TMI Tax Updates - e-Newsletter
October 26, 2021

Case Laws in this Newsletter:

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

Articles

1. TAXABILITY OF DEVELOPMENT RIGHTS / TRANSACTION IN IMMOVABLE PROPERTY – ADVANCE RULING

   By: Dr. Sanjiv Agarwal

News

1. Auction for Sale (Re-issue) of (i) ‘GoI Floating Rate Bond 2028’, (ii) ‘6.10% GS 2031’, and (iii) ‘6.76% GS 2061’

2. Income Tax Department conducts searches in Nashik

3. Role of Audit in the Modern Financial System (Address by Shri Shaktikanta Das, Governor, Reserve Bank of India - October 25, 2021 - at the National Academy of Audit and Accounts (NAAA), Shimla)

4. IBBI organises Training of Trainers (ToT) programme for Insolvency Professionals

Notifications

GST - States

1. 12/2021 - State Tax (Rate) - dated 14-10-2021 - Maharashtra SGST

Seeks to exempt MGST on specified medicines used in COVID-19, up to 31st December, 2021

2. F.12(1)FD/Tax/2021-64 - dated 30-9-2021 - Rajasthan SGST

Seeks to exempt RGST on specified medicines used in COVID-19, up to 31st December, 2021

3. F.12(1)FD/Tax/2021-63 - dated 30-9-2021 - Rajasthan SGST

Seeks to amend Notification No. F.12(56)FD/Tax/2017-120, dated the 18th October, 2017

4. F.12 (1)FD/Tax/2021-62 - dated 30-9-2021 - Rajasthan SGST

Seeks to amend Notification No. F.12(56)FD/Tax/2017-Pt-I-43, dated the 29th June, 2017

5. F.12 (1)FD/Tax/2021-61 - dated 30-9-2021 - Rajasthan SGST

Seeks to amend Notification No. F.12(56)FD/Tax/2017-Pt-I-41, dated the 29th June, 2017

6. F.12 (1)FD/Tax/2021-60 - dated 30-9-2021 - Rajasthan SGST

Seeks to amend Notification No. F.12(56)FD/Tax/2017-Pt-I-40, dated the 29th June, 2017

7. F.12 (1)FD/Tax/2021-59 - dated 30-9-2021 - Rajasthan SGST

Seeks to amend Notification No. F.12(56)FD/Tax/2017- Pt-I-50, dated the 29th June, 2017

8. F.12 (1)FD/Tax/2021-58 - dated 30-9-2021 - Rajasthan SGST

Seeks to amend Notification No. F.12(56)FD/Tax/2017-Pt-I-49, dated the 29th June, 2017

Highlights / Catch Notes

GST

• Court Denies Anticipatory Bail for Alleged Fraudulent Input Tax Credit Claims; Notes Lack of Cooperation with Investigation.

  Case-Laws - HC : Seeking grant of Anticipatory Bail - availing input tax credit either using the invoices or bills or fraudulently availing such input tax credit without any invoice or bill - The conduct of the petitioner in not cooperating with the Investigating Officer is to be taken into consideration while deciding this petition. Initially the raid was held on few premises belonging to the petitioner on 28.11.2020 and the petitioner appeared before the Investigating Officer on few days, but thereafter, it is stated that he is avoiding to appear before the Investigating Officer. The delay in conducting investigation in these types of cases will have its own effects. - The petitioner is not entitled for grant of anticipatory bail - HC
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Income Tax

• Court Overturns Section 153A Assessment for Violating Natural Justice and Section 65(B) of Indian Evidence Act.

  Case-Laws - HC : Assessment u/s 153A - denial of natural justice - In view of the violation of the principles of natural justice and also due to the non compliance of Section 65(B) of the Indian Evidence Act, this Court feels that it is a fit case for setting aside the assessment orders. The alternative remedy under the statute is in the case of violation of principles of natural justice should be an effective one capable of remedying the violations by providing afresh, but however, it remains the fact that after amendment to Section 251(1)(a) of the Income Tax Act on 01.06.2001, the CIT(Appeals) does not have the power of remand. - It is a fit case to remand back the matter for fresh consideration - HC
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• Assessee's 'Sauda Settlement' Loss Disallowed; Lacks Transparency and Cannot Offset Wholesale Business Profits.

  Case-Laws - AT : Speculative business / transaction - Disallowance of loss suffered by the assessee on account of ‘Sauda Settlement’ - There is complete opaqueness about the nature and truth of the transaction/s between the assessee and SAOL, including the impugned credit thereto on 31/03/2013. The same thus cannot be regarded as a business loss and, in any case, is not available for set off against the business profit from its’ wholesale business - AT
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• Reopening Assessment u/s 147 on Partnership Deed's Validity Doesn't Breach Section 184; Needs Further Verification.

  Case-Laws - AT : Reopening of assessment u/s 147 - genuineness of partnership deed - No contravention of s. 184 due to non- signing of the front pages of the partnership deed by the partners so as to attract s.185. The Revenue is only making a guess in view of the long time interval between possible date of execution (as stated in the deed itself), i.e., 1.4.2007, and the date of its notarization; rather, admitting that the matter needs to be examined and ascertained. That is, there is a reason to suspect, and not a reason to believe for want of the relevant information. - AT
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• Loans Violating RBI Rules Lead to Non-Deductible Expenses u/s 37 of Income Tax Act.

  Case-Laws - AT : Disallowance of expenditure in terms of section 37 of the Act on proportionate basis for diversion of the fund - When the loans have been disbursed in violation of the rules of RBI to give benefit to a few, than expenses corresponding to such loans are not wholly and exclusively for the purpose of the business of the assessee and therefore also such expenses are not allowable as deduction - AT
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• Tax Authority Oversteps: Section 12A Registration Cancelled Prematurely While Under Review by Settlement Commission. Revenue Arguments Fall Short.

  Case-Laws - AT : Cancellation of registration u/s 12A - learned CIT (Exemptions) was not empowered to pass the order u/s 12A cancelling the registration granted to the assessee when the issue was still pending with Settlement Commission. The written arguments filed by the Revenue relate to the merits of cancellation of the registration and do not relate to arguments raised by learned A.R. therefore, these submissions are of no help to Revenue. - AT
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• Court Challenges Assessment Reopening: AO Lacked Clear "Reason to Believe" u/s 147, Failed to Apply Mind Adequately.

  Case-Laws - AT : Reopening of assessment u/s 147 - reason to believe - the Ld. AO has absolutely changed his view which was formed initially and which was formed while concluding the assessment. Therefore, the statutory provisions per ‘reasons’ and contents in ‘assessment order’ are distinct which shows that the reasons were not on account of application of mind on the part of AO. Thus it is a clear case of lack of basic ingredient of section 147 i.e. “reason to believe”, as AO himself was not able to decide about the legal provisions which are being attracted in the given case. - AT
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• Court Rules IT Support Services Exempt from TDS Without Human Intervention u/s 195 of Income Tax Act.

  Case-Laws - AT : TDS u/s 195 - TDS on Admin and Network Support service charge - The revenue failed to consider the fact that the IT support services availed by the Assessee did not involve any human intervention. The Ld. CIT(A) reproduced extracts of the Master Service Agreement and observed that human intervention is an integral part of the Master Service Agreement which is completely misconceived. In fact, no reasons were provided by the Ld. CIT(A) as to how human intervention was an integral part of the Master Service Agreement. - It is held that the IT support services availed by the Assessee from Hitachi Ltd., Japan, and Hitachi Asia Ltd., Singapore are standard connectivity and networking services cannot be termed as technical services within the meaning of Section 9(1)(vii) of the Act. - AT
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• Delhi High Court: 30% Disallowance u/s 40(a)(ia) for Expenses; Re-compute Net Losses After Deduction Adjustments.

  Case-Laws - AT : Income accrued in India - Business Connection and Permanent Establishment - As the position of the profit/loss of the assessee is evident. After deduction of the distribution expenses and 15% booking fee, the assessee is left with no taxable profit. Considering the disallowance @ 30% u/s. 40(a)(ia) in accordance with the law laid down by the Hon'ble Delhi High court, , we hereby direct the AO to re-compute the net losses computing the disallowance on other expenses @ 30%. - AT
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• Tax Assessment Cleared: No Evidence of Unrecorded Cash Payments Found in Patel/Patni Group Investigation. No Additions Made.

  Case-Laws - AT : Unexplained investments - There is no positive and credible evidence brought on record by the revenue to establish the allegation of cash payment over and above the investment recorded in the books. Neither the search party has found any incriminating material in the course of search on Patel/Patni group nor the Assessing Officer has brought any material/evidence on record in the course of assessment proceedings. Even no adversities or defects have been found in the evidences in the form of Due Dilignence Report, MOU, share transfer forms, share certificates, etc. furnished by the appellant has been pointed out. - No additions - AT
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• Commissioner of Income Tax (Appeals) Deletes Unexplained Cash Credits Addition u/s 68 for Assessee's Loan Transactions.

  Case-Laws - AT : Addition u/s 68 - unexplained cash credits - Addition on account of loans received - it is clear that the onus required to be discharged with respect to identity, genuineness and creditworthiness was duly discharged by the assessee and moreso the transaction is part of the regular overdraft account maintained by the assessee with the society. - CIT(A) rightly deleted the additions - AT
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• CIT Revises Order: Assessing Officer Failed to Enquire Disallowance u/s 14A During Reassessment u/ss 143(3) and 147.

  Case-Laws - AT : Revision u/s 263 by CIT - The order passed by the ld. Assessing Officer while completing the reassessment u/s 143(3) r.w. section 147, neither suggests that any such enquiry on the proposed disallowance u/s 14A of the Act as raised by the ld. PCIT has been made. If the proof of such enquiry is not reflecting in the order passed by the ld. Assessing Officer which ought to have been done by him at the time of reassessment, requirement of further enquiries/verifications u/s 263 of the Act, in our considered view, cannot be brushed aside. - AT
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Indian Laws

• Court Denies Fair Hearing: Cheque Dishonor Case Highlights Right to Cross-Examination Under Article 21 of Indian Constitution.

  Case-Laws - HC : Dishonor of Cheque - Principles of natural justice - The right to cross-examination is a part of right to fair trial, which, every person has in the spirit of the right to life and personal liberty as enshrined in Article 21 of the Constitution of India - In the case in hand, on the relevant date i.e. on 03.05.2018, the petitioner remained absent in the court and his counsel also remained absent though he has filed hazira. Thus, the petitioner remained unrepresented on that day. Therefore, the impugned order, closing the evidence of P.W.1, behind the back of the petitioners and also his counsel, is denial of fair hearing, as it has infringed their right to fair trial. - HC
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Service Tax

• Petitioner's Declaration Rejected Under Sabka Vishwas Scheme 2019 Due to Failure to Admit Duty Liability.

  Case-Laws - HC : SVLDRS - Rejection of declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - In the present facts, it is found that the learned counsel for the petitioner has not been able to demonstrate and/or there is nothing on record to indicate that the duty liability is admitted by the petitioner. On the contrary, though the amount is quantified by the letter dated August 29, 2019, the petitioner goes ahead and addresses the e-mail dated November 16, 2019 stating that the matter in respect of reversal of credit of ₹ 75 lakhs is under process and that the petitioner will revert back to the respondents shortly. Further, it is mentioned in the said e-mail that the petitioner attached the details of the credit taken within time and the details of credit taken more than 365 days, meaning thereby that even as late as on November 16, 2019, much after the cut-off date, the petitioner still does not admit its liability to pay the duty. - HC
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Case Laws:

• GST

• 2021 (10) TMI 1022
  Seeking grant of Anticipatory Bail - availing input tax credit either using the invoices or bills or fraudulently availing such input tax credit without any invoice or bill - procedure for raid carried on, without following the procedure as contemplated under law - HELD THAT:- The main aim of the Act is to simplify the taxation mechanism, to reduce the burden of taxes and clarify conformity of the tax payment. It also aims at consolidation of all indirect tax levies into a single tax and to remove cascading effect of the taxes. It is to achieve the motive of one nation one tax and to reduce tax evasion, to have corruption free tax administration, to reduce complications, encourage technically driven procedures and to provide ease of operation for e-commerce. If the citizens understand the importance of payment of tax, achieving the aims and objects of enacting the law would be easy, but on the other hand, if new ways and means are found to evade taxes, that will be a hurdle for the economic growth of the country. It amounts to loss of revenue and increase in inflation. It also have the impact on morale, increase in corruption and resulting in accumulation of black money and money laundering. So the impact on the nation as a whole is enormous. It is always considered that fiscal discipline is the base for strong economy that too for a fast developing country like India. Economic offences are always considered as serious threat to the economy of the country. It is nothing but economic terrorism. Therefore, such offences are considered as a class apart. The Hon ble Apex Court in Y.S. JAGAN MOHAN REDDY VERSUS CENTRAL BUREAU OF INVESTIGATION [ 2013 (5) TMI 896 - SUPREME COURT] categorically held that economic offences constitute a class apart and needs to be visited with a different approach in the matter of bail. Under such circumstances, the strong suspicion of evasion of tax by the petitioner cannot be taken lightly. Only after a detailed investigation, the truth or otherwise in the allegations made could be found out. The conduct of the petitioner in not cooperating with the Investigating Officer is to be taken into consideration while deciding this petition. Initially the raid was held on few premises belonging to the petitioner on 28.11.2020 and the petitioner appeared before the Investigating Officer on few days, but thereafter, it is stated that he is avoiding to appear before the Investigating Officer. The delay in conducting investigation in these types of cases will have its own effects. The petitioner is not entitled for grant of anticipatory bail - the petition is dismissed.

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• 2021 (10) TMI 997
  Cancellation of GST registration of petitioner - captioned writ petition pertains to cancellation of registration, but the same has since been revoked is learned Revenue counsel s say - HELD THAT:- Cancellation of registration has already been revoked - The revocation order dated 16.09.2021 has been placed before this Court by the learned Revenue counsel. The captioned Writ Petition is disposed of as closed.

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• Income Tax

• 2021 (10) TMI 1023
  Income accrued in India - Business Connection and Permanent Establishment - AO in conclusion held that the assessee has PE in India has a BC and PE in India - HELD THAT:- The issue of Appellant s PE/BC in India is covered against it by the above decisions of Hon ble Delhi High Court [ 2014 (8) TMI 902 - DELHI HIGH COURT ] and Hon ble Delhi ITAT. [ 2011 (3) TMI 1819 - ITAT DELHI ]in Appellant s predecessor s case. Excessive attribution to alleged PE of the Appellant in India - manner of attribution i.e. whether attribution is on sales or the net profits- HELD THAT:- PE attribution at 15% of gross revenue less the expenses (as already allowed by the Ld. AO and Ld. DRP), as per the decision of Galileo International Inc (GII) [ 2011 (3) TMI 1819 - ITAT DELHI ] reduces the taxable income to Nil and thus, no income is taxable in India.

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• 2021 (10) TMI 1021
  Illegal retention of seized money - petitioner is aggrieved by the failure of the respondents/revenue in not refunding sum retained illegally, after adjusting the tax and penalty due, out of the money seized by them - HELD THAT:- As revenue, says that, the petitioner, ordinarily, should have moved an application for rectification under Section 154 of the Income Tax Act, 1961 but having regard to the fact that, several years have passed since the adjustment was made, the best course would be to remit the matter to the AO with a direction to pass a speaking order, qua the grievances articulated by the petitioner in the writ petition. Given the circumstances obtaining in the case, that, indeed, would be the best way forward. Writ petition is disposed of with the following directions:- (i) The writ petition will be treated as the petitioner s representation/application. (ii) The AO, after hearing the petitioner and/or his authorised representative, will pass a speaking order. This exercise will be completed by the AO at the earliest, though not later than 6 weeks from the date of the receipt of a copy of this order. (iii) The petitioner will file a copy of the writ petition along with the annexures appended herein, with the AO. (iv) The AO will issue a prior written notice to the petitioner, indicating the date and time for hearing. The AO will have the discretion to hear the petitioner and/or his authorised representative, via video-conferencing mechanism.

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• 2021 (10) TMI 1020
  Assessment u/s 153A - denial of natural justice - no opportunity of cross examination of the persons whose statements are relied upon by the respondent for making additions or disallowance - argument of violation of the principles of natural justice, arbitrary, mechanical and without any independent application of mind and also stating that the Income Tax Department has not discharged the burden of proof, proving that the income determined and sought to be taxed were not from the materials seized during the time of search - HELD THAT:- As petitioners have sought for copies of panchanamas in the 63 places searched, but however, the department had admittedly not given all the panchanamas to the petitioners even though they accepted that the petitioners are entitled to the same in the counter filed. The stand taken by the department now by way of counter of non furnishing of panchanamas cannot be accepted. It is also not explained as to which are the concern, the respondent department concluded as belonging to the other group and what was the basis for such conclusion when the petitioners in its communication dated 28.07.2021 has explained their interest in every concern. Non furnishing of the panchanama to the assessee is a violation of the principles of natural justice as it disables the petitioners from having knowledge of the seized materials and the alleged incriminating materials relied upon by the respondent department. Refusal of cross examination of the persons whose statements were recorded during the time of search under Section 132(4) - The person against whom a statement is used, should be given opportunity to counter and contest the same. We are unable to accept the contention of the learned Senior Counsel that since the statements recorded were of persons who were employees of the assessee and therefore the assessee cannot seek for cross examination of them. The basic principles of jurisprudence governing the law of evidence can in no way interfered and could not be by the Income Tax Act provisions and neither the authorities functioning under the Income Tax Act has any discretion in such matters. In view of the violation of the principles of natural justice and also due to the non compliance of Section 65(B) of the Indian Evidence Act, this Court feels that it is a fit case for setting aside the assessment orders. The alternative remedy under the statute is in the case of violation of principles of natural justice should be an effective one capable of remedying the violations by providing afresh, but however, it remains the fact that after amendment to Section 251(1)(a) of the Income Tax Act on 01.06.2001, the CIT(Appeals) does not have the power of remand. Therefore, in the facts and circumstances of the case, since the petitioners have made out a clear case of violation of principles of natural justice and the statute, this Court feels that it is a fit case for interfering with the impugned orders. In such circumstances, plea of alternative remedy which is also an effective one to undo the violations committed by the respondent, cannot be sustained. This Court is well within its power to set aside the impugned orders and remand back the same for fresh consideration.

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• 2021 (10) TMI 1019
  Speculative business / transaction - Disallowance of loss suffered by the assessee on account of Sauda Settlement - disallowance being in respect of a specific loss or expenditure, made on the basis of non-acceptance of the assessee s explanation qua the same - HELD THAT:- The assessee shall not be, because of the transaction being open-ended and, in any case, unsupported by any materials, saved by section 43(5)(a). The same, being carried in the regular course of the assessee s business, shall qualify for being set off only against the profits of a speculative business which, in terms of Explanation 2 to section 28, is to be regarded as a separate and distinct business. There is, thus, no question of it being set off against the assessee s other, regular business of trading in food grains and oilseeds or, as stated before me, of commission agent/broker. This, further, would also result in non-explanation of the recovery of railway freight by the assessee therefrom. This also explains of this being stated as in the alternative, even as, as afore-stated, it is also without any details or material in support. Again, much less several, as claimed, no similar bargain stands shown as executed during the year, or even in the past, even as the same does not detract from the fact that the bargain under reference is wholly unproved, so that the factum of other bargains would not impact positively on the allowance of this transaction. Such transactions would, similarly, result in either a gain or a loss to the assessee, also demonstrating the manner in which the same is accounted for. There is complete opaqueness about the nature and truth of the transaction/s between the assessee and SAOL, including the impugned credit of Rs. 10,43,274 thereto on 31/03/2013. The same thus cannot be regarded as a business loss and, in any case, is not available for set off against the business profit from its wholesale business. The same stands rightly disallowed by the Revenue. - Decided against assessee.

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• 2021 (10) TMI 1018
  Reopening of assessment u/s 147 - genuineness of partnership deed - ascertainment of correct date of the deed - front page was signed - reason/s to believe escapement of income from assessment to tax based on an audit objection - HELD THAT:- As Auditor has only made the assessing authority aware of the law impinging on the matter, the same could not be disqualified inasmuch as it is not expression of opinion by him. In the facts of the case, all that the Revenue Audit has brought forth for the consideration of the Assessing Officer are some facts, which may have a bearing on the compliance or otherwise of s.147; s. 40(a)(ia); and s.184 (leading to the consequence of s.185). That the same appealed to the AO is another matter. The reasons recorded, thus, cannot be faulted with on this score i.e., for being based on an audit objection/s. The assessee s argument, thus, fails. Eligibility of reason to believe - Late furnishing of the return of income by itself affords no ground to entertain any reason to believe escapement of income from assessment. Likewise, there is no allegation of non-filing of the declaration (F-15H) by the assessee, which only could lead to a valid reason to believe disallowance u/s. 40(a)(ia), not effected in the original assessment. No wonder, the ld. Sr. DR, Ms. Agarwal did not respond to the Revenue s case qua these two reasons in her arguments/ No contravention of s. 184 due to non- signing of the front pages of the partnership deed by the partners so as to attract s.185. The Revenue is only making a guess in view of the long time interval between possible date of execution (as stated in the deed itself), i.e., 1.4.2007, and the date of its notarization; rather, admitting that the matter needs to be examined and ascertained. That is, there is a reason to suspect, and not a reason to believe for want of the relevant information. - Decided in favour of assessee.

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• 2021 (10) TMI 1017
  Revision u/s 263 by CIT - unexplained share application money - HELD THAT:- We agree with the contentions advanced by the ld AR that the share transactions are duly reflected in the bank statement as well as in the balance sheet of the investor company and therefore, the same cannot form the basis for holding that the order passed by the Assessing officer was erroneous as he failed to consider such discrepancies. Regarding identity and creditworthiness of the investor company and genuineness of the transaction, we find that where the ld PCIT has himself accepted the fact that the share application money atleast to the extent of Rs. 20 lacs has been received through the banking channel from Maxius Ventures, the identity and nature of the transaction is very much accepted by him. Regarding creditworthiness, the assessee has submitted that during the course of reassessment proceedings, the assessee has submitted the copy of bank statement of the investor company which shows clearly the money standing to the credit of the investor company account from its share trading business and out of which, the investment has been made in the assessee s company. Further, the assessee has submitted copy of balance sheet, income-tax return, company master data available on MCA website of the investor company which has details of its directors/shareholders and other relevant details as well as copy of confirmation from the investor company. Besides, the Assessing officer has also directly called for information from the investor company u/s 133(6) and has verified the same with the books of accounts of the assessee company. We therefore find that where the assessee has submitted all these documentation and the same has been duly examined by the Assessing officer by independently calling for the information and cross-verifying the same with the investor company and with the books of accounts of the assessee company, it cannot be held that the Assessing officer has failed to carry out proper verification of the transaction under consideration. We are of the considered view that there is no legal and justifiable basis to interfere with the findings of the Assessing officer as the necessary enquiries and examination as reasonably expected have been carried out by the Assessing officer and he has taken a prudent, judicious and reasonable view after considering the entire material available on record and the order so passed u/s 143(3) r/w 147 cannot be held as erroneous in so far as prejudicial to the interest of Revenue.- Decided in favour of assessee.

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• 2021 (10) TMI 1016
  Rectification of mistake u/s 154 - restriction of the TDS credit - CIT(A) restored the issue to the A.O. for examination and grant of correct TDS credit - HELD THAT:- A.O. while giving effect to the CIT(A) s order dated 05.12.2018 granted the TDS credit as originally claimed in the return of income. Therefore, the present proceedings, which arise out of 154 proceedings of the A.O. dated 28.03.2014 has been subsumed by the later proceedings of the CIT(A) dated 05.12.2018 and the order giving effect to the CIT(A) by the A.O. dated 25.10.2019. Therefore, this appeal of the Revenue in essence is rendered infructuous and the same is dismissed as such.

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• 2021 (10) TMI 1015
  Rectification of mistake u/s 254 - issuance and service of notice U/s 148 - HELD THAT:- In the present case, there doesn t exist any legal or factual mistake, apparent from record and the assessee has merely sought to rectify the impugned Tribunal s order, on the basis of different view conceived by the assessee, in respect of the issue in question raised in the Miscellaneous Application. It is further added that this issue raised by the Revenue through the impugned Miscellaneous Application is debatable question, not mistake apparent from record and hence, is not amenable to rectification jurisdiction conferred on the Tribunal u/s. 254(2) of the Act. It is a settled legal proposition that in the garb of Miscellaneous Application for rectification, the assessee cannot be allowed to re-open the whole matter, which is beyond the scope of section 254(2) of the Act, in the absence of any manifest error, which is obvious, clear and self evident. Tribunal is not competent to recall its previous order and re-write the same again and reverse the earlier decision taken on merit what can be rectified under the said section is a mistake apparent from record and not the mistake which needs elaborate reason or inquiry to establish the same. There is e difference between a power to review and a power to rectify a mistake apparent from record. In a nut-shell the scope of such power of rectification, in exercise of jurisdiction u/s 254(2) of the Act, clearly contemplates what can be corrected is an apparent mistake from record and not to deal with merits of the case and to recall the order, on the basis of taking a second opinion, on the merit, which is not the scope of such rectification. The scope of section 254(2) is very limited and it is only the apparent error, which can be rectified and the Tribunal can be held to be justified in rejecting the application for rectification raising a matter relating to the merit of the case and not involving an apparent mistake to be rectified - Thus the ground/issue raised by the Revenue in the impugned Miscellaneous Application is dismissed with no order as to costs.

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• 2021 (10) TMI 1014
  Addition u/s 68 - addition in Share Capital only by confirming the reference of RBI Inspection report - assessee submitted that alleged shareholders deposited the fund out of compensation received from Government Authorities for acquisition of the land - HELD THAT:- Addition has been made by the Assessing Officer not merely on the basis of the statement of the alleged shareholders but in view of failure on the part of the assessee in substantiating the ingredient of section 68 - assessee has failed to provide complete address and produce the two alleged shareholders namely Rakesh Kumar and Jagveer. The claim of source of fund in the hands of alleged share holders is also not been found correct as the assessee has not supported any documents in respect of the land compensation received by those alleged shareholders - Assessing Officer duly confronted the statement of two alleged shareholders during the course of the assessment proceeding - no cross-examination was sought by the assessee during the assessment proceeding and for the first time the assessee asked cross-examination before the Ld. CIT(A). Those persons have been claimed by the assessee as shareholders and thus onus was on the assessee to produce before the Assessing Officers. It is only when the assessee failed to produce those persons, the Assessing officers issued summons requesting them to appear before him. When summons were issued to them on the request of the Assessee, the onus was on the assessee to be present during recording of their statement but assessee ignored to present before the AO. The assessee did not ask cross examination even after confronting the statement to the Authorised representative. Thereafter asking cross examination before the Ld First Appellate Authority is not justified. As in preceding year, the assessee itself has admitted the addition made by the Assessing Officer on identical ground, then in view of rule of consistency, the assessee is not justified in raising the grounds without any valid reasons. - Decided against assessee. Disallowance of expenditure in terms of section 37 of the Act on proportionate basis for diversion of the fund - According to AO loans were issued in violation of the norms and hence proportionate cost cannot be allowed because of the illegality involved - HELD THAT:- Assessee has admitted the disallowance in immediately preceding assessment year. In the year under consideration the Assessing Officer made addition relying on his finding in the preceding assessment year. Once the assessee has admitted addition in immediately preceding assessment year, preferring appeal on same issue in the year under consideration is not justified and against the rule of consistency. When the loans have been disbursed in violation of the rules of RBI to give benefit to a few, than expenses corresponding to such loans are not wholly and exclusively for the purpose of the business of the assessee and therefore also such expenses are not allowable as deduction - We uphold the finding of the Leonard CIT(A) on the issue in dispute and dismiss the ground of the appeal of the assessee. Disallowance of expenditure on various heads - AO made disallowance following the finding of his predecessor in the earlier year - CIT(A) allowed part relief on repair maintenance and travelling and conveyance and restricted the disallowance to 20% instead of 30% made by the Assessing Officer - HELD THAT:- We find that disallowance has been made relying on the audit report of the RBI, where specific defects or deficiency of vouchers have been raised. Further, in immediately preceding assessment year 2013-14, the assessee has admitted the disallowance in respect of the identical expenses based on the audit report of the RBI. In our opinion following the rule of consistency, the assessee is not justified in preferring the appeal on same issue in the year under consideration without any valid reasons. The assessee has not submitted any rebuttal of the observation by the RBI in respect of deficiency of vouchers of the expenses. In the circumstances, the finding of the Ld. CIT(A) on the issue in dispute is upheld. - Decided against assessee

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• 2021 (10) TMI 1013
  Reopening of assessment u/s 147 - prior approval of the PCCIT/CCIT/CIT before issuance of notice u/s 148 obtained or not? - HELD THAT:- In the instant case, as against provisions of section 151(1) read with proviso thereto, the provisions of section 151(2) are applicable as no assessment has been completed earlier either u/s 143(3) or section 147 and in terms of mandatory condition prescribed u/s 151(2), the Assessing officer has duly sought and obtained approval from the JCIT who was the competent authority as so prescribed under law before issuance of notice u/s 148 - This is thus no oversight on part of the AO and no inherent lacunae affecting the very correctness of the notice issued under Section 148 - Therefore, the said decision is distinguishable on facts and doesn t support the case of the assessee. Similar is the case with the other decisions relied upon by the ld A/R which stand distinguishable on facts. Therefore, the contention so advanced by the ld A/R cannot be accepted and the same is hereby dismissed. AO in the assessment order has stated that the reasons for reopening were duly conveyed to the assessee and therefore, on this basis itself, where the reasons have been duly communicated to the assessee, the contention so advanced by the ld A/R deserve to be rejected. As noted that the assessment was completed u/s 147 r/w 143(3) vide order dated 23.10.2015 and after completing of the assessment proceedings, the assessee is claiming to have requested the AO vide his letter dated 10.01.2017 to supply copy of the reasons. As during the entirety of the assessment proceedings, the assessee has neither sought copy of the reasons so recorded nor any objections have been filed against such reasons during the assessment proceedings and therefore, where the assessee has not sought and has infact participated in the assessment proceedings, we don t find there is any prejudice which has been caused to the assessee and even there is no violation of any of the directions so laid down by the Courts in this regard. Thus, the contention so advanced cannot be accepted. AO had no reason to believe but reason to suspect that the income has escapement assessment and there is no honest application of mind and it was clearly a case of borrowed satisfaction - We have gone through the reasons so recorded by the Assessing officer and find that the AO was having sufficient material in his possession for formation of prima facie belief that the income has escaped assessment in the hands of the assessee. In the result, the contention so advanced cannot be accepted.In the result, ground no. 1 and 2 of assessee s appeal are dismissed. Unexplained cash deposits - HELD THAT:- CIT(A) has returned a finding that claim of gift from the mother couldn t be proved and copies of cheques produced were illegible and corresponding bank account of the assessee in which the same were deposited were also not produced. It has been claimed before us that the copies of cheques as well as bank statement of the assessee showing deposit of cheque were submitted before the AO and the same has not been considered by the ld CIT(A). We accordingly remand the matter back to the file of the AO to verify the said claim of the assessee and decide as per law after providing reasonable opportunity to the assessee. Tuition fee receipts from assessee s wife - The explanation which has been submitted is that the assessee s wife has been teaching for past several years and she has been receiving the tuition fees from the students besides there are other household savings which have been handed over to the assessee for deposit during the year. We find that such an explanation has to be supported with certain credible facts and figures for each of the past years and should be balanced and not one-sided in terms of receipts, expenditure and savings for each of the past years and availability thereof. And therefore, a mere explanation without reasonable corroboration with facts and figures remains merely an assertion and which cannot be accepted on face value. In the result, the explanation so submitted in support of source of deposit of Rs. 6 lacs cannot be accepted and is hereby dismissed. Balance claimed to be out of past savings - We find that where the assessee has already claimed deposits of Rs. 3.2 lacs out of opening cash in hand, the same is nothing the past savings which is available at the beginning of the year. In such a situation, we failed to understand how the assessee is claiming source of cash deposits out of opening cash in hands and past savings twice. In any case, no credible evidence has been placed on record in terms of past savings as so claimed and the contention so advanced is hereby dismissed. Plea of working out the peak credit - As been claimed that there are deposits which have been made out of earlier withdrawals during the year and the same has been ignored by the AO. In absence of any findings recorded by the AO, we set-aside the matter to the file of the AO to examine the said claim of the assessee and decide as per law after providing reasonable opportunity to the assessee.

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• 2021 (10) TMI 1012
  Cancellation of registration u/s 12A - powers of CIT (Exemptions) when the matter is pending with the Settlement Commission - HELD THAT:- As due to search on the assessee, cash was found at the premises of the Trust as well as with the trustees and which the assessee claimed to have received as cash gifts from students, and the assessee for the purpose of bringing these donations to tax, filed application before Settlement Commission and learned CIT (Exemptions) proceeded to cancel the registration u/s 12A on the basis of these facts. We hold that issue of cancellation of registration u/s 12A arose from the search conducted on the assessee and there was no other reason to initiation of proceedings for cancellation of registration therefore, as per the provisions of section 245D read with order of Hon ble Delhi High Court in the case of Tahiliani Design Pvt. Ltd. [ 2021 (2) TMI 106 - DELHI HIGH COURT] all the powers of income tax authorities including power to cancel the registration u/s 12A got vested exclusively with Settlement Commission. The assessee filed the application before Settlement Commission on 05/01/2017 which had been accepted by the Settlement Commission on 17/01/2017. The learned CIT (Exemptions) has passed the order on 26/03/2019 which is after the date on which the Settlement Commission had admitted the application filed by the assessee The important findings in this case law are contained in para C D wherein their Lordships have held that powers of Settlement Commission under section 245D(4) also extend to examining such further evidence as may be placed before it or may be obtained by it and then the Hon ble court held that since Settlement Commission was still seized of the matter, it would be within its rights to deal with the aspect of violation of Section 269ST of the Act. The Hon ble court further held in para D that the issue of section 271DA and that of section 153A both had their origin in the search and therefore, held that both are part of the same. In the case before us also we have observed that the instance of going to Settlement Commission regarding settlement of dues as well as cancellation of registration by learned CIT (Exemptions) occurred due to a search on the assessee and therefore, both incidents are part of the same search. We are in agreement with the arguments of learned A.R. and hold that learned CIT (Exemptions) was not empowered to pass the order u/s 12A cancelling the registration granted to the assessee when the issue was still pending with Settlement Commission. The written arguments filed by the Revenue relate to the merits of cancellation of the registration and do not relate to arguments raised by learned A.R. therefore, these submissions are of no help to Revenue. Ground nos. 2 3 of the appeal are allowed and order of CIT (Exemptions), cancelling the registration, is cancelled.- Decided in favour of assessee.

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• 2021 (10) TMI 1011
  Credit of tax paid in Japan - claim of foreign tax credit - Disallowing complete credit of taxes paid by appellant in Japan on income from sale of software under Article 23 of India-Japan Double Taxation Avoidance Agreement - HELD THAT:- We find that the India-Japan DTAA is worded in similar lines with that of India-USA DTAA. Therefore, the aforesaid decision quoted by this Tribunal in HCL COMNET SYSTEMS AND SERVICES LTD VERSUS THE DY. C.I.T CIRCLE 12 (1) NEW DELHI [ 2020 (7) TMI 169 - ITAT DELHI] squarely applies on the facts of the case in hand. Therefore, we direct accordingly. Application of incorrect rate of MAT - We direct the Assessing Officer to consider the applicable rate of MAT for the year under consideration as per provisions of law.

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• 2021 (10) TMI 1010
  Disallowance of Employee Stock Option Scheme Compensation - Addition on the ground expenditure was on account of issuance of share capital, which being in the nature of capital expenditure, was not allowed as business expenditure - CIT-A allowed the deduction - HELD THAT:- We find that learned CIT(A) has allowed the appeal of the assessee following the decision of the Special Bench of Tribunal in the case of Biocon Ltd.[ 2013 (8) TMI 629 - ITAT BANGALORE] and other decision of jurisdictional High Court. We do not find any infirmity in the order of the Learned CIT(A) in following binding precedents, and allowing employee stock option compensation as revenue expenditure. The ground of the appeal of the Revenue is, accordingly, dismissed. Disallowance u/ 14A r.w. Rule 8D - assessee claimed exempted income which included dividend income and profit on redemption of investment - assessee made suo motu disallowance for earning the above exempted income - CIT(A) has deleted the disallowance mainly on the ground that investment from growth fund is taxable, and therefore, said investment should be excluded while working out the disallowance under Rule 8D(2)(iii) of the Rules. Also directed not to consider investment in subsidiary, which according to the Ld. CIT(A), was for controlling stake - HELD THAT:- As in view of the recent decision of the Hon ble Supreme Court in the case of Maxxop Investment Ltd [ 2018 (3) TMI 805 - SUPREME COURT] strategic investment for obtaining controlling stake has also been found liable for computing disallowance under Rule 8D(2)(iii) of the Rules and therefore to this extent, the order of the Ld. CIT(A) is set aside and matter restored back to the learned Assessing Office for re-computing the disallowance under Rule 8D(2)(iii) of the Rules. The Assessing Officer is also directed to verify whether income from growth funds has been included under taxable income and if so, then he shall exclude the said investment for computing disallowance in terms of Rule 8d(2)(iii) of Rules. The ground of the appeal of the Revenue is accordingly allowed partly for the statistical purposes.

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• 2021 (10) TMI 1009
  MAT Computation u/s 115JB - Amount of the provision for bad and doubtful debt to be taken for the purpose of computing book profit u/s 115JB - AO rejected the contention of the claim of bad debt on the ground that assessee had not placed anything on record to substantiate its claim - claim of bad debt written off under section 115JB for computation of the book profit was rejected by the learned CIT(A) - HELD THAT:- Under the provisions of the Act book profit is computed after making adjustment mentioned in the section 115JB of the Act. In view of the settled position in the case of Apollo Tyres Ltd. [ 2002 (5) TMI 5 - SUPREME COURT] and Malyalam Manorama [ 2008 (4) TMI 20 - SUPREME COURT] , the assessee or the Assessing Officer is not permitted to make any adjustment to the book profit except which has been specifically provided therein and, therefore, the assessee was required to add back provision which has been provided in the books of accounts. CIT(A) has held that claim of bad debt actually incurred during the year did not appear in the profit and loss account and, therefore, same could not be added back since the same is not covered under Explanation 1 below section 115JB of the Act. Thus, as per the Learned CIT(A), the Assessee has not credited the amount in relation to the bad debt in the profit and loss account made on the basis of the books of account, whereas claim of the assessee is that effect of the bad debt written off has been taken into consideration in books of accounts. In our opinion, this is a matter of the verification with the books of account of the assessee. From the details filed before us prima facie it appears that the amount of bad debt written off has been reduced while computing the income as per provision of Act and, therefore, we feel it appropriate to restore this issue back to the file of the Assessing Officer for deciding after verification of the books of account and financial statement prepared thereon for the year under consideration. Assessing Officer has to verify the amount of provision for doubtful debt in the books of accounts and book profit has to computed as per Explanation 1 below the section 115 JB - Appeal of assessee is allowed for statistical purposes.

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• 2021 (10) TMI 1008
  Characterization of income - non-compete fee on account of executing of negative covenant - whether consideration received by the assessee as non-compete fee was capital receipt not liable to tax - HELD THAT:- As evident from the aforesaid clauses of Sale and Purchase Agreement, the assessee was paid sum that assessee will not for a period of two years from the closing date, directly or indirectly or otherwise carry out any business or activity in any manner similar to the business which was transferred. Thus, there was a clear cut negative covenant for which assessee had received non-compete fee. Since the payment of non-compete fee has been made in assessment year 1998-99, therefore, same is prior to the amendment brought to section 28 (va). Hon ble Supreme Court in the case of Shiv Raj Gupta vs. CIT [ 2020 (7) TMI 544 - SUPREME COURT ] wherein their Lordship following the principle laid down in the case of Guffic Chem vs CIT [2011 (3) TMI 6 - SUPREME COURT] held that prior to the amendment brought by the Finance Act 2002 w.e.f. 1.4.2003 in section 28(va), the compensation received by the assessee under non compete agreement was a capital receipt not taxable. Thus, issue as raised in the cross objection is squarely covered by the judgment of Hon ble Apex Court. Accordingly, we hold that the payment of non-compete fee received by the assessee company has not compete fee is a capital receipt and not liable to be taxed. - Decided in favour of assessee.

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• 2021 (10) TMI 1007
  Reopening of assessment u/s 147 - Eligibility of reason to believe - reason to believe V/S suspicion - Independent opinion of assessee need to be recorded - Addition u/s 69A on unexplained money - AO has mentioned about section 40A(3) in the reasons of reopening, however, the AO deviated from his aforesaid stand and later on while framing the assessment, he added the said amount u/s 69A- HELD THAT:- It is mandatory that the opinion should be that of assessing officer for forming belief whereas in the instant case, he has relied upon the information received from the DCIT-Central for which he himself was not sure on the question of authenticity as perceived from the word it appears noted in the reasons u/s 148(2) wherein in the first line, the AO wrote that it appears that payments to the tune of Rs. 7,12,00,000/- was given to M/s Ferro Concrete Const. (I) Pvt. Ltd. to M/s Keti Constructions Ltd. . Thus, these words show that AO was not having reason to believe , rather he has reopened the case on mere suspicion . As the main component of reasons should be AO having reason to believe. The words has reason to believe are stronger than the words is satisfied . The belief entertained by the Assessing Officer must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. Where reasons recorded by AO lack clarity and it was practically impossible to derive meaning out of it and was incapable of being understood , reassessment notice was liable to be quashed. AO mentioned about section 40A(3) in the reasons of reopening and opined that the said transaction of Rs. 7.12 crores attracts the violation of section 40A(3). However, we find that the AO deviated from his aforesaid stand which he basically took while reopening the case and later on while framing the assessment he added the said amount u/s 69A. Thus, from this action of AO, it is concluded that he was not sure in himself since beginning that the transaction involved is of what nature, which section is attracted here and what kind of violation is there. Therefore, the Ld. AO has absolutely changed his view which was formed initially and which was formed while concluding the assessment. Therefore, the statutory provisions per reasons and contents in assessment order are distinct which shows that the reasons were not on account of application of mind on the part of AO. Thus it is a clear case of lack of basic ingredient of section 147 i.e. reason to believe , as AO himself was not able to decide about the legal provisions which are being attracted in the given case. Reassessment proceedings were initiated under suspicion as narrated above, therefore, the proceedings u/s 147 is bad in law for want of jurisdiction in the light of first proviso to section 147 and in the absence of cogent reasons to form belief that the assessee s income had escaped assessment and also in the light of the fact that the AO deviated from his stand by changing his view which was formed initially and which was formed while concluding the assessment as he was not sure in himself since beginning that the transaction involved is of what nature, which section is attracted here and what kind of violation is there. Thus, the reassessment proceedings are bad in law and accordingly, we quash the present assessment order for the assessment year 2009-10 being void and invalid. As on merits of the case, we find that there is no case of assessing the income as there was no material evidencing movement of cash. Further, principal of natural justice was badly ignored by accepting version of third party without affording opportunity for cross examine. We also find that Section 40A(3) applies for payment otherwise than account payee cheque or bank draft against expenses and in the instant case, we find that no goods or service were provided by M/s Keti Construction Ltd. against which payment warranting action under section 40A(3) would be required. We find that the primary onus as regard to movement of cash, as alleged was on M/s Keti Construction Ltd. Therefore, it had bearing in the assessment in the case of above named person. It has not been brought on record either in the reasons under section 148(2) or during the assessment proceedings at any stage as to what action has been taken in the case of M/s Keti Construction Ltd. Section 69A deals on the question of money etc. found to be in the ownership of the assessee and such money is not recorded in the books of accounts - in the instant case, there is no evidence that the assessee was found to be the owner of any money during the subject year. There is no other tangible material on records which shows that assessee was actually indulged into any such transaction and the authenticity of copy of ledger account of assessee in the books of Keti Construction Ltd. was also doubted by the assessee. AO has discussed about the statement of one Shri Kedarmal Jakhetiya, director of Keti Constructions Ltd. the ld. Assessing Officer placed reliance on the said statement where Mr. Jakhetiya has submitted a list of certain bogus petty contractors in which assessee s name was also included. However, we observe that during the entire assessment proceedings, neither the copy of the statement was provided to the assessee nor the said person was allowed to be confronted by the assessee. Ld. AO was duty bound to provide an opportunity to assessee to confront Mr. Jakhetiya regarding the same. But AO did not follow the principle of natural justice. Thus in such a situation, the discussion made by AO about the statement of director of said company is invalid in view of the violation of principle of natural justice. Assessing Officer applied n.p. rate of 1% higher than disclosed making an addition on account of low net profit. Thus, the addition was already included in regular assessment on account of low n.p.-. Accordingly, we do not find any merit in confirming the addition on estimation basis by the ld. CIT(A). - Decided in favour of assessee.

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• 2021 (10) TMI 1006
  Unexplained credit u/s. 68 - addition has made by the AO owing to non-production of principle officer of the 9 entities who have lend the monies to the assessee - assessee argued for non issue of summons - HELD THAT:- We find that the assessee has given the new addresses and requested the AO to send the summons u/s. 131 to the new address which the AO failed to do. Having failed to issue the summons and making the enquiries at the new address despite having the information provided to the AO by the assessee, Assessing Officer made the addition, holding that the Directors of the companies have failed to attend for recording of the statement. CIT(A) issued summons which have been duly complied by the Principle Officer of the loan parties and duly recorded the statement. The facts of recording of the statement and the compliance made has also been conveyed to the Assessing Officer who has not objected to the proceedings before the ld. CIT(A). Hence, in view of the undisputed facts on the record with regard to proving of the identity, creditworthiness, genuineness of the loan parties, the statement recorded by the ld. CIT(A), the turnover of the companies the profits earned thereof, the position of the reserves surplus available with the lenders, we hereby decline to interfere with the well reasoned order of the ld. CIT(A). Accordingly, the interest disallowed by the Assessing Officer on account of interest expenses claimed by the assessee is also directed to be deleted. - Decided against revenue.

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• 2021 (10) TMI 1005
  TDS u/s 195 - IT support services - Fee for technical services or not - TDS on Admin and Network Support service charges paid by Hitachi Metglass India Pvt. Ltd. to Metglass INC USA, Hitachi Asia Ltd. Singapore and Hitachi Ltd. Japan - payments made for network and administrative support charges are characterized as FTS under section 9(1)(vii) of the Act and therefore the appellant is liable to deduct tax at source - HELD THAT:- We find that the services provided by the non-resident AEs to the Assessee are standard automated services. These services, as specified above, are provided to enable the assessee to send and receive data through the broadband network over the intranet and internet. All companies of the Hitachi group are provided with network services to exchange information through intranet and regulate use of internet through its proxy servers or provide remote access to log on to the company s network. It is a settled law that standard/common services cannot partake the character of FTS under the IT Act. Foreign AE (service provider) has neither employed any technical or skilled person to provide managerial or technical service nor there was direct interaction between the assessee and the foreign AE. Thus, where the entire process resulting in provisioning of service is fully automated process with no human intervention, charges paid for provision of such services cannot be classified as FTS for the purpose of the IT Act. The invoices raised by Hitachi Limited, Japan and Hitachi Asia Limited, Singapore to the Assessee in lieu of the services received by the latter make it clear that services provided by foreign AEs were not technical in nature but were standard intranet, broadband and link services. Payment of network charges does not take the character of FTS due to absence of human intervention: Hence, the services received by the assessee can be said to be not in the nature of FTS as defined under Explanation 2 to Section 9(1)(vii) of the IT Act. To treat any consideration as FTS, such consideration must be paid for rendering of managerial, technical or consultancy services. Disallowance of amount includes amounts accrued towards link charges payable to Airtel and BSNL and misc. provision. The revenue failed to consider the fact that the IT support services availed by the Assessee did not involve any human intervention. The Ld. CIT(A) reproduced extracts of the Master Service Agreement between the Assessee and Hitachi Asia Limited, Singapore and observed that human intervention is an integral part of the Master Service Agreement which is completely misconceived. In fact, no reasons were provided by the Ld. CIT(A) as to how human intervention was an integral part of the Master Service Agreement. It is held that the IT support services availed by the Assessee from Hitachi Ltd., Japan, and Hitachi Asia Ltd., Singapore are standard connectivity and networking services cannot be termed as technical services within the meaning of Section 9(1)(vii) of the Act. Hence, we hold that the assessee was not liable to deduct TDS on such expenditures. Accordingly, the disallowance made by the AO and confirmed by the Ld. CIT(A) in the present case is liable to be deleted. - Decided in favour of assessee.

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• 2021 (10) TMI 1004
  Income accrued in India - Business Connection and Permanent Establishment - Assessee is a company incorporated in The United Kingdom as providing electronic global distribution services in the rest of the world territory (including the Indian region) for the travel industry, by utilizing a Computer Reservation System ( CRS ), which is an automated system which processes booking data - HELD THAT:- As relying on TRAVELPORT INTERNATIONAL OPERATIONS LTD. VERSUS ACIT, CIRCLE-3 (1) (1) , INTL. TAXATION, NEW DELHI [ 2021 (10) TMI 1023 - ITAT DELHI] the assessee has Business Connection and Permanent Establishment (PE) in India. Attribution to the PE in India - The correct attribution rate be taken at 15% of the gross booking fee for the years in appeal before us.As per the table above, Indian related expenses are more than attributed gross booking fees to the PE in India, it would extinguish the assessment of tax as no further income is taxable in India. The AO may check the correctness of the figures before giving effect to this order. Allowability of distribution expenses - As duly accepted by the revenue authorities that the distribution expenses incurred by the assessee is for maintaining their network of subscribers/travel agents and thus, an inseparable part of the business and thus it cannot be denied that the expenses have been incurred for the purpose of the business. It is also an accepted fact that there is only one business of the Company i.e., the CRS business. Therefore, all expenses incurred by Company including distribution expenses can only be related to such business. Thus, the AO s argument that distribution fees is not related to its business since its nomenclature in invoices is specified as data processing charges instead of distribution fees lacks basic fallacy. As distribution commission has been made to resident of India and duly offered to tax. Hence, the provisions of Section 40(a)(ia) are not attracted in the instant case. Since, there is no change in the factual matrix and legal proposition, we hereby allow the claim of the assessee. Allowability of other expenses - AO disallowed entire amount (100%) claimed by the assessee on account of other expenses such as royalty, vendor cost, license fee owing to non-deduction of withholding tax - As the position of the profit/loss of the assessee is evident. After deduction of the distribution expenses and 15% booking fee, the assessee is left with no taxable profit. Considering the disallowance @ 30% u/s. 40(a)(ia) in accordance with the law laid down by the Hon ble Delhi High court in case of CIT Vs. Herbalife International India (P.) Ltd.[ 2016 (5) TMI 697 - DELHI HIGH COURT ] wherein the High Court struck down discriminating treatment of disallowance u/s. 40(a)(i) and Section 40(a)(ia) of the Act by relying on Article 26(3) of the DTAA between India and US, we hereby direct the AO to re-compute the net losses computing the disallowance on other expenses @ 30%.

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• 2021 (10) TMI 1003
  Unexplained trade receivable - CIT-A deleted the addition for want of proper enquiry by the AO - HELD THAT:- When no evidence has been given by the assessee company during the assessment proceedings and no remand report has been called, and accepting the contentions of the assessee as a gospel truth without conducting any enquiry is not sustainable in the eyes of law. Findings returned by the ld. CIT(A) are cryptic and without any reasons, hence set aside. So, this issue is remitted back to the ld. CIT(A) to decide afresh after examining all the evidences brought on record by the assessee during the first appellate proceedings by passing a reasoned order. Consequently, grounds no. 1 2 are determined in favour of the Revenue for statistical purposes. Disallowance of depreciation - AO disallowed the depreciation on the ground that assets were not put to use during the year - HELD THAT:- We are of the considered view that when the financials of the assessee company are audited one u/s.44AB of the Act which has not been disputed by the AO and date of purchase of the assets has been brought on record which have not been purchased during the year under assessment as is evident from the table extracted in preceding para no. 10, we find no illegality or infirmity in the findings returned by the dl. CIT(A). However, deletion of addition is subject to the verification by the AO as to the date of purchase of the assets as claimed by the assessee. - Decided against Revenue.

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• 2021 (10) TMI 1002
  Unexplained investments - unexplained investment being made in the shares of M/s. Gulmohar Towers Pvt. Ltd - incriminating material in the course of search or not? - cash payment over and above the investment recorded in the books - Whether CIT(A) erred in facts and law in not appreciating that there is no possibility that the appellant company could have generated unaccounted income in the year under consideration as it was just incorporated on 13-04-2010 and had not even commenced its business operations - HELD THAT:- We find that there is neither any incriminating material of any cash payment unearthed by the department during the course of survey/search conducted on the Patni group nor in this regard, any evidence has been brought on record even in the course of assessment proceedings. Even the reliance placed on statement of Shri Khimji Karamshi Patel recorded u/s. 131 during the course of survey u/s. 133A in the case of M/s. Trishul Developers, M/s.N.S. Enterprises, M/s. Novelty Stationery, M/s. Trishul Infra Pvt. Ltd., M/s. Patel Associates, M/s. Real Trade Corporation and M/s. Om Trilok Realty Infrastructures on 11.10.2014 cannot have any evidentiary value in eyes of law as well settled by the Hon ble Apex Court in the case of CIT v. S. Khader Khan Son [ 2013 (6) TMI 305 - SC ORDER] The CBDT has time and again vide its Instruction F. no. 286/2/2003-IT (Inv. II) dated 10.03.2003, F. No. 286/98/2013- IT (Inv. II) dated 09.01.2014 and F. No. dated 286/98/2013- IT (Inv. II) dated 18.12.2014 has directed the field officers on search to gather evidences and incriminating material in the course of search rather than merely recording statements and obtaining confessions The retraction of Shri Khimji Karamshi Patel and Shri Gaurav Patel is immediate and backed with corroborative evidences, the same cannot be rejected. Further, it is also noted that Shri Khimji Karamshi Patel had no locus standi in the assessee company at all to disclose any undisclosed income in the hands of the assessee company. He is neither a director nor a shareholder of the assessee company There is no positive and credible evidence brought on record by the revenue to establish the allegation of cash payment over and above the investment recorded in the books. Neither the search party has found any incriminating material in the course of search on Patel/Patni group nor the Assessing Officer has brought any material/evidence on record in the course of assessment proceedings. Even no adversities or defects have been found in the evidences in the form of Due Dilignence Report, MOU, share transfer forms, share certificates, etc. furnished by the appellant has been pointed out. There is no finding as to who paid the alleged cash to whom either promoter/director/shareholders of M/s. Gulmohar Towers Pvt. Ltd. The AO has not even examined the promoters/directors of M/s. Gulmohar Towers Pvt. Ltd. None of the shareholders of M/s. Gulmohar Towers Pvt. Ltd. have been examined. Nowhere the name of the appellant company has been found to be purported in any of the statements of Shri Anand Sharma and Shri Vivek Agarwal to say that the appellant company had paid cash to M/s. Gulmohar Towers Pvt. Ltd. over and above the investment recorded in its books. On the contrary, the assessment made by the department on 22.04.2010 in the case of M/s.Gulmohar Towers Pvt. Ltd. does not refer to any adversities but in fact goes to suggest that the said company is not a shell or bogus company. The revenue has failed to discharge its burden to prove and conclusively establish by material the allegation made on the assessee. In the light of the above, we cannot uphold the addition merely on surmises and suspicion in absence of any credible and corroborative evidence brought on record. Assessing Officer has alleged the group as a whole but has not carried his investigation further to identify which of the entities/concerns were indulged either in on money sales or routing of investments in shell companies and brought into the regular books by way of unsecured loan or advance against booking. If the version of the Assessing Officer is also taken to be correct, then the allegation which is drawn on the assessee company is that it is a mere conduit to the rotation of funds which were ultimately passed on to the group. Thus, it is clear that the assessee company is not the beneficiary of the alleged unexplained investments. Assessee argued that the assessee company was incorporated on 13.04.2010 i.e. the year under consideration was the 1st year of the company and its business operations had not yet commenced. This is also an important facet to this case as being the 1st year of incorporation and that business has not been commenced by the assessee, there does not arise any generation of cash sales through on money from any of the real estate projects. In fact, the Ld. Counsel has argued that none of the real estate projects had commenced in the group at the time when the company was acquired. Therefore, applying the ratioM CIT v. Bharat Engineering Construction Co. [ 1971 (9) TMI 14 - SUPREME COURT] assessee cannot be taxed as there is no possibility of generating undisclosed cash by the assessee in the year under consideration. It is a trite law that only the right person can be taxed under the law and the Assessing Officer cannot pick one person merely because some third party has made disclosure in the hands of the appellant company. Thus the addition of unexplained investment cannot be made in the hands of the Assessee company. This is not the case of invoking provisions of section 68 of the Act as there is no cash credit involved nor it is a case of applying section 69 as investments are already recorded in books which is an undisputed fact - We have to accept this proposition as the relevant section under the factual matrix ought to have been invoked is section 69B of the Act which refers to Investment not fully disclosed in books of account - However, no such section 69B has either been invoked by the Assessing Officer or Ld.CIT(A) in confirming the alleged addition. Hence, even on this count, the addition made u/s. 68 is not tenable as per law. Assessee appeal allowed.

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• 2021 (10) TMI 1001
  Addition u/s 68 - unexplained cash credits - CIT-A deleted the addition - HELD THAT:- It is not the case that loan creditros refused to have advanced the amount of loan to the assessee rather the assessee through documentary evidences proved that the amount of loan was received through account payee cheques and income-tax returns of the loan creditors were also provided. Thus, source of loan was duly established by the assessee. The assessee had properly discharged the onus lying on it by furnishing various supporting documents moreso when the loan as recieved by the assessee was only related to the directors of the assessee. Thus, the Assessing Officer was not justified in adding the said amount of loan to the total income of the assessee. Further, the Revenue could not bring any contrary material on record to rebut the findings of the ld. CIT(A). Accordingly, the addition on account of loan taken from directors was rightly deleted by the ld. CIT(A). Therefore, we confirm the action of the ld. CIT(A) on this point. Addition on account of loans received - AO added the loan as received from the said society on the ground that directors of the assessee, their family members and friends are the office bearers/promoters of the society and further confirmation, ITR, Bank statement and PAN of the loan creditor was not provided - CIT-A deleted the addition - HELD THAT:- From the perusal of the copy of account of the society in the books of accounts of the assessee for the year under consideration and vice-versa and also for the subsequent year filed by the assessee reveals that the assessee had repaid entire amount of loan as taken from the society in the subsequent year. We find that the assessee had duly filed its copy of account in the books of the society which was also tallied with the copy of account of the society in the books of accounts of the assessee, therefore, the copy of account of the assessee in the books of the society is the confirmation itself which was filed by the assessee during the course of assessment proceedings AO was not justified in observing that confirmation was not filed by the assessee during the course of assessment proceedings - CIT(A) rightly noted that the addition on account of overdraft loan as taken by the assessee made by the assessing officer was neither correct nor proper as the account balance of the loan account was duly confirmed and filed during the course of the assessment proceedings. Thus, it is clear that the onus required to be discharged with respect to identity, genuineness and creditworthiness was duly discharged by the assessee and moreso the transaction is part of the regular overdraft account maintained by the assessee with the society. Hence, we do not find any reason to interfere with the findings of the ld. CIT(A). We confirm the same on this point - Decided against revenue. Rejection of books of accounts - estimation of income - Notional addition to the total income of the assessee by adopting a net profit rate of 8% on the amount of total construction expenses as incurred by the assessee - HELD THAT:- assessee had raised bills to the land owners from time to time on the basis of terms of its agreement and on the basis of stage of completion as agreed upon by the assessee with the land owners. Further, we are of the view that there was no law for maintaining project wise separate sets of books of account but what is necessary is to calculate seperate project-wise profit and the assessee had properly maintained details of expenses as incurred for particular project and the same was controlled through cost centre. Thus, the books of account as rejected by the Assessing Officer for this ground was not correct. CIT(A) observed that remaining amount of expenses as incurred by the assessee on the project were shown by it as closing work-in-progress for which bills were subsequently raised in the next year and the same were also offered to tax and as such, the ld. CIT(A) deleted the addition made by the AO - CIT-DR could not controvert the findings of the ld. CIT(A) by bringing any contrary material on record. AO was not justified in estimating the income at 8% on the amount of total cost of project even when the said amount included as incurred for its own project in form of cost of land and development expenses as incurred. Thus, the addition made to the total income of the assessee was rightly deleted by the ld. CIT(A). We confirm the action of the ld. CIT(A) on this point - ground raised in the appeal of the Revenue is dismissed. Disallowance of claim of loss by the assessee - AO after adjusting the other income disallowed the loss on the ground that the books of account have been rejected and profit has been estimated - CIT(A) deleted the addition - HELD THAT:- CIT(A) allowed the loss on the ground that the assessee had properly maintained its books of accounts and the same was also examined by the Assessing Officer himself as the assessing officer passed detailed order after considering the books of accounts produced before him. Hence, there was no justification for the Assessing Officer to further disallow loss as claimed by the assessee in its return of total income. Even before us, the Revenue could not controvert the finding of the ld. CIT(A) by bringing any contrary material on record. Therefore, we do not find any reason to interfere with the order of the ld. CIT(A).

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• 2021 (10) TMI 1000
  Revision u/s 263 by CIT - Whether non-enquiry also renders a particular order passed by the lower authorities as erroneous and prejudicial to the interest of Revenue? - HELD THAT:- The order passed by the ld. Assessing Officer does not suggest that non-reflection of working progress of Rs. 20,20,000/- in assets side of the balance sheet as on 31.03.2010 has been considered by the ld. Assessing Officer in its proper perspective. The clarification given by the assessee in support of his case, on this issue, before the ld. PCIT neither seems to be enquired nor explained by the assessee before the AO; no such deliberation is seen in the order passed by the ld. Assessing Officer. The order passed by the ld. Assessing Officer while completing the reassessment u/s 143(3) r.w. section 147, neither suggests that any such enquiry on the proposed disallowance u/s 14A of the Act as raised by the ld. PCIT has been made. If the proof of such enquiry is not reflecting in the order passed by the ld. Assessing Officer which ought to have been done by him at the time of reassessment, requirement of further enquiries/verifications u/s 263 of the Act, in our considered view, cannot be brushed aside. Thus the order passed by the ld. PCIT in setting aside the order of reassessment dated 18.12.2017 and in directing the ld. Assessing Officer to frame the assessment afresh, in our considered opinion, is without any ambiguity so as to warrant interference, hence we confirm the same. The assessee s appeal is thus dismissed.

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• Customs

• 2021 (10) TMI 999
  Import on concessional duty which provided Zero duty in case of CIF value of Rs. 20 crores or more and a custom duty of 10% in the other eventuality - conversion of Zero Duty EPCG licence - HELD THAT:- Learned Counsel for the appellant submits that thereafter the duty amount was deposited on 16-4-2014 and subsequently even interest was deposited on being called upon to do so on 30-3-2018 and duly communicated as such, on 31-3-2018 - the subject matter of dispute stands resolved in the aforesaid terms and thus no further directions are required in this appeal. Appeal disposed off.

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• 2021 (10) TMI 998
  Levy of penalty - belated reopening of the case - Violation of principles of natural justice - detailed discussion not made - Imposition of penalty - HELD THAT:- There is lack of discussion and in-depth examination in light of the defence raised, inter alia, referring to worldwide operations and that the employees were working under supervision of the joint venture partner. Keeping in mind the statement made on affidavit that the appellant(s) has withdrawn from Indian market and have no active business operations in India anymore and that the appellant(s) have already deposited Rs. 38 crores covering the principal amount and possibly the part of statutory interest component, we are inclined to set aside the order imposing penalty on the appellant(s) in the peculiar facts of the present case. This order shall not be treated as precedent in any other case. These appeals partly succeed and the order of penalty is set aside.

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• Corporate Laws

• 2021 (10) TMI 996
  Freezing of the assets and properties - Directions to Serious Fraud Investigation Office (SFIO) to conduct an investigation into the affairs of Videocon Industries Ltd. and its group companies - whether in the light of the petitioner s plea that the proceedings before the NCLT, Mumbai Bench are without jurisdiction having been filed before a Bench whose jurisdiction has been specifically ousted by the proviso to Section 241(2), the writ petition ought to be entertained or the petitioner ought to be relegated to the NCLT/ NCLAT? HELD THAT:- The power of judicial review with which the High Court is vested under Article 226 of the Constitution cannot be taken away merely because an alternative statutory remedy of appeal is available. However, it cannot be denied that the power of the High Court to entertain a writ petition under Article 226 even when an alternative statutory remedy is available, is ultimately only discretionary and therefore, it is for the High Court to consider whether, in the facts of the case, a party must be relegated to the available statutory remedy. There can be no dispute with the proposition urged by the petitioner that one of the factors which the High Court will consider while exercising its discretion to entertain a writ petition would be whether the order passed by the Tribunal was without jurisdiction or was merely a case of an error of jurisdiction. In the present case, the only basis for the petitioner to approach this Court is that under the proviso to Section 241(2), it is only the Principal Bench of NCLT at Delhi which could entertain the petition preferred by the Central Government and therefore, the very filing of the petition before the NCLT, Mumbai Bench and the passing of any order by the said Bench being coram non judice, was a nullity - there is also no denial that the Companies Act is a complete code in itself, as also that the NCLT and NCLAT are specialized Tribunals created by the statute for dealing with issues arising under the Companies Act. The petitioner s primary plea before this Court is that in view of the proviso to Section 241(2) of the Companies Act, the NCLT, Mumbai did not have the jurisdiction to entertain the petition and therefore, the proceedings before it and all orders passed by the said Bench are a nullity. The respondents have vehemently denied this position and have contended that only the Mumbai Bench had the necessary jurisdiction. It is deemed appropriate to examine the petitioner s plea that the issuance of the impugned order and letter by the respondent no.1 are, even otherwise, vitiated by non-application of mind or that the condition precedent for invocation of Section 241(2) of the Act, which requires the Central Government to come to an opinion that the affairs of the company are being conducted in a manner prejudicial to public interest was not satisfied. In view of my conclusion that the present petition is not maintainable on account of the alternative statutory remedies available to the petitioner and not for want of territorial jurisdiction, I do not deem it necessary to delve into this aspect. Petition dismissed.

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• 2021 (10) TMI 995
  Seeking extension of time to clear office objections with respect to Company Application - Section 10(F) of the Companies Act, 1956 - HELD THAT:- It must be borne in mind that the Appeals filed before us arise from the proceedings filed in Section 10(F) appeals and therefore the issue before the Company Court would be in respect of the management of Respondent No. 1 company. The Learned Single Judge has exercised his discretion in granting time to Respondent Nos. 1 and 2 to take steps to restore Company Application (L) No. 3 of 2017, which in our view is not perverse and does not warrant any interference. We are informed that Respondent Nos. 1 and 2 have filed Interim Application (L) No.15777 of 2021 in Company Application (L) No. 3 of 2017 for carrying out appropriate amendments since the form of Company Application (L) No. 3 of 2017 warranted such amendments. It would be apposite that the Appellant is permitted to intervene in Interim Application (L) No.15777 of 2021 as well. There is nothing perverse in the Impugned Order, which warrants any interference - Appeal disposed off.

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• 2021 (10) TMI 994
  Seeking modification of the order of CLG - CLB directed the company appointment of two Government Directors/Government Nominee Directors - failure of the company in repaying the public deposits - Section 408 read with Section 397/398 of the Companies Act, 1956 - HELD THAT:- As rightly pointed out by the learned counsel appearing for the Union of India as against the claims of Rs. 156 Crores from the fixed deposit holders, even according to the company it has paid only a little more than Rs. 18 Crores and it cannot be said that either the original fixed deposit holders or any of the legal heirs or successors keep quiet without claiming their fixed deposits irrespective of issuance of any advertisements for this purpose. No valid reasons are shown. No details of the fixed deposit holders who have not claimed their deposits back are given. Nothing forthcoming even with regard to the payment or otherwise of the interest on the fixed deposits said to have been repaid. Even with regard to the submission made by the learned senior counsel appearing for the applicant company with regard to conversion of some of the fixed deposits into shares and trading thereof, as the applicant failed to furnish the details of the fixed deposit receipts which were converted into equity shares and those equity shareholders who approached the company for refund of the fixed deposits and those equity shareholders who have not approached the company for refund of their original fixed deposits is unacceptable. There are no merits in the present application - application dismissed.

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• Insolvency & Bankruptcy

• 2021 (10) TMI 993
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Operational Creditor annexed the invoices dated 30.03.2019, 04.04.2019 and 02.05.2019 in the present application along with the Reminder Letter dated 23.07.2019 and a Reminder email dated 19.09.2019 requesting the Corporate Debtor to clear the dues. A Certificate dated 24.01.2020 Under Section 9(3)(c) of IBC, 2016 issued by the Axis Bank stating that no credits from Corporate Debtor were observed during the period from 13.07.2019 to 23.01.2020 in the account of Operational Creditor has also been filed. The Operational Creditor has clearly established the existence of debt and default on the part of the Corporate Debtor. The Corporate Debtor, on the other hand, chose neither to appear nor to contest the instant application filed under section 9 of the IB Code, 2016 - upon appreciation of the documents placed on record to substantiate the claim, this Tribunal admits this petition and initiates CIRP on the Corporate Debtor with immediate effect - Application admitted - moratorium declared.

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• 2021 (10) TMI 992
  Seeking direction to Respondent, who is in possession of the movable properties of the CD, as the erstwhile landlord of the CD s old office, to cooperate with the company Liquidator, in collection of information about the movable assets which is in their physical possession and custody, so as to enable him to sell them in accordance with law - seeking permission to sell the movable assets of the CD as per the lists given in the Minutes of the 1st CoC meeting dated 25.04.2019 by private sale - scope of Liquidation Estate - HELD THAT:- This Tribunal already vide its order dated 11.03.2021 has directed the Respondent to hand over voluntarily forthwith the items as listed at Page No. 26 of the typed set filed along with the present Application within a period of two weeks from the date of the order, failing which, the Liquidator was directed to take assistance from the Police Station concerned in this regard for the implementation of the Order on the part of the Respondent. It is seen that the movable assets, which are kept in the old premise at Cathedral Road, Chennai, are still in the custody of the Ms. Sundaravel T, the Respondent herein and that the Respondent refuses the Liquidator to value the said assets. Further, it is also pertinent to note that the Respondent had filed claims in Form-C before the liquidator for a sum of Rs. 27,21,744/- by attaching the lease agreement and rent working in order to substantiate the claim. At this juncture, it is pertinent to point out that once the creditor had submitted the claim in Form-C, the Creditor cannot hold back the movable assets of Corporate Debtor as a security for his claim, which goes against the principles of IBC, 2016. Ultimately, the said moveable assets of the Corporate Debtor would come within the purview of Liquidation Estate and the Respondent is in possession of the same and not willing to hand over the said moveable assets to the Liquidator. The Respondent is directed to hand over the moveable assets of the Corporate Debtor - application disposed off.

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• PMLA

• 2021 (10) TMI 991
  Permission of the Court to go abroad and visit USA and Dubai was sought, which was rejected - HELD THAT:- Counsel for the petitioner could not dispute that vide order dated 19.08.2021 passed in CRM-M No.33804 of 2021 filed by the petitioner, the similar prayer has already been dismissed by this Court. There are no ground to entertain this petition and the same is accordingly, dismissed.

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• Service Tax

• 2021 (10) TMI 990
  Rejection of declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - It is submitted that the quantification was communicated to the petitioner for the first time only on September 4, 2019, which is after the cut-off date - whether the e-mail dated March 22, 2018, further correspondence of the respondents vide communication dated April 4, 2018, letter dated September 4, 2018 and the e-mail dated October 31, 2018 is an intimation or written communication for quantification to be eligible for the benefit of the Scheme? HELD THAT:- There is nothing reflected from the communications to indicate that duty demand was quantified. There are force in the submission of learned counsel for the respondents that the correspondence/mails referred to by the petitioner prior to the cut-off date are meant only to obtain additional required information by the audit officers during the course of the audit and cannot be termed as quantification of the duty. There is nothing on record to indicate that quantification of duty was done prior to June 30, 2019. The demand of the duty quantified/finalised by the Audit Raigad was only under letter dated August 29, 2019. The respondents categorically denied that the said e-mails are intimation as regards the tax amount having been quantified finally. It is further stated in the affidavit-in-reply that as the petitioner did not provide any further documentary evidence, a letter dated September 4, 2018 was issued to the petitioner for providing necessary clarification. No doubt it is only on the basis of the communications placed on record and the impugned letter that its action is to be justified by the respondents - there are substance in the contention of the respondents that the final quantification in terms of the scheme was done only on August 29, 2019 and not prior to the cut-off date viz. June 30, 2019. In the present facts, it is found that the learned counsel for the petitioner has not been able to demonstrate and/or there is nothing on record to indicate that the duty liability is admitted by the petitioner. On the contrary, though the amount is quantified by the letter dated August 29, 2019, the petitioner goes ahead and addresses the e-mail dated November 16, 2019 stating that the matter in respect of reversal of credit of Rs. 75 lakhs is under process and that the petitioner will revert back to the respondents shortly. Further, it is mentioned in the said e-mail that the petitioner attached the details of the credit taken within time and the details of credit taken more than 365 days, meaning thereby that even as late as on November 16, 2019, much after the cut-off date, the petitioner still does not admit its liability to pay the duty. In view of the decision in SHRI SIDDHI KUMAR INFRASTRUCTURE PRIVATE LIMITED VERSUS UNION OF INDIA, MINISTRY OF FINANCE AND OTHERS [ 2021 (2) TMI 982 - BOMBAY HIGH COURT] , we are of the considered view that even on this count, there being no admission of the petitioner as to its liability of duty payable prior to the cut-off date of June 30, 2019, the petitioner is not entitled to any relief. Petition dismissed.

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• 2021 (10) TMI 989
  Rejection of application under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - the quantification made as per the Audit Report has been indicated as 04.12.2019, whereas the relevant date is 30.06.2019 - HELD THAT:- It comes out from SVLDRS, 2019 that as per Section 123(c) that tax dues would be the amount of duty payable under any of the indirect tax enactment which has been quantified on or before 30.06.2019. A perusal of Annexure-B would clearly indicate undisputedly that there has been quantification as per the Audit Report dated 04.06.2019. Said aspect has not been controverted by learned counsel appearing for the respondent Department. In light of the same, clearly the petitioner s case prima facie falls within the requirement of quantification before 30.06.2019 The respondent No.3 to reconsider the application of the petitioner in Form SVLDRS-1 at Annexure-E afresh - Petition disposed off.

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• Central Excise

• 2021 (10) TMI 988
  Vires of Rule 17(2) of the Pan Masala Rules as ultra vires to the provisions of Section 3A of the Central Excise Act - HELD THAT:- It is true that, the High Court has observed that, in the facts of the case, challenge to the vires of Rule 17(2) of the Pan Masala Rules is rather without substance, however, the High Court has not at all addressed the issue on vires on merits in detail. The question of vires cannot be decided by the Appellate Authority/Tribunal in an appeal against the order-in-original. Under the circumstances, the High Court has not at all addressed on merits on the question with respect to vires of Rule 17(2) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, the impugned order passed by the High Court is set aside and matter remanded to the High Court for its fresh decision - appeal allowed by way of remand.

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• 2021 (10) TMI 987
  Maintainability of appeal - appropriate forum - different Commissionerate was being established and in that process inefficiency occurred - remedy to file an appeal within a particular time limit - HELD THAT:- We consider this hardly a proper justification except that it is a result of inefficiency of the working of the Department and lack of knowledge of legal remedy. Since some similar matters are stated to be pending consideration, we are inclined to condone the delay, subject to deposit of Rs. 10,000/- as costs in each of the special leave petitions with the Supreme Court Group C (Non-Clerical Employees Welfare Association) within three weeks. The applications for condonation of delay are accordingly allowed.

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• CST, VAT & Sales Tax

• 2021 (10) TMI 986
  Reversal of input tax credit (ITC) - alternate remedy to file an appeal - lone pivotal contention of the learned counsel for writ petitioner is that reversal of ITC should be in excess of 5% of tax or in other words, upto 5%, there cannot be reversal - HELD THAT:- In the instant case, as would be evident from the trajectory which lead to the impugned order has been captured, it is clear that more than reasonable i.e., adequate and ample opportunity has been given to the writ petitioner for showing cause against the impugned order. So there can be no grievance in this regard. Though there can be no disputation or disagreement on the aforesaid rule, what is of relevance is Honourable Supreme Court in a catena and series of judgments i.e., a long line of case laws commencing from ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR VERSUS DUNLOP INDIA LIMITED AND OTHER [ 1984 (11) TMI 63 - SUPREME COURT ] , UNITED BANK OF INDIA VERSUS SATYAWATI TONDON AND OTHERS [ 2010 (7) TMI 829 - SUPREME COURT ] and AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VERSUS MATHEW K.C. [ 2018 (2) TMI 25 - SUPREME COURT ] , has held that when it comes to Revenue matters, the alternate remedy rule should be applied with utmost rigour. If the writ petitioner chooses to file appeal under Section 51 or revision under Section 54 as the case may be (subject to limitation) the same can be dealt with on its own merits and in accordance with law by the appellate authority or revisional authority as the case may be - If the appellate authority or the revisional authority as the case may be entertains the appeal or revision (subject of course to limitation), the observation made in this order will neither be an impediment nor serve as an impetus qua appeal or revision, in other words, the appellate authority or revisional authority shall deal with it on its own merits and in accordance with law untrammeled by any observation made in this order. Petition dismissed.

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• 2021 (10) TMI 985
  Grant of exemption on second sale - sale of food and drinks to the canteen as claimed by the assessee - whether the sale will fall under Entry 6(a) of the Fifth Schedule to the KST Act - reimbursement of ESI, PF, Bonus is taxable under the KST Act or not - competency of the Advance Ruling Authority in issuing the clarification when the matter was pending before the Revisional Authority - HELD THAT:- It is ex-facie apparent that the Tribunal having given a finding on the sales of food and drinks made by the assessee to the canteens would not fall under Entry 6(a) of Fifth Schedule, remanded the matter to the revisional authority only to examine the exemption of second sales with respect to bakery products sold by the assessee. The review petition was filed by the assessee against the order of the Tribunal which also came to be dismissed and the same has attained finality. The said finding having attained finality, after passing of the order by the revisional authority on the aspect of the second sales, now while challenging the said order before the Tribunal again re-adjudicating the issue already concluded amounts to rehearing the decided issue which is wholly impermissible under law. The Tribunal has rightly held that the issue now raised by the assessee having attained finality, no further re-adjudication is required and dismissed the appeal - no questions of law arises for our consideration in this revision petition - revision petition dismissed.

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• Indian Laws

• 2021 (10) TMI 984
  Interpretation of statute - Assignee of the decree holder in terms of Order XXI Rule 16 of the Code of Civil Procedure, 1908 - scope of Section 146 of the CPC read with Section 2(1)(g) of the Arbitration Conciliation Act, 1996 - significant aspect is the addition of the explanation to Order XXI Rule 16 of the CPC, which was added pursuant to the recommendation made by the Law Commission of India in its 54th Report on the CPC in 1973, which in turn was a sequitur to the conflicting views of the High Courts on the matter in issue. HELD THAT:- It is an admitted position that the explanation was added to Order XXI Rule 16 which did not exist earlier, pursuant to the recommendations made by the Law Commission of India in its 54th Report on the Code of Civil Procedure, 1908. The Explanation was so added due to conflicting High Courts decisions on the question, i.e., whether a person who does not have a written assignment of the decree, but who has succeeded to a decree holders right, is entitled to such decree under Section 146 of the CPC. The objective of amending Order XXI Rule 16 of the CPC by adding the Explanation was to deal with the scenario as exists in the present case, to avoid separate suit proceedings being filed therefrom and to that extent removing the distinction between an assignment pre the decree and an assignment post the decree - Once the legislative intent is clear, and the law is amended, then the earlier position of law cannot be said to prevail post the amendment and it is not in doubt that the present case is one post the amendment. Appeal allowed.

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• 2021 (10) TMI 983
  Dishonor of Cheque - legally enforceable debt or not - without giving an opportunity to the petitioners the ld. Court below has closed the cross-examination - Principles of natural justice - power to recall the witnesses under section 311 Cr.P.C - HELD THAT:- The ld. Court below, in the impugned order dated 03.05.2018, has noted that the case was posted for cross-examination of P.W.1 on 30.05.2017, and since then ample opportunities were afforded to the petitioners to complete cross-examination of P.W.1. But, the accused persons could not avail the opportunity. And on that day, i.e. 03.05.2018, also the petitioners have failed to cross-examine the P.W.1. Instead, on that day neither the accused nor his counsel remained present in the court, though the ld. Counsel has filed hazira in the court. Then being left with no option the ld. Court below has closed the evidence of the P.W.1. The right to cross-examination is a part of right to fair trial, which, every person has in the spirit of the right to life and personal liberty as enshrined in Article 21 of the Constitution of India - In the case in hand, on the relevant date i.e. on 03.05.2018, the petitioner remained absent in the court and his counsel also remained absent though he has filed hazira. Thus, the petitioner remained unrepresented on that day. Therefore, the impugned order, closing the evidence of P.W.1, behind the back of the petitioners and also his counsel, is denial of fair hearing, as it has infringed their right to fair trial. The impugned order dated 03.05.2018, passed by which the ld. Court below closing the evidence of P.W.1, behind the back of the petitioner and his counsel, and subsequent impugned order dated 06.04.2018, by which the ld. Court below, after hearing ld. Advocates of both sides declined to invoke its jurisdiction under section 311 Cr.P.C, to allow the petitioners to cross-examine P.W.1 and other listed witnesses of the complainant withstand the test of legality, propriety and correctness - Here in this case, it appears from the impugned order dated 03.05.2018, that in a span of almost one year, ample opportunities were afforded to the petitioners. But, the petitioners have failed to avail the same. They have failed to assign any reason, not to speak of a plausible one, as to why they could not cross-examine the P.W.1. There are sufficient merit in this revision petition, and accordingly, the same stands allowed.

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