TMI Tax Updates - e-Newsletter
October 27, 2021

Case Laws in this Newsletter:

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

Articles

1. Recent judgment of the Supreme Court on S.263 - need a review – this also shows that court officers must be more serious in helping Courts in rendering justice.

   By: DEVKUMAR KOTHARI

News

1. India, ADB sign project readiness financing loan to support urban mobility in Mizoram

2. Income Tax Department conducts searches in Punjab

3. Shri Piyush Goyal reviews Open Network for Digital Commerce

4. Finance Minister Smt. Nirmala Sitharaman holds review meeting on CAPEX for Civil Aviation and Telecommunications

Notifications

GST - States

1. G.O.Ms.No.293 - dated 25-10-2021 - Andhra Pradesh SGST

THE ANDHRA PRADESH GOODS AND SERVICES TAX ACT, 2017 - AMENDMENT TO GO.MS.NO.174, REVENUE (CT-II) DEPARTMENT, DATED 14.07.2021, APGST, ACT, 2017- IN ORDER TO EXTEND DUE DATE OF COMPLIANCES FALLING BETWEEN 15.04.2021 TO 29.06.2021 TILL 30.06.2021

2. 12039/67/2021 - dated 11-10-2021 - Andhra Pradesh SGST

Andhra Pradesh Goods and Services Tax Act, 2017–Exempt the taxpayers having Annual Aggregate Turn Over upto ₹ 2 Crores from the requirement of furnishing annual return for FY 2020-21

3. S.O. 157 - dated 18-10-2021 - Bihar SGST

Amendment in Notification S.O. No. 173, dated the 21st September, 2017

4. S.O. 156 - dated 18-10-2021 - Bihar SGST

Amendment in Notification No. S.O. 84 , dated the 12th March, 2021

5. S.O. 155 - dated 18-10-2021 - Bihar SGST

Bihar Goods and Services Tax (Eighth Amendment) Rules, 2021

Income Tax

6. 124/2021 - dated 25-10-2021 - IT

U/s 280A(1) of IT Act 1961, Central Government, in consultation with the Chief Justice of the High Court of Manipur designates Special Court in the Manipur

7. 123/2021 - dated 25-10-2021 - IT

U/s 280A(1) of IT Act 1961, Central Government, in consultation with the Chief Justice of the High Court of Bombay designates Special Court in the Goa

8. 122/2021 - dated 25-10-2021 - IT

U/s 280A(1) of IT Act 1961, Central Government, in consultation with the Chief Justice of the High Court of Karnataka designates Special Court in the Karnataka

Circulars / Instructions / Orders

Income Tax

1. 19/2021 - dated 26-10-2021

Guidelines under clause (23FE) of section 10 of the Income-tax Act, 1961

2. 18/2021 - dated 25-10-2021

Clarification regarding Section 36(1)(xvii) of the Income-tax Act, 1961 inserted vide Finance Act, 2015

GST - States

3. 12039/76/2021 - dated 20-10-2021

Clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 45th meeting held on 17th September,2021 at Lucknow

4. 12039/74/2021 - dated 11-10-2021

Clarification relating to export of services-condition (v) of section 2(6) of the IGST Act 2017

5. 12039/73/2021 - dated 11-10-2021

Clarification in respect of Certain Goods and Services Tax related issues

6. 12039/72/2021 - dated 11-10-2021

Clarification on doubts related to scope of “Intermediary”

7. 12039/71/2021 - dated 11-10-2021

Clarification regarding extension of limitation under GST La in terms of Hon’ble Supreme Court’s Order dated 27.04.2021

8. 10/2021-GST - dated 21-9-2021

Clarification regarding extension of limitation under GST Law in terms of Hon’ble Supreme Court’s Order dated 27.04.2021.

9. 09/2021-GST - dated 9-9-2021

GST on milling of wheat into flour or paddy into rice for distribution by State Governments under PDS

10. 08/2021-GST - dated 10-8-2021

Clarification in respect of applicability of Dynamic Quick Response (QR) Code on B2C invoices and compliance of notification 14/2020- State Tax dated 4h November, 2020

11. 07/2021-GST - dated 10-8-2021

Clarification regarding GST rate on laterals/parts of Sprinklers or Drip Irrigation System

Highlights / Catch Notes

GST

• Authorities' Argument on January 2, 2019, Consignment Delivery Invalidated; Evidence Shows Timely Arrival per E-way Bill.

  Case-Laws - HC : Seizure of goods alongwith the conveyance - valid E-way bill or not - The appellant-authorities contention that the consignment was being delivered on 2.1.2019 and therefore, the goods cannot be transported cannot be acceded to. The materials on record clearly indicates that the action by the authorities was taken at the destination and not during transit and therefore, an inference has to drawn that the conveyance had reached the destination well within the subsistence of the valid period stipulated under the E-way bill. - HC
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• Selling Developed Land with Structures Is Taxable Under GST; Undeveloped Land Sales Are Exempt Per CGST Act, Schedule III.

  Case-Laws - AAR : Levy of GST - activity of disposal of developed plots of land to allottee members - If the applicant sells the land after developing by way of erecting a civil structure or a building or a complex then such supply is liable to tax under CGST/SGST Acts. However if land is sold without any development involving any civil structure or building or complex such supply falls under paragraph 5 of schedule III to Section 7(2) of CGST Act, 2017 and hence is exempt from tax. - AAR
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Income Tax

• Tribunal Upholds Findings on Re-Screening Charges in Iron Ore Extraction; Assessee's Claims Lack Evidence Support.

  Case-Laws - HC : Determining the income on mining activity - increase in expenditure of re-screening charges in the course of extraction of iron ore - the attempt made by the assessee to establish the lower grade of material purchased by the assessee required more extraction/rescreening charges was not supported by any material evidence. The same being considered extensively by the Tribunal, we do not find any ground to interfere with the factual findings recorded by the Tribunal - HC
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• Jurisdiction Issue: DCIT in Bengaluru Issued Invalid Notices u/s 153C Before Official Case Transfer.

  Case-Laws - HC : Jurisdiction of DCIT Bengaluru to issue notice u/s 153C - transfer of case u/s 127 - it is ex-facie apparent that the notices under Section 153C were issued prior to transfer of case and jurisdiction conferred on the DCIT. It is well settled by now that any order passed without jurisdiction is invalid. - HC
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• Transfer pricing adjustment removed after evidence showed customer delays caused receivable issues, not the assessee's actions.

  Case-Laws - AT : Transfer pricing adjustment made because of interest charged on delayed receivables - As before the TPO the assessee had furnished certain evidences including the bank statements of subsidiaries and reconciliation statement reconciling the time gap in amounts receivable from subsidiaries and from third parties. These evidences furnished by the assessee, certainly, support assessee’s claim that the delay in receivables was purely because of the delay in receipt from end customers. - the adjustment made on account of delayed receivables has to be deleted. - AT
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• Charitable Entity Maintains Status: Predominant Objective Key to Section 2(15) and 11 Exemption, Says Tax Commissioner.

  Case-Laws - AT : Exemption u/s.11 - Charitable activity u/s 2(15) - it is fairly settled legal position that it is the pre-dominant objective which would be relevant to examine the applicability of proviso to Sec.2(15). The Ld. CIT(A) after examining the primary objects of the assessee as well as the purpose for which it was established, came to a conclusion that the primary objective was charitable in nature and collection of fees was not to earn profit. Therefore, the assessee did not cease to be charitable in character so as to render it ineligible to claim benefits u/s 11 and 12. - AT
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• Car "Fancy" Number Costs Not Business Expense; No Revenue or Depreciation Benefits Allowed.

  Case-Laws - AT : Expense for obtaining special number for car - the orders of the authorities below are appropriate that expenditure for obtaining “fancy number for the car” is not at all business expenditure. Hence, there is no question of allowing the same as revenue expenditure or capitalizing the same and allowing depreciation thereon. - AT
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• No Extra Tax for Assessee: Section 40(a)(ia) Exemption Valid with CA Certificate Confirming Payee's Tax Compliance.

  Case-Laws - AT : Disallowance u/s 40(a)(ia) of the I.T. Act for non-deduction of TDS - the assessee had obtained and furnished the certificate of the CA of the broker wherein it has been clearly certified that the amount on which TDS not deducted by the assessee was included in the total income of the payee and requisite amounts of taxes due were also paid on it. - No additions can be made - AT
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Indian Laws

• Testimony from PW13 and other witnesses questioned; prosecution's case weakened by lack of truck registration evidence.

  Case-Laws - SC : It is very difficult to believe that PW13 who was not knowing the accused Nos.2 and 4 prior to the incident could identify them in the Court after lapse of 11 years. That is also the case with all the official witnesses. The prosecution has chosen not to produce evidence regarding the correct registration number of the truck and the name of the registered owner thereof. Therefore, the entire prosecution case becomes doubtful. - SC
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• Accused Found Not Guilty in Cheque Dishonor Case; Appellate Court Misjudged Burden of Proof u/s 138.

  Case-Laws - HC : Dishonor of Cheques - legally enforceable debt or not - Rebuttal of presumption - The cheques pertain to these 4 cases, have been issued by the accused only to discharge the legally enforceable debt and being the reason, the same were dishonoured, it should be held that the accused had committed an offence under Section 138 of the Negotiable Instruments Act. The first appellate Court without appreciating the same in proper perspective, particularly, without understanding the onus of proof, has held that the accused is not guilty under Section 138 of the Negotiable Instruments Act and the said finding is not in accordance with law. - HC
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IBC

• NCLAT Tribunal Cannot Review or Recall Orders Without Explicit Provision; Rule 11 Offers No Substantive Authority.

  Case-Laws - AT : Power of tribunal to review application - It is the well laid down proposition of law that ‘in the absence of any power of ‘Review’ or ‘Recall’ vested with the ‘Adjudicating Authority’ – ‘Appellate Authority’, an order/ judgment passed by it cannot be either Reviewed or Recall as opined by this Tribunal - It cannot be gainsaid that there is no express provision for ‘’Review’’ under the National Company Law Appellate Tribunal Rules, 2016. Moreover, the Applicant/Appellant cannot fall back upon Rule 11 of the NCLAT Rules, 2016 which provides for “inherent powers’’. In fact, Rule 11 of NCLAT Rules, 2016 is not a substantive Rule which showers any power or jurisdiction upon the ‘’Tribunal’’. Undoubtedly, the ‘Tribunal’’ has no power to perform an act which is prohibited by Law.- AT
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Central Excise

• Product Not "Excisable" u/s 125(h) SVLDRS: No Duty Rate Specified, No Excise Duty Applicable.

  Case-Laws - HC : Excisable goods - even though the product in this case is marketable, it does not answer to the question of ‘excisable goods’ as, practically there can be no levy of duty thereupon in the absence of a stipulated rate and applicable rate of duty. Thus, notwithstanding that the language of Section 125(h) of the SVLDRS Scheme uses the phrase ‘with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944’, the use of the word ‘excisable’ cannot be seen to be cosmetic, but must contain some purpose - Mere mention of the commodity without the rate of tax would serve no purpose as far as excisability is concerned. - HC
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• Prescription Lens Assembly in Showrooms Not Considered Manufacturing; Refined Product Creation Excluded from Definition.

  Case-Laws - HC : Activity amounting to manufacture or not - fixing of a lens in a spectacle frame - Post manufacture of the spectacle frames and lenses, the goods are sent separately to the petitioners’ show rooms and what is undertaken in the show room is only an assembly of the prescription lenses and the spectacle frames wherein the lenses are merely mounted upon the frames, to result in a spectacle - The process of assembly is bound to involve some amount of refining and fine-tuning of the individual components and this, by itself, will not tantamount to manufacture. In fact, most establishments engaged in selling eye-wear provide a gamut of services in this area including, having an optician in their employ or on call, and infrastructure for the testing of vision. Thus, notwithstanding that a distinct commercial product is obtained upon assembly of a lens with a spectacle frame, this would not result in such assembly being equated to manufacture.- HC
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• Rebate Approved: Exported Goods Re-imported, No Double Benefits from Central Excise Duty Rebate Claim, Revision Granted.

  Case-Laws - CGOVT : Rebate Claim - In the present case, the goods were removed for export on payment of Central Excise duty on 22-6-2017 (i.e. not earlier than six months from 1-7-2017) and were imported back on 23-11-2017 (i.e. within six months from 1-7-2017). There is also no dispute regarding the identity of goods. The Government further observes that upon import, IGST was paid and no refund of IGST, so paid, has been claimed. Therefore, sanction of rebate of Central Excise duty paid will also not lead to any double benefit. In these facts and circumstances, the Government holds that the rebate claim is admissible. - the revision application is allowed with consequential relief. - CGOVT
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Case Laws:

• GST

• 2021 (10) TMI 1063
  Artificial Increase in Valuation or not - express provisions not followed - HELD THAT:- Matter requires consideration. Learned Standing Counsel has accepted notice on behalf of all respondents. He prays for and is granted four weeks time to file counter affidavit. Petitioners shall have two weeks thereafter to file rejoinder affidavit - List thereafter.

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• 2021 (10) TMI 1062
  Seizure of goods alongwith the conveyance - valid E-way bill or not - requirement of seeking extension of validity period of E-way bill - HELD THAT:- There is a categorical finding by the learned Judge that the conveyance had reached the destination on 1.1.2019 at 11.00 p.m. which was well within the prescribed validity period under the E-way bill. The appellant-authorities contention that the consignment was being delivered on 2.1.2019 and therefore, the goods cannot be transported cannot be acceded to. The materials on record clearly indicates that the action by the authorities was taken at the destination and not during transit and therefore, an inference has to drawn that the conveyance had reached the destination well within the subsistence of the valid period stipulated under the E-way bill. Appeal dismissed.

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• 2021 (10) TMI 1061
  Levy of GST - activity of disposal of developed plots of land to allottee members of the applicant from and out of the land received from the TSIIC for specified purpose of industrial development - the activity failing under Entry 5 of Schedule III of Central Goods Service Tax Act, 2017 and corresponding provisions under Telangana Goods Service Tax Act, 2017 as amended - activity of infrastructure development (ID) of land received from the TSIIC for specified purpose of industrial development and undertaken on behalf of allottee members (allottee(s) or the member(s)) - supply under Section 7 of the Central Goods Service Tax Act, 2017 corresponding provision under Telangana Goods Service Tax Act, 2017 as amended. HELD THAT:- There will be (2) sale deeds one between TSIIC and the applicant and the second between the applicant and the individual industrialist. The peculiar circumstances obtaining from these (2) transactions are due to the larger objective for development of industrial parks in pursuance of the industrial policy of the State - the TSIIC ltd executes an agreement for sale of land with the applicant and collects the full consideration for the cost of land but sets condition to execute the sale deed to transfer the title only after the applicant completes infrastructure development in the land. The perusal of the contract entered by the applicant with the TSIIC ltd clearly indicates that the property in land will be transferred to the applicant only when the applicant completes the development of infrastructure of schedule land. However, this clause in the agreement appears to have been made to meet the larger objective enumerated in industrial policy of the State. Though there is a contract for development of the land the other (2) conditions enumerated above are not fulfilled i.e., transfer of property in goods from the applicant to the TSIIC ltd and payment of consideration by TSIIC ltd to the applicant. The examination of the agreement between the applicant and one individual allottee M/s. Beaver tracks pvt ltd reveals that the applicant has taken up development of infrastructure as per the conditions of allotment set by TSIIC. And that M/s. Beaver tracks pvt ltd will get the title of the land only on commencement of industrial production. There is no clause in the agreement by which the applicant is obliged to develop the land for the industrialist like M/s. Beaver tracks pvt ltd. This obligation is only with TSIIC ltd. Thus even in the contract with individual industrialist like M/s. Beaver tracks pvt ltd the above (3) conditions for making such a supply as supply of works contract are not fulfilled - Further the applicant also indicates that it may take up certain infrastructure development after the title to land is transferred to M/s. Beaver tracks pvt ltd by way of sale deed. It is also indicated that consideration will be recovered for executing such works. Such development works executed after the sale deed is registered will necessarily amounts to works contract and the consideration received for the same will be liable to tax under CGST Act, 2017. If the applicant sells the land after developing by way of erecting a civil structure or a building or a complex then such supply is liable to tax under CGST/SGST Acts. However if land is sold without any development involving any civil structure or building or complex such supply falls under paragraph 5 of schedule III to Section 7(2) of CGST Act, 2017 and hence is exempt from tax - If the applicant executes works contracts involving transfer of property in goods for a consideration under an agreement of contract such consideration will be liable to tax. However if these elements are missing in execution of a construction it shall not be liable to tax. Application disposed off.

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• Income Tax

• 2021 (10) TMI 1060
  Filing of two proceedings challenging one order or proceeding - HELD THAT:- It is not in dispute that petitioner after passing of assessment order 16.06.21 (Annexure P-1) and issuance of demand notice dated 16.06.21 (Annexure P-2), petitioner has approached the Appellate Authority by way of filing an appeal under Section 246(A) of the Act. It is also not in dispute that the Appellate Authority has powers to set aside the assessment order if found to be contrary to mandatory provisions under the Act. Under Section 251 of the Act of 1961, the Appellate Authority is having all the powers to consider the grounds raised by the petitioner in appeal. See SATYA PAL ANAND VERSUS STATE OF M.P. AND ORS. [ 2016 (10) TMI 1142 - SUPREME COURT] Provisions under Section 251 of the Act of 1961, grounds raised by petitioner and also considering aforementioned ruling of Hon ble Supreme Court, the writ petition challenging the same order which is pending consideration before the Appellate Authority is not maintainable ad is liable to be dismissed, as such.Consequently, writ petition is dismissed as not maintainable.

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• 2021 (10) TMI 1059
  Determining the income on mining activity - increase in expenditure of re-screening charges in the course of extraction of iron ore - HELD THAT:- As assessee vehemently argued that the authorities have failed to consider the invoices in a proper perspective, we are unable to subscribe to her submissions. It is well settled that the Tribunal being the last fact finding authority, the finding recorded by the Tribunal with respect to the quality of material i.e., iron ore purchased by the assessee has some relevance. The arguments now advanced by the learned counsel for the assessee would not touch upon any question of law much less the substantial questions of law to be decided by this Court. On the contrary, the submissions would relate to the factual aspect of the expenses incurred towards the extraction/re-screening charges of iron ore purchased in the assessment year in question. Thus the attempt made by the assessee to establish the lower grade of material purchased by the assessee required more extraction/rescreening charges was not supported by any material evidence. The same being considered extensively by the Tribunal, we do not find any ground to interfere with the factual findings recorded by the Tribunal. Hence, we dismiss the appeal answering the substantial questions of law, in favour of the revenue and against the assessee.

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• 2021 (10) TMI 1058
  Jurisdiction of DCIT Bengaluru to issue notice u/s 153C - transfer of case u/s 127 - assessee s case was transferred from ACIT, Circle 6(1), Bengaluru to DCIT, Central Circle, Bengaluru on 20.07.2009, as per the order passed under Section 127(2) - HELD THAT:- As assessee s case was transferred from ACIT, Circle 6(1), Bengaluru to DCIT, Central Circle, Bengaluru on 20.07.2009, as per the order passed under Section 127(2) dated 20.07.2009; notices under Section 153C for the assessment years under consideration were issued by the DCIT, Central Circle, Bengaluru on 11.05.2009; date of transfer of files from ACIT is 19.08.2009. Thus, it is ex-facie apparent that the notices under Section 153C were issued prior to transfer of case and jurisdiction conferred on the DCIT. It is well settled by now that any order passed without jurisdiction is invalid. As in the case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Ltd.[ 2019 (7) TMI 1449 - SUPREME COURT] wherein, it has been held that the assessment order passed against the non-existent company is a substantive illegality and not a procedural violation of the nature adverted to Section 292B. Thus, it is well established that the notice issued by the DCIT Circle 1(1), Bangalore, is without jurisdiction and as such, all further proceedings would render void ab initio. The arguments of the learned counsel for the revenue with respect to Sections 292B and 292BB do not merit any consideration. - Decided in favour of assessee.

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• 2021 (10) TMI 1057
  Disallowance of deduction u/s.80IA - aggregate losses was more than the claim of deduction u/s.80IA(4) the AO disallowed the deduction - HELD THAT:- It is seen that the losses pertaining to the earlier years, referred to by the AO for setting off against the current year s qualifying income from the eligible unit, relate to the years prior to the initial year. Obviously, such losses cannot be set off against the income from the wind mill on or after the initial year. Similar issue came up for consideration before the Tribunal in the case of the assessee for earlier years. Vide order dated 25-06-2019, the Tribunal in for the assessment years 2007-08, 2009-10, 2010-11 2011-12 [ 2019 (6) TMI 1644 - ITAT PUNE] has accepted the assessee s claim. The ld. DR fairly accepted the position. In view of the foregoing discussion and respectfully following the precedent, we uphold the impugned order on this score. Liability on account of revised wages - HELD THAT:- As seen that Central Govt. set up Wage Board for the working Journalists and other Newspaper employees. The Board submitted its report on 31-12-2010. The Central Govt. issued consequential notification on 11-11-2011 accepting the recommendations, which was challenged in the Courts of law and eventually got nod in a later year. In terms of the notification of the Central Govt., the assessee recomputed the amount of wages pertaining to the year under consideration and claimed deduction for the same by means of the revised return. The assessee is admittedly following the mercantile system of accounting. Since the amount of additional wages pursuant to the Central Govt. notifying the recommendations of the Wags Board pertaining to the year under consideration amounted to Rs. 6.26 crore, in our considered opinion, the same has to be allowed under the mercantile system of account followed by the assessee. The fact that the payment was made in subsequent years cannot mar the deductibility of the amount which pertains to and became payable during the year. We, therefore, uphold the impugned order deleting the liability on account of revised wages for the year under consideration .

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• 2021 (10) TMI 1056
  Revision u/s 263 by CIT - Low net profit or loss shown from large gross receipts - HELD THAT:- As in the present case, we have examined in reference to the shortcomings in the assessment order as alleged by the Ld. Pr. Commissioner of Income Tax the assessee had demonstrated each and every aspect of such queries raised before the Assessing Officer. DR also could not refute the fact that necessary documents were placed before the AO and he also could not bring on record any material/evidence to show that the Assessing Officer has not conducted any enquiry. Rather, we have observed that questions were asked and in response thereto, the assessee had given reply to each and every queries raised by the Department. It is a settled position of law while assuming jurisdiction u/s.263 of the Act, the Ld. Pr. Commissioner of Income Tax should specifically state the reasons why the order of the Assessing Officer was erroneous in so far as prejudicial to the interest of the revenue by supporting factual evidences and reasoning which in this case is absent. Thus we hold that resorting to revisionary jurisdiction u/s.263 of the Act by the Ld. Pr. Commissioner of Income Tax in this case is not valid in law and hence, we quash the impugned order of the Ld. Pr. Commissioner of Income Tax. - Assessee appeal allowed.

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• 2021 (10) TMI 1055
  Benefit of exemption u/s. 11 12 - Scope of charitable purpose as defined in Section 2(15) - regular receipt of money from the sale of paintings - AO observed that the assessee is renting out galleries to the artists for displaying their work and has thus concluded that the assessee is engaged in a business activity and held to be in violation of the statutory remit in view of the amendment in section 2(15) of the Act by Finance Act, 2009 - HELD THAT:- As relying on India Trade Promotion Organization vs. DIT (Exemption) Others [ 2015 (1) TMI 928 - DELHI HIGH COURT] , India International Centre [ 2015 (5) TMI 515 - ITAT DELHI] AND ALL INDIA FOOTBALL FEDERATION [ 2015 (10) TMI 2162 - ITAT DELHI] if some incidental activities are carried out by a charitable organization whose dominant and prime objective is not a profit motive, the organization cannot be deemed to be pursuing non charitable objects and hence be considered to be existing for non-charitable purposes - the constitutional validity of proviso to Section 2(15) of the Act, had held that mere receipt of fee or charge will not mean that the assessee is involved in any trade, commerce or business. Accordingly considering the legal position as found settled with respect to interpretation of proviso of Section 2(15) of the Act in the case of India Trade Promotion Organisation vs. DGIT (Exemption) (supra) the coordinate bench held that the benefit of exemption u/s. 11 12 of the Act could not be denied. We find that similar view has been followed right from 2009-10 assessment year till date. Thus we hold that the appeals filed by the Revenue have to be dismissed in view of the consistent orders available on record qua the issue ordered accordingly. Lack of opportunity as pleaded by the assessee - Without commenting upon the correctness, of the conclusions drawn addressing the procedural shortcoming only, we deem it to appropriate to set aside the orders of the Ld. First Appellate Authority to this extent and restore the issue back to the file of the CIT(A) with a direction to give a specific opportunity to the assessee to make its submission before the passing of the order. No doubt technically the resultant addition may not be capable of being described as an enhancement, however, the fact remains that when the administrative authorities proceed to pass an order adverse to a party then due notice of this fact necessarily in all fairness needs to be given to the assessee. In the facts of the present case, it is evident that the assessee was not heard. The law is well settled that it cannot be inferred/presumed that the assessee even if given an opportunity would have nothing further to state on facts or law. The principles of natural justice mandate that a reasonable and effective opportunity of being heard needs to be granted specifically where an administrative authority proceeds to take an adverse view. Accordingly, in the interests of justice, it is deemed appropriate to set aside the impugned order back to the file of the Ld. CIT(A) with a direction to pass a speaking order.

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• 2021 (10) TMI 1054
  TDS u/s 192 - Demand u/s 201(1)/201(1A) - withholding of tax on LFC paid to employees - assessee submitted that LFC was paid to the employees for the shortest route by the entitled class to the destination in India - HELD THAT:- As decided in own case [ 2021 (2) TMI 28 - ITAT MUMBAI] taxability of these amounts in the hands of the employees concerned, because that aspect of the matter is not really relevant as on now. We leave it at that for the time being. The coordinate bench decisions deal with only the issue of taxability of leave travel facility under section 10(5) and not with the broader question about the nature of tax deduction at source liability under section 192, as also the issue about bonafides of the stand of the assessee employer. These decisions, therefore, do not come in the way of our present decision. Once we hold, as we do in this case, that estimation of income, in the hands of the employees under the head income from salaries , by the employer was bonafide and reasonable, the very foundation of impugned demands raised under section 201 r.w.s 192 ceases to hold good in law. We must, therefore, vacate these demands. Bearing in mind entirety of the case, we cancel the impugned demands under section 201 r.w.s. 192 as unsustainable in law. - Decided in favour of assessee.

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• 2021 (10) TMI 1053
  Denial of deduction claimed u/s 10A in respect of income derived from training activity - HELD THAT:- As the Tribunal in the preceding assessment year has allowed assessee s claim of deduction under section 10A of the Act in respect of the income derived from training activity. It is relevant to observe, aforesaid decision of the provision has been upheld by the Hon ble jurisdictional High Court [ 2014 (3) TMI 1162 - BOMBAY HIGH COURT ]while dismissing revenue s appeal. [ 2014 (3) TMI 1162 - BOMBAY HIGH COURT ] Facts being identical, respectfully following the decision of the co-ordinate Bench and the Hon ble jurisdictional High Court in assessee s own case, as referred to above, we direct the AO to allow assessee s claim of deduction under section 10A of the Act by including it both in the total turnover as well as export turnover. This ground is allowed. Facts being identical, respectfully following the decision of the co-ordinate Bench and the Hon ble jurisdictional High Court in assessee s own case, as referred to above, we direct the AO to allow assessee s claim of deduction under section 10A of the Act by including it both in the total turnover as well as export turnover. This ground is allowed. Deduction claimed under section 10A of the Act in respect of interest income - assessee had earned interest income on bank deposits, bonds, loans to employees, loans to subsidiary etc - HELD THAT:- Undisputedly, out of the total interest income earned, the assessee has apportioned an amount of Rs. 12,37,49,444/- to the 10A units. It is the stand of the assessee that the interest income on which deduction under section 10A of the Act was claimed was because of temporary parking of surplus funds available to the 10A units out of the export proceeds. Thus, it is closely related to the activity of the 10A units. A reading of section 10A of the Act would show that profits and gains derived by an undertaking from export of articles or things or computer software would be eligible for deduction. Whereas, in the decisions relied upon by the Departmental Authorities, the dispute related to claim of deduction under chapter VI-A of the Act - in principle we accept assessee s contention that interest earned from temporary parking of surplus funds in bank deposits, bonds as well as loans to employees and subsidiary would qualify for deduction under section 10A of the Act. However, the quantification and attribution of such interest to the 10A units has to be examined by the AO. The assessee is directed to furnish necessary evidence in this regard to establish its claim of deduction under section 10A of the Act on the amount of Rs. 12,37,49,444/-. This ground is allowed subject to factual verification. Transfer pricing adjustment made because of interest charged on delayed receivables - delay in remittance by overseas subsidiaries, the assessee has submitted that such delay was because of delay in remittance by the end customers to the overseas subsidiaries - HELD THAT:- As assessee had furnished reconciliation statement, bank statement of subsidiaries and some other evidences. Notably, learned Commissioner (Appeals), in fact has appreciated assessee s contention that there could be delay/considerable time gap in remittance of receivables by the overseas subsidiaries and the third party distributors, as the AEs are not the end customers, whereas, the third party distributors are themselves the customers. He has also appreciated the fact that some of the subsidiaries in USA and Netherland are incurring losses. Thus, when the AEs themselves are not the end customers and their remittance to the assessee, in turn, depends upon the remittances by the end customers, it cannot be said that the AEs have benefitted because of delay in remitting the receivables. As before the TPO the assessee had furnished certain evidences including the bank statements of subsidiaries and reconciliation statement reconciling the time gap in amounts receivable from subsidiaries and from third parties. These evidences furnished by the assessee, certainly, support assessee s claim that the delay in receivables was purely because of the delay in receipt from end customers. In fact, learned Commissioner (Appeals) has also appreciated this fact. Thus, after taking into consideration the entire factual we are of the view that the adjustment made on account of delayed receivables has to be deleted. Transfer pricing adjustment on account of customization fee - CIT-A deleted the addition - HELD THAT:- As relying on assessee s own case [ 2010 (8) TMI 750 - ITAT MUMBAI ] though the subsidiaries are not directly involved in the customization work of the software but at the same time they are only authorized to collect the customization work in the market and other independent distributors are not doing said work. It is also seen that some of the independent distributors are paid higher commission then the subsidiaries without doing any job for collection of customization work. Moreover, the Learned D.R. could not controvert the findings of the Learned CIT (A) before us. TP adjustment made towards granting fee on loan extended by the assessee to the AE - HELD THAT:- As rightly observed by learned Commissioner (Appeals), question of providing a corporate guarantee will arise in a situation where the borrower has obtained debt from third party lender. In the facts of the present case, the assessee itself has advanced the loans to the AEs and has charged interest at the appropriate rate of LIBOR + certain basis points. No material has been brought on record by the TPO to demonstrate that the rate of interest charged by the assessee on the loans advanced is not at the appropriate rate prevailing in the countries, where the AEs are located. Therefore, in the aforesaid factual position, when the assessee has charged interest on the loans advance, there is no question of additionally charging guarantee commission for provision of corporate guarantee. - Decided in favour of assessee.

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• 2021 (10) TMI 1052
  Addition u/s 68 - Unsecured loan entries facilitated - discharge of primary onus - identify , creditworthiness of lender and genuineness of transactions and discharge of primary onus or not? - addition based on information received from DCIT,Circle-2(4) Ahmedabad - HELD THAT:- No independent finding was given by Ld. CIT(A) except holding that mere filing of confirmation, bank statement, copy of return of income is not sufficient to prove the genuineness of transaction and creditworthiness of lenders. CIT(A) has not given any finding as to what more evidence was required to file if any other evidence was required from the assessee. In our view the assessee has discharged the primary onus in showing the identity, creditworthiness and genuineness of such transaction. We further find that similar addition of the same amount was made in the hand of facilitator Dhirajlal Sanghvi [ 2019 (10) TMI 1369 - ITAT AHMEDABAD ] As in view the decision of Hon ble ITAT Ahmedabad Bench in case of facilitated Dhirajlal V Sanghvi (supra), wherein it was held that he had acted as facilitator in providing the funds to the investors and from this purpose he had made noting of funds which were remitted by third party and received by another third party. Hence, we are of view that once the assessee has discharged the primary onus, the Assessing Officer without brining any adverse evidence was not justified in making addition under section 68 of the Act. This ground of assessee s appeal raised by assessee is allowed.

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• 2021 (10) TMI 1051
  Exemption u/s.11 - Charitable activity u/s 2(15) - assessee is a registered entity u/s 25 of The Companies Act, 1956 and holds valid registration u/s 12AA since the year 2005 and hitherto allowed exemption u/s 11 / 12 as applicable to a charitable trust - AO denied the same in this year by holding that the assessee collected maintenance charges, track rent and earned income from other sources which would be in the nature of commercial receipts and therefore, the activities were hit by proviso to Sec. 2(15) - HELD THAT:- As in INDIA TRADE PROMOTION ORGANIZATION VERSUS DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS) OTHERS [ 2015 (1) TMI 928 - DELHI HIGH COURT] if the institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it would be an institution established for charitable purposes. It was also observed that merely because a fee or some other consideration is collected or received by the assessee, it would not lose its character of having been established for a charitable purpose. The dominant activity of the assessee was to be examined. If it was not business, trade or commerce then any such incidental or ancillary activity would also not fall within the categories of business, trade or commerce. Hon ble Allahabad High Court in CIT V/s Lucknow Development Authority [ 2013 (9) TMI 570 - ALLAHABAD HIGH COURT] has held that where a trust is carrying on its activities for the fulfillment of its aims and objectives which are of charitable in nature with no motive to earn profit and in the process, earns some profit, the same would not be hit by proviso to Section 2(15). Thus, it is fairly settled legal position that it is the pre-dominant objective which would be relevant to examine the applicability of proviso to Sec.2(15). The Ld. CIT(A) after examining the primary objects of the assessee as well as the purpose for which it was established, came to a conclusion that the primary objective was charitable in nature and collection of fees was not to earn profit. Therefore, the assessee did not cease to be charitable in character so as to render it ineligible to claim benefits u/s 11 and 12. We concur with these findings of Ld. CIT(A) and consequently, dismiss the revenue s appeals for all the years.

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• 2021 (10) TMI 1050
  Nature of land sold - gain on sale of land - agricultural land or capital asset - distance between the Municipal limit and agriculture land - why the agricultural land should not be treated as capital asset within the meaning of section 2(14)? - AO treated the agricultural land as capital asset by taking view that aerial distance of land is less than 8 kms from Municipal Limit of Surat - whether CIT (A) was justified in allowing the appeal of the assessee as not appreciated that even the word road distance does not constitute the distance followed by the traffic Rules? - HELD THAT:- We find that CBDT in Circular No.17/2015 while accepting the decision of Hon ble Bombay High Court in Smt. Maltibai R Kadu [ 2015 (4) TMI 227 - BOMBAY HIGH COURT] held that measurement of aerial distance is to be applied prospectively, therefore, considering the facts and circumstances of the case, particularly the finding of ld.CIT(A) that distance of land measured road is more than 8 kms, therefore, we affirm the order of ld.CIT(A). No contrary decision is brought to our notice to take other view. In the result the grounds of appeal raised by the revenue are dismissed.

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• 2021 (10) TMI 1049
  Estimation of income - Bogus Purchase u/s 69C - HELD THAT:- The assessee has shown Gross Profit @ 6.3% and Net Profit @ 4.69%, which is in line in the business of diamonds. We find that the impugned purchases are less than 10% of the total transactions of the assessee. Assessee has not fully substantiated purchases, the Revenue Authorities are not entitled to make addition @ 100% of the transaction rather to tax the income component in the said transaction - Lower Authorities has not discarded the documentary evidence furnished by assessee. The Lower Authorities basically relied upon the report of Investigation Wing. Therefore, considering the peculiarity of the facts and circumstances of the case, we are of view that to avoid the possibility of revenue leakage, the disallowance of token amount of Rs. 20,000/- will meet the end of justice.

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• 2021 (10) TMI 1048
  Rectification of mistake - disallowance of interest expenses for want of non-deduction of tax at source while making payment of interest - HELD THAT:- As gone through the order dated 10.12.2020 order passed by the AO while giving effect to the order of Tribunal vide his order dated 12.04.2021 and the subsequent order passed u/s 154 of the Act, withdrawing the relief is granted to the assessee in terms of order of tribunal. AO initially while following the direction of Tribunal, verified the fact and granted relief to the assessee. However, the relief granted to the assessee was withdrawn by AO on the same day in order passed u/s 154. We find that the AO passed the subsequent order without giving opportunity of hearing - we find that the ld.AR of the assessee failed to point out any mistake apparent in the order dated 10.12.2020. Therefore, the application filed by the assessee under section 254(2) of the act is dismissed - Miscellaneous Application filed by the assessee is dismissed.

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• 2021 (10) TMI 1047
  Non addition of additional grounds of appeal in revised return - Deduction u/s 36(1)(viia) - additional claim was not accepted by the AO on the ground that he is not empowered to accept additional claim in absence of revised return - HELD THAT:- AO is not entitled to entertain fresh claim, however, these restriction is not applicable on the first appellate authority or on the Tribunal. We find that before the AO assessee claimed that due to calculation mistake the assessee claimed deduction u/s 36(1)(viia) however, they are entitled @7.5% of interest earned on the advances on rural loan. In our view it was not a fresh claim. AO should have examined the fact instead of rejecting the claim by raising legal objection. To avoid any further objection by the lower authority, we admit the additional claim of the assessee and restore the issue back to the file of AO to examine the facts as to how much interest earned by the assessee on rural advances and allow relief to the assessee in accordance with law. Ground of appeal raised by the assessee is allowed for statistical purpose.

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• 2021 (10) TMI 1046
  Estimation of income - Bogus purchases - disallowance at 10% of disputed purchases made during the year - assessee is one of the beneficiaries of various dealers who provide only accommodation entries without any delivery of goods based on the information received from Sales Tax Department, Mumbai - HELD THAT:- Taking the totality of the facts and circumstances into consideration we are of the view that ends of justice would be met if the disallowance is sustained at 6% of the alleged bogus purchases considering the fact that even the Assessing Officer in his remand report did not dispute the records in respect of purchases, consumption, sales as well as the stock reconciliation etc., furnished by the assessee - we direct the AO to restrict the disallowance to 6% of the alleged bogus purchases. Ground raised by the assessee on this issue is partly allowed. Deduction u/s. 35(2AB) - assessee company has incurred expenditure on research and development activities and has claimed additional deduction u/s. 35(2AB) - application for approval in form 3CK was made after the close of the Financial Year - HELD THAT:- Merely because approval is received in the subsequent year, the deduction u/s 35(2AB) could not be denied to the assessee - denial of deduction u/s. 35(2AB) of the Act on the ground that the application for approval in form 3CK was made after the close of the Financial Year is also unsustainable. See BANCO PRODUCTS (INDIA) LTD.[ 2018 (7) TMI 1559 - GUJARAT HIGH COURT] - we have no hesitation in holding that the deduction u/s.35(2AB) as claimed by the assessee is to be allowed. Hence, the deduction u/s 35(2AB) as claimed by the assessee is allowed. Disallowance u/s 14A r.w.r. 8D - CIT-A deleted the addition - HELD THAT:- It is the finding of the Ld.CIT(A) that the financial statements of the assessee shows that it had sufficient own funds to make the investments on equities. The Ld.CIT(A) following the decision of the Hon ble Jurisdictional High Court in the case of Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC BANK LTD. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] held that there is no case for disallowance of any interest under Rule 8D(2)(ii) of I.T. Rules. We do not find any infirmity in the order of the Ld.CIT(A) in deleting the interest disallowance. The order of the Ld.CIT(A) is affirmed on this issue. The ground raised by the revenue is rejected.

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• 2021 (10) TMI 1045
  Revision u/s 263 by CIT - Delayed employees contributions to the Provident Fund (PF) - addition u/sec. 2(24)(x) - Deposits on or before due date of filing of return u/sec. 139(1) - HELD THAT:- An order cannot be termed as erroneous unless it is not in accordance with law. If assessing officer makes assessment in accordance with law, the same cannot be branded as erroneous by the commissioner. The Commissioner is not empowered to substitute his view to the view already taken by the AO in accordance with law or judgements of the higher Courts. In the instant case the AO in view of the decisions of the Hon ble High Courts, had taken the plausible and favourable view to the Assessee, while considering the expenses qua employees contribution to the provident fund deposited on or before due date of filing of return u/sec. 139(1) of the Act, and hence the assessment order can not be termed as erroneous and prejudicial to the interest of the revenue. Consequently the directions of the ld. Pr.CIT to the AO to make the addition u/sec. 2(24)(x) of the Act to the income already assessed in the assessment order dated 31/08/2017 and to pass the consequential order accordingly, cannot survive. Assessee during the course of argument also raised an issue that Assessee s return of income was selected for scrutiny under CASS but for limited purposes i.e. other deductions and other expenses claimed in the profit loss account (as reflected in notice u/sec. 143(2) of the Act, dated 27/07/2016). The Assessee s contention is that once the case is selected for limited scrutiny and not covering the issue other than involved for the limited purposes as specified in the notice, then the revenue authorities are not entitled to travel beyond the parameters except while following the due procedure prescribed as per law and instructions issued by the CBDT instructions No.20/2015, dated 29/12/2015 and 05/2016, dated 14/07/2016 etc., but not otherwise. The Assessee also relied upon the order passed by the coordinate bench of the tribunal in the case of M/s. Suraj Diamond Dealers Pvt. Ltd. [ 2019 (12) TMI 26 - ITAT MUMBAI] . As perused the other expenses and deductions debited in the profit loss account and the expenditure incurred and specified in the profit loss account for the year under consideration. The contention of the Assessee prima-facie seems to be correct, however as we are inclined to quash the impugned order on merit and therefore not travelling to this issue in detail, as the exercise would become academic only.

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• 2021 (10) TMI 1044
  Deduction u/sec. 54B - Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases - determination of distance of land - whether land in question falls beyond 8 km. from the local municipality? - conclusion of the Ld. Commissioner with regard to applicability of section 2(14)(iii)(b) is that the said section got amended w.e.f. 01/04/2014 where the distance is measured aerially, therefore, the amended provision is not applicable to A.Y. 2008-09 - HELD THAT:- If we consider the conclusion of the ld. Commissioner to the effect that provisions of section 2(14)(iii)(b) which got amended w.e.f. 01/04/2014 will not be applicable to A.Y. 2008-09 qua the case of the Assessee, then in principle the provisions prior to shall be applicable, whereby in 1994 the Central Government has notified the areas within the limits of Visakhapatnam municipality and as per that notification, the Assessee s land in question is undoubtedly falls beyond 8 km. from municipal limits and thereafter no notification has been issued by the Central Government. Meaning thereby, the notification of 1994 still construed as in existence. Even otherwise, the coordinate bench of the tribunal in the case of Jasti Vayunandana Rao [ 2010 (10) TMI 1082 - ITAT VISAKHAPATNAM ] dealt with the exactly similar issue related to the A.Y. 2008-09 itself, of the same village i.e. Kapuluppada village, Bheemunipatnam Mandal of Vizag, where the land in question before the Co-ordinate Bench and the land sold by the Assessee is situated. The co-ordinate bench of the tribunal thoroughly examined the issue and came to a conclusion that undisputedly the impugned land was initially situated beyond 8km. from the municipal limit of Visakhapatnam Municipal Corporation, but later on, on incorporation of Greater Visakhapatnam Municipal Corporation, it falls within 8 km. from the Visakhapatnam limits, but no notification as required u/sec. 2(14) was issued in the official gazette by the Central Government to bring the land within the purview of section 2(14)(iii)(b). The Central Government is required to issue notification in the official gazette and without notification land falls within 8 km. from the local limits of any municipality would not declare to be an agricultural land. Thus we do not have any hesitation to set aside the order passed by the ld. Commissioner and to delete the addition as income of the previous year as per section 54B(1)(i) as held by the AO and sustained by the Ld. Commissioner. Consequently, the addition stands deleted - Decided in favour of assessee.

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• 2021 (10) TMI 1043
  Delayed payment qua employees share of ESI and PF - deposit of employees contribution qua ESI PF after the prescribed dates as per the relevant Acts i.e. ESI PF, but before filing of return u/sec. 139(1) - contention of the Assessee is that PF and ESI contribution of Employees, if paid within the due date of filing of return of income u/s 139(1) of the Act, then the same is allowable for deduction as per section 43B - HELD THAT:- We are of the considered view that as in the instant case, the employees contribution qua ESI PF for the Asst. Year: 2019-20 has been deposited before the due date of furnishing the return of income u/sec. 139(1) of the Act and therefore cannot be subjected to disallowance, consequently, the addition sustained by the ld. Commissioner (NFAC) is liable to be deleted. - - Decided in favour of assessee.

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• 2021 (10) TMI 1042
  Addition of commission paid to overseas agent - assessee was unable to prove the need for commission @ 25% paid to M/s. Khadlaj Perfumes LLC, whereas commission incurred with other parties was @ 0.5% to 5.85% - HELD THAT:- Assessee in this case has paid commission to its overseas commission agent. Agreement has been duly submitted. Payment has been duly made to the overseas commission agents. The same is duly approved by the RBI. AO has questioned necessity of high rate of commission. In his opinion lower commission was to be paid. No case has been made out that the payment is bogus. In fact there was search and seizure operation at the premises of the assessee and no evidence was unearthed that the payments were bogus and non-genuine. Names and address of the overseas commission agents were very much there with the Assessing Officer. He insisted the assessee to produce principal officer of the overseas entity. Assessing Officer has made no effort whatsoever to make any independent examination of his own. He sits in the shoes of the businessman and decided that lower rate of interest should have been charged. In our considered opinion this is legally totally unsustainable. CIT(A) has elaborately examined the issue and after detailed analysis of the factual data has come to the conclusion that the assessee s performance has hugely increased pursuant to support from the commission agents. In this view of the matter in our considered opinion learned CIT(A) has passed a correct order. Addition made by the Assessing Officer is solely based upon surmises and conjecture without any cogent independent verification on record. See RAJARANI EXPORTS PVT LTD [ 2013 (5) TMI 410 - CALCUTTA HIGH COURT] . TP Adjustment - transfer of fund for equity capital - assessee advanced interest free loan to its subsidiary - HELD THAT:- As assessee has given funds to its subsidiary initially which has been converted later on into equity capital. For the intervening period the Assessing Officer has charged 10% notional interest. The Revenue was relied upon the case of Perot System TSI India Ltd.[ 2009 (10) TMI 638 - ITAT DELHI] . There was no issue of conversion of fund into equity in the case of Parot System TSI India Ltd. (supra). However in the present case the plea is that fund transferred was for conversion into equity and there was some procedural delay. This has been accepted by learned CIT(A) on the touchstone of the ITAT Ahmedabad decision in the case of Micro Inks Ltd. [ 2009 (10) TMI 638 - ITAT DELHI] We find that the proposition that transfer of fund for equity capital does not attract transfer pricing adjustment. Assessment u/s 153A - addition when no incriminating material was found and these were completed assessment - HELD THAT:- Hon ble Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] has held that in the case of completed assessment no addition can be made under section 153A of the Act dehorse any incriminating material found. It is not disputed that upto A.Y. 2006-07 these were completed assessment and no incriminating material was found. To this extent this ground raised by the Revenue stands dismissed. Addition of staff welfare expenses - AO also disallowed expenses on account of purchase of goats for distributing it to its employees for Eid celebration - CIT(A) has upheld the addition by holding that there is nothing to indicate that this expenditure was incurred specifically on the employees of the assessee company and there is no detail available as to the number of employees of the assessee company, the number of employees who are Muslims and the reasonableness of the said expense - HELD THAT:- We find that learned CIT(A) has passed reasonable order. In the absence of necessary details in this regard expenditure involved cannot be allowed as business expenditure. The decision of Borsad Tobacco Co. P. Ltd. [ 2019 (9) TMI 1600 - ITAT MUMBAI] referred by learned Counsel of the assessee are not applicable on the facts of this case. Hence, we uphold the order of learned CIT(A) Expense for obtaining special number for car - as per AO there is no benefit to business in any way and therefore he disallowed the expenses - HELD THAT:- We find that the orders of the authorities below are appropriate that expenditure for obtaining fancy number for the car is not at all business expenditure. Hence, there is no question of allowing the same as revenue expenditure or capitalizing the same and allowing depreciation thereon. Hence, we uphold the order of learned CIT(A). Excess physical stock found in search - HELD THAT:- We find that the addition in this regard is based upon the excess stock found during search and we do not find any infirmity in the order of the authorities below. Even the assessee is taking shifting stand partly accepting and partly denying the veracity of findings. This is not sustainable. Hence, we uphold the same. Excess cash found - amount of the seized cash would be added to the Total Income u/s. 69A - We find that the assessee has contended that it was never a case the assessee has not pressed for this ground. Hence, in our considered opinion this issue has been left unadjudicated by learned CIT(A). Moreover the Assessing Officer has rejected the assessee s explanation without mentioning as to what was the explanation. Hence, in the interest of justice we remit this issue to the file of learned CIT(A). The learned CIT(A) is directed to consider this issue afresh and decide as per law. Addition of commission paid to overseas agent - HELD THAT:- As decided in own case commission on export activity had been fully disclosed in all correspondences and activities in relation to export, the commission was paid through banking channel of RBI approval and it was paid pursuant to an agreement approved by Government of India and UN. The payment of commission was for business consideration and there was apparently no illegality in making payment of commission. Besides this, nothing has brought on record to show that the transactions relating to payment of commission are non-genuine or are excessive and unreasonable. Unexplained purchases - HELD THAT:- We find that the addition has been made by the Assessing Officer without any cogent material. The assessee has supplied all purchase/evidence. This has been rejected by the Assessing Officer without any reasoning whatsoever. Moreover learned CIT(A) has also given finding that the said purchase was not routed through profit and loss account as expenditure. For all these reasons we do not find any infirmity in the order of learned CIT(A). Hence, we uphold the same.

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• 2021 (10) TMI 1041
  Addition u/s 68 - advances for agricultural land as shown by the assessee - assessee failed to provide necessary evidences to prove the genuineness or transactions and creditworthiness of the persons giving advances - CIT-A deleted the addition - HELD THAT:- Addition as made by the Assessing Officer on account of advance received against sale of land by invoking the provisions of section 68 of the Income-Tax Act, 1961 were unjustifiable since the amount of advances received by the assessee were subsequently adjusted against the sales made by the assessee and the same was also verifiable from the registered sale deeds - AO was not justified in treating the amount of advance received by the assessee as his income as the AO failed to consider the fact that the assessee had sold agricultural land belonging to him to Shri Rakesh Agrawal in lieu of consideration which included the amount of advance received from the said party. Accordingly, we are of the view that the additions made by the Assessing Officer were rightly deleted by the Ld CIT(A). - Decided against revenue. Additions u/s 68 - unsecured loan from various persons - HELD THAT:- On perusal of the remand report, we find that the Assessing Officer did not comment on any of the documents filed by the assessee during the course of the appellate proceedings rather the Assessing Officer reiterated the findings of the then Assessing Officer. Thus, it is clear that the Assessing Officer failed to controvert the genuineness of the transaction and identity as well as creditworthiness of these parties. As from documentary evidences, it is apparent that the assessee satisfactorily discharged the primary onus cast upon him under section 68 of the Income-Tax Act, 1961 to establish the identity and creditworthiness of these parties and genuineness of the transactions as entered into with them. Taking into consideration all these facts, the ld. CIT(A) examined each and every entry in respect of unsecured loan received from the creditors and reached to the conclusion that the addition made by the Assessing Officer is unjustified. In view of these facts, we are of the view that it is a settled position of law that no addition is called for under section 68 of the Income-Tax Act, 1961 on account of unsecured loans if the assessee establishes the identity and creditworthiness of the parties and genuineness of the transactions as entered into with them - Decided against revenue. Disallowance of interest out of property income and on account of disallowance of interest out of income from other source - HELD THAT:- We find that copy of repayment schedule/ loan statement in respect of the loan taken from ICICI Bank Ltd. and State Bank of India have been filed so as to justify the amount of interest paid and claimed as deduction during the year under consideration. In view of these facts, it is clear that the disallowance made by the Assessing Officer was unjustified as the borrowed funds were utilized towards purchase of the properties which were let-out and rental income earned therefrom was offered for tax under the head Income from House Property and more so when such deduction on account of interest was allowed in the preceding as well as subsequent years. Therefore, we do not find any reason to interfere with the order of the ld. CIT(A) on this point. Accordingly, ground of the Revenue is dismissed. Addition on account of interest claimed under the head Income from Other Sources - assessee failed to prove the direct nexus of funds borrowed and advanced to the parties from whom interest income was earned - HELD THAT:- It is clear that the disallowance made by the Assessing Officer was unjustified as the borrowed funds were utilized towards advancement of loan to the parties from whom interest income was earned and was duly offered for tax under the head Income from Other Sources and more so when such deduction on account of interest was allowed in the preceding as well as subsequent years. Therefore, we do not find any reason to interfere with the order of the ld. CIT(A) on this point. Accordingly, ground no.4 raised in the appeal of the Revenue is dismissed. Taxability of agricultural income as income from other sources - HELD THAT:- We find that the assessee had submitted before the Revenue Authorities that that agricultural land owned by him was given on Batai and agricultural income earned therefrom was duly shown in the income-tax return and the Assessing Officer himself did not disbelieve the agricultural lands owned by the assessee. Further, the assessee has filed the detail of the persons to whom agricultural land was given on Batai and from whom agricultural income was received during the year along with the details with respect to area of land - the amount of agricultural income was duly shown by the assessee in his income-tax return every year and the agricultural income shown by the assessee had also been duly examined and accepted in the preceding as well as subsequent years. On consideration of above facts, it is clear that non-acceptance of agricultural income shown by the assessee in his income-tax return was unjustified more so when agricultural income was shown by the assessee on a year-to-year basis and such agricultural income had also duly been examined and accepted in the preceding as well as subsequent years. Thus, we direct the Assessing Officer to accept the agricultural income in full. Disallowance u/s 40(a)(ia) of the I.T. Act for non-deduction of TDS on the amount of late payment charges - benefit of the second proviso to section 40(a)(ia) - HELD THAT:- As second proviso to section 40(a)(ia) of the Act shall have retrospective effect from 01-04-2005 and in the present case, the relevant assessment year is the Assessment Year 2010-11 and the benefit of the second proviso to section 40(a)(ia) of the Act shall be available to the assessee as the assessee had obtained and furnished the certificate of the CA of the broker wherein it has been clearly certified that the amount on which TDS not deducted by the assessee was included in the total income of the payee and requisite amounts of taxes due were also paid on it. Therefore, we do not find any reason to interfere with the order of the ld. CIT(A) on this point. Accordingly, ground no.6 raised in the appeal of the Revenue is dismissed.

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• Corporate Laws

• 2021 (10) TMI 1040
  Sanction of scheme of Amalgamation - Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 and in terms of Rule 15 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- The objections/observations to the Scheme received from RD, RoC, OL, BSE, and IT Department have been adequately replied by the Applicant Companies and hence, there is no impediment in approval of the Scheme. The scheme is approved - application allowed.

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• Insolvency & Bankruptcy

• 2021 (10) TMI 1039
  Admissibility of application - monetary amount involved in the appeal - power of tribunal to review application - Fraudulent acts of the Respondents - pivotal submission is that Fraud vitiates the entire judicial proceedings and that if such fraudulent acts of the Respondents are permitted and the order passed by this Appellate Tribunal is not recalled - HELD THAT:- Resting upon Review the Tribunal would not rehear the parties on Facts and Law. No wonder, a re-appraisal of evidence on record for unearthing an error will amount to an exercise of Appellate Jurisdiction which is not permitted in Law. A Review is not to be sought for a Fresh Hearing or Arguments or Correction of an erroneous view taken earlier. It is the well laid down proposition of law that in the absence of any power of Review or Recall vested with the Adjudicating Authority Appellate Authority , an order/ judgment passed by it cannot be either Reviewed or Recall as opined by this Tribunal - It cannot be gainsaid that there is no express provision for Review under the National Company Law Appellate Tribunal Rules, 2016. Moreover, the Applicant/Appellant cannot fall back upon Rule 11 of the NCLAT Rules, 2016 which provides for inherent powers . In fact, Rule 11 of NCLAT Rules, 2016 is not a substantive Rule which showers any power or jurisdiction upon the Tribunal . Undoubtedly, the Tribunal has no power to perform an act which is prohibited by Law. This Tribunal taking note of the prime fact that the Applicant/Appellant has sought for recalling the judgement passed by this Appellate Tribunal is impermissible in Law - application dismissed.

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• 2021 (10) TMI 1038
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Existence of debt and dispute or not - time limitation - proper service of demand notice or not - HELD THAT:- The demand notice was sent to the registered address of the corporate debtor on 21.06.2018. It can be seen that the corporate debtor has replied to the Demand Notice on 29.06.2018 (Annexure-II(A)-24. Therefore, the question of non-delivery of Demand Notice does not arise at all. It can be seen that the operational creditor has replied to the response/reply vide notice dated 11.07.2018. In view of the same, it is held that demand notice has been duly served. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The respondent-corporate debtor has filed reply and raised objections with regard to quality of material supplied by the operational creditor. It can be seen that respondent has raised the same objection in its reply to Demand Notice dated 29.06.2018. However, the corporate debtor has raised the objections for the first time only after issuance of Demand Notice dated 21.06.2018 and has failed to show that if any dispute was raised prior to the issuance of Demand Notice. Thus, the dispute was raised for the first time only after service of Demand Notice, therefore it cannot be treated as pre-existing dispute. Hence, this issue is held in favour of the petitioner. Time Limitation - HELD THAT:- It can be seen that the invoices and lorry receipts Annexure 1(A)-1 to Annexure 1(A)-18 pertains to the years 2014 and 2015. The present application is filed on 13.07.2018. It can be seen from the Balance Confirmation letter dated 31.03.2016 issued by the corporate debtor, that the corporate debtor has acknowledged the debt amounting to Rs. 93,05,491/- towards operational creditor. Thus, the CP is well within the period of limitation. It has been shown that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. It is also observed that the conditions under Section 9 of the Code stand satisfied. Accordingly, the petitioner proved the debt and the default, which is more than Rs. 1 lakh by the respondent-corporate debtor - the present petition being complete and having established the default in payment of the Operational Debt for the default amount being above Rs. 1,00,000/-, the petition is admitted in terms of Section 9 of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code. Petition admitted.

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• 2021 (10) TMI 1037
  Liquidation of the Corporate Debtor - Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- This Tribunal is of the view that the endeavours to obtain resolution of corporate debtor has failed and CoC in its commercial wisdom decided to liquidate the corporate debtor which does not require any interference, thus in present circumstances the CoC decision is appropriate. The corporate debtor KK Milk Fresh India Ltd., stands liquidated and the incidence of liquidation to follow, on and from the date of this order in terms of the provisions of IBC, 2016 and more particularly as given in Chapter-III of IBC, 2016 and also in terms of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 - Application allowed.

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• 2021 (10) TMI 1036
  Seeking approval of Resolution Plan - section 30(6) and 31 of the IBC, 2016 read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- The resolution plan is for the amount of Rs. 96.50 crores, which is to be paid in 150 days from the date of approval of Resolution Plan by this Adjudicating Authority and all the funds shall be sourced by the Resolution applicant through its internal sources which includes the working capital and through its FDR of Rs. 30,50,00,000/- with Yes Bank in the name of the Group Companies and the balance amount will be paid through the internal resources of the company - the resolution plan, as approved by the CoC, is found in accordance with the sub-section 2 of Section 30 read with Section 31 of the Code, thus the Resolution Plan under sub-section (1) of Section 31 of the Code is approved. The Resolution Applicant is allowed to remove and/or substitute the Monitoring Agency with prior approval of this Adjudicating Authority if the Monitoring Agency is unable to satisfactorily perform its responsibilities or breaches terms of its appointment. The resolution plan, as approved by the CoC, is found in accordance with the sub-section 2 of Section 30 read with Section 31 of the Code - the scheme is approved - application allowed.

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• 2021 (10) TMI 1035
  Liquidation of Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Appointment of Liquidator-Section 34(1) of the Code provides that where the Adjudicating Authority passes an order for liquidation of the corporate debtor under Section 33, the resolution professional appointed for the corporate insolvency resolution process shall, subject to submission of written consent act as the Liquidator for the purpose of liquidation. In the present case, the Resolution Professional has sufficient time available to file an application before Adjudicating Authority for liquidation of corporate debtor i.e. from 07.03.2021 till 23.03.2021. However, the application was filed on 02.11.2020 and no explanation with regard to the delay at least from 07.03.2021 to 23.03.2021 i.e., the date of passing of the resolution by CoC for liquidation of the Corporate Debtor to the date of imposition of Ist lockdown, has been given in the application. In view of the lackadaisical conduct of the RP, we are of the view that RP should not be continued as Liquidator in the present case. The corporate debtor Addinath Rubbers Private Limited is directed to be liquidated in the manner as laid down in Chapter III of the Code - Application allowed.

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• 2021 (10) TMI 1034
  Approval of resolution plan - section 30 (6) of Insolvency and Bankruptcy Code, 2016 read with section 31 of IB Code and Regulation 39 (4) of The Insolvency and Bankruptcy Board of India (Insolvency Process of Corporate Persons) Regulations, 2016 - HELD THAT:- The Resolution Plan provides for the settlement of the claims of various stakeholders. The Resolution Plan also provides the background of the successful Resolution Applicant and its associates, and the financial capabilities of the successful Resolution Applicant. Hereafter, Resolution Plan is both feasible and viable, Resolution Plan also contains the procedure for its effective implementation of the Resolution Plan - the Resolution plan also provides for the appointment of RP as the person in charge to look after the implementation of the Resolution Plan. The Resolution Plan has also addressed the issues which resulted in the Insolvency of the Corporate Debtor and future business plan so as to such a situation does not arise again. The Resolution Plan filed with the Application meets the requirements of Section 30 of IB Code, 2016 and Regulations 37, 38, 38(1A) and 39 (4) of IBBI (CIRP) Regulations, 2016 - resolution plan is approved - application allowed.

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• 2021 (10) TMI 1033
  Seeking grant of extension of time to continue the liquidation process for further period of one year with the exclusion of the lockdown period - HELD THAT:- It is seen from the averments made in the application, that liquidation in relation to the Corporate Debtor was ordered by this Tribunal on 27.08.2019 and as such the Liquidation period in relation to the Corporate Debtor is required to be completed on or before 27.08.2020. The Applicant in the Application has averred that the avoidance applications filed by Liquidator are yet to be adjudicated by this Tribunal and till such time the avoidance application is adjudicated, the Liquidation process in relation to the Corporate Debtor cannot be completed. Further, it is also seen that the assets of the Corporate Debtor are yet to be sold. This Authority feels that it is just and proper to extend the Liquidation period for a further period of one year and as such the Liquidation period of the Corporate Debtor is extended for a period of one year and the Liquidation process in relation to the Corporate Debtor is required to be completed on or before 20.12.2021 - Application allowed.

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• 2021 (10) TMI 1032
  Directions of this Tribunal complied by the Respondents or not - Applicant submitted that the Respondents/Corporate Debtor has not handed over the books and records to the Applicant - HELD THAT:- It is seen that the documents in relation to the Corporate Debtor had already been handed over to the Applicant and the documents in relation to the Guduvancherry and Thiruvallur property belongs to 1st and 2nd Respondents. Further, it is averred that the documents relating to company affairs before the month of November 2015 were destroyed in the flood which happened during the year 2015. The Respondents are directed to extend full co-operation to the Liquidator in case of any documents are being sought for in future, for completion of the Liquidation process in relation to the Corporate Debtor - application disposed off.

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• Central Excise

• 2021 (10) TMI 1031
  Manufacture - whether the activity of metalizing undertaken by the assessee amounts to manufacture or not? - HELD THAT:- There are no reason to deviate from the finding of fact recorded by the Tribunal, which is consistent with the record of the case. The conclusion reached is inevitable - there is no merits in this appeal and the same is dismissed.

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• 2021 (10) TMI 1030
  Rejection of application for settlement of disputes under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 - excisable goods - supplies made as against international competitive bidding to power projects, under exemption - Department adopted the view that the commodity supplied, being lubricant, was only used as a coolant/lubricating agent and hence did not entitle the petitioner to the exemption sought - HELD THAT:- The incidence of duty must not be looked at a mechanical event but a constructive one, that contains all incidents of a taxable event. Thus, to attract levy of duty, a practical point of view must also be called into play to determine whether the goods are marketable or capable of being marketed. Though in that case the Court was concerned with whether the commodity in question was capable of being marketed as a distinct and marketable product, the observations made would apply to the present scenario as well, since in the present case, there is no rate of duty that is set out alongside lubricants that may be applied to a transaction of manufacture and sale of the said lubricant. Thus, even though the product in this case is marketable, it does not answer to the question of excisable goods as, practically there can be no levy of duty thereupon in the absence of a stipulated rate and applicable rate of duty. Thus, notwithstanding that the language of Section 125(h) of the SVLDRS Scheme uses the phrase with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944 , the use of the word excisable cannot be seen to be cosmetic, but must contain some purpose - Mere mention of the commodity without the rate of tax would serve no purpose as far as excisability is concerned. Neither the judgment of the Hon ble Supreme Court in the case of MOTI LAMINATES PVT. LTD. VERSUS COLLECTOR OF CENTRAL EX., AHMEDABAD [ 1995 (2) TMI 67 - SUPREME COURT] , the General Rules of interpretation to Schedule 4 of the Act nor the Clarification of the OSD have been brought to the notice of the Division Bench of the Allahabad High Court while considering the case of M/S INDIAN OIL CORPORATION LIMITED VERSUS UNION OF INDIA AND 2 OTHERS [ 2020 (12) TMI 316 - ALLAHABAD HIGH COURT] and for these reasons, this decision is distinguishable. Petition allowed.

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• 2021 (10) TMI 1029
  Activity amounting to manufacture or not - fixing of a lens in a spectacle frame - Remission of Excise Duty - activity of fixing of prescription lenses in spectacle frames - HELD THAT:- A perusal of the show cause notice reveals that the activity carried out in the show rooms was the manufacture and clearance of spectacles carrying Titan Eye+ Brand. Though adverse inferences are sought to be drawn by the respondents on other grounds as well, such as violation of conditions contained in Notification 8/2003-CE dated 01.03.2003, this point has not been argued and both the parties before me have confined the scope of the arguments to (i) whether the respondents were right in law in having issued the impugned show cause notices inspite of binding judicial precedents to the opposite effect and (ii) whether the assembly of prescription lenses on to a spectacle frames is an activity that amounts to manufacture attracting levy of duty under the Act. The petitioners would specifically confirm that manufacture of the power lens i.e., the conversion of lens blanks into prescription lens is a taxable activity and that such activity takes place in the workplace/factory. They also confirm that the frames used are either imported or manufactured indigenously in a factory, subject to central excise duty. These two activities i.e. manufacture of the spectacle frames and prescription lenses are, admittedly excisable events and the petitioners are liable to remit duty in regard to the aforesaid two events, where applicable. The petitioners also engage in sale of ready-made eye-wear that is purchased by customers, off-the-shelf. Post manufacture of the spectacle frames and lenses, the goods are sent separately to the petitioners show rooms and what is undertaken in the show room is only an assembly of the prescription lenses and the spectacle frames wherein the lenses are merely mounted upon the frames, to result in a spectacle - The process of assembly is bound to involve some amount of refining and fine-tuning of the individual components and this, by itself, will not tantamount to manufacture. In fact, most establishments engaged in selling eye-wear provide a gamut of services in this area including, having an optician in their employ or on call, and infrastructure for the testing of vision. Thus, notwithstanding that a distinct commercial product is obtained upon assembly of a lens with a spectacle frame, this would not result in such assembly being equated to manufacture. The judgments in the cases of BHOLANATH SREEMANY VERSUS ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES AND OTHERS [ 1978 (7) TMI 225 - CALCUTTA HIGH COURT] and M/S AMAZON SELLER SERVICES PRIVATE LIMITED, BANGALORE VERSUS THE COMMISSIONER OF CENTRAL EXCISE, THANE-I [ 2016 (3) TMI 69 - AUTHORITY FOR ADVANCE RULINGS] decide and reiterate the issue of whether the activity of assembly simpliciter including fitting and minor adjustments that are part and parcel of the process of assembly, constitute manufacture for the purposes of the Act, in favour of the assessee. The show cause notices, to this extent, and insofar as they purport to equate the process of assembly to manufacture, are quashed. Petition allowed.

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• 2021 (10) TMI 1028
  Rebate Claim - rejection on the ground that since the goods exported vide the said ARE-I were reimported by the Applicants, it implied that the export was not completed - whether the rebate of Central Excise duty paid in respect of exported goods would be admissible when the goods were exported before advent of CGST regime but rebate claimed after it? - Rule 18 of Central Excise Rules, 2002 - HELD THAT:- As the goods were reimported and a credit note was issued against the proceeds realised, the lower authorities have taken a view that the export was not complete. As per Section 2(18) of the Customs Act, 1962, export with its grammatical variations and cognate expressions, means taking out of India to a place outside India . In the present case, the goods were taken out of India and reached buyer s place who returned them. Thus, it is clear that goods had been taken to and had reached a place outside India. Subsequent reimport of goods would not change this factual position. The findings of Commissioner (Appeals) on this count cannot be sustained. Further, the Applicants have correctly drawn attention to the provisions of Section 142(1) of the CGST Act, 2017 which provide for refund of Central Excise duty paid in accordance with the Central Excise Law if the Central Excise Duty had been paid for any goods at the time of their removal not earlier than six months from the appointed date i.e. 1-7-2017 and if the goods are returned within a period of six months from 1-7-2017 and are identifiable to the satisfaction of proper officer. In the present case, the goods were removed for export on payment of Central Excise duty on 22-6-2017 (i.e. not earlier than six months from 1-7-2017) and were imported back on 23-11-2017 (i.e. within six months from 1-7-2017). There is also no dispute regarding the identity of goods. The Government further observes that upon import, IGST was paid and no refund of IGST, so paid, has been claimed. Therefore, sanction of rebate of Central Excise duty paid will also not lead to any double benefit. In these facts and circumstances, the Government holds that the rebate claim is admissible. Application allowed.

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• CST, VAT & Sales Tax

• 2021 (10) TMI 1027
  Interpretation of statute - Section 8 (5) of the CST Act - inter-state sale - C-Form - changes brought about by the amending Act of 2002 governs only Section 8 (5)(a) and not Section 8 (5)(b) of the CST Act is right and justifiable? - Whether the Division Bench of the Hon ble High Court of Karnataka was justified in not considering the Notification No.FD 199 CSL 2002(4) dated 31.5.2002 in the right prospect, though the same was upheld by the Division Bench of the Karnataka High Court in W.A. No.2417 of 2007 dated 02.04.2009 in the case of M/s Volvo India Pvt. Ltd.? - HELD THAT:- Giving effect to the industrial policy 1996-2001, Government of Karnataka issued a notification bearing No.FD:32 CSL 96(II) dated 15.11.1996 under Section 19-C of the KST Act providing for tax exemptions or deferrals. Similarly, a corresponding notification dated 15.11.1996 was also issued under 19-C of Act read with Section 9 (2) of CST Act. The said notification issued under the CST Act exempted/deferred the tax payable under CST Act in respect of goods manufactured and sold in the course of inter-state trade and commerce by industrial units which are eligible and opted for the benefit prescribed under the notification dated 15.11.1996 issued under KST Act - The assessee had utilized FAVC tax exemption to a certain extent up to 01.04.2002. In the meantime, Section 8 (5) of the CST Act was amended with effect from 11.5.2002, thereby the benefit of tax exemption under Section 8 (5) of CST was made subject to the condition mentioned in Section 8 (4) of the CST Act pursuant to which the notification dated 31.5.2002 was issued by the Government of Karnataka specifying that exemption of tax shall be subject to the condition of furnishing declaration C / D forms by the assessee. It is now pointed by the learned counsel for the parties that said Special Leave Petitions are admitted and C.A. Nos. 473-480/2016 are pending, but no interim order of stay has been granted. In view of aforesaid, we have no hesitation to dispose of this petition answering question of law in favour of assessee and against Revenue subject to the result of C.A. Nos. 473-480/2016 pending before the Hon ble Apex Court. However, we make it clear that the dispute being confined herein to the exemption claimed in respect of inter-state sales turnover which is not supported by production of C or D forms, this decision would not come in the way for consequential adjustments. The question of law, with regard to interpretation of statute, is answered in favour of the assessee and against the Revenue - the question with regard to non-consideration of Notification No.FD 199 CSL 2002(4) dated 31.5.2002, does not arise for consideration in view of the first question, being answered in favour of the assessee - appeal dismissed.

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• Indian Laws

• 2021 (10) TMI 1026
  Offence punishable under Section 55(a) of Kerala Abkari Act - only evidence against the accused No.1 is of an alleged confession made by the accused No.2 - HELD THAT:- It is well settled that T.I Parade is a part of investigation and it is not a substantive evidence. The question of holding T.I Parade arises when the accused is not known to the witness earlier. The identification by a witness of the accused in the Court who has for the first time seen the accused in the incident of offence is a weak piece of evidence especially when there is a large time gap between the date of the incident and the date of recording of his evidence. In such a case, T.I Parade may make the identification of the accused by the witness before the Court trustworthy. However, the absence of T.I Parade may not be ipso facto sufficient to discard the testimony of a witness who has identified the accused in the Court - in the facts of the case, the evidence of PW13 as regards the identification of the accused Nos.2 and 4 in the Court cannot be accepted. PW8 was a police constable working at the concerned police station. He claimed that after the truck was stopped, three persons in the truck ran away. One was caught who disclosed that he was the driver of the truck. He identified the accused No.2 in the Court. However, he has not seen accused No.2 driving the truck. PW10 Shri N. George was a police constable attached to the concerned police station who claimed that after the truck was stopped, three persons inside the truck ran away and one person who was stopped, claimed to be the driver of the truck. However, he has not stated that he had seen the accused No.2 driving the truck. He also identified the accused No. 4 as a person who ran away from the truck. It is very difficult to believe that PW13 who was not knowing the accused Nos.2 and 4 prior to the incident could identify them in the Court after lapse of 11 years. That is also the case with all the official witnesses. The prosecution has chosen not to produce evidence regarding the correct registration number of the truck and the name of the registered owner thereof. Therefore, the entire prosecution case becomes doubtful. The impugned judgment and orders are hereby set aside and the appellants are acquitted of the offences alleged against them. Their bail bonds stand cancelled - Appeal allowed.

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• 2021 (10) TMI 1025
  Dishonor of Cheques - legally enforceable debt or not - Rebuttal of presumption - whether complainant alone is having the duty to prove that the cheques were issued for discharging the liability? - HELD THAT:- Primarily, in respect of filing of 4 cases by the complainant, he deposed before the trial Court that, all the cases were filed within the time stipulated under Section 138 of the Negotiable Instruments Act. Further, it is not in dispute on the side of the accused that the complainant has filed four cases after violating the limitations narrated in Section 138 of the Negotiable Instruments Act. Therefore, it was concluded that all the cases were filed within the limitation as contemplated under Section 138 of the Negotiable Instruments Act - It is another thing that the accused has not disputed the signature found in the cheques in dispute. Therefore, being the reason that the signatures found in the cheques were admitted by the accused, the statutory presumption comes into play. It should be presumed that being the reason that the signatures found in the cheques were admitted by the accused, this Court is in a position to presume that the said cheques have been issued to discharge the debt or liability - however, there can be no doubt that there is an initial presumption, which favours the complainant. Section 139 of the Negotiable Instruments Act is an example reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. Therefore, it is for the accused to rebut the presumption by adducing credible evidence that the cheques were issued as a guarantee or for some other reasons. After seeing the accounts maintained by the accused and after seeing the rejection orders given by J.J.M. Company, Chennai, this Court comes to the conclusion that due to belated delivery of the goods, the accused alone incurred loss and therefore, the cheques issued by him are not for discharging his liability - It is well settled legal position that the presumption under Section 139 of the Negotiable Instruments Act is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for doing so is that, on preponderance of probability. Therefore, to rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. The cheques pertain to these 4 cases, have been issued by the accused only to discharge the legally enforceable debt and being the reason, the same were dishonoured, it should be held that the accused had committed an offence under Section 138 of the Negotiable Instruments Act. The first appellate Court without appreciating the same in proper perspective, particularly, without understanding the onus of proof, has held that the accused is not guilty under Section 138 of the Negotiable Instruments Act and the said finding is not in accordance with law. Therefore, all these appeals are liable to be allowed.

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• 2021 (10) TMI 1024
  Dishonor of Cheque - insufficiency of funds - cheque issued by the petitioner or not - role played in the transaction with the defacto-complainant/respondent - offence punishable under Section 138 of the Negotiable Instrument Act - HELD THAT:- In the disposition of the dispute, the arbitrators shall be governed by the express terms of this agreement and otherwise by the laws of the State of (specify) which shall be govern the interpretation of the Agreement. The decision of the arbitrators shall be final and conclusive on the parties and shall be a bar to any suit, action or proceeding instituted in any court or before any administrative tribunal. Notwithstanding the foregoing, judgment on any award by the arbitrators may be entered in any court of competent jurisdiction. This arbitration provision shall survive any expiration or termination of the agreement. While perusing the records, it could be seen that the defacto complainant was working as an employee in the said Company and 2nd accused Mr. Saravanan General Manager of the firm in his personal capacity issued a cheque for liability as the arrears of salary to be paid to the defacto-complainant but the case under Section 138 of N.I. Act was filed against VT Manpower Consultancy Services Private Limited. - It could also be seen that there are allegations and counter allegations against each parties and as per clause 19 (Arbitration) of the Agreement of Employment of VT Manpower Consultancy Services Private Limited, the parties expressly agree that all disputes or controversies arising out of this agreement, its performance, or the alleged breach thereof, if not disposed of by agreement, shall be resolved by arbitration in accordance with this section. Either party must demand such arbitration only within three (3) months after the controversy arises by sending a notice of demand to arbitrate under the Indian Arbitration and Conciliation Act, 1996, to the other party. This Court cannot have a roving enquiry in this matter and as per the order of the Hon ble Supreme Court where guidelines were issued for quashing the FIR, this case would not fall under the guidelines issued and this Court is of the view that the petitioner s claim to quash the C.C. No. 4965 of 2014 on the file of the III-FTC, Saidapet, Chennai, cannot be accepted and all the aspects regarding employment and other aspects have to be decided only before the trial Court. This Court is not inclined to quash the proceedings - petition dismissed.

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