TMI Tax Updates - e-Newsletter
October 15, 2020

Case Laws in this Newsletter:

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

Articles

1. AMENDMENT of S. 50C ALLOWING RELIEF IS CURATIVE AND RETROSPECTIVE MADRAS HC – also speedy justice by Tribunal and High Court.

   By: DEVKUMAR KOTHARI

2. POWER TO EFFECT SEIZURE OF CASH FROM THE REGISTERED PERSON

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Tamil Nadu goes for Option-1, gets permission to borrow an additional amount of ₹ 9,627 crore

2. Twenty States allowed to mobilize ₹ 68,825 crore

3. Cabinet approves demerger of Nagarnar Steel Plant from NMDC Ltd. and strategic disinvestment of demergedentity

4. CCI approves acquisition of shares in CG Power and Industrial Solutions Limited by Tube Investments of India Limited

5. CCI approves acquisition of solar energy generation assets of Adani Green Energy Ten Limited by Adani Green Energy Twenty-Three Ltd

6. Ministry of Finance statement on misinterpretation of LTC stimulus and its benefits

Notifications

Customs

1. 30/2020 - dated 13-10-2020 - ADD

Seeks to amend notification No. 48/2015-Customs (ADD), dated 21st October, 2015 to extend the levy of ADD on imports of “Plain Medium Density Fibre Board of thickness 6mm and above” originating in or exported from China PR, Malaysia, Sri Lanka & Thailand, for a period of three months i.e. upto 20th January, 2021

GST - States

2. 73/2020-State Tax - dated 8-10-2020 - Gujarat SGST

Special procedure for taxpayers for issuance of e-Invoices in the period 01.10.2020 - 31.10.2020

3. 72/2020-State Tax - dated 7-10-2020 - Gujarat SGST

Amendment in Notification No. 13-2020-ST regarding financial year and exports

4. 72/2020-State Tax - dated 7-10-2020 - Gujarat SGST

Gujarat Goods and Services Tax (Eleventh Amendment) Rules, 2020.

5. 71/2020-State Tax - dated 7-10-2020 - Gujarat SGST

Amendment in Notification No. 14/2020-ST regarding implementation of QR Code for B2C invoices w.e.f. 01.12.2020

6. 04/2020-State Tax (Rate) - dated 7-10-2020 - Gujarat SGST

Extending exemption to services by way of transportation of goods from customs station of clearance in India to a place outside India upto 30.09.2021

7. G.O. Ms. No. 57 - dated 2-10-2020 - Puducherry SGST

Seeks to amend Notification G.O. Ms. No. 53, dated the 1st October, 2020

8. GST-2020-21/F. No. 509/53/Commercial Tax - dated 13-10-2020 - Uttar Pradesh SGST

Amendment in Notification No. GST-2020-21/F.No. 509/50/Commercial Tax dated 22.06.2020.

9. 729/2020/7(120)/XXVII(8)/2020/CT-65 - dated 28-9-2020 - Uttarakhand SGST

Amendment in notification no. 344 dated 20-5-2020 regarding enhancement of compliance period till 30-11-2020

10. 728/2020/7(120)/XXVII(8)/2020/CT-64 - dated 28-9-2020 - Uttarakhand SGST

Amendment in Notification No. 430/2019/3(120)/XXVII(8)/2019/CT-21 dated the 31st May 2019

11. 727/2020/7(120)/XXVII(8)/2020/CT-63 - dated 28-9-2020 - Uttarakhand SGST

Appointment of 1-9-2020 for enactment of clause 11 of Uttarakhand GST act (amendment) 2019

Circulars / Instructions / Orders

Customs

1. PUBLIC NOTICE NO. 34 2020 - dated 21-9-2020

Streamlining of UQCs in Export Declarations — Certain relaxations to Licence SBs

2. PUBLIC NOTICE NO. 10 /CCP/JMR/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

3. PUBLIC NOTICE NO. 09/CCP/JMR/2020 - dated 16-9-2020

All India roll-out of Faceless Assessment

Highlights / Catch Notes

GST

• Confiscation of Goods and Vehicle Requires Reasoning u/s 130 CGST Act; Lack of Reasons Suggests Invalid Decision.

  Case-Laws - HC : Confiscation of goods alongwith vehicle - Section 130 of the CGST Act - As is well settled in law, the absence of reasons by an adjudicating authority in the order passed by him would suggest a non application of mind by the adjudicating authority and the presumption to be drawn by the reviewing court is that the adjudicating authority did not have any reason to give. - HC
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• Court Grants Two-Week Extension for Tax Return Upload and Input Credit Claims Under GST Act.

  Case-Laws - HC : Grant of short extension of the registration granted to the petitioner - limited purposes of the petitioner accessing the system to upload its returns and pay tax, as also to avail applicable input tax credit - Revenue/ GSTN directed to allow 2 weeks time for for extension of his registration, so that the petitioner can, during the said period of two weeks, upload the details of the invoices raised by him as also details of the input tax credit claimed by him under the GST Act - HC
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• High Court Orders IGST Refund with 7% Interest for Exporter After Mistake in Drawback Claim Resolved.

  Case-Laws - HC : Refund of IGST paid on export - refund not being paid for the reason that the writ petitioner had inadvertently mentioned the drawback claim under column A instead of column B - Refund granted with 7% interest - HC
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• Court Grants Pre-Arrest Bail to One Applicant in CGST Act Case, Denies for Another Over Evidence Tampering Concerns.

  Case-Laws - HC : Grant of Bail - Taking into consideration, the facts of the case, though the officers under the CGST Act, cannot seek custody of the arrested persons for completing the investigation, respondent’s contention that applicant’s detention in custody is necessary to prevent him from causing the evidence of the offence to disappear or tampering such evidence is well founded - Pre-arrest bail of applicant no.1 is rejected - Pre-arrest bail of applicant no.2 is granted, subject to conditions. - HC
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Income Tax

• Settlement Order Upheld: Revenue's Late Technical Objections Rejected Due to Mutual Benefit and Finality.

  Case-Laws - HC : Validity of Settlement commission order - The settlement was mutually beneficial and acceptable. The money stood accepted without any protest or demur. As such, at a belated stage in the year 2020, more so, after a period of one year from the settlement, Revenue cannot be allowed to raise pleas, technical in nature, particularly when matter stood conclusively decided and concluded even at the end of Revenue. - HC
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• Court Rules on Tax Deduction Eligibility for Deemed Exports Between STP Units u/s 10A of Income Tax Act.

  Case-Laws - HC : Benefit of deduction u/s 10A on the ‘deemed export’ made to another STP unit - the provisions of the Income Tax Act resorts to the provisions of the SEZ Act while considering as to whether the assessee would be entitled for the benefit under Section 10A or 10B of the Act. - HC
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• Section 50C(1) Inapplicable: Six Property Transactions Exempt from Stamp Duty Valuation for Capital Gains Calculation.

  Case-Laws - AT : Capital gain computation - right in land or building - stamp duty valuation - invoking of Section 50C - the present transaction of six properties in question does not warrant invoking of section 50C(1) of the Act as the property in question is not of the nature covered by section 50C(1) of the Act. - AT
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• Undisclosed Income Case u/s 69: Taxpayer Must Prove Source of Deposits; Case Sent for Further Review.

  Case-Laws - AT : Addition u/s 69 as undisclosed income - the burden to prove the source and credibility of deposits and statement of the assessee - opportunity to discharge this burden has to be given to the assessee by the AO - Matter remanded back - AT
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• Tax Rate Hike on Surrendered Income from 30% to 60% Not Rectifiable Under IT Act Section 154.

  Case-Laws - AT : Rectification of mistake u/s 154 - tax rate on surrendered income u/s 115BBE - the action of the Assessing officer in rectifying and increasing the rate of taxation from 30% to 60% and surcharge and cess on such undisclosed income doesn’t come within the purview of section 154 of the Act. - AT
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• Assessing Officer Misapplies Section 2(15), Incorrectly Denies Tax Exemption to Trade Association Lacking Profit Motive Evidence.

  Case-Laws - AT : Exemption u/s 11 - mutual trade association having the main object to safeguard the interest of the industry and trade - Assessing Officer erred in invoking proviso to Sec. 2(15) to treat the activities of the assessee as being non-charitable specifically considering the fact that no material or evidence has been led to show that there was any profit motive in carrying out such activities. - AT
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• Assessee's Claim of Error in 26AS Statement Rejected Due to Lack of Evidence in Contractual Discrepancies Case.

  Case-Laws - AT : Additions on account of mismatch in 26AS (TDS) statement and accounting entries on account of contract report - submission of assessee that difference reflected in 26AS statement is a mistake, however, no evidence has been submitted - Merely stating that there is a mistake cannot suffice. - AT
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IBC

• Corporate Insolvency Resolution Process threshold raised to Rs. 1 crore under IBC to protect small businesses; pending cases unaffected.

  Case-Laws - AT : Enhancement of minimum amount of default limit from one lakh to 1 crore for initiating CIRP as against small and medium scale industries - the said notification will not apply to the pending applications filed before the concerned ‘Adjudicating Authority’ (Authorities), under IBC (waiting for admission), prior to the issuance of the aforesaid notification, as opined by this Tribunal - AT
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Central Excise

• Tribunal Can Rule on Interest-Only Issues Regardless of Amount u/s 35D(3) of Central Excise Act 1944.

  Case-Laws - AT : Jurisdiction - Whether the single member bench of this tribunal is having the jurisdiction to decide the issue involving only interest irrespective of any amount in terms of Sec. 35D (3) of Central Excise Act, 1944 or not? - Held Yes - AT
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Case Laws:

• GST

• 2020 (10) TMI 574
  Confiscation of goods along with vehicle - Section 130 of the Goods and Service Tax Act - principles of natural justice - HELD THAT:- In the instant case, the learned Government Pleader fairly conceded that there was no statement of reasons that accompanied Exts.P4 and P4(a) orders, but all that the adjudicating authority had done was to enclose the separate sheets that had accompanied the notices issued in Form GST MOV-10 (Exts.P3 and P3(a)) to the assessee. In fact paragraph 2 of Form GST MOV-11 contemplates the separate enclosure of the contents of the notice issued in Form GST MOV-10 along with the order that is to be served on the assessee in Form GST MOV-11. The said requirement is over and above the requirement to give reasons to support the demand in the order of confiscation passed in Form GST MOV-11. In as much as it is not in dispute that the reasons that weighed with the adjudicating authority while passing the impugned orders of confiscation were not enclosed with the said orders, Exts.P4 and P4(a) orders have to be quashed on the ground that they do not reflect an application of mind by the adjudicating authority on the objection/ explanation of the assessee against the proposal for confiscation - As is well settled in law, the absence of reasons by an adjudicating authority in the order passed by him would suggest a non application of mind by the adjudicating authority and the presumption to be drawn by the reviewing court is that the adjudicating authority did not have any reason to give. The matter is remanded to the adjudicating authority for a reconsideration of the matter and to pass fresh orders after hearing the petitioner - petition allowed by way of remand.

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• 2020 (10) TMI 573
  Levy of GST on profiteered amount - constitutional validity of Section 171 of Central Goods and Services Tax Act and Rules 126, 127 and 133 of the CGST Rules - HELD THAT:- Keeping in view the orders passed by this Court in PHILLIPS INDIA LIMITED VERSUS UNION OF INDIA ORS. [ 2020 (6) TMI 626 - DELHI HIGH COURT] as well as M/S. SAMSONITE SOUTH ASIA PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2020 (7) TMI 526 - DELHI HIGH COURT] and M/S. PATANJALI AYURVED LTD. VERSUS UNION OF INDIA ORS. [ 2020 (7) TMI 614 - DELHI HIGH COURT] , this Court directs the petitioner to deposit the principal profiteered amount i.e. Rs. 25,53,454/- (Rs. 30,13,058/- minus Rs. 4,59,604/-) in six equated installments commencing 02nd November, 2020. The interest amount directed to be paid by the respondents as well as penalty proceedings are stayed till further orders. List on 03rd November, 2020.

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• 2020 (10) TMI 572
  Grant of short extension of the registration granted to the petitioner - limited purposes of the petitioner accessing the system to upload its returns and pay tax, as also to avail applicable input tax credit - HELD THAT:- In the instant case, the original certificate of registration (Ext.P1) granted to the petitioner was only for a limited period of about 30 days. In other words, the petitioner did not seek a registration for a period which it could have applied for. However, on account of the Covid-19 pandemic situation, the petitioner could not upload the details regarding the invoices issued during the period for which it was granted registration, and in relation to the work that was done during the said period. When it tried to apply for a short extension of the registration so as to complete the process, it was met with a situation where it could not access the online portal because it did not have a valid registration at that time. No doubt, the period of extension permitted under the statute is already over by now, but I am of the view that the petitioner cannot be faulted for his inability to access the system for the purposes of seeking an extension of the registration period. Thus, by excluding the period during which the petitioner could not access the system for extension of his registration, it is deemed appropriate to direct the respondent to extend the registration period of the petitioner for a period of two weeks from the date of receipt of a copy of this judgment, so that the petitioner can, during the said period of two weeks, upload the details of the invoices raised by him as also details of the input tax credit claimed by him under the GST Act - petition allowed - decided in favor of petitioner.

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• 2020 (10) TMI 571
  Refund of IGST paid on export - refund not being paid for the reason that the writ petitioner had inadvertently mentioned the drawback claim under column A instead of column B - HELD THAT:- Similar issue had arisen and was duly dealt with by a Division Bench in its judgement M/S AMIT COTTON INDUSTRIES THROUGH PARTNER, VELJIBHAI VIRJIBHAI RANIPA VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS [ 2019 (7) TMI 472 - GUJARAT HIGH COURT] - The said judgement has attained finality and this Court, while allowing the petition, directed for refund of the IGST paid in regard to the good exported with 7% simple interest from the date of shipping bills till the date of actual refund. The present petition also deserves to be allowed in the same terms, and is, accordingly, allowed.

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• 2020 (10) TMI 570
  Grant of Pre-arrest Bail - non-bailable offence in terms of Section 132(1)(b) and (c) read with Section 132(5) of the Central Goods and Services Tax Act, 2017 - main allegation of the respondents is that, applicants are guilty of circular trading by claiming Input Tax Credit on the materials never purchased and passing on such Input Tax Credit to companies to whom they never sold any goods - HELD THAT:- It is to be noted that, applicants in their written submissions did not explain why applicants could not produce invoices and other documents before the respondent-Officer and further when such invoices came in their possession. Applicants ought to have been explained and furnish the explanation in view of the fact that, M/s. Jai Bajrang Traders, the sole supplier has lodged FIR against the applicants for forging the invoices - Be that as it may, when respondents were confronted with these invoices and transport receipts, learned Counsel for the respondent would submit that invoices and transport bills were submitted to the office of the respondents recently. He would submit, some of the invoices and transport bills were verified by the Officer which revealed that, many of the vehicle numbers are bogus and further also found that vehicle s registration date is latter then the lorry receipt dates. Taking into consideration, the facts of the case, though the officers under the CGST Act, cannot seek custody of the arrested persons for completing the investigation, respondent s contention that applicant s detention in custody is necessary to prevent him from causing the evidence of the offence to disappear or tampering such evidence is well founded - in the larger interest of the public and the State, in serious cases like this, I am not inclined to exercise discretion under Section 439 of the Criminal Procedure Code in favour of applicant no.1. Pre-arrest bail of applicant no.1 is rejected - Pre-arrest bail of applicant no.2 is granted, subject to conditions viz. that in the event of her arrest, she shall be released on bail on furnishing bond in the sum of Rs. 50,000/- with one or more sureties in the like amount - prayer dismissed.

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• Income Tax

• 2020 (10) TMI 569
  Validity of Settlement commission order - Revenue attempts to reopen one such settlement after a period of more than one year on account of a single observation made in the order, It is not practicable for the Commission to examine the records and investigate the cases for proper settlement - HELD THAT:- If the Settlement Commissioner had all records before him, Revenue had duly made its representation, and the Settlement Commission had thereinafter accepted the settlement, to us the only way of reading the impugned sentence is that the matter was straightforward on the face of the record. It is also not disputed before us that the Settlement Commission necessarily was required to pass orders before 31.3.2008, else the proceedings would have abated. Revenue has not pointed any finger of misconduct against any one of the members of the Settlement Commission. Even before us, the integrity and ability of the members of the Settlement Commission are not in doubt. In this background, can an isolated sentence, purportedly crept into the order, be allowed to defeat the object and purpose sought to be achieved with the enactment in question? Impugned order stood passed in the presence of the Revenue and none objected to the same. As per the assessee of which we do not express any opinion, the stand taken is highly immoral for the Authorities to file the instant petition even though enhancement is to the extent of 100 per cent. And the amount deposited in terms thereof was accepted without any protest or demur. All this is for the Settlement Commission to examine if the need so arises. The settlement was mutually beneficial and acceptable. The money stood accepted without any protest or demur. As such, at a belated stage in the year 2020, more so, after a period of one year from the settlement, Revenue cannot be allowed to raise pleas, technical in nature, particularly when matter stood conclusively decided and concluded even at the end of Revenue. Further, with the mere change of the Revenue Officer, opinion cannot be allowed to change.

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• 2020 (10) TMI 568
  Proportionate deduction u/s 80IB - profits attributable to the units, where the built up area is below 1500 sq.ft.- Whether Tribunal was right in law in holding that the assessee is entitled to claim deduction under Section 80IB in respect of profits derived from sale of residential units, wherein the built up area is below 1500 sq.ft. without appreciating the fact that the deduction under Section 80IB(10) is project based rather than unit and there is no concept of proportionate deduction u/s 80IB(10)? - HELD THAT:- For the reasons assigned by us in the order passed [ 2020 (9) TMI 1137 - KARNATAKA HIGH COURT] , the substantial questions of law are answered against the revenue and in favour of the assessee.

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• 2020 (10) TMI 567
  Exemption u/s 11 - Charitable activity u/s 2(15) - AO came to the conclusion that assessee was engaged in the Area Development and Town Planning and carrying out the activity of general public utility assessee was not carrying out any charitable activities and was squarely covered by proviso 1 2 to Section 2(15) r/w Section 13(8) - HELD THAT:- Functions of the respondent assessee are for charitable purposes and for general public utility and therefore, the respondent assessee is entitled to exemption under Section 11 of the Act. Following the judgment of this Court in the case of Ahmedabad Urban Development Authority [ 2017 (5) TMI 1468 - GUJARAT HIGH COURT] present appeal fails and is hereby dismissed. Substantial questions of law as framed are answered in favour of the assessee

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• 2020 (10) TMI 566
  Exemption u/s 11 - Charitable activity u/s 2(15) - AO came to the conclusion that income of the assessee is business income since such receipts were in the nature of trade or commerce and it exceeds Rs. 25 lakh - HELD THAT:- Functions of the respondent assessee are for charitable purposes and for general public utility and therefore, the respondent assessee is entitled to exemption under Section 11 of the Act. Following the judgment of this Court in the case of Ahmedabad Urban Development Authority [ 2017 (5) TMI 1468 - GUJARAT HIGH COURT] present appeal fails and is hereby dismissed. Substantial questions of law as framed are answered in favour of the assessee

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• 2020 (10) TMI 565
  Revision u/s 263 - additions on the basis of the report of the special audit - payment to the related parties covered u/s 40A(2)(b) including the job work charges, purchases of services, etc. - HELD THAT:- The finding of fact recorded by the Appellate Tribunal, after due consideration of the relevant aspects of the matter, is that the assessment order was framed u/s 143(3) of the Act after due verification by the A.O. - order of the AO could not be said to be erroneous and prejudicial to the interest of the Revenue. The Tribunal has also recorded a finding that the assessee had furnished complete details of the parties and the accounts. We are convinced with the reasonings assigned by the Appellate Tribunal while allowing the appeal of the assessee. We are of the view that none of the three questions proposed by the Revenue could be termed as the substantial questions of law.

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• 2020 (10) TMI 564
  Benefit of deduction u/s 10A on the deemed export made to another STP unit - the receipt was routed through the banking channel by convertible foreign exchange - whether a transaction is an export or a deemed export and not on the quantum of deduction, which the assessee is entitled to? - HELD THAT:- A proper reading of Section 27 of the SEZ Act would mean that the benefit, which will accrue to the assessee will be subject to the modification specified in the Second Schedule and it would mean fulfillment of certain conditions for being entitled to the benefit of the special provision namely Section 10AA of the Act. The provisions of the SEZ Act cannot be ignored because of the fact that the terms developer , entrepreneur and authorized operations are not defined under the Income Tax Act, but they are defined under the SEZ Act, which, being a special Statute, will have to be applied to consider as to whether the transaction is an export or a deemed export . This is amply made clear by the provisions of Section 53 of the SEZ Act, which states that a Special Economic Zone shall, on and from the appointed day, be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations . CBEC issued a clarification vide Circular No. 1001/8/2015-CX.8 dated 28.4.2015 with regard to rebate of duty on goods cleared from DTA to SEZ, which clearly explains the concept of a deemed export and also states that the provisions of the SEZ Act shall have overriding effect of the provisions of the Income Tax Act in case of any inconsistency. In the instant case, there was no inconsistency. Rather, the provisions of the Income Tax Act resorts to the provisions of the SEZ Act while considering as to whether the assessee would be entitled for the benefit under Section 10A or 10B of the Act. The receipt was routed through the banking channel by convertible foreign exchange - Decided in favour of assessee. Allowance of expenditure incurred towards telecommunication u/s 10A - whether it has inextricable nexus to the export made by the appellant ? - HELD THAT:- This second substantial question of law admitted is, in effect, a question of fact and that the Tribunal affirmed the order passed by the Commissioner of Income Tax (Appeals)-3, Chennai-34 [hereinafter called the CIT(A)], who remanded the matter to the Assessing Officer for a fresh consideration.

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• 2020 (10) TMI 563
  Capital gain computation - right in land or building - invoking of Section 50C - As per AO consideration received by the assessee as a result of the transfer of the six properties in question was lower than the value adopted by the Stamp Valuation Authority for the purposes of payment of stamp duty and Section 50C is to be not invoked - HELD THAT:- The expression land or building in its coverage is quite distinct from the expression any right in land or building . The legislature, in its wisdom, has used the expression land or building or both in Section 50C(1) and not the expression any right in land or building . Express use of one expression would exclude the other, a legal premise which is supported by the judgment of GVK Industries Ltd. [ 2011 (3) TMI 1 - SUPREME COURT] . In this view of the matter, in our considered opinion, the point sought to be raised by the assessee deserves to be upheld. As in MANISH TRADERS VERSUS ITO, WARD 1 (4) , GHAZIABAD. [ 2019 (7) TMI 1268 - ITAT DELHI ] observed that assessee s leasehold right for a period of 90 years in question is a capital asset to which provisions contained u/s 50C are not applicable. Even if for the sake of argument, it is understood to be a new plea, it does not change the complexion of the dispute, inasmuch as the subject matter of the dispute remains to be the efficacy or otherwise of the action of the Assessing Officer of invoking section 50C of the Act. More importantly, it has to be appreciated that the point of law raised by the assessee is competent to be adjudicated, based on the accepted factual position, which is available on record.Report of the DVO dated 21.6.2018 reveals that the nature of property being lease hold , has been specifically noted. Thus, in our considered opinion, there is no merit in the plea of the Ld. C.I.T. DR to prevent the assessee from pursuing the aforesaid argument before us. The defence by the C.I.T. DR, in our view, is misplaced and is hereby negated. We find that the present transaction of six properties in question does not warrant invoking of section 50C(1) of the Act as the property in question is not of the nature covered by section 50C(1) of the Act. Therefore, on this point itself, we set aside the order of the ld. Commissioner of Income Tax(A) and direct the Assessing Officer to delete the addition. - Decided in favour of assessee.

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• 2020 (10) TMI 562
  Addition u/s 69 as undisclosed income - AO treated the cash deposits as undisclosed turnover and estimated the profit at 8% u/s. 44AD - HELD THAT:- AO has stated that he issued notice u/s.142(1) of the Act on 11.4.2016 but there is no mention therein that it was served on the assessee and other several notices were also served. In absence of specific mention regarding the service of such notices, we safely presume that the assessee was not allowed due opportunity of hearing for explaining and substantiating his stand before the AO. Definitely, we are in complete agreement with the contention of D.R. that the burden to prove the source and credibility of deposits and statement of the assessee before the Investigation Wing was on the assessee but opportunity to discharge this burden has to be given to the assessee by the AO. Assessee should be given an opportunity to discharge the burden lay on his shoulder that the impugned account belongs to Shri Pramod Kumar Sundara, which has not been given by the AO. Therefore, ends of justice would meet if the assessee is provided due opportunity of explaining his stand and explanation given before Investigation Wing and to substantiate its claim that the account belongs to Shri Sundara alongwith supporting evidence. Hence, this sole issue is restored to the file of the AO for verification, examination and adjudication - Decided in favour of assessee for statistical purposes.

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• 2020 (10) TMI 561
  Disallowance of business expenditure - assessee has not commenced its business operations - expenses incurred after setting up of business - HELD THAT:- The settled principle is that the expenses incurred after setting up of business and when it is ready for actual commencement of business, is allowable as deduction. The assessee is engaged in the business of real estate development, i.e., it is engaged in the business of acquiring land and developing the same into residential/commercial properties. The question as to when the business can be set up in this kind of business was examined by the co-ordinate bench in the case of Valmark Developers P Ltd [ 2018 (4) TMI 1565 - ITAT BANGALORE] and held that the acquisition of lands for purposes of real estate development would amount to setting up and commencement of business and the expenses claimed by the appellant are allowable. Also see M/S DHOOMKETU BUILDERS DEVELOPMENT PVT. LTD. [ 2013 (4) TMI 668 - DELHI HIGH COURT] In the instant case, there is no dispute with regard to the fact that the assessee has started acquiring lands in 2007 itself. Accordingly, we set aside the view expressed by Ld CIT(A) on this point and direct the AO to hold that the assessee has set up its business. all the expenses related to the project should be taken to Work in Progress . Remaining expenses should be allowed as deduction. If any common expenses have been incurred, then it may be split into project related item and general item on a rational basis. Since this exercise has to be carried out, we restore this issue to the file of AO. Interest income under the head income from other sources - HELD THAT:- In the instant case also, the assessee has failed to demonstrate the business compulsion for making deposits with banks. Accordingly, following the above decision GLOBAL ENTROPOLIS (VIZAG) PVT. LTD. [ 2019 (9) TMI 37 - ITAT BANGALORE] we hold that the Ld CIT(A) was justified in assessing the interest income under the head Income from other sources in assessment years 2012-13 and 2014-15.

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• 2020 (10) TMI 560
  Stay of recovery of outstanding demand - assessee instead of depositing the amount as directed by the Tribunal, filed the present Applications seeking direction to the Assessing Officer to adjust outstanding refund of the earlier assessment years - Economic scenario and financial crises triggered by COVID19 pandemic - HELD THAT:- Though, the Tribunal vide order dated 17/1/2020 directed the assessee to deposit the amount of Rs. 45,00,000/- (Rs. 15,00,000/- for each assessment year) by 15/3/2020, keeping in view the depressed economic scenario and financial crises triggered by COVID19 pandemic we grant leverage to the assessee/applicant to comply with the condition mentioned in Para 5(i) of stay order dated 17/1/2020 by way of adjustment of refund due from the Department. AO is directed to adjust the remaining amount of Rs. 1,30,330/- for AY 2012-13 and Rs. 5,00,000/- for AY 2014-15 against the refund due to the assessee for AY 2008-09, if any and shall report the compliance to the Bench on the next date of hearing of the appeals. In case no refund for AY 2008-09 is due, the AO shall intimate the same to assessee and the assessee shall deposit the said balance amount forthwith and furnish proof of deposit of the amount before the Bench on the next date of hearing of the appeals i.e. 12/11/2020. The stay order shall come into force only after the entire amount as mentioned in stay order dated 17/01/2020 is deposited/adjusted. After the adjustment of refund/deposit of the amount by the assessee, as the case may be, the garnishee notices dated 13/01/2020 shall stand withdrawn by the Department.

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• 2020 (10) TMI 559
  Rectification of mistake u/s 154 - tax rate on surrendered income u/s 115BBE - undisclosed income for the year under consideration - applicability of section 115BBE by default in search cases - as per amended provisions of section 115BBE as applicable in the instant case, the tax rate should have been charged @ 60% on the above surrendered amount - HELD THAT:- There is nothing stated in either the pre-amended or post-amended provisions of section 115BBE that where the assessee surrenders undisclosed income during the search action for the relevant year, the tax rate has to be charged as per provision of section 115BBE - without dwelling further on the applicability of the amended provisions of section 115BBE for the impugned assessment year, the reasoning so adopted by the Assessing officer in terms of applicability of section 115BBE by default in search cases cannot be accepted and in any case, the same is clearly not a mistake which is apparent from the plain reading of the provisions of section 115BBE Tax rate has been charged @ 30% on surrendered income u/s 115BBE of the Act and which is now sought to be rectified in terms of impugned order - Both the income so offered by the assessee as well as rate of taxation has been accepted by the AO and in fact, we find that there is a specific finding by the Assessing officer in the assessment order that the assessee has also paid all due tax with interest in respect of the undisclosed income. No finding that any of the aforesaid provisions so referred in section 115BBE have been invoked by AO during the assessment proceedings and therefore, we find that the contention of the Assessing officer that during the assessment proceedings, the tax rate has been charged @ 30% on surrendered income u/s 115BBE of the Act is not factual correct as not borne out of assessment records and thus, the action of the Assessing officer in rectifying and increasing the rate of taxation from 30% to 60% and surcharge and cess on such undisclosed income doesn t come within the purview of section 154 of the Act. Appeal of the assessee is allowed.

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• 2020 (10) TMI 558
  Taxability u/s 44 - Taxability of life insurance business - consistently followed and accepted accounting policy - transfer between share holder s account and policy holder s account - assessee prepared its accounts as per the format prescribed by the IRDA in tune with the Insurance Act 1938 - HELD THAT:- As decided in own case for AY 2012-13 [ 2019 (11) TMI 1463 - ITAT MUMBAI] the appellant has to prepare its accounts as per the formats prescribed by the IRDA under the Insurance Act, 1938. These accounts have accordingly been prepared by the appellant and have been subject to statutory audit. Further, the accounting policy of claiming 100% depreciation in its financial statements has been consistently followed by the appellant and has also been duly accepted by the IRDA. The appellant has stated that the assets on which depreciation has been claimed have been initially capitalized in the books and then 100% depreciation has been claimed on these assets. Taxation of Lift Insurance is presumptive taxation with only the surplus as disclosed by Form I being subjected to tax - as per the provisions of law only those adjustments which are expressly not prohibited under section 44 of the Act could be made. Consequently depreciation which has been debited in the audited accounts as per the consistently followed and accepted accounting policy need not be disallowed. After considering the rival submissions, we are of the opinion that the action of the CIT(A) in deleting the amount is consistent with the accounting principles followed and the provisions of section 44 read with Rule 2 of the 1st Schedule, Therefore we uphold the order of the CIT(A) and dismiss the ground raised by the Revenue Claim of 100% depreciation on fixed assets - HELD THAT:- Action of the CIT(A) in deleting the amount is consistent with the accounting principles followed and the provisions of section 44 read with Rule 2 of the 1st Schedule, Therefore we uphold the order of the CIT(A) and dismiss the ground raised by the Revenue.

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• 2020 (10) TMI 557
  Reopening of assessment u/s 147 - audit objection relied upon - reopening of assessment in 2nd round of litigation - Non disposing of the objections - HELD THAT:- Assessment is reopened on the basis of audit objection which is nothing but a borrowed satisfaction of the audit party and not AO s own satisfaction. In our opinion there is no application of mind by the AO while recording the reasons under section 148(2). Reopening of assessment proceedings is not based upon any new tangible material and there being no application of mind on the part of the AO. No infirmity in the order of Ld. CIT(A) on this issue. Further, we note that assessee has also filed objections to reopening for the first time in the set aside proceedings before the AO vide letter dated 13.10.2015 and AO observed that objections could not be disposed off in the second round of litigation. The said non disposal of objections by way of speaking order rendered the entire assessment proceedings as invalid and void. See HINDUSTAN UNILEVER LIMITED (FORMERLY KNOWN AS HINDUSTAN LEVER LTD) [ 2018 (1) TMI 1506 - ITAT MUMBAI] and M/S. BAYER MATERIAL SCIENCE PVT LTD.[ 2016 (3) TMI 179 - BOMBAY HIGH COURT]. Assessment framed without disposing of the objections by way of speaking order is invalid and has to be quashed. In view of the above facts and circumstances and the ratio laid down in the various decisions, we hold that the order of Ld. CIT(A) is correct and pursuant to the ratio laid down by various judicial forums. Accordingly the order of CIT(A) is upheld by dismissing the appeal of the revenue.

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• 2020 (10) TMI 556
  Validity of reopening u/s 147 - addition u/s 2(22)(e) and unexplained cash credit u/s 68 - HELD THAT:- In the present case were reopened by the Assessing Officer for bringing to tax the income on account of deemed dividend u/s 2(22)(e) of the Act that had allegedly escaped assessment as is evident from the reasons recorded by the AO, but no addition was finally made by the AO in the assessments u/s 143(3) r.w.s. 147 for both the years under consideration u/s 2(22)(e) and the addition was made only on the issue of unexplained cash credit u/s 68 which did not form the basis of reasons recorded by the Assessing Officer for reopening of the assessments for both the years under consideration. If these facts of the case, which have remained undisputed or uncontroverted by the ld. DR, are considered in the case of CIT vs. Jet Airways (I) Ltd [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] we find merit in the contention of assessee that it was not open to the Assessing Officer independently to make addition u/s 68 in the assessments completed u/s 143(3) r.w.s. 147 for both the years under consideration and the assessments so made by him without satisfying the requisite condition are liable to be cancelled being bad in law. - Decided in favour of assessee.

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• 2020 (10) TMI 555
  Exemption u/s 11 - mutual trade association having the main object to safeguard the interest of the industry and trade - Assessee says it is a company registered under section 25 of the Companies Act, 1956. Additionally, the assessee has also been granted registration under section 12A - As per AO assessee is a mutual trade association receiving membership contribution and, in turn, members are provided a common platform to avail the facilities provided to the rubber trade - HELD THAT:- As decided in own case [ 2018 (10) TMI 1172 - ITAT MUMBAI] examining all aspects of the issue and taking note of the submissions made by the parties ultimately concluded that the assessee is eligible to avail exemption under section 11 - no justification for the Assessing Officer to hold that since the objects of the assessee seek to promote and protect the interests of a particular trade, industry, the same loses the character of being charitable. Assessing Officer erred in invoking proviso to Sec. 2(15) to treat the activities of the assessee as being non-charitable specifically considering the fact that no material or evidence has been led to show that there was any profit motive in carrying out such activities. Pertinently, there is no rebuttal at any stage to the assertions of the assessee that its activities in the instant years are similar to the activities in the past years. We set-aside the order of CIT(A) and direct the Assessing Officer to allow the exemption Decided in favour of assessee.

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• 2020 (10) TMI 554
  Validity of reopening of assessment u/s 147 - information received from the Investigation Wing - reopening a completed assessment after four years - assessee has received share application money from accommodation entry providers - HELD THAT:- Specific query was raised in respect of share application money and vide reply assessee furnished all details as required by the Assessing Officer. Pursuant to the reply of the assessee and on perusal of the details, the Assessing Officer issued notice u/s 133(6) of the Act to the three share applicant companies. Not only these companies complied with the notices received u/s 133(6) of the Act from the Assessing Officer, but all of them filed confirmations, confirming the transactions along with bank statements and copies of Income Tax returns. No hesitation to hold that the observation of the Assessing Officer that the share applicant companies are non-est is without any basis. Original assessment was completed after due verification from share applicant companies and share applicant companies have been assessed to tax u/s 153C read with section 153A of the Act post search and post enquiries made by the Assessing Officer. Considering the totality of the facts of the case in hand, we find that reopening is nothing but change of opinion when every aspect was examined in the original assessment proceedings - Decided in favour of assessee.

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• 2020 (10) TMI 553
  Estimation of income - bogus purchases - purchases through the grey market - HELD THAT:- In several decisions it has been held that disallowance on account of bogus purchases should be done by reducing the gross profit already disclosed from the standard 12.5% disallowance being done. Hon ble Jurisdictional High Court in the case of Adam H Kazi [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] has held that the disallowance regarding bogus purchases should be restricted to the difference between gross profit on normal purchases and purchases through bogus routes. We also note that several decisions that ITAT has considerably lowered the disallowance on account of bogus purchase. Accordingly, we direct that disallowance in this case be restricted to 10% of the bogus purchases. Additions on account of mismatch in 26AS (TDS) statement and accounting entries on account of contract report - submission of assessee that difference reflected in 26AS statement is a mistake, however, no evidence has been submitted - HELD THAT:- Merely stating that there is a mistake cannot suffice. The issue needs proper verification at the level of AO. Hence, we remit this issue the file of AO to examine has assessee s submission that the said receipt reflected in 26AS statement is factually incorrect. The assessee should be granted adequate opportunity of being heard.

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• 2020 (10) TMI 552
  Disallowance u/s 14A r.w. Rule 8D(2)(iii) on average investments - assessee has argued that the investment which yielded the exempt income is liable to be considered to assess the expenditure towards the exempt income u/s 14A read with Rule 8D - HELD THAT:- In view of the observation made by the Special Bench Delhi in the case of Vireet Investment [ 2017 (6) TMI 1124 - ITAT DELHI ] we set aside the finding of the CIT(Appeals) on the issue and direct the AO to assess the expenses to earn the exempt income by excluding the investment which did not yield the exempt income. Accordingly, we decide this issue in favour of the assessee. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]

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• 2020 (10) TMI 529
  Depreciation on plant and machinery claimed by the appellant given and leased various parties - HELD THAT:- As in case SBI. HOME FINANCE LTD. [ 2005 (8) TMI 34 - CALCUTTA HIGH COURT] held that the ingredients of ownership and user of the plant in business as required Under the provisions of Section 32 of the act have been fulfilled by the assessee and therefore it is entitled to depreciation available to it u/s 32 of the act. In M/S COSMO FILMS LIMITED [ 2011 (7) TMI 32 - DELHI HIGH COURT] held that once it is established that the ownership of the said equipment is that of the assessee, then it is clear that the respondent/assessee would be entitled to claim depreciation. In the present case lease rental is received regularly and has been shown in the Profit Loss A/c. The other parties who are paying lease rentals to the assessee have shown lease rental paid to the assessee. The department has not brought a single case on record that the parties who had paid lease rental has not shown/claimed the deduction on account of lease rental but has claimed deduction of interest paid to assessee. Moreover, the assessee has produced the certificates from the lessee that they have not claimed any depreciation on these assets, which are owned by the assessee. No material contrary to the above facts was shown by the revenue. We direct the learned assessing officer to delete the disallowance of depreciation on plant and machinery as claimed by the appellant on plant and machinery given and leased various parties. - Decided in favour of assessee.

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• 2020 (10) TMI 528
  Disallowance u/s 14A - CIT-A deleted the disallowance on account of interest expenditure however sustained the disallowance of administrative expenditure - assessee has submitted that it has huge interest free funds available with it which far exceeds the amount of investment made in those securities which yielded tax free exempt income u/s 10 (34) - HELD THAT:- Naturally the presumption would be available in favour of the assessee that, if the amount of investment made in such a tax free earning investments does not have any nexus with interest bearing borrowed funds, that the amount of investment made by the assessee in such exempt income-yielding instrument is out of interest free funds available with assessee. DR could not show that the amount of investment made by the assessee in those investments, which earned tax-free income, is higher than the amount of share capital and free reserve available with the assessee. In view of this, we do not find any infirmity in the order of the CIT A in deleting the disallowance u/s 14 A on account of interest expenditure following the decision of Reliance Utilities And Power Ltd [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] . Accordingly, we find no infirmity in the order so far as the disallowance on account of interest expenditure is deleted. Administrative expenditure disallowance applying the ratio of administrative expenditure with respect to the dividend income to the total receipt of the assessee and thereafter making a proportionate disallowance is unwarranted. As in absence of proper rule for computation of disallowance, which came into effect only for assessment year 2008 09, the above method cannot be upheld. Therefore looking to the past assessment records wherein for assessment year 2004 05 the disallowance was restricted to Rs. 2 lakhs and for assessment year 2006 07 the disallowances restricted to Rs. 10 lakhs, we further direct the learned assessing officer to restrict the disallowance of expenditure to Rs. 10 lakhs only for this year too. Addition on account of interest on bonds disallowed u/s 43B - interest on PP bonds payable to unit trust of India - CIT(A) had held that the Assessment cannot be expected to comply with the law and the return had been filed as per the law prevailing at that time and hence the deduction of interest was allowable - HELD THAT:- Under clause (d) of Section 43B, shall be allowed, if such interest has been actually paid and any interest referred to in that clause which has been converted into a loan or borrowing shall not be deemed to have been actually paid. Therefore, the provision of the law amended retrospectively clearly provides that when such interest not actually paid but is converted into loan or borrowing it cannot be considered as actually paid for the purpose of its allowablity u/s 43B of the act. Even otherwise the issue is squarely covered against the assessee by the decision in case of Commissioner of income tax versus Gujarat Cypromet Ltd [ 2019 (2) TMI 1599 - SUPREME COURT] which is rendered with respect to assessment year 2001 02. - Decided against assessee. Depreciation on lease assets - HELD THAT:- As in assessee s own case [ 2020 (10) TMI 529 - ITAT DELHI] wherein we have allowed the claim of the assessee holding that assessee is owner of the asset and is entitled to the depreciation on lease assets. Addition of provision for bad and doubtful that which is debited to the profit and loss account as reserve while calculating book profit u/s 115JB - HELD THAT:- In view of the retrospective amendment by The Finance Number 2 Act, 2009, with retrospective effect from 1 April 2001, any amount or amount set aside as a provision for diminution in the value of any asset is required to be added back to the book profit as per explanation (1) of Section 115JB - The amount of provision for bad and doubtful debts is definitely a diminution in the value of the asset i.e. book debts, therefore, it is also required to be added back to the book profit. It may also be a reserve created by making a provision out of bad and doubtful debts for the future losses that may arise out of debts. We dismiss ground of the appeal of the assessee. Levy of interest u/s 234C - AO directed to charge the interest u/s 234C for short payment/deferment of the advance tax - HELD THAT:- We find that the issue squarely covered in favour of the assessee by the decision of Smt. Premlata Jalani [ 2003 (7) TMI 62 - RAJASTHAN HIGH COURT] as in this case also the capital gain arose after the last date of payment of the last installment of advance tax by the assessee for the impugned assessment year. Further provisions of Section 234C does not apply to any shortfall in the payment of the tax due on the returned income of such thoughtful is on account of under is to of the amount of capital gain. Disallowance u/s 14A - non recoding of satisfaction by AO - HELD THAT:- Before applying the theory of apportionment, the Assessing Officer needs to record satisfaction that having regard to the kind of the assessee, suo motu disallowance under section 14A was not correct. It will be in those cases where the assessee in his return has himself apportioned but the Assessing Officer was not accepting the said apportionment. In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, nature of loan taken by the assessee for purchasing the shares/making the investment in shares is to be examined by the AO. In the present case, we do not find any such satisfaction recorded by the assessing officer with respect to the disallowance made by assessee on its own. In view of this, we hold that no disallowance u/s 14 A can be made in absence of proper satisfaction. Computing the book profit with respect to the disallowance made in the original computation of the income u/s 14 A - HELD THAT:- This issue is squarely covered in favour of the assessee by the decision of Vireet investments private limited [ 2017 (6) TMI 1124 - ITAT DELHI] wherein it has been held that holding that the computation under clause (f) of Explanation 1 to section 115JB(2). is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income-tax Rules, 1962.. Accordingly we restore this ground of appeal back to the file of the learned assessing officer to decide the issue without resorting to the rule 8D of the income tax rules for disallowing expenditure in relation to the exempt income by working out the book profit. Fringe benefit tax credit to the book profit u/s 115JB - No disallowance to be made. Short interest was paid u/s 244A - revised return was processed u/s 143 (1) wherein the refund was determined of the above sum and interest u/s 244A - claim of the assessee is that the amount of refund and its interest should have been granted at the rate of 0.5% for a month from first day of April of assessment year to the date of actual refund - HELD THAT:- In the present case, the assessee filed original return in time without claiming any refund. Subsequently on 31st of March 2011, the assessee revised return after two years and claimed the substantial refund. In the revised return, the assessee submitted the details of the certificate as well as the claim were made. Therefore, it is apparent that the delay of claim of the refund is on account of the assessee and therefore the revenue is not obliged to grant interest to the assessee for this period. In view of this, we do not find any infirmity in the order of the learned CIT A in refusing to grant interest to the assessee as claimed by it. In the result, appeal of the assessee is dismissed.

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• Customs

• 2020 (10) TMI 550
  Waiver of charges in accordance with the existing policy of Container Corporation of India Limited. - HELD THAT:- The petitioner undertakes that the aforesaid balance amount along with any additional demurrage shall be paid within four weeks. He craves leave and liberty to file an application (after making the aforesaid payment) with respondent no.2-Container Corporation of India Limited for waiver of charges in accordance with the existing policy of Container Corporation of India Limited. - The aforesaid undertaking and statement is accepted by this Court and the petitioner is held bound by the same. The petitioner is also given liberty to file an application for waiver and the same shall be decided by the Container Corporation of India Limited in accordance with law. 6. In the event of breach of the aforesaid undertaking, respondent no.2Container Corporation of India Limited shall be at liberty to auction the nine containers of the petitioner forthwith. Petition disposed off.

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• 2020 (10) TMI 549
  Misdeclaration of imported goods - Aluminium Scrap Tread - old and used pipes were found - restricted goods or not - Special Import License (SIL) for the import not submitted - rejection of transaction value - Confiscation - redemption fine - penalty - HELD THAT:- Since, correct information was not furnished in the import documents, the transaction value was appropriately rejected under Rule 12 of the Customs Valuation Rules, 2007 and the value was re-determined considering the same as serviceable goods. The appellant had not submitted any plausible evidence either before the authorities below or the Tribunal that the goods in question were corresponding to the declaration made in the Bill of Entry. Thus, the appellant is exposed to the consequences provided under the statute for payment of differential duty, fine and penalty. Appeal dismissed.

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• Insolvency & Bankruptcy

• 2020 (10) TMI 551
  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 evident that the Petitioners in these three I.B. Petitions have issued some cheques towards unsecured loan to the Corporate Debtor Company between the period of 13.12.2006 to 24.01.2007 (in respect of CP(IB) No. 36 of 2018) and further, between 29.01.2007 to 18.05.2010 (in respect of CP(IB) No. 37 of 2018) while the Petitioner in CP(IB) No. 35 of 2018 has contended that he made payment of rupees three (03) lakh towards investment to the company during the year 2006 - 2007. Thus, all the petitioners in these petitions have contended that they are entitled to receive their money back along with 2% interest per month (i.e. 24% per annum) which was deposited with Corporate Debtor. However, it is found that the petitioners have issued notice for repayment of money deposited (given as unsecured loan) only on 28.07.2017 and 11.10.2017 which is apparently beyond three (03) years of date of disbursement of loan or issuance of cheque. Hence, their such claim/debt is barred by the Limitation. It is now the well settled legal position by the Hon ble Supreme Court in respect of the I.B. proceedings that the limitation prescribed for filing an I.B. Petition is three (03) years from the date when default has occurred. The present petitioners have filed these petition with some mala fide intention only to create pressure on the Corporate Debtor for recovery of its amount invested or unsecure loan given to the Corporate Debtor without having a formal and written contract and that is too with an exorbitant rate of interest of 24% per annum, which cannot be treated as fair and legally sustainable. Moreover, it appears that the present petition is result of some family dispute arose among them and merely to harass the Respondent/Corporate Debtor - The Corporate Debtor is showing a positive net-worth as per its last balance sheet, hence, it cannot be termed that the company is unable to pay its debts but there may be some dispute with regard to oppression and mismanagement in the company, which is not the subject matter of the present I.B. Petition. There seems bonifiedy on the part of the Corporate Debtor for making payment of debts and by offering the demand draft in the open court, which was refused to be received by the Petitioner for the reason best known to them. It gives such impression that the petitioner is not having any bona fide intention to seek revival or resolution of the debt stressed company and want to use this forum as a court of recovery of its disputed debts - there is no proof of default of the debt on the part of the Corporate Debtor because it earlier has tendered a cheque in favour of the petitioner. Petition dismissed.

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• 2020 (10) TMI 548
  Liquidation of Corporate Debtor - Section 33 of the Insolvency and Bankruptcy Code 2016 - HELD THAT:- Liquidation of the Corporate Debtor should be a matter of last resort. The IBC recognizes a wider public interest in resolving corporate insolvencies and its object is not the mere recovery of monies due and outstanding. The appellant has indicated its bona fides, at least prima facie at the present stage, by unconditionally agreeing to subject itself to the forfeiture of an amount of Rs. 20 crores, which has been deposited by it, in the event that it fails to comply with the requirement of depositing an additional amount of Rs. 50 crores within a period of three months in terms of the understanding that was arrived at on 25 February 2020. In order to enable the appellant to have one final opportunity to do so, we direct that the appellant shall, in order to demonstrate its bona fides deposit an amount of Rs. 50 crores upfront in terms of the understanding which was arrived at on 25 February 2020. The following interim directions are issued: (i) The operation of the impugned order of the NCLAT dated 8 September 2020, is stayed; (ii) The appellant shall, in order to demonstrate its ability to implement the Resolution Plan and in compliance with the understanding arrived at on 25 February 2020 deposit an amount of Rs. 50 crores, on or before 10 January 2021; and (iii) The auction of the properties of the Corporate Debtor shall remain stayed in the meantime. The appeal shall be listed on 12 January 2021.

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• 2020 (10) TMI 547
  Enhancement of minimum amount of default limit from one lakh to 1 crore for initiating CIRP as against small and medium scale industries - whether notification is under section 4 of the Code raising the minimum default limit be applicable to the applications pending for admission? - initiation of CIRP - HELD THAT:- In the instant case on hand, it is crystalline clear that the Corporate Debtor had accepted and agreed to make payment of the outstanding debt, as rightly observed by the Adjudicating Authority in the impugned order. In short, no iota of any dispute / controversy was raised by the Corporate Debtor . The 2nd Respondent / Operational Creditor issued a Demand Notice to the Corporate Debtor owing to the failure in effecting payment of the outstanding debt. In reality, the Demand Notice was served on the Corporate Debtor on 01.08.2019, which is not disputed. For the Demand Notice in issue, the Corporate Debtor had not given any reply to the 2nd Respondent / Operational Creditor. Although, adequate opportunities were provided to the Corporate Debtor by the Adjudicating Authority no endeavor was made to make payment in respect of the outstanding debt. On a careful consideration of respective contentions advanced on either side and considering the facts and circumstances of the instant case in a conspectus fashion holds unhesitatingly that the notification dated 24.03.2020 of the Ministry of Corporate Affairs, Government of India, is prospective in nature and it is not retrospective or retroactive in nature. Further, the said notification will not apply to the pending applications filed before the concerned Adjudicating Authority (Authorities), under IBC (waiting for admission), prior to the issuance of the aforesaid notification, as opined by this Tribunal - the conclusion arrived at by the Adjudicating Authority in the impugned order to the effect that the notification dated 24.03.2020 of the Ministry of Corporate Affairs, Government of India, shall be considered as prospective and not retrospective and the finding that there was no payment on the side of Corporate Debtor after receipt of Demand Notice, no pre-existing dispute also alleged or proved and ultimately admitting the application filed by the 2nd Respondent / Operational Creditor are free from legal infirmities. Appeal dismissed.

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• 2020 (10) TMI 546
  Reclassification of debt owed by the Corporate Debtor to the Applicant as financial debt - inclusion of Applicant in the CoC as a financial creditor - return of scheduled equipment to a working condition after carrying out the necessary repairs and handover the same once done at a location specified by the Applicant at that time, at the cost of the Corporate Debtor - inclusion of lease rental till the date of the handover of the scheduled equipment - possession of the scheduled equipment. Reclassification of debt owed by the Corporate Debtor to the Applicant as financial debt - HELD THAT:- This Adjudicating Authority has directed the RP to reconsider the decision only to the extent of the differential amount, such being the case, the reduction of the claim of the Applicant from Rs. 60,68,03,736.16/- to Rs. 12,73,69,756/- on the pretext of the order of this Adjudicating Authority is unfair and such reduction does not hold good in the eyes of Law - in relation to the reclassification of the debt from Financial debt to Operational debt on the pretext of order of this Adjudicating Authority also does not hold any good as there is no any specific finding regarding classification of debt in the above referred order. With regards to other prayers, this Adjudicating Authority observes that the equipment of the Applicant herein is lying in the premises of the Corporate Debtor and that the RP vide its letter dated 19.09.2019, has requested the Applicant to remove the Equipments from its premises and also indicated that it would charge a penalty of Rs. 1 lakh per day. Further it is not in dispute that the equipment is not in Workable condition and the railway track is damaged, because of which the said Equipment could not be transferred to the Applicant - The Applicant relied on the Clause 18 of the Lease Agreement, wherein it is stated that it would be the Lessee s obligation to ensure that the equipment is handed over in the same operating order and condition as originally delivered to the lessee and at a place notified by the Lessor at the cost of the Lessee. However, the Applicant herein itself has waived Clause 18 vide its letter dated 21.11.2018, written to the RP wherein it has made a request to permit Applicant to remove the Equipment from the premises of the Corporate Debtor, the cost of which was to be borne by the Applicant itself. Therefore, the applicant cannot insist on execution of Clause 18 in its original form. This Adjudicating Authority, to put to rest the controversy surrounding this issue, hereby directs the RP to get the railway track repaired as soon as possible for transportation of Equipment in as is condition. However, minor repair only, if any, required for smooth transportation of the Equipment, may be carried out. Lease Rentals during the CIRP - HELD THAT:- This Adjudicating Authority observes that the Applicant herein was willing to take out its Equipments from the premises of the Corporate Debtor as indicated by its letter dated 21.11.2018. However, due to some circumstances including disrepair of the railway track, it was unable to do so. Thus, the Applicant alone cannot be said to be in default for non-removal of the Equipment. Further, till the time equipment is lying in the premises of the Corporate Debtor, it is deemed to be used by the Corporate Debtor - this Adjudicating Authority deems it proper to direct the RP to include such amounts as CIRP costs towards the lease rentals for the period starting from 29.08.2018 i.e., date of initiation of CIRP, till the date the railway tracks are made ready by the RP for removal of the Equipment from the premises of the Corporate Debtor by the Applicant. Application disposed off.

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• 2020 (10) TMI 545
  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 is of the view that referral fee though not agreed to be paid under any agreement between the parties, was being considered to be paid and several disputes have been raised by the Corporate Debtor before the issuance of section 8 demand notice vide above said emails. It can be said that there is a pre-existing dispute regarding the quantum of referral fee and a plausible dispute has been raised by the Corporate Debtor before the issuance of demand notice and therefore there is no crystallization of debt due and payable by the Corporate Debtor in the absence of any agreed terms - Petition dismissed.

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• 2020 (10) TMI 544
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Petition made by the Operational 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 more than minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Application admitted - Moratorium declared.

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• 2020 (10) TMI 543
  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:- The corporate debtor is having outstanding debt liability towards payment of materials were supplied to it and utilized by it for a sum of Rs. 9,42,841/- such amount is obviously is more than of one lakh, hence, such attracts triggering of the Corporate Insolvency Resolution Process (CIRP), in respect of the corporate debtor - That apart, the corporate debtor did not deny specifically and categorically about its loan liability for making payment nor paid the balance payment nor refused goods supplied, but utilized the same. Therefore, the corporate debtor is liable to make payment of the aforesaid amount, wherein, the corporate debtor has failed. Thus, the default of outstanding dues has been occurred. Time Limitation - HELD THAT:- As in this matter, the remaining amount is of Rs. 9,42,841/- as against balance due as on 22.09.2017 and the present IB Petition is filed in the year of 2018. Hence, it is found to be filed well within the limitation. Application admitted - moratorium declared.

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• 2020 (10) TMI 542
  Liquidation of the Corporate Debtor - no resolution plan could be accepted - Section 33 and 34 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Since allegations have been made against the Liquidator by some of the Creditors, it is made clear that Resolution Professional is only a Facilitator and he is not the deciding authority for the claims and it is only the CoC who decides the claim. Therefore, I do not find any reason to differ from the decision of the CoC not to appoint Mr. Nitin H Parikh as the Liquidator of the Corporate Debtor - In case some of the Operational Creditors who have complained against the proposed Liquidator, they may refer the matter to the IBBI as IBBI is the Regulator for all Insolvency Professionals registered with them for their investigations and doing the needful at their end. Liquidation of the Corporate Debtor is allowed - application allowed.

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• 2020 (10) TMI 541
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor - existence of debt and dispute or not - HELD THAT:- By filing the reply, the Corporate Debtor admits this fact that originally the loan was sanctioned by Kotak Mahindra Bank Limited but subsequently, the loan was restructured as per the SARFAESI and same was done on the request of the Corporate Debtor, which would be evident from Annexure R-3 enclosed with the Rejoinder at page 16 filed by the Financial Creditor. Financial Creditor means a person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred. Here, in this case, we find as per the assignment letter dated 29.09.2017, loan has been assigned to the Applicant by the Kotak Mahindra Bank, the Original Lender, therefore, the Applicant is a Financial Creditor under Section 5(7) of the IBC, 2016 and the outstanding due which the applicant claimed as a Financial Creditor is a financial debt under Section 5(8) of the IBC, 2016 - there are no force in the contention raised on behalf of the Learned Counsel appearing for the Corporate Debtor that the applicant is not a Financial Creditor and the amount which the applicant claimed is not a financial debt, rather, we are of the considered view that applicant is Financial Creditor and the outstanding due which the applicant claimed comes under the definition of financial debt . The Corporate Debtor has taken the loan from the Kotak Mahindra Bank Ltd. which was subsequently assigned by assignment letter dated 29.09.2017 to the applicant and that has not been paid and the documents enclosed with the application as well as the rejoinder shows that there is a default in payment of the said debt - the application is complete - application admitted - moratorium declared.

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• 2020 (10) TMI 540
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - allegation that Corporate Debtor has also not made any payment after the receipt of the Demand Notice dated 18th December, 2018 and the last part-payment made by the Corporate Debtor was on 18th January, 2017 - HELD 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. When we shall consider the case in hand then we are of the considered view that 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 Mere plain reading of the provision shows that when the payment of account of debt or of interest is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorized in this behalf, a fresh period of limitation shall be computed on the time when the payment was made. Here in the case in hand, all the invoices are in between 3rd September, 2015 to 30th November, 2015, whereas the last payment was made on 18th January, 2017 which is within 3 years from the date of issuance of the invoices as required under article 137 of the Limitation Act, therefore, the last payment was within 3 years from the date of the issuance of the invoice - limitation runs from the last date of payment and when we shall count the date of limitation from 18th January, 2017 then we find that the present application is filed on 11th September, 2019, therefore, it is within 3 years from the date of last payment made by the Corporate Debtor. From the date of last payment that is from 18 January, 2017, the present application is within time - Application admitted - moratorium declared.

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• 2020 (10) TMI 539
  Termination of Power Purchase Agreement - restraint on respondent No. 1 from taking any steps pursuant to thereto or in consequence thereof and for continuance of PPA - HELD THAT:- he Adjudicating Authority is empowered to decide the priorities as well as question of law and facts in matters concerning insolvency resolution as well as liquidation. The Corporate Debtor is undergoing liquidation. GUVNL has issued Termination Notice dated 30.08.2019 when Corporate Debtor is under liquidation. The termination is being questioned when Corporate Debtor is under liquidation. The right of financial creditor is recognized under Article 12.9 of PPA. The applicant being a secured creditor is questioning the termination notice. Therefore, the applicant can maintain the present application before the Adjudicating Authority under section 60(5)(c) of I B Code. Jurisdiction of Tribunal to entertain this dispute - whether the applicant has to approach Gujarat Electricity Regulatory Commission by filing application under section 79 of the Electricity Act, but not before this Tribunal? - HELD THAT:- Now the company is under liquidation. When CERC has categorically stated in para 10 of the order that when moratorium under section 14 of the IBC was pending no proceeding lies before CERC. Relying on the decision of the CERC since the Corporate Debtor is under liquidation and by virtue of Article 12.9 of the PPA, the applicant has to approach the Adjudicating Authority under section 60(5)(c) of the I B Code and not before CERC to decide the dispute. It is true the asset without producing power and supply of power will not meet the object of the Code, viz. maximisation of value of the asset. Termination is not on the ground that power plant is unable to supply power. It is purely on the ground that the Corporate Debtor has gone into liquidation. Therefore, when the unit of the Corporate Debtor is sold as an ongoing concern and then only the object of the Code can be achieved. The Adjudicating Authority has to see the object of the Code, which is maximisation of value of the asset. The financial creditor, who is having security interest be allowed to continue with the secured asset till it is disposed of. Therefore, termination notice dated 30.08.2019 is liable to be set aside to enable the Financial Creditor to dispose of the secured asset as an ongoing concern. The Hon ble NCLAT further held in the appeal that even during the liquidation PPA cannot be terminated. Termination notice set aside - application allowed.

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• 2020 (10) TMI 538
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- A perusal of the counter/objections filed by the Corporate Debtor shows that the Corporate Debtor has only made allegations as against the Financial Creditor, but has nowhere stated or denied that the amount was not disbursed to the Corporate Debtor. A bare perusal of the documents filed by the Financial Creditor viz. the Loan Agreements, the Demand Promissory Notes, the Letter of Confirmation and the Letter of Renewal limits would manifest the fact that the same are fact borne on record and the Corporate Debtor by simply making an allegation that a financial fraud happened between the parties and without placing on record any concrete evidence to substantiate the same, would not absolve the Corporate Debtor s responsibility to repay the amount to the Financial Creditor - The objections raised by the Corporate Debtor are hypothetical and illusory and it does not warrant any interference by this Tribunal. The plea of the Corporate Debtor that financial fraud took place in the company and as a result of which, this Application should be dismissed, does not appear to be plausible and it cannot be considered as a ground for not initiating the CIRP against the Corporate Debtor. All these, the Tribunal has to see that whether there is a financial debt which is due and whether there is any default on the part of the Corporate Debtor and whether the Application filed by the Financial Creditor is within the period of limitation. For the said reasons, the objections, as raised by the Corporate Debtor are rejected. The Financial Creditor has satisfied this Tribunal that there is a financial debt which is due and payable by the Corporate Debtor and the Corporate Debtor has committed a default in repayment of the loan to the Financial Creditor and the Application filed by the Financial Creditor is also within the period of limitation and the Application filed by the Financial Creditor is complete in all respects. Hence, this Tribunal is perforce required to admit the Application as filed by the Financial Creditor - Application admitted - moratorium declared.

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• 2020 (10) TMI 537
  Condonation of delay in filing the requisite Form F under Regulation 9A - Liquidation Process - HELD THAT:- It is evident that not only there has been a delay in lodging the claims with the Liquidator by the Applicant but in appealing against the decision of the Learned Liquidator there has been a delay on the part of the Applicant by more than 5 months in approaching this Tribunal. From the records of this Tribunal, it is evident that no Application seeking for condonation of delay of 5 months has also been filed before this Tribunal, as Section 42 has clearly laid-down, under which it is required of an Appeal to be filed within a period of 14 days from the decision of the Learned Liquidator. In view of the absence of any specific Application seeking for condonation of delay having been filed by the Applicant in approaching this Tribunal by way of an Appeal against the Order of rejection of its claim by the Liquidator beyond the prescribed period of 14 days and well settled principle that there is no equity about limitation , we are unable to entertain this Application/Appeal. In view of the IBC, 2016 being a time bound process as well as the Learned Liquidator being under a compulsion to complete the liquidation process within a period of one year from the date of commencement of liquidation, the application stands dismissed

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• 2020 (10) TMI 536
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - debt dues to financial creditor or not - HELD THAT:- The respondent has not filed reply even after given sufficient opportunities from 11.09.2019. On perusal of the records it is found that on 20.01.2020 the matter was fixed for filing affidavit from the side of the corporate debtor in view of admitting the debt, but, the corporate debtor has failed to file affidavit. However, during the course of hearing, the learned lawyer appearing on behalf of the corporate debtor admitted the debt on receiving instructions from the corporate debtor - On perusal of the records it is found that the letter of authority dated 06.08.2019 issued by Legal head of the applicant company authorising Mr. Kaushik Harjani, is proper and valid. The Adjudicating Authority is of the considered view that there is a debt due to financial creditor and there is default on the part of the corporate debtor. In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the financial debt to the Applicant and the respondent company has acknowledged the debt - Application admitted - moratorium declared.

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• PMLA

• 2020 (10) TMI 535
  Recording of the ECIR - it is contended that the recording of the ECIR is itself bad in law since the Directorate of Enforcement ( ED ) has not followed the procedure prescribed under law, including the mandatory provisions of Chapter XII of the Cr.P.C. HELD THAT:- List on 14th October 2020.

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• Service Tax

• 2020 (10) TMI 534
  Short payment of Service Tax - CHA Services - period Oct. 08 to Dec. 08 - non-inclusion of reimbursable expenses in taxable value for paying the service tax for the period Apr. 06 to Mar. 08. Short payment of service tax - HELD THAT:- The appellant has paid-up the amount and also filed service tax returns in 2009. Only an amount of Rs. 9,073/- with interest stands to be discharged as calculated by the adjudicating authority. Taking note of this fact that the appellant has discharged the service tax for the said period before show-cause notice, the imposition of penalties in this regard is unwarranted - appellant has to pay the balance amount of Rs. 9,073/- with interest if not paid. Inclusion of reimbursable expenses - Apr. 06 to Mar. 08 - HELD THAT:- The demand is made on the expenditure incurred by the appellant as pure agent - The said issue is covered by the decision of the Hon ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. - demand do not sustain. Appeal allowed in part.

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• 2020 (10) TMI 533
  Withdrawal of appeal when declaration filed under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - As per the Scheme, on filing of a declaration, it is deemed that the appeals is withdrawn - HELD THAT:- Taking note of the fact that the appellant has filed declaration under the said scheme, the appeals is dismissed as withdrawn with liberty for the appellant to approach the Tribunal to restore the appeals in case discharge certificate is not issued for the dispute pertaining to this appeals. Appeals dismissed as withdrawn.

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• Central Excise

• 2020 (10) TMI 532
  Jurisdiction - Whether the single member bench of this tribunal is having the jurisdiction to decide the issue involving only interest irrespective of any amount in terms of Sec. 35D (3) of Central Excise Act, 1944 or not? - HELD THAT:- Section 35D (3) of Central Excise Act, 1944 restricts the powers of Single Member Bench of this Tribunal to hear the cases where the dispute is other than determination of any question having a relation to rate of excise duty or value of goods for the purpose of assessment is in issue or the fine or penalty involved does not exist Rs. 50 Lakhs which means a case where the case is determination of any issue in relation to the rate of the duty and valuation of the goods or differential duty, fine or penalty involved are more than Rs. 50 Lakhs, the Single Member Bench of this Tribunal have no jurisdiction to deal the issue. It is settled law that the provision of Section 35D (3) of the Act has to be dealt as it is and no word can be edited or deleted while interpreting the said provision. The Hon ble Apex Court in the case of Commercial Taxes Officer vs. Bombay Machinery Store [ 2020 (4) TMI 769 - SUPREME COURT ] held that we are of the view that interpretation of the Division Bench of Delhi High Court given the case of Arjan Dass Gupta does not lays down correct position of law. In the event, the authorities felt any assessee or dealer was taking unintended benefit under the aforesaid provision of the Act, 1956, then proper course would be legislative amendment. The Tax Administration authority cannot give their own interpretation of legislative provisions on the basis of their own perception of trade practice. The administrative exercise, in effect, would result in supplying words to legislative provisions, as if to cure omissions of the legislature. The Single Member Bench of this Tribunal is having the jurisdiction to decide the issue of interest irrespective of monetary limit. The objections raised by the Revenue are answered that the Single Member Bench of this Tribunal is having the jurisdiction to decide the issue of interest irrespective of any amount. The matter is listed for final hearing on 27.10.2020 alongwith the stay application.

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• Indian Laws

• 2020 (10) TMI 531
  Grant of Bail - Dishonor of Cheque - applicant in his application has submitted that the applicant although is the director of the company Auby Satellite Pvt. Ltd, he did not indulge in any financial dealings and all financial matters were looked after by the co-accused Neeraj Shukla only - HELD THAT:- It has been admitted by the counsel for the applicant that the cheques were indeed given to the complainant. However, it has been submitted that application is pending under Section 138 of N.I. Act and that applicant has appropriate explanation which shall be divulged while defending his case under Section 138 of N.I. Act. It has been stated that the aforesaid cheques were given only for security purposes of the transaction. Despite these arguments the fact remains that applicant admits to have given the cheque to the complainant which could not be encashed. During the submissions it came to light that the applicant is barely an undergraduate whereas in Annexure A/3, which is a permission letter to visit Lakshdweep by ADM Union Territory of Lakshdweep, the applicant is shown to be an engineer with the organization BSNL whereas neither the applicant is an engineer nor he works in BSNL organization. This Court does not feel inspired to allow the bail application of the applicant. Although it appears that there is a transaction of Rs. 7.00 lacs depicted in statements of account, but the fact remains that the applicant company had given two cheques to the complainant total amount of which was Rs. 24,84,000/-. The delay in lodging the FIR has been appropriately explained by the prosecution. The applicant is although in custody since 28.6.2020, however, that in itself is not sufficient ground for the applicant to be released on bail. No case is made out for grant of regular bail under Section 439 of Cr.P.C to the applicant - Bail application rejected.

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• 2020 (10) TMI 530
  Dishonor of Cheque - insufficiency of funds - whether entire amount has been settled by the petitioner? - HELD THAT:- It is seen the respondent is the complainant who lodged a complaint for the offence punishable under Section 138 of Negotiable Instrument Act as against the petitioner and others. The petitioner herein arrayed as A3 who is representing the first accused company, as Managing Director. On purchase of the Electrical goods, the petitioner and others issued 4 cheques to the tune of Rs. 3,25,687/- to the respondent. All the cheques were returned dishonoured, and the respondent proceeded with the complaint for the offence punishable Under Section 138 of Negotiable Instruments Act. According to the petitioner, pending the complaint the petitioner issued another seven cheques to the tune of Rs. 3,25,689/- and all the cheques were encashed by the respondent. Therefore, the entire dues as alleged in the complainant have been settled by the petitioner and even then, the respondent refused to withdraw the complainant. Whereas, the learned counsel for the respondent would submit that pending the complaint, cheques were issued in respect of other dues pertaining to the cheques in the present case. Therefore, the disputed fact is that the entire amount has been settled by the petitioner. The petition is devoid of merits and dismissed.

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