TMI Tax Updates - e-Newsletter
October 14, 2022

Case Laws in this Newsletter:

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

Articles

1. INSPECTION OF GOODS IN MOVEMENT UNDER GST LAW (PART 2)

   By: Dr. Sanjiv Agarwal

2. International Taxation

   By: Atul Sharma

News

1. PM GatiShakti National Master Plan has the potential to save over Rs. 10 Lakh Crore annually by improving logistics efficiency: Shri Piyush Goyal

Notifications

DGFT

1. 38/2015-2020 - dated 12-10-2022 - FTP

Export quota of only broken rice (HS code 1006 40 00) for the year 2022-23

GST - States

2. 17/2022-State Tax (Rate) - dated 12-10-2022 - Delhi SGST

Amendment in Notification No. 13/2020 – State Tax, dated the 31st March, 2021

3. 11/2022-State Tax (Rate) - dated 12-10-2022 - Delhi SGST

Seeks to rescinds Notification No. 45/2017-State Tax (Rate), dated the 28th November, 2017

4. 08/2022-State Tax (Rate) - dated 12-10-2022 - Delhi SGST

Amendment in Notification No. 3/2017-State Tax (Rate), dated the 30th June, 2017

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/DDHS-RACPOD2/P/CIR/2022/140 - dated 13-10-2022

Suspension, Cancellation or Surrender of Certificate of Registration of a Credit Rating Agency

2. SEBI/HO/MRD/MRD-RAC-2/P/CIR/2022/141 - dated 13-10-2022

Governing Council for Social Stock Exchange (“SSE”)

GST - States

3. 180/12/HGST/2022/GST-II - dated 22-9-2022

Guidelines for filing/revising TRAN-1/TRAN-2 in terms of order dated 22.07.2022 & 02.09.2022 of Hon’ble Supreme Court in the case of Union of India vs. Filco Trade Centre Pvt. Ltd.

DGFT

4. 30/2015-20 - dated 12-10-2022

Amendment in Standard Input Output Norms (SION) of ‘Chemical & Allied Product’ (Product Code ‘A’): Suspension of SIONs A254, A257, A282, A1939, A1973, A2061, A2331, A2539, A2818, A3056 and A3486

Highlights / Catch Notes

GST

• Authority Confirms Profiteering of Rs. 6.89 Crore in Flat Purchase; Orders Refund with Interest, No Penalty Imposed.

  Case-Laws - NAPA : Profiteering - purchase of Flat - The Authority finds no reason to differ from the detailed computation of profiteered amount by the DGAP or the methodology adopted by it. The Authority determines that the Respondent has profiteered an amount of Rs. 6,89,62,698/- - Amount directed to be returned - Interest levied but no penalty - NAPA
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Income Tax

• Court Rules Section 50C Inapplicable to Buyers; Section 56(2)(x) Doesn't Apply to LLPs Before 2018-19 Assessment Year.

  Case-Laws - AT : Addition u/s 56(2)(vii) - relevant Section 50C cannot be invoked as the said section is applicable in the case of seller of the property only while the appellant is a buyer. Section 56(2)(vii)(a) and Section 56(2)(vii)(b) of the Act are also not applicable in case of partnership firm or LLP and the assessee is a LLP. - Section 56(2)(x) which may be applicable in case of partnership firm or LLP was introduced with effect from A.Y. 2018-19 while the present case is with regard to A.Y. 2015-16. - AT
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• CIT's Section 263 Revision Valid for Errors in Fact or Law, Not All AO Revenue Losses Qualify.

  Case-Laws - AT : Revision u/s 263 by CIT - An incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase 'prejudicial to the interest of the Revenue has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue - AT
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• India-UK DTAA Article 13(3): Royalty Income Defined by Copyrights, Industrial, Commercial, or Scientific Experience Payments.

  Case-Laws - AT : Income deemed to accrue or arise in India - Royalty Income - conducting research activities - Article 13(3)of India-UK DTAA shows that the transaction shall fall under the ambit of Royalty only when payments are received from a buyer to exploit the underlying copyrights of an article or payment is made for information concerning industrial, commercial or scientific experience.- AT
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• Tax Authorities Should Focus on Benefit Admissibility, Not Procedural Delays, in Auditor's Reports u/s 12A.

  Case-Laws - AT : Exemption u/s. 11 - delay in furnishing of auditor's report as required u/s. 12A - Admittedly, assessment was not completed u/s. 143(3) of the Act and, therefore, there would have been no error had the authorities below had taken up the copy of Form 10B, which was available with the Department. Thus, in our considered opinion, if the assessee was entitled to the statutory benefit, it would be incumbent upon the concerned authority to examine the admissibility of the benefit than to foreclose the assessee on technicalities. - AT
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Customs

• Exporter Denied MEIS Benefits Due to Procedural Lapse Despite Eligibility; Legal Review Suggests Benefits Should Be Granted.

  Case-Laws - HC : Rejection of request for benefit of merchandise under Merchandise Exports India Scheme (MEIS) - In this case, there is only a procedural lapse. If the petitioner was otherwise entitled to the aforesaid exporter incentive and was not disentitled to the same, such benefit cannot be denied - HC
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• HDPE woven fabric in roll form classified under Tariff Heading 3926, not 3923 10, based on current form.

  Case-Laws - AAR : Classification of goods - HDPE woven fabric - to be classified under Tariff Heading 3926 or 3923? - since the fabric is in roll form, even though it can be used to make bags or sacks, following the settled principle of law, the classification of the article should be based on the form it is presented in, and therefore, cannot be classified under Heading 3923 10. - AAR
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Indian Laws

• Cheque Dishonor Case: Part-Payments Nullify Enforceability of Debt; No Liability u/s 138 for Insufficient Funds.

  Case-Laws - SC : Dishonor of Cheque - enforceable debt at the time of encashment - The first respondent has made part-payments after the debt was incurred and before the cheque was encashed upon maturity. The sum of rupees twenty lakhs represented on the cheque was not the ‘legally enforceable debt’ on the date of maturity. Thus, the first respondent cannot be deemed to have committed an offence under Section 138 of the Act when the cheque was dishonoured for insufficient funds. - SC
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IBC

• Adjudicating Authority mistakenly rejects Financial Creditor's Section 7 application despite Corporate Debtor's lack of response or dispute.

  Case-Laws - AT : Initiation of CIRP - Corporate Debtor although once appeared before the Adjudicating Authority but neither filed any reply nor appeared thereafter and Adjudicating Authority proceeded ex-parte against the Corporate Debtor. - In this appeal also despite service of notice, Corporate Debtor did not appear. There is not even dispute to allegations and case set up by the Financial Creditor against the Corporate Debtor. - The Adjudicating Authority committed error in rejecting Section 7 application - AT
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• Notify Judges Immediately to Correct Court Judgment Errors; Delays Mean No Further Recourse.

  Case-Laws - AT : If a party thinks that the happenings in court have been wrongly recorded in a judgment, it is incumbent upon the party, while the matter is still fresh in the minds of the judges, to call attention of the very judges who have made the record to the fact that the statement made with regard to his conduct was a statement that had been made in error. That is the only way to have the record corrected. If no such step is taken, the matter must necessarily end there. - AT
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Service Tax

• Court Allows Appeal on Service Tax Dispute Involving Mutuality and Risk Pooling by P & I Clubs.

  Case-Laws - HC : Non-payment of service tax - principles of mutuality - pooling of risks - insurance services provided by Protection and Indemnity Clubs (P & I clubs) - it would be preempting the issue, and stepping into the shoes of the officer, for this Court to embark upon the exercise of assessment - The petitioner is permitted to approach the appellate authority, and appeals, if filed within three weeks from today, will be taken on file without reference to limitation - HC
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• Appellant Granted Service Tax Refund for Mistaken Deposit on Housing Construction Project; Evidence Verified via Form 26AS and Bills.

  Case-Laws - AT : Refund of service tax - amount have been deposited by mistake - Form 26AS, VAT-41, copies of challans and copies of running bills prepared by the Housing Board showing deduction of service tax out of amount paid to the appellant. Further, the total tax deposited by the appellant and also deducted by the Housing Board is far more and more than the refund claim and that the appellant had claimed refund only in respect of tax deposited on construction of individual houses and corresponding tax deducted by the Housing Board on such construction - refund allowed - AT
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Central Excise

• Appellant Entitled to 15% Interest on Rs. 15.5 Lakhs Redemption Fine Refund u/s 11B of Central Excise Act.

  Case-Laws - AT : Claim of interest on the refund amount of redemption fine - section 11B of Central Excise Act - It is clear that since the order of confiscation of goods has already been set aside the amount of redemption fine as was deposited by the appellant was an amount of revenue deposit with the department - the appellant to be entitled for the interest on the refunded amount of Rs.15.5 Lakhs (the redemption fine) to be paid from the date of its deposit at the rate of 15% per annum. - AT
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• No VAT Exemption for 100% Export Oriented Unit; Central Excise Duty Not Required on SAD for Cleared Goods.

  Case-Laws - AT : 100% EOU - Levy of SAD equivalent of VAT - Undisputedly, there was no exemption from VAT in this case. The mere fact that the payment of VAT does not happen concomitantly with the clearance of the goods does not mean that the VAT is exempted. - The appellant is not liable to pay Central Excise duty reckoning the SAD payable on goods cleared by the appellant if they were imported into India - AT
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Case Laws:

• GST

• 2022 (10) TMI 462
  Constitutional Validity of Section 16(2) (c) of the CGST Act/WBGST Act - denial of input tax credit, where the purchasers are proved to be collusive and in the nature of sham transaction - HELD THAT:- The only reason for declining the input tax credit was on the ground that the selling dealers registration was cancelled with retrospective effect. Be that as it may, the larger relief sought for by the respondents/writ petitioners mainly writ of declaration has not been granted by the learned Single Judge. The respondents/writ petitioners are not on appeal as against the said finding. The directions issued by the learned Single Judge were not only in the interest of the respondents/writ petitioners, but also would safeguard the interest of the revenue - matter has been sent back to the appellant authority to enable verification of documents, correspondences exchanged between the Department and the writ petitioner which have been referred to as memos, it is found that the actual adjudication of the dispute has not taken place which is required to be done before an order is passed either accepting or denying the input tax credit. Appeal dismissed with a direction to the respondents/writ petitioners to submit one more set of documents which they seek to rely upon to the concerned appellant authority within a period of two weeks from the date of receipt of the server copy of this order and on receipt of these documents.

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• 2022 (10) TMI 461
  Profiteering - purchase of Flat - it is alleged that the benefit of ITC had not been passed on to the Applicant No. 1 by way of commensurate reduction in price - contravention of section 171 of CGST Act - interest - penalty u/s 171 (3A) of the CGST Act, 2017 - HELD THAT:- The Authority finds that it is clear from a plain reading of Section 171 (1) that it deals with two situations :- One relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP s Report that there has been no reduction in the rate of tax in the post GST period. Whether there was any net benefit of ITC with the introduction of GST? - HELD THAT:- On this issue it has been revealed from the DGAP s Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 3.02% and during the post-GST period (July-2017 to December-2018), it was 6.66% for the project Godrej 24 . This confirms that, post-GST, the Respondent has been benefited from additional ITC to the tune of 3.64% [6.66% (-) 3.02%] of his turnover for the said project and the same was required to be passed on to the customers/flat buyers/recipients. The DGAP has calculated the amount of ITC benefit to be passed on to the customers/flat buyers/recipients as Rs. 6,89,62,698/- for the project Godrej 24 , the details of which are mentioned in Table- B above. Further as per Table-C of DGAP, the profiteering amount to be passed on to the Applicant No. 1 is nil as no post-GST billing during the investigation period was made to Applicant No. 1. The Authority finds no reason to differ from the above detailed computation of profiteered amount by the DGAP or the methodology adopted by it. The Authority determines that the Respondent has profiteered an amount of Rs. 6,89,62,698/-(Rupees Six Crore Eighty-nine Lacs Sixty-two Thousand Six Hundred Ninety-eight only) during the period under present investigation i.e. 1.07.2017 to 31.12.2018, in the present Project - the Authority under Rule 133 (3)(a) of the CGST Rules orders that the Respondent shall reduce the price to be realized from the customers/flat buyers/recipients in the Project Godrej 24 commensurate with the benefit of additional ITC received by him. Interest - HELD THAT:- The Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 6,89,62,698/- for the project Godrej 24 . Hence the Respondent is directed to also pass on interest @18% to the customers/ flat buyers/ recipients on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per the provisions of Rule 133 (3) (b) of the CGST Rules, 2017. Penalty - HELD THAT:- The Respondent has committed an offence by violating the provisions of Section 171 (1) during the period from 01.07.2017 to 31.12.2018, and therefore, he is liable for imposition of penalty under the provisions of Section 171 (3A) of the above Act. However, perusal of the provisions of the said Section 171 (3A) shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 31.12.2018 when the Respondent has committed the above violation and hence the penalty under Section 171 (3A) can not be imposed on the Respondent for such period. Accordingly, notice for imposition of penalty is not required to be issued to the Respondent. Application disposed off.

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• Income Tax

• 2022 (10) TMI 460
  Addition u/s 68 - Unexplained share premium and share capital - bogus share capital or share premium - substantial question of law - HELD THAT:- This Court is in agreement with the factual finding of the appellate authorities below that the identity, credit worthiness and genuineness of the transaction could not be doubted and that it cannot be said that the Assessee company had brought in its own unaccounted funds through these investor companies as bogus share capital or share premium. As Supreme Court in Ram Kumar Aggarwal Anr. vs. Thawar Das (through LRs), [ 1999 (8) TMI 1008 - SUPREME COURT] has reiterated that under Section 100 of the Code of Civil Procedure the jurisdiction of the High Court to interfere with the orders passed by the Courts below is confined to hearing on substantial question of law and interference with finding of fact is not warranted if it involves re-appreciation of evidence. Supreme Court in State of Haryana Ors. vs. Khalsa Motor Limited Ors. [ 1990 (8) TMI 416 - SUPREME COURT] has held that the High Court was not justified in law in reversing, in second appeal, the concurrent finding of the fact recorded by both the Courts below. The Supreme Court in Hero Vinoth (Minor) vs. Seshammal, [ 2006 (5) TMI 478 - SUPREME COURT] has also held that in a case where from a given set of circumstances two inferences of fact are possible, the one drawn by the lower appellate court will not be interfered by the High Court in second appeal. Adopting any other approach is not permissible. It has also been held that there is a difference between a question of law and a substantial question of law . This Court is of the view that no substantial question of law arises for consideration in the present appeal

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• 2022 (10) TMI 459
  Deduction u/s 80IB - disallowance was on account of that assessee has not fulfilled the certain conditions of the project - order of the learned CIT (A), wherein reopening of the assessment proceedings is quashed - HELD THAT:- CIT (A) has not decided the issue on merits of the case. He is merely quashed the reopening of the assessment because the original functional material for the reopening was the assessment order passed by the learned Assessing Officer for A.Y. 2006-07 that has already been decided for 2006-07 in favor of the assessee. Therefore, as the order of the learned Assessing Officer for A.Y. 2006-07 ceased to exist, naturally, reopening made on that basis cannot survive. Therefore, on this ground itself, the appeal of the learned Assessing Officer deserves to be dismissed.

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• 2022 (10) TMI 458
  Reopening of assessment u/s 147 - claim of deduction u/s 10B - reopening of the assessment after a period of 4 years from the end of the relevant A.Y - CIT-A s ustaining the reassessment order of AO who had reopened the assessment undersection 148 - HELD THAT:- We find the order of the CIT (A) is a very skechy and a cryptic one. The order of the learned CIT (A) neither addresses the grounds raised by the assessee challenging the validity of the re-assessment proceedings nor addresses the allowability of claim of deduction under section 10B on account of such false and inaccurate particulars. On a pointed query raised by the Bench, the learned Counsel for the assessee submitted that he has no control over the reasons given by CIT (A) while allowing the deduction especially when the assessee has filed all requisite details before the AO as well as before the CIT (A). We find neither the learned CIT (A) has addressed the various issues raised by the assessee challenging the validity of the re-assessment proceedings nor the CIT (A) has addressed the issues raised by the Assessing Officer while denying the claim of deduction u/s 10B. Considering all we deem it proper to restore the issue to the file of the learned CIT (A) with a direction to adjudicate the issue of validity of re-assessment proceedings as well as the claim of deduction u/s 10B of the I.T. Act by passing a speaking order giving pointwise reasonings on both the issues. The grounds raised by the Revenue as well as the grounds raised by the ass in the cross objection are accordingly allowed for statistical purposes.

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• 2022 (10) TMI 457
  Addition u/s 56(2)(vii) - difference between the purchase price of the property purchased by the assessee firm during the year on the basis of value adopted by the Registrar of Documents for stamp duty purpose over the actual amount paid by the assessee firm for purchase of property - HELD THAT:- AO was taking benefit of any presumption under law that any amount was paid from undisclosed source to the seller by purchaser then certainly that relevant section should have been mentioned in the show cause itself. Then relevant Section 50C cannot be invoked as the said section is applicable in the case of seller of the property only while the appellant is a buyer. Section 56(2)(vii)(a) and Section 56(2)(vii)(b) of the Act are also not applicable in case of partnership firm or LLP and the assessee is a LLP. Section 56(2)(x) which may be applicable in case of partnership firm or LLP was introduced with effect from A.Y. 2018-19 while the present case is with regard to A.Y. 2015-16. Thus, in the absence of any statutory presumption the AO was under obligation to establish by definite evidence that purchaser had made more payment then stated in sale deed. Circumstances of distress sale are on record and there was no attempt of AO to discredit the same. CIT(A) has rightly taken all these aspects into consideration while allowing the relief of deletion and no interference is required.The appeal of revenue is dismissed.

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• 2022 (10) TMI 456
  Exemption u/s 11 - recognition as a charitable institution for granting exemption u/s 10(23C)(vi) denied - HELD THAT:- Every assessment year is a separate unit and the activities of the taxpayer are to be evaluated for each of the assessment year, before granting exemption u/s 10(23C)(vi). These are factual aspects which need verification of facts. The assessee has not even filed before us the audited financial statements for the impugned AY s . CCIT while rejecting application of the assessee for grant of approval u/s 10(23C)(vi) has not exhaustively dealt with all the aspects of the matter in a comprehensive manner. The matter needs to be restored back to ld. CCIT for passing a detailed and exhaustive order by going through various activities carried on by the assessee , and then arriving at decision as to the allowability of claim of the assessee seeking approval u/s 10(23C)(vi). CCIT shall also consider recent decision in the case of PCIT v. Wipro Limited [ 2022 (7) TMI 560 - SUPREME COURT ] as the assessee in the instant case before us is already claiming benefit of exemption u/s 11 and 12 of the 1961 Act for all these years , on strength of registration u/s 12A , and accordingly returns were filed by assessee with Revenue for all those years. It is also claimed by assessee that exemption provisions are to be liberally construed , however we draw attention to case of Commissioner of Customs(Imports) , Mumbai v. Dilip Kumar Co. [ 2018 (7) TMI 1826 - SUPREME COURT ] wherein Hon ble Supreme Court held that exemption provisions are to be strictly construed. We clarify that we have refrained ourselves from commenting on merits of the issue s in this appeal, so that ld. CCIT can decide the issue unhindered by any of our observations. We are setting aside the common order passed by ld. CCIT u/s 10(23C)(vi) holding that the assessee does not qualify to be accorded recognition as a charitable institution for granting exemption u/s 10(23C) (vi) for assessment year s (ay s): 2000-01 to 2003-04 , 2006-07 and 2007-08, for denovo determination of the issue after granting proper and adequate opportunity to the assessee. All the evidences/submissions filed by the assessee in its defense shall be admitted by CCIT , and then adjudicated on merits in accordance with law.

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• 2022 (10) TMI 455
  Capital gain computation - AO observed that the assessee sold immovable property as per the value assessed by the Stamp Value Authority - AO rejected the assessee s contention and added a sum by invoking the provisions of section 50C Addition u/s 68 - Deduction u/s 54F - admitting Additional Evidence denied - applicability u/s.50C of the Act and confirming addition made by the AO though the said amount as per Stamp Duty Value is not received by the Appellant - assessee submitted that the assessee was unable to submitted bills before the AO during the course of assessment proceedings due to paucity of time - HELD THAT:- As established law that in appropriate circumstances/cases, the Ld. CIT(Appeals) should admit additional evidence in the interest of justice, in case the filing of such evidence goes to the root of the matter and is essential to establish the justification/genuineness of the claim of the assessee. Further, we also observe that in the case of Tarun Manmohan Garg v DCIT [ 2017 (8) TMI 1461 - ITAT AHMEDABAD] held that even in the absence of a specific request from the assessee, the AO has to give an option to the assessee to the follow the course provided by law under section 50C of the Act. Further, the Calcutta High Court in the case of Sunil Kumar Agrawal [ 2014 (6) TMI 13 - CALCUTTA HIGH COURT] held that where according to assessee, agreed consideration as per conveyance deed was highest prevailing market price of property, it would follow that assessee disputed higher valuation made by Stamp valuation authority and in such case, Assessing Officer should have referred matter to a Valuation Officer as contemplated under section 50C. Accordingly, we are restoring the file to the assessing officer for fresh adjudication, after giving due opportunity to the assessee to place supporting documents/evidence in order to establish genuineness of unsecured loans to establish details/value regarding sale of property and to examine claim of deduction u/s. 54F of the Act after grating due opportunity of hearing to the assessee.

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• 2022 (10) TMI 454
  Reopening of assessment u/s 147 - Non-filing of Return amounted to escapement of income - on the basis of information received from ITD systems regarding the non-filers of return of income - HELD THAT:- As well settled that sufficiency or correctness of the material is not a thing to be considered at the stage of recording of reasons. In the present case, it is undisputed that the assessee has not filed its return of income for the year under consideration. Since, no return was filed and no books, i.e. balance sheet, profit and loss account, computation of income, were available, the AO on the basis of information generated by ITD systems and verification of facts initiated proceedings under section 147 of the Act in the case of the assessee. As per the learned DR, the codes links to the information available with the Department and the assessee never requested during the continuation of the proceedings under section 147 of the Act to share that information. DR further submitted that extent of the information available with the Department will be clear when the issues on merits will be dealt. From the record, it is evident that even after receipt of the reasons recorded for issuing notice under section 148 of the Act, the assessee did not file any objections against same nor sought any other details. As noted above, the reasons recorded indicate the basis on which proceedings under section 147 of the Act were initiated in the case of the assessee. Therefore, we are of the considered view that AO had reason to believe on the basis of tangible material for initiating proceedings under section 147 of the Act. As a result, grounds No. 1 and 2, raised in assessee s appeal, are dismissed. Addition on account of cheque and cash deposited in the bank accounts of the assessee - It is not in dispute that assessee s bank account with HDFC Bank was an overdraft account and the closing overdraft balance on this account tallied with the Bank OD A/c on the liability side of the assessee s balance sheet. In the return of income filed in response to notice issued under section 148 of the Act, the assessee returned the above figures of overdraft. Therefore, insofar as the cheque transactions amounting to Rs. 8,15,000 in the aforesaid two undisclosed bank accounts, which are duly corroborated with the assessee s overdraft bank account maintained with HDFC bank, we find the same to be duly explained. Therefore, to this extent we direct the AO to delete the addition made under section 69A of the Act. As regards wife s bank account maintained with HDFC Bank, from where amount of Rs. 14,00,000 was transferred through cheque in the aforesaid two undisclosed bank accounts is not clear established, therefore, we deem it appropriate to remand this issue to the file of AO for necessary verification whether the deposits made in wife s account are genuine. We further direct the assessee to file necessary details before the AO for examination. We also direct that if source of deposits in wife s HDFC Bank account is found to be genuine then the addition to the extent of Rs. 14,00,000 be deleted. As regards the transaction in NKGSB Bank the assessee has already admitted before the lower authorities that source of same is not explainable. Thus, the findings of lower authorities, in this regard, are sustained. Addition in respect of peak cash deposit in HDFC bank account - We are of the considered view that the entries in the cash book have not been linked with the deposits in the bank account(s) maintained with HDFC. Therefore, we remand this issue to the file of AO for de novo adjudication. We further direct the assessee to furnish the necessary details before the AO for examination. We also direct that relief be granted to the assessee to the extent entries in the cash book are linked with the deposits in the HDFC bank account(s). As a result, ground raised in assessee s appeal is allowed for statistical purpose. Disallowance made under section 14A read with rule 8D(2) - As per assessee addition cannot exceed the amount of exempt income - HELD THAT:- Accepting the aforesaid contention of the assessee, which was in lines with the prevailing jurisprudence, the learned CIT(A) directed the AO to restrict the disallowance under section 14A to the quantum of exempt income earned by the assessee - We find that Hon ble jurisdictional High Court in Nirved Traders (P.) Ltd. v/s Dy. CIT, I.T. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT ] has held that disallowance under section 14A of the Act cannot be more than exempt income. Thus, we find no infirmity in the impugned order passed by the learned CIT(A). As a result, ground raised in assessee s appeal is dismissed.

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• 2022 (10) TMI 453
  Revision u/s 263 by CIT - Exclusion of agricultural income while computing the book profit under the provisions of section 115JB - Treatment to compensation received on account of compulsory acquisition of land - case was selected under complete scrutiny through CASS which included claim of large exempt income as one of the grounds for selection - HELD THAT:- AO based on the submission placed on record taken a plausible view on the calculation exempt income and thereby the computation of tax under section 115JB - Whereas the ld. Pr. CIT considered that the same has not been seen by the AO in light of the observations made by him in the proceedings before him. It is not disputed that the assessee is holding agricultural land and accordingly received the agricultural income which is also not disputed by the revenue in the proceedings. AO also raised the issue about the exempt income and the assessee has submitted all relevant proof in relation to compensation in question and has after considering the submission and evidence placed on record, the ld. AO taken plausible view which is not controverted that why the view taken by the ld. AO is not correct view, considering the compensation received by the assessee company as the agriculture income and also exempt. DR merely argued that section 10(1) exclude only agriculture income and it does not include compensation but he has not referred the definition of section 2(14)(iii) of the Act which exclude the agriculture land as a capital asset and these facts is also not disputed that the assessee is having land which is agriculture land when the ld. AO and ld. PCIT accepted that the assessee earns agriculture income the compensation received on account of compulsory acquisition of land why cannot be considered as part of agriculture income. He has not pointed out any provision of the law to support their views so as to show that the same is required to be excluded while computing the book profit u/s. 115JB of the Act. An incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase prejudicial to the interest of the Revenue has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue. It is pertinent to mention that if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the Pr. CIT does not agree, it cannot be treated as an erroneous order and it is prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. In this regard, we draw strength from the decision of the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [ 2000 (2) TMI 10 - SUPREME COURT] Thus, when it is very much evident and clear from the record that compensation that the assessee has received is on account of agriculture land on which the agriculture income is already considered and therefore, the action of the assessee and thereby the ld. AO is in accordance with provision of the Act and there is no mistake apparent on record on account of exclusion of the same while computing the book profit under the provisions of section 115JB of the Act. These views are fortified by the Cochin Bench and in fact decisions relied upon by the ld. AR of the assessee. Being consistent with that order of M/s. The Nilgiri Tea Estate Limited [ 2014 (6) TMI 774 - ITAT COCHIN] we hold that the order passed by the ld. PCIT u/s. 263 is neither erroneous and not prejudicial to the interest of the Revenue and therefore, the same is required to be quashed. Appeal of assessee allowed.

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• 2022 (10) TMI 452
  Income from other sources - Addition on account of difference in share price viz-a-viz Fair Market Value - HELD THAT:- There is no dispute that the AO has not given any valid reason for discarding valuation report of a registered valuer filed by the assessee. It is equally true that as per explanation a to section 56 (2)(viib) of the Act it has been specifically provided that the fair market value of the shares shall be based on (1) the value determined under rule 11UA or (2) fair market value of the under lying assets whichever is higher. Therefore, in our understanding of the law the AO grossly erred in adopting the circle rate of the property. Considering the facts of the case in totality in the light of the relevant provisions of the Act we do not find any reason to interfere with the findings of the CIT(A). The appeal filed by the revenue is dismissed.

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• 2022 (10) TMI 451
  Disallowance of employee s contribution to Provident Fund and Employee State Insurance Funds - Payment date of filing of return of income - HELD THAT:- This issue is now covered in favour of the assessee even after the amendment as held by ITAT Delhi Benches. ITAT, Delhi in the case of M/s. Express Roadway [ 2021 (10) TMI 514 - ITAT DELHI] has followed Hon ble Delhi High Court decision in the case of CIT vs. AIMIL Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT] and SPL Industries [ 2010 (7) TMI 81 - DELHI HIGH COURT] for the proposition that such additions are not sustainable if the impugned payments are done upto the date of filing of return of income for the concerned assessment year. Following the same, we set aside the orders of the authorities below and delete the addition. Disallowance u/s 14A - Sufficiency of own funds - HELD THAT:- We note that assessee in this case has earned exempt income. All the investments for the same were done in the earlier years. Assessee s claim was that no borrowed funds were used to make the investment. Authorities below have rejected the same on the ground that assessee should have maintained separate books. However, as held in the case of CIT vs. Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and in CIT vs. HDFC Bank Ltd.[ 2014 (8) TMI 119 - BOMBAY HIGH COURT] when assessee has sufficient interest free funds no disallowance u/s 14A is required to be done for interest. It is well settled that right of attribution lies with the assessee. In the present case, it is not the case of the Revenue that assessee has not own funds to make those investments on which exempt dividend income has been earned. Rather the case of the Revenue is that assessee should have brought in one to one nexus in the funds and investment. This view is not correct in terms of the decision of Hon ble Bombay High Court cited above, we set aside the orders of the authorities below and delete the addition in this regard. Decided in favour of assessee.

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• 2022 (10) TMI 450
  Income deemed to accrue or arise in India - Royalty Income - amount received for conducting research activities, which are in the nature of various rights transferred by the assessee to its Indian customers for commercial use - As per CIT-A revenue received by the assessee on account of granting various licences is not taxable as Royalty Income and so also the amount received for conducting research activities, which are in the nature of various rights transferred by the assessee to its Indian customers for commercial use - HELD THAT:- In our considered opinion, as per section 90 subsection (2) of the Act, where India has executed a tax treaty, then, the non-resident assessee has the option of being taxed under the tax treaty to the extent its provisions are more beneficial and based upon provisions of India-UK DTAA, we have to consider the treatment given by the Assessing Officer in light of the relevant Article of India-UK DTAA. Article 13(3)of India-UK DTAA shows that the transaction shall fall under the ambit of Royalty only when payments are received from a buyer to exploit the underlying copyrights of an article or payment is made for information concerning industrial, commercial or scientific experience. We are of the considered view that the impugned quarrel is now well settled by the decision of the Hon ble Supreme Court in favour of the assessee and against the Revenue in the case of Engineering Analysis Center of Excellence Pvt Ltd.[ 2021 (3) TMI 138 - SUPREME COURT] - we find no reason to interfere with the findings of the ld. CIT(A) and direct the Assessing Officer to delete the impugned addition. Decided in favour of assessee.

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• 2022 (10) TMI 449
  Disregarding the claim made during the course of assessment proceedings - assessee failed to file revised return u/s. 139(5) of the Act in support of its claim, hence the claim made by the assessee cannot be allowed - HELD THAT:- We find that the assessee did not claim the said deduction in original return filed on 28.11.2015 and failed to file the revised return u/s. 139(5) of the Act in support of its claim and claim of the assessee was disallowed by the ld. DCIT (International Taxation) by following the judgement in the case of Goetz India Ltd.[ 2006 (3) TMI 75 - SUPREME COURT] - After perusing the ld. co-ordinate bench s order, while deciding the similar issue in the case of Howrah Mills Co. Ltd. [ 2018 (1) TMI 838 - ITAT KOLKATA] held that while the assessee in the return of income did not make any claim in respect of carbon credit not taxable but such claim was made only in the assessment proceedings before the AO and such claim of the assessee has been allowed by the ld. co-ordinate bench. We followed the view taken by the co-ordinate bench and allow the claim of the assessee and directed the AO to accept the revised claim made by the assessee. Accordingly, grounds raised by the assessee are allowed.

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• 2022 (10) TMI 448
  Exemption u/s. 11 - delay in furnishing of auditor s report as required u/s. 12A - HELD THAT:- From the perusal of Form No. 10B, we note that assessee has claimed an amount towards application of income for charitable purposes in India during the year under consideration. It has also claimed accumulation or set apart of an amount for application to charitable purposes to the extent it does not exceed 15% of the income of the assessee. Audited financial statements of the assessee are also placed on record in the paper book. We note that, provisions of Section 143(1) deals with processing of return and refers to certain specific adjustments which can be made while processing the return provided that an intimation has been given to the assessee before making such adjustment either in writing or in electronic mode. Nothing is brought on record to demonstrate that an intimation was given to the assessee before resorting to the adjustment made in the processing of return of the assessee which resulted in raising of the demand in the year under consideration. We note that in the case of Rai Bahadur Bissesswarlal Motilal Malwasie Trust [ 1991 (4) TMI 56 - CALCUTTA HIGH COURT] has dealt with this issue under consideration before us and has held that claim of exemption u/s. 11 cannot be denied merely on account of delay in furnishing of auditor s report as required u/s. 12A more particularly when the said audit report in Form 10B was available with the officer before the completion of the assessment. We also note that CBDT has issued circulars vide Circular No. 10 of 2019 dt. 22/05/2019 and Circular No. 03/2020 dt. 03/01/2020 wherein, procedure for condonation of delay in filing Form 10B Form 9A has been prescribed for Assessment Years subsequent to Assessment Years 2016-17 which, in the present case is A.Y. 2017-18 before us. Admittedly, assessment was not completed u/s. 143(3) of the Act and, therefore, there would have been no error had the authorities below had taken up the copy of Form 10B, which was available with the Department. Thus, in our considered opinion, if the assessee was entitled to the statutory benefit, it would be incumbent upon the concerned authority to examine the admissibility of the benefit than to foreclose the assessee on technicalities. This view has been affirmed by the Hon ble High Court of Madras in the case of Chandra Prabhuji Maharaj Jain [ 2019 (8) TMI 363 - MADRAS HIGH COURT] We accordingly consider it fair and proper to set aside the order/intimation of the authorities below by taking force from the judicial precedents referred above and in the light of the fact that the assessment was not done u/s. 143(3) of the Act, and restore the matter to the file of AO for making a fresh assessment after taking into account the audit report in Form 10B placed on record as well as the claim of the assessee for exemption u/s. 11 - Thus, we set aside the assessment and restore the matter to the file of the AO for making a fresh assessment in accordance with law after giving a reasonable opportunity of being heard to the assessee in support of its claims made. Accordingly, the grounds taken by the assessee are allowed for statistical purposes.

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• 2022 (10) TMI 447
  Penalty u/s 271C - Addition being 2% of the EDC amount paid to HUDA - HELD THAT:- The issue in dispute regarding levy of penalty u/s 271C of IT Act is squarely covered in favour of the assessee and against the Revenue by aforesaid orders of Co-ordinate Benches in cases of M/s Tulip Infratech Private Limited Vs. ACIT [ 2022 (7) TMI 328 - ITAT DELHI ], Spaze Tower Pvt. Ltd. [ 2022 (5) TMI 1344 - ITAT DELHI ], M/s Perfect Constech Pvt. Ltd. [ 2020 (12) TMI 1158 - ITAT DELHI ], M/s Santure Infrastructure Pvt. Ltd. [ 2019 (12) TMI 1106 - ITAT DELHI ], Shiv Sai Infrastructure (P) Ltd. [ 2019 (9) TMI 631 - ITAT DELHI ] and M/s Sarv Estate Pvt. Ltd. [ 2019 (9) TMI 686 - ITAT DELHI ] in which, in similar facts and circumstances, it was held that penalty u/s 271C was not leviable. - Decided in favour of assessee.

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• 2022 (10) TMI 446
  Reopening of assessment u/s 147 - Addition invoking the provisions of section 50C - Whether there is a provision in the Act available to the CIT(A) to make a reference to the D.V.O.? - HELD THAT:- We find that it is a fact that on 28/03/2013, the notice u/s 148 was issued and then on 21/03/2014, notice u/s 143(2) was issued. Between the period 22/03/2014 to 27/03/2014 the assessee was out of station and therefore, the case could not be explained to the Assessing Officer. On 29/03/2014 itself the Assessing Officer completed the assessment u/s 144 of the Act. Before learned CIT(A), the assessee filed the valuation report but the CIT(A) dismissed the appeal of the assessee by holding that the assessee did not file the valuation report before Assessing Officer nor did he request the Ao to obtain report from D.V.O. CIT(A) further held that there is no provision in the Act available to the CIT(A) to make a reference to the D.V.O. and hence he dismissed the appeal. We find that the assessee did not get proper opportunity to explain his case before the authorities below and since the Assessing Officer has completed the assessment u/s 144 therefore, we deem it appropriate to remit back the issue back to the file of the Assessing Officer for re-adjudication after affording due and reasonable opportunity of being heard to the assessee.- Appeal of the assessee stands allowed for statistical purposes.

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• Customs

• 2022 (10) TMI 445
  Direction to respondents to intimate/convey the reasons for suspending the custom broker licence - revocation of suspension of the custom broker licence bearing number 09/2001 of the petitioner - authority to suspend the custom broker licence of the petitioner - HELD THAT:-The petitioner cannot be prevented from carrying on its business, at least in the Delhi Commissionerate. That being said, it would be open to the respondents to take requisite steps, in accordance with Regulation 16 read with Regulation 7(3) of the Customs Broker Licensing Regulations, 2018 and other applicable provisions of law - Petition disposed off.

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• 2022 (10) TMI 444
  Rejection of request of the Petitioner for no objection - benefit of merchandise under Merchandise Exports India Scheme (MEIS) under Chapter 3 of the Foreign Trade Policy 2015-20 - HELD THAT:- The Merchandise Exports From India Scheme [MEIS] is an exporter incentive given to an exporter to offset the infrastructural inefficiencies and the associated costs. The aforesaid scheme entitles an exporter to duty credit script to be utilized for discharging the basic customs duty, additional customs duty specified under Section 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 for import of inputs of goods including capital goods, as per DoR Notification, except in the case of listed goods under Appendix 3A to Foreign Trade Policy. The petitioner herein has failed to exercise the option in all the shipping bills unaware of the changes in the procedure. Though the Government has issued clarification dated 9-10-2015 in Public Notice No. 40/2015-2020 to the effect that Paragraph 3.01 of the Foreign Trade Policy [2015-20] does not allow manual feeding of EDA shipping bill details and following of such scheme is not possible manually, it is to be noticed that the aforesaid scheme in the Foreign Trade Policy is an incentive granted to an exporter - the petitioner herein has failed to exercise the option in all the shipping bills unaware of the changes in the procedure. Though the Government has issued clarification dated 9-10-2015 in Public Notice No. 40/2015-2020 to the effect that Paragraph 3.01 of the Foreign Trade Policy [2015-20] does not allow manual feeding of EDA shipping bill details and following of such scheme is not possible manually, it is to be noticed that the aforesaid scheme in the Foreign Trade Policy is an incentive granted to an exporter. In this case, there is only a procedural lapse. If the petitioner was otherwise entitled to the aforesaid exporter incentive and was not disentitled to the same, such benefit cannot be denied - the impugned order passed by the third respondent has to go as such export incentives cannot be denied on account of procedural lapse. Accordingly, the impugned order passed by the third respondent is quashed and the case is remitted back to the respondents to re-examine the issue as to whether the petitioner had indeed exported and was entitled to the exporter incentive under the aforesaid scheme, but for the lapse of not clicking the correct option in the System/Web Portal. The Writ Petition stands allowed.

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• 2022 (10) TMI 443
  Duty Draw back scheme - Focus Product Scheme - Misdeclaration of export goods - unscrupulous traders /exporters were exporting goods describing as floor covering (braided) of man made fiber for availing undue export incentives under Duty Draw back and Focus Product Scheme (in short FPS) by resorting to mis-declaration of description and value - HELD THAT:- From the show cause notice, it is apparent that the goods covered under 15 shipping bills which were detained and later seized on 18.12.2014 and 18.03.2015 and finally got confiscated vide the aforementioned Order-in-Original which has been upheld by the Order under challenge. Further perusal of the table given in the show cause notice reveal that six shipping bills pertaining to M/s. Seguro Traders and nine shipping bills thereof were of M/s. Goel Enterprises - The Original Adjudicating Authority after meticulous discussion while rejecting the classification has held the applicable entry to be 6301 9090. But the fact remain is that proposal of rejection of classification was very much raised in the show cause notice which has been upheld by the Original Adjudicating Authority. This observation is sufficient to reject the submissions of the learned Counsel of the appellant that findings of the Adjudicating Authority below are beyond the scope of show cause notice. From his subsequent statements dated 3.6.2015 about purchasing goods of impugned consignment from Panipat through a broker for both the firms, purchasing is very much apparent. The role of Vaibhav Goel has been discussed in the show cause notice and is clearly been appreciated as proved by the Adjudicating Authority Below. Since no documents could have been produced to falsify those findings and that the documents as produced are held to be highly insufficient to discharge Shri Vaibhav Goel from the impugned penalty, it is held that penalty which has been imposed upon him for the reason that the goods under investigation in the present matter were the consignments not only of M/s. Goel Enterprises but were also the goods of consignment of M/s. Seguro Traders under proprietorship of Vaibhav Goel has rightly been imposed. The confirmation of demand against M/s. Goel Enterprises and imposition of penalty on this firm as well as on its proprietor Mr Krishan Goel should have been abated as proceedings cannot continue against the dead person - Appeal allowed.

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• 2022 (10) TMI 442
  Review of the ruling of AAR - erroneous ruling or obtained by fraud / misrepresentation of facts - Classification of goods - unflavoured supari - flavoured supari - API supari - Chikni supari - HELD THAT:- On careful consideration of the documents submitted by the concerned Commissioner of Customs and having pronounced advance rulings on the same question of classification of betel nut items, albeit disagreeing with the rulings of the erstwhile AAR. I am not able to accord the crucial role ascribed to the process of roasting as has been claimed by the concerned Commissioner. The process of manufacture of four varieties of supari, involved inter alia boiling and/or drying/roasting, with the objective to minimize moisture content. On perusal of the said advance ruling, it is obvious to me that the ruling of the Hon ble AAR was not dependent on the involvement or otherwise of the process of roasting . Therefore, the contention of the concerned Commissioner of Customs in this regard, cannot be a ground for invocation of the provisions of Section 28K of the Customs Act read with Regulation 26 of CAAR Regulations, 2021. The said representation dated 19-2-2020 by the Commissioner of Customs, Chennai-II against the Advance Ruling No. AAR/44/Cus/02/2017, dated 31-3-2017 pronounced by the erstwhile Hon ble AAR cannot be admitted.

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• 2022 (10) TMI 441
  Classification of goods - HDPE woven fabric - to be classified under Tariff Heading 3926 or 3923? - export of Duty Drawback scheme, rather they plan to export under Advance Authorization Scheme - HELD THAT:- In Headings 39.20 and 39.21, the expression plates, sheets, film, foil and strip applies only to plates, sheets, film, foil and strip (other than those of Chapter 54) and to blocks of regular geometric shape, whether or not printed or otherwise surface-worked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut they become articles ready for use). HDPE woven fabric is not classifiable under Headings 39.20 and 39.21. Heading 3923 covers Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics. It includes sacks and bags (including cones) under Heading 3923 10; Stoppers, lids, caps and other closures under Heading 3923.50; and residual entry others under 3923.90. The explanatory notes to this heading further explain that this heading covers all articles of plastics commonly used for the packing or conveyance of all kinds of products - A careful reading to this heading suggests that HDPE woven fabric is not covered under this heading, in particular under the expression under closures. Further, since the fabric is in roll form, even though it can be used to make bags or sacks, following the settled principle of law, the classification of the article should be based on the form it is presented in, and therefore, cannot be classified under Heading 3923 10. Heading 3925 covers Builders ware of plastics, not elsewhere specified or included. Even though the applicant has contended that the fabrics are those which are used to cover buildings under construction, they cannot be considered as builder s ware of plastics, taking into account the Explanatory Notes of HSN and description of the articles mentioned in the heading/sub-heading - residual Heading 3926, covering Other articles of plastics and articles of other materials of Headings 39.01 to 39.14. This heading covers articles, not elsewhere specified or included, of plastics (as defined in Note 1 to the Chapter) or of other materials of Headings 39.01 to 39.14, noting that HDPE in its primary form is covered under Heading 3901. HDPE woven fabrics (uncoated/one-side coated/double-side coated) are most appropriately covered under residual Heading 3926 and further the residual sub-heading 3926 90 99 of the Customs Tariff Act, 1975.

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• 2022 (10) TMI 423
  Suspension of endorsement of Customs Broker License - Regulation 16 read with Regulation 7 (3) - HELD THAT:- What is evident is that the petitioner s suspension has been ordered vis- -vis all ports/CFS under the Noida Customs Commissionerate, with effect from 17.05.2022 - the petitioner was given an opportunity of personal hearing on the date mentioned in the notice dated 30.05.2022. A plain reading of the first proviso of Regulation 16 of the Customs Brokers Licensing Regulations, 2018 does indicate, that where the Principal Commissioner or Commissioner of Customs deems fit, he may for the reasons to be recorded in writing, suspend the license for a specified number of Customs Stations - Mr Maggu has drawn our attention to the communications dated 01.08.2022 and 08.08.2022, addressed in this regard, to the Deputy Commissioner of Customs (Airport General), New Custom House, New Delhi. Issue notice to respondents via all permissible modes, including email - List on 21.09.2022.

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• Corporate Laws

• 2022 (10) TMI 440
  Seeking interim relief of issuing directions to the other director to affix his digital signature in the prescribed E-Form 22A (Active) sent to him by the applicant - HELD THAT:- The paramount duty of this Tribunal is to see whether a company has followed the principles of natural justice while taking decisions and has protected the interests of shareholders and the survival of the company itself. It is also observed that the respondent No. 1 is a party to all the decisions regarding the appointment of the applicant as a director of the company. It is apparent that, for some reason, there is a dispute between the two directors, but that does not entitle either of the Directors to take such steps, which will adversely impact the legal status of the company. It is also noted that the complaint against the applicant before the ROC has been closed - As the respondent has fairly admitted during the proceedings that the affairs are currently managed by the sole surviving respondent director, i.e., respondent No. 1, it is all the more obligatory for him to ensure compliance with all the Rules and Regulations laid down in the Companies Act 2013 and the Rules made thereunder. The respondent No. 1 is directed to make compliances under Rule 25A and affix his digital signatures in the prescribed E-Form 22A (Active) sent to him by the applicant through email dated 23.04.2022 and file the same along with payment of fee/penalty as required so that the status of the company becomes active within two weeks - List the case on 29.11.2022.

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• Insolvency & Bankruptcy

• 2022 (10) TMI 439
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - amounts which were granted as Inter Corporate Deposit to the Corporate Debtor - existence of debt and dispute or not - HELD THAT:- The financial statement clearly mentions the Inter Corporate Deposit of Rs.1,43,37,53,247/-. Similarly, with regard to other financial years mention of total Inter Corporate Deposit is given. The Adjudicating Authority has drawn adverse inference against the Financial Creditor only relying on few names of companies to whom Inter Corporate Deposit was given and whose names were mentioned in the note in the Independent Auditor s Report, but as noted above the names in the Report were with regard to those companies with whom litigations were going on - the details of total Inter Corporate Deposits, which runs to Rs.143 Crores, has been reflected in the financial statements and the Adjudicating Authority without adverting to the relevant material jumped to conclusion that financial creditor has failed to prove Inter Corporate Deposit given to the Corporate Debtor, which finding is unsustainable. It is also relevant to notice that Corporate Debtor has also made payments in the years 2015, 2016, 2017 till the financial year 2018-19 which details are all mentioned in the Part IV of the application. It is further relevant to notice that Corporate Debtor although once appeared before the Adjudicating Authority but neither filed any reply nor appeared thereafter and Adjudicating Authority proceeded ex-parte against the Corporate Debtor. In this appeal also despite service of notice, Corporate Debtor did not appear. There is not even dispute to allegations and case set up by the Financial Creditor against the Corporate Debtor. The Adjudicating Authority committed error in rejecting Section 7 application - appeal allowed.

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• 2022 (10) TMI 438
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Whether payment to the Operational Creditor/Respondent No. 1 as per Second Work Order was due from the Corporate Debtor giving rise to an operational debt? - whether a default has been committed by the Corporate Debtor/Appellant in respect of payment of such operational debt having already become due and payable? - whether the said operational debt exceeds an amount of Rs. 1 lakh and is an undisputed debt? - HELD THAT:- The net outstanding amount as Rs 11.53 lakhs as on 04.08.2018 and therefore clearly establishes debt above the threshold of Rs. One lakh having become due and payable. Coupled with the fact that the Corporate Debtor by his own admission on 10.04.2018 has admitted that there was an outstanding amount payable on its part leads to the conclusion that there was debt due and payable beyond the threshold of Rs. one lakh on the part of the Corporate Debtor. Whether there is existence of dispute between the parties? - HELD THAT:- As there is nothing on record to suggest that the Corporate Debtor/Appellant raised any such dispute before receipt of invoices or at any period prior to the issue of demand notice, this cannot be held as a case of pre-existing dispute. There is no exchange of correspondence raising any dispute prior to issue of demand notice. The Corporate Debtor/Appellant has defaulted in the payment of operational debt, of an amount exceeding Rs one lakh, which amount had clearly become due and payable, and further in the absence of any pre-existing dispute, there are no error has been committed by the Adjudicating Authority in admitting the application under Section 9 of IBC and initiating CIRP - Appeal is dismissed.

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• 2022 (10) TMI 437
  Liquidation of Corporate Debtor - correctness of the approach of the Adjudicating Authority in opining that the period of limitation would start running from the date of acknowledgment of debt in the balance sheet by the Appellant - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case, the disclosure by the assessee company in its balance sheet as on 31st March, 2002 of the accounts of the sundry creditors amounts to an acknowledgement of the debts in their favour for the purposes of Section 18 of the Limitation Act. The assessee s liability to the creditors, thus, subsisted and did not cease nor was it remitted by the creditors. The liability was enforceable in a court of law. The appeal is denuded of merits and the same is hereby dismissed.

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• 2022 (10) TMI 436
  Application for Condonation of Delay in filing the Appeal - whether the Applicant(s) are entitled for exclusion of period requisite for obtaining the certified copy of the order with effect from 12.05.2022 to 14.06.2022 or the Applicant(s) are entitled to exclude the time only from 09.06.2022 to 14.06.2022, when balance court fee for obtaining certified copy was paid? - whether exclusion of period for obtaining of certified copy shall be from 12.05.2022 to 14.06.2022 or 09.06.2022 to 14.06.2022? - HELD THAT:- Section 149 contemplate an order of the Court for extending the time, whereas in NCLT Rules, 2016, no order is contemplated by the Court for extension of time and the deficiencies of court fee and the defects in the application is to be cured as per Rule 28 within seven days from the date of pointing out of the defects or within a further period as allowed by the Rules. When the defects are removed, the presentation of the Application has to be treated from the date of initial presentation and presentation of the Application shall not be treated from the date when defects were removed. The Applicant(s) were entitled to exclude the period from 12.05.2022 to 14.06.2022, which was time requisite for obtaining certified copy of the order dated 10.05.2022. If the time requisite is excluded, limitation of 30 days time for filing the Appeal shall be till July, 12.07.2022 - appeal is filed within the period of limitation and Appeal Nos. 920 and 922 of 2022 were filed within 15 days beyond the period of 30 days. Let the Appeal(s) be listed for admission on 12.10.2022.

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• 2022 (10) TMI 435
  Default in repaying the Arbitral Award - Section 7 of the IBC - November 2009 to 15th July 2015 - HELD THAT:- The Adjudicating Authority has rightly held that the basic nature of transaction is not covered under financial debt and rental lease agreement can be operational debt but not financial debt . The Transactions which transpired between the parties does not partake the character of a financial debt and the Appellant does not qualify to be a Financial Creditor in relation to the Corporate Debtor. Registry to upload the Judgment on the website of this Appellate Tribunal and send the copy of this Judgment to the Adjudicating Authority (National Company Law Tribunal, Principal Bench, New Delhi.) forthwith.

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• 2022 (10) TMI 434
  Validity of order of NCLT - seeking expunging the observations made against the RP - Seeking extension of claim amount - alleged non-compliance of the order - HELD THAT:- As a matter of fact, when the contempt petition was filed by the Respondent for the non-compliance of the direction it contained in the order dated 16.10.2019, the Adjudicating Authority vide its order dated 11.11.2019 directed the Appellant to appear personally on 13.11.2019. The Adjudicating Authority has observed that the Appellant was found by the staff of the court sitting outside the court room but he refused to appear when he was asked for it and when the court was about to rise after passing the remarks about which the prayer has been made for expunction, the Appellant appeared and prayed for recall of the order. All these observations were made either in the presence or with the knowledge of the Appellant but at no point of time any application was made by the Appellant before the Adjudicating Authority to expunge those remarks and has now challenged the order dated 13.11.2019 on the ground that he could not appear before the Adjudicating Authority because he was having injury on his hand - If a party thinks that the happenings in court have been wrongly recorded in a judgment, it is incumbent upon the party, while the matter is still fresh in the minds of the judges, to call attention of the very judges who have made the record to the fact that the statement made with regard to his conduct was a statement that had been made in error. That is the only way to have the record corrected. If no such step is taken, the matter must necessarily end there. The present appeal is allowed only to the extent of setting aside the order dated 18.12.2019 by which the Adjudicating Authority has directed that in view of the same we hereby clarify that the RP shall make the payment of entire amount due with regard to the rent after deducting any amount like GST etc. as per law - Petition disposed off.

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• 2022 (10) TMI 433
  Seeking substitution of name of Vijender Kumar Jain and allow her to continue the proceedings in the present petition - Rule 53 read with Rule 11 of NCLT Rules, 2016 - HELD THAT:- It is observed that the applicant is a legal heir along with four other legal heirs(daughters) of Vijender Kumar Jain, who was running a proprietorship concern under the name of Arihant Cycles. The copy of death certificate of Vijender Kumar Jain and the relinquishment deed furnished by other four legal heirs in favour of the applicant are attached as Annexure- A-1 and A-2 respectively of the application. In the present case, the applicant has stepped into the shoes of the petitioner in CP (IB) No. 217/Chd/Hry/2020 being the legal heir/wife of Vijender Kumar Jain(Since Deceased) - the present application is allowed and the applicant is to continue the proceedings in the present petition and the amended memo of parties is also taken on record.

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• 2022 (10) TMI 432
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- It is an undisputed fact that both the parties with a view to settle the matter has entered into an OTS scheme vide letter dated 23.11.2021. Wherein the OTS amount shall be paid on or before 31.03.2022 by the Corporate Debtor. However, the Corporate Debtor vide letter dated 29.11.2021 to the Financial Creditor proposes the amount to be paid up to June, 2022 and the same was rejected by the Financial Creditor via Email dated 30.11.2021. The Corporate Debtor via letter dated 31.12.2021 has accepted to make the payment under the OTS scheme up to March 2022 which was rejected by the Petitioner, citing the Sanction Letter can be issued only after the receipt of Credit Information Report of the other lender ACRE - the Corporate Debtor vide letter dated 26.04.2022, proposes to settle the dues outstanding by One Time Settlement by offering the sum of Rs. 2.66 Crores towards the Principal Dues and committed to pay the OTS sum before 31.03.2023. The same was rejected by the Petitioner vide the letter dated 28.04.2022, stating that the OTS proposal is only towards principal dues and does not address interest, further interest, penal interest and other cost and charges and advised that the application is not received in prescribed format before the last date i.e. 31.12.2021. It is to be noted that the settlement is derived between the parties only upon the acceptance by the parties, which is not in the present case. Hence, the Bench has come to a conclusion that the Corporate Debtor is liable and defaulted in making the payment to the Petitioner - the nature of Debt is a Financial Debt as defined under section 5 (8) of the Code. It has also been established that there is a Default as defined under section 3 (12) of the Code on the part of the Debtor. The two essential qualifications, i.e., existence of debt and default , for admission of a petition under section 7 of the I B Code, have been met in this case. Besides, the Company Petition is well within the period of limitation. It is clear that the Corporate Debtor has defaulted in repayment of debt. Hence, owing to the inability of the Corporate Debtor to pay its dues, this is a fit case to be admitted u/s 7 of the I B Code - it is found that the Petitioner has not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under the Code have been completed by the Petitioner, this Petition deserves Admission . Petition admitted - moratorium declared.

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• 2022 (10) TMI 431
  Rejection of Resolution Plan in view of the disqualification provided under Section 29-A (f) of the Insolvency and Bankruptcy Code, 2016 - seeking direction to Resolution Professional to place the present Applicant s Resolution Plan for consideration before the Committee of Creditors and any other order as deemed fit - if the Committee of Creditors had rejected the resolution plan of Aggarsain Spinners Limited, erstwhile Successful Resolution Applicant before its approval on 27.03.2019, being ineligible under Section 29A of the Code then what procedure the Resolution Professional or the Committee of Creditors would have adopted in that eventuality? HELD THAT:- After the rejection of the Resolution Plan submitted by Aggarsain Spinners Limited, erstwhile Successful Resolution Applicant, there were other three Resolution Plans, namely Navraj Mittal and Others- H2; M/s Shivani Trendz Private Limited- H3; and Pankaj Bhatia Shreeji Cotfab- H4 and obviously, these Resolution Plans were to be considered by the Committee of Creditors and all the three Resolution Applicants were required to be called for negotiations and for maximization of the value of the assets of the corporate debtor. Now, when the Resolution Plan of Aggarsain Spinners Limited has been rejected by this Bench, being ineligible under Section 29A(f) of the Code, then certainly to meet the ends of justice an opportunity is required to be given to the remaining three Resolution Applicants, who submitted their resolution plans simultaneously with erstwhile Successful Resolution Applicant- Aggarsain Spinners Limited. Although, it is contended by learned counsel for the respondents that if the earlier resolution plans are to be considered then it would amount to review of order dated 24.05.2022. More so, earlier resolution applicants including the present applicant do not meet the fresh eligibility criteria laid down by the Committee of Creditors. This contention of learned counsel for the respondents does not hold water because there is nothing on record that the new eligibility criteria is based upon any evaluation matrix. It is pertinent to note that the Resolution Professional had moved an application bearing IA No.639 of 2022 under Section 60(5) of the Code read with Rule 11 of the NCLT Rules, seeking appropriate directions to the Resolution Professional to reappoint the existing valuers duly registered with IBBI in order to ascertain fair value and liquidation value afresh in terms of Regulation 35 of the IBBI (CIRP) Regulations, 2016 but later on the said application bearing IA No.639 of 2022 was withdrawn by the Resolution Professional, as is recorded in order dated 21.07.2022 passed by this Bench. This shows that no fresh valuation of the assets of the corporate debtor was conducted. The contention of learned counsel for the respondents that the present application is hit by Regulation 36A(10) and (11) of the Regulations is also not much convincing. There is no dispute to the fact that purpose of resolution is for maximization of value of assets of the corporate debtor - the earlier resolution applicants including the present applicant may take part in the negotiation process before the Committee of Creditors and ultimately, Successful Resolution Applicant would be decided by the Committee of Creditor, which if found in consonance with maximization of value of the assets of the corporate debtor. The present application is partly allowed to the extent that Resolution Professional and Committee of Creditors are directed to invite the present applicant alongwith other earlier resolution applicants namely Navraj Mittal and Others (H2); M/s Shivani Trendz Private Limited (H3); and Pankaj Bhatia Shreeji Cotfab (H4) and also fresh resolution applicants for the purpose of negotiations in finalization of Resolution Plan in accordance with law.

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• 2022 (10) TMI 430
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - whether the present application is filed within limitation? - HELD THAT:- It can be seen from the records that the date of default is 03.05.2019 and the present petition is filed vide Diary No. 93 dated 06.01.2020. Therefore, the present petition is filed within limitation. Whether there is default in payment or not? - HELD THAT:- It is observed from the record that in the present case, the default is evidenced by the copy of the loan agreement (Annexure-VI), promissory note (Annexure-VIII), three cheques issued by CD (Annexure-X), Cheque returning memo (Annexure-XI), ledger account (Annexure-XIV) are attached with the main petition. The respondent corporate debtor has been proceeded ex parte, thus, there is no rebuttal to the claim of petitioner. The application filed in the prescribed Form No.1 is found to be complete. Another condition is that there are no disciplinary proceedings pending against the proposed Resolution Professional. In the present case, in Part III of Form 1, Mr. Satyendra Sharma has been proposed as Interim Resolution Professional. The present petition being complete and having established the default in payment of the Financial Debt for the default amount being above threshold limit, the petition is admitted in terms of Section 7(5) of the IBC. Moreso, the respondent has admitted the claim and expressed its inability to pay back the debt. Accordingly, moratorium is declared in terms of Section 14 of the Code. Petition admitted - moratorium declared.

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• 2022 (10) TMI 429
  Liquidation of Corporate Debtor - Section 33(2) of the IBC - HELD THAT:- Upon perusal of the Application, it is seen that the RP has conducted a total of 42 CoC meetings. It is also seen that on 23.07.2021, the Resolution Plan submitted by Sherisha Technologies Private Ltd. was approved by the CoC with 100% voting rights. However, the said Resolution Applicant has failed to furnish the performance guarantee and hence in the 38th CoC meeting held on 23.11.2021, the CoC has rejected the Resolution Plan of the said Resolution Applicant. It is seen that the even after issuing EoI twice, the Corporate Debtor did not garner any Resolution Plan and hence the CoC in its commercial wisdom has decided to liquidate the Corporate Debtor and also passed a Resolution to that effect in the 42nd CoC meeting held on 17.03.2022. Thus, by taking into consideration the provisions of Section 33 of IBC, 2016 and in the absence of any opposition to the Application from the Promoters of the Corporate Debtor and also guided by the decision of the Hon ble Supreme Court in the matter of Mr. K. Sasidharan Vs. Indian Overseas Bank [ 2019 (2) TMI 1043 - SUPREME COURT ] this Tribunal orders for the liquidation of the Corporate Debtor. Application allowed.

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• Service Tax

• 2022 (10) TMI 428
  Non-payment of service tax - insurance services provided by Protection and Indemnity Clubs (P I clubs), an entity situated outside India that provided for coverage in respect of third party liabilities - principles of mutuality - pooling of risks - HELD THAT:- No doubt, the authority has marshalled the facts presented - it is for the officer to set the facts against the ratio of the judgement, appreciate the same in proper perspective and arrive at his conclusions as to whether the petitioner is entitled to its claim. The availability of a statutory remedy is not an absolute bar to the maintainability of a writ petition and there are instances when the Writ Court will intervene to decide legal issues. However such a decision must be in the backdrop of undisputed facts and materials that emanate from the record or to correct flaws in the application of settled propositions where there has been such application, by the officer. In the present case, the entirety of the petitioners claim rests upon the judgement in the case of Calcutta Club that the officer has not had the benefit of, in passing the impugned orders. Thus, it would be preempting the issue, and stepping into the shoes of the officer, for this Court to embark upon the exercise of assessment, in such circumstances - The petitioner is permitted to approach the appellate authority, and appeals, if filed within three weeks from today, will be taken on file without reference to limitation but subject to all other statutory conditions and decided expeditiously in line with the judgement in Calcutta Club and in accordance with law. Writ petition disposed off.

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• 2022 (10) TMI 427
  Refund of service tax - amount said to have been deposited by mistake on construction of individual/independent residential houses - period from 01.04.2013 to 31.03.2014 - reverse charge mechanism - denial of refund of service tax paid for the reason that the appellant would not be entitled to claim benefit of the Exemption Notification dated June 20, 2012 - HELD THAT:- It is true that w.e.f July 01, 2012 construction of complex is a declared service, but the Exemption Notification exempts services by way of construction, erection, commissioning or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex have been exempted - the Commissioner (Appeals) was not justified in holding that the appellant would not be entitled to the benefit of the Exemption Notification. The Commissioner (Appeals) was also not justified in holding that the refund was hit by the principles of unjust enrichment. As per the work orders, service tax was to be borne by the appellant and the Commissioner (Appeals) has also found, as a fact, that the contract awarded by the Housing Board to the appellant mentions that service tax shall be borne by the contractor - Even in accordance with the Exemption Notification dated June 20, 2012, 50% of the tax to be deposited by the Housing Board under the reverse charge mechanism was deducted by the Housing Board from the amount payable to the appellant. The Commissioner (Appeals) was, therefore, not justified in rejecting the refund claim of the appellant on the ground of unjust enrichment. Relevancy of documents submitted with the refund claims - HELD THAT:- The appellant had submitted with the refund applications copies of work orders against which work was done during the refund period, ST-3 returns of the relevant period, Form 26AS, VAT-41, copies of challans and copies of running bills prepared by the Housing Board showing deduction of service tax out of amount paid to the appellant. Further, the total tax deposited by the appellant and also deducted by the Housing Board is far more and more than the refund claim and that the appellant had claimed refund only in respect of tax deposited on construction of individual houses and corresponding tax deducted by the Housing Board on such construction. The order dated August 04, 2016 passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside - Appeal allowed.

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• Central Excise

• 2022 (10) TMI 426
  Claim of interest on the refund amount of redemption fine - section 11B of Central Excise Act - HELD THAT:- The appellant opted for getting the goods redeemed. After paying Rs.15.5 Lakhs as redemption fine, the appellant had got the goods provisionally released - The amount which was prayed to be refunded is nothing but the interest on the value of the goods, the ownership whereof stands finally confirmed in favour of the present appellants. From no stretch of imagination the same can be called as the amount of duty paid by the appellants. Hence as of now, the said amount is nothing but a deposit made with the Revenue. The issue of refund of such deposit alongwith the interest is no more res integra. The Hon ble Apex Court also has settled this issue in the case of SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT] holding the assessee is entitled for interest along with the refund of the amount which he was not liable to pay to the department - the appellant is entitled for the interest upon the amount of Rs.15.5 Lakhs also. Section 11BB of Central Excise Act is opined to be not applicable to the appellant. It is clear that since the order of confiscation of goods has already been set aside the amount of redemption fine as was deposited by the appellant was an amount of revenue deposit with the department - the appellant to be entitled for the interest on the refunded amount of Rs.15.5 Lakhs (the redemption fine) to be paid from the date of its deposit at the rate of 15% per annum. Appeal allowed.

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• 2022 (10) TMI 425
  100% EOU - Levy of SAD equivalent of VAT - transfer of goods which are chargeable to VAT to its own Domestic Tariff Area Unit - does the Central Excise Duty have to be paid including Special Additional Duty (SAD) of Customs or otherwise? - HELD THAT:- The undisputed facts are that the appellant s goods were leviable to VAT and no VAT was paid because there was no sale of the goods but only stock transfer to its DTA unit. The point of taxation in respect of Central Excise duty and VAT are different. As far as the Central Excise duty is concerned, it becomes payable when the goods are cleared from the factory whether or not there is a sale because the taxable event is manufacture itself and not sale. On the other hand, the VAT is payable only when there is a sale or purchase. The taxable event is sale or purchase. Therefore, in cases such as this where the goods are transferred to the appellant s own units they are removed from the factory and, therefore, the Central Excise duty is payable. However, since there is no sale at that stage VAT is not payable. Subsequently, when the goods are sold by the DTA unit of the appellant VAT becomes payable. What is important for the Notification No. 23/2003 to be applicable is that VAT should not be exempted on those goods. Undisputedly, there was no exemption from VAT in this case. The mere fact that the payment of VAT does not happen concomitantly with the clearance of the goods does not mean that the VAT is exempted. The appellant is not liable to pay Central Excise duty reckoning the SAD payable on goods cleared by the appellant if they were imported into India - Appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2022 (10) TMI 424
  Dishonor of Cheque - enforceable debt at the time of encashment - acquittal of the accused - Rebuttal of statutory presumption - whether Section 138 of the Act would still be attracted when the drawer of the cheque makes a part payment towards the debt or liability after the cheque is drawn but before the cheque is encashed, for the dishonour of the cheque which represents the full sum? - date on which the cheque is drawn to the date on which the cheque matures - Section 138 of NI Act - HELD THAT:- It must be noted that when a part-payment is made after the issuance of a post-dated cheque, the legally enforceable debt at the time of encashment is less than the sum represented in the cheque. A part-payment or a full payment may have been made between the date when the debt has accrued to the date when the cheque is sought to be encashed - In Sripati Singh v. State of Jharkand [ 2021 (11) TMI 66 - SUPREME COURT] , this Court observed that if a cheque is issued as security and if the debt is not repaid in any other form before the due date or if there is no understanding or agreement between the parties to defer the repayment, the cheque would mature for presentation. In Sunil Todi v. State of Gujarat [ 2021 (12) TMI 175 - SUPREME COURT] , a two judge Bench of this Court expounded the meaning of the phrase debt or other liability . It was observed that the phrase takes within its meaning a sum of money promised to be paid on a future day by reason of a present obligation . The court observed that a post-dated cheque issued after the debt was incurred would be covered within the meaning of debt . The court held that Section 138 would also include cases where the debt is incurred after the cheque is drawn but before it is presented for encashment. Section 138 of the Act stipulates that if the cheque is returned unpaid by the bank for the lack of funds, then the drawee shall be deemed to have committed an offence under Section 138 of the Act. However, the offence under Section 138 of the Act is attracted only when the conditions in the provisos have been fulfilled. Proviso (b) to Section 138 states that a notice demanding the payment of the said amount of money shall be made by the drawee of the cheque - This Court has interpreted the phrase the said amount of money as it finds place in proviso (b) to Section 138. In Suman Sethi v. Ajay K Churiwal [ 2000 (2) TMI 822 - SUPREME COURT] the appellant issued a cheque for rupees twenty lakhs in favour of the first respondent. The cheque was dishonoured. A demand notice for an amount higher than the cheque amount was issued. For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation - If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque - The first respondent has made part-payments after the debt was incurred and before the cheque was encashed upon maturity. The sum of rupees twenty lakhs represented on the cheque was not the legally enforceable debt on the date of maturity. Thus, the first respondent cannot be deemed to have committed an offence under Section 138 of the Act when the cheque was dishonoured for insufficient funds. Appeal dismissed.

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