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TMI Tax Updates - e-Newsletter October 2, 2020 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise TMI SMS Detention of goods during stock transfer is illegal as is no element of sale of goods or services in it - Refund to be granted with interest @9% - HC Prize money received from the clubs for winning Horse Race competition is not a taxable supply - No GST liability, not eligible to claim ITC - AAAR Articles GST on Interest Free Maintenance Security News GST mop-up rises 4 pc to ₹ 95,480 cr in September GST Revenue collection for September, 2020 Aatma Nirbhar Bharat Package – Progress So Far Fundamental reset in training of Public Sector Bank officers Clarification on doubts arising on account of new TCS provisions Notifications Customs G.S.R. 601(E) - dated 30-9-2020 - Cus Relaxation of time limit under Central Excise Act, 1944, Customs Act, 1962, Customs Tariff Act, 1975 and Finance Act, 1994 35/2020 - dated 30-9-2020 - Cus Seeks to further amend notification No. 50/2017-Customs dated 30th June, 2017 so as to prescribe 5% BCD on Open Cell for LED/LCD TV Panels. 95/2020 - dated 1-10-2020 - Cus (NT) Exchange rate Notification No.95/2020-Cus (NT) dated 01.10.2020 94/2020 - dated 30-9-2020 - Cus (NT) Sea Cargo Manifest and Transhipment (Third Amendment) Regulations, 2020. DGFT S.O. 3446 (E) - dated 1-10-2020 - FTP Central Government notified annual quota of 1.5 lakh MT for import of Urad [Beans of the SPP Vigna Mungo (L.) Hepper] for the period up to 31st March, 2021 35/2015-20 - dated 1-10-2020 - FTP Extending scheme of Duty Drawback on supply of steel by steel manufacturers through their Service Centers/ Distributors/ Dealers/ Stock yards GST 72/2020 - dated 30-9-2020 - CGST Central Goods and Services Tax (Eleventh Amendment) Rules, 2020 71/2020 - dated 30-9-2020 - CGST Seeks to amend Notification No. 14/2020–Central Tax, dated the 21st March, 2020 04/2020 - dated 30-9-2020 - CGST Rate Extension of CGST exemption on services by way of transportation of goods by air or by sea from customs station of clearance in India to a place outside India, by one year i.e. upto 30.09.2021. 04/2020 - dated 30-9-2020 - IGST Rate Extension of IGST exemption on services by way of transportation of goods by air or by sea from customs station of clearance in India to a place outside India, by one year i.e. upto 30.09.2021. 04/2020 - dated 30-9-2020 - UTGST Rate Extension of UTGST exemption on services by way of transportation of goods by air or by sea from customs station of clearance in India to a place outside India, by one year i.e. upto 30.09.2021. GST - States G.O.Ms.No.288 - dated 29-9-2020 - Andhra Pradesh SGST PROVIDING RELIEF BY WAIVER OF LATE FEE BY DELAY IN FURNISHING OUTWARD STATEMENT IN FORM GSTR-I FOR TAX PERIODS FOR MONTHS FROM MARCH, 2020 TO JUNE, 2020 FOR MONTHLY FILERS AND FOR QUARTERS FROM JANUARY, 2020 TO JUNE, 2020 FOR QUARTERLY FILERS. G.O.Ms.No.287 - dated 29-9-2020 - Andhra Pradesh SGST PROVIDING ONE TIME AMNESTY BY LOWERING /WAIVING OF LATE FEES FOR NON FURNISHING OF FORM GSTR-3B FROM JULY, 2017 TO JANUARY, 2020 AND ALSO PROVIDING RELIEF BY CONDITIONAL WAIVER OF LATE FEE FOR DELAY IN FURNISHING RETURNS IN FORM GSTR - 3B FOR TAX PERIODS OF FEBRUARY, 2020 TO JULY, 2020. G.O.Ms.No.285 - dated 29-9-2020 - Andhra Pradesh SGST EXTENSION OF THE VALIDITY OF e-WAY BILLS TILL 31.05.2020 FOR THOSE e-WAY BILLS WHICH EXPIRE DURING THE PERIOD FROM 20.03.2020 TO 15.04.2020 AND GENERATED TILL 24.03.2020 G.O.Ms.No.284 - dated 29-9-2020 - Andhra Pradesh SGST AMENDMENTS TO SPECIAL PROCEDURE FOR CORPORATE DEBTORS UNDERGOING THE CORPORATE INSOLVENCY RESOLUTION PROCESS UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 Circulars / Instructions / Orders SEBI SEBI/HO/MIRSD/DOP/CIR/P/2020/191 - dated 1-10-2020 Relaxation in timelines for compliance with regulatory requirements DGFT 22/(2015 2020) - dated 1-10-2020 Procedure for allocation of quota for import of Urad 23/2015-2020 - dated 1-10-2020 Additional details to obtain AROs under domestic procurement of steel at export parity price by MSME exporters of EEPC Customs 43/2020 - dated 30-9-2020 Implementation of the Sea Cargo Manifest and Transhipment Regulations Highlights / Catch Notes GST Levy of GST - prize money received from the horse racing clubs for winning the horse race competition - Taxable supply or not - The prize money/ stakes will not be subject to GST in the absence of any supply - the Applicant- Respondent is also not entitled to avail any ITC in accordance with the provisions of section 17 (2) of the CGST Act, 2017 - AAAR Visit to Get Source Levy of GST - Works Contract - Composite service or not - contract entered into with DMRC for supply, erection, installation, commissioning and testing of UPS system - the supply of UPS system and erection and installation services are made by two distinct persons i.e. Maharashtra GSTIN and Delhi GSTIN respectively. - the supplies under question would not be considered as “Composite Supply” in terms of section 2(30) read with section 2(90) of the CGST Act, 2017. - AAAR Visit to Get Source Violation of principles of natural justice - Difference in the turnover as reported in GSTR-3B and as per TDS Return GSTR 2A - Suppression of facts (turnover) or not - for unexplained reasons and circumstances, without any prior intimation or knowledge, the matter was preponed and without affording any opportunity of hearing, decide, holding the view of the revenue. The order does entail civil and pecuniary consequences, causing prejudice to the petitioner. - Matter restored back - HC Visit to Get Source Pre-arrest Bail Application - allegation of monthly amount were being paid as bribe to the officers and officials of taxation department. - There is no quibble that the liberty of a person is of utmost importance. But when personal liberty is pitted against a sovereign function i.e. collection of tax which is life blood of the economy, the latter would prevail. Present is a case where arrest is imperative for fair and full investigation. The petitioner being an exofficer of the department can influence the witness or temper with the evidence - no case is made out for grant of pre-arrest bail - HC Visit to Get Source Income Tax Reopening of assessment u/s 147 - transfer of shares as gift - While initially contention of the petitioner that such transfer of shares was a gift without consideration was accepted, subsequently the above view was revised to treat the transfer of shares not as a gift and to tax the said transaction on the market value of the shares; this is nothing but change of opinion - HC Visit to Get Source Addition u/s.40A(3) - cash payments were effected by the assessee for the purpose of acquiring rights to screen movies in their theatres as exceeded ₹ 20,000/- - Revenue is right in contending that the genuinity of the transaction is hardly a matter, which should weigh in the minds of the Assessing officer while examining as to the whether the assessees had violated Section 40A(3) - Additions confirmed - HC Visit to Get Source By deciding the question of limitation of AY 2000-01 against Revenue, and by holding that there was no tax liability for AY 2003-04 and AY 2004-05, these two sets of orders passed by learned Income Tax Appellate Authority have resulted in a serious miscarriage of justice, which we cannot permit. The manner in which the various appeals and Miscellaneous Petition have been dealt with by the learned Tribunal for all the three Assessment years in question leaves much to be desired and the change of stand allowed by the Tribunal and later withdrawal of the appeals for AY 2003-04 and AY 2004-05 under the litigation policy of the CBDT Circular dated 28.01.2016, has resulted in all this goof up. - HC Visit to Get Source Income from other sources - addition u/s 56(2)(viib) - Method of valuation of shares issued at premium - FMV - The primary onus to prove the correctness of the valuation Report is on the assessee as he has special knowledge and he is privy to the facts of the company and only he has opted for this method. Hence, he has to satisfy about the correctness of the projections, Discounting factor and Terminal value etc. with the help of Empirical data or industry norm if any and/or Scientific Data, Scientific Method, scientific study and applicable Guidelines regarding DCF Method of Valuation. - AT Visit to Get Source Levy of Tax u/s 115BBE @60% - Income surrendered during the course of search - the provisions of Section 69 were not applicable as the business transactions were recorded in the books of account and the assessee either earned commission or profit on all those Real Estate transactions. - A.O. is directed to tax the entire surrendered income at the normal rate of tax. - AT Visit to Get Source Long term capital gain - re-alignment of shareholding pursuant to family settlement arrangement - The assessee did not receive any share from the family of her husband. The facts also clearly established that there is no equitable partition or distribution of family shares/ assets. The chart reproduced above shows that it was merely sale transaction of shares which could not be considered as Family Settlement - it would be transfer of capital asset, liable to tax - AT Visit to Get Source Long term capital gain - nature of land sold - The income returned in her Return of Income was an agriculture income was just for name sake and does not have any proportion. At the time of sale of land, no agriculture activity was carried out by the assessee. Accordingly we hold that the property sold by the assessee is not an agricultural land and to be treated as a capital asset liable to be taxed. - AT Visit to Get Source Corporate Law Restoration of names in the Register of Companies - sub-section (5) of Section 248 of Companies Act, 2013 - When such being the case, the order of striking off the name of the company itself is bad in law and when the notices itself have not been issued, then it is a good ground for the petitioners-companies to prefer an appeal under Section 252 of the Act. - Petitioner are at liberty to approach the Tribunal u/s 252 of the Companies Act. - HC Visit to Get Source IBC Direction to the State Goods and Services Tax Department to accept physical filing of returns after the commencement of CIRP - The RP is directed to complete the physical filing of the returns of GST relating to the period after the commencement of CIRP within three weeks. - Tri Visit to Get Source Service Tax Issuance of Form SVLDRS-3 against the Declaration filed in Form SVLDRS-1 - If at all the Designated Committee wanted to increase the payable amount, the least they should have done was to give an opportunity of hearing to the Petitioner after affording the Petitioner an opportunity to review the report of the jurisdictional divisional commissioner. - HC Visit to Get Source Central Excise Valuation and classification of ambulances - body building on the duty paid chassis - the appellant is liable to pay duty as per Rule 10A and if any differential duty has been paid, the same is subject to verification - Vehicle in question is classifiable under Chapter heading No. 8702 of CETA, 1985 - AT Visit to Get Source Case Laws: GST 2020 (10) TMI 48 Maintainability of application - Whether the impugned advance ruling, being allegedly obtained by the Respondent by suppressing the material facts regarding the investigation initiated against him by the DGGI, PZU on the same issues as those raised in the subject advance ruling application, is sustainable in terms of proviso to section 98(2) read with section 104 of the CGST Act, 2017, or not? - HELD THAT:- the investigation proceedings were initiated under the Service Tax and not under the CGST Act. Therefore, Section 98(2) is not attracted as there was no proceeding pending under the provisions of the CGST Act. Levy of GST - prize money received from the horse racing clubs for winning the horse race competition - Taxable supply or not - HELD THAT: - By applying the definition of Supply to the facts and circumstances of the case at hand, it is observed that no service has been provided by the Applicant- Respondent to the racing clubs for the Prize money/ stakes received from such clubs, as it is not in dispute that not all horse owners, who agree to provide their horses to such race organising clubs, get this consideration in the form of the said prize money/ stake from such clubs. Only those horse owners receive these considerations whose horses win the races organized by such clubs. Thus, there is no direct nexus between the activities carried out by the horse owners, viz.by providing thoroughbred horses to race clubs for organising horse race events, and the prize money received by such horse owners. The Applicant-Respondent has himself contended in their submissions as reproduced herein above that for the occurrence of any taxable event, there must be direct and immediate link between the supply made and the consideration received. He has also cited few judicial pronouncements to strengthen his arguments. However, as discussed, in the present facts and circumstances, this clause of direct and immediate link between the supply and consideration is absolutely absent in the present situation. As such, it would not be construed as taxable supply /events. The applicant- respondent had contended that they provide service to the Club and that the contract is a conditional contract and therefore there is supply. The applicant-respondent has argued there may be a conditional contract here and we might assume that for the moment. But not every contract becomes taxable under the CGST law. Every supply is a contract but not every contract is a supply. In order to levy tax under the CGST Act there should be supply of goods/ service and there should be consideration - We have already delineated in detail as to how there is no service provided in the present case and therefore the argument of the appellant is not acceptable. Whether they would be eligible to avail ITC in respect of the expenses incurred on the entry fee paid to the horse racing clubs, training charges paid to the trainers, amount paid to the jockeys, etc.? - HELD THAT:- Since there is no taxable supply by the Applicant Respondent in the present arrangement, there is no question of availment of ICT as per the provisions of section 17 (2) of the CGST Act, 2017 - thus, it is abundantly clear that input tax credit is restricted to the portion of taxable supplies only. Therefore, in the present case, the Applicant- Respondent will not be eligible to avail ITC in respect of any input supply including the entry fee, the training charges paid to the horse trainers and the charges paid to the jockeys, etc. The prize money/ stakes will not be subject to GST in the absence of any supply - the Applicant- Respondent is also not entitled to avail any ITC in accordance with the provisions of section 17 (2) of the CGST Act, 2017 - The AAR decision set aside. 2020 (10) TMI 47 Levy of GST - Works Contract - contract entered into with DMRC for supply, erection, installation, commissioning and testing of UPS system qualifies as supply of works contract under Section 2(119) of the Central Goods and Services Tax Act, 2017 - whether such supply made to DMRC would be taxable at the rate of 12% in terms of Sr. No. 3(v) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended w.e.f. 25.01.2018? HELD THAT:- The appellant is of the view that the supply of UPS system made from the state of Maharashtra would be leviable to GST at the rate of 18% as supply of goods and the supply of erection, installation and commissioning of UPS system made from Delhi GSTIN would be leviable to GST at the rate of 18% as supply of services separately. The supply of UPS system and erection and installation services is not dependent on each other and both the aforesaid supplies are capable of being made independently. The appellant submit that activity of erection and installation of UPS is a significant portion of the contract and not merely ancillary to the supply of UPS system. Hence, in the present case the supply of UPS system cannot be said to be a 'principal supply' to which the supply of erection and installation services is merely ancillary - the findings of the Ld. AAR that without supply of goods i.e. UPS system, the services of erection, installation and commissioning cannot be supplied by the appellant is incorrect. Circular No. 47/21/2018-GST dated 08.06.2018 issued by the CBIC, states that in case where a supply involves supply of goods and services and the value of each such supplies is shown separately, such supplied would be liable to GST separately as supply of goods and services. Thus, even in the present case, the supply of UPS system and erection and installation services supplied by appellant would be treated as separate individual supplies. The supply of UPS System and erection and installation services are provided by two distinct persons viz. Maharashtra GTIN and Delhi GSTIN. Thus, the said supplies cannot be clubbed together to make them a composite supply . Composite Supply or not - HELD THAT:- Section 2(30) of the CGST Act defines composite supply to mean a supply made by a taxable person, comprising of two or more supplies of goods or services, which are naturally bundled and supplied in conjunction with each other, wherein one of the supplies is a principal supply. Thus, in order to qualify as a 'composite supply, it is essential that all the supplies under a contract are made by a single registered person - In the present case, the supply of UPS system and erection and installation services are made by two distinct persons i.e. Maharashtra GSTIN and Delhi GSTIN respectively. The appellant submits that finding of the Ld. AAR that supply made by the appellant under the said contract qualifies as a composite supply is incorrect in law. Thus, the impugned ruling given by the Ld. AAR, to the extent it considers the supply of goods and services under the said contract as one composite supply, is liable to be set aside. The AAR ruling modified to the extent that the supplies under question would not be considered as Composite Supply in terms of section 2(30) read with section 2(90) of the CGST Act, 2017. 2020 (10) TMI 46 Bail application - allegation of issuing invoices without supplying the goods - offence(s) under Sections 132(1), (b) and (c) of Rajasthan Goods and Services Tax Act, 2017 punishable under Section 132(1)(i) read with Section 132(5) of Rajasthan Goods and Services Tax Act, 2017 - HELD THAT:- The offences being compoundable and punishable with maximum sentence of five years, the absence of criminal antecedents; but, without expressing any opinion on the merits of the case, this court deems it just and proper to enlarge the petitioner on bail. It is directed that accused-petitioner Dhanraj Singhal S/o Late Shri Anandi Lal Agarwal shall be released on bail under Section 439 Cr.P.C. in connection with afore-mentioned FIR registered at concerned Police Station, provided he furnishes a personal bond in the sum of ₹ 1,00,000/- together with two sureties in the sum of ₹ 50,000/- each to the satisfaction of the trial court with the stipulation that he shall comply with all the conditions laid down under Section 437(3) Cr.P.C. - bail application is allowed. 2020 (10) TMI 45 Violation of principles of natural justice - Difference in the turnover as reported in GSTR-3B and as per TDS Return GSTR 2A - Suppression of facts (turnover) or not - HELD THAT:- Impugned order dated 2nd of March, 2020 is passed by the Deputy Commissioner of State Tax, Patna Central Circle, Bihar, Patna who issued a notice asking the petitioner to show cause by a particular date. However, for unexplained reasons and circumstances, without any prior intimation or knowledge, the matter was preponed and without affording any opportunity of hearing, decide, holding the view of the revenue. The order does entail civil and pecuniary consequences, causing prejudice to the petitioner. On all fours, principles of natural justice stand violated. The impugned order dated 02.03.2020 and the resultant order dated 04.03.2020 passed by the Deputy Commissioner of State Tax, Patna Circle, Bihar, Patna are quashed and set aside with the matter remanded back to the authority for consideration afresh - petition allowed by way of remand. 2020 (10) TMI 44 Pre-arrest Bail Application - allegation of monthly amount were being paid as bribe to the officers and officials of taxation department. - alleged tax evasion in connivance with the officers/ officials of Excise and Taxation Department. - It is alleged that the tax was being evaded by ensuring that there is no checking or verification of the documents or the goods while being transported to and from State of Punjab - Sections 420, 465, 467, 468, 471 and 120-B of the Indian Penal Code, 1860 and Sections 7, 7(a) and 8 of the Prevention of Corruption Act, 1988 - HELD THAT:- With the introduction of GST regime, one of the object worked upon was free movement of goods, by removal of barriers and Information Collection Centres. The responsibility was shifted upon the Excise and Taxation Officers/ officials and more so on the mobile wing of the department. Under the GST, there is an inter-connected chain of sellers and purchasers as the purchaser gets the credit of tax paid or suffered by seller. The chain can be within the State or PAN-India. One link in the chain being ingenuine, doctored or non-existant, would impact the entire chain. The nature of allegation in present case of evasion of GST requires a deeper probe. There are far reaching ramifications which may vary from allowing of input credit/ MODVAT of tax not paid to the Government to an eventuality that the credit of tax paid on some other product is used for something else. Not only this, someone later in chain in spite of being bona fide purchaser not aware of the earlier misdeed in the chain yet will have to suffer the consequences. The allegation in the present case are very serious - There is alleged connivance of the transporters, passers and the officials to facilitate the evasion of tax. The investigation is going on, it appears that the officials were being paid bribe on monthly basis. There is no quibble that the liberty of a person is of utmost importance. But when personal liberty is pitted against a sovereign function i.e. collection of tax which is life blood of the economy, the latter would prevail. Present is a case where arrest is imperative for fair and full investigation. The petitioner being an exofficer of the department can influence the witness or temper with the evidence - Considering the complexity of the issue, the tax impact on chain of sellers and purchasers, the material as on date with the investigating agency, the multi dimensional aspects involved which needs a deeper probe, no case is made out for grant of pre-arrest bail. Petition dismissed. Income Tax 2020 (10) TMI 43 Reopening of assessment u/s 147 - original order u/s 143(3) - change of opinion - disallowance made of loss on sale of stores treating them to be revenue in nature - HELD THAT:- No reason to interfere in the matter. The special leave petition is dismissed, leaving all the questions of law open. 2020 (10) TMI 42 Assessment u/s 153A - absence of any incriminating material in search - Low tax effect - HELD THAT:- Learned counsel for the petitioner, on instructions issued by the Department of Revenue, Ministry of Finance vide F. No. 390/Misc./116/2017-JC dated 22-8-2019, seeks permission to withdraw this special leave petition along with pending applications therein due to low tax effect. Permission granted, subject to just exceptions. SLP and pending applications are dismissed as withdrawn, leaving question(s) of law open. 2020 (10) TMI 41 Exemption u/s 11 - activity of the assessee as engaged in the development of urban area of Rajkot - whether assessee is involved in widespread commercial activities in nature of business and the activity of the assessee is covered under first and second proviso to section 2(15) ? - HELD THAT:- We need not adjudicate these appeals on merit as the substantial questions of law as proposed are no longer res integra in view of the decision of this High Court in the case of Ahmedabad Urban Development Authority vs. Assistant Commissioner of Income Tax, [ 2017 (5) TMI 1468 - GUJARAT HIGH COURT] - We take notice of the fact that in the common judgment delivered by the appellate Tribunal for different assessment years, the Tribunal has placed reliance on the very same judgment of this High Court. - Decided in favour of assessee. 2020 (10) TMI 40 Reopening of assessment u/s 147 - transfer of shares was a colourable device for evading payment of tax on capital gains - notice issued beyond four years from the end of the assessment year in question - change of opinion - HELD THAT:- While any profits or gains arising out of transfer of a capital asset shall be deemed to be the income of the previous year in which the transfer took place chargeable to income tax under the head 'capital gains', section 47(iii) makes it very clear that any transfer of a capital asset under a gift or will or an irrevocable trust shall not be liable to income tax under the head 'capital gains'. Evidently, the proviso is not applicable to the present case. While initially contention of the petitioner that such transfer of shares was a gift without consideration was accepted, subsequently the above view was revised to treat the transfer of shares not as a gift and to tax the said transaction on the market value of the shares; this is nothing but change of opinion. It is quite apparent that petitioner had placed before the assessing officer during the assessment proceedings all the primary facts wherefrom he made the inference. Now it is not open to the assessing officer to take a second view on the same set of facts treating the earlier view as erroneous. This is not permissible. We find that Tribunal in the case of Jayneer Infrapower and Multiventures Private Limited [2019 (3) TMI 686 - ITAT MUMBAI] examined such transaction of transfer of shares which was held to be a colourable device by the CIT(Appeals) and liable to be taxed on the market value of the shares. Tribunal recorded a categorical finding of fact that such transfer of shares without consideration was a gift which is valid, permissible and genuine. Referring to section 47(iii) Tribunal held that transfer of shares by way of gift is exempt from the provision of capital gains and concluded that transfer made as a gift without consideration is not taxable under the provisions of capital gains. Thus, the very foundation on which the impugned notice was issued no longer survives. - Decided in favour of assessee. 2020 (10) TMI 39 Suppression of income - Lower rates for cash sales as against 'sales to jewellers'- HELD THAT:- Tribunal took note of the statement given by one of the employees and the assessee and has extracted the relevant portion of the statement. Noting that the deponent did not make any allegation that they were selling bullions in cash at lower rates and it was done for suppression of income, the Tribunal took note of the assessee's stand that the trade information and data will not be shared with all employees, as they follow 'need to know principle' and only such information which was required to be shared within employees will be made known to the concerned employee. Tribunal noted that the soft copy of the books of accounts found at the time of search was not a parallel set of account but only regular accounts maintained by the assessee based on which it was filing their returns. With the above factual finding, the Tribunal concurred with the CIT(A) correctly .- Decided in favour of the assessee Disallowance of interest - AO disallowed the interest alleging diversion of interest free loans at 12% given to various persons - HELD THAT:- CIT(A) found that the assessee had substantial capital built over various years and was also having substantial interest free advances and there was nothing on record to show that any interest bearing funds were diverted for giving any interest free loans or for making any investments. The finding rendered by the CIT(A) was decided for its correctness and the Tribunal confirmed the same after taking note of the observations made by the CIT(A), who had analyzed the total investments and interest free advances given for the assessment years 2006-07 to 2012-13 as well as the total of interest free advances received by the assessee for all the assessment years and confirmed the finding.- Decided in favour of the assessee Income arising to the assessee on account of the credit and debit notes issued by M/s.MMTC Ltd. - HELD THAT:- Tribunal, in it's considered view rightly deferred the proceedings under the Act to be commenced after the conclusion of the Arbitral proceedings, considering the nature of dispute between the assessee and M/s.MMTC Ltd.,. We find that the order passed by the Tribunal meets the ends of justice and safeguards the interest of Revenue and no cause has arisen to invoke the powers under Section 150 of the Act.- Decided in favour of the assessee Unexplained credit - non filing of confirmation letter from Smt.Pista Bai called for under Section 142(1) - HELD THAT:- Tribunal also verified the facts and noted that the transaction amounts received from Smt.Pista Bai were repayment of earlier advances of ₹ 30,00,000/- given by the assessee, when the business was run as a Proprietorship concern and the latter transactions were reflected in the accounts of the Proprietorship concern. Thus it was held to be only a repayment of debt by a Debtor. Once the business was taken over by the assessee Company, any repayment of debt by a Debtor will not create a further credit, it will square off the debit. Therefore, the Tribunal found that there was no reason for interfering with the order passed by the CIT(A).- No substantial question of law. 2020 (10) TMI 38 Nature of land sold - capital asset or agricultural land - Whether Tribunal was right in holding that the capital assets viz., vacant land sold by the Assessee was agricultural land as defined u/s 2(14)(iii) of the Income Tax Act especially when no agricultural operations was done by the Assessee prior to the sale and the assessee had obtained permission for converting the lands from agriculture use to non agriculture use prior to the date of the sale? - HELD THAT:- When the correctness of the order of CITA was tested before the Tribunal, once again, the Tribunal made a factual exercise and found that agricultural activities were carried out in the land, there were standing banana crops as well as coconut trees etc., Furthermore, from the revenue records, which were placed before the Tribunal in the form of paper book by the assessees, the Tribunal had recorded a finding of fact that the lands, which was sold were indeed agricultural lands. Furthermore, it is relevant to note that the lands, which are subject matter of consideration are situated 40 Kms away from Thiruvallur Municipality and 30 Kms away from Madhavaram Municipality. Furthermore, the Village Administrative Officer had certified on 01.12.2008, i.e., prior to execution of sale deed that the assessees and their family members were using the land for agricultural purposes. Furthermore, the President of Andal Kuppam Panchayat within whose limits the land is situated, has certified that the assessees and their family members are using the lands for cultivation of paddi, sugarcanes, ground nuts, mango and coconut etc., and the land, as mentioned in the sale deed has to be construed as 'unbuilt land', but not 'non-agricultural land'. This document was placed before the assessing officer. Furthermore, the statements of neighbouring land owners were also available before the assessing officer. Therefore, on facts, the first appellate authority as well as the Tribunal has correctly concluded in favour of the assessee. CITA applied the test laid down by the Hon'ble Supreme Court in Smt.Sarifabibi Mohmed Ibrahim [ 1993 (9) TMI 10 - SUPREME COURT ] found that the majority of the test were answered in favour of the assessees - Substantial questions of law are answered against the revenue. 2020 (10) TMI 37 Addition u/s.40A(3) - cash payments were effected by the assessee for the purpose of acquiring rights to screen movies in their theatres as exceeded ₹ 20,000/ - - nature and extent of banking facilities available, consideration of business expediency and other relevant factors - Whether Tribunal was right in holding that Rule 6DD has not been satisfied? - HELD THAT:- Correct test to be applied is to examine as to whether the expenses would fall under any one of the exceptional circumstances set out in Rule 6DD of the Rules. Concept regarding business expediency or commercial expediency can hardly be canvassed by the assessees, as the assessees had been periodically adopting the modes by effecting cash payments. Therefore, concurrently the two authorities and the Tribunal have held against the assessees and we are not expected to examine the correctness of the impugned order as if exercising powers as the third appellate authority and what we are expected to do is to consider as to whether any substantial question of law arises for consideration in these appeals, while exercising power under Section 260A of the Act. No question of law, much less substantial question of law arises for consideration in these appeals. Assessment years under consideration in these appeals are 2014-15 and 2015-16 when the said Rules stood deleted and therefore, the Revenue is right in contending that the genuinity of the transaction is hardly a matter, which should weigh in the minds of the Assessing officer while examining as to the whether the assessees had violated Section 40A(3) of the Act. - Decided against assessee. 2020 (10) TMI 36 Condonation of delay - delay had occurred due to the pendency of a petition filed by the petitioner under Section 154 - eligible submission of sufficient cause for delay - HELD THAT:- It is not clear from the impugned order of the CIT (Appeals) as to why a finding was recorded by the CIT (Appeals) that the rectification application u/s 154 before AO are issues which have no connection with the interest charged by the AO. CIT(Appeals) while passing the impugned order appears to have touched upon the issues which have some bearing in the outcome of the appeal preferred by the petitioner, without reference to the materials relied upon to arrive at such a finding. As in the interest of justice to remand the matter back in the Commissioner of Income Tax Act(Appeals) to re-decide afresh the issue of condonation of delay by providing adequate opportunities to the Assessee to refer to and/or rely on, any such grounds as may be sought to be relied upon her and after proper hearing in the matter. 2020 (10) TMI 35 Reopening of assessment - Taxability on the 'Capital Gains' - Year of assessment - matter referred to Third Member - whether the notice issued u/s 148 is barred by limitation or not? - HELD THAT:- The reassessment for AY 2001-02 had once been made on 30.03.2000 and again on 25.03.2013 in pursuance of Tribunal order dated 31.05.2010, whereas reassessment for AY 2003-04 and 2004-05 had been initially made on 30.03.2006 and 28.12.2006 respectively, which was very much within limitation prescribed under Section 149 - order of CIT (A) for these three years was passed on 22.07.2008, which was 'subject matter' of appeal before Income Tax Appellate Authority which held reassessment to be time barred by an obvious misreading of Section 150(2) of the Act. By deciding the question of limitation of AY 2000-01 against Revenue, and by holding that there was no tax liability for AY 2003-04 and AY 2004-05, these two sets of orders passed by learned Income Tax Appellate Authority have resulted in a serious miscarriage of justice, which we cannot permit. The manner in which the various appeals and Miscellaneous Petition have been dealt with by the learned Tribunal for all the three Assessment years in question leaves much to be desired and the change of stand allowed by the Tribunal and later withdrawal of the appeals for AY 2003-04 and AY 2004-05 under the litigation policy of the CBDT Circular dated 28.01.2016, has resulted in all this goof up. Set aside all the orders passed by the learned Tribunal for all the three Assessment Years as also all the orders passed by Lower Authorities also for all these three Assessment Years viz., AY 2001-02, 2003-04 and 2004-05. We are dealing with the appeal for AY 2001-02 only but since the Tribunal's order dated 31.05.2010 for AY 2003-04 and AY 2004-05 is at the root of the order of Tribunal dated 18.03.2016, by majority of 2:1 for AY 2001-02 and Appeal under Section 260A against that order dated 31.05.2010 already stands withdrawn by Revenue, we deem it appropriate to set aside even the order dated 31.05.2010 in the present appeal in these peculiar circumstances. We restore the matter back to the Assessing Authority to re-examine the whole issue of taxaility of the Capital Gains de novo, including the question of levy of capital gains Tax on sale of flats, the year of taxability and computation of Fair Market Value for computing such tax liability - we direct that the Assessing Authority will be free to impose the appropriate 'Capital Gain Tax Liability' by undertaking the fresh reassessment proceedings under Section 150(1) of the Act in pursuance of our directions, in terms of Section 150(1) of the Act, for all the three Assessment Years AY 2001-02, AY 2003-04 and AY 2004-05, de novo. - Decided in favour of the Revenue and against the Assessee, 2020 (10) TMI 34 Entitlement of claim of deduction u/s 80IA - activities undertaken by the assessee would fall within the meaning of the term infrastructure facility as defined in Clause (d) of the Explanation to Sec.80IA(4) ?- HELD THAT:- Tribunal while disposing off the appeal in the assessee s own case for A.Y. 2013-14 [2019 (4) TMI 544 - ITAT MUMBAI ] had after relying on the judgment of CIT Vs M/s Container Corporation of India Ltd. [ 2018 (5) TMI 359 - SUPREME COURT] concluded, that the CIT(A) was right in holding that the assessee was entitled for deduction under Sec.80IA(4) - the issue as regards the assessee s entitlement for claim of deduction under Sec.80IA(4) is squarely covered by the aforesaid judicial pronouncements and also the orders passed in the assessee s own case. Accordingly, finding no infirmity in the order of the CIT(A) who had rightly concluded that the assessee was duly entitled for claim of deduction u/s 80IA. Addition in Book Profit u/s 115JB on account of disallowance u/s 14A - HELD THAT:- As in the case of Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI ] A.O while computing the book profit under Sec.115JB of the Act shall not resort to the computation as contemplated under Sec.14A r.w. Rule 8D. As regards the claim of the ld. A.R that as the investment in the exempt yielding investments were made by the assessee out of its self-owned funds and no part of the interest bearing funds were therein utilised, therefore, no disallowance of any part of the interest expenditure was called for u/s 14A r.w Rule 8D(2)(iii), we find ourselves principally to be in agreement with the same proposition so canvassed by the ld. A.R. before us. But then, the said claim of the assessee would require verification of the factual position. If the aforesaid claim of the assessee that it had sufficient self-owned funds for making the investments in the exempt income yielding investments is found to be in order, then no disallowance u/s 14A of any part of the interest expenditure would be called for in its hands. Our aforesaid view is fortified by the order in the case of CIT Vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] - Decided in favour of assessee. 2020 (10) TMI 33 Accrual of income - interest income accrued on non-performing the assets - additions relating to interest income accrued on standard assets, disallowance made u/s 40(a)(ia) of the Act and disallowance made u/s 37(2B) - A.O. noticed that the assessee is following hybrid system of accounting, viz., cash system for accounting interest income on loans given by it and mercantile system for all other items - HELD THAT:- We notice that the issue relating to addition of interest income accrued on non-performing assets has been considered by the coordinate bench in the assessee s own case in assessment year 2009-10 2010-11 [ 2017 (9) TMI 1897 - ITAT BANGALORE] and it was decided in favour of the assessee- mere nomenclature adopted with reference to the bad loans and advances receivable, would refer to all non-performing assets of any nature, of whatever category it was placed as a non-performing asset and therefore, the decision of this court in Canfin Homes Ltd.'s case [ 2011 (8) TMI 178 - KARNATAKA HIGH COURT] would squarely apply. Assessee has opted for settlement of the dispute under Vivad Se Vishwas Act, 2020 - Since the assessee has opted to settle the dispute under Direct Tax Vivad Se Vishwas Act, 2020, the assessee would be moving application for withdrawing the present appeal filed before the Tribunal in due course - no purpose will be served in keeping the appeal of the assessee pending. Accordingly, we dismiss the appeal of the assessee as withdrawn. The assessee seeks adjournment only for the reason that it has not received Form No.3, meaning thereby, the assessee wants to ensure that there is no difference in the tax amount payable by it. However, since we have dismissed the appeal of the assessee, it is given liberty to move appropriate application for recall of the present order in accordance with law, if the assessee intends to do so. 2020 (10) TMI 32 TP Adjustment - addition in respect of international transaction of software development services rendered by the Appellant to its parent company in USA - comparable selection - HELD THAT:- Persistent Systems Ltd - The mandate of the law clearly provides that FAR should be compared for this reason also we reject the reliance placed by the assessee on other judicial precedents, as there was no comparability made of the functional profiles of the assessee with the assessee in whose case such comparables are held to be excluded or included. No infirmity in the order of the learned transfer pricing officer as well as the direction of the learned that DRP in holding that persistent Systems Ltd is a good comparable. Therefore, we reject the argument for its exclusion. L T Infotech Ltd - As assessee submitted that it filed an objection before the ld DRP as per para No. 4.5.2 however same has not been considered by the DRP, therefore, we set aside this comparable before the learned dispute resolution panel to decide on the objections of the assessee. Sasken Communication Technology Ltd. - Only objection of the assessee is that above comparable company has different margin shown in the show cause notice and order of the TPO - order the margins of this comparable was shown to be 7.28% whereas in the TP order as well as the effect order passed by the TPO on direction of the learned dispute resolution panel the margin of this comparable were taken at 33.2%. There is no justification or reasons were found in the TP order for change in the margins and the basis of such changes. Therefore, we set aside this comparable to the file of the learned transfer pricing officer to show assessee how he has changed the above margin and on what basis the margins have gone up to 33.2% from 7.28%. Cybercom Datamatics information solutions Ltd - as challenged by the assessee stating that it was never part of the show cause notice issued by the learned transfer pricing officer but featured in the final order of the learned transfer pricing officer - As carefully gone through the showcause notice issued by the learned transfer pricing officer dated 18 August 2017 and find that in para number seven this comparable company was not at all considered in the show cause notice but was taken into the order u/s 92CA (3) of the act straight. In view of this, we direct the learned transfer pricing officer to exclude the above comparable company from the comparability analysis as no proper opportunity was given to the assessee to contest the same before the learned transfer pricing officer. Adjustment of the margins with respect to the working capital and risk adjustment - There were no arguments raised before the learned transfer pricing officer also with respect to the adjustment of margin on account of working capital differences. On careful perusal is of the objections raised before the learned dispute resolution panel, where six objections were raised, we do not find any objection with respect to granting of the working capital adjustment and other risk adjustment. Even before us, no working of the working capital adjustment or other risk adjustment is provided. Therefore, in absence of any working, provided by assessee before us or before the lower authorities or even raising this claim before the lower authorities we do not find any merit in this ground. Hence dismissed. Appeal of the assessee is partly allowed. 2020 (10) TMI 31 Exemption u/s 11 - denying the registration u/s 12AA - as requested to issue only duplicate copy of the certificate of Registration of the trust already been registered since 13.8.1973 - HELD THAT:- All the documents are sufficient enough to prove that the claim of the assessee being registered u/s 12A of the Act is a charitable trust since 13.8.1973 has sufficient merit. DR failed to rebut these facts - no dispute to the fact that the assessee trust was enjoying the benefit u/s 12A of the Act as a charitable trust and other benefits available to the charitable trusts u/s 11 of the Act since it is running for charitable purpose. Assessee trust should be granted the registration u/s 12AA of the Act w.e.f. 13.8.1973 in place of the registration granted from assessment year 2019-20 onwards - CIT (Exemption) is directed to amend his order dated 20.8.2019 and issue a fresh order of registration certificate u/s 12AA effective from 13.8.1973 so that the assessee could claim the benefits of the provision of Section 11 12 as and where applicable for the preceding Assessment Years. Once Ld. CIT (Exemption) grants the registration certificate u/s 12AA w.e.f. 13.8.1973 the assessee shall have liberty to move application before Ld. A.O for rectification of the assessment orders for various Assessment Years in order to avail the benefit of Section 11 of the Act available for charitable trust registered u/s 12AA of the Act so that the Ld. A.O could decide accordingly - Decided in favour of assessee. 2020 (10) TMI 30 Interest paid on term loan as deduction u/s. 57(iii) admissible against business income - As per AO interest income earned on loans and advances cannot be claimed as business expenditure from the profit declared u/s. 80IB(10) and treated the same as income from other sources, held chargeable to tax - CIT(A) having examined the case of assessee held that the assessee is entitled to get deduction under Clause (iii) of section 57 - HELD THAT:- CIT(A) having examined the case of assessee held that the assessee is entitled to get deduction under Clause (iii) of section 57 of the Act but however without there being concrete finding to this effect that the interest paid is for the purpose of earning interest. CIT(A) should not have remanded the matter to the file of AO which in our opinion is contrary to the jurisdiction available to CIT(A). Before us, the ld. AR pointed that the assessee had mixed funds to an extent of ₹ 27.48 crores and no break up to that effect filed before us. In such a situation we deem it proper to remand the matter to the file of CIT(A) to verify the nexus between loans advanced and interest paid for the purpose of interest earning in terms of Clause (iii) of section 57 of the Act. Thus, the order of CIT(A) is set aside and the assessee is liberty to file all evidences if any in support of its claim in terms of Clause (iii) of section 57 of the Act. The CIT(A) shall consider the same and pass the order, in accordance with law. - Appeal of Revenue is allowed for statistical purpose. 2020 (10) TMI 29 Proportionate deduction u/s 80IB(10) - Valuation Officer reported the built-up area of the Bunglows / Row Houses are more than 1500 sq.ft - CIT-A allowed proportionate deduction - HELD THAT:- Commissioner of Income Tax (Appeals) in his order discussed the issue taking the reference to the decision of this Tribunal in the case of M/s. D.S.Kulkarni Developers Ltd. [ 2014 (7) TMI 1166 - ITAT PUNE ] wherein we note that in the claim of the assessee therein, on proportionate basis was allowed relating to eligible units. Therefore, in the light of discussion made by us hereinabove and in view of the findings recorded by the learned Commissioner of Income Tax (Appeals), we are of the view that there is no infirmity in the order of learned Commissioner of Income Tax (Appeals) and it is justified. Thus, the only ground raised by the Revenue is dismissed. 2020 (10) TMI 28 Income from other sources - addition u/s 56(2)(viib) - difference between the fair market value and the issue price of shares at a premium as income of the Assessee - FMV determination - shares are issued at a premium and at a value higher than the fair market value - adoption of the fair market value as per the two methods i.e., either DCF method or fair market value of the unquoted equity shares determined by a merchant banker - HELD THAT:- Fair market value may be determined with such method as may be prescribed or the fair market value can be determined to the satisfaction of the AO. Provisions of Rule 11UA(2)(b) of the Rules provides that, the Assessee can adopt the fair market value as per the above two methods i.e., either DCF method or fair market value of the unquoted equity shares determined by a merchant banker. The choice of method is that of the Assessee. The Tribunal has followed the judgment of Vodafone M-Pesa Ltd., Vs. Pr. CIT [ 2018 (3) TMI 530 - BOMBAY HIGH COURT] and has taken the view that the AO can scrutinize the valuation report and he can determine a fresh valuation either by himself or by calling a determination from an independent valuer to confront the Assessee but the basis has to be DCF method and he cannot change the method of valuation which has been opted by the Assessee. Issue with regard to valuation has to be decided afresh by the AO on the lines indicated in the decision of ITAT, Bangalore in the case of VBHC Value Homes Pvt. Ltd. [ 2020 (6) TMI 318 - ITAT BANGALORE] i.e., (i) the AO can scrutinize the valuation report and he can determine a fresh valuation either by himself or by calling a determination from an independent valuer to confront the assessee but the basis has to be DCF method and he cannot change the method of valuation which has been opted by the assessee. (ii) For scrutinizing the valuation report, the facts and data available on the date of valuation only has to be considered and actual result of future cannot be a basis to decide about reliability of the projections. The primary onus to prove the correctness of the valuation Report is on the assessee as he has special knowledge and he is privy to the facts of the company and only he has opted for this method. Hence, he has to satisfy about the correctness of the projections, Discounting factor and Terminal value etc. with the help of Empirical data or industry norm if any and/or Scientific Data, Scientific Method, scientific study and applicable Guidelines regarding DCF Method of Valuation. The order of ld.CIT(A) is accordingly set aside and this issue is remanded to the AO for decision afresh, after due opportunity of hearing to the Assessee. - Assessee appeal is allowed for statistical purposes. 2020 (10) TMI 27 Levy of Tax u/s 115BBE @60% - Income surrendered during the course of search - Addition while making a statement u/s 132(4) which was duly declared in the return of income as income u/s 69 - Business income or otherwise - income was declared in the return filed under section 153A - HELD THAT:- Provisions of Section 115BBE (1)(a) of the Act are applicable to the income which is referred in section 68, 69, 69A, 69B, 69C or 69D reflected in the return of income furnished u/s 139. In the present case no such income was reflected in the return filed under section 139 of the Act rather the income was declared in the return filed under section 153A of the Act after the search. The assessee declared the income under section 132(4) of the Act and disclosed the same in the return of income filed under section 153A of the Act. The assessee explained the source of investment of ₹ 1.10 Crore in the reply to Question No. 11. The said explanation given by the assessee to the Ld. CIT(A) has not been rebutted, therefore the provisions of Section 69 were not applicable as the business transactions were recorded in the books of account and the assessee either earned commission or profit on all those Real Estate transactions. The income earned from the Real Estate transactions was claimed to be utilized for making the investment in the property. In the present case it is not brought on record to substantiate that the said income was utilized by the assessee elsewhere and not in the investment of the property. Therefore we are of the view that the A.O. was not justified in taxing the aforesaid income of ₹ 1 Crore separately particularly when nothing is brought on record to substantiate that the assessee had made separate investment different from the income earned on real estate transactions recorded in the pocket diary found seized during the course of search. A.O. is directed to tax the entire surrendered income of ₹ 3.64 at the normal rate of tax. Direction given by CIT(A) to the A.O. to bring to tax the amount of ₹ 2.64 Crores u/s 115BBE - HELD THAT:- In the present case the assessee on the basis of the Real Estate transactions recorded in the pocket diary found seized during the course of search surrendered the income amounting to ₹ 3.64 Crore earned from Real Estate transaction i.e. profit amounting to ₹ 2.34 Crore, commission amounting to ₹ 30 Lacs and investment of ₹ 1.00 Crore, therefore the source of the said, income under consideration i.e; ₹ 2.64 Crore (₹ 2.34 Crore + ₹ 30 Lacs) was Real Estate business. The A.O. rightly accepted the income as declared by the assessee and the Ld. CIT(A) was not justified in directing the A.O. to treat the said income declared in the statement under section 132(4) of the Act, as the income chargeable to tax separately under section 115BBE CIT(A) has the powers to confirm, reduce, enhance or annul the assessment, however the powers to remand the case back to the file of the A.O. is not provided. In that view of the matter, we are of the view that the Ld. CIT(A) was not justified in restoring the issue under consideration back to the file of the A.O. Appeal of the assessee is allowed. 2020 (10) TMI 26 Restoration of revenue appeal - Miscellaneous Application (MA) by the Revenue in respect of the Order u/s. 254(1) by the Tribunal dated 23/08/2019, dismissing its appeal in limine as not pressed/withdrawn in view of section 268A - Denial of natural justice - non-provision of any opportunity, or in any case proper opportunity, of being heard - HELD THAT:- Clause 10(c) states of a case where a revenue audit objection is accepted by the Department. It is this clause which the authorization memo refers to. Circular 3/2018 was later modified by circular 17/2019, dated 08/8/2019, enhancing the monetary limit for appeals before the Tribunal to ₹ 50 lacs. The other terms and conditions of the earlier circular continued to be in force. The filing of the instant appeals, in view of the applicability of cl.10(c) of circular 3/2018, as clarified by the authorization memo, was thus a circumstance attending the filing of the appeals in the instant case. The Tribunal was therefore obliged to have regard thereto. It was open for the Tribunal to, where in doubt, or in order to satisfy itself, or as a matter of abundant caution, require the Revenue to place on record the copy of the revenue audit objection, or make such other inquiry or verification in the matter as deemed fit and proper, i.e., to ascertain if the appeals were indeed excepted or not. We have already stated of the absence of the due process of hearing while disposing these appeals by the Tribunal, so that there was no question of either any objection being raised by the Revenue, or calling for any substantiation therefrom by the Tribunal. Our clear view, dismissal of the Revenue s appeals by the Tribunal, in view of the authorization memo dated 30.10.2018 on record, clearly stating of the appeal being filed, despite its low tax effect, is, in view of cl.10(c) of the Board circular 3/2018 dated 11.07.2018, a clear case of a mistake manifest on record. We have already clarified that the authorization memo, an official document, can still be subject to verification by the Tribunal so as to satisfy itself, which itself implies having regard thereto, which the law obliges it to. Revenue s instant applications are, therefore, admissible, and cannot be ousted at the threshold on the ground that no objection raised by the ld. DR at the time of hearing. (also see para 4.1) 3.2 No other argument or plea was raised during hearing. As would be apparent, none of the decisions cited, in view of the specific findings by the Tribunal, are applicable or indeed relevant in the instant case. MA decided in principle, in the favour of the Revenue, decide like-wise, and direct restoration of the Revenue s captioned appeal for being heard and decided on merits. 2020 (10) TMI 25 Long term capital gain - re-alignment of shareholding pursuant to family settlement arrangement - indexation of assets (shares received as gift) from the date of ownership by the previous owner or from the first year in which the assessee became owner - Whether A.O./CIT(A) erred in not holding that the amount received on re-alignment of shareholding pursuant to family settlement arrangement was not liable to capital gains tax u/s 45? - Whether amount received by the appellant was not towards equalization of family interests and was thus, not in the nature of owelty, but was consideration received for transfer of shares, being personal property? HELD THAT:- Assessee did not produce any evidence of prior, present or likelihood of any future family dispute on record to justify the execution of the Memorandum of Family Settlement. The clauses of the Memorandum of Family Settlement clearly establish that it was a simple transaction of sale and purchase of shares, subject to consideration received by the assessee from Shri Golu L. Mirchandani. Shri Golu L. Mirchandani have been described as purchaser of the shares and assessee as seller in the Memorandum of Family Settlement which could never be regarded as Family Settlement Deed. The assessee did not have any antecedent, title of any family property because whatever shares/asset assessee has possessed as owner have been sold subject to consideration because the assessee has acquired the shares of two Companies by way of gift from her father and sons. Thus, it was not a family property which could have been divided between the assessee and Shri Golu L. Mirchandani. The assessee did not receive any share from the family of her husband. The facts also clearly established that there is no equitable partition or distribution of family shares/ assets. The chart reproduced above shows that it was merely sale transaction of shares which could not be considered as Family Settlement. Thus, it cannot be said that the impugned amount was given to assessee for equalisation of interest in the family property and thus, it was not an owelty as is claimed by the assessee. Since shares were the personal property of the assessee, therefore, when same were transferred to Shri Golu L. Mirchandani, it would amount to sale. It is an admitted fact that assessee initially admitted the transactions to be sale and purchase transaction subject to consideration. Assessee was not able to prove by any evidence to justify retraction from the earlier admission on disclosing the sale transaction in the original return of income disclosing capital gains - assessee by claiming now it to be Family Settlement tried to defruad the Revenue to reduce the taxable returned income. Assessee has received this amount for relinquishing her rights to manage the two companies i.e., the consideration for her asset. She has not received this amount as owelty as there were no division of assets. She had to forego her assets for a consideration and she did not receive any asset/right in reciprocation nor was the money paid for equalisation of the interest. Thus, the money received by her though indirectly were the sale consideration of transfer of her rights and not owelty. ₹ 45 lakhs was paid in settling the liability of the assessee in the matter of Excise prosecution which would amount to transfer. Thus, it is clear that assessee received the impugned amount on sale of the shares. Therefore, it would be transfer of capital asset within the meaning of Section 2(47) of the I.T. Act, 1961, so as to attract the provisions of capital gains which assessee has rightly disclosed in the return of income and paid the tax thereon - Decided against assessee. Indexed cost of acquisition of shares in question - This issue has already been decided by the Ld. CIT(A) in the first round of proceedings and deleted the addition. The Departmental Appeal have been dismissed by the Tribunal [ 2014 (10) TMI 698 - ITAT DELHI] . Thus, this issue should not have been taken-up by the authorities below in this second round of appellate proceedings because this issue was not the remanded matter. Orders of the authorities below are set aside and the A.O. is directed to follow the first round order of the Ld. CIT(A) and the Tribunal (supra). Ground No.4 of the appeal of the Assessee is allowed. Further, charging of interest is mandatory and consequential. 2020 (10) TMI 24 TP Adjustment - comparable selection - Functional similarity - HELD THAT:- The assessee is engaged in the business of software development, maintenance and IT enabled services.It provides system integration, enterprise solutions, software development services to the clients of its associated enterprise and two other independent customer is in UK, US and other countries in Europe as well as in India. It provides information technology enabled services in the nature of back-office process outsourcing and inbounds and outbound voice based services (BPO), thus companies functionally dissimilar with that of assessee need to be deselected from final comparable list. TDS u/s 195 - Disallowance of management services fees u/s 40 (a) (i) - Addition on account of management services fee on which no tax is been deducted - Indo French DTAA - HELD THAT:- As relying on own case [ 2016 (8) TMI 166 - DELHI HIGH COURT] payment made by the petitioner for the managerial services provided by the latter cannot be taxed as fee for technical services thus said payments are not liable to withholding of tax under section 195. Disallowance of deduction u/s 10 AA - reasons for restricting the disallowance as AO excluded foreign exchange outgo, telecommunication charges, subsistence allowance for on-site employees and standby and callout charges from the total turnover for the purpose of computing deduction u/s 10 AA - claim of the assessee is that both the export turnover and total turnover for computing that deduction under this Section should be on the same basis - HELD THAT:- In view of the decision of the coordinate benches and the honourable High Court in assessee s own case we reverse the order of the learned assessing officer and direct to consider a sum of all items in total turnover also for computing deduction u/s 10 AA of the income tax act. Accordingly, ground of the appeal is allowed. Disallowance of foreign-exchange loss on account of unrealized foreign exchange forward contracts entered into for hedging the export proceeds against the currency fluctuation holding the same to be contingent in nature - HELD THAT:- Assessee has claimed to place on record party-wise break up of revenue earned by the appellant, which comprises break up of MTP (Management Transfer Price) and LTP (Legal Transfer Price)/ true-up values of invoices raised on AEs. On sample basis, the appellant is furnishing invoice wise break up and corresponding invoices raised on Steria Ltd., UK, revenue wherefrom comprises 81% of the total revenue for the year. All these evidences need to be closely examined by the learned assessing officer to follow the direction of the learned dispute resolution panel. The direction of the learned dispute resolution panel is to only disallow the excess sum debited by the assessee in the books which is not been recovered. In view of this with respect to the submission of the assessee made during the course of hearing before us we set aside the whole issue before the learned that assessing officer with a direction to the assessee to show that the amount of loss that has been disallowed has also been recovered by the assessee from its associated enterprise. The learned assessing officer may examine the same and if it is found already been recovered by the assessee from its associated enterprise, to delete the disallowance. In view of this, ground number of the appeal is allowed accordingly. Short credit of advance tax paid - HELD THAT:- On careful consideration of the rival arguments raised before us we direct the assessing officer to consider the credit of advance tax paid to the assessee of the above sum after proper verification. No TDS liability on a sum paid by the assessee to its group entity based in France - See INRASOFT LTD. [ 2013 (11) TMI 1382 - DELHI HIGH COURT] 2020 (10) TMI 23 Exemption u/s 11 - deemed registered u/s 12AA - registration to be granted during the pendency of the appeal or assessment - disallowance of capital expenditure - HELD THAT:- In the instant case, the registration u/s.12A of the Act has already been granted on 14.09.2011 when there was neither any appeal nor any assessment was pending either before the first appellate authority or before the AO. Therefore, there were no any assessments pending before the revenue authorities. In view of this case law relied on by the ld. AR of the assessee is not applicable in the present case in hand. At the time of hearing, a specific query was raised by the Bench to the parties as to whether any assessment or any appeal was pending before granting registration for any assessment year. In response to the same, ld. DR stated at bar that no assessment nor any appeal was pending before the authorities below, to which ld. AR could not controvert the same. Registration was not granted on 14.09.2011 w.e.f.01.04.2011. Therefore, without registration u/s.12AA of the Income Tax Act in the hands of the assessee the benefit of Section 11 of the Act cannot be given. The case law relied on by the ld.DR in the case of U.P.Forest Corporation [ 2007 (11) TMI 303 - SUPREME COURT] supports the view rendered by us. Therefore, the CIT(A) as well as the AO has rightly denied giving exemption u/s.11 of the Act invested in the capital assets - Accordingly, ground No.1 of the appeal of the assessee is dismissed. Addition of excess depreciation - HELD THAT:- We do not agree with the submissions of the assessee that for the purpose of income tax the assessee must calculate/follow the income tax rules and regulations. We find from the order of the authorities below that the assessee had calculated depreciation on the normal accounting practice which is not sustainable because as per the income tax act while calculating the profit for the taxation purpose, the assessee must follow the income tax provisions and the depreciation has been provided in Section 32 - assessee himself calculated the depreciation as per his precedence. Res judicata does not apply in the income tax Act. Therefore, the lower authorities have rightly dismissed the excess depreciation claimed by the assessee.This ground No.2 is also dismissed. Disallowance u/s.40A(3) - assessee has made advance cash payments to its employees for the purchase of vegetables and chickens and the employees of the assessee used to purchase the vegetables and chicken from the market for providing meals to the students of the school as the assessee is running a residential school - HELD THAT:- We agree with the above contentions of the assessee considering the practicality of the circumstances and the fact that the assessee has made payment to the employees for purchase of vegetables etc. from the market - vegetables, fruits are coming under the agricultural products which are supplied by the green grocers and small vendors or vegetable sellers. Similarly, chickens are coming under the animal husbandry products, which are supplied by the chicken centres, therefore, payments made for purchase of agricultural and animal husbandry products for use of students in hostel are not be disallowed u/s.40A(3) - direct the AO to delete the addition made u/s.40A(3) - Ground No.3 of the appeal of the assessee is allowed. Adhoc disallowance @10% of the expenses - HELD THAT:- Assessee could not controvert the findings recorded by the authorities below in respect of addition made by the AO and confirmed by the CIT(A). The assessee has submitted statement of gardening cultural expenses for the financial year 2010-2011 - expenses have not been clarified that on what basis/object the expenditure have been incurred, neither any narration has been quoted for the said expenses. In view of this, we also uphold the action of lower authorities on this issue. Thus, ground No.4 is dismissed. Late payment of provident fund u/s. 36(1)(va) - HELD THAT:- assessee has not deposited the employees contribution within the due date as specified in that particular Act - substance in the submissions of DR that Section 36(1)(va) deals with the deduction in respect of the sum received by the assessee from any of his employees to which the provisions of sub- section 2(24)(x) of the Act applies, provided such sum is credited by the assessee to the employee s account in relevant fund on or before the due date. The due date is defined under the Explanation to section 36(1)(va) of the Act by stating that the due date referred under the relevant Act and certainly not the due date for filing the return. As decided in MILIND GUPTA, [ 2019 (10) TMI 128 - ITAT CUTTACK] Tribunal has restored the issue to the file of AO to examine the contributions made with reference to dates when they were actually made and grant relief to such of claim which qualified for such relief in terms of prevailing provisions of the Act. Accordingly, the issue in the present appeal, being similar we also restore this issue to the file of AO to decide the same in the terms as observed by the Tribunal cited above - Decided in favour of assessee for statistical purposes. 2020 (10) TMI 22 Addition of interest income on term deposits under the head income from other sources - allowability of interest expenditure u/s.57 to the extent of interest income - Against these interest receipts, the assessee had claimed deduction of interest expenditure u/s.57 on the amounts outstanding to related three notified broker entities M/s. Harshad Mehta, M/s. J.H. Mehta and M/s. Ashwin Mehta - HELD THAT:- As decided in own case [ 2020 (3) TMI 1252 - ITAT MUMBAI ] wherein this Tribunal had restricted allowability of interest expenditure u/s.57 of the Act to the extent of interest income. Decided in favour of assessee. Charging of interest u/s.234A, 234B 234C which was charged without giving credit for tax deducted at source - HELD THAT: - Interest levied under section 234 A. 234B 234C be recomputed after excluding the income which is subject to TDS. Therefore, as directed to recompute the interest accordingly. In the result, these grounds of appeal are allowed for statistical purpose. Disallowance of interest made u/s.14A - HELD THAT:- As decided in own case [ 2020 (3) TMI 1252 - ITAT MUMBAI ] we are of the view that to the extent the interest relate to the investment, i.e. being disallowable under Section 57 will become part of cost of acquisition of shares and therefore the AO is directed to take it as part of the cost of shares for determining profit on sale of the shares. Thus, the additional ground stands allowed to that extent. 2020 (10) TMI 21 Long term capital gain - nature of land sold - sale of agricultural property as the property sold by the appellant - Whether not capital asset with in the meaning of section 2(14) - first contention of the AR is that the impugned land is an agricultural land and it is not a capital asset since it is the land covered by Section 2(14)(iii)(a) (b) - HELD THAT:- It is an agricultural land, only if the said land is subject to agricultural operation and agricultural activities is carried on in that land. There is no presumption that all land situated outside the notified area are agricultural land and there is no automatic treatment of land as an agricultural land on the ground that it is covered by section 2(14)(iii)(a) (b) of the Act. The expression 'agricultural land' is not defined in the Act, and now, whether it is agricultural land or not has got to be determined by using the tests or methods laid down by the Courts from time to time. As in the case of Smt. Sarifabibi Mohmed Ibrahim [ 1993 (9) TMI 10 - SUPREME COURT] has approved the decision of case of CIT v. Siddharth J. Desai [ 1981 (9) TMI 48 - GUJARAT HIGH COURT] and has laid down 13 tests or factors which are required to be considered and upon consideration of which, the question whether the land is an agricultural land or not has got to be decided or answered. Though the circumstances that land is classified as agriculture in revenue record and Akkupet village, Devanahalli Taluk that is not notified under the provisions of Section 214(iii)(a) (b) of the Act still it is considered as agriculture land on the reason that no agriculture operations has been carried out by the assessee in the said land. In our opinion, the land situated on the presumption of urban area and in the municipal limit cannot be considered as agriculture land unless there was actual agriculture operations carried out by the assessee. Further it is to be seen that the income returned in her Return of Income was an agriculture income was just for name sake and does not have any proportion. At the time of sale of land, no agriculture activity was carried out by the assessee. Accordingly we hold that the property sold by the assessee is not an agricultural land and to be treated as a capital asset liable to be taxed. Claim of payment of compensation to unauthorized occupants and payment of commission to Brokers, the assessee has not produced any evidence in support of the same. Similarly, the assessee has not produced supporting evidence in relation to claim of deduction under section 54F of the Act. Assessee appeal dismissed. Customs 2020 (10) TMI 20 Refund - appeals rejected only on the ground that the appellant cannot challenge their own self-assessment before the Commissioner(Appeals) under Section 128 of the Customs Act, 1962 because self-assessment is not an assessment - HELD THAT:- This issue is no more res integra and has been settled by the Hon ble Apex Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT ] where it was held that The provisions under section 27 cannot be invoked in the absence of amendment or modification having been made in the bill of entry on the basis of which self-assessment has been made. In other words, the order of self-assessment is required to be followed unless modified before the claim for refund is entertained under Section 27. The refund proceedings are in the nature of execution for refunding amount. It is not assessment or reassessment proceedings at all. Matter remanded back to the Commissioner(Appeals) to decide the same on merits after affording an opportunity of hearing to the appellants and after complying with the principles of natural justice - appeal allowed by way of remand. Corporate Laws 2020 (10) TMI 19 Condonation of delay of 4 years in filing the present company petition - Section 59 of the Companies Act, 2013 - HELD THAT:- While considering the application for condonation of delay no straight jacket formula is prescribed to come to the conclusion if sufficient and good grounds have been made out or not. Each case has to be weighed from its facts and the circumstances in which the party acts and behaves - After all, justice can be done only when the matter is fought on merits and in accordance with law rather than to dispose it of on such technicalities and that too at the threshold. It is pertinent to point out that unless mala fides are writ large on the conduct of the party, generally as a normal 1 rule, delay should be condoned. In the legal arena, an attempt should always be made to allow the matter to be contested on merits rather than to throw it on such technicalities. While dealing with an 'Application for condonation of Delay', the concerned Tribunal/Appropriate Authority is only required to consider whether the 'Plea of Sufficiency of Cause' is a reasonable one or otherwise, of course after taking into consideration of the facts and circumstances of a given case. Undoubtedly, consideration of an existence of a 'Sufficient Cause' is within the ambit of the concerned Authority, which has to be exercised based on sound judicial principles - It cannot be gain said that 'Right to refuse' registration of transfer of shares, 'Sufficient Cause' is question of law and the cause shown for refusal is sufficient or otherwise in a given case, can also be a 'mixed question of law' and fact. Besides this, a refusal may be on the; basis of 'Breach of Law' or any other 'Sufficient Cause'. In the present case, it has become necessary to adjudicate the issue of whether the Company Petition as filed by the Petitioner is barred by limitation and whether the delay can be condoned. However, before venturing into the issue of whether the delay has to be condoned or not, from the facts narrated above, this Tribunal is of the considered view that issue of limitation in the present case, is a mixed question of fact and law. This Tribunal is of the view that this Application filed by the Petitioner to condone the delay of 4 years in filing the main Company Petition, should not be taken up as a preliminary issue and to be decided, without traversing into the merits of the case - this Tribunal deems fit that this Application should be taken up along with the main Company Petition for effective adjudication of this issue both on law and on facts - application disposed off. 2020 (10) TMI 18 Restoration of names in the Register of Companies - sub-section (5) of Section 248 of Companies Act, 2013 - opportunity of being heard not given - violation of principles of natural justice - HELD THAT:- It is well established principle that no person shall be condemned unheard. Here, the petitioners-companies are registered in the year 2010. When such being the case, it is the duty of the Registrar to examine as to whether the petitioners-companies have any valid legal defence for the purpose of sub-Section (5) of Section 248 of the Act. Sub Section (5) is very clear that before publication in the Official Gazette about the striking off the name of company, notice has to be issued to the company and thereafter on the basis of the reply, the Registrar can pass an order, but, before passing an order, the grounds given or defence taken in the reply to the notice should have to be verified - When such being the case, the order of striking off the name of the company itself is bad in law and when the notices itself have not been issued, then it is a good ground for the petitioners-companies to prefer an appeal under Section 252 of the Act. - Petitioner are at liberty to approach the Tribunal u/s 252 of the Companies Act. Application disposed off. 2020 (10) TMI 17 Approval of Amalgamation Scheme - Sections 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- In view of the foregoing, upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs and the report of official liquidator, there appears to be no impediment in sanctioning the present Scheme - Consequently, sanction is hereby granted to the Scheme under Section 230 to 232 of the Companies Act, 2013. The scheme is approved. 2020 (10) TMI 16 Sanction of Scheme of Amalgamation - section 230 to 232 of Companies Act - HELD THAT:- Right to apply for the sanction of the Scheme has been statutorily provided under Section 230-234 of the Companies Act, 2013 and therefore, it is open to the applicant companies to avail the benefits extended by statutory provisions and the Rules - It has also been affirmed in the petition that the Scheme is in the interest of all the transferor companies and the transferee company including their shareholders, creditors, employees and all concerned. Upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs and the report of official liquidator, there appears to be no impediment in sanctioning the present Scheme - sanction is hereby granted to the Scheme under Section 230 to 232 of the Companies Act, 2013. 2020 (10) TMI 15 Sanction of Composite Scheme of Amalgamation of wholly owned subsidiaries - sections 230-232 of the Companies Act, 2013 read with Companies (Compromises, Arrangement Amalgamations) Rules, 2016 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not in violation of any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, Company Petition is made absolute in terms of prayers in the Petition. The Scheme is hereby sanctioned with the Appointed Date fixed as 1st April 2019 - The Transferor Companies shall stand dissolved without the process of winding up. Insolvency & Bankruptcy 2020 (10) TMI 14 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 clearly established that the default in payment of the Operational debt has occurred by the corporate debtor further there also exist a pre-existing dispute with regards the payments of invoices on grounds of substandard quality of service and improper execution of the terms of the agreement. In the given facts and circumstances, the present application is complete and the Applicant has established its claim which is payable and due by the corporate debtor. In the light of above facts and records, the present application is admitted, in terms of section 9(5) of IBC, 2016. The Applicant has filed an affidavit under section 9(3)(b) dated 16.11.2018 affirming that no notice of dispute has been given by the Corporate debtor relating to dispute of the unpaid operational debt - The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The default occurred from 16.01.2018, hence the debt is not time barred and the application is filed within the period of limitation. Application admitted - moratorium declared. 2020 (10) TMI 13 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 statement of CIRP cost were filed along with the Petition, which says the total CIRP cost is ₹ 37,85,728/- out of which, only ₹ 8 Lakhs towards Interim Resolution Professional fees, ₹ 2,95,000/- towards Resolution Professional (Respondent) and advertisement cost of ₹ 1,36,000/- was paid and the remaining balance of ₹ 25,54,728/- was not paid. Therefore it is not the case of the Applicant alone that the entire claims towards various services rendered during CIRP was not paid. Moreover it is not in dispute that ₹ 50,000/- was paid each of said the valuers, which include the Applicant herein, towards the expenses incurred by them. Since the Hon'ble NCLAT set-aside the order of this Adjudicating Authority and this Hon'ble Tribunal also passed order consequently with regard to the CIRP cost, this Adjudicating Authority cannot entertain this Application and it became functous officio. The instant Application is not maintainable and also lack merits - Application dismissed. 2020 (10) TMI 12 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 facts, as narrated by the Parties in the Petition, it establishes that the instant Petition is filed to recover the sale consideration rather than to initiate CIRP in terms of provisions of Code. In terms of Agreements in question, the Petitioners are entitled for delivery of Apartment in question, within stipulated period, however, subject to justifiably delay. The Respondent have satisfactorily explained the reasons for delay in completion of Projects. Since the Respondent has expressed its readiness to deliver the Apartment in question, on expeditious basis, on par with other similarly situated Parties, the Petitioners are not entitled to seek initiation of CIRP against Corporate Debtor. The Petition itself is misconceived. The Adjudicating Authority is not recovery forum, and the Corporate Debtor is still a going concern, even during present economic crisis, and thus it cannot be disturbed by way of initiating proceedings under the provisions of Code. It would be just and proper to dispose of the instant Petition by directing the Corporate Debtor to handover the possession of the Apartment in question to the Petitioners, immediately on its completion - petition is hereby disposed of by directing the Corporate Debtor to handover the possession of the Apartment in question, on its completion, to the Petitioners, as committed by it. 2020 (10) TMI 11 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The Petitioner succeeded in proving its debt and the Corporate Debtor failed to discharge its payment liability towards supply of services to corporate debtor as per its invoices. The Corporate Debtor has not paid the outstanding debt owed to operational creditor despite demand notice delivered upon him under Sec 8 of the Code. Therefore, the amount and default on the side of the Operational Creditor stand proved in the present case. Therefore, petitioner is found entitled to initiate corporate insolvency resolution process as against the Corporate Debtor. The Petitioner, in the present IB petition, has complied with Section 9(3) (b) and 9(3)(c) by filing supporting affidavit. As the petitioner fulfils the requirement for invoking CIRP in terms of Section 9 of the Code, the present application is found complete and the default of debts is established. Hence, the present petition deserves admission. Petition admitted - moratorium declared. 2020 (10) TMI 10 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The dispute sought to be raised in the present case is a patently feeble legal argument or an assertion of fact unsupported by evidence. The dispute is also not shown to have truly existed in fact and is spurious, hypothetical or illusory - The contention of Nath Solvent that a dispute truly existed in the present case, is thus rejected. The application under Section 9(2) of the Code is complete. Also, in its account books, Nath Solvent has accepted almost the complete amount claimed to be in default. The dispute sought to be raised by Nath Solvent has been examined in detail above and rejected. No Interim Resolution Professional (IRP) has been proposed by Jai Bhagwan in the application. The requirements of Section 9(5)(i) of the Code are satisfied - application admitted - moratorium declared. 2020 (10) TMI 9 Maintainability of application - initiation of CIRP - Financial Debt or not - Financial Creditors or not - HELD THAT:- The Petitioner has approached this Tribunal in the clothe of Financial Creditor, within the meaning of Section 5(8) in respect of Financial Debt in respect of which he has submitted a Memorandum dated 05.02.2020. Admittedly, an allottee is eligible to apply under Section 7 as a Financial Creditor in the event of failure to deliver the residential apartment as per the Sale Agreement. Here the Applicant claims that he has advanced to land owners as requested by the Respondent towards the purchase cost of 700 sq.ft. undivided share in the land belonged to Mr. Ponnuswamy and Mr. G. Jayajothi. It has been ascertained that a Sale Agreement has been executed on 20.06.2016 followed by an Agreement for Construction dated 20.06.2016. The Respondent has completed the construction and carried out the interior work in the apartment as demanded by the Petitioner, which was ready for delivery and handed over to him and the petitioner has accepted the same and as such now he cannot choose to claim the money back as Financial Creditor - further, the right to claim money by the allottee of a Residential Apartment eminates is maintained only in the event of non-delivery of the apartment to the allottee. The application of the Petitioner for initiating CIRP against the Corporate Debtor, LLP stands dismissed. 2020 (10) TMI 8 Maintainability of application - initiation of CIRP - Corporate Debtor failed to amke repayment of its dues - existence of debt and dispute or not - pendency of SARFAESI proceeding - HELD THAT:- The present application has been filed by the Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy before this Adjudicating Authority to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor - It may not be out of place mention here that the Corporate Debtor has been declared as Willful Defaulter by the Bank of Baroda, which categorically demonstrates the intentions of the Corporate Debtor. It is a settled legal position that the pendency of SARFAESI proceeding or other disputes do not prevent a Financial Creditor to trigger the C.I.R.P. because the nature of remedy being sought for under the provisions of the I.B. Code is Remedy in Rem in respect of the CD. The Cash Credit and Term Loan facilities were sanctioned by the Petitioner Bank and the same were availed by CD, M.P. Agro BRK Energy Foods Limited. The Charges have been filed by the CD with RoC and the Financial Creditor has filed valuation report and search report - The CD has defaulted in making repayment of loan/credit facilities to the Petitioner Bank and the date of default is 30.09.2017. The Statement of accounts and the CIBIL Reports submitted by the applicant Bank confirm the debt is due and default has been committed by the Corporate Debtor - The Petitioner Bank has filed the petition within the period of limitation, as the last credit has come to the account on 31.08.2018 when this application has been filed on 22.10.2018 which is within 3 years of last payment. The present I.B. Petition is filed by the duly authorised official of the Applicant Bank in a prescribed format under Section 7 of the I.B. Code annexing copies of loan documents confirming the existence of debt due and defaulted and proposed a name of Resolution Professional to act as an Interim Resolution Professional (IRP). This Adjudicating Authority is satisfied that, (a) The Corporate Debtor availed the loan /credit facilities from the Financial Creditor Bank. (b) Existence of debt is above Rs. One Lac; (c) Debt is due; (d) Default has occurred on 30/09/2017; (e) Petition had been filed within the limitation period as the last payment of INR.2,50,000.00 has come to the account on 31.08.2018 whereas this petition has been filed on 22.10.2018; (f) Copy of the Application filed before the Tribunal has been sent to the Corporate Debtor and the application filed by the Petitioner Bank Under Section 7 of IBC is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process against the Corporate Debtor. (g) The Applicant's submission in IA 249 of 2019 that no such settlement proposal is pending before the Financial Creditor is taken record IA is thereby disposed of. Hence, the present IB Petition is admitted with the following Directions/observations. The date of admission of this petition is 05.03.2020 - petition admitted - moratorium declared. 2020 (10) TMI 7 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt or not - existence of debt and dispute or not - Service of notice - whether the demand notice in Form No.3 dated 08.03.2019 was properly served? - HELD THAT:- The demand notice dated 08.03.2019 was sent at the address as per the master data at Page No.22 of the petition in which the registered office is shown as Jalalabad Road, Muktsar, Punjab - 152026. Copy of the postal receipt along with tracking report and email are attached as Annexure-8 (Colly) of the petition. It is submitted that the Corporate Debtor has chosen not to reply to the demand notice dated 08.03.2019. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The respondent corporate debtor has neither filed any reply to the petition nor has disputed the liability towards the operational creditor. Thus, there is no dispute as to the liability between the corporate debtor and the operational creditor. It is also observed that till the last date of hearing, there has been no representation from the respondent-corporate debtor, hence the respondent can be proceeded ex parte and accordingly this CP may be admitted. Pre-existing dispute or not? - HELD THAT:- As a statutory requirement under Section 9(3)(b) of the Code, an affidavit dated 06.05.2019 (pages 20 21 of the petition) has been placed by the operational creditor stating that despite service of the demand notice dated 08.03.2019, till the date of filing of the present application, Corporate Debtor did not raise any dispute qua the outstanding payment and even no dispute was pending or arose by the corporate debtor qua the outstanding amount even prior to the sending the statutory demand notice dated 08.03.2019. We have held above that the demand notice in Form No.3 was properly delivered by the Operational Creditor and no pre-existing dispute is proved - It has been shown that the corporate debtor has failed to make payment of the ₹ 19,00,000/- as due after receiving payment of ₹ 8 lakhs vide two transactions, first an amount of ₹ 3 lakhs on 09.04.2019 and secondly ₹ 5 lakhs on 22.04.2019 till date. It is also observed that the conditions under Section 9 of the Code stand satisfied. The applicant-operational creditor states that from the abovementioned fact it is clear that the liability of the respondent-corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default, which is more than ₹ 1 lac by the respondent-corporate debtor. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition for initiation of the CIRP process in the case of the Corporate Debtor M/s. Evershine Solvex Private Limited, is admitted - moratorium declared. 2020 (10) TMI 6 Direction to the State Goods and Services Tax Department to accept physical filing of returns after the commencement of CIRP - HELD THAT:- The Resolution Professional is directed to complete the physical filing of the returns of GST relating to the period after the commencement of CIRP within three weeks. In respect of the claim prior to period of commencement of CIRP, the State GST may consider following the provisions of IBC, 2016 and filing their claim with the Resolution Professional in accordance with law - Application disposed off. Validity of arbitration proceedings - NCLT stated that given the moratorium that is imposed, no arbitration proceedings could go on - HELD THAT:- The mandate of the new Insolvency Code is that the moment an insolvency petition is admitted, the moratorium that comes into effect under Section 14(1) (a) expressly interdicts institution or continuation of pending suits or proceedings against Corporate Debtors - This being the case, we are surprised that an arbitration proceeding has been purported to be started after the imposition of the said moratorium and appeals under Section 37 of the Arbitration Act are being entertained. Therefore, we set aside the order of the District Judge dated 06.07.2017 and further state that the effect of Section 14(1) (a) is that the arbitration that has been instituted after the aforesaid moratorium is non est in law. The steps that have to be taken under the Insolvency Code will continue unimpeded by any order of any other Court - Appeal allowed. 2020 (10) TMI 5 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - pre-existing dispute or not - Service of notice - whether a notice of dispute has been received by Sidana and the application is required to be rejected on this ground? - HELD THAT:- The dispute sought to be raised on the basis of undated letter received in June, 2018 is a patently feeble legal argument or an assertion of fact unsupported by evidence and is spurious, hypothetical or illusory. Therefore, the pre-existence of the dispute cannot be accepted. Application in Form No.5 - only objection taken by Bhandari Hosiery was in respect of the petition being instituted in the name of the proprietorship concern - HELD THAT:- This objection was considered and vide order dated 29.10.2019, opportunity was given to Sidana to rectify the defect in the application and the defect was rectified vide diary No.6135, dated 05.11.2019. The copies of invoices as well as the ledger account of Bhandari Hosiery in the books of Sidana have been enclosed with the petition to show that debt of ₹ 2,20,116/- is outstanding and in default. It is discussed above that demand notice dated 20.08.2018 was sent by Sidana under Section 8 of the Code and notice of dispute was received vide letter dated 28.08.2018 - the notice cannot be treated as a notice of pre-existing dispute. There is no proposal for appointment of IRP and, therefore, the pendency of disciplinary proceedings pending against the proposed Resolution Professional does not arise. The conditions provided for in Section 9(5) (i) of the Code are satisfied in the present case - Application admitted - moratorium declared. 2020 (10) TMI 4 Maintainability of appeal - Writ Appeal is pending before the Hon'ble High Court of Karnataka - HELD THAT:- As per the ratio decided in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. [ 2017 (9) TMI 58 - SUPREME COURT ], the Adjudicating Authority has to ascertain the existence of the default within a period of 14 days on the date of the receipt of the application and if the Adjudicating Authority is satisfied with the requisite contentions as prescribed under the extant provisions of the code, the application/petition must be admitted - In the instance case, the main CP was filed on 18.01.2019, and it was adjourned on several occasions. During the pendency of the main CP, the Respondent has filed I.A No. 229 of 2019 u/s 8 of the Arbitration and Conciliation Act, 1996. Therefore, the Adjudicating Authority could not decide the main CP as per merits. The parties are directed to argue the main CP, subject to the Writ Appeal pending before the Hon'ble High Court of Karnataka - Post the case on 12.02.2020. No further adjournments will be given in the matter. Service Tax 2020 (10) TMI 3 Violation of the principles of natural justice - Issuance of Form SVLDRS-3 against the Declaration filed in Form SVLDRS-1 under Section 125 of the Finance Act, 2019 - rectification of the error in form SVLDRS-3 issued to the Petitioner - HELD THAT:- As a one time measure for liquidation of past disputes of Central Excise and Service Tax, the SVLDR Scheme has been issued by the Central Government. The SVLDR Scheme has also been issued to ensure disclosure of unpaid taxes by an eligible person. This appears to have been necessitated as the levy of Central Excise and Service Tax has now been subsumed in the new GST Regime. From a reading of the statement of object and reasons, it is quite evident that the scheme conceived as a one time measure, has the twin objectives of liquidation of past disputes pertaining to central excise and service tax on the one hand and disclosure of unpaid taxes on the other hand. It is not in dispute that the Petitioner is an eligible person. The Petitioner filed a declaration in Form SVLDRS-1 on 27-12-2019 as per Rule 3 of the SVLDRS Rules for relief under Section 124(1)(c)(ii) of the Finance (No.2) Act, 2019. Thereafter SVLDRS-2 was issued by the Designated Committee. As per Rule 6(3) of the SVLDRS Rules, this form is issued along with an estimate of the amount payable by the declarant along with notice of an opportunity for personal hearing. It is also not in dispute that Form SVLDRS-2 states that the estimated tax payable by the petitioner under the Scheme is ₹ 71,11,033.80 - If an opportunity for personal hearing as contemplated in Rule 6(3) of the SVLDRS Rules was given to the Petitioner pursuant to Form SVLDRS-2 with an estimate of an amount of ₹ 71,11,033.80 payable by the declarant, which amount has been accepted by the Petitioner pursuant to Form SVLDRS-2A in accordance with Rule 6(4) of the SVLDRS Rules, then, we do not see any reason as to why when the amount payable is sought to be enhanced from ₹ 71,11,033.80 to ₹ 2,19,82,499/- no such opportunity of hearing was granted to the Petitioner. If at all the Designated Committee wanted to increase the payable amount, the least they should have done was to give an opportunity of hearing to the Petitioner after affording the Petitioner an opportunity to review the report of the jurisdictional divisional commissioner. Rectification application - Section 128 of the Finance Act - HELD THAT:- It has been stated by the Respondents in their reply that they have considered the same but since there was no change in the amount after certification from the concerned authorities, they have not issued a revised SVLDRS-3. No order has been passed as contemplated under Section 128 of the Finance Act. This is not acceptable. Also the failure of the Respondents to pass an appropriate order under Section 128 of the Finance Act with respect of the Petitioner s rectification application and merely to state in the Reply Affidavit that since there was no change in the amount after certification from the concerned authorities, they have not issued revised Form SVLDRS-3 is in gross in breach of Rule 6(6) of the SVLDR Rules. Form SVLDRS-3 and Form SVLDRS-4 set aside - the Designated Committee under the SVLDR Scheme are directed to give an opportunity of hearing to the Petitioner and after considering all the material furnished - petition allowed. 2020 (10) TMI 2 Short payment of Service tax - Construction Services in Respect of Commercial of Industrial Building and Civil Structures and Erection Commissioning and Installation - period October, 2004 to March 2007 - HELD THAT:- There is no dispute that the service provided by the appellant is otherwise specified under Works Contract Service. The criteria for qualification of Works Contract Service is that the service should be provided along with material. It is obvious that when the services on construction is provided along with the material the assessee needs to pay VAT or the Works Contract Tax. From the contract it is seen that the appellant is required to provide the service along with material like Cement, Metal, Steel Reinforcement, Sand, Charcoal, Salt and Earting Material. Moreover, in respect of the Works Contract Service the recipient of the service will deduct the Works Contract Tax which shows that the works contract service is suffered with works contract tax. As per this fact there is absolutely no doubt that the nature of service as well as facts such as service provided along with the material and it suffered works contract tax which clearly qualifies as Works Contract Service. Benefit of N/N. 01/2006-ST. - HELD THAT:- As per the condition of such notification for allowing the abatement, the material cost needs to be included in the gross value of the service charges. When the revenue itself has allowed the abatement, it has admitted that the material cost is included in the gross value of the Works Contract Service. With this fact also, it is clearly established that the service provided by the appellant is Works Contract Service. As per the Hon ble Supreme Court s judgment in the case of LARSEN TOURBO LTD. [ 2015 (8) TMI 749 - SUPREME COURT ] the works contract service is not taxable before 01.06.2007 - In the present case, the entire period is prior to the said date therefore, in view of the apex court judgment the service being Works Contract Service is not taxable. Appeal allowed - decided in favor of appellant. Central Excise 2020 (10) TMI 1 Valuation and classification of ambulances - body building on the duty paid chassis - the view of the Revenue is that the appellant has misclassified the ambulances and having merit classification under Tariff Item 87033392 of the CETA, 1985 - period December 2009 to September 2014 - HELD THAT:- Considering the fact that in the appellant s own case for the earlier period M/S SITA SINGH SONS P. LTD., M/S SML ISUZU LTD. VERSUS CCE, DELHI-IV [ 2016 (7) TMI 346 - CESTAT CHANDIGARH ] where it was held that Primary test is that sitting capacity of the vehicle. Admittedly vehicle in question can carry more than 12 persons excluding the driver or 14 persons including the driver. Therefore, we hold that the vehicle in question is classifiable under heading 87.02 of CETA - It was also held that valuation to be made under Rule 10A of Central Excise (Valuation) Rules, 2000. Therefore, we hold that the appellants are liable to pay duty on the value arrived at under Rule 10A of the said rules. Thus, the appellant is liable to pay duty as per Rule 10A and if any differential duty has been paid, the same is subject to verification - Vehicle in question is classifiable under Chapter heading No. 8702 of CETA, 1985 - appeal disposed off.
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