CGST Act are compoundable in nature. The apprehension of Ld. CMM that certain offences shall remain undetected on account of composition of various offences under the provisions of GST Act is well founded. Regretfully, almost for more than a month, the department seems to be in a state of slumber. The directions passed by the Ld. CMM appears to have not been paid any heed by the concerned quarter. In my considered opinion, the issue of life and liberty of applicant/accused cannot be decided on the basis of a half baked status report filed by the complainant department. Therefore, the court is constrained to adjourn the matter on the request of Ld. Standing Counsel. The worthy Commissioner, CGST, Delhi West is requested to look into the matter personally and file a fresh comprehensive report on the next date of hearing - List the matter for filing of comprehensive report by the complainant department and for remaining arguments on 15.10.2020.

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• 2020 (10) TMI 523
  Grant of Bail - It is forcefully argued by Ld. counsel for applicant/accused that department is maliciously and mischievously saving the real culprits - It is submitted that none of the firms which are availing tax input credit belongs to the applicant/accused. - HELD THAT:- Looking into the material available on record, the submissions of Ld. defence counsel calls for a deeper probe. To come up for further arguments/ further proceedings in the matter on 08.10.2020. A copy of the instant order be sent to Concerned Addl. Commissioner, Anti Evasion, GST department for necessary information.

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• Income Tax

• 2020 (10) TMI 522
  Interest in terms of Section 244A - Whether interest component partakes the character of amount due under Section 244A? - payment of interest on interest - HELD THAT:- A three judge bench of the Supreme Court in H.E.G. Ltd. [ 2009 (12) TMI 35 - SUPREME COURT ] while dealing with the expression refund of any amount becomes due to the assessee , held that the interest component will partake the character of amount due under Section 244A. When an order of refund is issued, the same should include interest payable on the amount, which is refunded. If the refund does not include interest due payable on the amount refunded, the revenue would be liable to pay interest on the short fall. This does not amount to payment of interest on interest. - If the interest has to be computed after 01.04.1989, the same has to be computed in accordance with Section 244A of the Act only and the assessee is entitled to interest in terms of Section 244A of the Act only. - Decided against revenue.

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• 2020 (10) TMI 521
  Capital gain computation - conversion of bonds into shares - foreign currency convertible bonds - Assessing Authority concluded that cost of acquisition of share has to be assessed at Rs. 200/- per share and not at Rs. 873.83 and Rs. 858.08 per share as claimed by the assessee and completed the assessment - HELD THAT:- The Central Government has issued the scheme viz., issue of foreign currency convertible bonds and ordinary shares (through Depository Receipt Mechanism) Scheme, 1993. The aforesaid scheme has been made applicable for the Assessment Year 2002-03 onwards vide notification dated 10.09.2002. Cost of acquisition has to be determined as per provisions of Clause 7(4) of the Scheme for computation of capital gains. It is also pertinent to mention here that Clause (xa) of Section 47, which refers to transfer by way of conversion of bonds has been inserted with effect from 01.04.2008 which is applicable to the Assessment Year 2009-10 onwards. Bonds issued to the petitioner were issued under the FCCB scheme and the conversion price determined on the basis of price of shares at Bombay Stock Exchange or National Stock Exchange on the date of conversion of FCBBs into shares. It is also pertinent to mention here that there is no conflict between the provisions of the scheme and the Acts / Rules. We respectfully agree with the view taken in KINGFISHER CAPITAL CLO LTD. [ 2019 (4) TMI 106 - BOMBAY HIGH COURT ] and therefore, answer the substantial question of law against the revenue and in favour of the assessee.

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• 2020 (10) TMI 520
  Revision u/s 263 - HELD THAT:- From close scrutiny of Section 263 it is evident that twin conditions are required to be satisfied for exercise of revisional jurisdiction u/s 263 firstly, the order of the AO is erroneous and secondly, that it is prejudicial to the interest of the revenue on account of error in the order of assessment. The aforesaid provision was considered in MALABAR INDUSTRIAL CO. LTD [ 2000 (2) TMI 10 - SUPREME COURT ] and held that the phrase prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the AO and every loss of revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of revenue. Where two views are possible and ITO has taken one view with which the Commissioner does not agree, the order passed by the AO cannot be treated as erroneous order prejudicial to the interest of the revenue. Tribunal has held that the CIT while exercising powers u/s 263 of the Act had relied on an order passed under Section 263 of the Act in respect of Assessment Year 2007-08. The aforesaid order has been quashed by the Tribunal [ 2011 (12) TMI 590 - ITAT, BANGALORE ] . It has further been held that the AO after due application of mind and on proper consideration of the material available on record has allowed the claim for depreciation on lease hold rights. The order passed by the AO can neither said to be erroneous nor prejudicial to the interest of the revenue. Tribunal has rightly quashed the order passed by the Commissioner of Income Tax. Decided in favour of assessee.

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• 2020 (10) TMI 519
  Claim of deduction u/s 48(i) - deduction of expenditure incurred wholly and exclusively in connection with the transfer of shares - expenditure was incurred voluntarily - whether section 48(i) of the Act makes no distinction between voluntary or involuntary expenditure -Tribunal disallowing the Appellant s claim for deduction of expenditure on the ground that the Appellant had not fulfilled a condition in a clause in the Share Purchase Agreement - HELD THAT:- Tribunal after taking note of Clause 29 in the agreement has recorded a finding that even if the assessee has made payment as required under Clause 29 of the Share Purchase Agreement, the same cannot be termed as expenditure in connection with transfer of shares - whether the expenditure is incurred wholly and exclusively in connection with transfer of an asset is a question of fact, which depends in the facts and circumstances of the case. We agree with the findings recorded by the Tribunal and hold that from careful scrutiny of the order passed by the Tribunal, it is evident that in fact, first substantial question of law does not arise for consideration in this appeal. Assessee was unable to point out that three share holders who were parties to the same transaction had claimed the similar expenditure in their returns as was claimed by the assessee. - Decided against assessee.

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• 2020 (10) TMI 518
  Disallowance u/s 14A read with Rule 8D - whether tax payer in a particular year has not earned any exempted income? - Tribunal has held that since the assessee had not received any dividend on the investment and since there was no earning to exempt income, therefore, there can be no disallowance under Section 14A - HELD THAT:- The aforesaid issue is no longer res-integra and is covered by the decision of the Supreme Court in MAXOPP INVESTMENT LIMITED [ 2018 (3) TMI 805 - SUPREME COURT] as well as Circular No.5/2014 dated 11.02.2014 issued by the Central Board of Direct Taxes which clearly provides that disallowance under Section 14A of the Act read with Rule 8D has to be made even when the tax paid for a particular year is not earned in exempt income, the substantial question of law framed by this Court is answered in negative and in favour of revenue. Order of the Tribunal insofar as it pertains to disallowance under Section 14A of the Act read with Rule 8D of the Income Tax Rules is hereby quashed.

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• 2020 (10) TMI 517
  Capital Gain computation - Whether agreement for Sale cannot be regarded as a transfer for the purpose of Section 2(47)(V) ? - Invoking provision of section 50C - assessee while computing Capital Gain had taken the sale consideration for the property at Rs. 19 crores which according to AO was not a full value of consideration because on the date when the property was sold, i.e., date on which the Deed of conveyance was executed and registered, the guideline value was much higher than the agreed sale price - whether proviso inserted in Section 50C has to be read retrospective or prospective? - HELD THAT:- AO could not have based his finding solely relying upon the guideline value especially when the Assessing Officer is not a person who is computing stamp duty under the provisions of Indian Stamp Act on the Deed of conveyance. Having observed so we need to take note of the next issue would be as to whether the proviso to Section 50C could be read to be prospective or retrospective. Case on hand is very straight forward case, where there is an Agreement for Sale, agreeing to sell the property at Rs. 19 Crores and a sum of Rs. 6 Crores has been received as advance sale consideration. The proviso to Section 50C(1) deals with cases where the date of the agreement, fixing the amount of consideration and the date of registration for the transfer of the capital assets are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer. Thus an amendment by insertion of proviso seeks to relieve the assessee from undue hardship. No hesitation to hold that the proviso to Section 50C(1) of the Act should be taken to be retrospective from the date when the proviso exists. The assessee s consistent case was that the sale consideration agreed to be paid to him by the purchaser was Rs. 19 crores and Rs. 6 crores was received as advance on the date of entering into the Agreement for Sale. AO disbelieved the same and applied the guideline value at Rs. 27 crores on the date when the Sale Deed was executed and registered. - Decided against revenue.

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• 2020 (10) TMI 516
  Exemption u/s 11 - charitable activity u/s 2(15) - As per AO Assessee was engaged in the activities which are not in the nature of charity but were of business as per proviso 1 and 2 of Section 2(15) r/w Section 13(8) - assessee is a company registered under section 25 of the Companies Act, 1996 and is inter alia engaged in the activity of management of liquid and solid wastes in Naroda Industrial Area and thereby earned profit - HELD THAT:- No error in the impugned orders passed by the CIT(A) as well as Income-tax Appellate Tribunal and have concurrently held that taking on overall view, the dominant objects of the assessee are charitable in nature and dominant object is not only preservation of environment but one of general public utility and, therefore, the assessee is entitled to seek exemption under section 11 of the Act. Following the judgment of the Division Bench of this Court [ 2019 (10) TMI 150 - GUJARAT HIGH COURT] in the case of respondent -assessee for three assessment years and Division Bench has considered the order passed in relation to the AY 2009-10 as lead matter, we do not find any case to take a contrary view then the view taken by the CIT(A) as well as Income-tax Appellate Tribunal. We do not find that this is a fit case to interfere in appeal under section 260-A of the Act as the findings of fact are not perverse. - Decided in favour of assessee.

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• 2020 (10) TMI 515
  Additions u/s 68 - burden of proof - Whether explanation offered by the assessee to be non satisfactory? - HELD THAT:- Onus is on the assessee to explain the sums credited in the books of the assessee. If the explanation offered by the assessee about the nature and source is acceptable to the AO, then there can be no additions. If the AO finds the explanation offered by the assessee to be non satisfactory, the sum so credited may be charged to income tax as an income of the assessee. Admittedly in the instant case, the assessee has provided the explanation, such explanation was found acceptable by the AO for the previous and subsequent Assessment Years. AO did not record a specific note of his satisfaction / dissatisfaction with regard to those three persons. Assessee is non-suited solely on the ground that Mr.Naninar Mohammed did not appear and other two persons did not respond. The fact remains that the notice sent by the AO to Mr.Naninar Mohammed returned with a postal endorsement left and there appears to have been no attempt made to summon the said person by following other modes of substituted service - Appropriate view that should have been taken is to take note of the genuinity of the assessee and the decision of the Assessing Officer in the assessee s own case for the earlier and subsequent assessment years. - Decided in favour of the appellant / assessee.

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• 2020 (10) TMI 514
  Deduction on account of bad debts written off - assessee is an individual carrying on business of project management and consultancy services earning income from profession - AO did not allow claim of assessee for deduction on the ground that the Assessee was not able to show as to how the debts that were written off as bad debts had in fact become bad and irrecoverable - HELD THAT:- Deduction on account of bad debt as allowed u/s 36(l)(vii) read with section 36(2), after amendment by the Direct Tax Laws (Amendment) Act 1987, envisage merely wiring off the debt as irrecoverable in the accounts of the assessee as a condition for such an allowance. Before the amendment by the DTL (Amendment) Act 1987, of course, there was a condition to establish that the debt has become bad. As in the case of T.R.F. Limited vs C.I.T [2010 (2) TMI 211 - SUPREME COURT] has clearly observed that after 01.04.1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. - Decided in favour of assessee.

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• 2020 (10) TMI 513
  Ad hoc disallowance - adding 15% of the sub-agent commission involving payments - assessee distribution and commission agent business in communicative services - DR highlight the fact that assessee had failed to file the relevant detailed evidence before both the lower authorities - HELD THAT:- This taxpayer has acted as distributor / commission agent in telephone / mobile services and paid the impugned re-charge sum(s) to the sub-agents working in the field. Assessee said documents formed part of the assessment record. From certificate dated 18.02.2016 (much before the assessment order dated 08.03.2016) coming from the cellular operator M/s Reliance Telecom Limited making it clear that the corresponding e-re-charges amount involved a sum of Rs. 235,11,268 including commission of Rs. 113,06,268/- and re-charge(s) figure of Rs. 122,05,000/-; respectively as per the relevant understanding between the parties. There is no rebuttal to this clinching fact coming from the Revenue s side. The assessee has also placed on record the relevant details of all the corresponding re-charge transactions. There is no prayer coming from the department side that the assessee s certificate having placed on record all these documents is factually incorrect. Assessee has also placed on record profit and loss account at page 104 in the paper having disclosed net profit on turnover @ 6.92% not identify any abnormal trend vis- -vis earlier and latter assessment years. This tribunals co-ordinate bench order in Gouranga Sundar Mondal [ 2018 (9) TMI 1997 - ITAT KOLKATA] also deleted identical disallowance in similar telephone income / mobile services distribution and commission business on the basis of cellular operators certificate - lower authorities have erred in law and on facts in making the impugned ad hoc disallowance @ 15% - Assessee s appeal is allowed.

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• 2020 (10) TMI 512
  Reopening of assessment u/s 147 - AO obligation to dispose off the objections filed by the assessee - tangible material to conclude or to form the opinion that due to Client Code Modification Facility used by the broker the income of the assessee assessable to tax has escaped assessment - HELD THAT:- The requirement of disposing off the objections against the notice issued u/s 148 by a separate and speaking order is a mandatory requirement in view of the judgment in case of GKN Driveshafts (India) Ltd. vs. ITO [ 2002 (11) TMI 7 - SUPREME COURT] the failure of the AO to dispose off the objections renders the reassessment order not sustainable in law. In the case in hand there is complete failure on the part of the AO to dispose off the objections against notice u/s 148 of the Act and not merely a procedural irregularity of separate and speaking order. Accordingly, in the facts and circumstances of the case and specifically involving the issue of addition in this case the AO does not deserve a second inning. Accordingly, without remitting the matter to the record of the AO, the reassessment order passed by the AO is set aside being invalid. - Appeal of the assessee is allowed.

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• 2020 (10) TMI 511
  Penalty u/s 271C - leave Travel Allowance (LTA) disallowance - HELD THAT:- As decided in M/S. ANKITA ELECTRONICS PVT LTD. [ 2015 (3) TMI 1029 - KARNATAKA HIGH COURT ] assessee in the present case had disclosed all the materials on which it was claiming deduction. The matter as to whether the deduction was to be given or not, was taken up by the revenue authorities and it was held that certain deductions claimed by the assessee were to be disallowed. It is not disputed that the questions regarding the disallowance of the deductions claimed by the assessee is under consideration by the High Court, as the appeal filed by the assessee has been admitted, on the substantial questions of law which have been reproduced hereinabove. Mere admission of the appeal by the High Court on the substantial questions of law as have been quoted above, would make it apparent that the additions made were debatable. The Tribunal has thus rightly held that the admission of substantial questions of law by the High Court leads credence to the bona fide of the assessee and therefore, the penalty is not exigible u/s 271(1)(c) - Merely because the claim of the assessee has been rejected by the revenue authorities would not make the assessee liable for penalty - Decided in favour of assessee.

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• 2020 (10) TMI 510
  TDS u/s 194C / 194H - Disallowances u/s 40(a)(ia) - expenditure claimed by way of sales rebate / discount given to the dealers / distributors - HELD THAT:- A reading of section 194C of the Act would suggest that in respect of any payment made to a contractor/sub contractor for carrying out any work, including supply of labour, would be subject to deduction of tax at source at the appropriate rate. In the facts of the present case, the assessee has entered into a sale contract, simpliciter, for sale of its products to dealers/distributors. Certainly, the transaction between the assessee and the dealers/distributors cannot be termed as a contract for work. The assessee simply sells its products to dealers/distributors who, in turn, sell them to the end users. Therefore, there is no element of work as defined under clause (iv) of Explanation to section 194C of the Act. Therefore, under no circumstances, section 194C of the Act would be applicable to the discount/rebate. We hold that the rebate/discount given by the assessee to the dealers will not coming either within the purview of section 194C or section 194H therefore, would not require deduction of tax at source. At this point, it is relevant to observe, the AO while invoking the provisions of section 40(a)(ia) has stated that it attracts section 194C / 194H - The aforesaid statement of the AO makes it clear that he himself is not sure whether it is a payment for carrying out any work or is in the nature of commission / brokerage for any service rendered by another party in the course of buying and selling a product. That being the case, no disallowance under section 40(a)(ia) can be made. Accordingly, we delete the disallowance. Disallowance u/s 40(a)(ia) being 30% of the volume discount - HELD THAT:- Revenue has failed to establish any principle agent relationship between the assessee and the dealers/distributors to whom volume discount was given. Therefore, following our detailed reasoning given in respect of ground no.2, we delete the disallowance made by the AO. Disallowance u/s 40(a)(ia) - reimbursement of octroi and insurance to dealers/distributors - HELD THAT:- neither there is any contract for work between the assessee and the dealers/distributors as provided under section 194C of the Act, nor there is any principal agent relationship between the assessee and the dealers/distributors to treat the payment made as commission in terms of section 194H r/w its Explanation. Since the payment made by the assessee are not covered under section 194C/194H of the Act, no disallowance under section 40(a)(ia) could have been made. At the cost of repetition, we must observe that considering the limited issue arising in the present appeal as to whether the reimbursement of octroi/insurance claimed is covered under section 194C/194H thereby, requiring deduction of tax at source, we refrain from expressing any opinion whether the expenditure is allowable as a business expenditure at the hands of the assessee. TDS u/s 194C - Disallowance u/s 40(a)(ia) - payment made to dealers/distributors on account of refurbishing and repair of defective products - HELD THAT:- Assessee allows 30% additional discount in respect of the defective products by issuing credit note. Thus, it is very much clear, ordinarily it is the duty of the assessee to repair/refurbish the defective products. Basically, as a matter of convenience, assessee has outsourced such work to the dealers/distributors and allowed additional 30% discount. In our view, this additional 30% discount given by the assessee towards cost of repair is nothing but payment made towards contract for work as described under section 194C of the Act. In fact, in the submissions made before the AO the assessee itself has stated that such discount was provided for cost of labour. Payment made towards refurbish / repair clearly comes within the ambit of section 194C - assessee having failed to deduct tax at source in terms thereof, the disallowance made by the Assessing Officer under section 40(a)(ia). TDS u/s 194H - Disallowance being the provision for sales rebate under section 40(a)(ia ) - HELD THAT:- AO has not raised any doubt with regard to the genuineness or allowability of expenditure. He has disallowed part of such expenditure simply for the reason that tax has not been deducted at source in terms of section 194H - Commissioner (Appeals) has also approved the aforesaid decision of the AO. Therefore, the limited issue before us is the validity of disallowance u/s 40(a)(ia) - we decline to entertain the fresh plea of learned Departmental Representative. The decisions cited by the learned Departmental Representative being factually distinguishable would not apply to the facts of the present case. The ground raised by the assessee is allowed.

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• 2020 (10) TMI 509
  Bogus purchases - proof of existence or genuineness of the alleged sellers as long as purchases are recorded in the books and payments of purchase and brokerage have been made through cheques - addition made on the basis of survey conducted by the DGIT (Inv) u/s 133A on one Shri Sanjay Chaudhary and his concerns namely M/s Mayank Impex and M/s Nazar Impex (P) Ltd. - HELD THAT:- On the issue of purchase diamonds from bogus concerns, we agree with the submission of Ld. AR that the applicant cannot be asked to discharge the burden of proof of existence or genuineness of the alleged sellers as long as purchases are recorded in the books and payments have been made through account payee cheques. The applicants have furnished copies of purchase bills, bank statements, copies of return filed and copies of ledger accounts and sale tax registration. No hesitation in upholding the order of learned CIT (A). While upholding the order passed by the learned CIT (A), we rely on the judgment of the Hon ble Jurisdictional High Court in the case of CIT vs. M/s Surendra Buildtech Pvt. Ltd. [ 2012 (5) TMI 629 - DELHI HIGH COURT] wherein the Hon ble Court held that where the Revenue failed to rebut the findings recorded by the learned CIT (A) by bringing any contrary material on record, the finding recorded by the lower authority based on documentary evidences needs to be upheld. - Decided against revenue.

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• 2020 (10) TMI 508
  Interest earned on FDRs as income from other sources - assessee is under construction and business of the assessee has not commenced and the funds on which interest was earned were inextricably linked to the setting up of the Hotel and thus the said interest income has been netted off against the interest paid by the assessee and also ignoring the submissions and evidences placed on record - HELD THAT:- Interest on FDRs during the period has been netted off against interest paid by the assessee which is identical to the fact of earlier Assessment Year 2012-13. There is no change in the circumstances in this year. CIT(A) was not correct in confirming the addition by taking different opinion from the earlier A.Y. 2012-13 taken by the earlier CIT(A). It is pertinent to note that once the ECB loan which is to be utilized for capital expenditure only, then, any interest earned on funds temporarily parked in FDRs is inextricably linked with the setting up of hotel of the assessee, and the same should be held as capital receipts only and is permitted to be set off against the capital expenditure as per the provisions of Income Tax Act. The order of the CIT(A) is set aside. Hence, appeal of the assessee is allowed.

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• 2020 (10) TMI 507
  Assessment u/s 14A r.w.r. 8D - HELD THAT:- There should be no disallowance in view of the provision under Sec. 8D(2)(ii). Accordingly, we delete the addition and decided the issue in favour of the assessee. Further we notice that the investment to the tune of Rs. 65,05,859.23 is liable to be taken into consideration for the purpose of assessing the expenditure in view of the provision under Rule 8D (2)(iii) of the Rule and accordingly the expenditure has been assessed to the tune of Rs. 32,529-30. Those income which yielded exempt income is liable to be taken into consideration while application of provisions under Rule 8D(2)(iii) of the Rule Accordingly, we set aside the calculation did by the A.O as well as confirmed by the CIT(A) and restore the issue before the A.O to re-assess the expenditure to earn exempt income in view of the provision u/s 14A r.w. Rule 8D(2)(iii) of the Act.

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• 2020 (10) TMI 506
  Disallowance of expenditure towards purchase of tools - Revenue or capital expenditure - HELD THAT:- Assessee has drawn its statement of affairs adhering to the principle of materiality concept. In this situation, we are of the considered view that the disallowance made by AR is not warranted as the expenditure claimed by the assessee is too negligible compared to the volume of the business of the assessee and further it is meaningless to maintain the negligible assets in the books of accounts of the assessee. Claiming these expenditures as deduction is only revenue neutral because even otherwise depreciation has to be allowed on these petty assets. Hence, we hereby set-aside the order of the CIT (A) on this issue and further direct the AO to delete the addition and accordingly withdraw the benefit of depreciation granted to the assessee. Disallowance of depreciation - demolition of the building - HELD THAT:- As per the provisions of section 32(1)(iii) it is apparent that the amount of Rs. 17,38,711/- has to be removed from the block of assets and conversely treated as depreciation. It appears from the orders of the Ld. Revenue Authorities that they have only partially followed the provisions of the Act by excluding the amount of Rs. 17,38,711/- from the block of assets without granting depreciation for the entire amount of Rs. 17,38,711/- which is erroneous. Therefore, we hereby set aside the order of the Ld. CIT (A) on this issue and further direct the Ld. AO to grant depreciation of Rs. 17,38,711/- towards the demolition of the building and delete the same from the block of asset. While doing so, the Ld. AO shall also ensure that the same amount is not claimed as loss in the P L Account once again which will amount to double deduction. Disallowance of depreciation - discarding the furniture and remove the same from the block of asset - HELD THAT:- As per the provisions of section 32(1)(iii) it is apparent that the amount of Rs. 4,758/- has to be removed from the block of assets and conversely treated as depreciation. It appears from the orders of the Ld. Revenue Authorities that they have only partially followed the provisions of the Act by excluding the amount of Rs. 4,758/- from the block of assets without granting depreciation of Rs. 4,758/- which is erroneous. Set aside the order of the Ld. CIT (A) on this issue and further direct the Ld. AO to grant depreciation of Rs. 4,758/- towards discarding the furniture and remove the same from the block of asset. While doing so, the Ld. AO shall also ensure that the same amount is not claimed as loss in the P L Account once again which will amount to double deduction. Addition towards Excise Duty levied on finished goods - HELD THAT:- Opportunity should be provided to the assessee to establish before the Ld. Revenue Authorities that the assessee had not paid the Excise Duty for the unsold finished stock. Therefore, in the interest of justice, we hereby remit back the matter to the file of the Ld. AO to examine whether the assessee had not paid the Excise Duty for its finished closing stock and if found so delete the addition because in that case unpaid Excise Duty need not be added to the value of the finished closing stock of the assessee. If found otherwise, reinstate the order of the Ld. AO passed on the earlier occasion on the issue.

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• 2020 (10) TMI 505
  Penalty levied u/s 271(1)(c) - Bogus purchases - HELD THAT:- Imposition of penalty is not automatic. Penalty proceedings are not to be initiated merely to harass the assessee. The approach of the Assessing Officer in this behalf must be fair and objective. Concealment of income and furnishing inaccurate particulars are different. Both concealment and furnishing of inaccurate particulars refer to del/berate acts on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppression or furnishing of accurate particulars - See Dilip N. Shroff [2007 (5) TMI 198 - SUPREME COURT] There is no active concealment of income on the part of the assessee and additions made on estimation by the AO do not called for initiation of penalty. Thus, penalty levied by AO has rightly been deleted by Ld. CIT(A). Accordingly, the grounds raised by the revenue stands dismissed.

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• 2020 (10) TMI 504
  Adjustment to arm s length price of trading segment - adjustment made to trading in industrial chemicals - restrict the adjustment to the transaction with the Associated Enterprises (AE) only - TPO rejected both internal TNMM as well as RPM applied by the assessee - AO proceeded to determine the arm s length price under TNMM by short listing external comparables - HELD THAT:- Observations of learned DRP do not reflect the correct factual position. The legal principle is fairly well settled that if internal comparables are available, then they have to be preferred over external comparables. Therefore, when the assessee has sold products both to AEs and non AEs and audited segmental results of the AE and non A.E. segments are available, then, the net margin earned on non AE transaction can be considered for determining the arm s length price of the transaction with the AE. The decisions relied upon by the learned Counsel for the assessee, referred to above, clearly support this view. Even otherwise also, the contention of the learned Counsel for the assessee that the adjustment, if any, has to be restricted to the AE transaction is acceptable as it is supported by a number of judicial precedents. In view of the aforesaid, the addition made on account of transfer pricing adjustment to the trading in industrial chemical deserves to be deleted. Adjustment made in trading in agro chemicals and public health chemicals - Assessee benchmarked the transaction by applying RPM. Whereas, the Transfer Pricing Officer has benchmarked them by applying TNMM - HELD THAT:- It is fairly well settled that in a case of import of goods for resale in domestic market merely as a reseller/distributor, the most appropriate method to benchmark is RPM. Even, a reading of rule 10B(1)(b) makes the aforesaid position clear. The decisions relied upon by the learned Counsel for the assessee also clearly support this view. In contrast, the Department has not brought any material on record to either show that the assessee has made any value addition to the products imported from AEs or establish the nature of such value addition. Prima facie, it appears, RPM has been rejected merely on unsubstantiated allegation. The decisions cited by assessee support this view - in the cited decisions, it has also been held that re packaging and re labeling of goods do not amount to value addition RPM is the most appropriate method to benchmark the transaction. Even, otherwise also, we accept the contention of the assessee that adjustment, if any, has to be restricted to the AE transaction. Adjustment made to the arm s length price of fee paid towards management services - HELD THAT:- Assessee has not benchmarked the transaction relating to payment of management and accounting service fee independently, but, has allocated such payment to all the segments. This, in our view, is not a correct approach. The assessee should have benchmarked the aforesaid transaction independently. On the other hand, the TPO has determined the arm s length price at nil purely on ad hoc basis without following any prescribed method. This is also not acceptable, as held in various decisions cited by assessee. Assessee may not be required to prove the benefit derived by it, however, it is required to furnish the basic documentary evidences as well as proper benchmarking to show the arm s length nature of the transaction. Since, the aforesaid exercise has neither been done by the assessee nor by the Transfer Pricing Officer, we are inclined to restore the issue to the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. Disallowance of depreciation on goodwill acquired - HELD THAT:- We find that this is a recurring issue between the assessee and the Revenue since assessment year 2006 07 onwards. While deciding the issue in earlier assessment years, in the orders referred to above, the Tribunal has allowed assessee s claim of depreciation on goodwill. Respectfully following the aforesaid decisions of the Tribunal, we allow assessee s claim of depreciation. This ground is allowed. Set off of brought forward loss and unabsorbed depreciation as well as proper credit to advance tax and TDS - HELD THAT:- Direct the AO to verify assessee s claim and in accordance with law. These grounds are allowed for statistical purposes.

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• 2020 (10) TMI 503
  Income accrued in India - Permanent Establishment (PE) in India under Article 5 of the India Mauritius Tax Treaty - bring the income earned by the assessee to tax net in India - HELD THAT:- Both Parekh Marine Agency Pvt. Ltd. and Samsara Shipping Pvt. Ltd., were not exclusively working for the assessee and are having their independent status - Services provided to the assessee by them are in the ordinary course of their business. That being the case, the exceptions provided under Article 5(5) of the Tax Treaty would be clearly appliable. Hence, neither Parekh Marine Agency Pvt. Ltd. nor Samsara Shipping Pvt. Ltd. can be considered as dependent agents so as to constitute PE in India. The Co ordinate Bench in Bay Lines Mauritius [ 2018 (2) TMI 1524 - ITAT MUMBAI ] while deciding identical issue involving more or less similar facts, has held that if the agent was not exclusively acting on behalf of the assessee enterprise, it cannot be considered as dependent agent so as to constitute a PE. Thus, the ratio laid down in the aforesaid decision would also support assessee s case. No infirmity in the order OF Commissioner (Appeals) holding that the assessee does not have a PE in India even under Article-5(5) of the Tax Treaty, hence, is eligible to avail the benefits of the Tax Treaty. More so, considering the fact that the Tax Authorities in Mauritius have issued Tax Residency certificate in favour of the assessee. Decided against revenue.

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• 2020 (10) TMI 502
  Disallowance of the cost of TDRs - HELD THAT:- Revenue has also proceeded without any definite basis. Sure, there is nothing to show or exhibit the sale of TDRs to RSB, for the assessee to claim the cost thereof, but that does not by itself demonstrate their sale to any other person. Revenue should have insisted on the assessee producing some authentic document/material with regard to the obtaining status of those rights, which could then be verified, before imputing their sale by the assessee during the relevant year. Why, it could itself make enquiry with the registering authority. Non-reflection of the said TDRs in the assessee s balance-sheet (as on 31.3.2010), on which it relies for the purpose, is of little consequence in view of the admitted position of the assessee having charged their cost to the P L account for the year, claiming it as a deductible expense. The matter, therefore, is indeterminate, and is accordingly restored back to the file of the AO for consideration afresh. The matter being old, he shall decide the same within a reasonable time. As regards valuation, i.e., where held to be a case of sale, valuation of TDRs shall be with reference to the rate of open land, and not of residential building, inasmuch as these are development rights of land. The land location, in case of estimation, shall not be, as also observed during hearing, where the TDRs arose, but where these are (or would be) utilized and, further, with reference to a land with similar development potential therein. This is as only like can be compared with like. Further, the issue of deduction of the TDR cost (Rs. 14.42 lacs), i.e., the first issue, being inter-related, we consider it proper to remit the same along with. We may though make it clear that it is not that we entertain any doubt qua the disallowance of TDR cost (Rs. 14.42 lakhs) on the basis of the material on record as not valid. Disallowance of the refundable security deposit in computing the assessee s business income for the year - HELD THAT:- The assessee has disposed its rights in land, encumbered by the obligation to re-compense the displaced occupants/ tenants, so that the cost suffered toward the same, by way of its forfeiture or transfer of the right to receive in favour of the purchaser, whichever way one may look at the transaction, is an associated cost, integral to the said transfer. It cannot, therefore, be regarded as the capital cost. The third objection is of the same arising in the following year. In fact, this is in contradiction of the claim of the loss having already arisen, i.e., independent of, and prior to, the transaction of transfer in March/July, 2010. That apart, when the income arising from the transfer is being subject to tax for AY 2010-11, how could a related cost possibly arise for being claimed/allowed in a subsequent year ? The same militates against the concept of income (or income computation), which is (to be) at net of all expenditure incurred in relation thereto. Section 5 of the Act in any case makes it clear that income can be brought to tax either in the year of its receipt or its accrual. The objections by the ld. CIT(A) to the disallowance of the cost of Rs. 54 lakhs are, therefore, not valid. Disallowance is accordingly, i.e., in view of the discussion directed to be deleted. We decide accordingly.

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• 2020 (10) TMI 501
  Interest u/s 244A - maintainability of the appeal against the order of the Assessing Officer and levying the interest under section 220(2) in pursuant to the order/judgment of the appellate forum - HELD THAT:- Tax liability of the assessee is varied from as it was at the time of the original assessment order passed u/s 143(3) due to the reason of levy of interest u/s 220(2) as well as interest under section 234D though the AO has also raised the demand by adding an amount on account of withdrawal of interest u/s 244A which was granted along with the refund. CIT (Appeals), has dismissed the appeal of the assessee in limine being not maintainable as the said order of the Assessing Officer in computing the Income-tax liability/demand is not appealable - assessee has relied upon a series of decisions in support of the contention that the order passed by the Assessing Officer in pursuant to the appellate authority is an appealable order. It is pertinent to note that there are divergent views on this issue about the maintainability of the appeal against the order of the Assessing Officer and particularly levying the interest under section 220(2) in pursuant to the order/judgment of the appellate forum. Commissioner of Income-tax relied upon the judgment of ANZ Grindlays Bank PLC [ 1999 (8) TMI 29 - CALCUTTA HIGH COURT] whereas the learned authorised representative of the assessee has relied upon a series of decisions of other High Courts in support of his contention. So far as the recomputation of the total income of the assessee AO has not passed any order or decided any issue but he has simply computed the total income as it was determined while passing the original assessment order. Therefore, to that extent the said order AO cannot be regarded as a decision of the Assessing Officer which can be challenged in the appeal until and unless some calculation mistake or typographical mistake occurred which can be rectified under section 154 of the Income-tax Act. Computation of Income-tax liability of the assessee in pursuant to the said order certainly increased the demand which was raised at the time of original assessment order passed under section 143(3) and further since after the order of the Tribunal there was no demand outstanding against the assessee and, therefore, it becomes a debatable question whether the interest under section 220(2) will be reckoned from the original demand arising from the assessment order passed under section 143(3) or it will be reckoned from the giving effect order passed by the Assessing Officer to the judgment of the hon ble High Court. This aspect requires application of mind and also to take a decision whether the interest under section 220(2) has to be levied for the period reckoning from the original demand till the recomputation of Income-tax as per the outcome of the finality of the dispute. Once the Assessing Officer has to take a decision regarding the reckoning of the period from which the interest has to be calculated on the outstanding demand then the said order of the Assessing Officer would certainly be challenged by filing appeal before the Commissioner of Income-tax (Appeals) under section 246 - Appeals of the assessee are allowed for statistical purposes.

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• Customs

• 2020 (10) TMI 500
  Extended period of Limitation for issuing SCN - Release of seized goods - situation during COVID-19 lockdown - Smuggling - Gold - Section 110(2) of the Customs Act, 1962 - case of petitioner is that the seized gold bars were not smuggled gold, those were purchased by the father of the Petitioner for the marriage of his sister long back from the local market in Kerala. Petitioner had carried six gold bars to Mumbai for making ornaments for the marriage. HELD THAT:- A conjoint reading of Sections 110(2) and 124 of the Customs Act would make it clear that a show-cause notice has to be issued to the person from whom the goods were seized within six months of seizure, failing which the goods shall be returned to the person from whose possession the goods were seized. However, it is provided under the first proviso that the said period of six months can be extended for a further period not exceeding six months by the higher authority for reasons to be recorded in writing with intimation to the person concerned within the extended period. Coming to the facts of the present case, it is seen that the goods were seized from the Petitioner on the intervening night of 4th and 5th October 2019. The period of six months would have expired on 5th April 2020. It was during this period that the show-cause notice under Section 124(a) was required to be issued as per the requirement of Sub Section (2) of Section 110. However, as per the proviso this period could be extended for a further period not exceeding six months after complying with the conditions mentioned in the first proviso. Within the initial period of six months Petitioner was informed by the office of Commissioner of Customs, Pune that Commissioner of Customs, Pune being the competent authority had accorded sanction under the proviso to Section 110(2) and had granted further time to issue show-cause notice. The extended period of limitation upto six months as per the first proviso to Sub Section (2) of Section 110 of the Customs Act stood extended by Section 6 of the above Ordinance till 29.09.2020. This is fortified by the order of the Supreme Court dated 23.03.2020 passed in exercise of powers under Article 142 of the Constitution of India read with Article 141 thereof - It is during such extended limitation period that Joint Commissioner of Customs, Pune has issued show-cause notice to the Petitioner under Section 124(a) of the Customs Act dated 21.09.2020 calling upon the Petitioner to show-cause in writing before the adjudicating authority as to why the seized gold should not be confiscated besides imposition of penalty. Thus, it is evident that show-cause notice under Section 124(a) has been issued to the Petitioner within the extended limitation period. Therefore, the rigour of Sub Section (2) of Section 110 would not be applicable in the case of the Petitioner. Consequently, question of returning the seized goods to the Petitioner under Section 110(2) would not arise. It is true that Delhi High Court in KRAMPE HYDRAULIK (INDIA) AND ORS. VERSUS UNION OF INDIA (UOI) AND ORS [ 2003 (7) TMI 694 - DELHI HIGH COURT] had held that the total effect of the provisions of Section 110(2) read with Section 124(a) would be that not giving notice within six months of seizure or within the further extended period of six months would entitle the person concerned to return of the seized goods without any condition. Had the pandemic not intervened, had the Supreme Court not passed the order on 23.03.2020 and had the Ordinance not extended the limitation period across board till 30.06.2020 and thereafter till 29.09.2020, certainly Petitioner would have had a valid claim to return of the seized goods under Section 110(2). But because of the aforesaid developments, the limitation period stood further extended and within such extended limitation period the show-cause notice under Section 124(a) of the Customs Act was issued. Petition dismissed.

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• 2020 (10) TMI 499
  Imposition of penalties u/s 114(iii) of the Customs Act - Wrongful availment of the duty drawback - drawback availed fraudulently by forging and manipulating documents without exporting any item - appellant submits that he was neither served show-cause notice nor intimated about the personal hearing - HELD THAT:- The learned Commissioner has observed in para 6.7 that appellant had disappeared after the investigation was initiated and that the appellant has knowingly conspired with Shri G. S. Kohli in fraudulent drawback availment. It is seen that learned Commissioner has relied upon the statements of Shri G. S. Kohli and Shri Jagmohan Basant Singh Kohli. Therefore, the submissions of the appellant that his case is similar to that of other noticees against whom proceedings were dropped by the Commissioner, are factually incorrect. However, we find that his role is limited to the allegation of being a front for operating the current account of M/s. G.S.K. Exports in Bombay Cooperative Mercantile Bank; two pay-in slips bear the signature of the appellant. To this extent, the appellant has abetted the crime of M/s. G.S.K. Exports. However, it is not clear from the show-cause notice or the Order-in-Original that if there was any financial gain obtained by the appellant. In such circumstances, we find that the penalty imposed is very high. Penalty should be commensurate with the offence committed. Penalty reduced from Rs. 35,00,000/- to Rs. 5,00,000/- - appeal allowed in part.

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• Corporate Laws

• 2020 (10) TMI 498
  Oppression and Mismanagement - transfer of shares - Section 241-242 of the Companies Act, 2013 - principles of quasi partnership - HELD THAT:- Admittedly, it is closely held private limited company of two persons in the form of quasi partnership and on perusal of the record it is found that there is a dispute with regard to the agreement(s) dated 11.08.2017 whereby the Petitioner as well as the Respondent No. 2 have arrived at an understanding to settle and part with on certain terms and conditions. However, dispute arose with regard to non-compliance or deficiency in compliance of the conditions of the said agreement by Respondent No 2. There are no documents on record so as to show that the shares of the Petitioner in question have been transferred to the Respondent No. 2 or any other person(s) after following the due procedure relating to the transfer of shares as claimed by Respondent No 2. There are no concrete evidence or proof filed to show that the payments have actually been made to the Petitioner in the form of cash receipt or bank statement or such other document against the transfer of the shares in favour of the Respondents. Thereby, it is established that the Petitioner still holding 50% of the share capital of the Respondent No. 1 Company and is entitled for his rights as the shareholder of the company. On perusal of the record, it is found that Petitioner annexed Annexure-C i.e. list of shareholders as on 31.03.2018 at page No. 58 of the petition which shows that Petitioner is holding 18,35,500 Nos. of shares and the Petitioner is eligible to file the present petition. For an application under sections 241-242, the act which is contrary to law may not necessarily and by itself support the inference that the law is/was violated with mala fide intention or that such violation was burdensome, harsh and wrongful. There must be continuous act on the part of the members or majority shareholders, continuing upto the date of petition, showing that the affairs of the Company were being conducted in a manner oppressive to some of the members. The conduct must be burdensome, harsh and wrongful. In the instant case, it is found that there is a lack of trust and confidence between the members/shareholders which would not be enough unless the lack of confidence springs from oppression by members in the management of the Company s affairs. Such oppression must involve an element of lack of probity or fair dealing to the members in the matter of his propriety as a shareholder. There are several irregularities in the procedures adopted by the Respondent (s) in compliance of the provisions of the Companies Act, 2013. The Petitioner has established a case of oppression and mismanagement in the affairs of the Respondent No. 1 Company and therefore, the present petition has merit and deserves to be allowed. The Respondent No. 1 Company is brought back to the original position as it was prior to the date of execution of agreement i.e. 11.08.2017 - The resolution (s) dated 30.06.2017, if any, is declared as void and shall not have any effect relating to the appointment of the Respondents No. 3 and 5 as the directors of the Respondent No. 1 Company - appointment of Respondents No. 3, 4 and 5 are declared as illegal and set aside. The Tribunal/Bench hereby orders removal of the said Respondents as the directors of the Respondent No. 1 Company. Petition allowed in part.

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• 2020 (10) TMI 497
  Approval of Scheme of Arrangement - Sections 230 to 232 read with Section 66 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- Various meetings dispensed with - various meetings are held and notices issued - the scheme is approved - application allowed.

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• 2020 (10) TMI 496
  Approval of the Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- The Regional Director, Northern Region, MCA, to whom notice was sent has filed his affidavit and has filed its affidavit dates 12.01.2018 wherein it is submitted that the Transferor and Transferee Companies are regular in filing statutory return. It is further noted that no prosecution has been filed and no investigation/inspection proceedings are conducted against any of the Petitioner Companies. It is further observed that the objects of the Petitioner companies is different and any change in the main object and the name of the Transferee Company shall be automatic and compliances are to be made as per the provisions of Companies Act, 2013 and Rules - The Official Liquidator (hereinafter referred as OL ) has filed a report dated 18.01.2018, wherein it is submitted that he has not received any complaint against the Scheme from any person/party interested in the Scheme in any manner and that the affairs of the Transferor Companies do not appear to have been conducted in a manner prejudicial to the interest of its members, creditors or to public interest. The report of Income Tax Department (hereinafter referred as ITD ) had been filed on 07.02.2018 in which it is submitted that with regard to the Transferor No. 4 Company that the revenue receipts are nil for the assessment Year, while borrowing is huge i.e. in Crores. It is noted that the Petitioner has replied to the objections raised by the ITD and submitted that the Transferor Company No. 4 is facing losses from last few years and therefore has decided to merge with the group companies. Further, it is submitted that as per the audited financials there are no borrowings which run in crores and that the transferor No. 4 Company has filed balance sheet and profit and loss as on 31.03.2017 - It is further noted that the Petitioner Companies have duly complied with all the Accounting standards applicable thereto. The Petitioner Companies have obtained necessary certificates from their respective Auditors certifying that the Accounting Treatment under the Scheme is found to be in order and conform with the Accounting standards. On the Scheme becoming effective, the Transferor Company shall be dissolved without any further act, deed or instrument, without going through the process of winding up and shall be succeeded by the Transferee Company - There is no additional requirement for any modification and the Scheme of Amalgamation appears to be fair and reasonable and is not contrary to public policy and not violative of any provisions of law. All the statutory compliances have been made under Sections 230 to 232 of the Companies Act, 2013. The Company Petition is allowed and the Scheme of Amalgamation annexed with the Petitions is hereby Sanctioned.

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• Insolvency & Bankruptcy

• 2020 (10) TMI 495
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is observed that there is business relationship between the two parties and has gone into rough weather from March, 2018. It is not in dispute that both the operational creditor and the corporate debtor were maintaining Running Account - It is also observed that the operational creditor is making all attempts to realize the payment and conveniently used I B Code, 2016 for faster realization. The Operational Creditor is claiming that the Debt due is more than Rs. 1 lac. If, it may also be due for payment as it will be becoming the job of IRP to reconcile and get the disputed amount segregated and the claim can be counted provided the application meets the criteria of Section 8 9 of the Code. The Object of the Code is not recovery of money but to bring out of insolvency and maximization of value of assets of the Corporate Debtor. It is also very much clear that if there is a dispute as per relevant provisions of the Code, it is incumbent on the Adjudicating Authority to reject the petition/application as per the provisions of the Section 9 of the Code. It is also very much clear in this case that there is a dispute of the Debt and dispute resolution mechanism is also provided in the purchase order. Since the I B Code, 2016 debars the application of the Code for recovery of money as well as if there is a dispute then also petition/application requires to be rejected. The Hon ble Supreme Court has already held in Mobilox Innovations Pvt. Ltd., Vs. Kirusa Software pvt. Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT ], that IBC is not intended to be a substitute for recovery forum. It is also laid down that wherever there is existence of real dispute, the IBC provisions cannot be invoked - Since Hon ble Apex Court has clearly laid down the mechanism to be operated by Operational Creditor in terms of Section 8 9 of the Code, it is very clear that the undisputed debt is sine qua non of initiating CIRP as also the debt should be due and payable. Since, the order of Adjudicating Authority in the present case, does not meet the above criteria and hence the appeal needs to be allowed - We are not passing any comment on the merit of the dispute between the parties and the parties are free to approach appropriate forum for recovery or dispute resolution. Appeal allowed.

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• 2020 (10) TMI 494
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Existence of debt and dispute or not - time limitation - HELD THAT:- There is acknowledgment of debt in the balance sheet of the corporate debtor all along. It is well-settled through various judgments of the Hon ble Supreme Court now that an acknowledgement in the balance sheet of the company satisfies the requirements of section 18 of the Limitation Act, 1963, leading to a fresh period of limitation commencing from each such acknowledgement. Further, the reply also makes it clear that there is a debt due and payable to the Financial Creditor, which remains unsatisfied. Therefore, the aspect of limitation raised as one of the defences by the Corporate Debtor does not hold water. As far as the other contentions are concerned, such as not being given Buyers Credit Facility on time, the fact that there was fluctuation in the exchange rate, the availability of raw materials, and initiation of proceedings in various other courts under other laws, outstanding amounts payable by the customers, security deposit realisable from various authorities, parties etc cannot be considered to be defences in a petition filed under section 7 of the IBC. Further, the fact that the Corporate Debtor has itself submitted various OTS proposals to the Bank, is ipso facto an admission of the fact that there is a debt due and payable to the Financial Creditor. The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC at the relevant time. Therefore, the default stands established and there is no reason to deny the admission of the Petition. Petition admitted - moratorium declared.

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• 2020 (10) TMI 493
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- This Bench has gone through the details of payment with the statement of account of the Corporate Debtor maintained with the Corporation Bank. It is found that the payment was made from the bank account of the Corporate Debtor except for two transactions i.e. Invoice No. 1800915 and Invoice No. 1800890 wherein the Corporate Debtor have submitted that they have availed loan from HDFC Bank and the payment was made in full. This Invoice wise payment made by Corporate Debtor was not denied by the Petitioner but it is submitted that the statement of account(Ledger account) maintained by the Petitioner shows that there is balance due payable by the Corporate Debtor. It is also submitted that the payment was on account. However, such submission cannot be accepted in view of the fact that each invoice is based on separate purchase order and payment has been made towards individual invoices. Coming to the second portion of the claim where some rental dues were claimed, the statement of account produced by the Corporate Debtor (Page No. 55 of the reply) reveals that there is no outstanding payable by the Corporate Debtor. When we go through the ledger account of the Corporate Debtor in the books of the Petitioner, it shows a balance of Rs. 3,26,389/- as receivable from the Corporate Debtor but the Invoice No. SP2/1900009 dated 03.04.2018 for Rs. 1,98,949/-, as claimed in the petition is not even reflecting in the statement of account, hence, the claim under this invoice cannot be accepted. As far as the other invoice no SP2/1900165 dated 16.04.2018 for Rs. 1,27,440/- is reflecting in the statement of account produced by the Petitioner (Page No. 50 of the Petition) but the same is not reflected in the statement of account of the Corporate Debtor (Page No. 55 of reply). In view of this, this claim also fails. It is established that there is a clear dispute relating to the quality of goods as provided u/s 5(6)(b) of the Code - Petition dismissed.

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• 2020 (10) TMI 492
  Amendment of the list of creditors - appropriate determination of the claims - determination of statutory Relinquishment Charges claimed by the Applicant - HELD THAT:- This Adjudicating Authority is of the view that the non-admission of said claim by the RP is only on the technical ground of non-filing of its claim in appropriate Form before the RP. Therefore, this Adjudicating Authority hereby direct the Applicant to approach RP by filing its revised claim Form before the RP for consideration. However, it is made clear that the RP may consider the claim only after verification of all the relevant documents pertaining to the claim of the Applicant. Application disposed off.

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• 2020 (10) TMI 491
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - time limitation - HELD THAT:- It is stated that as per Section 18(1) of Limitation Act, 1963, an acknowledged of liability should be expiration of prescribed period for filing a suit or application. As per Art. 137 of the Limitation Act, where there is no prescribed period of limitation then the period of limitation to file proceedings in 3 years from the date when the right to apply accrues. It is submitted that the AMC has deducted/levied amount of Liquidated Damages from the Corporate Debtor on the basis of Clause 5 of the contract which provides for penalty for breach of contract and same is levied by Corporate Debtor to Operational Creditor on back to back basis as it is mentioned in email dated 11.07.2018 sent by Corporate Debtor to Operational Creditor. It is submitted that the same is acknowledged by the Operational Creditor through its mail dated 13.07.2018 which also shows that there is pre-existing dispute between the parties - it is evident that there are pre-existing disputes between the parties. Accordingly, as per the provisions contained in Section 9(5)(ii)(d), the petition is liable to be rejected. Application rejected.

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• 2020 (10) TMI 490
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- Before initiating a proceeding under Section 9, the operational-creditor is required to fulfil the conditions mentioned under Section 8(1), if he has not sent the demand notice as required under Section 8(1) of the Code, then he cannot invoke the provision under Section 9, rather he can invoke the provision of Section 9 only, when Corporate Debtor fails to raise the existing of disputes or produce the document to show that unpaid operational debt has been paid within ten days of the receipt of the demand notice. Section 8 and 9 cast a duty upon the operational-creditor as well as Corporate Debtor to act as per Section 8 and if they fail to fulfil the conditions of Section 8 and 9 then in that case neither the application filed by the operational-creditor is maintainable nor the plea of existing of disputes or the payment of debt subsequently taken by the Corporate Debtor can be taken into consideration. Since it is specifically mentioned in Section 8(2) of the Code that within ten days from the date of the receipt of the demand notice, the corporate-debtor is required to bring to the notice of the operational-creditor, the existence of dispute or the documents regarding the payment of debt, therefore, we have no option, but to hold that since the corporate-debtor fails to give the reply of the demand notice and raised the disputes, hence after his appearance in response to the notice, he cannot raise it by filing the reply to the application, filed on behalf of the operational-creditor. Since, no dispute has been raised in pursuance of the demand notice issued under Section 8(1) of IBC, 2016, therefore, any dispute raised after the appearance of the respondent in pursuance to summons issued after filing the main application is not liable to be accepted - in view of Section 9(5)(i)(a) since the application is complete, the invoice for notice of the payment to the Corporate Debtor has been delivered by the Operational Creditor, there is no payment of unpaid operational debt, which is more than Rs. 1 Lakh, which is the minimum threshold U/S 4 of the Code for initiating a proceeding U/S 9 of the Code and no notice of dispute as required U/S 8(2) of the Code is raised by Corporate Debtor and there are no disciplinary proceedings pending against the Resolution Professional. Therefore, we think it is proper to admit the application. Petition is admitted - moratorium declared.

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• 2020 (10) TMI 489
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is admitted fact that the Corporate Debtor has not sent the reply as required under Section 8(2) of the IBC, 2016, according to which the Corporate Debtor shall within a period of 10 days of the receipt of demand notice or copy of invoices mentioned in sub section (1) bring to the notice of the Operational Creditor, the existence of dispute or record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such disputes. Before initiating a proceeding under Section 9, the operational-creditor is required to fulfil the conditions mentioned under Section 8(1), if he has not sent the demand notice as required under Section 8(1) of the Code, then he cannot invoke the provision under Section 9, rather he can invoke the provision of Section 9 only, when Corporate Debtor fails to raise the existing of disputes or produce the document to show that unpaid operational debt has been paid within ten days of the receipt of the demand notice. Therefore, on the basis of aforesaid provisions, we are of the considered view that Section 8 and 9 cast a duty upon the operational-creditor as well as Corporate Debtor to act as per Section 8 and if they fail to fulfil the conditions of Section 8 and 9 then in that case neither the application filed by the operational-creditor is maintainable nor the plea of existing of disputes or the payment of debt subsequently taken by the Corporate Debtor can be taken into consideration. In the present case, since it is specifically mentioned in Section 8(2) of the Code that within ten days from the date of the receipt of the demand notice, the corporate-debtor is required to bring to the notice of the operational-creditor, the existence of dispute or the documents regarding the payment of debt, therefore, we have no option, but to hold that since the corporate-debtor fails to give the reply of the demand notice and raised the disputes, hence after his appearance in response to the notice, he cannot raise it by filing the reply to the application. In view of Section 9(5)(i)(a) since the application is complete, there is no payment of unpaid operational debt, which is more than Rs. 1 Lakh, which is the minimum threshold U/S 4 of the Code for initiating a proceeding U/S 9 of the Code and no notice of dispute as required U/S 8(2) of the Code is raised by Corporate Debtor - petition admitted - moratorium declared.

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• 2020 (10) TMI 488
  Maintainability of application - initiation of CIRP - time limitation - first and foremost objection raised by the respondent is that the present application filed in 29th April, 2019 is time barred as the petition is filed on the basis of the documents which pertain to the period from 2000 to 2014 - suppression of material facts or not - HELD THAT:- On perusal of the records it is found that the applicant bank has placed on record simple debit balance confirmation letter dated 07.04.2016 (Annexure A/34 of petition at page No. 653-657) issued by the respondent and addressed to the applicant acknowledging the debt. Moreover, the account statements show that there are regular credit entries after 7th April, 2016 till May, 2018. The corporate debtor by its letter dated 17.11.2018 has also given the details of amount repaid till 30.09.2018 and also acknowledged the amount outstanding in the respective account as on 30.09.2018. Moreover, the corporate debtor in para 29(a) of its reply, has admitted that it has paid Rs. 16.17 lacs during the financial year 2019-20. Further, the records reveal that from time to time the respondent has executed/entered into various documents acknowledging the debt. This itself shows that the respondent company has acknowledged the debt in the financial year 2019-20. Since the application is filed on 29.04.2019, it is well within time. Whether the power of attorney holder is not competent to file an application on behalf of financial creditor? - HELD THAT:- It is a matter of record that the seal affixed at the foot of the said power of attorney is the seal of the said bank and the name of signatures of Shri P.Y. Nagar, Shri T.K. Sharma and Shri D.K. Jain thereto subscribed are as those of the General Managers of said Bank of Mumbai are of the proper respective handwriting of the said Shri P.Y. Nagar, Shri T.K. Sharma and Shri D.K. Jain and the power of attorney is granted as per resolution passed by the Board of Directors of the Bank. Failure to establish the default on the part of the respondent - HELD THAT:- It is a matter of record that the petition reveals that the corporate debtor had availed term loan, fund/non fund based limits, working capital limits etc. from the petitioner bank and the respondent has acknowledged the debt from time to time - The debt recovery proceedings are initiated by the Financial Creditor to recover the amount. Simply because the Financial Creditor initiated proceedings before the Debt Recovery Tribunal, it does not lie in the mouth of the corporate debtor to say that no default occurred. As such there is no bar in filing IB application during the pendency of DRT proceedings. Moreover, Corporate Debtor did not disclose any bona fide defence based on substantial grounds for the claim made by the Financial Creditor before this Authority. The above said evidence is sufficient to substantiate the plea of the Applicant that a default has been committed by the Corporate Debtor in payment of amount due and payable to the Applicant. In the instant case, the documents produced by the Financial Creditor clearly establish the debt . Section 13(2) Notice issued by the Financial Creditor clearly indicates that entire debt was recalled. There is a default on the part of the Corporate Debtor in payment of the financial debt - the petitioner/financial creditor having fulfilled all the requirements of Section 7 of the Code, the instant petition deserves to be admitted. Application admitted - moratorium declared.

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• 2020 (10) TMI 487
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is the admitted case of the parties that the agreement which Operational Creditor has enclosed with the application has never been signed by the parties. It is also admitted case that the draft agreement which was sent by the Corporate Debtor was changed by the Operational Creditor and which was never been signed by the Corporate Debtor - on the basis of aforesaid admitted facts, it can be said that there is no agreement in between the parties because the proposal which was made by the Corporate Debtor was according to the case of Operational Creditor was modified but the same was not accepted by the Corporate Debtor. Therefore, on the basis of that, it can be said that the agreement which the Operational Creditor annexed is no agreement in the eye of law. When we shall consider the claim of the Corporate Debtor then we find that the Corporate Debtor tried to convince us that there was a pre-existing dispute which the Corporate Debtor raised prior to the receipt of the demand notice by sending the legal notice on 14th March, 2018 and 25th April 2018 which th(sic) Corporate Debtor claimed that no reply had been given by the Operational Creditor till date - when we shall consider the case of the Operational Creditor then we find, in the reply of the demand notice, it is specifically mentioned that a legal notices were sent to the Operational Creditor by the Corporate Debtor on 14th March 2018 and 25th April, 2018 and also claimed that no reply was given by the Operational Creditor to that notice. Even no averment was made either in the main application filed by the Operational Creditor or in the rejoinder filed by him, in response to the reply filed by the Corporate Debtor. Therefore, we are of the considered view that the Operational Creditor has not reverted the averment made in the legal notice dated 14th March, 2018 and 25th April 2018 and on the basis of that, we find that these two notices were sent by the Corporate Debtor prior to the receiving of the demand notice and by sending these legal notices, the Corporate Debtor raised certain issues even one of the issues is the excess payment was made and there is no due of the outstanding debt, which is payable to the Operational Creditor. In view of Section 8(2) of the IBC, 2016, the Corporate Debtor, after receiving the demand notice is required to bring to the notice of the Operational Creditor, the existence of disputes or record of pendency of the suit or arbitration proceedings before the receipt of the notice or produce the document to show that the payment of non-operational debt has been made - In view of that provision of law, when we shall consider the case in hand then we find, admittedly, in the case in hand, the Corporate Debtor has raised the dispute prior to the receipt of the demand notice and the facts which the Corporate Debtor has raised some of the facts has also been admitted by the Operational Creditor that is the agreement is not properly signed by the parties and both the parties are placing reliance on the different draft agreement, which in our considered view can only be decided by the Court of a competent jurisdiction having jurisdiction to decide the issue. Since there is a pre-existing dispute between the parties, therefore, we have no option but to reject the prayer of the Operational Creditor to initiate proceedings under Section 9 of IBC, 2016 - application dismissed.

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• 2020 (10) TMI 486
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Dishonor of Cheque - pre-existing dispute or not - time limitation - HELD THAT:- As per the record, the said cheque got dishonoured / remained un-cleared due to insufficient funds and for exceeds arrangements. The Petitioner has enclosed a copy of the dishonoured cheque. The fact of this cheque as issued by the Corporate Debtor has not been disputed or denied by the Corporate Debtor but it only made attempt to explain that the Petitioner falsely represented to the Respondent that the final bill amount was going to be released by the concerned government department (P.W.D. Khandwa) and such amount would get credited soon in the Respondent s account. Therefore, on such expectation, Petitioner managed to obtain a cheque of Rs. 17,90,000/-from the Respondent/ Corporate Debtor, the same was issued by considering long and healthy professional relationship with the Petitioner. The Corporate Debtor further made an attempt to explain that such cheque got dishonoured due to such false claim made by the Petitioner. However, it is evident that no such contention was ever made or such plea is taken by the Respondent, prior to issue of Demand Notice. It is a matter of record that the said cheque was properly presented before the Bank but it got dishonoured by the Bank due to insufficient funds/ exceeds arrangement and not for any other reason. Thus, such alleged act on the part of the respondents attracts penal provision of the Section 138 of the Negotiable Instruments Act. Hence, such contention of Corporate Debtor is without proof and substance. Hence, it is not acceptable being an afterthought plea. Time Limitation - HELD THAT:- It is a matter of record that the Petitioner duly performed his part of contract /agreement and was getting regular payments time to time from the Corporate Debtor. So, this may be the position in respect of present cheque also, which got dishonoured by the Bank for want of sufficient funds. That shows that the Corporate Debtor has admitted its debt liability to the extent of amount mentioned in the cheque, i.e. Rs. 17,90,000/- and which undisputedly is above rupees one Lakh to make eligible the Petitioner to trigger the Corporate Insolvency Resolution Process in respect of the Corporate Debtor. As the above stated cheque was issued on 29.08.2017 and presented before the concerned branch of the Bank on 15.11.2017, while the present petition is found to be filed on 09.02.2018, hence, it is filed well within the limitation. In the present matter that the Respondent himself has admitted in its reply that the above stated cheque was issued on the request of the Applicant for settling of amount of contract and in order to maintain good relationship with the Petitioner. This means that the Corporate Debtor has admitted its liability for making payment of debt towards settlement of its contract has it voluntarily and bonafiedly issued such cheque in the favour of the Petitioner. The Respondent did not produce in writing any protest letter issued immediately thereafter as an attempt to stop the payment. Therefore, such plea taken by the Respondent appears to be an afterthought plea and devoid of merits. Hence, the default is well established. The present I.B. Petition is found complete to initiate CIRP in respect of the Corporate Debtor. Therefore, the present I.B. Petition deserves admission - Petition admitted - moratorium declared.

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• 2020 (10) TMI 485
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The case of Petitioner in the Affidavit is that as per MoU entered with Corporate Debtor, the flats sold to the Operational Creditor should be completed and to be delivered to the Operational creditor within 6 months. However, the Corporate Debtor failed to complete the construction of the four flats and failed to deliver the same to the Operational Creditor. So, the contention of the Operational Creditor is that it is ready to give up the flats and also for cancellation of sale deeds and wanted the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Already Civil Suit was filed for specific performance to complete the construction of the flats and delivery of the same and the said civil suit is pending. It is undisputed fact that the amount due by the Corporate Debtor to the Operational Creditor was settled by entering into MoU and by executing four registered sale deeds in respect of four flats. Thus, parties entered into settlement with regard to the amount payable in respect of supply of TMT bars covered by the invoices. Even otherwise, the stand taken by the Corporate Debtor that in respect of the first six invoices shown in the table supra the amount was paid and remaining four invoices was subject matter of MoU. Thus, the contention of the Corporate Debtor that there is no operational debt due to the Petitioner by the Corporate Debtor. Some settlement took place between parties and disputes arose over settlement and civil suit was also filed against the Corporate Debtor and it is pending. Prior to filing of the present petition already Operational Creditor approached civil court. Secondly, Operational creditor earlier filed CP (IB) No. 124/9/HDB/2017 under Section 9 of IBC against Corporate Debtor and the same was withdrawn. Thirdly, the invoices referred are of the year 2013 whereas the present petition is filed in the year 2019. The limitation to proceed against invoices is three years from the date of raising of invoices. The invoices are barred by limitation by the date when the present petition is filed under Section 9. Article 137 of the Limitation Act is applicable to the present facts of the case - the petition filed under Section 9 of IBC is liable to be rejected on the ground that there was prior dispute and further the invoices are barred by limitation. Petition dismissed.

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• 2020 (10) TMI 484
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- Corporate Debtor has drawn the attention of this Tribunal to the Notices of Dispute dated 01.08.2018 and 17.09.2018 sent by the Corporate Debtor to the Section 8 Notices issued by the Operational Creditor wherein a reference has been made with regard to the return of the materials worth Rs. 17,12,649/- by the Corporate Debtor vide Tax Inv. No. RM-RTN-001 dated 06.02.2017, owing to the quality issue and expiry of shelf life and the same were duly received and acknowledged by the Operational Creditor. It is further submitted that vide notice of dispute dated 01.08.2018, the Corporate Debtor had categorically put the Operational Creditor on notice of several disputes such as the returned goods, Debit Notes not accounted for, payments not given credit to and among others. It is worthwhile to refer to the provisions of the I B Code, 2016 more particularly to Section 9(5)(ii)(d) of the I B Code, 2016 which provides that if notice of dispute has been received by the Operational Creditor or there is a record of dispute in Information Utility, this Authority is required to reject the Application and thereby communicating the dismissal to both the Operational Creditor as well the Corporate Debtor. There exists a dispute between the parties before the issuance of the Demand Notice itself and the contentions raised by Corporate Debtor is a plausible contention which requires further investigation - since this Adjudicating Authority is having summary jurisdiction and while admitting or rejecting the Applications filed under Sections 7 and 9 of the I B Code, 2016 if precise documents substantiating the claim not being filed in order to substantiate that the debt has become due and payable by the Corporate Debtor, this Authority would certainly not be able to ascertain the default on the part of the Corporate Debtor. Application dismissed.

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• 2020 (10) TMI 483
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- This is a matter where the Operational Creditor has chosen to move this Adjudicating Authority after accepting the Letter of Intent for Allotment of the two plots of land. It is the case of the Operational Creditor that it does not know when it is likely to take possession of the said plots in view of the orders of the Hon ble Supreme Court. That by itself cannot be a reason to move this Adjudicating Authority. Moreover, the orders of the Hon ble Supreme Court make it clear that there cannot be any alienation of movable or immovable property in the light of the order dated 21.11.2013 passed by the Hon ble Supreme Court. Petition rejected.

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• 2020 (10) TMI 482
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - HELD THAT:- Section 14(2) of Law of Limitation saves period of limitation, if any application of civil nature is being filed in wrong Court with bona fide assumption that the Court having jurisdiction. In the present case, Operational Creditor immediately upon the debt become due and payable, had filed winding up proceeding before Hon ble High Court. It was a proper forum but having no territorial jurisdiction. Later on, Hon ble Karnataka High Court dismissed the Petition granting liberty to the Operational Creditor to file such Petition before Court/Forum. Thus, as soon as Operational Creditor filed a proceeding of recovery of operational debt against the Corporate Debtor before the then available Forum, the time stop running against the Operational Creditor for purpose of filing the proceeding relating to that debt for computing period of limitation. The proceeding of winding up filed against the Corporate Debtor is still pending. It was filed within period of limitation. In view of above facts, this application is not barred by limitation. In this case, it is not in dispute that the Corporate Debtor has committed default in paying the operational debt. Before filing this application, the Operational Creditor has served notice under Section 8 IBC to the Corporate Debtor. Operational Creditor has filed on record affidavit complying provisions of Section 9(3)(b) and 9(3)(c) of IBC - application admitted - moratorium declared.

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• 2020 (10) TMI 481
  Validity of unilateral action of appropriation of receivables of the Corporate Debtor deposited in the cash credit account and the working capital account of the Corporate Debtor - Section 14 read with Section 17 and Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The 4th respondent, the State Bank of India in its reply states that they have recalled the loan accounts on 21.03.2017 much before the initiation of the Corporate Insolvency Resolution Process. The State Bank of India further states that the Corporate Debtor does not maintain any current account with this respondent. However, the Corporate Debtor availed various credit facilities which include cash credit from Overseas Vishakhapatnam Branch of State Bank of India In view of the fact that the erstwhile Resolution Professional himself remitted the amounts towards the credit of the cash credit account, this respondent has not violated/contravened provisions of Section 14 and Section 17(1) (d) of the Insolvency and Bankruptcy Code, 2016. In respect to the claim of Rs. 20.52 crores as on 13.07.2017 which included fund based outstanding of Rs. 1.46 crore and non-fund-based outstanding of Rs. 19.06 crore. The fund-based facilities have been paid off by the company management i.e. the erstwhile Resolution Professional. Hence, it is incorrect to states that the respondent has appropriated the fund towards the loan account during the Corporate Insolvency Resolution Process. Since, it was a unilateral act of the erstwhile Resolution Professional who has paid during the moratorium period. So, this respondent categorically states that they have not violated the provisions of Section 14 and 17 of the Insolvency and Bankruptcy Code, 2016. However, the erstwhile Resolution Professional has inadvertently paid the loan amount. During the moratorium period various payments towards non-fund and fund-based accounts of the respondents were credited by the erstwhile Resolution Professional. Hence, these payments ought to be reversed as receivables of the Corporate Debtor. The meeting to sort out the issue between them have failed. All banks are directed to reverse the due amounts - application allowed.

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• 2020 (10) TMI 480
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - dispute not raised within required time period after receipt of demand notice - HELD THAT:- Corporate-debtor after the receipt of the demand notice is required to raise the dispute within ten days from the receipt of demand notice or show the documents that the payment of the unpaid operational-debt has already been made. And if the corporate-debtor fails to raise the existence of disputes and documents showing the payment of operational-debt then the operational-creditor has right to file an application under Section 9 of the Insolvency and Bankruptcy, Code, 2016. In this case no reply to the demand notice was sent by the corporate-debtor. Therefore, corporate-debtor has failed to raise any existence of disputes and show that the operational-debt raised by the operational-creditor has already been paid. So under such circumstances, there are no option, but to pass the order under Section 9(5) (i) if the application is complete and from the perusal of the application, we find that the application is complete and there is no payment of unpaid operational-debt and no notice of dispute has been raised by the operational-creditor or there is no record of dispute in the information utility and the operational-creditor has also proposed the name of the IRP against whom there is no disciplinary proceedings pending and the defaulted amount is more than one lac. So, considering these facts, we have no option to admit the application. Application admitted - moratorium declared.

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• Service Tax

• 2020 (10) TMI 479
  Levy of service tax - Banking and other financial services - third party payments for exports effected by M/s AKR Textiles to buyer outside India - negative list regime - POPOS rules - applicability of 29/2004-ST dated 22nd September 2004 - HELD THAT:- It has been pointed out that the levy of tax on charges deducted by overseas banks, in identical situation, has been held by the Tribunal, in Rogini Garments and ors v. Commissioner of Customs, Central Excise Service Tax, Coimbatore [final order no. 41819-41832/2017 dated 29th August 2017], to be unsustainable in law - the issue is no longer res integra and that demand pertaining to other financial services has been erroneously confirmed in the orders impugned. On the amounts retained by M/s Amsco Finance Ltd, which is sought to be taxed under cash management within section 65(12) of Finance Act, 1994, the definition comes into play for services rendered by banking company or a financial institution including a non-banking financial company or any other body corporate or commercial concern and the question that requires resolution is the nature of activity intended by cash management which has been invoked in the show cause notice for the period prior to 1st July 2012. Admittedly, the omission by specific exclusion of such activity, effected on 1st June 2007, is the sole description that could be fastened on the appellants for taxability as deemed provider of service. From the clarification in circular no. 96/7/2007-ST dated 23rd August 2007 of Central Board of Excise Customs, issued soon after the legislative change, it would appear that the intent was limited to chit funds thus negating the recourse to section 65(105)(zm) as taxable service for which appellants were liable till 30th June 2012. On the other hand, this may have the scope of inclusion within the taxable service as bill discounting for which exemption is afforded by notification no. 29/2004-ST dated 22nd September 2004 when provided to customers. As a customer of the provider of the service is not, under the notification, required to be an account holder, the benefit of such exemption is not deniable to the appellants. Thus, while consideration is passed from appellants to the overseas entity, it is the overseas customer who is, contractually, bound to repatriate value of exports to the appellant and, instead of doing so, authorises M/s Amsco Finance Ltd as delegate to effect that responsibility. It is not the contractual responsibility of the appellants to collect the dues and, therefore, by no stretch can it be held that the mediation of M/s Amsco Finance Ltd is a substitution for the task that would, otherwise, fall to the appellants. If at all, the Hong Kong entity is an intermediary within the meaning assigned in Place of Provision of Service Rules, 2012 to render the service, it has been performed in Hong Kong and, thus, not in the taxable territory. The demand for the period after 1st July 2012 also fails - the liability for allegedly having received services provided by M/s Amsco Finance Ltd also does not sustain. Appeal allowed - decided in favor of appellant.

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• 2020 (10) TMI 478
  Refund of CENVAT Credit - input services - Club or Association membership service - Design Service - Sponsorship Service - denial on account of Nexus. Sponsorship Services - HELD THAT:- It is clear that the Adjudicating Authority granted relief to the appellants qua sponsorship service proportionately and the same was neither challenged by the Appellant nor by the Revenue before the Commissioner, but the learned commissioner still chooses to give findings on the said service also that too in the Appeal filed by the Appellant. Therefore in view of the decision of a co-ordinate Bench of the Tribunal in the matter of COMMISSIONER OF C. EX., BANGALORE VERSUS MAVENIR SYSTEMS PVT. LTD. [ 2012 (11) TMI 868 - CESTAT, BANGALORE] , the findings recorded by the learned Commissioner on the said service is beyond his jurisdiction and hence liable to be ignored. Learned Commissioner could not have passed any further order beyond the scope and ambit of the appeal before it and by doing so in this case, it has exceeded its jurisdiction and exercised the power which is not vested in it. Club or Association membership service - periods i.e. January to March, 2016 and April to June, 2016 - HELD THAT:- Documentary evidence has been submitted by the Appellant before the authorities below to establish the plea that service tax has been paid with regard to membership of ASSOCHAM, National Highway Builders Federation, the Taj Mahal Hotel and Federation of Indian Exports Organisation - In the instant matter the appellant is engaged in the business of Erection, Installation or Commissioner service for the aforesaid purpose in today s scenario everybody wants latest, fast and more economical technology and therefore the membership of such kind of Federation etc. are essential for getting day to day information about the latest trends etc. in the concerned Industry as now a days technologies are changing very fast. It is not the case of Revenue that the membership has been taken in the name of any particular employee. The absence of these services will have an impact on the quality and efficiency of output service and therefore will be eligible as input service - refund allowed. Membership of Taj Mahal Hotel - HELD THAT:- Since the members gets priority in the respective hotels where they are members therefore membership of hotels also becoming essential day by day as the members can get conference halls, cabins etc. in a short notice for conducting business meetings with foreign delegates etc. and the same is the case of the appellants also. Therefore it has also nexus with the output service. Similarly Diaries/calendars etc. are also essential part of business promotion therefore designing them can very well be said to have nexus with the output service. Appeal allowed - decided in favor of appellant.

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• 2020 (10) TMI 477
  Accrual of Service Tax liability - mobilization advance paid to the appellant - payment to be made on which stage? - on receipt or on issue of the bill? - HELD THAT:- The several contracts provide for the payment to be made at different, pre-determined stages of performance and are, generally, subject to evaluation of the work undertaken. It is also seen that such appraisal, as a prelude to making payments, is not undertaken until after the execution of the work in relation to the taxable service has commenced and that all the contracts, while linking such measurable stages, provide for payment of only 90% of contracted amount for the entirety of the work. The mobilization advance is adjusted against the final payment due and is not linked to the work but as a pledge of the contract between the appellant and principal. It is also subject to furnishing of prescribed bank guarantee ; there is no connection with the performance of the contract. It is not in dispute that the mobilization advance , carrying interest, is granted to enable the contractor to prepare for undertaking the contracted work. The subsequent adjustment with the final payment due does not suffice to construe this as an advance payment for the work to be done merely because the recipient and payee happened to be the provider of service. The payment of mobilization advance is but a separate financial transaction within the contract for providing of service and, within the limits laid down by the Hon ble Supreme Court in re Intercontinental Consultants and Technocrats Ltd, [ 2018 (3) TMI 357 - SUPREME COURT ] is not permitted to be included in the gross amount envisaged in section 67 of Finance Act, 1994. In view of absence of allegation that any part of the contracted value has not been levied to tax, the demand is not consistent with law and deserves to be set-aside - Appeal allowed - decided in favor of appellant.

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• 2020 (10) TMI 476
  Valuation - event management service - non-inclusion of payments pertaining to events organized by them for clients, in the gross amount - period between April 2008 and March 2011 - HELD THAT:- The implication is that the contracts entered into with the recipients of event management service by the appellant would determine the extent to which the two parties have visualized the proper rendering of the service and anything beyond those would be rendering of a different service that may or may not be taxable - Furthermore, in terms of the decision of the Hon ble Supreme Court in INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. ANR. [ 2012 (12) TMI 150 - DELHI HIGH COURT] , the reimbursable expenses that can be established as having been incurred for convenience, in accordance with an agreement between the two parties, to be passed on by the appellant without retention of any portion thereof is not amenable to inclusion in the gross amount envisaged in section 67 of Finance Act, 1994. Despite this defence having been placed before the lower authorities, the contentions thereof were not ascertained in the context of the contract and pass through of the payments. Neither before those authorities not before us has the appellant furnished the necessary evidence. This lapse on both sides is required to be resolved before appellate intervention is purposeful - it would be appropriate to set aside the impugned order and remand the matter back to the original authority to dispose of the proposals in the show cause notice - Appeal allowed by way of remand.

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• 2020 (10) TMI 475
  Levy of service tax - works contract service or erection, commissioning and installation service - rescinded notification no. 34/2012-ST dated 20th June 2012 - HELD THAT:- The reviewing authority is not aggrieved by the rejection of the proposal in show cause notice to subject the receipts of the respondents to tax as provider of works contract service instead of erection, commission and installation service and the appeal is limited to the inapplicability of notification no. 32/2010-ST dated 22nd June 2010 that has been relied upon by the adjudicating authority. The grounds preferred in the present appeals are also limited to the eligibility of the respondents to avail the benefit of a notification intended for exempting services rendered by distributors of electricity. The appeal has not disputed eligibility under the other notification, exempting services in relation to transmission of electricity which extinguishes tax liability for the period prior to 30th June 2012. The impugned order has confirmed the liability for the period thereafter and found that the noticees therein had paid in excess of such amounts while making their declarations under the scheme - Appeal dismissed - decided against revenue.

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• 2020 (10) TMI 474
  Non-payment of Service tax - Commercial Industrial Construction service - period 1/4/2007 to 31/3/2012 - suppression of facts or not - Extended period of Limitation - HELD THAT:- The appellant provided construction service in all the cases with material. The perusal of work order/agreements show that all the construction services in dispute is with material. Therefore, the counsel for the appellant correctly submitted that the services fall under Works Contract Service and not under Commercial or Industrial Construction Service . The construction of common Amenities building for Kishangarh Hi-Tech Textile Park was constructed for providing training and welfare facilities to the worker employed. KHTPL is not a commercial entity but a body created by Ministry of Textile for providing common infrastructure to textile industries. There is force in appellant s submission that the construction service done by the appellant is with material and it had paid VAT on works contract as per Rajasthan VAT Act. Therefore it would fall under works contract service . The service provided by the appellant falls under Works Contract Service but the department has classified the service under Commercial or Industrial Construction Service and not under Work Contract Service. Appeal allowed - decided in favor of appellant.

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• 2020 (10) TMI 473
  Classification of services - Infrastructural Support Service or not - up linking services - hiring of transponder capacity by the appellant in the satellite of M/s. B.T. Singapore Pte. Ltd. - Reverse charge mechanism - extended period of limitation - HELD THAT:- In the case of M/S. SRINIVASA TRANSPORTS VERSUS CCE. ST., VISAKHAPATNAM-I [ 2014 (6) TMI 205 - CESTAT BANGALORE ], it was held that supply of tractor trailers along with trained drivers to undertake transportation of containers within terminal cannot be considered to be service provided under business support service and the demand raised under the said category was unsustainable - the appellant cannot be held to have received the services of infrastructural support service and no tax liability would rest upon them. Time limitation - HELD THAT:- The demand is also barred by limitation. The issue involved is a complex issue involving interpretation of law and in the absence of any evidence to reflect mala fide on the part of the appellant, extended period would not be available to the Revenue. As such, demand along with penalty is set aside on limitation also. The appeal is allowed on merits and also on limitation.

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• Central Excise

• 2020 (10) TMI 472
  Maintainability of appeal - requirement of pre-deposit - section 35F of CEA - this is a second round of litigation - appellant had earlier complied with the requisite pre-deposit - HELD THAT:- Hon ble High Court of Delhi in the case of SUPER TYRES PVT. LTD. VERSUS UNION OF INDIA [ 2005 (1) TMI 119 - HIGH COURT OF DELHI ], have held that once the appellant assessee has made compliance of the provisions of section 35F of the Central Excise Act, 1944, it would be appropriate for the authorities concerned to hear the appeal without pre-deposit condition as the appellant had already complied with the provisions of section 35F and that should be the adequate amount of compliance with the provisions of section 35F. It would be appropriate to remand the matter to the lower appellate authority to decide the appeal on merits without insisting on any further pre-deposit - Appeal allowed by way of remand.

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• 2020 (10) TMI 471
  Refund of excess paid excise duty - finalization of provisional assessment - Department had credited the same to the Consumer Welfare Fund, created under Section 11D of the Central Excise Act, 1944 - amount credited to the Consumer Welfare Fund on the ground that the incidence of excess duty has been passed on to the dealers of the excisable goods - Principles of Natural Justice - HELD THAT:- The amount in question, for which the refund claim was filed by the appellant was all along been reflected as claims receivable from the government authorities . The said entry made in the balance sheet for the period 31.03.2009 was all along reflected in the balance sheet prepared as on 31.03.2019. It is an admitted fact on record that the excess paid central excise duty by the appellant during the provisional assessment of the excisable goods were not reflected as part of expenditure in the profit and loss account prepared for the relevant period. Thus, in absence of reflection of such amount as an element of expenditure in the profit and loss account, the profitability of the company has not suffered. Further, reflection of the refund amount in the balance sheet under the head of loans and advances , clearly depicts that the incidence of excess paid duty amount has all along been borne by the appellant. Therefore, it cannot be said that the element of excess paid central excise duty had been transferred to the dealers and for that purpose, the appellant should not be entitled for the benefit of refund and the amount in question should be transferred to the Consumer Welfare Fund. Appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2020 (10) TMI 470
  Grant of Bail - Dishonor of Cheque - cheque is alleged to have bounced in the year 2015 and no efforts were made by the informant to file complaint. After three of years, FIR has been lodged on the basis of false allegation against the applicant - HELD THAT:- Larger mandate of the Article 21 of the Constitution of India and the dictum of Apex Court in the case of DATARAM SINGH VERSUS STATE OF UTTAR PRADESH AND ANR. [ 2018 (2) TMI 410 - SUPREME COURT ] and without expressing any opinion on the merits of the case, let the applicant involved in the aforesaid crime be released on bail on his furnishing a personal bond and two sureties each in the like amount to the satisfaction of the court concerned with the conditions imposed - application allowed.

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• 2020 (10) TMI 469
  Dishonor of Cheque - insufficiency of funds - offences under Section 138 r/w 142 Negotiable Instrument Act - petitioner also filed application for declaring him insolvent - HELD THAT:- The petitioner is an accused in the complaint lodged by the respondent under Section 138 of NI Act. The respondent lodged complaint alleging that the respondent is a manufacturer of crackers and supplying the same to the wholesalers and retailers. The petitioner is being retailer of cracker, purchased the crackers on various dated from the year 2017, thereby the petitioner is liable to pay a sum of Rs. 1,86,00,000/- to the respondent herein. Hence, the petitioner had entered into an agreement on 24.04.2018 and he agreed to pay the due amount. In order to pay the part of the above amount, the petitioner issued cheque for a sum of Rs. 15,00,000/-. The said cheque was present for collection and the same was returned dishonour for the reason that Funds insufficient . It was duly informed to the petitioner herein and after his instruction, the cheque was once again presented for collection. Again it was returned dishonour for the reason that Drawer s signature differ . Therefore after issuing statutory notice, respondent initiated the present proceedings for the offences punishable under Section 138 of NI Act as against the petitioner. Though the petitioner filed petition to declare him as insolvent in I.P.No.5 of 2018, it is no way bared for the respondent to proceed with the complaint for the offences under Section 138 of NI Act. Further, the learned counsel appearing for the petitioner would submit that the alleged cheques were obtained from the petitioner under threat and coercion. However, there is no iota that the cheques were obtained under threat and coercion and also there is no complaint lodged by the petitioner before the police officials regarding the said coercion. Therefore, the present petition is devoid of merits and liable to be dismissed. Petition dismissed.

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