TMI Tax Updates - e-Newsletter
October 25, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

News

1. Chasing the Horizon (Remarks delivered by Shri M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India – October 22, 2021 - at the CII NBFC Summit on Role of NBFCs in Achieving $5 trillion Economy)

2. Sovereign Gold Bond Scheme 2021-22 Series VII - Issue Price

3. Finance Minister Smt. Nirmala Sitharaman meets European Commission Executive Vice President Mr. Frans Timmermans

4. Repayment of ‘7.75% OMC GoI Special Bonds 2021’

Notifications

Customs

1. G.S.R. 755 (E) - dated 22-10-2021 - ADD

Corrigendum - Notification No. 61/2021 – Customs (ADD), dated the 20th October, 2021

2. 63/2021 - dated 22-10-2021 - ADD

Seeks to rescind Notification No. 24/2021-Customs(ADD) dated 26th April, 2021, to remove levy of ADD on Polytetrafluoroethylene originating in or imported from Korea RP.

3. 62/2021 - dated 22-10-2021 - ADD

Seeks to rescind Notification No. 23/2016-Customs(ADD) dated 6th June, 2016, to remove levy of ADD on Polytetrafluoroethylene originating in or imported from Russia.

4. 51/2021 - dated 22-10-2021 - Cus

Seeks to amend notification No. 25/2021 - Customs dated 31.03.2021

5. 50/2021 - dated 22-10-2021 - Cus

Seeks to amend notification No. 96/2008-Customs, dated the 13th August, 2008

GST - States

6. 11/2021-State Tax (Rate) - dated 14-10-2021 - Maharashtra SGST

Seeks to amend notification No. 39/2017- State Tax (Rate) dated 18th October 2017

7. 10/2021-State Tax (Rate) - dated 14-10-2021 - Maharashtra SGST

Seeks to amend notification No. 4/2017- State Tax (Rate) dated the 29th June 2017

Indian Laws

8. G.S.R. 750 (E) - dated 21-10-2021 - Indian Law

Sovereign Gold Bond Scheme 2021-22

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CDMRD/DoC/P/CIR/2021/651 - dated 22-10-2021

Amendment to SEBI Circular pertaining to Investor Protection Fund (IPF)/ Investor Service Fund (ISF) and its related matters

Highlights / Catch Notes

GST

• Petition to Release Truck in Illegal Cigarette Transport Denied; GST Confiscation Proceedings Limit Magistrate's Jurisdiction.

  Case-Laws - HC : Seeking grant of permission to release the Truck - illegal transport of Gold Steef Cigarettes - tax evasion - GST Department has already initiated proceedings for confiscation of the vehicle - Since the proceedings have already been initiated by the GST Department, therefore, the learned trial Magistrate has no jurisdiction to entertain the application filed by the Petitioner for grant of supurdnama. - HC
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Income Tax

• High Court Overturns Tribunal, Disallows R&D Tax Deductions Due to Insufficient Evidence and Inadequate Justification.

  Case-Laws - HC : Disallowance of research and development expenses - the AO as well as the CIT (A) has disallowed the R & D claim made by the assessee mainly for the reason that no documents were placed on record to establish the same. But the Tribunal has proceeded to allow the claims made by the assessee on the ground that the same is not double deduction or weighted deduction. We are not convinced with the reasoning of the Tribunal in allowing this deduction for want of material evidence and lack of proper reasoning. - HC
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• Court Recommends Flagging Unresolved Software Issues for Policy Decisions to Improve Tax Assessment Process Efficiency.

  Case-Laws - HC : Glitches and shortcomings in the computer programme and software - DGIT (Systems) states that in the event any Assessing Officer has an issue with the operation of the computer programme or software, the said officer raises a ticket which is then resolved by the concerned vertical in her department, and in the event, the issue cannot be resolved by the concerned vertical, the officer can raise a ticket with another vertical. - The Court has suggested to the DGIT (Systems) that in the event the ticket cannot be resolved by any of the verticals due to constraints/limitations in the system or software, then a mechanism should be put in place whereby the said issue can be flagged for a policy decision before her. - HC
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• Petitioner's Refund u/s 241A Withheld Unjustly; No Reasons or Revenue Impact Materials Provided by Officer.

  Case-Laws - HC : Refund withheld u/s 241A - No reasons were assigned by the Officer concerned by referring to any materials that refund declared in case of the petitioner/assessee on being actually made will adversely affect the revenue. No demand as against the petitioner was pending on the date when refund was notified. The petitioner/assess became entitled to the refund immediately on completion of assessment and refund on being notified. - HC
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• Society Entitled to Section 80P Deduction for Member Loan Interest; Section 68 Inapplicable to Disallowed Expenditure Entries.

  Case-Laws - HC : Deduction u/s 80P(2)(i)(a) - Additions u/s 68 - For a reason recorded and accepted by all the authorities, the 5% of the expenditure booked against interest paid to depositors is disallowed and once disallowed portion is accepted by all the authorities, the said disallowed portion forms part of the interest earned by the Society on the amount lent by the Society to its members, vis-a-vis in other words, income earned from business carried on by the Society. Therefore, the Society is entitled to deduction u/s 80P(2)(i)(a) of the Income Tax Act. Section 68 of the Act in terms is not applicable to an entry warranted consequent to the disallowed expenditure by the Assessing Authority. - HC
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• No Penalty Imposed for Cash Transactions in Construction Expenses Due to Reasonable Explanation u/s 271D.

  Case-Laws - AT : Levy of penalty u/s 271D - violation of the provisions of section 269SS - payment of construction expenses incurred in cash towards the purchase of construction material and payment to labourers - the assessee has offered reasonable explanation justifying the cash transactions and thus, in the entirety of facts and circumstances of the case and considering various decisions cited at the Bar which also support the case of the assessee - No penalty - AT
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• Court Overturns Depreciation Denial for Office Premises Due to Non-Segregated Land and Building Purchase Price.

  Case-Laws - AT : Disallowance of depreciation on composite land and building - depreciation claimed by the assessee on account of office premises at India Habitat Centre - when it is categoric case of the assessee that the purchase price of land and building is composite one and it has no segregation of value of land and building separately, disallowance made by the Assessing Officer/CIT(A) is not sustainable in the eyes of law. - AT
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• Depreciation Disallowed on Home-Theatre Overturned; No Breach of Rule 46A Found by Tax Authorities.

  Case-Laws - AT : Disallowance of depreciation - A.O. was of the opinion that the home-theatre was not for the purpose of business - The stand taken by the assessee before the A.O. was that there was a fire accident, wherein the invoices were destroyed and hence, cannot be produced. The same is the stand taken before the CIT(A) and the same set of evidence are produced. Therefore, there is no violation of provisions of Rule 46A of the I.T. Rules. - Additions were rightly deleted - AT
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• Income Tax Act Amendment: ESI/PF Payment Rules Apply Only From April 1, 2021, Not Retrospective.

  Case-Laws - AT : Disallowance of Employees share of ESI/PF paid belatedly as per the due dates laid down in the law - Whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also. On this aspect, we find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. - AT
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• PCIT's Section 263 Revision Blocked: No New Evidence Against AO's Consistent Deduction Claim u/s 80P for 2013-15.

  Case-Laws - AT : Revision u/s 263 by PCIT - claim of deduction u/s 80P - When the rule of consistency has been applied by the ld AO, his order cannot be termed as erroneous without bringing any fresh facts on record. PCIT had not brought any evidence on record to prove that the facts prevailing in Asst Yea₹ 2013-14 and 2014-15 were different from that of facts prevailing in the year under consideration. Hence in our considered opinion, the conclusion of the ld PCIT that no enquiries were indeed carried out by the ld AO cannot be accepted and hence the revision order passed by him u/s 263. - AT
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• Court Upholds 10% Income Addition for Bogus Purchases in Tax Evasion Case Involving Hawala Transactions.

  Case-Laws - AT : Estimation of income - bogus purchases - hawala transactions - it would be reasonable to sustain addition @ 10% of the amount of bogus purchases, being profit element involved therein. - AT
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Customs

• EPCG Scheme: ADGFT to Review Petitioner's Export Documents for Compliance; Resolution Expected in Two Weeks.

  Case-Laws - HC : Export Promotion Capital Goods Scheme (EPCG Scheme) - authority calls upon the petitioner to produce various export documents to establish the discharge of export obligation under the scheme - The dispute in this matter can thus be resolved by directing the ADGFT to continue the proceedings under show cause notices dated 26.03.2019, hear the petitioner and pass orders on the entitlement to the benefits under the EPCG Scheme. The exercise shall be completed within two weeks - HC
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IBC

• NCLAT Appeal Maintainability Hinges on Timely Filing; Rule 22(2) Compliance Crucial for IBC Litigants Seeking Justice.

  Case-Laws - SC : Maintainability of appeal before NCLAT - applicability of time limitation - A sleight of interpretation of procedural rules cannot be used to defeat the substantive objective of a legislation that has an impact on the economic health of a nation - Rule 22(2) of the NCLAT Rules mandates the certified copy being annexed to an appeal, which continues to bind litigants under the IBC. While it is true that the tribunals, and even this Court, may choose to exempt parties from compliance with this procedural requirement in the interest of substantial justice, as re-iterated in Rule 14 of the NCLAT Rules, the discretionary waiver does not act as an automatic exception where litigants make no efforts to pursue a timely resolution of their grievance. - SC
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• Withdrawal Application Under IBC Section 12A Rejected Due to Lack of 90% CoC Approval.

  Case-Laws - Tri : Seeking withdrawal of application filed under section 9 of IBC, 2016 by filing the FORM-FA which is not accepted - Since the CoC has been constituted by the IRP and the same is in vogue, the Application filed by both the Operational Creditor and the Corporate Debtor under Section 12A of IBC, 2016 without soliciting the requisite 90% approval from the CoC, is not maintainable. - Tri
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Service Tax

• Procedure Not Followed in Tax Arrears Settlement u/s 127 of Sabka Vishwas Scheme 2019: No Form-2 Issued.

  Case-Laws - HC : SVLDRS - Quantification of value of tax in relation to settlement of service tax arrears - Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 - the scheme itself provides, at Section 127 thereof that once there is a variation between the amount stated in the declaration and the estimate arrived at by the Department, Form-2 shall be issued accompanied by personal hearing notice. This has not been done in the present case. - HC
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Central Excise

• Court Rules Repacking Duty-Paid Cigarettes Not Manufacturing Under Central Excise Laws; No Additional Duty Imposed.

  Case-Laws - AT : Process amounting to manufacture or not - duty paid cigarettes - affixing brand name, repacked in new pack - In the case in hand, it is an admitted fact on record that excepting the process of masking and putting code number, the appellant had not undertaken any other activity to render the resultant product marketable. Thus, it cannot be said that there was involvement of labeling or relabeling of containers. The appellant in this case, had repacked the bought-out cigarettes from one retail pack to another retail pack before it was coded. Such activity also will not be covered under the purview of Chapter Note 3 (supra) inasmuch as there was no repacking from bulk pack to retail pack. - AT
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VAT

• Supreme Court Confirms Input Tax Credit on Mining Tippers for Iron Ore Production as Part of Manufacturing Process.

  Case-Laws - HC : Input tax credit of VAT paid on the Mining Tippers (and its accessories) which were used in the activity of manufacture or production of iron ore - The Apex Court ruling is squarely applicable, where the extraction of ore from the mining and the transporting the same to the harbor involving different operations is held to be in the manufacture or processing of goods for sale or in mining, the mining tippers purchased by the assessee as capital goods is entitled for input tax credit, denial of the same is unjustifiable. - HC
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Case Laws:

• GST

• 2021 (10) TMI 982
  Correction / modification of the wrong order has been transcribed - Seeking grant of Bail - deposit of GST illegally - Section 132 (1) (b), 132 (1) (i) CGST Act - HELD THAT:- Having perused nature of accusation and the severity of punishment in case of conviction and the nature of supporting evidence, prima facie satisfaction of the Court in support of the charge, reformative theory of punishment, and larger mandate of the Article 21 of the Constitution of India, the dictum of Apex Court in the case of Dataram Singh v. State of U.P. and another, [ 2018 (2) TMI 410 - SUPREME COURT] and without expressing any opinion on the merit of the case, this case is found fit to be a case of bail. Let the applicant involved in aforesaid crime be released on bail on his furnishing a personal bond and two sureties each in the like amount to the satisfaction of the court concerned subject to conditions imposed. Application allowed.

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• 2021 (10) TMI 981
  Validity of assessment order - rejection if input tax credit - each of the four clauses of sub-section (2) of Section 16 of the Act had been complied with by the petitioner - HELD THAT:- The matter requires consideration. Learned Standing Counsel has accepted notice on behalf of State-respondents. He prays for and is granted four weeks time to file counter affidavit. Petitioner shall have two weeks thereafter to file rejoinder affidavit - List thereafter.

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• 2021 (10) TMI 980
  Seeking disposal of appeal filed under Section 107 of the Central Goods and Services Tax Ac, 2017 in a time bound manner - seeking to defer proceedings pursuant to Exts.P3 and P4 till the appeal preferred by the petitioner is considered - nature of activity - works contract service under Section 2(119) or a manufacture and sale of goods under the Act - HELD THAT:- The interest of justice could be subserved, if the appeal filed by the petitioner is considered in a time bound manner, while the proceedings proposed to be initiated as per Exts.P3 and P4 notices are kept pending till such consideration. If the proceedings pursuant to Exts.P3 and P4 are kept in abeyance till a decision is rendered by the appellate authority, unnecessary complications and proceedings could be avoided. Ultimately it will enure to the benefit of both parties. There will be a direction to the 2nd respondent to consider and pass appropriate orders at the earliest, at any rate, within a period of two months from the date of receipt of a certified copy of this judgment - Petition disposed off.

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• 2021 (10) TMI 979
  Seeking grant of permission to release the Truck - illegal transport of Gold Steef Cigarettes - tax evasion - HELD THAT:- From perusal of the records, it is quite clear that GST Department has already initiated proceedings for confiscation of the vehicle, which is evident from the letter dated 04.01.2021 written by the GST Officer, Mahasamund to the Police Station Komakhan. This factual matrix with regard to the request made by the GST Department to the SHO, Police Station Komakhan for confiscation of the vehicle has not been disputed by the Petitioner or he has not pointed out that the findings recorded by both the Courts below on this aspect of the matter are perverse or contrary to the record, as such, since the proceedings have already been initiated by the GST Department, therefore, the learned trial Magistrate has no jurisdiction to entertain the application filed by the Petitioner for grant of supurdnama. Since the proceedings have already been initiated by the GST Department, therefore, the learned trial Magistrate has no jurisdiction to entertain the application filed by the Petitioner for grant of supurdnama. Thus, the rejection of the application for grant of supurdnama by the learned Sessions Judge, Mahasamund vide its order dated 05.02.2021 arising out of the order dated 23.01.2021 passed by the learned Judicial Magistrate, First Class, Mahasamund is legal and justified, therefore, the instant Cr.M.P is liable to be disposed of. In view of the above settled legal position, it is clear that the learned Judicial Magistrate, First Class and the Sessions Judge have not committed any illegality or irregularity in rejecting the application filed by the Petitioner for grant of supurdnama within the powers conferred under Section 482 Cr.P.C.

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• Income Tax

• 2021 (10) TMI 978
  Reopening of assessment u/s 147 - Unexplained purchase of immovable property - HELD THAT:- Going through the above submission shows that it is nothing but a reiteration of earlier argument and nothing afresh has been submitted by the assessee. In her submission, assessee stated only was paid by her and payment was made by her son Gaurav Parkar - statement of the assessee is not supported by any documentary evidence such as bank account statement correlating the payments made to the builder etc. Therefore the sources of investment made for purchase of aforementioned immovable property apart from the loan amount remains unsubstantiated. There is absolutely no whisper about petitioner s request to grant time to get statement from ICICI Bank, Nariman Point Branch for the account of the son that has been close - we have no hesitation in setting aside the impugned order dated 20th September, 2021. Though respondent have been served a copy of the petition on 12th October, 2021 no reply has been filed. We requested Mr. Suresh Kumar who was present in the court to assist the court. Mr. Suresh Kumar stated that Mr. Sham Walve was briefed in the matter, but Mr. Sham Walve is unwell. At the same time, Mr. Suresh Kumar in fairness stated that as the documents annexed to the petition speak for themselves, the court may set aside the impugned order and remand the matter for denovo consideration without making any observations on merits of the case. Since we are also satisfied with the submissions made by Mr. Hakani, the order requires to be set aside and no purpose will be served in adjourning the matter. The order dated 20th September, 2021 is hereby quashed and set aside. The matter is remanded for denovo consideration but shall not be placed before the same Assessing Officer who passed the impugned order. But we also clarify that we have not made any observations on the merits of the case.

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• 2021 (10) TMI 977
  Deduction u/s 80HHE - Substantial question of law or fact - whether Hon ble ITAT was correct in confirming order of CIT(A) allowing deduction u/s 80HHE without considering the facts brought on records which clearly established that the assessee did not conduct any software development and the assessee failed to establish the genuineness of the software development charges so paid as evidence from the replies to the summons issued to the persons to whom the assessee purportedly paid software development charge and the assessee even failed to produce the source code of the purported software developed and exported ? - HELD THAT:- ITAT has come to the factual finding that on the basis of material on record the claim of respondent under Section 80HHE of the Act was in order. ITAT has also come to the factual finding that the source code of softwares developed have been provided by respondent to the Assessing Officer. ITAT, therefore, concluded that when the export made by LNSEL has been accepted to be genuine by the Assessing Officer in LNSEL s case, the objection of the Assessing Officer in the present case that the exporters Apkidukan.com, the ultimate purchasers of the softwares does not appear to be genuine, cannot be accepted. Assessing Officer had relied upon statements of 5 persons who had denied having developed any software for respondent. ITAT rightly concluded that respondent should have been given an opportunity to cross-examine those 5 persons, which was not granted. ITAT has also observed that there were others, whose affidavits were filed by respondent confirming that they worked for respondent and those affidavits have not been considered by the Assessing Officer. ITAT has made an observation on fact is that the Assessing Officer has also overlooked the fact that TDS for the payments made were duly recorded in the books of accounts and relevant vouchers found during the search only corroborate the genuineness of such payments and that TDS duly deducted was paid to the Government account. ITAT held that nothing has been brought on record by the Assessing Officer to suggest that all such facts borne from the books of account were bogus or incorrect as the books of account have not been rejected. We find that no substantial questions of law arise and the entire dispute revolves around question of facts. ITAT has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that questions as pressed raises any substantial questions of law.

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• 2021 (10) TMI 976
  Addition of bad debts and advances - no information was furnished by the assessee with regard to the bad debts for the purpose of claiming as expenditure in computation of profits - tribunal considering trade of the credit as claimed by the assessee being revenue in nature allowed the claim - HELD THAT:- Revenue has placed reliance on the judgment of Vijaya Bank [ 2010 (4) TMI 46 - SUPREME COURT] wherein it has been explained that after the explanation vide Finance Act, 2001, in Section 36(1)(vii) with effect from 01.04.1989, the assesee (s) is now required not only to debit the profit and loss account but simultaneously also reduce loans and advances or the debtors from the asset side of the balance sheet to the extent of the corresponding amount so that, at the end of the year, the amount of loans and advances/debtors is shown as not of provisions for impugned bad debt. There is some force in the said arguments advanced by the Revenue. None of the authorities have examined the issue in this angle in deciding the matter relating to substantial questions of law No.1. Hence, we remand the matter to the Tribunal to reconsider the matter in the light of the judgment of the Hon ble Apex Court in the case of Vijaya Bank. Foreign exchange fluctuation loss - AO disallowed the same holding that the assessee had not established the nexus for utilization of the funds raised in FNCR are used for the business purposes - HELD THAT:- The assessee has demonstrated before the Tribunal that increase in investments from Rs. 102.92 crores to Rs. 380.32 crores was on account of investment of Rs. 287 crores in 8% redeemable preference shares of Phipso Distillery Ltd., which was made on 31.03.2005 i.e., on the last day of the year and therefore the working capital obtained on various dates between 02.04.2004 and 31.03.2005 could not have been utilized from the same. It was also pointed out that the interest paid on the loans were allowed by the Assessing Officer himself as a deduction, however no loss in connection thereto was allowed. The action of the Assessing Officer accepting the Foreign Exchange but disallowing the loss appears to be erroneous. It is apt to refer to the decision of the Hon ble Apex Court in Commissioner of Income-tax, Delhi vs. Woodward Governor India (P.) Ltd ., [ 2009 (4) TMI 4 - SUPREME COURT] wherein it has been enunciated that the loss suffered by an assessee on account of foreign exchange difference as on the date of balance sheet is an item of expenditure under Section 37(1) of the Act. The view of the Assessing Officer and the CIT (A) that the investments were made on, from the FNCR loans is not based on any supporting material and is only a presumption. Hence, confirming the view of the Tribunal, we answer this question in favour of the assessee and against the revenue. Disallowance of research and development expenses - whether it is expended by the assessee relates to the business activity in terms of Section 37[1] - AO disallowed the expenses of Research and Development expenses on the ground that the said expenditure was not connected to the business of the assessee as it was in the business of manufacture and trading of beer and the details of research and development had not been furnished - HELD THAT:- As could be seen from the material on record, the Assessing Officer as well as the CIT (A) has disallowed the R D claim made by the assessee mainly for the reason that no documents were placed on record to establish the same. But the Tribunal has proceeded to allow the claims made by the assessee on the ground that the same is not double deduction or weighted deduction. We are not convinced with the reasoning of the Tribunal in allowing this deduction for want of material evidence and lack of proper reasoning. Hence, we remand the matter to the Tribunal to reconsider on this issue sans answering this substantial question of law.

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• 2021 (10) TMI 975
  Assessment of income from life insurance business - surplus arising from shareholder account as separate income and not as income arising from life insurance business - Tribunal allowing claim of assessee made on account of surplus from shareholders account being treated as income from other business by holding that surplus available both in Policy Holders Account and Share Holders Account is to be consolidated and only net surplus is to be taxed as income from insurance business - HELD THAT:- This Court has dealt with this substantial question of law in extenso in M/S. PNB Metlife India) [ 2021 (10) TMI 928 - KARNATAKA HIGH COURT] and the same is applicable to the facts of the present case. Accordingly, substantial question of law No.1 is answered in favour of the assessee and against the revenue. Disallowance in respect of claim of losses from pension fund not allowed to be carried forward - losses incurred from pension fund is exempt under section 10(23AAB) - taxability of income from life insurance business is governed by section 44 of the Act with the first schedule of the Act even though when section 10 of the Act is applicable and income is exempt from tax, it follows that losses are also not allowed to be set off nor can be carried forward - HELD THAT:- The insurance business has to be considered by the actuary valuation as per the valuation report allowable under Section 44 read with First Schedule to the Act. Merely for the reason that the income from pension fund is exempted under Section 10(23AAB) with effect from 01.04.1997, it cannot be held that the loss incurred under the fund cannot be carried forward or given a set-off. The Clause 13.1 of the C.B.D.T. Circular No.762, dated 18.02.1998, provides that the Life Insurance Corporation of India (LIC) has started a new personal-cum-family pension scheme. The scheme offers attractive terms to its contributors and has a provision for payment of a life-time widow s pension in the event of the death of the contributor during the contribution period. Clause 13.3 provides that in order to enable the LIC to offer attractive terms to the contributors, exemption from income-tax has been provided to the income of such funds which the LIC has set up on or after the August 1, 1996, under the scheme to which contributions are made by the contributors. Clause 13.5 contemplates that the amendment will take effect from April 1, 1997, and will, accordingly, apply in relation to the assessment year 1997-98 and subsequent years. The object of inserting Section 10(23AAB) being made clear as per the said Circular, the same cannot be equated with the provisions of Section 10A of the Act. Section 44 of the Act begins with a non-obstante clause and overrides the other provisions of the Act relating to computation of income under the various heads of income including income under the head profit and gains of business of insurance. Thus, the provisions under Sections 28 to 43 of the Act would not be applicable to the assessee coming within the ambit of Section 44, Judgment in Harprasad [ 1975 (2) TMI 2 - SUPREME COURT] is distinguishable. These aspects were considered by the Hon ble High Court of Bombay in Life Insurance Corporation of India Ltd., [ 2011 (8) TMI 47 - BOMBAY HIGH COURT] and following the said decision, the Tribunal has dismissed the appeals filed by the revenue, which indeed was applied for the earlier assessment year. We do not find any perversity or irregularity in the finding of the Tribunal in answering these issues. Hence, we answer the second substantial question of law also in favour of the assessee and against the revenue.

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• 2021 (10) TMI 974
  Glitches and shortcomings in the computer programme and software - Direct Tax Vivad se Vishwas Act, 2020 - petitioner challenging the subsequent Form-3 issued by the respondent/revenue after a full and final settlement of disputed taxes in Form-5 - modification of the software, the DGIT (Systems) is directed to join the proceedings - revenue issued a rerevised Form-3 treating the petitioner s case as a non-search case - Revenue insists that the petitioner should once again file Form-4 on the basis of which they would issue a fresh certificate in Form-5 - revenue states that it is imperative that the petitioner should once again complete the process by filing Form-4 as the portal does not permit restoration of the previous Form-5 - as per revenue system functionality, as of now, does not permit the Assessing Officer to access the TDS and prepaid taxes data for the assessment year 2016-17 - HELD THAT:- Since digitisation is being implemented at a rapid pace in the arena of Direct Taxes and a policy decision has been taken to reduce human interface, this Court is of the view that public at large should be asked to use the new software and programme only after the said programme/software has been tested prior in time on a sufficiently large sample base of assesses. The computer programme/software should be flexible enough to incorporate the implementation of Court s orders. For this purpose, if any policy initiative is required, the DGIT (Systems) should take up the issue with CBDT.5. During the hearing, this Court also gave practical instances of glitches and shortcomings in the computer programme and software. DGIT (Systems) states that in the event any Assessing Officer has an issue with the operation of the computer programme or software, the said officer raises a ticket which is then resolved by the concerned vertical in her department, and in the event, the issue cannot be resolved by the concerned vertical, the officer can raise a ticket with another vertical. The Court has suggested to the DGIT (Systems) that in the event the ticket cannot be resolved by any of the verticals due to constraints/limitations in the system or software, then a mechanism should be put in place whereby the said issue can be flagged for a policy decision before her. Ms.Pragya, DGIT (Systems) assures this Court that her direct orate would take steps to improve on both the fronts, namely, co-ordination and feedback. She states that wherever necessary, improvements in the process shall be carried out. She also states that she is confident that their directorate will be able to resolve the glitches in the system and shall revert back with solutions, if possible, within a fortnight. Keeping in view the aforesaid, the personal appearance of DGIT (Systems) and her officers are dispensed with.

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• 2021 (10) TMI 973
  Refund withheld u/s 241A - Withholding the refund on the basis of statutory prescription - mandation of Application of mind by AO - HELD THAT:- The very essence of passing of the order under Section 241A is application of mind by the Assessing Officer to the issues which are germane for withholding the refund on the basis of statutory prescription contained in the said Section. The power of the AO under the provisions of the section 241A can be exercised not only after he forms an opinion that the refund is likely to adversely affect the revenue and thereafter with the prior approval of the Chief Commissioner or Commissioner as an order for refund after assessment under Section 143(3) of the said Act pursuant to a notice under Section 143(2) is subject to appeal or further proceeding. In the instant case, after notice for refund was issued the refund was withheld with no reasons given. From the judgment reported in Maple Logistics Pvt. Ltd. [ 2019 (11) TMI 340 - DELHI HIGH COURT] Section 241A provides that where there is a refund payable on the returns furnished under Section 143 (1) of the Act, and the Assessing Officer is of the opinion that grant of refund is likely to adversely affect the revenue, he may withhold the refund up to the date on which the assessment is made, subject to reasons to be recorded in writing and with the previous approval of the Principal Commissioner or Commissioner, as the case may be. On a combined reading of Section 143 with Section 241A, it can be discerned that by virtue of the new proviso, it is now mandatory to process the return under sub-section (1) of Section 143, and proceed with grant of the refund determined therein, unless, sufficient reasons exist under Section 241A prima facie demonstrating that the grant of refund is likely to adversely affect the revenue. The scope of the power under Section 241A is narrow, making it clear that a speaking order is required to be passed culling out the reasons as to how the grant of refund is likely to affect the revenue. The recording of reasons to substantiate why such withholding is necessary and how the refund will adversely affect recovery of subsequent revenue is essential. No reasons were assigned by the Officer concerned by referring to any materials that refund declared in case of the petitioner/assessee on being actually made will adversely affect the revenue. No demand as against the petitioner was pending on the date when refund was notified. The petitioner/assess became entitled to the refund immediately on completion of assessment and refund on being notified. The Assessing Officer could not have kept the refund withheld to link such refund with any demand against the petitioner for a subsequent period when such demand was not in existence on the date when the refund was notified. The powers under this revenue friendly provision cannot be used in a mechanical manner without application of mind, wherein the Assessing Officer being of the opinion that the grant of refund may make recovery of pending demands. In that case refund can be withheld only after recording reasons and obtaining approval of Principal Commissioner or Commissioner as held in the judgment reported in Vodafone idea Ltd. vs. DCIT [ 2020 (2) TMI 1282 - BOMBAY HIGH COURT] -The assessee must also be given an opportunity of hearing before reasons are recorded for withholding the refund under this Section. In absence of these proceedings being followed the action of the Assessing Officer withholding refund is amenable to judicial review by way of writ petition under Article 226 of the Constitution of India. The action on the part of the respondents in withholding of the refund for the assessment year 2017-18 is not sustainable in law and is set aside and quashed. The petitioner, is therefor, entitled to a mandatory order of refund.

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• 2021 (10) TMI 972
  Condonation of delay of 2554 days in filing the appeal - Eligible reasons of delay - HELD THAT:- There is lack of sufficient justification shown by the present Petitioner for the inordinate delay in filing the appeal. Petitioner is unable to offer any better explanation for the delay except to say that since the question whether the employees in the NCERT were to be treated at par with the Central Government employees was pending consideration and was decided by the CIT (Appeals), Mysore only on 31st August 2017, the Petitioner could not have preferred an appeal earlier. The extraordinary delay of 2554 days cannot be condoned on such a weak explanation given by the Petitioner. The Court is unable to find any error committed by the ITAT in declining to condone the delay of 2554 days in the Petitioner filing an appeal before it against the order of the CIT (A).

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• 2021 (10) TMI 971
  Deduction u/s 80P(2)(i)(a) - Additions u/s 68 - whether the CIT(Appeals) and the Tribunal are correct in extending the deduction availed under Chapter VI A to the 5% disallowed by the Income Tax Officer on interest paid to the depositors? - HELD THAT:- The Society is entitled to claim deduction u/s 80P(2)(i)(a) - The exclusion of 5% from the expenditure disallowed is treated as a deduction permissible under 80P(2)(a)(i) of the Act. The argument of the Department is that the said disallowed portion will have to be treated as income earned from other sources . The foundation for such argument is that the Circular relied by the Tribunal is inapplicable, and secondly the dis-allowance forms part of a situation contemplated by Section 68 of the Act. Applicability of the Circular to the case on hand. Circular Dated 02.11.2016 refers to Section 32, 40(a)(ia), 40A(3), 43B, etc . The appreciation of Revenue that it is applicable only to the sections stated therein, is unacceptable and stated so without noticing the word etc used in the Circular. Therefore, the objection now raised against the Tribunal that the Tribunal relied on an inapplicable Circular is incorrect and accordingly rejected. The Circular comprehensively sets out the procedure for treating such items of expenditure. The assessee/Society, in view of the recent Supreme Court judgment in Mavilayi Service Co-operative Bank Ltd. Case [ 2021 (1) TMI 488 - SUPREME COURT] is entitled to be treated as a Society satisfying the definition of Section 2(19) of Income Tax Act read with Kerala Societies Registration Act, 1860. The primary business of assessee/Society is accepting deposits and providing benefits to the members of the Society. The income, therefore, received by the Society is from the interest it earns on the amount lent to the members. The Society, likewise, is paying interest on the deposits it has accepted. For a reason recorded and accepted by all the authorities, the 5% of the expenditure booked against interest paid to depositors is disallowed and once disallowed portion is accepted by all the authorities, the said disallowed portion forms part of the interest earned by the Society on the amount lent by the Society to its members, vis-a-vis in other words, income earned from business carried on by the Society. Therefore, the Society is entitled to deduction u/s 80P(2)(i)(a) of the Income Tax Act. Section 68 of the Act in terms is not applicable to an entry warranted consequent to the disallowed expenditure by the Assessing Authority. - Decided in favour of assessee.

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• 2021 (10) TMI 970
  Deduction u/s 80P - assessee failed to produce the books of account and income earned from non-members, therefore, the assessee is not entitled to exemption under Section 80P(2) of total income - whether the assessee is a Primary Agricultural Credit Society or not, for, admittedly, the Society is registered under Kerala Societies Registration Act? - HELD THAT:- In the case on hand, the observation of the Assessing Officer that books are not produced has not been expressly considered by the Appellate Authority and the Tribunal. The paragraphs excerpted from the judgment of the Supreme Court in Mavilayi Service Co-operative Bank Ltd case (supra) leaves no doubt that a Society registered under Kerala Co-operative Societies Act is entitled to claim deduction and the assessing authority determines the other incomes earned or derived by the assessee after according to assessee all the eligible deductions in this behalf. We are of the view that, in the case on hand, the matter requires reconsideration by the primary authority, for, the return filed by the assessee is examined in the light of decision of the Apex Court in Mavilayi Service Co-operative Bank Ltd case [ 2021 (1) TMI 488 - SUPREME COURT ] and fresh assessment orders are made. Hence, the orders in Annexures A, B, and C are set aside, case remitted to the Income Tax Officer for examination of books of accounts and verification of the return filed by the assessee for the subject year, strictly within the four corners of the dictum laid down by the Supreme Court in Mavilayi Service Co-operative Bank Ltd case and make a fresh assessment order. The assessee is entitled to file a fresh reply, if so advised, and the assessee is afforded an opportunity in accordance with law.

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• 2021 (10) TMI 969
  Rectification of mistake u/s 154 - Adjustment of current year losses with income under section 115BBD - claim of the assessee was dismissed by AO who was of the opinion that since the assessee has declared income u/s 115BBD of the Act and calculated the tax at special rate of 15%, therefore, the same cannot be set off against losses - CIT-A was of the opinion that whether current year loss can be set off from the income declared under section 115BD of the Act is a highly debatable issue and a debatable issue cannot be rectified u/s 154 -HELD THAT:- It is true that in the intimation u/s 143(1) of the Act, loss of the current year has been mentioned at Rs. 22,53,768/ . It is equally true that the assessee has returned income in respect of dividend received from a foreign company u/s 115BBD. As per clause (2), no deduction in respect of any expenditure or allowance should be allowed to the assessee under any provision of this Act in computing its income by way of dividends referred to in subsection (1). Now, the interpretation of expenditure or allowance to cover current year loss is, in my considered opinion, a highly debatable issue and no precedences have been made available to me. Therefore, in these circumstances, I have no hesitation in upholding the findings of the ld. CIT(A). Ground raised by the assessee is dismissed.

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• 2021 (10) TMI 968
  Addition u/s 68 - Unexplained unsecured loans - assessee challenged the addition claiming that these were business loans - assessee argued as no adequate opportunity provided to prove the claim - HELD THAT:- It is seen that as per record more than adequate opportunity had been made available to the assessee before the Assessing Officer and similarly even before the Ld. CIT(A) there was adequate opportunity and now even before the ITAT the assessee has been given more than adequate opportunity and still no evidence has been placed by the assessee to assail let alone effectively assail the findings arrived at. Accordingly, considering the facts as available and the position of law no interference in the impugned order is warranted. - Decided against assessee.

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• 2021 (10) TMI 967
  Levy of penalty u/s 271D - violation of the provisions of section 269SS - payment of construction expenses incurred in cash towards the purchase of construction material and payment to labourers - HELD THAT:- On persual of the registered sale deed, we find that there is payment of consideration by way of demand draft for Rs. 6 lacs which has been paid in advance and remaining amount of Rs. 1 lacs which has been paid in cash at the time of registry and handing over of the possession. As stated at the Bar by the ld AR that the assessee had no option but to discharge the remaining consideration in cash at the time of registry as so insisted by the seller of the property and in absence thereof, the deal might have not fructified. The explanation so furnished as reasonable and plausible and donot find any malafide in the explanation so submitted as everything is flowing from the registered sale deed where transactions have been duly documented including the payment through demand draft and cash which is from the known sources of funds contributed by the assessee s husband - assessee has explained the payment of construction expenses which are also required to be incurred in cash towards the purchase of construction material and payment to labourers. We therefore find that the assessee has offered reasonable explanation justifying the cash transactions and thus, in the entirety of facts and circumstances of the case and considering various decisions cited at the Bar which also support the case of the assessee especially the decision of the Coordinate Bench in case of Tuhinara Begum [ 2017 (10) TMI 1321 - ITAT KOLKATA] where there was a reverse situation where the wife gave money to husband for construction of house which was held not exigible for levy of penalty u/s 271D, we are of the considered view that the assessee doesn t deserve to be punished by way of levy of penalty u/s 271D for receiving money from her husband for purchase of family property and hence, the same is directed to be deleted. - Decided in favour of assessee.

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• 2021 (10) TMI 966
  Rejection of books of accounts - Estimation of income - bogus purchases - addition by declaring purchases as bogus purchases and applying 25% profit thereon - HELD THAT:- We find that the Assessing officer has rejected the books of accounts by invoking the provisions of section 145(3) and the same are not under dispute before us - where the books of accounts have been rejected, the appropriate course of action for the AO is to estimate the gross profit in the hands of the assessee on some reasonable basis and in this regard, the past history has been stated to provide reliable and reasonable basis for estimating gross profit in the hands of the assessee. In this regard, reference can be drawn to the decision of the Coordinate Bench in case of ACIT vs. M/s Allied Gems Corporation [ 2017 (12) TMI 1252 - ITAT JAIPUR] wherein it was held that where the books of accounts have been rejected, the ld. CIT(A) was correct in restricting the addition to the average G.P rate based on the past history. In the instant case, the average gross profit for the past two assessment years as available on record comes to 25.18% as against 24.80% declared by the assessee. Therefore, the addition to the extent of differential of 0.38% is sustained and the remaining addition sustained by the ld CIT(A) is hereby directed to be deleted. In the result, the ground of appeal is partly allowed. Disallowance of certain expenses claimed in its profit/loss account - During the course of hearing, the ld. AR submitted that these expenses relates to telephone, mobile, vehicle running maintenance and depreciation on car - HELD THAT:- AO has disallowed an amount of Rs. 20,000/- only out of total expenditure of Rs. 1,82,510/- on account of personal and non business used. It was accordingly submitted that considering the above facts and circumstances of the case, the nature and involvement of the assessee s business, the ld. CIT(A) has rightly upheld the disallowances of Rs. 20,000/- to cover possible leakage on account of personal expenses. It was accordingly submitted that there is no infirmity in the order so passed by the ld. CIT(A) and the same may be confirmed. We have heard the rival contentions and perused the material available on record. We find that the expenses have been disallowed purely on an adhoc basis and the same is directed to be deleted. In the result, the ground of appeal is allowed.

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• 2021 (10) TMI 965
  Penalty u/s 271(1)(c) - Unexplained household expenses - Addition based on entries found recorded in the seized diary - HELD THAT:- Considering the fact that the quantum has been set aside by the Tribunal in assessee s own case in [ 2019 (10) TMI 1468 - ITAT DELHI] pertaining to Assessment Years 2005-06, 2008-09, 2010-11. We therefore, set aside the impugned penalty orders. However, it is clarified that if the additions are sustained, the Assessing Officer would be at liberty to decide the question of levy of penalty in accordance with law. Thus, grounds raised by the assessee in this appeal are partly allowed for statistical purposes only.

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• 2021 (10) TMI 964
  Disallowance of depreciation on composite land and building - depreciation claimed by the assessee on account of office premises at India Habitat Centre - case of the assessee was selected for scrutiny under CASS - HELD THAT:- When the assessee bank does not have any segregation value of land and building of the said premises and it has paid composite price, the entire deprecation claim is allowable under section 32 of the Act. So, following the aforesaid decision rendered by the Co-ordinate Bench of the Tribunal in CIT vs Rajesh Exports Ltd. [ 2005 (11) TMI 362 - ITAT BANGALORE] , and when it is categoric case of the assessee that the purchase price of land and building is composite one and it has no segregation of value of land and building separately, disallowance made by the Assessing Officer/CIT(A) is not sustainable in the eyes of law. - Decided in favour of assessee.

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• 2021 (10) TMI 963
  Non granting registration u/s 12A - denial of registration as object of the trust is only for the benefit of worker/employee of the company who has created the trust and does not appear to be for the general charitable cause - As argued activities of the Appellant are charitable in nature and conducted to support the activities of International Center For Research On Women which is the its self a section 25 company under companies act 1956 and engaged in charitable activities - HELD THAT:- In the case of Hiralal Bagwati [ 2000 (4) TMI 14 - GUJARAT HIGH COURT] the trust was created for the benefit of employees of the 16 institutions with the object of providing aid in case of sickness and disablement. The Hon ble High Court following the decision of Hon ble Supreme Court in the case of Ahmedabad Rana caste Association [ 1971 (9) TMI 8 - SUPREME COURT] held that an object beneficial to a section of the public is an object of general public utility. The registration of the assessee trust cannot be rejected merely on the ground that it is for the benefit of a restricted group of employees of the company ICRW . However, we find some merit in the argument of the Ld. DR that trust has been engaged in discharging the statutory obligation of the company ICRW of making gratuity payment to their employees. But in this regard the competent authority has not examined the activities actually carried out by the trust, sources of funds and how the same are distributed to the employees, whether by way of creating the trust, the company is getting some benefit of saving of money, whether any activity of welfare of the employees other than making gratuity payment has been carried out by the trust etc. The assessee has also not filed any information with regard to its activities before us. Therefore, examining those issues need enquiry at the end of the Ld.CIT(E) - We restore this issue back to the Ld. CIT(E) for re-examination of the application of the assessee trust as per the provisions of the law, in the light of the decision in the case of Ahmedabad Rana caste Association (supra) and the decision of the Hon ble High Gujrat of in the case of Hiralal Bhagwati (supra) - Appeal of the assessee is allowed for statistical purposes.

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• 2021 (10) TMI 962
  Validity of reopening of assessment - scheme of amalgamation conceived - framing the assessment in the name of non-existent entity - assessment framed in the name of amalgamating company - HELD THAT:- Merely because the assessee has participated in the assessment proceedings, the stay proceedings and penalty proceedings post completion of assessment, the inherent defects embedded in the assessment order by way of framing the assessment in the name of non-existent entity would not get cured. It is elementary that there can be no estoppel against this statute . As assessee has participated in the assessment proceedings, penalty proceedings and stay proceedings, the assessment framed in the name of amalgamating company (i.e. non-existent entity) would still have to be held as void ab initio in the eyes of law. Reliance in this regard has been rightly placed by the ld. AR on the decision of the Co-ordinate Bench decision of this Tribunal in the case of Satyam Computer Services Ltd., [ 2020 (7) TMI 329 - ITAT MUMBAI] wherein under similar facts and circumstances, this Tribunal had quashed the entire assessment stating that assessment order passed in the hands of a non-existent entity has no sanctity of law, therefore, the same cannot be sustained and is hereby quashed - Decided in favour of assessee.

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• 2021 (10) TMI 961
  Addition on account of diversion of funds to sister-concern - proof of commercial/business expediency of the transaction between the assessee and its subsidiary company - assessee-company had diverted funds towards sister-concern without charging interest - HELD THAT:- There is no advances was made during the year. CIT(A) categorically held from perusal of assessment orders for the earlier years, i.e., assessment years 2011-2012, 2012-2013 and 2013-2014 there has been no addition on account of diversion of fund to sister-concern. Therefore, there cannot be any disallowance in the current assessment year in view of the Hon ble Karnataka High Court judgment in case of SRIDEV ENTERPRISES [ 1991 (1) TMI 52 - KARNATAKA HIGH COURT] The interest expenditure incurred by the assessee is on loans taken for specific purposes and the same cannot be diverted - there is no nexus between the borrowed funds and the amounts outstanding in the case of the sister-concern, namely, M/s. Tally India (P) Ltd. In such factual situation, there cannot be any addition for the reason that funds have been diverted to the sister-concern interest free. In the case of Embassy Development Corporation [ 2015 (9) TMI 1055 - KARNATAKA HIGH COURT] , the assessee advanced borrowed funds to the sister-concern. The diverted funds was utilized by sister-concern for purchase and development of a property. In this context, the Hon ble High Court held that funds have been diverted to sister-concern not out of business necessities of the assessee. In the instant case, it is clear that the assessee is having sufficient interest fund for diversion to sister-concern. Therefore, the judgment of CIT Anr. v. M/s. Microlabs Ltd. [ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] , has application to the facts of the instant case. Disallowance of depreciation - A.O. was of the opinion that the home-theatre was not for the purpose of business - CIT-A deleted the addition - HELD THAT:-The theatre is admitted used for the business purpose of exhibiting various technologies development in the field of software to the employees and also to the customers. There was a major fire accident in the premises of the assessee and various books of account, documents and invoices were destroyed. These facts were brought to the notice of the A.O. during the course of hearing vide assessee s letter dated 21.12.2016. The proof regarding the fire accident was also furnished by supplying copy of FIR, paper report, etc. All the payments for the purchase of the equipment were made through bank account and the investment is not doubted. Further, we are of the view that there is no violation of Rule 46A(3) of the I.T. Rules, since there is no fresh facts produced before the CIT(A). The stand taken by the assessee before the A.O. was that there was a fire accident, wherein the invoices were destroyed and hence, cannot be produced. The same is the stand taken before the CIT(A) and the same set of evidence are produced. Therefore, there is no violation of provisions of Rule 46A of the I.T. Rules. For the aforesaid reasons, we hold that the CIT(A) is justified in deleting the disallowance of depreciation made by the A.O - Decided against revenue

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• 2021 (10) TMI 960
  TP Adjustment - comparable selection - inclusion of Just Dial Ltd. in the list of comparables by the TPO - HELD THAT:- The source of revenue of Just Dial is subscription by the providers of goods or services, who enroll themselves on the company s platform. For enrolling with Just Dial, the providers choose from a variety of subscription models depending upon the type of coverage and the manner of their presentation on the company s platform. When we advert to the nature of services rendered by the assessee which are - Information Technology related services; Finance related services; Health, Safety and Environment Control; Quality analysts; Supply base Analyst; Supply chain planners/Analysts; and Packaging Specialist - it becomes graphically clear that not only the nature of services rendered by Just Dial is different but also the business model on which it works is poles apart from that of the assessee. Whereas Just Dial receives subscription from the providers of the goods or services for hosting their products/services on its platform and the user has to pay nothing, the assessee is providing services to its AE and gets remunerated at a cost with mark up from the user of the service itself, namely, the AE. In view of such a divergence in the nature of services and business model between the assessee and Just Dial, we hold that this company is not comparable. Accordingly, Just Dial is directed to be excluded from the list of comparables. We set-aside the impugned order and remit the matter to the file of the AO/TPO for re-doing the ALP determination of the international transaction of `Provision of Business support services afresh in terms of this order. Admission of additional ground - Education Cess paid during the relevant Assessment Year be allowed as a deduction expense which is not covered under the provisions of section 40(a)(ii) - HELD THAT:- As relying on NATIONAL THERMAL POWER COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX [ 1996 (12) TMI 7 - SUPREME COURT] having gone through the subject matter of the additional ground espoused by the assessee, it is apparent that the same raises a pure question of law. We, therefore, admit the same. On merits, it is found that the issue raised through the additional ground is no more res integra in view of the judgment Sesa Goa Lt. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] in which it has been held that Education Cess is not a disallowable expenditure u/s. 40(a)(ii). Also see CHAMBAL FERTILISERS AND CHEMICALS LTD., PR. COMMISSIONER OF INCOME TAX, KOTA. VERSUS JCIT, RANGE-2, KOTA., M/S. CHAMBAL FERTILIZERS AND CHEMICALS LTD., GADEPAN, DISTT. KOTA. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] - We, therefore, direct the AO to ascertain the correct amount of education cess and then allow a deduction of it, after allowing opportunity of hearing to the assessee.

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• 2021 (10) TMI 959
  Estimation of income - bogus purchases - estimations of profit embedded in accommodation entries of bogus purchases transactions @ 12.5% by CIT-A - HELD THAT:- CIT(A) restricted the estimation of profit embedded in accommodation entries of bogus purchases transactions @ 12.5% of the purchase price accounted in the bogus invoices and the same view was upheld as the fair profit rate out of the bogus purchases by various Courts and Tribunals. Estimation of profit is very much restricted to the benefit taken by the assessee by availing accommodation entries. In our considered view, the Ld. CIT(A) has adjudicated the issue and reached the conclusion to estimate the income @ 12.5% is proper and just. Therefore, we are inclined not to interfere with the findings of the Ld. CIT(A) and accordingly, grounds raised by the Department are hereby dismissed.

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• 2021 (10) TMI 958
  Grant of approval u/s. 10(23C)(vi) denied - Denial of principles of natural justice - no reply was filed by the assessee by ignoring the fact that information could not be filed by previous counsel of the assessee due to Covid-19 effect - assessee s grievance is that it was not given sufficient opportunity being heard by the CIT(Exp) in accordance with the principles of natural justice - HELD THAT:- The contention of the ld. AR that details required by the CIT were available with the assessee but the same could not be furnished due to lack of sufficient opportunity granted to the assessee sounds logical, reasonable and justified. Considering the ld. AR contention that the assessee was prevented by sufficient cause primarily in filing the appeal and secondly in making submission before the lad CIT(Exp) in absence of sufficient opportunity of being heard to produce the necessary documents as per principles of natural justice as above, we find it deem fit to restore the matter back to the file of the CIT(Exp) to examine the issue of granting of approval u/s. 10(23C)(vi) of the act, afresh after taking into consideration the material evidence and after affording sufficient opportunity of being heard to the appellant assessee, as per principles of natural justice. Accordingly, the case is restored to the CIT, for afresh consideration and examination of the application of assessee u/s. 10(23C)(vi) - Assessee appeal treated allowed for statistical purposes

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• 2021 (10) TMI 957
  Depreciation on account of application of income for charitable purposes - Double deduction - CIT(A) has given a factual finding that assessee has not claimed investment in fixed asset as application of the income in the year of purchase of fixed assets - HELD THAT:- CIT(DR) has not brought anything on record which could controvert the finding of the Ld. CIT(A), despite the impugned order which has been passed by the Ld. CIT(A) on 30/03/2017 - assessee has also referred to audited balance sheets and income and expenditure accounts of earlier years and submitted that investment in fixed assets was not claimed as application of the income in the year of investment. This fact has also not been controverted by the Learned Departmental Representative. In the circumstances, the assessee has claimed depreciation for the first time as application of the income and, therefore, claim of double deduction of the Assessing Officer is baseless and without any evidences, hence not justified. Also as per Rajasthan and Gujarati Charitable Foundation, Poona [ 2017 (12) TMI 1067 - SUPREME COURT ] even if investment in capital asset has been claimed as application of the income, the assessee is entitled for depreciation as application of the income in subsequent years, prior to insertion of section 11(6) of the Act with effect from assessment year 2015-16. The instant case being of assessment year 2010-11, the assessee is eligible for depreciation as application of the income irrespective of the fact whether investment in fixed assets was claimed as application of the income or not. - Decided against revenue. Addition u/s 68 - AO found the donation in dispute as anonymous observing that donor companies are only paper companies - CIT-A deleted the addition - HELD THAT:- As the assessee has maintained name and address and other details, which have been made available to the Assessing Officer. In such circumstances, following the decision of the Tribunal in the case of Jai Maa Savitri Education Society [ 2021 (2) TMI 707 - ITAT DELHI ] entioned above and the finding of the Assessing Officer in remand proceeding, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground No. 2 of the appeal of the Revenue is accordingly dismissed Addition on account of transport activities - CIT(A) deleted the disallowance - HELD THAT:- We find that the Assessing Officer has made disallowance purely on estimate and on ad-hoc basis without pointing out any specific defects in vouchers of expenses maintained by the assessee, which is not permitted in law. Accordingly, we uphold the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground No. 3 of the appeal of the Revenue. Addition on account of surplus from hostel activity - CIT-A deleted the addition - as per assessee he was maintaining hostel facility for the college student studying with the assessee, which is mandatory requirement under Rules and Regulation of AICTE (i.e. regulatory authority for technical education) - HELD THAT:- As the assessee submitted that it has maintained separate books of account as required under the provisions of the Act and further the hostel facilities maintained for the students of the college belonging to the assessee society and the facility is not been extended to any student not studying in the college by the assessee. In such circumstances, the hostel activity has been maintained as part of the education activity. Further, after apportioning the common expenses, there is no surplus from hostel activity. DR could not controvert above submission of the learned Counsel of the assessee. In such circumstances, we do not find any error in the order of the learned CIT(A) - Decided against revenue.

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• 2021 (10) TMI 956
  Income from house property - ALV of property - addition in respect of three properties in Amritsar - these properties were vacant during the year and annual income should have been computed at nil under section 23(1)(c) of the Act - HELD THAT:- . After carefully perusing the provisions of section 22, section 23(1)(a) and section 23(1)(c) of the Act, we are of the considered view that the ALV of the property, which could not be let out during the year, would be nil in accordance with the provisions of section 23(1)(c) of the Act. The assessee is entitled for the vacancy of allowance in respect of the said properties and armed length price has to be assessed as rent received or receivable and not the amount for which the property is expected to be let out from year to year is to be considered for the purpose of assessing the ALV. In the present case since the properties have not been let out at all during the year, therefore the ALV has to be taken as nil. See M/S. METAOXIDE PVT. LTD. [ 2018 (4) TMI 1513 - ITAT MUMBAI] - thus we direct the AO to delete the addition made in respect of three vacant properties at Amritsar. Ground No. 1 is allowed. Addition of agricultural income declared by the assessee - In the A.Y. 2011-12, the assessee has declared income of Rs. 7,63,472/- and the AO has treated the 50% as agricultural income of the assessee and 50% was added to the income of the assessee and taxed accordingly - HELD THAT:- We find merit in the contention of the Ld. A.R. after perusing the assessment order for A.Y. 2011-12 wherein the AO has treated the agricultural income on the same basis. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to treat 50% as agricultural income and to treat the remaining 50% as regular taxable income. Accordingly, ground is partly allowed.

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• 2021 (10) TMI 955
  TP Adjustment - Comparable selection - grievances of the assessee that the appellant ought not to be considered as tested party, comparables selected by the TPO who are functionally different from the assessee having different business module and not granting the appellant the option to choose a price that falls within the 5% range of arithmetic mean of comparables as contemplated under proviso of section 92C(2) - HELD THAT:- Merit in contention of assessee that Comparables selected by the TPO are functionally different on account of the fact that the assessee did not have its own manufacturing facility, the business model of the assessee is quite different coupled with fact that the appellant is operating only in domestic market whereas the comparables namely Rane (Madras) Limited and Gabriel India Ltd. had sufficient export turnover. We are conscious of the fact that two companies cannot be compared with accurate arithmetic precision; however, the factors that would influence the profit margin substantially should be kept in mind while rejecting the comparables. In the present case, this is first year of operation; the appellant does not have its own manufacturing facilities and is purely operating in domestic market. In our considered view, these factors certainly would have substantially impact on the profit margin of the assessee. Therefore, findings of the authorities below cannot be sustained under the facts and circumstances of the present case. The impugned order is therefore hereby set-aside and the issue of computation of Arm s Length Price is restored to the file of the Assessing Officer. The Assessing Officer would refer the matter to the TPO for making search for fresh set of comparables, who accordingly, recommend the computation of Arm s Length Price afresh. The grounds raised by the assessee are allowed for statistical purpose only.

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• 2021 (10) TMI 954
  Undervaluation of closing stock of free sugar, levy sugar and molasses on account of non-inclusion of education cess and higher education cess - Application of provision of section 145A - CIT-A directed the AO to consider the opening value of the stock for the next year which is the closing stock for the current year as per the revised valuation - HELD THAT:- Since the ld. CIT(A), while deciding the issue has followed the order of his predecessor for A.Y. 2011-12 in assessee s own case and the ld. Counsel for the assessee could not throw any light as to the fate of such order, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the CIT(A) with a direction to find out as to what is the fate of the issue in A.Y.s 2008-09 and 2011-12. He shall decide the issue on the basis of the order for A.Y.s 2008-09 and 2011-12 which has been followed by the CIT(A) and as per fact and law, after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The Grounds of appeal No. 1 and 2 raised by the assessee are accordingly allowed for statistical purposes. Correct head of income - AO treating interest earned from Cooperative Societies and Bank as income from other sources instead of business income - HELD THAT:- This ground of appea taken by the assessee is decided against the assessee by the order of the Tribunal in assessee s own case for AY 2001-02. In view of the above submission by the ld. Counsel for the assessee and in absence of any objection from the side of the ld. DR, the ground No. 3 raised by the assessee is dismissed.

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• 2021 (10) TMI 953
  Reopening of assessment u/s 147 - period of limitation to issue notice u/s 143 - non-issuance of notice u/s. 143(2) of the Income Tax Act, 1961 within six months from the end of the financial year in which the return u/s. 148 was filed i.e. 30.03.2019 which was barred by limitation - HELD THAT:- Here in this case, the assessee vide letter dated 30.03.2019 has intimated to the AO pursuant to the notice u/s. 148 of the Act to treat the original return filed by it as return pursuant to the notice u/s. 148 of the Act, the AO ought to have issued mandatory notice u/s. 143(2) on or before 30th September, 2019. Whereas in this case, the AO had issued notice u/s. 143(2) on 24.12.2019. Therefore, the service/issuance of mandatory notice u/s. 143(2) of the Act dated 24.12.2019 was not permitted as per proviso to Section 143(2) of the Act is ergo without jurisdiction. So the consequent re-assessment order of AO dated 28.12.2019 is void as held by this Tribunal in the case of Asiatic Oxygen [ 2019 (7) TMI 1875 - ITAT KOLKATA] and similar arguments were raised by the Ld. DR/AO to overcome the proviso to section 143(2) of the Act, however for the same reason as taken note of by this Tribunal in the case of Asiatic Oxygen (supra), we repel the contention of Ld. DR in this case also. Therefore, the re-assessment order of AO dated 28.12.2019 is void in the eyes of law. Appeal of assessee allowed.

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• 2021 (10) TMI 952
  Disallowance of Employees share of ESI/PF paid belatedly as per the due dates laid down in the law - whether contribution is made on or before due date for furnishing the return of income u/s 139(1) ? - Scope of amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021 - HELD THAT:- The Hon ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] has taken the view that employee s contribution u/s 36(1)(va) of the Act would also be covered u/s 43B of the Act and therefore if the share of the employee s share of contribution is made on or before due date for furnishing the return of income u/s 139(1) of the Act, then the assessee would be entitled to claim deduction. Therefore, the issue is covered by the decision of the Hon ble Karnataka High Court. Whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also. On this aspect, we find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so - aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act in both the Assessment Years deserves to be deleted. - Decided in favour of assessee.

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• 2021 (10) TMI 951
  Revision u/s 263 by PCIT - claim of deduction u/s 80P - HELD THAT:- AO had indeed made requisite enquiries on the subject mentioned issue of claim of deduction u/s 80P - Infact the return itself was selected for limited scrutiny only for examining the said deduction. AO had indeed carried our requisite enquiries on the same and had duly applied his mind on the eligibility of assessee for claiming deduction u/s 80P of the Act by taking due cognizance of the fact that the assessee is a registered co-operative housing society deriving interest income from deposits kept with co-operative banks. The assessee had indeed placed the copies of scrutiny assessment orders for the immediately preceding two assessment years before the ld AO, wherein under identical facts and circumstances AO had accepted the fact that interest received from a co-operative bank would be eligible for deduction u /s 80P - AO could not have taken any other view in the matter while framing the assessment as he is bound to apply the rule of consistency. When the rule of consistency has been applied by the ld AO, his order cannot be termed as erroneous without bringing any fresh facts on record. PCIT had not brought any evidence on record to prove that the facts prevailing in Asst YeaRs. 2013-14 and 2014-15 were different from that of facts prevailing in the year under consideration. Hence in our considered opinion, the conclusion of the ld PCIT that no enquiries were indeed carried out by the ld AO cannot be accepted and hence the revision order passed by him u/s 263. - Decided in favour of assessee.

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• 2021 (10) TMI 950
  Revision u/s 263 by CIT - no enquiries were indeed carried out by the ld AO - eligibility of assessee for claiming deduction u/s 80P of the Act by taking due cognizance of the fact that the assessee is a registered co-operative housing society deriving interest income from deposits kept with co-operative banks - HELD THAT:- We find that the ld AO had indeed made requisite enquiries on the subject mentioned issue of claim of deduction u/s 80P of the Act. Infact the return itself was selected for limited scrutiny for examining the said deduction, among others. AO had indeed carried our requisite enquiries on the same and had duly applied his mind on the eligibility of assessee for claiming deduction u/s 80P of the Act by taking due cognizance of the fact that the assessee is a registered co-operative housing society deriving interest income from deposits kept with co-operative banks. AO had even applied his mind that in respect of interest income derived from public sector banks (viz Bank of Baroda and Bank of India), the assessee would not be entitled for deduction u/s 80P of the Act as the same is eligible for only for interest derived from co-operative bank. Hence in our considered opinion, the conclusion of the ld PCIT that no enquiries were indeed carried out by the ld AO cannot be accepted and hence the revision order passed by him u/s 263 of the Act in this regard, is hereby quashed. We find from the computation of total income, the assessee had not claimed any expenditure as deduction, in view of the fact that the entire expenses had been disallowed by the assessee voluntarily in the return of income. Hence there cannot be any applicability of provisions of section 40(a)(ia) of the Act. This crucial fact has been completely overlooked by the PCIT while assuming revision jurisdiction u/s 263 - Decided in favour of assessee.

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• 2021 (10) TMI 949
  Estimation of income - bogus purchases - hawala transactions - HELD THAT:- As observed that the assessee allegedly purchased raw materials through the Hawala purchase bills and thereafter consumed the same in the power project sites. In such a situation, it cannot be said that the entire amount of hawala purchase bills requires addition. The Hon ble jurisdictional High Court in Pr.CIT Vs. Paramshakti Distributors Pvt. Ltd., [ 2019 (7) TMI 838 - BOMBAY HIGH COURT] has sustained the addition @ 10% of the amount of purchases, being, the profit element involved therein. Thus we are of the considered view that it would be reasonable to sustain addition @ 10% of the amount of bogus purchases, being profit element involved therein. Grounds of appeal raised by the assessee are partly allowed.

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• 2021 (10) TMI 948
  Estimation of income - Bogus purchases - CIT-A estimation of income @12.5% on the genuine transactions of purchases - HELD THAT:- Gross profit rate disclosed in the financial statement is @3.25% and the assessee is in the Civil construction business and the margin of profit as mentioned by the AR is comparatively very much lower than 12.5% estimated by the CIT(A) - Accordingly, to meet the ends of Justice, we restrict the profit percentage to 6% as against 12.5% and modify the order of the CIT(A) - we make it clear that this reduced percentage is applicable only to the AY. Reopening of assessment u/s 147 - Estimation of commission - HELD THAT:- We are of the opinion that the A.O. has only estimated the commission payment without any evidence and the addition was solely made on the basis of statement recorded - the addition is without evidence and the revenue has not discharged the burden with any incriminating material and we direct the AO to delete the addition and allow this ground of appeal - appeal of validity of re-assessment proceedings, we find the reopening was made with proper information from DCIT(Central circle) and we are not convinced with submissions of the AR and we dismiss this ground of appeal of the assessee. Gross profit/ profit embedded in the non genuine purchases and has restricted the addition to the extent of 12.5% of bogus purchases - AO has not doubted the sales and we rely on the ratio in the case of M/s Nikunj Eximp Enterprises [ 2014 (7) TMI 559 - BOMBAY HIGH COURT] - we are not inclined to interfere with the order of the CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue.

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• 2021 (10) TMI 947
  Assessment u/s 153A - Application for admission of additional evidences - assessee s contentions that no opportunity was given to the assessee for explaining the source of investments and before CIT(A) also assessee could not place on record necessary evidences as the assessee was of the view that the ratio of the decision in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] would be applicable - HELD THAT:- Considering the totality of the facts that no opportunity was given to the assessee by the AO for explaining the source of investments, we are of the view that in the interest of justice one more opportunity be granted to the assessee to place on record the necessary evidences to support her case. We therefore admit the additional evidence and restore the additional evidence to the file of AO to examine the same and thereafter decide the issue on merits in accordance with law. Needless to state that AO shall grant adequate opportunity of hearing to the assessee. Since we are restoring the issue to the file of AO, the other grounds raised by the assessee and the grounds raised by Revenue are not being adjudicated at present and the same are also remitted to AO - Grounds of Revenue and assessee are allowed for statistical purposes.

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• 2021 (10) TMI 928
  Computation of profit of Life Insurance business - interpreting the special provision under Section 44 of the IT Act while granting benefits to assessee- company - AO treating the surplus under shareholders account as income from business and taxed at normal rates. - HELD THAT:- In the assessee s own case relating to the assessment year 2010-11, considering the challenge made to the order of the CIT that policyholder s account and Shareholders account has to be considered separately and the benefit of Section 115B of the Act could be given only to the profits from life insurance business, Tribunal in the Assessee s own case relating the earlier year has held that there is no dispute that assessee was doing only life insurance business as regulated by the IRDA. It has been categorically observed that CIT himself has mentioned that assessee was engaged in life insurance business. The question whether policyholders account and shareholders account, in the case of an assessee carrying on only the business of life insurance business was to be separated or consolidated, being considered by the Tribunal of Mumbai Bench in ICICI Prudential Insurance Co. Ltd.,[ 2012 (11) TMI 13 - ITAT MUMBAI] , applied the same to the assesse s case thereby allowing the appeal of the assessee and the same has reached finality. For the subsequent assessment years, the Tribunal has followed the decision of the Tribunal in assesse s own case and has held that the surplus with deficit as per shareholders account should be aggregated with surplus with deficit in the policyholders account for determining the profit or loss of the assessee under Section 44 of the Act. In the case of ICICI Prudential Insurance Company Ltd., [ 2015 (7) TMI 1346 - BOMBAY HIGH COURT] , identical question having considered, the High Court of Bombay has held that shareholders amount has to be considered as arising out of Life Insurance Business. We find no fault with the Tribunal in following this ruling which is squarely applicable to the case on hand. It is not the case of the revenue that the assessee is carrying on any other business other than life insurance business. Thus, Section 44 read with Rule 2 to Part-A of First Schedule to the Act is applicable to the facts of the present case, not Rule 5 of Part B as canvassed by the Revenue. As brought to the notice of this Court Civil appeal filed by the Revenue against the judgment of the High Court of Bombay in ICICI Prudential Insurance Company Ltd., supra, is pending before the Hon ble Apex Court. We answer the substantial questions of law in favour of the assessee

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• 2021 (10) TMI 927
  TP adjustment - ALP adjustment on corporate guarantee adjustment involving its overseas Associated Enterprises - international transaction or not? - HELD THAT:- As relying on assessee s own case [ 2021 (8) TMI 1238 - ITAT HYDERABAD] we hold that the learned lower authorities have rightly treated the assessee s corporate guarantee(s) in all the three impugned assessment years as an international transaction falling u/s.92B - Decided against assessee. Delayed employees contribution - assessee had very much deposited the said employees contribution before the due date of filing return u/s.139(1) - As per revenue employees contribution is covered u/s.36(1)(va) of the Act rather than Section 43B applicable in case of employer s contribution - HELD THAT:- We notice in this factual backdrop that the legislature has not only incorporated necessary amendment in Sections 36(1)(va) as well as u/s. 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 01-04-2021 only. It is further not an issue that the foregoing legislative amendments have proposed employers contribution/disallowance u/s.43B as against employee s contribution u/s.36(va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable only with prospective effect from 01-04-2021 only, we hold that the impugned disallowance is not sustainable in view of all these latest developments. The impugned ESI/PF disallowance is deleted therefore. - Decided in favour of assessee. Disallowance of sponsorship fees under section 37(1) - HELD THAT:- We find no merit in the assessee s instant last substantive grievance. This is for the reason that it has failed to pin point even a distinct direct nexus between its day to day business activity viz-a-viz the impugned alleged sponsorship fee paid to the eligible women for their life time achievements. This tribunal s Third Member s decision in M/s. Hyundai Motors India Ltd. Vs. DCIT, [ 2015 (9) TMI 962 - ITAT CHENNAI ] after considering the hon ble apex court s landmark decision Sassoon J. David and Company (P) Ltd [ 1979 (5) TMI 3 - Supreme Court ] holds that any expenditure claim raised u/s.37 of the Act ought to be wholly and exclusively incurred for the purpose of the concerned business only. We therefore find no reason to interfere with the impugned disallowance made in both the lower proceedings - Decided against assessee.

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• Customs

• 2021 (10) TMI 946
  Investigation proceedings regarding the anti-dumping - all that the High Court has done is to issue notice in the writ petition and the interlocutory applications calling upon the parties to file responses. - Recalcitrant attitude of the Government in not appointing High Court Judges for years together even where the recommendations have been cleared by the Collegium - HELD THAT:- If we peruse the impugned order, all that the High Court has done is to issue notice in the writ petition and the interlocutory applications calling upon the parties to file responses. This can hardly be a stage of a proceeding where the Supreme Court of the country should be asked to step in. The factual matrix paints an even a sorrier picture of the Government s conduct as the Court, conscious of the urgency of the matter, on 4-6-2021 while issuing notice called upon counter affidavits to be filed within four weeks and listed the matter on 19-7-2021. We are informed that the Government did not filed the counter affidavits and took further four weeks time to file the counter affidavits necessitating the adjournment till 5th October, 2021. And the special leave petition was filed on 17-7-2021. Thus on one hand, the Government does not deem it expedient to even file the counter affidavits while it has the ability to draw the special leave petitions and file the same before this Court. So much for the urgency expressed by the Government of India in the present proceedings - SLP dismissed.

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• 2021 (10) TMI 945
  Valuation of imported goods - Classification of goods - whey protein - efficacy of Section 3 of the Customs Tariff Act, 1975 and Section 4A of the Central Excise Act, 1944 - HELD THAT:- The view taken by the Commissioner in respect of classification of product specified as whey protein , is the correct view, which does not require interference. The Tribunal has rightly endorsed that position. It is a different matter that the Tribunal in the impugned judgment ought to have elaborated on the aspects dealt with by the Commissioner, to take that view. That does not take the matter any further for the Appellant-Department. However, the only indulgence that needs to be shown in this appeal is in regard to the issue of valuation. For, the Tribunal has not adverted to the efficacy of Section 3 of the Customs Tariff Act, 1975 and Section 4A of the Central Excise Act, 1944 at all. Whereas, it decided the issue under consideration only in reference to Section 14 of the Customs Act, 1962. We set aside the finding and conclusion of the Tribunal on the issue of valuation and relegate the parties before the Tribunal by remanding the appeal for considering the limited issue of valuation, afresh on its own merits and in accordance with law - application disposed off.

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• 2021 (10) TMI 944
  Export Promotion Capital Goods Scheme (EPCG Scheme) - import of capital equipments either at nil or concessional rate of customs duty - authority calls upon the petitioner to produce various export documents to establish the discharge of export obligation under the scheme, within a stipulated time - violation of the terms of the Scheme disentitling the petitioner to the benefit claimed - HELD THAT:- In the present case, since the exports were under free shipping bills, it appears that authorities have not had no opportunity or avenue to undertake any examination in the matter. However, and fortunately for the petitioner, the matter is still at large, since the show cause notices issued by R2 in respect of the exports undertaken under two licenses, are still pending. The dispute in this matter can thus be resolved by directing the ADGFT to continue the proceedings under show cause notices dated 26.03.2019, hear the petitioner and pass orders on the entitlement to the benefits under the EPCG Scheme. The exercise shall be completed within two weeks from today and shall cover the entitlements of the petitioner in respect of all eight licenses. Let suitable orders be passed in this regard after the petitioner is heard. Till such time the impugned order dated 26.07.2019 passed by the PRC be kept in abeyance and subject to the result of the enquiry to be undertaken as ordered aforesaid. Petition disposed off.

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• 2021 (10) TMI 943
  Seeking appropriate direction for encashment of the fixed deposits made in respect of the sale proceeds received by selling the unclaimed/uncleared goods at the bonded warehouse - Also, seeking handing over the residual amount after adjusting the Customs duty payable in respect of the items sold - HELD THAT:- The application along with the writ petition can be disposed of if the concerned office who can look into the issue of the computation of the Customs duty to be adjusted from the sale proceeds in terms of provisions of Section 150(2)(c). The matter according to the applicants/writ petitioners can also be referred to the Chief Commissioner of Customs, being the overall head so that any one representing the Customs Authority will be subordinate to him - Let this matter appear on next Friday (5-3-2021) when the department shall inform this Court about the competent authority to whom the matter can be relegated for the purpose of computation of Customs duty in terms of provisions of Section 150(2)(c) of the said Act. Petition disposed off.

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• Corporate Laws

• 2021 (10) TMI 942
  Approval of the Scheme of Amalgamation - Section 230 to 232 and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions regarding holding, convening and dispensation with various meetings issued - directions regarding issuance of various notices also issued. The scheme is approved.

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• Insolvency & Bankruptcy

• 2021 (10) TMI 941
  Maintainability of appeal before NCLAT - applicability of time limitation - Whether the appeal before the NCLAT under Section 61(1) of the IBC was barred by limitation? - HELD THAT:- The salient aspects of Section 29(2) of the Limitation Act are three fold- (i) prescription of a period of limitation under any special law or local law may differ from the period prescribed by the Schedule under the Limitation Act; (ii) in such a case, the period of limitation prescribed under the special or local law shall be deemed to be period prescribed for the purpose of Section 3 of the Limitation Act; and (iii) Section 3 of the Limitation Act shall apply accordingly. An appeal is a creature of statute, hence there is a fundamental distinction between the right to file a suit and the right to file an appeal. In terms of Section 9 of the Code of Civil Procedure, 1908, there is an inherent right to bring a suit of a civil nature, unless the suit is barred by statute - An appeal lies against an order of the Adjudicating Authority to the Appellate Authority, the NCLAT, under Section 61(1) of the IBC. An order of the NCLAT is subject to an appeal on a question of law to the Supreme Court under Section 62. The jurisdiction of civil courts has been explicitly ousted by Section 63 of the IBC. The import of Section 12 of the Limitation Act and its explanation is to assign the responsibility of applying for a certified copy of the order on a party. A person wishing to file an appeal is expected to file an application for a certified copy before the expiry of the limitation period, upon which the time requisite for obtaining a copy is to be excluded. However, the time taken by the court to prepare the decree or order before an application for a copy is made cannot be excluded. If no application for a certified copy has been made, no exclusion can ensue - in the absence of an application for a certified copy, the appeal was barred by limitation much prior to the suo motu direction of this court, even after factoring in a permissible fifteen days of condonation under Section 61(2). The Court is not empowered to condone delays beyond statutory prescriptions in special statutes containing a provision for limitation. Section 12(2) of the Limitation Act allows for an exclusion of the time requisite for obtaining a copy of the decree or order appealed against. It is not open to a person aggrieved by an order under the IBC to await the receipt of a free certified copy under Section 420(3) of the Companies Act 2013 read with Rule 50 of the NCLT and prevent limitation from running. Accepting such a construction will upset the timely framework of the IBC. The litigant has to file its appeal within thirty days, which can be extended up to a period of fifteen days, and no more, upon showing sufficient cause. A sleight of interpretation of procedural rules cannot be used to defeat the substantive objective of a legislation that has an impact on the economic health of a nation - Rule 22(2) of the NCLAT Rules mandates the certified copy being annexed to an appeal, which continues to bind litigants under the IBC. While it is true that the tribunals, and even this Court, may choose to exempt parties from compliance with this procedural requirement in the interest of substantial justice, as re-iterated in Rule 14 of the NCLAT Rules, the discretionary waiver does not act as an automatic exception where litigants make no efforts to pursue a timely resolution of their grievance. The appellant having failed to apply for a certified copy, rendered the appeal filed before the NCLAT as clearly barred by limitation. Appeal dismissed.

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• 2021 (10) TMI 940
  Seeking Liquidation of FDR accounts - Section 10 of the IBC - HELD THAT:- The Appellant have taken objections, no special resolution in terms of Section 10(3)(c) of the Code have been filed by the Respondent No. 1 Corporate Debtor which is evident at page 1097, Vol.- VI of the Appeal Paper Book. It is also an admitted fact that from the Status Report filed on behalf of the Respondent No. 2 it is crystal clear that the Appellant RNY Healthcare Services Pvt. Ltd. have filed an Execution Petition against M/s Bourn Hall International India Pvt. Ltd. Corporate Debtor before the District Judge, Gurgaon in view of Arbitration Award passed by Ld. Arbitrator Mr. R.S. Baswana, District Session Judge (Retd.) on 06.02.2019 in Arbitration No. 87/2018 against M/s Bourn Hall International India Private Limited Others and next date in the matter on 19.08.2021. The Appellant have not come with clean hand before this Tribunal and despite directions passed by Ld. Adjudicating Authority the Appellant has not filed claim before the IRP - there is no illegality in the impugned order - Appeal dismissed.

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• 2021 (10) TMI 939
  Rejection of claim due to delay in filing - appeal filed by the Creditor against the decision of Liquidator - Section 42 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Liquidator in the present case rejected a time barred application for filing claim as he does not have any authority to entertain the same. However, Section 42 comes to the rescue of a claimant when his claim is rejected by the Liquidator. The claimant can file an appeal before the Adjudicating Authority against such decision of the Liquidator within fourteen days of the receipt of such decision. The present appeal can be filed within fourteen days from the date of receipt of decision of Rejection from the Liquidator; however, the appeal has been filed after 22 days (appeal filed on 31.12.20 while rejection was on 09.12.20) which is beyond the time provided in Section 42 IBC. Further, there is no rebuttal on the point that the Appellant being husband of the Suspended Director of CD had knowledge of the ongoing CIRP proceedings. There are no merit in the pleas taken by the Appellant - in the light of the well settled law, the Appellant is unable to show the sufficient cause for condoning the delay in submitting the claim by the Appellant - appeal dismissed.

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• 2021 (10) TMI 938
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- Based upon the Loan Agreement dated 05.07.2013, the Financial Creditor has disbursed money to the Corporate Debtor at different intervals and the outstanding debt was also acknowledged by the Corporate Debtor at the end of each financial year. It is also seen from the said acknowledgment, the Corporate Debtor has expressly stated that they have outstanding balance in respect of unsecured loan amount . All these documents go on to show that there is a financial debt and the Corporate Debtor has committed default in repayment of the said financial debt to the Financial Creditor. It is also seen that the default which is arising in the present Application has happened much before the advent of Covid - 19 and the Corporate Debtor also cannot seek shelter under Section 10A of IBC, 2016. Under these circumstances, this Tribunal is left with no other option than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor. Petition allowed - moratorium declared.

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• 2021 (10) TMI 937
  Seeking withdrawal of application filed under section 9 of IBC, 2016 by filing the FORM-FA which is not accepted - whether the constitution of the CoC by the IRP has been done in violation of the Orders passed by the this Tribunal and also by the Appellate Tribunal? - whether the Application filed under section 12A of IBC, 2016 is required to be allowed? - HELD THAT:- The Corporate Debtor has averred in the Application that since the account of the Corporate Debtor was under the control of the IRP, they could not do any transactions and the amount was settled to the Operational Creditor only through the associate entity of the Corporate Debtor - it is significant to point out here that even though the Corporate Debtor has filed an Application under section 12A of IBC, 2016 before this Tribunal, the same was not accompanied with Form-FA and also there was some serious objections being raised by the Operational Creditor on the ground that the Corporate Debtor cannot directly file an Application under section 12A of IBC, 2016 and also on the ground that said Application has been filed by the Operational Creditor on 01.04.2021 without settling the amount which is due and payable by the Operational Creditor. This Tribunal is of the considered view that the Constitution of the CoC by the IRP on 12.04.2021 cannot be termed as illegal or unconstitutional , since as 12.04.2021, there was no stay which was in operation. Hence, the constitution of the CoC by the IRP on 12.04.2021 does not suffer from any legal infirmities. It is required to be noted here that the Hon ble NCLAT had given only 10 days time to file an Application under Section 12A of IBC, 2016 before the Adjudicating Authority and the Operational Creditor and the Corporate Debtor ought to have settled the matter within the stipulated time period. Since the CoC has been constituted by the IRP and the same is in vogue, the Application filed by both the Operational Creditor and the Corporate Debtor under Section 12A of IBC, 2016 without soliciting the requisite 90% approval from the CoC, is not maintainable. It is seen that the IRP has not violated any of the Order passed by this Tribunal or by Appellate Tribunal in constituting the CoC - Application dismissed.

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• PMLA

• 2021 (10) TMI 936
  Money Laundering - predicate offence - irregularities in the loan disbursement by the City Co-operative Bank - only contention of the Petitioner is that since the Petitioner himself has filed the FIR, if it is to be used against the Petitioner on the premise that it is a predicate offence, then there must be material that the Respondent No. 1 must demonstrate - HELD THAT:- The contention of the Petitioner that without having copies of the ECIRs, the Petitioner cannot approach the competent court with a prayer for anticipatory bail under section 438 of Cr.P.C. is misplaced. The Petitioner apprehends his arrest, and section 438 of Cr.P.C. provides a statutory remedy for such a contingency. The learned ASG has shown the file containing the statements recorded in furtherance of ECIRs. Considering that the Petitioner has a statutory remedy under section 438 of Cr.P.C. and any observation by us on the merits of the matter against the Petitioner will prejudice the Petitioner in case the Petitioner approaches the competent court for anticipatory bail; we refrain from elaborating the same in this order. However, since this point was argued before us, all we state is that it cannot be said that there is no material against the Petitioner. Furthermore, having concluded after examining the facts that exercise of jurisdiction under section 226 of the Constitution of India and 482 of Cr. P.C is not warranted. There is no question of granting any such relief as sought for by the Petitioner as it would be contrary to the observations made by the Supreme Court in paragraph 23(xvi) of the decision in the case of NEEHARIKA INFRASTRUCTURE PVT. LTD. VERSUS STATE OF MAHARASHTRA AND ORS. [ 2021 (4) TMI 1244 - SUPREME COURT] . Having considered the grounds urged by the Petitioner in the invocation of 226 of the Constitution and 482 of Cr.P.C., we do not find that the Petitioner has failed to make out a case for interference. As regards the protection from arrest is concerned, the Petitioner has a remedy under the Cr.P.C. Petition dismissed.

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• 2021 (10) TMI 930
  Money Laundering - procedure being followed by the AA for serving the Relied Upon Documents (RUDs) on the parties concerned - HELD THAT:- List for further hearing and for conclusion of submissions on behalf of all counsels, on 13th September, 2021 at 2:30 P.M.

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• Service Tax

• 2021 (10) TMI 935
  SVLDRS - Quantification of value of tax in relation to settlement of service tax arrears - Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 - according to the petitioner, this amount has been unilaterally quantified by the Central Excise Department - HELD THAT:- The quantification of the demand under cover of its compilation of documents dated 12.08.2021 is not valid because, even according to the Department, a substantial portion of that demand was barred by limitation. That apart, the impugned order is clearly non-speaking and does not set out any alternate demand. This cannot be set right by way of counter or additional note - To quote the Hon ble Supreme Court in the celebrated case of MOHINDER SINGH GILL ANR. VERSUS THE CHIIEF ELECTION COMMISSIONER, NEW DELHI ORS. [ 1977 (12) TMI 138 - SUPREME COURT] , orders are not like old wine becoming better as they grow older. The petitioner, in my view, ought to have been granted opportunity to put forth its case and to understand why its application was proposed to be rejected. Moreover, the scheme itself provides, at Section 127 thereof that once there is a variation between the amount stated in the declaration and the estimate arrived at by the Department, Form-2 shall be issued accompanied by personal hearing notice. This has not been done in the present case. The respondent is directed to issue Form 3 afresh accepting the declaration of the petitioner, within a period of four weeks from date of uploading of this order on the official website of the Court - Petition allowed.

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• 2021 (10) TMI 934
  Refund of CENVAT Credit - failure to furnish to furnish any evidence that they have recredited to their cenvat credit account - applicability of time limitation - claim filed for the present period July 2016 to September 2016 after a time lapse of 2 years and is barred - period April 2014 to June 2014 - HELD THAT:- In the subsequent refund claim, the appellant has maintained that the differential amount was recredited to the cenvat account vide general voucher No.611 dt. 30.09.2016. But it appears that the appellant has not supported its claim with any documentary evidence. In the impugned order, the Commissioner (Appeals) has therefore observed that the appellant had failed to furnish any evidence. The only way out is therefore for the appellant to establish its case before the adjudicating authority with duly supporting documents. The appellant should furnish the necessary supporting documents before the lower authorities who shall examine the same in the light of the appellant s claim for refund - the matter is remanded to the file of the adjudicating authority before whom the appellant shall furnish all necessary supporting documents for verification - Appeal allowed by way of remand.

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• Central Excise

• 2021 (10) TMI 933
  Process amounting to manufacture or not - duty paid cigarettes - affixing brand name, repacked in new pack - non-payment of duty on removal of competitor s cigarettes - period from 2004-05 to 2008-09 - HELD THAT:- The term manufacture has been defined under Section 2(f) inter alia, to include any process, incidental or ancillary to the completion of a manufactured product. In this case, the competitor s cigarettes procured by the appellant were masked, covering the manufacturer s brand name, repacked in new pack by putting only a code number for testing purpose to select panel of the smokers. The product emerged after carrying out the activity of masking, putting code number etc. for identification, remained cigarettes only, which were procured by the appellant on payment of appropriate Central Excise duty. Since, there was no change in the name, character and use of the originally bought-out cigarettes, in our view, the process undertaken by the appellant in its factory will not be considered as a manufacturing activity, in order to fall under the scope and ambit of the definition of manufacture , defined under Section 2(f) ibid. In the case in hand, it is an admitted fact on record that excepting the process of masking and putting code number, the appellant had not undertaken any other activity to render the resultant product marketable. Thus, it cannot be said that there was involvement of labeling or relabeling of containers. The appellant in this case, had repacked the bought-out cigarettes from one retail pack to another retail pack before it was coded. Such activity also will not be covered under the purview of Chapter Note 3 (supra) inasmuch as there was no repacking from bulk pack to retail pack. The basic test of marketability envisaged in Note 3 (supra) has not been satisfied - the requirements of deemed manufacture as per Note 3 to Chapter 24 are not satisfied in this case, for levy of Central Excise duty on the disputed goods. There are no merits in the impugned order in support of confirmation of the adjudged demands on the appellant - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (10) TMI 932
  Validity of Tax Recovery Notice (TRN) - demand for Petrol and Diesel suppression and cloth material suppression - levy of penalty u/s 43(2) of the OVAT Act - HELD THAT:- The fact of the matter is that the assessment order has remained unchallenged by the Petitioner, even assuming that it was without jurisdiction. Having not availed the remedy of an appeal, the Petitioner cannot question the assessment order at this stage i.e. after receiving the TRN. Consequently, the Court is not prepared to entertain at this stage a challenge to the assessment order or to the consequent TRN. Petition dismissed.

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• 2021 (10) TMI 931
  Input tax credit of VAT paid on the Mining Tippers (and its accessories) which were used in the activity of manufacture or production of iron ore - Restoration of reassessment order passed by the prescribed authority - tax periods July, 2009 to March, 2010 - Section 66(1) of the Karnataka Value Added Tax Act, 2003 - HELD THAT:- In the case of Suma Oil Agencies [ 2014 (4) TMI 545 - KARNATAKA HIGH COURT ], the assessee had purchased a canter fitted with the tanker for the transportation of edible oil which is taxable goods from one place to another. Even in such context, the input tax credit was extended to the assessee in respect of the purchase of the said canter fitted with tanker. As such, the said judgment would be squarely applicable to the facts of the present case - Moreover, in the light of the judgment of the Hon ble Apex Court [ 1964 (10) TMI 41 - SUPREME COURT] wherein goods purchased by the assessee for using in mining operation more particularly, where the extraction of ore from the mining and the transporting the same to the harbor involving different operations is held to be in the manufacture or processing of goods for sale or in mining, the mining tippers purchased by the assessee as capital goods is entitled for input tax credit, denial of the same is unjustifiable. The questions of law answered in favour of the assessee and against the revenue - Appeal allowed - questions of law are answered in favour of the assessee and against the revenue.

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• 2021 (10) TMI 929
  Reversal of input tax credit - no C declaration form made available or filed by the petitioner for part of value - section 19(2)(5) read with section 19(5)(c) of the Tamil Nadu value Added Tax Act, 2006 and Rule 10(9)(a) of Tamil Nadu Value Added Tax Rules, 2007 - HELD THAT:- In the judgment in M/S. EVEREST INDUSTRIES LIMITED VERSUS THE STATE OF TAMIL NADU, THE DEPUTY COMMISSIONER (CT) (FAC) [ 2017 (3) TMI 279 - MADRAS HIGH COURT] , the learned Judge has exactly confronted with the similar issue, where after having exhaustive discussion on the issue, the learned Judge has concluded that, if the manufacturer, who claimed that they have purchased inputs, which are referred to in first schedule of 2006 Act, in respect of them, if tax have been paid, and the tax suffered inputs have been used in manufacturing or processing of goods industries, they should be allowed to full credit of the tax paid on the inputs without being fatal by the proviso of Section 19(2)(v) of the TNVAT Act, 2006. Since it is the case of the petitioner that the same logic and the principle would apply to the facts of the present case also, accordingly, the learned counsel claimed that, the said benefit given in Everest Industries Limited case shall also be extended to the petitioner - the impugned pre-revision notice is quashed - petition allowed.

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