Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 22, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
GST
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Validity of SCN - Jurisdiction to issue SCN - validity of proceeding initiated without service of FORM GST-ASMT-10 - Section 74 of the JGST Act, 2017 - although it has been mentioned that there is mismatch between GSTR-3B and 2A, but that is not sufficient as the foundational allegation for issuance of notice under Section 74 is totally missing and the notice continues to be vague. - HC
Income Tax
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Validity of reopening of assessment u/s 147 - if the appellant is to be relegated to pursue the appellate remedy, all such findings needs to be vacated, otherwise it would tantamount to putting fetters on the exercise of the powers of the appellate remedy which should not be done. Thus, all issues are left open and the appellant is at liberty to canvas all factual and legal issues before the First Appellate Authority which shall be considered and decided by the First Appellate Authority in accordance with law. - HC
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Claim of deduction u/s 80P(2)(d) - interest income received from Co-operative Bank - In the present case even though the assessee’s claim of deduction under section 80P(2)(d) of the Act is allowable, however, since the assessee has failed to qualify the additional condition imposed by section 80A(5), the assessee would not be entitled to claim said deduction, even if, otherwise the assesssee is eligible for deduction under section 80P(2)(d) - AT
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Reopening of assessment u/s 147 - assessee has claimed deduction u/s 80IB without allowing interest on capital and remuneration to the partners - the same officer has took two contrary view in respect of the same assessee on the similar issue, which is not permissible under the provisions of the income tax Act. The revenue authorities are requires to adhere the principles of consistency while considering the similar issues, when there is no variations in the facts in earlier or subsequent year. - AT
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Addition u/s 56(2)(vii)(b) - difference between the stamp value and the purchase consideration - the AO made addition only on the basis of additional stamp duty. There is no evidence on record to suggest that the assessee has shown sale consideration on the lesser value of prevailing Jantri rates - Additions deleted - AT
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Exemption u/s 54 - no documentary evidence to substantiate the claim that any amount was invested for purchase of new residential house except a certificate of builder wherein the assessee is a partner that assessee booked a residential flat. No number of residential unit, cost of new residential property or any other details of scheduled of payment is furnished - assessee failed to substantiate the claim - AT
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TDS / Withholding tax u/s 195 - amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India - AT
Customs
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Levy of Penalty u/s 114 of the Customs Act, 1962 - Smuggling - prohibited goods or not - Export of Red Sander logs under cotton tufted floor mats- colour – The case of appellants that blank letter heads were left by omission in the vehicle which was sold is only put forward to get out of the charges levelled against them and cannot be accepted - department has been able to establish the guilt/charge of abetment on the part of appellants. - AT
Central Excise
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Delay in sanction of interest on interest - Applicability of time limitation - whether the delay in sanction of interest on interest beyond the three months, comes within the purview of section 11BB? - There is no delay of sanction of refund as was paid under Rule 18A - Further claim rejected - AT
VAT
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Principles of natural justice - Assessment of escaped turnover - wrong availment of Input Tax Credit - The impugned order being is set aside solely on the ground that the cause shown by writ petitioner has not been considered and it does not give any reason whatsoever for not accepting the dealer's position. - HC
Case Laws:
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GST
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2021 (10) TMI 880
Validity of SCN - Jurisdiction to issue SCN - validity of proceeding initiated without service of FORM GST-ASMT-10 - Section 74 of the JGST Act, 2017 - violation of principles of natural justice - HELD THAT:- A bare perusal of the impugned show-case notice creates a clear impression that it is a notice issued in a format without even striking out any irrelevant portions and without stating the contraventions committed by the petitioner i.e. whether its actuated by reason of fraud or any willful misstatement or suppression of facts in order to evade tax. Needless to say that the proceedings under Section 74 have a serious connotation as they allege punitive consequences on account of fraud or any willful misstatement or suppression of facts employed by the person chargeable with tax. In absence of clear charges which the person so alleged is required to answer, the noticee is bound to be denied proper opportunity to defend itself. This would entail violation of principles of natural justice which is a well-recognized exception for invocation of writ jurisdiction despite availability of alternative remedy. The impugned notice completely lacks in fulfilling the ingredients of a proper show-cause notice under Section 74 of the Act. Proceedings under Section 74 of the Act have to be preceded by a proper show-cause notice. A summary of show-cause notice as issued in Form GST DRC-01 in terms of Rule 142(1) of the JGST Rules, 2017 (Annexure-2 impugned herein) cannot substitute the requirement of a proper show-cause notice. This court, however, is not inclined to be drawn into the issue whether the requirement of issuance of Form GST ASMT-10 is a condition precedent for invocation of Section 73 or 74 of the JGST Act for the purposes of deciding the instant case. This Court finds that upon perusal of Annexure-2 which is the statutory form GST DRC-01 issued to the petitioner, although it has been mentioned that there is mismatch between GSTR-3B and 2A, but that is not sufficient as the foundational allegation for issuance of notice under Section 74 is totally missing and the notice continues to be vague. The impugned show-cause notice as contained in Annexure-1 does not fulfill the ingredients of a proper show-cause notice and thus amounts to violation of principles of natural justice, the challenge is entertainable in exercise of writ jurisdiction of this Court - petition allowed.
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Income Tax
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2021 (10) TMI 879
Validity of reopening of assessment u/s 147 - Whether case falls within the parameters of Section 153A to Section 153C? - materials relied upon were obtained during a search under Section 132 of the Act of another party at New Delhi - As contended that where the material relied upon was obtained in the course of search of another party, the proceedings of the appellant can be initiated only under Section 153C - HELD THAT:- The Court had proceeded to consider the effect of Section 153C and has observed that nowhere in Section 147, the provisions of Section 153C stands excluded. However, we find that the contentions which were raised by the appellant with regard to the validity of the reopening proceedings which were sought to be controverted by the respondent have not been decided which in our opinion was the case to be decided by the Writ Court. In any event, the appellant has filed appeals before the First Appellate Authority well within the period of limitation. Therefore, we are of the view that the appellant should pursue the appellate remedy instead of agitating the matter before this Court in these appeals - observations/findings rendered by the learned Writ Court may cause prejudice to the appellant or to the Department. Therefore, if the appellant is to be relegated to pursue the appellate remedy, all such findings needs to be vacated, otherwise it would tantamount to putting fetters on the exercise of the powers of the appellate remedy which should not be done. Thus, all issues are left open and the appellant is at liberty to canvas all factual and legal issues before the First Appellate Authority which shall be considered and decided by the First Appellate Authority in accordance with law. Writ appeals are allowed, the common order passed in the Writ Petitions is set aside and the appellant is at liberty to raise all issues in the appeals which they have filed before the First Appellate Authority. The appellant is also granted liberty to raise additional grounds if a need arises to do so.
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2021 (10) TMI 878
Exemption u/s 11 - cancelling the registration granted to it u/s 12A - order cancelling the registration granted to the assessee u/s 12A has been passed by the Ld Principal CIT on the basis of findings noticed by the search officials and also by the AO during the course of assessment proceedings - HELD THAT:- The fact remain that the Tribunal has now passed orders for AY 2010-11 to 2016-17 against the assessment orders passed for the above said years u/s 153A of the Act. There is no dispute that the Ld PCIT has also referred to the assessment orders passed u/s 153A of the Act. Now there is change in circumstances on account of passing of the orders by the Tribunal. Under these set of facts, we are of the view that the entire issues urged by the assessee before us require re-examination at the end of Ld. Principal CIT, who can take judicial view of the matters after considering the order passed by the Tribunal. Accordingly, we set aside the order passed by Ld. Principal CIT and restore all the issues to his file for examining the claims of the assessee. After affording adequate opportunity to the assessee, Ld. Principal CIT may take appropriate decision in accordance with law on all the issues. Appeal filed by the assessee is treated as allowed for statistical purposes.
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2021 (10) TMI 877
TP Adjustment - selection of MAM - assessee applied the CUP as the most appropriate method, which got repelled at the hands of the authorities below - HELD THAT:- The assessee purchasing similar products from non-AEs or a third party in India purchasing similar goods in an uncontrolled situation would have constituted the next best comparable uncontrolled price(s). Neither the best nor the next best comparable uncontrolled transactions are available and further, the assessee has provided no basis to crease out the effect of geographical differences in the transaction so chosen as comparable in terms of rule 10B(3). In such circumstances, we fail to comprehend as to how the sale transactions made by German AE to non-German AEs constitute valid comparable uncontrolled transactions insofar as the assessee s purchases of raw material from Spain, USA, China and Germany are concerned. Remaining part of the international transaction of purchase of finished goods. It is seen that the assessee made finished goods purchases from its German AE as well as Italian AE. In order to benchmark these transactions, the assessee relied on a transaction of sale made by its Italian AE to German non-AE - As fairly conceded that no comparable data of the sales made by German AE to non-AE is available. Geographical differences, as noted above, do not justify the adoption of the price charged by Italian AE from a German non-AE as a good comparable for the purposes of benchmarking the international transactions in India. The raison d etre given in the context of purchase of raw materials supra applies with equal force to the purchase of finished goods from the AEs for which no worthwhile comparable uncontrolled transaction is available. No separate argument was advanced qua the remaining part of the transaction under consideration, namely, Purchase of Stores, spares and consumables from the AEs.We, therefore, approve the view point taken by the authorities below to the effect that the CUP is not the most appropriate method in the facts and circumstances of the case. Application of the TNMM - transfer pricing addition proportionate to the international transactions - HELD THAT:- As AR submitted that if the CUP method is not to be adopted as the most appropriate method, then he has no grievance against the application of the TNMM or any of its other aspects except restricting the transfer pricing addition proportionate to the international transactions. The issue of proportionate adjustment is fairly settled by a judgment of the Hon ble jurisdictional High court in CIT Vs. Phoenix Mecano (India) Pvt. Ltd. [ 2017 (6) TMI 1240 - BOMBAY HIGH COURT] holding that the transfer pricing adjustment made at entity level should be restricted to the international transactions only. It is pertinent to mention that the Department s SLP against this judgment has since been dismissed by the Hon ble Supreme Court in CIT Vs. Phoenix Mecano (India) Pvt. Ltd. [ 2018 (7) TMI 798 - SC ORDER] . Similar view has been espoused by the Hon ble Bombay High Court in CIT Vs. Thyssen Krupp Industries Pvt. Ltd.[ 2015 (12) TMI 1076 - BOMBAY HIGH COURT] and CIT Vs. Tara Jewels Exports (P). Ltd. [ 2015 (12) TMI 1130 - BOMBAY HIGH COURT] . We, ergo, direct to restrict the transfer pricing addition only to the extent of international transaction under consideration. We restore the matter to the file of AO/TPO for re-determining the ALP of the international transaction of `Purchase of raw material, sale of finished goods, spares and consumables under the TNMM but restricting the amount of transfer pricing adjustment only to the international transaction.
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2021 (10) TMI 876
Addition of unexplained cash credit u/s. 68 - assessee had failed to discharge its onus of establishing the genuineness and creditworthiness of source of funds received - non-production of Directors/Principal officers of the Share applicant companies - HELD THAT:- It is pertinent to note that in Assessment Order, the Assessing Officer has categorically stated that the Directors or persons related to share applicant were never produced before the AO despite giving notice under Section 133(6) of the Act. But the CIT(A) in para 3.2 (k) mentioned the correct names and addresses which was not given to the AO by the Assessee at the initial stages of the assessment proceedings but at the end period of the Assessment proceedings. The parties with correct address were never inspected by the AO - CIT(A) without verifying the actual existence of the share applicant parties at those addresses, simplicitor accepted the contentions of the assessee, which is not just and proper. Therefore, we are of the view that the matter needs to be adjudicated after taking cognizance of the new addresses of the share applicants provided by the assessee by issuing fresh notice under Section 133(6) to those parties. And thereafter, take cognizance of the relevant material and adjudicate the matter. Thus, the matter is remanded back to the file of the Assessing Officer for proper adjudication after issuing fresh notice under Section 133(6) to those share applicant parties and thereafter, adjudicate the issue a fresh as per the due process of law - Appeal of the Revenue is partly allowed for statistical purpose.
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2021 (10) TMI 875
Disallowance of expenditure incurred on account of provisions for advertisement expenses u/s. 40A(IA) - whether CIT(A) erred in allowing relief on expenditure which has neither been ascertain or crystallized during the year and nor was the TDS deducted during the year? - HELD THAT:- CIT(A) has given a clear cut finding wherein it is categorically mentioned that the Assessing Officer never disputed the fact of deposit of tax deducted at source before the due date of filing the Income Tax Return for the subject year. CIT(A) rightly held that once the AO was directed to verify the amount on which tax has been paid before the due date of filing the return of income and allow the same in the first round of appeal before the Tribunal. AO was not right in disallowing the deduction under Section 40(a)(ia) of the Act for failure to deduct and deposit the tax at source. Hence, there is no need to interfere with the finding of the CIT(A). Hence, appeal of the Revenue is dismissed. Appeal of the Revenue is dismissed.
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2021 (10) TMI 874
Penalty u/s 271(1)(c) - Defective notice u/s 274 - as argued no particular limb mentioned in the notice issued under Section 271(1)(c) r.w.s. 274 - notice is not mentioning the concealment or the furnishing of inaccurate particulars - HELD THAT:- Since in the instant case also the inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s. 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s. 271(1)(c) is not sustainable and has to be deleted. Although the Ld. DR submitted that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, the decision of the Hon'ble Karnataka High Court in the case of SSA'S Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] where the SLP filed by the Revenue has been dismissed [ 2016 (8) TMI 1145 - SC ORDER] is directly on the issue contested herein by the Assessee. Further, when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down by the Hon'ble High Court in case of M/s. Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] will be applicable in the present case - Notice under Section 271(1)(c) r.w.s. 274 of the Act itself is bad in law - Decided in favour of assessee.
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2021 (10) TMI 873
Revision u/s 263 by CIT - scope of enquiry as assigned under 'limited scrutiny' - assessment so framed under section 143(3) should be modified/set aside on the ground that such order is erroneous in so far as prejudicial to the interest of the revenue - Discrepancy in turnover shown,Some of the expenses have considerably increased as compared to last year and unexplained unsecured loan - HELD THAT:- It is the PCIT who has acted in haste and without due application of mind to such glaring facts. Significantly, the assessment was made under 'limited scrutiny' on specific points. The issue aforesaid raised by the PCIT does not form part of the issues raised in the notice under section 142(1) dated 24.07.2017. A.O. was having no mandate to expand the scope of enquiry beyond the points for which case was put under limited scrutiny. The action of the A.O. for not making alleged enquiry on increase in the expenses thus cannot be levelled as erroneous. Thus, looking from any perspective, the action of the PCIT cannot be countenanced on this score. Allegation towards non-verification of nature and source of loan from Goldfeather Ventures PCIT issued show cause notice for verification merely because the Company is a Kolkata based Co. This approach, in our view, is highly untenable. Consequent directions of the PCIT is clearly in the realm of suspicion and surmises entertained by him for the reason that the loan has been availed from a Kolkata based Company. Such action, if endorsed, may tantamount to saying that all loans given by a Company addressed at Kolkata carries lesser bona fides in financial transactions. We cannot reckon such approach on judicial parameters. Secondly and importantly, the aforesaid issue also did not form part of the subject matter of limited scrutiny. Thus, the A.O. was actually prevented from carrying out enquiries on the point beyond the scope of limited scrutiny having regard to the guidelines issued by CBDT vide Instruction No. 5 dated 14.07.2016 in this regard. PCIT cannot ask the A.O. to travel beyond the scope of enquiry assigned by him under 'limited scrutiny'. We thus have no hesitation to hold that the action of the A.O. cannot be branded as erroneous. The exercise of jurisdiction under section 263 of the Act is thus without authorities of law and hence fails. Objections raised on behalf of the assessee towards serious lack of opportunity to the assessee while remanding the matter back to the A.O. for fresh assessment. PCIT, in the instant case, apparently has not given any effective opportunity to the assessee to counter the allegations raised in the show cause notice. - Decided in favour of assessee.
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2021 (10) TMI 872
Revision u/s 263 by CIT - action u/s. 132A of the act was initiated and concluded - cash seized by the SST-FS team of District Administration - case was selected under scrutiny by issuance of notice u/s 143(2) - SCN issued to assessee seeking to tax the surrender of ₹ 20 Lakhs @ provided under s. 115BBE - requisition has been made u/s 132A of the Act, the jurisdiction to complete the assessment is governed by the provisions of Section 153A - assessee contends that the assessment made u/s 143(3) of the Act in pursuance of requisition u/s 132A of the Act is grossly opposed to the very scheme of the Act and such assessment is wholly unsustainable in law and thusan ab initio void order cannot be subject to revision under s. 263 HELD THAT:- The normal provisions of assessment under s. 143(3) of the Act would not apply in the case where action has been taken either under s. 132 of the Act or under s. 132A of the Act. The assessment, however, has been wrongly framed with the aid of Section 143(3) under the normal provisions of the Act. The assessment made under s. 143(3) of the Act in pursuance of requisition under s. 132A of the Act is grossly opposed to the very scheme of the Act and such assessment is wholly unsustainable in law. We find considerable substance in the plea of the assessee. The order which is a nullity in law and has no legal effect, cannot be revised under s. 263 of the Act. The assessment order being infructuous in law, the consequential action under s. 263 of the Act is equally infructuous. The assessment, in the instant case, has not been framed under s. 153A of the Act despite requisition under s. 132A of the Act. The error committed by the AO in contravention of express provisions of Act is incurable and has rendered the assessment void ab initio and a nullity in law. Such assessment order being devoid of any legal effect could not be revised. The revisional order is accordingly quashed and set aside. - Decided in favour of assessee.
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2021 (10) TMI 871
Addition u/s. 68 - cash deposits in saving bank account in the name of the assessee - HELD THAT:- One opportunity should be granted to the assessee to prove the source of cash deposits. For this purpose, the issue on merits is restored to the files of the A.O. The assessee is directed to cooperate with the Assessing Officer. The assessee shall place necessary documentary evidences to prove the source of cash deposits - A.O. is directed to afford a reasonable opportunity of hearing to the assessee.
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2021 (10) TMI 870
Delayed contribution of employees' contribution of PF and ESI - amendment brought about to section 36(1)(va) and 43B - assessee has remitted the employees' contribution to PF and ESI before the due date for filing of return u/s. 139(1) - HELD THAT:- In view of the judgment of the Hon'ble jurisdictional High Court in the case of Essae Teraoka (P.) Ltd. [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] the assessee would have been entitled to deduction of employees' contribution of PF and ESI if the payment was made prior to due date of filing of the return of income u/s.139(1) of the I.T. Act. Therefore, the amendment brought about by the Finance Act, 2021 to section 36(1)(va) and 43B of the I.T. Act, alters the position of law adversely to the assessee. Therefore, such amendment cannot be held to be retrospective in nature. Even otherwise, the amendment has been mentioned to be effective from 01.04.2021 and will apply for and from assessment year 2021-2022 onwards. As the amendment by Finance Act, 2021 to Sec. 36(1)(va) and 43B of the I.T. Act will not have application to relevant assessment year, namely A.Y. 2017-2018. Accordingly, I direct the A.O. to grant deduction in respect of employees' contribution to PF and ESI since the assessee has made payment before the due date of filing of the return of income u/s. 139(1) - Decided in favour of assessee.
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2021 (10) TMI 869
Disallowance u/s 14A r.w. Rule 8D - As argued by assessee that its own funds is more than the investments, therefore, there should not be interest disallowance in accordance with law - HELD THAT:- All these figures speaks that the own funds of the assessee is more than the investment. No interest disallowance is required in the interest of justice. Moreover, we found that the AO considered investment in Gold and Silver Coins while calculating expenditure to earn the exempt income but those investment which yielded the exempt income is liable to be considered while calculating the expenditure to earn the exempt income in view of the provisions u/s 14A r.w. Rule 8D(iii). In this regard, we also placed reliance upon the decision of ACIT Vs. Vireet Investments P. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] . Accordingly, we decide this issue in favour of the assessee against the revenue. TDS u/s 194J - disallowance of lease line payment to stock exchanges - Addition u/s 40(a)(ia) - HELD THAT:- As transaction charges are in nature of payment made for facilities provided by stock exchange and no TDS was deductible u/s 194J of the Act. In view of the decision of the Hon ble Supreme Court in the case of Kotak Securities Ltd [ 2016 (3) TMI 1419 - SUPREME COURT] , no doubt, the claim of the assessee is liable to be allowable, hence, we ordered accordingly. Accordingly, this issue is decided in favour of the assessee against the revenue. Calculation of the long term capital gain for the period w.e.f. allocation of shares - contention of the assessee is that the indexation to calculate the capital gain is liable to be reckoned w.e.f allotment of BSE card and not from the date of BSE equity shares issued to the appellants - HELD THAT:- The Hon ble Third Member in case of M/s. Techno Shares Stock Ltd. [ 2019 (8) TMI 1770 - ITAT MUMBAI] has held that the period of holding of shares of BSE Ltd. shall be reckoned from the date of original membership of BSE and not from date of allotment of shares in BSE Ltd. Now it is clear that for computing the capital gain, indexation is liable to be considered from the date of original membership of BSE and not from the date of allotment of shares in BSE Ltd. By honoring the decision of Hon ble ITAT Mumbai Tribunal (supra), we set aside the finding of the CIT(A) on this issue and allow the claim of the assessee and direct the AO to reckon the capital gain accordingly. Disallowance of sub-brokerage paid to various parties - difference between amount accounted for by appellant in its books of account and the amount accounted for by the recipients in connection with sub-brokerage - HELD THAT:- No doubt, the confirmation is higher than disallowance. There is no need to disallowance the difference because the recipient has confirmed the higher sub-brokerage. The disallowance nowhere seems justifiable, therefore, we are of the view that the finding of the CIT(A) is not justifiable, hence, we set aside the finding of the CIT(A) on this issue and allow the claim of the assessee. Accordingly, this issue is decided in favour of the assessee against the revenue. Reduction of rebate u/s 88E - contention of the assessee is that the bad debt expenses and Telephone Expense nowhere rise in account trading share. The said disallowance is unjustifiable - HELD THAT:- Working of the AO has been confirmed by CIT(A), the said working nowhere demonstrate about the bad debts expenses, therefore, in the said circumstances, we set aside the finding of the CIT(A) in question and restore the issue before the AO to recalculate the claim of the assessee by considering the bad debts expenses and Telephone Expense in accordance with law. Needless to say that an opportunity of being heard is liable to be given to the assessee. Accordingly, this issue is restored to the file of AO. TDS u/s 194J - disallowance of amount paid as transaction charges to Stock Exchange on the ground of that the assessee has failed to deduct the tax at source - HELD THAT:- Such charges are nothing but payment made for facilities provided by Stock Exchange, therefore, no contention of such payment would, therefore, be deductible u/s 194J of the Act by relied upon the Hon ble Supreme Court in the case of CIT vs. Kotak Securities Ltd. [ 2016 (3) TMI 1419 - SUPREME COURT] We set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee accordingly.
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2021 (10) TMI 868
Reopening of assessment u/s 147 - Non disposing of objections put by assessee against reopening - HELD THAT:- Since Assessing Officer failed to dispose off the preliminary objections of the assessee by way of a separate order, respectfully following the decision of the Hon'ble Bombay High Court in the case of Fomento Resorts Hotels Ltd. [ 2006 (11) TMI 645 - BOMBAY HIGH COURT] we quash the re-assessment order passed u/s. 143(3) r.w.s. 147 of the Act for the A.Y. 2011-12. The preliminary ground raised by the assessee is allowed.
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2021 (10) TMI 867
Claim of deduction u/s 80P(2)(d) - interest income received from Co-operative Bank - assessee has not made claim of deduction u/s 80P in the return of income - HELD THAT:- Where claim of deduction under section 10A/10AA/10B/10BA or any provisions of Chapter VIC is not made in the return of income, the deduction shall not be allowed to the assessee. In the present case the assessee has claimed deduction under section 80P(2)(d) of the Act in respect of interest income from Co-operative Bank by way of note during assessment proceedings. Section 80P falls under Chapter VI-C, therefore, the provisions of section 80A(5) precludes the assessee to make claim of deduction under section 80P from any other mode other than the return of income. It would be relevant to mention here that this appeal was refixed for hearing especially to give an opportunity to the ld.Authorized Representative of the assessee to make his submissions to counter the provisions of section 80A(5) of the Act. The ld.Authorized Representative of the assessee filed a Paper Book giving written submissions and giving list of case laws primarily on admission of additional ground and new claim legally admissible during appellate proceedings. In the present case even though the assessee s claim of deduction under section 80P(2)(d) of the Act is allowable, however, since the assessee has failed to qualify the additional condition imposed by section 80A(5), the assessee would not be entitled to claim said deduction, even if, otherwise the assesssee is eligible for deduction under section 80P(2)(d) From literal interpretation of provisions of Section 80A(5) it is explicitly clear that for claiming deduction under Chapter VIC, the precondition is making claim of deduction in the return of income.- Decided against assessee.
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2021 (10) TMI 866
Reopening of assessment u/s 147 - assessee has claimed deduction under section 80IB without allowing interest on capital and remuneration to the partners - disallowing the partner s remuneration and interest on capital which is in contravention to the covenants laid down in the partnership deed - HELD THAT:- The partners decided not to give any remuneration. On the interest to partner s capital, the assessee stated that it is privilege of the partners to change or amend the clause as agreed under the deed of partnership.Clause- 21 of the partnership deed provides such amendment. The assessee stated that the partnership was revised on 01.04.2008 i.e. much prior to the selection of return for scrutiny - AO disregarded the contention of the assessee and disallowed the part remuneration under section 80IB of the Act to the extent of ₹ 2,73,90,313/- thereby disallowed ₹ 2,04,07,333/-. CIT(A) allowed the relief to the assessee by following decision of Tribunal in the case of Alidhara Taxspin Engineers [ 2017 (5) TMI 1684 - GUJARAT HIGH COURT] wherein it was held that mere incorporation of interest on the partners capital and remuneration does not signify that the same are mandatory in nature. The similar view taken by Hon'ble jurisdictional High Court in the case of M/s Sanidhya [ 2020 (2) TMI 588 - GUJARAT HIGH COURT] by following its earlier order in Alidhara Taxspin Engineers [ 2017 (5) TMI 1684 - GUJARAT HIGH COURT] . Therefore, we do not find any reason to interfere with the order of Ld. CIT(A), which we confirm. Assessing Officer re-opened the case of assessee for AY 2010-11 under section 147 of the Act on 05.03.2015 by recording reasons that assessee s claim deduction under section 80IB(10) without allowing capital and remuneration to its partners. However, same Assessing Officer allowed similar relief in assessment order passed under section 143(3) of the Act on 13.03.2015 in subsequent assessment year i.e. AY 2012-13. Therefore, the same officer has took two contrary view in respect of the same assessee on the similar issue, which is not permissible under the provisions of the income tax Act. The revenue authorities are requires to adhere the principles of consistency while considering the similar issues, when there is no variations in the facts in earlier or subsequent year. Thus, the assessee also succeeded on the secondary submissions of his ld counsel - Decided against revenue.
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2021 (10) TMI 865
Addition u/s 56(2)(vii)(b) - difference between the stamp value and the purchase consideration - sale consideration on the lesser value of prevailing Jantri rates - Difference of value is the stamp valuation worked out as per the value adopted by the Stamp Valuation Authority(SVA) - HELD THAT:- CIT(A) not discarded the contention of the assessee by taking view that no separate brake up of market value of actual plot, road, common area given in the sale deed is not established and that the recorded consideration is the market value of actual plot as per Stamp Valuation Authority (SVA), thus, concurred with the finding of the AO. We find that the AO made addition without verifying the facts either from the seller about the receipt of excess sale consideration. As assessee specifically stated before the lower authorities that he has paid 1% additional stamp duty on in accordance with the regulation of State Government and the additional stamp duty is levied to recover a loss of revenue which the State Government has to suffer on portion of land used in road and other amenities provided by the land organiser, which does not form part of sale consideration. The payment of additional stamp duty is outside the purview of valuation of asset, it has no bearing or impact on the market value of property assessed by the Stamp Valuation Authority. AO and the ld. CIT(A) has not made any effort to verify the assertion of the assessee. We further find that the AO made addition only on the basis of additional stamp duty. There is no evidence on record to suggest that the assessee has shown sale consideration on the lesser value of prevailing Jantri rates - we do not find any justifiable reason for making the addition in the hand of assessee - Appeal raised by the assessee is allowed.
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2021 (10) TMI 864
Penalty u/s 271(1)(c) - A.O. has estimated income/gross profit @ 8% on bogus purchases - HELD THAT:- As when the addition is on estimated basis, penalty u/s 271(1)(c) of the Act cannot be levied on such adhoc estimated income. The disallowance of purchases on ad-hoc basis does not tantamount to furnishing inaccurate particulars of income under the provisions of Section 271(1) (c) of the Act. The A.O. has not doubted the sales and made 8% disallowance of bogus purchases and we rely on the ratio of the Honorable Jurisdictional High Court in the case of M/s Nikunj Eximp Enterprises [ 2014 (7) TMI 559 - BOMBAY HIGH COURT] . Assessing officer made an addition based on the information received from Sales tax department Maharashtra. We are of the opinion that once the revenue accepts that penalty is levied on the basis of information from the outside agency/ department, the penalty is not sustained - Decided against revenue.
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2021 (10) TMI 863
Revision u/s 263 - As per CIT assessment framed under section 143(3) of the Act as erroneous insofar prejudicial to the interest of revenue - transaction for the purchase of the property was not completed within the period prescribed under section 54 and AO without verifying all these details allowed the exemption to the assessee u//s 54 - HELD THAT:- As the assessee cannot be denied the benefit of deduction provided under section 54 of the Act in the given facts and circumstances merely on the reasoning that the property was not registered as well as the possession was not handed over to the assessee. Assessee has filed a special civil suit in the civil court of Ahmedabad. Assessee has sent many reminders to the vendor of the property which are placed on pages 51 to 56 of the paper book for the registration of the property. Thus it is transpired that the assessee failed to register the property in his name due to the reasons beyond the control despite having made the substantial payment for the purchase of the property. Thus in such cases we are of the view that the benefit available under section 54 of the Act cannot be denied to the assessee. AO during the course of assessment proceedings has conducted inquiries with respect to the claim of the assessee under section 54 as has framed the assessment under section 143(3) of the Act after necessary verification and application of mind. Therefore, it cannot be said that the order passed by the AO is erroneous insofar prejudicial to the interest of revenue on account of non-verification of the claim of the assessee under section 54 of the Act during the assessment proceedings - Decided in favour of assessee.
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2021 (10) TMI 862
Disallowance u/s. 14A of the Act r.w. Rule 8D - contention of the ld. AR is that the assessee has investment in mutual funds and tax free bonds of out of its own funds out of share capital, free reserve and it exceeds the average value of investments during the AY 2013-14. No direct expenditure to earn exempt income, therefore section 14A r.w. Rule 8D - HELD THAT:- As these facts have not been examined by the CIT(Appeals) while deleting the addition holding that there is no exempt income, which is not correct. Accordingly, we set aside his order and restore this issue back to the Assessing Officer for examination and fresh decision in accordance with law after providing opportunity of hearing to the assessee. Disallowance of depreciation claimed on investments - assessee submitted that depreciation on investments in Govt. securities characterized as Securities Available For Sale (AFS) and Held for Trade (HFT) and that the depreciation on these investments has been made as per RBI guidelines - HELD THAT:- The issue is squarely covered in favour of the assessee by the judgment of case of Karnataka Bank Ltd. [ 2013 (7) TMI 656 - KARNATAKA HIGH COURT] wherein depreciation on investment in securities held for trading and available for sale was allowed. Being so, the CIT(Appeals) followed this judgment of the High Court. We do not find any infirmity in his order and confirm the same. This ground of the revenue is dismissed. Amortization of premium debited to profit and loss account and the amount claimed in the return of income - HELD THAT:- We find that this issue is covered by the order of this Tribunal in the case of Corporation Bank [ 2008 (12) TMI 745 - ITAT BANGALORE] in favour of the assessee. Being so, the CIT(Appeals) followed the same order of the Tribunal and hence we do not find any infirmity in the impugned order and the same is confirmed. Payment towards education fund to Karnataka State Co-operative Union, payment of annual subscription to Karnataka State Co-operative urban Federation and payment of benevolent fund to the bank's staff - HELD THAT:- There were no additions on this issue by the AO. However, the CIT(Appeals) has unilaterally considered these grounds and given relief. He fell into error in considering and adjudicating these grounds. Accordingly, the findings of the CIT(Appeals) in respect of these issues are vacated and the grounds raised by the revenue are allowed.
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2021 (10) TMI 861
Revision u/s 263 - claim of deduction under section 80P(2)(d) - HELD THAT:- Co-ordinate Bench of Rajkot Tribunal in Surendarnagar District Cooperative Milk Producer Union Ltd. [ 2019 (9) TMI 978 - ITAT RAJKOT ] held the assessee co-operative society could not claim benefit under section 80P(2)(d) in respect of interest earned by it from deposits made with nationalized/private banks, however, the said benefit was available in respect of interest earned and on deposits made with co-operative bank. Thus, in view of the aforesaid legal discussion we are of the considered view that order passed by Assessing Officer is not erroneous, though it may be prejudicial to the interest of the Revenue. Therefore, the twin conditions that orders is erroneous and so far as prejudicial to the interest of revenue, as prescribed under section 263 is not fulfilled in the present case. CIT while revising the assessment order relied on the case law in Totagars Co-operative Sales Society (second case) [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT ] wherein the Hon'ble Karnataka High Court held that interest earned by a Co-operative Society from surplus deposits kept with Co-operative bank, is not eligible for deduction under section 80P(2)(d). Considering the legal position that when there are conflicting decisions of non-jurisdictional High Courts, on similar issue, the decision of Jurisdictional High Court is having binding precedent. Thus, keeping in view of the decision Hon'ble Jurisdictional High Court in Surat Vankar Sahakari Sangh Ltd.(supra) [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT ] wherein the assessee-co-operative society is held eligible for deduction under section 80P(2)(d) in respect of gross interest received from co-operative bank without adjusting interest paid to said bank, we conclude that the order passed by assessing officer is not erroneous. Hence, the grounds of appeal raised by assessee are allowed.
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2021 (10) TMI 860
Exemption u/s 54 - denial of deduction as assessee has not furnished any documentary evidence to substantiate the claim that any amount was invested for purchase of new residential property - on one hand assessee submitted that she had purchased the land utilising the entire consideration received on the sale of property and on the other hand, she submitted that once the amount was realised from the firm, she will invest in purchase of new residential house immediately - HELD THAT:- Perusal of record reveals that initially counsel of the assessee appeared on a number of occasion and sought adjournment. After some time the counsel rescued herself from the case and informed the Bench that the assessee intends to engaged other counsel. However, none appeared on behalf of the assessee. This appeal is pending since 2016 and is in the category of more than five years old cases. In these circumstances, we have no option left except to decide the appeal after hearing the submission of ld.Sr.DR for the Revenue and the material available on record. We have also gone through the orders of Lower Authorities and various documents filed on record. We find that no documentary evidence to substantiate the claim that any amount was invested for purchase of new residential house except a certificate of builder wherein the assessee is a partner that assessee booked a residential flat. No number of residential unit, cost of new residential property or any other details of scheduled of payment is furnished. In our view, the assessee failed to substantiate the claim before the Lower Authorities as well as before the Tribunal. Therefore, we do not find any merit in the grounds of appeal raised by the assessee.
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2021 (10) TMI 859
Addition of on-money received @ 30% over and above the agreement value - CIT(A) deleted the addition as made by the AO on account of on money on the ground that neither the assessee s name nor the name of the projects done by the assessee is on document found in seach on the basis of which the addition was made by the AO - HELD THAT:- As decided in own case [ 2019 (4) TMI 267 - ITAT MUMBAI ] perusing the orders of the Coordinate Bench of ITAT in the case of group concern with regard to the same search, we are also of the view that the statements of the employees, in search and seizure cases, can be used only if they are supported by some kind of collaborative evidence. However, Ld. DR could not point out the evidence proving the receipt of alleged on money. As the assessment for the AY. 2008-09 was not pending, so, without some incriminating material, the AO should not have made the addition to the total income of the assessee. That the order of Ld. CIT(A) does not suffer from any legal or factual infirmity. Moreover, taking into consideration, the decision of the Coordinate Bench of ITAT in the case of group concern and also in order to maintain judicial consistency, we apply the same findings in the present case which are applicable mutatis mutandis. Resultantly this ground raised by the revenue stands dismissed. Addition u/s 68 - unsecured loans receipt - HELD THAT:- We find that the amount of loans taken by the assessee is sufficiently proved. Under these circumstances, we are inclined to uphold the order of Ld. CIT(A) in respect of 7 parties wherein the Ld. CIT(A) deleted the addition - we are not in agreement with the findings of Ld. CIT(A) on the loan taken from V.J. Shah Co after examining all the evidences which were also filed before the Ld. CIT(A) and consequently we set aside the order of Ld. CIT(A) so far as the part confirmation in respect of whom the necessary evidences were filed before us also. Therefore, appeal of the Revenue is dismissed whereas the appeal of the assessee is allowed. Protective addition as made in the hands of the assessee - substantive addition made by the AO in the hands of Shri Jitendra Mehta have now been confirmed by the Ld. CIT(A) without appreciating the fact that Shri Jitendra Mehta has challenged the decision of Ld. CIT(A) before the Tribunal - HELD THAT:- AO observed that respondent-assessee has availed loan at differential rate of interest and accordingly treated the differential rate which was not accounted for in the books of accounts as unexplained expenditure under section 69C of the Act and added the same to the income of the assessee on a protective basis. CIT(A) deleted the addition on the ground that substantive addition made in the hands of Shri Jitendra Mehta (legal heir Rohan Mehta had already confirmed vide order dated 29.03.2019 and thus deleted the protective addition made in the hands of the assessee. After having perused the order of Ld. CIT(A) and also various decisions relied upon we are of the view that the protective addition has rightly been deleted by the Ld. CIT(A) in the hands of respondent-assessee and accordingly we are inclined to dismiss the ground No.4 raised by the Revenue by upholding the order of Ld. CIT(A). Unexplained interest expenditure under section 69C - CIT(A) has deleted the addition on the ground that assessee has denied having taken any cash loan AND no corroborative evidences were brought on record - HELD THAT:- CIT(A) has rightly deleted the addition on the ground that there were no corroborative evidences except the statement of Mr. Anuj Shah. Accordingly, the ground No.5 is dismissed by upholding the order of Ld. CIT(A). Disallowance of telephone and conveyance expenses - AO disallowed @ 20% of the conveyance expenses as personal element in these expenses can not be ruled out - CIT(A) deleted the addition on the ground that AO has failed to establish that said expenditure was not incurred wholly and exclusively for the purpose of business - HELD THAT:- As we find that in this case the addition has been made without pointing any defect or deficiency in the bills, vouchers and books of accounts of the assessee or bringing on record any concrete evidence that some part of the expenditure related to the personal affairs of the director. Having examined all the facts before us we find that the Ld. CIT(A) has correctly held that the disallowance is just based on the presumptions, surmises and conjunctures and rightly deleted the disallowance. Accordingly, we dismiss the ground No.4 by upholding the order of the Ld. CIT(A). Addition made by the AO on account of non reconciliation of AIR - HELD THAT:- We find that the assessee has filed reconciliation before the Ld. CIT(A) and based on the said reconciliation the Ld. CIT(A) deleted the addition made by the AO. The Ld. CIT(A) recorded a finding of fact that the amount of ₹ 24,66,760/- has been duly accounted in the books of accounts of the assessee and this amount represented the interest received from Roxina Real Estate Pvt. Ltd. and TDS on interest under section 194A has been deducted of ₹ 2,46,676/- on the said interest. The Ld. CIT(A) also noted that the said interest income has been reduced from the interest paid to various parties and therefore net interest was shown on the debit side of the P L account. It was also noted by Ld. CIT(A) that a net interest was debited in P L account. - Decided against revenue.
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2021 (10) TMI 858
Addition as income from inflation of expenses - assessee s group cases who had preferred application before the Hon ble Income Tax Settlement Commission - Asst Year 2012-13 - HELD THAT:- There is no dispute on this aspect. It is not in dispute that assessee had resorted to inflation of expenses by making certain cheque payments and receiving back cash in return. It is not in dispute that the said cash had already also been utilised for the purpose of meeting business related expenses by the assessee. What is to be taxed is only the left over portion of the cash remaining with the assessee on this subject mentioned transaction, being the profit element, which has been already accepted by the Income Tax Settlement Commission at 12% vide its order dated 28/06/2018 in assessee s group company cases. We hold that the lower authorities ought to have followed the same in view of identical facts in the assessee herein also. Accordingly, we direct the ld AO to make an addition @ 12% of inflation of expenses of ₹ 28,76,106/- for the relevant Asst Year in line with the direction of the Income Tax Settlement Commission in assessee s group company cases. See M/S. BHALCHANDRA TRADING P. LTD. VERSUS DY. CIT, CENTRAL CIRCLE-6 (2) MUMBAI [ 2021 (2) TMI 1095 - ITAT MUMBAI] - Grounds raised by the assessee are partly allowed. Unexplained cash u/s 69 - as reflected in the seized material that cheque was received back in lieu of which cash was paid by the assessee company - Asst Year 2014-15 -HELD THAT:- As version of the assessee deserves to be believed that it had not received any sum of ₹ 7,84,932/- by cheque. In any case, the case of the revenue is only that the assessee had received cheque for ₹ 7,84,932/- and for which the assessee had in turn paid cash from its unexplained sources. It is not in dispute that there is abundance of cash balance in the assessee group reflected in the parallel books of accounts which were subject matter of seizure in the course of search and huge addition on peak credit basis of ₹ 26 crores was indeed offered by the group. Hence in any case, the meagre alleged cash payment of ₹ 7,84,932/- stands explained by the said income itself. Hence there is no need to make any addition on account of unexplained cash u/s 69 of the Act in the instant case. Accordingly, the grounds raised by the assessee are allowed.
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2021 (10) TMI 857
TDS / Withholding tax u/s 195 - Income accrued or taxable in India - Royalty income - off-shore supply of standardised/shrink wrapped software - taxing the same under the provisions of section 9(1)(vi) of the Act r.w Article 12 of the India- Singapore DTAA - HELD THAT:- As decided in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED [ 2021 (3) TMI 138 - SUPREME COURT] there is no obligation on the persons mentioned in section 195 of the Income Tax Act to deduct tax at source, as the distribution agreements/EULAs in the facts of these cases do not create any interest or right in such distributors/end-users, which would amount to the use of or right to use any copyright. The provisions contained in the Income Tax Act (section 9(1)(vi), along with explanations 2 and 4 thereof), which deal with royalty, not being more beneficial to the assessees, have no application in the facts of these cases. Thus amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act. - Decided in favour of assessee.
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2021 (10) TMI 844
Delayed employees contribution to PF and ESI - as submitted that the assessee has remitted the employees contribution to PF and ESI before the due date of filing of the return u/s 139(1) - scope of amendment to section 36(1)(va) and 43B - HELD THAT:- We hold that the amendment to section 36(1)(va) and 43B of the I.T.Act will not have application for the relevant assessment year, namely assessment year 2018-2019. Accordingly, we direct the A.O. to grant deduction in respect of employees contribution to PF and ESI since the assessee has made the payment before the due date of filing of return u/s 139(1). - Decided in favour of assessee.
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2021 (10) TMI 843
Disallowance u/s. 36(i)(va) - employees contribution to PF belatedly - contribution paid beyond the due date prescribed under the ESI Act but before the due date prescribed u/s. 139(1) - Scope of amendment of section 43B - HELD THAT:- Whether the amendment to section 36(1)(va) and 43B of the I.T.Act by Finance Act, 2021 is clarificatory and declaratory in nature. The Hon ble Supreme Court in the recent judgment in the case of M.M.Aqua Technologies Limited v. CIT [ 2021 (8) TMI 520 - SUPREME COURT] had held that retrospective provision in a taxing Act which is for the removal of doubts cannot be presumed to be retrospective, if it alters or changes the law as it earlier stood (page 597). In this case, in view of the judgment of the Hon ble jurisdictional High Court in the case of Essae Teraoka (P.) Ltd. [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] the assessee would have been entitled to deduction of employees contribution of PF and ESI if the payment was made prior to due date of filing of the return of income u/s 139(1) - the amendment brought about by the Finance Act, 2021 to section 36(1)(va) and 43B of the I.T.Act, alters the position of law adversely to the assessee. Therefore, such amendment cannot be held to be retrospective in nature. Even otherwise, the amendment has been mentioned to be effective from 01.04.2021 and will apply for and from assessment year 2021-2022 onwards. The amendment to section 36(1)(va) and 43B of the I.T.Act by Finance Act, 2021 will not have application for the relevant assessment year, namely A.Y. 2019-2020. Accordingly, we direct the A.O. to grant deduction in respect of employees contribution to PF and ESI since the assessee has made payment before the due date of filing of the return of income u/s 139(1). - Decided in favour of assessee.
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2021 (10) TMI 842
Delay in payment of employees contribution of PF u/s 36(1)(va) - Assessee submitted that payment made within due date of filing the return of income u/s 139(1) of the Act for the year under consideration - DR contention is that as per sec.43B(b) of the Income-tax Act and explanatory notes to Finance Act 1983, that Employees Contribution was never intended to be covered by sec.43B - HELD THAT:- We find no merit in the argument of the ld. DR since the explanation as provided in Finance Act 2021 prescribes that the amendment in both sec.36(va) as well as 43B by inserting corresponding explanation that although impugned PF comes in the form of provision and the same is applicable from 1/4/2021 onwards only. In the present case we are concerned with the asst. year 2017-18 and the amended provision could not be applied retrospectively as it is only applicable w.e.f 1/4/2021. Being so no disallowance could be made by the AO in respect of PF/ESI paid within the due date of filing return of income. Though, it was beyond the date mentioned in the respective Act. This view of ours is supported by various judgment relied on by the ld.AR. Accordingly the appeal of the assessee is allowed.
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Customs
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2021 (10) TMI 856
Manufacturing process taking place or not - aluminium alloy ingots - affixation of brand name - exemption under N/N. 93/2004-Cus dated 10 th September 2004 - HELD THAT:- The scheme has been designed in furtherance of export promotion strategy and require compliance with actual user condition with any sale or transfer of the imported goods or the goods manufactured therefrom permissible only after completion of the export obligation prescribed in the licence issued by the Director General of Foreign Trade. It is on record that the said obligations have not been fulfilled with and the sole issue pending before the licensing authority is the clubbing of the licences. Hence, by the clearance of the goods, the condition in N/N. 93/2004-Cus dated 10 th September 2004 has been complied with in its breach for which the duty liability is the logical corollary as found in the adjudication order. Entitlement to adjust the duty discharged on clearance of the goods against the duty liability arising from the impugned order - HELD THAT:- No doubt, the proposition sounds attractive and equitable but, nonetheless duty liability had been discharged under Central Excise Act, 1944 whereas the duty confirmed in the impugned order, including additional duties, are leviable under Customs Act, 1962 and Customs Tariff Act, 1975. In accordance with the provisions of Central Excise Act, 1944, any adjustment of duties paid thereunder is allowable only upon sanction of refund of the same It is not on record that such refund has been sanctioned. There is, therefore, no reason to heed this particular submission. Confiscation of goods - HELD THAT:- Though the goods are liable for confiscation under section 111(o) of Customs Act, 1962 for breach of post-importation condition, confiscation itself is not tenable in law. The finding in the impugned order that the decision in WESTON COMPONENTS LTD. VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2000 (1) TMI 45 - SC ORDER] would apply owing to the execution of bond does not find favour as the security therein was an earnest of the assurance of the goods being made available for confiscation during the adjudication proceedings; the bond security offered in the present instance is in relation to the conditions of import generally - even in the face of records of clearance on payment of duties of central excise, the suppression insofar as Customs Act, 1962 is concerned cannot be detracted from. Consequently, the penal liability under section 114A of Customs Act, 1962 is sustained. Penalty on the Director of the company, Mr Hitesh Shah - HELD THAT:- The finding in the impugned order is deficient in ascertaining the exact role of the appellant-Director in the diversion, other than by his position in the company, is concerned - the decision in JAYAKRISHNA ALUMINIUM LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [ 2005 (4) TMI 379 - CESTAT, CHENNAI] would require an adjudicating authority to render a clear finding of the specific role of the individuals against whom penalty is imposed and the lack thereof in the impugned order renders the imposition of penalty on the Director to be inconsistent with law - the personal penalty on Mr Hitesh Shah is set aside. Appeal disposed off.
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2021 (10) TMI 855
Levy of Penalty u/s 114 of the Customs Act, 1962 - Smuggling - prohibited goods or not - Export of Red Sander logs under cotton tufted floor mats- colour ASTD - also the fasteners (rivets) found on the Customs Sealing Point (latches) and Steamer Agent s Sealing Point (latches) of the container were found tampered - illegal omissions - scope of Section 107 IPC - HELD THAT:- The appellants plead total ignorance about the attempted smuggling of red sanders. The contention of the appellants that they kept the blank signed letter heads in the vehicle at the time of sale is too fanciful to digest. It is admitted by Shri A. Mohamed Naseer that there was omission on his part by giving the signed blank letter heads to Shri Farooq Basha. There is also an admission on the part of Shri Farooq Basha that he committed a mistake by leaving the said blank letter heads in the vehicle at the time of sale. These are serious omissions on the part of the appellants which has aided in the attempt for smuggling. Whether omissions are illegal omissions so as to be an ingredient to fall within the third limb of Section 107 IPC? - HELD THAT:- An omission can be considered to be illegal if what has been omitted was required to be done by such person under law. Thus, there should have been an obligation to do a particular act under some law. Such obligation may be under any Act, Rules, Regulations, Instructions. In the present case, entry into CFS/Port is restricted. Access to this area can be obtained only if a request is made by the transport agency along with recommendation letter of the Trailor Organizers Association. It is also necessary to give details of the driver and the trailer truck/lorry in such applications. After obtaining the gate pass, the transport agency is required to keep a record with regard to the movement of the vehicles for which he has obtained gate pass. These are regulations, which the appellants have to oblige with care and caution. The department need not establish facts beyond reasonable doubt. In quasi-judicial proceedings, the test is that of preponderance of probabilities. These are facts which stands admitted/established and also facts which are probable. When the established facts and the probable facts give a wholesome connection, the test of preponderance of probability would stand established. The signatures in the letters being admitted, the appellant cannot wriggle out of the liability by putting forward a plea of passing over blank signed letter heads by mistake. Similarly, the vehicle being owned by Shri Farooq Basha, he cannot escape by contending that during the relevant time the vehicle was sold. The case of appellants that blank letter heads were left by omission in the vehicle which was sold is only put forward to get out of the charges levelled against them and cannot be accepted - department has been able to establish the guilt/charge of abetment on the part of appellants. The penalties imposed on each of the appellants are legal and proper - Appeal dismissed.
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Corporate Laws
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2021 (10) TMI 854
Sanction of Scheme of Arrangement by way of Amalgamation - section 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013, read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions issued with respect to convening/holding or dispensing with the meetings of the Shareholders, Secured and Unsecured Creditors as well as issue of notices including by way of paper publication as follows - directions regarding issuance of various notices also issued. The scheme is approved - application allowed.
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2021 (10) TMI 853
Sanction of Scheme of Merger by way of Absorption - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensation of various meeting issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.
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2021 (10) TMI 852
Sanction of the Scheme of Amalgamation - Section 230-232 of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensation with various meetings issued - directions with regard to issuance of notices also issued. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2021 (10) TMI 851
Violation of moratorium period consequent upon initiation of the CIRP - seeking issuance of necessary directions to the respondent No. 1 for illegal action under the provision of IBC, 2016 - HELD THAT:- The invocation of bank guarantee by NSIC in present case is not in consonance with provisions of code. While deciding this, aspect which needs to be looked into is whether present bank guarantee falls under the category of 'Performance Bank Guarantee' to qualify to exclude the same as per the provisions of section 3 (clause 31) of the I B Code, 2016 and allow the invocation of such performance bank guarantee irrespective of the moratorium under section 14 of the code. The answer is No. The definition and categorization of bank guarantees as per RBI guidelines clearly demarcates the area while considering particular bank guarantee for its classification - NSIC admittedly was secured by bank guarantee against the purchase of raw materials and other allied purchases to enhance manufacturing of a unit, which is financial assistance to the unit. Nowhere the ingredients of performance bank guarantee are seen in the terms/clauses of bank guarantee in present case. Moreover, the Respondent No. 2 bank while filing its claim before RP has included the amount of bank guarantee in its total claim which is admitted by RP. Thus, the same claim cannot be allowed considered as payable twice though submitted by parties in different capacities. The notices issued for invocation of bank guarantee by Respondent is quashed - application allowed.
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2021 (10) TMI 850
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operator Creditors - existence of debt and dispute or not - issuance of demand notice - HELD THAT:- It is seen that CD in reply to the demand notice has not raised any dispute to the outstanding dues to OC and has rather admitted that on 30.03.19, it was communicated to the OC that due to financial difficulties payment could not be made by CD. It is further reiterated that the CD vide reply to the petition dated 06.02.20 has acknowledged that there is existence of commercial arrangement and on 30.03.19, payment of ₹ 1,00,000 was released against the outstanding. The applicant has placed sufficient evidence in support of its claim. Going by the above details, the OC has clearly established the existence of debt and default on the part of the CD. The petition is within the limitation period. The present application deserves to be admitted. Hence, the present application is admitted initiating CIRP on the CD, with immediate effect - moratorium declared.
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Service Tax
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2021 (10) TMI 849
Refund of the pre-deposit - Conflict with transitional provisions or not - dispute for the period prior to 30.06.2017 (i.e. prior to GST regime) - HELD THAT:- Appreciating that order of Commissioner (Appeals)/(Audit) dated 9.3.2018 is in conflict with the transitional provisions, as contained in Section 142 of CGST Act, wherein it has been provided that on or after 1.7.2017, any adjustment regarding refund of the duty or liability on the assessee has to be adjusted in cash. The Adjudicating Authority directed to disburse refund of ₹ 41,94,304/- in cash. It is further held that the appellant/assessee is entitled to interest on the said amount from the date of reversal (03.11.2015) till the amount of refund in cash, @12% p.a., as held by the Hon ble Supreme Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT] . Appeal allowed - decided in favor of appellant.
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2021 (10) TMI 848
Levy of service tax - postal charges/courier charges - reimbursable expenses - period is from 12/2004 to 3/2009 - HELD THAT:- During the relevant period, reimbursable expenses were not includible in the taxable value for determining the tax liability. The amendment in this regard so as to include reimbursable expenses also in the gross amount came to be introduced only w.e.f. 14th May, 2015. The issue stands decided by the judgment of the Hon ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (10) TMI 847
Delay in sanction of interest on interest - Applicability of time limitation - whether the delay in sanction of interest on interest beyond the three months, comes within the purview of section 11BB? - HELD THAT:- It is apparent that the issue has been decided by Hon ble High Court of Gujarat in favour of the assessee. The issue is no more res integra and stand settled by the Apex Court in the case of Ranbaxy Laboratories Ltd. [ 2011 (10) TMI 16 - SUPREME COURT ]. Perusal of the decision makes it abundantly clear that what is payable under section 11AB is the interest on the expiry of period of three months from the date of receipt of application for the refund the amount which is still not refunded. The sanction of refund of interest on the interest amount has been allowed for this decision only for the reason that the demand has caused unnecessary delay even while sanctioning the claim of refund of duty. There is no delay of sanction of refund of ₹ 37,75,854/- as was paid under Rule 18A as discussed above, the said claim of ₹ 66,01,485/-. was sanctioned within the period of 3 months as is required under section 11B. The interest thereupon has already been sanctioned as is required under section 11BB - there are no infirmity with the findings of the Commissioner (Appeals) - appeal dismissed.
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CST, VAT & Sales Tax
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2021 (10) TMI 846
Seeking restraint on respondent-State authorities from adopting coercive measures against the property purchased by the petitioner company - preferential rights of secured creditors - charge created over the property-in- dispute - plea of alternative remedy - HELD THAT:- Undisputedly, the State Bank of India is a banking company defined under the Banking Act. Therefore, it became open to it to raise a plea based on Section 34(2) of the Act. A plain reading of that provision brings out the existence of a non obstante clause created by the legislature. Thus, nothing contained in Section 34(1) of the Act, 1948 shall apply to (i) a charge created in favour of the State Bank of India or (ii) transfer made in favour of the State Bank of India. In face of the charge (over the property-in-dispute ), created in favour of the State Bank of India on 08.11.2005, it survives for consideration whether despite that charge being satisfied on 15.07.2014, it insulated the transfer of the property-in-dispute made in favour of the petitioner, on 16.07.2014, from the recoveries being sought by the revenue authorities. Section 34(2) of the Act insulates a 'charge' or 'transfer' made in favour of a banking company , as defined under the Banking Act. Hence, spoken in the literal sense, that transfer may not appear to be directly protected under subsection (2) of section 34. Though the debt of the State Bank of India may remain a secured debt against its charge existing on the property-in-dispute and it may remain entitled to recover its dues upon sale of the property-in-dispute , to the exclusion of the Crown/state dues, however, that sale may be obtained only in its own name - there is absolutely no warrant to allow for such an anomalous, uncertain, and therefore undesirable and even absurd result to arise. Plainly, there is nothing in the language of the Act, to allow for such a restrictive condition to be read into the words in favour of prefixed to the words banking company appearing in section 34(2) of the Act. That narrow meaning (as discussed above) would lead to results that are wholly absurd and may defeat the very object of enactment of Section 34(2) of the Act. In the facts of the present case, there is absolutely no doubt that the transfer of the property-in-dispute took place for the sole benefit of a banking company as defined under the Banking Act. Therefore, that transaction was covered within the meaning of the words - in favour of the banking company . In such undisputed facts, the non-obstante clause pre-fixed to sub-Section (2) of Section 34 of the Act, wholly insulates the sale-deed dated 16.07.2014. In fact, it takes that sale-deed out of the reach and gaze of sub-Section (1) of Section 34 of the Act. The exact wording of the prayer clause apart, in effect that prayer is duly supported by pleadings and material on record. In absence of any doubt as to the rights of the parties that stand established on the strength of undisputed facts noted above, it would be hyper technical to deny relief to the petitioner. The substance and the essence of the prayer made is clear. It arises on a clear cause of action admittedly existing, in the shape of the attachment order enforced by the State respondents. Also, all material facts giving rise to the cause of action and for our decision are undisputed. The writ Court cannot be seen to be diffident or stingy in granting the consequential relief. A writ Court ensures obedience to the rule of law. In that process, relief may flow to the petitioner as a natural outcome of the exercise. Once, the facts are clear and the crease or doubt in law stands cleared, relief must flow unhindered, upon application of that law to the clear facts of the case. It may not be obstructed on mere technicalities such as the objection to the exact wording of the prayer clause. The respondents are restrained from proceeding against the personal assets of the petitioner or the property-in-dispute , so however, they may remain at liberty to recover their dues from respondent no. 7 and its properties, in accordance with law - Petition allowed.
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2021 (10) TMI 845
Principles of natural justice - Assessment of escaped turnover - wrong availment of Input Tax Credit - reasonable opportunity to show cause given or not - Section 27 of TNVAT Act - HELD THAT:- Interestingly and intriguingly, the provision under which the impugned order has been made i.e., Section 27 of TNVAT Act talks about 'Best of its Judgment' for making re-assessment. This is all the more good ground to say that reasons even should be given and in the light of proviso to sub-sections(1) and (2) of Section 27 of TNVAT Act, it is imperative that the cause shown by writ petitioner is considered for re- assessment/revision by adopting Best Judgment Methodology. It follows as a sequitur that the reasons would therefore form the soul of a revision/re-assessment order and how the objections were considered should be set out and such articulations can be terse or short but it neither be laconic nor bereft of reason (as in this case) - in the instant case, there is nothing in the impugned order to show that the objections were considered. The impugned order being is set aside solely on the ground that the cause shown by writ petitioner has not been considered and it does not give any reason whatsoever for not accepting the dealer's position. To be noted, the impugned order also imposes penalty under Section 27(4) of TNVAT Act - Petition allowed.
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